[House Hearing, 115 Congress]
[From the U.S. Government Publishing Office]




 
  BUILDING A 21ST-CENTURY INFRASTRUCTURE FOR AMERICA: CHALLENGES AND 
           OPPORTUNITIES FOR INTERCITY PASSENGER RAIL SERVICE

=======================================================================

                                (115-19)

                                HEARING

                               BEFORE THE

                 SUBCOMMITTEE ON RAILROADS, PIPELINES,
                        AND HAZARDOUS MATERIALS

                                 OF THE

                              COMMITTEE ON
                   TRANSPORTATION AND INFRASTRUCTURE
                        HOUSE OF REPRESENTATIVES

                     ONE HUNDRED FIFTEENTH CONGRESS

                             FIRST SESSION

                               __________

                             JUNE 22, 2017

                               __________

                       Printed for the use of the
             Committee on Transportation and Infrastructure
             
             
             
             
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             COMMITTEE ON TRANSPORTATION AND INFRASTRUCTURE

                  BILL SHUSTER, Pennsylvania, Chairman

DON YOUNG, Alaska                    PETER A. DeFAZIO, Oregon
JOHN J. DUNCAN, Jr., Tennessee,      ELEANOR HOLMES NORTON, District of 
  Vice Chair                         Columbia
FRANK A. LoBIONDO, New Jersey        JERROLD NADLER, New York
SAM GRAVES, Missouri                 EDDIE BERNICE JOHNSON, Texas
DUNCAN HUNTER, California            ELIJAH E. CUMMINGS, Maryland
ERIC A. ``RICK'' CRAWFORD, Arkansas  RICK LARSEN, Washington
LOU BARLETTA, Pennsylvania           MICHAEL E. CAPUANO, Massachusetts
BLAKE FARENTHOLD, Texas              GRACE F. NAPOLITANO, California
BOB GIBBS, Ohio                      DANIEL LIPINSKI, Illinois
DANIEL WEBSTER, Florida              STEVE COHEN, Tennessee
JEFF DENHAM, California              ALBIO SIRES, New Jersey
THOMAS MASSIE, Kentucky              JOHN GARAMENDI, California
MARK MEADOWS, North Carolina         HENRY C. ``HANK'' JOHNSON, Jr., 
SCOTT PERRY, Pennsylvania            Georgia
RODNEY DAVIS, Illinois               ANDRE CARSON, Indiana
MARK SANFORD, South Carolina         RICHARD M. NOLAN, Minnesota
ROB WOODALL, Georgia                 DINA TITUS, Nevada
TODD ROKITA, Indiana                 SEAN PATRICK MALONEY, New York
JOHN KATKO, New York                 ELIZABETH H. ESTY, Connecticut, 
BRIAN BABIN, Texas                   Vice Ranking Member
GARRET GRAVES, Louisiana             LOIS FRANKEL, Florida
BARBARA COMSTOCK, Virginia           CHERI BUSTOS, Illinois
DAVID ROUZER, North Carolina         JARED HUFFMAN, California
MIKE BOST, Illinois                  JULIA BROWNLEY, California
RANDY K. WEBER, Sr., Texas           FREDERICA S. WILSON, Florida
DOUG LaMALFA, California             DONALD M. PAYNE, Jr., New Jersey
BRUCE WESTERMAN, Arkansas            ALAN S. LOWENTHAL, California
LLOYD SMUCKER, Pennsylvania          BRENDA L. LAWRENCE, Michigan
PAUL MITCHELL, Michigan              MARK DeSAULNIER, California
JOHN J. FASO, New York
A. DREW FERGUSON IV, Georgia
BRIAN J. MAST, Florida
JASON LEWIS, Minnesota

                                  (ii)

  


     Subcommittee on Railroads, Pipelines, and Hazardous Materials

                   JEFF DENHAM, California, Chairman

JOHN J. DUNCAN, Jr., Tennessee       MICHAEL E. CAPUANO, Massachusetts
SAM GRAVES, Missouri                 DONALD M. PAYNE, Jr., New Jersey
LOU BARLETTA, Pennsylvania           JERROLD NADLER, New York
BLAKE FARENTHOLD, Texas              ELIJAH E. CUMMINGS, Maryland
DANIEL WEBSTER, Florida              STEVE COHEN, Tennessee
MARK MEADOWS, North Carolina         ALBIO SIRES, New Jersey
SCOTT PERRY, Pennsylvania            JOHN GARAMENDI, California
MARK SANFORD, South Carolina         ANDRE CARSON, Indiana
TODD ROKITA, Indiana                 RICHARD M. NOLAN, Minnesota
JOHN KATKO, New York                 ELIZABETH H. ESTY, Connecticut
BRIAN BABIN, Texas                   CHERI BUSTOS, Illinois
RANDY K. WEBER, Sr., Texas           FREDERICA S. WILSON, Florida
BRUCE WESTERMAN, Arkansas            MARK DeSAULNIER, California
LLOYD SMUCKER, Pennsylvania          DANIEL LIPINSKI, Illinois
PAUL MITCHELL, Michigan              PETER A. DeFAZIO, Oregon (Ex 
JOHN J. FASO, New York, Vice Chair   Officio)
JASON LEWIS, Minnesota
BILL SHUSTER, Pennsylvania (Ex 
Officio)

                                 (iii)
                                 

                                CONTENTS

                                                                   Page

Summary of Subject Matter........................................    vi

                               WITNESSES

Paul Nissenbaum, Associate Administrator, Office of Railroad 
  Policy and Development, Federal Railroad Administration:

    Testimony....................................................     6
    Prepared statement...........................................    60
    Responses to questions for the record from the following 
      Representatives:

        Hon. Jeff Denham of California...........................    73
        Hon. Michael E. Capuano of Massachusetts.................    76
    Supplementary information to hearing remarks.................    80
Charles W. ``Wick'' Moorman IV, President and Chief Executive 
  Officer, Amtrak:

    Testimony....................................................     6
    Prepared statement...........................................    88
    Responses to questions for the record from the following 
      Representatives:

        Hon. Jeff Denham of California...........................    97
        Hon. Michael E. Capuano of Massachusetts.................   101
John D. Porcari, Interim Executive Director, Gateway Program 
  Development Corporation:

    Testimony....................................................     6
    Prepared statement...........................................   105
P. Michael Reininger, Executive Director, Florida East Coast 
  Industries, LLC:

    Testimony....................................................     6
    Prepared statement...........................................   110
    Responses to questions for the record from the following 
      Representatives:

        Hon. Jeff Denham of California...........................   120
        Hon. Michael E. Capuano of Massachusetts.................   121
Dan Richard, Chairman of the Board, California High-Speed Rail 
  Authority:

    Testimony....................................................     6
    Prepared statement...........................................   124
    Responses to questions for the record from the following 
      Representatives:

        Hon. Jeff Denham of California...........................   136
        Hon. Michael E. Capuano of Massachusetts.................   139
    Supplementary information to hearing remarks.................   141

          PREPARED STATEMENTS SUBMITTED BY MEMBERS OF CONGRESS

Hon. Eddie Bernice Johnson of Texas..............................     3

                       SUBMISSIONS FOR THE RECORD

Letter from constituent submitted by Hon. Elizabeth H. Esty of 
  Connecticut....................................................    29
Testimony of Keli'i Akina, Ph.D., President/CEO, The Grassroot 
  Institute of Hawaii............................................   148
  
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  BUILDING A 21ST-CENTURY INFRASTRUCTURE FOR AMERICA: CHALLENGES AND 
           OPPORTUNITIES FOR INTERCITY PASSENGER RAIL SERVICE

                              ----------                              


                        THURSDAY, JUNE 22, 2017

                  House of Representatives,
Subcommittee on Railroads, Pipelines, and Hazardous 
                                         Materials,
            Committee on Transportation and Infrastructure,
                                                    Washington, DC.
    The subcommittee met, pursuant to notice, at 10:06 a.m. in 
room 2167, Rayburn House Office Building, Hon. Jeff Denham 
(Chairman of the subcommittee) presiding.
    Mr. Denham. The committee will come to order. Before we--
can we turn this down, just a little bit?
    Before we begin, I would ask unanimous consent that 
Transportation and Infrastructure Committee members not on the 
subcommittee be permitted to sit with the subcommittee at 
today's hearing and ask questions.
    Without objection, so ordered.
    Good morning and welcome to today's hearing to consider the 
challenges and opportunities for intercity passenger rail 
service.
    At the outset, I want to thank Mr. Capuano. He and I have 
worked very closely on Amtrak for reauthorization for the last 
5 years, as well as the FAST Act. We have continued to push 
reforms that help us to unleash capital across the country and 
establish a good state of repair with Amtrak and other areas 
along the program.
    I am also pleased to see the progress that has been made on 
the implementation of PRIIA, the Passenger Rail Investment and 
Improvement Act of 2008. A consistent methodology to allocate 
operating and capital costs associated with Amtrak corridor 
services has been implemented, and a methodology to allocate 
costs among all the users of the Northeast Corridor is in the 
process of being implemented. As a result of these changes, 
this year Amtrak will receive $286.6 million from 18 States and 
approximately $119 million from commuter authorities.
    But in one respect our approach to intercity passenger rail 
service has been scattershot. Over $10 billion was appropriated 
by the ARRA, American Recovery and Reinvestment Act, during the 
fiscal year of 2010 to fund conventional and high-speed 
passenger rail projects.
    But rather than investing these funds strategically to 
achieve specific outcomes, the previous administration 
distributed the funds widely, making about 150 grants to 34 
States, the District of Columbia, and Amtrak. The result is 
the--most of the improvement made across the country has been 
incremental, at best. And further, about $1 billion of the $8 
billion in ARRA funds has not been spent and will be turned 
back to the Treasury in September.
    Particularly concerning to me is that nearly $4 billion of 
the funding was dedicated to California high-speed rail, which 
has seen skyrocketing costs at the same time the scope of the 
project has diminished.
    What was sold to the voters as a $33 billion project that 
would connect all of California's major cities by 2020 is now a 
$64 billion project without connections to Sacramento and San 
Diego, with an optimistic completion date of 2029, and blended 
service over commuter rail at both ends of the line. The 
Initial Operating Section alone, extending from San Jose to a 
north point somewhere north of Bakersfield, will cost over $20 
billion.
    Other members of the subcommittee may also have concerns 
about the projects selected to receive ARRA funding. Given the 
limited Federal dollars available for intercity passenger rail 
projects, it is imperative that projects be better prioritized 
to accomplish specific national goals.
    This hearing is also about understanding new technologies 
that will transform our passenger rail network. As an example, 
a number of members of this committee have experienced high-
speed trains in Europe and Asia and alternative technologies 
such as maglev.
    I want to thank all of our witnesses for being here today 
and look forward to a lively discussion.
    Mr. Denham. I now recognize the ranking member, Mr. 
Capuano, for his opening statement.
    Mr. Capuano. Thank you, Mr. Chairman. As usual, I will be 
brief.
    I want to thank the panel for being here, I look forward to 
your testimony. As always, we learn from the things we do right 
and the things we do wrong. And I am looking forward to having 
a lively and thoughtful and informative discussion today.
    And, with that, Mr. Chairman, I ask unanimous consent to 
include the gentlewoman from Texas--Ms. Johnson's written 
statement in the hearing record.
    Mr. Denham. Without objection.

    [Ms. Johnson of Texas's prepared statement follows:]
    
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    Mr. Denham. Mr. DeFazio?
    Mr. DeFazio. Thank you, Mr. Chairman. Thanks for this 
hearing today. It is yet another in a series of building a 
21st-century infrastructure for America. But unfortunately, 
thus far we are making no progress. In fact, the President has 
proposed to take us backwards.
    They had a much-touted infrastructure week 2 weeks ago, 
which came out with a mish-mash of devolution privatization 
proposals, and no real substantive move toward a needed Federal 
investment in a number of modes.
    They also pointed at environmental regulation as being the 
only problem that is before us. Actually, 90 percent of 
projects in surface go forward with what is called a 
categorical exclusion. So no environmental analysis necessary. 
Five percent go through a minimal process environmental 
analysis, and 5 percent, the largest projects that impact 
millions of people, go through a NEPA analysis.
    But that is not what is holding the States, the regions, or 
these projects back. In fact, the Department of the Treasury 
came out with a report that says a lack of public funding is, 
by far, the most common factor hindering the completion of 
transportation and water infrastructure projects.
    So we got a lot of pretend going on. All we have to do is 
streamline. Well, we streamlined in the Mica bill, and then we 
streamlined in the FAST Act. Most of that streamlining has not 
yet been implemented. And once that is implemented, these 
nonexistent problems will be even more nonexistent. They also 
announced a dashboard, but of course the Obama administration 
had a dashboard, so that wasn't big progress, either.
    And then the President's budget, $95 billion in cuts to 
highways, transit, and safety over 10 years; $20 billion in 
cuts to transit, New Start, over 10 years; $1 billion to the 
Army Corps of Engineers; and even $250 million in the FAA for 
the coming year.
    He also proposed to cut all 15 Amtrak long-distance routes. 
He also wants to cut Essential Air Service. So I think a lot of 
people living in smaller cities throughout the heartland of 
America are going to be a little surprised to wake up one day, 
find out they have no air service, they have no train service, 
and--but they can get on the newly tolled, privatized 
interstate system, and move themselves around as best they can.
    That is sort of where we are at today. So I really wish we 
could get down to the brass tacks of talking about building a 
21st-century infrastructure for this country.
    I have introduced three bipartisan bills. One would, 
shockingly, spend the taxes collected for the Harbor 
Maintenance Trust Fund on harbor maintenance. Whoa, that is 
shocking in Washington, DC. It was pulled out of the water 
resources development bill last year at the behest of the 
Speaker, at the request of Mr. Price, because the Budget 
Committee wants to pretend, by diverting that money from its 
intended purpose, that they are reducing the deficit: $9 
billion sitting in the Treasury--maybe, or evaporated into 
ether.
    Number two, lift the cap on passenger facility charges. I 
have introduced that with our colleague, Mr. Massie.
    And, number there, a Penny for Progress: index the gas tax. 
Could never go up more than 1.5 cents a gallon a year. Borrow 
$500 billion over 13 years, and really get some things done.
    There are three proposals totaling $560 billion of real 
investment. And all we have seen from the White House is 
privatization, and oh, they have one other great idea. They 
would bribe the States to sell their interstate. So if you 
propose to sell your interstate to a private vendor, then they 
will give you Federal gas tax dollars to do that. They will pay 
you 10 or 15 percent commission for selling the public 
infrastructure to private interests.
    You know, this is becoming absurd. So I hope today we can 
begin to talk about the real needs of Amtrak, and where we are 
really going to find the investment money that Amtrak needs for 
the Northeast Corridor and the national system.
    Thank you, Mr. Chairman.
    Mr. Denham. Thank you, Mr. DeFazio. Now I would like to 
welcome our panel of witnesses: Mr. Paul Nissenbaum, who is the 
Associate Administrator for Railroad Policy and Development at 
FRA [Federal Railroad Administration]; Mr. Charles ``Wick'' 
Moorman, the president and chief executive officer of Amtrak.
    I would now like to pause to allow Mr. Webster for a brief 
introduction.
    Mr. Webster. Thank you, Mr. Chair. Wick Moorman and I have 
three things in common: we both went to Georgia Tech, we are 
both engineers, and we were fraternity brothers. And he began 
there as a co-op student working with Southern Railway, and he 
never left rails. He stayed the whole time. He moved his way up 
in Southern, and it became Norfolk Southern. He was president 
and CEO, chairman, and then he retired.
    And I am not sure what struck him, but he decided to change 
from freight to get into passenger service. And I will tell you 
there couldn't be a better person, a more knowledgeable person. 
He even taught me what the distance between the rails are on 
standard rail, and why that is. It may have been an old wives' 
tale, I don't know.
    But anyway, I will say this: Wick Moorman is a railroader 
of all railroaders, and he understands the business, and I 
think he is going to do a fine job as president and CEO at 
Amtrak.
    Thank you, Mr. Chairman.
    Mr. Denham. Thank you, Mr. Webster.
    Also on the panel today is Mr. John Porcari, interim 
executive director of Gateway Program Development Corporation, 
and former Deputy Secretary of U.S. DOT; Mr. Mike Reininger, 
who serves as the executive director of Florida East Coast 
Industries; and Mr. Dan Richard, chair of the California High-
Speed Rail Authority.
    I would ask Members--Mr. Nissenbaum is a career employee, 
there is no Administrator, we are still waiting for staffing up 
of FRA, but he came as our--at our request, and may not be able 
to answer questions specific to the President's new plan.
    But nevertheless, I asked him to be here to answer some of 
the FRA questions as they pertain to a number of our rail 
projects.
    If there are other specific questions, I think we can send 
them in writing to the FRA afterwards. I ask unanimous consent 
that our witnesses' full statements be included in the record.
    Without objection, so ordered.
    Since your written testimony has been made part of the 
record, the committee requests that you limit your summary to 5 
minutes.
    We now recognize Mr. Nissenbaum for your opening statement.

 TESTIMONY OF PAUL NISSENBAUM, ASSOCIATE ADMINISTRATOR, OFFICE 
     OF RAILROAD POLICY AND DEVELOPMENT, FEDERAL RAILROAD 
 ADMINISTRATION; CHARLES W. ``WICK'' MOORMAN IV, PRESIDENT AND 
   CHIEF EXECUTIVE OFFICER, AMTRAK; JOHN D. PORCARI, INTERIM 
EXECUTIVE DIRECTOR, GATEWAY PROGRAM DEVELOPMENT CORPORATION; P. 
   MICHAEL REININGER, EXECUTIVE DIRECTOR, FLORIDA EAST COAST 
   INDUSTRIES, LLC; AND DAN RICHARD, CHAIRMAN OF THE BOARD, 
              CALIFORNIA HIGH-SPEED RAIL AUTHORITY

    Mr. Nissenbaum. Thank you, Mr. Chairman, and good morning, 
Ranking Member DeFazio, Ranking Member Capuano, and members of 
the subcommittee. My name is Paul Nissenbaum; I am the FRA's 
Associate Administrator for the Office of Railroad Policy and 
Development, which oversees the planning and delivery of 
passenger and freight rail development programs, including 
oversight of Amtrak.
    I have had the privilege of serving under three 
administrations as a career member of the Senior Executive 
Service. And, as such, it is an honor to be here before you 
today to discuss the challenges and opportunities for intercity 
passenger rail.
    I have submitted my full statement to the committee, and 
ask that it be made part of the hearing record.
    FRA would like to recognize the committee's commitment to 
rail embodied in the FAST Act. The FAST Act represents a 
historic milestone in that, for the first time, intercity 
passenger rail has been included in a comprehensive, multimodal 
surface transportation authorization. The FAST Act builds on 
policies and programs this committee established back in 2008 
in PRIIA, which shifted much of the responsibility for 
passenger rail development to the States.
    Notably, PRIIA established new cost-sharing frameworks 
between Amtrak and the States, and authorized competitive 
passenger rail grant programs directed to the States, including 
the High-Speed Intercity Passenger Rail, or HSIPR, program.
    Since January 2010, the HSIPR program has supported nearly 
150 projects in 35 States and the District of Columbia. About 
85 percent of those investments are concentrated in 6 corridors 
around the country. These projects are improving the rider 
experience by increasing reliability, adding new capacity, 
reducing travel times, and making stations and equipment more 
efficient and accessible.
    Many of these projects have benefitted the broader rail 
network, including freight rail services, by increasing 
capacity, reducing congestion, and improving fluidity and 
safety.
    In addition to critical infrastructure projects, the HSIPR 
program supported State planning, project development, and 
environmental work. The products that result from these efforts 
will lay the foundation for future construction projects and 
service improvements, establishing a strong pipeline of 
potential rail capital projects that are ready for funding and 
financing solutions.
    To help mitigate program implementation challenges and 
ensure proper stewardship of taxpayer dollars, FRA has 
established a risk-based oversight program for all of the 
agencies' grant programs, including HSIPR. This oversight 
approach comprises three major components: grant compliance, 
technical assistance to grantees, and project implementation 
oversight, which involves managing project scope, schedule, and 
budget.
    In the recently passed 2017 Appropriations Act, Congress 
provided funds for the competitive rail grant programs 
authorized in the FAST Act. FRA is currently working to develop 
the Notices of Funding Opportunity for these grant programs so 
that sponsors of eligible projects can leverage investment to 
help advance passenger and freight projects.
    The Department of Transportation also provides credit 
opportunities, including TIFIA [Transportation Infrastructure 
Finance and Innovation Act], RRIF [Railroad Rehabilitation and 
Improvement Financing], and Private Activity Bonds that project 
sponsors can pursue. These programs are managed by the 
Department's Build America Bureau, which works closely with FRA 
to help project sponsors navigate and accelerate Federal 
permitting and procedural requirements in order to get projects 
ready for funding or financing as quickly and efficiently as 
possible.
    To that end, FRA is working on a number of project delivery 
reforms to reduce duplication of environmental reviews and 
enhance interagency coordination. FRA has also been working 
with Amtrak to make changes to its account structure, and 
planning and reporting requirements. These reforms, which were 
developed under the leadership of this committee and included 
in the FAST Act, will significantly improve Amtrak's 
transparency and the delivery of its services.
    I would like to close by thanking the committee for 
recognizing how integral rail is to a competitive U.S. 
multimodal transportation system. Making investments in rail 
that are market-appropriate will ensure that we meet the 
demands of America's growing economy in a safe, reliable, and 
efficient manner, while maximizing public benefits across all 
modes.
    Thank you again, Mr. Chairman, for the opportunity to 
testify, and I am happy to answer any questions you may have.
    Mr. Denham. Thank you.
    Mr. Moorman, you are recognized for 5 minutes.
    Mr. Moorman. Chairman Denham, Ranking Members Capuano and 
DeFazio, members of the subcommittee, and fellow witnesses, 
good morning. Thank you. A special thanks to Representative 
Webster for that gracious introduction. I can tell you that 
many of our former fraternity brothers are very surprised that 
either of us amounted to anything.
    [Laughter.]
    Mr. Moorman. It is my privilege to be here today--or at 
least me; sorry, Dan--on behalf of Amtrak to discuss our role 
in America's multimodal transportation system.
    On many fronts, Amtrak is taking important steps to ensure 
that our business reaches the next level of success. Building 
on several years of record-setting ridership, last year we 
welcomed aboard a record 31.3 million passengers, and every day 
more than 300 of our trains carry almost 86,000 riders across 
the country. We serve more than 500 destinations in 46 States 
and the District of Columbia, over more than 21,000 miles of 
route, and we are the Nation's only high-speed, intercity 
passenger rail provider, operating at speeds to 150 miles per 
hour. More than half of our trains have a top speed of over 100 
miles per hour.
    Building on my career in the private sector, I have led a 
reorganization of Amtrak over this past year to instill a more 
corporate culture through the company. We are focused on a more 
streamlined structure, with enhanced project delivery 
capabilities. We are nearing our 50th anniversary. And as we 
approach that milestone, I can tell you we remain relentlessly 
focused on safety and efficiency.
    Already we cover an industry-leading 94 percent of our 
operating expenses, and we spend $1.7 billion annually on 
domestic goods and services. We simplified our chain of 
command, we have clarified responsibilities and 
accountabilities, and that will enable us to be more bottom-
line-driven and customer-centric. That is my objective with our 
employees, our customers, and with you, our investors.
    These changes will allow us to do more, to do what we do 
better, and to be more responsive to our Federal, State, and 
local partners. The services we provide across our network 
perform a vital role in the country's transportation network.
    Whether it is long-distance trains connecting otherwise 
isolated communities across the country, or State-supported 
trains that have seen 90 percent growth in the last 18 years, 
or the Northeast Corridor, where Amtrak and its commuter 
partners helped provide 820,000 passenger trips a day, Amtrak 
enables the economic vitality of America from rural towns to 
our largest cities.
    Any network as complex as ours will always face challenges, 
from weather disruptions and old equipment to limited capacity 
and rising customer expectations. We at Amtrak are tackling 
these head on, and applying new project delivery capabilities 
to the very difficult tasks associated with renewing our aging 
assets, strengthening our infrastructure, and much-needed 
upgrading of capacity.
    We would not be good stewards of the assets entrusted to us 
if we were not planning to rebuild and expand them as needed 
for the future. I am sure many of you are aware of the 
infrastructure renewal at New York Penn Station program that we 
are about to begin this summer. It will accelerate years of 
overdue infrastructure renewal to deliver essential increases 
in reliability.
    And the necessity of this effort speaks to the stresses 
which the station's infrastructure is subject to. Penn Station 
today operates without a sufficient capacity margin to 
guarantee reliable delivery of service. And while we will make 
genuine progress this summer, huge needs remain from our 1934 
vintage electric traction system to work in our 1910-era 
tunnels.
    Beyond addressing the immediate needs, there are also 
serious capacity requirements pursued through the Gateway 
Program Development Corporation, which my fellow witness and 
acting executive director John Porcari will describe. We are 
working with New Jersey Transit and the Port Authority of New 
York and New Jersey to address both capacity and resiliency 
through the Gateway Program. It will replace aging and failure-
prone structures such as the Portal and Sawtooth Bridges, and 
increase track, tunnel, bridge, and station capacity between 
Newark and Penn Station.
    We are also pursuing partnerships to enhance our stations. 
We are engaging master developers to work with us to maximize 
commercial value of stations like Washington, Philadelphia, New 
York, and Baltimore, and we have just announced our selection 
of a master developer in Chicago. These are public-private 
partnerships that will improve the stations for our riders and 
the communities we serve.
    We are also working with Alstom and the French railway, 
SNCF, on a new Acela fleet to be built here in the United 
States with more capacity, better amenities, and a smoother 
ride, and we are about to refurbish our Amfleet cars, which 
serve as the backbone of our regional service.
    These are essential initiatives, if we are going to lay the 
foundation for the next 50 years. We know how much our 
passengers rely on us now, and we clearly see the demand for 
new routes and increased service levels being expressed by so 
many communities. Investments now will allow Amtrak to ensure 
that all of our business lines are ready to expand and meet 
these growing demands.
    With your help, Amtrak is poised to build on our strengths 
and rebuild our infrastructure. We are poised to renew our 
commitment to serve the people across America, and I firmly 
believe that the time for those infrastructure investments has 
come in this country. They are no longer nice to have; they 
have now reached the point of must-have.
    We are committed to improving the way we run our business, 
to modernizing our customers' experience. We are investing in 
our assets. And I want to thank all of you for your leadership 
that resulted in inclusion of Amtrak in the FAST Act, and ask 
you to build on that foundation and invest at the levels you 
set in our authorization in these important essential steps to 
foster a renaissance in American passenger rail transportation. 
Thank you.
    Mr. Denham. Thank you.
    Mr. Porcari?
    Mr. Porcari. Good morning, Chairman Denham, Ranking Member 
DeFazio, Ranking Member Capuano, and members of this 
subcommittee. My name is John Porcari, and I am the interim 
executive director of the Gateway Program Development 
Corporation.
    The Gateway Corporation is the Federal-State entity created 
to carry out one of the most important and urgent 
infrastructure projects in the United States: the Gateway 
Project. The 450-mile Northeast Corridor is the busiest rail 
corridor in the country. And the busiest section of this 
corridor is the part around New York City.
    Heading out of Manhattan to the northeast, toward Boston, 
there are four tracks, which gives the system redundancy to 
allow maintenance to be performed and to respond to incidents. 
Unfortunately, in the other direction, where trains travel 
under the Hudson River to New Jersey and eventually to 
Washington, this is not the case. There are just two tracks. 
Any issues here, even minor ones, cause major problems for the 
corridor. There is no alternative route.
    The Gateway Program of projects is designed to address this 
deficiency. The section from Penn Station in New York to 
Newark, New Jersey, is the most densely used piece of track in 
the United States, and one of the most densely used in the 
world. It can host nearly 1,200 train movements per day. 
Unfortunately, it is also very old and in need of urgent repair 
and expansion.
    The existing tunnels under the Hudson River were completed 
in 1910, while the Titanic was still under construction, and 
while the Wright brothers were transitioning from their Model A 
to their Model B airplane. The tunnels' age is reason enough 
for them to be comprehensively refurbished. But compounding 
that is, during Hurricane Sandy in 2012, they flooded, 
worsening their already precarious situation.
    In addition to the two-track tunnel, this section of track 
contains the Portal Bridge over the Hackensack River in New 
Jersey, the busiest train bridge in the Western Hemisphere. 
This two-track swing bridge also dates from 1910. And because 
of its low clearance over the water, it must be opened to allow 
boats to pass.
    What we are calling phase 1A of the Gateway Program is the 
replacement of this aging bridge. The design, all environmental 
reviews, and permitting are completed, and we are just awaiting 
the last piece of funding. Preconstruction work on this new 
bridge site, such as building an access road and retaining 
walls, will be underway this summer. Amtrak has committed its 
funding for the new bridge, and the local partners, New Jersey 
Transit and the Port Authority of New York and New Jersey, have 
committed theirs.
    With everything else in place, we are awaiting word from 
the U.S. Department of Transportation on whether the project 
will be awarded a Federal Transit Administration Capital 
Investment Grant for core capacity that we applied for last 
fall. Award of these funds will be the last piece of the 
puzzle, and then construction will be able to start on the 
bridge.
    Let me emphasize that the technical assistance and 
coordination by the Department of Transportation has been 
extraordinary, and this first component of the Gateway project 
would not be ready for construction without DOT's assistance.
    We are simultaneously moving forward with phase 1B, which 
is construction of a new two-track tunnel under the Hudson 
River. The plan is to quickly build these two new tracks under 
the Hudson and, once they are open, to close each of the 
existing 106-year-old tunnels, in turn, for repairs. Closing 
one of these tunnels for repairs without the new tunnel in 
place would reduce throughput of trains during rush hour by 75 
percent, due to the need to run trains in both directions on 
the remaining track.
    When the entire Gateway Program is completed, including 
subsequent phases, there will be a fully functional, four-track 
railroad, all the way from Newark, New Jersey, to New York Penn 
Station, and enough track and platform capacity in Penn Station 
and New York to accommodate decades of future travel growth.
    Work is currently underway to finish the environmental 
impact statement [EIS] for the tunnel phase of the work. I am 
pleased to say that we are on an aggressive 24-month schedule 
for completion of the EIS, which is less than half the time 
that was typical for projects of this kind just a few years 
ago. With the help of U.S. DOT, we will release a draft EIS 
this month for the tunnel, and a final EIS Record of Decision 
and a Corps of Engineers section 404 permit simultaneously by 
March 2018.
    In addition to giving us an urgently needed transportation 
project that eliminates a single point of failure for 10 
percent of America's gross domestic product, this project 
serves as an example of how environmental reviews for even 
complex, expensive projects can be expedited without any 
compromise to environmental outcomes.
    In the coming weeks we will be holding an industry forum to 
solicit input from private-sector experts about how they 
believe the tunnel project can be most efficiently delivered. 
We are looking to tap into the best thinking from the private 
sector about how to get the tunnel project built quickly and 
cost effectively. This will be followed by a request for 
information process. We are actively evaluating design, build, 
and public-private partnerships, for example, for the tunnel.
    Despite the strong cooperation that is already in place 
between the national, State, and local stakeholders, it is not 
realistic to think that an infrastructure project of this 
magnitude can succeed without an appropriate Federal financial 
commitment. A project of national significance like Gateway 
requires this combined Federal, State, and local commitment.
    As we all know, America has huge infrastructure needs. And 
it is heartening to see that this subcommittee recognizes that 
rail is an important part of the equation. Just as our parents 
and grandparents--and in the case of the existing 106-year-old 
Gateway Bridge and Tunnel, our great-grandparents--designed, 
built, and paid for the transportation infrastructure that is, 
literally, the foundation of our current economy in much more 
difficult circumstances than we are experiencing today, we have 
to do the same for the benefit of our children and generations 
to come.
    I would submit there is no more urgent infrastructure 
project in the country than Gateway.
    Thank you, Mr. Chairman, for the opportunity to testify, 
and I look forward to answering any questions.
    Mr. Denham. Thank you.
    Mr. Reininger?
    Mr. Reininger. Chairman Denham, Ranking Member Capuano, and 
members of this subcommittee, thank you for the invitation to 
participate in this hearing, and to share a private-industry 
perspective on the opportunity to introduce intercity passenger 
rail as a new transportation solution needed in many cities 
across the country.
    My name is Mike Reininger, and I am the executive director 
of Florida East Coast Industries [FECI]. We are an 
infrastructure and real estate development company based in 
Miami, where we are represented by your committee colleague and 
our distinguished congresswoman, Frederica Wilson. Further 
along our corridor, we are also represented by distinguished 
Members Dan Webster, Lois Frankel, and Brian Mast.
    FECI is the parent company of All Aboard Florida, which was 
established in 2012 to pursue passenger rail opportunities on a 
private, for-profit basis. FECI traces its roots to the late 
1890s and the company founded by Henry Flagler, who first 
introduced the integrated rail network which gave rise to 
Florida's rapid growth. After some 120 years of continuous 
operations, that railroad remains a profitable private 
enterprise.
    Leveraging this legacy and historic assets, we have 
invested about $2 billion of private capital over the last 5 
years. And in about 90 days we will launch Brightline. This new 
express intercity passenger train will service the downtown 
cores in Miami, Fort Lauderdale, and West Palm Beach as the 
first phase of a vision to fully connect the southeast and 
central Florida markets.
    Today, 400 million trips are taken annually in this market, 
relying on roads and airways that are among the most congested 
in the Nation. These trips, which we see as too long to drive 
and too short to fly, represent the opportunity for the next 
generation of American train travel. Brightline will carry our 
customers in a new fleet of innovative, 100 percent Buy America 
trains to three new stations across 70 miles of modernized 
railroad that includes Positive Train Control.
    In addition, we are building over 1.5 million square feet 
of mixed-use development in and around our transit hubs, and 
these facilities will begin welcoming new occupants, concurrent 
with the start of Brightline trains.
    Our business thesis is quite simple. We believe that 
markets comprised of city pairs that are 250 to 350 miles apart 
present opportunities for trains to provide a more efficient, 
comfortable, and reliable alternative to cars and planes. The 
addition of integrated real estate development aligns two 
economic engines that directly support one another and creates 
a unified business platform that has more than one way to pay 
the bills.
    Our experiences have sharpened our perspective on several 
key factors where enhanced interaction between Government and 
industry will contribute to faster results, encourage private 
capital investment earmarked for infrastructure, and contribute 
new capacity into our transportation networks.
    Broadly speaking, the most notable areas for improvement 
that will help pioneering efforts such as ours, are a 
streamlining of complicated regulatory processes and 
enhancements to the debt markets that must accompany equity 
investments to produce new projects.
    The NEPA process remains a disincentive to the private 
sector. And while there is ample equity, such as ours, ready to 
invest in transportation, the lack of precedent for new 
systems, coupled with uncertain permitting, have limited the 
availability of the appropriate debt needed to complete the 
capital equation. Both issues can benefit from retooling of 
already-existing structures.
    Our own experiences with expanding our business into its 
second phase, an incremental investment of $2 billion, clearly 
demonstrates these points. Our project underwent a 
comprehensive 2.5-year-long NEPA study, resulting in the 
publishing of a final EIS. Yet 4.5 years after it began, the 
process has still not resulted in the outcomes that will 
facilitate needed permits. Rationalization of this reality will 
save enormous time and money, and produce much better results.
    Programs such as Private Activity Bonds, RRIF, or TIFIA 
loans are underutilized for greenfield developments, as they 
suffer from opaque and complex rules that discourage their use. 
Yet we are encouraged that these existing programs could be 
easily revised to remove ambiguity and provide exactly the kind 
of efficient debt needed to incent investment and create 
progress.
    As the demand for services such as Brightline continue to 
emerge, the opportunity to catalyze the direction of private 
capital against the infrastructure challenge can be effected 
through needed reforms that will align the interests and 
strengths of Government and industry toward common goals. As we 
work toward the launch of our business and the expansion of our 
system, we welcome the opportunity to contribute to enhanced 
solutions to these issues.
    Thank you for the opportunity to share these thoughts with 
you today, and I will welcome questions.
    Mr. Denham. Thank you.
    Mr. Richard?
    Mr. Richard. Good morning, Chairman Denham, Ranking Member 
DeFazio, Ranking Member Capuano. My name is Dan Richard, I am 
the chair of the governing board of the California High-Speed 
Rail Authority. And it is a privilege to appear before this 
committee today.
    My written testimony gives a comprehensive view of both the 
status and the future of the California high-speed rail 
program. In the few short minutes here I would like to 
emphasize three points.
    First, as we sit here today, construction of America's 
first true high-speed rail system is underway in California. 
The 119-mile spinal section of the project, with $3 billion of 
contracts already underway, has put 1,200 workers at 14 sites 
to work building this project. And this has all resulted from 
the American Recovery and Reinvestment Act, and I wanted to 
report to you that that act is performing as it was designed, 
and we thank the Congress of the United States and the 
administration for this support.
    As a result of this, right now, 630 private-sector firms 
are working on the project. Of that, 373 small businesses--and 
I know, Mr. Chairman, of special interest to you, 45 businesses 
that are owned and operated by disabled American veterans are 
working on the high-speed rail project in California today. And 
it is not just the businesses that are owned. Veterans like a 
32-year-old former Marine, Fernando Madrigal, is now earning 
$22 an hour as a third-year apprentice electrician, having 
served our country in Iraq and Afghanistan. This is what ARRA 
was intended to do, and it is performing as you wanted it to.
    I also want this committee and the Congress to know that, 
in this construction activity, every ounce of steel, every 
ounce of concrete that is being used right now, is being 
produced in America, domestically. And we will continue to 
respect the Buy America provisions that were installed by the 
Congress, as we move forward.
    In addition to the direct work having dramatic--direct 
effects on unemployment in one of the most challenging--
economically challenging regions in California, we have seen, 
for example, that the unemployment rate in Fresno County, which 
ranks as, in fact, the poorest county in California, with a 
25.2-percent poverty rate, the unemployment rate in Fresno 
County has fallen below 10 percent for only the fourth time in 
the last 25 years. And that is attributable to the investments 
that are being made by high-speed rail.
    And there are indirect benefits, as well. Part of this 
construction will remove 55 at-grade crossings, dangerous at-
grade crossings, up and down the Central Valley of California, 
and replace them with grade separations. And we are expanding 
freight capacity by moving to a new parallel passenger rail 
system. And this is very important.
    So, the high-speed rail program is under construction, it 
is having dramatic effects immediately in California in an area 
that has suffered historic underinvestment in our State.
    The second point that I want to make is that our next step 
is to connect the Central Valley of California with the Silicon 
Valley of California, and that will be a 250-mile stretch from 
north of Bakersfield, up through Fresno, and into San Jose and, 
ultimately, San Francisco. The import of this cannot be 
overstated.
    Right now, in the Silicon Valley, which is the engine of 
California's economy and, to a great extent, the engine of 
America's economy, the housing crisis has reached epic 
proportions. The average cost of a home in the San Jose area, 
the average cost, is more than $1 million. So the challenge for 
our high-technology industry to attract and retain talent in 
this area with those housing costs is enormous.
    Today, instead of taking a Google bus from San Francisco, 
which takes an hour, we now see the prospect of high-speed rail 
service connecting San Jose to Merced and Fresno, with 40- and 
50-minute trips, and the technology leaders in Silicon Valley 
are extremely excited about this prospect of bringing a jobs-
housing balance to a region that has not had that.
    And just last week, Google announced the creation of a 
20,000-person campus right at the Diridon Station, which will 
be the densest transportation hub in the West, with high-speed 
rail, BART, Amtrak, Caltrain, and so forth, all serving that 
region.
    Finally, I want to make the point that, at this point in 
our program, we are beginning the transition to 
commercialization. The California high-speed rail program will 
be a privately operated system. The Government's role is to 
reduce risk at the outset, and then provide the rights to the 
private sector to operate on the infrastructure.
    And last week, Members, we issued an RFP for a private-
sector early operator to come in and infuse commercial thinking 
into the design and development of the system. Five 
international bid teams have all qualified for that, and we 
expect to receive robust competition.
    So we are underway with construction of this system. We see 
the next step leading to either further connections between our 
economic regions, and we are moving towards the 
commercialization phase of high-speed rail in California. I 
think these are exciting developments for our State and our 
Nation.
    I thank you for the opportunity to appear here today, and 
look forward to your questions.
    Mr. Denham. Thank you, and I thank each of our witnesses 
for joining us today. We will have at least two rounds of 
questions. I know that there are a number of questions this 
entire panel wants to hear about: infrastructure and investment 
across the country, as well as the progress of each of these 
projects, as well as the oversight. I will start this morning 
off.
    Mr. Richard, first of all, thank you. You have appeared 
many times in front of this committee. We do have a lot of 
questions, as this is the first high-speed rail investment in 
the country. We want to make sure that we do it right. We also 
want to make sure that what was proposed to taxpayers is 
adhered to. And so that has raised a number of questions as we 
move forward on investment.
    I want to follow up on some of our previous hearings. First 
of all--and before I start, let me also thank you. I have taken 
you up on your request at the invitation of Congressman Costa 
to actually go on site, take a look at some of the jobs, take a 
look at some of the investment, as well as report back to this 
committee on that. So I want to thank you for your openness and 
invitation on that, and look forward to, over the next couple 
months, taking you up on that offer.
    First of all, on page 13 of your 2016 business plan, it 
states--and I quote--``Since the inception of planning for 
high-speed rail in California it has been assumed that the 
program would be funded with Federal funds, State funds, and 
private-sector investment, each at approximately one-third.'' 
Are you still confident we are at one-third, one-third, and 
one-third?
    Mr. Richard. Well, first of all, thank you, Mr. Chairman, 
for your remarks. And I guess I would have to say honestly that 
I don't think there is any question about the State's share of 
this, reaching roughly one-third of the cost. Our analyses show 
that the potential revenues that would generate private-sector 
investment would equal about one-third of the cost.
    As we sit here today, Mr. Chairman, I think the question 
for us is the Federal participation. Right now, of the $64 
billion, the Federal commitment is about $3.5 billion, 
representing a 5-percent share of Federal support for this 
project. And I would submit to you that that is far lower than 
historically has been the case.
    California has committed both bond money, State cap and 
trade money. Those programs are moving forward. We see $20 
billion of private-sector investment. That is about one-third. 
And I would hope, Mr. Chairman, that, as this Congress and the 
administration sees the private sector and the State 
contributions to this, that we could have a different 
conversation about the Federal support than we have had in the 
past few years.
    Mr. Denham. So----
    Mr. Richard. So my confidence level depends on that.
    Mr. Denham. And so far, the amount of expenditures that you 
have had so far has been primarily Federal dollars.
    Mr. Richard. Yes, sir. And, Mr. Chairman, we appreciate the 
fact that the Department of Transportation, through the tapered 
match approach, has allowed us to get going on this program 
when there was in the past some litigation and other 
challenges. We are on the threshold of completing the 
expenditure of the ARRA money.
    Further Federal money for us, under the fiscal year 2010 
grant, will have to wait, under the terms of the agreement, 
until California reaches its match. We have started to do that. 
And we see that moving forward appropriately.
    Mr. Denham. And our previous hearing--from memory--our 
previous hearing last year, you had stated that you would not 
need any more Federal dollars under the initial construction 
segment. Is that still correct?
    Mr. Richard. That is still correct, Mr. Chairman.
    Mr. Denham. But you are still counting on the Federal 
Government to come up with roughly $20 billion of the $64 
billion needed for phase 1?
    Mr. Richard. I would say the right verb there is we are 
hoping for it. I don't know that we are counting on it, as we 
sit here today.
    And the import of that will simply be that if the Federal 
Government does not provide additional support, it will 
certainly slow the development of the program. I think it is 
important to note that we have designed our program to be 
delivered in segments. Each segment will have utility. And as 
we complete each segment, the risk goes down.
    So, my hope is that the Federal Government would look at 
areas where there are gaps to fill in or other things like 
that, and I think we can have that conversation at that point.
    Mr. Denham. The California High-Speed Rail Peer Review 
Group concluded last year that even using a--California High-
Speed Authority's--using your own assumptions, phase 1 still 
faces an $18.9 billion funding shortfall. Can you briefly 
describe in the short amount of time we have left what revenue 
sources are you counting on to fill that gap?
    Mr. Richard. Well, again, I think the biggest part of that 
is I think they assumed that there was not necessarily going to 
be additional Federal support at this point. So Federal dollars 
could be a source of that.
    Mr. Chairman, we are just also starting to look at a number 
of ancillary revenue opportunities. In Japan, the Japanese 
experience is they get about 32 percent of their revenues from 
real estate development around the stations. We are just 
beginning to look at that kind of issue, leasing our right-of-
way for fiber optic and other things.
    So I think we can provide this committee with a more 
detailed assessment of that. We don't have our arms fully 
around that, but we do kind of have in sight what directions we 
would go in to fill those gaps in the future.
    Mr. Denham. I am about out of time here, but what I hear 
you saying is asset recycling might be something that you are 
looking at for California high-speed rail. And that might help 
you to fill some of that gap.
    Mr. Richard. Mr. Chairman, I was taught not to step in to a 
bar fight.
    [Laughter.]
    Mr. Richard. I would rather not, if I----
    Mr. Denham. Thank you.
    Mr. Capuano, you are recognized for 5 minutes.
    Mr. Capuano. Mr. DeFazio----
    Mr. Denham. Mr. DeFazio, you are recognized for 5 minutes.
    Mr. DeFazio. Thank you, Mr. Capuano. Thank you for your 
respect.
    For Mr. Nissenbaum, you know, we basically made rail 
projects eligible for streamlining that we previously adopted 
for highway projects. Has that been implemented yet?
    Mr. Nissenbaum. So we are in the process of working with 
Federal Highway Administration and Federal Transit 
Administration to join their NEPA regulations, per the FAST 
Act. And that is in process, and we expect that out soon.
    Mr. DeFazio. Will that require a rulemaking on your part?
    Mr. Nissenbaum. It does. It requires us to join in with the 
rule that the Federal Highway Administration and Federal 
Transit Administration are updating right now.
    Mr. DeFazio. OK. So you will be part and parcel of that 
rulemaking, but of course, you can't do any rulemaking right 
now.
    Mr. Nissenbaum. Well----
    Mr. DeFazio. You are not allowed to do----
    Mr. Nissenbaum. Yes, rules are under the regulatory review 
committee right now.
    Mr. DeFazio. Right.
    Mr. Nissenbaum. But we expect rules like that will be 
moving forward.
    Mr. DeFazio. OK. Now, here is a case where we are going to 
have a rulemaking that will expedite projects so I think almost 
everyone would agree that is beneficial, although some people 
will be concerned that there won't be adequate environmental 
protections, perhaps. I don't think that is the case.
    But you are going to have to find two other rules to 
repeal, right? I mean if you become part of the highway rule, 
and the new rule is that you have to repeal two rules to adopt 
a rule, even if that rule is beneficial and is streamlining, 
what two rules are you going to do away with?
    Mr. Nissenbaum. So what I can tell you is that there is 
support within the Administration to advance environmental 
streamlining. That is--this is consistent with that principle. 
And at this point, we see no reason why we can't move forward, 
full steam ahead, on that.
    Mr. DeFazio. OK. To President Moorman, the President has 
proposed for you to focus on core assets, or something like 
that, and they want to get rid of all your long-distance 
routes. And, as I said in my opening remarks, that would leave 
many communities throughout the heartland of America without 
either air service or rail service.
    Is that going to save you money if we cut all those routes? 
And will it have an impact beyond those--the heartland of 
America?
    Mr. Moorman. That is an excellent question, in that while I 
think there is a conversation that you can have about the 
efficacy and the need of just the long-distance network and the 
routes that we serve, the true impact is more severe in that 
when you look at how Amtrak does its accounting, and look at 
the long-distance network itself, the long-distance fares, 
which are roughly $500 million a year, cover the fuel costs, 
cover the crew costs, and cover the base operation of the 
network. Where the losses are incurred really is in the 
allocated cost, the cost of the reservation system for the 
entire network, for the Law Department, all of the SG&A.
    And if, in fact, the funding for the long-distance network 
was withdrawn abruptly and we were ordered to stop it, we would 
lose all of the revenue. We would have significant labor 
protection, because we, like all railroads, have labor 
protection in our agreements, and we would continue to incur 
most of our labor costs, which would be $300 million to $400 
million, and then all of the allocated costs that now go with 
the long-distance network, we would cut some, but the rest 
would just then go to the States, back to the State-supported 
business and the corridor.
    The net result of an abrupt change like that would--we 
would essentially stop investing in the Northeast Corridor. We 
would not have the cash.
    Mr. DeFazio. OK, that is helpful. Mr. Porcari, your 
project, I was just talking to my colleague, Mr. Payne, here 
about--what is the name of that bridge?
    Mr. Payne. The Portal Bridge.
    Mr. DeFazio. The Portal Bridge. And he witnessed it opening 
and closing, but it doesn't quite line up, so the guy gets out 
a sledge hammer and--you know, are we near the point of failure 
on this bridge?
    Mr. Porcari. It is an excellent question. Yes. The good 
news is it functions very well for a 106-year-old bridge. But 
the bad news is it is 106 years old. And there have been, 
operationally, repeated incidents where it doesn't open and 
close successfully, which stops the entire Northeast Corridor. 
That is in addition to the capacity issues.
    One of the design features of the new bridge that we are 
ready for construction on is it is high enough over the 
Hackensack River that it does not have to open or close. It 
will be a fixed-span bridge.
    Yes, it is true that blunt instruments have to be used at 
times to make it operate. And it is ironic that we are having a 
hearing on building 21st-century infrastructure, and it starts 
with, in my estimation, taking some early 20th-century 
infrastructure and trying to rehabilitate it and replace it.
    Mr. DeFazio. OK, thank you.
    Thank you, Mr. Chairman.
    Mr. Denham. Mr. Duncan?
    Mr. Duncan. Thank you, Mr. Chairman.
    Mr. Moorman, in your testimony you say we--you are now 
covering 94 percent of our investment. And I would like to have 
you explain that just a little bit more.
    And you said also it is a record. And I would like to know. 
How does that compare to--what would that figure have been, 
say, 10 years ago or a few years ago?
    Mr. Moorman. We do cover 94 percent of our operating costs. 
And as I said, if you look across the globe, that is an 
admirable number. I can only speculate about 10 years ago I 
would tell you I know it would be substantially less.
    And Amtrak has done a lot of things to improve that. The 
revenues on the Northeast Corridor, with the introduction of 
Acela, were a big component of that. And I won't sit here today 
and tell you that we will get to 100 percent next year or the 
year after, but I think we will continue to drive that down.
    Mr. Duncan. The staff tells us that you had a loss on 
operations last year of $800 million. Do you see that going 
down, or is that--the look on your face, you seem to think that 
may not be accurate.
    Mr. Moorman. I am not sure, Congressman, where that number 
came from. If you look at our reporting, the operating loss for 
the company last year was $230 million.
    Mr. Duncan. $230 million.
    Mr. Moorman. Yes, sir.
    Mr. Duncan. OK. All right, Mr. Reininger, people all over 
the country are moving from the high-tax States to the low-tax 
States. And an example of that, New York had 41 congressmen in 
the 1970s. Now they have got 27. And I was told last week they 
are going to go to 25 maybe in the next census.
    Nothing against New York, but it is because--this has been 
very beneficial to my State. The Nashville area is exploding in 
population, and the Knoxville area, which I represent, is 
having very fast growth just right behind Nashville. Your 
minimum estimate on distance is 250 miles to 350 miles. 
Downtown Knoxville to downtown Nashville is 185 miles.
    Do you think that a route between Knoxville and Nashville 
could be profitable, considering the tremendous population 
growth that both cities are having?
    Mr. Reininger. Thank you for that question, Mr. Duncan. It 
could be. I would tell you that the things that would have to 
be understood pretty clearly to know whether it could feasibly 
work on its own would be probably three things.
    Number one would be the magnitude of capital investment 
that would be necessary in order to put the system into 
operation, and that would be dependent on perhaps the ability 
to leverage other existing assets that may be contributory to 
that answer.
    Number two is the absolute size of the marketplace that you 
have, including the diversity of the passengers that you would 
be fulfilling. Are they all business travelers, or are there 
other market segments that could supplement sort of that 
overall market equation?
    And then, importantly, it will be the nature of the 
service, relative to the alternatives. Will traveling by train 
be a quicker and more reliable service than the alternative, 
which was--probably be predominantly driving in that particular 
case? And, if it is, then history has shown us across the world 
that there is an opportunity for a successful passenger train 
implementation in those kinds of markets.
    Mr. Duncan. All right. All right, thank you.
    Mr. Richard, once again the staff tells me that the 
original estimate on the cost of your project was approximately 
$22 billion to $25 billion and that now we are already at $64 
billion, $65 billion. Is this going to be one of those projects 
where we see just unbelievable cost overruns by the time it--
the completion date, I understand, is 2029.
    What are you doing to make sure that we just don't see an 
explosion in the cost of this project?
    Mr. Richard. Congressman, I--this is a really critical 
question, and my answer to this is that when we came in--when I 
was appointed, we came in in 2011, we looked at the cost. And 
those earlier estimates were probably based on 2006 year dollar 
estimates, whatever. But it was clearly higher. And we are the 
ones who came in and told the public, it is going to be more 
than you have been told in the past. And notwithstanding that, 
our legislature decided to move forward.
    But as I have reflected on this--and I think this is a 
critical point--the cost growth that we have seen now is not 
the result of construction costs going out of control. In fact, 
there has really been very little of that. Our construction 
bids have come in hundreds of millions of dollars below the 
engineer's estimates.
    The cost growth in the program is the difference between 
what people estimated when they were looking at a map and had a 
magic marker and were drawing it and when you actually get out 
there and find that, you know, you are really going to have to 
move this food processing facility, you are really going to 
have to underground in this area, you are really going to have 
to protect this ag land over here, you are going to have to 
protect this waterway over here. So the cost growth has all 
been the difference between somebody's initial plan and going 
out and looking on the ground.
    If you will, I would say it is the social cost being 
brought in to the cost of the program. As we have gotten into 
construction, we have very tight standards, and we are 
maintaining our construction budget. So your question is really 
essential, as a representative of the taxpayers. We are not 
seeing that kind of cost growth. What we are seeing is that the 
initial estimates really didn't account for what it takes to 
build this on the ground and protect communities and ag land. 
But I think we have now absorbed those costs.
    And, in fact, we are doing extensive and aggressive value 
engineering. Two years ago the cost estimate was $68 billion. 
We brought it down to $64 billion. We are continuing to look at 
ways that we can drive costs down, because we know we will have 
construction cost pressures.
    Mr. Duncan. All right. Thank you very much, Mr. Chairman.
    Mr. Denham. Thank you, Mr. Duncan.
    Mr. Payne, you are recognized for 5 minutes.
    Mr. Payne. Thank you, Mr. Chairman. And I would like to 
thank the witnesses for being here.
    And just to piggyback on what the ranking member was 
talking about in terms of the Portal Bridge, I had the 
opportunity to go out to the Portal Bridge and visit that piece 
of infrastructure. And we are talking about a bridge that was 
designed in the 1800s and constructed around 1910. And this 
bridge, if it goes down, stops traffic between Massachusetts 
and Florida. This one bridge.
    I mean the only thing--and if I am not mistaken, Mr. 
Porcari, all the other funding is in place except for the 
Federal part of that. Is that correct?
    Mr. Porcari. Yes, that is correct.
    Mr. Payne. And so, this is something that, from my 
understanding, is shovel-ready with the input of the Federal 
Government's dollars that we could start on this project, 
create the four lanes that are necessary, and to make sure that 
this vital piece of infrastructure does not hamper the entire 
northeast coast. Am I correct?
    Mr. Porcari. That is correct. It is not only shovel-ready, 
it is shovel-worthy. I like to describe it as the single point 
of failure for 10 percent of America's GDP, because that is 
really what that bridge is.
    As I mentioned in my testimony, we will be doing early 
construction activities, preconstruction work, this summer on 
the site, building an access road, retaining walls, and the 
like. We are ready to go, and it is 100 percent permitted, 
designed, and ready for bid.
    Mr. Payne. OK. And Mr. Chairman, I hope that we could 
really bring attention to how vital this single bridge is. I 
mean they actually have to--it swivels, and when it goes back 
it never--9 times out of 10 it does not go back into position. 
They have to contact someone, a technician, to come up there--
actually, sometimes, with a sledge hammer, and knock the track 
back into place. And this is a bridge between Florida and 
Massachusetts that, if it is down, everything is stifled, it is 
cut off. And I think that the only thing that is holding it up 
is our input.
    So I hope we can take a look at that, just so you can 
understand, and the committee can understand how vital this 
really is. So let's see.
    And Mr. Moorman, as a regular Amtrak rider myself, and a 
believer in the potential of intercity rail--and I really 
appreciate the unique and critical role Amtrak plays in my 
region and for the entire country. I also understand that 
Congress' inability or unwillingness to come up with the 
reliable funding stream for Amtrak since its inception has 
contributed to your company's shortcomings in updating 
infrastructure. And you know, we want to focus on that aging 
infrastructure.
    Earlier this spring, there were a couple of derailments at 
New York Penn Station. As a matter of fact, I was on the 
platform in Newark for one of those derailments, waiting to 
come to Washington. You know, thankfully, no one was seriously 
injured. The more significant derailment delays for a week, and 
has--you know, it has led to Amtrak's accelerated 
infrastructure renewal plan.
    You mentioned in your testimony while it is correct that 
Amtrak passengers will suffer the greatest impact of this plan, 
proportionately, I also know that New Jersey Transit customers 
will be impacted with--will far outpace Amtrak's. So how did 
Amtrak's infrastructure at Penn Station get to this point? And 
how do we ensure that the infrastructure failures don't 
continue to hamstring commuters?
    Mr. Moorman. That is an excellent question. I would tell 
you that I think Amtrak got to this point over a period of 
years, particularly in the 1990s and the 2000s, when it was not 
funded adequately. And, as a result, we did not do the renewal 
work that should have been done, not only in Penn Station, but 
in a lot of the corridor.
    We started that renewal process a few years ago, when our 
funding levels improved. But we were trying to do it, 
essentially, on the weekends because there has been a great 
understandable unwillingness to do work that disrupts the 
weekday traveler.
    But the second derailment, the more disruptive one that you 
talked about, occurred. And, quite frankly, I went down and 
started looking around in the station. It is a terrifically 
difficult place to work. There are trains 24 hours a day. It is 
a maze of track work. But based on the conditions I saw, and 
other people who have expertise and I trust saw, we came to the 
conclusion that trying to kind of piecemeal this on weekends 
for the next few years would create more situations where we 
would have disruptive events, unplanned events, and we needed 
to go ahead and take aggressive action to renew the 
infrastructure. And that is what we are doing this summer.
    Mr. Payne. Thank you.
    Mr. Denham. Thank you, Mr. Payne.
    Mr. Webster, you are recognized for 5 minutes.
    Mr. Webster. Thank you, Mr. Chair. I have a question.
    Mr. Reininger, you are plowing new ground, at least for the 
current timeframe. I was wondering, as you plow this ground, 
what is your biggest frustration with the Federal Government?
    Mr. Reininger. So the--as the stewards of private capital 
investment, we have to remain diligent with respect to the 
efficient use of that capital. And that really runs through the 
value of time. As processes are undertaken, the longer those 
processes take, the more challenge that that puts on the 
economics of the end game operation of the private-sector 
business.
    And so, what that does, in effect, is it robs available 
funds that could be used for capital investment into actual 
hard assets and operating businesses, and utilizes them for 
other purposes.
    And so, if I were to isolate one thing, I would say it 
would be a more private-sector-like appreciation for the value 
of time.
    Mr. Webster. So is it impact studies, things like that, 
that are----
    Mr. Reininger. Certainly, you know, the processes that I 
described earlier, such as our experience with the NEPA process 
would be a part of it. By their very nature, projects like 
ours, like any infrastructure project, are multijurisdictional, 
right? They, by definition, go through more than one 
jurisdiction. And at multiple levels: at the Federal level, at 
the State level, and at the local level. And because of a lack 
of cohesion around those processes, it has the result of 
protracting processes and extending timeframes and causing 
complications that result in a lack of efficiency with the use 
of the capital.
    Mr. Webster. Wick, you had mentioned that in this little 
[displaying a document]--there is a white page on--a couple of 
pages on the Northeast Corridor. And in there it implies that 
the environmental review process is consecutive. Does that mean 
it sort of goes from one to the next one to the next one and 
the next one, as opposed to doing it concurrent?
    And if so, is there any fix to that? Because it looks like 
it could. This is just one project, the doubling of the 
Washington Union Station's capacity. Do those studies--is there 
anything we can do to make them run concurrent, or in parallel?
    Mr. Moorman. I think that they have been consecutive more 
because that is where our planning processes have been. We, you 
know, like every other industry, have a certain capability, in 
terms of our planning processes and our planning mechanisms. 
And so, in order to run all of the studies concurrently, we 
would have to be planning all of these projects concurrently.
    I don't see that as a particular impediment. I think that 
certainly the whole issue around environmental regulation and 
other regulations is something we need to address, and 
something I asked internally for us to look at, in terms of 
suggesting the ways--be it working with Paul in the FRA or 
whomever, to streamline without giving up the essential aspects 
of regulation. But I think that there have been some very 
positives in that.
    One of the things that I do want to recognize about NEPA, 
which was mentioned earlier, is that we would have expected the 
NEPA process for the Hudson River tunnels to have taken about 4 
years. It took about 2. And, in fact, we will be ready to go, 
as John said, early next year.
    But the thing I would assure you--and I think it goes to 
the other testimony--that we are also very focused right now at 
Amtrak in terms of looking at where we can ask the Federal 
Government to help us do things more quickly. And I am hopeful 
that we are going to get a very positive response.
    Mr. Webster. So time is money, just as it is with All 
Aboard?
    Mr. Moorman. Yes, sir. Time is money. And the one thing I 
will tell you and the whole committee is that our intent at 
Amtrak is to look at the money that we are given, just like a 
private company looks at their money, to guard it and to spend 
it wisely.
    Mr. Webster. Thank you very much. I yield back.
    Mr. Denham. Mr. Nadler, you are recognized for 5 minutes.
    Mr. Nadler. Thank you, Mr. Chairman.
    Mr. Porcari, as you pointed out in your testimony, the 
Hudson River tunnels were completed in 1910, while the Titanic 
was under construction. They have lasted better than the 
Titanic, I must say. Amtrak's infrastructure along the 
Northeast Corridor is not just old, but it has suffered decades 
of underinvestment.
    Congress has, for many years, refused to provide adequate 
funding to bring the system into a state of good repair, let 
alone to upgrade it. We should have built new tunnels and 
expanded capacity in the Northeast Corridor long ago, but the 
damage to the existing tunnels caused by Hurricane Sandy has 
brought a real new urgency to the situation.
    The Gateway Project, which includes the construction of a 
new tunnel under the Hudson, is widely recognized as one of the 
highest priority transportation projects in the country. But it 
will take more than lipservice to get it done. We need a 
willingness to spend real Federal funds.
    Mr. Porcari and Mr. Moorman, which Federal programs are you 
depending on to fund the Gateway Project?
    Mr. Porcari. Excellent question. So the--as I mentioned, 
the local funding is in place for the first piece of it, the 
Portal North Bridge. The Federal funding we have requested for 
that is what is called the core capacity program within the 
Federal Transit Administration, because you are literally 
adding to the core capacity of an existing system.
    For the tunnel portion of the project, it would be 
similarly structured, with a local commitment. And the Federal 
commitment would likely be the core capacity program, as well.
    I should point out that, for the tunnel, regardless of the 
delivery methodology--in other words, whether it is design-bid-
build, design-build, public-private partnership--so it could 
well include private investment as part of it--in any event, a 
substantial Federal investment component is required.
    In my experience nationwide, there is no project of 
national significance that doesn't require a Federal funding 
investment.
    Mr. Nadler. You want to add to that, or----
    Mr. Moorman. I would point out, just to build on John's 
last point, that I am a great believer in private investment, 
and the----
    Mr. Nadler. I am sorry?
    Mr. Moorman. I am a great believer in private investment 
and the efficiency of the private sector and delivering 
projects. But when you look at something like Gateway, we will 
do everything we can to structure a private investment 
component of that.
    But at the end of the day, that is a limited mechanism. And 
it is--just requires significant Federal investment and 
significant State investment to get the job done.
    Mr. Nadler. Yes. Now, the President's budget proposes to 
cut funding for Amtrak by almost 50 percent, which also 
includes cutting the Northeast Corridor by $93 million, or 28 
percent. The President's budget also recommends phasing down 
FDA Capital Investment Grants, New Starts, and core capacity 
grants, and DOT announced that it does not intend to sign any 
new full-funding grant agreements under the program.
    Again, if Congress were to enact the President's budget 
request, or if FTA were to refuse to sign FFGA--full funding 
grant agreements for new projects, what would that mean for the 
Gateway Project?
    Mr. Porcari. To be clear, Mr. Nadler, for both the Portal 
Bridge and the tunnel, those projects cannot go forward without 
a Federal commitment.
    Mr. Nadler. So the President's budget would foreclose these 
projects?
    Mr. Porcari. Yes, it would.
    Mr. Nadler. Thank you.
    Mr. Nissenbaum, if the administration proposes to cut all 
of these important transportation programs, how does the 
administration expect to fund the Gateway Project?
    Mr. Nissenbaum. So, as you know, Congressman, the Gateway 
Program is made up of a series of projects, independent 
projects, starting with Portal Bridge, the Hudson tunnels, and 
there are others----
    Mr. Nadler. Well, there are two basic ones, the Portal 
Bridge and Hudson tunnels. Everything else is smaller.
    Mr. Nissenbaum. Right. And our responsibility is to advance 
those projects through the development process, so we are 
overseeing the engineering and the environmental process. And 
as John has mentioned, the Portal Bridge has completed the 
environmental process, and that is ready. The Hudson tunnels, 
we are in the middle of----
    Mr. Nadler. But you are not answering my question. As Mr. 
Porcari said, if there are no new FFGAs, if the core funding--
core capacity grants are phased down, there is no possibility 
of the Gateway Project, the Portal Bridge, and the Gateway--and 
the tunnels going ahead.
    So again, if the administration proposes to cut these 
important transportation programs, how does the administration 
expect to fund the Gateway Project? Or do you think--I mean is 
it one or the other? Either the--there has to be a way the 
administration is thinking of funding the project, or thinks 
that we can let the Northeast Corridor fall apart. Which is it?
    Mr. Nissenbaum. So what I can speak to is our role at FRA 
in the process, and----
    Mr. Nadler. Excuse me. I am not interested in the process. 
How, in the--how does the administration envision, in light of 
its budget proposals, that this admittedly key core project for 
the country will be funded?
    Mr. Nissenbaum. And again, in my position, what I can speak 
to is we take each project as they come to us. When funding is 
provided and when it is available, we evaluate those projects, 
we do the environmental work associated with them.
    Mr. Nadler. That is very nice, but how do you envision the 
fund--the projects going forward, given the project--I mean I 
assume the administration, in making its budget proposal, 
thinks of these things.
    Given the administration's budget proposal, how can these--
how can this project go forward? Is there any way it can go 
forward? I am not interested in the environmental assessment. 
How can it be funded, if the administration proposal and the 
budget goes forward? Or does the administration think it 
shouldn't be funded?
    Mr. Nissenbaum. So, at the risk of being redundant--I 
apologize, Congressman--again, my role in this process is to 
evaluate what is in front of us.
    Mr. Nadler. Well, let me say my time is running out. Let me 
just ask then. If the administration--if you will go back to 
the administration and get for this committee a reply, if 
Congress were to agree with the administration's budget 
proposals, how the administration envisions this--the Gateway 
Project being funded.
    And, if it can't answer that question, does it think the 
Gateway Project is not crucial to the country? It has got to 
either think it isn't crucial, and so why bother funding it, or 
it is crucial, in which case it has to have in mind a way of 
funding it. One or the other. So which is it? And please 
specify.
    So I am asking that you get us an answer for that question.
    Mr. Nissenbaum. I would be happy to bring that back to the 
Department and get you a response.
    Mr. Nadler. Thank you. I yield back.
    Mr. Denham. Thank you, Mr. Nadler.
    Mr. Mitchell, you are recognized for 5 minutes.
    Mr. Mitchell. Thank you, Mr. Chair.
    Mr. Moorman, can you help me with a couple of questions? 
The FAST Act required that Amtrak implement a new account 
structure and separate accounts for the Northeast Corridor and 
the national network. That was originally required by the end 
of--December 4, 2016. Like many things I have found here in 
Congress, that doesn't happen, apparently.
    That accounting structure was not submitted, was not 
submitted by the end of June, when promised--or by June 2nd. We 
seem to have a problem of getting what is a pretty simple 
structure. I come from private business. An accounting 
structure is not that hard to modify and put in place. When can 
we expect to receive that from Amtrak?
    Mr. Moorman. We----
    Mr. Mitchell. What is the problem?
    Mr. Moorman. Well, we have submitted the first draft of 
that accounting structure. But I can talk to you about what the 
issues have been. And, as you know, I arrived here in 
September----
    Mr. Mitchell. Yes, sir.
    Mr. Moorman [continuing]. And immediately was immersed in 
this. One of the complications, in fact, is that it is a fairly 
complex set of changes to the accounting structure, and just 
driving them out of the Amtrak accounting systems was not 
particularly easy to do, because it required a lot of 
understanding and manipulation of accounts to divide them into 
the appropriate buckets.
    The second was, quite frankly, that in January of this year 
we reorganized at Amtrak to, I think, accomplish some very 
meaningful things. And that delayed the process.
    But we are--we understand the importance of it. That work 
is being done. I have seen the drafts of the accounting 
structure.
    There is another piece of this, which is the 5-year 
business plans, which I think were a great part of the FAST 
Act, and we will be submitting them shortly, as well.
    Mr. Mitchell. Well, I appreciate the feedback. It is--how 
do you--I mean we have gone along this path for a while now, 
trying to identify where you are able to cover costs and where 
not. It is--$230 million is currently your operating loss last 
year. And we need to get that on schedule. We need to get--how 
do you determine how your--I mean I ran a business, and we had 
accounting down to the project level in order to identify what 
was working and what wasn't.
    Mr. Moorman. Right.
    Mr. Mitchell. So you have a draft--where has that draft 
been submitted?
    Mr. Nissenbaum. Yes, the draft is coming in at the end of 
this month on the 5-year plans, and they are currently--Amtrak 
is currently reporting on the new business line structure in 
their monthly reports.
    Mr. Mitchell. I thought we were supposed to receive that, 
and certainly we would like to see that structure when you do 
have that, Mr. Chair.
    The--way back in 2005 the inspector general recommended 
reducing or eliminating the sleeper service because of the 
ongoing losses in that. They estimated that the savings could 
be $158 million a year. It hasn't been done. What other 
alternatives are you considering that will achieve similar 
savings?
    Mr. Moorman. Well, I think that is a great question, and it 
goes back to this whole discussion about running Amtrak as a 
business. When you look at our sleeper service, there are a lot 
of times of the year where there is a lot of demand. It is 
full. And I think that Amtrak can do a significantly better job 
in its revenue analysis and its pricing systems in order to 
price for the demand appropriately.
    And I would tell you that I think we can cut those losses 
substantially, just by doing a smarter, better job of 
understanding the market and pricing, and that is the path that 
we are going down.
    Mr. Mitchell. I appreciate it.
    If we can, Mr. Richard, for a second, if we could talk for 
as much time as I have available about the high-speed rail 
project. Again, I come from 35 years in private business. 
Nothing at a scale of this. Quite impressive. The original 
estimate was $25 billion. We are now at north of $60 billion. 
Even if you adjust for inflation, that is quite an achievement, 
in terms of cost.
    You describe the reasons for the cost changes or overruns 
as being social costs because the plan didn't quite adjust for 
having to protect certain areas, go underground, all those 
kinds of things. I have to tell you if I went to my board of 
directors and said, well, we originally planned X, but we 
didn't plan for whatever in building out this project, do you 
know what the response would have been?
    Mr. Richard. Congressman, having spent a decade working for 
one of America's largest corporations as a senior officer, yes, 
I do.
    Mr. Mitchell. Mr. Richard, what would happen if you were a 
CEO of a company and you came in and said, ``We are off by''--
--
    Mr. Richard. Well, they would do what our State did, which 
was they would bring in new leadership. And so I was part of 
that new leadership. We are the ones who looked at those 
numbers. We are the ones who told the public what the new 
numbers were going to be. We were honest with the public about 
that. We were honest with our legislature about that.
    Mr. Mitchell. Let me stop you, because I have limited time, 
and I appreciate it.
    Mr. Chair, do I have time for one more question, Mr. 
Denham?
    Mr. Denham. Brief.
    Mr. Mitchell. Thank you, sir.
    Maybe you could submit it for the record, I guess. The 
question I now have is the State depended upon financing a big 
part of their contributions through the cap and trade program, 
which--the peer review group has raised some serious questions 
about the viability of that, and its ability to support the 
funding, either bonds or direct funding for this program.
    I would like to get in detail a response from the group as 
to how they are addressing that concern, which doesn't seem to 
be allayed at this point in time, as we continue to look at 
this as some form of investment. We need some response of how 
your group is addressing that, because it seems to be a 
significant flaw in the State's funding mechanism.
    And I will yield back, in deference to time, but----
    Mr. Richard. We will be happy to, and I would like to be 
able to discuss that. But we will be happy to----
    Mr. Mitchell. Thank you, sir, and I yield back.
    Thank you, Mr. Chair.
    Mr. Denham. Thank you.
    Ms. Esty, you are recognized for 5 minutes.
    Ms. Esty. Thank you, Mr. Chairman, and thank you all for 
coming today and helping enlighten us. I represent Connecticut, 
and I have constituents who ride these rails every day. And I 
have particular concerns about the Northeast Corridor and what 
some of these funding proposals would do to people I represent, 
who rely on this to get to and from work.
    So, Mr. Nissenbaum, the Northeast Corridor Future has 
proposed an alternative route, a coastal route. And it seems to 
be preferring that. There has been a great deal of public 
opposition, as I am sure you are aware. And I am wondering if 
there are any environmental concerns about the number of 
waterways that would have to be crossed, and what that might 
do.
    I am wondering if there has been any reconsideration of 
that route, given the strong amount of public opposition.
    Mr. Nissenbaum. So yes, we have spent quite a bit of time 
in Connecticut, and heard from lots of your constituents. And 
that has been very valuable in the process, and it is part of 
the environmental process to do that, to have the public 
hearings, to have the public meetings, to get input.
    And so, we are in the process of considering all of those 
comments, and putting together a Record of Decision on the 
Northeast Corridor Future, and would expect that out soon.
    Ms. Esty. And you expect that soon?
    Mr. Nissenbaum. Yes.
    Ms. Esty. Because I am getting that question asked of--and 
I want to be very clear on record I think it is really 
important to leave the door open for Connecticut to be part--at 
the table to consider an inland route, which would not have 
the--I think the same level of opposition, and could get us to 
much higher rates of speed than is ever going to be possible, 
given the geographical location, geology, and just--frankly, 
there is not enough footprint along the coast to ever make use 
of the speeds that new rail are able to get to. We can't do it 
on the coast, and people want actual high speed.
    I would like to ask--explore a little bit on that same vein 
about the opportunity to do P3s. There is a lot of discussion 
about public-private partnerships with this administration and 
in this committee. And I would like feedback from all of you on 
the opportunity, particularly in the Northeast Corridor, where 
we know there is high demand for, again, something like an 
inland route, a different route from what we are currently 
using that would be able to reach the kind of high speeds that 
we see, say, in Japan, in China, in Europe, in other developed 
countries around the world.
    Mr. Nissenbaum. Sure, I would be happy to start, and I am 
sure other panelists would have something to say about that.
    The Northeast Corridor Future is really a vision for the 
Northeast Corridor over the next 35 years. And it is kind of a 
prerequisite to get whatever kinds of investment into the 
corridor that we need. So it lays out the vision, and then it 
is agnostic as to what the funding source ends up being, but 
our expectation is that it will be multiple funding sources 
from a variety of entities, including the private sector, to 
actually deliver the program.
    Ms. Esty. If I could, are there examples of where private 
financing has helped alleviate funding for Amtrak? Can you give 
us any examples where that has actually happened, as opposed to 
being talked about?
    Mr. Nissenbaum. So what I can tell you is there are a 
number of examples around the country--in fact, you have one 
sitting here on the panel--of where the private sector has 
already put resources on the table. And we are actively working 
with those partners around the country. And there are certainly 
examples internationally, as well, where the private sector has 
made important contributions to project development.
    Ms. Esty. Mr. Chairman, I would like to submit for the 
record a letter I received from one of my constituents, who is 
very concerned about proposals to cut intercity rail, and made 
clear that, although he does not share my political persuasion, 
he shares my passion for intercity rail, rides the rails all 
the time, and is deeply concerned about these funding cuts that 
are being proposed.

    [The letter follows:]
    
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
    
    
    Ms. Esty. And I would like to follow up with those, 
because, again, we know the only part of the system that is 
making money is the Northeast Corridor. However, if we cut off 
the intercity rail, what feeds into that, what impact do we 
think that is going to have, including on the Northeast 
Corridor, for pieces that independently perhaps aren't making 
money, but funnel into the Northeast Corridor and then are 
needed to help maintain that system and keep it operating?
    Mr. Nissenbaum. So I think what you are referring to is 
that there are a number of branch lines that feed the corridor, 
as well as in other regions around the country, there are 
services which are generally known as State-supported services. 
And part of the original PRIIA of 2008--and then reiterated in 
the FAST Act--is that continuing relationship with the States 
to advance those services and to develop them. And I think what 
you did see in the budget proposal that came out this year was 
a commitment to focus on the Northeast Corridor and the State-
supported corridors, including those branch lines.
    Ms. Esty. And, Mr. Moorman, any thoughts on that?
    Mr. Moorman. Well, I will go back to one of the things that 
I mentioned earlier, which is the fact that--and this is true 
of any network-based company--there are a lot of allocations 
for cost.
    On Amtrak, the Northeast Corridor generates positive 
revenue, substantial amounts of positive revenue. Some amount 
of that would be lost, in fact, if some of our other services 
went away, because the allocation portion would then fall back 
on the corridor, which would diminish, if not eliminate its 
profitability, or its cash generation, if you will.
    So Amtrak exists as a system, right, a collection of 
businesses that are symbiotic in some ways. And the money flows 
the same way. So when you have a serious impact on any 
particular part of the business, it automatically flows to the 
others.
    Ms. Esty. Thank you very much, and I yield back.
    Thank you, Mr. Chairman.
    Mr. Denham. Mr. Mast, you are recognized for 5 minutes.
    Mr. Mast. Thank you, Mr. Chairman, for giving me the time. 
I appreciate that.
    I would like to start with you, Mr. Reininger. I appreciate 
your testimony today. I just wanted to start very simply. Is 
All Aboard Florida or Brightline, whatever we want to call it, 
is that publicly funded, or will it be publicly funded?
    Mr. Reininger. It is not publicly funded at all, no. It is 
completely an investment of private-sector capital.
    Mr. Mast. So in 2013, when it applied for about a $1 
billion Railroad Rehabilitation and Improvement Financing loan, 
would that have been considered publicly funded?
    Mr. Reininger. That would have been a loan from the Federal 
Government.
    Mr. Mast. What about 2014, when it applied for a $1.75 
billion public access bond, cost to taxpayers of up to $600 
million, would that have been considered----
    Mr. Reininger. Private Activity Bonds are 100 percent 
capital. It comes from the private sector. It doesn't have any 
involvement from any funds that are distributed from the 
Federal Government.
    Mr. Mast. A district court judge said up to $600 million 
could have been on the taxpayers.
    What about at the State level, 2014----
    Mr. Reininger. To be clear, if I could, about that----
    Mr. Mast. Please do so.
    Mr. Reininger. In that particular case, what he said is 
there might have been a deference of some amount of tax revenue 
that would have come from the interest paid on those bonds. 
That is not the same thing as an investment by the Federal 
Government.
    Mr. Mast. Thank you for the clarity.
    In 2014, at the State level, $214 million for the facility 
at the Orlando Airport, do you consider that----
    Mr. Reininger. As a part of the expansion of the Greater 
Orlando International Airport there was an investment made by 
the Florida Department of Transportation into the expansion of 
a multimodal facility in which we will be a tenant, and we will 
pay market rent for the utilization of the facilities that 
would be provided for us.
    In fact, our rent, in part, goes to pay back the loan that 
the airport authority has received in order to build that 
facility. So that--so neither were those funds Federal funds, 
nor were they directed directly at our project.
    Mr. Mast. Very good. Is Florida East Coast Rail, is that 
separate from All Aboard Florida or Brightline?
    Mr. Reininger. It is. Florida East Coast Railway is a 
separately owned and operated company that operates freight in 
a shared use arrangement on the corridor.
    Mr. Mast. Now, local county governments, they are billed 
for maintenance and safety equipment associated with Florida 
East Coast Rail?
    Mr. Reininger. There are longstanding agreements for the 
utilization of the crossings that exist in several of the 
municipalities. There is something very unique about our 
particular railroad. And that is that railroad corridor really 
predates the existence of any of the development on the east 
coast of Florida.
    As a matter of fact, most of the places along the east 
coast of Florida that have these grade crossings are as a 
result of the backbone of the infrastructure that was laid down 
in the late 1890s by Henry Flagler, which gave rise to the 
creation of those very communities. The unusual aspect of that 
is that when the municipalities up and down the corridor sought 
to get permission to cross the existing rail corridor, they had 
to go to the private company and get that permission. In return 
for that permission----
    Mr. Mast. Florida East Coast Rail, correct?
    Mr. Reininger. In return for that permission----
    Mr. Mast. Florida East Coast Rail?
    Mr. Reininger. It is both the--the rail right of way is 
shared ownership between two independent companies, Florida 
East Coast Industries and Florida East Coast Railway.
    Mr. Mast. Perfect. Now, in that are you counting on 
counties like Martin County, St. Lucie County, Indian River 
County to pay for maintenance associated with the All Aboard 
Florida high-speed rail project, as well?
    Mr. Reininger. The ongoing maintenance that would be 
associated with grade crossings in those particular counties we 
would expect that would be continued as it has been under 
longstanding contractual agreement with those communities. But 
I have to point out----
    Mr. Mast. Is the contract----
    Mr. Reininger [continuing]. That as a part of the----
    Mr. Mast [continuing]. Florida East Coast or with All 
Aboard Florida? You said those are two separate companies.
    Mr. Reininger. They are two separate companies, that is 
right.
    Mr. Mast. So is the contract with Florida East Coast or 
with All Aboard Florida?
    Mr. Reininger. They are with Florida East Coast Industries.
    Mr. Mast. So are there counties that don't have a 
contractual agreement with the All Aboard Florida project?
    Mr. Reininger. I am not sure.
    Mr. Mast. OK. I would like to move to something else.
    Mr. Porcari, I appreciate your testimony, as well. Phase 1, 
you noted, of your Gateway Project is fixing aging bridges. Is 
it important to fix those for safety?
    Mr. Porcari. It is. While both the bridge and tunnel are 
safe at 106 years of age, it is clear that the tunnel in 
particular, given that it flooded during Sandy, has to be 
rehabilitated in the next 10 years.
    Mr. Mast. Is it important to not obstruct maritime traffic?
    Mr. Porcari. It is very important to not obstruct maritime 
traffic. The state of the art now is to build a bridge that 
doesn't--isn't required to be open and closed periodically, 
which would be the design of the new bridge.
    Mr. Mast. So, Mr. Reininger, my question is to you. Will 
you be replacing the railroad bridges in my district that 
prevent all maritime traffic for 45-minute cycles?
    Mr. Porcari. We will made--in your district, as we did in 
the previous--in our first phase, there are--there happen to be 
two movable bridges within that district. With the similar 
situation that we have in Broward County, we will be making a 
significant investment in the complete reconstruction and 
remanufacture of the major component parts of those existing 
bridges. They are not of the same vintage ages that some of the 
other bridges we have been discussing here today are.
    But we will be making significant capital investments in 
the entire reconstruction of the mechanical, electrical, and 
structural systems that are associated with those bridges. And 
in one instance we will also be completely restructuring the 
span itself.
    Mr. Mast. My time has expired. Thank you for your 
testimony.
    Thank you, Chairman.
    Mr. Denham. Thank you, Mr. Mast.
    Mr. Lipinski, you are recognized for 5 minutes.
    Mr. Lipinski. Thank you, Mr. Chairman.
    Mr. Denham. I am sorry. Mr. Lipinski, if you will hold, 
please. Mr. Garamendi has returned.
    Mr. Garamendi, you are recognized for 5 minutes.
    Mr. Garamendi. Thank you, Mr. Chairman. Some days I 
actually get back on time. So I appreciate it, the forbearance. 
We did have a markup on strategic arms and nuclear weapons and 
all of that. But here we are. And something that is critically 
important to California, and I think to the Nation, and that is 
the high-speed rail system in California.
    Mr. Richard, my apologies for missing your testimony, 
although I was able to read it. Just a quick question to you 
about the new project going forward.
    The President talks about making it in America, a subject 
matter that I have been banging away on for the 7 years that I 
have been here, and I am delighted to find myself in agreement 
with the President on at least one issue, that is that we ought 
to make things in America. Could you please tell us about the 
new train sets that are coming on, the attitude of the 
commission with regard to this very important policy of 
enhancing American manufacturing by buying American?
    Mr. Richard. First of all, Congressman Garamendi, I want to 
recognize your leadership on this issue. You and I have had a 
number of conversations on this, and you have emphasized, as I 
think many of your colleagues would want you to, the importance 
of making sure that these dollars that are ultimately coming 
from taxpayers, Federal or State, go to create American jobs.
    We envision--unfortunately, today there are no domestic 
manufacturers, no American companies that are in the business 
of manufacturing high-speed rail trains. We hope that that will 
change. And I think, as you have indicated many times, we can 
provide a role in creating a whole new manufacturing base in 
the United States. And these are very high-technology systems. 
And so these are prevalent--very high-paying, high-tech jobs.
    Our view is that--well, first of all, we will respect the 
Buy America provisions that are in the law. That means that we 
have to do everything possible to make sure that the equipment 
and the components are manufactured in this country.
    As I have committed to you and I commit here today to your 
colleagues, we will not seek waivers from those provisions 
unless we get to the most extraordinary circumstance that we 
have plumbed the depths throughout our economy to create these 
components here.
    In California right now, Siemens, the German company, has a 
manufacturing plant in Sacramento. They are very interested in 
manufacturing high-speed trains with American workers. Kawasaki 
has a manufacturing plant in Lincoln, Nebraska. They are very 
interested in manufacturing trains with American workers. And 
any other entity that would come to participate in our program 
is going to need to come and show that they are either--
presently have the capacity to build these trains in the United 
States, or that they will create the capacity to build it here.
    Mr. Garamendi. There are many other elements in this 
system: concrete, steel, bridges, et cetera. Could you speak to 
that?
    Mr. Richard. I am proud to say that today, as we sit here--
and it is our intention that this will continue to be the 
case--every ounce of concrete, every ounce of steel is 
domestic. The steel girders are being manufactured in Lathrop, 
California. The steel rebar is manufactured in southern 
California. We continue to use 100 percent domestic content for 
the construction materials.
    Mr. Garamendi. Did you say Lathrop?
    Mr. Richard. I did. I believe you are familiar with that 
community, Mr. Chairman.
    [Laughter.]
    Mr. Garamendi. Lathrop. I think I know that city. And I 
know you do, also, Mr. Chairman.
    Well, thank you very much. Just a final point of my own. It 
was 1988 when California established the High-Speed Rail 
Commission. Congressman Costa and I were the authors of that 
legislation. So we have been at this a long time.
    The Buy America provisions are extraordinarily important 
for the continuation of support for this project. American 
taxpayer dollars and both California taxpayer dollars as well 
are the way in which this is going to be initially financed. 
And to maintain that support, the Buy America provisions 
maximum--I would love to see 100 percent.
    And as I told you, Mr. Richard, we will never build a high-
speed train in America unless the High-Speed Rail Authority in 
California simply says, ``It will be American-made,'' in which 
case this industry will move to America, and it will be built 
in America, and we can then capture both the technology, the 
jobs, and the future.
    And so I appreciate your position on this. I hope it is 
maintained. And, needless to say, I am sure this committee will 
watch closely, because Lathrop is an extremely important 
community in California. Thank you.
    Mr. Richard. Thank you, Congressman.
    Mr. Denham. Thank you, Mr. Garamendi.
    Just a point of clarification to Mr. Garamendi's question. 
California High-Speed Rail Authority did apply for a waiver in 
2014 on Buy America provision, did it not?
    Mr. Richard. It did. And actually, there was a further one. 
And I worked with Mr. Garamendi and reversed that decision to 
seek a waiver at that time. And part of, I think, the issue 
there was that we were working with Amtrak at one point, and 
Amtrak had followed a protocol, some of our staff people 
thought that that meant that we could kind of skip over some 
steps.
    My commitment to Congressman Garamendi and to also the 
members of this committee and the Congress is that, in the 
future, we will not seek any waiver prior to going out into the 
marketplace aggressively, looking for systems and components. 
And only after we have plumbed all those depths would we begin 
to discuss that.
    Mr. Denham. Thank you for the clarification.
    Mr. Faso, you are recognized for 5 minutes.
    Mr. Faso. Thank you, Mr. Chairman.
    Mr. Moorman and the panel, thank you for your appearance 
here today. And I find the testimony very illuminating and 
instructive.
    Mr. Moorman, I represent an area in the mid-Hudson Valley 
of New York State served by the Empire Service, and I have had 
occasion to frequently use that service through the years. Can 
you--we have not been able to find out from Amtrak as to the 
potential service disruptions because of Penn Station 
construction project, which is a very necessary project, and 
what disruptions may be taking place on the Empire Service. Are 
you able to advise me in that this morning, or should we 
discuss it subsequent to the hearing?
    Mr. Moorman. No, I think I can clarify that. We will 
continue to operate all the Empire Service trains during peak. 
It is our expectation that those trains will operate into Grand 
Central, rather than Penn Station, and that is how we will keep 
them out of the work that is going on.
    Mr. Faso. So you are expecting all the Empire Service 
trains----
    Mr. Moorman. We--right. We don't expect to cut any Empire 
Service trains, we just are going to keep them out of Penn 
during the peak periods, and that--those are the trains that 
will operate in and out of Grand Central.
    Mr. Faso. So people should anticipate going into Grand 
Central for July, August, that time period, and then, after 
Labor Day, anticipating going back to Penn?
    Mr. Moorman. Yes.
    Mr. Faso. OK.
    Mr. Moorman. That is correct. And the only people that 
should anticipate that will be the trains that are either 
arriving or departing in morning or afternoon rush hour.
    Mr. Faso. OK. The--you--also in your testimony you 
mentioned that you are undertaking a major refresh program for 
the 450 Amfleet I cars that are the backbone of the Northeast 
Corridor Service. Is that train rehabilitation and upgrade 
going to affect the service, or the train sets that are used on 
the Empire Service line?
    Mr. Moorman. Yes. Those are the so-called Amfleet I cars, 
and I believe they are all in Empire Service, as well.
    Mr. Faso. OK.
    Mr. Moorman. As well as a lot of other State-supported 
services and the corridor.
    Mr. Faso. That is good news, because I can tell you, as 
someone that has used those, that Empire Service many times 
through the years, they needed to be refurbished about 15 years 
ago.
    Mr. Moorman. Given that I think it was last done over 20 
years ago, I think your timing is exactly right.
    But let me say more broadly that this is part of the whole 
thesis, I think, that Amtrak has to have of being--of paying 
attention to the customer experience. And the work that we are 
doing is not extraordinarily expensive. But it will result in a 
completely different customer experience.
    Mr. Faso. And one last--now that you mention customer 
experience, the fact that you can't buy a cup of coffee on the 
Empire Service trains between Albany and New York City, I know 
this is an issue between Amtrak and New York State, as well. I 
hope that you would go back to the drawing board on this, 
because I can tell you it is a very frustrating experience for 
many people who utilize that service.
    And if there is ever a delay, there is virtually nothing--I 
have been on trains on the Empire Service where there was--a 
tree falls on the track, or there is some other unintended 
disruption, and literally, you have got to get off the train at 
a station, if you are close enough to it, and it is very 
uncomfortable for those folks, not having any refreshments on 
those trains.
    So I just wanted to--you don't have to answer that. I think 
you know my point----
    Mr. Moorman. I wasn't aware of it, but I will work on it.
    Mr. Faso. It really--it is important, believe me. If you 
can get coffee back--and other things back--on the Empire 
Service, we may name a car after you or something like that.
    [Laughter.]
    Mr. Faso. Mr. Porcari, you have perhaps one of the most 
integral and important projects in the Nation. Tell me. Is 3P 
something that you have looked at, in terms of trying to get 
some of the financing, some of the pieces of the financing that 
could be necessary to build this project? Because I understand 
that we are looking at a project that is $18 billion to $20 
billion.
    Mr. Porcari. Excellent question, Congressman. The short 
answer is yes. So for the first piece of the Gateway Project, 
Portal Bridge, which is 100 percent designed and ready to go, 
that will be a more traditional design-bid-build. For the phase 
1B, the tunnel project, starting with an industry forum this 
summer we are actively soliciting private-sector input to 
determine the best procurement methodology, which may well be a 
public-private partnership. So a project like that could well 
lend itself to a public-private partnership, because it is 
essentially a capacity allocation under the Hudson River.
    With a private-sector partner under that scenario, we would 
still, of course, require a Federal Government funding partner. 
The ratios might be slightly different, and certainly the 
allocation of risk would be different, which is one of the 
primary advantages of a public-private partnership.
    So we are actively evaluating that and considering that. We 
are looking at best practices from around the world. We truly 
have an open mind on where to go. What we--the real 
determination going forward is how we can most quickly and 
efficiently deliver that tunnel project.
    Mr. Faso. Thank you.
    Mr. Chairman, could I just ask one more followup for the 
record, if they could submit----
    Mr. Denham. Brief, yes.
    Mr. Faso. Mr. Porcari, could you advise whether there are 
any State or Federal statutory impediments to the Gateway 
Project seeking a public-private partnership? And if you could 
submit that to us for the record, I would appreciate that.
    Mr. Porcari. We will be happy to submit it for the record. 
The Gateway Project Development Corporation was created in part 
so that it would have the flexibility of doing things like a 
public-private partnership, if appropriate.
    Mr. Faso. Thank you, Mr. Chairman.
    Mr. Denham. Thank you, Mr. Faso.
    Mr. Lipinski, you are recognized for 5 minutes.
    Mr. Lipinski. Thank you, Mr. Chairman.
    Chicago Union Station is owned by Amtrak. And recently, 
Amtrak selected a master developer for a nearly $1 billion 
redevelopment project at Union Station that will bring over 3 
million square feet of office, residential, retail, and hotel 
space to the historic facility. It will certainly bring a 
markedly improved experience for commuters and travelers, be 
great for economic development in that area. So it is good to 
see that. I was--worked on getting some language in the FAST 
Act that helped to make that possible.
    Now, in 2013, Amtrak's board of directors called for a more 
coordinated approach to unlock the commercial value of Amtrak's 
assets and generate additional revenue that could be reinvested 
back into the infrastructure, with a particular focus on major 
stations such as Chicago Union Station. This was called the 
Terminal Development Initiative.
    So I wanted to ask Mr. Moorman, can you describe Amtrak's 
priorities for these investments? And will they be linked to 
the regions where the revenue is generated? Obviously, it is a 
big question that I have. The money that Amtrak receives in 
this redevelopment, will that be used in the region? Or could 
that be moved somewhere else?
    Mr. Moorman. As we look at these projects, Chicago being a 
great example and our first project--but with more to come on 
the Northeast Corridor--it is our hope and expectation that 
that will generate significant funds for Amtrak to use in the 
operation of its business.
    It is certainly our intention to make sure that funds, for 
example, from Chicago are used to the maximum extent possible 
to do the work that is required, and a lot of it is required in 
Chicago Union Station and in our Chicago facilities. We will 
have to make sure that we work on the timing because, in some 
cases, the funds that come from a particular development may 
not match the timing of the investments that we need to make. 
But we certainly plan on using those funds to the extent 
possible to do the work in the area where they are being 
generated.
    Mr. Lipinski. Thank you. And I want to go back to the--to 
Buy America. I was happy to hear what Mr. Richard said about 
the Buy America and what high-speed rail is--will do on Buy 
America. In February I introduced a Buy America Improvement 
Act, which seeks to close loopholes, increase transparency, and 
promote the use of American-made goods and materials.
    The FRA's official policy is that High-Speed Intercity 
Passenger Rail equipment can and should be manufactured in the 
United States. I want to ask Mr. Nissenbaum what your office is 
doing right now in reaching this goal. I want to make sure that 
you are doing that, and the waiver process--I have some 
concerns about the waiver process, and I want to make sure that 
is not being used to sort of undermine our goal of domestic 
rail manufacturing industry.
    Mr. Nissenbaum. Thank you, Congressman. Not only is it our 
policy, it is the law. So we are following it strictly for the 
entire HSIPR program, and all of our--all programs that are 
funded under the statutory authority granted by this committee.
    There is a very rigorous waiver process that is not easy to 
go through that requires public notice, requires full vetting 
of whether there are domestic suppliers available if someone is 
seeking a waiver. And so, while there have been a few waivers 
granted over the course of this program, the vast majority of 
all the project work has been done through domestic 
manufacturing.
    Mr. Lipinski. And the previous administration implemented a 
policy that imposed Buy America requirements on the RRIF loans. 
Does this administration believe this policy should be 
continued?
    Mr. Nissenbaum. I can't speak to that. What I can say is 
that all of the indications we have are--is the strong support 
for Buy America policy from our current administration.
    Mr. Lipinski. I certainly would encourage that. And the 
President certainly talks a lot about Buy America, so I want to 
make sure that we are not in any way going backwards. We should 
be moving forward on that. And I would appreciate your office's 
work on that. Thank you.
    Mr. Nissenbaum. Happy to bring that back.
    Mr. Faso [presiding]. Thank you, Mr. Lipinski. Mr. Lewis is 
recognized for 5 minutes.
    Mr. Lewis. Thank you, Mr. Chairman, and thank you to the 
witnesses for joining us today.
    Mr. Moorman, the FAST Act, as I understand it, required a 
separate P&L statement for the Northeast Corridor, as well as 
the network, by December of 2016. That didn't materialize, and 
I believe the date was pushed back to June 2nd. That didn't 
materialize. Where are we in this process?
    Mr. Moorman. We had an earlier conversation from--about 
this from a P&L standpoint and an allocation of all of our 
spending and revenue. Those accounts have been developed. And I 
think the FRA has--which has been a partner with us in 
developing them--has them. And I want to say that they have 
been delivered.
    But what--but I am going to go back and make sure that is 
the case, and I won't describe the issues we had in developing 
them, but there were several. What has not yet been delivered 
are the 5-year business plans for each one of our major 
businesses. That will be delivered within the next couple of 
weeks, in part delayed because, when I got to Amtrak, we did a 
substantial amount of reorganization to more clearly align our 
organization with the specific business lines----
    Mr. Lewis. OK. Mr. Nissenbaum, do you--would you want to 
comment on that, or----
    Mr. Nissenbaum. Sure. Congressman, it is a--we think it is 
a very important issue, something we have been working on for 
quite a while, and we appreciate the committee's leadership in 
advancing the account structure and more transparency and 
accountability for each of Amtrak's service lines and asset 
lines.
    It is a large task for Amtrak. They are dealing with some 
pretty antiquated accounting systems. Wick has brought in a new 
leadership team, including a new CFO, who has demonstrated to 
us a real commitment to not only comply with the requirements 
of the FAST Act, but to actually deliver and go beyond, in 
terms of transparency. So we are looking forward to continuing 
to work with Amtrak----
    Mr. Lewis. I believe, Mr. Nissenbaum, the FAST Act also 
required DOT to accept some competitive bids for some of the 
routes. Have you received an application? Or where are we on 
that?
    Mr. Nissenbaum. Yes. So the FAST Act provided for a pilot 
program for up to three long-distance routes to be 
competitively bid. We--it requires a rulemaking process. We 
issued an NPRM, and we are in the process of finalizing our 
final rule. Once that rule goes out, that will start the clock 
ticking on getting expressions of interest and then bids in 
on----
    Mr. Lewis. And when do you expect the timeline for that to 
be?
    Mr. Nissenbaum. We expect that rule to be out very soon.
    Mr. Lewis. What is soon?
    Mr. Nissenbaum. I can't say for sure. I can tell you that 
it is in the final review process.
    Mr. Lewis. OK. Mr. Reininger, I am interested in your 
business model on All Aboard Florida, and especially choosing 
the Miami-Orlando route.
    I mean I think you described the policy, or the business 
model as trying to serve those areas that are too long to drive 
and too short to fly. I call that high density, where rail is 
most successful. Was that a factor in your choice?
    Mr. Reininger. With certainty. The size of the absolute 
marketplace and the mobility between the individual cities is 
central to the equation.
    Mr. Lewis. The FRA envisions a high-speed rail network 
connecting urban areas up to 500 miles. Now, I am a little 
perplexed as to how that is going to work. I believe right now 
we serve about 1.2 percent with Amtrak of the rural communities 
in the country.
    But given the concern of what I call density, or too long 
to drive/too short to fly, what is your view of that?
    Mr. Reininger. I think the private sector's participation 
in this is important, in that you can use private investment 
dollars to solve portions of the overall infrastructure 
challenge, specifically those that have the dynamics where they 
can be profitable.
    Importantly, in my earlier remarks I emphasized the need to 
incent things to happen that actually create new capacity. The 
ability to create new capacity, to absorb future growth, or to 
tackle the core of the challenge is sort of an important part 
of that. And in these marketplaces like the one that we have 
entered into that give rise to a profitable operation is 
exactly the kind of position that----
    Mr. Lewis. I mean this is the conundrum, isn't it? I mean 
in 2005 the DOT said, well, on some of these long-distance 
routes for Amtrak they could save $75 million to $150 million 
if they just eliminated sleeper cars. Well, that is the first 
thing I look for when I get on the Empire, is a sleeper car.
    Mr. Reininger. Well, clearly, our approach from the 
beginning here, we entered into this as a provider of a 
transportation service with an emphasis on the word 
``service.'' And so, as we developed, we had the advantage of 
building our platform from scratch. We didn't have a legacy 
that we had to work from, and so we started with the customer. 
And we made sure that----
    Mr. Lewis. OK.
    Mr. Reininger [continuing]. Everything about our physical 
plan was addressed to those needs.
    Mr. Lewis. Very good. I thank the witnesses, and I yield 
back.
    Mr. Faso. Mr. DeSaulnier is recognized for 5 minutes.
    Mr. DeSaulnier. Thank you, Mr. Chairman. To all the 
witnesses, thank you.
    Thank you for the work you do, Mr. Richard. It is 
interesting to be back here, particularly if--under Mr. 
Denham's charge for the three of us. And for my colleagues that 
have been supportive of high-speed rail in California, 
particularly as we have become more urbanized, and it is in an 
area that Mr. Richard and I worked on when we were in local 
government.
    So to--following a little bit on Mr. Lipinski's questions, 
but broadening it in your introductory comments--and we have 
talked about this before, particularly the model in Japan, 
where I think 25 or 30 percent of their operational revenue 
comes from land leases, and they broaden the space beyond what 
Mr. Lipinski was talking about, as I remember from my trips 
over there.
    So in--as we urbanize in California at a rate that none of 
us expected, in San Francisco the assessed value around the 
Transbay Terminal, which cost us $4 billion in the Bay Area, 
but we still need to get the Caltrain line, the extra half-
mile, mile from Third Street in there, which will cost $1.25 
billion, so we are trying to find the revenue, the assessed 
value within a few blocks of the Transbay Terminal is being 
urbanized so intensely is $8 billion.
    So, in Union Station in Los Angeles, a similar order of 
magnitude. San Jose, as you have mentioned. How does the--maybe 
the Federal Government play a role as the Japanese Federal 
Government does in incentivizing a proper investment that those 
private-sector investments want, as well? So all the people at 
Union Station who are now investing heavily in downtown Los 
Angeles, Fresno is going through the same thing. On the east 
coast you already have that.
    I was--in terms of intercity investment, we did a trip--
former Chairman Mica and I were on a trip to the Second Avenue 
subway in New York, the most valuable real estate in the United 
States, and some of that--it would seem that at least the 
increase in the assessed value is a good investment back into 
the operations, or the capital investment of the 
infrastructure.
    So could you comment a little further on that, about where 
the Federal Government might have a role, based on your 
knowledge about other successful high-speed rail and intracity 
investments around the world, where they do it differently than 
we do it here, in the United States?
    Mr. Richard. Congressman DeSaulnier, thank you. The first 
thing that comes to mind is I think in the State and local 
context, if you and I were back in 1996 thinking about how we 
would do this, knowing what we know today----
    Mr. DeSaulnier. Yes, we probably wouldn't be here.
    Mr. Richard. Well, you would be here. But the--I think that 
there was a missing link in California, in terms of creating 
the initial authority for us, as the rail authority, to have 
control of the area around the station so that we could harvest 
some of this uplift that you are talking about.
    I am trying to recapture some of that now. I have created a 
transit land use committee, and we are trying to find ways to 
do that. As you know, our Governor dissolved the redevelopment 
authorities. You and I worked on a redevelopment authority 
previously.
    Your question, though, was to the Federal Government. And I 
would like to reflect on that and get back to you. But my 
initial thought on that is this: I think it goes to the generic 
role of the Federal Government and Government in general if it 
wants to unleash the potential of the private sector, which is 
to recognize the risk profile at the beginning is very high, in 
many cases, for the private sector.
    And well--and actually, one other thing. If you look at, 
for example, Fresno, where it is just going to be a hub, where 
high-speed rail is going to revitalize the downtown, they need 
about $800 million of infrastructure improvements: water, 
sewer, streets, internet, and so forth, because a private 
developer, as you and I saw in Pleasant Hill, cannot come in 
and make--and carry those kinds of investments on their balance 
sheet.
    So I do think that the partnership here is, to the extent 
that there is Governmental support for infrastructure, the 
private sector then both sees the risk profile come down and 
also sees that the infrastructure has been put in place that 
allows them to bring private dollars in. And I think that would 
be true in transit-oriented development, as well as the broader 
infrastructure----
    Mr. DeSaulnier. In the few seconds I have left, Mr. Porcari 
or any of the other witnesses, do you have--just capturing this 
investment--I mean, historically, in the United States we have 
let people speculate more than other countries, and benefit 
from the infrastructure. And it seems like the Japanese have a 
different relationship, in terms of risk. So could we do 
something to incentivize that behavior?
    And part of that allows for higher density, which a lot of 
the people in the community don't want, but then they do when 
they understand that this is the investment.
    Mr. Porcari. If I may, Congressman, there is a much more 
sophisticated view, I think, on both rail projects and transit 
projects nationally, in terms of value capture. Thinking more 
holistically from the beginning, in your Second Avenue subway 
example, of not capturing that----
    Mr. DeSaulnier. Right.
    Mr. Porcari [continuing]. Value, subsequent phases of that 
or other projects from the beginning, thinking about the real 
estate value capture as an integral part for both capital and 
perhaps operating cost recovery for the projects.
    Mr. DeSaulnier. Well, to the degree that any of you have, 
in your work--think that there are ways that we can incentivize 
this and do it appropriately, so we are not taking away 
inappropriately from the private sector, but where there is a 
mutual benefit, I think we would be all better served by your 
information.
    Mr. Porcari. One clear way to do that would be in the 
Federal grant-making process, whether it is New Start's core 
capacity grants, or others, to recognize that as part of one of 
the criteria for a grant application process.
    Mr. DeSaulnier. Thank you.
    Thank you, Mr. Chairman. I yield back.
    Mr. Denham [presiding]. Mr. Richard, one of the focuses of 
today's hearing is private investment in intercity passenger 
rail service. The Florida and Texas projects, for example, are 
funded entirely through the private sector. In California, 
where the high-speed rail project has been in development for 
an extended period of time, how much funding has been pledged 
or invested so far?
    Mr. Richard. We have not been at the point of seeking or 
receiving private-sector investment so far, Mr. Chairman, at 
this point. That is not to say that there is not overwhelming 
interest, but it would come in at a different phase in the 
project.
    Mr. Denham. Well, let me then ask you about the interest.
    At our January 15, 2014, oversight hearing on California 
high-speed rail, you had indicated that private-sector 
investment was imminent. And then, your written statement said, 
quote ``In 2011, the Authority issued a Request for Expressions 
of Interest (RFEIs) and received more than 1,100 responses.'' 
Those 1,100 responses, are those in the areas of selling right-
of-way, station development, fiber optics, real estate 
development, air rights, all in that type of----
    Mr. Richard. I don't remember specifically, but I think 
that is right. And then there was another round where we went 
out to the private sector, we got, very specifically, about 36 
responses to our question about how to finance the next phase 
of the project.
    But if I might, just two quick points. First of all, we 
applaud the success of both Texas and Florida and what they are 
doing. Their structures are different than ours. In some cases, 
they are operating on existing railway corridors. In some 
cases, there is an existing railway.
    Also, there was a deliberate decision made by my 
predecessors--and I think even your predecessors in the 
California Legislature--that this program should try to connect 
areas of the State, including the Central Valley, which has 
been underinvested. That is different than building a straight 
line from San Francisco to Los Angeles.
    And what that has meant, since we are also, by law, not 
allowed to provide an operating subsidy, what that has meant is 
that, for the private sector to come in, either the Government 
has to guarantee their first period losses, which we cannot do 
by law, or we have to show them that there is sufficient 
ridership that they will make that investment on a risk-
adjusted basis. And that is why our view is that the Government 
has to pay for the first operating segment. We will then 
auction the rights to the private sector to come in and operate 
on that segment.
    So it is in sequence, and I think we are on path for that 
to happen.
    Mr. Denham. I have got specific questions on the ridership 
side of things, and the private investors as it pertains to 
either direct money into the project, or from buying the train 
sets themselves.
    Mr. Richard. Right.
    Mr. Denham. But specifically on the redevelopment of real 
estate or selling of right-of-way for whatever purpose, whether 
that is development or fiber optics or signage or what have 
you, do you have estimates on what all of the different 
developments from L.A. to San Francisco and the right-of-way 
that is being purchased--estimates on what that value is that 
could be generated from just that aspect of the business?
    Mr. Richard. I don't have that at this time, Mr. Chairman. 
We are just really starting to get into that. So my answer is I 
do not have that at this time.
    Mr. Denham. But you had 1,100 responses. Those 1,100 
responses were pertaining to what?
    Mr. Richard. Mr. Chairman, I have to say I don't recall at 
this point. I would like to be able to supplement my testimony 
with that.
    Mr. Denham. OK. We are just looking for ideas and a----
    Mr. Richard. I understand.
    Mr. Denham [continuing]. Better understanding of how we put 
this--these numbers together.
    Well let me finish that quote from that hearing. 
``Following up on the results of the RFEI, in January 2012, the 
Authority met with eight infrastructure investment firms, which 
confirmed their interest in investing in the program.'' What 
has happened since 2012? It has been 5 years since you made 
that statement.
    I assume--well, let me ask you. The eight infrastructure 
investment firms, was that pertaining to buying the trains 
themselves? Was it capital infusion? Was it going into the 
infrastructure of rail? And what has happened with those eight 
companies?
    Mr. Richard. I was in many of those meetings, Mr. Chairman. 
It was really about, at that point, looking at the question of 
infusion of capital. And actually, it was my idea to say we 
need to go out and take snapshots of the market from time to 
time, and find out where we are and what we need to do.
    Subsequent to that, in 2012, probably the one thing that 
sort of disrupted our development was adverse court rulings in 
2013 that basically put the project on hold. Those ultimately 
were reversed. And, in fact, all the other court rulings have 
gone our way since then.
    There were questions about the extension of the cap and 
trade program, which are being resolved; issues about our 
bonds, which are being resolved. And so now, we are back at the 
point of talking to the private sector about when and how they 
want to come in.
    But that is why I want to reemphasize our action last week 
to issue an RFP for early operator. This would be operating 
companies that would come in to the program now, help us design 
the program, be available to start up the program, absorb those 
early losses. And we got very strong indications from five 
international consortia, all of whom want to compete for that. 
I think that is a very good indicator that we are now moving 
into a commercial phase, and about to enter into those 
conversations with the private sector.
    Mr. Denham. Thank you.
    Ms. Wilson, you are recognized for 5 minutes. Thank you for 
your patience.
    Ms. Wilson. Thank you, Chairman Denham and Ranking Member 
Capuano. Thank you to our esteemed witnesses for sharing your 
perspectives on challenges and opportunities for intercity 
passenger rail service. I especially want to thank and welcome 
Mr. Reininger for joining us today on behalf of Florida East 
Coast Industries, which is based in my district.
    Tourism is the backbone of Florida's economy, so the 
viability of every transportation mode matters today, 
especially passenger rail. I am pleased that Brightline, the 
Nation's first passenger rail service in 100 years to be 
privately funded, is headquartered in my district. I cannot 
overestimate how important this rail system will be to Miami 
and the greater Florida economy. We expect Brightline, which 
will launch this summer, to jumpstart our economy with up to 
10,000 jobs, and to transport 3 million to 5 million Floridians 
and tourists annually.
    Amtrak's Miami Station, which serves more than 70,000 
Floridians and tourists each year, also is in my district. So I 
was quite alarmed by President Trump's proposal to slash nearly 
half of Amtrak's funding. The draconian cuts would derail 
Amtrak in my home State and in 22 other States.
    If this budget is adopted, three Amtrak long-distance 
services currently available in Florida--the Auto Train, Silver 
Meteor, and Silver Star--could come to a grinding halt. This 
would not only deprive nearly 1 million Floridians and tourists 
of safe and reliable passenger rail service, it also would 
slash hundreds of jobs, exacerbate highway congestion, and harm 
Florida's tourism-driven economy.
    Once upon a time, Miami was a tiny hamlet of fewer than 300 
residents. Then Henry Flagler's railroad came to town and 
helped transform the city into a bustling metropolis. Today 
Miami is one of the Nation's largest cities, and a leader in 
global commerce.
    But the proposal would slow its economic growth, and 
perhaps even put it in reverse. Amtrak provides an essential 
service that enables hard-working Americans to travel from 
State to State and coast to coast in an efficient and cost-
effective manner. We should be looking for ways to work across 
party lines to improve and expand this national treasure.
    As Members of Congress, we have an obligation to our 
constituents. We need to support Amtrak and new passenger rail 
services like Brightline. I look forward to working with my 
colleagues on this subcommittee to derail proposed funding cuts 
and support sensible reforms that will help keep the traveling 
public, workers, and communities safe and secure.
     I have a couple of questions. Mr. Reininger, I applaud 
your commitment to the Miami community. Please elaborate on 
Brightline's commitment to workforce training and 
apprenticeship education. Specifically, who do you plan to 
partner with to ensure we develop a workforce that meets the 
industry's needs? And how do you plan to do that?
    Mr. Reininger. Thank you for the question, Ms. Wilson. As 
you know, we have taken to heart several very important 
initiatives around the idea of making sure that our workforce 
is a reflection of our local communities and all the places 
that we are serving them.
    In specifics, in the Miami Station area, we made an 
important decision to locate our corporate headquarters 
adjacent to our station location in downtown Miami, and we have 
a preference program in place that, as we are building up our 
staff, that we make a preference for hiring those that are the 
most local within our neighborhood as we possibly can.
    As an extension of that, we have also done a couple of 
things where we have partnered with other local business 
enterprises and created opportunities for them to open new 
businesses within the context of our developments there at the 
station. And we have made special provisions for making those 
deals with people that share our preference for hiring from the 
very sort of localized community.
    We have also been in discussions with local educational 
institutes like Miami-Dade College, to develop programs that 
will support the nature of the training that will be necessary 
to produce the workforce that we need to make our business 
successful. As I stated earlier, as a transportation service 
provider, we have a special emphasis on the word ``service,'' 
and we have a very hospitality-oriented approach to the product 
that we are delivering.
    And so, the development of training for people that will be 
in what is essentially a hospitality industry for us is central 
to our ability to be successful, as we go forward.
    Ms. Wilson. Thank you.
    Mr. Nissenbaum, the White House budget requests $25 million 
for consolidated rail infrastructure and safety improvements, 
down from $68 million in 2017. Will this cut impact rail 
safety?
    Mr. Nissenbaum. So in the fiscal year 2017 Consolidated 
Appropriations Act, Congress provided for the $68 million, so 
that is the program we will be implementing in fiscal year 
2017.
    Ms. Wilson. I didn't hear you.
    Mr. Nissenbaum. Congress provided in the fiscal year 2017 
appropriations the full $68 million for that program, and that 
is the program we will be implementing this fiscal year.
    Ms. Wilson. OK, thank you.
    Mr. Denham. Ms. Wilson?
    Ms. Wilson. Mm-hmm?
    Mr. Denham. Your time has expired.
    Ms. Wilson. I yield back.
    Mr. Denham. Thank you.
    [Laughter.]
    Mr. Denham. Mr. Richard, the peer review group noted in 
reviewing the 2016 business plan that if the--``if the initial 
northern Initial Operating Section is completed as planned, the 
lack of a connection into Bakersfield''--you are stopping, the 
first initial segment----
    Mr. Richard. Right.
    Mr. Denham [continuing]. Short of Bakersfield. So if it is 
not connected with Bakersfield, and you don't have a fully 
functional connection from San Jose to the Transbay Terminal in 
San Francisco, will that not--those two limit the ridership 
numbers and passenger revenue are needed to complete the rest 
of the project and encourage private investment?
    Mr. Richard. They will limit it, Mr. Chairman. I think that 
the key point here is our 2016 business plan showed that the 
construction that we are doing in the Central Valley from 
wherever the terminus is to San Jose, by itself, would allow us 
to build something that would be economically self-sustaining, 
which is both the law and the policy in California.
    That would be the minimum system that we could build. It 
would connect the Central Valley to Silicon Valley. There would 
be enough ridership on that system, even between sort of the 
Fresno-Merced region and San Jose, to be economically self-
sustaining, to not require an operating subsidy.
    Mr. Denham. Have you released those ridership estimates?
    Mr. Richard. They were part of the 2016 business plan.
    And so--but we also--and the reason we stopped north of 
Bakersfield is originally we thought we were going to build our 
first segment to Los Angeles. We changed our direction for 
reasons I can go into, and so we didn't go any further south, 
and we turned to go north and west.
    But we also said--as you point out--in the 2016 business 
plan that it would make a lot more sense to actually connect in 
to Bakersfield, and to enhance the service between San Jose and 
San Francisco. Even if we could meet the minimum criteria not 
doing that, it would make more sense to do that.
    That would require an additional $2.9 billion of 
investment, but it would generate $4.7 billion of additional 
ridership revenue. So our point was we could have the 
conversation with the Congress about whether that is an 
appropriate Federal investment, given the almost immediate 
return of doubling that investment, and further connecting 
those regions.
    So we don't need to connect into Bakersfield right now, or 
enhance the service to San Francisco, but we think it would be 
better if we could do that. Frankly, the first place we were 
going to look is here. If that is not satisfactory, we will 
start scrounging in the sofa cushions to see how we get there.
    Mr. Denham. And the recent FRA grant for Caltrain 
electrification, it is my understanding that the folks over in 
that area have made it very, very clear that they will never be 
high-speed rail, nor do they want to be high-speed rail, and 
that the Caltrain track will never be upgraded to be able to 
facilitate the California high-speed rail trains on that piece 
of track.
    So it is my understanding that, as the blended approach, as 
you connect with Caltrain eventually, that you would have to 
get off of California high-speed rail and on to Caltrain.
    Mr. Richard. Mr. Chairman, I am going to have to 
respectfully say that I don't think any of that is correct. The 
folks--you may be talking about people who, in the community of 
Atherton, have tried to bring litigation to stop high-speed 
rail from happening on that corridor. But in fact, all of the 
transportation leaders in the Bay Area have a very different 
view. We have a very different view. And, in fact, by law we 
could not provide the $600 million of bond funding contribution 
to that unless that corridor will accommodate high-speed rail. 
We simply couldn't do it.
    The plan is that the electrification will take place now, 
which will allow Caltrain to have more efficient service as a 
stand-alone thing. But in fact, we save $20 billion by using 
the Caltrain tracks. There is no appreciable diminution in 
speed between San Jose and San Francisco on that, and there 
will have to be some track straightening and some passing 
tracks.
    But we are in discussions with Caltrain and other 
transportation leaders in the Bay Area about precisely how to 
do that. We are doing environmental work on that right now. So 
that corridor will be upgraded to high-speed service, and we 
think that is the most cost-effective way to do it. But I would 
be happy to engage with you or your staff about where we are 
having differences there in----
    Mr. Denham. Thank you. I would like to understand that 
better, but it is your intention that the Caltrain system will 
accommodate high-speed rail trains at a certain point in time.
    Mr. Richard. That is correct. And those engineering studies 
have been done, and that is the plan. The California 
Legislature appropriated our bond money specifically with that 
idea in mind. And so I am happy to engage with you and your 
staff on this for----
    Mr. Denham. Would this be at a later date, or is this part 
of the FRA grant that the--the grant and the Caltrain upgrades 
are being put in place with the understanding that California 
high-speed rail trains will be on that track.
    Mr. Richard. Well, my understanding is that the grant, the 
core capacity grants that they got, which comes through a 
different part of the Department of Transportation, that grant, 
I believe--Mr. Nissenbaum can correct me--came out of the 
Federal Transit Administration, not FRA, and it was intended to 
be able to support Caltrain electrification as a stand-alone 
matter.
    But we are now working with Caltrain so that we--and the 
reason we are funding this is that it will allow us to step up 
to full high-speed service. But I think that the grant from 
Federal Transit Administration was independent of that, if I 
understand that correctly. And I----
    Mr. Denham. Mr. Nissenbaum?
    Mr. Nissenbaum. Yes, that is correct, it is through the 
Federal Transit Administration, through their Capital 
Investment Grant Program.
    Mr. Denham. OK, so this has been my concern from the 
initial grant request that came up in late January, is that you 
are using Prop 1A dollars as your State match, yet there has 
not been any clarification that Caltrain will ever be able to 
facilitate--well, let me ask you.
    Under the grant agreement, will Caltrain be able to 
facilitate California high-speed rail?
    Mr. Nissenbaum. So, I am going to have to get back to you, 
because this is an FTA administered grant, about how they have 
written that. From our standpoint, we worked closely with FTA 
to ensure that whatever sources of funding are applied to each 
grant, is uniquely for those grants, that there is no double-
counting and so forth. So that is our piece of it. But we 
will--I can certainly get back to you on how the--how it is 
written from FTA.
    Mr. Denham. But you understand my concern. If Mr. Richard 
is saying Prop 1A is for California high-speed rail, and you 
are using California high-speed rail money on a grant match for 
an upgrade to Caltrain, I want to make sure that we are not 
going to build a new track, an upgraded track, only to have to 
turn back around and find other money to upgrade it again, 
assuming we are going to have Caltrain--California high-speed 
rail on there. If you could clarify that position, we would 
look forward to a written response.
    Mr. Nissenbaum. I am happy to do that for you.
    Mr. Denham. Thank you.
    Mr. Richard. And may I just say I agree with you on that, 
Mr. Chairman. We certainly are working with Caltrain to make 
sure that we don't end up with sequential investments. We want 
to do this right the first time.
    Mr. Denham. Thank you, Mr. Richard.
    Mrs. Bustos, you are recognized for 5 minutes.
    Mrs. Bustos. Thank you, Chairman Denham, and also Ranking 
Member Capuano, and also to our panelists for being here today. 
This is an important issue for me.
    I represent the central and northwestern region of the 
State of Illinois, and we have two possible passenger rail 
corridors in the district that I serve. The first is service 
from Chicago to Rockford, and then on to Galena, and then over 
the river into Dubuque, Iowa. The second is Chicago to the Quad 
Cities. I live in a town called Moline. The Quad Cities are 
Moline and Rock Island in my congressional district.
    That project was awarded $177 million in Federal money in 
2011, as part of the High-Speed Intercity Passenger Rail 
program. The Chicago to Quad Cities route has experienced 
delays upon delays due to uncertainty, mostly at the State and 
Governmental level. We have got some issues with our State 
budget. But it is now moving forward, and we are working very, 
very hard to get this over the finish line.
    And as you might expect, it is a major economic development 
impact on our community: 800 new jobs, helping with tourism, 
helping our families get back and forth to Chicago on a--you 
know, which is very congested, if you do that by driving.
    So, Mr. Nissenbaum, I actually have two questions for you. 
The rest of you can relax. I don't have any questions for the 
rest of you. You have been at FRA for some time and you are--I 
think you are familiar with this project. And the FRA has been 
a really big help to our office, so I want to thank you and 
your colleagues for that.
    I am wondering if, as you sit here, if you can offer your 
commitment to continue to working with us on this project, so 
we don't continue to face delays, and just really help us get 
this over the finish line. Our community sees this as so 
important.
    Mr. Nissenbaum. Thank you, Congresswoman. Yes, absolutely. 
We have worked closely with the State and with the railroads on 
that route. They are having some challenges. A portion of it, 
we have been able to get those investments in place, the 
portion over the BNSF Railroad. It is when we have hit the 
short line territory that things have been a little bit more 
difficult, but we are working through that with the State, and 
you absolutely have our commitment. We are continuing to 
partner with the State on it.
    Mrs. Bustos. I appreciate that. And that was really part of 
my second question. We have got the--so you have got the 
Illinois Department of Transportation, and I think you--I don't 
need to mention the rail line, but the part that a certain rail 
line--that--where they own the track.
    So we have got timeline and design upgrades that are needed 
on that. I think if we can work through that part of it, we 
will be able to move this forward. And I guess that is probably 
more specifically the area that we just really hope that we can 
work together on, on working that part of it through.
    Mr. Nissenbaum. Yes, absolutely. Again, as you know, these 
are State grants. And so, you know, we do need the State DOT, 
as they have been, to stay focused on it and to try to resolve 
those issues. Ultimately, you know, they are responsible for 
it, but we have been partnering with them to help them try to 
clear some of the obstacles in the way of that grant.
    Mrs. Bustos. How are you feeling on our chances?
    Mr. Nissenbaum. We remain committed and hopeful on getting 
through them.
    Mrs. Bustos. I will pass that along to my community.
    Mr. Nissenbaum. All right.
    Mrs. Bustos. I appreciate that. No, we really do appreciate 
your help. The FRA has been very, very good to deal with. So 
thank you so much for that, your willingness to commit to that.
    That is all I have, Mr. Chairman.
    Mr. Denham. Thank you, Mrs. Bustos.
    Mr. Capuano?
    Mr. Capuano. Thank you, Mr. Chairman. And I want to thank 
the panel again. Like I said, I wanted to listen today, and I 
heard some interesting stuff.
    I want to be real clear. From my perspective, anything I do 
as a Member of Congress to deal with Amtrak or any passenger 
facility across the country, none of it is going to get me a 
single vote. No one is going to vote for me by spending a lot 
of money on passenger rail.
    Yet we all know that it is an absolute necessity for this 
society to be successful and our economy to be successful. So 
that is why people like me support this. Politically, I am much 
better off cutting a ribbon on a bridge or, you know, opening 
up a new subway stop, or whatever it might be. But this is 
essential.
    And honestly, I don't usually advocate for projects outside 
my district or my region. But clearly, the Gateway Project is 
absolutely critical to this country, and it has to be done. I 
think high-speed rail is an embarrassment, for those of us who 
travel internationally, to see how far behind we are on high-
speed rail.
    You know, we pride ourselves on being the best and the 
brightest and the fastest and the first, and yet we are 
probably the last, as far as developed countries go, for high-
speed rail. It is about time that we catch up.
    I want to clarify one thing. Several times today comments 
were made relative to ARRA, the American Recovery and 
Reinvestment Act, if I remember. Just for the record, I want to 
be real clear. ARRA was the stimulus which people like me, who 
voted for it, got the hell beat out of me for voting for it as 
some kind of a throwaway project. And yet today we are reaping 
the benefits of it, and I haven't met anybody who doesn't like 
what we did with it.
    Now, we could all argue about exactly where the money 
should have gone, but each and every one of you at this table 
are representing thousands of people that have been employed 
because of it. And I always like to draw that distinction 
because we in Government--I think wrongfully so--we took a lot 
of grief for the stimulus, and we took credit for ARRA, and 
nobody understands that it was the same thing.
    Now we are going through that today in the same thing with 
health care. You know, people hate Obamacare, but they love 
that ACA. It is the same thing. The stimulus was a good bill. I 
am glad I voted for it. I wish we could have had more into 
infrastructure. That is the mistake we made. But so be it.
    I guess I would like to ask--I am going to let you off on 
this one, Mr. Nissenbaum, out of respect for your current 
position, but I want to ask the rest of the panelists. I assume 
you are familiar with the President's proposal relative to 
rail, particularly passenger rail. And I would like to ask each 
of you. Do you support the President's budget, as proposed to 
this Congress, in regards to the money expended relative to 
passenger rail? Do you think it is sufficient? Can you do your 
jobs efficiently if that budget were to be passed as submitted?
    And again, Mr. Nissenbaum, out of due respect I will exempt 
you from answering that.
    Mr. Moorman, do you have an opinion on the President's 
budget, relative to passenger rail?
    Mr. Moorman. Mr. Capuano, I will say what I said earlier. I 
think that the President's budget, the statement of the budget 
is that we should not support the long-distance network, but we 
should continue to support the States and the Northeast 
Corridor.
    And as I have said before, I think the long-distance 
network provides valuable services, but that is an argument 
that you can have on a philosophical basis. The practical--from 
a practical standpoint, the President's budget would 
effectively eliminate capital funding for the Northeast 
Corridor, and that is a bad thing.
    Mr. Capuano. Mr. Moorman, you have a future in the State 
Department with that beautiful way to say no, you don't support 
it.
    [Laughter.]
    Mr. Capuano. Mr. Porcari, how do you feel about it?
    Mr. Porcari. Thank you, Ranking Member Capuano. The Gateway 
is a great illustration of a very specific project where the 
President's budget, as proposed, would not permit Federal--the 
Federal funding share. So any project that does not yet have a 
full funding grant agreement could not qualify for a core 
capacity or New Starts grants.
    So, starting with the bridge, the Portal North Bridge, and 
later with the tunnel, the two most crucial elements of this 
very crucial project, would not be eligible for Federal funding 
under the President's budget, as proposed.
    Mr. Capuano. I got to love this. I guess I am going to have 
to speak English for each of you. That was a no, as well.
    Mr. Porcari. That is a no, as well.
    Mr. Capuano. Mr. Reininger, how do you feel about the 
President's budget? I can translate afterwards, don't worry.
    [Laughter.]
    Mr. Reininger. Am I going to be cutting a ribbon on a 
bridge?
    I share your point of view, that there is a fundamental 
need for significant investment in infrastructure across the 
country. I absolutely believe that the role that intercity 
passenger rail can contribute to that is an important piece of 
the entire equation. We have, for 5 years now, been laser-
focused on a private-sector response to that. And, as much of 
the conversation has gone on today, I felt a little bit 
exempted from that because we aren't seeking grants, we aren't 
seeking subsidies, and we really aren't part of the Federal 
funding source resolution to the opportunities that we see for 
intercity passenger rail, as we go forward into the--you know, 
into the--in the infrastructure challenge, in general.
    I will say that I think there are--there is room within the 
context of the dialogue that is presently taking place on 
infrastructure in general for assistance for projects like 
ours, and we support those.
    Mr. Capuano. So that is a no, too. Thank you, Mr. 
Reininger.
    Mr. Richard, do you support the President's budget?
    Mr. Richard. Mr. Capuano, I am going to give you a direct 
answer, but----
    Mr. Capuano. I don't believe that for 1 second.
    Mr. Richard. You are going to see that I am, predicated by 
this. It will surprise people to know that California, a State 
where--we are a car culture, we write songs about our cars in 
California--actually has three of the five busiest Amtrak 
routes in the United States. Our L.A. to San Diego route is 
second only to the Northeast Corridor, which we acknowledge is 
the most important rail corridor in the country.
    Our State secretary of transportation has sent a letter 
opposing the cuts to Amtrak in the President's budget. I don't 
think you need to translate for me for that.
    Mr. Capuano. I think that is pretty good.
    Mr. Richard. And supporting full funding of the FAST Act 
budgeted amounts.
    Now, I will also say there are other aspects of this 
administration's proposals where we are supportive, and we are 
working with them on things like effectuating the fast track 
elements of regulatory permitting and other things, where we 
are having very positive, constructive conversations with the 
administration.
    But we have specifically opposed the cuts to Amtrak in the 
President's budget.
    Mr. Capuano. I am presuming the chairman is going to be a 
little flexible with me since I have been so nice all day. I 
got a few more.
    Mr. Porcari, I just want to be clear. On the Gateway 
Project, doesn't that include, like, a big project that 
Governor Christie shut down years ago?
    Mr. Porcari. Yes. The ARC project, which would have--wasn't 
exactly the same as the Gateway Project, but would have 
provided new capacity under the Hudson River into New York, was 
actually under construction when it was terminated. The Gateway 
Project is--you can think of as its successor. It is more 
comprehensive----
    Mr. Capuano. Right.
    Mr. Porcari [continuing]. But it is----
    Mr. Capuano. And yet the State of New Jersey or the Port 
Authority, or whoever it was, has a fair amount of money on the 
table for the rest of this project. Is that correct?
    Mr. Porcari. Yes. The State of New Jersey, through New 
Jersey Transit, is an important part of the local funding 
component to this, and----
    Mr. Capuano. How--when you come to the Federal Government 
and ask for money, how can we be sure that Governor Christie 
won't renege again?
    Mr. Porcari. The Governors in both the States of New Jersey 
and New York have been very strong supporters of this project. 
They have----
    Mr. Capuano. When did he change his mind?
    Mr. Porcari. We believe, because we have a project that is 
ready to go, that--by the way, the Portal North Bridge project 
will be managed by New Jersey Transit, an instrument of the New 
Jersey Government--that that shows the strong support, and 
Governor Christie has repeatedly expressed his support for the 
Gateway Project----
    Mr. Capuano. Well, I am particularly happy he was 
enlightened. Again, I will take all the money I can get. We 
tried to grab the Florida money when they walked away, and, you 
know, if Jeff ever stopped the California project, I would be 
grabbing your money, anything I can.
    [Laughter.]
    Mr. Capuano. But, as I said, I need this Gateway Project to 
go through, because it is good for the country. And actually, I 
am an American. I am not just a parochial guy. I am a little 
bit of both, but, you know, it would be good for us.
    I guess the last item I have is for you, Mr. Nissenbaum. I 
have been reading, and I have been informed that President 
Trump's administration have told all Departments not to answer 
any questions submitted to them by ranking members of committee 
or subcommittees. I haven't seen this, but that is what I have 
been informed is accurate.
    And I am just curious. I mean, honestly, up until now, this 
committee is about as bipartisan as you get. You know, we have 
minor differences, but they are kind of like family 
differences. We are--we--that is why we get things like the 
FAST Act----
    Mr. Denham. That is until I take your $20 billion for 
California high-speed rail.
    [Laughter.]
    Mr. Capuano. That is not a very family thing to do, but----
    [Laughter.]
    Mr. Capuano. But it is just--it just strikes me that that 
is the kind of policy that, absent some reason, would really 
drive a divisive wedge in a--maybe other places, but in this 
committee would drive a divisive wedge between people that get 
along and work together.
    And I am just curious. Has your Department been informed by 
the White House that you can't answer questions submitted by 
the ranking member of this committee?
    Mr. Nissenbaum. We have gotten no such direction. We have 
been responsive to requests from both----
    Mr. Capuano. Up until now, everybody has been great. I 
mean, you know, the DOT and all the subagencies have been 
great. We have had--to my knowledge, we have had no problem. As 
usual, we go back at you three or four times, but that is 
normal.
    But I just want to be clear. I mean, if that comes down, I 
guess we will be having another discussion because, again, I 
don't mind having our arguments with my colleagues on this 
side, on that side, but up until now we like to build things. 
And we all--again, here we are, having a long discussion about 
projects that are not going to get any of us votes. But we all 
know it is critical for this country. We know it. And we will 
do what we have to do, as best we can. There is no reason to 
find ways--and I am not talking to you, but there is no reason 
for anybody to find ways to drive us apart unnecessarily.
    And with that, thank you, and I yield back, and I deeply 
appreciate the chairman's wonderful flexibility and his liberal 
approach to his timing.
    Mr. Denham. Easy on the liberalism.
    Mr. Richard, a lot of new discussions about the blended 
approach. With Caltrain now--and Metrolink to the south, in 
L.A.--so you now have changes on the northern and southern ends 
of the high-speed rail line. What will the average train speed 
be with the current number of stops that are proposed be 
between San Francisco and Los Angeles? Average train speed.
    Mr. Richard. I would say--I will have to do the division in 
my head, but the system, as you know, Mr. Chairman, has to be 
designed so that a nonstop train can go in 2 hours and 40 
minutes. And we are still meeting that standard. In fact, the 
peer review group thought that we are about 8 minutes ahead of 
that.
    In a way, the answer to your question is going to depend on 
the operator. Again, we are going to turn this over to private-
sector operations. They are going to make decisions about how 
many through trains, which trains stop in which areas, and so 
forth. Those will be commercially driven. But I would say, in 
general, if I had to guess today, it would be about 3 hours 
from L.A. to San Francisco with normal stops, but with through 
trains at the 2 hours and 40 minutes that the statute calls 
for.
    Mr. Denham. So there will be some trains that skip a 
certain amount of stops to be able to hit the 2.4 hour----
    Mr. Richard. The requirement in the law is that the system 
be designed so that a nonstop train can go in 2 hours and 40 
minutes. Just as the airlines optimize their service, which 
things they do nonstop, which ones they go through hubs, the 
private-sector operator will come in, and they will look at the 
ridership numbers, and they will decide how they want to 
provide service to those cities. Some of it will clearly be 
nonstop, some of them will stop in San Jose, maybe make limited 
stops, some of them will stop in all the cities.
    And we will certainly want to make sure that everybody gets 
served. And I think the markets are there to serve them. But 
the reason that I can't give you a full answer today is 
whatever I say would be superceded by the commercial decisions, 
probably within some limits, that the commercial private-sector 
operator would make about how to optimize the system the best.
    Mr. Denham. Well, we have seen a number of models as we 
have taken a look at France and Japan and China, and seeing 
what projects there are that are high speed that are already 
out there. We have also seen Florida and Texas that are 
modeling on what is proposed in the future. I would also like 
to see that modeling for California to better understand what 
areas of the State you could actually hit the 220 miles per 
hour. And if you are adding in stops and optimizing the rail 
system based on those stops, we would like to see how that 
affects the 220 miles an hour.
    Mr. Richard. We will be happy to provide that to you. I 
would only make this point very quickly, Mr. Chairman, which is 
several times you have referenced the legislatively created 
peer review group. One of the things--before we agreed to the 
blended service, the peer review group not only recommended it, 
but indicated that we could run blended service in the end 
portions and still meet all the requirements of the Bond Act.
    Eighty-five percent of the track we are laying will be 
brand new, virgin track, and that will all be susceptible to 
the highest speeds that these trains can run on, subject only 
to track geometry. It is only in the urban areas where, as you 
have traveled around and seen it, the trains don't go 200 miles 
an hour anyway. That is why we were able to share track in the 
North. And in the South, we are only sharing corridor. We are 
building our own track, but adjacent in the corridor, with no 
appreciable impact on the speeds.
    Mr. Denham. Thank you. And I want to follow up on one final 
question, Mr. Richard, from a previous hearing that we had had 
last year.
    Last July, California High-Speed Rail Authority made a 
presentation to the U.S. DOT in which it indicated it would 
seek $15 billion in Federal funding and financing support. 
Where does this stand, and why was this not discussed in the 
2016 business plan?
    Mr. Richard. I was not in that particular interaction with 
the DOT. My understanding, Mr. Chairman, is that--and I have to 
search my memory on this--is that basically it was a 
conversation about possible access to RRIF funding and other 
sources like that. I don't believe it ever--well, I know, 
because it never came to our board--it never rose to the level 
of a proposal.
    I think that it was a conversation with DOT, but we have 
had an excellent partnership with our funding partners there 
about, as we moved forward, the ability to, if you will, 
securitize our revenue streams with RRIF loans, and so forth. I 
don't think it progressed past that at that point. We would 
like to come back to that at the appropriate point.
    And, Mr. Chairman, if you will permit me, at some stage I 
would like to work with you and your staff on our long-term 
view about how we are staging this, and what support we might 
be looking for at various junctures.
    Mr. Denham. I look forward to that continued discussion. 
But as chair of the California High-Speed Rail Authority, 
certainly you must authorize or at least know of any of your 
staff that may be going out and giving a formal presentation, 
especially one that would require $15 billion.
    Mr. Richard. That would be correct, sir. But I don't think 
that this was a formal presentation. But again, I am going to 
go back and take a look at it. I did not authorize it, and I 
would like to say that I know every single fact that----
    Mr. Denham. I would love to go over that with you.
    Mr. Richard. OK.
    Mr. Denham. It looks, from our standpoint, that we got it 
after the fact. It looks like a very formal presentation.
    I guess my bigger concern is that, while this happened in 
July, we had a hearing in San Francisco, or in the Bay Area, on 
August 29th----
    Mr. Richard. That is right.
    Mr. Denham [continuing]. Where you had indicated there 
would not be any Federal funding needed--both from questions 
from Republicans and Democrats, that there would not be any 
more funding needed under the Initial Operating Section. So you 
can understand how we would be concerned to see that, a month 
prior, $15 billion is being requested out of DOT.
    Mr. Richard. Well, Mr. Chairman, first of all, let me just 
say I take my obligation to give full and candid testimony very 
seriously. And what I said is exactly what I meant. For our 
Initial Operating Section, which is about a $20 billion 
segment, my belief right now is that it would be--I mean I 
would love to take Federal money, but my belief right now is it 
will be funded with $8 billion of State bonds, the $3.5 billion 
of Federal money we already have from ARRA, the stimulus act, 
and the fiscal year 2010 appropriation, from a combination of 
cap and trade dollars, and then we have a gap of a couple 
billion dollars we have to fill.
    But we have a financing plan in mind for that that does not 
involve us coming and asking for any additional amount of 
Federal money. So my statement to you on August 29th stands, 
and I am happy to go back and rectify that with this other 
presentation. But my statement to you stands on that. We were 
not looking for $15 billion to get the Initial Operating 
Section done.
    And again, I think it goes to the nature of--as Mr. 
Reininger was responding to a different question--a RRIF loan 
that is a payback of Federal dollars is certainly not the same 
as a Federal grant.
    And so--but again, I don't have that presentation in front 
of me or in mind, Mr. Chairman. I understand very seriously the 
concern you are raising, and I will be happy to follow up with 
you and the committee on it.
    Mr. Denham. The concern is to make sure that we have an 
open and transparent process----
    Mr. Richard. Yes.
    Mr. Denham [continuing]. And that we actually adhere to the 
will of the voters. So my concern with--both on Caltrain, as 
well as finding out--we want to make sure that it is a 
transparent model, that--you should be having a discussion with 
us. So when we find a grant agreement that comes up only a 
couple of days before the administration leaves, or when we 
find that there is a presentation that was presented to the 
U.S. DOT a month before we had a hearing, and we were not privy 
to that transparent document, it obviously raises questions.
    So we would like to see a little more transparency. I am 
looking forward to not only our sit-down to go through some of 
these items, as well as the items that we are requesting in 
writing, but also, again, taking up Mr. Costa's offer and 
invitation, that we actually take a look at some of the jobs 
that are being created in the Central Valley.
    Mr. Richard. Thank you, Mr. Chairman. I look forward to it.
    Mr. Denham. Thank you.
    You have more questions? I have got one final one for Mr. 
Nissenbaum, I wanted to follow up. Your written testimony 
mentions, with respect to oversight, that FRA uses its 
resources to focus on projects that present the highest risk. 
Do you consider California high-speed rail, the project itself, 
to be one that presents the highest risk?
    Mr. Nissenbaum. So, as I mentioned, 85 percent of the funds 
in the Recovery Act HSIPR program went to six corridors. And 
all six of those corridors are ones that we look at very 
closely, because they are complicated, there are multiple 
projects in them, there are lots of stakeholders and railroads 
and other parties involved. So we look at all of those very 
closely.
    Mr. Denham. OK. Do all of them present a highest risk?
    Mr. Nissenbaum. Any significant investment in a 
transportation project is going to put it up into, for us, a 
higher level of oversight. And that is the category for all of 
the six corridors that are in the program, that we treat them 
all on that level.
    Mr. Denham. Have all six corridors received a waiver, or 
received a tapered match?
    Mr. Nissenbaum. Not all six, but we have--there have been a 
number of tapered matches provided under the program.
    Mr. Denham. Outside of California high-speed rail, where 
else are we doing a tapered match?
    Mr. Nissenbaum. I will be happy to get back to you with the 
specific answer. I know of a few, but I don't want to misquote 
them. There are several that we provided tapered matches to.
    Mr. Denham. Is there guaranteed funding on the repayment of 
that tapered match? If you are going to spend all the Federal 
money upfront, and hope that there is State match in the 
future, is that State match guaranteed?
    Mr. Nissenbaum. Right. And not all of them were structured 
so that it was a 100-percent Federal match followed by State. 
There were different mixes. But it is the obligation of all of 
the grantees under the program to complete the scope of work of 
the project, which means they need to fulfill their match 
requirements, and they need to cover any additional costs that 
might be incurred. That is in the grant agreements, we have had 
remedies in the grant agreements to address any failure to 
comply with that, but that is absolutely our expectation.
    Mr. Denham. Has FRA done an audit on California high-speed 
rail?
    Mr. Nissenbaum. We are not an audit agency. What we do is 
we conduct assessments of risk, and work closely with our 
grantees to try to identify areas to mitigate risk and to 
address any concerns that we have.
    Mr. Denham. In your testimony, in your written statement, 
``FRA uses its resources to focus on projects that present the 
highest risk.'' So FRA's oversight program, how do you conduct 
oversight and use your resources to focus on projects that 
present the highest risk, if you don't do audits?
    Mr. Nissenbaum. Well, ``audit'' is sort of a formal term. 
What we do is--oversight, from a grant perspective, which 
involves looking at how the grantee is delivering the scope, 
schedule, budget, identifying areas where there may be concerns 
with any of those elements.
    So oversight is a sort of standard term that is used for 
grant-making agencies like ourselves. Audits are typically done 
by organizations like the inspector general's office.
    Mr. Denham. So do you ever coordinate with the inspector 
general's office or any other office to conduct an audit?
    Mr. Nissenbaum. Yes. In fact, we have had, I believe, 14 
audits conducted on the program and some of our projects over 
the course of the HSIPR program.
    Mr. Denham. How many of these types of audits have been 
done on California high-speed rail?
    Mr. Nissenbaum. I will have to get back to you on that. I 
know of at least one that was focused primarily on California 
high-speed rail. There are others that have touched on a number 
of our grants.
    Mr. Denham. We would request to see each of those written 
documents.
    Mr. Nissenbaum. I will be happy to provide those.
    Mr. Denham. So if you are going to do a full audit on the 
project, what agency would be responsible for that full audit?
    Mr. Nissenbaum. I can't say for sure what the right agency 
would be. We could certainly--I will take that back to the 
Department. We can get you an answer for the record.
    Mr. Denham. How are you not sure? I am a little confused 
here. So FRA changes its grant program. We have a grant program 
that says, OK, State and local government, you have got to come 
up with your match, and we will match it. We are going to do a 
grant program and invest Federal dollars to match funds.
    And then you take a waiver and you say, OK, we are going to 
spend all the Federal dollars upfront with the promise that 
these State dollars are eventually going to come, and you have 
no idea who does the audit, or if there is an audit that has 
been done to guarantee that the State----
    Mr. Nissenbaum. Well----
    Mr. Denham. So you can see where my concern is going here.
    Mr. Nissenbaum. Yes. No, I----
    Mr. Denham. Mr. Richard, in his testimony, understands that 
at some point he is going to have to come back to the Federal 
Government. And I imagine going to the rest of my colleagues on 
this panel, that this panel is not going to be very kind to 
that new request if they can't actually verify that a State 
match has actually been fulfilled on the previous grant before 
we issue another grant.
    So, if we don't even know if there is an audit that has 
been done, if we don't know who actually would do the audit, 
obviously it would raise a number of concerns that this match, 
that isn't there today, would actually come to fruition, 
especially before we have a new grant request.
    Mr. Nissenbaum. Yes, Mr. Chairman, I apologize if--I may 
have misunderstood your question.
    From the standpoint of our program being audited, and any 
of the projects in our program being audited, the DOT inspector 
general is the office that handles that. And they have 
conducted a number of audits, and they may in the future 
conduct audits. So that would be the agency that would do it 
with respect to FRA, and how we have delivered, and any of our 
grants under our program.
    Mr. Denham. OK, but, to your knowledge, you have not done 
an audit on the current grant.
    Mr. Nissenbaum. We have not. But again, the inspector 
general and the GAO have conducted--I believe the number is 14 
audits of the overall HSIPR program, of which at least 1 of 
those was focused on California high-speed rail.
    Mr. Denham. And you have reviewed this audit?
    Mr. Nissenbaum. Yes.
    Mr. Denham. And are you convinced that this is no longer a 
high-risk project, and that the State match will be fully 
funded?
    Mr. Nissenbaum. I would never suggest any of our projects 
are not high risk. I mean we treat all of the projects with the 
seriousness of a grant oversight agency, particularly the 
large, complicated corridor projects. And so we will continue 
to look at it. We have not changed our oversight regime at all 
with respect to those audits.
    Now, we did have some recommendations, which we have been 
in the process of putting in place, and have actually closed 
most of those recommendations. But we continue to oversee all 
of our grants, and particularly these six corridors, 
aggressively.
    Mr. Denham. I would--I hate to assume anything in politics, 
but it seems to me that if a State or a project came back to 
the Federal Government and said, ``Hey, trust us, let me give 
you some information and show you how great we are, we would 
like to have a waiver so that we can spend all the Federal 
money upfront instead of doing the obligatory State match at 
the same time,'' that at some point you would be looking at an 
audit or some type of guarantee to say this is less riskier 
than the other corridors, or other projects, because of a lower 
risk and a larger guarantee that the project will be done and 
the grant will be fulfilled.
    There has to be some type of understanding before we would 
do a tapered match, would there not?
    Mr. Nissenbaum. Correct. Whenever we get a request for a 
tapered match--and we have had a number, and, as I said, we 
have granted some--we go through a review process. It is a 
standard grant tool that is used. We follow the same procedures 
as the Federal Highway Administration when they do tapered 
matches. We look at whether the benefits of that tapered match, 
in terms of project efficiency and delivery, exceed the risks. 
And in this case, we made that determination and granted that 
tapered match.
    And again, in all of our grant agreements we have terms and 
conditions that are consistent across the grants that give us 
remedies to address a failure to comply, or a failure to 
deliver on any of the obligations to the grantee.
    Mr. Denham. Thank you. This committee will be requesting to 
take a look at and receive copies of what the guarantee was, or 
the cost analysis that was used prior to approving the tapered 
match, and then also take a look at where we are now, before we 
request an audit. We will do both of those in writing, as well.
    Mr. Nissenbaum. Absolutely.
    Mr. Denham. Anything else before we close? No more? I yield 
to Mr. DeSaulnier.
    Mr. DeSaulnier. I just--two comments. I share the concern 
expressed by the chair on these mega-projects. When we look at 
risk management, risk assessment--not specifically towards 
high-speed rail, but just from experience.
    And then, Mr. Richard, in regards to the commitment to the 
2 hours and 40 minutes, I feel obligated to at least ask you to 
provide me with some information to the committee. The last 
committee that I was involved with in Sacramento, the head of 
your peer review group said--and it was well publicized--that, 
under his belief, under the changes you had made at that time--
and that was 3 years ago--that you could no longer make the 
2urs and 40 minutes, I think it was 3 years ago. You weren't in 
attendance, Mr. Morales was. But it was well publicized. That's 
my memory.
    So we need to find out what changed, or what the difference 
was, because it was a clear, unequivocal response to a question 
I asked him, and it was the chair of the peer review group. So 
we just need to find out. I would like to find out whether it 
is 2urs and 40 minutes or not, whether he made an error in that 
public meeting, or if something changed subsequent to that, so 
that your testimony here is accurate.
    Thank you, Mr. Chair.
    Mr. Richard. I will provide that for you. I think I 
understand where the difference is, and I will get that 
information for you, but----
    Mr. DeSaulnier. Because I have a--sitting here today I have 
never heard an explanation of why he wasn't factually correct 
in response to that question. So let's find out.
    Mr. Richard. OK.
    Mr. Denham. Well, let me thank each of our witnesses. We 
normally in this subcommittee, with the help of Mr. Capuano, we 
are usually very, very quick and very, very efficient. We 
normally do not go over 3 hours. But I would like to thank each 
of you for your indulgence, as well as your testimonies today, 
and look forward to following up with each of you. We will have 
some written questions, as well.
    I ask unanimous consent that the record of today's hearing 
remain open until such time as our witnesses have provided 
answers to any questions that may be submitted to them in 
writing, and unanimous consent that the record remain open for 
15 days for additional comments and information submitted by 
Members and witnesses to be included in the record of today's 
hearing.
    Without objection, so ordered.
    If no other Members have anything to add, the committee 
stands adjourned. Thank you.
    [Whereupon, at 1:05 p.m., the subcommittee was adjourned.]
    
    
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