PAGENO="0004" *1 I(j~L/Li (/ ~J -~ AUTHORIZE APPROPRIATIONS FOR AMTRAK AND DOT'S FINAL ROUTE RECOMMENDATION HEARINGS BEFORE THE ON SURFACE TRANSPORTATION OF THE COMMITTEE ON COMMERCE, SCIENCE, AND TRANSPORTATION UNITED STATES SENATE NINETY-SIXTH CONGRESS FIRST SESSION ON NATIONAL RAILROAD PASSENGER CORPORATION'S FISCAL YEAR 1980 AUTHORIZATION AND THE DEPARTMENT OF TRANSPORTATION'S FINAL ROUTE RECOMMENDATION MARCH 5 AND 12, 1979 Serial No. 96-9 43-139 0 ~ e~ / ~ SUBCOMMITTEE Printed for the use of the Committee on Commerce, Science, and Transportation U.S. GOVERNMENT PRINTING OFFICE WASHINGTON 1979 JUN 8 797~ PAGENO="0005" CONTENTS Page Opening statement by Senator Long 1 Opening statement by Senator Schmitt 2 Opening statement by the Chairman 7 CHRONOLOGICAL LIST OF WITNESSES MARCH 5, 1979 Adams, Hon. Brock, Secretary, Department of Transportation 28 Prepared statement 52 Questions of the committee and the answers thereto 57 Boyd, Alan, president, National Railroad Passenger Corporation 62 Prepared statement 80 Questions of the committee and the answers thereto 92 Capon, Ross, executive director, National Association of Railroad Passengers; accompanied by Steven Peariman, Environmental Action; Peter Carlson, Environmental Policy Center; and Howard Harding, Sierra Club 126 Prepared statement 130 Downing, John, deputy commissioner, New York Department of Transporta- tion; Edson L. Tennyson, deputy secretary for local and area transportation, Pennsylvania Department of Transportation; and Bruce Hagen, commission- er, North Dakota Public Service Commission 147 Prepared statement of Mr. Tennyson 147 Prepared statement of Mr. Hennessy 151 Prepared statement of Mr. Hagen 155 Leahy, Hon. Patrick J., U.S. Senator from Vermont 8 Prepared statement 10 Letter of March 15, 1979 18 Melcher, Hon. John, U.S. Senator from Montana 20 Snyder, J. R., chairman, legislative committee, Railway Labor Executives Association, and national legislative director, United Transportation Union; accompanied by W. G. Mahoney, counsel 102 Stafford, Hon. Robert T., U.S. Senator from Vermont 18 Steadman, Charles, chairman, Committee To End Government Waste, National Taxpayers Union; accompanied by Charles Crawford, director 115 Prepared statement 124 MARCH 12, 1979 Opening statement by Senator Long 177 Anderson, Dana, city attorney of Pendleton, Oreg 231 Baucus, Hon. Max, U.S. Senator from Montana 177 Borough, Rex, City of Albuquerque, N. Mex 273 Prepared statement 274 Cookus, Randall, ticket agent, Amtrak, Little Rock, Ark 256 DeLora, John, executive director, Michigan Passenger Foundation, Rochester, Mich 261 Prepared statement 265 Gianturco, Andriana, director, California Department of Transportation 234 Attachments 238 Hirsch, Ralph B., legislative chairman, League of American Wheelmen, Phila- delphia, Pa 282 Prepared statement 284 Joyce, Larry, Keystone Association of Railroad Passengers, Harrisburg, Pa 275 Prepared statement 277 Knappen, Ted C., senior vice president, Eastern Division, Trailways 213 Prepared statement 216 (III) PAGENO="0006" COMMITTEE ON COMMERCE, SCIENCE, AND TRANSPORTATION HOWARD W. CANNON, Nevada, Chairman WARREN G. MAGNUSON, Washington BOB PACKWOOD, Oregon RUSSELL B. LONG, Louisiana BARRY GOLDWATER, Arizona ERNEST F. HOLLINGS, South Carolina HARRISON H. SCHMITT, New Mexico DANIEL K. INOUYE, Hawaii JOHN C. DANFORTH, Missouri ADLAI E. STEVENSON, Illinois NANCY LANDON KASSEBAUM, Kansas WENDELL H. FORD, Kentucky LARRY PRESSLER, South Dakota DONALD W. RIEGLE, JR., Michigan JOHN W. WARNER, Virginia J. JAMES EXON, Nebraska HOWELL HEFLIN, Alabama AUBREY L. SARvIs, Staff Director and Chief Counsel EDWIN K. HALL, General Counsel WILLIAM JOHNSON, Staff Counsel TIMOTHY LYNCH, Professional Staff Member MALCOLM M. B. STERRETr, Minority Staff Director MATFHEW V. ScocozzA, Minority Staff Counsel SUBCOMMIrFEE ON SURFACE TRANSPORTATION RUSSELL B. LONG, Louisiana, Chairman HOWARD W. CANNON, Nevada LARRY PRESSLER, South Dakota ERNEST F. HOLLINGS, South Carolina JOHN C. DANFORTH, Missouri ADLAI E. STEVENSON, Illinois HARRISON H. SCHMITT, New Mexico DONALD W. RIEGLE, JR., Michigan NANCY LANDON KASSEBAUM, Kansas J. JAMES EXON, Nebraska HOWELL HEFLIN, Alabama (II) PAGENO="0007" Iv Page Lewis, Arthur, president, American Bus Association 203 Attachments 210 Mulvey, Francis, assistant professor of economics, Northeastern University, Boston, Mass 249 Sarbanes, Hon, Paul S., U.S. Senator from Maryland 188 Prepared statement 196 Schiefelbein, Richard J., Deputy Director for Rail Services Planning, Office of Analysis and Evaluation, Interstate Commerce Commission; accompanied by Michael Sullivan, Chief, Rail Systems Branch 197 Sullivan, Carl, president, Friends of the Railroad, Charleston, W. Va 280 Prepared statement 281 ADDITIONAL ARTICLES, LETTERS, AND STATEMENTS Albuquerque, N. Mex, resolution 292 Brawley, H. W., Harpers Ferry, letter 293 Cmich, Stanley A., Mayor, City of Canton, Ohio, statement 291 Cookus, Randall R., and Dr. Wffliam A. Pollard, article 329 Crawford, Charles S., director, Committee To End Government Waste, letter of February 2, 1979 294 Delaney, Michael W., statement 289 Hill, Loren G., president, National Capital Association for Railroad Travel, and George Frain, secretary, Adams-Morgan Federation, letter with attachments of March 5, 1979 312 Kanegis, Arthur, statement 340 Knowlton, Richard K., vice president-law, The Atchison, Topeka & Santa Fe Railway Co., letter with attachment of April 4, 1979 .~ 325 Peterson, Esther, Director and Susan E. Johnson, attorney-adviser, Office of Consumer Affairs, letter 338 Phillips, Edward S., associate professor of economics, Shepherd College, state- ment 290 Pollard, Bill, D.D.S., director, Arkansas Association of Railroad Passengers, letter with statement of March 1, 1979 296 Randolph, Hon. Jennings, U.S. Senator from West Virginia, statement 289 Retain the Train, statement with attachments 342 Roisman, Anthony Z., staff attorney, Natural Resources Defense Council, Inc., letter of March 8, 1979 357 Schmitt, Hon. Harrison, H., U.S. Senator from New Mexico, statement 4 Simons, Nat Jr., executive director, Ohio Rail Transportation Authority, letter with attachment of March 27, 1979 319 Tierney, Paul J., president, Transportation Association of America, letter of March 26, 1979 318 Tyler, Clark, vice president, Government Affairs, Amtrak, letter of March 14, 1979 270 PAGENO="0008" AUTHORIZE APPROPRIATIONS FOR AMTRAK AND DOT'S FINAL ROUTE RECOMMENDATION MONDAY, MARCH 5, 1979 U.S. SENATE, COMMITTEE ON COMMERCE, SCIENCE, AND TRANSPORTATION, SUBCOMMITTEE ON SURFACE TRANSPORTATION, Washington, D.C. The subcommittee met at 10:30 a.m., in Room 235 of the Russell Senate Office Building, Hon. Russell B. Long (chairman of the subcommittee) presiding. OPENING STATEMENT BY SENATOR LONG Senator LONG. I will call this hearing to order a few minutes ahead of time, because I have a statement I would like to make and we might as well get that behind us and then hear from the witnesses. In addition to our responsibilities for authorizing appropriations for Amtrak and~ general oversight of Amtrak operations, this sub- committee has the further responsibility this year to review and evaluate the Department of Transportation's (DOT) proposal for restructuring Amtrak's current route system. Last year this subcommittee began the difficult process of criti- cally evaluating Amtrak's performance record and reassessing both the costs and benefits of continuing to provide massive subsidies for Amtrak. The result of that effort was enactment of the Amtrak Improve- ment Act of 1978 which directed the DOT to study Amtrak's route network and to recommend a new system that would restore logic and fiscal responsibility to Amtrak's operations. In accordance with that legislation the Department published preliminary recommendations last May that provided a number of route alternatives for consideration. Throughout last summer the Rail Services Planning Office con- ducted public hearings to gain additional information on a more efficient network for Amtrak. Together with its own continuing studies and the additional public data from the Rail Services Plan- ning Office's hearings, the Department submitted its final route plan to Congress on February 1, 1979. Congress now has a period of 90 days in which to evaluate the merits of the new route plan. In line with the new route plan, the Department is also request- ing a 3-year authorization for Amtrak totaling $2.49 billion. The Department estimates that adoption of the new route plan will save the Federal Government over $1,390 million over the next 5 years. In addition, the Department is recommending several (1) PAGENO="0009" 2 amendments to the Rail Passenger Service Act and other related acts that are designed to resolve certain problems relating to Am- trak's operations. The purpose of today's hearing is to continue the evaluation and analysis that began last year through consideration of the authori- zation request for fiscal year 1980 and the new recommended route structure. Moreover, this hearing will afford the members of the subcom- mittee an opportunity to hear from many individuals and organiza- tions that have an interest and concern for the role rail passenger service will continue to play in meeting the needs of the Nation's intercity traveling public. It's my hope that somewhere within all the representations and comments we will hear today, there will be some sound suggestions on how Amtrak could work to reduce its spiraling costs and raise its revenues. Before we begin, I would like to remind the witnesses that we have quite a few people to hear from today, and I would appreciate the cooperation of every witness in limiting his oral testimony to ten minutes, though I think we should permit the Secretary of Transportation to have 20 to summarize his prepared text. The statements of all the witnesses, of course, will be printed in full in the record. I have received word from Senator Larry Pressler that he will be unable to attend today's hearing due to a scheduling conflict. While Senator Pressler has sent his regrets, he has requested that several questions be submitted to the witnesses for the record. We are very happy to have with us this morning, Senators who have introduced resolutions of disapproval, and who have a partic- ular interest in this matter who would like to be heard. I would like to recognize the Honorable Patrick J. Leahy, Sena- tor from Vermont and also his colleague, the Honorable Robert S. Stafford, Senator from Vermont. Senator ScHMrrr. Mr. Chairman, would the Senators yield and allow me to make an opening statement on this matter? Senator LONG. Be happy to. OPENING STATEMENT BY SENATOR SCHMITT Senator ScHMIrr. Mr. Chairman, I believe, and I am fairly cer- tain my two distinguished colleagues also believe, two principles relative to the railroads: First, rail passenger transportation is an essential component of a national rail transportation network for the use of the American public; second, modern technology and management techniques can provide this Nation with an economi- cal high quality rail passenger system. I think those two points are clearly what is now possible. The question is, How do we provide for an expansion and im- provement of rail passenger service? Not how do we terminate such services for all but a favored few? As the sponsor of a resolution of disapproval of the DOT's ac- tions, I am sorry that DOT made this confrontation necessary. The proposed route restructuring is premature and should be preceded by a significant Amtrak effort to reduce its non-transpor- tation-related costs. PAGENO="0010" 3 I know of no one who would argue that if we deregulated rail transportation and started all over with the investments in plant and equipment already made and created a modern investor-owned corporation to run the rail passenger system, we would see a profit- making, low-cost, technically advanced, energy-efficient industry. I for one believe that we should do this, even if it means a high initial cost of compensation for those rail employees that would no longer be necessary to run this modern system. We have at least one model for the transition from Federal management to investor-owned management in the Communica- tions Satellite Corporation-Comsat. Hopefully, witnesses on March 12 will be able to provide insight into this possibility for a rail passenger corporation and other real solutions to the problem addressed so inadequately by DOT. It is not enough for the subcommittee simply to veto the DOT proposal and allow the status quo to continue. Instead, I would recommend that the subcommittee work over the coming months, after we have vetoed this action by DOT, to develop a rational, well-thought-out plan to reorganize Amtrak's management system which would reduce its existing operating expenses and increase revenues from greater passenger use. In 1977, Amtrak presented a plan to this subcommittee that would have expanded the Amtrak network beyond the level Con- gress then thought reasonable. Now DOT has ree~nmended major surgery on Amtrak that would jeopardize the continued existence of rail passenger services. Both of these approaches should be re- jected as extreme. Since DOT has failed to make any sense whatsoever in this matter, I think it is incumbent on this subcommittee to give firm direction of its own to DOT to find the proper balance for passen- ger rail services. To eliminate Amtrak routes all over the country before examining the alternatives is, I believe, needlessly crippling. We must remember that once abandoned, rail passenger routes are not easily reestablished and rail beds deteriorate rapidly and can't be quickly restored. We must remember that at present some 84 percent of the American public lives within 50 miles of Amtrak services, but under the DOT proposal this would decline to 65 percent, and I am sure that subsequent proposals would be made to cause it to decline even further. We can hardly call it a national rail network, if it fails to serve over a third of the population of the country, particularly those in rural areas that desperately need efficient low cost mass transportation. The proposal by DOT is irresponsible, Mr. Chairman. It is poor management. It ignores the reordering of transportation priorities that are necessary to respond to the energy crisis, to increased needs for mass transportation, particularly by rural residents of this country, and it should be rejected outright by this subcommit- tee, and I hope by the Congress. Mr. Chairman, I would like to have my complete statement included in the record. Senator Long. By all means. [The statement follows:] PAGENO="0011" 4 STATEMENT OF HON. HARRISON ScHMIrr, U.S. SENATOR FROM NEW MEXICO Mr. Chairman, I believe in two principles relative to the railroads: first, passenger rail transportation is an essential component of a national rail transportation network for the use of the American public; second, modern technology and modern management techniques can provide this nation with an economical high-quality passenger rail system. The question is how to provide for an expansion and improvement of passenger rail service, not how to terminate such services for all except the favored few. As the sponsor of the resolution of disapproval, I am sorry DOT has made this confron- tation necessary. At a time when the use of our nation's energy resources has become a matter of critical national importance, it has been proposed that our potentially most energy- efficient form of passenger transportation be cut by some 43 percent. Because it can be electrified, rail is the only form of transportation that can be run without petroleum. But DOT has openly admitted that the possibility of an energy crisis was in no way factored into the proposal before the Congress. Proponents of the Amtrak cuts point out that they would reduce existing rider- ship by 9 percent. What they don't point out is that the savings generated amounts to only 8 percent of Amtrak's budget in fiscal year 1980. This is the same false economy used to justify other reductions in Federal services to rural areas of the country. This proposal also ignores what the route reductions do to potential ridership. The Amtrak system is in the process of being upgraded significantly with the purchase of new cars and the improvement of track. Ridership is expected to grow. These cuts drastically limit the capacity for future growth of Amtrak ridership, and, in fact, will in the long run reduce it. This move lays the foundation for future route reductions and opens the possibility for outright elimination of Amtrak in every area of the country save a heavily subsidized Northeast Corridor. It is interesting to note that in preparing the cost projections for the Amtrak system, DOT has completely overlooked the massive infusions of taxpayer dollars into the Northeast Corridor. If these funds were attributed to the corridor rather than to Amtrak as a whole, then these lines would clearly be the most inefficient lines in the system. The $1.75 billion Northeast Corridor project was to be complet- ed in 1981. Now the Administration tells us they will increase funding by 37 percent to $2.4 billion. So while the rest of the nation loses access to passenger train service to save money, the Northeast Corridor receives a $655 million increase in funding, another example of dubious economics. It is unfortunate that DOT has failed to take into account these and other factors in their development of a proposed "optional" passenger rail network. It is appar- ent, however, that the route terminations in the final proposal announced on January 31, 1979, are significantly different than those originally evisioned by DOT. The first Amtrak proposal announced in May, 1978, was a far more moderate approach which would have maintained a reasonable level of passenger train serv- ice in America. What happened to change DOT's perception of an "optional" system between May and January? The answer was provided by Charles Swinburn, Deputy Director of the Federal Railroad Administration, who stated recently that negotiations with the Office of Management and Budget resulted in a "compromise" that would allow for an Amtrak authorization of $552 million in fiscal year 1980. DOT then developed a new "optional" system within this ceiling. This arbitrary budgetary reorganization is hardly what the Congress had in mind when we directed DOT to prepare a recommendation, and this action raises questions as to who formulates national transportation policy: Congress or 0MB? Finally, I do not question the possible need for some restructuring of Amtrak routes. But we must recognize that only 31 percent of Amtrak's costs are related to passenger transportation. As the ICC noted in its report on Amtrak of March 15, 1978, `Surprisingly, the cost to Amtrak of actual passenger transportation (includ- ing train crews, station agents, and onboard personnel) represents only 31.4 percent of Amtrak expenses, or $266.3 million of $847.9 million * * ** We are concerned that the share of expenses attributable to transportation is so low * * * even reductions in service over unprofitable routes would have a minimal impact on Amtrak's operating deficit, as the burden caused by transportation expenses is minimal. The proposed route restructuring is premature and should have been preceded by a significant Amtrak effort to reduce its non-transportation related costs. I know of no one who would argue that if we deregulated rail transportation and if we started all over with the investments in plant and equipment already made and created in PAGENO="0012" 5 a modern investor-owned corporation to run the passenger rail system, we would see a profit making, low cost, technically advanced, energy-efficient industry. I, for one, believe we should do this even if it means a high initial cost of compensation for those rail employees that would no longer be necessary to run this modern system. We even have at least one model for the transition from Federal management to invester-owned management in COMSAT, the Communication Statellite Corpora- tion. Hopefully, witnesses on March 12th will be able to provide insight into this possibility of a Passenger Rail Corporation and other real solutions to the problem addressed so inadequately by DOT. It is not enough for the subcommittee simply to veto the DOT proposal and allow the status quo to continue. Instead, I would recommend that the subcommittee work over the coming months to develop a rational, well though-out plan to reorganize Amtrak's management system which would reduce its existing operating expenses and increase revenues from greater passenger use. In 1977 Amtrak presented a plan to this Subcommittee which would have expanded the Amtrak network beyond a level Congress then though reasonable. Now DOT has recommended major surgery on Amtrak that will jeopardize the continued existence of passenger rail. Both of these approaches should be rejected as extreme. Since DOT has failed to make any sense whatsoever, this subcommittee must give firm direction to DOT to find the proper balance. To eliminate Amtrak routes all over the country before examining the alterna- tives is like amputating a patient's limb before a thorough diagnosis has been performed. The result may be needlessly crippling. We must remember that, once abandoned, passenger rail routes are not easily re- established, and the rail bed deteriorates rapidly and cannot be quickly restored. We must remember that, at present, some 84 percent of the American public lives within 50 miles of Amtrak services, but under the DOT proposal, this would decline to 65 percent. We can hardly call it a national rail network if it fails to serve over a third of the people, desperately in need of efficient, low-cost mass transportation. The proposal by DOT is irresponsible-it is poor management-it ignores the reordering of national transportation priorities that are necessary to respond to the energy crisis, and it should be rejected outright by this subcommittee and the Congress. THE CONTINUING PUBLIC MANDATE To IMPROVE INTERCITY RAIL PASSENGER TRAVEL-FINAL REPORT (By Louis Harris and Associates, Inc.) I. EXECUTIVE SUMMARY Amtrak in perspective.-About one year after Amtrak's first day of operation, Louis Harris and Associates conducted a national survey on public attitudes toward intercity rail passenger service-its then-present condition, its potential, and the possible role of government in rebuilding passenger rail service. The 1972 study found: A clear and decisive public mandate to revitalize inter-city passenger train travel, with a majority, 53 percent to 30 percent, believing that the federal government had a responsibility to improve long distance trains and an even larger majority-66 percent to 12 percent-feeling it was worth federal subsidies to continue to make inter-city train travel available. An extensive list of complaints and grievances about a rail travel system in seeming disrepair, with 62 percent of Americans agreeing that "train travel is just not what it used to be." An uncertain outlook for inter-city rail passenger demand, with 48 percent of the public expecting to travel less by train in the next few years than they do now, with only 15 percent expecting to travel more by train. Less than 1 in 3 Americans-31 percent-were familiar with Amtrak, and, those persons split almost evenly in rating Amtak's performance at that early stage, 40 percent positive to 42 percent negative. This less than enthusiastic evaluation of Amtrak's first year was coupled with the belief held by almost 2 out of 3 Americans-65 percent-that Amtrak "will be able to really improve the qualit1 of passenger service between cities," while only 21 percent felt it "really wouldn t have much effect one way or another." Amtrak today.-In February 1978, Amtrak again invited Louis Harris and Asso- ciates to conduct a national survey of public attitudes toward inter-city rail passen- ger travel and a public evaluation of the job Amtrak has done in attempting to revitalize the rail passenger system. The survey reveals that many Americans PAGENO="0013" 6 remain critical of the quality and availability of rail passenger travel and that cars and airplanes remain the preferred mode of transportation on trips 100 miles or more one way: A majority of Americans, 56 percent to 20 percent, still believe train service "is just not what it used to be," down slightly from 1972. When asked which means of travel would be their first choice if they were taking a trip of 100 miles or more one way in the next few weeks, 56 percent of likely travelers choose cars, 28 percent airplanes, 8 percent buses and 6 percent trains. Only 9 percent of likely travelers living in selected train corridors say they would choose a passenger train as their first choice. However, in several vital areas, Amtrak's prospects and public support look much more favorable today than they did six years ago. Almost twice as many people-57 percent-are familiar with Amtrak today than in 1972, when only 31 percent indicated familiarity with Amtrak. Amtrak's performance rating has jumped from 40 percent positive, 42 percent negative in 1972 to 55 percent positive, 38 percent negative in 1978 among those familiar with Amtrak. Amtrak's rating among persons living along five specially sampled train corridors is significantly higher than in the nation as a whole. More than 3 out of 5 persons familiar with Amtrak-62 percent-in these train corridors give Amtrak a positive rating. In the highly traveled Washington to Boston corridor, a pilot corridor, Amtrak's job performance rating is an even more positive 67 percent to 29 percent negative. One-third of Americans-33 percent-now expect to be traveling more by train in the next few years, while 23 percent expect to be doing less train travel. By contrast, in 1972 almost half of Americans-48 percent-expected to be traveling less by train in the next few years, and only 15 percent expected to travel more. Americans are generally optimistic that passenger train travel is turning the corner and will get better in the next few years. A majority of Americans-55 percent-believe train travel will get better in the next few years, while only 15 percent expect it to get worse. Moreover, of those Americans who are familiar with Amtrak, a majority-Si percent-say Amtrak has improved the quality of rail passenger service, while only 29 percent say Amtrak has not had much effect. The 1978 survey continues to find a clear and decisive mandate to upgrade rail passenger travel and mass transportation generally while finding less support for highway construction. This continued mandate is caused in part by concern over possible future energy shortages. An overwhelming majority of Americans-63 percent-say "providing comfortable trains that can cut travel time in half" is "very important," up from 56 percent in 1972. A majority of Americans-53 percent-want the federal government to spend more money to accomplish this goal. An almost as large majority of Americans-60 percent-want improvements in the quality and availability of rail passenger travel for trips 100 miles or more one way-up from 54 percent in 1972. More than half-Si percent-want the federal government to spend more money toward this end. The public's highest transportation priorities are improving auto safety, men- tioned as very important by 83 percent, and providing modern mass transportation for commuters between central cities and suburbs, mentioned as very important by 69 percent. Improvement in inter-city train service follows next. The public's enthusiasm about building new highways and express-ways has di- minished from 1972. Half of Americans today-SO percent-say new highways are very important, compared to 63 percent in 1972. More importantly, only 34 percent want the government to spend more money than is now being spent for highway construction, while 39 percent say the government should spend about the same, and 12 percent say the government should spend less. A major reason for increasing support for mass transportation is the nation's energy crunch. Americans, by 52 percent to 36 percent, believe the nation will face a real energy crisis in the next few years. Those who expect an energy shortage are more likely to support mass transportation and less likely to support highway construction than those who feel the energy problem is overstated. Only 54 percent of the public correctly choose trains (36 percent) or buses (18 percent) as the most energy-efficient forms of travel, while 19 percent say airplanes, and 12 percent say cars. Obviously, an intensive energy education program should be a national priority. Senator LONG. Senator Cannon? PAGENO="0014" 7 OPENING STATEMENT BY THE CHAIRMAN The CHAIRMAN. Thank you, Mr. Chairman. First, let me say to my colleague that it is very easy to talk profitability, but one can't talk profitability nor legislate profitabil- ity, if it isn't there. Last year Congress passed, and the President signed into law, legislation that required for the first time a full review of Amtrak's performance record and reevaluation of Federal financial support for Amtrak. The need for this type of reevaluation on the part of the adminis- tration and Congress was underscored by the ominous prospect that within 3 years Amtrak subsidy needs could exceed $1 billion for operating costs alone. The gap between Amtrak's revenues and costs had been steadily growing and the prospects for the future didn't look good. It was clear that the time had come for the Federal Government to take a close look at the costs and benefits of rail passenger service. The Amtrak Improvement Act of 1978 directed the Department of Transportation to study the Amtrak route system and to recom- mend a new system that would eliminate those trains that were providing little or no public benefit for the amount of money spent. In 1971, Amtrak's first year of operation, the annual subsidy was only $40 million. While some will make the point that this seed money was insuffi- cient for the job demanded, the fact remains that the subsidy has been steadily increasing each year to a point where in 1979 the operating subsidy alone amounts to $600 million. Since the creation of Amtrak the Federal Government has con- tributed more than $2 billion in operating grants, $500 million in capital grants and $900 million in loan authority to Amtrak. And what has been the net result of this investment? The railroad industry has spent a considerable amount of money in catching up on its deferred maintenance on their right-of-way, new service contracts have been renegotiated with the contracting railroads, schedules have been patterned and yet the on-time per- formance of Amtrak trains is getting worse. New equipment has been added to the system and yet the aver- age speed of Amtrak trains is less now than it was 30 years ago. And finally, with this investment and with the commitment to maintaining rail passenger service, the Federal Government is left with the hard fact that after 8 years of operations Amtrak is still carrying less than 1 percent of the traveling public. Regrettably, in 1978 Amtrak showed a decrease in passengers, with ridership falling below 19 million passengers. The point of this is to highlight the need for the Federal Govern- ment to continually monitor the performance of programs like Amtrak to assure that the American taxpayer is receiving benefits in some reasonable proportion to the level of Federal spending. We must continue to evaluate the Federal investment in Amtrak in light of the realities of the marketplace. We simply can't allow the present route system to drain the resources of the Federal Government nor can we wait another 8 years before we take a close look at Amtrak's performance. PAGENO="0015" 8 The DOT has made a diligent effort to study individual perfor- mances and to recommend a new system that eliminates unneces- sary and costly route miles. The Department's plan eliminates 43 percent of the route miles, yet it maintains service to 91 percent of the present passengers. The overall effect of this necessary reduction is to both cut costs and to allow Amtrak management to concentrate its efforts on a smaller system. If costs can be contained, if the quality of service can be im- proved, and if revenues can be increased, the potential exists to improve upon the new route system. But make no mistake about it, on its present course, if Amtrak's route structure is not reduced to a more manageable level, the alternative may well be the total elimination of the system. That is a situation that I hope will not come to pass and a situation I believe can be avoided .through a smaller and more logical route structure. I thank you, Mr. Chairman. Senator LONG. If there are any other Senators who wish to make a statement, I will be glad to recognize them. Senator ScHMrrr. Since the distinguished Senator from Nevada directed some of the comments to me, I would add my complete agreement with his diagnosis of the problems of the system. But I would have to disagree if he says there can't be a nominal rail transportation system in this country. It's just that Amtrak is not that system. We have to find out what is that system. Senator LONG. I hope we will save that debate until the hearings have been concluded. Both Senators had a prepared statement and I don't think that his statement was directed toward yours. All right, now, we will be pleased to hear from Senators Leahy and Stafford. However you gentlemen want to proceed. Senator STAFFORD. We are almost always in agreement. STATEMENT OF HON. PATRICK J. LEAHY, U.S. SENATOR FROM VERMONT Senator LEAHY. Mr. Chairman, my senior colleague has given me the honor of going first. I appreciate that, and want to ask permis- sion to put not only my full statement, but also certain addenda to it, and figures in the record. My great concern for the impact the proposed cuts will have on rural areas has been eloquently expressed by Senator Schmitt al- ready. Senator LONG. Without objection, that is agreed. Senator LEAHY. I would like to highlight a couple of points. We talked about Amtrak policy. We talked about a national rail trans- portation system. But they are a policy and system that were supposed to be designed by the Congress and were supposed to represent national policy in the form of representation of the Government. Congress, not the Executive, is responsible for creating national policy. Elected officials and not political appointees were entrusted with this task because we have a direct responsibility to the people of this Nation, our constituents. PAGENO="0016" 9 This basic constitutional requirement has been ignored. In this case by 0MB who directed DOT as to how much money they could spend and how, and as a result directly determined what kind of a system they were going to recommend. The DOT plan represents an Executive power play designed to usurp the constitutional delegation and separation of power. Make no mistake, with DOT and 0MB deciding how much they would spend on an Amtrak system, they were declaring national policy, not the Congress. In addition, once they decided which trains would run and which would not, they also decided how much Congress should spend on Amtrak next year. They were clearly attempting to dictate a national transporta- tion policy which would have a direct impact on our lives, and the lives of our children well into the next century. Mr. Chairman, the DOT is foisting their proposal on our country at a time when the call for cutting the budget is popular and easy. Certainly, budget cutting is something I agree with as a member of the Appropriations Committee. Cutting the budget, however po- litically expedient it might be at any time, is not always sensible. DOT is taking advantage of this money conscious mood and using it as a smokescreen to cripple our national passenger rail system. That is exactly what DOT is doing in this case. If 43 percent of the lines are abandoned as proposed by the agency, those tracks are going to deteriorate rapidly and will become irreparable. It will happen at a time when we are facing continuing fuel crises in this country. Now, besides the folly in false economics and poor policy, I have to admit to a personal gripe with the DOT. The DOT proposed Amtrak route structure calls for the termina- tion of the only passenger rail system serving northern and central New England. That train, the Montrealer, is Vermont's only passenger rail service. Obviously, I have parochial interests in keeping my State's only train, but I believe the story of the Montrealer and how it was treated in the DOT study highlights general problems with the study and the inequitable way in which DOT treated those who rely on the Montrealer. When he talked about cutting back the system last May, Secre- tary Adams stated publicly that the Montrealer and Southern Cres- cent were the last two trains left out of his recommended system. In last May, the Montrealer was recommended for continuation. Following that, in conformance with congressional instructions, the Rail Services Planning Office of the ICC held public hearings on the proposed route system. Again, pursuant to congressional intent, affected areas were al- lowed to be heard. There were no public hearings in Vermont. Neither I nor any other Federal or State official was notified or even consulted. No attempt was made to either mitigate the train's expenses or determine its impact on-or popularity in the region-popularity PAGENO="0017" 10 which is demonstrated by stacks of petitions like the one I hold here from Vermonters all over our State. We had no idea the Montrealer was in jeopardy until a few days before the Secretary announced the system he has recommended to Congess. The Montrealer was one of if not the last train, left out of the system. It's a darn good train. Based on the technical criteria used by DOT, the Montrealer is superior to many trains they are leaving in. The incremental direct operating costs of the Montrealer north of Springfield-they intend to go to Springfield-were equal to or less than the incremental revenues. That is comparing direct out-of-pocket costs with revenues the train actually could be operated at a surplus beyond to point where it will now be stopped. It's thriving. In the face of the overwhelming evidence, I am outraged, I really am, by DOT's proposal to abandon this service. The excellent cost performance, as our figures will show, was achieved despite excessive costs of operating the train in Canada. To add insult to injury, DOT recommended terminating the Mon- trealer without benefit of public hearings or an opportunity for the train's supporters to present evidence. It's too late for DOT to correct its error. We met with Secretary Adams last week. It's quite possible their figures are so much in error that had we had a chance to even tell our side of the story, we could have gotten them to make a different decision. We probably could have kept the Montrealer in. But now it's too late. And they apologized. They say that since no hearings or notice were provided for the Montrealer, that if their figures turn out to be wrong, their Department might apologize. Well, I don't want an apology. I want our Montrealer left in. I would also like to share with the committee a letter sent to DOT this morning signed by 11 of the 12 New England senators calling upon DOT to supply their figures, and a detailed justifica- tion of their proposal to discontinue the Montrealer. Mr. Chairman, I have a lot more that I would like to go into but having sat at enough of these hearings, I know how long this might go on. But I just want to emphasize that our figures are far more favorable to the Montrealer than DOT's. Had DOT even had the common decency of allowing us to present those figures at the time they were making their decision, we might have changed this decision. I hope that the committee will have a chance to observe all the facts in this case. I yield to my senior colleague. [The statement follows:] STATEMENT OF HON. PATRICK J. LEAHY, U.S. SENATOR FROM VERMONT Mr. Chairman and members of the committee, I appreciate this opportunity to appear before you on what I consider one of the most crucial issues before the Congress today, Congress' deliberations on this year's Amtrak's authorization bill and our decision to accept or reject DOT's proposed basic route structure for Amtrak will determine what role rail passenger service will play in meeting this PAGENO="0018" 11 country's inter city transportation needs not only for next year, but for the next decade and indeed the next generation. I believe that rail passenger service will prove to be one of the key components of this country's transportation system in the near future. It can be the efficient, economical and dependable service which will attract and retain users. It is the most energy efficient mode of transportation available. The daily changes of our present makes it impossible to adequately predict the future, but from what we do know and what we can assume, rail passenger service can be a winner. It isn't now and it is not my intention to pretend otherwise. Amtrak has not accomplished all that was hoped for when it was created in 1971. But then, a sincere commitment to rail passenger service has also not been supported either in the agencies or in Congress. I do not want to defend wanton Federal spending or unnecessary $100 million programs. However, we cannot abrogate our responsibilities while we examine our expenditures. We cannot be so shortsighted as to fail to realize that the short-term solution of a lower Federal subsidy this year, might well be saddling our children's generation with much more serious, and expensive, transportation problems in the future. The Amtrak subsidy must also be considered against the Federal subsidies other transportation modes receive. For example, we do not know how expensive an airplane ticket would be if it included the cost of FAA air controllers, the cost of operating the airports themselves, and the other Federal largess which is absolutely crucial to the air industry's survival, but is never listed as a budget line subsidy item. I understand that a report on these costs for all transportation modes is being prepared and should be available in about 1 month. I for one, will be most interest- ed in reading that report and urge all my colleagues to do the same. Last year the Congress instructed DOT to recommend "an optimal intercity railroad passenger system * * * ". A procedure was developed for a preliminary report, public hearings and then a final recommendation. Nowwhere in these con- gressional deliberations was DOT told that the Congress wanted the system to meet a specific cost requirement. No dollars were discussed, no minimums, no maximums. The instruction was clear-DOT was to design the optimal system. Somewhere alone the way things got confused. Instead of responding to this congressional instruction, DOT, in cahoots with the Office of Management and Budget, arbitrarily selected a figure, $552 million in operating subsidy, and designed a national rail passenger system within that figure. This is not only unresponsive to the congressional request, it raises serious political and legal questions as well. Congress, not the executive, is responsible for creating national policy. Elected officials, not anonymous bureaucrats or political appointees, were entrusted with this task, because we have a direct responsibility to the people of this nation, our constituents. This is a basic constitutional requirement. It is not to be ignored, bypassed, or forgotten. However, this DOT plan represents an executive power play designed to usurp the constitutional delegation and separation of power. Make no mistake, when DOT and 0MB decided how much they would spend on an Amtrak system, they were declar- ing national policy. In addition, once they decided which trains will run and which will not, not only have they decided how much we the Congress will spend on Amtrak next year, they are attempting to dictate a national transportation policy which will have a direct impact on our lives and the lives of our children well into the next century. By reducing Amtrak by 43 percent, by allowing over 10,000 miles of usable track to quickly deteriorate to a stage where future use becomes economically prohibitive, by raiding Amtrak's capital account for nearly $100 million to cover labor protec- tion costs, and by making false and empty promises to have new lines ready to replace the existing lines they have decided to terminate, DOT is attempting one of the biggest political fast shuffles I have witnessed in years. The transportation needs of our country, although not a politically exciting proj- ect, is crucial to shaping the future. Although we know it works sort-of-sometimes, rail passenger service has never been truly tested. Every other developed country has made a commitment in time, money, and priority which puts our efforts to shame. It is clear that DOT's proposal, if it is accepted by the Congress, will eliminate rail passenger service as a major component in meeting our present and future transportation needs. That is a big decision. And I believe it is one too big for DOT to make through administrative fiat. When Congress instructed DOT to recommend the optimal railroad passenger system, we asked that the route structure be based upon current and future market PAGENO="0019" 12 and population requirements. In addition, the Secretary of DOT was told to consider- First, any unique characteristics and advantages of rail service as compared to other modes of transportation; Second, the role that rail passenger service can play in helping meet the nation's transportation needs while furthering national energy conservation efforts; Third, the relationship of benefits of given services to the cost of providing such services, computing the costs in loss or profit per passenger mile rather than total loss or profit per route; Fourth, the transportation needs of areas lacking adequate alternative forms of transportation; and Fifth, frequent alternatives and the impact of such alternatives on ridership, revenues, and expenses of rail passenger service. I have read the DOT preliminary report. I have read the contradictory final report. I do not believe the agency has fulfilled the congressional mandate. The Deparment of Transportation is foisting this proposal on our country at a time when the call for cutting the budget is popular and easy. Cutting the budget is politically expedient, but not always sensible. DOT is taking advantage of this money-conscious mood and using it as a smokescreen to crippple our national passenger rail system. By now we are also acutely aware of our responsibility to cut the budget, because our constituents demand lower taxes and inflation is fueled by government spend- ing. Passenger rail systems are an easy target, but will we save money in the long run if we show a quick reduction in costs now? I would like to elaborate on three points of economy with regard to the transpor- tation study of Amtrak. If 43 percent of the lines are abandoned as proposed by the agency, those tracks will deteriorate rapidly and become irreparable. The Department of Transportation recommends that a number of new lines be added, and estimates of contract costs paided to private railroads for this run as high as $100 million, and yet DOT has allocated only $10 million. Labor contracts for existing lines set for nonrenewal contain labor protection clauses which will cost an estimated $69 million out of Amtrak capital expenditures next year alone and may total nearly $100 million within 4 years. Besides the folly in false economics and poor policy, I have to admit to a personal gripe with the Transportation Department. The DOT proposed Amtrak route struc- ture calls for the termination of the only passenger rail system to northern and central New England. That train, the Montrealer, is Vermont's only passenger rail line. While I have obvious parochial interests in keeping my State's only train I believe the story of the Montrealer and how it was treated in the DOT study highlights general problems with the study in adddition to less than equitable treatment for those people who rely on the Montrealer. Secretary Adams has stated publicly that the Montrealer and the Southern Cre- sant were the last two trains left out of the recommended system. In fact, in the Deparment's preliminary report last May, the Montrealer was recommended for continuation. Subsequent to that May Report and in conformance with congression- al instructions, the Rail Service Planning Office of the ICC held public hearings on the proposed route system. Again, pursuant to Congressional intent, affected areas were allowed to be heard. There were no public hearings in Vermont. Neither I nor any other federal or state official was notified or consulted. No attempt was made to either mitigate the train's expenses or determine its impact and popularity in the region. We had no idea that the Montrealer was in jeopardy until a few days before the Secretary announced his plan at a press conference and submitted it to the Con- gress thus triggering the approval period and freezing the plan from any modifica- tions. The Montrealer was one of if not the last train left out of the system because it's a darn good train. In fact, based on many of the technical criteria DOT used to rate trains, the Montrealer is superior to many of the trains DOT recommended for continuation. If the train was such a good performer I began to wonder why DOT wanted to scrap it. My investigations turned up a startling fact-DOT used a methodology for evalu- ating the Montrealer which was both inappropriate and inaccurate. What DOT has proposed in the final plan is the elimination of the Montrealer service north of Springfield, Massachusetts. What they evaluated in their study was the costs and benefits of eliminating the entire route. PAGENO="0020" 13 Based on this faulty methodology, DOT could not possibly have had any concep- tion of the cost impacts of their proposed action. Lacking this essential information, my staff conducted extensive research, and their findings produced revealing results which I will only mention briefly here. The fact is that in fiscal year 1978, the incremental direct operating costs of the Montrealer north of Springfield were equal to or less than the incremental rev- enues. That is, comparing direct out of pocket costs with revenues, the train may have operated at a surplus north of Springfield. Furthermore, by continuing past Springfield, the loss per passenger mile of the entire route was more than cut in half. If the train had actually stopped in Springfield, as DOT now proposes, the loss per passenger mile for the route would have soared from 15 cents, to an out outrageous 34 cents per passenger mile. I could go on and on with similar statistics. But the point is that DOT made no attempt to break out the costs and revenues north and south of Springfield, and as a result, they proposed the elimination of service along the most profitable Mon- trealer's route. I would like to submit the Montrealer performance charts for the record. Revenue alone was up 27 percent north of Springfield in 1978, and it was up another 21 percent already in the first two months of fiscal year 1979. The fact is that ridership north of Springfield is growing faster than on any route in the entire Amtrak system. In the face of overwhelming evidence that the Montrealer is thriving north of Springfield, I was and an outraged by DOT's proposal to abandon this service. What is more, the excellent cost performance I briefly summarized was achieved despite the excessive costs of operating the train in Canada, and without accounting for the positive impact of continued ridership and revenue gains. To add insult to injury, DOT recommended terminating the Montrealer without benefit of public hearings or an opportunity for the trains supporters to present evidence on its need and use. DOT also failed to make any effort to analyze the Montrealer's expenses to determine if the train's performance could be improved. This is especially significant when you consider, for example, the inflated Montreal terminal, Canadian customs and immigration, and Canadian National contracts. All are obviously bad deals which might have been renegotiated. The analysis and effort I would have expected DOT to give the Montrealer is not out of line with some of the efforts DOT made to justify some of the trains recommended in the system. DOT has kept trains by projecting and assuming improved performance based on line consolidations and improving service with Amfleet and Superliner cars. In effect, they have weighed assumption and conjecture against the Montrealer's demonstrated performance, and have ruled in favor of conjecture. This entire situation has disturbed me and my fellow Vermonters. I met with Secretary Adams last week and after that meeting I remained disturbed. My staff met with DOT personnel to go over the Montrealer figures for over three hours last Friday and after that meeting I still remain disturbed. The Montrealer got a bad deal from DOT. New England and Vermont got a bad deal. I remain disturbed. It is too late, of course, for DOT to correct its error. At my meeting with Secretary Adams last week one DOT official suggested that since no hearings or notice was provided for the Montrealer and if DOT's figures turned out to be wrong, the Department might apologize. Well I for one don't want DOT's apology-I want the Montrealer. Therefore I urge this committee to include specific authorization provisions which will expand the proposed Amtrak route structure to include proven winners such as the Montrealer. I know this committee wishes to avoid the potential "christmas tree" problem of adding specific trains to the system because of political pleas or pressure. I share your concern, but I believe there is a way to improve on DOT's recommended structure and not open a Pandora's Box. Add trains based on their performance records. Authorize the funds to be available on a priority basis and insure that it is a substantive standard of performance which determines which trains will be added. Please do not allow DOT's truncate system to close down viable railroad lines this year when all the evidence points to our need for them in the future. I would also like to share with the committee a letter which was sent to DOT this morning. This letter, signed by 10 of the 12 New England Senators, calls upon DOT to supply the figures and detailed justification which went into their decision to propose terminating the Montrealer. 43-139 0 - 79 - 2 PAGENO="0021" 14 Vermonters fought hard to get the Montrealer running in 1972. We fought hard in 1975 when an effort was initiated to cut the line. We have shown the train is a winner. We have shown it has the support and use necessary to justify its expenses. DOT ignored everything favorable to the Montrealer. They denied our right to a public hearing. They juggled their own criteria to add trains less profitable than the Montrealer and then they presented their "deal" in a manner which they believe locks in their position. Well, I'm only a single Senator, but I intend to fight this one right down to the last bell. PAGENO="0022" Route Name - The t'Iontrealer Basic Route Actual Montrealer Actual Montrealer Data FY 77 FY 78 Passenger Passenger Miles Revenue Avoidable Cost Fully allocated Cost Avoidable loss Fully Allocated Loss Revenue! PM Avoidable Cost/PM Avoidable Loss/PM Avoidable Loss/Passengers PM/TM Train Miles Loss (Revenue-fully Allocated cost)/PM Subsidy/Fully Allocated Cost 349,000 70,483,000 $ 5,253,000 $ 9,852,000 $18,405,000 $ 4,599,000 $13,152,000 $ 0.0745 $ 0.1397 $ 0.0652 $ 13.17 144 620 $ .186 $ .71 346,000 72,811,000 6,081,000 9,741,000 17,447,000 3,660,000 11,366,000 0.084 0.133 0.05 10.57 148 670 .156 .65 C)1 PAGENO="0023" N Route Name - The Montrealer Basic Route Data Passenger Passenger Miles Revenue Avoidable Cost Fully allocated Cost Avoidable loss Fully Allocated Loss Revenue/PM Avoidable Cost/PM Avoidable Loss/PM Avoidable Loss/Passengers PM/TM Train Miles Loss (Revenue-fully Allocated cost)/PM Subsidy/Fully Allocated Cost Actual Montrealer FY 77 349,000 70,483,000 $ 5,253,000 $ 9,852,000 $18,405,000 $ 4,599,000 $13,152,000 $ 0.0745 $ 0.1397 $ 0.0652 $ 13.17. 144 620 $ .186 .71 Actual Montrealer FY 78 .346,000 72,811,000 6,081,000 9,741,000 17,447,000 3,660,000 11,366,000 0.084 0.133 0.05 10.57 148 670 .156 .65 2/Moncrealer North of Springfield 1978 (escimateI~.._ 117,000 48,528,000 3,900,000 *3,361,000 6,919,560 * -538,190 3,019,560 0.08 * 0.069 * -0.01 * -4.60 215.13 .309 0.06 0.43 2/ Figures for Montrealer north of Springfield show the incremental direct costs and revenues resulting from running the Montrealer from Springfield, Massachusetts to Montreal, in 1978. *Avoidable costs include estimates of all direct expenses, including costs of operating in Canada, but do not include a share of the systems support or overhead costs. PAGENO="0024" Route Name - The Monti-ealer Basic Route Data Actual Montrealer FY 77 Actual Montrealer F? 78 3/Montrealer North of Springfield 1978, (estirnar~ nf ~vnid `r~'zt-~ Passenger Passenger Miles Revenue Avoidable Cost Fully allocated Cost Avoidable loss Fully Allocated Loss Revenue / PM Avoidable Cost/PM Avoidable Loss/PM Avoidable Loss/Passengers PM/TM `rrain Miles Loss (Revenue-fully Allocated cost)/PM Subsidy/Fully Allocated Cost 349,000 70,483,000 $ 5,253,000 $ 9,852,000 $18,405,000 $ 4,599,000 $13,152,000 $ 0.0745 $ 0,1397 $ 0.0652 $ 13.17. 144 620 $ .186 $ .71 346,000 72,811,000 6,081,000 9,741,000 17,447,000 3,660,000 11,366,000 0.084 0.133 0.05 10.57 14 8 670 .156 .65 117,000' ,48,528,000 3,900,000 4,428,568 6,919,560 528,568 3,019,560 0.08 0.09 0.01 4.51 215.13 309 0.06 0.43 3/ These figures show the incremental costs of operating the Montrealer north of Springfield, Mass in Fy 78. Avoidable costs include 307~ of support or overhead associated with the operation ot this stretch of track. NOTE: The incremental figures north of Springfield are certainly among the best in the Amtrak system, but would certainly be better if 1) the Canadian costs were successfully renegotiated, and 2) the revenue figures for FY 79 were up 2l7~, as they were during October and November of FY 79. PAGENO="0025" 18 U.S. SENATE, COMMITFEE ON APPROPRIATIONS, Washington, D.C., March 5, 1979. Hon. BROCK ADAMS, Secretary of Transportation, Department of Transportation, Washington, D.C. DEAR MR. SECRETARY: As Senators representing the New England region, we are greatly concerned with DOT's recommendation to eliminate Amtrak's Montrealer service. You are no doubt aware of the tremendous popularity and high ridership of this train. To be honest, we see little justice in describing as "optimal," any route system which does not include the Montrealer. If you had doubts about the viability of this route, or its importance to our region, we feel confident that New England's residents and businesses could have removed them had you given them an adequate opportunity to present their case. Since we feel DOT's explanation of the proposed elimination of the Montrealer has to date been incomplete and inadequate, we would greatly appreciate your sending us a more detailed explanation of the policy decisions and cost consider- ations that led to DOT's decision to abandon this service. Specifically, we are interested in a detailed explanation of how DOT applied the relevant criteria, established in Section 4(a) of the Amtrak Improvement Act of 1978, to its evaluation of the Montrealer service. In our view, an optimal rail passenger policy should encourage and improve, not abandon, those routes which have in the past demonstrated a strong potential for success. Sincerely, Patrick J. Leahy, William S. Cohen, John A. Durkin, Edward M. Kenne- dy, Claiborne Pell, Robert T. Stafford, Edmund S. Muskie, Paul E. Tsongas, Abraham Ribicoff, Lowell P. Weicker, Jr. STATEMENT OF HON. ROBERT T. STAFFORD, U.S. SENATOR FROM VERMONT. Senator STAFFORD. Thank you, Mr. Chairman and distinguished members of the subcommittee, for giving me this opportunity to join with Senator Leahy to testify in support of the pending resolu- tion to reject the drastic reductions in rail passenger service pro- posed by the Department of Transportation. My colleague from Vermont, Senator Leahy, has ably made the statistical and economic case for retention of Amtrak's Montrealer passenger train service into and through Vermont. I want to associate myself fully, and I might say enthusiastically and emphatically, with Senator Leahy's testimony in this record. It is ironic, I think, that Transportation Secretary Brock Adams has proposed to lop off 43 percent of the energy efficient rail passenger service operated by Amtrak at about the same time that Energy Secretary James Schlesinger is warning the Nation we may have to restrict the sale of gasoline because of events in foreign oil producing nations which are liable to make us petroleum short in this country. So, as I understand it, at the root of Secretary Adams' proposal is an effort to save taxpayers $280 million a year over the next 5 years in Federal subsidies to Amtrak. Now, $1.4 billion in saving over a 5-year period is a lot of money, especially to somebody from Vermont, but that figure surely pales in comparison, Mr. Chairman and members of the committee, with Federal subsidies to highway transportation, to say nothing of the cost of high-priced and, possibly, scarce gasoline used inefficiently in private automobile travel. PAGENO="0026" 19 Apparently, we have quickly forgotten the lessons we learned during the oil embargo of 1973 and 1974. I can only hope that the events that have brought us together here today will serve to give us another chance, while we still have time, to learn those lessons anew. Clearly, it is time to recognize we should not scrap our railroads, but, rather, that we should be doing all we can do to improve them and to encourage more Americans to ride them. It is my view Congress made the right decision in 1970 when it created the National Railroad Passenger Corporation, known as Amtrak. Our only error had been that we haven't done enough to increase ridership and to reduce our Nation's energy consumption. My old friend Brock Adams is a wise and good man and an able Secretary, but he is dead wrong, Mr. Chairman, in this instance. I don't know what prompted him to approve the report that would do so much violence to our national rail network. It seems to this Senator that the Secretary is marching to the beat of a different drum than that when we served together in the House of Representatives. Amtrak critics tell us that Americans simply won't ride trains, and that trains are transportation dinosaurs whose time has come and gone. I don't believe that, Mr. Chairman. I believe that we can, indeed that we must, develop a rail passen- ger network that will be an important part of a balanced national transportation system. Almost everyone else in the world had been able to do that. I know that trains that run with only a few passengers are not energy efficient. The answer is not to shut down the trains, but to improve their service to attract more Americans to ride them. Actually, more Americans have been riding the trains recently. Traffic was up 7.5 percent in December of this year over December of 1977. That increase suggests that rail passenger service can attract more patrons if we direct our national will to that end. Surely it would be in our national interest for the Federal Gov- ernment to adopt policies and to make investments that, over the long haul, would encourage a shift from private automobile travel to travel by trains for trips between cities. For, surely, if the time ever comes when events and forces beyond our control require that we have a working rail system, it will cost us, Mr. Chairman and members of the committee, a lot more than $280 million a year to replace a rail network that we have allowed to dissolve into rust. Thank you, Mr. Chairman. Senator LONG. Thank you very much. Any questions, gentlemen? Senator ScHMIVr. I would congratulate our two colleagues for excellent statements. I couldn't agree with them more. We also were not consulted. I think even if DOT is right, the courtesy of consultation might have been exercised. However, they are not right. It is false economy in almost every respect, not only with respect to the Montrealer, but also the Southwest Limited and every other example I have studied. They are eliminating some of the most efficient routes in the whole PAGENO="0027" 20 system in order somehow or another, to make the rest of the system more efficient. I don't understand that. HUD tried it. It is doing it in their own activities. It seems to be a symptom of the Government. I thank you for your statement. Senator LEAHY. If I could take 30 seconds more, tomorrow, in Vermont, is town meeting day. The whole State will come to a halt and everyone will go to their individual towns. It is democratic government and at its finest. Participatory government at its best. With that tradition, Vermonters are doubly incensed at this, that they never ever had a voice in the decision, never had a chance to even be heard on it. As long as that kind of policy takes place in government, it is absolutely wrong. Senator LONG. Thank you for your statements, gentlemen. Next, let me call Senator John Melcher. I believe the Senator will be expressing the views of both himself and his colleague, Senator Baucus. STATEMENT OF HON. JOHN MELCHER, U.S. SENATOR FROM MONTANA Senator MELCHER. That is right. My colleague, Senator Baucus, is in Montana and doing some of God's work in protecting some military installations out there. I am happy to be here to testify on some more of God's work. I appreciate this opportunity to appear before this subcommittee upon which I had, until recently, the good fortune to serve. Through my testimony this morning, I hope to provide some of my feelings which I would have otherwise provided as a committee member. I know this subcommittee has a full agenda. Therefore, I will be as brief as possible. On February 27, 1979, the Senate Committee on Energy and Natural Resources, of which I am now a member, began a series of hearings on the current oil supply situation. These hearings were prompted by the recent curtailment of oil production in Iran. While the impact of the Iranian developments has thus far been cushioned by production increases of other countries and a draw- down of petroleum stocks in the United States, the Iranian curtail- ment nevertheless clearly illustrates the vulnerability of our Na- tion's passenger transportation system. The simple fact is that our Nation is not energy independent. Because of our dependence on foreign oil sources and our inability or unwillingness to guarantee these sources, a major portion of this Nation's passenger transportation system could come to a rather abrupt halt. Obviously, those who cannot obtain or afford the fuel will need to seek out an alternative transportation mode, one of which would be Amtrak. This was certainly the case during the last oil embargo, when the Amtrak system had more customers that it served. By this, I do not mean to say that I subscribe to the belief that Amtrak be continued simply as a backup transportation mode. To the contrary, I believe that Amtrak not only can, but will become an ever-increasingly viable and competitive passenger transporta- tion mode. Just what can and should be done to assure this viability? PAGENO="0028" 21 One, instead of cutting out service totally to certain points, I think it would be advisable to keep much of the present route structure as is and revamp the Amtrak schedule. For example, in Montana, under the Secretary's final report, the restructured system will continue the operation of the Empire Builder. The Secretary's option seems to have been to choose be- tween the retention of either the North Coast Hiawatha or the Empire Builder. The Empire Builder's retention vis-a-vis the North Coast Hiawa- tha was premised on the lack of alternative forms of transportation for persons served by the Empire Builder. Additionally, the degree of isolation caused by weather amplified the Empire Builder's case. Both routes, however, serve as feeders to either Glacier National or Yellowstone Park. The Empire Builder was chosen despite the fact that the Hiawatha services the more highly populated portion of Montana and consequently generates more passengers. I do not feel that the decision that was made should have been an either/or proposition between the State's two routes. By alter- native scheduling of Amtrak trains on both routes, service could be sustained on each route and a larger system consequently pre- served. By preserving the larger route structure, continued loyalty and reliance can be maintained by a greater number of people on Amtrak. If a sufficient number of these people have the discretion as to their arrival and departure, increased capacity utilization will surely result. If a larger system can be maintained, such a system will more easily absorb or expand to serve a rapid increase in ridership caused by another gasoline shortage. Two, I think most agree that Amtrak's own ticket pricing system needs to be reviewed and any problems corrected. Three, strong congressional oversight is needed to insure that Amtrak provides an acceptable level of service as to encourage utilization of its services rather than generating the complaints now synonymous in congressional circles with the word Amtrak. Four, market dynamics of the immediate fuel price increases that the country is to endure will encourage people to utilize mass transportation systems. While I have no chart to substantiate it, I nevertheless doubt whether anyone would dispute the fact that, of the rate of increases of future costs for operating the different modes of transportation, those for rail will surely be the lowest. Consequently, at some point in the future, the Amtrak system will simply have to be economically competitive. Finally, we all have heard the arguments, pro and con, regarding the different subsidies provided the various transportation modes. I daresay with assurance, that the amount of subsidy provided Amtrak over its rather brief existence cannot compare to those funds provided its competitors. With perspective of a longer time- frame, it is easy to see that, compared to the other modes, Amtrak is still in its infancy. The up-front money we are providing today is no different than the injections provided in the past to other modes. Therefore, I feel the committee should operate with its eye on the historical per- spective. PAGENO="0029" 22 I close, Mr. Chairman, with a request. I hope the committee will require of DOT and DOE an energy impact analysis as to the amount of gasoline expected to be needed to transport those who could no longer be afforded Amtrak service and would seek service elsewhere. Second, it is my understanding from the briefing the DOT held for Senate staff, that the Amtrak structure in the final report does not embody the optimal Amtrak structure. I realize that the Secre- tary could hardly forward to Congress a final report which does not comply with the administration's budgetary limitations. Nevertheless, I would think that it would be critical for the members of the committee to have the opportunity of analyzing the optimal route structure which might otherwise have been brought forward. Finally, Mr. Chairman, I hope the subcommittee will send to the full committee the resolution of disapproval introduced by Senator Schmitt that I have cosponsored and that the full Senate be given the opportunity to work its will on this most important national policy decision. Senator LONG. Thank you. Any questions? Senator MAGNUSON. Senator, in going all the way from Fargo, N. Dak., going through North Dakota and Montana, you hit Spokane, and the road divides there, too. I wonder if people realize the distances between the two routes in North Dakota and Montana. When the statement is made that they might shift some of these passengers that are on the Hiawatha to the Empire Builder, they are talking about shifting people 300 and 400 miles. Senator MELCHER. That's right. Senator MAGNUSON. When there is nothing in between. Senator MELCHER. Nothing in between. The routes as they exist now have a spread between them of 300 and 400 miles. Senator MAGNUSON. 300 and 400 miles in between-the two roads do go pretty much apart there. Then the same thing is true in the State of Washington, where they come to Spokane and converge in Spokane, and then the Northern Pacific, Great Northern, then they move out the same way. You are talking about great distances between the two routes. I don't see how the argument that cutting out the Hiawatha, which in your case-well, in our case it is the northern, in your case the southern-would encourage people to go 200, 300 miles to get on the Empire Builder. They are better off going straight, parallel, driving themselves to where they were going without going up to catch a train. I don't buy that argument at all. I think the Empire Builder has to stand on its own feet; the Hiawatha, too. That is the way the railroads were built out there. It is still the best way to come from Chicago to the West Coast. Senator MELCHER. The Hiawatha, that serves southern Mon- tana-people in southern Montana can't be served by the Empire Builder. It is too far apart, as you said. The same is true in North Dakota. The same is true as it reflects on northern Wyoming, which out of the Hiawatha does get some service. PAGENO="0030" 23 Senator MAGNUSON. The same is true to a certain extent from Spokane to Seattle. Senator MELCHER. Yes. Senator DANFORTH. Senator Meicher, you suggested we examine other modes of transportation. With respect to comparing the rela- tive subsidies that we give the other modes, what modes would you suggest we make a comparison with? Senator MELCHER. The airlines, whose subsidy now is reduced- about $70 million last year. It keeps going down. Just envision what the up-front money was in years past for the airlines-in the 1950's in the 1940's-and compare it in those dollars as compared to 1979 dollars. Senator DANFORTH. Anything other than airlines? Senator MELCHER. From the railroad standpoint-I don't want to get in the middle of this argument-but from the railroad stand- point they feel that bus lines, through building the Interstate System, have been subsidized greatly. Bus people say that isn't true; they pay their way. And I just don't want to get in the middle of that argument. I know, from my own standpoint, I think we subsidize all public transportation. I think it is proper. If the chairman of this subcommittee advanced again, as he did last year, the idea we do something about bus terminals, I am for it. I think some help along that line is good. I just think it is in the Nation's interest to make sure you have all the forms of a transportation system. Senator DANFORTH. Would you suggest we compare the relative subsidies for railroads, air transportation, bus transportation, and automobiles? Senator MELCHER. Well, we citizens are like the bus companies. Those of us that drive automobiles, as most Americans, we think w~ pay our way. I don't know whether we do or not. I don't think that is necessarily significant. But I do think you have to listen a bit to what the railroads say-that the buses, in their viewpoint, have been subsidized. I don't want to argue one way or another whether they have, but you have to look at their side of it. Senator DANFORTH. As we struggle to try to compare the relative subsidies, those are the modes of transportation that should be considered by us; right? Senator MELCHER. Yes. Senator DANFORTH. How should we make the comparison? It would have to be by passenger mile, wouldn't it-amount of subsi- dy per passenger mile? Senator MELCHER. Yes. Of course, in the case of airlines, where most of the subsidy was earlier, you are looking at not so many dollars at that time; but if you compare them now to what the value of the dollar is-- Senator DANFORTH. But we are concerned about next year's budget and the following year's budget, aren't we? It is too late to recapture what we have done in the past. What we have to consid- er, it would seem to me, is what we are obligating the Congress to do next year and the year after and the year after that on a per- PAGENO="0031" 24 passenger-mile basis by way of railroads as one option, buses as another option, automobiles as another option. Senator MELCHER. I would also draw to your attention that per- haps it is even more important to obtain from the Department of Transportation and the Department of Energy some background information they can project on what a gasoline shortage would mean in our transportation system, and whether or not Amtrak indeed, as I contend, does have a viable position there, and a very necessary one. Senator DANFORTH. There again the relevant question, it would seem to me, would be energy consumption per passenger mile. Senator MELcHER. Absolutely. Senator DANFORTH. As comparing one route versus another on the routes that would be discontinued. Senator MELCHER. Absolutely. I would point out to the committee a point I am sure you are aware of: With the lighter equipment and more modern equipment Amtrak is purchasing, we are prob- ably looking at a smaller fuel consumption cost per mile of passen- ger service. Senator DANFORTH. I think we are in agreement on methodology, but not on result. The Chairman. First, let me say that I agree with your basic claim that we must maintain an essential transportation system considering all modes in this country today. I think the question arises as to how far you go with the essen- tial issue, and to what extent in reference to the cost to the American taxpayer. I am wondering if the Montana delegation has asked the Depart- ment about a routing of the Empire Builder so it might cover the towns on the old Hiawatha route. Senator MELCHER. I am suggesting that that be a consideration. That suggestion is going to DOT as well as to this committee. The Chairman. Do you think that might be a possible alternative solution? Senator MELCHER. It is a possible one. I really don't like alter- nate-day scheduling; but if it is an alternate or nothing choice, it is obvious that the alternate day scheduling is preferable to no serv- ice at all. Senator MAGNUSON. Would the Senator yield? I was going to suggest that to the Secretary in the State of Washington where you have the same thing. As I said before, they converge at Spokane, and then they move a little like they move out in Montana. I am wondering how much thought was given to-if they will have just the one train-to alternating the routes north and south as they move back and forth. The Chairman. If an amendment were added to section 403(b) of the Rail Passenger Service Act clarifying that two or more States could apply for funding of State-supported trains, would this help the situation in Montana? Senator MELcHER. I am in favor of that as one possibility. The CHAIRMAN. I know you were active on that issue last year. PAGENO="0032" 25 Senator MELCHER. It would only help to the extent that one or more States would obligate the funding to pick up some of the losses. But I think I am very much in favor of that option being availa- ble to States. The Chairman. Thank you, Mr. Chairman. Senator SCHMITT. Senator Melcher, we appreciate your state- ment. Do you feel that we could, however, get diverted if we go into single-minded subsidy comparisons, particularly on a per-passen- ger-mile basis? I ask that question because the three major forms of ground transportation-auto, bus, and rail-sort of feed each other in many respects, the auto being the shorter distance, bus the next, and rail being the longer distance form of transportation. They do compete to a considerable degree, but they also support each other. We found, for example, in Albuquerque that the bus station and the train station now have been built together; they operate together, and the buses feed passengers into the rail system. If we get into a per-passenger-mile comparison, we may get our- selves into some difficulty, particularly if we don't remember that there is a future need and potential for rail systems, and that need sometimes can't be forecast-whether it is higher gasoline prices or just a gasoline shortage, or whether it is a defense need, or what have you. I think we are running a tremendous risk if we just focus on that subsidy comparison issue. Senator MELCHER. I wouldn't want that to be the only factor. I think it is one of the factors that you have to relate to make a sound judgment. My feeling is that, given the lighter equipment that will come along, that we will find an increasingly advantageous position for Amtrak in the future because of much higher fuel costs that we will be facing this year and the years to come. Senator SCHMITT. I would also suggest that, in the area of air transportation, that this committee and the Congress have taken a major step toward further elimination-or at least future situa- tions where the airlines bear a much greater cost, if not all the cost, of future improvements. The deregulation bill has greatly increased the ability of the airlines to survive. Their profit margins are much higher now. I think this is a direct consequence of deregulation. If we remem- ber that we are trying to create a more economical transportation system in the country, one that provides much greater service, we shouldn't take any steps now that would eliminate the possibility that rail will feed into that same new transportation matrix, as well as air. Senator MELCHER. We built the finest airline system in the world in this country. I think one of the reasons was that 30 years ago people in Congress weren't hesitant in recognizing the future of airlines and put a little cash into it as subsidy. PAGENO="0033" 26 Some of that still exists in feeder routes, and it has been declin- ing, I know, through the diligent efforts of this committee looking at it and insisting on a very close scrutiny for subsidies for flights. But, nevertheless, this country moved into the finest airline serv- ice in the world with the use of subsidies to begin with. Senator SCHMITT. Thank you. Senator LONG. Let me touch on one other subject that is a sore spot. Politicians don't like to get involved in it, but it's crucial, and it had a lot to do with this whole picture. One of the trains being discontinued here would be the Crescent Limited from here to New Orleans. Now, at the time the Southern Railroad asked to be relieved of the burden of providing that service, they made the point that they would like to operate that train with a lot less people and if permitted to do so, that that would drastically have reduced the loss. In fact, they might have been willing to continue to operate it as a private operation without asking Amtrak to take it over. Now that had no appeal to the labor people, I regret to say, so the idea is that we either continue it with a lot more people than Southern thought was necessary to operate that train or else dis- continue it. So the recommendation comes in to discontinue it. Now, obviously, in comparison to other trains, if that reduced labor cost isn't available, that Crescent Limited wouldn't be contin- ued. It would have been a more cost-competitive train than some of those that are staying in the program. Likewise, the whole system wouldn't be showing the loss it's showing, if you had the type of use of personnel that Southern Railroad would advocate for its operations applied to other rail- roads. Now at some point it seems to me we ought to give some thought to this problem and face up to it. Just how far do we want to go in discontinuing services or loading on the public the cost of a lot of personnel the railroad doesn't really think they need? What is your reaction to that? Senator MELCHER. Well, where I come from is a freight division point. In the negotiation years ago, it was not a division point for conductors or brakemen. I don't know whether it was there all the time. When I was there all the time we still had it as an engineers' division point. Somewhere along the line they negotiated out with the labor involved, the brakemen and conductors are for Seattle being a division point. This makes a great deal of difference. They were running-instead of about 120 miles to a division point, as they were on freight-they were running about 230 miles or 230 to 240 miles in the run. I know it's a very sensitive point, but I think it's still part and parcel of workers that worked first on freight and then eventually on passenger after they gain a great deal of seniority, because they generally preferred the passenger routes. Senator LONG. Frankly, it's a touchy subject. PAGENO="0034" 27 Senator MELCHER. It ought to be negotiated out. Senator LONG. Senators don't like to talk about it. They like to talk about something else, because they don't like to find them- selves at odds with the railroad unions. But I think our duty to the public requires us to lay it out on the record and think about it. Just to raise the issue anyway and look at the problem, I would like to ask Mr. Boyd and the Secretary of Transportation to have some of their assistants go out and get them the information as to how many people Southern Railroad thought they needed to oper- ate that train and how many crew changes-I forget the exact figures, but I think it should be made available for the record. It ought to be considered with all the other problems. One of the problems is that we have more personnel operating these trains than the railroads think they need. Now at some point, especially when they get around to discon- tinuing the services, you ought to start thinking about, "Well, couldn't we perhaps continue some of these services, if we didn't have more personnel involved than the people who operate those railroads think is necessary? Senator ScHMIrr. Would the Chairman yield? I think the Chairman, as he so often does, put his finger on the basic fundamental problem we are facing in this committee. Senator LONG. It probably wouldn't get me any votes. Senator ScHMIrr. Nor me. But as I have indicated, this is a critical issue. I would support route adjustments. There may be some you need to make even now. But I can't support route adjustments until we have considered the fundamental issue that over two-thirds of the cost of railroads have nothing to do with the kind of costs to be saved by these route adjustments. That is what the chairman is getting at. It has to do with the management and labor situation that has been imposed on Amtrak and that we, as a committee and as a Government, have got to do something about. We need a rail transportation system in this country. I think we can have one if we are just willing to tackle the tough problem. Senator LONG. What we are talking about here is one aspect of it. Is it easier for those of us in Congress to vote to shut down the service than to vote to do something about featherbedding? Senator ScHMrrr. Mr. Chairman, if you want some data from ICC-and I will quote from their report-Amtrak, it says- Surprisingly, the cost of Amtrak of actual passenger transportation, including train crews, station agents, and onboard personnel represents a relatively modest percentage of total expenses. Transportation expenses for fiscal year 1977 total only 31 percent of Amtrak expenses. It is this other additional cost outside of what is actually on the trains that is causing the problem. Senator LONG. Thank you very much. Senator MELCHER. Mr. Chairman, I might point out that the conductors and engineers and brakemen and car attendants on Amtrak might be a special case, because they have a pretty fast schedule, and it's a definite schedule, and it doesn't involve a lot of things you have to do in freight service. PAGENO="0035" 28 But if it's going to be negotiated there has to be some willing negotiators. That does involve the railroad companies on whose line Amtrak rolls. Most railroad management that I am aware of is not very anx- ious for Amtrak-they feel quite relieved any time an Amtrak train is taken off their line, because they no longer have an experi- ence, what they call an experience, with their freight. We had a situation, I believe it was in Burlington Northern, where the Amtrak trains went into the siding to let the coal trains by. The ICC stepped in and said that wasn't correct. The passenger train still had the priority. They shouldn't be shunted into the siding to let the coal freight by. If we will have negotiations on this between labor and Amtrak management, it also will necessarily involve some willing negotia- tion, I think, with the individual railroad companies, because they still provide the labor for Amtrak. Senator LONG. That gets us to another point I want to discuss with the other witnesses. Should not Amtrak be permitted to nego- tiate its wage contracts directly with labor rather than having the railroads do it? Senator MELCHER. I think it would be extremely difficult, be- cause of all the work rules that are involved, to have two different sets of-if you divide it too much, you will have different work rules involved, and it will get pretty fuzzy. Senator LONG. We have a decision to make in Louisiana. Do we want to put up money at the State level, in order to try to continue that service? The Secretary will testify, I believe, that if the State wants to put some money into it, they would be willing to continue the Crescent Limited. If the State put money into it, I wouldn't advise the State to pay for all those crewmembers that presently roll on that train. If you will pick up the tab for half the cost, it would be fair to ask labor to operate that train with the number of people Southern thought they should have all the time. I wouldn't like to go to the State legislature and ask those people to put up more money than necessary. You wouldn't want it before your State legislature, I don't be- lieve. Thank you very much for your statement. Now, we will hear from Secretary Brock Adams. STATEMENT OF HON. BROCK ADAMS, SECRETARY, DEPARTMENT OF TRANSPORTATION Secretary ADAMS. Thank you, Mr. Chairman. I would like to request permission to enter my statement in full. I will summarize a great deal more of it than I ordinarily do because there have been a number of questions asked; but I want to state before I start my testimony that I think some of the facts that I state to the committee may be something that you have not heard. PAGENO="0036" 29 If you put three people in a passenger car, it is more fuel effi- cient than the average train we are running. The bus is far more efficient. I will discuss subsidies that are added here-and we pay 90 times the subsidy to railroad passengers than we do to any other surface mode. I will give you the specific figures and we can argue about the details of them. But I think the important thing today is to talk about the large problem that is involved. I am here to support Amtrak. I believe we must have a national system. That is why I am trying to get a grid that will stay in place. But only three-tenths of 1 percent of the intercity travelers in the United States ride on Amtrak. If there is an energy crisis in this country, Amtrak is not going to solve it. The buses won't solve it. The airlines won't solve it. You will have to stop driving. Over 85 percent of the people going intercity still travel in their automobiles. I say that before I start my statement so that we can talk of the important problem we have here, which is to keep this system alive, with a manage- ment system in place, with a national grid that the taxpayers are willing to support-not any bigger than we have to-and that we prepare for the future, so that this system can grow naturally. Senator LONG. Did I hear you say you have only three passengers per railroad car, that would be saving energy compared to-- Secretary Adams. Three per automobile. I will give you a break- down, Mr. Chairman, just immediately, since you are interested in that point. You go to Btu's per passenger-mile, which is the best way you can measure how many units of energy you are using to move somebody. If you take the average Amtrak cross-country train and run it, it cost you 3,500 Btu's per passenger train mile. Let's say we will fill up everything. That is one of the things I am trying to do with my system, get things full. If the Southern Crescent pulled out of here its last day with 284 seats and 28 people on it, that is not energy efficient. I think that has been misstated continually. I am for this system, but I don't think we ought to be for it for the wrong reasons. Let's say you filled up everything. This is now Btu's per seat mile. Seat mile means if it is empty, you still count it. If you go to that, a compact automobile where you have 2.4 people riding it-I don't know why they select 2.4 people. I never saw four-tenths of 1 person. But if you had 2.4 people in it, your Btu's per passenger-mile are 1,900. Your Btu's per seat-mile are 1,100. A train, if you got every seat filled, is 1,000. An airplane is 3,000. A bus is 500. Now people can argue back and forth, but you won't miss it far when you get to those figures. Senator LONG. What is the bus figure? Secretary Adams. 500. Senator LONG. The bus is by far the more efficient, then? Secretary Adams. Sure. If you put people on buses, it is more efficient, fuelwise, than any other way. 43-139 0 - 79 - 3 PAGENO="0037" 30 Senator LONG. If you think in terms of how to get the most mileage for energy, the thing to do would be to put them all on the bus. Secretary ADAMS. Yes. We haven't got enough buses to put them on, but if you want to save energy-- Senator LONG. You can build some. Secretary ADAMS. You can do that, too. Senator ScHMrrr. Aren't you comparing apples and oranges and pomegranates? We have to look at the total transportation system of the country. Secretary ADAMS. Absolutely. That is why I am for Amtrak. That is why I think we should keep it. Senator ScHMIrr. You made it impossible to have a reasonable mix in major portions of the western United States and the South, and particularly in rural areas, because we can't get to a railroad. Secretary ADAMS. Senator, we went through those routes inch by inch, based on passenger-miles per train-mile, which is nothing more than saying how many people are on the train, on the aver- age, over its entire route. People get on and people get off. When you look at the system nationwide and you look at the fuel economies, you will notice what we tried to do is to maintain one route across the South, one route across the middle, one route across the North, one route down each coast, and one route down the middle; and then let States add in where they want to pay for it. I don't think the Federal taxpayers, when you are running a deficit, should be having to face State legislatures which are saying, balance the budget, but we are not willing to put up half the Amtrak loss. Senator ScHMIrr. I am afraid with respect to national rail trans- portation, which is what has been the system traditionally and what it will have to be, that that is a red herring. I think it is a very important consideration as we get into this budget fight this year in terms of revenue sharing and a whole bunch of things. But, we are talking about what is necessary for this country in terms of rail passenger transportation. I think that we have deci- mated that capability now by the kind of proposal that you made. You considered a lot of other things besides the passengers per mile. You considered an 0MB ceiling they gave you, right? Secretary ADAMS. No. I appealed that and won it. They assigned $450 million, and I went up $100 million by going to the President. Senator ScHMIrr. That is still a constraint on the system. You couldn't add anything above that. Secretary ADAMS. The whole world lives with constraints as to what the taxpayer will pay. And there is one route on there-- Senator ScHMiTT. Let's make sure we keep that in mind when we talk about this as an optimum system. Secretary ADAMS. If you want to put enough money into subsi- dies, it is possible to a system that is technically superior. Senator SCHMITT. We might debate that. Secretary ADAMS. Well, that is an overstatement. PAGENO="0038" 31 Let me give you an idea. Subsidies were mentioned. In 1975 we subsidized the commercial air passenger three-tenths of 1 cent per passenger-mile. We subsidized the intercity bus one-tenth of 1 cent per passenger-mile. We subsidized Amtrak 9 cents per passenger- mile. We subsidize trains 90 times what we do buses, and roughly 30 times what we do air passengers. I think that's right. We should have a train system. We need it to grow as the years come on. But as I will state in my testimony, which I will turn to now, I think this has got to grow where people want it. I can't predict 10 years from now where they will exactly want it. But I have tried, as have all of us in designing this system, to give you a way of going at it that will completely show the people what they get for their money in each area. Senator MAGNUSON. Go on with your statement, Mr. Secretary. Secretary ADAMS. Mr. Chairman, I am here today in response to two things: First, with regard to my response to the congressional directive to improve the Amtrak system that is pending before the Congress. I plead with you, so that we can keep Amtrak in existence, that it not be disapproved and that we not go back to the old system we had. The second is the Amtrak Authorization Act, in which you will discuss how you want to fund Amtrak for the future. I am trying to provide Amtrac with a reasonable amount of subsidy. I am asking you to provide over $550 million in fiscal year 1980 to cover operating losses, and $171 million for capital pur- poses. In passing the Rail Transportation Improvement Act last year Congress indicated dissatisfaction with the way that it is going in the 27,000 mile system. * A good part of that was because it was easily visualized that the operating losses alone of that system within 5 years would ap- proach the $1 billion mark. So while we have reduced the system, it will still serve 22 of the 25 largest population centers in the United States and 40 of the States. It will operate 43 percent fewer route-miles, and 34 percent fewer train-miles; but it carry 91 percent of the number of people that were being carried before. We are trying to increase passenger loads to save energy. The best figures we could work from this, if the new system is allowed to go in place October 1, is that we will increase the number of people on the train by 23 percent; in other words, from 141 to 173. Now those numbers are the best we can develop working with Amtrak and projecting what will happen. The reason improved load factors are important is that they improve your energy efficiency. The more people you can get filling the seats, obviously the more energy you save, because you have the same engine on it and the same crew on it and the same cars. So the objective is to get the load factor up. I think it's also important to state that we have been asked to monitor Amtrak. We don't run Amtrak. As a Secretary, I have not tried to go down to each board meeting and run their day-to-day business. Amtrak has a president in whom I have confidence, Alan Boyd. PAGENO="0039" 32 He has come to grips with the issues. I recommended him. I have supported him. I am glad he is there. There is an Amtrak Board. That Board and the President run the day-to-day operations. They will run the frequencies on this route system. They will determine the equipment that is on the routes. They will do the ordering of the equipment. What we really are is the banker. The Department as your representative has to be that. Somebody has to do it. When you put $550 million into a corporation, you are in the position of a banker and the banker has to know where the money is going. That to me is what we are trying to do. When things aren't going well, and look like they are going worse, it's the duty of that person to come in and say so and try to make it better. I want to compliment and give my appreciation to Alan Boyd for the patience he has shown in trying to work out some really bad problems. In other words, we get into very differing points of view. That is what he is supposed to do and that is what I am supposed to do. That is why you will hear differences. That is why they exist. It's the way the statute is structured. Now, there is another problem that has to be addressed and that I hope the committee will focus on. When we started this system, the passengers, through their fares, paid half of the cost. Now, they are paying 37 percent and the taxpayers pay the rest. Fares have not kept up with costs. Every year the Federal subsidy per passenger has gone up. I have recommended that be changed. Amtrak has agreed with me. We hope by 1985 just to get back to 50-50. I do not like to hear people say we are trying to hurt Amtrak because we think the people riding ought to pay half of what the loss is, rather than just a third. In this society, people do the things they want to do. If they don't want to ride, you can't make them; if they do, they ought to pay their share. The Amtrak Board has adopted that policy. We are also applying the President's guidelines to increases. There will be flexibility because as you reduce Federal subsidy though price increases, you are allowed a variation in the percent price increase allowed. I have tried to say that we must have a 5-year plan. I think that is essential. I also think we ought to have at least a 3-year authorization. You have to have capital to buy cars. We are buying new locomotives. We are examining the idea of tilt bodies, to make the ride more comfortable. I think there needs to be a multiyear authorization so that the Congress, the public, Amtrak, and the Department all know what the plan is. I am asking that Amtrak provide a 5-year plan of the Depart- ment and give it to the Congress that we can work on it jointly and we can all march forward together. If you do what we are talking about, we will save over $1.4 billion. PAGENO="0040" 33 I don't want to emphasize just the monetary saving. I think the target is to make the system more efficient and as it's made more efficient, that is what you save. Then if people come back on it, and we have an energy crush and we have to expand it, then that money has not just gone down the drain for a system that isn't working. The system will be efficient and available for the Congress in its wisdom to decide, all right, we want to have it. As to State participation, I think the States ought to be involved, to say we want that train enough to put some money in it. Or the passengers to say we want that train enough to put some money in it. I don't think the Federal Government should go any farther in paying higher and higher percentages. That is all we are saying. We think the Federal Government should be in. But we think there is a limit to it. The trains that have been proposed for discontinuance-this, Senator, goes to your question-were primarily trains on long-haul routes. They have to carry a dining car. They have to carry sleeping cars. And all of those cars are nonutilized weight which detracts from the efficiency of the locomotive in carrying them. Therefore, we couldn't just match long-distance routes against short-distance routes or else fuel efficiency would have said just run short distances. So we compared long-distance trains to long-distance trains and short-distance trains to short-distance trains to try and make it as fair as possible. And I take responsibility for the system being the size that it is. The prior administration had a very strong position that you really ought slim it down and just run it where people wanted it, which meant breaking up the system into little pieces. I don't believe that is true and the fault, if there is one, is mine in saying there should be a national system. And I picked as big a national system as we felt could be effi- ciently operated and that people would ride. In other words, over 90 percent of the number of people will ride it. Now, as to the energy emergency. It's there. If this were 35 years ago, I would say do an entirely different thing; 35 years ago, 75 percent of the people traveling intercity by common carrier went by train. Now, three-tenths of 1 percent of intercity travelers use the trains. If you were going to shift people to the trains, it would require a minimum of 5 years and probably close to 10 to produce locomo- tives, cars and so on to even pick up a small percentage-say 5 to 10 percent-of what now go by automobile. Rightly or wrongly, we have an automobile-based economy. It's why I spend so much time trying to get the automobile industry to get more miles per gallon. And that is a struggle, too. But we live in a society where people do what they want to do in transportation. They ride the train and plane and take the car depending upon their choice. Most of them find now that it is cheaper to ride in their auto- mobile. As we try to improve this, let's hope we can get them on PAGENO="0041" 34 the trains or the planes or buses. Talking about the 3 years 1980 to 1982, you can take the entire Amtrak system and fill it up and you would be handling less than 1 percent of the people traveling intercity. I am saying that to solve the energy problem you will have to tell people you can't drive as much, and you will have to use the public transportation system as best as you can and get as many people as possible onto it. I want to get them onto it. I want them to have choices. I think the other thing that we have to always keep in mind is that 997/io percent of the intercity travelers are not on the train. I hope that some of you, after you attend a meeting out of Washington, will do what some of the Congressmen have done and that is get up the next morning and get on the train. See how many people are on it and see what the load factor is. Now, all of our decisions were based primarily on passenger- miles per train-mile with other supporting factors considered as relevant. The one exception was an environmental exception. There are 80,000 people on the northern route, the so-called Empire Builder route that goes across the North, that have no other way of moving out of the Dakotas and out of Montana and through that area, during the winter months especially. Therefore, that train was continued for the environmental and social reason that 80,000 people have to have a way when the snow comes, and you can't clear the highways, and the planes can't fly in and out, to be connected with the rest of the country. I am prepared to defend that decision. I think it's part of the national grid. We didn't recommend the Hiawatha because it was just not the same kind of situation. If somebody wants to recom- mend that it run so many days over one and so many days over another, that is a matter to take up with Amtrak because we have done that at times in the past and it can be done operationally. If the States want to come in because of their particular problems and assist with that, then fine. I asked in this authorizing legisla- tion that the amounts allowed for 403(b) be open ended-we don't often do that. In other words, I want the authorization to allow States to come in and then we can go with a supplemental appropriation to say so many States have come in and requested this and we will match them 50-50 if they want to put up their money. That is in the bill that is before you and it is an important part of that bill I don't like open-ended authorizations ordinarily but we don't know how many States will come forward and we don't have a figure. Not having a figure, I can't come before this committee and say it will cost you $10 million, $15 million, $18 million, or $17 million, whatever the number. Senator MAGNUSON. Mr. Secretary, you say that the alternate route system on the Empire Builder is the Hiawatha is open for operation. Secretary ADAMS. Yes, for parts of the routing. All we did is connect the end points and intermediate points. PAGENO="0042" 35 Senator MAGNUSON. And it could add up that you could run, whether you call it the Empire Builder or not-in your State, you can run it around the circle? The northern route one way and the southern route the other way. Secretary ADAMS. Congress said in the bill that Amtrak can decide between end points, to change end points from those we have designated Amtrak must hold to the Congress route and service criteria, which basically say you have got to give the best service you can-in other words, not downgrade the service-and second, that service must have some relationship to efficiency of the system. As long as it follows the route and service criteria the Amtrak Board can go either route or run in a circle. Senator MAGNUSON. What I am getting at is that Amtrak is not precluded from considering this alternative. Secretary ADAMS. They are not. Senator MAGNUSON. It can be brought up and discussed. Senator ADAMS. That's correct. Senator MAGNUSON. Because I don't see how you are going get what few people there may be riding the Hiawatha over to the Empire Builder. You will have to go around those people both ways. That applies to our State too. There is some difficulty getting around that State in the winter. Secretary ADAMS. No question about it. Senator MAGNUSON. It could run-as you know, the Wenatchee route, the old Great Northern route and then the MP route via Pasco and then the other way. We will strongly urge that that be done. Secretary ADAMS. Mr. Chairman, I now have gone through the package as it exists. Let me briefly highlight the Amtrak Improvement Act, with which the second part of my testimony deals. What I have talked about up to this point is, "Please leave the system that we have put in place, in place." It's a basic system. If Amtrak begins to earn more revenues, they can go where they want with their revenues as long as they meet the route and service criteria that Congress set out, or 403(b) routes can be used. If my recommended system goes down, I don't know how we will run the current system. I don't know because I don't know how we can justify the costs. With the amount of money that you are paying as a subsidy to take people on some of these routes we are discontinuing, you can give them a free airline ticket. That is very hard to sell. I will go through that. Our staff is available to yours. You can go route by route and see just how much the taxpayers pay, how much the passenger pays, for each one of these routes and how many people are riding. Senator MAGNUSON. That is not for the commuter system? Secretary ADAMS. No. Senator MAGNUSON. Let's not get that confused. Secretary ADAMS. Amtrak is completely separate from the com- muter system. Amtrak is intercity, not intracity. PAGENO="0043" 36 Senator MAGNUSON. I will talk a little about the commuter system. Secretary ADAMS. First thing, and I will be brief, because I know you have a familiarity with the bill, there should be a 3-year authorization, so you really can look at the system and go through it with some sound financial planning. In connection with that, we want Amtrak to give to us and to give to Congress their 5-year plan. We think you have to know what they expect to spend and what they expect to spend it for, so we can all plan as we go forward. I am proposing in this authorization a total amount of approxi- mately $2.4 billion. That is to meet Amtrak's operating and capital requirements through fiscal year 1982. Now that would give their management flexibility. Specifically, this breaks down this way: For operating losses in fiscal year 1980, we would go with $552 million, which is above what was available in fiscal year 1978 but does not meet the full inflation amount. In other words, in fiscal 1978, Amtrak had $536 million in losses. The CHAIRMAN. What is your estimate as to what the losses would be if you were required to maintain the present structure for that comparable year? Secretary ADAMS. $718 million, Senator, about $166 million more. The CHAIRMAN. You are saving about $166 million by reduc- ing-- Secretary ADAMS. First year. The CHAIRMAN. The first year. Secretary ADAMS. The next year we are proposing $591 million. That is fiscal 1981. And $598 million for fiscal 1982. That is for operations. In addition to that, we are proposing $627 million in capital funds over the 3-year period. Part of that is for labor protection, which was agreed to and which is part of their contract. That $97 million is part of that $627 million. I also have recom- mended that we include in here $37 million for the Northeast corridor payment. Payments are being made on that. Most of them have already been made. We have been making them since 1976. But I intended to ask the Appropriations Committee for $12 million in fiscal year 1980-that will finish off the direct payments for the corridor-and then for $25 million in fiscal year 1981 to pay off part of the loan guarantees they used to for earlier payments. We also recommend retiring their debt. Now, I have put in a contingency authorization for operating cost for section 403(b) routes and for increased interest payments due to the fact that Amtrak would not be allowed to just draw down its money, pay off part of its debt, and save that amount-in other words, shift its money back and forth in the capital account. We have added additional money, so they can pay for that. On commuter service, with regard to commuter service, we be- lieve that the commuter service should be supported by either local government authorities or State authorities. What happens is you buy a ticket on an intercity train, and you get to a particular city and the commuters get on, and they have a commuter pass that lets them ride for very little. PAGENO="0044" 37 In other words, it's subsidized by the State. But the States have not been willing to pay for at least what Amtrak is incurring as a cost to carry the people. That is all we are asking for in that. We have attempted to get to a rational basis with the commut- ers. We don't want to load it on them all at once. We want people on the trains. But, you know, if you have two people on there paying two different prices and one is paying a lot less than the other, you ought to try to make it up so they all are covering the cost. With regard to the ICC, we have recommended that Amtrak be given more authority to manage its own affairs and that the ICC not get in and manage its affairs. In other words, ICC standards cause Amtrak to suffer delays in trying to change their service requirements and in trying to make operations work better and in trying to provide more customer convenience. We are recommending that ICC service authority be reduced and that the ICC authority to require Amtrak to run a 403(b) train be done away with. We think that the States should propose 403(b) routes and that Amtrak should respond. There are contingency appropriations in our legislation so that Amtrak can pay for it, but I would like to see the people put up their money to say they really want this. Finally, there are a number of housekeeping items included in our legislation. I will mention one, so you understand how we have to clean up some of the regulations. We have proposed that Amtrak be able to enter into joint fares and through rates with domestic, air, water and motor carriers. In other words, so they can tie with the bus lines; So the bus lines can bring passengers in on a joint fare; so you get on and get one ticket. Another kind of housekeeping item will resolve an accounting nightmare. Each State now requires the employees to be paid on a different basis. There ought to be a nationwide system which would basically break down to, say, you get paid once a week and there would be 6 days, lag time. They have to maintain literally scores of different accounting systems to pay everyone on a different sched- ule, depending upon the State. There should be a national system. Mr. Chairman, I have tried to outline the route structure, and why I hope it will be maintained, what the present system is, and what the new authorization is. I want to say this: On the Empire Builder, you have to go on the old Great Northern route in Montana, and you can't go by way of Billings, which was the old Northern Pacific, unless the Congress rejects the plan or the Amtrak Board goes through a route and service criteria exercise to change the routing. They can do that. The reason for our choice of routing was based on an environmental and social question, and we designed the route to serve those people who are the worst off. The train can go either way in Washington State, because there is no environmental problem. Your environmental problem is in the Dakotas and Montana. Mr. Chairman, that completes my statement. / PAGENO="0045" 38 Senator LONG. Senator Cannon. The CHAIRMAN. Mr. Secretary, a little earlier I pointed out, with your help, that there would be $166 million savings in the new system over the old; but did that take into consideration the labor protection costs that would of necessity be incurred if you cut back to the proposed system? If not, how much is that? Secretary ADAMS. That does not include the labor cost. The labor costs are in the capital account, and if we use the new system, we will save $23 million over on that side. So you are really talking about close to $200 million if you count both capital and operating. The CHAIRMAN. And that is with the labor protection cost includ- ed in it. Secretary ADAMS. Yes. The labor costs come in the capital ac- count. The CHAIRMAN. Much has been made of Amtrak's ability to help conserve energy, particularly in the event of another disruption in oil supplies. How much additional traffic could Amtrak handle in the event of such a disruption? Secretary ADAMS. If it tripled its passengers, it would not get to 1 percent of the people traveling intercity. In other words, if 3 times as many people were on the train you wouldn't get 1 percent of the people presently moving between cities. The CHAIRMAN. So it is a very insignificant amount under pres- ent capabilities. Secretary ADAMS. Insignificant. The Chairman. How much additional equipment would Amtrak need to meet projected demands under such disruption in energy supplies? You haven't done any projections on it? Secretary ADAMS. An awful lot. The CHAIRMAN. You don't have any specific projections? Secretary ADAMS. We will try to develop it for you. It is very hard. Those are strictly on projections of how many people will shift out of their car, how many will go on the train as compared to on the bus or on the automobile, or would stay home. That is why I say it takes an awful lot of equipment to get up to that 1 percent; and then you have to determine what shifts will take place, where people will ride. The CHAIRMAN. Now your preliminary route plan utilized 1977 data. For your final plan, was the 1977 data used, or was it updat- ed? Secretary ADAMS. We updated it. The CHAIRMAN. So this is based on 1978 data now for your final plan? Secretary ADAMS. Yes, sir. The CHAIRMAN. To what extent did the Department rely on data generated from the GAO study that was completed in November of 1978? Secretary ADAMS. We went through it and looked at it, hut we generated data independent of it. In other words, our data has an independent base, but we are very familiar with the GAO study. The CHAIRMAN. Do you know whether, generally, your conclu- sions agree with that of the GAO study? Secretary ADAMS. Yes, sir, they do. PAGENO="0046" 39 The CHAIRMAN. I am referring now to the study that was enti- tled, "Should Amtrak's Highly Unprofitable Routes Be Discontin- ued?" Secretary ADAMS. Yes, sir. In fact, they went a little farther than we did. The CHAIRMAN. Of the $97 million that you have estimated that will go into labor protection, how much of that will be paid to Amtrak employees, and how much will be paid to employees of the contracting railroad? Secretary ADAMS. Could we come back to it? We will have to break that out of our worksheets. We will do so. As soon as he has it, I will refer back to it. The CHAIRMAN. In negotiating the labor agreements, will Amtrak be negotiating directly or through the contracting rail- roads? This is in line with the question Senator Long raised a little earlier. Secretary ADAMS. The individual railroads negotiate as part of the national agreement, Senator. The CHAIRMAN. What incentives are there for the railroads to bargain for the best arrangement for Amtrak? Secretary ADAMS. Not much. The CHAIRMAN. I think that strengthens, certainly, the point Senator Long raised. Secretary ADAMS. The point is, though, Senator, that they have a great self-interest in negotiating. In other words, the same people get paid for doing the same kind of jobs, so they have an incentive to do that. If you are asking me the question of whether you can break out Amtrak employees because they are doing a different thing than people that are covered by the master agreement, the answer is what I gave to you. You asked a question on labor protection. Amtrak employees will receive $76 million in labor protection, and railroad employees will receive $21 million. The CHAIRMAN. Under Section 12 of the Amtrak Improvement Act of 1978, the Department was requested to study the common stock ownership of Amtrak. When will the Department complete that study and present its recommendations to Congress? Secretary ADAMS. We are almost completed, Mr. Chairman. We should be able to report that to you very soon. Now, I want to emphasize that what I am giving you is what the staff has given to me. I have not signed off on it one way or the other; but I wanted to know where we were with it. I will give you what our first conclusions or first statements are. There is a problem of unintended enrichment of Amtrak stockhold- ers. The railroads could either receive stock in amtrack or get a tax writeoff. Several chose to take stock. We are of course improving the system, so they get a ride on their stock. To~p yentthaLwe will probably~recommend-I just say probably because it has not been signed off-some kind of nonvoting, noncu~i~iative, nonconvertible preferred stock to be -~ issued to protect the Government's money, particularly the capital investments that are going into the system. PAGENO="0047" 40 We have considered making some recommendation regarding the railroads being allowed to elect the four Board members, since they are not investing any more in it; but I have not decided on that. I think it is necessary in some manner to keep the railroads involved in this Corporation, because we are contracting with them. The CHAIRMAN. You pointed out that the subsidy now amounted to three-tenths of a cent per passenger mile for air, a tenth of a cent per mile for intercity buses, and nine cents for Amtrac. There is a study that, as I understand it, was to be completed either this month or next month. Secretary ADAMS. No, sir. Those were the 1975 figures. Our new ones get worse, from the railroad viewpoint. The Chairman. When will you have that information on the new study available? Secretary ADAMS. I don't know. We will do it as promptly as we can. The Chairman. Thank you, Mr. Chairman. I may have additional questions for the Secretary to submit for the record. Senator MAGNUSON. The three-tenths of 1 cent a mile for avi- ation passengers-is that based upon direct subsidies appropri- ations? Secretary ADAMS. No, sir. That takes into account all of the things we do net of the user charges; and if, in the Air Develop- ment act that is coming up, Congress shifts more of the ticket tax into operational expenses, that figure will go down. That is a decision the Congress will be making in the next year and a half. Senator MAGNUSON. When you include a subsidy-- Secretary ADAMS. By subsidy I mean that that includes the money that we are putting into the system. As you know, part of the money goes into airfields for safety, national defense, and those things-air controllers, FAA. Senator MAGNUSON. That is over $1 billion. Secretary ADAMS. Correct. Senator MAGNUSON. I wonder if that is all included in the three- tenths of a cent. Secretary ADAMS. Yes, sir. If you went to direct subsidy, it is quite small. I forgot the colloquy-- Senator MAGNUSON. We are about $17 million, local service. Secretary ADAMS. The subsidy actually paid is quite small. This includes all assistance. Senator MAGNUSON. On the labor matter, does the Department anticipate wholesale layoffs if this plan goes into effect? Secretary ADAMS. No, sir. I don't know what you mean by "wholesale." Obviously, there will be a change in the number of people that will work on the system because you will be running fewer trains. That is where your labor protection comes in. But I can give you an estimate of the number of people affected. Some, if we can get the freight bill through and get into movement there, we get a shift over. Senator MAGNUSON. Under the labor proposal, some of these workers could continue to work for railroads or Amtrak, couldn't they? Secretary ADAMS. That is correct. PAGENO="0048" 41 Senator MAGNUSON. They could go with the railroads because they negotiate on attrition and things of that nature. Secretary ADAMS. Yes, sir. Our problem is, as you know, that the freight railroad business has not been that good nationwide, and it has all declined. I don't want to mislead you. I wish I could say that the railroad business is going to come back. I am hopeful it will. I hope we pass a bill that does that. If we did, these people could shift over. If the whole industry stays flat, there could be people affected. I don't like it, but I don't know what else to do. Senator MAGNUSON. Now we discussed the alternative routing situation on the Chicago-to-Seattle run. Let me get to the commut- er line, the Pacific International between Seattle and Vancouver, Canada. I have often thought the reason that they haven't attracted more passengers is because of their poor scheduling and the delays, particularly at the Canadian border. I don't think that route ever had a chance. The scheduling was such that you almost had to stay overnight in Vancouver, and then come back the next day or vice versa to Seattle. It seems to me you ought to take a longer look at that before you recommend that that be abolished. It hasn't attracted many pas- sengers; I will agree with you on that; but you know the route well. It seems to me that if we are going to have rail transportation, here are two communities about 115 miles apart that-communi- ties, I guess the population of the greater Vancouver area would exceed 2 million, and surely the population of the Seattle area would exceed that. It seems to me we ought to take a longer look at that. Let me ask this: Could the State be involved in that? Secretary ADAMS. Yes, sir. Senator MAGNUSON. Would you have to have the British Colum- bia Government, too? Secretary ADAMS. Yes, sir, for the distance that is there. Several trains are involved and you point out very sharply that everybody gave up some service. The State of Washington lost a lot of trains; the South lost a lot of trains; the West, in portions of it, lost some trains. I am trying to hold the system together. Yes, the State could come in with a 403(b) payment if the legisla- ture wanted to do it. They would have to put up half the loss. Senator MAGNUSON. What about the Montrealer run? Secretary ADAMS. So you get some idea of the figures, the Pacific International in 1978 carried about 65,000 passengers. The revenue on it was $463,000. The cost was $2,114,000. So they would have to come up with $1,651,000 to maintain the service back and forth. Senator MAGNUSON. From the Seattle-Vancouver area. Secretary ADAMS. The same thing. I cut off the Montrealer be- cause it was in the same situation. I said if the States wanted to go 403(b), they could do that to maintain the traffic that went up there, just as the Southern Crescent could. In other words, the States of New Hampshire, Vermont, and Massachusetts. Again, I can give you the figures if you want, but it's the same kind of picture. PAGENO="0049" 42 Senator MAGNUSON. I know the figures are not very good. But those figures could be upped a great deal if the schedules were right. If you worked out-there was no attempt to work out a deal with the Canadians on customs in between. The same with the Montrealer. It seems to me-and equipment on that run, I don't know where they got some of the cars but I guess they picked them up after somebody else discarded them someplace. Secretary ADAMS. Let me give you an example of why I am discouraged about that analysis, Senator. In my opinion, the best passenger train in the United States is the Southern Crescent. It's clean. It's run fast. It is the flagship of the Southern Railroad. It was run by a private company. It happened that the president of that company kept it up beautifully. That train had everything going for it that a train could have and that train run got to be bad-this is under private manage- ment. We can't blame scheduling or anything else. They wanted to make it work. It was their flagship. The compa- ny said we can no longer run it, and when we examined it, we found it had a large loss and we would suffer the same. What I am saying is, no matter how good the scheduling and the equipment, unless you get the people to ride on it, you have got to be very careful about adding money. Senator MAGNUSON. I understand that, but I am trying to say you could get more people to ride if you have better scheduling and better equipment and a better train. Is there any possibility of having a leg like that be seasonal? Secretary ADAMS. Certainly that is possible. The scheduling, and the frequency, if you go the 403(b) route, are in control of Amtrak management and the State. We don't, within the end points, Mr. Chairman, tell them when to schedule and how to schedule. They operate within the constraints that the Congress puts on them, as to what they must run or as to 403(b) routes. Senator MAGNUSON. Those at Amtrak-I agree with you and with Mr. Boyd. I have known him for. a long time; he is a very able man. Secretary ADAMS. I am very grateful he is there. Senator MAGNUSON. Suppose Mr. Boyd decides from Seattle to Vancouver that, say, from the month of April 15 to September 15, they could run a schedule up there? Could that be done? Secretary ADAMS. If it meets the route and service criteria, it can. His problem, and I want to make it very clear so that you understand how much we are together on this, is that he has a certain total amount of money-Whatever the Congress sets. We recommended a particular amount. As you extend his system, he can't possibly run it with the amount we have recommended. Now, you are talking about the margin as to whether he can or can't do it. I rely on his judgment as to whether he can bring in enough revenues to do it, or else get a State to do it. PAGENO="0050" 43 Senator MAGNUSON. What I am saying is: Is it possible, with the growth of population in this area-it may be like the Northeast Corridor someday-is it possible to run the Seattle-Vancouver run seasonally? Secretary ADAMS. Legally, it's possible. Whether or not it's the thing to do, I would prefer you ask Mr. Boyd. I don't know the operations. I know the route. I have been on it. I have ridden it. Senator MAGNUSON. The argument you use about passengers using the train is that they haven't used it and, therefore, it's not possible to have a run which many passengers more would use. My argument is if you had better scheduling and had better equipment and maybe ran it seasonally, that you could make probably double or triple the amount of passengers using that run. Secretary ADAMS. Mr. Chairman, my problem is that we believed this and we have tried it for 7 years, and I, with you, helped create this system. Therefore, I am for it. All I am saying is, our problem has not been as much with the service of the individual trains as it has been that the automobile has been more attractive to individual people driving, for their own reasons, whatever they are. And that has been the major impact that has hit the railroad system. The second thing that is now impacting on it is airline deregula- tion, with lower fares and more frequent service. The people vote on Amtrak not by going to meetings but by their ridership. The only reason I used the Southern Crescent as an example was that it has been run as a good train. I don't know; you would have to ask Mr. Boyd the potential of the market there and whether it would go seasonally. It very well might. Senator MAGNUSON. I am talking about-I was with the begin- ning of Amtrak. We knew it was going to have to have some trial runs. We thought it had a better future then, but it apparently hasn't. What you are saying is that if the Seattle-Vancouver run is cut out, there is no future for it. That may be; conditions might be different that you could put it back in. Secretary ADAMS. Yes, sir. I think that over the next 10 years we will continue to look at Amtrak, year by year by year, and as things happen in the energy crisis, with the American automobile, and with the airlines, that we will be trying to have this system carry more people. I think it is a necessary alternative choice for the American people. I am not ruling out a route anyplace in the future, as long as we could figure out a way to get people on it and divide fairly the cost between those riding it and the taxpayers. That is all. Senator MAGNUSON. Well, I understand that, but what I am trying to suggest is that some of these lines, I think this one, didn't have a chance to prove its worth. Secretary ADAMS. Yes, sir, that may be so. PAGENO="0051" 44 Senator MAGNUSON. The Pioneer from Seattle to Salt Lake City-would the elimination of this service put additional ridership pressure on Amtrak between Seattle and Portland? Secretary Adams. Pressure on the system? I am not sure what you mean. More people riding? Senator MAGNUSON. Do you think you would increase the rider- ship between Seattle and Portland by eliminating this Pioneer? Increase the ridership on the Starlight or the other trains? Secretary ADAMS. Yes; some amount. Senator MAGNUSON. Now, that train has brand new equipment, doesn't it? Secretary ADAMS. Yes. Senator MAGNUSON. Would that equipment be available for use in other routes like the Starlight or the one going south to Los Angeles? Secretary ADAMS. Yes, sir. That is one of the reasons for this. You can concentrate your better equipment on the routes being used so that everybody gets better equipment, because you are putting it in the places where people are using it. Senator MAGNUSON. The Pioneer has real fine equipment. So you recommend the elimination of the Mount Ranier shuttle service between Seattle and Portland and your report states that service between Seattle and Portland will continue to be provided by the Coast Star Line. That is the one that goes all the way up and down the west coast. Is that adequate to serve those Seattle-Portland passengers who otherwise ride the Mount Ranier? Secretary ADAMS. Yes, sir. Senator MAGNUSON. The Starlight will be the only train between Seattle and Portland. Secretary ADAMS. Yes, sir. Senator MAGNUSON. Don't you think that is carrying it a little too far? Secretary ADAMS. I think it's carrying it far, Senator, but I can't say too far. I couldn't justify that. Senator MAGNUSON. I think that in this particular case, this should be considered as commuter service, and you are treating commuter service in the Northeast and East, you are keeping all those services alive and some of those trains don't carry as much as this commuter service carries. Secretary ADAMS. I will give you a comparison on any of them you want. We can supply them for the record. The Mount Ranier, in fiscal 1978, it carried 83,000 people. The current system average route carries 460,000 people. Revenues on it in 1978 were $703,000. The cost was $2,713,000. There is a $2 million subsidy. So the total number of people riding on it weren't even close to meeting what we were doing in other areas. That was all. Senator MAGNUSON. You have a lot of schedules in commuter trains in the East. New York, for instance. Baltimore. Those places. This was only one train a day, I think. Secretary ADAMS. TwO daily in 1971 when Amtrak was created. When the Pioneer came in, it replaced one, which was the Puget Sound. PAGENO="0052" 45 Senator MAGNUSON. And if you take the total of the passengers between here and, say, New York, by Amtrak, but you divide that by the number of schedules, and you get in that case sometimes some lesser amount of passengers than you have in the commuter trains you are eliminating here. How many trains do you have out of New York a day? Secretary ADAMS. Between New York and Washington? Hourly? Senator MAGNUSON. Take the total number of passengers moving between Washington and New York and divide that by 24 and you get some schedules that don't carry any more passengers-one train schedule-than trains between Seattle and Portland on that one a day. I don't say that that should be eliminated. Secretary ADAMS. The Northeast corridor trains average 159 people. That is average. All day long. All the trains; 159 passengers per train mile of corridor. It's very heavily traveled. In our report and recommendation we say that after the money is put in we want that Corridor to break even by 1985. We are not asking that anyplace else in the country-that there will be no operating subsidy in that area. Senator MAGNUSON. I will say this for you, Mr. Secretary, by eliminating four trains out of six in Washington State, you haven't shown any regional bias at all. Secretary ADAMS. You are correct, Senator. Senator LONG. Senator Schmitt. Senator SCHMITT. Thank you, Mr. Chairman. I would like to include in the record the executive summary from a Harris poll conducted, I believe, for Amtrak on people's attitudes toward Amtrak. It compares attitudes in 1972 versus those in 1978, February, and I think the summary of the survey is that people's attitudes toward Amtrak are improving by significant amounts. As a matter of fact,. in most categories where it would be appro- priate to say so, the majority of the people surveyed favor im- proved and increased Amtrak service and are improving their opin- ion of Amtrak. So, with that in the record, I think at least we understand that people are interested in Amtrak and would like to see it expanded, not contracted. And the other point, Mr. Secretary, is that if we could get the people on the train, as you said yourself, it is more energy efficient. It is more energy efficient to move large numbers of people by train than by other forms of transportation. The reason I bring this up is that I think an alternative proposal, at least in the short term, would be to improve marketing and sales and, of course, equipment, particularly in heating and air- conditioning and general comfort, to see if we can't get that rider- ship up. Did your department consider that kind of alternative to this, route structure change? Secretary ADAMS. Absolutely. And I went through this for hours and finally came to the conclusion that we have spent 7 years on this and it is getting better, but we better get to a basic system and build up. 43-139 0 - 79 - 4 PAGENO="0053" 46 People's votes on Amtrak will be measured by the dollars they spend to ride it. Not what they say about it. Unless you want to take the position that they are willing to have their tax dollars significantly expanded in this area as compared to the others that you must trade off. If Congress finally decides that and can carry it, so be it. I am just suggesting you try it on the State legislatures first, so you can get a real vote. Senator ScHMiTT. I support having State participation where we are talking about intrastate travel, but where we are talking about interstate travel, which is most of the issue here, I think it has to be principally a question of Federal activity until we develop a rail system that can operate without Federal activity. I made that point several times. I really think we have the cart before the horse in this route structure change. Secretary Adams. The best railroad systems in the world exist in Japan and in Europe. I meet with the European Ministers of Transport. There isn't a single one in the world that does not operate without substantial subsidies. Senator ScHMiTT. That is not a rail system in the United States. It is not a rail system most people who have thought about how to develop a future system in this country would say you should try to create. I think we can create an economical rail system and that should be an ultimate aim of the Congress and administration. I am not saying we could do it overnight or even in the next 5 or 10 years, but it can be done. Secretary ADAMS. I agree. Senator SCHMITT. The marketing concepts exist and the technol- ogy exists. I think the potential ridership exists from these kinds of surveys. What is missing is putting it all together. I would just like to draw your attention to a report by Mr. Randall R. Kukas, with whom I think you are familiar, and Dr. William A. Pollard, who has been associated with the Arkansas Association of Railroad Passengers, and he will testify before this committee at a later time, but he, Mr. Kukas, invested $600 of his own money in his personal advertising campaign for the local area in Arkansas and it resulted in, in 1 year, a 100-percent increase in revenues. Now, I haven't studied this in detail. There may be some other factors involved. But I just have the feeling, Mr. Secretary, that you have taken the easy way out. By advocating a route structure change to save Amtrak when maybe with essentially the route structure that we have today slightly modified and a better mar- keting and sales program and better equipment, some of which is already coming on the line, we could have saved it in another way. Secretary ADAMS. Senator, first, I can assure you that it has not been easy. Second, I don't ever try to say to anyone that he couldn't do a better job or do it a different way. So, I can't question that conclu- sion. I have done the best I know how. I think it is necessary that we make such a movement. What I have said is if you want to go with another Amtrak bill after you have gotten to the basic system, then the Congress should PAGENO="0054" 47 measure what it wants to spend against what it wants to run and we will all-Amtrak, DOT, all the consultants you want to bring in-we will all assist in doing it. When you haul a train with a diesel locomotive, you have a lot of iron behind it and the more iron you put in that doesn't carry people, the less fuel efficient it becomes. Now, I think we need a national system. You could do it a different way. I would suggest that you not. Because, at this point, you can blame me for the weakness of human ability to create one. If we go back, and I have seen this for 6 years in Congress, and start trading off as to who gets their route, what happens is it explodes. Senator ScHMrr'r. Mr. Secretary, that is not the issue I have tried to address. I think you made the wrong decision on the Southwest Limited, but I am trying to address the question of a national rail passenger transportation system, not the tradeoff of individual routes. I question the logic of the Southwest Limited. You are taking people a longer distance to Los Angeles from Chicago than you have before. And, as I understand it, the Ogden to Los Angeles rail line is not going to be immediately available. It will take some upgrading and some new facilities along it to make it available for Amtrak. But, nevertheless, what I am talking about is what should we be doing in the short and long term to create a viable national rail -~ system for passengers? I think we can do that. I truly believe that and I think you believe it, too. Secretary ADAMS. We do. Senator SCHMITT. The thing we are arguing about is approach. Your approach is, in this case, to reduce the route structure. My approach would be to maintain essentially the route struc- ture we have and, in a comprehensive way, get people on that route structure by doing the things we really either haven't done in terms of marketing and sales and having the kind of equipment that people would use on the rail system. I don't think that the system will last, Mr. Secretary, primarily because it eliminates too much country. There are no feeder lines into that system now. Secretary ADAMS. The feeder lines, I believe, for a rail system will always be, until we have basically shifted our whole attitude in this country, by bus and by rail and by car to central points and movement by rail then. Except for the Northeast corridor, where you have natural col- lecting points, with huge numbers of people that you can place on the system and you have significantly bad weather, so that people get on it and you can just almost follow the weather patterns to see when they shift on the train. Senator SCHMITT. We agree to disagree, then. Is the route struc- ture the principal cause of the Amtrak deficit? Secretary ADAMS. No. Senator SCHMITT. What is? Secretary ADAMS. The automobile; followed by the airplane. Senator SCHMITT. I mean within its management system, where are the operating losses-in the route structure? PAGENO="0055" 48 Secretary ADAMS. Yes. The route structure is the oniy effective way to get down to a lean enough system to manage it, use your equipment and then build it back. Senator ScHMIrr. There are not contractual problems? There are not managerial improvements? Why is it that the ICC says that only 31 percent of the costs to Amtrak are in the route structure? I'm quoting again from the ICC report to the President and Congress, on the effectiveness of the act, March 15, 1978. That is on Amtrak. Secretary ADAMS. That's why I supported a new manager, which we now have in Mr. Boyd. I think that improvements can take place. He is making improvements. But there is no question about the fact that if you break down Amtrak's costs, you got $214 million in transportation operations. Yes, you try to get a better contract with people that are out there. Your maintenance of equipment is $242 million. That will go down as we put the capital in and get newer cars. We both agree that should be done. Amtrak agrees. We are trying to order them and put them on. Maintenance of way is $42 million. You can run right down the accounts. When you get finally down to the so-called support func- tions-in other words, the things I think you are talking about- you are talking about a relatively small percentage of total Amtrak costs. If you laid off the whole staff, it wouldn't significantly dent their deficit. Senator SdHMIrr. You have a major area of disagreement with the ICC. Secretary ADAMS. I have disagreed with them before. Senator ScHMrrr. I quote from their report: We are concerned that the share of expenses attributable to transportation is so low. In our statement dated October 12, 1977- That was before the House committee- We noted that even reductions in service over unprofitable routes would have 1' minimal impact on Amtrak's operating defIcit, as the burden caused by transporta- tion expenses is minimal. We indicated in that statement that a fertile field of inquiry would be Amtrak's payroll. During fiscal year 1977, Amtrak's payroll budg- eted for $272.3 million, one-third of the carrier's total expenses. Now I just don't understand why DOT and ICC are coming to such different conclusions. Secretary ADAMS. I don't know that we are coming to such different conclusions. Payroll is an enormous part of the system and it has to be managed well. Senator ScHMIrr. You are saying somehow this will save Amtrak. Secretary ADAMS. Well, as we mentioned before, anytime a system is losing large amounts of money, the first thing you try to do is consolidate into the areas where you perform best and concen- trate your people and equipment there. That's all this does. That's a management tool. Senator ScHMIrr. It seems to me the first thing you try to do is get people to use the system you have. I don't think you tried to do that. Secretary ADAMS. For 7 years they have been trying to do that. PAGENO="0056" 49 Senator SCHMITT. I don't think they are trying successfully, obvi- ously. Secretary ADAMS. Let's put it this way: They have not been successful. But I don't blame that-- Senator SCHMITT. However, you have this amount of support in the public at large and you have the kind of situation that faces you now in terms of energy, and are going to face, and you have not had what apparently is an adequate marketing program to get people on this rail system, and your equipment, if the complaints from my constituents are any indication, is the prime reason they are not on there. It doesn't have anything to do with preferring the automobile, except that the train is not comfortable. Secretary ADAMS. I will just cite for you the example I did to Senator Magnuson. Take the Southern Cr~scent. That's a beautiful train. It has been run by private management. Its schedules are good. Its equipment is good. It doesn't have any people on it. And it was advertised; and it was supported by management. No question about it. And this was private. It didn't have anything to do with Amtrak. It was their flagship. And they gave it up reluctantly. They just couldn't get any people on it. Senator SCHMITT. We are getting them on in Albuquerque. We had a/29-percent increase in Albuquerque in recent years. Appar- ently, Mr. Kukas' effort was successful in Arkansas. Senator WARNER. Would the Senator yield for one question- Senator SCHMITT. Yes. I will have to go chair an appropriations hearing. I will submit some further questions for the record. I think Secretary Adams and I will have a hard time agreeing on this one although, hopefully, our long-term efforts will be easier to make compatible. Senator EXON. Senator Schmitt's question will be in, for the record, and you will respond, of course. - Senator WARNER. I, likewise, would like to submit my questions for the record and ask just one. Mr. Secretary, this decision may well have been overtaken by events here. We have a 90-day time period in which to make a decision here in Congress, up or down. Yet, we see a fuel crisis coming on the Nation of unknown propor- tions. No one can get a definitive answer today for the American public with respect to the duration and the nature of this potential crisis. Now if it goes to the extremes that some project, and we commence dismantling this system, we might be on a collision course. Have you got any stopgap in here in case in 120 days we are in a major crisis? Secretary ADAMS. Senator, before you entered the room, I went through this with the chairman. If you took every train on every route and filled it up every place in the United States, you would not get to 1 percent of the people traveling intercity. It's insignifi- cant in terms of the total intercity traffic. I think it should be built back. I think you have got to get it down and build it back. People in the United States travel 85 percent by automobile. The remaining 15 percent is split between PAGENO="0057" 50 air, buses, and railroads with the railroads carrying less than one- half of 1 percent. Senator WARNER. But it would be a helpful thing to fall back on. Secretary ADAMS. Yes. And we ought to keep it and have it, but the people aren't riding in the places that are on that system. We are trying to get to the places the people ride. That was the criteria of passenger per train-mile. Senator WARNER. I understand. I was addressing this problem in light of an unknown situation confronting America today. Thank you. Secretary ADAMS. Thanks. Senator KASSEBAUM. I have a provincial question that deals with our concern in Kansas. In figuring the savings, I wonder if this includes the costs that will be involved in transferring the line to make a paying line out of a nonpaying line, which the northern route would be. This is moving the Southwest Limited. Secretary ADAMS. It does, because there's no cost. Senator KASSEBAUM. Well, it has not been used as a paying line. Are the rails in condition, and so forth, that will make it a satisfac- tory paying line? Secretary ADAMS. This is the UP and it's in good shape. Senator KASSEBAUM. What was the reason in moving that line to the northern route? As I understand-- Secretary ADAMS. To try and get Denver and Salt Lake City in it and connect those cities out there where you had population points to get people in. Senator KASSEBAUM. In moving it north, it parallels our Inter- state 1-70 across the State. Secretary ADAMS. We have the problem north and south with the interstate. We have interstate problems all over. But we were trying to connect population centers. Senator KASSEBAUM. Thank you. Senator EXON. I just have one comment and question. Then we will recess until 1:30, and we will take up the testimony of Mr. Boyd at that time. Thank you very much for being here, and your associates. I just have one comment to make. I have talked with you two or three times about the problems we have in Nebraska. Mr. Bracey was over Friday and we asked some questions. We haven't received an answer to them yet. They didn't have them. I am sure we will get them. I would say this, Mr. Secretary, that really, those of us affected by these routes are very concerned and I suspect that if a recision of your efforts come to a vote in the Senate, I probably will support that activity. But I do feel, in all fairness, that we have to have facts and figures that you haven't given me yet, but I'm sure you will, on the cost. I would back up to a considerable extent what Senator Schmitt said. However, we honestly feel, Mr. Secretary, that as far as the Nebraska route is concerned, if you designed a rail transportation service-"a service" for failure, you would design it the way the Zephyr route is run from Chicago to Denver, Cob. It can be well documented the train does not have the best equipment; but more important, it doesn't run on time and not PAGENO="0058" 51 many people want to get up at 2:30 in the morning, even if the train is on time, to board that train in Lincoln, Nebr. I want to emphasize what I think Senator Schmitt has been saying, that those of us being cut off of their rail service, and we are fearful that once cut out, regardless of the improvements in tracks and service and equipment in the future, we will have a difficult time of ever getting reinstated. So I feel that as far as Nebraska is concerned that we have not given that a fair trial and treatment, notwithstanding that Southern Express or Silver Limit- ed, or whatever it is. We would like to have it tried in Nebraska more than it has been. But I would say to you that, as a man who feels we should be fiscally conservative, I would not even be in favor of Amtrak serv- ice in Nebraska if I was convinced that never, ever would it become anywhere even nearly in a position to pay for itself. So I want some hard facts and I am sure you will give me what you have, and then I will assess those facts in my usual fair manner before I vote. Secretary ADAMS. I appreciate that and I appreciate Senator Schmitt's concern. And I think we should close on an upbeat note about it. I would like to see passenger service rise, and "never, ever" is a long, long time. I am simply saying that you have got to start at a better base where we can have better equipment. I have ridden that train from Chicago to the coast. One of the problems-this is a technological problem affecting Kansas too. Depending upon the time of day you start out of Chicago, in order to go to the coast, you have to go through somebody's town in the middle of the night. That is the way it has always been. I have gotten off in a lot of towns in the middle of the night. In an airplane, you can get on and make it in one jump. In a car, we have motels scattered all over. Technologically, I wouldn't want to say to you that you can always put a train in at the proper time. The more trains you haul that don't go to population centers, don't pick up any people, the more the taxpayers must pay for it. So we are all trying for a common goal. My suggestion, which is done with as much staff work as we have got, may not be the best. I don't know a better one or I would have suggested it. Senator ScHMITF. Mr. Secretary, I said I was not going to get very specific about the Southwest Limited, but in this most recent colloquy, I just have to point out that this is the fastest route. It averages the highest miles per hour-I think a 55-mile-per-hour average across its route. Albuquerque and other points have been increasing their ridership. The city of Albuquerque located its bus terminal at the same point as the rail terminal. We have been doing everything we can, at least in New Mexico, to make that a viable route. There is new equipment coming on to take care of the complaints about heating and air-conditioning. And all of a sudden, before any of that had a chance to bear fruit, it's gone. That is what bothers me. It looks as if once again the Federal Government, in trying to design from some other perspective a national rail system-and I will give you credit for trying to do that- as HUD tried to design a PAGENO="0059" 52 national housing service system, has eliminated some of the most efficient. That is what has really gotten to a number of the Senators around here; plus the fact that we are not looking into the future far enough to create a truly viable rail system. Secretary ADAMS. We are trying, Senator. The Government came into Amtrak because there was, almost without exception, a deci- sion made in private management of the railroad companies, in the 1960's, that they would run no more passenger trains themselves. That is why we, the Congress, the administration and the Nation as a whole, are trying to fashion a system. We didn't start from that position. Senator ScHMIrr. We keep equating system with routes. If there is anything I ever do on this subcommittee, it is to get us to quit equating system with routes. The system is broader than that. It has to include managment problems, the labor problems, the technology problems. It has to include everything. We can, I am absolutely convinced, build a rail system that will pay for itself and provide large numbers of passengers, a great deal of service in the country. But we are so far away from that now, because we won't reset the clock or create a new clock. That's what we have to do. We haven't even done it. And I don't see any sign that we are moving in that direction. Secretary ADAMS. We are moving in that direction by trying to create right now a system that people will use. I agree with you that one day people will get out of their cars, for whatever reason, that system will go and there will be more people and it may break even. Senator ScHMrr'r. If nothing else changes, Mr. Secretary, and that is the route you have, I think you will be back here within a year or two saying we will have to cut some more. That won't pay for itself and the rest of the system. Secretary ADAMS. No question about it. It is a question of how much you want to pay to keep the system. The existing system will cost $700-some-odd million. This is $500 million. Senator SCHMITT. If you want to keep that one and get riders on it, it wouldn't cost you that much Secretary ADAMS. We tried that system. Senator SCHMITT. I am saying we haven't tried hard enough in the right ways. Secretary ADAMS. We think we are. We are trying to operate them where people are riding them. If it grows, they can go else- where. Senator SCHMITT. Thank you, Mr. Secretary. You are very kind to accept this kind of abuse. Senator EXON. We may not agree with you, but you handled your point of view very well. We stand in recess until 1:30. [The statement follows:] STATEMENT OF HON. BROCK ADAMS, SECRETARY, DEPARTMENT OF TRANSPORTATION Mr. Chairman and members of the subcommittee, I am pleased to appear before you today to discuss with you both my response to your directive to improve the PAGENO="0060" S 53 Amtrak route system and the Administration's recommended Amtrak Improvement Act of 1979. Since many of the provisions of the proposed Act flow from the findings contained in my report on the Amtrak route system, I shall begin this morning by discussing that report. As I am sure you and the members of this Subcommittee know, Mr. Chairman, I believe very strongly that the Amtrak route system recommendations which I have submitted to you present us with an opportunity to respond to the very clear concerns of many of the Nation's taxpayers. My recommendations will allow us to reduce Government spending and they will permit us to focus our limited resources on those Amtrak services which are most supported by its patrons and are most energy efficient. President Carter is committed to control of both Government spending and inflation. I am sure that you and the members of this subcommittee share that commitment, Mr. Chairman. My recommendations will contribute to that end. The improved Amtrak route system will save $1.4 billion in tax dollars during the next five years, and yet it will continue to provide rail passenger service to 91 percent of the number of riders served by the current Amtrak system. Opportunities to save that kind of money while not significantly impairing service are essential, and so I would like to take a few minutes of the Committee's time to discuss this opportunity with you in greater detail. As you will recall, Mr. Chairman, the Amtrak Improvement Act of 1978 required me to develop, in cooperation with Amtrak, an improved Amtrak route system. The Act also required that I base the improved system upon population and market requirements. In response to the Congressional mandate we have designed a system which as I indicated earlier will continue to serve most of the passengers served by the present Amtrak system. It will also serve 22 of our nation's 25 largest cities and 40 of our states, while operating over 43 percent fewer route-miles and 34 percent fewer train-miles. Those facts are true for two reasons: First, the trains to be discontinued are primarily those that cover vast distances, serve few major cities and consequently incur huge expenses to serve few passengers. By eliminating these trains, Amtrak can achieve significant savings while displacing few of its passengers. Secondly, our findings indicate that more people will, on average, ride the trains that will contin- ue to operate. The number of passengers aboard an average Amtrak train at any given time is expected to increase 23 percent, from 141 to 173. Some of these will be current Amtrak riders who will continue to be able to reach their destinations by using other trains. Some will be new riders, attracted by the new routings I have proposed and the new and improved equipment that Amtrak will shortly introduce on certain of its routes. In addition to the route improvements I have described, and equally important, my report also suggests that Amtrak establish several budget and service-oriented goals that will help both this subcommittee and our Department monitor Amtrak's progress. The first of these, which addresses a concern expressed by the conferees from this Committee in the Conference Report on the Amtrak Improvement Act of 1978, concerns Amtrak's system which has not met rising costs out of receipts from its customers, in spite of increasing ridership. During fiscal year 1978, Amtrak generated 37 percent of its cash expenses out of revenues from the farebox. The remainder was paid by the taxpayers. My recommended route system, as it promises to be operated by Amtrak's new management, will help to have the users pay for the costs of the service being given to them. I am happy to be able to report to you that Alan Boyd has established a goal of improving the proportion of revenues to costs, from the present 37 percent to 44 percent by fiscal year 1982 and 50 percent by fiscal year 1985. I endorse Mr. Boyd's efforts and I will support him in the achievement of that goal. My report calls for development of a fare policy aimed at keeping Amtrak's long term subsidy requirements at the minimum level possible, commensurate with maintaining a reasonable level of service. It is a pleasure to report to you that Amtrak's Board of Directors has recently adopted such a fare policy, and that we have already begun to see it implemented. Thanks to these actions, the Corpora- tion's financial expenses will, in the future, be shared much more fairly between the passengers and the taxpayers. Mr. Chairman, I would like to bring to your attention that Amtrak is expected to comply with the pay and price standards of the President's anti-inflation program. These standards call for a 7 percent limitation on the increase in pay rates and a ½ percentage point deceleration in the average rate of fare increases from the 1976 through 1977 average increase. Because the price standard allows government subsi- dized enterprises like Amtrak to offset price increases with subsidy reductions (as outlined in Section 705(c-4) when calculating their rates of price change, the fare- PAGENO="0061" 54 related policies outlined in this testimony are consistent with and in compliance with the price standard. In response to public testimony presented at hearings conducted last summer by the Rail Services Planning Office of the ICC on my preliminary route system report, I have called on Amtrak to improve the quality and efficiency of the services it offers, and I am recommending one billion dollars in capital funding for improved equipment and facilities over the next five years. To assist this Subcommittee and our Department in measuring Amtrak's progress in improving its services, I have asked the Corporation to develop a set of specific service criteria. Independently, Alan Boyd has reached a similar conclusion regarding the importance of upgrading service, and his management team is already at work developing such criteria. I hope you share my conviction that the inflation-fighting impact of the $1.4 billion savings proposed in my report, together with the fact that it can be achieved without a major reduction of service to most rail passengers makes a compelling case for allowing the route improvements, I have proposed to take effect. I realize, however, that some have expressed concerns with elements of my recommendations. Let me take this opportunity to discuss with you several of the major concerns that have been brought to my attention. We all realize that given the uncertainties of the nation's future oil supply, we may well be confronted with an energy emergency. Some have argued that, for this reason, we need to continue to operate those trains that I have proposed to discon- tinue. I strongly disagree. We must remember that passenger trains consume large amounts of fuel and that they must be heavily loaded to be energy efficient. Virtually all of the trains that I proposed to discontinue are long distance trains that consume large amounts of fuel to pull the dining, lounge and low density sleeping cars found on that kind of a train. These are not energy efficient. They also carry relatively few people. In short distance corridors between major cities, where trains can be energy efficient, I have proposed no significant service reductions. Similarly, on those long distance routes that can attract enough passengers to make the train relatively energy efficient, I have proposed continued service. We should all bear in mind one other point when we think about the role of passenger trains in meeting any future energy emergency. Although 35 years ago, 75 percent of intercity travelers used trains for their journeys, today Amtrak carries less than three-tenths of one percent of intercity travelers in this country. Substan- tial increases in ridership as a result of an energy emergency would require an increase in Amtrak's fleet of locomotives and passenger cars that would take several or more years to produce. In the event of an energy emergency during the period between Fiscal Years 1980 and 1982, the short term period we are discussing here today, the hard fact is that the nation's transportation needs would have to be met by a combination of rail service, intercity bus service, mass transit, carpooling, more energy conscious driving, and a reduction in nonessential travel. It is also important to remember that in spite of cutbacks in poorly patronized passenger operations, the basic track structure will remain in place to support intercity freight operations. A second major concern I have heard expressed is that I am proposing to cut services that are essential, especially to towns and small cities. I am sure that this view has been expressed to some of you in your constituent mail. In weighing the merits of this argument, several facts must be kept in mind. The most important is that 99 and seven-tenths of one percent of this countrys's intercity travelers do not use the train. To these people, the services I propose to discontinue are clearly not essential. Of the remaining three-tenths of one percent who do use the train, the majority will continue to be accommodated by Amtrak. My staff has studied each city-pair served by every train that was considered for discontinuance to determine whether the people along those routes would continue to have adequate public transportation available. On all the routes, but one, the analysis showed that most of the people along the route would have adequate bus or air transportation to take them to the same points which the train now serves. In many cases, it was found that the bus and train run on parallel routes, making virtually identical stops. The one exception was the Empire Builder route which runs from Chicago to Seattle and which, despite an expected reasonably high level of ridership, is an expensive route to operate. Analysis showed that 80,000 persons who rode that train during 1978 would have had no other reasonable means of public transportation available to make their journeys. Furthermore, many of these people live in relatively isolated communities in northern Montana and North Dakota with severe weather problems. For these reasons the Empire Builder is included in the recommended route system. PAGENO="0062" 55 Also, some have claimed that my recommended route system is inequitable, that it provides less service to some areas of the country than it does to others. In reply, I can only say that my recommendations were developed using the population and market criteria required by the Congress, and that the analysis was done strictly "by the numbers." I would also remind those members who may be losing service to their state or district that they are not alone. My recommendations end virtually all rail passenger service to the President's home State of Georgia, and four of the six trains serving my home state of Washington are recommended for elimination. Both the President and I have accepted that outcome because we know it was arrived at impartially and according to the rules. I strongly believe that the Amtrak route system I am proposing will ultimately provide higher quality transportation in areas where passenger trains make sense, and it will do so in a more energy-efficient manner and at less cost to the taxpayers. I am committed to making the new system work. I think its implementation is essential to the long-term survival of intercity rail passenger service. One key element in achieving that goal is to give Alan Boyd and his new management team more of the stability they have correctly called for, and that brings me to a discussion of the Amtrak Improvement Act of 1979. This Act is being proposed by Mr. Chairman, with the intent of helping Amtrak to best operate the new route system effectively and efficiently. With the proposed changes, Amtrak's Board of Directors and management should be able to concen- trate on improving the service quality and performance of the new route system. The key provisions are a long-term funding mechanism which should improve Amtrak's ability to plan future operations of the system, a clear definition of Amtrak's responsibility for commuter service and the curtailment of the ICC's ability to regulate service. With your permission Mr. Chairman, I will now discuss each of these items separately. THREE YEAR AUTHORIZATION A major thrust of my report is an intent to provide stability and predictability for Amtrak in implementing the new system through the mechanism of a three year authorization. This mechanism would also provide the opportunity to review Am- trak's operation of its new network on a systematic basis and would provide us with the opportunity to recommend further changes for each subsequent three year authorization period. As a further step in sound financial planning and cost control, we are proposing that future appropriations for Amtrak's capital needs be made one year in advance of the year in which the funds will be obligated. This procedure will permit Amtrak to plan its purchases of long-lead time items and materials. We also propose a requirement that Amtrak transmit to the Department, in connection with the normal; budget cycle, its annual and five year budget recom- mendations. We view that requirement as a clarification of changes made by the Amtrak Improvement Act of 1978 and believe that it will further contribute to * planning and budget stability by bringing Amtrak fully into the budget cycle. I am proposing a three year authorization of approximately $2.4 billion to meet Amtrak's operating and capital requirements through fiscal year 1982. The authori- zations are based on the needs of the new route system which I have recommended. With these funds Amtrak's Board and management will have the flexibility to operate the restructured system and to make it more efficient. However, in order to assure that limited resources are not diverted from the restructured system without sound justification, the proposed Act provides that all future additions and deletions to the system be made in accordance with the Route and Service Criteria previously approved by Congress. In conjunction with Amtrak, my staff will be reviewing the criteria to assure that they are not excessively weighty and time consuming, thus precluding timely action by Amtrak when route changes are warranted. Specifically, Mr. Chairman, the Administration proposes an authorization of $552 million for fiscal year 1980, $591 million for fiscal year 1981, and $598 million for fiscal year 1982 to cover Amtrak's expenses of operating the new system. The levels are based on the figures in my report. In addition, I am recommending the repeal of the current law which permits Amtrak to use its capital appropriations to tempo- rarily reduce its outstanding debt. This will place Amtrak on the same basis as any other federally supported program in dealing with its cash outlays. The proposed Act also includes $627 million in capital funds over the three year period. A portion of this amount ($97 million) will be used to make the required labor protection payments as a result of the restructured route system, but the majority of these funds will be used to meet urgent capital needs of the restructured system. I would like to note at this time that the report included a recommendation PAGENO="0063" 56 for $37 million for the Northeast Corridor purchase in the capital appropriation projections. We are not requesting a new authorization for this item since sufficient funds already have been authorized in the Regional Revitalization and Regulatory Reform Act of 1976. I intend to ask the Appropriations Committee to appropriate $12 million in fiscal year 1980 for the final payment to Conrail for the Northeast Corridor. I will request $25 million to be appropriated in fiscal year 1981 to be used to reduce the section 602 loan guarantee authorization, since the first two Northeast Corridor installments were funded under the loan guarantee program. As another element of our proposed three year authorization, we are recommend- ing further retirement of Amtrak's debt in the following amounts: $25 million in fiscal year 1980, $25 million in fiscal year 1981, and $75 million in fiscal year 1982. A contingency authorization for appropriations in an unspecified amount to fund cost increases which are either unanticipated or might result from congressional action on our legislative proposals is also provided. Examples of the cost increases which might occur are those operationg costs associated with a demand for new 403(b) services and those interest costs associated with the repeal of Amtrak's ability to use capital appropriations to temporarily reduce debt. Mr. Chairman, I firmly believe that a commitment by the Administration and the Congress to the three year program that I have outlined will provide a sound basis upon which Amtrak can improve the Nation's system of intercity rail passenger service. This program is based upon the restructured route system and over a five year period will decrease the need for appropriations by $1.39 billion. COMMUTER SERVICE Section 18 of the Amtrak Improvement Act of 1978, which for the first time authorized Amtrak to operate commuter service if it were reimbursed for the avoidable cost of providing the service, contains some potentially troublesome lan- guage. Therefore, Mr. Chairman, we are proposing language to clarify Amtrak's responsibility under this authority. In preparing this language we have attempted to draw a parallel between commuter service and state-supported 403(b) service. The definition of avoidable cost would be determined by the Board of Directors of Amtrak just as under section 403(b) the Board is charged with determining the formula for reimbursement. Commuter service agreements, like 403(b) agreements, could only be renewed by mutual consent. Finally, in order to protect its limited intercity passenger-related capital re- sources, Amtrak would be barred from using its capital authorization to purchase equipment or improve facilities to be used principally for commuter service. INTERSTATE COMMERCE COMMISSION As I have mentioned, the report contains a number of policy recommendations to Amtrak's Board and management regarding the more efficient and economic oper- ation of the restructured route system. At the heart of these recommendations is the need to provide Amtrak with the flexibility to respond quickly to market demand. In this regard, Mr. Chairman, our proposed bill contains several provisions which would lessen the Interstate Commerce Commission's authority over Amtrak. First, the proposed bill would repeal the ICC's authority to develop and enforce adequacy of service standards. We have felt for a number of years that the prescriptive standards established by the Commission are inconsistent with the policy of placing management responsibility with the Corporation. ICC service standards constitute an expensive external control over Amtrak's day-to-day operation, lead to the need for increased Federal subsidies, and hamper Amtrak's ability to respond to changing demand. It is anticipated that once these regulations are repealed, Amtrak will use the tests of customer convenience and costs versus benefits to determine which services should be provided on which trains. Second, the proposed bill would repeal the ICC's authority to require Amtrak to institute additional 403(b) service which it cannot afford or which it has judged unnecessary. The recommended authorization for operating subsidies includes a sufficient amount for Amtrak to continue operating all existing and a limited amount of additional 403(b) service. However, if Amtrak is expected to live within its budget, it must be able to refuse to operate this additional service. The ICC should not be permitted to substitute its judgment for that of the Amtrak's Board in this matter. To retain this provision would risk unjustified cutbacks in intercity train operations. Finally, we have proposed a series of minor amendments to the Rail Passenger Service Act to make Amtrak's day to day operation of the system simpler and more efficient. These amendments include authority for Amtrak to enter into joint fares PAGENO="0064" 57 and through rates with both domestic and international air and water carriers as well as with motor carriers; establishment of uniform pay dates to streamline a complex accounting nightmare; and a formula for reimbursement to Amtrak by the railroads for the transportation of railroad employees. All of these provisions are explained in detail in the section-by-section analysis of the bill. That concludes my statement, Mr. Chairman. I will be pleased to answer any questions you or other members of the Committee may have. QUESTIONS OF THE COMMITrEE AND THE ANSWERS THERETO Question. In the proposed plan, you have indicated a number of reroutings of existing trains that will, in some instances, require new negotiations with freight railroads. Have preliminary negotiations been made with those railroads to assure that the routings can be established? What additional costs will be incurred by Amtrak as a result of the new routings? Answer. Preliminary negotiations with the involved railroads are now being conducted by Amtrak. In proposing several new routes and changes to existing routes, the Department assessed available information and made several on-site inspections to estimate the construction costs associated with these routes. That cost was estimated by the Department at $10 million at the time of publication of the route study. The ultimate cost of those connections will depend upon the outcome of negotiations between Amtrak and the private railroads that own the properties involved and would do the work. On-site detailed inspections of the properties are being conducted by Amtrak with assistance from FRA engineering staff. It will be several weeks before an accurate assessment of the ultimate costs can be completed. If the $10 million estimate proves to be low, we should look first to existing Amtrak capital funds which had been programmed to support the existing system and which will not be necessary to support our recommended reduced system. We have asked Amtrak to quantify both those amounts and the amounts of other capital funds available to the Corportation which are no longer needed for their originally intended use. For example, we know that Amtrak is owed $15 million by the Penn Central Transportation Company and has already received some of that money. We have asked Amtrak to tell us how they plan to spend that money, but have received no response. Until we know both the amounts of those funds and the actual cost of completing the connections, we do not believe it would be appropriate to request additional capital funds for the purpose of financing track connection costs not covered in our analysis. Question. Amtrak has cited in its annual report to Congress slow orders and maintenance-of-way problems as major contributing factors to poor on-time perform- ance. To what extent has the department used the title V financing program to require improvements in tracks and facilities for rail passenger use in order to improve on-time performance? Answer. The major factors contributing to poor on-time performance include not only track condition, but also capacity of the track and rail dispatching practices. Some of Amtrak's more serious on-time performance problems are occurring in the Northeast and, of course, the involved railroad, Conrail, is undertaking substantial rehabilitation programs using Federal funding. The major focus of the Department's title V financing has been to provide improved track and facilities for major freight operations, although the presence of rail passenger service on a line is one of the considerations in evaluationg the merit of an application for such assistance. Rail passenger service thus has benefited from title V funding of track improvements on the Milwaukee Road, the Missouri-Kansas-Texas Railroad Company and the Illinois Central Gulf Railroad. Of course, the railroads have a responsibility to keep track speeds at 1971 track levels and Amtrak has the right to enforce this requirement through the courts. Question. The Department testified that labor protection payments would amount to $97 million over a three-year period. Another witness testified that the payments could be as high as $300 million over the same period of time. Could you explain how the Department arrived at its figure in light of this conflicting testimony? In the event the payments exceed $97 million, what impact will this have on Amtrak's capital improvements budget? Answer. The estimate of $97 million for labor protection payments was prepared by Amtrak and accepted by the Department as a reasonable level. It includes $69 million in their first year, declining to $22 million in the second year, and $6 million in the third year. It was arrived at based on the reduction in Amtrak employment from fiscal year 1978 levels to the estimated levels needed to operate the requested system. It assumes the continuation of Amtrak's present employee PAGENO="0065" 58 turnover rates and some ability of Amtrak to rehire displaced employees who have not, in the meantime, found other employment. We have no information regarding the other witness' basis for the $300 million estimate. It may be noted, however, that the Department's preliminary report estimated that labor protection payments could be from $70 million to $300 million. The $97 million estimate is a refinement of our earlier number. Question. The Department is recommending a repeal of section 601(a)(2) of the Rail Passenger Service Act. It is estimated that enactment of this provision would result in a $5 to $10 million reduction in Amtrak's revenue base. Has any provision been made in Amtrak's budget to offset this loss? Answer. The repeal of section 601(a)(2) would have little or no impact on the $552 million estimated need for fiscal year 1980, provided that Amtrak receives the fiscal year 1979 supplemental capital appropriation which has been requested (the inter- est income on that supplemental has not been included in the $552 million esti- mate). It will have an impact on the fiscal year 1981-82 estimates, however, and is one of the reasons for the Department's proposed contingency authorization. Question. Please provide a breakdown of the capital improvements budget request for the next three-year period. Answer. While we are able to provide a breakdown of FRA's fiscal year 1980 and 1981 spending plan for capital projects, we have not developed a specific breakdown for fiscal year 1982. However, we do project total capital project costs for fiscal year 1982 to be $225 million. The breakdown for fiscal years 1980 and 1981 follows: DETAILS OF FRA'S 2-YEAR SPENDING PLAN (DERIVED FROM INCOMPLETE DATA FURNISHED BY AMTRAK MAR. 9, 1979) 1980 36.0 1981 56.5 Total 92.5 Motive power (AEM-7 Iocomotives)1 (Other improvements) Passenger equipment Head-end power conversions Conversions to release Amfled° Other (includes handicapped access in 1981)~ (35.2) (0.8) 19.1 (19.1) 13.6 (2.0) (11.6) (-) (54.0) (2.5) 44.9 (12.4) (13.5) (19.0) 37.0 (2.2) (13.0) (21.8) (89.2) (3.3) 64.0 (19.1) (12.4) (13.5) (19.0) 50.6 (4.2) (24.6) (21.8) Upgrade/replace cars4 Maintenance facilities New routes5 Car and locomotive shops Other repair facilities 6 Stations and other facilities 14.5 (3.6) (9.1) (-) (1.8) 18.8 (10.0) (8.8) (-) 102.0 44.6 (-) (11.6) (28.9) (4.1) 20.0 (-) (9.1) (10.9) 203.0 59.1 (3.6) (20.7) (28.9) (5.9) 38.8 (10.0) (17.9) (10.9) 305.0 New routes Systemwide improvement NEC improvements Other (computer, handicapped, access, etc.)... of Right way Route Structure NEC Spurs Systemwide - Total ~ Reduction of $27.1 million in 1980 due to changed NEC requiremonts. `Includes deferral of $8.8 million from 1980 to 1981. `Includes deferral of $2.0 million from 1980 to 1981. `Funds lower option on upgrading vs replacement of passenger cars. `Includes deferral of $2.2 million from 1900 to 1981. 6 Includes deferral of $7.3 million from 1980 to 1981. Indludes deferral of $2.8 million from 1980 to 1981. Includes deferral of $10.0 million from 1980 to 1981. `Includes defenral of $8.8 million from 1980 to 1981. 10 Includes deferral of $9.8 million from 1981 to subsequent year. PAGENO="0066" 59 Question. How many trains is Amtrak operating under the 403(b) program? What is the history of losses associated with these services? Answer. Amtrak operated 11 trains over nine routes under the 403(b) program in fiscal year 1978. Following is a table showing the financial performance of 403(b) services in fiscal year 1978. Fiscal year 1978: In millions Avoidable cost $19.7 Allocated fixed cost 4.3 Fiscal year 1978 total costs 24.0 Less revenue 9.1 Less State contributions 1 6.8 Federal subsidy 8.1 1 50 percent of "solely-related" loss. Since there were 11 trains operated, the average 403(b) train incurred an avoid- able subsidy need of $345 thousand, and an allocated subsidy need of $740 thousand in fiscal year 1978. Question. In your proposed authorization for appropriations, section 8 paragraph (D) on page 7, you propose what in essence is an open ended authorization to cover "unanticipated cost increases." What costs increases do you feel might arise that cannot be accurately projected now? The Commerce Committee has traditionally held such an authorization in disfavor. What would the Department suggest to be an adequate level for a fixed authorization figure? Answer. Potential cost increases include amounts for new 403(b) routes, amounts to compensate Antrak for lost interest due to the proposed repeal of section 601(a)(2), unanticipated operating cost increases associated with putting the new system in place, and other unanticipated inflationary cost increases. We are provid- ing fixed authorization figures in separate correspondence with the Committee. Question. I notice that the recommended route system includes service between Kansas City and Denver. This service proposal was contained in Amtrak's 5-year plan which was published in late 1977. How many proposals, recommendations, or modifications advocated by Amtrak in their 5-year plan were incorporated into this restructure? Answer. Amtrak's 5-Year Plan advocated direct service between Washington and Pittsburgh via Cumberland, which is incorporated into the restructured Broadway Limited. Further, while it was not analyzed in the context of the Broadway Limited routing, Amrak also advocated direct service between Pittsburgh and Cleveland which likewise is a component of the restructured Washington/New York-Chicago service. While not listed in the 5-Year Plan, Amtrak has conducted a preliminary review of a western consolidated train known as the "City of Everywhere" which would operate from Chicago to Oakland with separate legs operating from Ogden to Los Angeles and Ogden to Seattle. The Department's requested Chicago-California serv- ice incorporates the Ogden-Los Angeles leg of that train. Question. Before the route restructure was ever contemplated, Amtrak was al- lowed to enter into firm contracts for the purchase of many new double-decker trains that were to be dedicated for service in the west. What is the status for delivery on these cars? Will there still be a western service network that will make adequate use of these cars? Answer. The new superliner bi-level cars being produced by Pullman Standard Incorporated have just begun to be delivered to Amtrak. The most recent delivery schedule calls for the last of these cars to be delivered during Fiscal Year 1981. We expect the recommended route structure to make adequate use of these cars. Question. Many of those who advocate retaining the present system or a system larger than proposed by the administration have charged that 0MB first came up with a subsidy figure and the route structure was designed to fit into the specified monetary boundaries. I think it would be most useful to our committee if you would describe where the figure of $552 million for operating subsidies came from and how it was computed. PAGENO="0067" 60 Answer. The recommended operating subsidy level of $552 million was proposed by the Department in its FY 1980 budget submission to the Office of Management and Budget (0MB) as an appropriate level of funding for Amtrak when measured against other transportation funding needs. 0MB proposed a reduction in this funding level to $452 million. The Department subsequently appealed that reduction and received a full restoration of the originally requested amount. Question. In your estimation, how many states will make overtures to Amtrak to operate "403(b) service"? What might be the maximum and minimum range of matching funds which the Federal Government will be responsible for? Answer. We understand that Amtrak presently has six pending applications for 403(b) services. We are unaware of other states which may be actively pursuing participation in this program. We have suggested that 403(b) service may be a viable option in cases where we have recommended discontinuing certain trains in the present system. The amount of money which the Federal Government will be responsible for providing to match such services depends not only on the number, but also the nature of the services requested. Question. Mr. Secretary, it has always been clear since the beginning of the 403(b) program that the States were to be encouraged to initiate service and take an active role in trying to prove the ridership potential and viability of the route. It appears that your proposal to repeal section 403(b)(2) of the Rail Passenger Service Act may inhibit such service in some States by preventing them from taking their case to the ICC if Amtrak turned down a 403(b) contract. Please detail the Departi~nent's rationale for recommending the repeal of section 403(b)(2). Answer. Let me emphasize that the repeal of section 403(b)(2) is not intended in any way to discourage the States from initiating 403(b) services. Preventing the States from taking their case to the ICC will not inhibit such service, rather the ability to provide this service will be determined by Amtrak's fiscal resources. I would like to point out that I have proposed a contingency authorization for Am- trak's operating subsidy to insure adequate funding for 403(b) services. The reason that we are recommending repeal of 403(b)(2) is to prevent the ICC from substituting its judgment for that of the Congress and Amtrak's Board in determining which is the best service that can be provided within the funds author- ized and appropriated by the Congress. If the ICC is authorized to order additional 403(b) service, and 50 percent matching funds are not available, Amtrak must either cut other services or come up with other funds. The .first alternative is unacceptable in that Amtrak must either cut other 403(b) service, which is difficult because of the contractual nature of this service, or it must cut national services, which is ludi- crous since they are the basic Amtrak services. The other alternative is equally unacceptable, as it would force Congress into providing supplemental appropriations to insure the continuation of basic services. This is a position which the Administra- tion and the Congress have been trying to avoid. Question. The issue of railroad rules has always been an extreme source of frustration when cost figures are factored out for rail freight and passenger service. It appears that more than 65 percent of Amtrak service is for personnel. For instance, the Southern Crescent used as much as eight crews to make one trip from Washington, D.C. to New Orleans. Last year the vice president of the Southern Railway testified before this committee and suggested that only three crews were really needed to make the 24-hour trip. Do you foresee any changes in the work rules on the horizon that will reduce the amount of crews needed to make these runs in the future? Has any headway been made to rationalize the work rules thus far? Answer. Changes in work rules to reduce train and engine crews will require extensive dialogue between management and labor. We agree that this a fruitful area for pursuit, and Mr. Boyd had indicated his commitment to working with the railroads and labor in a cooperative effort aimed at long-term modifications. Question. It is estimated by the Department that around $69 million of the funds for capital improvements in the restructure would be used for labor protection. Are you able today to give a more precise figure? Why was the decision made to put the labor protection funds in the capital budget instead of the operating category? Answer. Arriving at an exact estimate for labor protection payments is difficult for two reasons. First, employees have various options available and, second, Amtrak has never experienced an adjustment of this magnitude. We feel, however, that the $69 million estimate is accurate within plus or minus $10 million. Insuring the responsible expenditure of Federal funds for labor protection will require ex- treme vigilance on the part of the Corporation. Labor protection funds were includ- ed in the capital budget instead of the operating category because, like capital, they PAGENO="0068" 61 are viewed as one time expenditures to provide an improved system, rather than as meeting continuing year-to-year costs. Question. A manufacturer in the last year designed and put into production a self- propelled car. It would seem that this particular vehicle, designed to operate with only one crewperson, might be instrumental to Amtrak in operating over tradi- tioanlly low density passenger routes at a fraction of the present cost of a full consist of seven cars and as much as six operating personnel. It would seem that several of these vehicles could operate over low density areas and act as a gathering service to feed longer distance conventional trains. What research, testing, experi- ments, or investigation has Amtrak/DOT done with regard to this idea? Do you have any costing figures available? It would seem that several states might utilize this concept as a substitute for the conventional 403(b) subsidized train approach. Answer. Amtrak is in the final stages of negotiating an agreement with the State of Connecticut which will significantly improve the level of rail passenger service offered within the State. The State will be purchasing new self-propelled rail cars for Amtrak to operate on a service that currently has outdated equipment. Amtrak and the Manufacturer are participating in joint economic studies and operational tests of this self-propelled vehicle known as the SPV-2000. The prelimi- nary results of the economic studies as related to capital and operating costs have indicated that the operation of the self-propelled vehicle is generally cost-efficient compared to a locomotive hauled train when the consist requirements are two cars or less. Hovever, the self-propelled vehicle cannot be assigned to routes based solely on the average consist requirements for any of the following reasons: Railroads, such as the AT&SF, will not allow the operation of self-propelled vehicles over their tracks. Railroads, such as the ICG, require at least three cars in each consist to insure that signals and grade crossing protection are activated. The economics justifying the purchase and operation of the self-propelled vehicle are eliminated in this situation. The assignment of non-standardized equipment to an isolated route impacts the ability to maintain the equipment in an economic manner. It should be mentioned that a so-called full consist of seven cars is not operated in low density areas. The particular consist operated on a locomotive hauled train is adjusted to provide a minimum amount of equipment to satisfy ridership demand. At times this means that as few as two cars are operated in a consist with a locomotive. Also, current railroad union agreements require the assignment of an engineer, fireman and conductor to the new self-propelled vehicle as compared to the one crew-person mentioned in this question. Furthermore, under some labor agreements a second self-propelled car requires a second trainman, that is, a total of four crewmen. The operational tests of the self-propelled unit have indicated that it can be modified to operate in a locomotive hauled train consist with Amfleet cars. The final decision to operate this type of service must be based on consideration of the cost of providing compatible electric power and communication lines, car dia- phragms and high speed transmissions that will function properly when the car is being towed at high speed. It should also be noted that for lightly used rail services, a bus would provide more cost effective and energy efficient service. Question. It appears that the recommended route system will show an increase of 32 passenger-miles per train-mile from the current level of 141 to 173 projected in the recommended restructure. How many of the excluded routes in the present system have passenger-miles per train mile figures in excess of the current average of 141? If there are any, what was the rationale for excluding these lines? Answer. There are only four trains excluded from the recommended system which have passenger-mile per train-mile loads in excess of the average of 141 passenger- miles per train-mile. Two of these trains operate on the New York-Florida service which, on an absolute basis, loses more money than any other route in the system despite good ridership. We expect that passengers on the two trains being eliminat- ed will be partially diverted to the remaining services. The Southwest Limited is being rerouted and combined with the San Francisco Zephyr. This combined route will retain three of the five major markets on the Southwest Limited, and thus will still continue to provide service to the bulk of the riders on this train. The Montrealer's ridership estimate is somewhat inflated due to the fact that it provides intra-Northeast Corridor service, and on this portion of its run, carries much higher loads than on the portion being recommended for elimination. In addition, the costs on this train are higher than the average system. 43-1390-79-5 PAGENO="0069" 62 Question. In the 1960's, Sikorsky Aircraft was commissioned to build what was later to be known as the "Turbo-Train" at a substantial cost. The trains were equipped with turbine engines that later plagued the operating railroads and the Department of Transportation who commissioned the project. At least one of those trains is sitting on Amtrak's siding in the vicinity of New York Avenue. Via-Rail, Canada's Amtrak counterpart, bought two sets, removed the turbine engine guts and replaced them with a conventional diesel engine. Canada claims both sets are very popular with riders and have been relatively successful. Where are the rest of these turbo-trains? Who owns them? Why haven't we followed Canada's lead and rehabilitated that train that is just rusting away on a siding behind Union Station? Answer. The Federal Railroad Administration originally bought the experimental Turbo-Trains eight to ten years ago. These were built by Sikorsky Aircraft (now United Aircraft). Amtrak now owns these trains. These experimental trains per- formed poorly and required extensive, costly maintenance. They were originally used between Boston and New York, but are currently out of service. Amtrak has been trying to sell them, and although Canada has expressed some interest in purchasing them, they have not been sold. These trains have not been rehabilitated because Amtrak's Engineering Depart- ment has estimated it would cost more than $5 million to put them back in operation and it would be cheaper to buy new diesel locomotives. Amtrak currently uses Turbo-trains between New York and Albany and on the Chicago-to-Detroit and Chicago-to-Milwaukee routes. The Turbo-Trains used in the Chicago area are French made and the ones used in New York are from Rohr Industries, based on a French design. They have proven generally satisfactory in their current use. AVI'ERNOON SESSION Senator LONG. Next, we will hear from Mr. Alan Boyd, the National Railroad Passenger Corporation's president. Mr. Boyd, we are very pleased to have you with us. Please give us your statement. STATEMENT OF ALAN BOYD, PRESIDENT, NATIONAL RAILROAD PASSENGER CORPORATION Mr. BOYD. Thank you. It's a pleasure to be here today. I can go into my testimony at any length and would be glad to do so. Senator LONG. We will print your entire testimony and you can summarize. Mr. BOYD. This is my first opportunity to participate before this committee as president of Amtrak. It comes as no surprise to the members of the committee to know that Amtrak is heavily subsi- dized and so forth. I think many characterizations are not necessar- ily correct. However, it's a true statement, I believe, that we should look at Amtrak as you would look at Greyhound if Greyhound were in 1979 operating with the latest model 1950 buses, or if United Air Lines were operating in 1979 with the latest model DC-6 aircraft. That is exactly the situation we are in. I say that just to under- score the point that we are not giving good service over much of our system today. That has led to the restructuring which Congress required of the Department which led to a budget mark of $552 million. In that connection, Mr. Chairman, I would like to commend the DOT for a very fine effort. I don't know that I necessarily agree with the conclusions but I certainly want to give them "A" for effort. PAGENO="0070" 63 They worked long, hard, conscientiously, and intelligently to come up with a restructured route system. In connection with that, it is Amtrak's guess that the map you have can be operated as recommended for a subsidy payment of $552 million in fiscal 1980. We agree that the system will probably produce revenues in the amount of $325 million. By consolidating our structure to match our resources, we agree that a reduced route system will enable us to provide better service. We agree rail passenger service should be national, efficient, and should be used more intensively. But the real issue is not the route structure. It's the policy of whether or not the Congress-I should say the people of the United States-want to have a national rail passenger service. And the ultimate issue is what system will give better service to the existing and potential market for a national rail passenger network? In that connection, it's the resources that drive the decision. I tell you, Senator, we are a corporation that is spending about $1 billion a year, of which a substantial part comes from public funds. We have to know where we stand. You can't move a $1 billion corporation around the way Amtrak has been shoved and shifted since it became operational. It has been in operation 8 years now and at least every 2 years, it has undergone a major crisis of one kind or another. There is no future in that. We can't operate with 1950 model passenger equipment. I should say the worst thing that could happen to Amtrak would be to leave us with the system we have today because there is no way we can improve the quality of our service by any order of magnitude with the existing equipment and facilities that are available to Amtrak today. Now, the issues are just exactly the same issues that most people thought had been answered in the beginning of Amtrak. Why have an Amtrak? How big? How much will it cost? What is the public benefit? Where does it fit? DOT attempted to answer that. There are a number of benefits, social as well as economic, that have to be weighed in measuring the value of spending public dollars. You know what these benefits are. I have stated them in my testimony. There was quite a bit of discussion this morning on energy. I would like to point out that if the measurements had been made on energy against the 1950 model buses or the 1950 model airplanes, there would have been a completely different picture than you received today. What we should be looking at in terms of energy is the potential. Now, the energy requirements of Amtrak today are based on hauling around a lot of broken down equipment which is totally inefficient. Our potential is superior to that of other modes of transporta- tion. In order for Amtrak to be viable, we have to get to the policies set forth in the statute creating Amtrak-that it should be a modern, fast, comfortable service. PAGENO="0071" 64 I talked about our average age of 28 years for our equipment. That is not very modern. Fast or reasonably fast train is 60 to 90 miles an hour. Our average systemwide speed today is 45 miles an hour-lO miles an hour less than is permitted on the Interstate Highway System. Comfortable-comfort is a combination of good rolling stock and well-maintained track. We don't have enough of either. I am sure that this committee gets tired of hearing about subsi- dies. I won't belabor the point except to tell you that the U.S. Confer- ence of Mayors is about to issue a study detailing the Federal Government's involvement in subsidies to all modes of transporta- tion since 1971. We have a table in the testimony which points that out. The point is that Amtrak is not taking a great deal of the public's money. The argument is whether the amount it's taking should be spent. But it's not a terribly large amount of money in the context of the subsidies paid to all forms of transportation. I would point out that throughout history, there has been no transportation that was not subsidized to some degree by the Gov- ernment. Whatever Amtrak's route structure, the public must be offered service that is safe, reliable, comfortable, and convenient. It should be economic both for the passenger and the Government within the context of subsidies to all transportation. Amtrak believes the route restructuring process is essential. However, if it leads to still inadequate service operated over a smaller system, then the public will not be well served. We feel very strongly it's a management function to determine frequencies, routing between end points, onboard services, train consists, schedules, and fares. Amtrak is committed to respond to the legislative directive to use innovative operating and marketing concepts. Amtrak has pointed out that ultimately the Congress must estab- lish priorities for routes and service, an optimal basic network. Amtrak should be vested with authority to make additions to or deletions from the network using route criteria developed by the Board in 1975 and approved by the Congress. We are currently refining those processes. In that connection, I would say that the Board has adopted the policy that minimum service should be daily service. There are two routes, the Sunset Limited, between Los Angeles and New Orleans, and Empire Builder, Chicago-Seattle, that are to be operated on a 3-day-a-week basis under the DOT route restruc- turing. The absolute cost increases when you go from 3 days a week to daily service. I don't want to mislead the committee on that. How- ever, the service to the public is far greater than the incremental cost in the process. What I am most concerned with here is the principle of manage- ment flexibility as well as precise routings. We also have problems with the proposed reductions in the New York-Florida service. We operate three trains a day now carring over 700,000 passengers a year. There is no way we can carry them PAGENO="0072" 65 all on one train. I would also like to point out that in the route restructuring proposal, the reductions were made outside the Northeast corridor so the impact is totally outside the corridor. We are committed to operating as if for profit. There was a lot of discussion before the committee this morning about a profitable operation. I don't know how to make it profitable at the moment. I don't know any railroad anywhere in the world that is profitable. There are differences, as Senator Schmitt pointed out, but our commit- ment and our fare policy is to charge on the value of service. To put that in plain terms, how much will the traffic bear? That is what we are trying to find out. That is what we are charging. It's a continuing proposition. There is no way you could set a definite pattern and say it will be so much today. It's a mix of what are your costs, revenues, and what is the competition doing? In terms of competition, I would like to say that everything I have seen indicates that Amtrak is generally irrelevant to the bus industry. The bus industry has been on a downtrend since I first become acquainted with it in 1955 and it continued down in 1971 when Amtrak started, when half the trains in this Nation were taken off. There is relatively little impact of Amtrak on the bus companies. Their problems are bigger than Amtrak's. I wish we could be a problem to them. Our competition is the automobile. It's just that simple. We feel that Congress should establish a systemwide average speed goal for Amtrak in excess of that on the interstate highways. If we can't get to a 55-mile-an-hour or better speed, I question the wisdom of having a rail passenger service. I would like to talk a bit about commuter service. Last year, the Congress authorized Amtrak to operate commuter service. Several commuter agencies have requested us to undertake that service. The maintenance of current commuter fare levels, equipment and maintenance needs, and coordination of operations are all issues which require additional funding. For Amtrak to enter into commuter rail contracts, full reim- bursement for total cost must be provided. There is no way a loss operation such as Amtrak can cross-subsidize the commuter oper- ations. It's just that simple. Also, we need some time. If we are going to get into this, we need time to do it intelligently. Amtrak feels the 403(b) State service program worked well and, for the six States currently participating, provided rail service that would not other- wise exist. While the DOT restructuring report suggests States should un- dertake a larger role in providing financial support, unfortunately, unless some current service is canceled, Amtrak will not have funds to match any new State service. With a total of 40 States either losing or having no rail passen- ger service under the restructured system, it's important that some means be found for States to substitute State-supported service if they desire. Amtrak recommends that Congress consider other measures to enable either individual States or groups of States to continue or PAGENO="0073" 66 initiate marketable service or increased frequency on an appropri- ate matching basis. The DOT report recommends a 3-year authorization. Amtrak welcomes this type of response to our need for financial stability. However, the annual authorization levels are based on a number of assumptions which must come true in full measure to enable train operations to continue under the restructured system. We believe that we can operate the recommended system in fiscal year 1980 for the oerating subsidy requested. We can't, on the other hand, predict with any degree of certainty how long * revenue, ridership, and cost projections will hold 2 years from now. This is why Amtrak has suggested a contractual relationship with the Government as the best way of guaranteeing that agreed upon service can be financed. We are now developing a detailed analysis of how such a con- tract could be implemented for fiscal 1981-82 and beyond. Long-term stability must be established if Amtrak is to institute reasonable corporate planning and management controls to assure long-term financial accountability and cost containment. The key to this is a multiyear authorization similar to that recommended in the DOT report. From its inception, Amtrak has had serious equipment problems. In part, this results from the existence of a very limited equipment supply industry. Uncertainty resulting from annual authorization cycles has com- plicated long-term capital planning. To provide a basis for advanced planning without unduly com- promising either congressional branch or fiscal options, Amtrak recommends the Congress authorize capital appropriations to be made 1 year prior to when such appropriations may be obligated. Amtrak can't provide the quality of service Congress and the public expect with inadequate or obsolete facilities and equipment. Significant improvements have been made on a continuing basis, yet much remains to be done in every area where capital is re- quired. And I would like to say here, Mr. Chairman, that we had discus- sions this morning on fuel efficiency. What happens if there is a fuel crisis? What Brock Adams said is absolutely correct. With the equip- ment and facilities Amtrak has today, it's not a reed to lean on. There is no short-term energy benefit to come from Amtrak, except to the extent that our trains are completely filled. They will then, obviously, be more efficient than they are now. What we really need is new equipment to provide service and energy efficiency for the long term. That takes time. There are only two manufacturers of rail passenger equipment in the United States today. Indications are that one of them may get out of it. Moreover, there is no rail passenger technology work going on in the country today. Everything in the way of design and engineer- ing in the rail passenger field is going on in Europe and Japan. Amtrak has two other concerns relating to capital expenditures. The first is funding of labor protective payments necessitated by the restructuring of the system. For Amtrak to solve its equipment PAGENO="0074" 67 problems, it's important that such payments not be deducted from available capital funding as recommended in the DOT report. Second, Congress should recognize that the actual cost of making the track connections required by the new system can only be estimated at this time. We don't know what that figure is. We have a range of between $10 and $40 million at the present time. Further, in assuming October 1, 1979, will see the startup of new operations, the DOT report overlooks the real possibility that not all railroads will be in a position to permit operations of new routes on the schedule proposed or at the cost levels contained in the funding. The need for track connections and other modifications require unavoidable lead time in many instances. The operating railroads cannot be expected to initiate physical change until the nature of the restructured system is finally determined-after the comple- tion of congressional review. Amtrak recommends that Congress consider a possible funding problem in connection with continuing service on those routes designated for abandonment pending the completion of necessary construction on the proposed restructured routes. Since this committee last considered Amtrak, the corporation has a new management-for better or worse, a new President and Board of Directors with new members. Amtrak management is totally committed to providing the type of public service which the Congress directed. The Board has adopted a mission statement which has been provided to the committee. We have instituted new procedures to address our most pressing problems, equipment and on-time performance. We have adopted a goal of substantially im- proved ratio of revenue to costs and have a fare policy geared to achieving that. We have consolidated functions and cut back per- sonnel. We recently cut over 12 percent from our headquarters staff, for example. Various sources expressed the view that significant money could be saved if Amtrak observed more prudent management practices. After 8 months as Amtrak's President, I am convinced this is a misconception. The extent to which Amtrak must buy services from the rail- roads, the aging condition of equipment and facilities, impact of industrywide labor agreements on manning levels, work rules and pay rates, again, along with some lesser cost areas, tie Amtrak costs almost completely to the route structure, train frequencies, and quality of service. Given these requirements, there is very little management flexi- bility to reduce costs. In that connection, I would like to refer to something I read in a report of the Organization for Economic Cooperation and Develop- ment published in 1977, on the future of European passenger transportation: The share of the market in which the railways are competitive will continue to shrink unless they too can raise their standards. The economics of scale in the operation of railways are such that there is a minimum level of traffic below which it becomes increasingly difficult to operate at a profit and the costs of labor and energy, as the cost rises, this minimum level tends to rise too. PAGENO="0075" 68 I would like to say, Mr. Chairman, that if you look at Amtrak as a body, you have to have the trunk in order to do business. You have to have your mechanical departments, your finance depart- ments, your lawyers, your salesmen, your labor and personnel people, and so forth. That is the nut that must be covered. For a system of any size, it has to be covered. And you don't start spreading those costs until you start adding arms and legs. If we were a centipede, our overhead costs, the economies of scale would make our overhead costs minimal on a unit basis. But we are almost a quadraplegic at the present time and our costs are very high. Put simply, there is not much to cut, if we will stay in business. I don't mean to imply that there is no room for improvement. There is always room for improvement. We are doing it every day. Since the January 31 release of the route recommendations, there have been thousands of reactions, particularly from those who would receive reduced service or no service after the proposed system is in place. As I am sure the committee is aware, the targets for the criti- cism varied from Amtrak to DOT to the Congress, the Administra- tion, the railroads, unions, and in some cases, to potential passen- gers who just haven't used trains. I think the very fact that the public perceives these entities as scapegoats only confirms in my view the absolute necessity that we need a total commitment to operate a national rail passenger system. If the committee is hesitant or tentative, or if we cannot now provide better service over whatever route system, I personally believe it would be better to close Amtrak now and do it cleanly. For the reasons stated in my testimony and in the Board's mis- sion statement, we do believe there is a need for national rail passenger service, but we also believe that whatever reductions are made to the system, be it the DOT plan or something that approxi- mates that system, we must have the resources to implement and to operate it well. I would like now to comment on the bill that has been presented to the committee. We have worked with the DOT to a large degree in connection with this bill. We have talked about the route and service criteria. In addition, we recommend the following: Amend the term "security guard" to "railroad police." There is a rationale for that in the analysis. Exempt the Corporation from the current requirement to secure advance approval of the ICC before entering into loan arrange- ments with the banks. That legislation had nothing to do with Amtrak. Authorize through routes and joint fares with air and water carriers, as well as motor carriers in both domestic and interna- tional routes. A number of cruise ships operate out of the Florida ports. We think we could tie in with them. Have authority to establish a uniform pay cycle to improve pay frequency and timeliness and reduce processing time and adminis- PAGENO="0076" 69 trative cost. We are now paying employees in 44 States, and we are dealing with 34 different plans. We have talked to labor and labor is satisfied with this, as I believe one of the following witnesses can tell you. Statutorily establish Amtrak as doing business in each State to avoid the need to annually file a certificate of incorporation in each State. Amend the free and reduced fare transportation provisions in the law to require compensation by the railroads at a rate repre- senting 50 percent of the average monthly yield per revenue pas- senger mile for Amtrak service. We feel their payment should be in lieu of any charges for liability incident to travel by persons eligi- ble for free or reduced rate transportation and other costs incurred by Amtrak. This provision, if in effect in 1978, would have brought us $6.5 million-not a great deal, but we are trying to find money wher- ever we can. Repeal section 801 regulatory authority of the ICC. Amtrak should be responsible for monitoring and improving its own quality of rail passenger service. There are several provisions of the DOT bill which are objection- able to Amtrak. I have discussed these with Secretary Adams. Section 8(1) of the bill would repeal a paragraph from section 601 of the current law which gives the Secretary authority to make our capital grant funds available on a quarterly basis. Since Amtrak borrows from the Federal Financing Bank, this repeal would add significantly to Amtrak's operating grant requirements. An Amtrak capital grant is normally spent in 3 years. Assuming the funding levels in the bill, the interest savings from quarterly availability of capital grants over the next 3 years is about $42 million-if we continue doing what we are doing now, that is. I object most strongly to this, Mr. Chairman. What the amend- ment is saying here is, "We are going to add $42 million to your deficit. We will appropriate for that." At the same, I have made a commitment to Brock Adams before this thing came out that we would get our deficit to 50-50 in 5 years. Yet this is being loaded on top of it. It's not costing the Government anything. It's making it that much more difficult for us to achieve our commitment. It doesn't make a bit of sense to me for Amtrak. Senator LONG. What is that particular thing you mentioned? Mr. BOYD. Section 8(1). That eliminates the capital grant avail- ability on a quarterly basis, which we have been getting, and would put it on a basis that after we had committed to buy a locomotive or something and General Motors said, "We want our money," we would go to DOT and say, "We need more money for the locomo- tive." Now, we can borrow and put some of this money to use and get interest on it and save interest in the process, where instead of having the extra interest appropriated to us, what we do is use it for our working capital. That is what it really boils down to. Section 8(3) of the DOT bill could subject Amtrak to the Budget and Accounting Act of 1921, as amended. Amtrak has no quarrel PAGENO="0077" 70 with the existing requirement of submitting its budget through DOT. We are doing that now. I feel, however, this provision would go beyond that and would treat Amtrak as a Federal agency by requiring review of our testimony. Amtrak is not a Federal agency and it shouldn't, in my view, become one. We will continue to submit our budget requests through DOT and live with the outcome. We are not in the busi- ness of submitting our own legislative proposals or trying to bust the budget through any back-door approaches to the Congress. Review of testimony or other concerns of Amtrak impinging on management or operations is something else and is separate from the budget process. I submit to you, Mr. Chairman, that if you want to make Amtrak a Government agency, fair enough. That is your decision. But I don't want to see it done through a process like this. If this legisla- tion becomes law, the first thing that we will be asked to do is send a draft of our testimony to 0MB and we will be told whether we can use it. As long As we are a Corporation, I don't propose to accept that. I have already mentioned our concern regarding the funding of labor protective payments from capital fund. I thank you for your time. That completes my testimony. Senator LONG. Let me ask you this: What is the fastest speed being achieved by any railroad operating in the world today? Mr. BOYD. Approximately 125 to 150 miles an hour. Senator LONG. Where is that being done? Mr. BOYD. I believe that some of the Japanese trains are doing that. The British have a train which will shortly be doing that. The Germans have one that is either in operation or soon will be. The French have one that will be faster than that when it begins operation in 1980. Senator LONG. What is that expected to make? Mr. BOYD. That will be close to 200 miles an hour. Senator LONG. Some years ago, a man who was an aerospace engineer told me that he felt that the most neglected part of our transportation was surface transportation. He was talking about rails. He said that where you possess the right-of-way, it is all yours, you have total possession of it, you should be able to design something that would make something like 200 miles an hour and that if you can provide a surface transportation system, particular- ly if you take the heavily traveled areas, and have it moving at 200 miles an hour on the surface, you can provide a tremendous service and have a chance to make money at it. I see you nod because I think you understand what I am talking about. Nobody is talking in those terms now over at Amtrak. But it seemed to me that your statement is correct, and if I understand your statement correctly, also, your view is that if all we will do is piddle around at 45 miles an hour, the sooner we get out of the business, the better off we will be. You can't compete with the automobile or plane or-you can't even compete effectively with a good bus service at 45 miles an hour, can you? Well, maybe. Mr. BOYD. We do in the corridor. Elsewhere, I would guess we are probably close. That includes stops. PAGENO="0078" 71 Senator LONG. But as far as competing with the automobile and the airplane at that speed, you are just not an effective competitor. Mr. BOYD. Generally, that is right. Senator LONG. Has anyone discussed with you whether it would be possible to experiment somewhere to see if we could move something at somewhere between 150 and 200 miles an hour and provide a service to American people at that speed? Mr. BOYD. No, sir. Nobody discussed it with me. Senator LONG. I regret to say that I am the first. Mr. BOYD. I feel privileged to have this conversation. Senator LONG. To me, if we want to render a service, that is what we ought to be thinking about doing. We ought to be thinking about trying to provide a high-speed service, particularly in the corridor between here and Boston. That would cost a lot of money. And you mentioned subsidies. You are concerned about the people being tired of hearing about subsidies. I don't think they are tired of hearing about that if they will get something good for their money. They are tired about subsidies for some wornout broken-down thing that should be shut down. As far as subsidies we spend developing an airline service in this country, do you think people feel that was money wasted? Mr. BOYD. No, sir. If you did the same thing for the rail passen- ger service, you would have the same result. In certain portions of the country. Now not transcontinental or anything like that. But I want to say to you, Mr. Chairman, as I see it, the rail passenger service is an infant industry, just as the airlines were in the 1930's. We are trying to be like a phoenix coming out of the ashes of a totally different rail passenger service. Yet, we have not the resources to do it. Senator LONG. Some Japanese talked to me a while ago about the technology in Japan. They are not even using it there but developing the technology for it. I think you know what it is. They would move a car by the electric magnet system, moving it from one to the other, and are talking about more than 200 miles an hour. Can you tell me a little bit about that system of transportation? It is in its infancy, but if you want to go fast on the surface, that is how you would do it. Mr. BOYD. That is magnetic levitation. The difference is that you have a blanket of air between the vehicle and the rail, the guideway. Whereas, with the steel wheel on the steel rail, the theoretical maximum you can get, at least as I understand the laws of physics, is slightly more than 200 miles an hour steel wheel on steel rail; 230 miles per hour maybe, something like that. But when you get up to where you are not touching, then it is just a matter of how much of a fire you put into that thing. It can go. Senator LONG. My wife was privileged to break a bottle of cham- pagne a while back on a boat being developed down in New Or- leans. The principal power unit is not to push the boat but to push air beneath the boat. It rides on a cushion of air far faster than anything available in the area. Those things can be built so they don't even touch the water but zoom on top of it. If you have a PAGENO="0079" 72 fairly level stretch of water, I would think they could make that go as far as you want. Almost outrun a plane. Mr. BOYD. It is a matter of how much power you put in it. It is the same principal. You are eliminating the friction. You are elimi- nating the vehicle having to move along or in another element. In one case, the track. In the other, the water. Then you change the whole regime. Senator LONG. Aren't they using that principle-I was never on it-in the ferry boat between England and France going back and forth against the Channel? Mr. BOYD. Yes, sir. A hovercraft. Senator LONG. It doesn't actually ride in the water as much as over the water. Mr. BOYD. It rides over the water and has rubber curtains on the side to hold the air in. Senator LONG. That is something like what my friend has in the boat he asked my wife to christen. The techniques that work on water, in one way or another, can work on land, but the kind of thing those Japanese were talking about is at least a faster trans- portation system because the object is moved, I would take it, above the ground. It is not touching the ground. It is being moved by electric current. Mr. BOYD. That is right. Senator LONG. Now I would think the American people would be thrilled if we could talk to them about experimenting with that type of transportation. The Japanese wanted us to develop it to try it between here and Dulles Airport. You could do it anywhere where you can get the right-of-way. I would like to see us think in terms of doing something. Now I think with all the complaint about the Metro, it looks to me like we have a better investment now there than in Amtrak. Mr. BOYD. That is probably true. There, you have a new system that costs about $6 billion. That is why I feel so strongly, Mr. Chairman, that if the public is not willing to allocate the resources to Amtrak to operate well what we have today, there is not much point in it. Senator LONG. It was my offhand impression-and I don't like to see any service discontinued in any part of the country-incidental- ly, one of the best trains, the Southern Crescent, would be discon- tinued to New Orleans. I have a nostalgic feeling about it. When I first came to Washington, I came with my father on that train. I rode it many, many times. I hate to see it go. But we are going to either have to operate a modern system as you indicate here, or not operate a system. It seems we better be thinking about the future. Now between operating just more of these miles and trying to get you into something where you are showing what can be done with surface transportation, I find more enthusiasm for moving to something where you can demonstrate what the potential of sur- face transportation is. There is nothing in here for that, as far as I can see; is there? Mr. BOYD. No, sir. I think this is really a conversation that you ought to be having with Brock, or you should have had with me 10 years ago; one or the other. Because Amtrak is an operating com- PAGENO="0080" 73 pany. There is no way for us to get into the type of research you are talking about. It is a mammoth research effort to make it work. I do want to point out, Mr. Chairman, that where we have new equipment, we are providing a good service. Senator LONG. Where is that? Mr. BOYD. We are providing one train that Senator Magnuson was talking about this morning, the Pioneer, from Salt Lake City through Portland to Seattle. That has some of our new equipment on it. It is doing extremely well. It is providing very good service. The Panama Limited from Chicago to New Orleans has that new equipment on it, and it is very heavily patronized. We have some of that new equipment here in the Northeast corridor, and it is very well patronized, and it is a darned good service. However we are operating it with old locomotives. We need new locomotives. But we are providing, in various places, excellent service; but very little of it, because we have a total fleet of 2,200 cars, of which on a normal day we can get 1,500 to run; and of that, fewer than 500 are new. Senator LONG. I hope we can find a way to provide you the equipment you need for what you are seeking to do. I raised one issue, and I would have raised it with Brock if I had the opportunity, but I had to attend another meeting. He got away. I can raise the question with you just as well, I think. In previ- ous testimony with Southern Railroad, at the time they wanted to turn the Crescent Limited over to Amtrak, that witness indicated if he had his way, he would be operating that railroad with a crew of 4 rather than 5, and he would reduce the number of crew changes between here and New Orleans; so if he were doing it, that means he would use 16 men to take that train to New Orleans. At present, at the time he was testifying, they used 32; 5 crews of 5' men-no, 7 crews of 5 men. They were using 35 men to take that train to New Orleans. In his view, if they were doing it, they would move it down there with less than half that. They would move it with 16 men. My thought is that it might be worth trying to continue the service; it might be worth-I am not at this time planning to oppose this plan, but I thought the Secretary of Transportation indicated that if the State would be willing to put money into it, maybe something could be done. I would be willing to approach the State legislature about it, and suggest they consider it, and the Governor as well, provided that we could operate it as efficiently as could be operated. That would very drastically reduce the loss if you could move that train down there with 16 men rather than 35, would it not? Mr. BOYD. You can figure that $25,000 a year per man-- Senator LONG. I wasn't approaching it quite that way. I was thinking in terms of the labor cost is about two-thirds of the cost of the operations; at least, I was led to believe it was about two-thirds. If you cut that in half, you would be-it seems as though you would be cutting one-third off the cost. Mr. BOYD. The labor cost is close to two-thirds of the total cost of operating Amtrak; but that includes all of the people who are PAGENO="0081" 74 involved in maintenance of equipment, as well as operating the trains. And on the trains, there are two separate categories of people: One is the train and engine crew, which is the engineer, conductor, fireman, brakemen, flagmen; and the onboard service people, which are your stewards and waiters and so forth. You can't just draw a direct reduction by reducing the size of the train crew. Now I think we should be able to operate with fewer people on the trains, including the train crew. We are doing some- thing on this, Mr. Chairman. What we have done so far is this. Since I came here, I asked our labor relations people to take a look at the situations where we are currently paying crews to operate distances of 15, 25 miles, and getting a day's pay for it. I think this is ridiculous. And I wanted to get all of that together. I have been told it is ready. I don't know what it is, but there are any number of those instances. We are going to sit down with labor and say, fellows, this just won't wash. We have to work something out here. Get that out of the way. Then I want to sit down and talk to the brotherhoods about changing the whole way we operate the system; because I think it is in their best interest as well as being in Amtrak's best interests if we can do this. I am concerned about our ability to keep coming here and asking you all for more and more money, and not being able to produce more in the process. My feeling is that Amtrak has a future, should have a future, and will have a future if we can pull it back to a size where we have the resources to provide adequate service to the public and build out from there. But we have to do it on a different basis. When I say that, I want to be very clear, I don't mean cutting the wages of the individual employee, because I don't think that is right. I don't think that is moral. I don't think it is realistic. And I don't have that figured out yet. But we have to have a revolution in how we do business: Basis of pay, work rules and so forth. Senator LONG. The thought that occurs to me would be just in the area in which this particular witness was testifying before this committee-I am talking about a witness from Southern Railroad. He just said in the course of asking that we turn the train over to Amtrak and let Southern out of the thing, he said if they could do something like this that that might be worth Southern's while to try to continue to struggle on and make this work. I think he was very pessimistic about any hope of achieving such cost reduction. We weren't talking about cutting salaries. We were only talking about using four crews for what would amount to a full work day, rather than using seven crews and largers crews to go from here to New Orleans. Mr. BOYD. My hope is when we sit down to talk that we can change the system so that we are talking about workdays rather than 50 miles for a day or less. Senator LONG. You know how we got into that. When the guy who really earned his money on the train, he was a fireman. He would shovel that coal into that boiler and have to be pretty good PAGENO="0082" 75 to open up that door and shove the coal in and get the steel door shut back. He would shovel that coal and by the time he moved that train 150 miles, that was a very worn out workingman. At that time, if somebody had to let him off to get some rest, at that time they thought it was a good time to change the whole crew so the whole crew got off. Later on, as I understand this thing, we didn't need the fireman. With a diesel engine, you didn't need the firemen. We were still stuck with the rule about changing crews every 150 miles. So that I thought about the fireman explaining on television why his job was so necessary. He was explaining that while the engi- neer looks out the left side of the cab, he looks out the right side of the cab. You need somebody to look out the other side of the cab. I would think it would make better sense to have somebody look out the rear while the other man looks ahead. In any event, that was the argument for having the fireman on the train as explained by the fireman. I saw it on television. If you get down to where you can get yourself a train, we are talking about to go 200 miles an hour and we are stuck with that old rule, you would have to change crews- you would have to stop that to change crews every 40 minutes to put a new crew aboard. Really, that work rule in the modern day is outmoded. It's out- moded for now. Mr. BOYD. I agree with you, but I want to make clear I am not being at all critical of the individual employee. They are doing the job for which they were hired. It's a great example of how technol- ogy has changed but the job descriptions haven't. There has to be a change. Senator LONG. I just wish, Mr. Boyd, we could be talking here about the railroad of the future rather than the-I mean the passenger service of the future rather than of the past. It seems to me all we are talking about is saving some old relic of the past. You are too good an executive to waste your time on that. It seems you ought to be trying to develop something that would serve this Nation for the future. Maybe they would develop it in Europe or Japan and we could copy it from them. I know some of those people now, they came to see me. They must have seen you. Was anybody by to see you to talk about the new technology of the fast train? Mr. BOYD. No, sir, not directly. I agree with you. But I also feel the passenger service of the future is some way in the distance and my interest right now is if we are going to have a passenger service at all, I want to try to make it work right. It's not working right today. Senator LONG. In 1935, it was my privilege to attend the world's fair at Chicago. I was just a kid at that time. About 16 or 17 years old. I was very impressed b7 the General Motors' exhibit. That exhib- it was, I think, entitled `Highway into the Future," or some such PAGENO="0083" 76 thing as that. It showed how the automobile traffic would someday work where you would have overpasses, underpasses, cloverleafs, the below-street parking, the above-street parking. It was, in effect, the transportation system that we have today. That was our modern Interstate Highway System being displayed in 1935 by General Motors. But at least while we didn't have the Interstate Highway System until many years later, at least we were planning on it and build- ing some overpasses and underpasses and building components of such a thing at some future date. I would hope that we could try to work with you or else work with somebody, if Amtrak can't do it, to try to move us toward a transportation system of the future. When that Amtrak Corporation was set up, didn't that charter indicate that that type of thing could at least be discussed by Amtrak? Didn't it indicate we had in mind a modern-- Mr. BOYD. Yes, sir. Senator LONG. Didn't it indicate it might be something to meet the needs of the future? Mr. BOYD. Yes, sir. Senator LONG. I hate to think we have lost so much ground that we can't even think in imaginative terms or do any planning along that line for the future. I would hope that we could be thinking in terms of providing something that would be best. Now, it would help me, I know, if, in phasing out some of the service we have now which is behind time and not up to date, we could be talking about beginning to experi- ment with something that would do the job in the future. I take it you would be willing to talk about it even though you don't have the money to do anything about it. Mr. BOYD. I have a lot of ideas but no money. Senator LONG. Thank you very much. Senator CANNON. The CHAIRMAN. Thank you, Mr. Chairman. Mr. Boyd, in September of 1978, Amtrak instituted a rather unique pricing policy. Senator Long and I wrote to Amtrak at that time expressing our concern over the effect such a price decrease would have on Amtrak's deficit. Do you have any data on the results of that fare decrease now? Mr. BOYD. Yes, sir. I don't have it with me. I will provide it for the record. The CHAIRMAN. All right. At the same time, would you provide for the record the informa- tion as to whether Amtrak will realize a net financial gain from that fare decrease? In other words, will the revenues from the ridership increases offset the loss in revenue from the fare reduction, which was our concern at the time? Mr. BOYD. Yes, sir. The CHAIRMAN. Several months ago, it was brought out that a number of Federal agencies weren't cooperating with Amtrak on the use of Amtrak for Government travel, particularly in the Northeast corridor. PAGENO="0084" 77 What progress has been made in that area? Mr. BOYD. A great deal of progress, Senator Cannon. We are in the final stages of negotiations now with the General Services Administration, which I think will lead to a considerably increased use of Amtrak in the corridor by Government employees on official travel. The CHAIRMAN. Is Amtrak getting better cooperation now from the Government agencies? Mr. BOYD. Yes, sir. The CHAIRMAN. What is the potential revenue gain for Amtrak if all Federal employees traveling in the Northeast corridor were to use Amtrak? Do you have any figures? Mr. BOYD. We don't have the figures from all the agencies of Government on their corridor travel. A number of the agencies have given us their information but not all of them by any means. My recollection is as a result of these negotiations with the GSA we are looking for about an $8 million increase this year in rev- enues on the corridor. The CHAIRMAN. In going through your prepared statement, I note that there are several instances in which you challenge the figure used by DOT and presented to us by the Secretary this morning. Does that mean that you don't support this program that DOT proposed? Mr. BOYD. No, sir. The CHAIRMAN. You are in support of the program even though you disagree with them in some instances concerning the results of the statistical research. Mr. BOYD. We are trying to set the record straight as we under- stand the figures. No, we are not taking a position on the route restructuring. The position I am taking-that Amtrak is taking, that the Board is taking-is that we have to have a smaller system than we have today. We are the willing servants of the Congress. Whatever you decide is what we want to do. The CHAIRMAN. Do you think in light of the present circum- stances that exist, fuelwise and so on, do you think there is an opportunity to turn this system around given a smaller system in line with what the Secretary recommended? Mr. BOYD. We have to have a smaller system if we are going to have any hope of providing the public with adequate service, Sena- tor Cannon. As I mentioned a little earlier, the average age of our fleet is 28 years. It's as if Greyhound were trying to compete today with the latest model 1950 bus. We are not providing service to the public with that kind of equipment. It breaks down. We have trains freezing all winter. Our air-conditioning breaks down in the summer. Our maintenance costs are out of sight. We have to get back to a size of a system where we have the resources; 15,000 miles is pretty close. It's not going to be satisfactory completely, but we will be a lot better off. We have a lot of junk we are hauling around out there not serving any useful purpose. 43-1390-79-6 PAGENO="0085" 78 The CHAIRMAN. What is the current status of your capital mod- ernization program now? Are you bringing new equipment in? I note you said in your statement that at the time Amtrak took over, the average age of the equipment was 22 years. Now you say it is 28 years, some 7 years later. Are you just standing still or losing ground or what? Mr. BOYD. We are losing ground because we are having to contin- ue to operate with the old equipment. Since Amtrak came into existence, we purchased one order of cars, 489 cars from the Budd Co. Cars we call the Amfleet cars. They have gone into the system. They are ultimately to be used in the Northeast corridor. They are now spread around the country but will be used for the corridor. We have an order of 284 cars with the Pullman-Standard Co. This order was placed in 1975 and we should have received deliv- eries beginning 2 years ago. So far, we have gotten six cars. Those are double-deck cars which are for use primarily west of the Missis- sippi River. All the other equipment we have is the old equipment we inher- ited from the private railroads. The CHAIRMAN. In Amtrak's annual report, it was reported that the number of revenue cars either owned or leased by Amtrak had been steadily declining to a point where you had 200 cars less than you did in 1976. In light of the car problems facing Amtrak, what has happened to these other cars? Mr. BOYD. Most of them have taken themselves out of service. They have reached a state of deterioration where there just wasn't any point in trying to put money into them to get them back rolling again. The CHAIRMAN. In that same report you indicate that Amtrak sold over 163 cars last year, some of which, I believe, were the glass-domed observation cars. If this equipment was old and unusable, how were you able to sell them? Mr. BOYD. That is why we sold it. The CHAIRMAN. Who did you sell it to? Mr. BOYD. I don't have the vaguest idea. The CHAIRMAN. Sold for scrap? Mr. BOYD. Yes, sir. The CHAIRMAN. What condition were those glass-domed cars in when they were sold? Mr. BOYD. I will have to provide that for the record. We haven't sold anything that is usable, though. The CHAIRMAN. Let me ask you one final question. Do you think Congress is justified in using the taxpayer's dollar to support this system or do you think we would be better off if we junk the whole works? Mr. BOYD. I think definitely there is a value to a national rail passenger system. I think that it is well worth the taxpayers' money to have a good rail passenger system. We don't have that today. It will take some money to do it. But I do think so, clearly. The CHAIRMAN. Thank you, Mr. Boyd. Senator LONG. Let me ask you about one item. What I am thinking about here, Mr. Boyd, I am trying to think in terms of PAGENO="0086" 79 how to move us toward a rail transportation system for the future. Not just a recurring deficit thing in trying to cut down our losses. I am thinking about how it might be a better service for all Americans. It doesn't bother me to think about paying for some- thing. The American people expect to pay for service-everybody to subsidize it-provided what they get in the end is worth having. - Some time ago, the chief executive officer of Illinois Central made the point to me that it is time we had a grant to see what could be done about a fast train service between New Orleans and Baton Rouge. He said we had a grant planned between Moisan Airport on the outskirts of New Orleans. This man said we ought to see what we could do to develop a fast train from Moisan Airport into the heart of the city. If you can make it work there, you can make it work between Baton Rouge and New Orleans, which I was hoping to see done. About 85 miles apart. Now to do it with modern technology, the answer was just we would have to put a lot of overpasses in we didn't have. But if you spend the money on the overpasses, you could develop a very rapid transportation into the heart of New Orleans and once you did that, if that could be made to pay, you had a straight shot on up to the State capital in Baton Rouge and could probably do the same thing on the other end, too. Later on, someone came up with a proposal, with this new car the Budd people were developing, put that in service between - Baton Rouge and New Orleans and give these people some better service. When I first saw the schedule, from my point of view, my reac- tion was forget about it. The speed it would make wouldn't exceed the speed of the bus. My reaction was if you can't beat a bus, you are wasting your time to go buy this multimillion dollar piece of equipment and you can't get there any quicker than a bus would get you there. What you would need would be to separate the grade and clear it so you could go in as fast as the rails could roll it. Now, the same type thing, if it could be done there, it could be done between Washington and Baltimore. It could be done between Baltimore and Philadelphia. I don't see why you couldn't do it between Philadelphia and New York. You simply make the train run a great deal faster. So that it would be competitive timewise with what you do by the time you go out to the airport, wait for the plane and take you turn in line to get in the air and all that. By the time you get your bags and get in a cab and all that, it would be competitive for a great number of people to take a train instead of an airplane. Especially if it is between here and Philadelphia or New York. Now, what concerns me is: Why can't, between you and Mr. Brock Adams and some of us who might have some potential to look into the future and try to plan ahead, why can't we work together for something that will give us services like that rather than find ourselves thinking in the terms we are thinking of here, having to discontinue services? Mr. BOYD. When the Northeast corridor improvement project is completed, we will have to beat people off with a stick, because we PAGENO="0087" 80 will be providing that kind of service between New York, Philadel- phia, Baltimore and Washington. Senator LONG. When will that be? Mr. BOYD. 1983. Senator LONG. I wish you could have something to show sooner than that. Mr. BOYD. I only got here last June. Senator LONG. By my light, we have to think in terms of-I serve on a 6-year term. Now I am serving on a 2-year term because I run 2 years from now. I would like to think, though, we would have something to show the public that they could at least pass judg- ment on. Mr. BOYD. The problem is very simple. This is one of the major high-density railroads in the world and to do what we are trying to do is to rebuild that railroad under traffic. You just have to trade off-if we could close down the railroad, we could build it in 18 months. But we can't do that. No way. We are now moving 9 million people a year on it. But also the freight movement. Twenty-five freight trains a day go up and down that corridor. Senator LONG. I understand you also need more money. Mr. BOYD. Yes, sir. You will hear about that. - Mr. Adams is bringing that gift to you. Senator LONG. That just gets me to one point you ought to be thinking about. That is, that it is not quite fair for us to budget our capital improvement item as though the money is all gone. That is the way we have to do it now, that is how the Federal Government keeps its books, but we ought to start doing our business more like a businessman does business, where if he builds something of value, he puts it on the books as an asset and depreciates it over a period of time. Of course, conceivably, we couldn't take care of your problem by simply setting you up as a separate corporation and guaranteeing the loan. That way, they wouldn't have to put it on the books until you find yourself losing money. But it does seem kind of unfair to me we ought to have to budget that money as though the money is gone. If you didn't have to do that, we could probably get you the money quicker than that. Mr. BOYD. This is strictly an investment. No question about that. Senator LONG. If we could go with the loan guarantee, you might get the money quicker. Ever thought about that? Mr. BOYD. That is up to the administration and DOT. I am not going to get involved in that. I have differences with Brock already. Senator LONG. Thank you very much. [The statement follows:] STATEMENT OF ALAN S. BOYD, PRESIDENT, AMTRAK Mr. Chairman and members of the committee, this is the first Congressional opportunity I have had to make the case for Amtrak, and I welcome it. In the eight months since I became President of the Corporation, I have never ceased to be amazed at how little understanding there really is of Amtrak-its structure, its mission, its mandate, its financing, its operations, its problems and its potential. Frequently in the press, the words "financially-ailing," "embattled," "deficit- ridden," "beleagured," or "heavily-subsidized" appear as automatic prefixes to the PAGENO="0088" 81 word "Amtrak." We are often accused of being bumbling bureaucrats busily wasting the taxpayers money. I am confident that the Members of this Committee at least know that these charges are exaggerated, inaccurate, and unfair. And yet, there are good and substantial reasons behind many of the public perceptions of Amtrak. Our trains frequently do not run on time; much of our equipment is old and unreliable; substantial parts of the roadbed we operate on are below a comfort level for passenger service; many terminals we operate out of are run-down; many of our long-distance routings are circuitous; the only service to many cities is middle-of-the-night service;. . . and on and on. All of these items serve to underscore the fact that Amtrak-as a public service- is plainly spread too thin. We cannot do the job the American public expects of us, given the extent of the route structure we now have and the resources at our disposal. These physical and financial constraints are the main reason why Amtrak's "service" seems so illusory to so many: The passenger left waiting on the platform on Thanksgiving weekend as the standee-packed trains passes him by; the stranded traveler delayed four to eleven hours by a derailed freight train just ahead; those with reserved sleeping car space forced to stand in a coach because of a malfunctioning car; and those suffering in 100-degree temperatures in a car with failed air conditioning. The above problems, combined with increasing tugs-of-war over specific routes produced a Congressional mandate to study and resolve Amtrak's route-and-re- sources problem. The Congress intended from the beginning that the restructuring process should bring the question of routes into proper balance with the reality Of resources. Underscoring it all was a commitment to the public to continue providing nation- al rail passenger service in such manner as to attract the maximum number of revenue passengers. Inevitably, this study became enmeshed with the budget process of the Executive Branch. The end result was that both a budget mark of $552 million and a recom- mended route map were produced concurrently. Amtrak's role was to assist in developing costs of various parts of the proposal. We agree that the map before you can be operated as recommended for a subsidy payment of $552 million in fiscal year 1980. We agree that the system will probably produce revenues in the amount of $325 million. By consolidating our structure to that of our resources, we agree that a reduced route system will enable Amtrak to provide better service. We agree that rail passenger service should be national, should be efficient, and should be used more intensively. * But now comes the tough part. The Congress must decide whether the recoth- mended route structure and the funding level is acceptable. Let me point out that the drawing of lines on a route map is a very subjective exercise. It is always possible to argue for the inclusion of this route as opposed to that route. There are economic as well as social benefits to almost every route-some routes have more social than economic benefits. However, with a budget limitation of $552 million, the lines on the map tend to become secondary. The issue, really, is what system will give better service to the existing and potential market for a national rail passenger network? It is the resources and not the routes that drive the decisions. Without any reservations, I tell you, Senators, Amtrak has got to know where it stands. We are planning on the assumption that this plan will go into effect. We have got to have a new plan by October 1-you don't turn a billion dollar company around overnight. You don't have much time. For nearly eight years Amtrak has suffered while routes were argued and re- sources were ignored. Now, more than ever, it is incumbent upon the Administra- tion and the Congress to decide whether rail passenger service is a needed public service justifying Federal funding-or whether it is an experiment which has failed by becoming too expensive. I believe firmly that it is an experiment which has never really been given a chance to succeed. When Amtrak was created in May of 1971, it inherited a dying business. Half of the nation's passenger trains went out of existence on its first day of operation; its customers-turned off, disenchanted and unwanted through years of programmed decline-were hardly in a mood to support, much less flock, to existing service. The equipment fleet had an average age of 22 years and was largely in disrepair. The infant corporation did not own any tracks, terminals, yards or repair facilities, any locomotives, cars or other equipment and there was not a single manufacturer in the U.S. with an open production line for intercity passenger equipment. The roadbed, after years of deferred maintenance, was suited for little PAGENO="0089" 82 more than freight operations. Operations, onboard, and reservation services (such as they were) were totally controlled by the railroads who wanted little or no part of the business. Many terminals were in disrepair, marketing was nonexistent. Amtrak's mandate, under these incredible circumstances, was to make a profit- make a profit out of a business which was then losing $400 million a year! Unfortunately, the public perception at that time was one of a brand new system going into place. Little consideration was given to whether the size of the system handed to Amtrak was correct. The need to match resources to desired service was glossed over. THE ISSUES Today, seven and a half years later, the questions most thought had been an- swered in the beginning have reemerged: (1) Why an Amtrak? (2) How big should it be? (3) How much will it cost each year? (4) What are the public benefits? (5) Where does it "fit" in our national transportation needs? The Department of Transportation-which has had an uneviable job over the past year-has attempted to answer these questions in the environment of today's world. The questions have been forced by the increasing public demand for services of all kinds, resulting in higher Federal budget deficits and a spiraling inflation. Amtrak has thus become a part of the public policy/funding dilemma. In answering questions such as these, it is crucial to weigh the benefits-social as well as economic benefits-which must justify the spending of public dollars. Some of these benefits are: Availability of an intercity mass transit mode for those who cannot or choose not to travel by other means; Environmental aspects of land use, air and noise pollution; Rail transportation is acknowledged as the safest mode of travel; It provides city center transportation service which in turn promotes eco- nomic development including intermodal facilities; It contributes to maintaining stability in public transportation as well as service for those small communities which have only limited alternate transportation means at their disposal; It can help to alleviate the congestion on our highways and the overcrowding of airways and airports; and Potential energy savings through transportation efficiency, espe- cially since rail energy consumption is, or can be, derived from energy sources other than imported oil. Some of these points are made in the findings and purpose of the Amtrak Act; the others, I believe, should be added-especially at a time when energy is again becoming a cost and supply concern. The whole issue of the relationship of various transportation modes to energy - efficiency is one which should be explored and quantified more thoroughly-not on the basis of historical data, but on the basis of potential, since no one denies that a major crunch is coming. The only disagreement is when it will occur. Airline passengers are already being affected, since a number of airlines have cancelled flights due to lack of fuel. Consider for instance, the latest "best case" estimates which have been made for the various modes of intercity travel. The estimates are not made on past perform- ance. That's history. What can each mode accomplish in the crunch? That's the key question policymakers should address. The attached chart shows precisely how each mode of intercity transportation measures up on the issue of energy efficiency. Taking the best case for each mode, you will note that a single Amtrak train yields twice as many passenger miles per gallon of fuel as any other mode-500 versus 250 for the bus, about the same for a 6- passenger, 40 mpg auto, and only 62 for a 747 aircraft. PAGENO="0090" ©I~SE'~ FUEL EFFUCUENCY ©O~~AR~SON AUTO~A~RCRAFT...BUS~TRAgN NOTE: 55 MPH FORSURFACE VEHICLES PETROLEUM FUELS TRAIN -J 0 -J 0 z AUTO BUS z C) -a C) 1~ 0 z SOURCE DATA (1) BOEING COMM. AIRPLANE CO. (~ AMERICAN BUS AS~'N (3) GENERAL MOTORS CORP-END CURVE AND LOCOMOTIVE ENCYCLOPEDIA SIMMONS-BOAROMAN PUBL. CO. AMTRAK MARCH 1979 PAGENO="0091" 84 SERVICE GOALS In the findings and purposes section of the Amtrak Act, the Congress listed a few key works to characterize what our service should be-Modern, Fast, and Comfort- able. A comment on each of those categories is required. Modern.-Amtrak's aged fleet now averages more than 28 years in service (excep- tion the 490 newer Amfleet cars). These cars came from 22 railroads and are non- standard and very costly to maintain. As a result, more than $234 million was spent in maintenance last year. Modernization improves service and cuts maintenance costs. Fast-According to the laws of physics and good engineering, a fast train-a reasonably fast train of 60 to 90 mph-must have a track which is designed and maintained expressly for that rate of speed. That train will then not only be fast, but it will be comfortable and safe. Amtrak's current systemwide average speed is 45 mph-ten mph slower than the maximum speed on the Federal highway system. Comfortable-Comfort is derived from the combination of good rolling stock and well-designed and well-constructed track. Track which is not designed and main- tained for passenger train speeds and which is not maintained to passenger train standards is uncomfortable, and unreliable. To achieve these goals will require a realistic assessment of Amtrak's capital needs. Consider, for instance, that we now have an operational fleet of some 1,250 cars on a given day operating over 27,000 mile system-1,250 cars for 27,000 miles. England's national rail system has 18,000 cars for 11,000 miles; France, 15,000 cars for 22,000 miles; Germany, 17,000 cars for 17,000 miles; Italy, 11,000 cars for 10,000 miles; South Africa, 10,000 cars for 14,000 miles, and Japan 26,000 cars for 13,000 miles. There is another part of Section 101 of the Amtrak Act which finds that "inter- city railroad passenger service is a necessary part of a balanced transportation system." On this point, I would like to mention some figures from a study being undertaken by the U.S. Conference of Mayors-a study detailing the Federal gov- ernment's involvement in subsidies to all modes of transportation. The figures in the following chart show Federal transportation expenditures since 1971, Amtrak's first year. As you can see, Amtrak represents a little over 2 percent of the total Federal subsidies to all modes of transportation. Even when trust fund amounts are sub- tracted, Amtrak's share amounts to only 4 percent. The same trend continues in the Federal transportation budget for fiscal year 1980 when there is a 26 percent reduction in rail dollars but a 6 percent increase in subsidies to the other modes. Everytime the National Taxpayers Union or some other group cites Amtrak as an example of outrageous Federal expenditure, I wonder why Federal expenditures in other modes are not considered? How do they "fit" in the transportation priorities of the nation? The truth is, there is no mode of transportation that can exist without some form of Federal subsidy-simply because of the technology and safety requirements and the public service nature of the product. Shouldn't Amtrak therefore be considered in this context instead of in isolation as a "heavily-subsidized" or "financially- ailing" mode? FEDERAL AID TO TRANSPORTATION-FISCAL YEARS 1971 THROUGH 1977 [Dollars in millions] Amount Percent Highways $41,320 55 Trust fund 34,096 General funds 7,224 Air transportation 13,933 18 Civil Aeronautics Board 500 Federal Aviation Administration 13,433 Domestic water transportation 4,882 6 Army Corps of Engineers 4,298 Tennessee Valley Authority 15 PAGENO="0092" 85 FEDERAL AID TO TRANSPORTATION-FISCAL YEARS 1971 THROUGH 1977-Continued [Dollars in millions] Amount Percent U.S. Coast Guard 569 Ocean shipping 3,325 5 Ship construction 1,248 Reconstruction 115 Ship operations 1,962 Mass transit 9,424 12 Capital facilities grants 6,371 Formula grants 1,216 Other expenditures 1,837 Rail transportation 2,931 4 Federal Railroad Administration, United States Railroad Association and Rail Service Assistance 749 Federal Railroad Administration, R. & D 317 Emergency rail restoration 27 Amtrak 1,838 Total 75,815 source: Transportation 5obsidy 5tudy, united Conference of Mayors, 1979. It is in the light of these arguments that Amtrak management approaches the route structure recommended by DOT. We would be derelict in our role as manag- ers if we did not point out some additional problems that we feel must be considered as Congress debates the issue. We have discussed all of these with the Department and have included them in the Board of Directors Mission Statement and Amtrak's Legislative Report, recently submitted to the Congress as required by Section 308 of our Act. I would like now to address specific concerns that Amtrak has as it plans to implement the restructured route system as presented in the DOT report. As the Congress considers the system, I believe it is incumbent upon Amtrak as manage- ment to point out those things which will affect the type of service available to the public. LEVEL OF SERVICE Whatever Amtrak's route structure, the public must be offered service that is safe, reliable, comfortable and convenient. It must be economic, both for the passen- ger and for the government within the context of subsidies to all transportation. Amtrak believes that the route restructuring process is essential. However, if it leads to still inadequate service operated over a smaller system, then the public will not be well-served. It is a management function to determine frequencies, routing between end points, on-board services, train consists, schedules, and fares, and Amtrak will continue to respond to the legislated directive to use "innovative operating and marketing concepts" to increase ridership on designated routes. In its Board's Mission Statement, Amtrak pointed out that ultimately the Con- gress must establish priorities for route and service, an optimum basic network, with advice from Amtrak. Further, Amtrak should be vested with authority to make additions to, or deletions from, the network using route criteria developed by the Board in 1975 and approved by Congress. The Board is currently developing a refinement of those criteria and will seek informal endorsement by appropriate committees. Amtrak recommends that Con- gress include a definition of "criteria and procedures" in the Rail Passenger Service Act to refer specifically to the "Criteria and Procedures for Making Route and Service Decisions;" established pursuant to section 404(c) of the Act. PAGENO="0093" 86 The DOT report specifically recommends that two routes-The Sunset Limited between Los Angeles and New Orleans and The Empire Builder between Chicago and Seattle-be operated on a three-times-a-week basis. Amtrak believes strongly that any service less than daily is not fully marketable. Sufficient economies are achieved by operating on a daily basis to make it worthwhile and the cost per passenger is positively affected. Surveys and studies on the Crescent which are in progress buttress this point and we will make them available to the Committee. Additionally, we have a problem with the proposed reductions in the New York to Florida service. Currently we operate three trains a day over this route serving both the east and west coast of Florida. These trains are all well-above average perform- ers on our current system. We feel that there is no way we can serve the 700,000 or more passengers per year currently carried on three trains with the one remaining train. Also, we know from the Northeast Corridor that frequencies greatly affect patron- age and enable us to provide better service. Reducing frequency therefore will increase our loss per passenger in the high density New York to Florida market. The Department's assumption on the use of Amfleet and reductions of level of food and beverage service on the Florida trains and the Broadway is unrealistic. Apart from the unsuitability of Amfleet for such long distance routes, this equip- ment is being relied on by the Corporation for expanded use in Northeast Corridor service. The proposed food and beverage service level reductions are simply unsuited to longer distance trains. Also, they will not be typical of food and beverage service on the longer distance routes that will be served by our new Superliners. We have noted a drop in food and beverage revenues on longer distance routes using Amfleet equipment. The DOT report has been widely quoted concerning the projected retained rider- ship versus reduced route miles. Specifically, references have been made to 91 percent of the ridership being carried, while 43 percent of the route miles have been reduced. Some clarification of these statistics is necessary to fully understand their implications. The 91 percent refers to passenger trips, counting a short distance or commuter passenger equally with a transcontinental passenger. The statistic that measures distance traveled, i.e., passenger-miles, is not 91 percent but 80 percent in the DOT plan. The 91 percent passenger trips figure includes 100 percent retention of NEC trips, since NEC service is assumed to be constant. Therefore, all the passenger trip losses occur outside the NEC. The reduction in such trips outside the Corridor is approxi- mately 20 percent. This occurs because slightly more than half of all trips on the existing system are within the NEC. And, for the same reason, passenger miles outside the Corridor decline by 28.4 percent. It should also be noted that "route miles" only indicates presence or absence of passenger services, not frequency or service. A route mile with a single tn-weekly train is counted the same as a route mile having one, two, or more frequencies a day. As an example, the Sunset Limited, which travels through Texas on a tn-weekly basis between Beaumont, El Paso, is counted as 897 route miles. In contrast, the route miles between Boston and Washington, D.C., are only 456, with multiple service frequencies each day. EXPANSION OF SERVICE Implicit in any restructuring of Amtrak is the idea that better service will be offered to the public. As refined route and service criteria and procedures are adopted, the Congress should consider how new service levels on routes can be implemented. In considering a U.S. rail passenger route system, where the bulk of the railroad mileage is owned and operated by private firms, the provisions of passenger service is by virture of contracts between Amtrak and those owner railroads. To the extent the current route system is reduced, the contractual obligations of the railroads no longer providing passenger service will be lost. The net effect of this is clear: those railroads will no longer be required to maintain their physical plant at the elevated level of condition necessary to operate a rail passenger system. This happened in 1971, when approximately half of the passenger trains operating prior to that time were eliminated. When those services were abandoned, the operating railroads downgraded track and signal systems from the higher passenger train level to utility. In any reduction in routes, therefore, passenger capability must be pre- served. Amtrak recommends that maintaining existing facilities in a standby state PAGENO="0094" 87 of readiness should be considered. It Congress agrees that this is a desirable ap- proach, legislative language would be needed to keep our operating agreements with the railroads in effect. We are currently conducting studies to estimate precisely how much this would cost, but preliminary figures show that if all discontinued trackage was maintained by maintenance-of-way payments geared to the differential between freight use and passenger service, it would probably be approximately $10 million annually. GOALS The Northeast Corridor Improvement Project is based on the belief that high- speed rail service made possible by improved track and roadbed conditions will substantially increase ridership and revenues. While the same precise trip time and speed goals may not be economically justified in other areas of the country, there is no question about the desirability of improving track and roadbed conditions. Amtrak currently has very little influence over not only the conditions of track, but the requirement or passenger train preference over freight trains. These two eld- ments are the key to both improving on-time performance and offering an attractive and reliable alternative to the automobile for intercity travel. Therefore, Amtrak recommends that the Congress establish a system-wide aver- age speed goal in excess of that for interstate highways. COMMUTER RAIL SERVICE The needs and economics of commuter rail service must be realistically addressed. Since the legislative authorization last year for Amtrak to operate commuter serv- ice, several state/regional commuter agencies have requested that Amtrak under- take such service. The maintenance of current coumuter fare levels, equipment, and maintenance needs and coordination of operations are all issues which will require additional funding. For Amtrak to enter into cummuter rail contracts, full reim- bursrement for total costs must be provided. In addition, Amtrak should have the requisite time to coordinate with all entities involved before it is required to provide this service. STATE PARTICIPATION Amtrak feels that the 403(b) state service program has worked well and, for the six states currently participating, has provided rail service that would not otherwise exist. While the DOT restructuring reports suggest that the states should undertake a larger role in providing financial support, unfortunately, unless some current 403(b) service is cancelled, Amtrak will not have funds to match any new state service. With a total of 40 states either losing or having no rail passenger service under the restructured system, it is important that some means be found for states to institute state-supported service if they desire. Amtrak recommends that Congress consider other measures to enable either individual states or groups of states to continue or initiate marketable service or increased frequency on an appropriate matching basis. FINANCIAL STABILITY The DOT report recommends a three-year authorization. Amtrak welcomes this type of response to our need for financial stability. However, the annual authoriza- tion levels are based on a number of assumptions which must come true in full measure to enable train operations to continue. We believe that we can operate the recommended system in fiscal year 1980 for the operating subsidy requested. We cannot, on the other hand, predict with any degree of certainty how well revenue, ridership and cost projections will hold two years from now. This is why the Amtrak Board has suggested a contractual realationship with the government is the best way of guaranteeing that agreed-upon service can be fi- nanced. We are now developing a detailed analysis of how such a contract could be implemented for fiscal year 1981, fiscal year 1982 and beyond. CAPITAL REQUIREMENTS Long-term stability must be established if Amtrak is to institute reasonable corporate planning and management controls to assure long-term financial account- ability and cost containment. PAGENO="0095" 88 The key to this is a multi-year authorization similar to that recommended in the DOT's report. Amtrak must be able to plan effectively so its critical equipment needs, as outlined in the Board's Mission Statement, can be met. From its inception, Amtrak has had serious equipment problems. In part, this results from the existence of a very limited equipment supply industry. Uncertainty resulting from annual authorizations cycles has complicated long-term capital plan- ning. To provide a basis for advanced planning without unduly compromising Ex- ecutive Branch or Congressional fiscal options Amtrak recommends that the legisla- tion authorize capital appropriations to be made a year prior to when such appropri- ations may be obligated for expenditure. Amtrak cannot provide the quality of service that Congress and the traveling public rightly should expect with inadequate or obsolete facilities and equipment. Significant improvements have been made on a continuing basis since Amtrak began operations. Yet much remains to be done in all five major areas: (1) motive power; (2) passenger equipment; (3) maintenance facilities, (4) right of way; and (5) stations and other facilities. Funding to meet these needs amounts to $1,150 million over the 1980-84 fiscal year period, with $171 million scheduled for 1980. The primary business and service goals for this five year capital program are: to implement the new route structure emerging from the Congress' review of DOT's recommendations; to support and complement the planned NECIP construction program with needed rolling stock and improvements in passenger handling support systems (ticketing, reservations, station reconfigurations, etc.); to restore NEC, Har- risburg, and Springfield branch lines to appropriate track speeds; to comply with DOT handicapped access regulations-both in our stations and equipment; to up- grade and rehabilitate stations and other facilities to an appropriate system-wide standard; to continue to reduce use of obsolete steam-heated passenger equipment through the conversion of selected equipment to electrical heating/cooling systems; and to develop a new generation of "low-level" equipment suitable for intermediate to long-distance operations where the "double-decker" Superliner equipment is inap- propriate. This equipment would replace both (a) those steam-heated/cooled equip- ment not converted to electrical operation, and (b) units which have been converted when they reach the point where heavy overhauls and increasing annual mainte- nance costs justify replacement. I cannot emphasize fully enough my belief that this older, obsolete equipment should not be operated indefinitely. Attempting to do so would be an uneconomical use of taxpayers' money and would subject the travelling public to unacceptable and unnecessary delay, discomfort, and inconvenience. Amtrak has two other concerns relating to capital expenditures. The first is funding of labor protective payments necessitated by the restructuring of the Amtrak system. For Amtrak to solve its equipment problems, it is important that such payments not be deducted from available capital funds, as is recommended in the DOT report. Second, the Congress should recognize that the actual costs of making the track connections required by the restructured system can only be estimated at this time. Actual costs can only accurately be determined when negotiations with the operat- ing railroads are completed. PAGENO="0096" National Railroad Passenger Corporation Total System Capital Program in Mil]3.ons of Current (Inflated)~Dollars Projected Actual Budgeted 5-Year FY78 FY79 FY80 FY81 FY82 FY83 FY84 Total Cap4~al Proj~ç~. 1/ * Motive Power 52.3 53.0- 63.1 56.5 11.1 3.1 3.4 137.2 Passenger Equipment 32.3 50.5 29.9 66.2 113.8 116.7 36.1 362.7 Maintenance Facilities 28.2 12.4 13.1 27.5 35.3 26.4 28.6 130.9 Stations/Other Facilities 7.6 4.1 13.3 31.8 72.3 86.8 126.7 330.9 Right of Way 9.6 10.0 51.6 21.0 38.5 24.9 51.9 197.9 * Total * 130.0 130.0 171.0 203.0 271.0 .257.9 246.7 _______ Notes: ~$53.0 million Motive Power includes $29.0 million assumed supplemental appropriation for light-weight electric locomotives (AEM-7 `s). i/Differs from $1,581 indicated in table 5-2 of DOT's January restructuring report, as that amount included other nonoperating appropriations for debt retirement, NEC purchase payment, and, for the recommended system only, labor protection payments. Corporate Planning February 28, 1979 PAGENO="0097" 90 TRANSITION TO RECOMMENDED ROUTE SYSTEM Further, in assuming that October 1, 1979, will see the start-up of new operations, the DOT report overlooks the real possibility that not all railroads will be in position to permit operation of proposed routes on the schedules assumed or at the cost levels contained in the funding. The need for track connections and other modifications require unavoidable lead time in many instances. The operating rail- roads cannot be expected to initiate physical changes until the nature of the restructured system is finally determined after the completion of Congressional review. Amtrak recommeds that the Congress consider a possible funding problem in connection with continuing service on those routes designated for abandonment pending the completion of necessary construction on the proposed restructued routes. MANAGEMENT INITIATIVES Since this Committee last considered Amtrak legislation, the Corporation has new management-for better or for worse, a new President-and a Board of Directors with many new members. Amtrak management is totally committed to providing the type of public service which the Congress directed in the original enabling legislation-safe, fast, modern, and efficient. The Board has adopted for the first time a Mission Statement which has been provided to the Committee; we have instituted new procedures to address our most pressing problems-equipment and on-time performance; we have adopted a goal of a substantially improved ratio of revenues to costs and now have a fare policy geared to achieving that; and we have consolidated functions and cut back person- nel (we recently cut 12 percent from our headquarters staff). Various sources have expressed the view that significant money could be saved if Amtrak observed more prudent management practices. After eight months as Amtrak President, I am conviced this is a misconception. The extent to which Amtrak must buy services from the railroads, the age and condition of our equip- ment and facilities, and the impact of industry-wide labor agreements on manning levels, works rules and pay rates combine, along with some lesser cost areas, to tie Amtrak costs almost completely to the route structure, train frequencies, and qual- ity of service. Given these requirements, there is very little management flexibility to reduce costs. The following chart shows the breakdown of Amtrak operations in fiscal year 1978. Dollars in millions Percent Operating trains $350 39 Maintaining equipment and facilities 299 69 45 105 22 890 34 8 5 12 2 100 Operating stations Marketing and reservations Interest, taxes, insurance and depreciation General management Total In summary, management flexibility is limited to a very small percentage of costs and even these controllable costs have longer term implications. For instance, advertising expenses or staffing of ticket offices can be cut with a longer term impact of losing more in revenue than is saved in cost. There comes a point when the only way to cut costs further is to eliminate routes. This point was made by the GAO in its report to Congress of May 1978. However, there comes a time when the cutting of routes and frequencies will put Amtrak below the threshold of acceptable service for a national system. I have found that it often happens, when we are confronted with truly over- whelming tasks * * * and cutting back the once-great rail passenger system of the U.S.A. in 1970-71 was just such a task * * * we sometimes overlook completely one or more of the most important and fundamental factors of the whole system. This was forcefully brought to my attention when I read an Organization for Economic and Cooperation and Development document, 1977, "The Future of European Pas- senger Transport." I would like to quote a few lines from that important paper: "~ * * the share of the market in which the railways are competitive will contin- ue to shrink unless they too can raise their standards. The economics of scale in the operation of railways are such that there is a minimum level of traffic below which PAGENO="0098" 91 it becomes increasingly difficult to operate at a profit, and as the cost of labor and energy rises, this minimum level tends to rise too." Since the January 31 release of the DOT Route Recommendations, there have been thousands of reactions, particularly from those who would receive reduced service or no service after the proposed system is in place. As I am sure Members of the Committee are aware, the targets for the criticism have varied from Amtrak to DOT, to the Congress, to the Administration, to the Railroads, to the Rail Unions, and in some cases, to the potential passengers who have never used passenger trains. I think the very fact that the public perceives these entities as scapegoats only confirms in my view the absolute necessity that we have a total national commit- ment to operate a national rail passenger system. If the commitment is hesitant or if we cannot now provide better service over whatever route system the Congress dictates, I personally believe it would be better to close Amtrak down. For the reasons stated in my testimony and in the Board Mission Statement, we do believe there is a need for national rail passenger service. But, we also believe that whatever reductions are made to the system-be it the DOT plan or something that approximates that system-we must have the resources to implement and operate it well. Amtrak has been working closely with the Department of Transportation in the preparation of the Administration's proposed Amtrak Improvement Act of 1979. This addendum addresses its provisions. In the main text of my testimony, I have mentioned the need for amendment to Section 404(c) to define our Route and Service Criteria. In addition we recommend the following: Amending the term "security guard" to "railroad police" to achieve conformity with the term used by other railroads to provide Amtrak police with access to appropriate information systems and cooperation with state and local police. Exempt the Corporation from the current requirement to secure advance approval of the ICC before entering into loan arrangements with banks. Authorization for developing through routes and joint fares with air and water carriers as well as motor carriers in both domestic and international routes. Legislative authority to establish a uniform pay cycle to improve pay frequency and timeliness and reduce processing time and adminstrative costs. Statutorily establish Amtrak as doing business in each state to avoid the need for Amtrak to annually file a certificate of incorporation in each state. Amend the free and reduced fare transportation provisions in the law to require compensation by the railroads at a rate representing 50 percent of the average monthly yield per revenue passenger mile for Amtrak service. We feel this payment should be in lieu of any charges for liability incident to travel by persons eligible for free or reduced rate transportation and any other costs incurred by Amtrak. We estimate this provision, if in effect in 1978, would yield $6.5 million. Repeal Section 801 regulatory authority of the ICC. Amtrak should be responsible for monitoring and improving on its own the quality of rail passenger service. I must comment on provisions of the DOT bill which are objectionable to Amtrak. I have discussed these with Secretary Adams and he is aware of our concerns. Section 8(1) of the bill would repeal a paragraph in Section 601 of current law which gives the Secretary authority to make our capital grant funds available on a quarterly basis. Since Amtrak borrows from the Federal Financing Bank, this availability would add significantly to Amtrak's operating grant requirements. An Amtrak capital grant is normally spent out in three years. Assuming the funding levels in the bill, the interest saving from quarterly availability of capital grants over the next three years is about $42 million. Section 8(3) of the DOT bill would subject Amtrak to the Budget and Accounting Act of 1921 as amended. Amtrak has no quarrel with the existing requirement to submit its budget through DOT. We are doing that now. I feel however, that this provision would go beyond that and would treat Amtrak as a Federal agency by requiring, eventually, review of testimony. Amtrak is not a Federal agency and should not, in my view, become one. We will continue to submit our budget requests through DOT and live with the outcome. We are not in the business of submitting our own separate legislation or busting the budget through backdoor procedures. Review of testimony or other concerns of Amtrak impinging on management or operations is something else and is separate from the budget process. I have already mentioned our concern regarding the funding of labor protective payments from capital funds. PAGENO="0099" 92 [The following information was subsequently received for the record:] APRIL 4, 1979. Hon. RUSSELL B. LONG, Chairman, Subcommittee on Surface Transportation, Committee on Commerce, Sci- ence, and Transportation, U.S. Senate, Washington, D.C. DEAR MR. CHAIRMAN: Enclosed are Amtrak's replies to the 27 questions presented us based upon Amtrak President Alan S. Boyd's testimony of March 5, 1979. If you should need additional information, please advise me. Sincerely, CLARK TYLER, Vice President, Government Affairs. Enclosure. In your memorandum of March 23 Question one asked about the results of the September 1978 excursion plan. The following is in response to that question. In September 1978 Amtrak began offering round-trip travel for one-way plus a fixed amount as illustrated by the following scale: One-way fare range: return $25 to $49.99 $10 $50 to $74.99 $15 $75 and up $20 An important feature of the plan was that the number of seats available for sale at these prices was limited in the reservation system, and we have the ability to alter that availability according to demand. There is only a small period of data available to analyze, however, the results indicate a positive effect. Construction of the plan was such that the prime market was long distance travelers (250 miles or more). For the October/November period, passenger miles in 1978 were 14.6% above the 1977 period. I should mention that the routes were positively impacted by service restoration as well. Revenue for long distance routes was 11.4% above the 1977 period. RELATIVE TO ITEM No. 2 The Rail System Safety Program has been developed and presented to the Rail- way Labor Executive Association. It was approved by this Association unanimously and has been approved by our Legal Department. It is just a question of now getting it printed and after this is done, it will be implemented. QUESTION No. 3 For fiscal year 1978, expenses incurred in providing food and beverage services totaled $65.5 million. Revenues were $20.2 million for a loss of $45.3 million. (From Bruce Horowitz memorandum dated January 23, 1979 attached.) There are three major areas that impact the cost of providing food services on Amtrak, they are: 1. Labor 2. Food and Beverage-on-board 3. Commissary Support Facilities Each is examined below. Labor This is the major expense Antrak bears in food service. While labor costs are determined by contract negotiations, Amtrak presently endeavors to hold down cost by: 1. Turning crew members en route to save expense of salary over portions where demand does not require their service. 2. Reducing staff during the off-peak period of the year. 3. Minimize initial staffing and utilize flexible staffing from locations based on "day of departure" loadings. Food and Beverage This is an area that effective planning is impacting costs favorable. Currently we are: 1. Selecting food and beverage items that reduce waste (condemnage). PAGENO="0100" 93 2. Reducing the number of food items available on the cars (can speed service and/or reduce labor required). 3. Setting prices so as to maximize revenues. 4. Standardizing food items as much as possible to take advantage of volume purchasing and to reduce commissary handling costs. 5. Reducing menu printing costs through standardization and use of cost effective designs and colors. Commissary Support Facilities Support operations have been improved in the following areas: 1. Management surveys have been conducted in the two largest locations, Chicago and New York (Grant Central Terminal, Penn Station, Sunnyside Yards and Albany) with the other ten locations scheduled this year 1979) to ensure economic application of OBS support resources to service requirements. 2. Emphasis is beings placed on accountability and stock control methods to economize dollar expenditures for consumable and non-consumable supplies. This action area is focusing on condemnage reduction and quantities ordered and stocked. 3. Audit of Service Attendant dollar remittances for food items sold has been implemented at each field location to ensure funds collected for sale of items on trains are turned in to finance. 4. Controls have been implemented on support equipment to reduce losses and replacement attendant thereto, such as uniforms for OBS employees, linen, dining car equipment and trainside delivery vehicles. In uniforms alone this past year, the savings were in excess of $400,000. QUESTION No. 4 In your testimony, you state that Amtrak is an experiment which has never really been given a chance to succeed. By this do you mean that the Federal Government has not provided sufficient financial resources? In your opinion, how much money should be invested to provide a fair experiment? What happens if the Federal Government invests billions of dollars in operating subsides and capital improvements and ridership still doesn't increase? How long should the experiment continue? Answer. Amtrak has not had the necessary financial resources to conduct a worthwhile national experiment on the attractiveness of rail passenger transporta- tion. For example, the cars on our Eastern long haul trains to Florida and to Chicago were generally built between 1939 and 1952. We have not been able to order modern long haul replacements for such services. As a result, equipment failures, freeze-ups, delayed trains, and passenger inconvenience have plagued these trains and probably discouraged many potential passengers. Deteriorated track, slow trains and schedule unreliability have undoubtedly turned other passengers away from us. The amount needed for a fair experiment is probably not quantifiable at this point. But it can be stated in goals-i) track maintained to the level to allow our long-distance trains to average at least 55 mph, and short-distance trains to average at least 65-70 mph; 2) operating funds to operate at least a daily frequency on all our routes, and offer a convenient selection of departures on our short and medium haul routes; 3) a modern fleet of efficient and functioning passenger cars and locomotives with sufficient carrying capacity to allow Amtrak to expand its services as the national demand for its services increases. With such resources in place, a fair national experiment could proceed from which in five years or so a reasonable asessment of Amtrak's attractiveness could be made. I have no doubt the ridership and revenues from such a system would be substantial. Even with the antiquated and unreliable equipment we have, the circu- itous routings and slow schedules we have often been forced to operate, Amtrak has reversed the downward slide in rail passenger ridership. In 1972, Amtrak carried 16.6 million passengers. In 1978, Amtrak carried approximately 19 million passen- gers. QUESTION No. 5 Deals with Amtrak's average speed being increased from 45 to 55 mph; here again, it is impossible to give you a definite estimate other than a "ball park" estimate. I believe to accomplish this it would require in excess of $3 billion. In order to average 55 mph, you must run considerably higher in a lot of stretches. This estimate is without the beneift of consultation with any of the railroads and 43-139 0-79-7 PAGENO="0101" `PLAN NO. REV NO. PROGRAM SUPERLINLRS ORGANIZATION OPERATIONS SUPPORT IDATE DATE PAGE OP - DESCRIPTION I. 1901 9 IMAR APR LAYI TIN 1301 ~UC1lEP")CT'Io' l:rori Loochon Plan Month Actual Month Plan Cun. Actual Corn. Var. Month OLor Corn.. Plan Month Ragjage Cars Actual Month Plan Corn. . Actual Con. Var. Month Var. Coin. . Diners Plan Month Actool Month Plan Con. Actual Corn. Var. Month Var. Corn. Plan Month Sleepers Actual Month Plan Coor. Actual Corn. Var. Month Var. Corn. Plan Month Lounge Cars Actual Month , Plan Corn. Actual Corn Var. Month Var. Coer. lOCAL Plan Month Actual Month Plan Corn. Actual Con. * Var. Month Var. Cure. CD ~Ooi. CD CD En - . - ~...TI ~ 97 ~En ~ - CD~~ Enoi. CD - a 0 97 z - CD(-7~c ~En OIl - - CD - - ~ 0(0 Pg CD 00 CD CD CD CD97~ 09797 CD Pg En'~ 00 (0a (DO En CDE° vi- C2 C31970 En 970 CD TI CD 97 Mg CD 97 0 0 9, vi CD 9, En 970 CD TI CD 0 00 SYMBOLS 2. PLANNER STa*T 0* COMPLETE ~ keneMaTcA e.vT ~ *(BC000ULEB 51*51 05 COMPr.tTE ~ rvneaaresr eRCEInED 1~ acluai 6. We(vsSLO IssuE # * BE5LBULC CHANGE eso.caron I I QUANTITY I REMARKS - I Above schedule furnished by Mr. McDivltt to Mr. Boyd in his visit to Washington on 2/26/79. Baggage car scherjule was given in ph On~ conversation by Mr. Purvos, Pullman Prograrn Manager to Mr. Annechlnj, Amtrak Contract Adniniatratoron 3/9/79 I TITLE PAGENO="0102" 95 QUESTION No. 7 "In your testimony, YOU indicated the poor car/route mile ratio of Amtrak in comparison with foreign nations. To what extent will the elimination of 43 percent of the system's route miles help car utilization and that car/route mile ratio?" Answer. The recommended restructuring of the Amtrak system will reduce car utilization while increasing the passenger car/route mile ratio. Passenger car utili- zation can vary depending upon route distance, train schedule patterns, mechanical servicing times and equipment reliability. The greater the frequency over short distances the better the utilization. Some examples of reduced car utilization in the restructured system are the rerouted Broadway Limited (New York, Washington to Chicago) which will require 25 percent more equipment due to increased route length and running time, and the Empire Builder (Chicago-Seattle) which will have a lower car utilization ratio due to a reduction in frequency of service during the non-summer months. The passenger car/route mile ratio will increase in the DOT restructured system because restructuring reduces route miles by 43 percent while reducing the active fleet size by only 37 percent. QUESTION No. 8 What type of equipment purchases will Amtrak be making in the next five years? By 1984, how many cars will Amtrak own or lease? Answer. Over the next five years the majority of Amtrak's equipment purchases will be AEM-7 locomotives and new low level long distance cars. The AEM-7 locomotives are required to meet the objectives of the NECIP and low level equip- ment will replace the 30 year old equipment inherited from predecessor operating railroads. There will be some additional purchases made of electric switcher locomo- tives for the NEC and other equipment which will support the NECIP program and improve the efficiency of the national rail system. If the Amtrak route system evolves into the one recommended by the DOT in January 1979 it is estimated tht Amtrak will own or lease 1,233 passenger cars including all self-propelled vehicles by 1984 to satisfy its ridership demand. This assumes that approximately 1,300 antiquated conventional passenger cars will be retired. QUESTION No. 9 In fiscal year 1978, Amtrak experienced a decrease in ridership to under 19 million passengers. What do you attribute that decrease to? Answer. Fiscal year 1978 included several factors beyond our control as well as some within our control. The strike against the nation's railroads in September 1978 cost us thousands of passengers during the strike itself and others who may not have trusted trains immediately after the strike. The winter of 1978 caused the cancellation of many trains, both in the Chicago area and in New York and New England. We estimate this latter factor cost us a quarter million passengers. The Metroliners are being refurbished and in the meantime we are having to increase the running time, costing us passengers. The NECIP work program is also costing us passengers because of the necessary delays. Discount airfares, reservation staff reductions, and advertising budget reductions all add together to cause us to lose passengers, either to other modes or who simply do not have enough information to travel with us. Our projection for fiscal year 1978 ridership would have been nearly 22 million, for a 13.6 percent increase over fiscal year 1977, had the above circumstances not intervened. QUESTION No. 10 In the U.S. Conference of Mayors StudV, to be published by the end of April, entitled, "Federal Aid to Transportation,' subsidy is defined as direct obligation from the Federal Government. Users were not included in this study. We do not have ridership figures for the attached table. QUESTION No. 11 How many 403(b) services is Amtrak currently operating, and what is the history of losses associated with these services? PAGENO="0103" 96 Answer. Amtrak is currently providing 403(b) service on the following eleven routes: Philadelphia-Harrisburg. New York City-Buffalo. Chicago-St. Louis. Chicago-Detroit. Chicago-Carbondale. Chicago-Quincy. Los Angeles-San Diego. New York City-Montreal. Chicago-Port Huron. Chicago-Dubuque. Minneapolis-Duluth. The fiscal year 1978 financial operating results on these routes is as follows: [In thousands of dollarsl Cost impact: Fiscal year 1978 Avoidable costs 19,724 Fixed cost impact' Total cost impact on system base 24,063 Sources of funding: Passenger revenues 9,105 State reimbursement 6,818 Federal subsidy requirement 28,140 Total 24,063 `it is necessary to include a fixed cost amount which reflects the impact on system costs which is not included in current avoidable cost methodology. 2 average Federal subsidy requirement for each of the eleven routes is $740,000 per year. If the impact on fixed cost amounts is disregarded, the average would be stated at $345,000 per year per route. QUESTION No. 12 Are there any requests from the States for new 403(b) services now pending at Amtrak, and, if so, what is the status of those requests? (a) California: Sacramento-Oakland-Los Angeles-Amtrak has approved this 403(b) request. However, because of the operating railroad's refusal to operate, our legal de- partment has proceeded with an arbitration case. Los Angeles-San Diego-Undergoing internal analysis. Bakersfield-Los Angeles-Extension of San Joaquan-request differed pend- ing resolution of arbitration case concerning Sacramento-Oakland-Los Angeles. (b)lllinois: Chicago-Peoria-Negotiations with carriers now in process. (c) Oregon: Portland-Eugene-Decision deferred due to inavailability of Amtrak funds. (d) Pennsylvania: Altoona-Pittsburgh-Negotiations in process with operating railroad. All requests for new 403(b) service are contingent on sufficient Amtrak funding. QUESTION No. 13 I understand that, during the period of gasoline shortages in 1974, Amtrak was contacted by approximately 15 states requesting rail passenger service. If a similar situation arose this year, how would Amtrak respond to States' requests for addi- tional 403(b) services? Answer. Amtrak's position regarding new 403(b) services was stated in Mr. Boyd's testimony before the Senate Commerce Committee on March 5, it is as follows: "Amtrak feels that the 403(b) state service program has worked well and, for the six states currently participating, has provided rail service that would not otherwise exist. While the DOT restructuring reports suggest that the states should undertake a larger role in providing fmancial support, unfortunately, unless some current 403(b) service is cancelled, Amtrak will not have funds to match any new state service." PAGENO="0104" 97 Backgroud Information requested by the Senate Commerce Transportation Sub- committee-Tim Lynch. QUESTION No. 14 The Department of Transportation's draft Amtrak authorization bill recommend- ed authorization levels of $567 million for FY 1980, $621 million for FY 1981, and $628 million for FY 1982 to cover Amtrak's operating losses, including the cost of operating 403(b) services. Will the recommended authorization levels cover the cost of operating the existing 403(b) services, and would they allow Amtrak to begin operation of any new 403(b) services? Answer. The DOT draft Amtrak authorization bill compares with the estimated amounts in the DOT Final Report as follows: [In millions of dollars] Fiscal year- 1980 1981 1982 567 621 628 DOT Report Estimates 552 591 598 The DOT report estimates were developed to include the cost of operating of current 403(b) routes but do not provide for additional services. The higher authori- zation amounts could provide for some contingencies, including possible 403(b) routes. Amtrak feels, however, that a contingency of 10 percent of projected year subsidy could be required for uncontrollable events such as higher inflation, rider- ship shortfalls, delays in delivery schedules, and changes in basic assumptions. QUESTION No. 15 The Department of Transportation's draft Amtrak authorization bill recommend- ed authorization levels of $171 million for FY 1980, $225 million for FY 1981, and $231 million for FY 1982 to cover Amtrak's capital costs, including labor protection costs incurred in implementing DOT's route restructuring recommendations. What is the estimated labor protection cost; over what period will labor protection funds be disbursed, and how does Amtrak plan to use the remaining capital funds? Answer. The Amtrak spending plan shown below details the labor protection costs, the period over which the labor protection funds are expected to be disbursed, and Amtrak's plan to use the funds available for capital projects. Labor protection Fiscal year 1980 Fiscal year 1981 Fiscal year 1982 6.0 3-year total 69.0 22.0 97.0 Capital projects Motive power Passenger equipment Maintenance facilities Stations/other facilities 63.1 29.9 23.1 27.3 27.6 171.0 56.5 66.2 27.5 31.8 21.0 203.0 11.1 113.8 35.3 72.3 38.5 271.0 130.7 209.9 85.9 131.4 87.1 645.0 Right.of.way Total-Capital projects Total-Capital projects and labor protection 240.0 225.0 277.0 742.0 In fiscal year 1980, Amtrak and DOT are not in agreement concerning the proper funding source for the cost of labor protection resulting from implementation of the proposed route structure. DOT recommends this $69 million cost be funded from within the $171 million allowed for capital projects, while Amtrak is of the opinion that funding for this requirement should come from another source. In fiscal year 1982, DOT's draft Amtrak authorization bill recommends a total appropriation of $904 million, consisting of $598 for operation of the system, $225 million for capital projects, $75 million for debt retirement, and $6 million for labor protection. Amtrak recommends instead that the "mix" of the $904 million appro- PAGENO="0105" 98 priation be revised, allowing $602 million for operation of the system, $271 million for capital projects, $25 million for debt retirement, and $6 million for labor protec- tion. This recommendation is in keeping with DOT's Final Report to Congress on the Amtrak Route System (~. 5-2, Table 5-1, Note 1) which states that the proper mix of "capital appropriations' in each year is expected to be determined in the budget process. RESPONSE TO CONGRESSIONAL QUESTIONs QUESTION No. 16 I understand that Amtrak will have to incur some special capital costs in order to begin operation of the restructed system recommended by DOT. What is the cost of this transition, and will Amtrak be able to begin operation of the restructured system by October 1, 1979? - Response: There are a number of capital projects required in connection with the rerouting of trains under the restructured system. These capital costs include such items as major track connection projects at Pittsburgh and Cleveland, certain track rehabifitation, track relocation to provide adequate clearance between adjacent tracks, construction of locomotive and car servicing facilities, station platforms and station shelters and buildings. The details of the capital requirements and their related costs are presently being developed. Preliminary estimates of capital costs will probably not be received from the carriers in less than 30 to 60 days. These costs presently appear to be substantially greater than the DOT estimate of $10 million. The complexities of some of these projects (such as the track connections at Cleveland and Pittsburgh) preclude implementation of the new routes until the projects are essentially completed. This will result in route implementations consid- erably beyond October 1, 1979, and conceivably not within the required one year limitations after Congressional approval. To provide continued service to points designated on the DOT system which are currently served by Amtrak may require continuing current operations until the required railroad agreement and/or track work are completed. If this becomes necessary, it could result in additional annual costs of $12 to $13 million. We are currently discussing the operational requirements for the new segments with the various railroads. At this time we do not have an exact feel for the start-up date of the new segments but the preliminary indications show that certain of the new segments may not be ready for start-up on October 1, 1979. QUESTION No. 17 If Amtrak is unable to begin operation of the restructured system by October 1, 1979, will any costs result which are not covered in the fiscal year 1980 operating and capital authorizations? Response: Capital costs will not materially change if the projects cannot be completed by October 1; however, a crash program to attempt to complete all capital requirements by October 1 would result in greatly increased capital costs. With respect to fiscal year 1980 operating costs, the necessity to operate the two present western routes to California instead of the proposed consolidated route would result in considerable additional operating expenses; however, we are concen- trating our efforts to have the proposed route in service as soon as possible after October 1. The projected rerouting of the Broadway Limited and the Lake Shore between Chicago and the east coast will actually result in increased operating expenses. Therefore, failure to implement these new routes on October 1 will not add to these increased costs unless alternate service on segments of the proposed routes, such as Washington to Cumberland, is required during the interim period until the new routes can be implemented. An orderly transition coordinating engineering, me- chanical and transportation requirements will be most cost effective in the long run. QUESTION No. 18 Amtrak is currently taking delivery of the Superliners, the new bi level passenger cars. I understand that the Superliners are intended for Amtrak's western routes. Is new single level equipment planned for Amtrak's eastern routes? Answer. Yes, new single level (which we have named "low-level") equipment is planned for Amtrak's eastern routes. The capital program developed under the DOT restructured system included funds for low-level equipment to be assigned to long haul eastern routes such as New York-Florida, The Broadway Limited, and the Lake Shore Limited. PAGENO="0106" 99 QUESTION No. 19 How much new single level equipment, would be necessary to operate over the DOT Recommended System, and what would such equipment cost? Answer. The DOT Recommended System would require 283 low level cars at a cost of $297.5 million (includes escalation expense). QUESTION No. 20 If new single level equipment was authorized in fiscal year 1980, when could Amtrak expect to take delivery? Answer. The delivery of new low level equipment is dependent upon the availabil- ity of car manufacture production capacity at the time of the order. Under the most optimistic situation Amtrak could expect delivery of the first cars in fiscal year 1982 with all 283 cars to be delivered by the end of fiscal year 1984. If the car manufacturer capacity is taken up by other car orders, the optimistic schedule would slip by the number of months that Amtrak would have to wait to get into a production line. QUESTION No. 21 On page 9 of your testimony, you point out some interesting statistics. It appears that Amtrak operates more than twice the amount of route-miles than several foreign passenger rail systems with 1/10 of the equipment. Amtrak presently has 1,250 cars by your figures, what would you suggest would be the ideal number to operate over the present 27,000 mile route system? What would be the ideal number for the recommended restructure? Answer. Amtrak currently has an active fleet of approximately 1,800 passenger cars (including self propelled vehicles such as the Turboliners and Metroliners) and operates 1,250 on any given day. The comparison of Amtrak's equipment fleet and route system to that of foreign railroads illustrates how thin Amtrak's service is spread throughout the country. This comparison does not illustrate the adequacy of the fleet size to satisfy the operational requirements of the route system. it is estimated that the current fleet of passenger cars is sufficient to provide daily service over most of the present 27,000 mile route system. Other nations have chosen to provide such quality service frequencies. Presently, another more urgent problem Amtrak faces regarding its rolling stock fleet is not the number of cars it owns but the age and condition of the fleet. Over 50 percent of its currently active fleet are antiquated steam heated cars inherited from its predecessor operating railroads. The age of these cars and the fact that they have been subject to deferred preventive maintenance has caused frequent malfunctioning of the equipment and a high out-of-service ratio. A major capital program is required to replace this anti- quated equipment with modern, cost efficient, passenger cars. It has also been estimated that a fleet of approximately 1,200 passenger cars would be able to operate the route system as recommended by the DOT. QUESTION No. 22 Further, what would the increase in cost for the restructured system be with the increased cars? Answer. There would be no increase in costs for the restructured system since current estimates already assume a fleet of passenger cars sufficient to operate the system. QUESTION No. 23 What does Amtrak pay for a brand new Metroliner car? Average new locomotive? The new double-decker cars used in western service? Answer. Amtrak has not bought or contracted to buy any new Metroliner cars. It therefore does not have any factual base upon which to estimate the price of a new Metroliner. The average cost to overhaul and upgrade the Metroliners for high speed service in the NEC is $1.35 million per unit. The average cost of a new electric locomotive such as the AEM-7 is estimated at $2.7 million including escala- tion and a new diesel electric such as the F4OPH is estimated at $0.9 million. The average cost of a Superliner car is $0.9 million. QUESTION No. 24 While Amtrak continues to attempt to obtain needed work relief through the collective bargaining process, its success in this area has been limited. PAGENO="0107" 100 In order to freely evaluate the foregoing statement, certain facts must first be put in proper perspective. In its early days, Amtrak relied almost exclusively on employ- ees furnished by contracting railroads. These employees were governed by the work and pay rules covered in the respective collective bargaining agreements and de- pended less and less on employees of other railroads. Today, the only significant use of other than Amtrak employees is in tram and engine service (operating personnel). Amtrak employes none of its own tram and engine employees, either within or outside the Northeast Corridor. These employees are governed by the collective bargaining agreements of the various contracting railroads and Amtrak is prohibited by the Railway Labor Act from entering into collective bargaining negotiations with the labor organizations representing the employees involved. Relief from existing work rules applicable to operating personnel can only be obtained through the negotiation efforts of the contracting railroads. While some relief has been obtained on a case by case basis as a result of our requests of the various roads involved, it is fair and factual to say that the contracting railroads have been no more successful in obtaining work rule relief for Amtrak than they have been in negotiating such relief for their own operations. In the period between 1971 and April 1, 1976, when the Northeast Corridor was acquired pursuant to the 3R Act, Amtrak entered into a number of collective bargaining agreements covering its employees. These agreements resulted in some flexibility and productivity improvements over the -traditional non-operating collec- tive bargaining agreements; however, because of the scope of Amtrak operations prior to acquisition of the Corridor, limited maintenance personnel were employed and, as of April 1, 1976, final agreement has been concluded with only two of the eight unions representing the various maintenance crafts. Acquisition of the Northeast Corridor dramatically changed the scope of Amtrak's operations. Particularly significant was the expanded responsibility for mainte- nance. Unfortunately, the very legislation which made it possible for Amtrak to acquire the Northeast Corridor, also made it virtually impossible for it to obtain any significant "streamlining" of the work rules applicable to its maintenance person- nel. Section 504(f) of the SR Act placed Amtrak in the following negotiating posture: 1. It could not offer employment to Conrail employees who had been performing the work to be taken over by Amtrak until implementing agreements has been entered into with each of the labor organizations involved. 2. Before the terms of the implementing agreements could be applied to effect the transfer of employees from Conrail to Amtrak, Amtrak was required to negotiate agreements with each of the labor organizations covering rules, rates of pay and working conditions. 3. If any of the agreements covered in (2) above were not concluded in 60 days, the applicable Conrail agreement became the Amtrak collective bargaining agreement. These requirements, coupled with the labor protection provisions of Section 505, placed Amtrak in the worse possible "negotiating" posture. Given these circum- stances, the resultant collective bargaining agreements do not represent a signifi- cant streamlining of work rules. The collective bargaining process is, however, a continuing one. Work rule flexi- bility resulting in meaningful productivity gains is, and will remain, a top Amtrak priority. QUESTION No. 25 Before the route restructure was ever contemplated, Amtrack was allowed to enter mto firm contracts for the purchase of many new double decker trains that were to be dedicated for service in the West. What is the status for the delivery on these cars? Wifi there still be a western service network that will make adequate use of these cars? Answer. To date, Amtrak has accepted seven Superliner coach cars. Based upon Pullman Standard's most recent delivery schedule, 108 cars will be delivered by the end of calendar year 1979. At the end of calendar year 1980 281 cars will be delivered with the last three cars to be delivered by January 1981. The Amtrak route system as recommended by the DOT in January, 1979, will be adequate to utilize all the Superliner equipment. The recommended route system will require 256 Superliner cars for long distance services. The remaining cars will be utilized m 1) short haul routes freeing Amfleet equipment to meet the NEC's projected ridership at the completion of the NECIP, 2) routes with increased in service frequency, and/or 3) routes that experience unanticipated ridership growth. PAGENO="0108" 101 QUESTION No. 26 A Manufacturer in the last year designed and put into production a self-propelled rail car. It would seem that this particular vehicle designed to operate with only one crew-person might be instrumental to Amtrak in operating over traditionally low density passenger routes at a fraction of the present cost of a full consist of seven cars and as much as 6 operating personnel. It would seem that several of these vehicles could operate over low density areas and act as a gathering service to feed longer distance conventional trains. What research, testing, experiments, or investigation has Amtrak/DOT done with regard to this idea? Do you have any costing figures available? It would seem that several states might utilize this concept as a substitute for the conventional 403(b) subsi- dized train approach. Answer. Amtrak is in the final stages of negotiating an agreement with the State of Connecticut which will significantly improve the level of rail passenger service offered within the State. The State will be purchasing new self-propelled rail cars for Amtrak to operate on a service that currently has outdated equipment. Amtrak and the Manufacturer are participating in joint economic studies and operational tests of this self-propelled vehicle known as the SPV-2000. The prelimi- nary results of the economic studies as related to capital and operating costs have indicated that the operation of the self-propelled vehicle is generally cost-efficient compared to a locomotive hauled train when the consist requirements are two cars or less. However, the self-propelled vehicle cannot be assigned to routes based solely on the average consist requirements for any of the following reasons: Railroads, such as the AT&SF, will not allow the operation of self-propelled vehicles over their tracks. Railroads, such as the ICG, require at least three cars in each consist to insure that signals and grade crossing protection are activated. The economics justifying the purchase and operation of the self-propelled vehicle are eliminated in this situation. The assignment of non-standardized equipment to an isolated route impacts the ability to maintain the equipment in an economic manner. It should also be mentioned that a so-called full consist of seven cars is not operated in low density areas. The particular consist operated on a locomotive hauled train is adjusted to provide a minimum amount of equipment to satisfy ridership demand. At times this means that as few as two cars are operated in a consist with a locomotive. Also, current railroad union agreements require the assignment of an engineer, fireman and conductor to the new self-propelled vehicle as compared to the one crew-person mentioned in this question. Furthermore, under some labor agreements a second self-propelled car requires a second trainman, that is, a total of four crewmen. The operational tests of the self-propelled unit have indicated that it can be modified to operate in a locomotive hauled train consist with Amfleet cars. The final decision to operate this type of service must be based on consideration of the cost of providing compatible electric power and communication lines, car dia- phragms and high speed transmissions that will function properly when the car is being towed at high speed. QUESTION No. 27 The Canadian (United Aircraft) Turbo-trains have proven very disappointing in use, both in the Northeast Corridor and elsewhere. They have suffered an extremely high "out of service" ratio, due both to the propulsion used and the articulation system. We have considered rehabilitating them but are, at this point, recommend- ing against it because of the incompatability of these units with the remainder of our system, the electrification proposed for the Northeast Corridor, where they could be most effectively used, and the cost of rehabilitation. For your information, none of these trains is sitting in our New York Avenue yard. All sets are presently stored in a more secluded place at Philadelphia. The Canadian sets have had an engine replacement and have use parts cannibi- lized from other sets. We still own the sets we purchased from United Aircraft. We are interested in leasing or selling them to Via Canda for use with their sets. Senator LONG. We will next call Mr. Jim Snyder. We are happy to see you here. I am happy to see you again. PAGENO="0109" 102 I also want to congratulate you on the fine job you have done representing the railroad workers of America. STATEMENT OF J. R. SNYDER, CHAIRMAN, LEGISLATIVE COM- MITTEE, RAILWAY LABOR EXECUTIVES ASSOCIATION, AND NATIONAL LEGISLATIVE DIRECTOR, UNITED TRANSPORTA- TION UNION; ACCOMPANIED BY W. G. MAHONEY, COUNSEL Mr. SNYDER. Thank you, Mr. Chairman and members of the committee. It's indeed a pleasure to be here, on the bottom of the totem pole here. Senator LONG. There are a lot more waiting behind you. Don't worry about that. You are right about the middle. Right behind the administration's witnesses. Mr. SNYDER. Thank you very much. I would like, with your permission, to read my entire statement in the record. Mr. Chairman and members of the subcommittee, on behalf of the Railway Labor Executive Association, its members and the employees of the Nation's railroads whom they represent, I wish to express our appreciation of the opportunity to present to you their views on a subject which we are convinced is most vital to this Nation's future welfare, not only in terms of our future transporta- tion needs but also in terms of energy conservation. My name is J. R. Snyder. I am chairman of the legislative committee of the Railway Labor Executives' Association and the national legislative director of the United Transportation Union. My office is located in the Railway Labor Building, 400 First Street, NW., Washington, D.C. Accompanying me is Mr. William G. Mahoney, counsel to the Railway Labor Executives' Association. The Railway Labor Executives' Association is an unincorporated association with which are affiliated the chief executive officers of all of the standard national and international railway labor unions in the United States. When Amtrak was created, the Congress was fully aware that a massive Federal financial effort would have to be undertaken to preserve rail passenger transportation in this country. This new creature of the Congress literally had to resurrect the corpse of rail passenger service. Everyone concerned with the enactment of the Rail Passenger Service Act of 1970 knew that resurrection could not be accomplished cheaply, easily, or quickly. Amtrak had to take over equipment that was virtually worthless and operate it over rights-of-way which, for the most part, were completely inadequate. In order to evaluate properly the final report to Congress on the Amtrak route system and the recommendations made in that report, it must be precisely determined what we expect of the rail passenger service in the future. We must look at the transportation in this country, what it will be like 25 to 30 years from now. It seems to us that this country can't afford to dismiss the existence of Amtrak routes simply because at the present time there are adequate alternative means of transportation or because PAGENO="0110" 103 certain routes have not yet been developed, as much as we believe they should. The future of transportation in the country would be governed by the availability and cost of fuel, considerations which were appropriate measures of the need for the rail passenger service in the past simply will not be appropriate in the future. Nobody can deny it would be in our national interest, indeed, whenever action of the OPEC countries demonstrated it would be vital to our national interest to have a nationwide rail system that would be fully utilized by the traveling public, nor can it be or- dered that such a system would not be fully patronized if it were made attractive to the public. The day is approaching when gas will become so expensive and perhaps so scarce that intercity rail service would be preferred to travel by private auto. Billions of tax dollars are being spent on mass transit. This money will not be recovered except in terms of preservation of the quality of life which we believe to be necessary. Such expenditures will be required for rail service for the same reason. We can't afford to destroy half our existing lines, because the service we destroyed over a period of some 20 years hasn't been satisfactory. The position taken by DOT in its final report can be viewed as of value only if rail passenger service is looked upon as unnecessary, old fashioned methods of intercity transportation. We have seriously and constantly-the energy crisis we face destroys that position. We are convinced the time is near when the citizens of the country will take the trains because the automobile will be too expensive or unavailable to them. The accuracy of this conclusion is confirmed by events which occurred during the so- called Arab oil crisis of 1973, when the Amtrak could not obtain enough passenger cars to service the upsurge in patronage it experienced. The future of rail passenger service in this country was doomed with the enactment of the Transportation Act of 1958 which per- mitted discontinuance of the passenger trains on notice. Hundreds of trains were permitted to deteriorate and were dis- continued. ICC found some trains which passengers stubbornly remained faithful to were deliberately downgraded. Upon the inauguration of Amtrak, hundreds more trains were discontinued, though some members operated at a profit. Those that remained presented a sorry sight in terms of equipment and scheduling. By the time Amtrak began operation, the traveling public for 13 years had been urged in every way to use other forms of transpor- tation. That education was effective. It would remain effective until rail passenger operation-and to a great extent, quantity are reestablished in this country or until the public is simply forced back to the rails by the scarcity and cost of gas. PAGENO="0111" 104 An acceptable level of operation is being reestablished between Washington and Boston with favorable results. We believe it can and, indeed, must be reestablished elsewhere with regard to a change in the public attitude toward passenger trains. There is encouraging evidence in the statistics recently released by Amtrak. These show ridership increasing on Amtrak through the country. Comparing fiscal year 1978 with fiscal year 1979, ridership in- creased over 6 percent. The Northeast corridor increased ridership by only 1.9. Short- distance travel increased by 13.4, long distance by 8.7. Among the long-distance routes which increased initially were the New York- Florida 28.7, the Chicago to New Orleans 16 percent, Chicago to Los Angeles 15.3, Chicago to San Franciso 11.9, and Chicago to Laredo 16.5. The progress made on the three latter routes will be destroyed if the Department's recommendations are put into effect. The market for rail service is not to be found among those who fly, but in those who drive. Clearly, this should be of paramount interest for Amtrak to cut deeply into that market. It will never do so, if the final recommendation of DOT becomes effective. The Department's recommendations would not only con- demn our rail passenger system to unexpandable straitjacket exist- ence which would insure its ultimate extinction; but would also prove unworkable. For example, the final report doesn't indicate whether the non- Amtrak railroads will agree to operate Amtrak trains over the modified routes, and we understand some railroads will refuse to operate Amtrak trains over the proposed new routes. In the above trains, primarily in most of the-there is a triweek- ly service, which would be a further deterioration of service which could result in just the Northeast corridor passenger service for years to come. Looking at Amtrak as a corporation that should fail to make a profit, we doom rail passenger service at the outset. By cutting its route mileage by 43 percent, we prevent Amtrak from becoming a truly national system and begin a process that can only lead to initial reduction in route mileage and eventually the cessation of all operations, except perhaps those in the Northeast corridor. The loss of the national rail passenger service will eventually cost this country a great deal more than money. At the very best it will result in much faster deterioration of the fossil fuel and at worst it could result in citizens being unable to travel for pleasure or in some cases for need. What is gained by this reduction is paltry even by the figures presented by the Department. While reducing Amtrak by 43 percent, we save about 20 percent in Government funding, when the additional cost of track changes and employee protection is figured in: 3,400 Amtrak employees, about 17 percent of the total work force, and 2,400 employees of other railroads will be laid off. PAGENO="0112" 105 Hundreds of others will be displaced to lower paying jobs, forced to move their homes, or both, as a result of the process begun by the 5,800 job abolishments. According to the Department's estimate, these adverse effects will cost the Government $69 million in fiscal 1980 and a total of $97 million in fiscal year 1980 through 1984 under the employee protection system designed by the Secretary of Labor under the Rail Passenger Act of 1970. This latter cost could be much higher if the 5,800 employees who are laid off are paid the equivalent of their wages for only 3 years. The cost could run as high as $300 million, and the figure does not include displacement allowances to employees bumped to lower paying jobs or moving expenses nor does it include the additional 3 years protection which would be due non-Amtrak employees, be- cause of their longer service that could come to another $150 million. That it will cost only 32 percent of the potential as indicated by the Department of Transportation seems to be optimistic. It is the position of rail labor first that the final report recom- mendation designating the basic route system for Amtrak should be disapproved by both Houses in the Congress. To that end we support the adoption of Senate Resolution 62 introduced on February 7, 1979 by Senator Leahy. Second, that Congress formally recognizes the mission of Amtrak to be a public service mission and enact legislation which will reflect that. In this regard we recommend your favorable consideration of legislation such as the proposed bill entitled Amtrak Cost Alloca- tion Act of 1979, which we understand will be introduced in the Senate in the near future. In the meantime sufficient funding should be authorized to permit Amtrak to maintain its present system. We submit this makes good sense. It would cost no more than what is recommended for authoriza- tion by the Department proposal. The Department seeks a 3-year operating expense subsidy fund of $567 million for the fiscal year ending 1980; $621.5 million for the fiscal year ending 1981; and $628 million for the fiscal year ending September 30, 1982. We do support the 3-year authorization. We do think it's needed. In a separate Northeast corridor proposal, it recommended an increase in funds of $654 million from the $1.6 billion to $2.254 billion, and we support that. I understand this to be in the bill sent to the Hill. Because of the lead time required by the proposed corridor pro- jects, $100 million of the proposed increase can't be utilized in the time allowed. We urge that the Congress apply that $100 million to the Amtrak authorization for fiscal year 1980 and require the Amtrak Board and its management to operate on those funds through the fiscal year 1982 by paring the system if necessary to keep within the authorizations requested by the Department. PAGENO="0113" 106 This has the advantage of providing Amtrak management time to plan and work toward a system designed by itself on the basis of business judgment rather than of a system imposed on it from the outside. It would also cost no more than the Department recommends be spent on Amtrak in the Northeast corridor over the next 3 years. In addition, it would prevent the drastic or immediate cuts in the system recommended by the Department. In closing I would again emphasize our conviction that Amtrak is needed to provide a vital future public service. This country can't afford to accept the Department's recommen- dation to dismember it, nor can we accept as either logical or rational-in the face of eventual fuel shortages-an administration transportation budget which increases financial aid to less fuel efficient modes of transportation by 6 percent, $12.79 billion, while reducing aid to our most fuel efficient, and in the long run, our most vital transportation system by a 27-percent cut of $1.67 bil- lion. I have attached two exhibits to my statement which show the large population of metropolitan city areas which will lose all Amtrak service if the trains which the Secretary marked for dis- continuance are removed. Also, the amount of Federal money which will have been wasted in the building of new Amtrak stations and rebuilding stations on these routes as shown in exhibit 2. Mr. Chairman, I would like to express our appreciation for the opportunity to present our views on this most important subject, and we would be delighted to receive any question on the exhibit from you. On exhibit 1 it shows 205 cities and towns on the lines to be proposed eliminated under the DOT plan that would have no rail service whatsoever. We show a population of 14,301,000. This does not include the Crescent. As you know and I know, it operates in about 10 States there. Thank you, Mr. Chairman. [The exhibits follow:] EXHIBIT 1 TOTAL POPULATION AND RIDERSHIP Number stations City 1977 losing all services ~pulation ridership Inter-American 18 2,722,000 173,073 Pacific International 7 525,000 70,525 Southwest Limited 18 496,000 216,562 Lakeshore Limited 1 128,000 12,327 Pioneer 13 230,000 68,566 San Joaquin 8 345,800 133,341 North Coast Hiawatha 21 352,000 113,468 Cardinal 19 874,000 170,027 Hilltopper 11 214,000 65,608 ~ieieiiuuaii 9 125,000 42,277 San Francisco Zephyr 13 664,000 90,370 Montrealer 10 1,285,000 112,308 Lone Star 23 2,314,000 221,443 PAGENO="0114" 107 TOTAL POPULATION AND RIDERSHIP-Continued Number stations losing all services City population 513,000 1977 ridership 35,881 Broadway Limited 6 National Limited Floridian Total (without Crescent) 9 19 205 904,000 2,592,000 14,301,800 66,235 226,648 1,818,659 EXHIBIT 2 Money Amtrak has spent for station improvements on routes being eliminated Inter-American $1,108,000 Pacific International 94,300 Southwest Limited 106,900 Pioneer 306,000 San Joaquin 229,000 North Coast Hiawatha 98,800 Cardinal 986,125 Hilltopper 1,001,825 Shenandoah 323,200 San Francisco Zephyr 138,200 Montrealer 142,500 Lone Star 320,300 Broadway Limited 334,000 National Limited 156,000 Floridian 397,350 Total 5,742,000 Senator LONG. Thank you very much, Mr. Snyder. I am very hopeful that we can move into a future for railroading where we will have much faster equipment and move a great many more people on it. What do you think the potential is of making those trains move a great deal faster? Mr. SNYDER. Better equipment, as Mr. Boyd pointed out. No question about it. Improved new equipment, better road beds to operate over. Faster schedules. Better connections. Rerouting some. That is, I think, one of the major reasons we recommended to the committee here to take some of the northeast funds and operate the system for another year and send it down to the board of directors of Amtrak who should be with their staff people-Amtrak staff people should come up with, I think, a much better plan than the DOT came up with. As we see it, as practical railroad people, in looking at this map here, going into the triweekly service, if you want to kill a train quick, put in triweekly service. It doesn't reduce the cost all that much. This is the way it looks to us. If Congress adopts this plan, in a very few years, you will have nothing but the Northeast corridor left. It's so confusing for people to ride on a triweekly train. I know from experience and operating one as a conductor and trainman that it's just almost impossible. It's very confusing for the people. They will run what passengers you have away. Senator LONG. In my part of the country, as I indicated, we could very much use a lot more grade separations. We have to find PAGENO="0115" 108 money to pay for it. But the first order of business, if I had money to use in Louisiana, I would put it on grade separations and I would try to get it so we could move traffic into the heart of those cities really rapidly. It seems as though you can start out by getting something modern and fast that people use, then you have a chance to expand from there to extend it for longer distances and move from there hopefully until you have a better system. To do that, I guess we need a stronger budget. In order to do that, we need to start thinking in somewhat different terms, whether you buy a physical asset, even when you are in a modern railroad, you want to put it on the books as an asset and count it as such rather than handling it in such a way that it looks like the Government is out that money because it puts money into some- thing we thought would be an asset for the future. I hope you don't too much disagree with that. Mr. SNYDER. Mr. Chairman, during the course of the day with the various witnesses, you mentioned the Crescent on several occa- sions, where I think you are being discriminated against. I know I am. The people from the South have reason to feel this. This is one of the finest passenger trains in the country. Even though the equipment was old, it goes back into the thirties, the Southern did a good job of operating those trains. I, personally, the last few years, up until just the last few years here, rode that train once or twice every 2 weeks between here and Atlanta. In most every case, the train was loaded both ways. You couldn't get in the dining car. The potential of rail passen- ger travel is really there. It's really there on those trains. Like a lot of these-I am personally acquainted with that particular train, the Crescent. Senator LONG. My impression was when I used to ride the Cres- cent, it seems to me as though that train got up here in about 36 hours. It seems that when I first started riding it, you would get on at New Orleans and come up this way about 11 at night and then ride all night and then ride all the next day and you would get in here about 6 in the morning in Washington. That would be-about 36 hours, I guess. Someone told me that train is doing it in 24. Mr. SNYDER. Yes. It leaves 7 in the evening and gets into New Orleans the next evening about 7 or 8 o'clock New Orleans time- 24-25 hours. Senator LONG. About 25 hours from here? Mr. SNYDER. Right. Senator LONG. Back in the days when I rode it, it seemed it didn't make that time. I think it was about 10 or 11 at night then. Mr. SNYDER. This is the latest Crescent. The old Crescent you are speaking about was an all-Pullman train leaving New Orleans and it took a little longer coming through Montgomery and that way. But that train is gone for a number of years. Now they have taken that name and put it over to the Southern, which Southern operates exclusive between Washington and New Orleans. Senator LONG. Make it about 25 hours then. PAGENO="0116" 109 Mr. SNYDER. Yes. A shorter route than when you traveled back in the early thirties. Senator LONG. I rode it a time or two when I first came up here but my impression was it didn't get here in 25 hours. Mr. SNYDER. You raised a question about the number of people operating the Crescent. I would like to say this: There are always ways you can reduce the number of personnel on a train. We got the mechanics for that in the Railway Act to reduce this. But let's go back. In 1963, when the fireman issue was on the Hill before this committee, Senator Cannon remembers this-I don't think he was on this committee at that time-we had numerous hearings. That is when the 282 came in and they reduced and took the fireman off. At no time were passenger crews an issue in this. At no time has it been an issue because of safety reasons. You can reduce the personnel on this but to have a safe and economical operation, a real safe operation and give service and keep those people on there riding the train, you have to have sufficient manpower on there to operate the train. Senator LONG. It seems to me two things. One, you ought to try to make those trains move faster if we can. That means straighter tracks. Less inclines. It means a little more efficient service. Less stops at some of these-perhaps less stops, shorter period of time in the stations. It would need to shorten the time. It obviously has been shortened since the day I first rode up here as a boy. That is No. 1, get there quicker. No. 2, insofar as we can provide a more efficient service, we ought to try to do it. A friend of mine was an old conductor and he didn't ride airlines very much because he had a pass. He could go anywhere free on the train. In the old tradition, he didn't see any point in paying to go somewhere if he could go there free with his pass. I was talking to him after his first long-distance trip on a plane, took out his watch to see how long it took those young ladies to put the meal down and was shocked to see they could feed about 100 people in a period of 20 minutes. He was shocked. He couldn't do anything like that with a train. I would think if that guy owned a train company, he would have figured out some way to compete with that rapid airline service. Senator ScHMrrr. It can be done the same as the airlines, but would probably cost more money. Back to your first inquiry, your question there about speeding up the trains and that type of thing, in all fairness to Amtrak and the officials of Amtrak and the employees of Amtrak, I think they have done a remarkable job under adverse conditions. These railroads have not cooperated. The record shows that, with the exception of the Southern perhaps. They will put it on the side track for coal trains and local freights. These trains don't operate on time. The Amtrak officials know they haven't been kept on time because the railroads have not given them any type of priority. Senator LONG. Some friend was riding that Crescent a while back and the train jumped off the track. 43-1390-79-8 PAGENO="0117" 110 That is the first time I heard of the Crescent jumping off the track in many, many years. So obviously it's not being given the attention it was given at an earlier date. It was unheard of for the Crescent to jump the track. Mr. SNYDER. I think it was the track-a slow order of repair on the track or something like that. Senator LONG. Thank you very much. Senator Cannon. The CHAIRMAN. Thank you very much, Mr. Chairman. Mr. Snyder, let me ask you this: Does your organization favor any reductions at all in the size of Amtrak from what it presently is? Mr. SNYDER. No; we don't favor the reduction across the board in the DOT plan. In some areas-that was our purpose of recommend- ing to the committee here that: Send it back to the drawing board at Amtrak; that there could be rerouting and some token reduction in service, but let somebody that is being paid to do it-the Amtrak Board. Let them do it. They have the personnel to do it. In all fairness to this committee, in all fairness to the DOT, they don't have the equipment to do it. The CHAIRMAN. You heard Amtrak say here today they support- ed this reduction. Mr. SNYDER. To my understanding, Amtrak is going to support whatever Congress gives them. Not necessarily this reduction here but what the Congress gives them to operate. Mr. Boyd was talking, as far as the dollars go, it has been recommended in the first-year authorization-3-year authorization. The CHAIRMAN. You suggested in your statement that Congress take $100 millon that isn't required right now in connection with the Northeast corridor proposal, and add that to Amtrak's authori- zation for fiscal year 1980, and let them operate through fiscal year 1982, and then say this has the advantage over providing Amtrak's management time to plan and work toward a system designed by itself on the basis of business judgment rather than of a system imposed on it from the outside. Are you suggesting that business judgment is not used in arriv- ing at whether these segments ought to be or ought not to be maintained? Mr. SNYDER. Yes; I think the DOT did a miserable job on this plan, the bureaucrats down there. I don't think they have done a good job on this at all. I think the Amtrak officials and Amtrak Board would be in a better position to do this. The reason that we recommend $100 million, under the DOT proposal that was sent to the Hill here, it's an extension from a 6- year to an 8-year with an increase of $654 million for the North- east corridor. All we say it is to take that $100 million in the first year and operate this system and send it back down there and see if we can't get this thing straightened out. This is our best approach to it. The CHAIRMAN. You say to do it on the basis of wise judgment. I thought that is what these people were doing. When we gave the direction from the act last year as to where they would go, we certainly expected them~ to use business judgment. PAGENO="0118" 111 I am wondering if you think it's good business judgment to continue to run these segments where they obviously have no possible chance of ever operating at a profit. Is that good business judgment? Mr. SNYDER. Senator Cannon, if you recall last year when we had the Amtrak authorization, it was brought up about the crisis and all that. And under the statement-correct me, if I am wrong-if they cut off everyone on the train and just had an engineer, they would still lose money. The record shows that any public transportation in the country or throughout the world is not operating at a profit. Amtrak won't operate at a profit. What rail labor will do, would be glad to sit down with Amtrak and work with this Congress to have a decent passenger system in the country and operate it the most economi- cal way we can. Senator LONG. Could I ask about another matter? It seems to me if we want to save rail passenger services for the public and want to save as much of it as we can, then the first order of business ought to be to give the public something they can see, something that they can use that they would like to expand. Now Mr. Boyd sat where you are sitting a few minutes ago, and he said when they get the Northeast corridor thing completed, you will have to beat passengers off because so many people will want to ride on it. Did you hear him say that? Mr. SNYDER. Yes. Senator LONG. If it is anything like that good, it seems to me we ought to get busy and get it done in a hurry. This thing about waiting until 1983, you will have a lot of services shut down by then. A lot will be gone because of what the public sees today looks like a losing proposition. Mr. SNYDER. There's a market out there, Mr. Chairman, for rail passenger business along the line you are talking about, if you give them service. You can't run the train and miss connections and be 4 to 5 hours late and miss connections with not up-to-date equip- ment. As pointed out, in the severe winter we had, the heat is off. In the summertime the air-conditioning doesn't work. It's like a good restaurant. Senator LONG. Here is the point I had in mind. It seems to me the way the act was administered was a disgrace, to begin with. We thought that we would make money available for railroads to repair their tracks or put them in shape and then found the people amending the 4R Act in such a way. that in order to get a loan to fix your tracks up, you had to prove you were bankrupt. Mr. SNYDER. You are absolutely right. Senator LONG. In other words, it actually worked out that either you had to prove you were bankrupt on the one hand, which would destroy your ability to borrow money in the private market, or else you would have to prove you were in such good shape that you didn't need the Government money. Mr. SNYDER. We wrestled with that with DOT. We wrestled with them at meeting after meeting in trying to insist the railroad does need money to rehabilitate the track. PAGENO="0119" 112 Senator LONG. It seems to me as though we ought to start out by saying we will make a loan guarantee where we think this thing is worth doing. We will make a loan guarantee and all you have to pledge is just the piece of track that we put in shape. In other words, if we put some rails down here, you could just pledge us that strip of track right there for that loan guarantee. The railroad can't operate without the track. That's all you have to do. Just pledge that asset. Likewise, if you want to get some new equipment, we will guar- antee the loan for the latest locomotive and guarantee the loan for the latest equipment. Give us a chattel mortage on the equipment. That's all. If you do that, we can get lots of equipment in a hurry. And if we do that type of thing, I don't see why we need to wait until 1983 to get something done. You have budgetary problems scaring them off fixing up this Northeast corridor. It seems to me the answer is to use a loan guarantee approach on that; to say, go ahead and get the thing off, to move, to get this finished. Any reason why they can't shut down 5 miles of track at a time and use a track alongside of that while they are putting some track in order? Mr.~ SNYDER. In most cases, I think that could be worked out. In some cases, it would create a problem. But if they turned it over to me and you and this committee, we can get the ball rolling. Senator LONG. I think as far as getting tracks fixed up and a few grade separations, they ought to give us complete carte blanche to go ahead and do it our way. Just give us the old railroad highball to go ahead; and it seems to me we could get that done in about a year or so. Thank you very much. Did you want to comment on something else? Mr. MAHONEY. All I had in mind was to supplement Mr. Snyder's statement with respect to the question of Senator Cannon. That was the theory that we had, was to take the money that DOT recommended for authorization for the Northeast corridor and Amtrak, take $100 million off that, which we understand could not be used in the time allotted on the Northeast corridor, anyway, put it into Amtrak for the first year and utilize it then for recommen- dations for the second and third year that the DOT made; leave the system as it is and let Amtrak determine on the basis of its knowledge and its experience what it should cut. Now, it might cut back to this system-we hope not-the pro- posed DOT system. It might cut back to something substantially less, we hope. It might not cut back, for example, on a train that this past year gained 68 percent ridership. None of that went into the DOT thing. None of these gains on any of these trains went to the DOT thing. They sat back and decided you need triweekly service around the country, except for the Northeast corridor. When people try to figure whether they will ride south Monday and Thursday, and north Tuesday and Friday, they won't ride it. Without costing more, you can let Amtrak make that decision and let you know what they have done. They will have an opportu- nity to plan ahead with that money. PAGENO="0120" 113 Mr. SNYDER. One other impact I failed to mention in the state- ment here is very important, I think, with the 5,800 jobs here. These people want work. They are good dedicated people. They want to work here. You know, we have a problem with the Rail- road Retirement System. The Railroad Retirement System is run- ning a 4-percent deficit. When you cut a block off 5,800 employees participating in the plan, that would cause additional problems for them, in the railroads themselves. The CHAIRMAN. One of the things that disturbs me, you are suggesting, it seems to me from what you say, that this can be made a profitable operation, based on business judgment. I don't agree. I don't think there is any way in the world the railroads of the country can be made profitable from the passenger standpoint. That's what we are trying to do, is arrive at what we actually need as a part of our national transportation system. I think if they could be made profitable, certainly the Southern Crescent would not be-you would not have had a private company trying to get rid of it. From what I hear, the Southern Crescent was probably the best train in the country. Yet it was in such condition that the company that owned it, running it on a private business-like basis, couldn't make a profit. Do you agree with that? Mr. MAHONEY. No, I don't, Senator. Passenger trains in this country have never been profitable at best-ever. Back in 1958 when the Transportation Act of 1958 was passed, a deliberate judgment was made to get rid of passenger trains by the railroads. They did a very good job of it. People were discouraged from riding them. They took the capital investment they had and put it in freight which was much more remunerative. That is easily under- standable. The problem is when we get to Amtrak, they pared the system down to such a point where it's practically as small as you could get it in a national system. What happened here, when Mr. Snyder used the term business judgment, that meant that they would not take a train that has just had a 68-percent increase in ridership and may look like it will have another the year after that and take it off. That doesn't mean that train would ever be profitable. The CHAIRMAN. Which one are you referring to? Mr. SNYDER. Portland to Seattle. Mr. MAHONEY. Seattle to Portland. Between December 1977 and December 1978, they had a 68.8 percent increase in ridership, according to Amtrak s figures. Now I wouldn't think Amtrak would take that train off. The DOT is taking that off. The CHAIRMAN. There could be a lot of other considerations as to how it fits into the network and what the comparable costs are as well. Mr. MAHONEY. Whatever they are, they are not in the final report to Congress on the Amtrak route system. The CHAIRMAN. The staff advises me that that is primarily a commuter train, which is something that we are not talking about here. Mr. MAHONEY. Not the 68-something percent increase from Port- land to Seattle. Unless everbody riding from Portland to Seattle are considered commuters. PAGENO="0121" 114 There are others. There is a long stretch of others. Los Angeles and San Diego, 40 percent. Washington-Cincinnati 36 percent. These are percentage increases. It seems to me that the railroad itself looking at it might be able to take all the considerations into view and say, well, there is- although we had a 15 or 30 percent increase on that train, that was due to such and such and we ought to take it off. But to have an agency say that, when they really don't know- all they are getting is older figures and don't know. They are trying to set up a system into a tn-weekly service except for the Northeast, or virtually all of it, is to destroy the system and not put it on a business judgment basis, even though all that means is you lose less money. Not make a profit, just lose less money on it. And you will serve more people. The CHAIRMAN. We gave Amtrak the authority to do just that sort of thing and they tried in 1977 to eliminate costly routes. The House blocked that. That is why-through the appropriations process-that is why we finally came up with an act called the Amtrak Improvement Act of 1978 to require that the routes be re-examined by DOT and that they go through this review process considering the items we spelled out in that act and then made their judgment. That is what we have before us now. I don't know how we would ever get to it if we didn't give them some authority to move in. I do know this: The American taxpayer is not going to stand for a continuation of the tremendous types of subsidies that would be required if you continued that route structure, that very unecono- mical route structure that we saw on the board here this morning. Mr. MAHONEY. Senator, we don't advocate that sort of thing. What we do advocate is let Amtrak do it. Give them 3 years. Give them the money for authorization. Give them 3 years to do it, but let them do it. As Mr. Boyd already said, they are willing to pare it down. He thinks it should be smaller. He doesn't agree with what DOT has done here, but he does agree it should be a smaller system. But let them do it. The CHAIRMAN. He said they had some basic disagreements factwise with the DOT, but they did support the paring down of their system. Mr. MAHONEY. Not in the manner, as I understand it, that it was done. Mr. SNYDER. You might wish to check this out. It is my under- standing, from what 0MB told me back in January, that they didn't agree with the Final Plan either. You might want to check that out. The CHAIRMAN. I think you can find in this room probably 90 percent of the people won't agree with the Final Plan because there are some particular parts they don't like. Somebody has to make those tough decisions. Mr. SNYDER. This is a surprise when it comes from 0MB that they thought it was too drastic. The CHAIRMAN. Thank you, Mr. Chairman. Senator LONG. Thank you very much, gentlemen. Next we will call Mr. Charles Steadman. PAGENO="0122" 115 STATEMENT OF CHARLES STEADMAN, CHAIRMAN, COMMIVI'EE TO END GOVERNMENT WASTE, NATIONAL TAXPAYERS UNION; ACCOMPANIED BY CHARLES CRAWFORD, DIRECTOR Mr. STEADMAN. Mr. Chairman, Senator Cannon, we are honored to be here to testify in respect to Amtrak's 1980 authorization and the Department of Transportation's final route restructuring pro- posal. My name is Charles Steadman and I am chairman of the Nation- al Taxpayers Union's Committee To End Government Waste. With me is my colleague, Charles Crawford, who is the director of the NTU. The National Taxpayers Union is a national nonprofit organiza- tion renresenting over 1 milliOn members and affiliates in every State. We are an organization over 10 years old and have been very active in numerous areas of tax reduction which are well known, including that of proposition 13. Mr. Chairman, we are gravely concerned over the massive and extravagant subsidies Amtrak has received since 1971. Amtrak has become a tremendous burden on the taxpayers of this Nation. It is a glaring example of wasteful government spending. For this reason, as representatives of the Nation's taxpayers, our position is to oppose further subsidies for Amtrak. To have the taxpayers pay two-thirds of the operating cost of each ride on Amtrak is blatant misuse of tax dollars. There is no justification for taxpayers paying the cost of passen- ger train service. What is more ominous is the rapid escalation of Amtrak's costs and subsidies, while revenue has been growing at a much slower pace and ridership has been declining. If Amtrak proceeds un- checked, Mr. Chairman, by 1982 it will require $1 billion a year- all for a system that draws 54 percent of its riders from less than 500 miles of its 27,500 mile system, and one which serves less than one-half of 1 percent of all intercity travel. Mr. Chairman, the people are the marketplace. And they have been trying to tell the Congress that the product which the Con- gress is subsidizing is neither needed nor wanted. Reassuringly, Congress and the Department of Transportation have realized the danger of allowing Amtrak to proceed as in the past. The Department of Transportation's route restructuring pro- posal is a first step in solving the problem of Amtrak. This is a positive, forward-thinking first step, and we endorse it. This route restructuring will cut Amtrak's route miles by 43 percent while retaining 91 percent of Amtrak's passengers. Addi- tionally, between 1980 and 1984, implementation of the plan will save taxpayers $1.39 billion. This proposal is not a drastic cutting of Amtrak's routes when measured in terms of economic viability. Rather, it is a belated, commonsense reduction of a system desper- ately in need of pruning. There are many reasons to support this route restructuring. Amtrak has developed into a system which costs the taxpayers far too much for the nonessential service it provides. As you know, after Amtrak's formation in 1971, it was intended to quickly devel- op into a profitmaking organization. This has not occurred, of course. PAGENO="0123" 116 Amtrak proudly points to the fact that it has doubled its rev- enues between 1972 and 1978. It ignores the fact that in the same years, its costs have tripled, and its subsidies have quadrupled. Amtrak has attracted the riders it has only by keeping its fare unrealistically low. This is possible only because of subsidies. Even so, in 1978, total ridership went down to 18.9 million from 19.2 million in 1977. With subsidies going up and ridership going down, only the most myopic would continue their faith in the viability of Amtrak. The DOT route restructuring begins to address these problems. Along with passing the proposal, however, Congress must ensure that the process of evaluating Amtrak and reducing subsidies con- tinues. The DOT plan is limited in that it does not go far enough in furthering this goal. This route restructuring, itself, as we have said, should be adopted by Congress. But there are some areas where the DOT proposal can be substantially improved. Amtrak presently recovers only 36.8 percent of its operating expenses through revenues. The other two-thirds of each ride is paid for by taxpayers. The DOT proposes rectifying this grave imbalance by requiring Amtrak's revenues to represent 44 percent of its costs by 1982, and 50 percent by 1985. It is grossly unfair to taxpayers to expect riders, on most routes, to pay for any less than the operating cost of their Amtrak trains. If the system is properly restructured, Amtrak should be better able to recover more of its operating costs through passenger fares. It is essential that budgetary discipline be placed on Amtrak and that the imbalance in passenger revenues to expenses be corrected immediately. At the time Amtrak was established in 1971, Congress directed Amtrak to manage itself so that it would become self-supporting and that its subsidy would be eliminated in a reasonable period of time. During the years from 1971 through 1979, this goal has become lost as Amtrak has moved further and further away from a zero subsidy concept. The National Taxpayers Union asks that the Congress reassert its original goal, as it did in the 1978 legislation, and that Amtrak be required in a period of a few years to demonstrate that it can operate itself on a self-supporting basis. To realize this objective, the National Taxpayers Union proposes: One, that Amtrak be required to recover from the fares it charges its passengers its full operating costs in the Northeast corridor during 1980 and thereafter; two, that subsidies outside the corridor be reduced at the rate of 7 percent each year beginning in 1980 through 1982. At the end of this time, it is proposed that Congress assess the ability of Amtrak to achieve a self-supporting status. If it is determined that it cannot achieve this status, the man- date is clear. The system does not have an economic viability, and the subsidy should be terminated forthwith; and such part of the system not capable of self-support should be relegated to the age of the stagecoach. These criteria will facilitate congressional decisionmaking free of political and subjective considerations. Amtrak, under these propo- PAGENO="0124" 117 sitions, will be judged on the ultimate cost of the marketplace which should determine if Amtrak is a product people will buy. Let us turn to a 3-year authorization matter in the Department's plan. Before doing this, I want to address the point that the chairman brought up with regard to operating the system on the basis of Government guarantees and setting it up so it would operate, in essence, as a private or quasi-private business. Of course, we are very pleased that the Chairman made this point, because this is something we have been discussing extensive- ly. We think that the only place where this is possible of achieve- ment on a sensible basis is in the Northeast corridor where there is such a density of population, interconnected areas of high-density population, that this may be possible of achievement. If it couldn't be achieved there, it is highly unlikely it will be achieved any other place. We think it is not appropriate for us to come forward with our plan at this particular time, because we believe that it is appropri- ate that the Congress dispose of the Department's plan first and, at that point, we will come forward with our plan which will embrace, in essence, what the chairman has enunciated here today. With respect to the 3-year authorization, we are opposed to this for a variety of reasons, important among which is that we believe that a 3-year authorization cycle negates congressional responsibility. This 3-year authorization cycle would essentially mean Amtrak will be accountable to Congress only once every 3 years. It would be all too easy for appropriations to become automatic. There cer- tainly would be less incentive for Amtrak to improve its perform- ance in interval years. It is fanciful to believe that a 3-year author- ization cycle will improve planning. It is more probable these exercises will further deteriorate if the congressional pressure to improve them were to be removed. There is no reason long-range continuity couldn't be achieved within the normal authorizing framework to which so many other programs adjust. We hope this committee will give its full support to the Depart- ment's plan and will also adopt the National Taxpayers Union's proposition as they have been presented to you today. The Depart- ment's plan does hold forward promise. However, we must not lose sight of the fact that the subsidy levels remaining in that plan as proposed are at an exorbitantly high level, which will still total $4.59 billion in the period of time set forth in the plan between now and 1984. The Congress has a clear and present message from the people to reduce unnecessary spending. This is a message that the Congress does not want to ignore and we are sure will not ignore. This is a message which commands resolute action in connection with the Amtrak subsidy, and we ask that the committee read the proposals as we have presented them here today with the Department's plan. May we thank you very much for your kindness. Senator LONG. Thank you very much. PAGENO="0125" 118 I would like to explore with you what you want to pass judgment on later on. That is the idea of moving toward what hopefully might be a new surface transportation system. In other words, we were talking about trying to perpetuate serv- ice which loses $2 for every $1 it takes in, when you could get there quicker, when you have three other ways to get there: Air, and get there quicker; bus, about the same time; private automobile, and get there about the same time. The public is not going to find much enthusiasm for spending its tax money to perpetuate a service that people use but scantily. On the other hand, if we could come up with something where you could go from here to New York at a speed of better than 140 miles an hour on the surface, you could actually get there from door to door quicker by going by rail, then I think the public would be very much interested in that. And I don't think the public is especially concerned about the Government taking a risk of subsi- dizing something that looks like it has a real potential for the future. If you are talking about surface transportation, 140 to 200 miles an hour, that is something which the public would be interested in. I would like to have your reaction on that subject. Mr. STEADMAN. I agree with you. I think in this high-density area of the Northeast corridor, from here to Boston, if the roadbeds can be put into condition, if the overpasses and grade crossings can be eliminated so trains could be operated on a consistent even basis at high speeds, it is entirely possible that such a system can become self-supporting. This is going to have to be a very large initial investment, but the Congress already knows that if that is to be achieved-if it is going to be achieved-it ought to be achieved on an immediate basis or we should simply accept the fact that there is not going to be a product there that the public, even on an outside chance, would buy. Senator LONG. It seems to me you begin to get an idea what might happen by building a segment. Maybe you might want to build it from Philadelphia to New York or just pick any particular place. It may be, by building a segment, you could get an idea and sort of test public acceptability and get some idea about what you could expect. But if you are going to do it, it seems we should be getting on with it. I don't see much point in taking 5 years to find that out. If you are going to do it, you might as well start finding out. Mr. STEADMAN. Certainly because in 5 years there will be so much money down the drain, it would have been better to improve the roadways or do other things to improve transportation if the public will spend the money. Now you understand, we are not for subsidies. We are opposed to subsidies. We think there had been too much subsidy in this transportation field. My colleague, Mr. Crawford, wishes to make a comment. Mr. CRAWFORD. If I may, Mr. Steadman raised a number of points which I hope you consider carefully. One of the things we find offensive is that, I guess, we look at taxes as a confiscation of someone's income. It gets to the Government and, whatever the PAGENO="0126" 119 purpose, the money is spent on supposedly the best interest of the public in general. What we are finding offensive is the trip-time allowance between here and New York, which is a goal that Congress set of, I think it is 3 hours and 40 minutes or so, and it is supposed to be dropped 40 minutes by the time the Northeast corridor is improved. Before we start dealing with the answers, we need to define what the question was: Who benefits from the service of a faster train? Is it the average passenger that has no alternative between Wash- ington and New York or is it a businessman who could certainly afford the cost of the trip and service without a subsidy? We are thinking that the improvement in trip time between the two cities, for instance, which seems to be the heart of the matter, that that improvement is not benefiting the taxpayers in Kansas and Maine and Colorado who may be paying for this, but is benefit- ing very specific travelers who have all the national modes of transportation available. That is the point. We look at every dollar that is spent on this system as something that is taken away from the taxpayer. If it will be taken away, let's make sure it is benefiting in a very direct way all taxpayers. Senator LONG. Let's go further down the road than that, though. If you can make-if you can get your speed up to 200 miles an hour between here and New York on the ground and can go right into the heart of the city and can have an efficient way to get to your automobile and a taxicab when you get there, then that is what people would use rather than go out to the airport. That would save the public a lot of money. Now, we pay a lot of money to help operate those airlines. It would be worth our time to do whatever it takes to develop a transport service that would be the best in the world on the surface if it is going to save us that much money. If you could get something that the public would prefer just because it is better service, and one that could get the people there cheaper, it would mean a huge capital investment, but if you can get something that would get you from here to New York as fast as airlines could get you there and do it on the surface, you would have something worth putting a lot of money into. We spent a lot of money getting the airlines where they are. The United States developed the commercial airline system, and we put a lot of money into that before it began to pay off. That looks like a pretty good investment. We are spending a lot of money in communications, with the space satellite and things of that sort, but we like to think we will have something to show for it. If we are moving to where it provides something superior to what we have, and something that in time will be cost effective, I think you might be justified in that research. That is a good investment. You can't see what you are going to get out of it for sure, but one thing experience has proven-the only way you lose money on research is by doing it on a small scale. If you do it on a big scale, what you come up with justifies it. Sometimes you don't find what you were looking for but find something equally valuable. PAGENO="0127" 120 So that to develop a very modern surface transportation system, it seems to me, to be something the people would be interested in. I don't think they would be particularly interested in dragging along with some 30-year-old equipment and trying to patch it up and trying to hold it together with baling wire and providing a service people won't use. Mr. STEADMAN. Senator, I just have this to say about your com- ments. No. 1, as you already stated, the public will buy a first-rate transportation service like they will buy a first-rate donut. Now, our position is this: We want to see the Government get out of the transportation business. We have suggested here today that we realistically separate Amtrak into two segments. One, the Northeast corridor. Second, the segment of the remaining outside of the Northeast Corridor. With respect to the Northeast corridor, once Congress deter- mined what it wants to do with the Department's plan, which you are considering here today, we intend to come forward with a proposal that will encompass the idea of the putting the Northeast corridor on a basis so that it will have a product that it will sell, that it will be in the hands of private operators, and that that will only be possible on the basis of guaranteed loans in order to fi- nance the restructuring which will be the underlying support for the reasons as you have pointed out, and on this basis there is a very good likelihood that the Northeast corridor can become a self- sustaining operation. It will require Government subsidies for the financing-Govern- ment guarantees-but that certainly is superior to anything we have seen up to this point. And it will provide service. And it's the service you are talking about, Mr. Chairman. Senator LONG. If it works, it might pay for itself and might make money. I am sure that if that type of thing worked, it would be some- thing for which people can find a good deal of enthusiasm. Mr. STEADMAN. You mentioned two things today, all of which are analogous to what we are talking about here. You mentioned the matter of research and development. Expend- itures for research and development actually can be high enough because this is the course of the progress that we develop. It gives a foundation an opportunity for American inventive genius to spring forward with the things that made this country great. Second, you have mentioned the fact that we subsidize the air- lines. We subsidized the railroads with massive land grants when they got started, too. It was worth the investment for a long time. The railroads, including passenger operations, were very successful and made money. The freight lines are still doing well for the most part. The airlines have begun to pay back because they are earners now. If we can get this thing on a basis so that it can get started and quickly so that it can become an earner, can become a taxpay- er, let's say, that's what we want. Senator LONG. Thank you very much. The CHAIRMAN. Thank you, Mr. Chairman. PAGENO="0128" 121 Mr. Steadman, let me ask you this: Do you favor a national transportation system? Mr. STEADMAN. Rail transportation? The CHAIRMAN. Any kind. National, complete, comprehensive, national transportation system. Mr. STEADMAN. Yes, but not a rail passenger-not a national rail passenger. The CHAIRMAN. Beyond that, do you favor a national transporta- tion system that has to be subsidized in any way? Mr. STEADMAN. No. The CHAIRMAN. Let me ask you what you would do without the highways. The highways are the biggest part of the subsidized national transportation system today. According to a report from the U.S. Conference of Mayors in 1979, 55 percent of the subsidy for the highway is highway subsidy. Now, would you have us go back to the horse and buggy age where we don't have interstate highways and don't have these fine highways that permit us to communicate between our cities and towns today? Mr. STEADMAN. I certainly would not, Senator, but I believe that the user taxes have paid for the great amount that has been expended by the Federal Government in building those highways. The CHAIRMAN. No question about it. That is part of the tax dollars. That is a subsidy. The Federal Government charged that tax and then pays it back. Now, you said this afternoon that Amtrak had received massive and extravagant subsidies. Yet, Mr. Boyd, when he testified earlier today, said the entire rail system received only 4 percent of the Federal assistance to transportation subsidies for the period of 1971 to 1977. Would you care to comment on that? Mr. STEADMAN. Compared with what? I didn't hear his testi- mony; 4 percent of what? The CHAIRMAN. Four percent of the total subsidy, the total Fed- eral aid to transportation subsidy that is provided by the Federal Government to all forms; only 4 percent went to rail transporta- tion. Mr. STEADMAN. I don't know what that included. The CHAIRMAN. I can tell you quickly. It included highways, 55 percent, $41.3 billion. Mr. STEADMAN. What period? The CHAIRMAN. 1971 to 1977. This is the report of the U.S. Conference of Mayors, 1979: It has air transportation, $13.9 billion for 18 percent; Domestic water transportation, $4.8 billion for 6 percent; Ocean shipping, $3.3 billion for 5 percent; Mass transit, $9.4 billion for 12 percent; And rail transportation, $2.9 billion for 4 percent. For a total of $75.8 billion expended in Federal aid to various transportation modes. Mr. STEADMAN. Well, we have not dealt with the figures that have been insinuated into that-or that comprise that particular figure. PAGENO="0129" 122 We have been working with figures that relate to surface trans- portation on modes of intercity transportation and compared those subsidies. For the period 1971 to 1979, the highway users' tax has paid for the cost of the highways. We consider that there is no subsidy. As far as buses are con- cerned, there has been no subsidy. General aviation transportation has received a subsidy of about 4.5 percent, and the certified airlines have received a very small subsidy, about one-tenth of 1 percent. Mr. CRAWFORD. We are not here to debate the other modes of transportation. I am sure you understand. What is important to understand, I think, is the amount of money the Government is using in terms of subsidy for Amtrak and the Nation's passenger railway in terms of its benefit. If you look at the number of taxpayers that have gone on the trains versus what it cost, it's the highest subsidy by far of any of the modes of transportation. One figure I saw was 10 cents per passenger- mile on trains versus one-tenth of a cent in subsidies over the same period for airlines. - What that indicates is that if subsidies are warranted, they should only be warranted by use of the system by passengers and that hasn't been the case up to this date. What we are saying is at that time, taxpayers aren't getting their dollars' worth out of the subsidy. The money spent on airlines did buy the greatest air transportation system in the world. I would have to give you credit for your leadership in that area. In the highway area, as Mr. Steadman pointed out, the subsidies, yes, they were subsidies in the sense it was taxpayer dollars and came out of the taxpayers' pocketbook, but the beneficiaries were those who paid for the system through the gas tanks and other Federal taxes to make that system possible and used it. None of us in this room could question the benefit of the inter- state highway system for the flexibility to the American traveler. Intracity as well as intercity. Mr. STEADMAN. Apropos of that, if I may, the Congressional Budget Office rendered a report on this in January 1978 and that report reads as follows: "Rail passengers, it's about 8.2 cents per passenger mile." General aviation, as I said before, is 4.9 cents. Air carriers, as I stated previously, is one-tenth of 1 percent. With the bus industry, it's a negative subsidy since 1975. The CHAIRMAN. That is fairly close to the figures that were given us this morning. This morning we were given the figure of 9 cents per mile for Amtrak, 3 cents per mile for air transportation, and that would include both air carrier and general aviation. Mr. STEADMAN. That's exactly right. The CHAIRMAN. One-tenth of a cent for intercity buses. Those were the figures-- Mr. STEADMAN. I couldn't quarrel with those. That is close enough. The CHAIRMAN. If Amtrak was forced to fully recover all its operating costs through the fare box within the next 5 years, what do you think would be the result? PAGENO="0130" 123 Mr. STEADM4N. I think Amtrak, outside of the Northeast corri- dor, would have to be abandoned. If the subsidies were withdrawn, Amtrak outside of the North- east corridor would undoubtedly go out of business. The CHAIRMAN. Do you think it could even exist in the Northeast corridor? - Mr. STEADMAN. I think it could under the kind of program that I was discussing here earlier. That would require an investment of a lot of capital in order to get the Northeast corridor operation on a basis so it has a product that the public will use and pay for. Understand we are not opposed to rail passenger service. All we want is the people using the service to pay for it and not other taxpayers. The CHAIRMAN. I understand. The CAB had a policy with respect to service to communities. Use it or lose it theory. If they weren't using it enough to justify it, they would lose the service. What disturbs me, and this is why I was asking you questions about this overall national transportation policy, because I heard last year and I'm sure it's true today, that on some of these long- haul trains, if they ran 100 percent full, they couldn't run at a profit. Mr. STEADMAN. That is true. The CHAIRMAN. They would still lose money. I think that if, at the present time, if every Amtrak train ran full at all times, based on what we were told this morning by the Secretary of Transporta- tion and Mr. Boyd, the system would still lose money. If those reports are true, I am wondering what implications that has for Federal support of Amtrak. Are we going to say we will simply abandon the whole system or do we find there is a public benefit out of this system that the taxpayers ought to subsidize part of it? I guess you have already said the answer is no. Mr. STEADMAN. That is our position and it's our position for this reason: Amtrak does not offer the only mode of transportation to the highways and the byways throughout the country. I came from a little town out in Nebraska and grew up during the period when the railway going through our town was the big event. Then the intercity bus came along and people began to ride them. And the airlines began to give service. Then we developed this vast system of highways that you have referred to, Senator Cannon, and you are absolutely right about it, which provided superb service to every nook and cranny, every town, village, and hamlet in this country. It's the greatest thing we have. When people talk about the absolute need to have this rail passenger service, they ignore, I think-with great intellectual honesty, but they are carried away from the fact and in the world of fancy and out of reality. The reality is that this country is unique in many ways. Not the least of which is that it has the grandest system of highways in the whole world. It has the greatest airline industry in the whole world. And it has the greatest bus system in the whole world. PAGENO="0131" 124 Those are very adequate means and attractive means of trans- portation. And they are operating, may I say, without subsidy. The CHAIRMAN. And one of the poorest rail systems. Mr. STEADMAN. I think we have already recognized that. The CHAIRMAN. Thank you, Mr. Chairman. Senator LONG. Thank you very much. Do you have any questions? Senator HEFLIN. No. [The statement follows:] STATEMENT OF Cir~s ~ C JItMAN, NATIONAL TAXPAYERS UNION, COMMITTEE To EN1) GOVERNMENT WASTE Mr. Chairman and Members of the Committee. We are honored to be here to testify on Amtrak's fiscal year 1980 authorization, and the Department of Transpor- tation's final route restructuring proposal. My name is Charles Steadman and I am Chairman of the National Taxpayers Union's Committee to End Government Waste. With me is Charles Crawford, Dirctor of N.T.U. The National Taxpayers Union is a national, non.proflt, public interest organization representing over one million mem- bers and affiliates in every state. We are an organization over ten years old and have been very active in numerous areas of tax reduction which are well known including that of Proposition 13. THE PROBLEM OF AMTRAK Mr. Chairman, we are gravely concerned over the massive and extravagant subsi- dies Amatrak has received since 1971. Amtrak has become a tremendous burden on the taxpayers of this nation. it is a glaring example of wasteful government spend- ing. For this reason, as representatives of the nation's taxpayers, our position is to oppose further subsidies for Amtrak. To have the taxpayers pay two-thirds of the operating cost of each ride on Amtrak is a blatant misuse of tax dollars. There is no justification for taxpayers paying the cost of passenger train service. What is more ominous is the rapid escalation of Amtrak's costs and subsidies. While revenue has been lagging behind costs, ridership at the same time has been declining. Yet Amtrak s predictions have been just the opposite. Results have proved Amtrak's attempts at financial forecasting to be an undiluted disaster. Revenues and rider- ship have been consistently overestimated while forecasts of expenses and deficits have been grossly understated. Today Amtrak stands as a massively subsidized system, existing as a unwarranted burden on taxpayers. Taxpayers throughout America are demanding that this burden be lifted. If Amtrak continues unchecked, Mr. Chairman, by 1982 it will require a subsidy of one billion dollars a year. All for a system that draws 54 percent of its riders from less than 500 miles of its 27,500 mile system, and which serves less than one- half of one percent (Y2 of 1%) of all intercity travel. Mr. Chairman, the people are the marketplace. And they have been trying to tell the Congress that the product which the Congress is subsidizing is neither needed nor wanted. DOT ROUTE RESTRUCTURING PLAN Reassuringly, Congress and the Department of Transportation have realized the danger of allowing Amtrak to proceed as in the past. The Department of Transpor- tation's route restructuring proposal is a first step in solving the problem of Amtrak. This is a positive, forward-thinking step, and we endorse it. But the Congress should view this as the first step not the last. AMTRAK NEEDS TO COVER MORE OF THE COST OF ITS SERVICE THROUGH FARES Amtrak presently recovers only 36 percent of its operating expenses through revenues. The other two-thirds of each ride is paid for by taxpayers. The Depart- ment of Transportation proposes rectifying this imbalance by requiring Amtrak's revenues to represent 44 percent of its cost by 1982 and 50 percent by 1985. The N.T.U. believes it is grossly unfair to taxpayers when riders pay for any less than the operating cost of their Amtrak trains. We will therefore present to you today a plan of financial disciplinary measures to achieve the goal of making Amtrak self-supporting. PAGENO="0132" 125 At the time Amtrak was established in 1971, Congress directed Amtrak to manage itself so that it would become self-supporting and that its subsidy would be eliminated in a reasonable period of time. During the years from 1971 through 1979, this goal has become lost as Amtrak has moved further and further away from a zero subsidy concept. The National Taxpayers Union asks that the Congress reassert its original goal as it did in the 1978 legislation, and that Amtrak be required in a period of a few years to demonstrate that it can operate itself on a self-supporting basis. THE NTU PROPOSITIONS To realize this objective, the National Taxpayers Union presents these proposi- tions for immediate Congressional action (1) that Amtrak be required to recover from the fares it charges its passengers its full operating costs in the Northeast Corridor during 1980 and thereafter; (2) that subsidies outside the Corridor be reduced at the rate of seven percent each year beginning in 1980 and continuing through 1982. At the end of this time it is proposed that Congress assess the ability of Amtrak to achieve a self-supporting status. If it is determined that Amtrak cannot achieve this status, the mandate will be undeniable. Amtrak will have demonstrated that it does not have an economic viability, the subsidy should be terminated and such part of the system that is not capable of self support should be relegated to the age of the stagecoach. These criteria will facilitate Congressional decison-making free of political and subjective considerations. Amtrak under these National Taxpayers Union proposi- tions will be judged on the ultimate test of the marketplace which will determine if Amtrak is a product the people will buy. A THREE-YEAR AUTHORIZATION CYCLE NEGATES CONGRESSIONAL RESPONSIBILITY The Department of Transportaton proposes to move to a three-year authorization cycle to provide continuity in planning for Amtrak. The National Taxpayers Union is opposed to this proposal. A three-year authorization cycle will essentially mean that Amtrak will be ac- countable to Congress only once every three years. It would be all too easy for appropriations to become automatic. There would be less incentive for Amtrak to improve its performance in the interval years. It is fanciful to believe that a three-year authorization cycle will improve Am- trak's forecasting and planning. It is more probable that these exercises will further deteriorate if the Congressional pressure to improve were to be removed. There is no re~ison long-range continuity cannot be achieved within the normal authorizing framework to which so many other program adjust. We are unalterably opposed to a three-year authorization cycle. SUMMARY AND CONCLUSIONS We hope this Committee will give its full support to the Department of Transpor- tation's route plan and will also adopt the National Taxpayers Union propositions as presented to you today. The Department of Transportation plan does save $1.390 billion dollars in taxpayers funds between now and 1984. It does hold forth the promise of arresting the trend of ever-increasing Amtrak subsidies. However, we must not lose sight of the fact that the susidy levels remaining are at an exorbitant- ly high level which will still total $4,590 billion in that period. This subsidy program continues to exist at a time when the government needs desperately to save money to ease the burden on overtaxed people. To fight inflation, the Department of Transportation plan must not be a stopping point but a starting point in reevaluat- ing Amtrak. Congress has a clear and present message from the people to reduce unnecessary spending. This is a message that cannot be ignored. This is a message that com- mands resolute action in respect to the Amtrak subsidy. There is no question that the taxpayers of the country want this problem solved. We look forward to working closely with you to achieve this purpose which the taxpayers are expecting. May we thank you for your kindness. Senator LONG. Next we will call Mr. Ross Capon. - 43-1390-79-9 PAGENO="0133" 126 STATEMENT OF ROSS CAPON, EXECUTIVE DIRECTOR, NATION- AL ASSOCIATION OF RAILROAD PASSENGERS; ACCOMPANIED BY STEVEN PEARLMAN, ENVIRONMENTAL ACTION; PETER CARLSON, ENVIRONMENTAL POLICY CENTER; AND HOWARD HARDING, SIERRA CLUB Mr. CAPON. Thank you very much, Mr. Chairman. I am Ross Capon. To my right is Howard Harding from Akron, representing the Sierra Club. Immediately to my left is Peter Carl- son, representing the Environmental Policy Center and to the far left is Steve Pearlman, representing Environmental Action. I would request my statement be placed in the record. Senator HEFLIN. So ordered, without objection. Mr. CAPON. I would comment briefly because the hour is late. Senator HEFLIN. You are competing with the Prime Minister of Israel right now. Mr. CAPON. I am honored that you are here. Senator HEFLIN. Enough said. Mr. CAPON. Our association is a consumer organization. We also pay taxes. We believe Amtrak is laying a foundation, albeit painfully slow, for the future, and a foundation which this country is going to be very grateful to have very soon. As to public acceptance, we believe the record is clear: Where the public is given good service they are using it. This is true today inside and outside of the Northeast corridor, the most dramatic example being the 142 percent increase in rider- ship on the Los Angeles-San Diego service. We believe the threshold at which you can attract in significant numbers is somewhat lower than Senator Long suggested and that, in fact, a train which could consistently operate at 79 miles an hour, as all Amtrak trains except metroliners don't, could, in fact, be full and do quite an adequate job. I would like to comment briefly on the Southern Crescent, since this seems to be Secretary Adams exhibit A in the argument that good trains are not patronized. The train averages about 46 miles per hour. There has been no advertising since 1976. Even though Southern is a good company, the cars are 30 years old and there have been many heating and air-conditioning problems even on the Crescent. The train only ran 3 days a week west of Atlanta and, until Amtrak took it over, Amtrak and Southern maintained two sepa- rate stations, in both Birmingham and Charlottesville. Neverthe- less, Cresent ridership increased 7.3 percent since 1975, up to 168,000 in 1978. The day Amtrak took over, they consolidated operations in both cities for better convenience to the traveler and lower operating costs in terms of station personnel. With regard to energy savings again, good trains are used, and trains that are even half full are about twice as energy efficient as the automobile. I have covered that in my statement. I would note that a 46-percent increase in passenger miles was experienced by Amtrak during energy crisis months of November 1973 to April 1974, as compared with the same months 1 year earlier. PAGENO="0134" 127 So the energy crisis drastically reduces the threshold in terms of what kind of service the public accepts. Basically, our message is simple: Give people good trains; they use them. Give them an energy crisis; they will use any trains. I would like to conclude by observing that the high speed trains in Japan in 1976 earned a profit of $727 million. That is the high speed route only, not the national system as a whole. Before I turn it over to Mr. Harding, I would like to submit one article for the record, since it deals directly with the question of the extent to which Amtrak could deal with an energy crisis. It's called "Toward More Transportation With Less Energy." Basically, Richard Rice, a professor at Carnegie-Mellon Universi- ty postulated how you could treble intercity travel by the year 2000 and hold your energy consumption more or less constant. In order to do that, he found it necessary to dramatically increase intercity passenger rail, intercity bus and autotrain-type service. The most dramatic increase was in the latter. Mr. Harding. Mr. HARDING. My statement today is on behalf of the National Sierra Club, a national conservation oriented organization. At its last board meeting, the board of directors adopted the following policy position with regard to the DOT report: The Sierra Club views with alarm the DOT proposal to cut both coverage and service within the Amtrak system. Long-term economies especially in use of energy are essential to any sound transportation system. Cutting rail passenger traffic works against these long-range economies and is generally shortsighted. The budget cutting considerations which motivate these proposals can better be served by eliminating the hidden but nonetheless large subsidies to air and auto traffic. The proposed savings from Amtrak cuts would be almost offset by closedown costs over the short term. This statement is based upon our awareness of many facts and concepts contained in the written submission provided to the com- mittee. I would like to mention a couple. According to U.S. DOT figures, 35 percent of all U.S. highway expenditures are derived from non- highway user sources. This amounts to $156 billion in the last 50 years. About 67 percent of the Federal aviation program comes from nonaviation user taxes. Also the California Department of Transportation calculated if you removed all subsidies from airline operations the round trip New York to California would be about three times what it is now, or in excess of $1000. Essentially, at that rate, passengers would find trains much more acceptable. I would also like to mention one other thing in our statement. That is a 1974 study by Drs. Buzdek and Hannon of the Universi- ty of Illinois on the comparative impact of highway spending di- verted to other programs. They examined six other possible Federal programs, but there are two particular points germane to this issue. PAGENO="0135" 128 Total primary energy demand would decline about 62 percent if the money was spent on railroads and mass transit rather than highways. Shifting the spending to railroads would produce 2.4 million more jobs and reduce annual energy consumption by the equivalent of 2.7 billion gallons of gasoline. On the basis of those points and the rest contained in our state- ment, the Sierra Club urges the subcommittee to recommend that the Senate vote unanimously for rejection of the DOT restructur- ing plan and direct the Secretary to reevaluate his assumptions in light of these facts and of the other things brought out at this hearing. I would like to thank you for the time here. As I said, we have additional points covered in our statement that was submitted. Mr. CARLSON. Good afternoon, I am Pete Carison, Washington representative for the Environmental Policy Center. We are strongly opposed to DOT's proposed plan to reduce Amtrak routes for the following reasons: Indications show it's unwise to reduce these at the time our Nation may need them most. During the energy crisis in the winter of November 1973 to April 1974, Amtrak ridership was up 46 percent. There is considerable talk about weekend closings of gas stations and substantial gasoline taxes. Reduction of routes as proposed by DOT appears an unattractive option. Increased operations will increase efficiency and make Amtrak vastly more efficient than automobiles. Improvement of cars and service has increased Amtrak ridership. The country shouldn't be trapped in a vicious cycle of poor quality trains which lead to declines in ridership which lead to poorer service followed by still more declines in ridership. The Congress, we believe, should make a good solid appropriation to bring Amtrak service up to the highest standards. The specific DOT plan is unacceptable. DOT proposes to scrap lines like New York-Florida, Washington- Cincinnati, Chicago-Florida, and Seattle-Portland, which have expe- rienced recent ridership increases. The dismembering of Amtrak overlooks the fact that many of the problems facing the various routes are correctable. The testimony of the National Association of Railroad Passen- gers provides details on that. We believe the time is coming when the Nation will need to place greater reliance on rail passenger service. The cost of replacing the system would far outstrip current subsi- dies. We disputed DOT on it's negative declaration on the reduc- tion of Amtrak routes. In our judgment, DOT's action constitutes a major step backward in attempting to reduce dependence on auto transportation and to cut back on the fuel requirements in the transportation sector. The environmental impacts of such an action should be fully explored in an environmental impact statement. In conclusion, we submit for the record an article by Tom Wicker of the New York Times, February 25, 1979, which makes a strong case against cut- ting back Amtrak routes. PAGENO="0136" 129 Thank you. Mr. PEARLMAN. I am Steven Pearlman, legislative representative of Environment Action, Inc. For the past 7 years, we have coordinated the activities of the Highway Action Coalition, an umbrella association of citizens groups concerned with Federal transportation policy and its impact on society. As an environmentalist, I recognize the tremendous potential of passenger rail in providing energy-efficient environmentally sound transportation. Rather than attempting to maximize this potential, DOT's Amtrak recommendations illustrate a narrow view of cost-effective- ness in both the near and long term. I don't maintain that questions of cost in ridership should be ignored in determining Amtrak's route structure. I do maintain the Department needs to make a full and fair comparison of the total societal costs of various transportation alternatives. It needs to look to the future considering the potential of modes in achieving national policies and priorities in transportation, energy, pollution, and urban revitalization. DOT's Amtrak recommendations don't reflect any such careful analysis. All forms of transportation in this country are heavily subsidized. Let me take automobiles as an example. As pointed out by the President of Amtrak and others, it's automobiles that are the competitors of Amtrak for the most part. The ridership on Amtrak comes from people getting out of their cars, not out of planes. As I note in my written testimony, State and Federal highway trust funds are themselves a self-perpetuat- ing subsidy. Even more shocking, in 1973, the Federal Highway Administra- tion statistics show that a full third of all highway construction and maintenance expenditures came not from so-called user fees, but from others, namely local property taxes. This percentage is unquestionably even higher today. Moreover, the following multibillion dollar hidden highway costs paid for by all of us but never calculated as a highway subsidy could be signifi- cantly reduced by greater reliance on passenger rail. No. 1, police costs which reach up to a third of total urban law enforcement expenditures. No. 2, hospital and accident costs; 1975, 5 million injuries, 45,000 deaths, estimated cost of over $37 billion. No. 3, loss of tax revenues totaling billions of dollars from land taken for heavily land-intensive highway rights-of-way. Los Ange- les is now over half concrete. No. 4, air pollution. In cities such as Washington, motor vehicle emissions are the prime source of air pollution. Billions are now being spent to clean up. In many areas, industrial growth will have to be limited due to automobile pollution. No. 5, energy waste. Amtrak has the potential of achieving triple the passenger-mile-per-gallon level of the current automobile. No. 6, costs to inner cities. Suburban flight of people and busi- nesses has been largely due to construction of superhighways. PAGENO="0137" 130 Train service at least serves the central cities and can help in their economic revitalization. Last, loss of alternatives. Those who don't or can't own or oper- ate automobiles-predominantly the poor, black, elderly, and handicapped-are paying the cost of drastically limited mobility. Finally, there is one point which I neglected to include in my written testimony but which is very significant. Amtrak's cost and efficiency are largely a function of the condi- tion of the rails, switches, and other matters directly influenced by the overall health of the Nation's railroads. In this regard, the massive cross-subsidization of the trucking industry by automobile drivers has a direct negative impact on Amtrak. Studies indicate that by shouldering an unfair share of fuel taxes, other highway users have been subsidizing heavy truck traf- fic in the many tens of billions of dollars over the last 20 years allowing an immense free ride to the trucking industry at great cost to the Nation's railroads. Senator HEFLIN. Thank you, gentlemen. [The statement and attachment follow:] STATEMENT OF Ross CAPON Mr. Chairman. I am Ross Capon, executive director of the National Association of Railroad Passengers, a non-profit, consumer-oriented organization, supported entire- iy by membership dues and contributions. We receive no financial support from the government, the railroad companies, Amtrak, or the railroad labor unions. We appreciate very much the opportunity to participate in this hearing. Our Association believes that the U.S. needs an expanded and coordinated network of intercity rail and bus services to improve the energy efficiency and safety perform- ance of our total transportation system and to assist in maximizing reliance on urban public transit systems. The American public has shown its support for expanded rail service by: (a) riding the trains in growing numbers where good service is provided (Los Angeles-San Diego ridership up 142 percent from 1973 to fiscal year 1978 though service fre- quencly only rose 87½ percent) and even in many cases where inferior service is provided; (b) during the energy crisis of Nov. 1973-Apr. 1974, riding trains of any quality to the tune of a 46 percent increase in passenger miles "systemwide over the same period one year earlier" (DOT Environmental Impact Assessment, p. 2-13); (c) overwhelmingly supporting maintenance/improvement of the services in public hearings conducted by ICC's Rail Services Planning Office across the nation last summer (over 2,300 witnesses, average 20-1 pro-service; letters to RSPO averaged 90-1 the same way); and (d) registering as pro-service in opinion polls conducted by Peter Hart Associates for DOT (53 percent want to continue present service; 20 percent would end most service) and by Louis Harris for Amtrak (82 percent wants the government to maintain or increase its spending-SO percent wants that spend- ing to increase-on improving the quality and availability of rail travel "for trips 100 miles or more one-way"). Similarly, state governments have reflected the same interest by offering to pay their 50 percent share of the cost of several prospective services for which Amtrak has no money. We are very appreciative of the support which this committee and particularly Senator Long has shown for developing an intercity bus terminal at Washington Union Station. We believe such a facility, directly adjacent to Amtrak, commuter rail, Metrorail, and Metrobus services would stimulate a major increase in utiliza- tion of all public transit. The great advantage of the automobile is its flexibility; to the extent we remove barriers to convenient transfers among different public trans- port modes we help the public transportation network come closer to matching the auto's flexibility. Such an intermodal facility would demonstrate how rail and bus-the two most energy-efficient modes of travel-can help each other. In fact, we believe the best way to revive bus ridership is to establish intermodal rail-bus terminals in as many cities as possible, following the examples of New Orleans and Harrisburg. This PAGENO="0138" 131 would benefit bus services not only by providing attractive rail connections, but also by helping to overcome the negative image of the "bus station". Michigan DOT recently established an intermodal terminal in the Kalamazoo railroad station and found a significant increase in all-bus trips. Why not an all-bus network? Because modern trains are much more effective in attracting people from their automobiles. Even when the image problem of buses is overcome, their speed potential and on-board space remain serious barriers to market acceptance and dictate that the market attracted will be predominantly for much shorter trips than rail could handle. Despite construction of the Interstate highway network and deterioration of rail service, revenue passenger miles handled by U.S. intercity buses dropped 16.8 percent from 1950 to 1970. In both intercity and local service, the substitution of buses in place of rail services has always resulted in a decrease in public transport use and an increase in automobile use. On the other hand, we believe-and Amtrak's limited experience with rail-bus coordination sug- gests `-there are many people who would use a bus as part of a rail-bus journey who would not consider the bus by itself. NEEDED: GOOD SERVICE I frequently hear the statement that it is virtually impossible to entice people from their automobiles. Secretary Adams said, "I can't force people to get out of their automobiles and into trains". (Railway Age, Feb. 12) This statement seems to overlook the fact that most people respond logically to the incentives they are given. It is not surprising that mediocre train service with an inadequate and declining advertising budget, continued highway construction, and cheap gasoline would pro- duce no dramatic shift of riders to Amtrak. (By mediocre service I refer primarily to 30-year old cars with unreliable heating and air-conditioning operated on trains that consistently run late on padded schedules.) What is important is the extent to which the public has responded to the service Amtrak has provided. I've already noted on page 1 the positive response to the good Los Angeles-San Diego service and, during the last energy crisis, to the entire system. Some recent ridership increases on lines DOT would kill are: RIDERSHIP INCREASES COMPARED WITH 1 YEAR EARLIER [Percent] 1978 October- December December New York-Florida 38.4 36.1 22.4 20.5 1 17.9 28.7 12.3 12.9 15.3 16.5 Washington-Cincinnati Chicago-Florida Chicago-Los Angeles Chicago-Laredo New York-Kansas City 13.4 13.3 3.9 11.8 Seattle-Salt Lake City Washington-Montreal 14.0 8.5 Seattle-Portland 68.8 27.1 1 Revenues increased 50 percent. lAmtrak was billed over $500,000 in 1978 for tickets it sold which were honored on buses (both travel to non-Amtrak points and some travel on parallel routes.) PAGENO="0139" 132 For the entire system, ridership increased as follows: [Percent~ 1978 October- December December Long-distance trains 11.5 17.1 1.9 9.7 13.4 1.9 Short-distance (non-NEC) Northeast corridor During fiscal year 1978, it is significant to note that the only major long-distance route equipped for the entire year with new equipment, Chicago-News Orleans, experienced a 3.6 percent ridership increase over fiscal year 1977 despite bad on- time performance (27.4 percent in May; 53.3 percent in September). Overall, Amtrak ridership in fiscal year 1978 was down 1.5 percent reflecting smaller capacity on many long-distance trains, less frequent operation on the Chicago-Seattle routes, a 5-day strike in late September, a 19 percent decline in Amtrak's advertising budget, and sharply reduced air fares. Some efforts by individuals to promote Amtrak's services have met with amazing success. The improved performance of the Chicago-Laredo route is partly the result of work by Randy Cookus, a Little Rock ticket agent, who spent $600 and a lot of energy and produced a $30,000 revenue increase. In a recent controversy over a proposed road widening project near my home, I was impressed with the determination of the state and city highway departments to press hard for the maximum size project even after overwhelming public opposition became apparent; only the responsiveness of the city council to the public's views sent the road builders back to the drawing boards to come up with a smaller project. But the message in all this is clear; citizens of the U.S. must fight hard to contain highway spending, yet they must also fight hard to retain their trains. Our system reflects a tremendous anti-rail bias-a natural result of the fact that massive government aid to non-rail modes has left the railroad industry as the smallest of the three major modes. We appreciate the fact that Amtrak service has generally been maintained be- cause the Congress-like my city council-is more responsive to the public's wishes than is the Administration. We also appreciate your frustration at the size of Amtrak's operating deficit. However, we urge you not to support DOT's plan to dismember Amtrak because we believe the problems plaguing almost every route now operated are correctable, and that corrections should be made rather than the service discontinued. Generally speaking, Amtrak's revenues are lower and costs are higher because capital investment has been too little to late. Capital investment through fiscal year 1979 will total $1.3 billion. Of this amount, $206 million is for superliners cars for the Western long-distance trains. These cars are just now being delivered and are not yet in service, except for a handful of coaches being tested on short-distance runs. Yet these cars should lead to dramatic ridership increases on the runs DOT would kill. Reliable climate control will in itself mean a vast improvement over present service quality, including the virtual elimination of one major cause of train delay-attempts to correct malfunctioning steam heat en route. Overall, it cost Amtrak $1.25 million in fiscal year 1978 to reaccommodate passengers due to missed connections and cancelled trains. The $239 million maintenance cost (this is all operating money) was inflated by the large number of old cars and by inadequate maintenance facilities. Amtrak is now spending $40 million to improve its mainte- nance capabilities in Chicago, which should both cut costs and improve all-weather reliability. Amtrak has belatedly inaugurated a program to convert old single-level cars used on Eastern long-distance routes to electric heating/air-conditioning; the reliability of the handful of sleeping cars already so converted has been impressive. Some trains need minor modifications to their routes, particularly the north-south Texas trains. The specific correctable problems which have inflated operating deficits are dis- cussed on a route-by-route basis in the appendix. We ask your patience in continuing support of most of the present system because we believe ridership to date shows people will use good service, and investment to date is laying the foundation for the provision of good service on a system-wide basis. The possibility that gas stations will be closed on weekends further brightens Amtrak's short-term ridership prospects. The continuing trend towards smaller automobiles likewise will increase demand for good intercity public transportation- PAGENO="0140" 133 a demand increase which would largely be met by energy-wasteful airplanes if trains are not available. DOT PLAN LAYS FOUNDATION FOR KILLING AMTRAK We believe the DOT plan would lay the groundwork for Amtrak's demise because the surviving trains would lose so many connections and the frequency of service would decline on 2,985 miles (19 percent of the DOT system's mileage) and remain unsatisfactory on 3,892 miles (less than daily). Although the Secretary says his system would be used "more intensively" most major terminals will have less service, 43 percent of the route miles will have either less service or continued less- than-daily service, and the key New York-Florida route would suffer a drastic decline in capacity. According to the Environmental Impact Assessment, "It is estimated that some 28 percent of the passenger-miles which would be accommodat- ed in the base case (on the NY-Florida route) would be diverted to other modes due to capacity restrictions on the two remaining frequencies." (p. 2-144) The key to Amtrak's plight is the relationship between its low earning capacity (one daily round-trip or less on most route segments) and high fixed costs (stations in most major cities; many costs at Washington headquarters which would not very with service levels). The costs of many stations are borne by a single pair of trains. The DOT plan would extend this problem to the New York-Florida route where every station south of Petersburg, VA (except for Savannah) would have 100 percent of costs charged against a single train instead of shared among two or three daily round-trips as at present. Thus prospects for the "Palmetto" (NY-Charleston-Savan- nah) and "Silver Star" (NY-Raleigh-Florida) turning in a good financial perform- ance are not good. Given adequate cars, Amtrak could introduce major service improvements for a small increase in funding; conversely, as you have seen with the DOT plan, a small decrease in funding produces an inordinately large cut in service. The DOT plan would drastically decrease earning capacity while only moderately reducing fixed costs. Surviving trains would no longer be connected to many markets. Such cities as Dallas/Ft. Worth, Atlanta, and Cincinnati/Columbus/Dayton would have no service. The situation facing Amtrak is even more acute on this point than is that facing Greyhound and Trailways, who have "stated that a substantial cut in service would precipitate a further decline by destroying their route network. They contend that the maintenance of an integrated nationwide route structure is essential to preserve their existing level of traffic." (The Intercity Bus Industry, ICC Bureau of Econom- ics, May, 1978, page 90) The preliminary DOT report of least May stated that the largest option DOT studied-Scenario E, about the size of the present system but with several adjust- ments including less West Virginia service but the addition of Cleveland-Pittsburgh and Los Angeles-Las Vegas-Salt Lake City-would have the lowest deficit per pas- senger mile of the five options considered; Scenario A, isolated corridors, produced the highest such deficit. (p. 5-13) There is a conflict between the short-term goal of minimizing the total cost of the system and that of improving its productivity. We urge you to take the longer term view. ENERGY CONSUMPTION Working estimates for the different modes are: Passenger miles per gallon Air 16.2 Automobile 43.1 Bus 121 Rail 125 Nors~-From DOT, "Summary of Opportunities To Conserve Transport Energy", August 1975. (1977 data reported to ICC). I have used the same rail figure as used by Prof. Richard A. Rice of Carnegie- Mellon University in "Toward More Transportation with Less Energy" (Technology Review, February, 1974), an article which proposed drastic increases in the use of intercity buses, trains, and auto-train services to permit holding the line in petro- leum usage while tripling intercity travel from 1975 to 2000. Most Amtrak critics, of course, quote, energy usage of today's Amtrak with all of its handicaps noted, above, but these figures-which compare antiquated rail equipment and systems with modern systems in the other modes-should not be used as the basis for developing PAGENO="0141" 134 policy for the future. To give some perspective to may rail figure above, Harbridge House, Inc., in its 1977 report for this committee, stated "intercity rail passenger service should be able to produce between 270 and 360 seat-miles per gallon." (Intercity Domestic Transporation System for Passengers and Freight, p. 387). At a reasonable load factor of 55 percent, this would produce a range of 148.5 to 198 passenger miles per gallon. (Amtrak had reached a load factor of 54.9 percent in 1974; service problems have since depressed it somewhat.) The HH figure is for all- coach service, so 125 is a reasonable compromise if some first-class accommodations are assumed. DOT's May report found that Amtrak was already achieving about 100 PM/gallon on its San Diego service by 1977, and that the Los Angeles-Seattle train with old equipment over a hilly profile got about 70 PM/gallon. The National Taxpayers Union, in its Feb. 2 letter to Senators, claims DOT projects 1,800 BTU/passenger mile for automobiles in 1990 (at "a load factor of 0.45") and that this is more efficient than rail. On the other hand, a report published by DOT shows diesel-hauled trains on the New York-Albany route at 911 to 1,100 BTU/passenger mile (50 percent load factor). ("Energy Intensity of Intercity Passenger Rail" by Ram K. Mittal, December, 1977, pages 6-3 and 6-4). As noted on page 6, we believe energy conservation policies will significantly increase the demand for public transport, and it seems unwise to us to be cutting back on rail service because most of the new demand for intercity service-created short-run by weekend gasoline station closing and long-run by more efficient, but smaller and less comfortable automobiles-would go to air, defeating energy conser- vational goals-in the absence of a good rail network. If the effects of the different modes on urban transit and urban development could be incorporated into the energy consumption figures at the bottom of page 7, the already-large advantage of the bus and train would dramatically increase. Buses and trains generally serve (or should serve) city centers near urban transit hubs. By contrast, airports can generally be reached by mass transit from only one or two directions. Thus a much higher percentage of air passengers and airport-area employees must reach the airport by car now and in the future. One expects, for example, the most of those who work at the industries planned along the Dulles highway will commute by automobile. This reliance on the automobile not only deprives the mass transit system of riders and revenues but encourages more sprawling development which itself is energy intensive as to provision of heating and utilities. These negative effects of the automobile would remain even if Secre- tary Adams' laudable goal of a 50-mpg fleet in service by 2000 is achieved-and the $100 billion pricetag on that goal casts much doubt on its likehood of being realized. SAFETY AND ALL-WEATHER DEPENDABILITY The Environmental Impact Assessment shows, at page 2-28, that the train is 19.4 times safer than automobiles and taxis and 32.3 safer when auto-related fatalities (including non-passengers) are included. This spread presumably grows when high- ways are made dangerous by inclement weather. On certain routes. highways are impassable for several days at at time. While DOT includes the "Empire Builder" partly for this reason, it is equally true for points along the routes of the "South- west Ltd.", "Pioneer", and "North Coast Hiawatha". CONCLUSION Ridership has responded to improved service to date and will continue to do so. Maintenance and improvement of Amtrak service is particularly vital in the context of energy conservation, and the "carrot" of improved Amtrak service is more strongly supported by the public than the "stick" of reduced gasoline availability, though both may be necessary. ROUTE-BY-ROUTE DISCUSSION San Joaquin (Oakland-Bakersfield): Caltrans would like to subsidize the extension of this run mto Los Angeles which would drastically increase ridership, but South- ern Pacific is obstructing new services. North Coast Hiawatha (Chicago-.Bismarck-Billings-Seattle): This route has con- stantly been hampered by unreliable performance and frequent schedule changes. If contmued, it would likely be helped by rerouting through Helena, the capital of Montana. Lone Star (Chicago-oklahoma-Dallas/Houston): NARP has long called for realign- ing Texas north-south services so they would run straight south from Dallas, the biggest market, rather than Ft. Worth. The full train should run Ft. Worth-Dallas- Waco-Houston and its performance would be improved by (a) picking up Waco, and providing direct Dallas-Houston service; (b) eliminating the costs of switching in Ft. PAGENO="0142" 135 Worth and running a separate Ft. Worth-Dallas section; (c) providing a shorter route between Temple and Houston (using MKT Sealy-Houston). Inter-American (Chicago-St. Louis Little Rock-Dallas-Ft. Worth-Austin-San Anto- nio-Laredo): As with the Lone Star, this train should head directly south from Dallas to improve running times between key cities. It has enjoyed dramatic rider- ship increases recently (Novbember up 36.4%). Station problems in San Antonio. Floridian (Chicago-Louisville-Nashville-Jacksonville-Miami/St. Petersburg): NARP and others have fought a long hard compaign to get this train rerouted through Atlanta and Indianapolis. It also has heavy ridership within Florida, especially between Waldo (for the university at Gainesville) and Miami. New York-Florida: The DOT report recommends cutting back from three daily trains to one, plus continuing the daylight NY-Savannah "Palmetto". This is Am- trak's most successful long-distance route and would suffer a dramatic decrease in capacity, as well as the following specific service eliminations: Charleston-Fayette- ville (eastern) route in Carolinas would lose service to points south of Savannah; all service would be discontinued to the Waldo (western) line in northern Florida serving U. of Fla.; assuming Amtrak uses the heaviest travel pattern (Champion/ Meteor schedules), cities served at convenient hours now by the Silver Star only would lose convenient service (Raleigh area; Richmond northbound; Jacksonville southbound). We find it hard to believe DOT's claim 81 percent of existing passen- gers would be served, unless one assumes people don't care what time of day they ride, and many extra sections would be operated. DOT implies, however, that very high peak fares would discourage peak ridership. (see note on page 11). Southern Cresent: Secretary Adams says this train suffers from low ridership, yet SR's statistics presented to the ICC showed 1976 and 1977 ridership figures both up from year-before, and this train has uniquely been excluded from Amtrak's promo- tional campaigns. SR has not advertised the route since 1976, but Amtrak has just started a promotional effort timed with its Feb. 1 takeover of the train: advertising; new fares; consolidating stations with other Amtrak trains in Birmingham and Charlottesville; and eliminating SR's restrictions on riding between certain points. ICC did not grant permission to discontinue until after SR reached agreement with Amtrak to continue the service. Ridership has grown steadily: 156,574 in 1975; 157,493 in 1976; 165,729 in 1977; and 168,000 in 1978 (revenue passengers). National Limited (NY/Washington-Pittsburgh-Columbus-Dayton-Indianapolis-St. Louis-Kansas City): GAO's study did not take into account cost reductions and service quality improvements realized late in 1978 when this train was converted to new Amfleet equipment. This is the only train Amtrak runs to Indianapolis near the Beech Grove shops, which Amtrak would continue as its major car overhaul facility under the DOT plan. Cars can be cycled in and out as "deadhead" equip- ment on the "National"; Amtrak would have to pay about $200,000/year to operate a special weekly move between Chicago and Indianapolis, in addition to having cars out of service longer than necessary. Mt. Rainier (Seattle-Portland) and Pacific International (Seattle-Vancouver): These trains should run as one, producing a much more convenient schedule north of Seattle, and providing more ridership south of Seattle. A further improvement would result if the train was extended south to Eugene, OR, which the state may subsidize in the future. Vancouver is ideal route for testing of the LRC train. Montrealer (Washington-NY-Montreal): Heavily patronized in Vermont; not strict- ly an international service. Used extensively by Canadians traveling to the U.S., which helps our trade balance. An opportunity exists to negotiate a reduction of costs billed by Canadian National. Transport 2000 (Canada), our Canadian counter- part, is protesting this proposal of discontinuance. Pioneer (Seattle-Salt Lake City): This train connects with the "San Francisco Zephyr" at Ogden for service east to Denver and Chicago. The "Zephyr" has been plagued with exceptionally bad equipment and reliability and the provision of superliners on the run will greatly help the "Pioneer" which itself provides vital all- weather service to isolated points in Eastern Oregon. Cardinal (Washington-Charleston, WV-Cincinnati-Chicago): Provides vital service to isolated points in West Virginia, particularly around Prince and Beckley. Has been hurt by bad Indiana track conditions forcing bypass of Indianapolis, and by bad station location in Cincinnati. Southwest Limited (Chicago-Kansas City-Albuquerque-Los Angeles): Vital all- weather service to southeastern Colorado (where it is the No. 1 subject of letters to the Representative) and northern New Mexico and Arizona including Flagstaff. One of the fastest and most consistently reliable long-distance trains. Efforts to increase non-automobile visits to Grand Canyon would be hurt by discontinuance of this train. PAGENO="0143" 136 Note on New York-Florida: DOT estimates 28 percent of "base case" passenger miles on this route would be diverted to other modes. However, this assumed use of higher-density Amfleet cars. If Amtrak President Alan Boyd sticks by his judg- ment-with which we agree-that such cars are not appropriate (NY Times, Feb. 23), the percent lost to rail would be even higher. TOWARD MORE TRANSPORTATION wrm Lass ENERGY (By Richard A. Rice, Professor of Transportation, Carnegie-Mellon University) During the years from 1965 to 1970, this country was using almost 200 billion gallons of petroleum (five billion barrels) a year; at this rate, without the con- straints we are now beginning to experience, usage could reach 400 billion gallons before 2000 A.D. In 1968, half this petroleum, or 100 billion gallons, was used for transportation, with about 60 percent burned in private motor vehicles. The 200 million private vehicles forecast for 2000 A.D. would need upward to 130 to 150 bfflion gallons alone; this is as much as the entire world usage as recently as 1950. We now begin to sense that such projections, made easily enough a year or two ago, may in fact be impossible to fulfill. Does this country have either the energy prospects, the materials, or the funds to build and support such a fleet? Is there, then, an alternate mobifity system to the automotive habit we now enjoy? Can we seriously consider planning goals and even legislative efforts to stimulate more efficient systems and reduce petroleum consumption rates? In a previous article in this journal ("System Energy and Future Transportation," January, 1972), the author has reported in detail on the present productivity of transport energy use by various modes and attempted to discern directions tha tmay be indicated by such an analysis. This paper, building on that study, explores various alternatives for achieving a very specific goal: doubling transport output in 25 years while holding oil consumption devoted to transport under the present 100 billion gallons per year. We propose shifting intercity and urban traffic to modified systems with better energy efficiency, and then show that, if the right choices are made, personal vehicle ownership and auto travel could continue to increase, as could air travel; thus per capita transportation could be maintained or increased; and door-to-door travel convenience could be maintained or improved within the hypothesized constraint. This paper is not designed to advocate any particular policy or any specific system design to accomplish the goal. The modal variants herein are only a few of many that have been or might be proposed. They are presented only as examples of possible energy savers. The same numbers and results could possibly be achieved with other modal variants. Several assumptions are involved in this approach. The first, for the sake both of simplicity and challenge, is that the American family will continue to place a high priority on personal mobifity and to prefer private vehicles when it comes to modal choice. We will accordingly arbitrarily assume that public transport will handle only 40 percent of the urban movement and 30 percent of what we call intercity travel. Thus we will assume that about two-thirds of the projected year-2000 over- land passenger travel must move in door-to-door private vehicles. This latter assumption imposes the condition that only 750 billion passenger miles of intercity passenger travel demand can be considered susceptible to commercial carriers. The balance-1,750 billion passenger miles-would have to be accom- plished with 875 billion private-vehicle miles if the traditional two passengers per automobile are assumed. The figure for automobile traffic is only double the 1970 motoring volume, but the figure for commercial carriers is five times the 1970 figure of about 150 billion miles. I. LOW-ENERGY INTERCITY PASSENGER TRANSPORT The earlier paper showed that some 30 billion gallons of petroleum propelled 800 billion passenger miles per year of intercity travel in the 1965-70 period; the gross efficiency was about 26 passenger miles per gallon (P.M./g.). Automobiles provided 700 billion passenger miles at about this 26 P.M./g. average; buses, trains, and aircraft, supplying about 100 billion passenger miles, achieved about the same average, consuming 4 billion gallons of fuel. The low propulsion efficiency of air transports, usually in th 20-to-22-P.M./g. range, offset the higher yields of rail and buses. Holding the line in petroleum usage while tripling intercity travel by the year 2000 can be achieved only if we can increase the productivity of intercity transport from the average of 26 to about 75 P.M./g. in the next 25 years. At the latter figure PAGENO="0144" 137 we could have nearly 2,500 billion passenger miles annually of intercity travel with a total petroleum use of 33.3 billion gal./year, quite comparable to 1970 intercity passenger fuel requirements. To achieve such high propulsion yields in intercity transport in the year 2000 we can project only about 750 billion intercity passenger miles by private automobiles- and projecting even this much auto transport requires a motor vehicle far more efficient than today's. (We might note that at 15 m.p.g., 750 billion private vehicle miles would require a prohibitive 50 billion gallons just for the intercity portion of automobile driving.) The year-2000 goal is for 60 P.M./g. in private vehicles. This implies a very small auto (1.2 tons) achieving 30 m.p.g. with an average load of two people, a slightly larger compact auto of 1.5 tons carrying an average of 2.2 passen- gers on 25 m.p.g. or a two-ton automobile achieving 20 m.p.g. and carrying not less than three passengers. If private vehicles are to be utilized in more than 750 billion miles of intercity travel in our year-2000 model, they will have to be piggy-backed on car carriers such as flatcar trains or highway movers. A 2000-h.p. locomotive using 130 gal./hr. of fuel at 70 m.p.h. could, in theory, pull a 700-ton train; this would accommodate 100 autos with 200 passengers-a load weighing 180 tons. Technically each car is thus travel- ing 50 m.p.g. It is this option, related to very small urban vehicles transported by rail in intercity service, that marks the great departure from present practice in the plan for the year 2000 here proposed. Air transportation is a continuing option. A present four-engine 707 (130 seats) using 4 gal./mi. or a DC-10 (220 seats) using 6 gal./mi. yields at 60 percent occupan- cy about 20 to 25 P.M./g. But if flying speeds are held to 500 m.p.h. an air-bus similar to a DC-10 with 250 seats can be designed to use only 5 gal./mi.; at 60 percent load (150 passengers) this yields 30 P.M./g., and this appears to be the maximum passenger efficiency we can predict with the best-planned fan-jet engines. In the final plan we propose 150 billion passenger-miles annually of such intercity air service in the year 2000. Maximum Maximum Loaded Block theoretical passenger- weight speed numher of miles per (tons) (mph) seats gallon Automobile (1970 model) 1.5 50 8 40 Luxury intercity bus 13.5 45 70 146 Ten-coach train 700 80 220 150 High-speed train 700 100 240 97 Pullman overnight train 870 90 100 33 Auto-train (coach service) 690 70 200 1 (160) 104 Overnight auto-train 1,420 80 200 1 (100) 34 T.A.C.V. hovertrain 60 200 120 23 727 jet 100 300 376 23 DC-1O airbus 200 400 750 30 I The number in pareotheses is the number of urban mini-autos for which special railroad cars are provided. This table compares the size, speed, and efficiency of several forms of intercity transportation which the author discusses. In order to increase available transporta- tion by the year 2000 without increasing the amount of fuel devoted to it, the author proposes growing reliance on buses, trains, and auto-trains; such new, high- technology vehicles as hovertains are not promising in the time frame and under the fuel constraints which he sets. Intercity buses today achieve 6 to 7 m.p.g. with loads of 20 to 25 passengers; they are unsurpassed in efficiency-measured in passenger-miles per gallon-in the U.S., and perhaps among all general carriers in the world. That this service must be expanded in the future appears almost certain. A somewhat more roomy bus 40 to 50 ft. long carrying 40 to 50 seats and attaining 4 to 5 m.p.g. is possible; at 60 per cent load this vehicle would deliver 125 P.M./g., and 250 billion passenger-miles of such service is included in the year 2000 model. At 125 P.M./g., this would involve only 2 billion gal. of petroleum-one-third of the amount recently used by domestic airlines to move but 100 billion passenger-miles. In order to attract a patronage this large, the present passenger bus (8 ft. wide 40 ft. long) may have to be made a little roomier. Instead of crowding additional seating to gain the much higher energy yields that would be possible, we propose holding to 125P.M./g. with a 45-to-50-ft.-long vehicle 9 ft. wide with a load of 25 to PAGENO="0145" 138 30 passengers. The larger size of this vehicle-essentially 9x 50x 11 feet, represent- ing 100 ft.3 per seat-is generous by today's bus standards. Today's long-haul passenger trains often carry too many sleepers and lounge cars and too few seats, only 33 per cent of which were regularly filled in the period between 1950 and 1970. A modern 2,400-h.p. locomotive (125 tons, using 2.0 gal./mi.) can pull a train of 525 tons at 70 to 90 m.p.h. This could take the form of a trailing load of six 65-ton modern bilevel cars, the coaches of which can be designed to provide 100 to 120 seats with spacing equal to airlines. With 60 per cent of its seats occupied (a load of 300 passengers), such a train of five 100-seat coaches and one baggage-express car yields 150 P.M./g. If the train runs at 125 to 150 m.p.h., a 4,000- h.p. locomotive (2.5 g.p.m.) is required and the system yields 120 P.M./g. By the year 2000 we need a fleet of 20,000 such rail coaches. Assembling all this data, one can propose a model for intercity travel in the last decade of this century which gives 2,500 billion passenger-miles annually with a consumption of 33.3 billion gal. of petroleum: Fuel con- Passenger- miles (billions) Passenger- miles/gallons sumption (billions of gallons) Intercity autos 900 850 60 100 15.0 8.5 Intercity autos piggy-backed Overland air service 150 250 30 125 5.0 2.0 Intercity buses Passenger trains 350 2,500 125 75 2.8 33.3 Total per year The automobile travel and air service implied by this table would be a trifle Spartan by today's standards but are technically achievable; they represent about a 45 per cent productivity increase for air and a 90 per cent increase for autos. The rail and bus modes are already capable of delivering over 100 P.M.!g. and in the styles projected above could actually provide service superior to that often offered today. THE DISECONOMIES OF HIGH-TECHNOLOGY ALTERNATIVES Are there significant alternatives for intercity transportation under the require- ments we have postulated? Can other private vehicle concepts yield 50 to 70 P.M.! g.? Are there other surface systems in the 100-P.M./g. range that might be better (or faster) than buses and trains? And finally, is there any alternative to airbus service in crowded 500-m.p.h. jumbo jets that would yield 30 P.M./g.? The questions obvious- ly require evaluation of such alternatives to the tranditional modes as helicopters, short- or vertical-take-off-and-landing (V.T.O.L. or S.T.O.L.) aircraft, high-speed air- cushion vehicles on tracked systems (T.A.C.V.), magnetically levitated craft with linear electric motors, even automated intercity electronic guideways using perhaps electric power and magnetic guidance. Initial research efforts in these areas have been concentrated more on technology and on component "demonstrations" than on long-range economics or general util- ity. But reports on these studies are beginning to yield information from which extrapolations can be made as to probable power requirements, general perform- ance, and system-operating expense. The resulting conclusion is that most of the proposed innovative fast corridor systems have energy and propulsion ratios that are inferior even to today's automobile and represent no improvement over present fixed-wing aircraft yields at much higher speeds. In fact, none can apparently yield even 50 per cent of the 75 P.M.!g. which seems imperative for such systems in the year 2000. S.T.O.L. can deliver at best only around 30 P.M.!g., and T.A.C.V. systems would apparently average around 24 to 30 P.M.!g. for top speeds in the 200- to 250- m.p.h. range. Aside from reasonable fares, speed, and comfortable service, fuel economy quite probably will be the critical specification for any viable passenger system in the years 1990 to 2000. One expects that buses, trains, and other tracked systems will be held to the 100 P.M.!g. goal. To offset and lower 50 to 60 p.m.g. which seems to be the ceiling on automobile and aircraft performance. Systems such as S.T.O.L. to T.A.C.V. and their derivatives are clearly inadequate by a factor of three, and the PAGENO="0146" 139 prospects for evolutionary improvement to bring this deficiency from 30 to 90 P.M.! g. look dim. VERY HIGH-SPEED RAIL-BASED SYSTEMS When the exotic contenders for short- and medium-haul special passenger service shall have been researched and found wanting, then such interest as has been focused on V.T.O.L., S.T.O.L. and T.A.C.V. might well stabilize on high-speed trains, now called "H.S.T." in British transport circles. Between 1964 and 1971 there were completed in Japan and Europe some 1,000 units of high-speed railway equipment capable of operating safely and economically at speeds of 110 to 130 m.p.h. As early as 1954 the French operated two test trains with conventional electric locomotives pulling three cars at speeds over 200 m.p.h. Recently, the French and British have begun testing self-propelled turbine trains for 150-m.p.h. service. The experience amassed in Japan and Europe now amounts to some 80 billion passenger miles in over 250 million train miles-about three million hours of service, most of it at speeds over 100 m.p.h. The safety and on-time performance records of these are accomplishments largely unnoticed in the United States. By 1975, when over 5 million hours of operational experience will have been accumulated, newer high-speed rail lines will be under construction in Japan, France, Germany, and Russia. Speeds on these newer lines are to be in the 150- m.p.h. range; a surface trip of 300 to 400 miles will then occupy less than three hours center-to-center. Nor is 150 m.p.h. in 1975 to 1980 to be considered the limit: plans are well under way for 200-m.p.h. passenger trains in the decade of the 1980's, and there appears to be no technological or economic barrier to this concept. Today's high-speed trains in the 125 to 150-m.p.h. bracket seem to operate with an energy-yield of about 100 P.M.!g. Double-deck car bodies might slightly increase this overall efficiency, but significant increases in net concept-effectiveness may have to come from the elimination of extra cars in some trains for restaurant service, baggage, and mail; the s~ibstitution of better restaurant and baggage facilities within each pair of revenue coaches is a possible example. A final pressure in this direction is toward the "unit passenger train" utilizing more compact propulsion systems to virtually eliminate half the weight and most of the volume of the separate locomotive unit. Tokaido trains are examples of paired cars (170 seats) of this type, using about 1700 h.p. to move 130 tons at 125 m.p.h. The Washington-New York "Metroliners" are essentially single 83-ton 61-passenger cars using 1,00 h.p. for 110-m.p.h. oper- ation. The "Metroliners" are astonishingly heavy in relation to capacity; their propulsion components consume almost twice the weight and space per horsepower of comparable European and Japanese units. But there are precedents for improve- ment: the seven original articulated four-car stretched "Zephyr" unit-trains of the Burlington Lines, placed in service in 1963, cruised easily at 100 to 110 m.p.h. with a 660-h.p. diesel. The weight was 150 tons loaded, and various models carried 112 to 144 seats plus dinette and baggage areas. (It is interesting to speculate on the design implications of the Metroliner; it appears that at 100 m.p.h. two Metroliner cars with 122 seats and no mail-parcel rooms use energy equivalent to about 1.8 g.p.m. or 18 k.w.h.!mi. A more recent unit train design, the three-car double-deck 200-ton concept for U.S.A. intercity service in the 1990s carrying 360 seats, including restau- rant and baggage facilities, and cruising at 130 m.p.h. with 1,800 h.p., or 156 m.p.h. with 2,400 h.p. would deliver 170 m.p.g. with a 180-passenger load. At 90 m.p.h. using 800 h.p. it would deliver 270 p.m.!g. CAN TRUNKLINE RAILROADS MEHT THE CHALLENGE? Our model proposes that 48 per cent of intercity private vehicle movement be by autotrains, using 8.5 billion gal. of energy. This exceeds the 5.5 billion gal. of energy proposed for freight trains and the 2.8 billion gal. for passenger trains in the year 2000. Total railway energy use per year could thus rise to 16.8 billion gal. of petroleum (168 billion k.w.h. if electrified), of which half would be for autotrains; the latter, however, would replace a usage of over 20 billion gal. if these same autos motored independently. Considering both piggyback and conventional passenger-carrying trains, the rail- roads by the year 2000 might be responsible for 1,200 billion passenger miles of travel. This compares with just under 14 billion in 1968 or about 35 billion in 1950. Since much of this increased year-2000 rail movement would take place over the 100,000-mile basic trunkline network of the U.S., it is necessary to ask if this much higher concentration of service is within the reasonable expectations of railroad PAGENO="0147" 140 technology. Responding to that question, we have analyzed maximum average train tonnages and movements for freight, passenger, and piggyback service. Our finding is that if all the year-2000 rail traffic had to be concentrated on only 100,000 route- miles, something on the order of one train averaging the size of today's would be required every 30 mm. each way. This frequency would be reduced if each train carried more traffic. This density is quite high for a railway in America-though it is about average for many European and Russian railways. But this may be somewhat overestimated, since more than 100,000 miles of the present 200,000 mile network could probably be used, especially for freight and regular passenger trains, and the load carried on each schedule could probably be increased. AUTOTRAIN: AN ENTICING VISION OF THE FUTURE How convenient and acceptable would be a private-vehicle mobility pattern based on perhaps about 95 million small vehicles adapted for urban use and usable in intercity service only on car-carrier trains? The requisite service densities along the 100,000 mile route model system clearly indicate enough volume to warrant very frequent daytime autotrain serviôe. The average wait would thus be very short even if schedules were not consulted; average speeds would be higher than driving on any trip over 80 mi. Personal amenities-heating and cooling vehicles en route and food and sanitary service-would be as easy to adapt to as was the Interstate Highway System with its very limited interchange pattern. Overland autotrain service should be markedly free from the usual driving delays and breakdowns, and the safety factor might well be five times better than on current highways. Given proper roadbeds and equipment, noise levels and riding comfort should be better than those in the same auto under its own power at 70 m.p.h. PAGENO="0148" 141 Despite impro~'ed fuel economy since 1940 (until 1974, when air-pollution-cntrol equipment reduced efficiencies), the fuel consumption p.~r mile of the typical "low-priced" American car has tended to remain about constant because highway speeds gradually incre ised. A compact automobile suitable for intercity service, makin1i nearly 30 mpg. at 40 mph., is one element of the author's plan fdr increased transport mobility without in- creased fuel coflsumption by the year 2000. II. REDUCING URBAN PASSENGER TRANSPORT ENERGY How shall we reduce the energy expended for transport urban areas? Today all motor vehicles of any design are permitted access at any time of day, and clearly the stringent restrictions already being discussed will have to be implemented. For example, consolidated freight and goods deliveries, with the exclusion of through motor-freight vehicles, can probably reduce truck-related urban petroleum use. The energy expended for urban passenger movement can, in theory, be reduced by rail rapid transit where densities justify it. In practice, however, like nuclear power plants for our electricity, most cities must wait until new rapid transit facilities are complete. When one considers the cost of such facilities, it is difficult to contemplate more than 2,000 route-miles of new electric rail urban transit being added in the next 25 years; the estimated cost of $40 to $50 billion is equal to the cost of our 40,000-mile Interstate System, and most of the former would be invested in 20 to 30 cities. Thus, on a national scale, rapid transit and suburban trains can be projected to carry only some 70 billion passenger miles by the year 2000 A.D.-only five to six times more than at present. The balance of urban travel-at least 800 billion passenger miles-will have to move in buses and in gasoline- or electric-powered automobiles. THE ULTIMATE URBAN VEHICLES To meet the transport goal specified in the opening paragraphs of this article, we postulate a totally new class of automobiles. We are accustomed to thinking of three general sizes of automobiles-4000-lb. six- passenger; 3000-lb. five-passenger, and 2000-lb. three-to-four-passenger. We think of Miles per gallon 30 20 10 30 1990 1970 1940 50 70 Speed (miles per hour) 0 Typical urban performance L~ Typical highway performance 43-139 0 - 79 - 10 PAGENO="0149" 142 these as yielding perhaps 15, 20, and 30 m.p.g., respectively, under the best circum- stances. The design constants for the three sizes of personal autos are based on assump- tions by no means as rigid as many motor car builders and buyers assume. Accept- ing today's assumptions, we remain essentially locked into our present three sizes of automobiles with their eight-to-ten year life. If we attempt instead the twelve new planning compromises which are listed in the adjacent table, then the design of a strictly urban-oriented, 1500-lb. low-powered vehicle with 15 to 20 h.p. becomes possible. Even at low efficiences typical of all automobiles, such a vehicle should only use 1 to 1.5 gal./hr. in normal suburban driving at 25 to 40 m.p.h.-actually achieving 30 m.p.g. in urban use and 40 m.p.g. in level country driving. This would be 2.5 times better than many domestic cars and over 50 per cent better than most European autos near cities. Further improvement in this size of vehicle could be achieved by lowering rolling resistance with tire pressures double present levels to 50 to 60 lbs. Ultimately, it is possible to conceive a vehicle-almost a bicycle in some respects-with a true power requirement of only 6 h.p. at the transmission, deliver- ing 5 h.p. at the wheels which is required for level 30 m.p.h. cruise. Somewhere on the way to this ultimate vehicle, between today's 2-per-cent effi- cient automobile engine using one gal./hr. to move a soft-tire, scaled-down 1,500-lb. auto at 30 m.p.h. and tomorrow's possibly 30-per-cent efficient engine requiring only 1/3 gallon to move a similar or smaller vehicle per hour on hard tires, may lie the achievable urban auto. Thus we are looking ultimately at vehicles using 30 to 100 m.p.g., and in the interim-to the year 2000-at 1,500-lb. urban autos crusing at 40 m.p.h. with perhaps 10 h.p. using 0.8 gallon per hour for cruising at 50 mi/gal. The sacrifice in this concept is mainly large tires, heavy suspension, bulging panels, and super-acceleration. Other weaknesses of such a vehicle from today's viewpoint would be a fragile suspension requring elegantly smooth and level urban streets; very poor snow-negotiating or soft-ground capability, inability to negotiate very rough country roads a light-weight body structure compared to most of today's automobiles, and a somewhat diminished cornering ability. Yet the result should be a resonable level-terrain, personal transportation vehicle; and with the choices of yesterday vanishing, the urban dweller's future alternatives may well be an auto- mobile something like the above, an electric bus, or bicycling or walking. If 50 per cent of urban transportation can be accomplished by such small personal vehicles and the balance through a relatively modest expansion of public transport, urban passenger transport energy might well be cut by over one third-and petro- leum use for urban transport by over 50 per cent. This would be done while continuing to expand urban passenger mobility. ENERGY-INTENSIVE URBAN INNOVATIONS The concepts of people-movers within the central areas of the larger cities, and of airport corridors in many of these same cities, have sparked a number of proposals for automated and uniquely suspended transit systems. Most of these share two characteristics-an electrically based propulsion system and a separate-level guideway. Except for the linear moving sidewalks, most of these systems are modern, sophis- ticated versions of the urban monorail proposals that flourished in the 1925-to-1955 era. Most of today's proposals are no longer hanging or suspended modes; the trend is to propose tires (captive aircushions) or "pads" (pumped air cushions) for basic support. Proposed speeds range from 6 to 15 m.p.h. for the smaller central circulator systems and up to 150 m.p.h. for the airport corridor pad-supported systems. But the scale of urban transit use is such that, even with what might be consid- ered "extensive" installation of such modes in some urban areas by 1995, the overall energy problem as being evaluated in this perspective will not be significantly affected. And there is a second basic issue here: most of these ideas are surprisingly energy-intensive on a passenger-mile basis. For both reasons, the overall impact on urban energy needs by the year 2000 is not likely to be significant. PAGENO="0150" 143 Automobile characteristics Almost certain" compromises impl;cit in present assumptions to meet future constraints Top cruise speed over 60 mph. Top speed of 45 m.p.h. in moderate terrain Fast acceleration Reach 37 mph. in 30 sec. `Uncrushable" superstructure Waterproof, rigid structure Minimum yisuat size for "good styl- Size not exceeding 5 x 12 ft. ade- ing": 6 x 15 ft., with apparent space quate for three people (or two adults for four passengers minimum and two children) for short trips Graceful fenders and bonnet Utilitarian covers for wheels and motor Permanently mounted engine (no Slide-in-slide-out exchangeable en- Instant engine repairs) gine for flexible options Soft tire pressures and suspensions Harder tires and less springing pos- sible on better.urban streets Interchangeable parts among Standardization of many parts builders discouraged Do-It-yourself repairs not encouraged Do-it-yourself maintenance facilitated Follow-on parts utility in future New chassis buyer will Include many models discouraged; limited useful- parts from older autos where safç ness for used parts Discard utility strictly foc scrap ma- Many parts-window panels, seats, terials except, for selected items wheels, electrical units, etc-usable in other vehicles or for other pur- poses If the automobile is deeply engrained in American life, so are a set of assumptions and constraints deeply engrained in most Americans' view of the automobile. The need to make more efficient use of energy in transport will force change, thinks the author; indeed, a dramatic change in automobile transport efficiency is an essential part of his plan for increasing U.S. mobility with reduces energy consumption by the year 2000. The list above omits one significant recent design assumption: the U.S. has elected to reduce automotive pollution by using a percentage-of-exhaust principle. The alternative, a fixed limit of total emission per vehicle per year, would have the effect of encouraging lighter, more economical automobiles. III. FREIGHT SERVICE: MORE WORK ON THE RAILROAD Motor carriers today move about half of the non-fuel, non-bulk, manufactured and general products in the U.S.; the other half of this group moves by rail, special captive units, or air freight. Heavy tractor trailers (10 to 15 tons of cargo) get about 4 m.p.g. at 55 mph.; they are therefore delivering 40 to 60 net ton-miles per gallon (T.M./g.). Today's freight trains may deliver up to 250 T.M./g. Intercity motor trucks are now estimated to consume about 8-billion gallons of fuel per year, and this figure would reach almost 12 billion gallons by 1990 without restriction. But under severe restraint, up to 50 percent of truck-trailers could be moved piggyback by rail flatcar-trains; and the balance of motor-truck traffic could be managed at somewhat better energy ratios in more efficient equipment and operations. Under this minimum truck-haul strategy, the intercity motor-carrier operators would handle some 500 to 600 billion ton-miles of traffic. But only 300 PAGENO="0151" 144 billion ton-miles of this would be permitted on motorways, and this amount would have to move at efficiencies of 75 T.M./g. requiring only 4 billion gallons of fuel per year. The balance of the motor carrier freight would be managed by rail carrier trains where presumably the energy-efficiency can be increased about 200 T.M./g. IV. SUMMARY: DOUBLING MOBILITY ON TODAY'S FUEL The problem explored in this paper is that of adequately serving America's expanding transport needs in the face of an energy squeeze. Surely a change in the present patterns of fuel availability would bring about quantitative and qualitative changes in our transportation system, which is today based largely on energy from petroleum. But when all the yields of the various alternatives are compared, it does not after all appear inevitable that curtailment in total energy use means restric- tions in travel. Alternate transportation systems are already available with potential energy yields far higher than those of today. Even without extensive system electrifica- tion-which would make coal and nuclear fission available as primary transport energy sources-petroleum consumption per unit of traffic moved could be cut in half. Almost twice as much traffic could be moved with the same or less total petroleum. If some electrification is additionally undertaken, and electric power substituted for on-board fuel, total transport petroleum use-but not total transport energy-could be further reduced. Even if we are held to technology basically similar to that of today 6,400 billion passenger- and ton-miles of transport could be performed after 1990 using only about 78 billion gallons of petroleum (or equivalent in electricity), as compared with about 91 billion gallons used to propel only 3,725 billion unit-miles in the 1965-to- 1970 period. If we tried to move the 1990 traffic of 6,400 billion unit-miles at today's transport efficiencies we would require 159 billion gallons to do the job; this is almost 80 percent more transport petroleum energy than used today, and would surely have more environmental impact despite some improvement planned for auto emissions. While this proposal requires some shifting to public carriers in the intercity field, auto ownership could still increase to 200 million units. Private-vehicle intercity travel in door-to-door trips could double from 900 billion passenger miles to 1,750 billion passenger miles if performed in compact intercity autos achieving up to 28 m.p.g. at 50 m.p.h. and in even smaller urban vehicles on autotrain carriers. Some 750 billion passenger miles, or 30 percent of the intercity total, would move by fast buses air-bus planes, or passenger trains. In the urban field, where we now move 32 billion passenger miles per year by transit bus, taxicab, commuter trains, and rapid transit lines, some 150 billion passenger miles would have to be thus accommodated by the 1990-to-2000 period. The present 620 billion passenger miles in urban autos at only 1.3 persons per car might be increased to 750 billion passenger miles with compact urban autos travel- ing up to 30 m.p.g. at 20 to 30 m.p.h. These adjustments of private vehicle usage imply a fleet of perhaps 150 to 200 million vehicles, of which about 95 million would be compact travel units (suitable for car-carrier trains in intercity service) and perhaps 75 million small, "regular" petroleum autos. On top of this 170-million vehicle fleet, one would postulate 30 million motorcycles, travel trailers, and recreational vehicles of special design whose energy use is included in a miscellaneous use category. MAINTAINING PERSONAL MOBILITY AT TWICE THE EFFICIENCY To the general question: "Could the United States continue to expand its overall transportation output and mobility in the face of a severe constraint on petroleum usage?", one can reply with qualifications in the affirmative. One can even go further that this and state that apparently the United States could almost double its collective mobility volume over the next 25 years and use less oil and energy per year than at present. Originally it was postulated that we would try to avoid requiring over 30 percent of intercity journeys to be moved by commercial carrier, or over 40 percent of urban journeys by public transport. In the model evolved, 70 percent of the cross-country travel is moved door-to-door in private vehicles, including piggyback vehicles, and more than half of urban trips remain in private vehicles. The numbers of private vehicles of all types that might be permitted for our 300 million population in the year 2000 is surprisingly large-about 2.5 vehicles per household, or 200 million units. PAGENO="0152" 145 The method in evolving the model was to move always in the direction of energy efficiency while holding to the most compatible adaptions of today's existing trans- port modes, and while retaining private-vehicle mobility to the greatest degree feasible. In consequence, the results do not depend on the successful introduction of virtually all-new modal systems and netwc~ks; such new modes as V.T.O.L., S.T.O.L., or T.A.C.V. are not required or utilized. One modal variant is anticipated: a small urban auto; and one transmodal hybrid is expanded: the piggyback principle for a car-carrier passenger autotrain. Finally, it is not proposed that this energy-conserving transport model is the only one possible for achieving substantially higher efficiencies, and it is not even set forth at this point as the best that might be achieved. Other modal variations and tradeoffs are undoubtedly possible which could also yield significantly lower energy needs, and especially lower petroleum use. Lastly, while a reduction in oil consumption for transportation is clearly desir- able, it is still not yet proved by what magnitude, if any, overall energy usage must be reduced in the transport field. The doubling of transport energy efficiency was arbitrarily selected as a 25-year goal. The conclusion, on these assumptions, is that neither the expansion of total national mobility nor the wider ownership and operation of private vehicles need to be sacrificed in order to significantly reduce transport energy consumption and petroleum use in the United States by the year 2000. Transport alternatives quite similar to today's service patterns might in fact yield twice the transport output per unit of energy consumed. PAGENO="0153" I 146 Typical year, 105670 period Typical year, 1)002000 period Total anruol Passenger- Total fuel Total arrua I lumber of Passerger- Total fuel Investment on fondle s corsamption passenger, units In or Ion-miles consumption in fleet on for-miles per gallon (billions or fon*~ilestenolce per gallon (billions (billions (billions) )N.P.E.) of gailors) (billions) ))bousando) (f~p.~)* of gallons) of doiiarsf Interclty passenger transport Trains: Coaches and Pullmans 13 - - 350 25 - - $ 6.25 Power units - 65 0.2 - 5 125 2.8 2.00 Buses 25 83 0.3 250 45 125 2.0 4.50 Aircraft: Short-hou) 30 15 2.0 30 0.6 30 1.0 5.40 Long-hau) 60 20 3.0 120 0.55 30 4.0 11.00 Au)o-trains: Vehicle carriers - - - 850 500 100 - 30.00 Power units - - - - 12.5 100 8.5 6.25 Intercity freight transport Railroad freight cars 700 - - 1,350 1,400 . - - 9.00 Railroad piggy.back cars Trailers for piggy-bock use Tractor-drawn trailers Freight locomotives Highway tractor units 50 (52) 400 - - 170n - - 200 50 0.3 - - 3.5 8.0 240 (240) 300 - - :50 280 ~60 30 270 200 - - 240 75 1.2 - - 5.5 4.0 6.00 4.20 5.40 9.00 5.40 * Automobile transportation . Highway aulomobiles: Intercily use Local use 900 620 35 18 26.0 35.0 900 450 . 45 000 35,000 60 27 15.0 16.3 180.00 140.00 Urban automobiles: Auto-train use Local ash - - - - - - (850) 300 70:000 31)000 150 50 - 6.0 210.00 90.00 . Urban passenger transport Rail rapid transit Rail commuter service 7 5 60 50 . 0.1 0,1 60 10 40 3 70 70 0.8 0.2 10.00 0.75 Diesel urban buses 20 40 0.5 80 - 80 50 1.6 3.00 Electric urban buses - - 250 . 100 100 2.5 10.00 Miscellaneous Local and urban trucking 200 20 10.0 200 40 5.0 Inland waterways 290 240 1.2 400 267 1.5 Oil pipelines 400 287 1.5 500 333 1.5 Air freight and private (lying 14 10 1.4 25 12 2.0 Subtotals Automobiles (including auto- 1,520 . 25 61.0 2,500 55 45.8 $656.25 trains) All other passenger carriers 160 26 6.2 1,150 77 14.9 52.90 Intercity truck and railroad 1,150 98 11.8 1,890 177 10.7 39.00 freight Miscellaneous 904 64 14.1 1,125 112 10.0 Grand total 3,734 40 93.1 6665 N.A. 82 81.4 NA. ts 1970 the U.S. aced about 90 billion gallons of oil to provide jet aircraft; but the annual gross g1asufactotrcd value of trues- 1,100 billion ponseoger-ssites and 2,050 billion )on.miles of leans- purl ionits for the projected, energy-efficient fleet may be higher portatios. This table shows how the anothor would provide under than that today. A sloxving is the general growth of private ye- what he calls a `semi-acosterily" transport energy budget nearly hid eocvnership and opeealioo does not appear ommooent, writes twice the total of passenger- and ton-mites of transport by 1995 Professor Rice. (The inveslcocenls shown above for nail commuler with no increase in petroleum consccmptios. The ptan colts for and rapid transit cars do nol inctude the cost of new subways or considerable increase by 1993 in the traffic carried by inlercity slations; indeed, no fixed-facility costs are included on any of passenger buses and trains, orrbas buses, and railway piggy-back- the Heels. htililary and agricsclturat consumption are satin- ing of road trailers. Txvo nesv developmen)s are projected: a chided.) sizeabte fleet of oorban passenger automobiles and a flee) of inter- °The passenger- or ton-mites per gallon measure net propulsion city passenger-carrier auto-trains to give Obese urban aulomobiles efficiency (N.P.E.); this is the name as fon.miles or passenger- intercity capability. miles per 130,000 B.t.u. or pee 10 kxv.h. supplied at the third On ternss of yearly' prodoclion of transpoot vehicles, the acothor rail or poxvec wire of an elcclrical rail system. sees no overall change by 1995; the numbers of highway tractors nl'he figsnres foe rail piggy-hock-freight are for the contents ef hauling freight witlbe reduced, and so n-ill the demand for ness' the trailers only; the weight of trailers is sot included. PAGENO="0154" 147 Senator HEFLIN. The next group, I believe, is a group of State officials representing various public service commissions. Gentlemen, your full statements will appear in the record. If each of you will try to summarize your statements, we would appreciate it. STATEMENTS OF JOHN DOWNING, DEPUTY COMMISSIONER, NEW YORK DEPARTMENT OF TRANSPORTATION; EDSON L. TENNYSON, DEPUTY SECRETARY FOR LOCAL AND AREA TRANSPORTATION, PENNSYLVANIA DEPARTMENT OF TRANS- PORTATION; AND BRUCE HAGEN, COMMISSIONER, NORTH DAKOTA PUBLIC SERVICE COMMISSION Mr. TENNYSON. I will start. I am deputy secretary of the Pennsylvania Department of Trans- portation, Senator. Basically, our statement points out that the USDOT report has cut out some of the most heavily patronized and least costly or most cost-effective trains in the whole national system. Right through Pennsylvania, Pennsylvania to Florida, Pennsylvania to the west, Philadelphia to New York. The heaviest line in the country is being cut at a time the peak trains are running with 1,000 people on each one. Philadelphia to Harrisburg, trains attract 33 percent of the market, not one-third of 1 percent. Wiping out the best trains. We can't have this. You must reject the report. We have the most cost-effective service. Only 5 cents per passen- ger mile in the report that they gave you, perhaps 6.5 or 7 now with inflation, but it is very close to no loss at all in an operating cost basis. The reason they are wiping it out, they call it commuter service. It is not commuter service. The Federal courts have determined it is intercity service, serves Pennsylvania, New Jersey and New York. We can't have such a wipeout. [The statement follows:] STATEMENT OF E. L. TENNYSON The Department of Transportation of the Commonwealth of Pennsylvania appre- ciates and welcomes this opportunity to appear here to explain our serious problems with the United States Department of Transportation's recommendations for re- structuring the Amtrak intercity railroad passenger system as required by the Amtrak Improvement Act of 1978, Public Law 95-421. I am E. L. Tennyson, for the past 7 years Deputy Secretary for Local and Area Transportation, and for 32 years an engineer working with all modes of common carrier passenger transportation. Act 120 of the Pennsylvania General Assembly of 1970 authorizes my participation in federal matters of interstate commerce. I am a registered professional engineer in Ohio and Pennsylvania. The Congress was well advised when it voted to improve Amtrak by restructuring. Our problem is with the specific recommendations from U.S. DOT which would increase unit costs of serving a greatly reduced segment of the market. Pennsylva- nia would be particularly hard hit, even though our trains operate at the lowest avoidable unit costs and generate some of the highest unit revenues. This does not comply with the Congressional instructions in the Act, or with the public interest. In Section 4(a) of the Act (P.L. 95-421), Congress established five criteria which were not squarely faced by the U.S. DOT recommendations before you. 1. The unique characteristics of rail was one. Properly operated rail service uniquely penetrates metropolitan areas free of traffic congestion at relatively high speed at lowest cost. Rail passenger service is the most popular of all modes, including the automobile, for trips of 160 to 190 miles, and has the highest public PAGENO="0155" 148 attraction except for the automobile for trips of lesser distance when the schedules are convenient. Rail is least inhibited by fog, snow, traffic and accidents. 2. Energy conservation was another. The Philadelphia-Harrisburg and the Los Angeles-San Diego trains actually produce 5 times as many passenger-miles per gallon of fuel as air or auto travel. That is an 80 percent saving of precious energy. Other trains average twice the fuel efficiency of the more popular modes. 3. The relationship of benefits to cost was the third question. The average Amtrak rider moves at an avoidable cost of 10 cents per passenger mile. This is figured comparable to and considerably less than the same cost for auto or air travel for distances under several hundred miles. The avoidable cost is that which would be saved if the service were discontinued. It does not include fixed costs and overheads, just as the cost of driving does not include the $7 billion annually of non-user local tax money that goes into streets and roads, and the nearly $2 billion of air transpor- tation costs that are not paid by the airlines. It is impossible for Amtrak passengers to pay their full cost plus taxes when other travelers do not. The only fair basis for comparison is avoidable cost. It should be noted in the U.S. DOT report that trains which they recommend for abandonment cost $15 per mile, but trains recommended for continuation cost $45 per mile. It should be obvious that no meaningful recommendation can be based on such disparate figures. Our Philadelphia-Harrisburg and Philadelphia-New York trains, the best of which would be discontinued on October first under the recommendations, have avoidable costs of only 8 cents per passenger mile, which is just about what the fare is. In contrast, an automobile trip over these same routes will cost about 20 cents per passenger-mile, 2½ times more. It will be a disaster to the people of our area to discontinue their most economical service. It is diametrically opposed to energy and environmental policies coming out of Washington. Why should the best trains be discontinued? 4. Adequacy of alternative modes. Air travel in this market, which is one-sixth of Amtrak's national total, is not relevant. The cost and inconvenience of air travel makes it useless in this market. Bus service is partially available, but it too is useless for many of the trips. There is no bus service at all between Harrisburg and Lancaster because there were only one or two passengers per trip. There are only 20 bus riders a day from Lancaster to Philadelphia, as compared to 300 by Amtrak. The bus is much too slow. The New York-Philadelphia buses cannot stop at Trenton, Princeton Junction and Newark and still be fast enough to attract many riders. No alternative is more cost effective than these trains which U.S. DOT would curtail. They have high load factors and serve thousands of people each day. 5. Market and Population. The U.S. DOT report does not address this Congres- sional requirement at all. Service is being stripped from the best markets with large populations, such as: The peak hour New York-Philadelphia trains (1st and 4th largest cities). The peak hour Harrisburg-Philadelphia trains (Amtrak's third best). The Philadelphia (and New York) to Florida run, the nation's best long rail haul. The Pittsburgh-Cleveland market, now not served at all, would be offered what we believe will be middle-of-the-night service for a 130 mile trip. This is an insult to the traveling public and to the taxpayer. The Philadelphia-Pittsburgh market would have its poor present service cut in half at the most inconvenient travel hours possible. The Congress should look at the size of these markets: (1) New York-Philadelphia-16 million population; (2) Phila- delphia-Harrisburg-S million population; (3) N.Y.-Philadelphia-Florida-23 million population; (4) Cleveland-Pittsburgh-5 Million population; and (5) Philadelphia- Pittsburgh-8 million population. The avoidance of market consideration is best illustrated by the complete elimina- tion of service from Dallas/Fort Worth, one of nation's 10 greatest metropolitan areas. In our own state, passenger use of the Lake Shore Limited has grown very well serving Erie, Buffalo, Cleveland and Toledo on the Boston-Chicago run. The recommendation will eliminate this rail service between Buffalo, Erie, Cleveland and Toledo in favor of a closed-door operation through Canada at U.S. taxpayer expense. We have no air service from Erie to Cleveland or Toledo and only one flight per day, Erie to Buffalo. The U.S. DOT estimate that patronage will grow by removing service is surely mistaken, just as promises for Penn Central and ConRail success were mistaken. We do appreciate the recommendation that rail passenger service be instituted between Washington, Pittsburgh and Cleveland, but we fear it will bypass the Youngstown traffic generator and operate at the worst possible time of night. Good PAGENO="0156" 149 rail markets cannot be served by one train per day. Unit costs are too high in terminals with only one train per day. The U.S. DOT report would have us save our trains by assessing half the cost against the state. With interstate trains, charges against a state are unfair. Within the state, we have been attempting to contract for state assisted train service, but Amtrak has not been willing on new routes because they have no appropriation to fund the other half of the cost. If U.S. DOT is serious about state participation, they should recommend the same 80-20 funding we have for other forms of transporta- tion and they should recommend at least $16 million per year for it. It is most important that our well patronized and low cost service not be emascu- lated. Congress must reject the report, or approve it with additions and corrections. We recognize the budget problem, but there can be no saving when the lowest cost service is eliminated and higher cost services are retained. Savings can be found on the empty trains, in the failure to recover waterway costs, in the cross-subsidy to other forms' of transportation and in the terribly costly and impractical regulations being promulgated to require huge low return investments in alternative facilities elsewhere in the federal budget. National Railroad Passenger Corporation AMTRAK AVOIDARLE COST RI I8)UTE 1977 Actual + 1979 8 115% (000) (000) Route ~ Train Miles Passenger Miles */P.M. `77 */P.M. `79 Passg~g,~ PM/TM `@Harrisburg 103 mi. Col. Tidewater 414 733 467(1) 47,675 99,946(1) 5.8* 6.2* 6.7* 7.1* 914(2) 598(l) 65 214 Panama 923 5N.Y.-Phila. 90 667 505 93,979 137,737(1) 7.1* 7.1* 8.2* 8.2* 200 2,687(1) 141 273 5Slue Ridge 73 Bos.-Wash'n 456 58 3,139(1) 10,479 577,544(1) 7.2* 7.4* 8.3* 8.5* 256 4,410(1) 180 184 Palmetto 828 Metroliner 225 @San Diegan 128 55.W.L~. 2,223 570 2,001(1) 517 1,616 86,018 272,179(1) 66,150 271,447~~~ 7.5* 7.7* 7.8* 8.0* 8.6* 8.9* 9.0* 9.2* 398 1,852(1) 794(3) 257 151 ` 136 128 168 @Minn-Duluth 181 111 10,981 8.5* 9.8* 79 99 55altI~Jc.5eatt1e 1,081 778 47,428 p.6* 9.9* 142 61 L.A.-Seattle 1,364 987 198,338 8.8* 10.1t 424 201 *N.y._Harrisbg 197 *5.1._Florida 1,385 99 2,670(2) 12,097 518,042(2) 8.9* 8.9* 10.2* 10.2* 202 703 122 194 System Average 128 @thi.-St.Louis 282 409 33,529 9.0* 10.4* 187 82 Sunset Ltd. 2,022 630 86,917 9.1* 10.5* 89 138 `~t1ini 310 315 23,938 9.2* 10.6* 147 76 roadwayLtd. 904 833 130,851 9.2* 10.6* 214 157 *I.a)ce Shore 1,038 866 111,652 10.1* 11.6* 267 129 Median @thi.Detroit 279 650 58,493 10.4* 12.0* 426 90 @Chi.-Quincy 263 190 14,825 10.8* 12.4* 87 78 *Vancouver 156 114 7,265 10.9* 12.5* 65 64 *I~c~ne Star 1,369 1,019 95,744 11.1* 12.8* 245 94 *NatjonalLtd. 1,324 1,005 89,425 11.4* 13.1* 188 89 @Dnpire State 465 c1ii.-SanFrimo 2,404 1,332 l,736~~~ 115,901 204,864 11.7* 11.9* 13.5* 13.7* 603 255 87 118 *Seatl_Portld 186 134 12,224 12.0* 13.8* 83 91 , @Adirondeck 375 282 24,011 12.5* 14.4* 114 85 ` *Coi._F]orida 1,601 1,361 81.684 12.7* 14.6* 125 60 Coi.-Seattle 2,289 952 129.483 12.9* 14.8* 188 136 5Montrealer 670 492 72,811 14.0* 16.1* 346 148 *5t.I,..tar~jo 1,167 558 40,704 14.3* 16.4* 133 73 *Coi....Seatt]e 2,230 1,048 108,994 15.0* 17.3* 210 104 5Bakersfield 312 225 11,933 15.3* 17.6* 81 53 *wash...Cjn...~j 898 1,085 52,082 15.7* 18.1* 164 48 @Dubuque 182 130 6,125 16.5* 19.0* 46 47 `bi.-Milwaukee 85 H.-Spfld. 62 230 278 20,512 10,003 16.7* 17.0* 19.2* 19.6* 256 283 89 36 @Blue Water 318 234 15,890 17.6* 20.2* 94 68 *Shenandoah 545 409 10,223 20.0* 23.0* 60 25 *Restructured (curtailed) by U.S. @State supported (403-b) DOT Reconsuendation. PAGENO="0157" 150 Mr. DOWNING. I am Deputy Commissioner John Downing, New York State. I have with me Mr. Lou Rossi, director of our rail group. I will briefly go over some of the highlights as we see it. On DOT's final plan, is 60 percent of the load serving 90 percent of the market worthwhile? We think it is. Therefore, New York wholeheartedly endorses DOT's final conclusions and national route recommendations. There should be no doubt this plan must be approved and imple- mented without delay even though recommended service cuts for New York will probably be greater than cuts for any other state. DOT has targeted the Montrealer, National Limited, and two of the Florida trains, Silver Meteor and Champion, for termination. The point is DOT correctly concluded that it is impossible to justify continuation of these and other highly unprofitable long-distance trains for the immediate future. Fortunately, affected passengers will be able to take other Amtrak trains or switch to alternate modes. DOT's viewpoint that Amtrak's system must be shrunk to a more manageable size hits the nail on the head. Now that DOT has attempted to solve the simpler route struc- ture problem, I am convinced, from our experience in New York, that Amtrak management, under the leadership of Mr. Alan Boyd, can successfully tackle the remaining key issues and keep their federally funded deficit in check. This will free up Amtrak management resources to resolve the important questions of revenues, costs and service qualities. On the need for Amtrak 403(b) legislation, Amtrak's greatest ridership potential exists in the Nation's high-density corridors. Therefore, we have committed more than $65 million since 1974 for capital improvements to initiate high-speed rail service between New York City, Albany, Buffalo and Niagara Falls. Our commitments have gone far beyond capital investments. To supplement Amtrak basic system service in the State, we have distributed $9 million since 1974, under section 403(b). To increase service frequency in New York City-Albany, portions of the Empire corridor and extend new service from Albany to Montreal. Over and above our involvement with Amtrak services, we fund and operate the New York Area Commuter Rail System. This is the largest rail passenger operation in the United States with over 1,200 daily trains carrying nearly 100 million passengers each year. High density corridors are the mainstay of Amtrak's national network and I applaud the Department's vote of confidence for our Empire corridor. The section 403(b) program must be expanded to accommodate those States that are willing to put up resources to continue serv- ices targeted for elimination and to provide an improved program for existing 403(b) States. At a minimum, therefore, the revised 403(b) program should provide increased service management responsibility for the States with provisions to permit States to contract directly with the rail- roads to operate Amtrak services. PAGENO="0158" 151 The bottom line would be dramatically improved service at a lower cost to the taxpayer. Details of the proposed direct contract procedure are highlighted in your attached brief outline. New York State will not support any changes to the existing 403(b) program unless the direct contract procedure is adopted. Thank you very much. [The statement follows:] STATEMENT OF WILLIAM C. HENNESSY Mr. Chairman and members of the subcommittee, I am pleased to be here today to comment on USDOT's final Amtrak route plan and present the views of New York. Up front, I'd like to emphasize that I'm representing the largest "Amtrak state" in the nation. In 1977, New York State alone produced almost one-quarter of all origins and destinations for the entire Amtrak system. I'm here today as the spokesman for all these Amtrak passengers. USDOT'S FINAL PLAN MUST BE ADOPTED New York whole-heartedly endorse USDOT's final conclusions and national route recommendations. There should be no doubt in the mind of Congress that this plan must be approved and implemented without delay. I'm not saying this because New York escaped USDOT's route cuts. The fact is, recommended service cuts for New York will probably be greater than cuts for any other state. USDOT has targeted the "Montrealer", "National Limited" and two of the Florida trains-the "Silver Meteor" and the "Champion"-for termination. The New York Metropolitan area alone generated 18 percent, 16 percent, 19 percent and 21 percent of total origins and destinations for these trains respectively in 1977. The point is, USDOT has correctly concluded that it is impossible to justify continuation of these and other unprofitable long distance trains and that cuts must be made now. Fortunately, affected passengers will be able to take other Amtrak trains or switch to alternate modes. New York will swallow hard and take these cuts. Other states should do the same. USDOT's viewpoint that Amtrak's system must be shrunk to a more manageable size hits the nail on the head. The DOT report identified several key issues that remain to be addressed including a need for increased revenues, better cost controls and improved service quality. Critics of the final Amtrak plan will suggest that Congress should scrap the plan and send USDOT back to the drawing board to address and resolve these issues. This is clearly not the answer. Only Amtrak, and not USDOT, can solve these fundamental problems. Now that USDOT has solved the simpler route structure problem, I am convinced from our experiences in New York that Amtrak management, under the leadership of Alan Boyd, can successful- ly tackle the remaining key issues and keep their federally-funded deficit in check after the national system has been shrunk to a more manageable size. This will free-up Amtrak management resources to resolve the important questions of rev- enues, costs and service quality so Amtrak can provide high quality, efficient service at a reasonable cost to the taxpayers. NEED FOR AMTRAK 403(b) LEGISLATION We in New York have known for several years that Amtrak's greatest ridership potential exists in the nation's high density corridors. As a state that puts its money where its mouth is in the passenger service business, we have committed more than $65 million since 1974 for capital improvements to initiate high speed rail service in our New York City-Albany-Buffalo/Niagara Falls Empire Corridor. And, our com- mitments have gone far beyond capital investments. To supplement Amtrak basic system service in the State, we have contributed $9 million since 1974 under Section 403(b) to increase service frequency in the New York City-Albany portion of the Empire Corridor and extend new service from Albany to Montreal. Over and above our involvement with Amtrak services, we fund and operate the New York City area commuter rail system. This is the largest rail passenger operation in the United States, with over 1,200 daily trains carrying nearly 100 million passengers each year-more than five times the volume handled by Amtrak. I am pleased that USDOT's final report correctly recognizes that high density corridors are the mainstay of Amtrak's national network. And, I applaud the Department's vote of confidence for our Empire Corridor with their recommenda- tion that service be maintained at full frequency. In all, because we have put enormous amounts of money on the line to strengthen rail passenger service in the PAGENO="0159" 152 State, Empire Service and our Albany-Montreal train will not be cut. I submit that this same course of investment action should be taken by those states concerned about necessary Amtrak cuts in their regions. The Section 403(b) program must be expended to accommodate those states that are willing to put up resources to continue services targeted for elimination and to provide an improved program for existing 403(b) states. At a minimum, the revised 403(b) program should provide for: Increased service management responsibility for the states with provisions to permit states to contract directly with the railroads to operate Amtrak services (Direct Contracting Procedures); A separate appropriation for the federal share of 403(b) operating losses to prevent competition for funding between basic system and state-sponsored trains; Revision of the existing 50-50 funding formula to an 80 (federal) 20 (state) ratio; Expansion of the definition of eligible service costs to include marketing and advertising; and consideration of state capital investments in intercity rail passenger service track, facilities and equipment as an eligible offset to the state share of the subsidy. The most important part of this proposal is the Direct Contracting Procedure to permit a state to receive federal rail passenger subsidy funds and contract directly with a carrier to provide basic system services. In many cases, states are in a better position to negotiate with carriers, keep costs under control and resolve service problems to the benefit of all. The bottom line would be dramatically improved service at a lower cost to the taxpayer. Details of the proposed Direct Contracting Procedure are highlighted in the attached legislative outline. New York will not support any changes to the existing 403(b) program unless the Direct Contracting Procedure is adopted. Thank you for this opportunity to comment. LEGISLATIVE OUTLINE DIRECT CONTRACTING PROCEDURE FOR RAIL PASSENGER SERVICE Purpose: To permit a State to receive federal rail passenger subsidy funds and to contract directly with a carrier to provide service. Legislative Outline One, Congress would authorize a State to enter into agreement(s) with a carrier or carriers to provide rail passenger service (one or more trains), for any service desired by the State, whether provided now by Amtrak or not. Two, upon making the election, the State would become the exclusive agent for the application of federal funds for the routes named by the State; competition by Amtrak would not be permitted on any route. Three, Congress would authorize a "pass through" of the federal funds needed to subsidize the service(s) which the State would be contracting for, directly to the State. Four, funding would be authorized for a period of three years, the amount being the same each year (no inflationary increases, etc. would be permitted). Five, the State would be granted control (as by leasehold) of the equipment and facilities needed to provide the service(s). Six, Amtrak would cooperate with the State in all other respects, particularly in providing reservations service, system schedule publications, scheduling connections, etc. Seven, the State would be granted for administrative purposes a proportion of the sum appropriated to Amtrak for such purposes in the ratio of the amount received by the State for the service subsidy divided by the amounts received by Amtrak and all states participatmg for all subsidized passenger services. Mr. HAGEN. Mr. Chairman, I am Bruce Hagen, public service commissioner for the State of North Dakota, representing our Com- mission and Governor Link of our State and state for the record our State legislature has a resolution supporting the retention of Amtrak service to our State. I have my statement as well as a research paper on rail passen- ger transportation put together by the Upper Great Plains Trans- portation Institute at our State university, Fargo, N. Dak. I would like to submit that paper for the record. To very quickly summarize, we realize that Amtrak has problems but unfortu- PAGENO="0160" 153 nately it has never had the power and direction it needed in our opinion. It hasn't had the authority to order the routes it desires from the railroads and lacks other powers as well. Amtrak has seemed to have a board that didn't do much or care to make it work. I would agree with Amtrak this morning that railroads have lacked the capital to renovate their systems, rebuild their roadbeds, which Amtrak uses and we feel Congress should address that problem, too. Part of my job is regulating railroads, among quite a few other responsibilities in our State. There are many things in the Secretary's report which we heart- ily endorse. We particularly concur in its long-term commitment to the passenger train and its concern for controlling runaway costs which have plagued Amtrak. We agree that new equipment and better, more reliable service is a key toward expanding passenger revenue. Furthermore, we commend the DOT for realizing the major im- portance of the passenger train is to the intermediate points rather than end points on transcontinental runs. In many cases, these cities receive competition from airline dis- count fares. The emphasis is in the right direction and we gener- ally concur in the representations. We agree that looking to the future of 150-mile-an-hour trains makes sense. It's a positive way to look at it. We need Amtrak. We know the ridership hasn't been what it could be but there are reasons. In 1978, of 92 weekly stops in North Dakota, 75 percent were made between midnight and 6 a.m. People can't get to the depot during those hours. We need good surface transportation too, because of lower-income people and students. We have severe weather in North Dakota. We have frequent airlines strikes. We need consistent and regular services to attract people. Also we would like to see Amtrak look at Canadian service through Winnipeg. Specifically, we urge upon Congress the accept- ance of the Department's acknowledgement that the Empire Build- er is a particularly unique train. The social benefits of the train essentially outweigh the financial picture and urge its retention. Among the factors considered are the absence of air or bus service paralleling the route as well as no paralleling interstate highway. This the northern-most Amtrak route is in the area of the Nation which receives severe winter storms. Last summer, at hearings by the Rail Services Planning Organi- zation along this route, hundreds of witnesses testified to the needs of their communities for the service, 40 percent of which would be without adequate alternative transportation. New superliner equipment scheduled for introduction on this route should improve passenger comfort and timekeeping perform- ance as well as ridership. Generally, the route structure, many route adjustments should have been made some time ago. People out West have felt for some time the long-haul Amtrak train is often made the villain of the PAGENO="0161" 154 piece and many of the fixed costs associated with the Northeast corridor were visited upon the losses assigned to all these trains. We strenuously object to the Empire Builder being one of two trains slated for triweekly service. Anything less than daily service is inadequate. Passengers along the route find it difficult to determine which days to ride the train. The report emphasizes daily operation of all routes, it's hard to ascertain why this was dropped. The statement is that the long-haul train is needed. But it's precisely during the winter months they plan to run the Empire Builder on a triweekly basis. We urge it be kept on a daily service. With regard to dropping the Hiawatha, we point out the report of the RSPO estimated little if any savings would be accomplished by the discontinuance since many prospective passengers would be lost as well as mail and express travel presently moving from Chicago to Seattle. We urge modification of the report not only to provide for daily operation of the Empire Builder but to make provisions for passen- gers stranded by the discontinuance of the Hiawatha if it's discon- tinued. A possible solution would be for Amtrak to contract with an intercity bus operator to provide service between Fargo, Bismarck, and Dickinson, connecting Amtrak at Fargo making stops current- ly made by the Hiawatha. Such a transfer would provide feeder revenue to the system. I agree we need total national transportation services in this country and that will have to be done finally by Congress with the force of law. President Carter is now asking for legislation to adopt a system of gas rationing with possible restrictions of sales of gas on week- ends. There is also in the Federal budget an 8 percent increase in the request for highway construction lifting it to $8.6 billion. More money for roads when energy is scarce should raise serious questions for us. We import half our oil and cars use most of it. Shifting more people to Amtrak makes sense. Not necessarily 3 times present ridership but perhaps 20 times or more. Part of my job is siting energy plants and regulating energy rates to the consumer. There is absolutely no question that energy costs are dramatically increasing. We may love our cars now and our passenger trains may be our reluctant suitors but our passion may grow quickly as trade deficits continue as more oil is required. With modern equipment, good service, competitive fares and on- time performance, ridership will increase as gas goes up in price, and that increase could be dramatic. I believe Amtrak needs the power to work with the railroads to get the routes and other services it needs. I hope Amtrak will be given the muscle it needs to do the job the American public wants it to do and that is provide good rail pas- senger service to this country. Thank you for the opportunity to testify. [The statement and article referred to follow:] PAGENO="0162" 155 STATEMENT OF BRUCE HAGEN I am Bruce Hagen, Public Service Commissioner for the State of North Dakota. I am here representing the North Dakota Public Service Commission. We support retaining and improving Amtrak service to North Dakota. North Dakota Governor Arthur A. Link supports retention of Amtrak service to North Dakota. The North Dakota Senate has passed a resolution supporting Amtrak service to North Dakota. That resolution is pending in the North Dakota House of Representatives, and is expected to be adopted. These have been many problems with Amtrak during the 8 years of its existence. Unfortunately, it has never had the power and the direction it has needed. Amtrak relieved the Nation's railroads of providing passenger service. Unfortunately, Amtrak was saddled with slower trains, inadequate equipment and arbitrary changes in routes by railroads. In fact, some railroads have not allowed Amtrak to use the best routes. Amtrak has not had the authority it should have to be able to order the routes it desires from the railroads. It lacks other powers as well. And, Amtrak has seemed to have, at times, a Board of Directors that didn't do much or care to make it work. There are many things in the Secretary's report which we heartily endorse. We particularly concur in its long-term commitment to the passenger train, and in its concern for controlling runaway costs which have plagued the Amtrak corporation. We agree that new equipment and better, more reliable service is the key toward expanding passenger revenue. Furthermore, we commend the Department of Trans- portation for realizing that the major importance of the passenger train is to the intermediate points, rather than the end-points of transcontinental runs. In many cases these are cities with inadequate air or bus service, where the most potential growth in passenger count will occur. These are also the cities which are least vulnerable to competition from airline discount fares. The emphasis of the Depart- ment's report is in the right direction, and we generally concur in its recommenda- tions. North Dakota needs Amtrak service. There are some obvious reasons why. It is a fact that the ridership has not been as high as it might become, but there are obvious reasons why this has occurred. According to information available in the summer of 1977, for example, 75 percent or 69 out of the 92 weekly stops made in North Dakota were made between midnight and 6 a.m. Many people find it difficult to get to the depot during those hours. Good surface transportation is needed, especially for lower income people and students. The severe weather which strikes North Dakota is another reason for Amtrak, as are the frequent and long airline strikes we have experienced, which have made other types of transportation more necessary. But service should be consistent and regular, with good schedules to attract passengers. Before Amtrak, North Dakota had daily passenger train service on both the north and south routes between Chicago and Seattle. That has changed. We now have much less service today. Amtrak also has not had an opportunity to develop possible connections to Winni- peg with the Canadian Rail System, which could open up new possibilities for passengers. Specifically, we urge upon Congress the acceptance of the Department's acknowl- edgement that the Empire Builder is a particularly unique train. The Secretary reported that the social benefits of this train essentially outweighed its financial picture and urged its retention. Among the factors considered are the absence of through air or bus service paralleling this route, as well as no paralleling interstate highway. In addition, this is the northernmost Amtrak route and is the area of the Nation which receives severe winter storms, and thus needs all-weather transporta- tion. Last year hearings by the Rail Services Planning Organization along this route drew hundreds of witnesses who testified to the needs of the communities for the service-40 percent of which would be without adequate alternative transportation. New "Superliner" equipment scheduled for introduction this year on this route should improve both passenger comfort and timekeeping performance, as well as ridership. Generally, the route structure is well thought through for the revised system, with new service planned to connect Pittsburgh and Cleveland, Kansas City and Denver, and Denver, Las Vegas and Los Angeles. Many of these are route adjust- ments which should have been made some time ago. However, we cannot approve of slashing almost half the system to save less than a third of the costs. Especially since most of the cuts were made in the West and South, leaving the Northeast virtually unscathed. People in the West have felt for some time that the long-haul Amtrak train was being made the villain of the piece, and many of the fixed costs PAGENO="0163" 156 associated with the Northeast Corridor were visited upon the losses assigned to long-haul Western trains. We strenuously object to the Empire Builder's being one of only 2 trains slated for tn-weekly service. Anything less than a daily operation is inadequate service. Fixed costs associated with station maintenance go on whether or not the train runs that day. Passengers along the route find it difficult to determine which days the train operates. The Preliminary Report emphasizes daily operation of all routes, and it is hard to ascertain why this criterion was dropped. What is more, despite the Secre- tary's statement that the long-haul train is necessary for winter transportation to the Northwest, it is precisely during the winter months when he plans to operate the Empire Builder on a tn-weekly basis. We urge Congress to require Amtrak to operate at least daily service on all routes. With regard to the dropping of the North Coast Hiawatha, the other train serving our state, we point to the report of the Rail Services Planning Organization, which estimated that little, if any, savings would be accomplished by the discontinuance, since many prospective passengers would be lost. Mail and express traffic presently moving by Chicago-Seattle trains could also be lost, as shippers and the Postal Service find themselves unable to adjust to a tn-weekly schedule. We urge modification of the report, not only to provide for daily operation of the Empire Builder between Chicago and Seattle, but to make provisions for passengers stranded by the discontinuance of certain trains. A possible solution would be for Amtrak to contract with an intercity bus operator to provide dedicated service between Fargo, N.D., Bismarck and Dickinson, connecting with Amtrak at Fargo, and making stops currently made by the North Coast Hiawatha in North Dakota. Presently Amtrak and Greyhound depots in Fargo are adjacent. It would be very little effort to arrange for through ticketing, guaranteed connections, and through checking of baggage between these points. Such an intermodal transfer could pro- vide needed feeder revenue to the Amtrak system. it is ironic that cutbacks in the system come on the eve of the introduction of new equipment, which the taxpayers have already paid for, and which was intended to alleviate the problems which have plagued Amtrak service in this region. We urge that the new trains be given a chance to serve the people of the Northern Plains who have so patiently born the brunt of Amtrak's deficiencies in the past 8 years. Rather than effect necessary savings by cutting needed service, we urge that Con- gress investigate the basic institutional weakness of the Amtrak concept, which results in less than half of the Amtrak dollar going for the operation of trains. Last of all, in this period of severe energy problems and shortages, the immense cost savings of moving people by rail versus the passenger car are obvious. One recent study pointed out that cars move about 13½ miles per gallon, an average of 1.4 persons ride per car, which equals about 19 passenger miles per gallon. The passenger miles per gallon of fuel by train for the same distance ranged up to 360 passengers. We presently have a very crucial energy problem in this country. There is a shortage of oil. We continue to import increasing amounts of oil. Rail transportation is much more energy efficient than other modes of transportation. Amtrak is a first, and somewhat beleaguered attempt to establish a modern, coordinated rail passenger system. No one can argue about the need for change, nor can anyone argue that Amtrak has been a total success. Unfortunately, we have bought a horse, and we are not willing to give it grain and hay to do its job. Amtrak has limited powers; yet, it is expected to give unlimited service. I am totally convinced that a first class rail passenger system, operating on reasonable schedules, will attract increasing nidership in North Dakota, or any- where else, for that matter, where it serves. President Carter is now asking for legislation to adopt a system of gasoline rationing with possible restriction on sales of gasoline on weekends. There is also, in the federal budget, an 8 percent increase request in highway construction obliga- tion, which would bring those obligations up to a level of about 8.6 billion dollars. Yet, all of us know, in spite of our love for the four-wheel horse called the auto- mobile, that it is one of the worst energy wasters in the United States. Transportation Secretary Brock Adams is trying to save 1.4 billion dollars with the revised Amtrak route system and other savings over the next five years. Mr. Adams has also asked for higher fares for Amtrak. I applaud his attempt to try to make Amtrak climb out of the red. However, the record does show that when Amtrak cut its own rates with a discount in the fall of 1978, its ridership rose. Although it may eventually be necessary to increase Amtrak fares, it is possible to increase nidership with lower fares, which will retain or improve revenues. Certain- ly the airline industry has vividly demonstrated this fact during the last year. PAGENO="0164" 157 The chief carping critics of Amtrak maintain that people will not ride trains. I disagree! With modern equipment, good service, competitive fares and on-time per- formance, ridership will increase. As gasoline goes up in price the increase may be dramatic. Those same critics often maintain that trains are not energy efficient. Basing energy efficiency on very low ridership is one thing. But calculating energy efficiency on potential ridership is another. In fact, it might be an astronomical comparison. I think Amtrak needs the power to be able to work with the railroads to get the route and other services it needs. I hope Amtrak will be given the muscle it needs to do the job the American public wants it to do, and that is to provide good rail passenger service to this country. Thank you for the opportunity to testify. CHAPTER 4.-Rail Passenger Service L THE PASSENGER TRAIN IN NORTH DAKoTA This chapter deals with the adequacy of the State rail network for passenger service. This is not only essentail to the purposes of the 4-R Act, but is in line with a long history of railroad passenger operations within North Dakota which has continued to this day. Most of the larger towns and cities in the state have railroad passenger service, while some towns have no scheduled air service and are more dependent upon the rail mode than small towns elsewhere. Furthermore, the ex- treme nature of the winter weather in the state often means that the passenger train is the only method of access to population centers during storms and interrup- tion of other transportation services. Evaluation of lines used for passenger service is especially important now that the Department of Transportation has completed a classification of railroad lines throughout the nation as to branch-line or main-line status. Unfortunately, a single criterion of ton-miles was used, with little or no thought given to passenger service. If the recommendations of the Department were to be placed into action unchanged, at least one of our passenger routes would be reduced to branch line status and necessary funds for maintenance might not be forthcoming. A. Legislative History. Originally, jurisdiction over passenger service within North Dakota was vested in the state Public Service Commission. The North Dakota Century Code had contained provisions requiring passenger service, or at least a mixed train, to be operated on every line of railroad within the state. The Public Service Commission enforced this law strictly and whole fleets of gas-electric cars were retained by the railroads to serve the granger branches which laced the Northern Prairie State. The Interstate Commerce Commission did not interfere with state regulatory agencies in their handling of train-off cases until 1958. Up until that time, the Commission followed the "partial abandonment doctrine" which deferred to the states on questions of discontinuance of service, reserving jurisdiction to the Inter- state Commerce Commission only in those cases where an entire line was aban- doned. This situation was changed by passage of the Transportation Act of 1958, which enacted Section 13a of the Interstate Commerce Act. Congress thought it was necessary to strengthen the financial health of the railroads by allowing the carri- ers, at their option, to have the ICC, rather than state commissions, pass upon discontinuance or change in the operation of any trains or ferries. Although the statute never mentions the word "passenger," application has been to passenger and mixed trains only. The only instance involving a freight train was a case wherein the North Dakota Public Service Commission denied a request for discontinuance of several mixed trains and a local freight by the Northern Pacific Railway. The ICC here stated that it had no jurisdiction, since the case had arisen before 1958. The railroads took their cue, however, and interstate trains serving the state were discontinued under the provisions of Section 13a(1), while railroads operating intra- state trains could first seek approval of the North Dakota Public Service Commis- sion. If that were not forthcoming, the carrier could appeal to the ICC for relief, while the public had no corresponding right to appeal. All the remaining branchline trains in North Dakota were discontinued by 1970, and only two railroads remained in the passenger business-the Northern Pacific and Great Northern. Both were merged into the Burlington Northern in 1970. In 1970, the Rail Passenger Service Act was enacted. This law created the Nation- al Railroad Passenger Corporation (AMTRAK) to operate the majority of intercity trains in the nation. ICC jurisdiction over trains in the basic Amtrak system was suspended, although the corporation's first act was to cut the number of trains 43-139 0 - 79 - 11 PAGENO="0165" 158 operating in half. Presently, neither the ICC nor the North Dakota PSC has any authority over the discontinuance of Amtrak trains serving the state, although the ICC does have jurisdiction over standards of Amtrak service. B. North Dakota Before Amtrak. On the eve of the passage of the Amtrak law in 1970, North Dakota was well served by passenger trains of the Burlington Northern. Four eastbound and four westbound trains crossed the state, bringing service to every sizeable community. In addition, a daily train connected Grand Forks with Winnipeg, connecting with the Western Star to and from St. Paul. The Mainstreeter operated between St. Paul and Seattle, with through cars to Portland. In North Dakota, it stopped at Fargo, Casselton, Valley City, Jamestown, Steele, Bismarck, Mandan, Judson, New Salem, North Almont, Glen Ullin, Hebron, Richardton, Taylor, Gladstone, Dickinson, South Heart, Belfield, Madora, Sentinel Butte and Beach. These stops were all made during daylight hours. In the evening, an overnight train, the North Coast Limited, ran between Chicago, St. Paul, Port- land, and Seattle with North Dakota stops at Fargo, Valley City, Jamestown, Bismarck, Mandan and Dickinson. This route is still operated by Amtrak's tn- weekly North Coast Hiawatha. The Empire Builder operated via the Surrey cut-off through New Rockford. The train connected Chicago, St. Paul, Portland, and Seattle, with North Dakota stops at Wahpeton (actually located in Breckenridge, Minnesota), Fargo, Hannaford, New Rockford, Minot, and Williston. This route was discontinued by Amtrak and the Empire Builder operates today via Grand Forks. The former Great Northern mainline was until 1971 traversed by the Western Star, connecting St. Paul; Portland, and Seattle with a daylight schedule through North Dakota. This train served the cities of Fargo, Hillsboro, Grand Forks (where connection was made for Winnipeg), Lanimore, Michigan, Lakota, Devils Lake, Church's Ferry, Leeds, Rugby, Towner, Minot, Stanley, Tioga, and Williston. The Grand Forks-Winnipeg connection operated via Crookston and points in Minnesota, serving Pembina, N.D. through the station at Noyes, Minnesota. The train left Winnipeg at 6:45 a.m., and arrived at Grand Forks at 11:05 a.m. Returning, the equipment left Grand Forks at 4:00 p.m. and arrived in the Manitoba metropolis at 8:30 p.m. No petition had been ified with either the ICC or the Canadian Transport Com- mission for discontinuance of the Winnipeg service. However, BN, by virtue of joining Amtrak, was relieved of responsibility for operating the U.S. portion of the train. The Canadian segment, which BN operated via trackage rights over the Canadian National, had not been designated a "passenger train service" by the CTC and thus did not require governmental approval for discontinuance. Nor was its continuance eligible for financial assistance under the National Transportation Act. On April 30, 1971, all Burlington Northern passenger service in North Dakota was discontinued. C. The First Five Years of Amtrak, 1971-76. On May 1, 1971, Amtrak assumed responsibility for the operation of the only passenger train left in North Dakota: the Empire Builder. The remaining cities with passenger service were Wahpeton (Breck- enridge), Fargo, Grand Forks, Devils Lake, Minot, and Williston. The train passed through all the involved communities at night. This was the result of a decision by Amtrak and the Department of Transportation to concentrate all Chicago-Seattle traffic on one train. The stop at St. Paul was abolished as well as the connections to Portland and Winnipeg. The latter line was dropped because of Secretary of Trans- portation Volpe's belief that the law did not authorize operations in foreign coun- tries. Congress has since amended the Amtrak law to authorize operations to Canada and Mexico, but the Winnipeg route remains the one international route not restored by Amtrak, creating a 150-mile gap in an otherwise continuous rail journey of 5,500 miles between Churchill, Manitoba and Cutucu, El Salvador. Jamestown, Bismarck, Mandan, and Dickinson gained Amtrak service on June 15, 1971. This additional service was largely due to congressional pressure from leaders such as Senator Mike Mansfield (D-Mont.). Irked by the passenger corporation's bypassing of Butte and Helena, he called the Senate in extraordinary session on April 30, 1971, statmg his opinion that "whoever drew up this Rube Goldberg plan was not taking into consideration the needs of the country." The result of this criticism was the establishment of the North Coast Hiawatha connecting Chicago and Seattle via the former Northern Pacific route. At first the Hiawatha was run as a separate section of the Builder between Minneapolis and Spokane. The trains ran at the Mill City for the next 1400 miles. The two trains passed through Fargo less than an hour apart in either direction. Later, in November 1971, the trains operated separately between Chicago and Spokane. Since they were combined on the Spokane-Seattle segment, the trains had PAGENO="0166" 159 to operate four hours apart, an arrangement which persisted until 1977 although the trains have operated as completely separate entities between Chicago and Seattle since the summer of 1973. This would appear to be an example of the great appeal traditional operation has to the railroads, even if the rationale for a particu- lar schedule has disappeared. The Hiawatha originally operated as a tn-weekly train, westbound operating through North Dakota before dawn on Tuesdays, Thursdays and Sundays, and eastbound in the wee hours of Wednesdays, Fridays, and Sundays. At various times several Amtrak trains were intituted as tn-weekly operations, such as Seattle-Los Angeles, Denver-Oakland, St. Louis-Laredo, and New Orleans-Los Angeles. Some of these routes have since been upgraded to daily operation. The Hiawatha is unique inasmuch as it has been increased to daily operation and then cut back during the colder months, when rail transportation becomes a necessity for the more isolated portions of the state such as Dickinson and Valley City, which have no air service. At present, the North Coast Hiawatha operates only on a tn-weekly schedule. Professor Ronald Sheck of New Mexico State University claims that a tn-weekly schedule is next to useless. Not only is it difficult to remember when the train runs, but it is economically wasteful. Station crews and ticket agents are paid a regular salary, and it is impossible to sustain these fixed costs when the train only operates three times a week. Similarly, effective utilization is difficult under tniweekly oper- ating conditions. It is hard to drum up patronage or reliance on the train when four days a week a community such as Bismarck is without service. During the past four years, new stops have been instituted. The Empire Builder now stops at Rugby and Stanley, and the Hiawatha has added a stop at Valley City. The latter station has been a cause celebre because of Amtrak's failure to man the station and the fact that service was cut back to tn-weekly the week after the Valley City stop was commenced. Patronage at Stanley has been surprisingly good. Valley City patronage has been disappointing, because of the unmanned station and the inconvenient hours at which the trains stop. Although Amtrak has been in business for over seven years, it is still paying the Burlington Northern a cost-plus contract for the operation of its trains. The engi- neers, conductors, and trainmen are all BN employees; Amtrak has recently taken charge of the station forces and the dining room crews. This makes for ineffective supervision and conflicts of interest, as well as making it difficult to control costs. Patronage on Amtrak trains generally has been good, with the peak occurring with the fuel shortages of 1973-74. North Dakota patronage has been encouraging, even though the Hiawatha's ridership has fluctuated. (It rose 20 percent from summer 1973 to summer 1974, and then declined 20 percent between 1974 and 1975). The Empire Builder was for some time the long-haul train on the system which has come the closest to showing a profit. The train is often sold out for weeks on end, especially during the summer and holiday peak travel periods. North Dakotans have always enjoyed travel by train, but now, with cutbacks in air service and the bypassing of small communities by buses using the Interstate highway system, many passengers, especially those without cars, have no alternative. The route of the Empire Builder is one of the few Amtrak routes not parallelled by an Interstate highway. Furthermore, there is no bus service from Grand Forks to points further west than Minot. (A connection to Williston is possible with an overnight stop in the Magic City). Air service is available from Grand Forks to Minot and Devils Lake; passengers for points further west must fly east to Minne- apolis and then change planes. The Empire Builder provides the only late night departure from Grand Forks and Fargo with an arrival in Minneapolis in time for a full business day. Rugby and Stanley have no scheduled air service, and are thus heavy users of Amtrak service. Patronage is lighter along the route of the Hiawatha, due primarily to inconve- nient schedules and tn-weekly operation, as well as competition on the East-West route from Greyhound buses. Northwest Air Lines and North Central Airlines also serve this route. Valley City, Mandan, and Dickinson have no scheduled air service and Jamestown has only one departure in each direction daily. Passenger loads on the North Dakota lines are expected to increase, especially if the Canadian govern- ment perseveres in its plan to phase out petroleum deliveries to the Upper North- west. Amtrak's timetable reliability increased with the signing of an "incentive con- tract" with the Burlington Northern in 1975, providing for increased payments for on-time performance and penalties for substandard performance. The contract proved to be overly generous to the host railroad, and was modified in 1977. The passenger carrier started out with second-hand equipment in 1971. Since 1973, trains have been hauled by General Motors SDP4OF diesels, which originally PAGENO="0167" 160 enhanced train timekeeping performance. In 1976, these locomotives were suspected to be derailment prone and were restricted in speed on BN, until retired in late 1977. Timetables were then lengthened to reflect the slower speeds. Passenger cars utilized in North Dakota are the same 25-year old veterans handed down from the railroads in 1971. Some of the better older cars were switched to East Coast runs at the inception of Amtrak service, and new equipment is not expected to reach North Dakota until 1979. Equipment shortages stifi vex Amtrak in dealing with peak travel, especially now that there is a conversion underway from steam-heated to electrically-heated equip- ment. Although no one expects Amtrak to maintain a surfeit of equipment to deal with passengers grounded by airline strikes or bad weather, a reasonable amount of cars should be held in reserve for known periods of travel increase. An example of deterioration in car availability is the Budd "Slumbercoach," a popular double-deck sleeping car with small rooms, suitable for budget travel. Originally assigned to the Empire Builder throughout the year, it was later sent to New York-Florida trains during the winter months, and now it has disappeared from the trains' consist altogether, despite service standards of the ICC requiring a budget sleeper to be included in long distance trains. The main attraction of the Slumbercoach was high capacity-a room for the night was rented at coach fare plus $7. Now North Dakotans must pay high first-class fares or sit up all night in the coach, since there is no day train service provided. In December of 1975, the Upper Great Plains Transportation Institute published a report on Amtrak service in the state and made several specific recommendations for improvements in service. Although Amtrak has expressed interest in following up on these proposals, particularly in the area of new equipment, progress has been very slow in this part of the system. In a latter section, we shall outline our recommendations for making the Amtrak system serve our people better. D. The winter of 1977 and its aftermath. North Dakota was not unique in experiencing a brutal winter in early 1977. Hardly any area of the United States was unaffected. The weather wreaked havoc with the nation's railroads and called into doubt whether or not the passenger train could function as a reliable all- weather mode of transport. At least, North Dakota's trains kept running, while lines elsewhere in the Amtrak system were annulled during January and February. Other trains lost sleeping cars and other amenities which were slow to be restored. Such services have been resumed on North Dakota trains. Severe as the winter was, the weather only served to amplify Amtrak's main reliabifity problems: locomotives, cars and track. 1. Locomotive unreliability Between 1973 and 1978, most long-haul Amtrak trains have been hauled by diesel- electric locomotives built by General Motors, model SDP-40F. Although these en- gines were constructed to order for Amtrak, the six-motor units are basically a modification of the SD-40 freight locomotive. The reason for this order was that Roger Lewis, at that time Amtrak president, did not know whether the passenger system would survive for more than a few years and the SDP-40F's could always be sold to other carriers for freight service. Not more than a year had passed before disturbing reports came to the surface about these engines. The Brotherhood of Locomotive Engineers requested that the Federal Railroad Administration conduct stabifity tests of these locomotives, which the engineers claimed tended to oscifiate on curves. The test results were inconclu- sive. But the big engines began to be involved in a series of freak accidents, although bad trackage and deferred maintenance might have been to blame. Final- ly, in December of 1976, the Burlington Northern banned these Amtrak locomotives from operating on its lines, and BN freight diesels with steam generator cars began operating on the trains through the Peace Garden State. The Burlington Northern operates more long-distance Amtrak lines than any other railroad. Despite the ban, Amtrak continued to operate its Chicago-Seattle trains but the schedule suffered, with eight hours late being not uncommon. The passenger carrier had already junked most of the E units acquired from the rail- roads in 1971, which were replaced by the ill-fated SDP-40F's. Newer diesels were not interchangeable with the steam-heated cars used in North Dakota. Finally, the Burlington Northern relented but restricted the offending diesels to 40 mph on curves, thus reducing average speeds below the 55 mph attainable on the highways. Amtrak, seeing the handwriting on the wall, has sent the troublesome units back to General Motors for trade-ins on lighter power. In the meantime, locomotive short- ages continued as did the speed restrictions. PAGENO="0168" 161. 2. Car failures Prior to 1971, the Burlington Northern operated fairly modern and attractive cars in its trains. Such features as the "Lounge in the Sky" and the "Lewis and Clark Travelers' Rest" disappeared after Amtrak operation began. In many cases, the newest cars were removed from BN lines and used to supplant the rolling tene- ments of the Penn Central and other eastern roads. Due to management failure, new equipment was not ordered by Amtrak, and for the first three years, the corporation contined to use old railroad cars in its service. The average age of the cars on the trains serving North Dakota is over 25 years. it is interesting to note that twenty years after steam locomotives were retired from passenger service, the bulk of Amtrak's long-distance passenger cars require steam for heating. Not only is this system cumbersome and unreliable, but it requires diesel locomotives hauling passenger trains to be equipped with a steam generator or else a car equipped with such a generator must be handled behind the engine. Steam lines tend to freeze up during extremely cold winters, which renders the heating system useless. This happened throughout the Amtrak system during the blizzards of 1977, but especially in Chicago, where Amtrak's largest coach yard flooded due to broken water mains. Hundreds of cars were frozen solid, and trains of deadhead coaches were moved to such terminals as New Orleans to thaw out. The problem of car availability drastically shortened the Chicago-Seattle trains which serve our state. It is ironic that progress made by Amtrak in alleviating this steam-heating problem also aggravated the short-term problem of protecting the winter timetable. Beginnin~ in 1976, Amtrak began accepting delivery of new electrically heated "Amfleet' cars. Based on the proven Metroliner design, these cars have no steam lines and are thus not as susceptible to freezing weather. They have since replaced virtually all daytime service east of Chicago and are used on short-haul runs in the west as well. Most of the Amfleet are coaches and no sleepers or dome cars have been produced. They are incompatible with conventional steam-heated cars and require new locomotives with head end power for operating the cars' electrical system. Thus, the new cars could not fill in the consists of long-haul trains and the old cars which were compatible had been retired to make way for the Amfleet. Catch-22 seems to apply here. As a result, some long-haul trains like the Panama Limited from Chicago to New Orleans were equipped with Amfleet cars. It took more than a year for a compatible sleeping car to be adopted for these trains. Fortunately, enough operable steam-heated cars were found to protect the Chicago- Seattle schedules, although the trains operated light and late throughout the cold season. New electrically-heated double-deck cars are on order, and the Empire Builder is presently slated to be the first train to be so equipped. In a 1977 interview with our staff, Burlington Northern president Norman Lorentzen said that no work had been done in preparing Amtrak s steam-heated cars for the winter of 1977-78. Another equipment shortage resulted. In December 1977, the Empire Builder was given new, lighter F40 engines. Designed for use with Amfleet, the new locomotive had no steam generator and boiler cars had to be borrowed from Burlington North- ern. A strike has held up delivery of the Superliner cars, and no solution to this equipment problem is presently in sight. 3. Track maintenance problems Except in the Northeast Corridor, Amtrak does not have title to its own railroad, and thus is dependent upon the track conditions of its host carriers. In 1976, the Milwaukee Road placed slow orders throughout its Chicago-Minneapolis main line. This had the effect of increasing the time on the 421-mile run from less than 8 to 10½ hours: the slowest running time since the Great Depression! In addition to the other indignities of the winter, this lengthening of running time made a mockery of the Amtrak timetable and rendered all connections in Chicago inoperative. Although the Soo Line, Chicago & North Western and Burlington Northern also mamtain track between Chicago and the Twin Cities, Amtrak elected to continue on the double-track Milwaukee Road. Burlington Northern passenger trains operated on their own lines all the way to the Windy City prior to 1971, and the track still sees a lot of high-speed freights. But Amtrak apparently did not wish to change horses in mid-stream and miss the patronage to and from the city of Milwaukee. The Milwaukee Road has since made application for a Federal loan to finance track rehabilitation under the 4-R Act, and intends to retain the passenger service plus the lion's share of the freight traffic. 4. Schedule revisions On May 1, 1977, Amtrak released its new national timetable. It contained few surprises, since most of the schedule changes were based on Amtrak's inability to PAGENO="0169" 162 run trains within the confines of previous timetables. Although the weather had improved, the problems of the SDP-40F's, the old cars, and the slow orders still plagued the National Railroad Passenger Corporation and its operating railroads. A slower schedule was issued for both the Empire Builder and the North Coast Hiawatha while these problems are being worked out. Paradoxically, the slow timing provided better service for some North Dakota passengers, because the trains now serve communities within our state at more civilized hours. Compare the 1976 and 1977 schedules between Chicago and Minot: 1976 1977 1976 .1977 Lv. Chicago 2:30 p.m. 1:40 p.m. Lv. Minot 7:30 p.m. 6:51 p.m. Lv. Mpls. 10:45 p.m. 12:45 a.m. Lv. G. Fks. 11:40 p.m. 10:45 p.m. Due Fargo 3:40 a.m. 5:20 a.m. Lv. Fargo 1:30 a.m. 12:29 a.m. Due G. Fks. 5:05 a.m. 6:57 a.m. Due Mpls. 6:30 am 6:25 a.m. Due Minot 9:20 a.m. 11:05 a.rn. Due Chicago 2:50 p.m. 5:15 p.m. The lengthening of the schedules had little effect on intrastate travel times because of the lack of curves on the two BN main lines. Thus, the SDP-40F's did not have to slow down as often in North Dakota as in other states. A sleeper was set off eastbound and picked up westbound in Minneapolis, which could be occupied early in the evening and vacated later in the morning. The April 1977 schedule missed most connections in Chicago and Seattle, causing many passengers to remain over- night in those cities. On September 8, 1977, a radical change occurred in the scheduling of Amtrak trains throughout the country. The failure of Congress to accede to Amtrak's request for additional operating subsidies resulted in nation-wide cutbacks of serv- ice. Chicago-Seattle trains were victims of the retrenchment. Henceforth, the Hia- watha would operate on Tuesdays, Thursdays and Sundays westbound and Tues- days, Thursdays and Saturdays eastbound. The Empire Builder was to run through North Dakota westbound on Mondays, Wednesdays, Fridays and Saturdays and eastbound on Mondays, Wednesdays, Fridays and Sundays. The announced reasons for the partial discontinuance of service were operating savings and decreasing patronage. With respect to the first criterion, it is difficult to see how substantial savings can be made as long as certain fixed costs, such as stations, continue to be an Amtrak expense no matter how often the train runs. Furthermore, cutting of service makes it less attractive to passengers, who may switch to other modes. In addition, the Empire Builder received certain revenues from the carriage of mail and package express. Shippers cannot be expected to tailor their output to a four-day week. As a result, mail service (except between Chicago and Fargo) was removed from the trains. The planned savings failed to materialize. The Transporation Institute does not believe that the fall-off in patron- age during early 1977 was representative of North Dakota travel habits. Rather, decreased patronage was a result of the operating and other difficulties faced by Amtrak during the severe winter, when train service ceased to a be a reliable alternative for passengers. It appears that Amtrak's decision to reduce service may have been motivated by other factors. Asking for a supplemental appropriation may have been impolitic at the time. Renegotiating the cost-plus incentive contracts with the railroads, with their heavy labor and overhead costs, may not have seemed a reasonable alterna- tive. Eliminating a money-losing route or two may have been politically impossible and would have required extensive hearings on Amtrak's part. Thus, a paring down of service frequency, which required no regulatory approval, may have seemed the path of least resistance for Amtrak. The September 8 timetable provided for a single schedule for the Empire Builder and North Coast Hiawatha between Chicago and Minneapolis. Four days a week the train operated via the former Great Northern to Seattle, and three days a week via the former Northern Pacific route. Fargo is now the only city in North Dakota which receives daily passenger railroad service. The result of the changes was that for the first time in 95 years, Grand Forks and Minot received less than daily passenger service. But there was a bright side as well; Bismarck and other stations on the former Northern Pacific line enjoyed daytime service, instead of the middle-of-the- night schedules imposed by Amtrak since its inception. Since 1975, the Upper Great Plains Transportation Institute had pressed for daylight service on the southern PAGENO="0170" 163 route, stating that it was ridiculous to expect anyone who had any choice to board a train that left Bismarck three times a week at 3 o'clock in the morning. A further change in scheduling occurred with the change of time on October 30, 1977. Both the Builder and the Hiawatha became daylight trains between North Dakota and Minneapolis, running overnight between Minneapolis and Chicago. Besides providing the first Twin Cities-Chicago overnight service since the demise of the Pioneer Limited in the late 1960's, it also provides convenient morning or afternoon arrivals and departures at all North Dakota stations. There are some drawbacks, such as the impossibility of making one-day round trips between Grand Forks and Minot. The revised schedule provided for better connections with trains to and from the East and South at Chicago. Elimination of the SDP-40F locomotives from the route and improvements in Milwaukee Road track have speeded up the trains' schedules somewhat. Amtrak still plans to introduce the new Superliner long-distance cars to both North Dakota routes when the new cars arrive on the property early in 1979, if then. Amtrak's financial problems did not disappear, but it began to look as if the long- haul train was being made the scapegoat for the passenger corporation's failure to control costs in the Amtrak-owned Northeast corridor and several money-losing runs in the East and South. Although the fall 1977 timetable indicated many other cutbacks nationwide, a supplemental appropriation restored all of the October 30 reductions. The only routes to have reduced service are the two Chicago-Seattle routes through North Dakota. While Amtrak, the Department of Transportation and Congress talk of cutbacks, our region is the only part of the country to actually experience reductions in Amrak service. With the change to Daylight Saving Time on April 30, 1978, Amtrak schedules were once again changed, this time to a schedule which provided only night-time service through North Dakota. The Upper Great Plains Transportation Institute protested this schedule change as premature, in view of the fact that Congrss has not yet received, much less acted upon, the DOT survey of Amtrak's needs. Further- more, Paul Reistrup, president of Amtrak, had decided to resign his position and his successor, Alan Boyd, had not yet been appointed. Despite this protest, Amtrak placed the new schedules in effect, saying that it wanted a daylight service between Chicago and Minneapolis, daytime arrival at national parks en route, and better connections at Seattle. However, the new trains miss all connections to and from the South and East at Chicago, where most connections traditionally have taken place. The pattern of scheduling on Amtrak trains has been arbitrarily changed so much as to disrupt and confuse would-be passengers. Much revenue has been lost since the average passenger now has no idea what days the trains run, and whether it is a nighttime or a daytime arrival. It appears the Chicago-Seattle run has been a guinea pig for the Amtrak scheduling department. The current Amtrak schedules are as follows: PAGENO="0171" _____________ NORTH COAST HIAWATHA Lv. Chicago 11:30 am Mon, Wed, Sat Lv. Mpls-St. P. 8:45 pm Mom, Wed, Sat Lv. Fargo 1:22 am Tue, Thu, Sun Lv. Grand Forks Lv. Devils Lake Lv. Rugby Lv. Minot Lv. Stanley Lv. Williston Lv. Valley City 2:25 am Tue, Thu, Sat Lv. Jamestown 3:01 am The, Thu, Sat Lv. Bismarck 4:30 am The, Thu, Sat Lv. Mandan 4:50 am Tue, Thu, Sat Lv. Dickinson 5:39 am Tue, Thu, Sat Arr. Seattle 8:30 am Wed, Fri, Mon Lv. Seattle Lv. Dickinson Lv. Mandan Lv. Bismarck Lv. Jamestown Lv. Valley City Lv. Williston Lv. Stanley Lv. Minot Lv. Rugby Lv. Devils Lake Lv. Grand Forks Lv. Fargo Lv. Mpls-St. P. Arr. Chicago E. The Transporation Department 1978 Amtrak Report. In response to a Congres- sional mandate, Secretary of Transportation Brock Adams reported to Congress on May 8, 1978, concerning the future of Amtrak. Secretary Adams recommended that Amtrak's passenger rail network be reduced by 30 percent to avoid impending billion-dollar-a-year deficits. The recommendation, which is not binding, will be the subject of congressional and public hearing. No final decision will be made effective before May 1, 1980. The Secretary recommended increasing service to daily frequency on the route of the North Coast Hiawatha, Chicago-Seattle. He also recommended the addition of Washington, D.C.-New Orleans service presently operated by the Southern Rail- way, and addition of service over the Santa Fe Railway between LaJunta, Colorado and Denver, and between Barstow, California and Oakland. Both these routes would connect with the Southwest Limited, now operated over the Santa Fe between Chicago and Los Angeles. A Spokane-Portland connection was also proposed. The Transportation Department recommended discontinuance of the Empire Builder route between Chicago and Seattle, as well as the following trains operating elsewhere in the country: (1) The San Francisco Zephyr (Chicago-Oakland); (2) The Pioneer (Salt Lake City-Seattle); (3) The Inter-American (Chicago-Laredo); (4) The Floridian (Chicago-Miami/St. Petersburg); (5) The National Limited (Harrisburg- Washington section only); (6) The Shenandoah (Washington-Cincinnati); and (7) The Hilltopper (Washington-Catlettsburg). It must be stressed that this is but the latest of many proposals. Threats to cut back the national network have occurred since 1972, but the only abandonments of Amtrak service to date have been on short connecting runs or reroutings due to track conditions. The only actual reduction in frequency has been the cutback of the Empire Builder and North Coast Hiawatha to less-than-daily frequency in 1977. Nevertheless, the report of the Secretary is ominous, since it would deprive the states of Nevada, Utah, Wyoming, Nebraska and Arkansas of all Amtrak service, and thus lessen popular support for the system. In addition, it singles out the long- 164 WESTBOUND EMPIRE BUILDER 11:30 am Sun, Tue, , Fri 9:45 1:32 pm am Sun, Mon, Tue, Wed, Thr, Fri1 Fri Sat 3:05 am Mom, Wed, Fri, Sat 4:39 am Mom, Wed, Fri, Sat 5:45 am Mom, Wed, Fri, Sat 7:09 am Mon, Wed, Fri1 Sat 8:01 am Mom, Wed, Fri1 Sat 9:10 am Mom, Wed, Fri, Sat 10:10 am Tue, Thu, Sat, Sum EASTBOUND 7:30 pm Sum, Tue, Thu, Sat 10:50 pm Mom, Wed, Fri, Sun 11:55 pm Mom, Wed, Fri, Sun 1:00 am Tue, Thu, Sat, Mom 2:14 am Tue, Thu, Sat, Mom 3:21 am Tue, Thu, Sat, Mom 5:05 am Tue, Thu, Sat, Mom 6:55 am Tue, Thu, Sat, Mom 12:15 pm Tue, Thu, Sat, Mom 10:15 pm Tue, Thu, Sat, Mom 8:35 pm Mom, Wed, Fri 12:23 am Wed, Fri, Sum 3:35 am Wed, Fri, Sum 3:48 am Wed, Fri1 Sun 5:32 am Wed, Fri, Sum 6:10 am Wed, Fri, Sun 7:35 am Wed, Fri, Sum 12:15 pm Wed, Fri, Sun 10:15 pm Wed, Fri, Sun PAGENO="0172" 165 haul train as the villain of the piece. This is in line with the popular mythology that the Northeast corridor operates self-sustaining trains. In fact, two percent of Amtrak's route-miles (the Boston-Washington corridor) is responsible for 27% of its deficit. It appears that long-haul trains are being cost-accounted to death with allocated expenses which bear no relation to their actual operation. Amtrak's deficit would be reduced from $545 million, to only $411 million if all long-haul trains were discontinued. It seems that Amtrak, which owns the Northeast Corridor outright, is trying to make its deficits there more politically palatable by spreading its losses over miles of Western tracks. This is especially significant in view of the fact that in 1973 a previous Amtrak administration had cited the Empire Builder as the second most patronized train in the country and as covering its expenses and a bit more. With regard to North Dakota, the Secretary's report acknowledges our need for rail service in his designation of North Dakota as the route through which future Chicago-Seattle trains should operate as opposed to the more circuitous Union Pacific route through Ogden and Boise. We also applaud his realization that daily service, rather than tn-weekly, should be provided through the state to Portland. North Dakotans believe that the traffic justifies maintenance of service on both routes, at least between Fargo and Spokane. The State disagrees strongly with the Transportation Department's rejection of the Empire Builder route and suggests that the Department made the wrong decision, for the following reasons: (1). The Empire Builder currently and historically has had more patronage than the North Coast Hiawatha and its predecessors. (2). The Empire Builder serves cities in North Dakota with greater population than does the Hiawatha. Minot has traditionally been one of the best cities for patronage on the Chicago-Seattle route. (3). Transportation alternatives are better on the North Coast Hiawatha route. Fargo, Bismarck, and Dickinson are linked with Billings and points west by several Greyhound buses per day while Northwest Airlines flies between Fargo, Jamestown, Bismarck and the west. In May 1978, North Central Airlines was certified to fly between Chicago, Minneapolis, Fargo and Bismarck. In contrast, there is no air or bus service direct from Grand Forks and Minot to the west coast. (4). The route of the Empire Builder is one of the few, if not the only Amtrak route not to be paralleled by an Interstate highway. At this writing, it is not certain whether or not the Empire Builder route will be saved. The Transportation Institute proposes an intermodal solution to the problem. One Chicago-Seattle through train would operate connecting Fargo, Grand Forks, Minot and Williston. Express buses, with through ticketing and checking of bag- gage, would leave from trainside at Fargo and run through to Bismarck. A similar service would meet the train at Grand Forks and run straight to Winnipeg, thus fulfilling one of the proposals of the Amtrak 5-year plan and allowing connections between Amtrak and Via Rail Canada trains in Winnipeg. Such a proposal would provide some type of service to most North Dakota communities, and would require no additional regulatory approval, since Greyhound Lines already holds authority to operate along these routes. II. EVALUATION OF AMTRAK SERVICE North Dakota now has had over seven years of experience with Amtrak oper- ations. There are no short line or commuter railroads operating in the state. Despite Amtrak's promises to make the trains worth traveling again, there are few visible signs of progress since the Amtrak takeover in May of 1971. However, the down- ward trend in passenger ridership and operations has been halted, and we have been promised new equipment within the next year. The drift of the last few years could have been avoided by better management decisions, but it appears that one more winter of makeshift operations is in store for us. The staff of the Upper Great Plains Transportation Institute has conducted a follow-up to its 1975 study of Amtrak operations within the state. The purpose of this section is to report on the adequacy of Amtrak facilities, equipment, and service within North Dakota. A. Track conditions. Presently operations are conducted over mainline trackage only: the former Great Northern main (route of the Empire Builder) and the former Northern Pacific main (route of the North Coast Hiawatha). Track conditions are generally good, although the ride gets somewhat rough in stretches, possibly due to the pounding the track gets from heavy coal trains. The Department of Transportation has conducted a classification and evaluation of railroad routes, in accordance with the requirements of the 4-R Act. Classified as "A" or "B" mainlines were the entire route of the North Coast Hiawatha and the Empire Builder route between Fargo and Grand Forks and between Minot and PAGENO="0173" 166 Wihiston. Alternative routes, such as the Surrey cut-off (used by passenger trains until 1971) and the Milwaukee mainline through Bowman (used by passenger trains until the mid-1960's) were also granted mainline status. The Surrey cut-off is occas- sionally used as a detour route by the Empire Builder. However, the Department of Transportation did not see fit to classify the track between Grand Forks and Minot as mainline, and instead labelled it as a class "A" - branchline. We have received no explanation why this was done, except that the Department operated on a strict gross ton-miles criterion, without considering other uses of the line, contribution to through traffic, profitabifity or passenger oper- ations. Burlington Northern spokesmen assured the Institute's staff that the rail- road considers the Grand Forks-Minot line to be a main line and has operated and maintained it as such. However, the Department's stand may make it difficult for the Burlington Northern or for Amtrak to obtain needed loans for maintenance in the future. Branchline standards of maintenance bring to mind a weed-covered single track with a speed limit of 10 to 20 mph. Under such conditions, through train operation would become virtually impossible and trains would have to be routed instead over the Surrey cut-off, leaving Grand Forks and Devils Lake with- out passenger service. With the Air Force Base and the University of North Dakota located there, Grand Forks is a heavy origin and destination of passengers. This is one reason why the Secretary of Transportation designated Grand Forks as part of the Empire Builder route in 1971. We strongly recommend that the entire Grand Forks-Minot route be redesignated at least to Mainline "B" status, so that the existing passenger service as well as freight operations may be continued. One line which warrants looking into for possible passenger use is the former Northern Pacific line between Grand Forks and Pembina via Grafton. If service to Winnipeg is ever restored, which would be a possible route for Amtrak trains. Presently it is classified as a class "B" branchline and has been slated by the railroad as a potential candidate for abandonment. It may be in the interest of this state to see that this line is preserved. B. Rolling stock. In an earlier section, we dealt with the problems accompanying the changeover from steam-heated to electrically-heated equipment and the reliabil- ity problems of the SDP-40F locomotives. Presumably, these problems will disappear with the installation of new equipment. Largely because of the severe weather encountered on the northern routes, Amtrak's management has decided that the first new long-distance cars received by the corporation will go to the Empire Builder, and that the North Coast Hiawatha wifi receive the next batch. Whether these new cars will actually go into serice on these lines by 1979 remains to be seen. The 1977 schedule cutbacks were supposed to make it easier for Amtrak to replace the trains with new equipment. Present rolling stock leaves much to be desired. The F40 locomotives must have auxiliary steam boiler cars. The old cars used on these trains have been cosmetical- ly refurbished but the ancient steam heating systems and mechanical air condition- ing units are unreliable and passengers still freeze in winter and roast in summer. Air conditioning failures are more of a problem in America than in other countries, since our windows are hermetically sealed and cannot be opened to admit fresh air. Equipment shortages mean that the one train a day is often sold out, and such budget accommodations as Slumbercoaches have been removed and transferred to Eastern runs. Such conditions may be expected to reoccur until the changeover to new equip- ment is complete. However, service on the Empire Builder is generally better than on many other Amtrak trains, including such once-famous names as the Broadway Limited and Panama Limited. Replacement of conventional trains by Amfleet equipment should release additional cars which could be used to supplement the consists of North Dakota's trains until new cars are available. A recent visit to Winnipeg confirms earlier reports that the Canadian National and Canadian Pacific Railways have a few surplus coaches stored there, which could be leased on a short- term basis as well as for immediate implementation of a Winnipeg-Grand Forks shuttle until new cars are available. Consolidation of Canadian passenger service under the VIA scheme should release a few more cars for Amtrak use. New passenger cars ordered by Amtrak fall into four categories. 1. Rohr Turboliners.-These are self-contained turbine-powered trains which are an adaptation of a French design. They require no locomotives or switching facili- ties. Currently they are used in New York-Buffalo service as well as on some routes radiating from Chicago. Designed for short-haul quick-turnaround service, they have no sleeping facilities and would not be well adapted to long-distance routes such as ours. A further complication is that the Rohr Company has decided to get out of the passenger-car building business, which means the existing Turboliners may become PAGENO="0174" 167 orphans on the Amtrak system. Since they have fixed consists, the Turboliners cannot meet peak traffic demands. 2. Amfleet.-These curved-side lightweight cars come in four configurations: Am- coach, Amcafe, Amdinette and Amclub. The latter is an extra-fare variant of the traditional parlor car, while the Amcafe and Amdinette are light-food facilities. Essentially, Amfleet cars are non-motored versions of the popular Metroliner design. Like the Turboliners, they were designed for short-haul service such as the Boston-Washington run. They began arrriving on the property in 1975, when the new Amtrak management found to its dismay that there was no plan as to where to run the cars or what to haul them with. Meanwhile, the cars were being delivered at the rate of one a day. Now, the Amfleet protects virtually all schedules on the Northeast corridor and on many other day coach trains as well. Since the car shortage of last Winter, the Amfleet has also covered such long-haul schedules as New York-Savannah, Boston-Newport News, Chicago-Washington, Chicago-New Or- leans and Salt Lake City-Seattle. Such usage is technically in violation of Transpor- tation Department regulations, which require overnight trains to carry sleeping cars. The Amfleet does not come in an overnight version. However, existing sleepers can be converted to electric power, so as to be compatible with Amfleet cars. In the past year, there has been a surplus of Amfleet and a shortage of head-end- power-equipped locomotives to haul it. This problem is somewhat alleviated now that the Amfleet itself is experiencing heavy bad-order rations. 3. Overnight Low-Clearance Cars-Trains operating into New York, Philadelphia, Washington and other eastern terminals with restricted clearances cannot utilize vistadomes or doubledeck cars. Thus, trains operating between the Midwest and these eastern cities still operate with older steam-heated equipment. Amtrak had hoped to replace these old cars with new electrically-heated cars including luxury coaches, dining cars, and sleepers. Although the company has designed a new fleet of overnight cars, budget funds for these replacements were not forthcoming, and the question of new single-deck cars is now in doubt. The corporation may convert existing equipment instead. 4. Superliners.-To protect schedules on the transcontinental runs, Amtrak hopes to re-equip these trains with luxurious electrically-heated double-deck "Superliner" cars. The design of these coaches, sleepers, lounges and diners is based on cars used successfully for the last twenty years on the Santa Fe Railway. The cars would be boarded at the lower level, which would otherwise be used for baggage, kitchen facilities, service bars and other non-revenue areas. The upper levels would be joined so that one could walk throughout the train without going down stairs. The problem of steam-line failure or freeze-ups would be theoretically eliminated. The Chicago-Seattle run is scheduled to have the first train to be so equipped, although current thinking is for them to run Chicago-Minneapolis only on a trial basis, until the inevitable bugs are worked out. Some of the double-deck sleepers are arranged as budget sleeping cars, which will sell at a rate near that of the Slumbercoach. As attractive as the new cars seem to be, there are a few drawbacks. The dome car, a feature of Western train travel, will apparently disappear, although there are plans for a glass-walled "Sightseer" lounge to replace the vista-domes. Access through the upper level means that the cars will be incompatible with conventional equipment, which might be needed to add to the trains at peak travel periods. Finally, no prototype for the car yet exists, and delivery dates are as yet doubtful. In view of Amtrak's problems with new equip- ment, North Dakotans are not disposed to believe in the new cars until they can actually see and ride them. Cost overruns and inflation have pushed the price of American-built passenger cars to close to a quarter of a million dollars each. In view of this staggering cost, it might be better for Amtrak to explore the possibility of converting the best of its conventional cars to electric heat. A complete rebuilding of these cars could prob- ably serve Amtrak's needs until the end of the century. Amtrak's high costs are hard to justify in terms of the poor utilization given this equipment, which sits idle in terms for hours if not days, due to inadequate scheduling. C. Station facilities. The passenger stations used by Amtrak in this state are generally clean, comfortable, and sufficient for the traffic they generate. They range from the architecturally pleasing Spanish hacienda at Bismarck to the modern functional structure at Minot. North Dakota is not cursed with huge, decaying white elephants which hold Amtrak hostage to the tax collector in other jurisdictions. The stations in North Dakota serve at most one train each way per day. It is foolish and uneconomic for a building to be maintained for two peak periods only. Often it is impossible to have an agent available during business hours and also at PAGENO="0175" 168 train time. Local communities could alleviate this situation by finding additional uses for the station buildings, including joint use as a railroad and bus station. Such a solution could provide financial savings to both Amtrak and the bus companies, as well as making travel easier for the passenger who has to change transportation modalities. D. Level of Service. With the exceptions of insuring daily operation of the Empire Builder and North Coast Hiawatha, and instituting a Winnipeg connection, we feel the present level of service is adequate for the needs of the North Dakota rail traveler. There are some areas of the state which do not have rail service, but with present levels of travel, we believe that an intermodal system, with expanded bus service connecting with Amtrak trains in major cities, is a more feasible option. As patronage increases, and if the rising price of gasoline continues to limit auto travel. Amtrak should consider the possibility of adding an additional day train over the route of the old "Red River", connecting Grand Forks, Fargo, and Minneapolis. Another factor which should be taken into account is the increased development of the western portion of the state due to lignite mining operations and coal gasification planned for that area. If population and travel increases in the West as has been predicted, passenger service may be required over the Milwaukee Road mainline serving Marmarth, Bowman, Scranton, and Hettinger. This function could be fulfilled by a local coach train operating between Minneapolis and Miles City, Montana, where it would connect in each direction with the North Coast Hiawatha to and from Seattle. Such a rail service would also restore passenger trains to South Dakota, one of five states which presently is not served by the Amtrak system. The schedules of Amtrak trains leave something to be desired both in terms of speed and convenient hours. In our Recommendations we will approach the problem of scheduling. Suffice it to say that we hope that track and equipment improve- ments will make possible fast schedules during daylight hours; and a return to daily operations on all routes. The quality of service received by passengers is spotty. Much of this can be traced to the lack of contol which Amtrak has over the railroad employees who operate the trains. It is clear that Amtrak, with some exceptions such as food and station service, has relegated itself to the role of contractor in providing passenger service. Thus it is difficult to assign responsibility for performance, and management by objectives becomes an ifiusion. At any rate, service on the Empire Builder and North Coast Hiawatha seems to be on a generally high level compared to many Amtrak runs in the east and south. Reliabifity of Amtrak schedules is another matter. During the winter of 1976-77, the timetable was a shambles. Schedules have been lengthened so that Amtrak can be on time at the end point of the journey. Still, trains may be as much as an hour or two late in North Dakota and make up the time before they hit Chicago or Seattle, due to excessive padding in the schedule. On-time reliability has not yet come to North Dakota. One of the problems facing any further development of passenger service in the United States is the huge deficit, made up by the Federal government, incurred by the Amtrak organization-close to half a billion dollars per year! For this reason, we do not foresee any great expansion of the system in the near future, and think that any additional long runs would be hopelessly uneconomic. Instead, Amtrak should work toward improving its existing system and adding short connecting links, which would improve the utility of the present network. Amtrak's deficit is apportioned among the various routes, thus creating the impression that long-haul routes can never be self-supporting. This may in fact be true, but the Amtrak deficit is not an accurate measure of what it costs to operate passenger trains. A good percentage of the Amtrak dollar goes for items that are not directly connected with railroad passenger service. Some of the expenses include Cabinet-level salaries for Amtrak officials, executive prerequisites such as air travel to points served by the Amtrak system, salaries of diesel firemen and other superfluous personnel, and the maintenance of large obsolete stations to serve one train per day. Because of the legal fiction that Amtrak is a private corporation, the passenger company must pay property taxes to local and state governments. Equipment cost- ing mfflions of dollars sit idle between runs, depreciating uselessly because of schedules which, m the case of the North Coast Hiawatha, are as infrequent as thrice weekly-although station agents are paid for opening the depot seven days per week. Finally, contracts with the operating railroads provide for additional incentive payments when trains are operated on time at least 65 percent of the time. In the case of Burlington Northern, an improved contract has been signed, PAGENO="0176" 169 which provides for a higher percentage of on-time arrivals in order to obtain compensation. The recurrent Amtrak deficit and attempts of the current administration to cut back on perceived pork-barrels in transportation raise the spectre of massive cut- backs in the future unless Amtrak achieves better control over its spending. The question is bound to arise as to the need which Amtrak is to fulfill. Much criticism has been made as to the existence of long-distance trains which take two days to cover a distance which can be met in hours by plane. This is somewhat misleading, as few passengers ride the entire length of the train's run. Most of the traffic is generated by intermediate communities which use the train both for interstate and intrastate travel. Here in North Dakota, the train serves several communities: Wahpeton, Valley City, Dickinson, Rugby and Stanley, which have no scheduled air service. There is no air service to the west coast from Grand Forks, nor is there through bus service along Route 2. The train provides all-weather transportation to the center of towns at a minimal energy and environmental cost. North Dakotans have supported the train service despite inconvenient hours. Preserving the present level of service is in the interst of North Dakota rail users. Amtrak should investigate the possibility of carrying more mail and express traffic as a means of reducing the costs of service. In addition, Congress should investigate the budget figures provided by Amtrak to see if the western lines are carrying too much of the administrative costs and other burdens primarily attributable to "corridor" operations. IlL INTERMODAL PASSENGER FACILITIES Air transporttion is not only faster than surface, but the air passenger benefits form a greater convenience factor. An airline agent can send a passenger to any airport in the world, knowing that the carriers will cooperate to send the passenger and his baggage safely through to his destination. Having paid his airline ticket, the traveler knows that no further costs will be incurred. No comparable security is available to the surface passenger. Bus and rail carri- ers compete for a scant 8 percent of the intercity passenger market. Connections are not guaranteed, separate stations are used, and through tickets and checking of baggage are not available. Now that Amtrak has been coming back to Congress each year for subsidy requests, the buses are getting into the act as well. The bus industry is sponsoring a bill before Congress called the "Bus Revitalization Act of 1977". The bus companies are worried about declining return on investment and decreases in patronage as well as by Amtrak competition. ICC Chairman Daniel O'Neal stated on June 16, 1977, that in the future states should be required to develop an overall state intermodal passenger transportation plan, if both the buses and trains are to be viewed as candidates for public largesse. Recently, the Interstate Commerce Commission completed a study of through routes, joint fares, and interchange arrangements between Amtrak and bus compa- nies. The Commission concluded that the potential exists for establishing intermo- dal coordination which would foster public passenger transportation. Such coopera- tion would promote energy conservation and provide consumers with a practical alternative to the automobile for travel between all areas of the country. The ICC added that intermodal arrangements can save money for the carriers by sharing terminal expenses, can provide sparsely populated areas with a connection to the Amtrak system and they can save passengers time, effort and money. However, as much as the Commission would encourage joint routes and fares, it does not have any authority to require them. It may approve fares when there is carrier initiative. That has been long in coming; Amtrak's fares are not regulated by the ICC and it has avoided that body, and the bus companies are not overly anxious to short-haul themselves. Nonetheless, the ICC urges a seven-point pro- gram, including the use of rail stations for both rail and bus, uniformity in ticketing and co-ordination of rail and bus service on a national, though voluntary, basis. With regard to North Dakota, the Commission specifically indicates the following Amtrak and bus stations as candidates for intermodal service: Jamestown (Jack Rabbit Lines and Jet Base Shortway), Fargo (Jack Rabbit Lines and Doyle Transit), Grand Forks (Star Bus Lines and Triangle Transportation), Minot (Star Bus Lines, Jet Base Shortway and Interstate Transportation), Bismarck (Interstate Transporta- tion), and Williston (Missouri Valley). The Transportation Institute generally sup- ports the recommendation of the Commission. The Amtrak Improvement Act of 1974 requires the Secretary of Transportation to report to Congress on the feasibility of intergrating Amtrak rail service with other modes of transportation such as buses. Particular attention is to be paid to the PAGENO="0177" 170 needs of rural areas. Here in the United States, only a few cities such as Harrisburg and New Orleans maintain true intermodal facilities. Few passengers are willing or able to lug suitcases at strange hours through unfamiliar towns during North Dakota's six-month chilly season. The location of the Greyhound and Amtrak termi- nals at Fargo has the makings of a true intermodal station, but improved common terminals are necessary in Bismarck, Minot, and Grand Forks. In the latter city, joint arrangements could not be satisfactorily made between Burlington Northern and Greyhound, and the bus station is now located far from the railroad depot and from the center of the city. A. Provide International Service to Winnipeg and Regina. One of the lines aban- doned by Amtrak on May 1, 1971 was a connecting train from Grand Forks to Winnipeg which made connections from Chicago, St. Paul, Minneapolis and Fargo. This train had never been posted for discontinuance before the Commission or other regulatory authorities, but was not included in the system by the Secretary of Transportation on the mistaken assumption that the Amtrak law did not authorize operations into Canada. Presently Winnipeg is the only city in Canada which had passenger service to the United States in 1971 which has not been reinstated. Greyhound Lines operate buses between Fargo, Grand Forks and Winnipeg which with some schedule adjustment could make a reasonable connection with Amtrak trains at Grand Forks. What is necessary to provide a true intermodal service is for the Amtrak to list this bus connection in its timetable and for the connection to be guaranteed. It would then be possible for Amtrak and the bus companies to publish through routes and issue through tickets and checking of baggage. Once the joint rate has been approved by the ICC, connecting service between Seattle, Bismarck and Winnipeg could start immediately. (Although Amtrak's rates are unregulated, apparently joint rates must have ICC approval.) Since April 30, the Amtrak westbound train has been operating into Grand Forks at 3 a.m. The bus schedule should be adjusted so as to provide a short layover in Grand Forks and a reasonably early arrival in Winnipeg. Establishment of a Grand Forks-Winnipeg bus connection with the buses picking up passengers at the railroad station and through ticketing and checking of baggage would be a progressive step and would make travel a great deal easier for North Dakotans and travelers to and from Manitoba. The bus should leave from Fargo to connect with the Hiawatha on the days the Builder does not run. There are no connecting links anywhere between the Amtrak and VIA Rail Canada systems in the Upper Midwest, despite the existence of large Canadian cities and travel meccas in that area. One of the larger cities is Regina, Saskatch- ewan. Recently air service has been established to and from Minot, North Dakota but no surface transportation exists. It would be helpful for Amtrak to establish connecting links at Minot with either bus or air carriers to allow access to the Saskatchewan capital from points along the Empire Builder's route. B. Intermodal terminals necessary. Although North Dakota's cities are by and large compact, the distance between terminals is usually quite significant. An exception is in Fargo, where the Greyhound and Amtrak depots are adjacent. In the other cities, the distance is usually too far to walk with a suitcase. True intermodal terminals would mean a combining of facilities with schedules rearranged to make transfer between modes more convenient, and facilities for through ticketing of passengers and checking of baggage. This could be easily arranged even with the present set-up at Fargo, so that passengers from Grand Forks and Canadian points could make connections to the westbound North Coast Hiawatha and passengers from the eastbound Hiawatha could transfer for Red River Valley points at Fargo. Other connections, such as Fargo-Sioux Falls, Grand Forks-Duluth, Bismarck-Pierre, and Minot-Bismarck, should be established. In the other cities, it may be advisable to consolidate stations. it is economic nonsense to keep a depot open for one train or four buses a day, when in most cases savings could arise by pooling facilities. The benefit for both carriers is there-what is needed is some way to facffitate cooperation. C. Supplement Amtrak service with connecting buses. Since September 8, 1977, trains have operated four times weekly on the Minot route and three times weekly on the Bismarck route. Meanwhile, there is waste involved in keeping stations open on both routes for seven days per week. The Institute proposes that through ticket- ing and checking of baggage take place at Fargo so that passengers could proceed by bus to Jamestown, Bismarck, Grand Forks or Minot on the days when Amtrak does not operate through to those points. PAGENO="0178" 171 Thus, a passenger bound for Bismarck on a Monday or Wednesday morning would arrive in Fargo ticketed through to the capital city. Although the train is scheduled to go to Seattle via Minot, his baggage is transferred across the platform at Fargo to a waiting Greyhound bus, arriving in Bismarck some four hours later. The bus would stop at the Amtrak stations en route at Valley City and Jamestown. Similar- ly, a Grand Forks bound passenger arriving in Fargo on a Tuesday would be transferred to a bus at Fargo, with one coupon provided for the entire trip. Exten- sion of connecting service to Minot would involve an additional carrier, Star Bus Lines, resulting in a through tn-weekly Fargo-Minot bus schedule. Since the bus carriers already have ICC authority to serve these cities, they could pick up local passengers as well as Amtrak riders. If Greyhound and Star are not amenable to that arrangement, the services of Interstate Transportation between Bismarck and Minot could be used instead. Such rail-bus cooperation would result in daily service to all North Dakota cities until circumstances are propitious for resumption of daily train service. Such a plan is in line with Federal recommendations concerning conservation of fuel and utiliza- tion of existing transportation facilities. It should result in more riders for both Amtrak and the bus companies, and a reduction in terminal costs for both. W. UPPER GREAT PLAINS TRANSPORTATION INSTITUTE RECOMMENDATIONS Since the publication of the Transportation Institute's report on Amtrak in North Dakota in 1975, the passenger company has made some effort to improve service in line with our recommendations. They have included the changing of the schedules of the two trains to provide daylight arrivals and departures at North Dakota cities, improving connections at Chicago, speeding up running time, and assigning new equipment to the trains. Although the latter promise has not yet come to fruition, both the Builder and Hiawatha are in line to be the first to receive the Supenliner cars when they are delivered. However, there are still several serious gaps in the quality of passenger train service in North Dakota, which need to be corrected. A. Reinstate daily service on both routes through the State. Amtrak's president, Paul Reistrup, has indicated that less-than-daily service is next to useless. In 1976, he was campaigning for twice-daily service on all long-distance routes. Yet, in 1977, service was cut to thrice weekly through Bismarck and four times weekly through Minot. The Empire Builder reductions represent the first instance where a route designated as part of the "basic system" in 1971 has been reduced from daily to less frequent operation. The partial operation of both trains is confusing, inefficient and costly since fixed expenses remain much the same whether the train runs every day or not. With the release of many cars because of Amfleet replacements, equipment shortages are not the factor they were two years ago. Loss of mail and other contracts has negated whatever operational savings were claimed by the cutback in service. From the experience of the 1960's, North Dakota passengers are wary that such cutbacks in service might be a prelude to an attempt to discontinue the service altogether. The publication of the Adams report in May, 1978, tends to reinforce this conclusion. Amtrak could keep faith with the people of this region by restoring the service cuts when the Superliner equipment becomes available. B. Institute a station stop at Medora. Medora is the gateway to North Dakota's only national park and its biggest tourist attraction. Until 1971, trains stopped there daily. Now Amtrak runs nonstop for 100 miles between Dickinson and Glen- dive, Montana. The Park Service has been trying for the last two or three years to reduce the flow of automobile traffic into our national parks, yet this site is bypassed by passenger trains. With the revised schedule of the North Coast Hiawa- tha, eastbound trains would stop at Medora, in mid-morning, westbound trains late in the afternoon. This stop should be instituted at least on a trial basis during the summer. If it proves successful, year-round operations should be implemented. C. Establish service to Winnipeg. Manitoba's capital is the only Canadian city which was linked to the United States by passenger trains as late as 1971 which is not served today by Amtrak. The city still is the rail hub of Western Canada, with daily passenger service by Via Rail Canada. Winnipeg, with a population of over half a million, is larger than any city on the Empire Builder route between Minne- apolis and Seattle and is a good generator of traffic. Since the emergence of Amtrak, service has been restored to Montreal (over two different routes-one of which had not been operated since 1966) and Vancouver, with connecting service available to Toronto from the east and midwest. But no passenger train crosses the border between Lake Ontario and Puget Sound. Rail travelers are unable to reach the Canadian midwest and Rockies from Chicago or Minneapolis; Winnipeg passen- PAGENO="0179" 172 gers are unable to go by train to visit the traditional tourist areas in the midwest- ern United States. Service between Grand Forks and Winnipeg would fill the 150-mile gap between the two countries' rail service. The train could be operated over the BN and CN lines as was the predecessor train until 1971, making a connection with the Empire Builder at Grand Forks. Such a train could be a daylight coach train which would provide a substantial amount of feeder traffic for the Empire Builder. In addition, both major rail systems of Canada provide passenger service to Winnipeg, and the addition of this short link would provide optimum connectivity between the rail networks of both countries. Presently, train travel is easier between Northern and Southern Ireland and between East and West Germany than it is between the supposedly cooperative nations of the United States and Canada. The Grand Forks-Winnipeg market is one where there are not many competing modes. Within the past two years, Northwest Airlines has cut back its flight schedule to the point where there is only one plane on the route. It flies to Winnipeg and immediately turns around, making a business day there impossible. There are two buses a day, but their schedule is geared more for the local than for through traffic, and does not permit a morning arrival in the Manitoba metropolis. Both in Grand Forks and in Winnipeg the bus terminals are at a considerable distance from the railroad stations. There are two possible routes for the Winnipeg train. The former Great Northern line runs from Grand Forks to Crookston, Minnesota, and then north through Warren, Minnesota, to Noyes, where it follows the Canadian National into Winni- peg. This route was followed by Burlington Northern trains until 1971, and the track is in good condition, since it is used by through freights. Most of the route has been designated as Class B mainline by the Department of Transportation. The former Northern Pacific line through Grafton and Pembina is considerably shorter than the Crookston line. However, the track is not in good shape, and passenger service has not been operated this way for over a decade. In addition, the Pembina line is designated only as Class "B" Branchline by the Transportation Department, and the Burlington Northern has designated the line as a likely candidate for abandonment. A Grand Forks-Winnipeg train would be a low-cost option for Amtrak that would expand patronage by linking the two countries and restoring a historic travel market. It would benefit Manitoba, North Dakota and especially Minnesota in providing service to such towns as Warren and Crookston which have been without rail service for seven years. This is the optimum length for an Amtrak run, and the type of market in which the train can satisfactorily compete with other modes. If additional equipment is needed for this run, there are some surplus CN and CP coaches available in Winnipeg which could be leased from the Canadian lines for a short term, until new cars arrive on the Amtrak property. Establishment of a Grand Forks-Winnipeg connection might require cooperation between Amtrak and Via Rail, the new Canadian passenger corporation. As the latter is in the formation stages, it behooves North Dakota officials to contact the incorporators of Via Rail and express their interest and support for this internation- al cooperative venture. In October, 1977, Amtrak announced that it was considering resumption of Winni- peg service as one of six possible future experimental routes. Congress has required the Corporation to initiate one such route each year, and the Winnipeg proposal was part of Amtrak's five-year plan submitted to Congress for its consideration. If such a train is initiated, we propose that it originate and terminate in Fargo on the days that the Empire Builder does not run. These recommendations of the Transportation Institute have in mind ease of adoption, low cost, and benefits to the population of our state. We believe that these are the areas in which passenger rail service should be developing in our state, in close cooperation with an expanded bus system, which would make single ticket surface travel available at reasonable cost and schedules to every community in North Dakota. With regard to the May 8 report of the Department of Transportation, we wish to emphasize that this is only a basis for discussion and Congressional action. There are some good points to the report: the proposed addition of connecting service to Portland, and the recognized need for daily service through North Dakota. We do not believe that one of our two routes should be abandoned without a clear showing that the route is failing to carry its own burden. We do not think the long- haul tram should be Amtrak's scapegoat for administrative and Northeast corridor costs. At public hearings and Congressional debates, we should make our wishes known to our elected representatives. - PAGENO="0180" 173 V. NORTH DAKOTA RIDERSHIP SURVEY In the fall of 1977, the Upper Great Plains Transportation Institute conducted an on-train survey, with the co-operation of Amtrak. The questionnaire was intended to gauge the reaction of North Dakota passengers to conditions of rail passenger - service and proposals for improvements in the service. The survey was run once in October and once in December on each of the following routes: The Empire Builder, between Breckenridge and Grand Forks; The Empire Builder, between Grand Forks and Williston; and The North Coast Hiawa- tha, between Fargo and Dickinson. The researcher was Mrs. Karen Thoms, a graduate student at the University of North Dakota, formerly associated with the Interstate Commerce Commission. North Coast Hiawatha survey. Passengers on this train were a smaller number than those on the Empire Builder; due largely to the tn-weekly schedule and inconvenient boarding hours. Of the passengers destined to or originating at North Dakota points (the only ones surveyed), over 20 percent of the westbound passengers boarded at Fargo, Bismarck and Minneapolis. Other origins of passengers with more than 2 percent of the passengers on the trains surveyed were Jamestown, Mandan, Valley City and Mil- waukee. The westbound passengers were bound for Billings, Montana (21 percent and 16 percent of the two trains surveyed) while Dickinson, Seattle, Bismarck and Jamestown were the next biggest westbound detinations. Over 90 percent of the passengers arrived at their originating station by private car or taxi. Many of the passengers were destined to points not on the Amtrak system which they would reach by private automobile. These cities included: Garrison, ND, Middle River, MN, Miller, SD, McClusky, ND, Jud, ND, Strasburg, ND, Tacoma, WA, Rathdrum, ID, Corwin Springs, MT, Powell, WY, Bigfork, MT, Post Falls, ID, Worden, ND, Bremerton, SD, and Edgeley, ND. Of the eastbound passengers on the North Coast Hiawatha, 24 percent boarded at Glendive or Dickinson, two cities without air service. Billings at 14 percent was the next most popular origin. Three-quarters of the passengers drove or were driven to the station, 9 percent arrived by taxi, and 5 percent walked to the Amtrak depot. Of the passengers surveyed, 33 percent were bound for Fargo and an equivalent amount for Bismarck and Mandan. 19 percent were bound for Jamestown and 14 percent for Minneapolis. Some of the passengers were destined for towns not on the Amtrak system; these included Oakes, ND; New Rockford, ND; Buxton, ND; and Aberdeen, SD. All would arrive there by private car. Empire Builder survey. Because the base of our survey was in Grand Forks, the Grand Forks-Williston segment and the Grand Forks-Breckenridge segment were surveyed individually. On a southbound run between Grand Forks and Breckenridge, 52 percent of the passengers boarded at Grand Forks, 24 percent at Minot, 14 percent at Rugby and 10 percent at Fargo. 95 percent drove to the station and 5 percent walked. Many of the passengers between Grand Forks and Breckenridge were bound for points not served by Amtrak, including Gary, Indiana (served by South Shore, Conrail and Amtrak, but apparently the passengers were going there by other means), Redwood Falls, Minnesota, Celina, Ohio; Detroit Lakes, Minnesota (on an- other Amtrak route) and Sarasota, Florida. Fourteen percent would arrive by car, 5 percent by bus, and 81 percent by other means. Northbound passengers from Breckenridge to Grand Forks boarded at Minneapo- lis (33 percent), Chicago (28 percent) and Fargo (28 percent). Seventy percent arrived by car, 6 percent by taxi and 9 percent by bus. The Northbound passengers were destined for Grand Forks (30 percent), Minot (28 percent), with Williston and Fargo tied for 13 percent. Other destinations were Stanley, Rugby, and Devils Lake, with 2 percent each. Users of this train were en route to several towns not on the Amtrak system, including the North Dakota cities of Mohall, Tioga, Ryder, Roseglen, Lignite, Eureka, Burlington, Rolette, Fortuna and Grafton. Other destinations were Moor- head, Minnesota and Medicine Hat, Alberta. For the Grand Forks to Williston segment of the run, the largest originators of traffic were: Fargo, (39 percent); Minneapolis, (26 percent); and Grand Forks, (20 percent). The most popular destinations were Minot, (35 percent); Williston, (35 percent); and Rugby (13 percent). Other destinations of passengers sampled were Whitefish, Stanley, Devils Lake, Havre, Seattle, Glasfow, Wolf Point, and Cut Bank. North Dakota destinations off the Amtrak line included: Dunseith, Berthold, Bel- court, Wildrose, Powers Lake, Tioga, Munich, Towner, Fort Benton, Penn, Sydney, Noonan, Ray, Pendleton, Rollette, Dunseith, Wolford, Sarles, and Bottineau, with 89 percent arriving at destination by private auto and 11 percent by bus. PAGENO="0181" 174 On the eastbound train between Wihiston and Grand Forks, the major originators of traffic were: Seattle, (26 percent); Williston, (25 percent), and Minot, (15 percent). The major destinations were: Minot, (22 percent), Fargo, (19 percent); Minneapolis, (16 percent), Grand Forks, (11 percent); and Devils Lake, (11 percent). Passengers were destined for the following off-rail North Dakota points: Towner, Richfield, Voltaire, Langdon, Fergus Falls, Portland and Hillsboro. Reasons for traveling. Very few business travelers ride the Amtrak trains through our state. The combination of long travel time, erratic schedules and inconvenient departures tend to mitigate against businessmen's use of the trains. Thus, only 12.7 percent of the travelers described themselves as on business trips, 80.7 percent were on pleasure travel, while the remaining 6.6 percent gave other reasons for their journey. Choice of train travel. Among North Dakota passengers, price was the largest consideration, with 44.3 percent of the passengers electing train travel because of economic considerations. The second most frequent reason for choosing rail was the personal preference, (11.8 percent), while 10.6 percent said that lack of convenient air service was an important factor. Comfort accounted for 8.6 percent of the passengers electing rail, while scenery, a negligible factor since the trains operate at night through the state, attracted only 4.3 percent. Possible improvements to Amtrak service. Our passengers were asked how they would respond to various proposals made in the interest of improving rail service in North Dakota. Passengers generally favored restoration of daily service to the southern route through Bismarck. Of our passengers, 34.3 percent strongly favored restoration of daily frequency to the Hiawatha route, while 12.1 percent somewhat favored this move. A bit more than 40 percent of the passengers believed it "made no difference", while 12.5 percent had no opinion. Less than one percent of the passengers opposed restoration of daily service. Since more passengers answered our survey on the Empire Builder, it may be that there was not as great an enthusiasm for increased service on the Hiawatha because the riders would not have cause to use this train. With regard to the Empire Builder, which at the time Amtrak was seeking to discontinue, the results were as follows. A clear majority felt the train should be returned to the daily schedule. Forty-four percent felt strongly about this, while 12.4 percent somewhat favored the change. Less than one percent was opposed to such a move, while 29.2 percent felt it would make no difference to them and 14 percent had no opinion on the matter. The passengers were also asked their opinions on other proposals of the Transpor- tation Institute concerning new service. A proposal to institute service between Grand Forks and Winnipeg, which Amtrak has also proposed, met with the follow- ing response. There was no oipposition to the proposal. Twenty-seven percent strongly favored the Winnipeg connection, while 17.2 percent somewhat favored the new route. About 39 percent of the passengers said it would not make any differ- ence, while 16.8 percent had no opinion on the proposed service. At the inception of Amtrak, the passenger corporation continued Burlington Northern's practice of including a budget sleeping car called a "slumbercoach" in the Chicago-Seattle train. This car was later removed and utilized on eastern runs. Over 27 percent of the passengers strongly favored the return of the slumbercoach, 16.2 percent were somewhat in favor, less than 1 percent was opposed, 41.5 percent said it made no difference, and 14.1 percent had no opinion. The Transportation Institute has proposed a stop to serve Theodore Roosevelt National Memorial Park at Medora. This proposal failed to win a majority of the train riders' votes. 17.8 percent were in favor of the new station strongly, 12.6 percent were somewhat in favor, 48 percent said that it made no difference, 18.2 percent gave no response and 3.2 percent were opposed. We asked the passengers what changes they would like to see in Amtrak. Some of their responses were: stay close to schedule, more courtesy, shorter time at stops, better service, smoking coach, and smoking area in the diner. Other criticisms called for a snack bar, better air conditioning, cleaner, quieter trains, having re- served seats, and having the crew announce the station stops. Still other passengers thought more coaches should be added to the consists and that better connections should be made with buses. Free pillows and a "better view" were some of the amenities requested, while other respondents called for movies, excursion fares, private dmmg areas, and better scheduling, including trains to and from Hettinger, North Dakota. Alternative service. We asked our passengers how they would travel if they could not use the train. Three percent would travel in an air taxi or private plane, 28 percent would use a scheduled airline, and 11 percent would go by bus. Of the PAGENO="0182" 175 remainder, 41.5 percent would drive their own cars, while 11.5 percent said they had no alternate means of travel and would not go at all. Why rail is not used more often. The passengers we interviewed can be expected to have a generally favorable view of rail transportation since they were using the service at the time. However, we asked them why they did not use the trains more often. Of the passengers who responded, 12.4 percent complained that the train was too expensive, while 22.1 percent said that the trip took too long (this was during the period of slow orders due to bad track and worse weather). More complaints were - made about inconvenient schedules than any other factor-35.7 percent. Despite complaints about service and comfort elsewhere on the Amtrak system, North Dakota passengers seemed relatively satisfied. Only 2.9 percent complained of bad service, and less than 1 percent said that the train was uncomfortable. Apparently comfort and economy are the two big things the trains have going for them. Who Rides the Trains, Anyway? Our researcher included some demographic questions in her survey. Railroad employees and others riding on passes or reduced- rate orders accounted for only 6.5 percent of the respondents to our survey. Thirty- seven percent had not ridden another train within the past year, while 27 percent had taken only one additional trip, 16 percent twice before, 3 percent three trips within the year, 5.5 percent with 4 trips in the past year, and 10 percent had taken 5 or more trips during the year previous to the survey. Our figures disabuse the myth that only older people ride the trains. Persons from 16-21 made up 29.2 percent of our interview sampling, young people between 21-30 another 25.1 percent, between 31-40, 14 percent, between 41-50, 8.8 percent, between 51-65, 12.3 percent. Only about ten percent of the riders fell into the category generally considered as "retirees", i.e. over age 65. Children were not counted in this sampling. Of the passengers surveyed, 30 percent classified themselves as students, 47 percent as employees, 8 percent as presently unemployed, and 16 percent as retir- ees. Forty-seven percent of the passengers were traveling alone, 5 percent with some sort of group, and 48 percent with the families. The percentage of families may well have risen since the survey due to a new promotional offer which allows free transportation for children when cereal box tops are presented in exchange for a ticket. In short, the train riders correspond to a cross-section of North Dakota's Norx.-Chapter 4 prepared by Professor William Thoms, University of North Dakota Law School. Senator HEFLIN. Thank you. Your statements will be entered into the record. This concludes the hearings for today. We will recess until next Monday, the 12th. [Whereupon, at 4:35 p.m., the hearing was adjourned, to recon- vene on Monday, March 12, 1979.] PAGENO="0183" PAGENO="0184" AUTHORIZE APPROPRIATIONS FOR AMTRAK AND DOT'S FINAL ROUTE RECOMMENDATION MONDAY, MARCH 12, 1979 U.S. SENATE, COMMITTEE ON COMMERCE, SCIENCE, AND TRANSPORTATION, SUBCOMMITTEE ON SURFACE TRANSPORTATION, Washington, D.C. The committee met at 10 a.m. in room 235, Russell Senate Office Building, Hon. Russell B. Long (chairman of the subcommittee) presiding. OPENING STATEMENT BY SENATOR LONG Senator LONG. Today the Senate Commerce Committee's Sub- committee on Surface Transportation will continue hearings on Amtrak's fiscal year 1980 authorization request and the Depart- ment of Transportation's proposed new route plan for Amtrak. These hearings are a continuation of last Monday's hearings and will conclude the subcommittee's scheduled public review of Amtrak. These hearings will afford the members of the subcommit- tee an opportunity to receive additional information on the difficult problems facing Amtrak and the Federal Government. For those individuals who are unable to testify orally, the hear- ing record will remain open for 2 weeks to receive additional comments on both Amtrak's financial needs and the Department's proposed plan. I want to remind witnesses here today that we have a number of witnesses to hear from and all witnesses must limit their oral presentation to a 10-minute summary of their full statement. The full statement will be printed in the record. The first witness this morning will be Senator Baucus-is he here-he will be along shortly, and in the absence of Senator Baucus I would like to next call Mr. Richard J. Schiefelbein, Deputy Director for the Rail Services Planning Office Analysis and Evaluation, Interstate Commerce Commission. If I may for the moment, I'm going to turn the gavel over to the chairman of the full committee, Senator Howard Cannon. The CHAIRMAN. All right. Mr. Schiefelbein. Mr. Schiefelbein, if you would permit, Senator Baucus is here now and I wonder if you would mind allowing Senator Baucus to proceed with his statement. STATEMENT OF THE HON. MAX BAUCUS, U.S. SENATOR FROM MONTANA Senator BAUCUS. Thank you very much, Mr. Chairman. (177) PAGENO="0185" 178 Mr. Chairman, I appreciate the opportunity to appear today to discuss the DOT's recommended route plan for Amtrak. As you know, in response to public desire for revitalization of a faltering passenger rail network, Congress at the beginning of this decade created Amtrak. Since that time, Congress has had to over- come executive branch opposition in providing the necessary fund- ing and incentives for its development. Recent public opinion polls and the outpouring of public support exhibited at last summer's ICC hearings throughout the country demonstrate that citizen interest has not declined but in fact has increased. Once again, it is up to Congress to reflect the public's desires and insist that a truly nationwide passenger rail system remain a part of national policy. The Amtrak Improvement Act specifically mandated the develop- ment of an "optimal intercity railroad passenger system" based upon current and future markets and population requirements. It further calls for consideration of the "role passenger rail can play in helping meet the Nation's transportation needs while furthering national energy efforts." Congressional intent was clear, and I submit in large measure such intent is inadequately reflected in the final product. Rather, it would appear that the planners started from a dollar figure the administration was willing to allocate, making wholesale amputa- tions in the national route structure until that budget level was reached. This is a time of growing concern for the problems of inflation and unnecessary government expenditures, and I share that con- cern. It is then especially important that the taxpayers' dollars be allocated prudently and to areas with the greatest benefit poten- tial. The administration proposes $552 million for Amtrak operations next year. That's about a 12-percent reduction in dollars, but a 43- percent loss of route miles plus further frequency reductions in those trains that would continue. I cannot fathom the logic of such a drastic move, especially when weighed against other events and conditions in our economy. At the same time the administration is proposing cuts in availa- ble rail service, it is putting renewed emphasis on energy conserva- tion. I heartily support these efforts. Fuel shortages are increasing and future supplies are uncertain. Gasoline prices continue to esca- late with little hope of relief. Almost daily we read of delivery cutbacks by major distributors and we are told to expect weekend gas station closings as the summer travel season approaches. I might add, Mr. Chairman, that in this morning's Washington Post there was a report by the Office of Technology Assessment of a study which very strongly implies, and in fact states, by about the late 1980's or 1990 we may not be able to rely nearly as much on the automobile as we do today because of gasoline shortages. Not only are automobiles and buses affected, but airline flight cancellations due to lack of jet fuel are also on the rise. It would seem almost axiomatic that national policy should be emphasizing fuel-efficient public transportation alternatives to help us reduce our dependency on uncertain future supplies of foreign oil at inflat- ed prices. PAGENO="0186" 179 Also, when you weight this relatively small budget savings today against the gigantic expenditures that would be required to bring these abandoned lines back into service in the future, it does not make good fiscal sense. We are seeing this happen as some of our large cities now struggle to revive dismantled mass transit systems at great taxpayer expense. Let me speak briefly about the report's effect on the Northwest, where distances are great and transportation alternatives limited- and the situation I know best, my own State of Montana. Current- ly, this market is served by two trains operating between Chicago and Seattle, with service on alternate days across different sectors of Montana. The DOT plan eliminates the southern route entirely, leaving only three frequencies per week via northern Montana through most of the year. The southern route now serves population centers of Billings, Bozeman, Butte, Missoula, and points in between, including Living- ston-one of the gateways to Yellowstone National Park. In response to my request for comment on poential Amtrak use for public access to Yellowstone, the National Park Service said in part: The time is approaching when, regardless of the magnitude and permanency of the energy problem, additional visitors to national parks will have to consider public transportation in order to have park experiences. In Yellowstone National Park, for example, the roads and facilities have reached their carrying capacity limit. It is not environmentally or economically feasible to expand the roads to accommodate the limited frequency of these excessive demands. Any increase in the use of public transportation services for park access will be beneficial to the park resources and the visitor experience. I am sure the problem of private vehicle congestion is not limited to Yellowstone. I quote again from the Amtrak Improvement Act passed by Congress- The Secretary shall consider the impact of such recommendations upon existing tourism markets and the potential for future tourism in areas to be served by the recommended route system. The continued operation of both routes through the Northwest is essential to the economic and personal well-being of the area. The ICC Rail Service Planning Office conducted public hearings throughout the region last year. Its evaluation report specifically called continued operation of both routes essential, noting both overwhelming public support and revenue losses-estimated at sev- eral million dollars-far greater than the small savings-$800,000 at most-it would provide. There are those who would point to ridership figures on the southern route as an indication of lack of interest or need. Precise- ly the opposite is true. Montanans have demonstrated the necessity for public train service by enduring antiquated locomotives and cars with frequent heating and cooling malfunctions, deteriorating ontime performance, and schedule changes without adequate public information and advertising. More than 2 years ago, modern dome-top, climate-controlled cars were promised for this route which crosses areas of unsurpassed spectacular natural scenic beauty. None are yet in service, and we are told that their inauguration is expected in October-precisely when this train would be eliminated. PAGENO="0187" 180 If given the opportunity, with service improvements on the hori- zon, passenger traffic will increase here just as it has elsewhere on the Amtrak system when decent, dependable service is available. Once again it falls to the people's elected representatives to reflect their expressed desires and the best interest of the Nation by returning this misguided proposal to the Secretary of Transpor- tation for extensive redrafting. The cost in dollars today is small, but the future savings will be manifold. It is the wrong plan-as it does not respond to the congressional mandate for an "optimal intercity railroad passenger system." It is wrong for the time-when mounting fuel shortages and prices require new emphasis on alternate, energy-efficient public transportation systems. It looks to cut the budget in the wrong place-where a very modest reduction in dollars slashes our rail network almost in half, further weakening the system. It is almost certainly the harbinger of further route cuts in the future or huge outlays when circum- stances force us to face the necessity of once again resurrecting those lines shortsighted expediency caused to be abandoned. I urge the distinguished members of the committee to give the full Senate an opportunity to debate and vote on the Secretary of Transportation's proposed Amtrak route system. Thank you, Mr. Chairman, and members of the committee. I appreciate the opportunity to express my very strong views about what I consider to be the failings of the proposed plan. The CHAIRMAN. Thank you very much, Senator Baucus. You know, Congress is faced with a rather unpleasant dilemma here because at the rate Amtrak was going it was certain to reach astronomical figures as to the subsidy required from the Federal Government. We directed DOT to come up with a new plan, not necessarily in the hope that they would reduce their rail mileage, but they would take other steps to reduce that subsidy by the Government. If this resolution of disapproval that-these resolu- tions of disapproval were to be passed by the Senate, that would result in a $166 million additional cost to the taxpayers just this year. On that particular train that you referred to, for example, the revenue there was $11,576,000 and the cost to operate that train this last year, or 1977 rather, fiscal 1977, was $24,913,000. So it was a net loss of $13 million on that one train alone. Senator BAUCUS. If I may interject, Mr. Chairman, I think to the degree those figures represent a discrepancy, that's all the more reason why they should be sent back. The Rail Planning Service shows that the savings "by the implementation of the plan"-that is, northern service and elimination of the southern route-"is only about $800,000" and that is about roughly a calculation of 8 per- cent of the loss of the DOT's estimates. So it seems to me that the Rail Planning Office and the ICC, Amtrak, and DOT, all ought to get together again and all three agencies find out what in fact is the savings of this. I worry that even if the Senate were to reject the plan and the DOT and the Amtrak came back in 45 days, the 45 days would not be a sufficient period of time within which to adequately and fully get to the heart of the problem to provide basic passenger service. PAGENO="0188" 181 My strong feeling is-and I'm sure, Mr. Chairman, you will agree-that when you ride on Amtrak it's a difficult experience at times. Sometimes Amtrak trains are very pleasing; the food is good and service is good; and other times it is abominable; and I think were Amtrak providing a lot better service that the profit would improve significantly. The CHAIRMAN. Of course, you get yourself into a chicken-and- egg situation. Which comes first: The improvements in Amtrak or the improvements in ridership? The figures that I gave you were just the avoidable costs. If you look to the fully allocated cost, the loss on that route, instead of being $13 million, was $28,132,000 for the fully allocated costs on that particular route. Now the question is: Where do we start? I'm satisfied in my own mind that the American taxpayer is not willing to sit back and see the subsidy into Amtrak go in excess of a billion dollars and that's really where we're heading. Senator BAUCUS. I think that's absolutely correct if Amtrak con- tinues operating as poorly as it has. If Amtrak wants to provide good service you're going to find those figures turned around. There's no question in my mind. I personally have ridden Amtrak and I was shocked at the poor service that I experienced on Amtrak compared with earlier trips I have taken on passenger trains 10 or 15 years ago. It was a big shock to me and, sure, it's a question of chicken before the egg, but any businessman knows that when he starts a new business he's going to incur early losses. He hopes to turn around those losses for profits if he provides the very best service he possibly can, and I don't believe Amtrak has done that. The CHAIRMAN. Well, of course, Amtrak is handicapped by the fact that the Federal Government provides two-thirds of its funds and it can't do something that it doesn't have the funds to do. Senator BAUCUS. Well, a lot of it is a question of-- The CHAIRMAN. We are the people who furnish the funds or fail to furnish them. Senator BAUCUS. I appreciate that. The CHAIRMAN. And you have also made reference to the cost to bring this sytem back if it's once abandoned. Well, those rails are not going to be abandoned. Freight trains are running and will continue to operate over those lines, irrespective of what hapens to the passenger service. The bus people here will be testifying later this morning and pointing out that they parallel service or are willing to provide service at every point that's discontinued for the intercity routes. Senator BAUCUS. I appreciate your earlier point that Amtrak is somewhat hampered by congressional allocation of funds, but I submit that a lot of Amtrak's failures are just due to improper attitude. You have to have resources to provide the service, but one's attitude in providing that service is I think just as important, if not more important. The CHAIRMAN. Senator Schmitt. Senator SCHMITT. Thank you, Mr. Chairman. Senator Baucus, if you have 4 or 5 minutes, I'd like to buttress your testimony with a statement and then ask some questions that I think will help us both. We appreciate your support on the PAGENO="0189" 182 resolution of disapproval and I agree with you that I think if we can move this to the floor of the Senate that we will have the will of the people expressed. The proposed cutbacks in Amtrak service could be a death blow as you have indicated to rail passenger service in the United States rather than the cure claimed by its advocates. Contrary to the Department of Transportation's posi- tion, modern rail transportation is at the current time an infant industry in the United States. This becomes more apparent when we consider, as the distinguished Senator from Louisiana pointed out last week, that 150-mile-per-hour trains are either operational or in the planning stages in Japan, France, Germany, and Great Britain. We add to that this tremendous base of technology that has been created just in the last decade and a half that a great deal of which could be applied to rail transportation. While the rest of the world forges ahead with more research and development into new technology for faster, more efficient, and more comfortable rail transportation, we languish behind, insuring the eventual phaseout of our existing rail service to the detriment of all trans- portation services. The Senator from Illinois, Senator Stevenson, has pointed out the dangers of our technological depression in this committee and our attitude toward rail transportation is symptomatic of this mal- aise. Amtrak trains today travel no faster than they did over 30 years ago. But if we were to develop efficient, comfortable, high- speed, reliable trains and support systems for those trains along the coasts of this continent and between the major cities in each of the United States, I have little doubt that the interest of the public would be stirred-that these trains would be well used. As you yourself have so well indicated, trains can be enjoyable as well as efficient and in many parts of the country absolutely necessary transportation forms integrated with a broad transportation net- work of other kinds. The critics of Amtrak have accurately pointed out that we cannot return to the railroad system of the past. We cannot afford to satisfy the nostalgic yearnings of a handful of railroad buffs, of which I am one. The lonesome, compelling sound of a steam engine stopped me more than once as I was growing up, and occasionally elsewhere in this world has done so since. What we can do, howev- er, is build a railway system of the future, a system that will pull people out of their cars, not because it is quaint, but because it is faster, more comfortable, cheaper, more fuel efficient, and fun to use. I admit to a certain parochial interest in this matter. New Mexico would lose the Southwest Limited, formerly the famous Super Chief. In Albuquerque, the passenger volume for this train grew from 48,000 in 1976 to over 62,000 people in 1978-and this is with equipment that is 25 years old and virtually no local Amtrak advertising or sales program. Ridership is expected to increase significantly in the coming year with the delivery of new sleeping cars, dining cars, lounges, and chair cars-the same situation that you indicated you face in the Northwest. The Southwest Limited would probably receive them in time for the Christmas traveling season. Ridership on other routes increased dramatically when Amtrak introduced new equipment and the same can be expected PAGENO="0190" 183 in this case and other cases. To amputate this route prematurely from the system without allowing it an opportunity to operate with modern equipment doesn't make any logical or economic sense, particularly in view of the other problems that affect Amtrak much more deeply than does its route structure. Out of the 474 stations served by Amtrak in 1976, Albuquerque ranked 73d in total ridership generated, far above many stations that would maintain service under the DOT amputation plan. On a comparison of number of passengers per train per day, Albuquer- que ranks in the top 20 of all stations in the Amtrak system. What is the DOT logic for eliminating several of its most highly used stations and routes? In my view, it represents unsound thinking used throughout the proposal and the pronounced bias against continued rail transportation in Western and largely rural parts of the United States. The rerouting of the Chicago-Los Angeles train through Ogden, Utah and Nevada would not only lengthen the distance of this trip to Los Angeles, a questionable move in any system seeking to increase the speed of its trains, but it would also require the rehabilitation of many miles of deteriorated track at considerable expense. I might add that that is something that happens when you remove passenger trains from a rail system-that you no longer maintain those rails to the degree necessary for rail passen- ger service. This move in the case of the Southwest Limited not only appears to be devoid of any benefit for the public in general, but also will impose difficult expense and in many cases even hardship on those who are dependent upon Amtrak for their basic transportation needs. I would advocate the extension of Amtrak services into Nevada and other areas if they are needed there as much as they are needed in New Mexico and other parts of the country. DOT has made it clear in private meetings that they feel that rail transportation can only be effective in the Northeastern States and that trains in the West are relics of the past. I could not disagree more. DOT has no problem with spending $2.4 billion for the Northeast corridor, but tells the people of my State and many others to forget it; you don't have enough voters to have Amtrak. I can't accept this attitude and neither can the people of New Mexico. For many New Mexicans, the Southwest Limited provides the only reasonable form of transportation between Albuquerque and other points within the State, as well as to Flagstaff, Ariz., and Los Angeles to the West and Kansas City to the East. The Southwest Limited is Amtrak's fastest long-distance train, averaging 55 miles per hour over its 2,200 mile route, and that speed is expected to increase significantly as improvements in equipment and rails are made. Thousands of tourists have visited New Mexico on the Southwest Limited and its famous predecessor the Super Chief. These numbers will only increase as service is improved and gasoline supplies become more scarce or more expen- sive. Finally, Mr. Chairman, tourism is the second largest industry in New Mexico. It certainly is a major industry throughout the West- ern United States and it currently is served by Amtrak routes. It is the State's largest private employer, employing in excess of 34,000 PAGENO="0191" 184 people, with a payroll of $150 million, generating over $880 million in revenues in the State of New Mexico. The elimination of rail service will add to unemployment in New Mexico in addition to depriving our people of a valuable, useful, and increasingly used form of transportation. For all of these reasons and several that I have not had time to touch upon but I'm sure will be touched upon today and at other times, this committee, as Senator Baucus has indicated, should reject this proposal and take the time to work with Amtrak and the Department of Transportation to provide this country with a fast, modern, and efficient rail transportation system that recent public opinion polls show a majority of the people earnestly wish to have. Senator Baucus, are you aware of any Amtrak marketing and advertising efforts to increase ridership on trains in Montana? Senator BAucus. I'm not aware of any at all. Senator SdHMIrr. That is a comparable situation, not only here but in Montana and also in New Mexico. Later on this morning we're going to hear from Randeall Cookus, who has undertaken his own efforts with respect to Amtrak advertising, personal efforts I might add with his own money, and with some significant success. Wouldn't it be appropriate to undertake a sales and marketing and publicity program in order to increase ridership and therefore decrease deficits before we cut back the routes? Senator BAUCUS. I think the Senator makes an excellent point. I touched on that in my statement and to reemphasize or reiterate it, nothing is clearer to me than that if Amtrak wants to increase its ridership it could. With an aggressive sales effort, in my judg- ment, it could increase ridership in the State of Montana 200 or 300 percent easily. I can't speak for other portions of the country but I'm confident of that in the State of Montana. So many people want to ride the trains, but they call the reservations office which I think is located in Los Angeles, and sometimes they are told there are no reservations-no spots on the train-and sometimes people get on anyway and find it empty. I have had lots of examples like that. Or the converse, despite advance booking it's full when they get on. It's just a very, very poorly run operation, but with a good sales effort and with the intent and good attitude there's no doubt the ridership would increase considerably. Senator ScHMIrr. Senator, I think the intent of Congress with respect to Amtrak was very clearly shown last year in that we appropriated $130 million, largely for the purpose of getting new, more serviceable equipment for the Amtrak routes with the idea of increasing ridership. For the Congress now to allow the route structure to be cut before that equipment has even had a chance to come online and be used and before there can be a marketing program to let people know that Amtrak is available and before the schedule and the service facilities provided by Amtrak are improved, would seem to me to be ridiculous. Senator BAUCUS. I'd like to add to that. We were told by Amtrak personnel in Montana that ridership probably would expand and the frequencies of the train would improve once steam-heated cars were replaced with electrically heated Pullman cars. We were told that those were supposed to come online a year ago. They have PAGENO="0192" 185 never been in service. That's just one indication, not very signifi- cant I grant you, but one example of poor management and poor operation. Senator ScHMIrr. Up until now, Congress has authorized the purchase of 494 metroliner cars, 108 locomotives, 220 double-decker cars for Western service specifically, and apparently few, if any, of those double-decker cars have been delivered and put into service. It doesn't mean they are not going to be or could not be. They are just not yet into service, and here we are saying Amtrak is not working, even though nothing that Congress has said it wanted to do has really been done in order to improve service. Senator BAUCUS. I'd like to add one more small point if I could, Senator Schmitt. The chairman indicated that the bus lines feel they could replace some of the lost service, but let me point out why that probably is not adequate in many situations. In Montana, at harvest time when wheat farmers are beginning to combine the grain and when farmers and ranchers are cutting hay and going through their farming operations-and I might add that Montana is still primarily an agricultural State-because of high rates of inflation in the country today and equipment short- ages, whenever a farmer's combine breaks down or his tractor breaks down and the farmer needs some parts, the local suppliers don't often have the inventory. That's again because of inflation. They just can't carry the inventory they have carried in the past. Very often they will wire ahead to Minneapolis where they can get the part, for example, and that part is put on the Amtrak and they get 24-hour service. The farmer can pick it up the next day, go to the field and replace the part in his combine or tractor, and begin his operation. It's crucial because in the harvest time of the year you're racing against the clock, against the weather, against possi- ble hail storms, and you've got to get the crop up. With the elimi- nation of Amtrak on a lot of these routes-sure, buses could come along, but there will be no buses likely to stop at different towns along the way. I haven't seen market studies or transportation studies and I don't know precisely what routes the buses would follow or what the frequency would be, but I'm fairly confident they could not provide the same service that is essential to the farmers to get those replacement parts. Senator ScHMrrr. Well, Senator, you make an extremely impor- tant point. Unfortunately, all of the Government reorganizations I have been involved with since coming to the Congress only look at the economic impact of a particular action on the Federal budget and not on the budget of the local governments, the State govern- ments and the individuals and groups of individuals that are de- pendent on that service. We saw that with the HUD reorganization. We saw it with the IRS reorganization, and now we are seeing it again with the Amtrak route reorganization. We've got to remember that there are broader economic impacts in this country than just the Federal Government. We also have to remember that there are expendi- tures of the Federal Government that are inherently inflationary and there are expenditures of the Federal Government that if properly expended are inherently deflationary over the long run, and I personally believe that the improvement and encouragement PAGENO="0193" 186 of an Amtrak system or some kind of rail passenger system is inherently deflationary in terms of the whole economic structure of this country. That's why I feel it's so ridiculous for DOT to argue purely on the basis of saving next year a lot of dollars-there's no question about it-at the expense of even broader future savings if the system were left intact. I want to thank you for your testimony and I'm looking forward to that of others this morning. The CHAIRMAN. Senator Baucus, the Congress had the Comptrol- ler General do a study for Congress on Amtrak subsidy needs. I'd just like to read to you two or three extracts from that report-the digest of that report. Its operating deficit- and "its" refers to Amtrak- grew from $153 million in fiscal year 1972 to over $521 million in fiscal year 1977. It lost $9 per passenger in 1972 and over $27 per passenger in fiscal year 1977. In addition, Amtrak is requesting operating subsidies of $613 million for fiscal year 1979 while the administration has budgeted only $510 million. Amtrak insists it cannot operate within the lower figure without substantial service reductions. GAO reviewed Amtrak's costs and operations and concludes that although there are ways Amtrak can eventually improve its operating efficiency, Amtrak cannot substantial- ly reduce its operating cost without reducing the size of its route system. Efficien- cies available will not substantially reduce Amtrak's subsidy need. Now in light of that report, what would you suggest, that we just appropriate more money for Amtrak? What is the solution? Senator BAUCUS. I suggest, Mr. Chairman, that GAO come out to Montana where they can learn a little bit. If they ever come to Montana they would realize that revenues can be significantly increased because more people will ride trains if the service is there. Deficits are in large extent dependent not only upon costs but also upon revenues. My point again is, and I believe it strongly because it's in my bones-I can feel it-if Amtrak wanted to pro- vide much better service, at least in my State of Montana, that the revenues would significantly increase. Senator SCHMITT. If the Senator would yield and the chairman would yield, I would say that everybody in Congress can find a report to back up their own position and I would note that, as I did at the last hearings, the ICC report on Amtrak said: Even reductions in service over unprofitable routes would have minimal impact on Amtrak's operating deficit because the burden caused by transportation expenses is minimum. I think GAO and ICC and the Congress and the DOT have all got to sit down and take a realistic long-term look at just how in the world you save money and how you make Amtrak into an efficient operating rail system. The CHAIRMAN. Senator Exon. Senator EXON. Senator, I'm going to be brief because I know we have some other testimony. I would generally like to support what Senator Baucus and what Senator Schmitt have said. My experience with this situation in Nebraska goes back a long, long way and I think it's very short-sighted indeed for us to arbi- trarily take some figures that some group has put together and say that this is why Amtrak won't work. As I have said before and I wish to state for the record here again today, that, as far as the PAGENO="0194" 187 Zephyr is concerned which runs from Chicago, Ill, to Denver and through Nebraska, if you wanted to design a rail system that was a sure-fire success to fail, you would have designed the route as they have out of Chicago to Denver, Cob. I think the fallacy in this whole thing, Mr. Chairman, is the fact that it was the intent of Congress to experiment with an Amtrak service to see whether or not it has a chance of being somewhere near self-sustaining, recognizing if we will that Amtrak and the Secretary indeed has told us that as far as they can see into the future it's going to require some subsidy to keep the Amtrak system going. My main point is that I do not believe all of the options have been considered and I will have some more to say about that a little later in the morning. The point is that as far as Nebraska is concerned-and I suspect these other States as well-there has not been, I suspect, and I know it to be true in Nebraska-there has not been a fair assessment as to whether or not this is going to work and I thought that that was the very thrust of the idea when we first launched a so-called trial period for Amtrak. You can't have a successful trial if you don't run the trains right on time and at decent hours in the first place. I will yield any further time. The CHAIRMAN. Senator Warner. Senator WARNER. Thank you, Mr. Chairman. I welcome our colleague from Montana. I'm glad you spoke up for the farmers. I have been engaged in agriculture for many years and I know what happens when that breakdown occurs and ties up the whole crew and you need the part. I think it's a constructive observation that helps us with this difficult situation. Thank you very much. The CHAIRMAN. Senator Packwood. Senator PACKWOOD. May I ask just a quick question? You men- tioned a farmer ordering a part. Is there no freight train that comes from Minneapolis on a regular basis going through that territory? Senator BAUCUS. As the Senator knows, unfortunately turn- around times for trains has increased significantly in the last several months. Yes, there are freight trains, but it takes a lot longer. I don't have the exact measurement, but I'm sure it takes about a week to order the part and get it down by freight car. Again, it's because parcel post doesn't travel by freight trains and it's the daily Amtrak service that enables the farmer to wire Minneapolis, for example, and have that supplier take the part down and put it on the train, making it available the next day in Montana. This is not available at all on the freight service. Senator PACKWOOD. Let me ask you a further question. I have in eastern Oregon much of the same kind of territory you talk about, wheat and cattle country, and for years we have built highways and run them at a loss on the theory that sparsely populated areas are entitled to be tied together and if the only network we are going to have are those that theoretically pay, they will run from main city to main city and that will be about it. Do you think if Amtrak is given a fair trial, something you and I would consider a fair trial, and it does not pay its way with new PAGENO="0195" 188 equipment, should we continue it at a loss on the same theory we do highways or should it be abandoned? Senator BAUCUS. That's a very tough question. My answer would be that if we give Amtrak a fair trial period that probably we should discontinue Amtrak service if it does not show a profit, except in rural areas, I think there should be a strong public policy to help maintain service in rural areas that is not otherwise pro- vided like in metropolitan areas. So my answer to your question would be if Amtrak is given a fair trial and provides the very best service it can, we should continue to maintain that Amtrak service, certainly in the case that Amtrak runs a profit or breaks even. Also we should maintain it if it's, I would say, a negligible or not a significant loss but relatively small subsidy. In those situations, yes, we should maintain it. Senator PACKWOOD. There's nothing to be embarrassed about by that answer. To come back to the highways, highways in the rural areas do not make money in the normal sense of making money and you would have nothing but towns of 25,000 or bigger in our areas tied together with highways and dirt roads to anything smaller than that if you went on the basis that it had to break even. Senator BAUCUS. And further, we provide subsidies to the local airlines to provide service to the smaller rural communities. Senator PACKWOOD. Thank you. The CHAIRMAN. Before we let you go, I think I should make one other comment from the GAO report on page 54 where they state: Amtrak's biggest problem is that there are not enough people who want to use the train for intercity travel. While Amtrak attracted about 3 million more passen- gers in fiscal year 1977 than it did in 1972, it did so by substantially increasing the number of trains available. The number of revenue passengers per mile have decreased. As we have stated in recent congressional testimony, the reasons why demand does not exist in spite of Amtrak's low fares, fare revenue averages only about 35 percent of operating costs are fairly straightforward. Air travel is much quicker and more convenient for time sensitive travelers, smoother and more com- fortable, especially considering the comparatively short time the traveler must occupy the airplane and on longer trips almost the same price as Amtrak's. Buses go more places than Amtrak, usually at a lower cost to the travelers. That's extracting from their report and the essence of the report is that there's no way of getting ourselves out of this situation. We had testimony in this committee before that some of these runs, even if the trains ran absolutely full, would still operate at a loss. They couldn't make a profit with a full load of passengers on some of these long-distance trains. Senator BAUCUS. All we ask, Mr. Chairman, is that Amtrak be given the opportunity to run full in Montana. The CHAIRMAN. Thank you very much. Senator Sarbanes. STATEMENT OF HON. PAUL S. SARBANES, U.S. SENATOR FROM MARYLAND Senator SARBANES. Mr. Chairman and members of the commit- tee, I know you have a long witness list and I will try to be very brief. If I could submit the statement in full for the record I think I can summarize it in just a few moments. PAGENO="0196" 189 I first want to urge the committee to review very carefully the DOT submission. I know the procedure is, in effect, structured in such a way that they have an enormous advantage in terms of the package itself-a take it or leave it proposition-but it seems to me the committee might well be able to work through the proposals and come up with rational principles which would govern an ap- propriate revision of the submission. I think there's a need to search through and try to find these principles and in effect get the committee somewhat out of the box everybody thinks it's been placed in in terms of an all or nothing process. I want very briefly to touch on two aspects of it which have a particular impact in Maryland. One involves the Blue Ridge which is an intercity train from Martinsburg and Harpers Ferry, W. Va. through Maryland and into Washington, D.C. The patronage on this train has increased from 118,000 in fiscal 1974 to 254,000 in fiscal 1978. That's more than double over that period of time and strongly reflects, I think, an obviously increased usage and the excellent reception by the communities through which the train passes even though there's not been, even by Amtrak's own admis- sion a major marketing effort. Now just to illustrate how the proposal perhaps has not been thoroughly thought through, Amtrak proposes to discontinue this train altogether as an Amtrak train and shift it into a section 18 train which would require it being completely supported by the states. The DOT proposal would completely bypass the possibility of having it designated a 403 train thus allowing a sharing of the costs between the Amtrak and the States, despite the fact that the usage and the costs on this train are better than most of the designated 403 trains. I only make that point to underscore the fact that the DOT submission warrants some very careful analysis and study by the committee. There's no reason to assume that simply because they have come forward with it that it's necessarily valid and well justified. Also, our state legislatures are about to conclude their sessions both in Maryland and West Virginia. This train will go out of business on the 1st of October. So even if there was a State will to maintain the train, it's not possible in the time frame in which DOT has now placed us with respect to support under section 403(b). Second, I want to strongly make the point that there's a need to have careful attention given to interrelating what is called com- muter service and intercity service as it affects the Northeast corridor where obviously train movement is of great validity. There is a problem with respect to rationalizing those train schedules and commuter usage, and it's something again to which the committee could direct its attention. Finally, let me just make the observation, having heard the earlier discussion and colloquy in the committee, that I think there's a national purpose and objective to be gained by having a national transportation network and that rail is an important part of that national transportation network. I appreciate that in some instances air or bus constitutes a rational alternative, but I don't believe that on a national basis 43-139 0 - 79 - 13 PAGENO="0197" 190 you're going to meet our transportation problems if we completely abandon in certain areas of the country one of those forms of transportation. And in response to what Senator Packwood asked Senator Baucus, I would say that if there's a reasonable cost in- volved in providing that national transportation network, it ought to be incurred. The progress of this country has in large measure resulted from the willingness of the Federal Government in con- junction with private enterprise to develop the infrastructure of transportation and communication, essential to a modern industri- al society, and it seems to me that something of that perspective ought to affect our thinking as we look at the DOT proposal with respect to the Amtrak services. The CHAIRMAN. Well, thank you, Senator Sarbanes, for a very fine statement. As you indicated, there is a provision in section 403(B) where Amtrak can pay 50 percent and the State pay 50 percent of the operation of certain trains on a cooperative basis. Now the committee has received a great deal of correspondence from West Virginia and Maryland residents complaining of service cutbacks on the Blue Ridge train and almost every letter begins with the statement that the individual is a commuter and needs the train to get to work. Now if this train is in fact a commuter train, as the riders apparently think it is, don't you think the States of Maryland and West Virginia should be willing to fund the continued operation of the train? Senator SARBANE5. Mr. Chairman, my response to that is at about three levels. First of all, as I made the point toward the end, I think there's need to rationalize commuter and intercity trans- port and that hasn't been done. Amtrak simply wants to shift it out of the intercity category over into the commuter category. They see that as a cost saving. This goes back to Senator Schmitt's point made earlier this morning, which is a very good one, that there may be a cost saving in the Amtrak public budget and a cost addition to somebody else's public budget. So you're not saving public dollars in the overall sense. Second, on the Blue Ridge, what Amtrak has done is to recom- mend dropping it as an Amtrak train. They are not going to make it a 403 for 50-percent sharing. They are going to throw it into section 18 for total local financing in a situation in which either under section 18 or section 403 the States can't react by October 1 which is the deadline for this service ending because the State legislatures are about to adjourn for this year. So what we're faced with is a train that has more than doubled its usage in 4 years and that's scheduled to go out of business on the 1st of October in a time frame in which you can't move even if there was a State desire to do so. Finally, Amtrak has structured it so if the State wanted to support the Blue Ridge they would have to come in at 100 percent and not at 50 percent. I make all those points just to underscore that I think a critical analysis will show shortcomings in the Amtrak proposal. I'm sure that the same problems or the same defects will probably show up across the country as you start PAGENO="0198" 191 analyzing this proposed plan. I was very interested to hear the usage figures with respect to the Albuquerque station. Senator SCHMITT. It's been accelerating very rapidly. Senator SARBANES. Yes. The CHAIRMAN. Well, certainly the committee-at least I agree with you and I think the committee has a responsibility to look at the entire national transportation system and that I think is what we are really trying to do, but, of course, at some point we have to say, well, beyond this point we can't go. We can't impose that kind of an obligation on the taxpayers. It kind of shocks me when I see the result here that GAO found that I indicated earlier showing that Amtrak lost $9 per passenger in 1972 and over $27 per passen- ger in fiscal year 1977, and they don't give it much hope of making substantial improvements and this is the thing that really disturbs me. Certainly we have got to have a national transportation system and we can't just simply say eliminate all the trains, although some people would suggest that; but we do have to decide on a point that we won't go beyond with respect to taxpayers funding. Senator SARBANES. Well, I understand that concern and all I'm trying to get at is that because of the way the legislation is struc- tured there's a great tendency obviously-not only tendency, almost a compulsion for the committee to say, well, either we have to reject it all or take it all. That's technically true. But on the other hand, it seems to me possible for the committee to work out in its analysis of the proposals certain principles that would govern a rejection and a resubmission which would enable you to make some distinctions between routes which really cannot carry a justi- fication anyway you look at it and other routes which through better service would justify themselves or because of their essential nature to the economic and transportation network of a region need to be maintained. The CHAIRMAN. Senator Schmitt. Senator SCHMITT. Thank you, Mr. Chairman. Thank you, Senator Sarbanes, for your testimony. I think you make some excellent points. I just happened to be in West Virginia Friday night and talked with some of the State legislators there. They had exactly the same reaction that you have and many people around the country have, which is that the States don't have time to react to this. I think we ought to set some point out there in the future that says we are going to try these kinds of things and if they aren't working then we are going to restructure, but that's what we haven't done. We haven't given anybody notice that that was going to happen. As a matter of fact, we have given them all the opposite indicators, that we are going to buy new equipment. Congress appropriated money last year for new equip- ment throughout all these routes, and I think that that is some- thing we clearly have to bear in mind. Even if this route structure turns out to be eventually justified, at least we have got to give the states time to react to the proposals. We haven't done that and if for no other reason we ought to do what you suggest, reject it and work with DOT to come up with an appropriate plan. But, my biggest concern is that I've not been convinced it's the route struc- ture that's the problem. PAGENO="0199" 192 There may be, as you have indicated, some routes that are never going to pay for themselves, that bus or car or air is clearly the only alternative for all economic classes of Americans. But, I would submit that because of limitations that the tax structure and the regulatory structure puts on management of rail lines, because of limitations that various Federal laws and labor agreements have put on management-labor relationships, the lack of action in most respects that Amtrak has made in terms of sales and marketing, we really have not given this system a chance and the opportunity to turn it if not into a profitmaking operation, certainly one that significantly reduces the subsidy that has been required up until now. I have made a statement rather than ask a question, but mainly in support of what you have said. Senator SARBANES. I appreciate that. The CHAIRMAN. Senator Exon. Senator EXON. Senator Sarbanes, there seems to be an inconsist- ency in Amtrak's position. In our section of the country, while ridership is down very slightly, they maintain that that's the reason that the route should be dismissed. I say it's amazing to me that the ridership isn't down more than it is with the equipment and service that's been provided but now in your section of the country the opposite seems to be true. I'd first like to ask is the equipment and the time schedules and the promptness of the trains generally good on the route that you have reference to, the Blue Ridge route I believe you said? Senator SARBANE5. Yes, I would-it's good enough at least that it's doubled the ridership over a 4-year period. Senator EXON. All right. That being true, then what justifica- tion-I can see how they might develop a justification for our section of the country-I don't agree with it-but what justification do they give for eliminating the Blue Ridge route since the rider- ship has doubled? You still have the cost problem. You still have the gap between revenue and cost which continues to plague you. Of course, when you start talking about costs you always have to ask what are the alternatives if you are to eliminate that facility and then especially in this area of the country you really don't- you don't have an air alternative. That's not feasible in this situa- tion and the bus alternative is not really feasible so you're putting 250,000 passengers a year sort of back on difficult private transpor- tation is what it amounts to. If one of our objectives I think is a national energy policy, if nothing else, let alone a rational trans- portation policy, to avoid that, it doesn't make a lot of sense. My point is, Senator, if your ridership is doubled, which I'm sure it has, and still losing money, we'd better first recognize the fact that if rail passenger service was economical and we're going to make a lot of money on it the private railroads probably would have continued that. So I think first we'd better recognize it's going to cost us something to maintain a viable rail service system in the United States of America. I come back to the question, though, that certainly you're still losing money on this line, but I would suggest, although I haven't seen the figures, you're probably losing less money on this particu- PAGENO="0200" 193 lar line than many of the other lines that Amtrak is suggesting we continue under the new route structure. Senator SARBANES. That's right. That's a very good point. This line actually does better than most of the intercity lines which Amtrak has considered appropriate for 50-50 funding and yet with respect to this train they are proposing to go not to 50-50 funding but no Federal funding at all. Senator EXON. But on what basis, Senator? Senator SARBANES. I don't know the basis. I don't see a rational basis for it and that's why I'm here questioning this particular aspect of the plan. Senator EXON. Thank you, Mr. Chairman. The CHAIRMAN. Senator Warner. Senator WARNER. I pass, Mr. Chairman. The CHAIRMAN. Senator Schmitt. Senator SCHMITT. Mr. Chairman, just one more comment. Senator, in reaction to Senator Exon's comment if rail could be profitmaking the private enterprise would have stayed in it, I still have a very strong feeling that there is in theory now a corporate- labor regulatory route and marketing structure that could be cre- ated to make rail transportation in this country profitable and that would be a very broadly based rail transportation system and one based on modern technology, modern management systems, and modern marketing systems rather than what we have seen in the past. I think the rail corporations of the past just let themselves get into very serious trouble when things were going good and they never could recover and we're going to have to try among ourselves to figure out how to reset that clock and create a system that can be efficient and, if not profitmaking, certainly one with a much lower subsidy than we have today. So that's where I come from and I hope the subcommittee can work together in the next few years to try to structure such a system. I think it's there, but we can't-- Senator EXON. If the Senator would yield, I'm not saying you're wrong. You may be right, Senator Schmitt. The point I'm trying to make is what is the sense and what is the structure-as Senator Baucus has said and Senator Sarbanes has said, it would seem to me there's total inconsistency on the part of discontinuing some routes and keeping others. They give the same reasons for discon- tinuing the train in maybe Nevada and Nebraska but when you come back to his part of the country the opposite seems to be true, which convinces me that we could take a much harder look at the information that's been presented to us at this time and see indeed what have been the bases for the discontinuation of a specific 45- or 46-percent elimination of route structures. Senator SCHMITT. The Senator is entirely correct and I agree with you completely on that. I think that's the problem you get into when you say the problem with Amtrak is the route structure and we have that much money we can spend and, therefore, we will start carving it out. That is how those decisions are made, and made in somewhat of a hurry I think, because most of them were made just since this budget cycle started. It's clear that many of them are going to have the same kind of inconsistency that Sena- PAGENO="0201" 194 tor Sarbanes has mentioned. We also have heard a lot about subsi- dies and I think we still have to remember that the level of subsidy is very, very high for the major modes of transporation that are mentioned here as alternatives. Those subsidies are there and they are high and that's probably not an argument we ought to get ourselves into at this stage. Five years from now maybe yes, when we have done other things to make this a viable system. Senator LONG. Might I just make one point? It seems to me if we would take some of the money that we are losing on Amtrak-the trains we're talking about discontinuing are in the main, trains that for every dollar they take in they spend $3. All right. Now if we were willing to do what we have done in building up new services and providing even railroads in the beginning, take some- thing that looks like it might work, just buy some modern bus equipment on the routes that we're taking these trains off of and let those buses roll on those highways a little fast-let them roll out there at 70 miles per ~hour. Incidentally, that's what they're doing half the time anyway. But let them roll a little faster, provide more comforable seats and provide safer buses and try to provide something very modern-something that would be comfort- able for the individuals that would be using it-you might have them packed in there a little tighter than a Pullman car, but you could roll them through with comfort. Then you wouldn't have to provide a meal car or they could stop somewhere and get off and get a meal. You could provide a modern service and I would think it would be a service that would pay for itself. Now wouldn't that make better sense than keep fooling around with-if you've got that bus running down the road you've just got one bus driver driving that thing now. You haven't got a whole big crew. You haven't got five people running that thing and the bus doesn't have to-the bus does not stop and start with the rule that it's got to change drivers and five-man crew every 150 miles. That bus can roll on through and in an 8-hour day can take you a long way down the road. It can take you 500 miles. Couldn't that be a better answer than to go along here trying to provide some service that's losing $2 every time it takes in $1? Senator SARBANES. Well, Mr. Chairman, specifically, the train discontinuance that brought me into the meeting was the Blue Ridge which leaves Martinsburg, W. Va. at 6:15 in the morning and is in Washington, D.C. at 8:30 a.m. Now you can start out from the suburbs of Washington, D.C. here at 7 in the morning and not get here until 8:30. So with respect to that train, the mode you're suggesting is just not an alternative. In other parts of the country it may be, although I really raise the question whether we simply want to drop rail passenger service in certain regions of the country, which is what this is amounting to, and just say, well, that's a relic of a bygone day. I especially don't think it ought to be done without some very careful analysis of what the potentials are and that's why I think the committee needs to go over very carefully the DOT proposals to see whether the distinctions that are regional and valid can be made. Senator LONG. Now you discussed in your statement the possibil- ity of providing more modern type equipment for that particular service. PAGENO="0202" 195 Senator SARBANES. Our problem there is just continuing to pro- vide the facility. We have more than doubled ridership in 4 years. We have gone from 118,000 to 254,000 passengers per year from fiscal 1974 to fiscal 1978. Better equipment would help us, but we are making good use of what we've got. The way the Amtrak proposal is now-this is why I say there's faulty analysis here- they would drop this train on the 1st of October. They don't sug- gest that it ~be made a 403 train which would be 50-50 sharing between Amtrak and the State governments. They say it should be made a section 18 train, total State funding, even though the figures on this train are better than most of the existing 403 trains in terms of its costs and, in any event, our State legislatures in both States are about to finish their session for this year. They can't act to pick up this thing even if they had the will and inclination to do so. So we are facing a situation on the 1st of October where this train service is going to end. Senator LONG. Well, I didn't get a chance to hear the beginning of your statement. I had to go over and hear what was being said in the Finance Committee, but I will go back and review it and do justice to it. Senator SARBANES. I appreciate that. Senator EXON. On that point, Mr. Chairman, could I maybe provide my distinguished colleague from Louisiana something that Amtrak has not gotten into, but it shows I think the lack of imagination as to what is needed in certain sections of the country. In talking about a bus, you made reference in this committee 2 or 3 weeks ago about the fact that a certain highway down in your area was torn asunder after it was on the line for 2 or 3 years or something like that. Senator LONG. Yes. Senator EXON. I'm not against bus transportation because it's a vital part of our rural transportation system. However, to show the lack of ingenuity and foresight, there's a company that's come up with what's called the SPV-2,000 which is a bus that has a bus diesel engine in it and it rolls down the rails. It can be operated by one engineer and it goes backward and forward. It seems to me things like this in the modern transportation area that we're trying to work to, especially as you pointed out, Senator Long, the fact that certainly it makes more sense from an energy conserva- tion standpoint to put people in trains, we have certainly got to give some thought to the process, at least the possibility of adding to our transportation system with a more functional, possibly a more convenient and maybe less expensive way than even bus transportation. Senator LONG. Well, these people are developing a way-they haven't perfected it to the extent it ought to be, but they are developing a way that you could put tires on something like that and so you can roll down the rails to get to the heart of town and at that point you can lower your wheels and you could lift the rails as the case may be, and go right on where you want to go, right on down the city streets, and so instead of dumping those people out where they have got to get off the thing and get in a taxi cab or walk or something, at some point-you couldn't do it at Union Station, but before you get there, at some point either the front car PAGENO="0203" 196 or the rails go under independent power, simply lift up-drop their wheels, lift up their rails and that is steel wheels, and just roll right on down the street and take people to the office buildings and down Constitution Avenue where people want to go. Now you'd have a far better service if you did that and mean- while you would bypass all that congested traffic getting them into the heart of town. The rails, as far as a potential of getting people to the heart of the city in the morning and getting them out in the evening are the most neglected asset we have. There they sit. I know in my home town there they sit at 5 o'clock, everybody bumper to bumper, half the time standing still, and when they're moving they're moving at 5 miles per hour on the interstates, and there you have the rails without anything on them. Try to get across the bridge to try to get to National Airport between the Capitol and National Airport between 5:30 and 6 in the afternoon and the whole thing moves like molasses and there the rails sit without a thing on them, just sitting there. There you sit on the interstate cussing and waiting for somebody to move and the rails sit there with nothing on them. If we could use those about the time when you have the commuters moving in and out, they could take a lot of pressure off and a huge number of people. It's just a matter of trying to modernize the technology of how you do it. There's no point in putting a five-man crew on there just to move the train across the river and get a bunch of people on it and do like they do in the subway with one driver and a horde of people to get them there in a hurry. Well, thanks very much. [The statement follows:] STATEMENT OF HON. PAUL S. SARBANES, U.S. SENATOR FROM MARYLAND Mr. Chairman and members of the subcommittee, I appreciate the opportunity to submit this statement before the Surface Transportation Subcommittee during hear- ings on the Final Report to the Congress on the Amtrak Route System submitted by the Department of Transportation. There are several concerns which I have with regard to the reductions in service which will result in the new route structure. Amtrak's ridership has increased in the last several years, and serious consideration should be given to the possibility that the building enthusiasm for intercity rail travel may be dampened in such a degree as to prohibit any recovery. Maryland citizens have been particularly attracted to rail travel, and ending the Blue Ridge intercity week-day service and reducing the number of trains through Baltimore can only discourage rail travel and force higher use of the automobile. To focus on more particular concerns, I am struck by the manner in which DOT treats the Blue Ridge by restructuring it to weekends after October 1, 1979. The Blue Ridge is an important intercity train serving Martinsburg and Harpers Ferry, W. Va.; Brunswick, Gaithersburg, and Rockville, Md. and Washington, D.C. as well as patrons from Virginia and Pennsylvania. Patronage of this train has increased from 118,900 in fiscal year 1974 to 253,900 in fiscal year 1978. This increase has occurred in the absence of any real marketing effort. In addition, the Blue Ridge generates more passenger miles per train than any of the state assisted trains listed on table 4-3 of the DOT Report and, according to DOT's own figures, loses less per passenger mile than most of the 403(b) services. For these reasons it is my belief that the service offered by the Blue Ridge should not be reduced as recommended in the Report. Another aspect of the DOT treatment of the Blue Ridge which troubles me is that there is no real opportunity for Maryland and West Virginia or any of the other jurisdictions to participate in its operation. The Maryland General Assembly will adjourn on April 20, 1979 a date which will arrive before Congress is likely to have voted on the pending resolutions of disapproval of the route structure. it is my understanding, that the West Virginia legislature will also be adjourning shortly. The hundreds of Blue Ridge passengers from each of these jurisdictions will there- PAGENO="0204" 197 fore be faced with the prospect of no train after October 1, 1979-a prospect which does not comport with a national policy of transporting intercity travelers by energy-efficient transportation modes. It is clear, in my view, that the Blue Ridge is an intercity train and that DOT should give Amtrak and the jurisdictions the Blue Ridge serves the opportunity to support it under the 403(b) scheme. In addition, Mr. Chairman, a mechanism should be devised to permit the Blue Ridge and other, similar trains to continue running after October 1, 1979 while the 403(b) support is implemented. Mr. Chairman, another aspect of the report which I am most concerned about is the way in which DOT puts the label "commuter" on some intercity train travelers and urges Amtrak to exclude them from its trains. This recommendation would particularly affect several hundred passengers between Baltimore and Washington. These passengers buy a commutation ticket from ConRail which is now being honored by Amtrak. If Amtrak accurately counts these passengers, it receives income from ConRail for transporting them. The Baltimore to Washington travelers often ride regular Amfleet, Northeast Corridor trains almost none of which is to be dropped from service under the DOT Report. Since these trains will run anyway, there are no additional costs to Amtrak to carry the Baltimore to Washington travelers. There is ample room on morning and evening trains for them. The only alternatives to refusing them are empty seats and loss of income to Amtrak-an alternative seemingly at odds with the thrust of the DOT Report. Clearly, Amtrak should be encouraged to treat these passengers as it presently does just as it should create incentives for increased patronage through excursion rates and other multitrip package deals. Mr. Chairman, I appreciate this opportunity to submit these views with regard to the DOT report. I am hopeful that as the committee prepares the Amtrak authoriz- ing legislation, it will carefully consider them. Senator LONG. Mr. Schiefelbein has been waiting for some time to be heard and he has a very good statement. We'll be happy to hear from you now. STATEMENT OF RICHARD J. SCHIEFELBEIN, DEPUTY DIREC- TOR FOR RAIL SERVICES PLANNING, OFFICE ANALYSIS AND EVALUATION, INTERSTATE COMMERCE COMMISSION; ACCOM- PANIED BY MICHAEL SULLIVAN, CHIEF, RAIL SYSTEMS BRANCH Mr. SCHIEFELBEIN. I want to thank the members of the subcom- mittee for giving the Rail Services Planning Office this opportunity to present its views on the Department of Transportation's recom- mended redesign of Amtrak's route structure. Accompanying me this morning is Michael Sullivan, who is Chief of our Rail Systems Branch. Recognizing the importance of public input in the Amtrak re- structuring procress Congress directed us to hold public hearings on the preliminary route restructuring and to report on our conclu- sions and recommendations based on those public hearings and on our own evaluation. Our report was transmitted to DOT and the Congress on September 30, 1978. DOT's final recommendations have now been issued. Understand- ably, DOT's final route structure reflects some of our recommenda- tions and does not incorporate others. However, I would like to focus on two major issues which I believe are important to the future of Amtrak. The first issue addresses how Amtrak is funded and the second addresses the importance of public participation in the route restructuring process. When Amtrak was created in 1970, it was envisioned to be a for profit corporation which would eventually become self-sustaining. However, Amtrak's annual operating subsidy has grown from $40 million to over $480 million. If no changes are made in the present PAGENO="0205" 198 system, the annual operating subsidy could be $976 million by 1984. Even if Amtrak operated only short distance, corridor serv- ices, it would still require an operating subsidy of $387 million in fiscal year 1980. Experience has shown that Amtrak can no longer be expected to achieve a self-sustaining status. These changed expectations for Amtrak were recognized in the Amtrak Improvement Act of 1978, which eliminated Amtrak's for profit objective and set forth social and environmental criteria for evaluating Amtrak's route structure. Viewing Amtrak as a public service, however, should not be an excuse for burgeoning costs or for not aggressively seeking ways to make rail passenger oper- ations more efficient. Every effort should be made to reduce the overhead and indirect costs borne by each route, and every possibil- ity for increasing ridership or decreasing the direct costs of oper- ations should be explored. Congress has decided that the continuation of intercity rail pas- senger service is necessary from the standpoint of meeting social needs. As a result, it is also necessary to approach the funding of Amtrak from a different viewpoint. Service, rather than profit, is now the primary consideration. Amtrak should be funded at a level sufficient for it to perform the essential services required by the public while staying within or below allotted budgets. We need to devise a funding mechanism that wisely directs taxpayers' subsidy funds to Amtrak on the most equitable and service-efficient basis possible. In order to provide rail passenger service which will meet the goals of the Amtrak Improvement Act of 1978 and will keep costs under control, we recommend that a performance-incentive fund- ing process be established for Amtrak. Our recommendation is that Amtrak's funding should be based on a formula which would remain constant from year to year. Under the formula, Amtrak would receive a direct appropriation for a predetermined percent- age of its funding needs. Amtrak would be required to earn the rest of its funds by providing service to the public. The level of Am- trak's earnings would be determined by service-oriented criteria such as the number of passengers handled or the number of pas- senger-miles generated by its services. This flat-rate payment would exceed Amtrak's cost on some routes and would be less than the costs on other routes. The funding process would be an auto- matic incentive for Amtrak to reduce costs or increase efficiency on the more expensive routes and to encourage and promote ridership on those routes which are less costly to operate. There are three principal benefits of this performance-incentive funding process: First, it recognizes that the premise upon which Amtrak is founded is service; Second, the permanent funding process would permit Amtrak to concentrate management attention on service rather than justify- ing deficit operations; Third, it provides an incentive to Amtrak to improve service. We believe that this funding process is preferable to that recom- mended by DOT because of the permanent nature of the funding formula and the built-in incentives. The DOT proposal would re- semble a route reexamination process every 3 years. This process PAGENO="0206" 199 might well focus only on reducing costs by eliminating trains, rather than on reducing indirect and overhead costs. The result would be a pruning of the route system, which would be repeated every few years as inflation drove Amtrak's costs higher. An inevi- table cycle would be initiated in which each cut in service would increase the share of overhead and indirect costs to be borne by the remaining trains, thus raising the costs per train and the subsidy payment per passenger, and necessitating further route reductions. The Amtrak Improvement Act of 1978, in mandating the Amtrak route reexamination, provided that the route restructuring was to be an open, public participation process. In addition to the public hearings, the act required RSPO to invite comments on the restruc- turing from agencies and organizations, including Amtrak, the De- partment of Energy, the Postal Service, the railroads, labor organi- zations, and the Governors, transportation departments, and public utilities commissions of the States. During a 6-week period in June, July, and August of 1978, RSPO held nationwide public hearings in 51 cities. We held hearings in locations where the preliminary route recommendations were ex- pected to have the greatest impact. The chart to my left indicates with orange dots the 51 cities in which we held hearings. The heavy dark lines are Amtrak lines that were recommended for continuation in the preliminary recommendations. As you can see, we concentrated the hearing sites on those locations which were going to be most affected by the proposals along those routes where service was to be discontinued. There was a very high level of public interest in Amtrak and its route structure. Over 2,100 individuals and organizations presented their views and comments in person at the hearings. In total, including those who preferred to submit written comments rather than appear at a hearing, over 4,200 parties presented their views on the Amtrak route structure. At the hearing in Minot, N. Dak., 133 persons testified and RSPO received a petition with 12,600 signatures supporting Amtrak service. However, DOT's final recommendations strayed from this com- mitment to public participation in the restructuring process. Shown in red on the overlay to the map are routes which were included in the preliminary recommendations but which were not included in the final recommendations. The blue line from New Orleans to Los Angeles indicates a daily service recommendation in the preliminary report which was cut to tn-weekly service recom- mended in the final report. Eight major routes which were includ- ed in the preliminary route report were not included in the final report. There were also seven city pairs between which, in the preliminary report, DOT indicated there was a need for service, but DOT left open which of the two or three alternate routes it would choose, relying on the public input. Out of those seven routes where there were options, four of them are not even in the final plan. Only three of those optional routing choices are recommend- ed for continued service. We are concerned about this situation. As you can see from the map, we set up the hearings to draw the most representative public response we could of those persons who would be affected by the proposed changes. After the hearings were completed, these other--- PAGENO="0207" 200 routes were dropped and the public along these routes have not had an opportunity to comment on that decision. We recommend that the subcommittee attempt to draw the com- ments of public along these routes into your deliberations on the route restructuring recommendations. One additional point deserves comment. DOT has recommended that the Amtrak Board of Directors determine the avoidable costs of providing commuter service. In his statement last week, Am- trak's president, Alan Boyd, called for full reimbursement of total costs for commuter services. Although we support the provision assuring that Amtrak is adequately compensated for providing commuter service, we think it is critical that a proper definition of avoidable cost be developed. We recommend that the level of com- pensation be clearly delineated in the legislation in order to avoid any ambiguities or uncertainties in the compensation to be pro- vided. Thank you for this opportunity to present RSPO's views. I will be glad to respond to any questions you may have. Senator LONG. Any questions, gentlemen? The CHAIRMAN. Well, Mr. Schiefelbein, do you feel there are other ways to reduce Amtrak's deficit rather than by eliminating routes? Mr. SCHIEFELBEIN. I think there are ways to encourage Amtrak to make changes that will certainly not wipe out the deficit but could improve it. If, for instance, under some type of incentive performance plan where Amtrak got a flat payment per passenger- mile, it found a route that greatly exceeded what we are willing to pay per passenger-mile, Amtrak could look at the equipment oper- ated on that route. Perhaps the route is operated by a turbotrain when a single self-propelled Budd car would be more efficient. Hopefully, such an incentive would drive Amtrak to concentrate on these types of changes. The CHAIRMAN. Are you familiar with the GAO report entitled "Amtrak Subsidy Needs Cannot Be Reduced Without Reducing Service?" Mr. SCHIEFELBEIN. Yes. The CHAIRMAN. In that report GAO concludes that while Amtrak can improve its operating efficiency, it cannot substantially reduce its operating costs without reducing the size of its system. Now would you care to comment on this study? Mr. SCHIEFELBEIN. Yes, I would. First, there are some efficiencies that can be made. I agree with GAO on that. Even if you made many efficiencies in Amtrak, you can not wipe out a one-half billion dollar deficit. That's a large deficit. There are efficiencies that can be made. I think there are also incentives that can be put in. We have routes that are losing a lot of money. I think an incentive plan that would identify those routes would give Amtrak the opportunity to make changes in equipment. In trying to lower the deficit, I think that if the deficit could not be removed, that the incentive process would identify for us those routes that ought to come out of the system rather than bring the system down. The CHAIRMAN. Under section 18 of the Amtrak Improvement Act of 1978, Amtrak can now operate commuter trains for State or PAGENO="0208" 201 local transit agencies. Inasmuch as many of the present 403(B) trains are similar to commuter trains, how would you distinguish between a 403(B) train and a commuter train? Mr. SCHIEFELBEIN. I think that a train that tended to draw the same group of people repeatedly would fall in the category of a commuter train. I would try to distinguish that from a train that would go between two major cities in a given State and served travelers between those cities, but not the same people every day. It's a little difficult to figure out precisely who the individuals riding the train are, but the commuter train would draw basically the same clientele on a regular basis. The CHAIRMAN. In outlining your support for performance incen- tive funding process, does that funding proposal only refer to the operating subsidy or does it include the funding for capital im- provements? Mr. SCHIEFELBEIN. It was designed for the operating subsidy. The CHAIRMAN. So how would you handle the capital improve- ments then? That would be on the basis of a subsidy provided by us here at the congressional level; is that right? Mr. SCHIEFELBEIN. I think it would be based on your decisions as to which projects or which directions you chose to see Amtrak going in. There's also the possibility that this performance incen- tive process could cause enough efficiencies that Amtrak could generate funds in addition to what they have lost and that these funds could then be directed toward equipment or track improve- ment or other such items. The CHAIRMAN. In your proposal, did you look at the figures as to how much the Government should guarantee of Amtrak's cost; that is 50 percent or 75 percent or what? Mr. SCHIEFELBEIN. As the basic payment we were working with a number of 50-percent, and Amtrak would have to earn the other half. There was nothing magic about the 50-percent number. The CHAIRMAN. So that after the initial guaranteed base funding then of 50 percent the Government then would pay Amtrak a certain amount of money for each additional passenger it handled. Is that the way it would work? Mr. SCHIEFELBEIN. Yes. The CHAIRMAN. You state that the flat-rate payment would exceed Amtrak costs on some routes and be less than costs on other routes. How would Amtrak determine which routes receive more and which receive less? Would that be a management decision? Mr. SCHIEFELBEIN. Well, Amtrak would, if it were on passengers- handled basis, get a flat payment for each passenger handled and it shouldn't take too long for Amtrak to find out its true costs or equipment costs. If all the costs of a certain route greatly exceeded the $15 they were getting from the Government in addition to revenue for a small number of passengers, I think the Amtrak management's job would be driven, in part, by the incentives put into the funding process. The CHAIRMAN. Is there any incentive to cut costs under the plan you propose here? Mr. SCHIEFELBEIN. Yes. I think there is, because if the costs are allowed to continue to increase, this payment per passenger or per passenger-mile would have Amtrak fall short of its needs. Some- PAGENO="0209" 202 where during its budget year, Amtrak would have to make a conscious decision-reviewing its budget and its funds-would have to make a conscious decision to cut back service or change equip- ment or do something along less profitable routes in order to fit within its budget by the end of the year. The CHAIRMAN. But as I understand your plan, from what you said about it, it appears to me there's no ceiling on the Amtrak subsidy. In other words, you're guaranteeing to them say 50 per- cent and then beyond that, the incentive process, it would be possible for Amtrak to receive more than they are getting in subsi- dy at the present time, wouldn't it? Mr. SCHIEFELBEIN. Yes, it would, and in return for that addition- al money there would be much greater service probably over the more heavily used routes. Unless Amtrak overfihled it's trains, there would be a limit, a practical limit, to how many passengers Amtrak could carry. The basic question that came through to us in the planning process was that Amtrak is losing money, and the question is now whether the service that Amtrak is providing on a given route or over its total system justifies that expenditure of funds. If we are going to have Amtrak, we are going to end up spending funds on Amtrak. Now we see it as a matter of trying to find the best way to direct those funds to provide the type of service that collectively the people of the country would use. The CHAIRMAN. Thank you, Mr. Schiefelbein. Senator LONG. Any other questions? Senator SCHMITT. Yes. I find your testimony very intriguing and it indicates further that this committee and the DOT and others should work together to try to find that optimal system that at least would minimize the subsidy, if not eliminate it in the long run. I was also interesed to see what I guess I already knew, and that is that prior to the final recommendations of the Secretary the Southwest Limited route was not really thought to be in danger. Is that right? Mr. SCHIEFELBEIN. That is true. Senator SCHMITT. Do you have any feeling why it was eliminated since it had not been indicated that it would be prior to this time? Mr. SCHIEFELBEIN. No, I do not. If we had anticipated that we would have had some hearings along that route. Senator SCHMITT. Now my constituents are asking me why in the world you didn't hold some hearings in Albuquerque, but again, the answer that I'll give them is that nobody really suspected that the Southwest Limited was in danger probably because it's been a steadily improving route for the last couple years or so. In your study of the GAO report, did you note whether or not they treated what is considered by some of us as the alternative to route reduction-and that is better marketing and sales as well as improved equipment which the Congress has already appropriated a great deal for? Mr. SULLIVAN. I believe they touched on that, Senator, and they also touched on the need for capital improvements and better equipment, but I don't believe the marketing aspect of it-- Senator SCHMITT. Do you feel that that would be a sufficient alternative to a restructuring of the routes? PAGENO="0210" 203 Mr. SULLIVAN. Well, the major point brought out in most of our hearings was that there was very little marketing of Amtrak. Most people had a difficult time finding out when trains were running, where they were running, and things of that sort. Mr. SCHIEFELBEIN. If I could add to that answer, I think that on certain runs, changes in marketing, changes in schedule, and things of that nature would make a difference. I think it's also important to realize there are some routes that it probably would not help. There are some that are very unprofitable routes and that's where, it becomes a very difficult question as to whether there is public need for that particular service. If there is one, it is a matter of balancing what need there is with how much it would cost to operate it. So Amtrak is a very difficult thing to give definitive answers on, because it's different types of trains in differ- ent parts of the country for people who have totally different needs for transportation. So what's true in one part of the Amtrak system isn't in another part and there are some bad routes. There are also some routes that have suffered from poor advertising and poor service that are probably good or at least better routes than they appear to be now. Senator SCHMITT. You don't have, though, any feeling for or know of anybody who has done an economic study about improving passenger loadings along those routes where that potential does exist whether or not you could at least save as much as DOT claims they will save by this route restructuring? Mr. SCHIEFELBEIN. If you're running trains that are significantly below their capacity and your marketing effort would draw more people on to that train, you're adding very little cost but you're collecting more revenue. I don't know of a study that's been done that shows this directly, but when you're running at a very low load factor, there's always the opportunity to increase ridership and revenue generation with a minimal increase in cost. If you have to add an additional train or additional cars, you pick up increments of cost that then would have to be evaluated also. Senator ScHMITr. Thank you. Senator LONG. Any further question, gentlemen? Senator WARNER. No questions. Senator PACKWOOD. No questions. Senator LONG. Thank you very much. Next we call Mr. Arthur Lewis, president of the American Bus Association, and he's accompanied by Mr. Ted C. Knappen, senior vice president. STATEMENT OF ARTHUR LEWIS, PRESIDENT, AMERICAN BUS ASSOCIATION Mr. LEwIs. Good morning, Mr. Chairman. I am Arthur Lewis, president of the American Bus Association. I heard your comment about limiting the testimony to 10 minutes and I will try to do so, although I do have a problem in being, I guess, about the only opponent or supporter, at least it looks that way, this morning for the Secretary's proposal for restructuring Amtrak, and the issues are faily broad, particularly in line with some of the conversations that have taken place this morning, but I will try my best to move along. PAGENO="0211" 204 I'd like to just give you some brief background of my experience as it relates to some extent to the subject at hand. I left the University of Texas in 1941 with the equivalent of a master of bachelor of arts in economics and master of business administra- tion, specializing in transportation. I joined American Airlines in the economic planning department and spent 14 years with them rising to the head of the planning department. During that time I spent a great deal of time on analyses and investigations having to do with the kind of subject we have here today. I left American to become president of Hawaiian Airlines. Subsequently I left Hawai- ian to become senior vice president and general manager of East- ern Airlines. And subsequently was given the title of president and chief operating officer. During that period of time it was my pleas- ure to supervise the operation of the Eastern shuttle which was a major competitor to Amtrak. I left Eastern in 1969 to become chairman of F. F. Smithers & Co., an investment banking company While I was there I was appointed by the President as incorporator of Amtrak and spent 4 months in the spring of 1971 for that purpose. Then later became Chairman of the U.S. Railway Associ- ation. So my interest in this is broad from my transportation experi- ence and economics, and not just because of my present position. The intercity bus industry serves 278,000 miles of routes in the United States and 15,000 communities. Last year we carried 332 million passengers in intercity service, more than the airlines and Amtrak combined. We support the proposal put forward by the DOT to restructure the intercity rail passenger system operated by Amtrak. We believe it is an important first step in rationalizing the Government poli- cies affecting the development of our surface transportation system, and in reducing the waste in Government expenditures which is involved in subsidies to Amtrak. No one has exressed the necessity to do this more succinctly than the Secretary of Transpor- tation in his letter transmitting the restructuring report to Con- gress. He said: We can no longer afford to provide a disproportionately large and continually increasing amount of Federal funds for operating subsidies for a passenger transpor- tation system that is used by less than one-half of 1 percent of the intercity traveling public. We live in a time of Federal fiscal restraint. The bus industry strongly objects to Federal subsidies to main- tain an obsolete rail system which competes unfairly with it. How- ever, Amtrak's problem today is not so much with the bus industry as it is with the taxpayers and others who are concerned with the priority in Federal expenditures given Amtrak over other social goals. Those concerned about the priorities of Federal subsidies are epitomized by a statement made by Mr. M. J. Anderson, president of the 300,000-member Federation of Masons of the World, when he testified during the field hearings on the initial restructuring pro- posal issued in May. I quote: To see Congress throwing away good money to support a national rail passenger system when black Americans continue to suffer from poverty, high unemployment, high infant mortality and other health problems, poor education and deteriorating innercity communities, is unconscionable. I believe these moneys could be better PAGENO="0212" 205 spent addressing problems which have a far greater positive impact upon the quality of life for all Americans, rather than that the nation should pour billions of dollars into revitalizing an ailing railroad. While every Federal program and expenditure must stand on its own merit, I think Mr. Anderson has made a legitimate and strong point. Those that are concerned about waste are epitomized by the article which appeared in the National Journal on July 1, 1978. The article starts off with the statement, "In the hail of fame for Government waste, they should reserve a room-or perhaps a whole wing-for Amtrak." It states later: If nothing else, Amtrak stands as a shining example of the Government's inability to eliminate wasteful programs. Trains enjoy an undeserved fashion. Their support- ers refuse to ask the question: Why should the Government pay so much for so little? Amtrak survives on nostalgia, sheet inertia, and muddled analysis that blames its problems on mismanagement. Frankly, I am surprised that the restructuring report stopped where it did. The subsidies now required to support Amtrak are truly mind boggling when you consider what the Nation gets out of it and the comparative need either to reduce inflation or to meet other pro- grams with a higher social priority. By the end of this fiscal year the Federal Government will have provided $4.1 billion in capital and operating subsidies and guaranteed loans in subsidizing Amtrak. If the program is not reduced as the Secretary proposed, subsidies for the next 5 years will approach $6 billion. This is waste at a rate of $1.2 billion per year to support a rail transportation system which carries only three-tenths of 1 percent of our intercity passenger traffic. Even with the restructuring proposed by the Secretary, the cost of Amtrak is estimated to exceed $900 million per year for that period. And, the Secretary himself has testified that Amtrak cannot help to reduce the energy requirements of the Nation nor is the system meaningful in helping meet the needs for service to rural America. Mr. Chairman, I think what we are seeing here is the failure of a concept. Almost without exception, people believe and logically so, that we need a rail system in the Northeast corridor. Somehow or other that real need in the corridor is transposed in the minds of many so that they visualize the same need on a national basis. The issue is somewhat clouded by the fact that there are national railway systems in France, Germany, England, Japan, and the like. But this country is different. A national railway system here simply does not play the same role that it does in these other countries whose geographic boundaries more nearly resemble the Northeast corridor than they do the continental limits of the United States. There is nothing in these smaller countries whose societies had matured long before the development of the automobile and the airplane, which compare to the economic and geographic character- istics of this country. There are no vast distances to travel. The automobile never became the basic transportation system of the average family. No major European city was ever built around the use of the private automobile. No large geographic region in Europe was developed uniquely around the use of the private car. 43-139 0 - 79 - 14 PAGENO="0213" 206 To visualize the need of this country for a rail service because the Northeast corridor needs it, or because it has remained an integral part of the ground transportation of the smaller, older countries in Europe or Japan is simply wrong. This country developed its modern transportation characteristics after World War I with the development and use of the private automobile and after World War II with the development of the air transportation and the national highway system. Long haul rail passenger service,which was the only form of intercity passenger travel of any magnitude before World War I died a very natural death after World War II. It simply could not compete with the private automobile and the airplane. It would have been phased out of existence on long-haul routes many years before the birth of Amtrak if the ICC had not forced the rail industry to continue its operation in spite of heavy losses. And, of course, the fundamental flaw in the development of Amtrak has been the attempt to develop a national rail passenger system by continuing in existence the long-haul trains which have no valid market constituency. Eighty percent of the losses on Amtrak occur on the long-haul trains outside the corridor although they carry less than 50 percent of total passengers carried on the system. Outside the corridor, Amtrak recovered only 34 percent of its costs from its passengers in fiscal year 1977 although it recov- ered 47 percent from its customers in the corridor. The deficit per passenger carried outside the corridor in 1977 averaged $47.16. Expense per passenger mile outside the corridor totaled 19.7 cents per mile that year. With the passenger paying 6.7 cents per passenger mile, Government subsidies per passenger mile totaled 13 cents. That is the deficit. The average airline fare on which the airlines made money was 8.6 cents. The average busfare on which the bus industry made money was 5.2 cents. Amtrak's deficit per passenger mile outside the corridor was 1.5 times the average fare charged by the airlines and 2.5 times the average fare charged by the bus lines. Outside the corridor where great distances are involved and where density of population is relatively low and where whole cities and geographic areas have developed based on the pervasive use of the private automobile, Amtrak simply cannot generate a valid market for its product. It does not have a market constituen- cy today nor will it ever develop one. None of the apologists for Amtrak really face up to this fundamental fact. They keep talking about the need for more time, the need for more frequent service, the need for more speed and service reliability to enable Amtrak to prove its worth. The Washington Post editorial of February 6, 1979, sums it up this way: Congress may wish to make minor changes in the proposal Secretary Adams is sending to it, but it should not make many. The surprise is not that he wants to cut Amtrak so sharply, but that he is willing to leave so much of it in operation. Long- haul passenger trains may be energy efficient, useful to have around in case of an emergency, and fun to ride. But so are horses. Without travelers who want to use them, both modes of transportation have become expendable on a national long- distance scale. Recognizing the meagerness of Amtraks' ridership, supporters for Amtrak rely heavily on certain poiis taken in recent years to show PAGENO="0214" 207 broad public support for Amtrak. The Lou Harris poii in February 1978 has been construed by some advocates as a public mandate to upgrade and continue subsidization of Amtrak. Yet, only 6 percent of those interviewed said they would take a train as their first choice if going on a trip of 100 miles or more. Rail ranked last, far below airplanes and buses. In fact, among survey respondents actu- ally expecting to take trips of 100 miles or more in the next few months, rail also ranks last-4 percent. We do not know what portion of those saying they would take the train as their first choice were located in the Northeast corridor. Based on the distri- bution of Amtrak's customers, it could be assumed that about 50 percent would be corridor residents. The Hart research survey in March 1978, has also been touted as a mandate for Amtrak because over 50 percent of survey respond- ents indicated they had used a train in the last 5 years and 30 percent of those reporting train usage had only done so once during the period. The fundamental problem with this poll and others like it is that no one poses to the public what the cost would be for improvement and what could be expected in the way of future subsidies if the proposed improved service were introduced. They are a general statement of support without real meaning until the matter of cost is clearly set forth in the questionnaire. The true test of public suport and demand for this service lies in the willingness of the public to use and pay for it. In effect, the American public has voted clearly through its lack of patronage of Amtrak service. The National Transportation Policy Study Commission states the case against Amtrak very succinctly: The weight of evidence presented here and in the materials cited provide little justification for the Amtrak subsidy. The system does not contribute to the overall quality or quantity of intercity travel available to the American public. There is nothing truly unique about rail that warrants special consideration. In all the elements of service that we have examined Amtrak performs no better, and usually less well, than the other modes. Up to this point, it cannot be said that Amtrak is a vital element of the intercity transport network or that it contributes balance to the Nation's passenger transport system. Mr. Chairman, the GAO has made several reports to Congress having to do with Amtrak. One of the most cogent statements concerning the public need for Amtrak was made on March 20, 1978, by Mr. Henry Eschwege, Director, Community and Economic Development Division, before the Subcommittee on Transportation and Commerce, House Committee on Interstate and Foreign Com- merce, on Amtrak's costs and operating results. It was as follows: * * * the reasons why demand does not exist in spite of Amtrak's low fares (fare revenue averaged only about 35 percent of operating costs) are fairly straightfor- ward. Air travel is much quicker and more convenient for time-sensitive travelers, smoother and more comfortable (especially considering the comparatively short time the traveler must occupy the airplane), and, on longer trips, almost the same price as Amtrak. Buses go more places than Amtrak, usually at a lower cost to the travelers. Automobiles give travelers more control over where and when they go, are convenient to have at the destination, and, on the marginal basis most people use to make travel decisions, are perceived as being much cheaper than the train, particularly when more than one traveler is involved. Except in the Northeast corridor where the train offers comparatively high speed, competitive fares, and where the major cities along the route have public transportation minimizing the convenience value of the automobile; the train simply does not offer the inter-city PAGENO="0215" 208 traveler a service that is as good as the alternatives available. Demand for rail passenger service is not likely to increase very much unless this situation changes. Amtrak advocates maintain that the filed hearings conducted by the Rail Services Planning Office demonstrated overwhelming sup- port for maintaining Amtrak services. This should be analyzed critically. The nature of these hearings are such that they provide a forum for special interest groups to make a major presentation. The average citizen simply does not respond to them. As a result, special interest groups can show overwhelming support for a matter and yet still represent only a small fraction of the general public. It is not surprising that the National Association of Railway Passengers can turn out a good crowd. Its members are quite supportive of Amtrak but, in every sense of the word, they are a special interest group and do not represent generally the communi- ty in which they live. NARP is an effective lobbying organization and it was quite helpful in setting up advance teams to generate interest in the subject. It is most interesting that the National Taxpayers Union and many individual taxpayers took an active roll in these hearings. It is also meaningful that some individual chambers of commerce passed resolutions questioning the need for a continuation of Amtrak services. For example, the Chamber of Commerce of Lin- coln, Nebr., passed a resolution which among other things: Urges the Department of Transportation and Congress to closely scrutinize all Amtrak schedules, retaining only those trains actually returning their operating costs. Senator EXON. Since you mentioned that and I have to leave for the floor, I'd just tell you there are several things I do not agree with that the Lincoln Chamber of Commerce says. Mr. LEwIs. Yes, I understand, but I did want you to know that. Senator EXON. Yes, I am familiar with that. Mr. LEWIS. All right. Fine. I don't think there's really a sponta- neous broad public constituency which is strongly supportive of continuing long-haul trains in operation. The basic supporting groups are comprised of rail labor, some of the few passengers who ride Amtrak, and a rather narrowly conceived special interest group organized for the sole purpose of lobbying for Amtrak, the National Association of Railway Passengers. The essential fact of the matter is that the marketplace deter- mines the degree of public support for Amtrak. It is those who ride it who determine the degree of public interest. The low ridership on the long-haul trains and the enormous losses on the trains speak eloquently in the only voice this Government should listen to. As I have said, we support the recommendations of the Secretary of Transportation on the restructuring of Amtrak, but are disap- pointed that he did not go far enough to reflect fully the public interest in cutting the waste in Amtrak. However, we strongly disagree with his recommendation that we go to a 3-year funding period for Amtrak. I do not believe the experience of this Congress or the Department of Transportation can give you the degree of confidence you would need to adopt this policy. It would represent an abdication by Congress of its fiduciary responsibility that would be out of keeping with the problems PAGENO="0216" 209 Amtrak has presented so far in financial responsibility. Why is Amtrak any different than all other Federal programs in its need for longer term funding? Now, Mr. Chairman, I have here maps showing Amtrak and bus schedules. I want you to know the bus industry is making a study of the services that have been proposed for cancellation or elimina- tion by the Department of Transportation-both Greyhound and Trailways are involved in studies to make sure, at least on their routes, that no significant absence of service results as a result of cancellation of trains. I have here as part of that study maps on each State which show the direct operations and lines of Amtrak and the lines of the bus industry and almost without exception there is an absolute direct parallel. The number of lines that would have to be operated unique to it, as compared simply to institution of nonstop service, would be very small. I have those for New Mexico, Senator Schmitt; for Nebraska, for Montana; and I think, for example, if you look at Montana-you heard from Senator Baucus this morning and you will find there's a direct parallel right across the State of Montana through Billings and the like, and the same thing is true, Senator Schmitt, in New Mexico. Amtrak misses Santa Fe, which we don't, and serves Lamy, Albu- querque and parallel by the bus industry. The same thing is true with Nebraska. So we are preparing this study for you and I think you will find that there simply will not be an elimination of service of any kind that would be consequential in this thing. I have also one other comment. You made several comments this morning about the need for service to rural areas particularly for freight and Amtrak service in Montana, for example, for the summer in the harvesting-Amtrak's gross revenues in 1977 were $311 million from passenger service and package express. The in- tercity bus industry had revenues of $154 million from package express only. We had revenues from package express equal to 50 percent of the total commercial revenue of Amtrak. If there's any way that you can get farm equipment to a farm faster it's with frequency of service, and not daily service that extends along those routes. Actually, I have talked to Mr. Knappen and over 60 percent of the traffic from Trailways package express is from urban areas to rural areas and rural areas to urban areas. So I think you will find the pervasiveness of intercity bus or passenger service applies likewise to the package express system. I'd like also to make one other comment. I don't want to take too much time, but we talked about the fact that on these long-haul trains the service has not been particularly good and with improve- ment of quality of service and perhaps frequency that traffic will go up. If there's any place in the country in the last 4 or 5 years where there's been a significant improvement in quality of train service it's been in the Northeast corridor. You have a significant increase in the number of cars and the like, and while recently there's been some deterioration due to track rework, the funda- mental fact is that the quality is high and consistently so, but traffic in the corridor for the last 4 years has been flat. No signifi- cant change in the traffic on the corridor. I think if the thought were accurate that elsewhere improved quality of service would PAGENO="0217" 210 increase train ridership, you would see a much stronger rate of growth in the corridor. [The attachments referred to follow:] ArrACHMENT I [From the National Journal, July 1, 1978] ECONOMIC FOCUS (By Robert J. Samuelson) GErrING AMTRAK ON TRACK In the hail of fame for government waste, they should reserve a room-or perhaps a whole wing-for Amtrak. The numbers on Amtrak (National Railroad Passenger Corp.) are astonishing. In fiscal 1978, the government will pay about $650 million to subsidize Amtrak's trains. Since its start in 1971, Amtrak has swallowed almost $3.4 billion in government funds or government-backed loans. By 1982, annual subsidies will approach $1 billion-even if the system is scaled back as proposed by the Transportation Depart- ment. Ticket revenues now cover only about 37 cents of every dollar in costs. For this colossal outlay, Amtrak has performed very little social good. On many routes, it provides massive subsidies to middle and upper middle-class travelers. On the New York to Miami run, it subsidizes the average trip by about $122. Despite the mounting government aid, service has generally deteriorated. Nearly one-third of the trains regularly arrive more than 10 minutes late, a record worse than two years ago. Nor is that all. Running with many empty seats, Amtrak probably wastes energy. Even if it doesn't, the potential for reducing energy use, pollution or congestion is small. Last year, Amtrak provided less than 1 per cent of intercity travel, about a third that of buses and a tenth that of airlines. Finally, by subsidizing competition to buses, Amtrak has hurt that industry's profits and encouraged bus owners to seek federal subsidies exceeding $100 million. Subsidies thus beget subsidies. If nothing else, Amtrak stands as a shining example of the government's inability to eliminate wasteful programs. Trains enjoy an undeserved fashion. Their support- ers refuse to ask the question: why should the government pay so much for so little? Amtrak survives on nostalgia, sheer inertia and muddled analysis that blames its problems on mismanagement. Whatever mismanagement exists, the genuine source of Amtrak's failure is more fundamental. Trains simply cannot compete-in time, cost or travel flexibility- with planes, buses and automobiles. Business executives won't trade two hours on a plane for a day on a train. Family vacationers usually need their cars; even if they don't, train travel generally costs families more than car travel. These simple realities explain why Amtrak was doomed from the beginning and why its continuation means throwing more good money after bad. To establish genuinely first-class service would require untold billions in track improvement, new equipment and more frequent trains. But most Amtrak trains don't cover their operating costs. To run more trains is to lose more money. Congress won't pay for that, but it has neither the vision nor the courage to embrace the logical alterna- tive-put Amtrak out of business. Ending programs like Amtrak ought to unite liberals and conservatives: liberals because they want to channel government dollars to more socially useful programs; conservatives because they want to squeeze government spending. But, in fact, the political process does not work that way. The average Member of Congress-whatever his or her ideology-recoils at the incendiary idea of axing a whole program. The political pains and pleasures don't balance. The federal budget has now grown so large (about $500 billion in fiscal 1979) that many otherwise sizable programs get lost. Often, the only people who know about spending cuts are spend- ing beneficiaries. And no Member, as one aide said, "likes to cut services for his district." Moreover, congressional courtesy being what it is, most Members defer to the recommendations of the relevant committees. Agencies pander to the key committee leaders. Amtrak simply runs trains through their districts, a practice best epito- mized by the trains that run through West Virginia, home of Rep. Harley 0. Staggers, chairman of the House Interstate and Foreign Commerce Committee. PAGENO="0218" 211 Consequently, efforts to cut spending often take forms that are economically inefficient but politically painless. One trick is to reduce big-ticket purchases by the Pentagon, such as cutting the number of new fighters from 100 to 80. This saves money in the current year, but usually increases the government's ultimate costs. The extra planes are bought later, lengthening production runs and raising unit costs. Another trick is to demand across-the-board cuts for an agency. The House, for example, recently mandated that the Secretaries of Labor and Health, Education and Welfare reduce their "controllable" spending by 2 per cent below congressional appropriations. This approach allows Congress the twin pleasures of voting for both higher and lower spending. Congress has treated Amtrak with characteristic ambivalence. When subsidies surpassed $500 million (up from $40 million in 1971), it made slight reductions, but when Amtrak said it might discontinue some service, Congress forbade that and voted supplemental appropriations. The sad thing about Amtrak is that train service has probably declined in the one area where it might be justified: the Northeast corridor, in the Northeast, popula- tion centers are large, intercity distances are short and auto and air congestion are high. In fiscal 1977, these trains accounted for 57 per cent of Amtrak's ridership, 31 per cent of its revenues and only 24 per cent of its costs. Unlike most other Amtrak trains, most of these actually cover operating costs (but not fixed investment ex- penses). But to think that Congress might limit Amtrak only to the Northeast is to forget logrolling. Members outside the Northeast won't vote for the Northeast unless they have something for their own districts. Not surprisingly, Transportation Secretary Brock Adams' preliminary "reevaluation" of the Amtrak system-a final plan is expected by December-still would allow for a nationwide railroad system with a spiraling subsidy bill. Adams conceded that Amtrak "spent large amounts of money" for a "relatively small segment of the traveling public." But he rejected ending Amtrak, saying, "There is a significant constituency for maintaining Amtrak . . . even among people who today do not frequently use it." That's a statement worthy of a former six-term Member of Congress. ATFACHMENT II [From the Washington Post, Feb. 6, 1979] THE DISMEMBERING OF AMTRAK Last Wednesday morning, Secretary of Transportation Brock Adams announced his proposal to cut almost in half the nation's railroad passenger network. On Wednesday evening, the Southern Crescent pulled out of Union Station here for the last time under the auspices of the Southern Railway. So much for riding the rails in style. The government, like the railroad corporations before it, has become convinced that most long-haul passenger trains deserve to live only in memories. The evidence that Secretary Adams put forward to justify this dismembering of Amtrak is substantial. A 43 percent cut in the length of the network its trains serve will reduce the number of passengers it carries by only 9 percent and will save the nation's taxpayers about $1.4 billion in five years. Regardless of how you feel about the particular train service that Mr. Adams has marked down for extinction, those numbers are too impressive to ignore. So are some other facts about Amtrak's operations. Amtrak collects from its customers only 37 cents for every dollar it spends; the other 63 cents come from the govern- ment. On some routes, it could save money by giving its passengers airline tickets instead of putting them on its trains. Its annual deficit has grown from $150 million to $575 million in six years. No doubt there will be considerable anguish, both on Capitol Hill and elsewhere, over the specific cuts Mr. Adams has proposed. He wants to lop off all the routes Amtrak was forced to serve for purely political reasons, as well as many other routes that were picked on their merits. The network he proposes to retain is less than a skeleton of what once existed. Only on the East Coast and, to a lesser extent, in the area around Chicago will anything remain that deserves to be called a passenger railroad system. We were among those who, at the beginning of this decade, urged the government to create Amtrak as a way of preserving a national passenger-train network. The railroads, with a few exceptions, had been killing passenger service through neglect. PAGENO="0219" 212 The idea that a well-planned system with good management and good service would attract enough travelers back to the rails seemed to us at least worth a try. And Amtrak, for all its shortcomings, has tried, but outside of the Boston to Washington corridor, where the revival of the trains has been remarkable, the experiment hasn't worked. The lure of the airplane for business travelers and of the automobile for vacationers has been too great. For us, the evidence that Amtrak needed drastic surgery became overwhelming when the Southern Railway, which had refused to join Amtrak and insisted upon running its own train, finally gave up. Seven million dollars a year was more than it was willing to spend to keep the Crescent, its pride and joy for more than 80 years, on the tracks. Congress may wish to make some minor changes in the proposal Secretary Adams is sending to it, but it should not make many. The surprise is not that he wants to cut Amtrak so sharply but that he is willing to leave so much of it in operation. Long-haul passengers trains may be energy efficient, useful to have around in case of an emergency, and fun to ride. But so are horses. Without travelers who want to use them, both modes of transportation have become expendable on a national long- distance scale. ATFACHMENT III LINcoI~ CHAMBER OF COMMERCE, Lincoln, Nebr., June 9, 1978. Memorandum to: Chamber Board of Directors. From: Surface Transportation Committee, Bob Campbell, Chairman. Subject: Proposed Amtrak Curtailment. The Surface Transportation Committee has thoroughly discussed Transportation Secretary Brock Adams' proposal to reduce the nation's heavily subsidized rail passenger system by some 8,100 miles. This proposal calls for the combining of the Chicago-San Francisco (California Zephyr) Chicago-Los Angeles trains, eliminating Amtrak passenger service at Lincoln and all Nebraska points presently served. Statistics for 1977 show Amtrak's on-off traffic at Lincoln averaged 39.3 passen- gers daily, compared to an average of over 1,000 passengers a day using air carrier service at the Lincoln Municipal Airport. It is apparent there is a very limited use of Amtrak service at Lincoln, partly because of the middle-of-the-night schedule and the lack of reliability of Amtrak meeting this inconvenient time schedule; but, predominately Amtrak's demise is the result of the rapid growth of our airline service that is today's preferred mode of long distance travel for the vast majority of Lincoln area travelers. Because of the apparent lack of need (and use) of Amtrak service and the ever- rising cost of federal subsidy for Amtrak service throughout the nation, the Surface Transportation Committee recommends the Lincoln Chamber of Commerce adopt the attached resolution for submission to the Department of Transportation at its June 26-27 hearings on the proposed reductions in the Amtrak system. Ar~rrx~x RESOLUTION Whereas Transportation Secretary Brock Adams has recently proposed a restruc- tured rail passenger system that would substantially lower the cost of maintaining Amtrak with federal subsidies; and Whereas the proposed reduction in the Amtrak system from over 27,000 miles to 18,900 miles calls for the discontinuance of several long-distance trains, and the combining of the Chicago-San Francisco and Chicago-Los Angeles trains, eliminating rail passenger service to Lincoln, all Nebraska points and points in seven other states; and Whereas the 1972 average Amtrak operating subsidies of $9.48 per passenger carried had skyrocketed to cost the taxpayers of this nation $26.82 per passenger in 1977 and is projected to increase to $32.35 in 1982; and Whereas the present Amtrak system requires federal subsidies in excess of $500 million annually and is projected to call for about $1 billion taxpayers subsidy by 1984; and Whereas the nation's airlines and buslines are not running at their capacity and could absorb the highly-subsidized Amtrak travelers, resulting in substantial sav- ings in energy as well as federal subsidies; and Whereas the tax load of individuals and businesses have grown to stifling propor- tions, requiring a nationwide effort to hold down uneconomic and unnecessary government expenditures; and PAGENO="0220" 213 Whereas the Lincoln Chamber of Commerce has consistently advocated the need for government cut back on unnecessary spending, it is time we stand up and be counted on a matter that should be decided on actual cost/revenues relationships, rather than political considerations that everyone seek their "fair share" of a deficit operation; and Whereas even though several long-distance Amtrak trains have greater net avoid- able operating deficits than the California Zephyr, we recognize that if everyone fights to keep "their train" running Amtrak's ever-rising subsidies may never be curtailed: Therefore be it Resolved, That the Lincoln Chamber of Commerce: (1) Go on record in support of a greatly scaled down Amtrak rail passenger system, determined solely by factual cost/revenue data and not political consider- ations. (2) Urges the Department of Transportation and Congress to closely scrutinize all Amtrak schedules, retaining only those trains actually returning their operating costs. (3) Where trains are discontinued because of their inability to generate revenues equal to costs, we urge the Department of Transportaion to channel efforts to move these people via the nation's buslines and airlines, saving travelers time and money, while reducing unwarranted or uneconomical uses of precious energy resources. Mr. LEWIS. Would you like to question me? Senator LONG. Mr. Knappen wants to make a statement. I think we ought to hear both of you first. STATEMENT OF TED C. KNAPPEN, SENIOR VICE PRESIDENT, EASTERN DIVISION, TRAILWAYS Mr. KNAPPEN. Thank you, Mr. Chairman. I have a prepared statement which I'd like to submit for the record. I just want to hit a few of the major points and I'll make it brief. I think this issue is unique from the standpoint of the unanimity of all those who have studied the issues, concluding that Amtrak is a uniquely non-cost-beneficial Government program. That includes, of course, the GAO, DOT, the National Transportation Policy Study Commission, and several others. Certainly, as Mr. Samuelson said in his Washington Post article, Amtrak is "a shining example of the Government's inability to eliminate wasteful programs." Now we believe that Secretary Adams' proposal is really a small first step toward eliminating the waste from the Amtrak program but the point is that even though DOT did quite a good job from the standpoint of eliminating 40 percent of the scheduled miles, while only eliminating 10 percent of the passenger miles, the Amtrak deficit will continue to grow at an alarming rate. If you go back to the DOT study, you will find that although Amtrak in its first 7 years of operation, from 1972 to 1979, has spent $4.03 billion of the taxpayers' money, in the next 5, under the slimmed down system that Secretary Adams proposes, the Government will spend $4.59 billion on the Amtrak program. That works out to an average in the first 5 years of $575 million a year in operating and capital subsidies for Amtrak and $918 million over the next 5. That's an average annual increase of 62.6 percent. That's why we say that Secretary Adams' proposals are really a first small step. Talking about the costs and benefits. We have addressed the costs. Now let's look at the benefits. You have heard today that Amtrak presently serves approximately three-tenths of 1 percent of the intercity passengers in the Nation. Even if you tripled Am- trak's ridership, which would be absolutely incredible, you would PAGENO="0221" 214 still have less than 1 percent of Amtrak served passengers in this country. So really Amtrak in the past and the foreseeable future is having very little effect on our transportation system but it has had one major effect, and that is the very counterproductive effect of diverting from intercity bus up to one-third of Amtrak's passen- gers; that is, up to one-third of Amtrak's passengers according to studies done by several organizations, including GAO, are bus pas- sengers. Now the fact is that intercity bus is far more energy efficient than any other mode of transportation, including Amtrak. Every independent study has concluded that and I understand that Secre- tary Adams started his testimony last week with that point. So what we have occurring here is a drain of one of the most energy efficient modes of transportation, intercity bus, to Amtrak, and that's been the real effect of the Amtrak program. Another effect, and I really think it should be said here where we have had so much talk about rural service, as Senator Exon said earlier, bus transportation is a vital part of rural transporta- tion. Indeed, bus transportation is the vital part of rural transpor- tation serving some 16,000 communities around the country while Amtrak serves I believe between 500 and 600. What has happened is that this diversion of passengers from bus to Amtrak has had a serious effect on the ability of the bus indus- try to provide intercity service and thus to cutbacks and where does that cutback in service come? It comes from rural areas inevitably. That's been the history over the last 2 or 3 years and I would suggest to all the Senators from rural States that this pro- gram has had a tremendously negative impact on the amount of transportation in the rural areas of their States. I can speak from personal experience. I'm responsible for running half of a bus company, and it's the eastern half so it doesn't touch on most of the States represented here, but time after time when we cut schedules they are rural schedules. We have had to do that because of the loss of passen- gers, and primary among the reasons for the loss of passengers has been the Amtrak program. I do not want to suggest that it's the only reason. There are certainly others, including the airline discounts, higher inflation- ary pressures and so forth, but it is the only one that is a Govern- ment subsidized effort, it appears, to drive the private enterprise intercity bus industry out of existence. So from the standpoint of benefits, the only benefit that we can see is counterproductive. Now let me just take the Amtrak program for a minute in this year of fiscal conservatism and the recommendations of the DOT for a funding level in 1980 of $760 million for what we view as a very counterproductive program. I think everybody would at least conclude it's a very questionable program. In that same year, the administration is recommending, among other cuts, that $500 mil- lion be eliminated from the social security program, cutting bene- fits of widows and children; $730 million is being eliminated from the CETA program, cutting something like 150,000 jobs. For rural areas, $400 million is recommended for elimination from rural housing programs; $326 million for other rural development pro- PAGENO="0222" 215 grams; and finally $60 million eliminated for a program that has provided in the past 38,000 summer jobs. Now whatever you think about any one of these particular rec- ommendations, at least you can say that each of those has an identifiable social benefit that the American people are going to be deprived of. You can't say that about Amtrak. Thus, we submit that it makes no sense whatsoever to fund Amtrak at a level of $760 million on the one hand and deprive these other programs of that kind of funding. So what more can be done in addition to the schedule reductions that Secretary Adams has recommended? Well, we suggest and I have proposed some specific statutory language in my prepared statement-that we give Amtrak a chance over the next 5 years to prove itself with the new equipment that's been referred to and so forth, but at the same time gradually reduced its subsidy by requir- ing Amtrak to recover an increasingly greater percentage of its operating costs through revenue that it generates from its passen- gers. Now the only exception that we would make to that is in the Northeast corridor where we suggest that immediately Amtrak should be required to go to a revenue level which allows it to recover 100 percent of its operating costs because the fact is that in the Northeast corridor, where you have at least 50 bus schedules a day between all major points, there is no substantial reason to subsidize the out-of-pocket costs of Amtrak for running those trains. Yet, at the present time, according to GAO, Amtrak is recovering in the Northeast corridor, which is their most profitable area, less than 50 percent of its operating cost. We suggest that that should be jumped up immediately. What's happened is in the last 7 years Amtrak has held down rates and thus every year has recovered a smaller percent of its operating costs through revenues. It's now down to 37 percent. It's done that by simply holding its fares down way below the level of inflation. For example, its excursion fares-that is, its round-trip fares in the major travel corridors, where the demand is and where you think they would raise their rates, have been raised less than 10 percent since 1972. Now during that time inflation has risen at a rate of 60 or 70 percent. So we have an incredible situation here where even in their most heavily traveled corridors they have held their rates down way below the rate of inflation. The effect has been to deprive the intercity bus industry of its one competitive advantage and that is low cost. We suggest that you can allow us to compete once again in the marketplace, give Amtrak a chance and reduce the subsidy over the next 5 years by adopting a proposal similar to the one we have made in our testi- mony which would require them to achieve a greater and greater amount of their operating subsidies through revenues over the next 5 fiscal years. With that kind of action, we think that this huge wing in the hall of waste that Mr. Samuelson refers to can be shut down and we can get on to more important issues. Thank you, Mr. Chairman. PAGENO="0223" 216 [The statement follows:] STATEMENT OF THEODORE C. KNAPPEN, SENIOR VICE PRESIDENT, EASTERN DIvIsIoN, TRAILWAYS I am Theodore C. Knappen, Senior Vice President of the Eastern Division of Trailways and I appreciate the opportunity to testify on behalf of Trailways in connection with the fiscal year 1980 authorization of appropriations for Amtrak and the recommended route restructuring. A good way to get right to the heart of the problem is to quote from a Robert J. Samuelson article in the July 4, 1978 Business Section of the Washington Post, titled "DOT Plan to Cut Amtrak by a Third Stirs Controversy." Samuelson wrote: "In the Hall of Fame for government waste, they should reserve a room-or per- haps a whole wing-for Amtrak * * * If nothing else, Amtrak stands as a shining example of the government's inability to eliminate wasteful programs." For the last several years, Trailways and others have attempted to focus attention of the visably substandard service provided to the rail passenger market, albeit at ever increasing costs to the United States Treasury. Indeed, practically every print- ed document discussing the subject over the last few years has arrived at the same conclusion that we have-benefits derived from the existing rail passenger network are dwarfed in comparison to the Federal Tax dollars required to operate that system. Reports from the General Accounting Ofice during the past 24 months reach this conclusion. Reports of this Committee and its counterpart in the House of Representatives reach the same conclusion, and now the National Transportation Study Commission's draft chapter on Amtrak reconfirms everything that we have been saying. One quote from that chapter at page 121 will illustrate the point: "The weight of evidence presented here and in the materials cited provide little justifica- tion for the Amtrak subsidy. The system does not contribute to the overall quality or quantity of intercity travel available to the American public. There is nothing truly unique about rail that warrants special consideration. In all the elements of service that we have examined Amtrak performs no better, and usually less well, than the other modes. Up to this point, it cannot be said that Amtrak is a vital element of the intercity transport network or that it contributes `balance' to the nation's passenger transport system." It is not, Mr. Chairman, as though this problem has developed unexpectedly. From the beginning of Amtrak's operations there were warnings that the very notion of a National Rail Passenger Corporation was ill conceived. For example, I cite the following quotation from the minority views filed in connection with S. 3706, establishing the National Rail Passenger System, Senate Report 91-765, 91st Congress, 2nd session, April 9, 1970: "Intercity railroad passenger service has been and now does represent big busi- ness in terms of capital investment. Unfortunately, it is an investment which has not paid off under practices and procedures tried to date. It has been capable of generating sufficient revenue to be self-supporting in only about four years out of the past four decades. "The bill ordered reported by the Committee on Commerce after only three days of hearings on several various legislative proposals is an omnibus subsidy package. It has not been the subject of public hearings. It is a beguiling, simplistic solution and an imperfect one based solely on federal funding. It could result in a direct and a very substantial, perhaps permanent involvement on the part of the Federal Government in the day-to-day operations of railroad passenger service within the system to be designated pursuant to this bill. This represents an anomaly coming at a time when the Government is trying to extricate itself from such involvement by the proposed sale of the Alaska Railroad. It is worse than no solution at all and for this and the following reasons we are compelled to oppose the bill: "It is too costly in a period of needed fiscal restraint, providing authorization to appropriate $435 million over the next four fiscal years; "It is ambiguous with respect to the potential future cost to the Federal Govern- ment and could result in subsidies of an interminable duration; "It commits the Federal Government to a multi-million dollar program without adequate knowledge of market demand, need, or reasonably accurate cost data." Every major point contained in that passage has been proven correct. It is obviously time to begin to make some fundamental policy changes in the system. Speaking for Trailways I can say that the Secretary of Transportation's recom- mended route restructure for Amtrak is definitely a step in the right direction. The current system has grown by leaps and bounds during the last eight years and it is fortunate that efforts are now being made to bring it under control. PAGENO="0224" 217 At the same time, Mr. Chairman, I wish to emphasize that the Congress ought to make certain that fiscal year 79 and fiscal year 80 do not merely represent two exceptional years in which costs were held somewhat in check. If all that is accom- plished is the achievement of a relatively flat plateau during this two-year period, after which costs are once again free to skyrocket, all will have been in vain. Regrettably, we see that this may be the case from the appendix contained in the Secretary's final report to the Congress on the Amtrak route system. At page 5-3 operating and capital subsidies from 1980 through 1984 escalate from $760 million a year (1980) to one billion sixty-four million dollars (1984). An operat- ing and capital budget of one billion sixty-four million dollars in 1984 represents a 72 percent increase over the comparable figures for fiscal year 1979. While it is correct, that viewed from another prespective, namely how large would the current system have grown to by 1984, then it is true that the new recommended route structure represents somewhat of a decrease from that figure. However, it is accept- ed by almost everyone that the cost and efficiency of the current system is outra- geous. Therefore to boast that we are saving "x" numbers of millions of dollars in this new route structure compared to what it would have been under a worse possible case, (i.e., the current system) seems to be less than a statistically fair way to express the improvement. As a matter of fact, viewed from a somewhat different perspective, even with this slimmed down system, Amtrak is projected to cost the taxpayer $4.59 billion dollars over the next five years as compared to the $4.03 billion dollars that Amtrak cost the taxpayer during its first seven years. In other words, Amtrak in its first seven years cost the taxpayer an average of 575 million dollars per year; under the Secretary's restructured system, Amtrak would cost the taxpayer an average of 918 million dollars per year over the next five years, an average annual increase of 62.6 percent. Our view is that the current system has progressed up to the present, as far as any system should be allowed to go. Viewed from that perspective the new recom- mended system will by 1984, represent a 72% increase over today's admittedly wasteful system. We really don't believe that Amtrak, as a transportation system, can be rational- ized or defended on grounds of either fuel efficiency or impending energy crisis. The Interstate Commerce Commission's May, 1978, study of the Intercity Bus Industry has a discussion beginning at page sixteen, of three previous studies: (a) Federal Energy Administration; Project Independence Report, November, 1974 (b) Boeing Airplane Company Study (c) Nutter's, A Perspective of Transportation Fuel Economy, Mitre Corporation, 1974 All three studies concluded that the bus was more fuel efficient than the train. The Congressional Budget Office did a study for the Senate Committee on Environ- ment and Public Works in September, 1977, (serial number 95-8) and reached the same conclusion: bus is more efficient than rail. These analyses that the bus is indeed more fuel efficient than the train, have been reinforced and reconfirmed by a recent study (January, 1979) prepared for the Department of Energy by A. B. Rose, Oak Ridge National Laboratory, entitled "Energy Intensity and Related Parameters of Selected Transportation Modes: Pas- senger Movements." Principal results are shown in the table below: ENERGY INTENSITIES-BRITISH THERMAL UNITS PER PASSENGER MILE, INTERCITY BUS, RAIL, AND AUTOMOBILE Year Amtrak Commuter Rail Intercity Bus Intercity Automobile 1972 4,110 3,590 3,050 3,410 3,230 3,410 (1) (1) 4,400 3,900 3,500 3,790 1,050 1,020 960 990 1,010 980 2,990 (1) (1) (1) 2,810 (1) 1973 1974 1975 1976 1977 (1) Denotes intormation not available. In fact, Amtrak's fuel intensity is such that the General Accounting Office's November 27, 1978 report to the Congress concerning Amtrak's highly unprofitable routes, indicated that the trains on the eleven routes reviewed consumed more PAGENO="0225" 218 energy in fiscal 1977 than would have been consumed if every passenger has used an automobile. (page 8). In the fact of this uncontroverted evidence there should be no doubt about the bus' fuel efficiency superiority over Amtrak. But, if there is, it is noteworthy that Transportation Secretary Brock Adams, in testifying before the Senate Committee on Commerce, Science and Transportation, on Monday, March 5, 1979, stated at the outset of his testimony that the bus was more efficient. Comparable BTU's per seat mile and per passenger mile among the various modes, were provided for the record. Since intercity fixed rail can no longer be defended on the grounds of fuel efficiency and fuel conservation, it makes little sense to pour additional hundreds of millions of dollars into a system which is obviously less efficient while the more efficient system is allowed to wither on the vine. The two and a half billion dollars that will eventually be spent on the Northeast Corridor project, for example, (unless the Administration comes back again asking for more money in which event the figure will be higher) could just as well be spent on construction of modern bus terminals in all major cities, with millions of dollars left over for rural bus subsidy programs. This way, hundreds of millions more passengers would be encouraged to ride the bus, which, as we have seen, is the most efficient form of transportation. Not only is this year the year for the austere budget, it is also the year that we begin the fundamental reappraisal of our entire transportation network. As we have said, although we support the basic thrust of the Secretary's route restructuring, we question whether a 72 percent increase in Amtrak funding over the next five years is consistent with fiscal restraint and budget austerity when we look, for example, at the steep cuts that are being made in other social programs. For example $500 million in social security cuts is being proposed, including eliminating the lump sum death benefits, phasing out college aid for survivors and terminating the parents benefit once the youngest child reaches sixteen rather than eighteen. Another example, is a proposal to reduce by $729 million funding for the Comprehensive Employment and Training Act. Further reductions in public service jobs are pro- posed by the end of 1980. Still another example is a $326 million reduction in rural development projects and a $400 million cut in grants and loans for rural housing. What this amounts to is a vast increase in a program with questionable benefits, while at the same time we're cutting other programs with acknowledged social benefits. We believe that another important point in analyzing costs and benefits associat- ed with Amtrak, is whether or not some related benefits are realized by diverting travelers from their automobile to the train. This Committee is well aware that a principal rationale for continued heavy funding for Amtrak is its alleged ability to get people out of their cars, and into more fuel efficient trains. We already know the trains are not as fuel efficient as the bus. But do we even know that people are getting out of their cars to board the train? Two recent studies indicate that, with the exception of certain short haul runs, those people using the trains are being diverted from the bus and the airplane. These studies indicate, Mr. Chairman, that the bus industry has lost up to one third of its ridership to Amtrak. The General Accounting Office's report to the Congress on "Amtrak's Economic Impact on the Intercity Bus Industry", (January, 1979), page 25, confirms this. This conclusion is reconfirmed in the National Transporta- tion Policy Study Commission's Special Report Number 2, on Amtrak, dated Sep- tember, 1978 where it is indicated at page 59 that roughly 30% of Amtrak's customers are really our customers. We don't mind competing with another mode for passengers, but the competition ought to be on equal terms. As Senator Domenici said recently in introducing legislation to prevent govern- ment giveaways of tickets to Kennedy Center performances: "When an organization fails to meet its financial obligations, it is not wise policy, simultaneously, to give the product away for free." While we concede that not all Amtrak's tickets are "free", they're certainly the next best thing to it. Now, Mr. Chairman, if Amtrak can no longer be defended on grounds of efficien- cy, energy conservation or automobile diversion, there is very little left in the way of social or environmental rationale for its justification. If the service could be said to represent the clear choice of the majority of intercity passengers, that would be one thing. But, it can't. Under those circumstances we strongly recommend that this Committee and the Senate re-examine the public policy decisions that led to Amtrak's creation; including its exemption from regulation of rates, fares and charges. We are not advocating that another study be done-you have one here which as we have indicated, is a step in the right direction. What we suggest is that PAGENO="0226" 219 the system be permitted to stand on its own two feet and compete with the rest of the passenger transportation world. Unfortunately, Amtrak hides behind its enormous subsidies by virtue of a gener- alizing, and glossing over process. Subsidies are nothing new, says Amtrak. High- ways get them, waterways get them, airlin~s get them, and ours, well they're small in comparison to the others. In the first plac~, a specific examination would demon- strate what Secretary Adams said before this Committee last week-namely that on the basis of subsidies now being received (based on 1975 figures currently being updated) rail receives nine cents per mile, air three cents per mile and bus .1 cent per mile. In the second place, even if those figures were reversed, Amtrak's position would not be strengthened because of a fundamental error in the way it discusses subsidies in general. In the case of all of the other modes, federal monies are largely expended on capital construction projects that relate to the right of way being used, or some other safety or navigational related aspect of the right of way use itself. In return, the users pay varying amounts of taxes, charges, excises, etc. In no instance does the Federal Government select individual carriers, be they truck, barge, or air, for the receipt of millions in Federal largesse to cover annual losses from oper- ations. This is the critical difference, Mr. Chairman, and is fundamental to an understanding of the policy choices available. The characteristics that have enabled the intercity bus to maintain its market position are its low operating costs, and low prices. In the face of changes that have occurred in the travel market over the past few decades, these are really the only things we have going for us. Because of ever increasing government subsidies, Amtrak has been able to hold its rates far below the level of inflation and the result is that bus rates have been forced above Amtrak's rates. The General Accounting Office's report to the Congress on "Amtrak's Economic Impact on the Intercity Bus" Industry, dated January 12, 1979, pinpoints the prob- lem. TABLE 2-8.-AMTRAK'S WIDENING GAP BETWEEN OPERATING EXPENSES AND REVENUES [Dollars in millions] Amtrak operating eupenses Amtrak revenues Amtrak revenue as a percent ot expenses 1973 $319.1 438.9 559.8 1 692.0 821.7 $177.3 240.1 246.5 1 268.0 306.7 55.6 54.8 44.0 38.7 37.3 1974 1975 1976 1977 Retlects change in the fiscal year. To the extent that Amtrak's management need not concern itself with this trend the U.S. Treasury gets saddled with the bill, and my company gets saddled with another profit squeeze. Last year's study on the Intercity Bus Industry by the Interstate Commerce Commission (The Intercity Bus Industry, A Preliminary Study) demonstrates the bottom line impact on our industry as a result of an "unbalanced" transport policy. As a group, says the study, Class I carriers have experienced a significant decline in profitability over the past five years. The year-to-year decline in profitability is reflected in the following table: CLASS I CARRIERS [Dollars in millions] Percent Numher Net operating Net retorn on Year of carriers revenues 1 income 2 equity' 1971 71 $94.0 $64.5 16.1 1972 74 85.7 58.9 14.7 1973 75 76.6 54.6 13.7 PAGENO="0227" 220 CLASS CARRIERS-Continued [Dollars in millions] Percent Year Numher of carriers Net operating revenues Net income 2 return on equity' 1974 81 73.9 56.1 13.3 1975 77 76 61.1 44.2 56.4 38.6 12.5 8.3 1976 1 The Term net operating revenues (operating revenues less operating eopenses) is almost synonymous with the term "net carrier operating income." 1 Net income includes fixed charges, ronoperating income, income taoes, and extraordinary and prior period items. `Net income divided by average of beginning and end-of-year stockholders' equity. Thus, the Government is the one who has taken away the bus' advantage, and discouraged the use of the most energy efficient mode of transportation. Because it is the Government's encouragement of Amtrak's rate policy that has caused the problem, it is the Government that should correct the policy, this can be done by instituting a new rate policy, designed to reverse the trend of the last seven years by requiring an increasingly greater amount of Amtrak's operating costs to be met by revenues,' specffically: by amending this authorization bill, at the appropriate section by adding the following paragraph: "(a) Effective beginning with fiscal year 1980; "(1) on or before July 1st of each year, beginning July 1, 1979, the Department of Transportation shall calculate the amount of Amtrak's total expenses, (excluding the Northeast Corridor), for the fiscal year ending the previous September 30, and shall report this finding to the Senate Committee on Commerce, Science, and Transportation, the Senate Committee on Appropriations, the House Committee on Interstate and Foreign Commerce and House Appropriations Committee. The appro- priations for operating subsidies for the next fiscal year, which commences three months after the deadline for the Department of Transportation's calculation, is not to exceed 50 percent of the Corporation's total expenses as calculated by the Depart- ment of Transportation for such previous fiscal year (excluding the Northeast Corridor). The percentage referred to in the preceding sentence shall decrease to 40 percent in fiscal year 1981, 30 percent in fiscal year 1982, 20 percent in fiscal year 1983, 10 percent in fiscal year 1984, and zero in fiscal year 1985. "(2) The provisions of the preceding paragraph apply to Amtrak service between boston, New York, and Washington, and intermediate points, except that the appli- cable percentage, beginning with fiscal year 1980 is zero. We do not, and should not, complain about fair competition in transportation, but Amtrak's means of competing is totally unfair in that it is based on predatory, below cost pricing that would never be tolerated by the Justice Department if done by any private sector company. While the bus industry has had to increase its rates in order to try to keep them ahead of ever inflating costs, Amtrak has simply increased its subsidy. The result is that now Amtrak's revenues are a paltry one- third of its costs and each year the Federal Government is called on to pour more taxpayers' dollars into this ever-widening gap. Even on Amtrak's most successful route, the Northeast Corridor, its revenues were less than 50 percent of its expenses in fiscal year 1977.' In conclusion, we see that Amtrak was exempted from National Transportation Policy in 1971, as an experiment. The experiment has failed. Today, the Congress is undertaking a major legislative effort in the transportation field in order to develop a consistent, unified transport policy. For the Congress to permit this major aberra- tion in current transport policy to continue, protruding out like a sore thumb, is contrary to the goals of the broad legislative effort about to be undertaken. 1 Minimum rate regulation and noncompensatory rates of return are issued that over the years have been before the Congress and the courts in connection with their relationship to the National Transportation Policy. See, for example, Missouri Pacific railroad Company v. United States of America, and Interstate Commerce Commission, 203 F. Supp. 629; Interstate Commerce Commission v. New York, New Haven and Hartford Railroad Company, 372. U.S. 744; and American Commercial Lines, Inc., et al. v. Louisville and Nashville Railroad Co. et. al, 392 U.S. 571. In addition, for a good discussion of these problems see Alfred E. Kahn, The Economics of Regulation: Principles and Institutions, Vol. I, pp. 65-67; and 160-166, especially footnotes 9 and 12 on pp. 164 and 165. `Comptroller General's Report of April 5, 1978. PAGENO="0228" 221 Senator LONG. Thank you very much. I really think you made an absolutely devastating statement. What you're saying and I'll see if anybody can successfully challenge these figures-what you said in your statement, Mr. Lewis, was that the expense per passenger mile outside the corridor is 19.7 cents and the average airline fare on which airlines made money, and I assume they are making it in the corridor, is 8.6 cents. So what you're saying here is that for less than half the price of what it costs us to take somebody somewhere with Amtrak you could send them on the airline and get them there a lot quicker. Mr. LEwIS. Yes, sir. Senator LONG. And then, for about one quarter of what it costs to take them there, you could get them there on the bus. Mr. LEWIS. You could pay the price of the bus. Senator LONG. And make a profit. Mr. LEWIS. Yes, sir. Senator LONG. Now here people are on the airlines paying their way and here they are on the bus paying their way and as taxpay- ers they are required to pick up the tab for a subsidy cost that actually exceed the cost of them going from point to point. If I understand these figures you've given us here, the subsidy per passenger mile is 13 cents. Well, for a great deal less than that we could have sent the person on there for free on the airline, just send him for free. Just tell him, please don't ride Amtrak, I'll give you a free airline ticket. Mr. LEWIS. Yes, sir; that's correct. Senator LONG. And if we could have given him a free ticket on the bus we would have made a ton, just go on the bus for free and we'll pay you more than you would pay to buy the ticket on the Amtrak. Mr. LEWIS. Yes, sir. I'd like to just make a point about that. Nobody I know of in the intercity bus industry is asking for a subsidy on the mainline runs, but if you were to decide you really wanted to create a fine, high quality bus operation and put 30 passengers in that bus instead of 45 with a fine stewardess in it or stewards in today's times, you might very well have a fine, high quality service with sleeper accommodations that would be superi- or to that of overnight train service. And so it would be far more energy efficient. As I say, we're not asking for money. I'm just showing the inconsistency in Federal policies in thinking we've got to subsidize something that existed 100 years ago. Senator LONG. My thought about this is where some of these routes are going to be discontinued it would be worth us consider- ing suggesting for the kind of people who won't fly. I think we really owe those people some consideration. Some people just have a psychic thing about flying. It just scares them to death and they can't get on an airplane-I've had some friends like that and still do- if you're going to put them on the airplane you've got to dope them up and take them on there while they're fully under the influence because otherwise they just can't get on the airplane. They're scared to death of it. Mr. LEWIS. That's correct. 43-139 0 - 79 - 15 PAGENO="0229" 222 Senator LONG. So for people like that we could, I would think provide a service where we just run a bus from here down to a place and run a safer bus. I take it that for a subsidy of this dimension you could provide them with a very nice accommoda- tion. Mr. LEwIs. Yes, sir; and more fuel efficient; but actually you could go to sleeper accommodations, three abreast instead of four. People say they don't like to ride the bus. It's not because the buses are uncomfortable, but it's because in order to produce its service for 5 cents a mile and make money on it you only provide 4½ cubic feet per passenger. To the passenger on your regular trains in the corridor it's 12½ square feet per passenger. That doesn't include the dining cars, the club cars, and the like. It's an inefficient way to get people between cities. Senator LONG. The thing I'm saying is let's just assume that between here and New Orleans that we're going to discontinue the Crescent Limited. That's a lovely old train. The first time I came to Washington I came on that train and I was a boy at that time. I haven't been on it for 20 years, but back in that time I thought it was a lovely thing and we didn't have any air service between here and New Orleans at that time. Now if we discontinue the train, people who are afraid to fly I would think might consider saying that we ought to give them something to replace it and for those kind of people who have a phobia about it, what kind of cost do you think it would be? How much per passenger mile do you think it would take for the buses to buy some equipment that would give them a comfortable bed to sleep in and roll them down the highway in a reasonably comfort- able accommodation with a mattress under them at night? Mr. LEWIS. Well, I could make a study of what it would cost to operate a regular bus service, but I think you could put sleeperette accommodations, which is what Pan American is currently offering on their 747 SP services nonstop between New York and Japan or we could offer a seat that was on a 52-inch pitch and you could lean back in a nice reclining chair and with an extended foot rest and you could get a very fine sleep that way, but you could prob- ably do that with 30 people in the bus instead of 45. Senator SdHMIrr. It sounds to me like you're describing the Pullman car, Mr.Chairman. Mr. LEWIS. The only thing I'm saying is we could do it so much cheaper. In other words, it costs 20 cents average per passenger mile. It costs us 5 cents. You could reduce the revenue per plane mile 50 percent-pardon me-you could reduce the revenue per bus mile 50 percent and still you would be talking about a cost per passenger of only 10 cents, not 20 cents. The fact of the matter is, the bus is an efficient vehicle. It is the train that is not. It's just simply not. It's got to be operated very large. We hear fuel efficien- cy figures given by Mr. Boyd which he gave to your Committee the other day, some that showed the so-called maximum fuel efficiency you could gain, and he talks about a 600 passenger train and a 1,400 passenger train and there's no way you can get a load on trains that kind of seating capacity unless you're a troop transport during the war. PAGENO="0230" 223 Senator LONG. Now I can recall the kind of sleeper accommoda- tions that Pan American Airways had to have back in the early days of flying out to Hawaii. That really wasn't bad. Mr. LEwIs. Not at all. I've flown it many times. Senator LONG. You could get up there and get a pretty nice rest on that thing. Mr. LEWIS. That's right. Senator LONG. And I can recall the kind of accommodations that we had back when I was in the Navy. I recall what we had on that little landing craft that wasn't nearly as spacious as what you're talking about here. But my crew and I, we lived in those kind of accommodations for 2 solid years and we were in robust good health so we certainly were no worse-if anything was wrong with our health, it wasn't from those bunks that we were sleeping in, let me put it that way. So just anything in terms of what you could provide-I would think you could provide a reasonably comfortable service to people who wanted to ride by night. Is any such bus service being provided anywhere in the world? Mr. LEWIS. No, sir; there is not. The problem you would probably find with that, although it would cost you a lot less to operate it than a train, the question of it is how many people really would want to pay that much for an overnight sleeping accommodation and how frequent the bus service would you be able to operate. It would take a marketing study of which I'm not qualified to discuss at this point to determine how many people would want to go between here and Atlanta, for example, overnight in a sleeper accommodation. Actually you're getting a hotel free. It's not a service that should be ignored when you're talking about the alter- native being the Crescent, for which the loss this last year was in the millions of dollars. Mr. KNAPPEN. Senator, could I take a stab at this? I think we can put some numbers to this and I think it helps to demonstrate how much more cost-effective bus travel is. The rough revenues for the intercity bus industry are $1 ½ billion. Even if you assumed- and I think this is a largely inflated assumption-that it required an additional 10 percent in order to create that kind of sleeperette car, and I think that's much too high given the relative ease of converting a motor coach as opposed to a rail car-it would prob- ably cost you $150 million a year to provide sleeperette or exclusive service on every route now served by inter-city bus. That means that 15,000 to 16,000 communities would be served with sleeperette service at an extra $150 million a year as against Amtrak's appro- priation for this year of $760 million-or that's their requested appropriation. Further, your question about whether that service presently exists, yes. Trailways and Greyhound and several independent car- riers have experimented with and are running now exclusive serv- ice with kitchens, recliners, two abreast, three abreast seating, the whole bit-soft music and a bar, and it's a good trip. There's a lot of that running in the Northeast corridor right now, particularly to Atlantic City. There's also some running in Las Vegas and up in New England. So the state of the art is starting to advance in that area and there's certainly many good ideas that could be evolved. PAGENO="0231" 224 Senator LONG. You see, one thing people object to about riding buses is you tend to pack people in and they are not very comfort- able, but some years ago I was exposed to an executive-type bus and you undoubtedly know the kind of thing I'm talking about, and it was a lounge-type thing. They had a hostess on it to serve coffee and you had card tables where you could play cards if you wanted to and read and lounge, and that was quite different from what one thinks of the ordinary bus service. Now if we're going to subsidize something, I would think that you would be subsidizing something that might make it in the future if you're talking in those terms. If you're talking about subsidizing what you've got right now with Amtrak, especially these long-run trains, I don't see how we're ever going to do a thing but lose money with it. Mr. LEwIs. There would be no question but that kind of alterna- tive service by bus between the major cities would be very economi- cal compared to anything possible by train. Senator LONG. One thing that does concern me is the need of using buses to roll-and I think we ought to find a way to use buses to roll down those railroad tracks during the busy hours especially for the commuters. When you come into the heart of town during the rush hour you've got those tracks sitting there, more often than not there's nothing on those tracks, and you've got traffic bumper to bumper on the interstate highway creeping along at 3 miles per hour or less. Now they've developed a truck now that can ride those rails and it can get off the rails and go to its destination. What can be done to develop a bus that can use the rails during the rush hours to get people to the heart of the city? Mr. LEWIS. I don't think there's any technical problem that presents itself there. The rail industry for many years has had higher rail cars than others. There are cars that they operate mechanically over their system for the purpose of moving execu- tives or inspecting rail and I'm sure the sample principle can be applied to an intercity bus. There's no question but that it's rela- tively, again, fuel efficient. I noticed there was a study-I'm not a Metro expert, but there was a study that was discussed in the Washington Post about a year ago by an English economist who made an analysis which indicated that if you operated Metro today with buses rather than on Metrorail that you would have a much more efficient, economically and fuel efficient system than Metro- rail. The biggest single problem you'll face with the matter of rail commuting would be that the railroads own the tracks and facili- ties on which those cars would operate and I would suspect that during the commuting hours you would get a substantial interfer- ence of traffic with the commuter trains and with the commuter buses with the regular freight operations, and I would suspect that would be a difficult problem to cure. You might be able to rent the tracks and pay quite a bit of money for those hours of the day, but that would be the single biggest problem. Senator LONG. If you look at what it would cost to expand the interstate system to get all those people to the heart of the city, it would seem to me it would be a very cheap investment by contrast PAGENO="0232" 225 to just ask them to make those rails available during the rush hour, particularly if you're only talking about a half-hour period in order to get literally-well, it depends on the size of the city, but in a place like this you could get 50,000 people in here I would think in a half-hour period when otherwise they are going to be out there bumper to bumper. Mr. LEWIS. I don't know what your traffic flow figures would show. Most of your peak commuting hours are a little longer than half an hour. I just don't know what it would take. I think that would be the big problem, that is, the preemptions of the line for the bus equipment on the line. Technically there's no problem. I'm sure that could be resolved. Senator LONG. Does the bus industry have any plans to expand service or to increase routes in order to accommodate communities that may be losing Amtrak service? Mr. LEWIS. As I say, both Trailways and Greyhound are analyz- ing the routes or potential routes for cancellation to determine if any adjustments to schedule needs to be done to make a com- plete-to avoid any suspension of service. I'm not familiar with Lamy, N. Mex., but that's about the only one I know of, and that is an alternate stop to Santa Fe. Senator LONG. One of the witnesses last week presented informa- tion on the comparable energy efficiency of various modes and that table showed that buses had 121 miles per gallon and railroads had 125 passenger miles per gallon. Do you agree with those statistics? Mr. LEWIS. No, sir; I do not. The interstate bus industry in its regular intercity operations with its 43 to 45 percent load factor achieved 121 passenger miles per gallon of fuel. On the same basis, Amtrak this last year achieved a fuel efficiency of 41. I don't know where the 125 came from. It's come from no analysis that I have seen that Amtrak has done based upon the seat mile productivity of the train and it certainly doesn't reflect any load factor that Amtrak would have. Senator LONG. Now the recent Harris poll survey said over 50 percent of the respondents said they favored increased subsidy for rail service, yet Amtrak is still carrying less than 1 percent of the public. How do you explain that imbalance between opinion and actual usage? Mr. LEWIS. It's very difficult. I have been in the transportation business 40-some-odd years and I must admit there's a lot of nostal- gia that has to do with maintenance of long- or short-haul trains. I think there's probably a misconception on the part of many people as to how energy efficient the train is. I think there's a misconcep- tion as to how much it costs. When you talk to a passenger about the fact that it only takes $20 to get between here and New York he doesn't realize that everybody else is helping him pay for that out of their taxes. If you were to ask him, would you take a train between here and New York for $40, maybe he would or maybe he wouldn't, but he's not posed that issue and he's not posed the issue of society subsidizing him either. So it's not a good question from the standpoint of the kind of answers you get. Senator LONG. I think if you would ask the average citizen in my State they'd say-the Panama Limited between here and Chicago and the Southern Crescent Limited between here and Washington PAGENO="0233" 226 and New York, and the Sunset Limited over there going to Los Angeles, along with the rest of this Amtrak thing-if you told them it's costing you $15 a year; when is the last time you used one of them; he would probably say about 20 years ago. Now are you willing to pay $15 a year for your family in taxes to continue that service which you haven't used for 20 years, if you ask it that way, he would probably say, "Hell, no." I think it depends on how you ask it. Now I don't think the average guy would pay for something he's not using. If it's something that's benefiting him, that's differ- ent; he would rather pay something. Mr. LEWIS. The question is not posed in a way that would give you a good answer from the standpoint of public policy. Senator LONG. Mr. Chairman. The CHAIRMAN. Further, on the point Senator Long was making, I have just been reviewing one of the charts here that indicates that the most widely used long-distance train is the New York to Florida, and it generates 600 million passenger miles and yet on that run the fully allocated loss on that is $1,681,000 and that I think in a previous hearing figured out-if I remember when Sena- tor Long conducted those hearings-I believe it was about $122 or $124 a passenger one way that was being subsidized. Mr. LEWIS. For the average passenger. The CHAIRMAN. Is that about the figure? Mr. LEWIS. Yes, sir, but that's average per passenger carried and the average length of haul for each passenger carried is probably around 200 miles. It's not the New York to Miami passenger. That $121 is the average loss per passenger carried, not the average loss for a passenger carried from terminal to terminal. This figure is absolutely astronomical. Do you see my point? The passenger may get on going from Washington to Richmond. The CHAIRMAN. If your average haul is 200 miles, you may have five passengers going all the way from New York to Florida and your loss is $121 loss per passenger, so you multiply that by five to really get your correct passenger loss. So if that's the case, the point Senator Long made-it's certainly true that you could give them first class air fare and give them a couple hundred dollar vacation as well, and save money on it by having them go by air on that particular route. Mr. KNAPPEN. Could I also comment on that because I think that illustrates another very good point. That New York to Florida run is one of their biggest money losers and it's also been one of their major efforts for promotion. I'd like to address that issue because we have had a lot of talk this morning about lack of marketing, lack of promotion on the part of Amtrak. The fact of the matter is, my company competes in that market every day with Amtrak and I can tell you right now that we are competing against very heavy promotional activity with discounts of from 25 to 55 percent off. Now that's off of the regular ticket which recovers one-third of the operating cost. So we're really talking about for next year now that they have put in those discounts a much larger gap and a much larger cost per ticket for the American taxpayer because of those promotional efforts. The CHAIRMAN. I must say I was very shocked a couple months ago when I saw that Mr. Boyd put into effect some kind of a PAGENO="0234" 227 promotional fare to substantially reduce the fares to try to gener- ate more traffic at a time when we were losing money hand over fist and I wrote him a letter to ask him to please justify that and I got a response back-I must say that I didn't agree-that it justi- fied the expenditure. But it is certainly a very important factor, as you point out, and this I think is from the GAO study, that in 1977 Amtrak revenues as a percent of expenses was 37.3 percent where- as in 1973 the fifth year earlier it was 55.6 percent. So it's con- stantly going downhill instead of going up as it should be going. Mr. LEWIS. The first year after we organized Amtrak it recovered 52 percent of its expenses in the fare box which is fundamentally the rate structure which it inherited from the rail industry. The CHAIRMAN. Thank you, Senator Schmitt. Senator SCHMITT. Thank you, Mr. Chairman. Mr. Lewis, I have argued in this same committee many, many times in favor of doing everything we can through deregulation and otherwise to assist the intercity bus industry. I anticipate I will continue to do that, but I'm a little bit surprised at a great deal of your testimony. How are the buses doing these days? Are you gaining ridership? Mr. LEWIS. No. We are gradually declining in ridership except in our tours and charters. Our regular route intercity operations have been declining since World War II at a rate of about 2 or 3 percent per year. Senator SCHMITT. Don't you and rail passenger service have the same competitors that are doing you in right now-the automobiles and the airlines? Mr. LEWIS. We are fighting each other. Mr. KNAPPEN. The most devastating statistic on that subject is the fact that surveys clearly demonstrate that roughly 30 to 33 percent of Amtrak riders are bus passengers. That is, about one- third of their passengers are diverted from intercity bus. That's pure bottom line revenue in passengers we have lost. Senator SCHMITT. But aren't you both, though, losing out to other forms of transportation because of a variety of mutual and specific problems? Mr. KNAPPEN. Yes. It's certainly not the only reason for prob- lems in the intercity bus industry, but it is a major problem. Senator SCHMITT. But isn't that really a positive sign and that there's a synergistic involvement between buses and rail? I know in the West more and more you're seeing the bus and train passen- ger train stations being colocated. That's certainly true in Albu- querque, and we feel very strongly there's a synergism between the two forms of transportation. They are not necessarily competitive. It may be along some routes, but in other cases they are going to feed each other. Mr. LEWIS. Senator, it costs the Federal Government three times as much to take a passenger from Dallas to Chicago-- Senator SCHMITT. Excuse me for interrupting because I think there's a misunderstanding, and that is I think Amtrak is the way we ought to organize rail passenger transportation. I don't think it is. I don't want to destroy a basis for a better organization in the near future. That's what got me concerned about this route struc- ture reorganization. I think there can be a national transportation PAGENO="0235" 228 system that can include all modes of transportation used to the degree possible as appropriate for each type. That's what concerns me. I'm not going to argue with you on the specifics of today and what the relative cost per passenger mile and subsidy per passen- ger mile and energy cost per passenger mile is. What I'm arguing about is what it can be, and I'm also arguing about the fact that the reorganization has cut the more efficient and most rapidly growing routes in many cases and not those that are least efficient. So I just want you to understand where I'm coming from. A lot of what you say I would probably agree with in the present, but I won't agree with you that it can't be repaired and fixed in the future so that both forms of transportation are economically viable. I think they can be. Now I particularly, though, would like to hear you talk a little more about the synergism about the two forms of transportation. Mr. LEWIS. Fundamentally, I don't know what you mean by synergistic. We compete and if they bring a passenger from Waxa- hachie to Dallas and put him on a plane to New York, we have diverted a passenger of ours. We are directly competitive. Senator SCHMITT. What about the potential synergism in the future? Mr. LEWIS. They don't offer us anything we don't have ourselves. Mr. KNAPPEN. That really is the key. Yes, there's always the potential for one mode to connect with another mode, but the point is that if that other mode is already serving over that trunkline in a much more energy efficient manner at much less cost to the taxpayer, why is there any reason for further synergism. Senator SCHMITT. Well, for one reason, sir, the Harris survey, whatever you may think of it-you apparently have quoted it and you believe part of its figures-indicates that a majority of the American people would like to ride trains. Now whether they are riding them or not is another issue and it's an important issue, but a majority of them, for whatever reason, wish there was a train that they could ride from point to point, depending on their inter- est, that they would enjoy riding, and would also serve their own personal or business purposes. It seems to me with that kind of a view and with you losing passengers, that there's a tremendous opportunity with an im- proved rail system for you to have an improved bus system as a feeder to that rail system. Mr. LEWIS. Senator, may I just comment very briefly. I have not made a study of all the potential opportunities there are to develop a cheap, low cost rail service in this country. For years I commuted between New Canaan, Conn. and New York City, which is 52 miles. We commuted in five abreast seats on these trains and it was not a comfortable seat. It was about as much space as we give a passen- ger in a bus. The reason people don't want to use the bus is the fact that buses don't have dining car facilities; they don't have sleeping car facilities-when Milton Berle takes the train, he takes the whole train. He doesn't like to fly, as the chairman said a moment ago. But when you're talking about developing a low cost, economical transportation system by rail as compared with the bus on the highway, you've got to think in terms of about the same PAGENO="0236" 229 cubic capacity given to each passenger-if you do it any other way your cost is going to go out of line. There's a high density rail system on the Northeast Corridor. It costs twice as much as its rates and fares are in the corridor. There's no way you can give club cars, the large spacious aisles, plenty of seat room front to rear and sideways. There's no way you can give 12½ square feet per passenger and be energy efficient or economical. Senator SCHMITT. Mr. Lewis, I'm fighting and will continue to fight to have both a rail and a bus system for this country because I think it will be necessary in the future, but it is not what it ought to be in the present-and the chairman and I have sat here on hearings on the bus industry and I think we generally agree that there's a tremendous potential for the bus industry. I think the same exists for rail and that's the basis of my argument and questioning. But just to be fair, though-I think you have to be fair-you must realize that the intercity bus system operates today because in 1971 through 1977 there's been a $41.3 billion investment in the national highway system. Now, sure, that has other returns, but it's an investment and in that same period of time there's been a $2.9 billion investment in the rail system. So the Nation has made an investment in its highway system so there can be a bus system. We have also made an investment in the rail system so there can be a rail system and we continue that up to this point and then all of a sudden all the intent of Congress, which was to try to give Amtrak a shot or a try to develop a rail system, is suddenly going to be thrown into a cocked hat by this reorganization. Mr. LEwIs. Let me just speak to that one point. What you've got to do it seems to me is to relate the subsidy of the Federal Govern- ment to the user and the number of people who use the highway system in this country and who incidentally pay for it fundamen- tally by their user charge, as contrasted to the number of individ- uals who benefit by the Amtrak subsidies. The subsidy per person for Amtrak is $47 outside the corridor. Senator SCHMITT. Mr. Lewis, I'm going to interrupt you again because I'm not talking about the present. I'm talking about, as I said in my prepared testimony, an infant rail industry compared to an existing bus industry which still is not what it could be. What we are trying to do is to see if we can create a rail transportation system, not at the expense of the buses, but one which serves a need of the American people for interstate and intercity transport that cannot be served by any other form. Mr. LEWIS. I don't want to be too argumentative here, but Sena- tor, I dare say if you take those New Canaan commuting cars which are reasonably efficient rail transport commuting cars and put them between Dallas and Chicago and then charge the public what it costs or come close to that, we will compete with that train every time. The problem you have is trying to find a way to make a dining car and a sleeping car and all the other accommodations in these long-haul trains-make that as efficient as a bus with 4½ square feet provided the passenger, and that's technically, I say to you, impossible. PAGENO="0237" 230 Senator SCHMITT. But, Mr. Lewis, I think there have been a number of studies, including ICC, that show that it is not those kinds of costs that are the primary costs of Amtrak. That's why I say I don't like Amtrak. It's not their route structure I don't like. It's the way the whole thing is structured and put together. Now, Mr. Chairman, it's my understanding that our next witness is going to have to leave shortly so I would defer further question- ing if these gentlemen are going to be around for a little while so she could testify, and I think we will find her testimony very interesting. Senator PACKWOOD. I'm waiting for the next witness, too, and I'm going to defer any questions. Senator PRESSLER. I shall be very brief. I did want to say that I come from South Dakota, the only State other than Maine that doesn't have Amtrak under the current system, so I don't think in any way, shape, or form are we going to get rail passenger service in the State of South Dakota. We depend very heavily upon bus transportation in the State and I don't want to take up a lot of time now but I would like to state for the record, Mr. Chairman, because apparently many Senators are waiting for the next wit- ness, what we can do as a Congress to improve the quality of that bus service in rural areas and indeed in intercity small cities in States such as South Dakota. Really improving bus service is the only hope for the small towns of my State for people who want some form of public transportation, and I'm concerned that it is dwindling, and I would seek your recommendations if we could have them for the record and if my office could have them-- Mr. LEwIs. We will be very glad to supply them and we will stand by for further questions if you like. Senator PACKWOOD. I have no questions, Mr. Chairman, for these witnesses. I have made a request of the chairman. I have a meeting that was due at 12 o'clock that's waiting for me to appear and I would like to hear one witness from Oregon who is catching a plane back midafternoon and I would request that Mr. Anderson be allowed to testify. Senator LONG. Any objection? Senator SCHMITT. Mr. Chairman, it's my understanding that Ms. Gianturco must also leave shortly. Maybe they could come up as a panel. Would the Senator from Oregon object to that? Senator PACKWOOD. I have no objection if Mr. Anderson can testify first. It's a short statement and I don't think it's going to take very long. Senator SCHMITT. I have no idea what the specifics of the time constraint are, but that might be one way to try to resolve it. Senator LONG. We can hear these witnesses fairly rapidly if we're not going to interrogate them. If we could simply hear their statements we could handle this fairly rapidly. You say Mr. Ander- son has to leave this afternoon. Senator PACKWOOD. Midafternoon. Senator LONG. As I understand, Senator Schmitt, you said Ms. Gianturco has-- Senator SCHMITT. She has to leave within just a very few min- utes. PAGENO="0238" 231 Senator LONG. Is it all right to hear her for 5 minutes and then hear the other witnesses? Ms. GIANTURCO. He can go first. Senator SCHMITT. Let him go first. That's fine. STATEMENT OF DANA ANDERSON, CITY ATTORNEY OF PENDLETON, OREG. Mr. ANDERSON. Thank you, Mr. Chairman, for allowing me the privilege of testifying before this committee and thank you, Sena- tor Packwood, for affording me this appearance. I am an attorney from Pendleton, Oreg., but not appearing here today in my professional capacity. I do not represent any special interest group other than the cities and community groups of Oregon, especially eastern Oregon, who are concerned about trans- portation and rail passenger service. I carry with me today over 13,000 signatures on petitions from more than 100 communities in Oregon. The signatures on these petitions, collected in less than 2½ weeks, are from Oregonians who have but one message: We, too, want to cut Government waste and inefficiency, but not a vital Government service such as that provided by the Amtrak system and more particularly by its Pio- neer route from Salt Lake City to Seattle. With your permission, Mr. Chairman, I should like to offer these petitions, in bulk, for the official record of this hearing. Senator LONG. Agreed. I don't want to print all those petitions. We will keep those in the committee record so Senator Packwood can have them all. Senator PACKWOOD. I agree with you, Mr. Chairman. Mr. ANDERSON. Thank you, Mr. Chairman. The Pioneer route is in a unique position among those routes proposed for elimination. In 1977, Rail Travel News, a publication of rail passenger proponents, named the Pioneer its "Train of the Year." In 1978, the American Association of Railway Passengers similarly tabbed the Pioneer as its "Train of the Year." More importantly, the Pioneer has shown an increase in ridership of 12 percent since its inception in June of 1977. This is solid progress for a new Amtrak run which many had give little chance for success. In fact, the Pioneer was the fourth least costly of all the Amtrak routes in terms of dollar loss per passenger mile in fiscal year 1977, and ridership continues to in- crease. The Pioneer run's popularity is not surprising in light of the general benefits of rail travel, those being safety, comfort, fuel efficiency, and the necessity of people along the Pioneer route in the Western United States to move from rural areas to urban centers which may be located 400 to 500 miles away. And in severe winter weather, rail travel is often the only means of travel as freeways become iced or closed and airlines are no longer able to serve communities plagued with snow or fog. Even with the successes shown by the new Pioneer route, we could do better if ridership were not artificially lowered through poor scheduling connections which prohibit 1-day service from rural Oregon to its urban centers in Salem and Eugene; from lack of sleeping accommodations during the first year of service, an PAGENO="0239" 232 essential feature for overnight rail travel; from inadequate dining facilities normally available for overnight trips where now only a snack bar is provided; for failure to provide a domed observation car, which would be of much use in enjoying the scenery of our Western States; from the lack of checked baggage service, which places a severe burden upon the handicapped and elderly; from failure to advertise this route regionally; until recently, failure to provide a through tariff between Portland and Chicago, as exists for similar service from Seattle to Chicago; at this very moment the failure of the Amtrak reservation system computer to inform callers that through service is even provided to Chicago, thereby discouraging ridership on the Pioneer in favor of alternate routes. Having only initiated the Pioneer route 21 months ago, and noting its success since that time despite the disadvantages just mentioned, I suggest it is too early for a final analysis of the route. Ridership continues to increase while losses continue to decrease. I therefore ask that this committee separate from the package pro- posed for elimination any line which has not had a chance to operate over a 2-year period, and which shows some signs of growth. The Rail Services Planning Office of the Interstate Commerce Commission notes in their evaluation report of the Secretary of Transportation's preliminary recommendations on Amtrak's route structure, at page 30: Although DOT's route recommendations appear to be drawn from the uniform application of objective criteria, the resulting route selections are not consistent. Some of Amtrak's better routes (in terms of both DOT's criterion of passenger miles per train-mile or the Act's measure of loss per passenger mile), are recommended for discontinuance, while other routes with poorer performances are recommended for retention. Such is the case with the Pioneer line, and I understand that the figure of 100 passengers per rail mile has been selected by DOT, although somewhat arbitrarily, as the cutoff point for an economi- cally feasible route. This criteria may unfairily discriminate against most of the Western U.S. trains by not taking into account whether the equipment used is old or new, or whether the trains travel over sound track beds or beds of poor quality. While it may take 100 passengers per train mile to economically operate an older East Coast line, in fact it may take only 75 or less passengers to feasibly operate a train such as the Pioneer which has more effi- cient equipment and runs over better roadbeds. Further, in planning for a drastically reduced Amtrak system, the DOT is ignoring the testimony of thousands of concerned citi- zens who attended 51 Interstate Commerce Commission hearings held throughout the Nation last summer. A recent Harris survey reveals that 82 percent of the public wants the Government to maintain or increase its spending to improve the quality and avail- ability of rail travel for trips of 300 miles or more. In that particu- lar study a ranking of nine proposed transportation improvements showed intercity rail passenger service ranking third behind auto- mobile safety and commuter mass transit. New highways, new airports and faster airplanes were at the bottom of the list. If the Federal Government truly desires to encourage energy conservation and to lure Americans from their private automobiles, PAGENO="0240" 233 then it must maintain a national rail passenger service. The pub- lic's perception of the seriousness of our energy shortage will be greatly affected by your decision to eliminate or retain rail passen- ger service, not on the basis that it is making money, but on the basis that it provides a safe and efficient form of travel. To under- line this point, surveys taken aboard the Pioneer and other west- ern routes indicate that less than 12 percent of those train passen- gers would switch to bus service if train travel is eliminated-they will simply use their private automobile when the trip is necessary and air travel is either unavailable or too expensive. Most mass transit systems are not moneymaking entities, as for example the Tn-Met system in Metropolitan Portland, which pro- duces less than 25 percent of its operating costs from passenger fares. Additionally, current cost and ridership figures for the Amtrak do not estimate rail passenger service in the light of expected heavy increases in gasoline prices and the possibility of gas rationing. What happens to DOT's ridership and loss figures if the price of gasoline rises only 10 percent? Let's not forget that during the 1973-74 Arabian oil embargo ridership on the western Amtrak system increased some 50 percent. Our dependence on foreign oil is no less serious in 1979, and in my view this is absolutely the wrong time to cut back over 43 percent of the only viable intercity travel service available for the majority of Ameri- cans. As an alternative, I suggest that this committee propose a 10- percent increase in Amtrak fares, which surveys indicate will not decrease ridership, and require State governments through which the service operates to provide 10 percent of its operating costs as they provided for interstate highway construction. Additionally, I suggest a further moratorium of 2 years on any elimination of Amtrak routes in order that we may assess the impact of gasoline prices and availability. Senator PACKWOOD. I have just a few questions. Do you think if it were proposed to the Oregon Legislature that they pick up half of the cost of the Pioneer based upon the argument you put forth. Mr. ANDERSON. I think there would be some problem with half the cost. I have not had any communication with the legislature or any of their committees, but I am confident that a 10 percent assumption of the operating costs on the basis of either they will or will not have a service would be something they would politically have to be in a position to support. Senator PACKWOOD. You suggested in your testimony that an exception be made for those Amtrak routes that have not operated 2 full years, that they be carved out and given a chanceS If the Pioneer and other similarly situated routes were given a reason- able chance and people would agree they had been given a fair chance, do you think we should continue to run the trains at a loss or at that stage should we terminate them? Mr. ANDERSON. Senator, provided that the things I outlined-the artificially decreasing ridership can be corrected, I think there should be some minimal level of ridership we should expect off these routes. All I'm asking for is a fair chance to do just that. Senator PACKWOOD. Let me rephrase the question. PAGENO="0241" 234 Giving it a fair chance and given the alternative you suggest if it does not make money and it's not in the foreseeable future going to make money, should we continue to subsidize it and run it at a loss? Mr. ANDERSON. Senator, there should be some level of subsidiza- tion. I understand that no Amtrak routes make money on a fully allocated basis. I suggest we don't want to fund a run that is decreasing in ridership. This really isn't serving the public interest. But it is my view this run does and it would be within an accept- able category of funding. Senator PACKWOOD. I have no other questions, Mr. Chairman. Senator LONG. Thank you very much. Now we'll hear from Ms. Gianturco. STATEMENT OF ANDRIANA GIANTURCO, DIRECTOR, CALIFORNIA DEPARTMENT OF TRANSPORTATION Ms. GIANTURCO. Mr. Chairman and members of the subcommit- tee, I want to thank you for allowing me to testify. I would like to point out that, like the previous speaker, I do not in any way represent a narrow special interest group. I am the head of the California Department of Transportation responsible for all modes of transportation in that State, specifically highways, which just happened to be mentioned, and aeronautics. My testimony today is presented in strong opposition to the DOT proposal to cut back the Amtrak system both from the perspective of likely adverse impacts of this cutback nationwide and from the perspective of what the system means to the western part of the country, in particular California. It is our position, based on the energy situation, the broad con- text of Federal support to modes of transportation other than rail, including specifically highways and airways and airports and mar- keting cost and other factors relating to Amtrak, that passenger rail service should be expanded and not cut back as DOT proposes. In addition, we believe that a more equitable regional balance should be achieved within the Amtrak system to make passenger rail service truly national in scope and not just an incidental feature in all but the Northeast corridor. I'd like to begin by quoting directly from the instructions you originally gave the Secretary of Transportation, which I notice several of the previous speakers have also quoted, and you have probably been hearing it for months. What you told him to do was to come up with a proposal which would provide an optimal inter- city railroad passenger system based on current and future market and population requirements. Providing additional guidance and reflecting concerns that many of us have with the thrust of the Congress and DOT approach to Amtrak, you further instructed DOT to assess a number of factors, including specifically the fur- therance of national energy conservation efforts and the impact and frequency of fare structure alternatives on the ridership and revenues and expenses of rail passenger service. In our opinion, the DOT's recommendations and the analysis upon which these recommendations are based have not met the directive you have set forth. It takes a heap of imagination to agree that the system as proposed the DOT would be optimal and that PAGENO="0242" 235 DOT analysis which leads up to their proposal is, in our view, seriously flawed. The logic used by DOT in thinking through what we ought to support in the way of passenger rail service in this country appears to be parallel to this: First, take the current route system as the basis; don't worry too much about what might be causing problems with various routes in this base or in the system as a whole, but just use current passen- ger miles per train mile as the indicator of whether any particular route should be continued. Second, lop off those routes with low passenger miles per train miles-with a minor adjustment here or there to take account of tourism or weather conditions or the like. Third, calculate what would be saved by this surgery- and it's pretty major surgery as it turns out because you lose 43 percent of the route miles-and finally, as a postscript, suggest that Amtrak use its management flexibility to keep the amputated system alive by adjusting frequency of service first and all the other things that probably had a great deal to do with how many passengers you had, what your costs were, and why the original route mileage wasn't working as well as it could have in the first place. It seems to us that a good doctor starts out by diagnosing what ails his patient. He doesn't just amputate the patient's limbs on the theory that the patient will as a result suffer less proportionately and spend less for food and clothing. We don't think that route surgery is going to do much for the ailments Amtrak has and while we are debating whether or not to cut the patient is weakening because its problems aren't being treated. In our view, some of Amtrak's problems are as follows: First, featherbedding. Labor costs are a very large share of total Amtrak costs. While only two members are required to operate and collect tickets on most European trains, five or six crew members are required to do the same job on most Amtrak trains. I believe you asked, Senator, is it easier to shut down the service than it is to do something about featherbedding. Congress in the early 1960's helped curb freight train featherbedding and a simple bill would probably do the same for passenger trains most likely with much less of a lasting effect on railroad employment than we're going to get by eliminating 11,800 route miles. We also feel that the potential for added income through in- creased mail and express services have been underplayed and that increasing such service on Amtrak trains could significantly narrow the gap between costs and revenues of the system. In 1964, combined railroad mail revenues equalled $329 million against pas- senger revenues of $507 million. Today, less than 5 percent of revenues come from mail compared to 36 percent in the mid-1960's. But basically, what happened was that the Federal Government removed hundreds of millions of dollars of mail from passenger trains and put it mostly on trucks and freight trains, where in many cases it moves more slowly, taking 1 or 2 additional days to be delivered. Bulk mail or first class mail traveling less than 500 miles are now truck cargo, but it doesn't have to be that way. A provision such as was deleted from last year's Amtrak bill to put $50 million of mail revenue back on the passenger trains and the PAGENO="0243" 236 potential is much higher than that. This action is one which Con- gress could take itself, saving many of the threatened routes and saving money at the same time. Another major cause in our view for Amtrak's current problems has to do with service levels which affect ridership and therefore revenues. One important reason that the current service hasn't been satisfactory is that Amtrak lacks enough authority to force the railroads to provide good service. For instance, Amtrak is pow- erless to enforce laws about on-time performance and passenger train priority. To make things worse, in a number of instances, Amtrak can't even use the track it needs. One consequence of this is that the San Joaquin, Lone Star and Floridian do not pass through Los Angeles, Dallas, nor Atlanta, respectively. The DOT's proposal is to cut these trains out of the system. We think a more productive solution would be for Congress to give Amtrak more clout to run trains where they are needed. At least Congress should restore the power of States to mandate passenger service to rail- roads within their jurisdiction. We are currently in California engaged in arbitration with Southern Pacific to run a train along the coastal route. It will probably take a year minimum to get through just to try to run on tracks which are already there where there is one train already. Yet another thing which ought to be built into the development of an optimal system is frequency of service. We in the West have some working experience with infrequent train service since many of our routes, as well as many routes in the South, were cut back in 1971 to one train a day or less. This underutilizes station person- nel, terminals and other facilities and besides it makes train serv- ice unattractive to much of the traveling public, escalating costs for remaining riders. On most routes running one train a day just doesn't provide enough travel options. Running three trains a week, as is done with the Sunset Limited from Los Angeles to New Orleans, pretty much leaves patronage to diehard train lovers. We agree with the DOT that fares on Amtrak trains should be studied and that their structure needs a lot of change. We are disturbed on the other hand by the conclusion DOT seemed to have reached in the admitted absence in their report of any good data to support such a conclusion that, generally speaking, fares should be raised, surcharges imposed, and discounts reduced. We would sug- gest the opposite thrust, look for more discount opportunities and other ways to stimulate ridership; don't cut back peak demand but try to raise off-peak demand; don't penalize current users to the extent the traffic will bear. On the overall issue of ridership and, more broadly the role to be played by passenger rail service in this country's future transporta- tion system, it is our opinion that the DOT has seriously under- played energy as an issue. Energy appears to have been considered in only one context, where existing railroads have been compared one to another in terms of passenger-miles-per-train-mile. Because of the way the DOT has framed the energy issue, the Department reaches the extremely odd conclusion that less train service, which means very simply more auto and plane use, is going to help our energy conservation efforts. During the 1974 energy crunch, Amtrak ridership jumped 18 percent. When next PAGENO="0244" 237 time petroleum use is limited by Sunday closing of gas stations or rationing or steep prices, the demand for Amtrak service is going to increase. We in California think it's going to soar, except this time the trains will be gone. I'd like to say just a few words about what we consider to be an anti-West bias in the report and then conclude my remarks. We are all in favor of a high level of rail service in the Northeast corridor; we support improvements to that corridor and we look positively on the marketing efforts used by Amtrak to stimulate ridership in the corridor. We also think, however, that what's good for the Northeast corridor is equally good for the West. We have in the coastal zone of California alone one-half the population of the Northeast corridor. Trains currently running within California or with the terminal point in California generated 953 million passen- ger miles in 1977, only 108 million passenger miles less than in the Northeast corridor. Yet we are scheduled if the DOT recommenda- tions go through to get no track or facility improvements compared to $2.5 billion upgrading in the Northeast and, further, to have two of our routes combined, one cut entirely, and nothing added. To conclude, as we have previously testified, we favor an expand- ed Amtrak system along the lines of scenario E in the DOT's preliminary report. Scenario E is a truly national system and its cost per passenger-mile is only about two-thirds that of the U.S. DOT's latest recommended system. We believe that the $693 mil- lion in operating subsidy required to support the scenario E system in 1980 is small compared to the estimated $23 billion a year in taxpayers' funds being spent on highways-that's both Federal, State, and local-or the over $2 billion being provided annually to subsidize American airports and airways. We urge the rejection of the DOT's proposal to cut Amtrak. The $166 million annually in so-called savings which the 11,800 mile cutback will supposedly generate will build only 4 miles of 8-lane urban freeway at today's cost. For the 1980's we think we need to have some real alternatives in transportation. Thank you. [The attachments referred to follow:] 43-139 0 - 79 - 16 PAGENO="0245" costs Current 1~tra~n routes costs ?o35n9er5 Typ~ca! 19~5 s~rv~ce J~ ~ ~ ~ $iEJ~-t' o~5~ -~ o~ _ p4 5L~I~ ~ V _ Faoftt1e~ & OwrheM I?ired Train Oprotir~ 70% f~c~(ft~es &Over~d 55% revenues 1~r~Lç Tram Cpratir9 hJ57 00 revenues EXp~) M~ P~5~n9crs )j°7O Mail & Sprt~ss 2~°7o PAGENO="0246" SCENARIO E: NATIONAL- INTERREGIONAL- INTRAREGIONAL SYSTEM PAGENO="0247" 240 ATTACHMENT A SPECIFIC CONCERNS REGARDING CALIFORNIA-ORIENTED RAIL PASSENGER SERVICES 1. San Diegans.-As recommended in the preliminary report, five trains should be in the Amtrak System. All Northeast corridor trains have been kept in system. With five Amtrak plus three State-supported trains, we feel level of service in this corridor would be excellent and overall costs reduced. We feel so confident of the future of this corridor that we are asking Amtrak, under the provisions of 403(b), to initiate a seventh train on April 29th. 2. Southwest Limited (City of Los Angeles).-Combining with Zephyr is not feasi- ble because of the resulting loadings and the longer travel time-li plus hours from Los Angeles to Chicago. The combined train would require up to a 30-car train during off peaks and an estimated 50-car train during holiday and summer periods. Disruption of the present Chicago connections or the tie with the Starlight. As a result, these trains would lose significant ridership also. 3. San Joaquin.-This train has never been given a reasonable chance to succeed. We strongly urge keeping it and we support 403(b) service for such a continuation under the following conditions: (1) Adequate funds made available; (2) The present crewing problem mitigated; (3) Schedule changed to provide better equipment utili- zation and expanded market; (4) Service extension to Los Angeles undertaken. 4. Coast Starlight.-(This is one of the most heavily used trains in the present system.) It should be routed through Sacramento. Ridership will suffer because of loss of connecting services. The multiplier effect of lost ridership is, we feel, underplayed by the U.S. Department of Transportation report. Information on interconnecting passengers is weak and the 9 percent claimed reduction is highly suspect. We continue to work toward establishing an overnight train in the major portion of this corridor. 5. Sunset Limited.-Daily service is warranted as was recommended in prelimi- nary report as more cost effective. 6. Pioneer.-We favor the continuation of this train as a major connector to the proposed Ogden to Los Angeles service. The subsidy per passenger mile is among the lowest in the present system and ridership has continued to build. SUMMARY OF THE CALTRANS PROGRAM OF INTERCITY RAIL SERVICE IN THE STATE The report recommends the following services for implementation as soon as practicable: 1. A second daily train between Sacramento, Oakland, San Jose, Santa Barbara, Los Angeles, and San Diego. Of all the services studied, this train would make improved rail service available to the greatest number of Californians and provide the most cost effective intercity service. (This service has been requested of Amtrak. The Southern Pacific has refused to operate it without capital improvements. Cur- rently the request is under arbitration.) 2. Extension of the San Joaquin train from Bakersfield to Los Angeles and San Diego. This would improve connectivity of the State system of rail service, as well as improve the marketability of the San Joaquin. (We are willing to sponsor this train under conditions outlined in Attachement A.) 3. Extension of the San Diegan train through from Los Angeles to Santa Barbara. This train would have particular tourism value and would relieve overloading on the Coast Starlight between Los Angeles and Santa Barbara. (We-with the County of Los Angeles-are currently involved in establishing commute service in a portion of this corridor.) 4. A seventh daily train on the Los Angeles-San Diego corridor. This would continue the successful expansion of the San Diegans' market, and improve equip- ment utilization. (We have asked Amtrak to implement this service April 29-under State sponsorship). A further round of service improvements is recommended following completion of proposed capital work projects in the Los Angeles-Orange-San Diego and Sacramen- to-Oakland-San Jose corridors. Service to date Three round trips between Los Angeles and San Diego have already been imple- mented and it is assumed that these will continue for the remainder of the demon- stration period. PAGENO="0248" 241 Prior to the service augmentation, 320,100 to 390,000 passengers were carried annually. The first additional round trip, inaugurated September 1, 1976, resulted in patronage increases averaging 18,000 per month over the prior year. The second additional round trip, begun April 24, 1977, saw overall patronage increased by another 10,000 passengers monthly. This increase occurred in spite of fare increases totaling 20 percent during a ten-month period in 1976-77. By January 1978, the San Diego-Los Angeles corridor patronage had grown to 840,000 per year. Following the San Diegan service improvements, the Starlight's ridership rose by some 4,000 per month over similar months of the preceding year. The Starlight's gains were registered despite the fact that it was slowed 45 minutes southbound, 60 minutes northbound and the connection time at Los Angeles for San Diego-bound passengers was slightly increased to 1 hour, 35 minutes. AMTRAK "SAN DIEGAN" FACT SHEET (March 8, 1979) Cities served.-Los Angeles, Fullerton, Santa Ana, San Juan Capistrano, San Clemente, Del Mar, Oceanside, and San Diego. Number of trains-Monday through Friday, 12 daily. Saturday and Sunday, 11 each day. Number of Trains supported by Caltrans.-Three round trips (six trains daily). The Department has requested a fourth round trip to begin service April 29, 1979. Cost.-$1.1 million annually. Annual ridership prior to Caltrans participation.-378,000. Current annual ridership.-840,000. Current fares (Mar. 5, 1979 tariffs) Round trip between Los Angeles and Fullerton $4.30 Santa Ana 6.40 San Juan Capistrano 9.40 San Clemente 9.90 Oceanside 12.50 Del Mar 15.00 San Diego 18.50 Comparison of passenger volumes-February 1979, 61,217; February 1978, 56,328. The increase of February 1979 Against February 1978 is 8.6 percent. Current marketing program-Round trip fares are reduced by 18 to 20 percent between any two points between Los Angeles and San Diego on weekdays with presentation of coupon. The coupon is available in area newspapers in ads placed at regular intervals, and from all Amtrak stations. The station attendants are placing a coupon in each ticket folder, so that with a purchase of any ticket to anywhere, the purchaser receives a discount coupon for the San Diegan. Other information.-Caltrans has currently available $500,000 to be used for station improvements, and Federal bus service, and an additional $1.65 million for track improvements in the "San Diegan" corridor. Senator SCHMITT. Mr. Chairman, I know Ms. Gianturco has limit- ed time and I have a number of questions I would like to have her answer for the record if you can do that. Do you have any time remaining? Ms. GIANTURCO. Yes. Senator SCHMITT. Although I think the subsidy issue is not the basic issue of this, it's one that keeps being raised by the propo- nents of the cutback. I believe you have estimated that if all Federal subsidies were removed from coast-to-coast air tickets, the tickets would cost $1,000. Do you stand by that remark? That's a fairly remarkable figure. Ms. GIANTURCO. That's based on a statement that was made by Secretary Coleman who was previously the Secretary of Transpor- tation in 1976. We looked up recently some figures on what the current subsidies are. I believe that about $2 billion a year in PAGENO="0249" 242 subsidies are now made to the airways, which would be principally the controllers, and about $2 billion is spent on airports beyond that which is recovered. So that would actually come to $4 billion and I think the costs that are paid are about $1 billion, so it's more like $3 billion a year. In terms of whether that's one-third, two-thirds, or whatever, I couldn't say at this point in time, but there's clearly a substantial subsidy way in excess of what is being put into Amtrak. I would also point out that every form of transportation in this country is subsidized, including most particularly the automobile. We have calculated in California that a minimum of one-third of the cost of the use of the automobile is not captured in the gasoline tax, the user tax, that is charged. If you just look at air pollution alone, the damage to crops-we are a major agricultural State- attributable to pollutants emitted by automobiles, it comes to about $1 billion a year. Senator ScHMIrr. So the issue really is whether is there a role for rail transportation that justifies in itself or in synergistic inter- action with other forms of transportation the preservation of a route structure and the improvement of service along that route structure. But frankly, when I look at the map, it looks like Cali- fornia came out pretty well in this whole thing. As a matter of fact, we haven't heard too much from California's representatives on this issue as yet. Why in the world are you here? Ms. GIANTURCO. Well, while we came out better than most, that's true, we had two routes combined. We only lost one route. We are not having anything added. We are not getting any improvements. Compared to States which lose all their service or the overall average which is 43 percent, we came out pretty well. However, as I say, we did lose some things. Our principal con- cerns have to do, however, with the fact that what happens in the rest of the country affects California. We are talking about a national system. Even if there are trains still running in Califor- nia, if you can't get from California to elsewhere or vice versa, that will have an adverse impact on ridership within our State. You can't separate out one State from another if you're talking about a national system any more than you can with the interstate system on the highway side. Senator ScHMIrr. It's my understanding that you think that passenger rail transportation in California could pay for itself if it carried mail. Ms. GIANTURCO. Yes. Senator ScHMIrr. Would you elaborate on that? Ms. GIANTURCO. The passenger rail service we currently have in California, contrary to the statements by the people representing the American Bus Association implied that the only successful rail service in this country is in the Northeast corridor. In fact, we have a highly utilized service between Los Angeles and San Diego which is-I can't give you an exact figure-I can supply it for the record, but it's doing pretty well financially. Ridership on that line has tripled in the last 3 years, practically tripled, and is growing constantly and we have a second route which is a coastal route going from Seattle to Los Angeles, one of the most heavily traveled routes in the country. So we are starting off from a pretty good PAGENO="0250" 243 point. We think if we could get mail service and marketing im- provements which we desperately need-the marketing effort in this country seems to be devoted to the Northeast-that we could turn the corner. I'm not saying we could make a profit, but again, no form of transportation in this country is operated at a profitable level whether it's public or private. Senator SCHMITT. I think that's an excellent point. There are many hidden and doubly hidden subsidies to various forms of transportation, not the least of which as you pointed out is the automobile. I would finally just concur with what you have said about the growth of passengers on various aspects of the Amtrak system. In spite of everything we have said to criticize what Amtrak has done, in the last several years the movement away from rail passenger service utilization has obviously turned around. It's not only turned around in public attitudes, as indicated by the Harris survey, but it's turned around in actual numbers. It's happened in Albuquer- que. We've heard testimony that in Oregon that it has been in- creasing. You testified yourself that there's rapidly increasing utili- zation of rail transportation in California. I think we did have a brief indication of what will happen in a future energy shortage or rapidly escalating prices. People will turn to rails if it is available. They will turn to buses too, but the total system is what we have to keep our eye on. I want to thank you for your testimony and I will submit a few more questions for the record. The CHAIRMAN. Thank you. I find it rather interesting that you come from the State that started proposition 13 and I'm sure you're aware of the fact that the National Taxpayers Union testified in opposition to a continu- ation of Amtrak's present structure pointing out that Amtrak is carrying less than 1 percent of the traveling public and therefore should not be funded at the present rate. Would you care to comment on that? Ms. GIANTURCO. Well, I would point out that I do come from the home of proposition 13 and I think probably the State of California is as aware as any State of having to set priorities and trying to maximize the use of taxpayers' dollars and so on. We think the money that's being spent on Amtrak could be spent more effectively than it is spent. We don't argue with that at all. But we think that a level of support to Amtrak along the lines, as I say, under the expanded system, would not be disproportionate to what is being spent on other modes. We are spending in California now alone at the State level $1.2 billion a year on highways and a national rail passenger system, a national system, operated at a net cost of $500 million or $600 million we don't think is out of line. It depends on how it's operated. We are definitely in favor of improvements to operation. The CHAIRMAN. Do you think it's adequate, though, to say be- cause somebody else is getting a big subsidy that we ought to get a bigger subsidy from Amtrak. Is that the proper answer to it? Ms. GIANTURCO. I don't think the subsidy to Amtrak is out of line with the subsidy provided to either of the other two major forms of transportation, the automobile and the airlines. PAGENO="0251" 244 The CHAIRMAN. Let me ask you this. You referred to the Seattle- Los Angeles route. That route lost $6.75 million. That was the avoidable cost loss in 1977. You indicated that you thought that was pretty close to breaking even, I thought, on that run. Ms. GIANTURCO. Well, I'm not familiar with all those figures in there. That has generally been given and it was given I believe by the DOT itself in their preliminary report and possibly also with the GAO report, although that's kind of hazy in my memory, as one of the better routes in the country. The CHAIRMAN. I think it may be one of the better routes, but it still lost $6.75 million in 1977 avoidable costs, and fully allocated it lost over $20 million. Ms. GIANTURCO. Let me give you another example to put that in context, again I think you have to look at transportation as a whole. We spend $18 million a year alone in California on trans- portation planning. So $6 million cost for one route which is a real service being provided is not disproportionate The CHAIRMAN. Well, let me ask this again. Would the taxpayers and the legislature in California be willing to pay part of the operating loss as a 403(b) provision for the San Diegan that lost a quarter of a million and the-- Ms. GI~TuRco. We already are, sir. Those services are being supported under 403(b). There are six trains in operation now, three of which are supported entirely by Amtrak, two of which are supported under 403(b) provisions, and the sixth of which is sup- ported 100 percent by the State of California. The CHAIRMAN. Well, what about the loss on those that are fully supported by Amtrak? Would you be willing to consider those as 403(b)'s? Ms. GIANTURCO. If the same things were done with similarly healthy trains in the rest of the country. Again, those trains are usually given by Amtrak as the example of the strongest trains outside of the Northeast corridor. The CHAIRMAN. That train from Seattle is a fairly strong train. The San Joaquin is different. That loses about $1 ½ million. Ms. GIANTURCO. Yes, we have had a problem with the San Joa- quin since its inception. We believe that the San Joaquin will never succeed unless it's extended to Los Angeles. To have it stop in Bakersfield is not good. We have been trying to change that. The opposition is from the railroad and this is Southern Pacific which does not want to have its tracks used. The CHAIRMAN. Do you have any limit in your mind as to how high Congress ought to go in providing a taxpayers' subsidy for Amtrak? Ms. GIANTURCO. Well, as I say, in looking at the preliminary report and the options that were presented there, we thought the most rational one was scenario E, which was at a level of I believe about $661 million per year subsidy by the Federal Government. The CHAIRMAN. Well, $661 million wouldn't permit the present structure to be operated, as Amtrak has pointed out in this propos- al. They reduced 43 percent of the track but only lose 9 percent of the riders of their entire system. But if the present system were operated, the figure would actually be over $718 million. So would you just give them the $600 million odd and then let them termi- PAGENO="0252" 245 nate whatever structure they had to terminate to bring it down to that figure? Ms. GIANTURCO. I don't know. I think there ought to be a back and forth and there has been a lot of back and forth, but what disturbs me about the approach that seems to have been taken by DOT is they have predetermined the level to cut to and then made everything back into that. I think you have to start out with some hypothetical number and then look at frequency of service level and service routes and so on and see if your original thinking was correct and then correct it. It doesn't seem to me that has hap- pened. In terms of the $661 million, I based that on the material we saw earlier for Amtrak. I don't know what their more recent estimates are of what it would do, scenario E. Scenario E may not be ideal and there may be things wrong with that, but that was a national system and it cost the per passenger about a third below this current proposal and it seemed to us a fairly reasonable starting point at least in trying to examine this problem. The CHAIRMAN. I think you're right. I think they probably were given a budget figure and were told: you have to come within this figure and therefore had to try to tailor their route structure to come within that, at least come within that ballpark figure, but I think that is due in part to Congress as well because we told them to go back and look at their route structure and try to find some way of getting these costs down to a manageable figure because they're certainly getting out of hand now from the standpoint of manageability. Ms. GIANTURCO. Well, one of our objections, as I said in the testimony, to their analyses are we don't think they have done enough along the lines of the other instructions you gave them, which is looking at, first, frequency, ridership patterns, marketing, and pricing policies, and how they affect in turn cost and revenues; and I think you have to take into account all those things before you start coming up with something that fits together and makes sense. It seems to me they approached it very narrowly. The CHAIRMAN. Thank you very much. We appreciate your being here and giving us your views. Dr. Francis Mulvey is our next witness. Let's ask the bus people to come back first. Senator SCHMITT. Mr. Lewis, I appreciate your staying and I will not keep you too much longer I hope. You indicated that the bus system was having to cut back in rural areas. Would you briefly say again why that is happening? I know it's happened in New Mexico. It hasn't exactly helped your reputation out there, but that's one of the things Senator Long and I have discussed in this committee before: What can we do to find some way to make bus service economical in those areas? Mr. LEWIS. Well, one of the problems that's plagued us for the last four decades has been the outmigration from rural areas which has resulted in a smaller population in many of the rural counties, and I realize that in certain sections of the country in the last 4 or 5 years, particularly in Appalachia and in certain isolated parts of the country there is an increase in population once more. PAGENO="0253" 246 Senator SCHMITT. That's certainly true in New Mexico. Silver City, my home town, when I was growing up, was 5,000 with a regular bus service to El Paso, and now it's probably well over 13,000 with a much increased economic activity because of a whole new mine that's opened up there. However, there's no bus service. Mr. LEwIs. Well, we'll be glad to have somebody take a look at that. Senator SCHMITT. Well, I heard that last year and the year before. Apparently there's something wrong and I understand that this is not a bus service hearing, but I just want to make it clear again that buses and rail are fighting the same kind of battle. Now your position is that rail is unnecessary. Their position is that buses are necessary but so is rail. And I tend to feel that way also because I think there are certain aspects of the national transportation system that you can't fill. Although maybe in theory you can, I'm not sure you will in terms of the attitudes and preferences of ridership. Mr. LEWIS. Well, sir, let me just say in the rural areas of the country we are the system of transportation for the rural areas and while Amtrak may provide a parochial service here and there in rural areas we serve 15,000 communities in this country and Amtrak serves on the order of 450 or 500 and if there's any pervasive service of rural America it's the intercity buses. Senator SCHMITT. I think that's a very important point and one way in which we will provide better rural bus service may be to make it integrated with rail service and that's exactly what we tried to do in Albuquerque with our relatively new rail-bus termi- nal which is colocated. Mr. LEwIS. Senator, I may not have been clear a moment ago about the problem but-and you may come up with a new program 5 or 10 years from now and new technology that I don't now * visualize, but we find it very difficult public policy for us to accept to bring a passenger from a rural area to a larger community and transfer that passenger to Amtrak and not give that passenger an opportunity to pay the full cost of the train trip. If you were to charge what it cost that passenger, what it cost the government to provide that ticket and then let the passenger make his decision as to whether he wanted to go from Gallup to Los Angeles but pay three times as much as the current fare or the alternative to take the bus at current fares, then you're providing a valid market decision for him to make and we will abide by that decision. Our problem is short hauling ourselves to a market like Gallup and having Amtrak take that passenger into Los Angeles and take the long haul profitable business away from us; not because he's more efficient, the train, but because it is subsidized by the Govern- ment to roughly two-thirds of its cost. Senator SCHMITT. But, if we continue to raise the ridership that many of these routes have and take other steps to decrease the cost, then it can be that both of you will come out ahead. Mr. LEWIS. That's right, except for this problem. Amtrak's rate of growth, as you know, really has tailed off rather significantly and it's actually 5 percent down. Senator SCHMITT. You've got to look at the various routes and particularly those routes that have been cut, and as our friend PAGENO="0254" 247 from California has testified and as we have seen in New Mexico along the Sunset Limited and as we have heard about in Portland, many of the routes that are going to be cut are the wrong routes to be cut. They are the ones that are beginning to assist Amtrak rather than hurt it. That's the point I'm making. Sure, there are places where you ought to readjust the route structure. Nobody opposing this change has argued that point, but we think the entire focus on route structure has missed the point completely of what Congress was trying to do and what this coun- try needs in terms of a rail system and a bus system. Mr. KNAPPEN. Senator, could I address the issue because I think you really hit on the critical point. We share that concern for rural service, but what has happened pure and simple in the last 7 or 8 years is that we have started to lose money on our trunk routes because of competition with Amtrak. For example, in the North- east corridor, Trailways is now losing $2.5 million a year. The year before Amtrak started we made $2 million a year. What that means is that we are no longer able to subsidize the money losing routes which we have by the bushelful. So we go to the ones with the least patronage on them and they are invariably the rural routes like the ones from your hometown or any one of hundreds of others that I have dealt with over the last couple years and that service is disappearing, pure and simple. What is happening is that the urban Amtrak service on the trunklines is causing the rural States such as New Mexico to lose a vast amount of its basic transportation system that is the intercity busing system. What's going to happen is that you're either going to end up with a system where you subsidize both highly or you're going to let the market govern and go with the more energy efficient intercity bus system. Senator ScHMrrr. Mr. Knappen, buses are more energy efficient right náw because the ridership isn't on the rails, and some of the equipment they are using is energy inefficient, but that is in the process of changing or could be changed. I don't know how far or whether they can catch up with you or not, but I do want to make the additional point that Mr. Boyd made in a letter to you, Mr. Lewis, of October 9, 1978. I'll quote from that letter: Amtrak began service over a nationwide rail passenger network- This was in 1971- which had been selected by the incorporators of the National Railroad Passenger Corporation and designated by the Secretary of Transportation. In that first year Amtrak carried some 15 million passengers and its gross revenues amounted to $152 million, scarcely more than a modest beginning in a travel industry that grossed over $25 billion a year. During that same year, intercity buses carried 395 million revenue passengers. That was down 6 million passengers from the 401 million of the preceding year. Yet this was the same year with the creation of Amtrak parentheti- cally that rail passenger network had been cut in half. Your ridership went down 6 million and I assume those are correct figures. Continuing the quote- As you know, more than one-half the trains which have been running since April 30, 1971 ceased operation the next day. Amtrak began with only 186 trains. PAGENO="0255" 248 So although that was 1971, I don't understand your argument of how Amtrak with its creation hurt the bus system. As a matter of fact, you were hurt without it apparently. Mr. LEWIS. Well, there's no question we have been hurt without it and I have never in my testimony ever indicated that Amtrak is our principal problem, but it is a very difficult problem when you add it to others that are pervasive with us and over a period of time we can't do anything about. The influence of Amtrak has been somewhat spotty. As Mr. Knappen indicated a moment ago, we are down sharply in the Northeast corridor. The traffic on the bus industry and paralleling routes in the Northeast corridor from Boston to Washington droped 26 percent from 1971 through 1977. During that same period of time outside the corridor our traffic dropped 11 percent for the industry. So I can't say even that in the corridor that 100 percent of the difference between the losses out- side the corridor and in the corridor were Amtrak. I will say that there are several surveys that have been made by passengers who said that in the alternative to the train they would take the bus and the two that I specifically know of myself range from 19 percent on the Floridian to 23 percent on the corridor. The General Accounting Office has found that there is a very broad band of competition between Amtrak and the bus and the amount of duplication could go up to as high as 33 or 35 percent. Senator SCHMITT. But we keep coming back to the Northeast corridor as the principal of this competition and that may or may not be, but the route structure readjustment that you're favoring is covering the whole country. Mr. LEwIs. Yes, but the Floridian that I also quoted was from Chicago to Florida and the figure that I gave you from 19 percent was developed by Amtrak itself and testified to by Mr. Boyd, that there was 29 percent who said they would have taken the bus without it. Senator SCHMITT. Have you ever surveyed how many people on that train later used the bus or as a part of that? Mr. LEwIs. The Floridian is still operating. Senator SCHMITT. But do you know how many riders you have gained because of Amtrak? Have you ever done that survey? I have no idea whether you gain. Mr. LEWIS. It's so pervasive-- Senator SCHMITT. I know you gain in Albuquerque because people get off that train and they take a bus. Mr. KNAPPEN. Senator, I think the amount of people are a verita- ble thimbleful. Senator SCHMITT. Have you ever done that survey? Mr. KNAPPEN. No, because it's just not really-you don't-you're not going to add ridership to a system by running a competing system over the main routes of that system. You're going to cause ridership to go down and the real proof in the pudding is that there is a direct relationship in every study ever done between the amount of Amtrak competition for the bus industry on the one hand and the loss of passenger traffic to the bus industry on the other hand. There's a direct relationship. The more Amtrak compe- tition there is, the less people we carry. PAGENO="0256" 249 Senator SCHMITT. Well, I just read to you an example of where that doesn't seem to hold, but I also would disagree with your premise that no transportation system assists another. You wouldn't have a bus system for the most part unless you had automobiles. Mr. LEWIS. Senator, I think you have to go back to the fact that the Federal Government subsidizes what would be the long-lines operation of the bus industry. Now it's historic, it's characteristic of every transportation mode that I know that your long-haul operations are more profitable than your short-haul. When Am- trak's longer haul routes are subsidized by the Government to two- thirds of their cost and they cause us to divert our long-haul traffic to them and we become a feeder, there's no way they could do anything except divert. Senator SCHMITT. Well, I'll end, Mr. Lewis, by saying I'm going to do everything I can to make Amtrak, wherever it is and whatever route structure exists, pay for itself, and I hope that you all will do the same within your system and I will assist you there with whatever means that we can because I think it's possible. I think we can have a pay-for-itself national transportation system. I think we have just built in so much regulation and so many artificial barriers to efficiency and profitability that we have made it impos- sible for you, and for the rails and the airlines-well, we finally have done something about the airlines, thanks to the leadership of the chairman, and I think that is gradually going to pick up. There are going to be some hurts in the transition, but nevertheless it looks like it's moving in the direction we want it to. Mr. LEWIS. It's been the position of the bus industry all along if we were to be faced with a nonsubsidized Amtrak that we would not accept a subsidy from you. Senator SCHMITT. Give us a few years and we'll make it. The CHAIRMAN. Mr. Francis Mulvey is our next witness. STATEMENT OF FRANCIS MULVEY, ASSISTANT PROFESSOR OF ECONOMICS, NORTHEASTERN UNIVERSITY, BOSTON, MASS. Mr. MULVEY. I would like to thank the committee for asking me to testify before you today. I'm sorry about my handout to you but I was only informed I was going to be testifying on Friday and I didn't have much time to prepare a formal statement. I am not involved with any State or local transport organization or special interest group. The basis of my testimony today lies in my experience as a consultant and as an educator in transporta- tion economics at Northeastern University. Over the past several years I have undertaken several studies of Amtrak, including my doctoral dissertation in 1974 entitled "The Economic Future of Amtrak." That was a very hopeful document. I am sorry to say that my subsequent research efforts did not support my original conclusions. Included among these studies are reports I undertook for State and Federal transport planning agencies. Those who support continuation or expansion of the Amtrak route network have always stressed the social benefits that could result from a restored and revitalized intercity rail passenger transport system. An examination of the progress of the Amtrak legislation clearly demonstrates that the Congress adopted this PAGENO="0257" 250 view. Successive amendments placed increased emphasis on rail's potential for helping to achieve important national goals such as energy conservation, environmental protection, and congestion alle- viation. Although Amtrak has often been admonished to exercise better control over spiraling operating costs and mounting deficits, in fact, Amtrak has had little incentive to be economically efficient and considerable impetus to increase service and slow ridership growth regardless of cost. Congress has often prodded Amtrak to expand the rail passenger route system. Amendments to the original act have directed Amtrak to offer international train services to Mexico and Canada, and to add two new experimental routes each year. Amtrak has been encouraged to join with the States and develop additional 403(b) services. As a result, the passenger train network has grown considerably beyond the original basic route system of May 1971. Most of these additions have been particularly unprofitable on a per-passenger-mile basis. On the other hand, it has been Amtrak's long-distance transcontinental trains which have generated the largest absolute losses. Systemwide, the annual deficit has climbed above $500 million, and there is little likelihood of abatement in the absence of drastic service reductions. On a per-passenger-mile-of-service basis, Amtrak riders are the most heavily subsidized of all intercity travelers. I must emphasize that subsidy comparisons must take into account the amount of service provided. The absolute subsidy is irrelevant. The question which I have tried to address in my research is: Are the social benefits from Amtrak services large enough, or potentially large enough, to justify the public subsidy? Several years ago the State of Wisconsin asked me to evaluate the potential ridership, revenues, expenses, and social impacts of improved and expanded Amtrak service in that region. Employing several demand estimation models, I developed revenue and rider- ship forecasts, and with the Federal Railroad Administration's Amtrak cost simulation model I was able to project train operating costs and terminal expenses. All proposed services would have operated at a deficit. However, when we tried to justify the expend- iture of public funds to cover the State's share of the expected deficit, we were unable to do so. The energy savings expected as a result of traffic diversion from other modes to Amtrak were incon- sequential. The fuel saved was only enough to meet the annual needs of perhaps 30 or 40 cars. Even the environmental impacts were mixed, as Amtrak diversion reduced some emissions but in- creased others. Based on our demand estimates, none of the pro- posed routes would have attracted sufficient riders to produce social savings large enough to warrant subsidy. Amtrak was not the most cost-effective means of meeting the transport needs of Wisconsin travelers. Recently I undertook a broader study of Amtrak's contribution toward achieving national transportation goals and objectives. In addition to examining the energy savings and pollution-reduction effects, I also attempted to evaluate Amtrak's impact on airport and highway congestion alleviation, improved transportation safety, and the overall quality of the Nation's intercity passenger PAGENO="0258" 251 transportation ,system. The analysis distinguished among the three main types~of'Amtrak services-short-haul, long-haul, and North- east--co~ridor Metroliners-and examined Amtrak's expected impact on the transportation environment in 1990, as well as the contributions from current operations. For existing Amtrak services, the results indicated that although Amtrak saved energy by diverting traffic from the more energy- intensive air and highway modes, the value of the fuel savings were insignificant relative to the size of the deficit. The contribu- tion of long-distance passenger trains was particularly small. Amtrak is not a cost-effective approach to reducing energy con- sumption. If Amtrak travelers would take the bus, the energy savings would be larger. Although traffic diversion to Amtrak reduced the amount of carbon monoxide emitted into the atmosphere, the impact of rail service on the other transport-produced emissions is either negligi- ble or negative. The analysis indicates that long-distance trains, for example, emit more nitrogen oxides, sulfur oxides, particulate matter, and hydrocarbons than would have been emitted if these rail users had chosen their next alternative travel mode. Further, carbon monoxide pollution is primarily an urban problem, and Amtrak impacts rural, relatively unpopulated areas. It is doubtful that Amtrak contributes much in the way of protecting the envi- ronment. Amtrak is the safest form of intercity travel, but all public modes are safe, and only auto traffic diversion really contributes to a reduced level of transportation-related deaths and injuries. The data indicate that approximately 30 fewer deaths occur each year because travelers chose Amtrak rather than drive themselves. Nev- ertheless, there are many investments that could achieve a reduc- tion of this size, and it is doubtful that Amtrak is a cost-effective approach. Providing intercity rail passenger service can relieve airport and highway congestion, but in order for the impact to be measurable the facility must already be congested and the Amtrak traffic diversion must be substantial. Only in the Northeast corridor does Amtrak offer sufficient capacity to produce an impact. Routes out- side that region are often served by only a single daily train in each direction, and only a few short distance routes are served by as many as a half-dozen daily departures and arrivals. Amtrak does have an impact on Northeast corridor congestion, but the analyses suggests that the value of the time saved by air and highway travelers is less than 5 percent of Amtrak's annual deficit. Finally, in terms of overall transportation network service qual- ity, it is difficult to argue that Amtrak makes a positive contribu- tion. It is slower, less often on time, offers fewer departures and arrivals, and serves far fewer city-pairs directly than any of the alternative modes. To the extent that subsidized train operations harm the more efficient bus operations, the overall impact on the Nation's transport system may be negative. Many who support continued Amtrak operations would readily concede current Amtrak service does little to promote the social welfare or improve the overall passenger transport system, but they would stress that as Amtrak proceeds with its program of PAGENO="0259" 252 replacing aged locomotives and rolling stock, refurbishing passen- ger train stations, and improving its reservations and information systems, the service will become more attractive and more effi- cient. Extrapolation from Amtrak's own highly optimistic forecasts of ridership, revenues, and expenses yielded an estimated annual op- erating deficit of more than $1.5 billion by 1990. Yet, when one examines the projected impacts in the areas of energy, environ- ment, and congestion, it is clear that most Amtrak service outside the Northeast corridor will fail to generate social benefits that even remotely approximate the cost-of-service provision. Even if we assume that Amtrak achieves 70-percent load factors, operates with all new equipment and increases ridership threefold, only electri- fied Metroliner service in the heavily traveled Northeast corridor will generate benefits sufficient to warrant subsidy. There may be several corridors outside the Northeast, for example, Los Angeles- San Diego, perhaps Chicago-Detroit, and Chicago-Milwaukee, which also will qualify for public support. Amtrak was originally designed as an experiment, and although it has not been conducted as scientifically or as freely as many would have liked, if the experiment has demonstrated anything, it is that the day of long-distance train travel is over. The Nation's long-distance travel needs can better be served by the auto, bus, and air modes. Regularly scheduled, heavily subsidized long-dis- tance passenger train services should be abandoned. In addition, many short-haul routes lack the potential to attract sufficient rider- ship to warrant public support and should also be eliminat- ed. Some would argue that as the world's supply of petroleum- based fuels dwindles, only electrified train service will allow inter- city tripmaking. However, that day lies beyond the foreseeable future, and it is not necessary to operate the rail system today because it might be needed 20 or 30 years from now. The rights-of- way will continue to be used to serve the Nation's rail freight movements. The rolling stock and locomotive fleet could be moth- balled so as to be ready to meet future needs, if they arise, or the equipment could be better used in those markets where there is a sizable demand for rail service. Some rail advocates would argue that other transport modes have long enjoyed subsidies and, in fact, many of the difficulties facing intercity rail passenger transportation today can be traced to the generous public aid afforded the air and highway modes over the years. Modal fairness, they claim, justifies the Amtrak subsidy. However, this argument cannot withstand serious scrutiny. The public authority should undertake investment in transport when- ever the public benefits exceed private ones. But, in the case of Amtrak there is little evidence to suggest that meaningful social impacts exist outside the Northeast corridor. It may be true that some past transport subsidies promoted some modes at the expense of others, but such mistakes are now history, and are irreversible. It was, after all, subsidies to Western railroads that killed the stagecoach. The equipment no longer employed in long-distance service could be reconfigured and reassigned to those markets where intercity rail has potential. Amtrak's future must lie in serving city-pairs PAGENO="0260" 253 that are relatively proximate, less than 250 miles apart, and have substantial online and endpoint populations. The service should be trip-time competitive with the alternative surface transport modes and be priced to reflect the cost of providing the service. Subsidies should be limited to those necessary to generate identifiable social benefits. The service should also be frequent. Nearly all studies of traveler preference conclude that frequency is a critical factor determining choice of mode. To date Amtrak has been forced to pursue a policy of broadening the route system, rather than im- proving the existing network by adding more frequencies. Outside the corridor most travelers will find that the departure times scheduled by Amtrak do not coincide with their preferences. This is especially true for travelers in cities that lie on long-distance routes. The service offered is often highly inappropriate to those not traveling between the endpoint cities. Many cities on long- distance routes receive only middle-of-the-night service. This is es- pecially unattractive given the location of many Amtrak stations. Frequent service between relatively proximate cities that lie within long-distance routes might attract the requisite patronage to justify public support. Some will claim that this proposal goes too far. It would Balkan- ize intercity passenger rail. Many smaller towns would lose all rail passenger services. Instead of a national network only local or regional services would be available. Nevertheless, places that cannot support rail service should not receive it. Small towns are without major medical centers, international airports and sympho- ny orchestras. But they do have services and amenities appropriate to their size. Bus services could easily be substituted in those relatively few cases where Amtrak is the only public transport available. Long-distance passenger train revenues are a much too costly way of insuring the mobility rights of rural Americans. Bus service would not only be less costly, but would provide residents with greater flexibility, more convenient schedules and more fre- quent departures. Finally, it should be stressed that it is not rail transport that has failed. It is not Amtrak managements that have failed. Rather, it has been the notion that the country needs a national network of transcontinental trains that has impeded the development of a rational, viable rail passenger transport system. Nostalgia and romanticism can be powerful forces, and make what should be an economic issue into a highly charged emotional one. Yet, the Congress must recognize that the useful, productive role of rail passenger services has changed. Rather than meeting the challenges of today, the system is designed to satisfy those who wish to live in the past. The results have been large deficits, a failure to meet real transport needs and the decline in rail's repu- tation as an effective alternative transport mode. It would be a great tragedy if in the future rail is rejected in those areas where it could make a real contribution because of the Amtrak experi- ence today. I will be glad to answer any questions. The CHAIRMAN. Thank you, Mr. Mulvey. Senator Schmitt. Senator SCHMITT. Thank you, Mr. Chairman. PAGENO="0261" 254 Mr. Mulvey, do you believe that route structure is the principal problem of Amtrak? Mr. MULVEY. In a sense it's route structure and I basically agree with the proposal, but I feel it doesn't go far enough. The difficulty lies in providing transcontinental services. For example, Amtrak is scheduled to depart out of Chicago at a convenient time and arrive at Los Angeles at a convenient time, but the cities en routes are often served at inconvenient times. Pittsburgh, for example, re- ceives only late night service. Very few people are going to be attracted unless trains leave and arrive on convenient schedules. Transcontinental travel needs are being better met by the airlines. What we need to look at is the needs of cities which are fairly close together, say Pittsburgh and Cleveland or Cleveland and Toledo. These cities receive very poorly scheduled service because the Amtrak long distance route network is not designed to meet their needs. Senator ScHMIrr. Mr. Mulvey, what I'm really getting at, do you agree with the ICC that only a third or less than a third of the cost of operating Amtrak go with the route structure? Mr. MULVEY. Obviously, a lot of the costs are overhead, costs, administrative costs, and, of course; capital costs. What I'm sug- gesting is that the Amtrak can generate significantly more volume if it were a regional network not necessarily interconnected- there's no reason-- Senator SCHMITT. I understand your point,but what I'm getting at is many of the routes that have been cut are generating over the last few years fairly rapidly increasing ridership and two-thirds of the costs have little to do with ridership. Do you think we could design a management system for a national rail transportation system roughly along the present route structure that could justify a subsidy or even make a profit? Mr. MULVEY. No. Senator SCHMITT. Why? Mr. MULVEY. I don't believe it because the subsidy has to be justified based upon contribution to the social welfare. The pream- ble to the Amtrak legislation says that a national rail transport system is needed because of energy efficiency considerations, envi- ronmental degradation, and the traffic congestion affecting the other modes, but Amtrak hasn't contributed to solving these prob- lems. Senator SCHMITT. That's what I'm not talking about-Amtrak. I'm talking about a national rail transportation system. If you have carte blanche to design such a system, the only constraint is roughly maintain the present route structure or expand it into profitable areas-- Mr. MULVEY. Are we also talking about existing technology? Senator SCHMITT. No. We're talking about a period of 5 to 10 years, I'll give you roughly the inflation compensated $700 million subsidy that we say exists today, the contribution to Amtrak, and I'll give you that period of time and you tell me what you can do with it. Mr. MULVEY. If we're talking about 5 or 10 years, then we are talking about existing technology and not 300-mile-per-hour trains. I would identify those corridors outside the Northeast and the PAGENO="0262" 255 Northeast corridor itself, and I would substitute fast, rapid, fre- quent train service between those relatively proximate cities, and I would abandon the long-distance transcontinental network. Senator SCHMITT. But many of those routes that you would like to see are abandoned by this proposal, are they not? Mr. MULVEY. Some of them. Senator SCHMITT. You talk about small towns. Mr. MULVEY. I live now in Boston, Mass., but in the past I have lived in small towns. Senator SCHMITT. But you implied that the small town may be characterized by one that is without a major medical center or a symphony orchestra. I think many of the towns-in fact my guess is that most of them that are significantly impacted by the Amtrak cutback, would have major medical centers for their State. They would have at least a large airport, if not an international one. Albuquerque happens to have an international airport. Mr. MULVEY. I would not include Albuquerque in that list. Senator SCHMITT. It also has a symphony orchestra. Mr. MULVEY. Those towns which would lose all public transporta- tion if Amtrack operations are eliminated. There are several towns in Montana where the only public transportation available is Amtrak. Senator SCHMITT. But the significant towns in terms of the poten- tial Amtrak ridership which would make the existing system subsi- dy less are towns like Albuquerque, fairly sizable towns along those routes, are they not? Mr. MULVEY. Well, the towns that I was referring to in terms of my statement were towns smaller than Albuquerque. Senator SCHMITT. I understand what you're referring to but I'm just trying to make sure we realize when we talk about rural service we're talking about service into major metropolitan centers that themselves serve a rural constituency. Mr. MULVEY. This is correct, but if you survey Albuquerque travelers, and ask them where they want to go, when they get on at Albuquerque; if they are traveling short or long distances; we might find that it would be better to run trains from Albuquerque to Santa Fe, or Denver or to other relatively approximate cities rather than rely on a train traveling between Chicago and Los Angeles to meet their needs. Senator SCHMITT. I'm not going to argue that we can't design a better route structure but I would argue with some of your assump- tions that there's nothing of value in the present route structure that couldn't be improved and certainly brought to compensate much more than it does for the present deficit, particularly for the kind of savings we're talking about here. Mr. MULVEY. Only if these resources devoted to rail have no cost, if the resources were free and you insinuated that when you said, "I'll give you $100 million." So if I'm supposed to treat the re- sources as if they are free, I say continue the present Amtrak route system and then add or delete routes as warranted by the evidence. Senator SCHMITT. That's not what I asked. I said we are going to let you design a new management system, a new labor manage- ment system, a new marketing system, adjust your routes after some period of time where it's clear adjustments must be made- PAGENO="0263" 256 let's just design a national passenger rail transportation corpora- tion, and we'll subsidize it as we in fact have done for other kinds of ventures of this kind for some periods of years and then we'll take a snapshot of it-how are you doing, are you making a profit for your investors, an investor-owned, profitmaking corporation with roughly the existing network. Mr. MULVEY. I don't see how it could be done. Senator ScHMrrr. Have you ever tried to design such a system? Mr. MULVEY. I have tried to imagine such a system. I worked with the Federal Railroad Administration while I worked on my dissertation when Amtrak was first put together and at that time many still thought that such a system could be designed, and that the Secretary's original basic system before modifications had the potential to break even. However, most of those who felt that way would no longer agree. Senator SCHMITT. But not with the management and labor iner- tia or anachronisms that were built into it. Mr. MULVEY. We have now gone through several managements. Senator SCHMITT. No; I don't think we're communicating. I'm talking about resetting the clock. I'm not a major supporter of Amtrak as a rail transportation system. I'm a supporter of rail transportation as being a part of a viable national system of trans- portation. Mr. MULVEY. As am I; I support rail transportation. Senator SCHMITT. You and I are getting closer and some of your testimony makes a great deal of sense about what kind of a route structure is required and I think the best point you made is that we probably have moved too fast. In fact, I know we have, that DOT has not examined this alternative that you proposed or some other alternative. All they have said is let's cut back the route structure and therefore save some money. Mr. MULVEY. I would certainly agree that the DOT proposal would not give evidence of a lot of research. Senator SCHMITT. Thank you. The CHAIRMAN. Thank you very much, Mr. Mulvey. Mr. Randall Cookus is our next witness. STATEMENT OF RANDALL COOKUS, TICKET AGENT, AMTRAK, LITTLE ROCK, ARK. Mr. CooKus. Mr. Chairman, my name is Randall Cookus. I am the Secretary of the Arkansas Association of Railroad Passengers and currently employed with the National Railroad Passenger Cor- poration-Amtrak-as a ticket agent in Little Rock, Ark. The fol- lowing testimony should not be construed as an official statement of Amtrak or by an employee of Amtrak, but only that of an officer of the Arkansas Association of Railroad Passengers. My testimony will discuss a basic and logical approach to mar- keting Amtrak as developed by the Arkansas Association of Rail- road Passengers. This comprehensive program, which was success- fully demonstrated at Little Rock, Ark., Texarkana, USA and Longview, Tex., is unique in that it did not cost Amtrak 1 cent, and yet has produced thousands of dollars in revenue for Amtrak. Arkansas ARP seriously believes that if a marketing program based on our local approach instead of the current "Hub and PAGENO="0264" 257 Feeder Market" philosophy now in effect, Amtrak revenues could increase by millions of dollars. In order to fully appreciate the significance of our local market- ing efforts, I would like to point out some of the obstacles we have had to overcome on the Inter-American and are still trying to correct. The 5-year history of the Inter-American reads much like the Perils of Pauline, except in this case the train itself has been the victim. This train until recently had been plagued with so many prob- lems that many of us believed there would never be a train through this area worthy of patronizing. Some of the problems had unfortunately become a way of life. Poor on-time performance has been and is still a major problem despite an incentive contract which was signed between the Missouri Pacific Railroad and Amtrak in January 1978. Running time was in the 50- to 60-mile- per-hour range, with an overall average speed of 43 miles per hour for the entire route. This slow speed, imposed by the Missouri Pacific, was not only ridiculous but totally unjustified because of their excellent right-of-way. Only after a threatened lawsuit by Amtrak in May 1978 was the speed limit increased to 75 miles per hour-still not up to the 79 miles per hour standard used when the Missouri Pacific ran their own passenger trains. Station facilities are inadequate or nonexistent along this route. The routing at the outset was circuitous and still needs refine- ment south of Dallas, Tex. Despite a congressional mandate which established that this train make a through international connec- tion into Mexico, this has, to date, never been accomplished. Equipment failures on this route had become commonplace-no air conditioning in the summer and frozen steampipes in the winter. Ridership and revenues reached an alltime low as a result. Finally, after 3½ years of equipment failures, the Inter-American was outfitted with new Amfleet cars in August 1977. Although this equipment was not designed to be used on this type of long dis- tance train-1,449 miles-it was welcomed, nonetheless. Sleeper service was initiated a year later in June 1978, after Amtrak failed to convince the Interstate Commerce Commission that it was not needed. Sleepers were provided only three times per week despite daily train service during this period. Advertising of the Inter-American varied from dismal to nonexis- tent. In fact, the last newspaper advertisement of the Inter-Ameri- can in Little Rock ran in November 1976. This consisted of two quarter page ads which ran in both Little Rock papers on the same day. Many of the above problems could not be corrected by the Ar- kansas Association but could be brought to the attention of the concerned party and hopefully lead to corrective action. However, one area which we felt we could be productive in helping out the Inter-American was through a comprehensive local marketing effort. Although many of the problems with the Inter-American still exist, several significant events did take place and they provided the catalyst for this effort-new Amfleet equipment with rebuilt sleepers, a revamped schedule-two hours faster-with more PAGENO="0265" 258 convenient arrival and departure times and the May 1978 an- nouncement by Secretary of Transportation Brock Adams to reduce the Amtrak system which included the elimination of the Inter- American. It became rather obvious that Amtrak's marketing department was no longer going to promote the Inter-American so the Arkan- sas Association decided they would. At first we approached the marketing of this train in much the same manner as a political candidate would in seeking office on a very limited advertising budget. We would create noteworthy news items and seek media coverage from radio and television. This was very effective in that we were telling our story to the reporter in a rather positive manner and it was a very inexpensive way to get good press coverage for Amtrak. We also had a very distinct advantage which the political candi- date and Amtrak do not have in that Arkansas ARP is a nonprofit organization. We could utilize a lot of free public service time. We basically utilized radio for these public service spots and tried not to sell Amtrak in a commercial manner but present an overall positive view of rail passenger transportation in general. Newspaper advertising was utilized because of its low cost. In all, about $600 was spent at Little Rock, Texarkana, and Longview, Tex. This was financed through membership donations in the $5 to $10 range. Small, yet informative ads were run in order to extend our advertising frequency and dollars. The results of this program were published in the nationally distributed Rail Travel News, a copy of which is attached. The officers of Arkansas ARP decided to go "hog-wild" in in- creasing Amtrak ridership and revenues by running football spe- cials to out-of-State University of Arkansas football games. Thus, Hogtrain, Inc. was born. September, October, and the first few weeks of November are historically slow periods for all public carriers. This is also football season, so why not run football specials to make this a more productive, profitable period? So we did. With an initial capital investment of $1,600 for 200 game tickets, Hogtrain president William H. Eldridge, with help in planning from Dr. William A. Pollard and me. Hogtrain got off the ground. The total package for the first Hogtrain which included game ticket, rail fare, transfers, hotel, and two meals, was $97.50. The entire 200 reservations were sold out 3 weeks after first announc- ing this through the media, and without spending a penny for advertising. The second Hogtrain was not as successful in terms of numbers as the first, but just as effective. Hogtrain, Inc., through this ven- ture, increased revenues at Little Rock by about $13,000 for these two specials, not to mention roughly $2,500 to the food and bever- age operation on these trains. Hogtrain introduced or reintroduced almost 300 people to the comforts of rail travel on board the Inter- American. From the earnings of Hogtrain, the officers of the corporation decided to purchase an automatic telephone answering device and loan it to the Little Rock Amtrak office to help compensate for the unusual hours the office is staffed. This device, which cost about PAGENO="0266" 259 the same as two round trip tickets, Little Rock to Chicago, is responsible for at least doubling the revenues and ridership at this station since its installation in late October. As a direct result of the phenomenal success we have achieved and at the insistence of Amtrak's vice chairman of the board, Mr. Charles Luna, I was asked to appear before Amtrak's vice presi- dents of operations, marketing, and public affairs to discuss our local approach to marketing Amtrak on February 21. Although a formal commitment was received from these gentlemen to set up a pilot test program, we believe the testing period has already been conducted and at no expense to Amtrak. Now is the time to initiate this program systemwide and not in just a few test markets as they have suggested. The Inter-American is a classic example of one of Amtrak's worst-made better-trains, and with a little promotion has achieved one of the highest ridership increases in the system-16.5 percent for the first quarter of fiscal year 1979. The Arkansas Association of Railroad Passengers categorically rejects the statement issued by Secretary of Transportation Brock Adams, "that better equipped trains that run on schedule would not improve Amtrak ridership and therefore reduce the system's subsidy," when, in fact, as we have demonstrated, better equipped trains, which may not necessarily run on schedule but are made known to the public through local marketing techniques, do attract ridership and will decrease the system's dependence of taxpayers subsidy. I have submitted with this a copy of the report which I presented to the three vice presidents. At your earliest convenience I suggest either you or some of your aids look through this and see some of the marketing techniques which we have done. As I mentioned earlier, the only costs we have incurred in this was $600 collected through the membership donations in the $5 to $10 membership range and the investment in the game tickets. The Arkansas Association of Railroad Passengers thanks you for giving me the opportunity to express our views. Senator LONG. Thank you. Do you have any questions? Senator ScHMIrr. Yes. Thank you very much for this very inter- esting and I find extraordinarily intriguing alternative to the cut- back in the route structure, at least an interim alternative that certainly should be tested to see if the ridership can in fact pay for part of the subsidy that would be saved by such a cutback, if not for a great deal more than that. Do you see any reason at all why these programs that you have developed or extensions of them couldn't be applied to a national network? Mr. COOKUS. No. In fact, if you would read the copy of this article that was written for Rail Travel News, we proposed 1 percent of the gross station's revenues be set aside for local advertising and basically the approach that we were going to take on the local advertising was to develop an adbook which would indicate topics for television-not necessarily television, but radio and newspapers and all the station agent would have to do is look at what he made the month before and take 1 percent of that and he would have x PAGENO="0267" 260 amount of dollars to spend as he would see fit. One of these ads we took off the back of an Amtrak timetable. We substituted some local information; station hours, when we would be there with our local phone number and, well, the results are right there. We doubled and tripled revenue. For the month of October we quadru- pled the revenue at Little Rock. We also created, by using the Hogtrain approach, a lot of local interest that was never there before, by getting the people in the community involved in this program. That's been Amtrak's biggest problem as I can see, from being an employee. Since the conception of Amtrak, there has been a lack of awareness of Amtrak, resulting in limited ridership. If you survey the people in the United States as to what they know about Amtrak-you would find that people don't know about it and therefore don't ride it. If they are attracted to it they see it as a reasonable alternative to the automobile or bus or airline. Senator ScHMIrr. Does the Arkansas ARP communicate with other associations of railroad passengers around the country? Mr. CooKus. We do to a certain extent, but this particular pro- gram was, like I said, the thought of myself and the other two individuals and we basically through our own brainstorming and through our own efforts put the package together. I happened to have done a little marketing work beforehand and the other two individuals were willing to go along with me on this and work the thing out. Senator ScHMIrr. Have you looked at the total national system to try to identify those areas that would be particularly amenable to your approach? Mr. CooKus. You bet. Albuquerque would be one fine one. Lin- coln, Nebr.; Birmingham-I have a list here of the market areas which Amtrak now currently is advertising in. I mentioned the hub-feeder approach. There are five hub markets-Washington, D.C., New York, Los Angeles, Chicago, and Philadelphia. The feeder markets-and the last time I heard they were utilizing 27 feeder markets, included Boston, Baltimore, New Haven, San Diego, Seattle, Providence, Albany, Minneapolis-St. Paul, Portland, Detroit, St. Louis, Kansas City, Orlando, Richmond, Miami, Buffa- lo, Jacksonville, San Francisco, Springfield, Ill., Charleston, S.C., Denver, Kalamazoo, Syracuse, Cincinnati, Houston, New Orleans, and Rochester. Senator ScHMIrr. Have you made any estimate on what the total income to Amtrak would be if a percentage increase in ridership such as you experienced were applied to that whole market? I realize that's stretching things a bit. Mr. CooKus. Right. Like I say, in our particular situation and looking at the current levels of ridership on the Inter-American route, this program really got going in November and December. Ridership on the Inter-American for the month of November in- creased 36.4 percent over what it had been the year before. Rider- ship of the Inter-American for the month of December increased about 18 percent over what it did that same month a year before. So we're looking at about a 16.5-percent increase in ridership. Another significant thing I found out was that the Inter-Ameri- can's revenue for the month of December increased 49.9 percent over that same period of last year and this is a direct result of the PAGENO="0268" 261 people up and down the line getting involved and doing the same things we are doing, going out and drumming up business, beating the bushes on their own time, spending their own money. In fact, the agents in Longview, Texarkana, and in Little Rock are still spending money out of their own pockets to advertise Amtrak. Senator SCHMITT. Has your program terminated? Mr. CooKus. $600 doesn't last very long and we are in the proc- ess now of trying to solicit more funds to possibly continue this thing. How successful we will be I really don't know. This was kind of a, one-time thing. We could not believe that people wouldn't ride the train, that there had to be another reason for it. In mentioning these cities, there are a lot of towns in between there that are not on it. Senator SCHMITT. Are your station and bus terminals colocated? Mr. CooKus. No; they're not, but I'm glad you brought that up because in fact I worked quite closely with one of the bus compa- nies-I might get the individual in trouble-but one of the individ- uals down there and I have talked at great lengths about this and he said, "We don't care if people come down here from Amtrak; you're bringing people to us that we probably would not have seen otherwise, and we'll take them from you and we'll take them to their destinations." Senator SCHMITT. So you think maybe a survey such as you suggested earlier might show some interesting results? Mr. CooKus. You mentioned one point earlier that is significant. The bus industry and Amtrak are attracting less than 3 percent of the total market available. The airlines are about 10 or 12 percent. Personal automobile takes up the rest of that. The buses and trains should not be at each other's throats in this particular issue. They should be going out and getting people out of the automobile which is the worse fuel consumer on the road. If we are truly trying to set up a national transportation plan with energy factors involved, then there's no other approach. Senator SCHMITT. Why do you think Amtrak hasn't implemented your suggestion? Mr. CooKus. I would rather not comment on that. I have my own personal feelings on that. Senator SCHMITT. That's an unfair question. Thank you, Mr. Chairman. Senator LONG. Thank you very much. We will now hear from a panel of Mr. John DeLora, Mr. Rex Borough, Mr. Larry Joyce, Mr. Carl Sullivan, and Mr. Ralph B. Hirsch. STATEMENT OF JOHN DeLORA, EXECUTIVE DIRECTOR, MICHIGAN PASSENGER FOUNDATION, ROCHESTER, MICH. Mr. DELORA. Mr. Chairman, I don't know if I'm in the right group or not. I'm with the Michigan Passenger Foundation. We operate under a State grant from the State of Michigan to monitor rail service in the State of Michigan. This is an abbreviated statement of my written submission. My name is John DeLora and I am the executive director at the Michigan Passenger Foundation. The foundation is a nonprofit Michigan corporation which has received a $172,000 grant from the PAGENO="0269" 262 State of Michigan to monitor Michigan passenger trains. We have 13 full-time passenger aides who ride trains, assist passengers with travel problems, and make daily reports on the conditions aboard the trains. These reports are forwarded to the Michigan Depart- ment of Transportation for its use. Since none of the trains in Michigan are scheduled for discon- tinuance under the Federal DOT plan, and since I work for neither Amtrak nor DOT, and do not represent any constituency, I believe I can speak objectively about the DOT plan. DOT has chosen to try and cut Amtrak's deficit by reducing train operations, which amount to only 30 percent of Amtrak's expenses. The rest of Amtrak's expenses come from overhead costs such as reservations, commissaries, car, and locomotive shops, et cetera. These facilities are required whether Amtrak runs 9 or 900 trains per day. If the cuts proposed by DOT are made, these over- head expenses will remain, but will have to be reallocated among the remaining trains. This will make them, in turn, show sharply higher losses. On the other hand, DOT's own scenario E in its preliminary report showed that losses per passenger mile begin decreasing as new routes are added. The reason is simple: There are more trains among which overhead costs can be allocated. It is in these overhead areas, which constitute 70 percent of Amtrak's expenses, that costs can be reduced most easily, while increasing reliability, lowering operating cost, and without cutting service. These overhead costs can be reduced most quickly and in greatest size in two ways: (a) Proper auditing of Amtrak's bills from the railroads, and (b) giving Amtrak the capital it desperately needs to modernize and increase the reliability of its fleet. Proper auditing provides the greatest potential for savings. Last year, an Amtrak field auditor in 1 day found $400,000 in over- charges by ConRail in Detroit. In Jackson, Mich., I have personally seen a boiler repair which consisted of a brick wedged against the boiler by a 2 by 4. For this, Amtrak was charged $600. This last winter, ConRail once needed a crew in Chicago for an early morn- ing Detroit-bound train, the only available crew was in Detroit, and the last bus, train, and plane had already departed. Instead of giving the crew in Detroit a ConRail truck or car to drive to Chicago, ConRail sent them by taxicab with a bill of over $300. Every investigation I have seen regarding Amtrak's bills from railroads has shown massive overcharges. The best way to put a stop to these overcharges would be for Congress to order the GAO to audit Amtrak's bills from the rail- roads for any single quarter of 1978. If that audit shows the level of overcharging is more than 4 percent, a general audit of all of Amtrak's bills from April 1, 1976, should be ordered. That was the day that ConRail began operations, and ConRail is the worst of- fender by far. If such a general audit were done, I believe more money would be saved than under the DOT plan. The second area in which major cost savings can be made is in maintenance. According to the GAO, the potential savings through increased maintenance efficiency amounts to 28.5 percent of Am- trak's fiscal year 1977 cost. The single item which would yield the greatest benefit would be the conversion of all conventional steam- PAGENO="0270" 263 equipped cars to head end electric power. The conventional cars are about 25 to 30 years old, and the heating systems are steampowered. The steam systems break down frequently-more so in severe weather-resulting in desperately needed cars being pulled out of service. It takes time and money to build new cars, get them debugged and into service. Amtrak could expand its available fleet in less time for a fraction of the cost by converting to head-end electric power. A few cars have already been so converted, and they have performed exceptionally well during the harsh winter we have just experienced. A modest expenditure in capital would generate huge savings in maintenance costs, and give Amtrak more capacity through greater car availability. One poorly understood aspect of Amtrak's operations is the fact that many of Amtrak's trains are running sold out because of lack of equipment. Amtrak's reservation system records the number of denied reservations, so this can be confirmed. Several routes show poor results because lack of equipment prevents them from being operated daily. Triweekly or quadweekly service all but renders use of the train impossible. Another reason so many long-haul trains look bad on the balance sheet is because they are saddled with the cost of the Northeast corridor. A report prepared for the Austin, Tex., Chamber of Com- merce shows that the Northeast corridor is a major producer of Amtrak's deficit, contrary to popular belief. In fact, when North- east corridor costs are properly allocated to the corridor, several long-haul trains suddenly turn from moneylosers to moneymakers. During the 1973-74 oil embargo as ridership on all trains rose, the deficits outside the Northeast corridor declined, but rose within the corridor. The reason is fairly simple: the average fare in the North- east corridor was about $7.20 in fiscal year 1977. That simply is not enough money to cover the cost of operating the corridor, so when more people ride in the corridor, the losses will increase. This fact has been obscured by Amtrak's cost allocation formula, which treats many Northeast corridor expenses as unavoidable expenses. This allows those costs to be allocated away from the corridor and out to the other trains in the system. The DOT's cutting of trains outside the Northeast corridor will simply cut off a major portion of Amtrak's revenues. For those of us who see people waiting 2 days for a train, and see no cuts in the Northeast corridor where most of Amtrak's operating expenses arise, it is very frustrating. I just hope that someone informs DOT that the western border of the United States is not Harrisburg, Pa. One of the prime attractions of rail service is that it is reliable, or at least should be. I have seen ridership on Detroit-Chicago trains go up and down as ontime performance went up and down. Amtrak has incentive contracts with many railroads which are supposed to improve ontime performance by paying bonus pay- ments for ontime service. In fact, these incentive contracts have done little to improve service. The biggest offender, again, is Con- Rail, which has thus far shown that it is better at hustling dollars than trains. No bonus payments should be allowed where ontime performance is less than 80 percent per month. Fines should be established for any ontime performance of less than 50 percent. If PAGENO="0271" 264 this sounds harsh, please keep in mind that the railroads agree to the setting of schedules, the schedules are not imposed on them. Amtrak's biggest problem is the lack of a dedicated funding source. The present system of annual appeals to Congress for gen- eral tax revenues obviously is not adequate. Amtrak has never been able to get anywhere near the capital it needs to overcome its many problems, and winds up using its money to try to hold the existing system together for another year. The DOT report was correct in recommending that Amtrak not be obliged to absorb commuter losses. There are many areas in the country in which it is simpler for Amtrak to operate a commuter service than for a local authority to do so. While it may be more convenient for local authorities to have Amtrak operate a commuter service, Amtrak should not be re- quired to absorb the losses of the service. The DOT report did not cover Amtrak's advertising efforts, and this has been one of Amtrak's weakest areas. The only needed modifications to Amtrak's route structure are minor. A real need exists for service from the Midwest to Florida. Although the current Floridian is a poor performer, it has great potential if restructured properly. The present route structure from Washington to the Midwest provides some of Amtrak's biggest losers, has heavy duplication of service, yet misses some of the biggest markets west of Washington. The Blue Ridge should contin- ue as a commuter operation only if Amtrak bears no losses on the commutation rates. The Cardinal should be continued, but routed through Indianapolis as soon as possible. The Hilltopper should not run west of Roanoke. The National Limited should be continued on its present route, particularly between Dayton and Indianapolis. Only recently has the Inter-American been given decent equip- ment and speeds. Yet this train will improve only if its congres- sional mandate as an international service is implemented. The DOT report concludes correctly that Amtrak has had a negligible impact on the bus to rail. Because the bus is also energy- efficient and can serve the markets too small to be served by train, it is in the public interest that money-losing bus routes be subsi- dized. Finally, the public is worried about fuel. Pollsters have shown the public wants more, not less, Amtrak service. At the hearings on the preliminary DOT plan, hundreds of people turned out and spoke in favor of keeping or expanding Amtrak service. Virtually the only voices raised in favor of cutting Amtrak service were employees of bus companies. For DOT to have so totally ignored the public's comments is a prime example of why so many are so disgusted with Government. We can no longer afford to close our eyes to the energy shortage, nor can we close our ears to the voices of the people. Senator, a little earlier Senator Cannon was asking some ques- tions about cost allocation. This is not in my statement. About the avoidable losses on some of these trains, I'd love to answer some of those questions and I think it would demonstrate some of what's in the GAO report is consistent with the other things that have been said here, yet still back up my statement. PAGENO="0272" 265 Senator LONG. We would like a statement by you to express your views on any of those matters and we'll be glad to include that in the record. [The statement follows:] STATEMENT OF JOHN DELORA My name is John DeLora, and I am the Executive Director of the Michigan Passenger Foundation. The Foundation is a nonprofit Michigan corporation which has received a $172,000 grant from the State of Michigan to monitor Michigan passenger trains. We have 13 full-time passenger aides who ride trains, assist passengers with travel problems, and make daily reports on the conditions aboard the trains. These reports are forwarded to the Michigan Department of Transporta- tion for its use. Since none of the trains in Michigan are scheduled for discontinuance under the federal DOT plan, and since I work for neither Amtrak nor DOT, and do not represent any constituency, I believe I can speak objectively about the DOT plan. DOT has chosen to try and cut Amtrak's deficit by reducing train operations, which amount to only 30 percent of Amtrak's expenses. The rest of Amtrak's expenses come from overhead costs such as reservations, commissaries, car and locomotive shops, etc. These facilities are required whether Amtrak runs nine or nine hundred trains per day. If the cuts proposed by DOT are made, these overhead expenses will remain, but will have to be reallocated among the remaining trains. This will make them, in turn, show sharply higher losses. On the other hand, DOT's own Scenario E in its preliminary report showed that losses per passenger mile begin decreasing as new routes are added. The reason is simple: there are more trains among which overhead costs can be allocated. It is in these overhead areas, which constitute 70 percent of Amtrak's expenses, that costs can be reduced most easily, while increasing reliability, lowering operat- ing cost, and without cutting service. These overhead costs can be reduced most quickly and in greatest size in two ways: (a) proper auditing of Amtrak's bills from the railroads, and (b) giving Amtrak the capital it desperately needs to modernize and increase the reliability of its fleet. Proper auditing provides the greatest potential for savings. Last year, an Amtrak field auditor in one day found $400,000 in overcharges by ConRail in Detroit. In Jackson, Michigan, I have personally seen a boiler repair which consisted of a brick wedged against the boiler by a 2x4. For this, Amtrak was charged $600. This last winter, ConRail once needed a crew in Chicago for an early morning Detroit-bound train, the only available crew was in Detroit, and the last bus, train, and plane had already departed. Instead of giving the crew in Detroit a ConRail truck or car to drive to Chicago, ConRail sent them by taxicab with a bill of over $300.00! Every investigation I have seen regarding Amtrak's bills from railroads has shown massive overcharges. The best way to put a stop to these overcharges would be for Congress to order the GAO to audit Amtrak's bills from the railroads for any single quarter of 1978. If that audit shows the level of overcharging is more than 4 percent, a general audit of all of Amtrak's bills from April 1, 1976 should be ordered. That was the day that ConRail began operations, and ConRail is the worst offender by far. If such a general audit were done, I believe more money would be saved than under the DOT plan. The second area in which major cost savings can be made is in maintenance. According to the GAO (CED-78-86, May 11, 1978, pp 18-19) the potential savings through increased maintenance efficiency amounts to 28.5% of Amtrak's FY 1977 cost. The single item which would yield the greatest benefit would be the conversion of all conventional steam-equipped cars to head end electric power. The convention- al cars are about 25-30 years old, and the heating systems are steam-powered. The steam systems break down frequently, (more so in severe weather) resulting in desperately needed cars being pulled out of service. It takes time and money to build new cars, get them de-bugged and into service. Amtrak could expand its available fleet in less time for a fraction of the cost by converting to head-end electric power. A few cars have already been so converted, and they have performed exceptionally well during the harsh winter we have just experienced. A modest expenditure in capital would generate huge savings in main- tenance costs, and give Amtrak more capacity, through greater car availability. One poorly understood aspect of Amtrak's operations is the fact that many of Amtrak's trains are running sold out because of lack of equipment. Amtrak's reservation system records the number of denied reservations, so this can be con- PAGENO="0273" 266 firmed. Several routes (North Coast Hiawatha, Sunset Limited, Interamerican, Empire Builder) show poor results because lack of equipment prevents them from being operated daily. Tn-weekly or quad-weekly service all but renders use of the train impossible. Another reason to many long-haul trains look bad on the balance sheet is because they are saddled with the cost of the northeast corridor. A report prepared for the Austin, Texas Chamber of Commerce by D. E. P. Hamilton, III, examines this question in some detail. His report, "Wh~r Amtrak's Long Distance Trains Pay For Northeast Corridor Track Maintenance' shows that the Northeast corridor is a major producer of Amtrak's deficit, contrary to popular belief. In fact, when North- east corridor costs are properly allocated to the corridor, several long-haul trains suddenly turn from money-losers to money-makers. During the 1973-74 oil embargo as ridership on all trains rose, the deficits outside the northeast corridor declined, but rose within the corridor. The reason is fairly simple: The average fare in the northeast corridor was about $7.20 in fiscal year 1977. That simply is not enough money to cover the cost of operating the corridor, so when more people ride in the corridor, the losses will increase. This fact has been obscured by Amtrak's cost allocation formula, which treats many northeast corridor expenses as unavoidable expenses. This allows those costs to be allocated away from the corridor and out to the other trains in the system. The DOT's cutting of trains outside the Northeast corrdior will simply cut off a major portion of Amtrak's revenues. For those of us who see people waiting two days for a train, and see no cuts in the northeast corridor where most of Amtrak's operating expenses arise, it is very frustrating. I just hope that someone informs DOT that the western border of the United States is not Harrisburg, Pa. DOT assumes that their plan will keep most of the patronage. I doubt this. The Detroit-Chicago trains used to carry 20-25 people daily who made connections for the Empire Builder at Chicago. In the summers, this number was closer to 50 per day. When the Empire Builder's schedule was changed so that this connection became impossible, these connecting passengers simply stopped riding. Few of them were going to Seattle, but instead were going to intermediate cities on that route. Virtually all of those passengers now drive. Under the DOT plan, so many interme- diate cities will be cut out of the Amtrak system that ridership on all trains will suffer as connecting passengers to those cities are effectively barred from the Amtrak system. One of the prime attractions of rail service is that it is reliable, or at least should be. I have seen ridership on Detroit-Chicago trains go up and down as on-time performance went up and down. Amtrak has incentive contracts with many rail- roads which are supposed to improve on-time performance by paying bonus pay- ments for on-time service. In fact, these incentive contracts have done little to improve service. The biggest offender, again, is CorRail, which has thus far shown that it is better at hustling dollars than trains. No bonus payments should be allowed where on-time performance is less than 80 percent per month. Fines should be established for any on-time performance of less than 50 percent. If this sounds harsh, please keep in mind that the railroads agree to the setting of schedules, the schedules are not imposed upon them. The other side of reducing Amtrak's deficit is to raise revenues. There are several areas where this can be done at little or no increase in cost. The easiest to implement would require no increase in cost and would raise revenues substantial- ly. The ICC Adequacy of Service Rule 1124.4 (c) requires Amtrak to hold reserva- tions until 30 minutes prior to departure. This rule has caused Amtrak to sustain an extraordinarily high number of no shows particularly in sleeping car space at peak periods. This causes trains listed in Amtrak's reservations computer to be shown as sold out when in fact they leave their origin points with many empty seats because of no shows. In the meantime, many potential customers are told the train is sold out and are turned away. Amtrak keeps a record of denied reservations requests, so this is an easy matter to check out. Amtrak should only be required to hold reservations without payment until 24 hours before departure. In the 24 hours prior to departure, tickets should be sold strictly on a full payment, first come, first served basis. FUNDING NEED5 AND SOURCES Amtrak's biggest problem is the lack of a dedicated funding source. The present system of annual appeals to Congress for general tax revenues obviously is not adequate. Amtrak has never been able to get anywhere near the capital it needs to overcome its many problems, and winds up using its money to try to hold the existing system together for another year. PAGENO="0274" 267 Our highway system has come under very little criticism about its enormous costs simply because the source of highway funds is a dedicated source. With gasoline taxes earmarked for the Highway Trust Fund, the highway system has an assured source of money, and highway officials can turn their efforts toward long-range planning go they can make the best use of their money. There is no reason why rail passenger service could not have a similar fund. The ideal method would be to place a 2 percent surcharge on freight rates of Class I railraods, and to dedicate the revenues to a National Rail Passenger Trust Fund, which would then become Amtrak's sole source of federal funds. Such a fund would conservatively yield $3 billion per year, which would be enough to allow Amtrak to begin making the capital improvements necessary to provide its services more efficiently. This 2 percent surcharge need not be a burden on the railroads or the shippers, either, since it could replace a current 2 percent freight surcharge that has been dedicated to deferred maintainance. The fund could be administered by the ICC or by DOT. FARE ~ouc~ The DOT report correctly states that one of the primary public benefits of Amtrak is its availability as an alternate to the automobile. As such, it can play a major role in gasoline conservation, and in so doing, help reduce the nation's balance of payments deficits and dependence on foreign oil sources. The only way Amtrak can help solve these problems is by carrying a large volume of rides. Therefore, Amtrak's fare policy should be to maximize ridership at the expense of the automobile. To accoplish this, Amtrak's fares should be set at a level equal to the PERCEIVED auto cost, i.e., the cost of gasoline. This would mean an average Amtrak's coach fare of $.035 per mile, which is not too far below several of Amtrak's current fares. The main reason ridership growth on the Detroit-Chicago trains has flattened out in the last two years, has been the rapid rise in fares (25 percent in two years). Amtrak's own corporate reports and five year plans have stated repeatedly that fare increases above 5 percent per year are counterproduc- tive. Cutting the fare to the price of gasoline at 20 miles per gallon would mean packaged trains nationwide. COMMUTER SERVICE5 The DOT report was correct in recommending that Amtrak not be obliged to absorb commuter losses. There are many areas in the country in which it is simpler for Amtrak to operate a commuter service than for a local authority to do so. For example, the Detroit-Jackson MICHIGAN EXECUTIVE provides a needed commut- er train which operates across the boundaries of two local agencies, one responsible for the metropolitan Detroit area and one for Jackson County. If the Detroit area transit authority (SEMTA) takes over the service, expensive terminal facilities would have to be built in Ann Arbor. Amtrak's operation of the train allows it to be run to Jackson, a railroad division point, where suitable terminal facilities are in place. While it may be more convenient for local authorities to have Amtrak operate a commuter service, Amtrak should not be required to absorb the losses of the service. Another facet of this problem are those situations where Amtrak honors local transit authority commuter tickets with Amtrak only being reimbursed at the commutation rate by the local authority. For example, in the Boston area, Amtrak honors Massachusetts Bay Transportation Authority (MBTA) commuter tickets. The MBTA then reimburses Amtrak for each commuter carried, but at the commutation rate. In cases such as this, Amtrak should be reimbursed at Amtrak's regular one- way fare. MAIL One area of tremendous revenue potential, mail and package express, was unfor- tunately dealt with only in passing in the DOT report. Unfortunately, Amtrak's handling of mail is always treated as if it were in a vacuum. Other factors must be considered. The taxpayer pays once, at high cost, for private truckers to haul mail between cities, then pays again for Amtrak to carry passengers between the same cities. It makes much more sense to pay Amtrak to carry the mail, and by doing so, reduce its deficit and the total cost to the taxpayer. In Detroit there are tracks leading from the depot directly into the main post office, approximately ¾ mile away. In Chicago, most trains entering Union Station PAGENO="0275" 268 must pass through the main Chicago Post Office, with its extensive mail-handling facilities. Bulk mail can be even more profitable, since it is ideally suited to Amtrak capabilities. Adriana Gianturco, Director of the California Department of Transpor- tation, has estimated that the existing Amtrak system could generate $50 million annually in mail revenue, and that a very modest expansion could generate an additional $40 million per year. By a very modest capital expenditure for baggage cars and mail containers, that taxpayers would save substantially on the continuing cost of mail transport. OPERATING CREWS Amtrak could also become much more efficient if it were allowed to take over operating crews. Currently, the railroads provide engineers, conductors and brake- men under contract to Amtrak. The rail unions have shown a willingness in the part to discuss changes in work rules (see the 1974 Congressional report on the BLUE RIDGE), but the railroads will not discuss separate contracts for passenger and freight crews. In addition, the present method virtually requires Amtrak to stay on one railroad over most of its routes. This tends to freeze Amtrak into the nineteenth century markets of individual railroads. If Amtrak directly employed the operating crews, it could operate over those tracks which would allow it access to the largest markets between its endpoint cities, instead of starting at one major city then passing through dozens of small villages and bypassing major markets en route to another major city at its endpoint. ADVERTISING The DOT report did not cover Amtrak's advertising efforts, and this has been one of Amtrak's weakest areas. To date, Amtrak's advertising has largely been general in nature. Virtually all specific route advertising has been done in very plain newspaper ads. Almost the only time Amtrak tried specific route advertising in the Detroit area on television, it was a roaring success. When Amtrak introduced its Turboliner service between Chicago and Detroit, very effective television commercials were used to announce the service. Up to then, most people didn't even know that there were trains running between Detroit and Chicago. The result of the ads was stand- ing room only on Detroit-Chicago trains until the ads had been off the air for several months. In the same vein, Amtrak has failed to properly promote is excursion fares. Some time ago, Amtrak introduced a very attractive excursion fare for the NIAGARA RAINBOW, but failed to advertise it. The result was that passengers who appeared at the station prepared to pay the regular fare found, much to their delight, that there was an excursion fare in effect. Amtrak may have gained some goodwill this way, but if lost revenue without gaining passengers in doing so. Amtrak's advertising should be geared to informing people that trains are run- ning from point A to point B, and excursion fares should not be introduced unless they are first properly promoted. In addition, Amtrak needs to do much, much more advertising. As proof of this, an Amtrak agent in Arkansas spent money from his own pocket for newspaper ads that simply told what time the train ran, and gave a sample fare. Patronage quadrupled. ROUTE STRUCTURE The only needed modifications to Amtrak's route structure are minor. MIDWEST-FLORIDA A real need exists for service from the midwest to Florida. Although the current FLORIDIAN is a poor performer, it has great potential if restructured properly. Virtually everyone has recognized for years that the train should serve Atlanta. What has not been recognized, however, is that the train is also poorly routed on the northern end of the route. The major sources of midwest to Florida travel is not Illinois and Indiana, it is Ohio and Michigan. A survey of auto license plates taken by the Florida Tourism Development Bureau at the Florida state line on major freeways proves this. According to their figures, Michigan and Ohio send more auto tourists to Florida combined, than Illinois and Indiana combined; in fact, they send 72 percent more than Illinois and Indiana. PAGENO="0276" 269 Michigan and Ohio tourists are presently asked to take a train west to Chicago to go southeast to Florida, and with the predictable results. For that reason, one of two alternate routings of the FLORIDIAN should be instituted. A. Add a Detroit-Toledo-Cincinnati-Louisville section to the FLORIDIAN, which would then continue to Nashville, Chattanooga, Atlanta, Savannah, Jacksonville and on to other Florida points. B. Run the Detroit-Louisville-Florida FLORIDIAN, without a direct Chicago-Louis- ville connection. Chicago passengers could still use the train with the provision of through cars on the present LAKESHORE LIMITED which would be switched onto the Detroit FLORIDIAN at Toledo. Chicago passengers would not mind going east to go southeast, the service would be maintained, and patronage would be increased. Detroit to Florida service would not require the opening of any additional stations except Chattanooga and Atlanta, which Amtrak plans to open soon anyway. In addition, some Florida west coast trains should serve Sarasota, Bradenton, and Venice, which are in the fastest growing area of Florida. At the very least, the FLORIDIAN should not be discontinued until it has had a test on its new route through Chattanooga and Atlanta. WASHINGTON-MIDWEST The present route structure from Washington to the midwest provides some of Amtrak's biggest losers, has heavy duplication of service, yet misses some of the biggest markets west of Washington. First, the BROADWAY LIMITED's Washing- ton section should be split off at Pittsburgh, then follow the B&O to Washington, saving 47 miles. Washington bound passengers on the present route east of Pitts- burgh can use the NATIONAL LIMITED, which serves the same route just an hour or so later. There should be a Detroit-Washington service, running Detroit-Toledo-Cleveland- Pittsburgh on Conrail, thence to Washington on the B&O. At Pittsburgh, the train could pick up the rerouted Washington section of the BROADWAY LIMITED. All stations on the Detroit-Washington route are open with the exception of Youngs- town. This route has a very high population density (see appendix) and would draw a considerable amount of group tour traffic from Detroit, Toledo, and Cleveland for Washington. There would be no reason for this train to make stops at Martinsburg, Brunswick, Gaithersburg, Rockville or Silver Spring. Previous operation of the BLUE RIDGE proved that these demand primarily a commuter-type service. The BLUE RIDGE should continue as a commuter operation only if Amtrak bears no losses on the commutation rates, as is discussed later. The CARDINAL should be continued, but routed through Indianapolis as soon as possible. The HILLTOPPER should not run west of Roanoke. Ashland, Ky., the only major city west of Roanoke, is already served by the CARDINAL, and at much more reasonable hours. This would result in the saving of 279 very unproductive miles. The NATIONAL LIMITED should be continued on its present route, particularly between Dayton and Indianapolis. Since a schedule change that allowed service to Dayton at reasonable hours, this train has shown steady improvement. THE INTERAMERICAN Only recently has this train been given decent equipment and speeds. Yet this train will improve only if its congressional mandate as an "international service" is implemented. The whole purpose of this train was to provide service to Mexico, yet this has not been accomplished since the train was inaugurated. The train misses connections in both directions with the AZTEC EAGLE of the Mexican National Railways. Before this train is dropped, the Congressional mandate for International service should be carried out and through cars, or at least connections, should be provided to Mexico. AMTRAK AND THE BUS INDUSTRY The DOT report concludes, correctly, that Amtrak has had a negligible impact on the bus to rail. We surveyed 1100 passengers, and when asked about how they would have travelled if the train weren't available, virtually all said they would either drive or fly. The simple fact of the matter is that the sociological base from which the bus industry draws its patronage is slowly disappearing, and will not reverse itself until people desert their autos for intercity trips. Because the bus is also energy-efficient and can serve the markets too small to be served by train, it is in the public interest that money-losing bus routes be subsi- dized. To help both bus and rail services, intermodal facilities, ticketing and baggage PAGENO="0277" 270 services should be expanded vigorously. Getting people out of their cars and onto * fuel-efficient public transportation should be national policy. * Finally, the public is worried about fuel. Pollsters have shown the public wants more, not less, Amtrak service. At the hearings on the preliminary DOT plan, hundreds of people turned out and spoke in favor of keeping or expanding Amtrak service. Virtually the only voices raised in favor of cutting Amtrak service were employees of bus companies. For DOT to have so totally ignored the public's com- ments is a prime example of why so many are so disgusted with government. We can no longer afford to close our eyes to the energy shortage, nor can we close our ears to the voices of the people. [The following information was subsequently received for the record:] MARCH 14, 1979. Hon. RussEu~ B. LONG, Chairman, Subcommittee on Surface Transportation, Committee on Commerce, Sci- ence, and Transportation, US. Senate, Washington, D.C. DEAR MR. CHAIRMAN: During the Amtrak hearing on March 12, 1979, Mr. John DeLora referred to a report prepared for the Austin, Texas, Chamber of Commerce by Dr. E. P. Hamilton, III, entitled, "Why Amtrak's Long Distance Trains Pay for Northeast Corridor Track Maintenance." We have been unable to ascertain any Amtrak consultation or involvement in this report. It is based on erroneous assumptions and impressions of our cost accounting system. We would appreciate your inserting in the record, following Mr. DeLora's state- ment, our response to the Hamilton document. Thank you. Sincerely, CLARK TYLER, Vice President, Government Affairs. Enclosure. AMTRAK'S RESPONSE TO: DR. E. P. HAMILTON'S PAPER ENTITLED "THE GREAT Coy- ERUP-WHY AMTRAK'S LONG DISTANCE TRAINS PAY FOR NORTHEAST CORRIDOR TRACK MAINTENANCE" Dr. E. P. Hamilton, in his paper, "The Great Coverup-Why Amtrak's Long Distance Trains Pay for Northeast Corridor Track Maintenance," concludes that Amtrak has distorted route data to the advantages of Northeast Corridor trains. He believes the data shown in the Amtrak report entitled "Statement of Northeast Corridor Financial Operations (fiscal year 1977)" is not consistent with the data shown in the Route-by-Route Profit and Loss report (fiscal year 1977) for the North- east Corridor. His conclusions are based on a misinterpretation of the data in the reports. The data is consistent; it is, however, necessary to understand the differ- ence between the two reports. The Route-by-Route Profit and Loss report reflects the costs and revenues of each route in the system: those that run entirely in the NEC, those that run outside the NEC and those that traverse the NEC. The Statement of Northeast Corridor Finan- cial Operations includes all costs and revenues of the routes that run entirely in the NEC plus the NEC portion of the traversing trains (i.e., those that run for just a portion of their operation on the NEC). Reconciliation of fiscal year 1977 statements [In millions] Fully allocated cost of 6 NEC routes from Route-by-Route Profit and Loss 1 $198 Share of NEC costs allocated to 10 routes traversing the corridor 38 NEC allocated costs from statement of NEC financial operations 2 236 iFrom attachment B of Hamilton study. 2From attachment A of Hamilton study. The difference of $38 million in cost between the two statements is the cost of the traversing trains incurred on the Northeast Corridor. Dr. Hamilton erroneously concluded that $31.4 of the $38 million are track costs allocated to other routes. Dr. Hamilton postulates that certain NEC route costs are regarded as fixed where in long haul routes they are considered variable. This arises because Amtrak owns the Northeast Corridor, and operates six Corridor routes and ten traversing routes PAGENO="0278" 271 over it. Many NEC costs are fixed in the short-run which elsewhere are purchased on a use basis from railroads and are thus variable in the short term. NEC's fixed and variable costs are treated equally, however, for both NEC routes and traversing routes using the NEC. As to Dr. Hamilton's statement that certain NEC routes are among the largest losers in the entire Amtrak system, the following must be noted: (1) the six NEC routes as a whole make a positive contribution on an avoidable profit/loss basis; (2) the six NEC routes in FY77 averaged one cent per passenger mile avoidable profit versus a three and one-half cent avoidable loss for the rest of the system; (3) the six - NEC routes rank 1, 2, 6, 11, 17 and 25 of 41 routes on an avoidable profit/loss basis. Dr. Hamilton recalculated the priority ranking of all Amtrak routes based on total allocated costs per passenger mile. Rankings based on allocated costs are not a valid measurement in themselves. In so doing, he moved the $31.4 million of allocated costs into the avoidable column, which distorts avoidable costs. It is difficult to follow the logic of Dr. Hamilton's argument that an increase in short distance ridership increases loss per passenger mile while an increase in long haul ridership reduces the loss. Any increase in ridership on the same train normal- ly improves the profitability since it provides more revenue for only incremental cost increases. All services benefited from the surge in ridership during the fuel shortage, and suffered as riders returned to automobiles when the gasoline shortage ceased. The assumption is not valid that most wear and tear on the track in the NEC is attributable to the Metroliners, since they total less than 10 percent of the ton miles (passenger and freight). Despite years of research, the extent of track wear related to high speed versus heavy axle loading is still not entirely clear. Evidence to date indicates much less is due to speed than is suggested by Dr. Hamilton's superficial analysis. Track costs on NEC are allocated on a unit mile basis, and this is support- ed by the GAO and the ICC. GAO REPORT TO THE CONGRESS, MAY 11, 1978 "We examined and verified revenue, costs and train statistical data used in RPS. We are generally satisfied that RPS provides a reasonable estimate of the costs attributed to each train and route in Amtrak's system. . . . On the basis of our study of the system, we believe Amtrak's RPS provides reasonable estimates of individual train and route economic performance. RPS results are not exact, and route decisions should not be based on their estimates alone. However, RPS results can be relied upon as a good indicator of a route's contribution to Amtrak's overall results." ICC REPORT OF MARCH 25, 1978 "Amtrak has shown consistency and refinement in expense allocation and statisti- cal accumulations." To summarize: 1. The $38 million of eosts misinterpreted by Dr. Hamilton as primarily track costs, are in fact traversing train costs of all kinds, incurred geographically on the Notheast Corridor. 2. The $38 million traversing train costs appear in the Route Profitability State- ment against the appropriate routes concerned. 3. The consideration of fixed and avoidable Corridor costs are equally and fairly applied to both Corridor and traversing routes. 4. Amtrak has not and does not make route recommendations based on allocated cost comparisons. 5. The GAO and ICC support Amtrak's costing methods. An expanded and more specific response to each of Dr. Hamilton's prinicpal allegations is attached. Enclosure. RESPONSES TO SPECIFIC ALLEGATIONS 1. Allegation: Amtrak has two accounting systems. Explanation: Amtrak has one accounting system, the Cost Management System which monitors and reports costs at each facility. An extension of Cost Management is the Route Profitability System (RPS) which allocates these same facility costs to the trains using the facilities. These allocations are based on statistics best reflect- ing the operations being allocated (e.g., car miles, car trips, locomotive miles, loco- motive trips, frequency). Two of the reports produced from RPS are the Statement of Northeast Corridor Financial Operations and the Route-by-Route Profit and Loss PAGENO="0279" 272 report. The former shows cost and revenue data resulting from the operations of the NEC. The latter shows costs and revenues for each and every route in the Amtrak system by three categories: NEC, short distance, and long distance. The six NEC routes operate solely within the NEC, and ten of the short and long distance routes operate partially on (traverse) the NEC. Costs and revenues from operating these 16 routes on the NEC appear in the Statement of Northeast Corridor Financial Oper- ations. 2. Allegation: In fiscal year 1977 Amtrak misapplied NEC costs to other trains in the system to make Corridor operations appear more profitable. Dr. Hamilton's estimated of the amount is between $33.6 and $38 million. Explanation: The fiscal year 1977 Statement of Northwest Corridor Financial Operations showed $236 million as the cost of operating the Northeast Corridor. The fiscal year 77 Route-by-Route Profit and Loss report shows $198 million as the costs for six NEC routes. Ten other routes, however, operated partially on the NEC. The NEC related costs of these ten routes are therefore reported as NEC costs in the Statement of Northeast Corridor Financial Operations, and as individual route costs in the Route-by-Route Profit and Loss report. 3. Allegation: That of a potential $38 million misapplied by Amtrak, $31.4 million is related to Maintenance of Way. Explanation: The ten routes which operate partially within the NEC were allo- cated $38 million of total NEC costs. Of this amount, $8.2 million was for Mainte- nance of Way. 4. Allegation: That Amtrak does not consider Maintenance of Way costs to be avoidable. Explanation: We define avoidable costs as those costs which would not be incurred if an entire route were terminated. In fiscal year 1977 we did not consider that NEC Maintenance of Way costs would be reduced by terminating any one route. In fiscal year 1978 and this fiscal year, we did and do consider some of these costs to be avoidable. This cost avoidabiity decision is consistent with standards issued by the Rail Service Planning Office of the ICC. 5. Allegation: That NEC costs (Maintenance of Way, Yards) are totally avoidable. Explanation: Theoretically all costs are variable in the long run, thus if the NEC trains and the traversing trains were all abandoned, all operating costs would eventually be avoided. Practically, Amtrak's reports attempt to estimate the avoid- able costs of individual routes only. 6. Allegation: That when $33.6 of the $38 million questioned by Dr. Hamilton is taken from other trains in the system and applied to the six NEC routes, the profitability status of the routes is changed to reflect a worsening of the six NEC routes and an improvement for the others. Explanation: The study takes $33.6 of $36 million which were allocated to trains on ten short/long distance routes which have partical NEC operation and allocates them to the six NEC routes. By increasing the costs of six NEC routes and decreas- ing the costs of the rest of the system, the profitability status and ranking of the 41 routes is indeed changed. But this is not a logical redistribution of costs. The ten routes use the tracks and facilities of the NEC and should be assigned costs appro- priate for such use. 7. Allegation: That a fair allocation technique for Maintenance of Way costs should be based on a formula which takes speed into account. Explanation: Dr. Hamilton's method of allocating Maintenance of Way costs are based only one speed and train miles, and thus penalize lighter, faster and smaller trains. He did not, as do most experts, include weight as a factor in his analysis. Even worse, he used the clearly non-scientific method of relying on only two data points to support his conclusions. Amtrak, on the other hand, allocates Maintenance of Way to trains based on each train's units and miles of those units over the segment(s) being maintained. Both the GAO and ICC concur in the fairness and consistency of the way costs are allocated to trains and routes by Amtrak. To quote: GAO REPORT TO THE CONGRESS, MAY 11, 1978 "We examined and verified revenue, costs and train statistical data used in RPS. We are generally satisfied that RPS provides a reasonable estimate of the costs attributable to each train and routes in Amtrak's system. On the basis of our study of the system, we belive Amtrak's RPS provides reasonable estimates of individual train and route economic performance. RPS results are not exact, and route deci- sions should not be based on their estimates alone. However, RPS results can be relied upon as a good indicator of a route's contribution to Amtrak's overall re- sults." PAGENO="0280" 273 ICC REPORT OF MARCH 25, 1978 "Amtrak has shown consistency and refinement in expense allocation and statisti- cal accumulations." Senator LONG. Let's hear from Mr. Rex Borough now. STATEMENT OF REX BOROUGH, CITY OF ALBUQUERQUE, N. MEX. Mr. BOROUGH. Gentlemen, it's a pleasure to come here today to talk about a train that's a great train in the Southwest U.S.A. and that's the Southwest Limited. This is a train that does have a good schedule. It's a train that has been well operated and my prepared statement today is pretty limited but I think it will get the mes- sage across. It will be galling to New Mexicans and their congressional dele- gation to see funds voted year after year to support an Amtrak system that abandoned one of the best passenger train operations in the United States, the Southwest Limited. This train has the second highest ridership of any long-distance train in the West. In the summer it runs to capacity; this, in spite of the fact that no new equipment has been added by Amtrak. The proposed new route system has one incredible blight. It eliminates the Southwest Limited for a new line from Los Angeles to Ogden, Utah. Just to launch this new route will take perhaps months of preparation and expense, including renovation and re- building of depots. If these expenditures are made it will take 8 hours longer to get from Los Angeles to Kansas City on the South- west Limited it is replacing. Why should a great train with established ridership and a won- derful schedule be replaced by a makeshift new line to points that already have better train service than this line will provide? This ill-conceived plan should not be allowed to happen. The Santa Fe Chief El Capitan was certainly one of the best passenger train operations in America when Amtrak took it over and rechristened it the Southwest Limited. Amtrak has revised other lines and put on new trains in other parts of the country but have neglected the Southwest Limited from the outset. Ironically, this may have been because it was so much better than other trains throughout the country when Amtrak took it over. Incidentally, Amtrak has finally scheduled some new equipment for the Southwest Limited, brandnew trains for delivery shortly before the line of schedule is to be discontinued. New Mexicans will lose part of their heritage if their passenger trains to Chicago and the west coast are discontinued, but even more important, however, Amtrak will be dealt a serious blow if one of its great trains is arbitrarily replaced by a sure loser. Unless we want to lose our train by default, we have to tell the story as it is and be heard where it counts, here in Washington. Unless Congress makes a change in the DOT proposal, the South- west Limited goes into oblivion late this year. Now I want to quote from an article in the New York Times recently. Mr. Adams' meat axe assault on Amtrak is all the more weird because he himself said recently that future transportation decisions would be studied for their impact on energy use. Worse, he demanded policies of Amtrak that would drive away riders PAGENO="0281" 274 from the poor bleeding stump of a system they would permit to survive. It still seems to be the consensus here to give train service a chance to prove itself. Since this is still the goal, let's not amputate a healthy leg like the Southwest Limited and substitute a stump that will bleed Amtrak to death. [The statement follows:] STATEMENT OF REX BOROUGH, ALBUQUERQUE, N.M. Gentlemen, it is a pleasure to appear before this committee and testify for a great train, the "Southwest Limited" from Chicago to Los Angeles. It will be galling to New Mexicans and their Congressional delegation to see funds voted year after year to support an Amtrak system that abandoned one of the best passenger train operations in the United States, the Southwest Limited between Los Angeles to Chicago-through New Mexico. This train has the second highest ridership of any long-distance train in the west; in the summer it runs to capacity. This in spite of the fact that no new equipment has been added by Amtrak. The proposed new route system has one incredible flaw-it eliminates the South- west Limited for a new line from Los Angeles to Odgen, Utah. Just to launch this new route will take months of preparation and expense including renovation or rebuilding of depots. If these expenditures are made it will take eight hours longer to get from Los Angeles to Kansas City than on the Southwest Limited it is replacing. Why should a great train with established ridership and a wonderful schedule be replaced by a makeshift new line to points that already have better train service than this line will provide? This ill-conceived plan should not be allowed to happen. The Santa Fe "Chief-El Capitan" was certainly one of the best passenger train operations in America when Amtrak took it over and re-christened it the "South- west Limited". Amtrak, however, has revived other lines, put on new trains all over the country, but has been unable to get much needed new equipment for the Southwest Limited up to now. Even with this handicap this train has operated better than most other trains throughout the country. Incidentially, Amtrak will finally be getting some new equipment for the South- west Limited-brand new trains for delivery shortly before the line is scheduled to be discontinued! New Mexicans will lose part of their heritage if their passenger trains to Chicago and the West Coast are discontinued. Of even more importance, however, Amtrak will be dealt a serious blow if one of its great trains is arbitrarily replaced by a sure loser. Unless we want to lose our train by default, we have to tell the story as it is, and be heard where it counts-in Washington. Unless Congress makes a change in the Department of Transportation proposal, the Southwest Limited goes into oblivion late this year! Now, I'd like to read an excerpt from an editorial column by Tom Wicker that appeared in the New York Times recently: "Mr. Adams' meat-ax assault on Amtrak is all the more weird because he himself said recently that future transportation decisions would be studied for their impact on energy usage. Worse, he demanded policies of Amtrak that would drive away riders from the poor bleeding stump of a system he would permit still to operate.' It still seems to be consensus here to give train service a chance to prove itself. Since this is still the goal . . . LET'S NOT amputate a healthy leg, the Southwest Limited, and substitute a stump, Los Angeles to Ogden, that will help bleed AMTRAK to death! Public surveys indicate that Americans are not prepared to lose their train service-and they don't want to support just "corridor" trains. The DOT plan eliminates the Southwest Limited because it is a long-distance train. All other carriers-airlines, truck-lines, buses like the long-hauls; they are the cream of their business. Now, we feel the following points are extremely important in making a final - decision on the DOT recommendation: (1) Although overall ridership is down on the trains, this year use of it in New Mexico has grown. Ridership at Albuquerque grew from 48,000 in 1976 to 62,000 in 1978, an increase of twenty nine percent. Counting stops at Gallup, Lamy, Las Vegas and Raton nearly 100,000 riders used the train to or from points in New Mexico. (2) Out of 474 stations served by Amtrak in 1976, Albuquerque ranked 73rd in total ridership generated. Thus it ranked far above Toledo, Sacramento, Fargo and - PAGENO="0282" 275 Memphis all of which would retain train service under the DOT plan. In a compari- son of number of passengers per train, per day Albuquerque ranks in the top twenty of all stations on the Amtrak system. (3) Of all the east-west long distance trains operated by AMTRAK, the Southwest Limited has the best overall speed, averaging 55 m.p.h. on its 2222 mile run. Track conditions on the Santa Fe Railway over which the train runs range from good to excellent and the stations along the route in New Mexico and Arizona are some of the best maintained on the Amtrak system. (4) New long-distance bi-level Superliner coaches, dining, lounge and sleeping cars, on order for this train since 1975, are just now being delivered to Amtrak after a two-year delay. Removal of the train now would preclude a fair test of this equip- ment which has the potential of increasing ridership and reducing maintenance and operating costs. The 284 cars in this order, costing over $230 million, are to re-equip Western long distance trains and cannot be shifted to Eastern routes becase of tunnel clearance problems. (5) The City of Albuquerque moved in the mid-1970's to develop a unified, inter- modal transportation complex by constructing a new intercity bus terminal opposite the Amtrak station. The benefits of making transportation access easier to the consumer and encouraging connections between one mode and another will be lost if train service is discontinued. Finally, Albuquerqueans, and the citizens of the tremendous multi-state area served by the "Southwest Limited" were misled by the preliminary DOT route recommendation, as this route was included in the route structure then. It came as a shock when it was deleted from the final route structure without notice. No opportunity was given for hearings or review. No public hearings were ever held at Albuquerque, although our city was vitally affected. In view of this, we hope this Committee and the Congress will refer this proposed back to the Department of Transportation for further consideration. Senator LONG. Let's hear next from Mr. Larry Joyce. STATEMENT OF LARRY JOYCE, KEYSTONE ASSOCIATION OF RAILROAD PASSENGERS, HARRISBURG, PA. Mr. JOYCE. Thank you, Mr. Chairman. I am chairman of the Keystone Association of Railroad Passen- gers. I would like to enter my written comments in the record and simply summarize what I have to say. First of all, I think it should be noted that Amtrak's ridership since 1972, Amtrak's first full year of operation, to September 1978, has increased 32 percent and rail passenger miles have increased 43 percent during the same period. This is on page 1 of USDOT's report. Bus ridership, during the same period has continued to decline. Greyhound, which accounts for 60 percent of the nationwide motor bus intercity passenger miles and revenue, experienced in passen- gers carried from 70 million in 1969, the high water mark for passengers carried, to 49 million today. So while Amtrak's passenger ridership was increasing from 14.3 million in 1972 to 18.9 million in 1978 or 4.6 million, 32 percent, Greyhound's passengers declined from 61 million in 1972 to 48 million in 1978 or 13 million, 20 percent. Amtrak's gain did not come at Greyhound's expense for while Amtrak was gaining 4.6 million passengers. Greyhound was losing 13.0 million or almost three times as many. Actually, as the ICC has found, in a study of motor bus industry published in May 1978, that with the exception of the competition within the Northeast corridor. There is little competition elsewhere between Amtrak and the bus industry. Considering that the motor bus industry serves 13,000 to 15,000 cities and towns and that Amtrak serves only 500, and then on~1y once a day. The competition PAGENO="0283" 276 cannot be all that strong. Amtrak customers must find something particularily desirable about the train to wait all day for that one train and therefore would not take the bus. I ~ould also like to just comment on Mr. Mulvey. Senator LONG. If I might say so, we came here to hear your statement. You have a prepared statement and if you want to submit some additional information for the record you can. We'll be glad to have it, but we wanted you to summarize the statement you have. Mr. JOYCE. Very well, I'll start on the summary. The first point that should be considered is that the plan present- ed by USDOT will not work, for revenues are overstated. For exam- ple, it would be most unlikely that any other business could reduce-for instance, a store could reduce its number of hours by 43 percent and expect to retain 91 percent of its customers. This is most unlikely. In fact, in our area stores remain open on Sundays. More important, the report projects revenues to be $325 million on a system that will be 43 percent smaller than now. Current revenues however are now only $313 million. So that much smaller system, theoretically will produce even more money. This isn't possible. For example, on the New York-Florida trains, the average daily ridership is 1,630. The current train frequency is reduced from four to two trains a day thereby reducing the average daily ridership to 668 a day. This is a loss of 1,000 passengers a day in this route alone. The remaining two trains consisted of the direct train to Miami, Fla. and also the Savannah train, by removing the rider- ship on the Savannah train then the train that goes to Florida will carry on the average, 448 passengers. Since this is a seasonal train where ridership may fluctuate as much as 50 percent, requiring 25 to 40 cars on some trains. This isn't operationally possible. Expenses too, are understated. For instance, labor protection will amount to $96 million under the projected system. However, in a much larger system, the one outlined Scenario, C, a route structure recommended by USDOT in its preliminary report, where the cost of labor protection varied between $70 and $300 million. The pro- jected $96 million is for the 5-year period 1980-84. The maximum protection that one can expect is for 6 years. It is likely then that the older employees will opt for the 6-year protection, thus forcing labor protection costs up to $300 million or more. For these reasons we ask the Senate to reject USDOT's recom- mendations for the plan will not achieve its stated objective of reducing Amtrak subsidy requirement. Unfortunately, the failure of the projected system to achieve this goal will become the basis for continually trimming Amtrak system. Like California, we believe that the best system would be one that gives the lowest cost per revenue passenger mile therefore we recommend Scenario E in USDOT's preliminary report. To make Amtrak work, the Corporation must be restructured and also change in relationship with the Government. Amtrak thould be set up as a Federal Corporation similar to the TVA with `ive directors. Congress should give Amtrak whatever dollars Con- ~ress believes Amtrak needs to operate. Then let the Corporation ~un the organization by that I mean Amtrak should decide where PAGENO="0284" 277 the trains should run and what service should be provided. I think the least likely group to oversee Amtrak's operation would be USDOT. USDOT designed the original Amtrak structure in 1972. Then there was a fiasco on between former Secretary Coleman and Amtrak where Northeast corridor funds were held up for 1 year, causing the loss of millions of dollars in construction funds because of inflation. Thank you very much. That's all I have. [The statement follows:] STATEMENT OF LAWRENCE T. JOYCE, CHAIRMAN, KEYSTONE ASSOCIATION OF RAILROAD PASSENGERS The Keystone Association's comments will focus on three main topics: (a) Whether the proposed reduction in Amtrak's route system will actually reduce subsidy requirements. (b) How Amtrak should be restructured in its corporate structure and its institu- tional arrangement with the Federal government. (c) Will the public accept the motor bus as an alternative to the train in those travel corridors where Amtrak service is to be terminated? USDOT RECOMMENDATIONS WILL NOT REDUCE AMTRAK'S SUBSIDY REQUIREMENTS USDOT proposes reducing Amtrak's route system by 43%, however USDOT an- ticipates Amtrak will retain 91 percent or current ridership. If this assumption were valid, stores would remain open only in the evening hours, thereby halving expenses and retaining most customers. On the contrary, retail establishments, rather than reducing the number of hours available for business, now remain open on Sunday. Airlines too realize that the ability to serve or "market penetration" (the percentage of total flights serving a market) is a most competitive tool. They also realize that a reduction in the market penetration percentage will cause an even greater decline in "market share". USDOT appears to be oblivious to these accepted marketing principles when recommending not only route elimination, but frequency reduc- tions. USDOT recommends that the current New York-Savannah-Florida service, with four trains in each direction, be reduced to a two train in each direction. The New York-Florida service now produces 215 passenger miles per train mile, and the New York-Savannah service produces 170 passenger miles per train mile, or a combined average daily ridership of 1630 ((215 x 6)+(170 x 2)= 1630) (Table 3-1 Preliminary Report), compared with the estimated 1980 average daily ridership of 668 (334 x 2=668) for these same markets (Table 4-3 Final Report.) USDOT's projected 1980 average daily ridership then is one thousand trips below that experi- enced by Amtrak in 1977. Moreover, ridership on this route increased 38% in the first quarter of fiscal 1979 over the previous year. This route is also subject to seasonal fluctuations, where peak demand may exceed average demand by as much as fifty percent. The Florida service is not the only route where significant reductions in service will occur. The Chicago-Oakland-Los Angeles average ridership is projected to be 186 passenger miles per train mile in 1980. This is less than one-half the actual a~erage ridership experienced by Amtrak for fiscal 1977. Amtrak reported 197 passenger miles per train mile in the Chicago-Los Angeles market, 127 passenger miles per train mile in the Chicago-San Francisco and 87 passenger miles per train mile in the Salt Lake-Seattle market. We suspect that if similar comparisons are made between the actual average ridership for fiscal 1977 (Table 3-11 Preliminary Report) and projected average ridership for 1980 (Table 4-3 Final Report) for other routes or markets, equally wide variations will be seen. This will mean that many thousands of people desiring to travel by Amtrak will be denied the opportunity. USDOT combines the projected 1980 traffic statistics for the New York-Savan- nah, and the New York-Florida trains, showing an average ridership of 334 for each of the two remaining trains. However, if the New York-Savannah average ridership is subtracted from this amount, the average ridership for the New York- Florida train is 448.5. As previously shown, seasonal traffic on this route could exceed the average by as much as fifty percent. In addition, USDOT's projections for 1980 does not provide for increases in demand which might occur in the event of any serious energy crunch. Under these circumstances, USDOT recommended single passenger train to Florida may be 25 to 40 cars long on days of high travel demand. PAGENO="0285" 278 These projections are made on the basis of USDOT's recommended average daily ridership of 334 and excludes those one thousand potential riders that USDOT deleted from the plan when they recommended reducing New York-Florida service from three trains daily to only a single train daily. Besides being rather ludicrous from an operating sfandpoint, USDOT's 1980 traf- fic assumption for the Florida service will have a significant impact on projected 1980 total revenue, where USDOT estimates that Amtrak will retain $29.842 million of $36.393 million (82%) total revenue after Amtrak is restructured. This revenue retention, according to USDOT, will occur irrespective of the fact that one thousand fewer passengers daily will be using Amtrak's services in the Florida markets, or that sufficient space will not be available to accommodate the extra riders during peak travel periods that are projected to use the service. USDOT has recommended significantly higher fares in those markets where demand of Amtrak's service rises significantly above the average, evidently to discourage travel, so that actual demand will fall within the parameters projected by USDOT. This approach is contrary to the government's reaction to increases in airline or highway travel demand, where the solution is to expand or relocate the airport or provide additional lanes of highway or build a new highway. USDOT estimates of projected 1980 expenses may be as far from the mark as its estimates of revenue, but because of the scarcity of underlying information, similar irregularities have been more difficult to detect. One item, the estimated cost for labor protection of $96 million for the years 1980 through 1984, certainly appear low. The estimated cost for labor protection for Scenario C, the route system recommended by USDOT in the Preliminary Report, which was a much larger system than the one now being recommended, ranged from $70 million to $300 million. The lesser amount was based on the assumption of a "one-time payment of a sum equal to one year's compensation to protect employees." It is unlikely that Amtrak's or the railroad's employees will choose a one-time payment when a six year guarantee is available. Additional reduction in expenses is projected from the reductions in frequency, in addition to reduction in expense projected for elimination of service. The National Limited will cease operation, however terminal expense will continue at Pittsburgh, St. Louis and Kansas City, because other trains will require service at these termi- nals. In addition, the revenues from the National Limited will be lost. The reduction in the frequency in the Florida service will still require the same amount of station and terminal facilities, and personnel. The Chicago Coach Yard will not be able to achieve a corresponding reduction in expenses from the elimination of the South- west Limited, the Northcoast Hiawatha, the Cardinal and the Floridian, but the loss of revenue from these trains will significantly increase the unit costs of the remain- ing trains using the facility. USDOT estimates that the restructured system will require $1.39 billion less in federal subsidy over the five year period, fiscal 1980-84, or an average subsidy saving of $287 million per year. This is not a great amount of money when com- pared with the subsidy requirement of other items in the federal budget, in particu- lar other transportation modes-airports, highways and waterways. The Keystone Association is concerned that because the subsidy savings are relatively small, any overstatement of anticipated revenues or understatement of expenses by USDOT will put even the restructured system in default. The failure of the restructured system to achieve the subsidy savings outlined may be viewed by the public and the Congress as a failure of the concept of rail passenger service as a legitimate transportation alternative, rather than the failure of USDOT to correctly access the effect of a 43 percent reduction in Amtrak's route system. This failure by USDOT may in turn, become the basis for future cuts in the Amtrak system, to the point where rail passenger systems ceases to exist. It will be remembered that railroad service, whether passenger or freight, is a high fixed cost business where fixed costs as a percentage of total costs increase as the number of units are reduced, so that it requires even increasing amounts of revenue to cover these costs. Reducing rider- ship and revenue passenger miles is therefore generally counterproductive. We urge the Congress to reject the USDOT's recommendation for the restructur- ing of Amtrak. It is likely that the implementation of the law may place Amtrak in a worse financial position than at present by requiring the spreading of ever increasing costs over diminishing ridership. Increasing fares, as USDOT recom- mends will only accelerate the decline. For this reason the Keystone Association recommended at the public hearing that USDOT accept it's Scenario E, (Prelimi- nary Report) where subsidy requirements per passenger mile were estimated to be $0096, (as opposed to $0149 for the USDOT's recommended system), the lowest for any of the other Scenarios studied, and where average ridership per train would PAGENO="0286" 279 exceed 150 (as opposed to 173 in the USDOT's recommended system.) It would appear, that from a public service point of view, that once the concept of subsidy is found acceptable, the only true measurement of cost vs. benefit is the least cost per passenger mile. Evidently this is the standard used to justify much larger subsidies to airlines, highways and waterway, and in fact, Mr. Adams, at his appearance before the Committee last week, used the cost per passenger mile when compañng the subsidy requirements of Amtrak, the motorbus and the airlines. In view of the threatened petroleum shortage and the fact that Amtrak's rider- ship is at an all time high, it would appear that this is not the time for USDOT to weild the ax on Amtrak's route system. RECOMMENDATIONS FOR THE CORPORATE RESTRUCTURING OF AMTRAK Something is fundamentally wrong with Amtrak as it is now corporately struc- tured and in its relationship with the Federal government. It is difficult to imagine another business where at the beginning of every fiscal year the continued oper- ation of the service is in jeopardy because of lack of funds to continue operation. This situation has not only impaired the moral of Amtrak's personnel, but has made marketing of Amtrak's services difficult. The Keystone Association of Railroad Passengers recommends that Amtrak be restructured as a wholly-owned government corporation having a structure similar to the Tennessee Valley Authority. The Board of directors would consist of five full- time directors appointed by the President for a ten year term. The Secretary of Transportation would not be a member of the board. Keystone further recommends that Congress commit itself to the funding of the corporation on yearly basis for a period of five years (for both operational and capital grants), and that an inflationary clause be included to mitigate the effect of inflation. Revenues would remain with the corporation. If revenues plus subsidy exceeded expenses, the excess, at the discretion of the Board of Directors, could be used in any way to enhance the system. The corporation would decide where the trains were to run and the type of service to be offered. Congress should grant the corporation the power to engage in labor contract with its employees including operating employees. The railroads would be required to operate its trains over the routes selected by the corporation. The Congress should give the corporation the power to impose penalties (similar to those assessed the railroads by the post office) against the railroad for failure to maintain agreed upon levels of performance including on-time performance. This method would remove USDOT and the executive branch from the operation of the corporation and would provide the Congress an overview of the corporation from the funding process. The least desirable corporate structure would be one in which USDOT was in- volved in any way in the management of Amtrak. Most of Amtrak's problems can be traced to USDOT. It was USDOT who originally established the Amtrak route structure. It was Secretary Coleman who delayed for one year the start-up of the Northeast Corridor Project, thus losing millions of dollars to inflation. It was Secre- tary Coleman who insisted, as part of the compromise to restart the project, that management of the project should be shared between Amtrak and the USDOT, an arrangement that has cost the taxpayers millions of dollars in cost over-runs and had extended the completion of the project by three years. The cost overruns and waste are now the subject of a grand jury investigation for fraud. This is hardly the track record which should recommend USDOT as the policy decision maker for Amtrak. THE BUS AS AN ACCEPTABLE ALTERNATIVE FOR AMTRAK USDOT has recommended that on those routes and in those cities where Am- trak's services are to be terminated, that the public use the bus as an alternative means of transportation. It should be obvious that if the bus were an acceptable alternative, the public now riding trains, would be riding buses, for frequency is greater and fares are generally cheaper. The fact is, the public has found the bus to be the least acceptable alternative. Intercity regular routes busridership peaked in 1969 and has been in a constant decline since then. Greyhound, which accounts for more than 60 percent of both revenue and revenue passenger miles, carried 70.736 million passengers in 1970 but only 48.469 million in 1977, a reduction of more than thirty percent. Amtrak ridership, on the other hand, has increased from 14.3 million in 1972, its first full year of operation, to 18.9 million in fiscal 1978, a 32 percent increase, and in the same period revenue passenger miles increased 2.8 billion to 4.0 billion, an increase PAGENO="0287" 280 of 43 percent, indicating that the public found train service attractive enough to leave their auto. While Amtrak was making dramatic gains, Greyhound traffic was declining and the decline in traffic for the bus industry appeared at the time when many of the interstates were in the process of being completed, and before the 55 mph speed limit became law. The bus companies publically blame Amtrak for the loss in traffic, but these traffic reversals began before Amtrak was incorporated. A recent study by the ICC, The Intersity Bus Industry-May 1978, states, "Clearly, the automobile is by fare the most potent competitor to bus travel, as it is to the bulk of common carrier (rail, air) passenger service." It is not likely then, that elimination of train service will cause any significant increase in but travel. It does mean that those Amtrak passengers displaced by the elimination of train service because of USDOT recom- mendations, will simply return to their autos. The Keystone Association requests that the Congress reject USDOT's recommen- dations for the restructuring of Amtrak because this plan will eliminate almost half of Amtrak's route structure without substantially reducing the subsidy require- ments. This objective might be better achieved by providing Amtrak with certain levels of funding and by making Amtrak's management solely responsible for oper- ating and corporation including where the trains are to run-without any interfer- ence from USDOT. Senator LONG. The final witness will be Carl Sullivan. STATEMENT OF CARL SULLIVAN, PRESIDENT, FRIENDS OF THE RAILROAD, CHARLESTON, W. VA. Mr. SULLIVAN. Mr. Chairman, my name is Carl Sullivan and I'm the past president of an organization called Friends of the Rail- road. I might tell you we were organized 6 years ago up the Potomac Valley and we organized because we were threatened at that time with the loss of our Amtrak service into Washington, D.C. and we stayed active in that 6 years and it's somewhat in- credulous to see us faced with the problem again. I represent 600 people who ride the train every day, the Blue Ridge and the Shenandoah, into Washington, D. C., and I might point out that in the recent heavy snow in Washington we were the only ones that got to work. The trains ran and the buses were sitting on the roadside and the automobiles weren't moving at all and the trains came every day, and even when there isn't any snow we pass all the automobile traffic. We pass all the bus traffic. It's all stop and go, backed up on Route 60 for many, many miles. So train service is truly the most efficient, the most economical as far as most of us are concerned and the fastest way to get to work. Now we find it very difficult to understand a lot of things about this hearing. One is we don't know why we are here talking about less trains when everything we see on the international front and the national front suggests we ought to be talking about more trains and more service. We find it difficult to understand how this nation has committed itself to the rest of the Western World that we are going to save 5 percent in energy in the next few years at the same time we are going to be cutting mass transit. We find it difficult to understand how we could find billions of dollars for highway construction, to develop new aircraft, to build airfields all over the world, to provide free waterways transportation, and the other forms of mass transit, and then we cringe because we are losing money to subsidize the railroads because the rails are historically privately owned rather than publicly owned. We fail to understand that difference. PAGENO="0288" 281 We don't understand why particularly the world's most techno- logically advanced Nation has to continue to endure a rail system from the dark ages, one that is surpassed by every other nation in the free world. A few things we do understand, Mr. Chairman, are going to happen if Secretary Adams' plan is enacted. One, there's going to be about 50,000 miles a day of additional automobile miles to get to work in Washington, D.C. There are going to be 5-600 investors who have bought and build homes up the Potomac Valley who are going to find them devalued who are going to look for other ways to get to work and they are going to lose not only their life style but maybe some of their life savings. We don't understand where 500 more cars are going to be parked in downtown Washington, D.C. and we don't understand-I guess I mentioned my devaluation point-but we basically again don't un- derstand why the Secretary of Transportation rather than coming in with a plan to reduce rail transportation is not coming up with an innovative, imaginative futuristic plan for increasing mass transportation because we believe that the era of the automobile may be fast drawing to an end. Every indication is there that that is the case and that we are going to have to have mass transporta- tion as we have never had it before and the rails have traditionally served that point in all other parts of the world and there's no reason to assume they can't serve it here. And I thank you, Mr. Chairman, on behalf of this very special interest group. I might point out other people said they weren't representing any special interest. We do represent a special inter- est, 600 of us, and we are very, very interested in maintaining the Blue Ridge and the Shenandoah and the other trains that perform a similar function around the country. [The statement follows:] STATEMENT OF CARL SULLIVAN, PRESIDENT, FRIENDS OF THE RAILROAD Mr. Chairman, I am Carl Sullivan, President of an organization called, "Friends of the Railroad." I must tell you, however, that if we were to rename our organiza- tion today, we would probably call ourselves, "Angry Friends of the Railroad." We are an organization of roughly 450 rail commuters and rail friends from West Virginia, Maryland, and Virginia. We are entirely supported by member dues and all officers and committees serve on a voluntary basis. Friends of the Railroad was organized in 1973 in the face of an Amtrak threat to discontinue our passenger rail service. Despite this area's tremendous growth in rail passenger numbers over the past six years, the threat to long established service is still with us. It is time to stop fighting a holding action and start preparing for the future. I speak today for the 600 persons who would lose their rail passenger service if the Shenandoah and Blue Ridge Amtrak trains were discontinued today. I want also to speak for the many other persons who will become regular mass rail users between now and the October Amtrak execution date. Mr. Chairman, there are many things we do not understand about this plan to eliminate Amtrak passenger service. We do not understand why this hearing is not devoted to a discussion of ways to expand and improve mass rail passenger service rather than eliminate it. We do not understand how this country has recently pledged to the world that we will begin saving five percent of our fuel consumption while at the same instant we replace energy efficient rail passenger service with single passenger automobiles. We do not understand why in light of runaway inflation, fuel shortages, traffic congestion, and environmental pollution, the Department of Transportation has not produced and implemented a national mass transportation plan. We do not understand why the Office of Management and Budget should cringe at subsidizing rail mass transportation when it annually spends billions to support PAGENO="0289" 282 airway systems and aircraft development; billions more for highway construction; hundreds of millions for airport construction and half a billion to provide absolutely free waterways for industrial shippers. We do not understand where 500 more cars per day will be parked in Washington, D.C. We do not understand why the Department of Transportation would wish to terminate the Blue Ridge, perhaps the fastest growing, most efficient train in the Amtrak fleet. And, lastly, we do not understand how or why the most technologically advanced nation on earth can endure a pathetically inadequate rail passenger system, inferior to systems in every progressive nation on earth. While there is much which we do not understand, Mr. Chairman, what we do understand is what will happen if these trains are terminated and 600 plus people lose their transportation to work. We understand that many families who have invested life savings in rural homes will find the value of their homes reduced and a new, less desirable life style forced upon them. We know that if only half the displaced persons in this area elect to drive, it will add 23,000 car miles per day to the present Washington Potomac Valley total. This added driving will generate more air pollutants in an area already in violation of EPA air quality standards. We predict Chessie system commuter trains, already full, will be unable to meet the new space demands and existing congestion problems may become intolerable. People will be literally soured on rail transportation at a time when everything possible should be done to attract them. We understand that persons who depend on the late evening service provided by the Shenandoah will have to change their jobs or their residence. Mr. Chariman, if this paradox of reduced mass transportation in the face of critically chronic fuel shortages were not so tragic, it might be funny. But it is not funny. It is ridiculous, it is counter productive, it is short sighted, it is enefficient, and it is contrary to the interest of the entire public, while working even greater hardships on those persons who have come to rely on their government for mass transportation leadership and support. The "angry" Friends of the Railroad ask that this committee disapprove the Secretary of Transportation's Amtrak amputation plans and ask instead that he return with a comprehensive, visionary, innovative, realistic, and dynamic plan for meeting this nation's mushrooming mass transportation problems. Thank you for the opportunity of being heard on this matter of great national precedence and importance. Senator LONG. Mr. Hirsch is standing up over there, so why don't we make room for him at the table. STATEMENT OF RALPH B. HIRSCH, LEGISLATIVE CHAIRMAN, LEAGUE OF AMERICAN WHEELMEN, PHILADELPHIA, PA. Mr. HIRSCH. Mr. Chairman, my name is Ralph B. Hirsch. I'm the legislative chairman of the League of American Wheelmen, which is the national organization for bicyclists, founded in 1880. I have a brief prepared statement and with your permission I will just summarize that statement very concisely. Three points to set the context for specific suggestions that we would like to make regarding the future of Amtrak's route system and service: The first is that this decade has seen an amazing growth in bicycling in the United States. Since 1970, 92.9 million new bicycles have been sold in the year compared to 91.2 million new cars. So we have bicycles outselling cars in this decade. Most of these bicycles are the full sized variety, light weight, and they are there- fore suitable for both recreational and transportation purposes. Second, bicycle recreational touring over considerable distances has rapidly gained in popularity. While a decade ago it was unusu- al for people to tour long distances, nowadays it's commonplace. PAGENO="0290" 283 Thousands of people have used the Trans-America Trail the Bike- centennial Trail, which was opened in 1976 from Oregon to Virgin- ia. Thousands more have used the east coast and Pacific coast bicycle trails and various other long distance trails throughout the country. Third, the rail mode offers the potentially ideal complement to bicycle touring and we want to stress the potential of the rail mode because there are a number of factors which inhibit the use of the railroads. One is that even the existing Amtrak system doesn't go everywhere that bicycle tourist would like to go. Second, some very popular touring areas are proposed to be cut under the DOT recom- mendations. Further, some routes have very few baggage cars or none, and some stations in attractive touring regions have no bag- gage service at all. With those points in the background, I'd like to make some specific recommendations. With regard to route deletions, we are troubled by the proposal to cut the number of touring routes, among these, service to Vermont and New Hampshire between Albany, N.Y. and Montreal, and the Salt Lake City and Portland route, and a number of other prime touring routes throughout the country. We also view with great concern the proposal to cut service to such cities as Albuquerque, Atlanta, Dallas-Fort Worth, Little Rock, and Nashville, which would be left without Amtrak service. Second, on baggage provision, adequate space must be available on trains to transport bicycles and there have to be adequate arrangements for loading and unloading at all points in the Amtrak system. I mentioned the lack of baggage cars in some routes and that some stations have no baggage service. We wel- come innovations that have been attempted recently, for example, in the use of corrugated cartons at some places on the Amtrak system that permit the bicycle to be loaded and unloaded more easily, possibly by a member of the train crew or by the passenger himself, who thus wouldn't require baggage handling services. Another possible approach which would require changes in the design specifications for new rail cars and is therefore a longer term approach, but which has been used for many years successful- ly on British rail, is to provide baggage space on the rail cars themselves which will adequately accommodate bicycles. Third, bicycle parking and storage. Secure bicycle parking and storage needs to be available at all stations. Now not many have it. Fourth, the tariffs to promote expanded use of the Amtrak system by bicyclists ought to be set at a reasonable level. I would particularly draw your attention to the recent British experiment. As a part of the Queen's Jubilee the previous tariff for bicycles was canceled and the British Rail found in evaluating its experience after 6 months that there was a net increase in revenue because of the added patronage that British cyclists had given the British railways. Finally, the integration with bus systems. We note with approval the DOT's interest in establishing better coordination between Amtrak and the bus industry for intercity passenger travel. That kind of fully integrated system with convenient standardized ar- rangements to carry bicycles, to provide mixed-mode schedule in- PAGENO="0291" 284 formation at the train and bus stations, and to install bicycle support facilities of the kind I have indicated at bus stations will serve mixed-mode travel very effectively. Basically, we see as the issue which Congress must address whether the United States can and should have an effective pas- senger rail system. We think that the reductions in service pro- posed by DOT will cause further drops in patronage and increas- ingly uneconomic operation, because fixed costs will have to be spread among fewer trains. Mr. Chairman, thank you for the opportunity to make this pres- entation. I do have a prepared statement with an attachment from the British Rail system that speaks specifically to their provisions to accommodate bicycles. [The statement follows:] STATEMENT OF RALPH B. HIRSCH, LEGISLATIVE CHAIRMAN, LEAGUE OF AMERICAN WHEELMEN Three points will set the context for the specific suggestions the League of American Wheelmen wishes to make regarding the future of Amtrak's route system and the service on that system. First, this decade has seen an amazing growth in bicycling in the United States. Since 1970, 92.9 million new bicycles have been sold here, compared with 91.2 million new cars. Most of these bicycles are of the full-sized lightweight type, suitable for either utilitarian or recreational touring purposes. Second, recreational bicycle touring over considerable distances is rapidly gaining in popularity. While only a decade ago it was unusual to hear of people taking extended tours by bicycle, it now is quite common: thousands of persons have used the Bikecentennial Trans-America Trail from Oregon to Virginia since it opened in 1976, and thousands more are cycling on other long distance routes such as the East Coast Bicycle Trail and the Pacffic Coast Trail. Third, the rail mode offers the potentially ideal complement to bicycle touring. This complementarity is only potential rather than actual, because even the exist- ing rail routes do not go everywhere that bicycle tourists want to begin or end their trips, and some very popular touring areas are now being threatened by the pro- posed cuts in the rail routes which currently serve them. Further, some rail routes have few baggage cars, and some stations in attractive touring regions have no baggage service at all. With these points as background we want to offer some more specific comments. (1) Route deletions.-Among the routes proposed to be cut by the U.S. Department of Transportation are several which serve prime bicycle touring regions, among them the Albany/Montreal route which traverses the Adirondack lake region and the Salt Lake City/Portland route which penetrates the scenic forest lands of Idaho and Oregon. We view with great concern the proposed elimination of service to such cities as Atlanta, Cincinnati, Dallas-Fort Worth, Albuquerque, Billings, Little Rock and Nashville. (2) Baggage provisions.-Adequate space must be available on trains to transport bicycles, and there have to be adequate arrangements for loading and unloading them at all points on the Amtrak system. We noted above the lack of baggage cars on some routes, and the fact that some stations have no baggage service. We welcome innovations which hold promise for overcoming these obstacles, such as the recent experiment with corrugated cartons for bicycles. This technique may make it feasible for a train crew member or even the bicyclist passenger to load or unload a bicycle without requiring local baggage handling service at the station. Another possible approach, which will require changes in the design specifications for new rail cars but which has long been used successfully by British Rail, is to provide baggage space on the rail cars adequate to accommodate bicycles. (3) Bicycle parking and storage.-Many Amtrak stations have no secure facilities to park or store bicycles. High security protection for the bicycle and its components should be available at all stations, including protection against theft, vandalism and bad weather. Coin-operated lockers similar to but larger than the standard luggage locker are one promising solution. (4) Tariffs.-To promote expanding use of the Amtrak system by cyclists the tariffs for transporting bicycles on trains should be set at the lowest feasible level. PAGENO="0292" 285 The policy adopted by British Rail in 1977 of carrying bicycles without charge has generated an immense amount of good will for British Rail, and has even made a little money for them through increased rail patronage by bicyclists. (5) Integration with bus systems.-We note with approval DOT's interest in estab- lishing better coordination between Amtrak and the bus industry for intercity passenger travel. A "fully integrated service" should include buses with convenient and standardized arrangements to carry bicycles; mixed-mode route, schedule and ticket information at train and bus stations; and bicycle support facilities such as secure parking at bus terminals within the integrated system. The basic issue to which the Congress will have to address itself is whether the United States can and should have an effective passenger rail system. The proposed reductions in service will cause further drops in patronage and increasingly uneco- nomic operation, because fixed costs will have to be spread among fewer trains. As the national organization for bicyclists, the League looks forward to working with the Congress, the U.S. Department of Transportation and Amtrak in the creation of an extensive and versatile rail system that will meet the needs of all user groups, including bicyclists, conveniently and at a reasonable cost. TAKE US FOR A RIDE . . . FREE! Sounds amazing? It's true. That's the great news for cyclists. Now all you need is a valid rail ticket for your journey and your bicycle goes along with you-absolutely free! Almost anywhere on British Rail. TAKE YOUR BIKE BY TRAIN Some useful hints for cyclists- Your accompanied pedal bicycle goes free but you must have a valid rail ticket for your journey. Only one bicycle may be taken by each passenger. Arrive at the station in good time and check with station staff the location of the guard. Always report to the guard of your chosen train and remember that the guard and platform staff have other duties and may not always be able to help you to load or unload your bicycle. Before you put your bicycle in the luggage van make sure you remove anything that is not permanently fixed, especially valuable items. Always label your bicycle showing name, address and destination station. Space for bicycles may be limited so avoid trains during rush hours and popular trains at busy holiday periods-check in advance. Always walk with your bicycle in and around the station and on platforms. A charge is still made for the conveyance of bicycles on Inter-City 125, Continen- tal Boat trains and Motorail-only services, also on Sealink and Caledonian Mac- Brayne Shipping Services and Seaspeed Hovercraft. Bicycles cannot be taken on the Waterloo & City Line, on rail services between Finsbury Park and Moorgate, on the Isle of Wight railway or on the London Underground. Bicycles are conveyed in accordance with the Regulations and in the Publications and Notices of the British Railways Board. Senator SCHMITT. I thank you all for your testimony. I have a few quick questions before I also have to leave. Mr. Borough, have you studied the benefits of the colocation of the bus and rail terminals in Albuquerque? Mr. BOROUGH. I haven't made a study of it, but I have had some practical experience with it. From May through October every other Sunday I meet the train from Chicago and the train from the West and incidentally at that time, that's always a busy depot and I do see quite a few people that are delighted and surprised to find the bus station right across the street and I think Albuquerque was farsighted, unless our trains are discontinued. Senator SCHMITT. Unless we lose the train, we were very far- sighted. 43-139 0 - 79 - 19 PAGENO="0293" 286 Mr. DeLora, you wanted to make some comment relative to some questions of Senator Cannon. Would you do that in summary, and if you have more, would you make them for the record? Mr. DEL0RA. There seems to be a lot of confusion about these avoidable costs that were mentioned in quite a few reports. These avoidable costs are an accounting tool and it doesn't mean if you take away the train all those costs are going to be avoided. I think that's one thing that a lot of people don't understand here. Avoid- able cost assumes on your overhead expenses if you reduce train service, take off a certain train, that percentage of your overhead cost will also be reduced. The point I was trying to make in my testimony was that's not always the case. In a carshop, you're going to need machinists and you've got to have electricians, and Amtrak is at a point where they can't cut people or else they are going to have some skills in which they won't have anybody and they wouldn't be able to do their jobs. So Senator Baucus men- tioned the actual savings on the train to Seattle would only be about $800,000 a year. He was correct. When Senator Cannon was speaking about the avoidable losses, I think it was $6 million or something like that, he also was correct as avoidable cost, but the actual saving is less. We also do studies in bus and other modes of transportation and one thing which also seems to be poorly understood is that the bus industry has historically delivered its patronage from the urban and rural poor, generally people without cars, that market has been slowly disappearing ever since World War II, as Mr. Lewis testified. We had surveyed passengers from Detroit to Chicago where we found less than a quarter of them indicated they would even consider a bus. The rest of them would either not make the trip. Most of the passengers between Detroit who were going the entire length of the route said they might fly, and almost exactly half of them said they would drive instead. So I really don't think it's a bus versus train type of thing. Senator SdllMrrr. Mr. Sullivan, I was going to ask you that same question. Would you care to comment? Mr. SuLLIvAN. About the matter of driving as an alternative? Senator ScHMrrr. Is that the alternative? Mr. SULLIVAN. Yes; driving is the alternative. We do have some B. & 0. Chessie trains that are already packed to the gill, Senator, which don't serve as far up the valley as we like. If we got on them we would displace somebody else along the line. So we have no alternative now other than to drive or move into the city. May I expand on that? Buses are totally unacceptable in that area. Occasionally a bus comes through, but it has no commuter facility whatsoever and they are indirect with long stopovers in between and it's not an option in any way. Senator ScHMiTT. Do you have any reason to believe that that option might be created by the bus companies? Mr. SULLIVAN. Nothing that we have ever seen would suggest that's the case. Mr. DELORA. Senator, you have been consistently asking about coexisting bus and rail locations. I can give you one example. In the Kalamazoo in cooperation with the State of Michigan and the city, the rail station was purchased and turned into an intermodal PAGENO="0294" 287 center for buses, rails, city buses, taxicabs, and airport limousines. They all run out of the same station. There was no change with the bus services with the sole exception of moving to that station which was refurbished incidentally. Indiana Motor Coach Lines which runs between Fort Wayne, md., and Kalamazoo showed a doubling of their passenger revenues in the year since that was done. So the contention that intermodal systems are the way to tie the systems together works. It works spectacularly. Senator SCHMITT. I find it hard to believe that there have been arguments to the contrary today and other times. There are so many examples of how intermodal transportation is synergistic and creates much more than either one would get by themselves. Mr. DELORA. One further comment on that point. Mr. Lewis was saying he felt the railroads were short hauling the bus passengers or the bus passengers would be getting onto the train to feed into a long-distance train whereas they were losing a long-distance pas- senger. I think if they actually studied most of their ticket pur- chases they would find they have somewhat the same pattern as Amtrak does. Not everybody is going the full distance. Instead, they are connecting from the middle of one market to the middle of the other market. I testified in connection with one major train. This is happening in thousands of locations all across the country where people cannot make a convenient travel choice and they wind up having to drive. Senator SCHMITT. Or fly, and sometimes even that isn't as convenient, particularly for the smaller town. We are trying to make it convenient by the development of a commuter airline system, but again, one of the major arguments for having or trying to improve the environment for a commuter airline system is that they are a feeder to the major airline systems and I think the argument still goes and is very sound. Mr. SULLIVAN. Senator, I just wanted to point out in support of that the importance of the Metro station underneath Union Sta- tion and the one out at National Airport are certainly not there accidentally and when those trains get into Union Station half the people or two-thirds go immediately to Metro and are shifted all over the city of Washington without automobiles tying up traffic and without any buses. Senator SCHMITT. Gentlemen, I notice one light up there which means I have to go vote. We have time for one more comment, Mr. Joyce. Mr. JOYCE. Sir, there's been quite a bit of talk about the efficien- cy of the bus as fuel efficient. I think it should be recognized that the revenue passenger miles which is the basis for any efficiency that you've got to consider because it determines the number of people on the bus at any particular time is a figure that is provided by the bus company and that's an estimated figure and the point is that although passengers have been declining vehicle miles have been increasing. So it's going actually counter to each other. There's only really one system which actually takes a sample on every ticket with a zero, in other words, and they know where everybody is going between each mode, but the way the bus compa- ny does and the way the ICC recommendation is that they take PAGENO="0295" 288 total revenue for a selected route and divide it by the number of passengers and in this way-this is only done one time a year or whenever they do it, and under this it's a very unreliable system and nobody to the best of my knowledge has ever checked that or even is aware of it. Senator ScHMIrr. Again, I thank you all for your excellent testi- mony and I hope that with diligent effort here and continued effort on your part and those that you are associated with that this unwise action will be disapproved and we will then go to work on bui1din~ a real rail passenger system. We don't have it yet or it wouldn t have to be subsidized as heavily as it is, but I don't think this is the way to do it and I get the impression you all agree. The record will be left open for additional testimony that was not received here today. Mr. SULLIVAN. We thank you for sponsoring the resolution. Senator SCHMITT. Thank you. The hearing is adjourned. [Whereupon, at 3:10 the hearing was adjourned.] PAGENO="0296" ADDITIONAL ARTICLES, LETTERS, AND STATEMENTS STATEMENT OF HON. JENNINGS RANDOLPH, U.S. SENATOR FROM WEST VIRGINIA In these first months of 1979 the Congress and the American public are having to face many vital domestic questions. One of these issues is now before the Senate Subcommittee on Surface Transportation, continued rail passenger service. On February 1, I cosponsored S. Res. 49, a resolution to disapprove the Depart- ment of Transportation's proposed Amtrak route terminations. In joining with my colleagues on this measure, I am not disputing the need for an improved and more efficient Amtrak system nor the need to bring the National deficit in line. Rather, I am concerned that the system supported by the American taxpayer be a fair and equitable one-a system that provides rail service not only to the large metropolitan areas but also to the small cities and rural communities of our Nation. The pro- posed DOT plan does not serve this purpose. In West Virgiria and 10 other states across the country Amtrak service will be nonexistent. In still other states Amtrak will be rerouted to operate in only one section of the state; in some cases this will virtually eliminate service to all but a small segment of the population. West Virginia is a rapidly growing state, due, in part, to its available transporta- tion. Presently Amtrak operates four trains in WV-the Hilltopper, serving the southern coal fields of WV; the Cardinal, serving Charleston, the cap~ ~ol, and Huntington, WV's largest city; the Shenandoah, serving eastern and ceniral WV; and the Blue Ridge, one of the most heavily used trains in the Amtrak system, providing service to the eastern panhandle, Harpers Ferry National Historical Park and Washington, D.C. If this vital service is discontinued and is accompanied by continuing airline cut backs and pull outs resulting from the airline deregulation legislation, WV and other states in similar positions will be adversely affected. I am now dealing with this very situation in three WV cities-Clarksburg, Parkersburg and Charleston. Another of our major domestic concerns is the energy shortage. Taking trains off the rails will result in putting more automobiles on the highways. Those critical of providing trains service argue that diesel locomotive fuel prices increase along with gasoline prices. Proportionately, however, diesel fuel is far less expensive then gasoline and, with the Administration's talk of gas rationing, rail service may prove to be a part of the answer in 1979 as it was in 1973 and 1974 during the Arab oil embargo. If the gasoline shortage has not reached the critical level as yet, we must take every precaution to see that it doesn't. Finally, in reviewing the mail I have received on the proposed cuts and research- ing the issue myself I must conclude that these unfair slashes of Amtrak service are ill-thought out. There are too many questions unresolved; I dare say in some instances not even reckoned with. Some I have posed here; another that concerns me, deals with the facts and figures which DOT has provided Congress. DOT says 90% of the present ridership will continue to be served by Amtrak. This is question- able, however, since there is not enough reliable date to support such a conclusion. Can the impact of such large cuts be assessed accurately, when in Amtrak's own words, 1978 ridership was down from the preceding year because of frequency reductions? Until DOT shows the same concern for rural residents as it has for the urban populace, we must continue to reject all such proposals. STATEMENT OF MICHAEL W. DELANEY Mr. Chairman, my name is Michael Delaney. I live near Harpers Ferry, W. Va., and I depend on daily train service to and from Washington, D.C. My family and I, along with an increasing number of others, have chosen a life style which avoids congestion, pollution and lessens additional demands on fuel. In the interest of your time, I will be brief. I will not dwell on the proven energy efficiency of rail passenger service nor will I dwell on the fact that-according to DOT-airline passengers pay only 33 percent of the cost of their flight while Amtrak passengers pay 37.4 percent of their trip. In both cases taxpayers pay the rest. (289) PAGENO="0297" 290 Indeed, it may well be time for efficient reductions in Amtrak routes. But what I would like to bring to the attention of the Surface Transportation Subcommittee is that two of the trains scheduled for cancellation are fully patronized. These are the Blue Ridge and the Shenandoah. Both serve Western Maryland and West Virginia and I have been told that the Blue Ridge is one of Amtrak's few trains that actually makes money. It seems to me that such successful rail service should be made an example of, instead of being made a sacrifice on the altar of national politics. It's ironic, but I get the feeling that DOT is trying to get us out of riding trains and DOE is trying to get us out of driving automobiles. Perhaps those of us who depend on rail service as an alternative to the auto- mobiles are, in reality, victims in a battle of semantics. Perhaps the answer would be to refer to us as "repeat Amtrak customers" and not as "commuters." On behalf of the estimated 1,000 daily rail customers from West Virginia alone, I ask you to examine three options within the overall context of a more cost-efficient Amtrak system. These are: One-Congess should continue Amtrak routes which are already being patronized. As I recall, the aim of Secretary Adams is to eliminate routes which are not being used. Both the Blue Ridge and the Shenandoah are being used. The Blue Ridge comprises seven cars with seating for between 84 and 90 passengers per car. In three stops, (Martinsburg, Harpers Ferry and Brunswick, Md.) the Blue Ridge is nearly full each morning. By Gaithersburg, it is jammed and by Rockville, we have standing room only. And this is after four earlier B&O commuter trains have already served Brunswick, Gaithersburg and Rockville. The Shenandoah, which is the last train out at 7:40 in the evening, comprises an Amtrak engine and two cars. It is standing room only leaving Union Station and the Shenandoah is still half full leaving Harpers Ferry heading ultimately for Cincinnati. With the impending fuel crisis, I suspect more and more people, not only in West Virginia but in Maryland and Virginia, will turn to rail service as the only viable, energy-efficient alternative to traffic jams, rising fuel prices and sinking gas gauges. Option No. Two-Amtrak Blue Ridge and Shenandoah rail service should be continued while a fare increase-if deemed necessary to help offset operating defi- cits-may be considered. Today the monthly roundtrip fare from Harpers Ferry to Washington, D.C. is $77.00. I think you would agree that this is a bargain when you consider the cost of fuel, time, auto insurance, parking and the high per-mile costs of driving a private car. If it means having rail service as an alternative, I, personally, would pay a higher monthly rail ticket price. Option No. Three-Amtrak Blue Ridge and Shenandoah rail service should be continued until the states involved can phase in their necessary subsidies to Amtrak or to the B&O so that the B&O can expand its already overburdened commuter service. I thank you for your attention and for the opportunity to testify on the urgent need to continue select Amtrak service to Western Mayland and to West Virginia. STATEMENT OF EDWARD S. PHILLIPS, AsSocIATE PROFESSOR OF ECONOMICS, SHEPHERD COLLEGE, SHEPHERDSTOWN, W. VA. I am Edward S. Phillips, Associate professor of Economics, at Shepherd College, Shepherdstown, W.Va., in Jefferson County. I am not a user of the Amtrak rail system. My comments are an attempt to present some data as an impartial observer of the Amtrak system but as a concerned citizen of Jefferson County, West Virginia. Specifically, I intend to present data which will support the following contentions: 1) that Jefferson County would lose important human resources which are necessary for the stability and growth of this region if the intended DOT actions are executed; 2) eliminating rail service on Amtrak's Blue Ridge line will reduce revenues sub- stantially while most of the costs will still have to be met by Amtrak since the bulk of these costs are fixed; 3) that the demand for rail service is inelastic for Amtrak's Blue Ridge line and therefore, increases in passenger fares will substantially in- crease total revenues for the Amtrak system. First, a region is only as productive as the human resources which are available within that region. In the case of the Eastern Panhandle of West Virginia and more particularly Jefferson County, the approximately 150 persons who depend upon Amtrak for transportation provide leadership to their communities, a disproportion- ately high tax base for the operation of schools and other vital public services for the region. To wit, only about 20 percent of these Jefferson County residents have PAGENO="0298" 291 students in public schools, yet the majority of these citizens bear greater tax burdens than those individuals who have been in the area for a longer period of time. These individuals provide economic stability to the region which might be lost if this area loses the Amtrak as it is presently constituted. Jefferson County was the fastest growing county in the State from 1970-1975. Department of Commerce data show that 1970-1976 growth rate pattern of the county declined from first to fifth in the state. However, increases in rail usage during 1976 was less than 5 percent. Since 1976 rail passengers increased by an average of 20 percent for each of the last two years. It would appear from this data that the growth of this region is highly correlated to the maintenance and expan- sion of mass transit rail service from this valley to Washington, D.C. Second, the basic costs of running any railroad are fixed-roadbeds, stations, equipment, etc. By rescheduling Amtrak service to and from the Eastern Panhandle at less popular hours, less of these fixed costs will be recovered and thus, Amtrak may increase its operating deficits since these costs will continue to be incurred after the October DOT execution date. Third, a recent survey conducted by the "Friends of the Railroad" found that approximately 80 percent of the current potential of 600 riders on Amtrak trains from Martinsburg to Washington, D.C., would be willing to have an increase in passenger fares from anywhere from $5 to $30 per month. The mean, median and model increase was $10 per month. This would bring potential increased revenues to Amtrak of $57,600, per year given the current ridership on these trains. However, as stated previously, ridership from the Eastern Panhandle of West Virginia to Washington, D.C. has increased at a rate of 20 percent per year over the last two years. If this increase in ridership from this area continues along with a $10 rate increase during the next year, Amtrak will have a potential incremental income of $90,000, without projecting increases in ridership from Maryland and Virginia. An increase of this magnitude can be compared to a potential loss of approximately $500,000 per year in total passenger fares by discontinuing rail service at the presently scheduled hours. An increase in fares by $10 per month could spell the difference between loss and breakeven on this critical rail link. In conclusion, let me paraphrase Mr. Carl Sullivan, President of "Friends of the Railroad" in his testimony to this committee. Given the data that I have presented, I do not understand why this hearing is devoted to the elimination of vital rail service. Rather, the committee should be discussing ways to expand and improve rail passenger services in order to make these services "cost effective," which can only be done by continuing to expand service on lines such as the Blue Ridge where rail passenger demand is price inelastic. STATEMENT OF STANLEY A. CMICH, MAYOR, Cirv OF CANTON, OHIO I am here today representing the city of Canton, which is one of the largest metropolitan counties within the State of Ohio. We have worked with Amtrak for ~ p~t five (5) years in establishing a new terminal that would serve the citizens of Stark County an~ ~iiic th of Akron and Summit Counties to our north. After several years of negotiation, we w~rc ~b!~ to dedicate a ~ within our downtown area, on June 30, 1978. In order to obtain this station, the city of Canton guaranteed $75,000 of the total $250,000 budget from Federal community development funds to construct a parking lot, lights and landscaping. We also agreed to extend our city services to provide concentrated police security, snow removal and general maintenance around our new Amtrak station. Immediately, the number of riders increased from 700 per month to 1,000 riders per month. This occurred even though the train only arrived at 12:23 a.m. and 2:13 a.m., and more often than not, it was at least 4 hours late. Up to this point, we had cooperated with Amtrak and with our citizens by stationing police cruisers at the old, dilapidated station on a regular nightly basis. Most of the time, our cruisers would transport the passengers back and forth between our central police station and the Amtrak site in order to keep them safe and warm. After all of these efforts and the increased ridership, it is certainly a shock to know that this service will be discontinued for our citizens. We are deeply con- cerned about discontinuing this service which is badly needed by our area and with the investment the Federal and local governments have in the new Amtrak station. On February 2, 1979, an editorial in our local newspaper, the Canton Repository, called the decision to end our service "a senseless move." In the Akron Beacon Journal of February 27, 1979, columnist Tom Wicker, with a New York by-line, was quoted as saying, `slashing Amtrak funds is a short-sighted PAGENO="0299" 292 policy." I have received many calls from our citizens as to the wisdom of this proposal. It is understandable that Amtrak has financial difficulties. Our bus system at one time had financial difficulties. Yet, the Federal Government and local efforts led to the subsidation of this system, and now we have an excellent regional transit service. We have new buses and the city has maintained its right-of-ways, thus allowing the economics of supply and demand to make our system profitable. Presently, we have contracted out with the Canton board of education to transport students to and from schools throughout the city of Canton. If we had not fully subsidized our buses over the long haul and if the Federal Government had not appropriated the necessary Federal subsidies, our system would certainly be in the shape that Amtrak is today. The consensus of opinion is that Amtrak service, scheduling and condition of the passenger cars was poor. The air line service at the Akron/Canton regional airport has been reduced. The prediction of increased cost of oil, gas and energy will be a great burden on our consumers. By comparison with other modes of transportation, rail service has proved to be the most economical. However, we feel that improved service, schedul- ing and accommodations, with more reasonable hours of arrival and departure, would increase the ridership tremendously. If this would be proved otherwise, then I would be the first to suggest that the taxpayers' money should not be wasted if there were no need for such transportation. I am certain that the proposed cuts that we are discussing here today will not provide for sufficient funds for Amtrak to operate without subsidies by the Federal Government. I, therefore, urge this committee to disapprove the recommendations of the Secretary of The Department of Transporation regarding Amtrak schedule changes, as we in the Canton/Akron area are in need of Amtrak service. CITY OF ALBUQUERQUE, ThIRD COUNCIL Council Bill No. R-327 RESOLUTION Requesting the United States Congress to reject the Department of Transportation's proposal to discontinue daily service by Amtrak to Albuquerque, New Mexico, from Los Angeles, California and Chicago, Illinois. Whereas the City of Albuquerque, County of Bernalillo and State of New Mexico conducted public hearings in Albuquerque in January, 1971, to demonstrate our need for effective intercity rail passenger transportation as part of the National Railroad Passenger Corporation's basic national system; and Whereas rail passenger service between Chicago and Los Angeles via Kansas City and Albuquerque has been a part of the basic national system since C~iëss established the National Passenger Corporation in May 1, 1~71; and Wh~èas ihe CIty of Albuquerai~~ ~fl 1~74 developed a unified, multi-modal trans- portation center or intercity bus and rail service as part of the redevelopment of downtown; and Whereas the Congress requested the Department of Transportation to conduct a study on the effectiveness of Amtrak; and Whereas the Secretary of Transportation's Preliminary Report recommended re- tention of the Southwest Limited through Albuquerque because of its consistently high ridership, revenue, and operating performance; and Whereas the closest public hearings on the Preliminary Report were in Los Angeles, California; and Whereas the Secretary of Transportation's Final Report recommends a 43 percent reduction in service for a 22 percent reduction in operating subsidy and further, recommends discontinuance of the Southwest Limited between Kansas City, Albu- querque and Los Angeles; and Whereas nearly 100,000 New Mexicans, 9 percent of the State's population, rode the Southwest Limited in 1978; and Whereas Albuquerque is the transportation center of New Mexico and ranks in the top 20 of all 474 Amtrak stations in terms of passengers generated per train per day and is 73rd in terms of total ridership generated; and Whereas Congress appropriated $230 miffion to purchase 284 new cars to reequip western trains including the Southwest Limited and that such cars, including spe- cial accommodations for the handicapped are now being delivered; and PAGENO="0300" 293 Whereas the State of New Mexico is preparing a State Rail Plan which addresses the need for rail passenger services; and Whereas the possible shortage of gasoline and other forms of fuel will require New Mexico citizens to use more public transportation, and Whereas discontinuance of this historical railroad passenger service through New Mexico will be a serious blow to the citizens of Raton, Las Vegas, Santa Fe, Albuquerque and Gallup, New Mexico denying them any access to passenger rail- road service to other parts of this nation: Be it Resolved by the Council, the governing body of the city of Albuquerque: SECTION 1. That the City Council recommends that this Department of Transpor- tation proposal or any other similar proposal be rejected by the Congress of the United States. SEC. 2. That the City Council opposes any proposal to discontinue daily Amtrak service on its present schedule through New Mexico and its principal municipality, Albuquerque, since such discontinuance would leave many of the citizens of this City without the convenience and necessity of such railroad sevice to key areas of this country. SEC. 3. That the United States Congress is urged to direct studies be undertaken to improve the effectiveness of intercity rail passenger service as an alternative to service discontinuance. SEC. 4. That a copy of this resolution be sent to the presiding officers of the Senate and the House of Representatives and to each member of the New Mexico Congressional delegation. WASHINGTON, D.C., March 12, 197g. Mayor H. W. Brawley of Harpers Ferry spoke out strongly today against the curtailment of train service in the United States, and specifically in West Virginia's Eastern Panhandle, as proposed by the Department of Transportation. In hearings held before Senator Russell Long's Subcommittee on Surface Trans- portation, Brawley stated that "when the B. & 0. discontinued the same train (The Blue Ridge) between Martinsburg and Washington in 1971, the company explained that it was an `inter-city' train, and since AMTRAK was taking over service for all inter-city trains, it discontinued service on this and hundreds of other trains. The government, including the Department of Transportation, the Interstate Commerce Commission and the Congress, sat by and let them take the trains off on that basis. Now, AMTRAK-after having put the train back on-says that it is a `commuter', and AMTRAK does not provide `commuter trains." "Hundreds of people each day ride the Blue Ridge to their jobs. Do you want to force these people into automobiles in this day and age of energy shortages? In 1970, a single railroad passenger car was used for this train. Now it requires 7 cars with a seating capacity of 600 plus. It arrives in Washington with standing room only." Brawley, who was President Kennedy's Deputy Postmaster General and later Deputy Chairman of the Democratic National Committee, recommended that the subcommittee "have the Government Accounting Office audit the `sweetheart' con- tract between AMTRAK and the B. & 0. The railroad runs the Blue Ridge for cost plus 6 percent. But, in addition, B. & 0. banks 5/7 of the receipts from commuter tickets used on the AMTRAK train. In other words, B. & 0. gets two slices of the pie." "You may find it of interest," the Harpers Ferry mayor continued, "that the former president of AMTRAK who negotiated that contract in 1972 was an ex- employee of the B. & 0., that the vice president of AMTRAK is an ex-employee of the B. & 0., and that a key attorney for AMTRAK is a B. & 0. ex-employee." Brawley concluded, "So long as the railroads keep the financial books, AMTRAK will lose money. Why? Because passengers are too much trouble. Freight doesn't complain and is more profitable. AMTRAK should be nationalized as a common carrier and have trackage rights with priority over every train on every railroad in America. This is the only way to remedy the calculated abandonment of the rail- road passenger in this country, underway since the early 1950's. PAGENO="0301" 294 NATIONAL TAXPAYERS UNION, COMMITTEE TO END GOVERNMENT WASTE, Washington, D.C., February 2, 1979. Hon. HOWARD W. CANNON, Russell Senate Office Building, Washington, D.C. DEAR SENATOR CANNON: Recently you may have received from Amtrak a response to our open letter to President Carter which appeared in the Washington Post January 3, 1979. The following is a point-by-point response to Amtrak's defense of its system and subsidies. We hope you will benefit from this "correspondence debate" on Amtrak. Because of the sheer weight and scope of the government's subsidies to Amtrak, we know you will want to reach your decision to cut subsidies to Amtrak on the basis of well substantiated facts. (1) Amtrak defends its subsidies on the basis that other transportation modes are subsidized. A. it is true that other modes are subsidized. Yet the argument that "they are subsidized so we should be too" is the worst possible justification of subsidies. The only rational basis for providing subsidies is in relation to what they "buy" in return for tax dollars. Tax dollars to Amtrak buy less than those for any other transportation modes. Amtrak's subsidy per passenger mile is the highest of all modes of intercity travel. All this for a mode that carries less then 1% of all intercity travel. A convenient way to compare subsidies between modes is to examine subsidies per passenger mile. These are: Cets Rail passenger transportation (Amtrak) 8.2 General aviation 4.9 Air carriers (certificated airlines) 0.01 Bus No subsidy Source: GAO-January 18, 1978. For private competing modes (excluding Amtrak), these other subsidies "buy" a transportation system serving most of the population, linking virtually every city and town in the country, and, serving a myriad of needs. Amtrak's subsidies buy a system which is not serving 99 percent of the people, one unable to provide more than one or two routes through most states and missing some regions altogether, and one which draws 54 percent of its riders from the 500-mile N.E. Corridor. Furthermore, Amtrak's claims that competing modes are lavishly subsidized is tenuous at best. Amtrak asserts that $525 billion was spent on highways since 1921, while the Highway Trust Fund only recovered $344 billion of this. First, the Trust Fund was only established in 1956. Thus, this comparison lacks any meaning. Secondly, some of the monies spent on highways is for roads in National Parks, Forest Lands, and, on Indian Reservations. The Trust Fund is forbidden to allocate funds for these projects. Therefore, comparing total spending after 1921 to revenues of the Highway Trust Fund since 1956 is pointless. Finally, analysis has shown that users of Federal Highways have consistently paid in user and gasoline taxes suffi- cient amounts to cover their proportional use of, and cost of, the highways. In fact, for many years intercity buses paid so many taxes that they received a "negative subsidy." Similarly, with regard to the passenger airlines, statistics suggesting vast direct and indirect subsidies are quite misleading. it is true that the air traffic control system is a service to the aviation industry not charged to the airlines, but to the taxpayer. The Federal Airport and Airways Trust Fund, to which air carriers contribute through substantial user charges, is prohibited by law for making direct contributions to FAA operations, such as the air traffic control system. But expendi- tures from the fund on legally authorized captial development projects have gener- ally run much below the Fund's annual intake from the airlines. This surplus is loaned to the Federal Treasury each year where it can be applied to current operations-such as the air traffic control system of the FAA. Cutting through the: legal technicalities (which Congress may soon eliminate), FAA officials thus calcu- late that commerical air carriers essentially pay their own way as far as Federal aviation services are concerned, though private planes (so-called "general aviation") probably do not. Whether considering either absolute levels of subsidy or the relative benefits of each subsidy dollar, subsidies to Amtrak are plainly exhorbitant and wasteful. PAGENO="0302" 295 (2) Amtrak contends that trains use energy more efficiently and cleanly than other modes. A. These assertions are in error. Fuel efficiency of Amtrak's diesel and electricity consumption in relation to passenger-miles reported to the Interstate Commerce Commission (ICC) averaged 3,350 British thermal units per passenger mile,1 or 41 passenger miles per gallon of diesel fuel during 1977 if the diesel-fuel equivalent of electric power is included.2 By comparison, intercity buses achieved 121 passenger miles per gallon in regular route service, and, considerably more in charter and special service-also according to data reported to the ICC. Intercity automobile travel, according to our review of Federal Highway Administration and other authoritative data, achieved 41 passen- ger miles per gallon-roughly equivalent to that for rail travel on Amtrak.~ It is true that operating under optimum conditions and with the latest model equipment, trains would offer significant improvements in energy use compared with other modes. But our figures represent broad modal averages and not the "special cases" which Amtrak professes to see in comparative figures we have presented before. Interestingly, the comparative pattern reflected by the D.O.T. in the statement becomes more slanted towards automobile travel in estimates for future years; for 1990, energy requirements are shown as averaging, 1,800 BTU's per passenger mile for automobiles, with a load factor of 0.45; less than the lowest average for any rail category-1,855 BTU's per passenger for "improved" electric-powered rail. What is true of energy is also true of pollution control: Amtrak's outdated equipment, and still more its poor load factors make its actual pollution record per passenger mile far worse than what its best trains, in principle, are capable of achieving. But even enthusiasts of the allegedly pollution-free service from electri- fied routes (between New Haven and Washington, and between Philadelphia and Harrisburg) should be reminded that no more than 430 miles of Amtrak's 27,000 mile route system are electrified. Even with the extension of electrification planned over the next few years, electrified routes would still constitute less than 2% of the system. Moveover, power for these "non-polluting" trains comes from generating stations which do pollute. Almost half the power for Amtrak trains running be- tween New York and Washington, for example, derives from plants burning coal and oil. Most of the rest comes from nuclear plants, which as a group, needless to say, are not generally received with much enthusiasm by environmentalists. But is does matter whether the trains use electricity produced from nuclear plants, hydro- electric facilities, or generators, since that electricity is taken from the national power grid. Thus, this so-called "clean" electricity could cause reliance on fossil fuels elsewhere in the nation. (3) Amtrak claims it has been able to turn around the decline in rail passenger service, and to more than double its operating revenues from those of its first years. A. While this is true, taken at face value, this claim needs to be placed in perspective. Travel volume on Amtrak declined 1.5 percent in passenger miles between calendar years 1976 and 1977, and even more, 5.1 percent, between fiscal years 1977 and 1978, according to figures reported to the ICC. Also, the increases occurring during the years since Amtrak's inception have been the result of addi- tional routes and trains, with average loads decreasing. In this connection the Comptroller General of the U.S. stated: While Amtrak attracted about three million more passengers in fiscal year 1977 than it did in 1972, it did so by substantially increasing the number of trains available. The number of revenue passengers per train has decreased. "Amtrak's Subsidy Needs Cannot Be Reduced Without Reducing Service", G.O.A., Report CED 78-86, May 11, 1978, p. 54. The doubling of Amtrak's revenues, that Amtrak refers to, occurred with a quadrupling of its deficit and a tripling of its expenses. (4) Amtrak claims that it is a small system that must operate with very old equipment. A. In view of the need for austerity in budgeting, how can a system requiring a projected subsidy of one billion dollars per year by 1982 be considered small? Even if this claim is legitimate, it only proves that Amtrak cannot work in today's economic environment and should not be subsidized. (5) Amtrak claims America needs a balanced transportation system. `Diesel fuel energy figured at 136,000 BTU's per gallon and electric-power energy content at 11,300 BTU's per kilowatt. 2Diesel$uel equivalent of electric power figured at 12.92 kilowatts per gallon of diesel fuel. `Based on averages, for intercity travel of about 16.5 vehicle miles per gallon and an average passenger load of 2.5. PAGENO="0303" 296 A. This is true. However, America can have a balanced transportation system without Amtrak. There is no route serviced by Amtrak which is not more efficiently served by other modes. Amtrak is correct in stating that it was Congress who mandated that Amtrak is needed to maintain a balanced system. Equally true, however, is the fact that Congress established Amtrak to be profitable. Since it is not, Congress should face its responsibilities and abolish the Amtrak subsidy. Amtrak does not balance the transporation system but it does serve to further unbalance the budget. (6) Amtrak claims that since other industrial nations have "modern, high-speed passenger services which provide the most economical, the fuel efficient and the safest passenger transportation known", America should too. A. A 1977 survey of railroads in other countries by the Union Pacific Railroad of New York states that: "The glamorous passenger trains of foreign railroads are not so glamorous except for the few `name' runs. Ordinary passenger trains are often characterized by obsolete equipment, overcrowded cars, and delayed service". (page xvi) Aside from the dubious "success" of foreign railroads, the conditions in other countries are far different than in America. In the United States the population density is approximately 57 people per square mile (much less for the areas of most Amtrak routes). In Japan there are 785 people per square mile. France has 251 per square mile. Their trains, therefore, should be compared with the United States' commuter service, not intercity rail service. Using this analysis, it would be impossi- ble to say the record of foreign railroads is any argument for a train running, say, between Chicago and Seattle. The principle concern of the National Taxpayers Union is not that passenger trains be abolished. In fact, there are probably some routes where this service is justified. The point we ask you to keep in mind is that there are many other uses for the funds now being diverted to subsidize a system which is inefficient and unneeded. If passenger trains are justified at the least they should pay for their own operating cost from ticket revenues. Please feel free to call upon me or our staff if we can provide you with additional information. Sincerely, CHARLES S. CRAWFORD, Director. ARKANSAS ASSOCIATION OF RAILROAD PASSENGERS, Conway, Ark., March 1, 1979. U.S. SENATE, Commerce Committee-Amtrak Hearing, Washington, D.C. GENTLEMEN: Enclosed is a copy of my testimony submitted during the ICC hearing on Amtrak last July. I would like to submit this testimony as documentation of the operating and management problems which have hampered Amtrak long-haul trains in many areas of the country. The potential of the long-haul passenger train remains great; as would be revealed by quality operation, management, and a modest amount of advertising. Although the Inter-American's problems affected primarily Arkansas and Texas, other states experienced similar deplorable service. Nebraska and Colorado can relate horror stories about the San Francisco Zephyr, while Tennessee and Alabama are familiar with problems on the Floridian. To argue that these trains have been judged a failure after a fair trial is to admit to an overwhelming ignorance of Amtrak operations. Thank you for the opportunity to submit this information. Sincerely, BILL POLLARD, D.D.S., Director, ArkARP. Enclosure. STATEMENT OF WM. A. POLLARD, D.D.S., DIRECTOR OF ARKANSAS ASSOCIATION OF RAILROAD PASSENGERS INTRODUCTION My name is Bill Pollard, and I am a dentist in Conway, Arkansas. My past railroad experience includes serving as Amtrak ticket clerk in Little Rock in 1974, and employment as a brakeman (in freight service) by Missouri Pacific. PAGENO="0304" 297 I believe that rail passenger service is an essential mode of transportation, for the present and for the future. The United States must begin to build a viable alterna- tive to the automobile, and rail is the only energy-efficient alternative mode which can be made attractive to all segments of the population. Unlike the bus, Amtrak's passengers come from all areas of society. I am quite concerned about the DOT proposals to eliminate the Inter-American, because I feel very strongly that this route has never received an adequate trial. The past operation of the Inter-American reflects poorly on Amtrak, Missouri Pacific, the Interstate Commerce Commission, and the Congress, because each of these organizations has either caused or allowed to continue many haphazard operating practices which have effectively driven off much of the potential patron- age of the Inter-American. A few comparisons of the Inter-American ridership figures dramatically illus- trates the magnitude and severity of the problems which virtually destroyed this route over a four year period. During April 1974, the first full month of operation, each train averaged 250 passengers. By April 1975, after one year of unbelievable operating difficulties, ridership average per train had dropped to 123, a decline of over 50%. If the Inter-American had been properly operated, the ridership baseline should have been the first few months of operation, with subsequent months show- ing increases in ridership. Instead, ridership figures of the first several months of tn-weekly operation have never been surpassed, due to numerous recurring prob- lems. Another indication of the problems affecting the Inter-American can be seen in a comparison of this route with other long haul trains. The publication "Rail Travel News" began conducting surveys of riders every 6 months, beginning in June, 1975. The survey rates such diverse characteristics as food, food crew, operating crew, car condition, station facilities, routing, scheduling, and promotion. The Inter-American has consistently been ranked in the last 20% of all of Amtrak's long-haul trains. With such numerous shortcomings, it is apparent that the Inter-American has never been able to enjoy full utilization. The public supports the concept of quality rail passenger service, and would utilize such service if it was conveniently operated. A recent Harris poll 1 and a survey by the Department of Transportation 2 both reveal overwhelming support for a nationwide passenger train system. Now is the time to be adding passenger service, not discontinuing it. sww OPERATING SPEEDS The Inter-American passenger train schedule placed into effect on March 13, 1974, provided 28 hours and 50 minutes to travel the entire 1204 mile route from St. Louis, Missouri, to Laredo, Texas, at an average speed of only 43 miles per hour. By comparison, the last passenger service provided by the Missouri Pacific over this route (in 1969), required only 23 hours and 50 minutes to travel from St. Louis to Laredo, despite 30 intermediate stops. (Appendix A) Prior to the formation of Amtrak, Missouri Pacific and subsidiary Texas & Pacific allowed a 79 mph passenger train speed limit over much of their system, and a 65 mph speed limit over the remaining trackage. In order to provide a sufficiently "loose" schedule, and to avoid any passenger train interference with fast freight schedules, the Missouri Pacific system in 1971 placed an arbitrary 60 mph limit on passenger trains operated for Amtrak. (Appendix B) It should be noted that the Missouri Pacific's lowering of the allowable passenger train speeds was not caused by any safety consideration related to deterioration of trackage. Missouri Pacific is recognized as one of the most progressive railroads in the nation with regard to ongoing capital improvement projects for upgrading track and signal apparatus.3 All Missouri Pacific mainline trackage and particularly the important St. Louis to Texas line, is maintained to the highest railway engineering standards. A Federal Railroad Administration track inspection in 1977 (conducted at the request of Amtrak, over Mopac objections) found mainline trackage safe for 80 1 "The Continuing Public Mandate to Improve Inter-City Rail Passenger Travel", Louis Harris and Associates, Inc. March 1978. 2 "A Survey of American Attitudes Toward Transportation", Peter D. Hart Research Asso- ciates. January 1978. 3 to Missouri Pacific annual reports, since the creation of Amtrak in 1971, Missouri Pacific has replaced over 2000 miles of track with heavy duty welded rail, and added Centralized Traffic Control signaling to almost 300 miles of track. PAGENO="0305" 298 mph passenger train operation. With the addition of a more sophisticated signal system, most of the existing track could handle even higher speeds.4 ON TIME PERFORMANCE The Inter-American has produced a dismal on time record for each year since the St. Louis to Laredo service began in 1974, despite an overly padded schedule de- manded by the Missouri Pacific. Because of the inconvenience of unreliable service, which is consistently operated late, ridership has been adversely affected. The on time performance of the Inter-American has invariably fallen well below the on time performance average of Amtrak's national system. During the 6 month period from May through October of 1974, only 14.8 percent of all Inter-American runs arrived at their destination within six minutes of their scheduled arrival time. Only 56 percent managed to arrive within 30 minutes of the scheduled time. In other words, almost one-half (44 percent) of the total trains on this route during this period arrived more than 30 minutes late. The average arrival time for delayed trains was 76 minutes late.~ (Appendix C) The yearly on time average for the Inter-American is shown on the accompanying graph. The operation has never attained even 70 percent for a yearly on time average, a remarkably poor showing considering the excellent trackage over which the Inter-American operates. For fiscal year 1977 (October 1976-September 1977), the on time average for the Inter-American fell to 30.9 percent. This performance includes a 30 minute allow- ance before a train is even considered late. During this period, two out of every 3 trains arrived more than 30 minutes after their scheduled arrival time. There is no legitimate excuse for the Missouri Pacific's failure to operate this train in a reason- able manner. During this period of intolerably late operation, Amtrak was forced to schedule a two hour layover for northbound train No. 22. The train was scheduled to arrive in St. Louis at 8:00 a.m., but did not depart for Chicago until 10:00 a.m. The two hour built in wait was designed to accommodate the chronically late operation of the train over the Missouri Pacific. I.C.C. regulations place a maximum speed of 79 mph for train operation over routes which do not have an elaborate automatic train stop system. Much of the existing Mopac track structure capably handled the MP Eagle passenger trains at 90-100 mph speeds, before the change in signal regulations. "Report on the Inter-American", July 1975. U.S. House of Representatives, Committee on Interstate and Foreign Commerce. (Hereinafter referred to as Report on the Inter-American, July 1975.) PAGENO="0306" 1974 1975 1976 1977 l97~* *197~ Average for January-May. SOURCE: Amtrak Corporate Headquarters, Washington, D.C. On time figures allow 30 minutes grace period before trains are considered late. (I.C.C. On-time accounting method). Unlike some Amtrak routes, particularly those operating over financially trou- bled railroads, late operation of the Inter-American cannot be blamed on "slow orders" due to deteriorated track conditions. As previously stated, Missouri Pacific track has been maintained to very high standards. Many, if not most, of the Inter- American schedule delays can be traced to interference from Missouri Pacific freight trains. Between 1974 and 1978, it was not unusual for the train to be sidetracked from 8 to 10 times between Little Rock and St. Louis, to meet freight trains. Similar problems, perhaps of even greater magnitude, plague operations between Texarkana and Ft. Worth, and between Taylor, Texas and Laredo. Numer- ous documented cases exist of the Inter-American being dispatched behind slow freight trains which do local switching work, and of delays totalling an hour or longer due to waiting in sidings to meet freight trains. South of St. Louis, the Inter-American operates over three different railroads: 128 miles over the Sante Fe (AT&SF), 38 miles over the Missouri-Kansas-Texas (MKT), and over 1000 miles over the Missouri Pacific (Mopac). To their credit, both the Santa Fe and the MKT railroads have cooperated fully with Amtrak in the prompt operation of the Inter-American. Only the Missouri Pacific persists in repeatedly disrupting the operation of this train. Appendix "D" documents a typical example of Amtrak operating difficulties over the Missouri Pacific. These examples are limited to the Dallas Subdivision, a 250 mile stretch of Missouri Pacific trackage between Texarkana and Ft. Worth. Similar delays occur over most of the Inter-American route segments operated by Mopac, / ~1 I I 299 _~M?LY ON-TIME AVERAGE INTER-AMERICAN On-time performance; minimum acceptable level. PERCENT ON-TIME PE1~'0RMANCE 100 70 60 50 40 3C 2C lC 3~.9 43.~ PAGENO="0307" 300 and can be easily documented by a check of Missouri Pacific's own train delay reports and dispatcher train sheets. Section 402-E of the Rail Passenger Service Act of 1970 provides that, except in emergency, passenger trains are to be given preference over freight traffic. Despite the continuous flagrant violations of this law by Missouri Pacific, Amtrak tolerated repeated abuse which helped to destroy the reputation and the revenues of the Inter-American. In the public interest, legislation or litigation should be used to end the numerous avoidable freight train delays of the Inter-American, and to force the Missouri Pacific to provide punctual operation of this train on a reasonable sched- ule. It is axiomatic that to be economically viable the Inter-American must have good on-time performance. Without good on-time performance, passenger relations dete- riorate and potential riders choose other means of transportation. The poor on-time performance has not only tended to reduce revenues through a loss of ridership, but has also accounted for additional operating expenses.6 SCHEDULE DEFICIENCIES The restriction of the Inter-American to the absurd 60 mph limit from March, 1974, until May, 1978, has been a detriment to the potential utilization of this train. Because of the longer schedules required by the relatively slow average speed, the Inter-American was not competitive with either automobile or bus travel times between most points. By being unnecessarily ranked last, in terms of travel time, among the three modes of ground transporation, the marketability of the train was seriously impaired. As a result of the ridiculously long running time required between St. Louis and Laredo during the first 50 months of operation, the Inter-American was unable to make essential connections with other trains at either terminal. At St. Louis, the Inter-American has consistently failed to make connnections with other Amtrak trains for Kansas City, New York, and Washington, D.C. The National Limited, operating between Kansas City, St. Louis, and the East Coast, forms an important East-West connection for the Inter-American. When operations of the Inter-Ameri- can began in 1974, it was possible to make convenient connections to and from eastern cities, and a significant connecting line revenue was realized. Because of scheduling problems during this period, connecting travel west to Kansas City was effectively discouraged by a 20 hour layover at St. Louis. In May, 1977, the National Limited eastbound was rescheduled to depart St. Louis 1 hour before the arrival of the Inter-American, thus eliminating important connect- ing line revenue. In late October, 1977, the Inter-American schedule was redesigned to permit, for the first time, convenient connections at St. Louis to the east, west and north. It appears inexcusable that Amtrak would dawdle for over 3½ years before implementing a schedule for the Inter-American with marketable connec- tions at the important St. Louis gateway. As envisioned by Congress, the Inter-American was intended to provide an inter- national connection with the National Railways of Mexico at Laredo, Texas. The Inter-American has never provided adequate connections with the Aztec Eagle train service from Nuevo Laredo to Monterrey and Mexico City. Due to Amtrak's schedul- ing constraints, and despite helpful schedule adjustments by the National Railways of Mexico, rail travel to Mexico via the Inter-American has always required an approximately 22 hour layover at Laredo. Because of this problem, the train has not been able to attract any share of the growing American tourist travel into Mexico. On April 30, 1978, after over 4 years of operation, Amtrak has finally succeeded in devising a schedule which, with only slight alteration of Laredo departure times, would make all important connections at both St. Louis and Laredo. The single operating change which brought a suitable schedule into the realm of possibility, was the forced increase of Missouri Pacific passenger train speed limits to 75 mph. This concession by Missouri Pacific was gained through the threat of legal action by Amtrak, a threat which should have been made in 1974. An additional example of the myriad of scheduling deficiencies affecting the Inter-American exists at San Antonio. A potential connection to the West Coast exists, where passengers arriving aboard the Inter-American could theoretically. transfer to the Sunset Limited for El Paso, Tucson, Phoenix, or Los Angeles. Both the Sunset Limited and the Inter-American operate tn-weekly except during the summer season. Days of operation for the two trains are so arranged that the connection to the West Coast can be made only 1 day each week; on other days, a 1½ or 2½ day layover is required. 6 "Report on the Inter-American", July 1975. PAGENO="0308" 301 RECURRING EQUIPMENT FAILURES Beginning in March, 1974, and continuing to a lesser extent even after new Amfleet cars were assigned in September, 1977, the Inter-American suffered equip- ment failures of enormous proportions and embarrassing frequency. Air condition- ing and electrical system failures of several cars or the entire train were frequent occurrences each summer that conventional passenger cars were in use. Often, Amtrak was forced to substitute chartered bus service for train service, inconven- iencing passengers and substantially increasing the operating costs for this route. Many, many passengers were permanently disillusioned with rail passenger service after one of these disastrous trips. The "Report on the Inter-American; June, 1975" thoroughly documents the miser- able operation of the train during the first year of operation. This report quotes one letter sent to a number of Senators, as follow: "On Saturday, May 25, (1974) a trail of vultures followed Amtrak's Inter-American into Laredo. Inside the train people were roasting in 120 degree temperature-the air conditioning having failed in all three day coaches, one being non-functional before it arrived in Little Rock, and the other two failing shortly therafter." "The next morning in Laredo, the passenger service representative refused to board passengers in the hot cars in their best interest, and busses were ordered to pick them. Three busses were involved by the time the schedule reached St. Louis, in addition to the train which was running with only sleeping car passengers. This, gentlemen, is why the long haul passenger train loses money, not the lack of potential patronage." The record of chronically recurring equipment failures during the first years of operation is well documented. Contrary to Amtrak's implications, however, recur- ring equipment failures continued through 1976 and 1977. In fact, massive equip- ment failures have taken place during each summer of the Inter-American's operation. Appendix "E" documents the equipment failures during June, July, and August, 1977; the last months of operation for conventional equipment. During this period the Inter-American was operating on a daily basis. In June, 1977, 10 trips were made with inoperable air conditioners in one or more cars, and in July, 18 trips were operated with defective equipment. During the peak travel period of July 3 and July 4, train 21 operated each day with every coach hot, forcing the operation of substitute busses between Ft. Worth and Laredo. Amfleet operation has not totally eliminated equipment failure, although it is improved over previous conditions. Since the arrival of Amfleet cars on August 8, 1977, the Inter-American has occasionaly operated with only one Amcoach and a locomotive, due to bad ordered equipment. For a considerable period in late-1977 and early-1978, one consistently operated without an Amdinette or other food serv- ice car, in violation of Interstate Commerce Commission Regulation 17 (availability of food and beverage service). As recently as July 2, 1978, it was necessary to turn away passengers waiting to board No. 22 at Little Rock, because air conditioning had failed in one Amcoach, and sufficient seats were not available in the remaining cars. INADEQUATE STATION FACILITIES Amtrak station facilities along the Inter-American route in Arkansas and Texas are among the worst in the entire Amtrak system. Most appear to be in violation of Amtrak and Interstate Commerce Commission regulations governing the quality and condition of station facilities. These inadequate facilities contribute to the low ridership statistics for this route. Checked baggage is not handled at the unmanned stations of Walnut Ridge, Newport, and Malvern, Arkansas, or at Marshall, McGregor, Taylor, and San Marcos, Texas. Although facilities are obviously not available for handling large shipments, Amtrak should provide checked baggage service to these stations. The Inter-American carries a train baggageman, and it should present no problem or additional expense for him to load or set off suitcases, etc. at these stops. The lack of checked hand luggage service to these points is particularly inconvenient to the elderly and to those traveling with small children, and acts as a deterrent to travel by train. Numerous problems exist at all of Amtrak's Arkansas stations. Walnut Ridge, Newport, Little Rock, and Malvern all lack adequate lighting for night time train loading. Walnut Ridge lacks even a loading platform; it is necessary to wade through ballast along the right of way in order to board the train. No indoor waiting facilities are provided at Walnut Ridge or Malvern, and the open air shed provided at Melvern is constantly littered with filth. 43-1390-79-20 PAGENO="0309" 302 /At Little Rock, no air conditioning or heating is provided in the waiting room, `and an insufficient number of seats are provided for passengers. Little Rock has been promised renovated Amtrak facilities since 1974, but the funding always seems to be reappropriated to other routes. During late 1977 and early 1978, the staffing of the Little Rock station was reduced to one employee, working between 11:00 p.m. and 7:00 a.m. Station revenues during this time fell to approximately one tenth of the mid-1974 revenues. It should be noted that part of the station problems at Little Rock reflect Missouri Pacific's reluctance to operate Amtrak passenger services. In December, 1973, (less than 4 months before the Inter-American started) Mopac demolished the concourse and covered loading sheds. At all other small stations, Mopac bulldozed up the brick trackside passenger loading platforms. In Texarkana, Mopac delayed replacement of a track switch for 3½ years, forcing the Inter-American to use the wrong track at Texarkana Union Station. Texarkana passengers were required to leave the waiting area and cross the track to loading areas before the arrival of the train, and detraining passengers were forced to wait for departure of the train before crossing to waiting room or parking lot. Arkansas does not have a monopoly on absurd station facilities. In San Antonio, the Inter-American stops at a platform adjacent to the now closed Missouri Pacific station. There is no shelter, telephone, restrooms, or other amenities where the train stops-merely a platform. Passengers are transported to and from the Amtrak station (former Southern Pacific station) by chartered bus. Additional problems involving station facilities and station size are apparent at San Marcos and Austin. It is obvious that Amtrak has made no appreciable effort to upgrade stations on this route, and the resulting inadequate facilities have had a detrimental impact on the utilization of the Inter-American. AMTRAK'S LOW PRIORITY FOR INTER-AMERICAN Amtrak management appears to have placed the Inter-American near the bottom of their list of priorities. Numerous upper management decisions have been made reflecting the callous attitude that the continued operation of the Inter-American is of small consequence. In October, 1972, Amtrak President Roger Lewis requested from Congress a $4.5 million supplemental appropriation to operate the St. Louis to Laredo service. The funds were specifically earmarked for this train in the appropriation for Fiscal Year 1974. Amtrak, however, diverted almost ½ of this amount to other operations (primarily the glorified Northeast Corridor commuter operation), in violation of the intent of Congress. As a result, numerous physical plant improvements for this route were delayed or omitted. One obvious result is the inadequate station facilities at Walnut Ridge, Newport, Little Rock, Austin, and San Antonio.~ The Inter-American has suffered a greater percentage of equipment failures than any of Amtrak's other long-haul trains. One of the main causes of this dubious distinction was Amtrak's persistence in assigning only cars which were "left over" from other train assignments. As a result, a variety of incompatible equipment served this route, with predictably poor results. Many of the original cars assigned to the Inter-American were among the first to be retired when delivery of Amfleet equipment began; testimony to the quality and condition of equipment usually assigned to this route. During Amtrak's winter fiasco of 1976-77, two long-haul trains were annulled due to severe winter weather. This action in itself was unprecedented; it was previously unheard of for passenger trains to be abruptly terminated for long periods solely due to inclement weather. As might be expected, Amtrak stopped the Inter-Ameri- can between St. Louis and Laredo, and the Floridian between Chicago and Miami, in order to provide equipment for their `essential' routes. Routes which might be logically expected to have winter operating problems because of geographical loca- tion, remained in service. A final example of Amtrak management's low priority level for the Inter-Ameri- can is revealed in a May 17, 1978 letter from Mr. F. C. Ohly, Amtrak's Assistant General Counsel, to the Interstate Commerce Commission, as follows: "Amtrak still does not believe that the demand for sleeping car service on the Inter-American warrants its provision, but we have undertaken to convert two additional sleepers (beyond the initial 25 cars) in order to provide a further test of such service on the Inter-American. The two additional sleepers will only permit Amtrak to provide sleeping car service on the Inter-American three days per week, and no provision has been made for back-up equipment in the event of mechanical failure or oper- ~Report on the Inter-American, July 1975. PAGENO="0310" 303 ational causes which may make a car unavailable for operation on its scheduled run. In addition, the deployment of the initial 25 converted sleeping cars on the 5 other overnight Amfleet trains will remain Amtrak's first priority in this area. If serious problems arise with respect to the availability of sleeping cars for operation on those trains, it may be necessary to withdraw one or both of the cars which will be assigned to the Inter-American in order to maintain the reliability of our sleep- ing car service on those trains. Amtrak is not in a position to make any firm commitments with respect to the provision of an~ form of sleeping car service on the Inter-American beyond the immediate future.' Despite the fact that the first class service is subject to abrupt interruption from various causes, and despite the fact that the service is only offered on an unmarket- - able tn-weekly schedule, it is typical of Amtrak management to consider this token sleeper operation as a bona fide test of the potential first class ridership of the route of the Inter-American. AMTRAK FAILURE TO PROMOTE INTER-AMERICAN ROUTE The ridership levels of the Inter-American are significantly lowered because Amtrak has never made even a modest effort to advertise the route or schedules. Only three promotional campaigns have ever been conducted for the Inter-American in Arkansas, and these covered a total period of less than 2 weeks.8 No recent advertising has been done to advise potential passengers that the train now runs on a faster, daily schedule, or that sleeping car service is again available. Amtrak has failed to make even minimal promotion of Hot Springs National Park, Arkansas. Hot Springs can be reached by bus from Little Rock, and by free hotel/motel courtesy vans from Malvern. In spite of the fact that Amtrak refuses to even include this information, or even the mention of Hot Springs in their timeta- bles, passengers frequently detrain at Little Rock or Malvern for Hot Springs. If prospective passengers in St. Louis or Chicago were aware of the availability of convenient transportation from Little Rock/Malvern to Hot Springs, a considerable market would develop. One of the most depressing aspects of Amtrak's failure to actively promote the Inter-American, or other long-haul trains, involves Amtrak's own Marketing Vice President, Alfred A. Michaud. This ill-formed individual told Traffic Management Daily on May 30 that the D.O.T. plan was "the best planning platform for Amtrak that I've ever seen," and he also noted that the plan would allow "concentration of marketing and advertising by pulling in some of the weaker fringes." Anyone who is even remotely familiar with Mr. Michaud's lopsided advertising programs would find it hard to imagine a greater concentration on the Northeast Corridor than presently exists, or a greater apathy towards the much maligned long-haul routes. An example of Mr. Michaud's half-hearted advertising attempts for long-haul trains is seen in Amtrak's 34 page promotional brochure "The Great American Rail Sale" issued in early 1978. No mention is made of special fares for any of Amtrak's western long-haul trains, including the Inter-American, despite the fact that these trains also had special excursion fares in effect. Rather than advertising any of what the marketing department obviously considers "lower priority routes", five full pages in the back of this brochure were left blank. Amtrak desperately needs a marketing vice president who is capable of seeing and promoting the tremendous potential of the long-haul trains, not someone who is affected by an acute case of "corridor vision". FUTURE POTENTIAL OF LONG-HAUL TRAINS The future of long distance passenger train service has been debated repeatedly during the last several years. Most agree that the energy efficient passenger train can play an increasingly important role in solving the transportation problems of the future. The potential utilization of the long-haul passenger train during prolonged fuel shortages can be determined by an examination of Amtrak ridership during the 1973-1974 energy crisis. During the 6 month period from November, 1973, until April, 1974, Amtrak registered significant gains in passenger-miles, when compared to the equivalent period of the pervious year. Short distance routes experienced a 54 percent ridership increase, long-haul trains experienced a 50 percent increase, and the Northeast Corridor experienced a 36 percent increase.9 It is clear that during this period of reduced availability of gasoline, people turned to the train. 8 advertisements appeared in Little Rock for several days each, during March and October 1974, and in November 1976. DOT. Report "An Examination of the Amtrak Route Structure" May 1978. PAGENO="0311" 304 The comparison of this dramatic ridership increase on the deficit per passenger mile provides a most interesting study between the economics of long-haul versus commuter (corrider) passenger train operation. The ridership increase on the long- haul trains resulted in a 2 percent decrease in their deficit.b0 With additional ridership increases, the long-haul routes can become economically viable. A rider- ship increase can be expected for these trains when the long awaited Superliner cars are placed in service, regardless of the energy situation. The ridership increase in the Northeast Corridor, by comparison, resulted in a 44 percent increase in the deficit per passenger mile.h1 For a short-haul commuter operation such as the Northeast Corridor, high fixed costs, high operating costs, and low equipment utilization during non-peak periods result in an ever increasing deficit, even with an increase in ridership. The late Joseph V. MacDonald, a former member of the Amtrak Board of Direc- tors, submitted a report to the Amtrak Board at a meeting on December 14, 1977, which clarified the operating costs of the Northeast Corridor. He found that because of the large burden of fixed costs borne by Amtrak , even if all long-haul service were eliminated (a reduction of 75 percent of the service Amtrak now performs), the savings in the Fiscal Year 1978 projected deficit would be only 25 percent. In terms of route miles, the Northeast Corridor makes up only 2 percent of the Amtrak system, yet this small segment is responsible for 27 percent of the total system deficit. The profits to be earned in the operation of passenger trains lie in the long- haul market, not in the highly touted but deficit ridden Northeast Corridor. In view of the apparent inability of the Northeast Corridor to ever be profitable, it would seem that this operation would be carefully analyzed by the D.O.T. Zero-Base Study. In fact, however, within all 5 route scenarios offered, the Northeast Corridor (including feeder lines from Springfield, Mass. and Harrisburg, Pa.) was kept com- pletely intact.12 The social and environmental benefits of the Northeast Corridor cannot be denied; it is a most essential transportation source for that region. It appears unreasonable and unfair, however, for the entire nation to underwrite the subsidy for this regional commuter service, while receiving none of the benefits and while being forced to accept suicidal service reductions in the nationwide Amtrak system. The Northeast Corridor should be subsidized as a separate commuter service, apart from the nationwide Amtrak system. Barring this separation, no service should be reduced on any part of the Amtrak system unless commensurate reductions are also made in the Northeast Corridor. FALLACIES OF THE DOT REPORT The Department of Transportation report "A Reexamination of the Amtrak Route Structure," released in May 1978, contains many inaccurate conclusions and obser- vations due to flawed.criteria and evaluation techniques. The general tone of the DOT report appears to be anti-passenger train. Excessive emphasis is placed upon financial considerations, with very little concern given to environmental impact, quality of life, or other intangibles which help to make rail passenger service attractive to many people. There is an almost total lack of perspective when confronting transportation financial matters, and this lopsided view makes the report a failure as both a transportation and a financial document. There is no attempt to compare subsidies for -passenger trains with the huge subsidies given other modes of transportation. Fortunately, the California Department of Transportation, in a May 11, 1978 report, placed the question of transportation subsidies in proper perspective. Caltrans direc- tor Adriana Gianturco reports that, "The current subsidy of the U.S. Air Traffic Control System is $1.8 billion annually, and this represents only a small fraction of the public subsidy of airlines. Air travelers ticket price covers only one-third of the cost of their transportation. If the U.S. were to remove its subsidies to the airlines, a round trip ticket from California to the east coast would cost over $1,000, and very quickly the airplane would be threatened as a means of travel." "The subsidy of U.S. Highways by non-highway revenue sources since 1920 totals well over $150 billion, and this does not take into account the social and environmental damages, or the $46 billion dollars spent annually to import petroleum from the O.P.E.C. Nations. The money saved by proposed cuts in Amtrak would build 2-3 miles of urban freeway per year, and for this the nation would have to sacrifice 8,100 miles of rail service." 10Thjd 11 Ibid. 12D.O.T. Report "An Examination of the Amtrak Route Structure" May, 1978. PAGENO="0312" 305 Another major fallacy of the DOT report involves a lack of understanding that connectivity in a system will generate additional ridership on the connecting routes. An isolated short distance route in one route scenario is assumed by the DOT to have the same ridership that it would have if the route was connected to another *long distance route. This bias in DOT's figures tend to make the short distance routes look better than long distance routes. Amtrak's Matrix system of counting riders also favors short-haul trips. Connect- ing riders are counted twice, once on each route, for two short distance trips that actually should add up to one long distance trip. The DOT accepted the short trip bias in this method of counting, without question. Numerous other problems exist in the criteria used by the DOT, including the assumption of an overly optimistic average 18 miles per gallon and 2.5 intercity passenger occupancy rate for determining automobile passenger miles per gallon. This assumption allows the automobile a more favorable energy efficiency rating than is actually the case. Perhaps the evidence most damaging to the credibility of the DOT report is a report released by the Interstate Commerce Commission on March 15, 1978.13 This I.C.C. report raises serious doubts about the effectiveness of discontinuing routes to save money. According to this report, "The cost to Amtrak of actual passenger transportation (including train crews, station agents, and on-board personnel) repre- sents a relatively modest percentage of total expenses. Transportation expenses for Fiscal Year 1977 totaled only 31.4 percent of Amtrak expenses. Even a reduction in service over unprofitable routes would have a minimal impact on Amtrak's operat- ing deficit, as the burden caused by transportation expenses is minimal. A fertile field of inquiry would be Amtrak's payroll. During FY 1977 Amtrak's payroll accounted for over one-third of the carrier's total expenses." "During the 2 years from September 30, 1975 to September 30, 1977, the number of executives, officials, and staff assistants rose 59%; clerical and general staff jumped 65%. Amtrak probably does not need an administrative and clerical staff totaling one-third of all employees; this staff should be reevaluated." 14 The I.C.C. report clearly reveals that Amtrak's financial problems do not lie within the cost of operating trains and routes, the primary area covered by the DOT Zero-base Study. It would seem more appropriate to focus attention on improvement of services in the already existing route structure, and cancel the remaining aspects of the route studies as a waste of time and money for examining an issue that is not relevant to the problem. ALLEGATIONS OF THE BUS LOBBY The "bus lobby"represented by the American Bus Association has been clamoring for the demise of Amtrak for several years, and sees the current DOT studies as one last chance to eliminate rail passenger service in America. While Amtrak promotes intermodel (train-bus) travel, the bus industry continues to bemoan Amtrak's share of the intercity passenger market. Amtrak has publicly suggested that rail and bus interests should work together to decrease the 80 percent of the intercity market dominated by the automobile, but the bus industry has failed to see the logic of this reasonable suggestion. During Amtrak funding debates on Capitol Hill, the bus lobby has repeatedly drawn attention to the government's investment in Amtrak, claiming unfair subsi- dies to bus competitors. This argument consists of the same tired, old propaganda that conveniently ignores the benefit to the bus companies which stems from obtaining capital facilities (i.e. roads and highways) without having to raise capital funds. Given this same enviable position, the railroad industry could today be a health industry. A common argument presented by bus interests involves the so-called user taxes, which in theory, are intended to reimburse the federal government for the highway user's share of maintenance, replacement, etc. These taxes, in fact, do not even cover the annual share for damages resulting from motorbus operation, much less any repayment of their share of the intitial building cost. A strong argument can be made that bus operators actually bear no road use taxes, but merely pass them on to the general public in their rates. The bus industry's concerted effort to dismember Amtrak is made even more absurd by the realization that there is very little overlap between train riders and bus riders. In 1971, the formation of Amtrak on May 1 resulted in the overnight elimination of over one-half of the nations's passenger trains, yet bus ridership continued its steady downward spiral which began in 1966. If there had been any 13 I.C.C. Report on the Effectiveness of the Amtrak Act, March 15 1978. 14 J~~* Report on the Effectiveness of the Amtrak Act, Mar. 15, 1978. PAGENO="0313" 306 significant ridership overlap between the two modes, the drastic reduction in pas- senger train miles should have increased bus ridership for that year. In the DOT study `A Survey of Transportation Attitudes' (January 1978), one question asks what form of transportation would train travelers use if rail passen- ger service were discontinued. As expected, 48 percent would return to the private automobile, 25 percent would use planes, and only 22 percent would use buses. Amtrak is obviously in primary competition with the fuel inefficient automobile, not the bus carriers. In this time of concern for the environment and for energy conservation, it seems inconsistent to dismantle Amtrak for the purpose of sending only a handful of passengers onto the bus, while sending hordes of passengers into the private automobile. PAGENO="0314" Missouri Pacific: Sept. 1, 196~ 307 `APPEI~DICES' APFEMDIX 5A" Amtrak: March 13, 1974 -24- For Mexican rail connections at Nuevo Laredo, see adjacent schedule. PAGENO="0315" -25- APPENDIX "B" Comparison of Missouri acific Train 3peeO;: l~-1)7/-l97C iawimum spe:~ sLam (~i1es ~ar loom) route saguenta l97l'~s~~r. 1971 frtl. l9j~boLhJ op~. St. Louis-Poplar Sluff 60 50 50 60 Poplar Bluff-Ft. Worth 79 60 60 75 Taylor-San Antonio 79 50 50 70 San Antonio-Laredo 59 49 49/40 99 SOURCES: 1971 - Mopac System employee timetable #1, effective Nov. 30, 1969. 1974 - Mopac System employee timetable #5, effective Aug. U, 1974. 1970 - intrak press release detailing new contract with Moose; Mar. 27, 1970. AlPEIDIX 115,t Intar-.5riericon On Time Ferfonrance - 1674 iercenbapa of Prams fate ICC Method (1~ Conerassional (2~ ____________ Nay - - - 26% June - - - 51, 81 July- - - 35 73 August - - 58 100 September - 73 100 October - - 27 05 (1) ICC method considers trains `on time' if arrival is within 30 minutes of scheduled arrival time. (2) Congressional method considers treins `on time' if arrival is within 6 minutes of scheduled arrival time. SOURCE: "Report on the Inter-American", July 1975; Ethihit No. 23. ..~. / ~1 / :JY JUN JUL AUG SEP OCT (1974) 308 Uonih-l974 dverage Late ir:inutas) - 55 92 102 79 106 22 Percent of trains operating on-time: 90% ICC method: - Cong. method:~ 70% 40% 50% 40%. 26P%. 1(1% 43 139 0123 0% PAGENO="0316" 309 -26- APPENDIX "0" flR-tiU~RICAN DELAY BEPOSTS JUNh, 1977 DALLAS SUB-DIVISION (~r. oErH - rNAIN NO. 22 DATE STATI'SN CUSL I~ DLLAY AMjUI~f OF SaLtY 6-5-77 dational freight switching in yar' l'lO° (TOTAL) 6-5-77 Hoard in pass for freight Nxtra 3047 west 5" Giadewater in ass behind extra 3200 east, aeet X2061 west 29" (34") 6-6-77 Scottsdale extra freight west 10" Lansing extra freight west 15" (25") 6-B-77 TB Junction behind freight extra 3151 east 30" Silver Lake in pass for freight extra 3176 west 20" (50") 6-9-77 Edgewood extra freight west 10" Greggton extra freight west 15" Springdale 2 extra freights west 35" (it) 6-10-77 Gladewater extra freight west P04" 6-12-77 Gladewater extra freight 3172 west 45" Bivins extra freight 2544 west 10" (55") 6-15-77 Fox extra freight 2502 west 19" Big Sandy ertra freight west 15" (34") 6-23-77 Big Sandy wait for extra freight 3091 west 23" Greggton switch engine on main line 3" (26") 6-24-77 Mineola wait for extra freight west 25" Greggton red signal (freight ahead) 13" Bivins extra freight 3127 west 10" (56") 6-29-77 TB Junction extra freight west 5" Mineola extra freight 2060 west 10" Big Sandy in siding for local freight extra 162 west 10" (25") 6-30-77 Edgewood extra freight 3024 east ahead 30" Mineclm extra freight 3024 east ahead - flO - Lansing most extre west (Cs train) ~ 23" ~ freight 2110 west 13" (l'i?") Train Mo. 21 also exoerienced sinilar delays; omitted for brevity. SOURCE: Amtrak Delay Reports, Regional Operations Control, 2,~cs'~o. Missouri Pacific dispatcher train sheets end cooinny delay reports. PAGENO="0317" 310 -27- APPENDIX "D" (cont'4L Spot check of No. 22 delay reoorts during 1970: DATE STATION CAU3~ OF DELAY AMOUNT OF DELAY 1-10-70 Ft. Morth extra freight 2030 east ahead 5" Fox yard engine 1226 ahead 30" NP 12 local 931 ahead (switching) 25" Sulphur same 10" National same 20" (11301') 3-21-70 Edgewood wait for rail gang to clear 20" Gladewater freight ahead, meet extra 3005 west 20" Lansing freight ahead (FD train) 10" National wait for freight (iii train) 40" (1130") 4-21-70 Browder red signal (freight ahead) 20" Wills Point wait for rail gang to clear! meet extra freight 2065 west l'02" Springdale meet extra freight 3164 west 10" (1132~) 5-23-70 NP 193 local 910 switching ahead 25" National wait for yard engine to get clear 10" (35") 6-29-70 Nariuth wait on work extra 1779 - surfacing train 50" Springdale local freight 914 perfocming industrial switching ahead l'20 (2'lO) PAGENO="0318" 311 -28- APPENI)IX E" AIR-CONDITIONING FAILURES JUNE-JULY-AUGUST 1977 ~* T~?J~IN SPECIFIC EQUIPN~T AFFECTED 6-13-77 21 coaches 6017, 6013; diner 8150. 6-18-77 21 all three coaches. 22 coaches 6017, 6013. 6-19-77 21 coach 6032. 6-20-77 22 coaches 6012, 4845, 4426; dormitory 1049. 6-21-77 22 coach 4417; diner 8150. 6-23-77 22 coach 6017. 6-27-77 21 coach 4426. 22 coach 4417. 6-29-77 21 coach 4424. 7-3-77 21 coaches 4426, 4433, 4424, 4423. 7-4-77 21 coaches 4425, 4421, 4846; diner 8150. II II 22 coach 4426. 7-5-77 21 coach 4427. 7-7-77 21 sleeping car 2814. 7-10-77 22 coach 4846. 7-17-77 21 coach 4424; diner 8320. 7-18-77 22 coach 4846; diner 8324. 7-19-77 22 diner 8320. 7-21-77 21 coach 4425. 7-22-77 21 diner 8025. 7-23-77 22 coach 4425. 7-25-77 21 coach 5270. 1 II 22 coach 4424. 7-27-77 21 coach 4421; diner 8320. 7-29-77 21 coach 4421. 7-31-77 21 sleeping car 2683. 22 coach 5270. 8-2-77 21 coach 4421. 8-4-77 22 coach 4424, 4421, 5270; diner 8300. 8-8-77 - conventional equipment replaced with Ainfleet cars. *Date shown is arrival date at final terminal; train 21 at Laredo, and train 22 at St. Louis. NOTE: The seine equipment was repeatedly used, despite recurring air- conditioning failure. Failure of the air-oonditioning system frequently was accompanied by electrical system failure, e]iininating all lighting in the affected cars. PAGENO="0319" 312 MARCH 5, 1979. Hon. RUSSELL B. LONG, Chairman, Surface Transportation Subcommittee of the Commerce, Science, and Transportation Committee, US. Senate, Washington, D.C. DEAR CHAIRMAN LONG: We are writing to you to request you to reject the DOT plan to cutback AMTRAK, and to bring in a resolution of disapproval by the U.S. Senate of the DOT plan. We think much more thought must go into planning for AMTRAK. We say this after listening today very carefully to the many witnesses pro and con. We were not impressed by the presentation of DOT Secretary Brock Adams, especially in view of the fact that he is a strong supporter of the subway system in the National Capital Region which is now estimated to cost nearly $8 billion to complete-and it is only a 100 mile system. Let us state that it doesn't make sense to slash 11,800 miles off the nation's passenger routes as recommended by DOT Secretary Brock Adams for the claimed purpose of saving $1.4 billion over the next five years; and then to recommend the spending of nearly $8 billion for a 100-mile subway system to serve one favored region at the seat of government, as Secretary Adams has. We fully agree with Senator Harrison H. Schmitt's objections to the DOT cutback of AMTRAK. It is clear that the DOT plan will decimate the nation's rail network. We took notes on the testimony, and our notes show: Senator Schmitt said, rightly, that AMTRAK and DOT have not tried to "sell" AMTRAK to the people. We think much more could be done-in fact, it is clear that very little has been done to encourage and build new ridership of the AMTRAK trains. AMTRAK's officials, and DOT Secretary Brock Adams should long ago have launched an aggressive promotion campaign for AMTRAK at least equal to the promotion campaign of the nation's airlines. Why hasn't this been done. It isn't as if DOT Secretary Brock Adams doesn't know about the aggressive passenger promo- tion campaign of the great airlines such as American, National, TWA, United, British Airways, Continental, Braniff, Delta, Eastern, Japan Air Lines, Pan Am, and others. Why shouldn't AMTRAK have a comparable promotion? You can't turn on TV, or radio, or look at a single magazine, or newspaper without being inundated by promotion of air travel. Another thing, there isn't a single major nation which is decimating its railroad system as DOT Secretary Brock Adams proposes, indeed urges the Congress to do with the railroad system of this nation, and that is: drop half of it almost. The U.S. railroad system is a priceless resource which must be maintained and improved. It must not be abandoned, as DOT Secretary Brock Adams proposes to do with 11,800 miles of it. The DOT plan proposed by Secretary Adams is to drop 16 major trains, six of which serve Baltimore, Maryland. The Montrealer would be dropped, and this would leave Vermont without any passenger rail service. Understandably, this DOT plan to wreck the nation's rail- road system was strongly opposed by Sen. Patrick J. Leahy and Sen. Robert T. Stafford, both of Vermont. Senator John Melcher also strongly objected to the DOT wrecking plan, and said he was supported by Sen. Max Baucus who was unable to be present. In our view Senator Melcher is one of the Senate's abler members. We were very impressed by all of the points made by Senator Melcher, particularly when he called for continu- ation of the present railroad system because of the oil crisis brought on by the Iranian situation. Senator Melcher stated that he strongly supported the resolution (S. Res. 49) introduced by Senator Harrison H. Schmitt who called for Senate rejection of the DOT plan. We completely agree with and support Sen. Schmitt's fine resolution. We think Senator Schmitt made an excellent comment when he said the new route structure proposed by DOT Secretary Adams lacked feeders to build up patronage on main lines. In other words, this DOT plan for AMTRAK is a plan which has failure built into it. On this point alone DOT's plan must be rejected. We were impressed by the comments of Senator Warren Magnuson who pointed out that four of six trains to Seattle had been eliminated. Another point made by Senator Magnuson was that people could not be reason- ably expected to drive from 300 to 500 miles to board a train, yet this is what the new DOT plan would mean to people of his great state. The Washington Star, a Time, Inc. publication, stated in its report of the hearings held by your Subcommittee on the AMTRAK plan March 5, that: PAGENO="0320" 313 "Support for or against the administration plan broke into predictable camps. Senators backing the cutbacks were generally affected less profoundly than those who opposed reducing services. "Sens. Patrick Leahy, D-Vt., and Robert Stafford, R-Vt., said the decision to drop the only route that serves New England was based on `inadequate and incomplete statistics.' "Senator Harrison Schmitt complained that elimination of the Southwest Limited would have a serious impact on his state of New Mexico. Instread of shutting down, Schmitt said Amtrak ought to upgrade equipment and improve sales techniques." We want to register our vigorous support of Senators Schmitt, Leahy, Stafford, Melcher in their opposition to the DOT plan for cutting AMTRAK back. The DOT cut-backs of AMTRAK were criticized by J. R. Snyder, national legisla- tive director, United Transportation Union. Mr. Snyder said, as reported by the Baltimore Morning Sun (March 6, 1979), that the Brock Adams plan would mean layoffs for 3,400 AMTRAK employees. In view of the excellent testimony and the able witnesses heard by your Surface Transportation Subcommittee, we can only conclude that the Adams-plan for cut- ting back AMTRAK would be a disaster, that it would benefit no one, that it rejects the world-wide oil and energy crisis, and reality. We would suggest that DOT Secretary Adams call for cut-backs in other forms of transportation which are subsidized by his Department. He has not done so. We feel that DOT Secretary Adams is biased against the railroads ever again playing a major role nation-wide, and that he favors cars, trucks, airlines and other forms of transportation which he has not proposed to cut-back. The DOT plan to cut-back Amtrak is designed to serve cities already well and adequately served by airlines and high-way transport. We think it is clear the DOT plan of Secretary Adams for AMTRAK is not designed to serve the smaller cities and communities which the airlines do not serve and are increasingly abandoning because of de-regulation. We think this will hurt large sections of the West and South and East, irrepara- bly. Historically, the railroads served farm areas. The DOT plan to cut back AMTRAK is basically an urban plan, not a national plan. Look, AMTRAK was established in May, 1971. It was a much smaller system than existed before it was created. A large amount of tracks were dropped. The bus fleets of the nation did not grow greatly or benefit greatly from the AMTRAK system's cutback of the existing railroad system, in 1971. It is clear, therefore, that when DOT Secretary Brock Adams counts on the bus fleets to take up the task of hauling people abandoned by his cutback of AMTRAK, and by the airlines' abandonment of the smaller communities that he is whistling as he goes past a graveyard. A graveyard created by his disastrous policy calling for the abandonment of 11,800 miles of railroad routes. Busses, cars, and planes can't do it alone. We need a balanced system. We believe Secretary Adams is dead wrong when he said that even an improved AMTRAK operating at full capacity "could carry only 1 percent of the intercity trips" made by travelers in the United States. It clearly will be able to carry even less passengers if his DOT cutback plan is adopted. Also, We believe that when gasoline at the pump costs as much in the United States as it is already costing in Europe and elsewhere-and this may not be far off-that millions of people will turn to railroads. We think it is absolutely essential to maintain the present AMTRAK system, including the 11,800 miles of passenger lines which Secretary Adams would drop. If we don't keep them now, if we give them up as Secretary Adams urges Congress to do, we'll have to build them back one of these days at huge costs. Remember, railroads can run on coal, they don't need oil. This is something Secretary Adams forgets or conveniently overlooks. During his testimony he didn't once mention electric-powered locomotives, he only mentioned diesel- powered trains. And what about reviving the old coal-powered steam locomotives which had a major role in making this a great nation. Recently we had the opportunity to read the excellent testimony of the State of Pennsylvania on the DOT cut-back proposed for AMTRAK. It was presented to your Subcommittee by E. L. Tennyson, an official of the Commonwealth of Pennsylvania. We want to go on record as completely supporting the position of Pennsylvania, and we would like to quote the following excerpts as one of the best and most informed and cogent comments on the DOT plan and its drawbacks presented to your Subcommittee. We urge you to study it carefully and we include it here for this purpose: PAGENO="0321" 314 "The Congress was well advised when it voted to improve Amtrak by restructur- ing. Our problem is with the specific recommendations from U.S. DOT which would increase unit costs of serving a greatly reduced segment of the market. Pennsylva- nia would be particularly hard hit, even though our trains operate at the lowest avoidable unit costs and generate some of the highest unit revenues. This does not comply with the Congressional instructions in the Act, or with the public interest. "In Section 4(a) of the Act (PL 95-421), Congress established five criteria which were not squarely faced by the U.S. DOT recommendations before you. "1. The unique characteristics of rail was one. Properly operated rail service uniquely penetrates metropolitan areas free of traffic congestion at relatively high speed at lowest cost. Rail passenger service is the most popular of all modes, including the automobile, for trips of 160 to 190 miles, and has the highest public attraction except for the automobile for trips of lesser distance when the schedules are convenient. Rail is least inhibited by fog, snow, traffic and accidents. "2. Energy conservation was another. The Philadelphia-Harrisburg and the Los Angeles-San Diego trains actually pro- duce 5 times as many passenger-miles per gallon of fuel as air or auto travel. That is an 80% saving of precious energy. Other trains average twice the fuel efficiency of the more popular modes. "3. The relationship of benefits to cost was the third question. "The average Amtrak rider moves at an avoidable cost of 10~ per passenger mile. This is figured comparable to and considerably less than the same cost for auto or air travel for distances under several hundred miles. The avoidable cost is that which would be saved if the service were discontinued. It does not include fixed costs and overheads, just as the cost of driving does not include the $7 billion annually of non-user local tax money that goes into streets and roads, and the nearly $2 billion of air transportation costs that are not paid by the airlines. It is impossible for Amtrak passengers to pay their full cost plus taxes when other travelers do not. The only fair basis for comparison is avoidable cost. "It should be noted in the U.S. DOT report that trains which they recommend for abandonment cost $15 per mile, but trains recommended for continuation cost $45 per mile. It should be obvious that no meaningful recommendation can be based on such disparate figures. "Our Philadelphia-Harrisburg and Philadelphia-New York trains, the best of which would be discontinued on October first under the recommendations, have avoidable costs of only 8~ per passenger mile, which is just about what the fare is. In contrast, an automobile trip over these same routes will cost about 20~ per passenger-mile, 2½ times more. It will be a disaster to the people of our area to discontinue their most economical service. It is diametrically opposed to energy and environmental policies coming out of Washington. Why should the best trains be discontinued? "4. Adequacy of alternative modes. "Air travel in this market, which is one-sixth of Amtrak's national total, is not relevant. The cost and inconvenience of air travel makes it useless in this market. Bus service is partially available, but it too is useless for many of the trips. There is no bus service at all between Harrisburg and Lancaster because there were only one or two passengers per trip. There are only 20 bus riders a day from Lancaster to Philadelphia, as compared to 300 by Amtrak. The bus is much too slow. The New York-Philadelphia buses cannot stop at Trenton, Princeton Junction and Newark and still be fast enough to attract many riders. No alternative is more cost effective than these trains which U.S. DOT would curtail. They have high load factors and serve thousands of people each day. "5. Market and Population. "The U.S. DOT report does not address this Congressional requirement at all. Service is being stripped from the best markets with large populations, such as: The peak hour New York-Philadelphia trains (1st and 4th largest cities). The peak hour Harrisburg-Philadelphia trains (Amtrak's third best). "The Philadelphia (and New York) to Florida run, the nation's best long rail haul. "The Pittsburgh-Cleveland market, now not served at all, would be offered what we believe will be middle-of-the-night service for a 130 mile trip. This is an insult to the traveling public and to the taxpayer. "The Philadelphia-Pittsburgh market would have its poor present service cut in half at the most inconvenient travel hours possible. The Congress should look at the size of these markets: 1. New York-Philadephia-16 million population. 2. Philadelphia-Harrisburg-S million population. PAGENO="0322" 315 3. N.Y.-Philad~phià-Florida- 23 million population. 4. Cleveland-Pittsburgh--5 million population. 5. Philadephia-Pittsburgh-8 million population. "The avoidance of market consideration is best illustrated by the complete elimi- nation of service from Dallas/Fort Worth, one of the nation's 10 greatest metropoli- tan areas. In our our state, passenger use of the Lake Shore Limited has grown very well serving Erie, Buffalo, Cleveland and Toledo on the Boston-Chicago run. The recommnedation will eliminate this rail service between Buffalo, Erie, Cleveland and Toledo in favor of a closed-door operation through Canada at U.S. taxpayer expense. We have no air service from Erie to Cleveland or Toledo and only one flight per day, Erie to Buffalo. The U.S. DOT estimate that patronage will grow by removing service is surely mistaken, just as promises for Penn Central and ConRail success were mistaken. "We do appreciate the recommendation that rail passenger service be instituted between Washington, Pittsburgh and Cleveland, but we fear it will bypass the Youngstown traffic generator and operate at the worst possible time of night. Good rail markets cannot be served by one train per day. Unit costs are too high in terminals with only one train per day. "The U.S. DOT report would have us save our trains by assessing half the cost against the state. With interstate trains, charges against a state are unfair. Within the state, we have been attempting to contract for state assisted train service, but Amtarak has not been willing on new routes because they have no appropriation to fund the other half of the cost. If U.S. DOT is serious about state participation, they should recommend the same 80-20 funding we have for other forms of transporta- tion and they should recommend at least $16 million per year for it. "It is most important that our well patronized and low cost service not be emasculated. Congress must reject the report, or approve it with additions and corrections. We recognize the budget problem, but there can be no saving when the lowest cost service is eliminated and higher cost services are retained. Savings can be found on the empty trains, in the failure to recover waterway costs, in the cross- subidy to other forms of transportation and in the terriby costly and impractical regulations being promulgated to require huge low return investments in alterna- tive facilities elsewhere in the federal budget." If Secretary Adams believes that $1 to $2 a gallon gas will not make a great difference in transportation choices, and a return of the train to enormous populari- ty, then he really is wide of the mark. Gasoline is costing that now, in some countries. The airlines right now are cancelling flights. But, we have, in the United States, enough coal for a thousand years. This coal can be used to generate electric- ity to power our trains on all AMTRAK lines. In view of the determination of President Carter to use coal, and to make greater use of coal, it is interesting that coal wasn't once mentioned during the hour-long testimony of Secretary Adams before your Subcommittee. For the above reasons, we urge your Subcommittee to adopt Senator Harrison Schmitt's resolution of disapproval, and to urge the Senate to reject the ill-consid- ered plan of DOT Secretary Adams to decimate AMTRAK. We would appreciate it if you would include this statement and its attachments in your published hearings on DOT's plans for AMTRAK. Respectfully submitted, LOREN G. Hiu~, President, National Capital Association for Railroad Travel, Washington, D.C. GEORGE FRAIN, Secretary, Adams-Morgan Federation Washington, D.C. P.S-The Adams-Morgan Federation is concerned with the problems of maintain- ing the well-being of citizens and businesses in the inner city areas of the District of Columbia. It is clear that the DOT plan developed and presented to your Subcom- mittee by DOT Secretary Brock Adams is an urban plan which will not serve well great cities or smaller communities but will, instead, abandon them. It must be rejected and a sounder plan developed. Sincerely, GEORGE FRAIN, (Retired Congressional aide). Enclosures. PAGENO="0323" 316 [From the Washington Star, Mar. 6, 1979] SENATE BATrLE BREWING OVER AMTRAK CUTS (By Leonard Curry, Washington Star staff writer) Congressional leaders are drawing battle lines over the future of Amtrak, the national passenger railway system whose directors say a federal subsidy will be needed to cover more than half the operating expenses next year. Sen. Howard Cannon, D-Nev., said yesterday he fully supports administration proposals to eliminate 43 percent of the Amtrak rail system over the next five years. But Sen. Harrison Schmitt, R-N.M., and a coalition of New England senators labeled the proposal "irresponsible." The senators chose sides as the Senate Commerce subcommittee on surface trans- portation opened hearings yesterday on the Carter administration's plan to cut Amtrak. Transportation Secretary Brock Adams outlined the administration's proposal to drop 11,800 miles from the system, including the Washington to New Orleans route, by Oct. 1. Other long distance routes to be eliminated are Chicago to Florida, Chicago to Seattle and New York to Montreal. The plan will take effect in mid-May unless it is rejected by either the Senate or the House. Amtrak President Alan S. Boyd said rail routes ought to be reduced to a level that can be adequately maintained. "Amtrak as a public service is spread too thin," Boyd said. It would be better, Boyd said, to shut down entirely than to continue to offer the traveling public inferior service on "ancient cars, rundown facilities and poor track." Support for or against the administration plan broke into predictable camps. Senators backing the cutbacks were generally affected less profoundly than those who opposed reducing service. Sens. Patrick Leahy, D-Vt., and Robert Stafford, R-VT. said the decision to drop the only route that serves New England ski resorts was based on "inadequate and incomplete statistics." Subcommittee chairman Russell Long, D-La., said it was unfair to reduce service to hold down expenses when escalating costs are caused by outmoded union work rules that require unneeded workers to be used on many routes. "The question is: Is it easier to shut down the service than it is to do something about featherbedding?" Long asked. Cannon, the parent committee chairman who sat in on the hearing, said the problems with Amtrak go beyond featherbedding. "If Amtrak's route system is not reduced, the alternative may be the total elimination of the system," Cannon said. Schmitt complained that elimination of the "Southwest Limited" would have a serious impact on his state of New Mexico. Instead of shutting down, Schmitt said Amtrak ought to upgrade equipment and improve sales techniques. [From the Sun, Mar. 6, 1979] SENATOR LONG BACKS AMTRAK SERVICE CUT AS HEARING ON ADAMS PROPOSALS BEGINS SIX OF 16 TARGET TRAINS GO TO BALTIMORE (By John Schidlovsky, Sun staff correspondent) Washington-A Carter administration plan to cut 43 per cent of Amtrak's nation- al rail passenger service made congressional headway yesterday, as a key legislator indicated his support of it. Russell B. Long (D., La), the influential chairman of a Senate subcommittee considering the proposal, said he likely would back the plan slashing 11,800 miles off passenger routes. "I'm not at this point planning to oppose this plan," Senator Long told Alan S. Boyd, Amtrak's president, who added his voice yesterday to those in favor of a reduced rail system. The plan to drop 16 major trains-including 6 that serve Baltimore-was pro- posed in January by Brock Adams, the Secretary of Transportation, as a way of saving taxpayers $1.4 billion over the next five years. Mr. Adams appeared before the Senate's surface transportation subcommittee yesterday to push his proposal, which he said still would serve 91 per cent of Amtrak's present riders. However, several senators from states that would lose rail service denounced the Adams plan. PAGENO="0324" 317 Harrison H. Schmitt (R., N.M.), whose state would lose most of its service, said the cutbacks would "decimate" the nation's rail network. "I just have the feeling you've taken the easy way out by altering the route structure," Senator Schmitt told Mr. Adams. Vermont's two senators added their opposition to the Adams proposal, which would eliminate the Montrealer train and leave their state without any passenger rail service. "It's a darn good train," said Patrick J. Leahy (D., Vt.), who testified that he was "outraged" by the proposed elimination of the Montrealer and by the failure of administration officials to hold hearings on the plan in Vermont. Unless either the Senate or the House votes a resolution of disapproval by May 14, the proposed new route structure will take effect in October. The House will hold hearings on the plan next month. Congress is reported to be in a greater budget-tightening mood this year than last, when it rejected a similar proposal by Secretary Adams to trim Amtrak service, which operates with large federal subsidies. Mr. Long, who heads the Senate Finance Committee, indicated his support of a cutback in rail service, even though the Adams plan would eliminate the famed Southern Crescent service to New Orleans in his home state. Indulging in a moment of nostalgia about the Southern Crescent-long considered one of the finest in the nation-the Louisiana Democrat recalled his arrival in the nation's capital after winning a Senate seat in 1948, and even earlier memories. "When I first came to Washington, I came with my father [Huey Long] on that train," he said, "I've ridden it many times. I'd hate to see it go." But Mr. Long took note of Amtrak's persistent financial problems, which he traced in part to the number of employees. "We've got more personnel operating these trains than the railroads need," Mr. Long said. The gloomiest portrayal of Amtrak's future came from Mr. Boyd, who said the average age of an Amtrak car was 28 years. "We've got a lot of junk out there we're hauling around without serving any useful purpose," Mr. Boyd said. The Amtrak president told the subcommittee that neai~ly one-third of the net- work's 2,200 rail cars are unusable on any given day and fewer than one-fourth of the fleet consists of new cars. Mr. Boyd said Amtrak desperately needed cars that could increase the average speed of a train from the present 45 miles an hour. "If we can't get to 55 miles per hour, I question the wisdom of operating a rail service," he said. The proposed cutbacks were criticized by J. R. Snyder, a representative of a group of railway labor unions, who said the Adams plan would mean layoffs for 3,400 Amtrak employees. [From the washingthn Post, Mar. 6, 1979] REBUILT AMTRACK Is URGED FOR SURVIVAL OF RAIL SYSTEM (By Douglas B. Feaver) If rail passenger service is to survive in the United States, Amtrak must be given an opportunity to retrench and rebuild, Amtrack President Alan S. Boyd told a Senate subcommittee. "We've got to have a smaller system if we're going to have a system at all," Boyd said. "We're having breakdowns; our maintenance costs are out of sight and there's a lot of junk we're hauling around out there." The worst thing that could happen to Amtrak, Boyd said, "is to leave us with the system we have today." Boyd's testimony came on the first day of hearings on whether Congress will accept a Department of Transportation plan that would cut Amtrak's route miles by 43 percent and realign several routes. If the plan is not rejected by either house of Congress by May 2, it will automatically go into effect in October. The plan was vigorously defended against attacking senators yesterday by Trans- portation Secretary Brock Adams, whose department created it. "We went through those routes (that Amtrak presently serves) inch by inch" in deciding which routes to cut, Adams said. If a state wants to restore some of the service, then the state should be prepared to pick up part of the subsidy that is required to operate Amtrak, he said. Adams appeared to gain valuable support from Sen. Russell Long (D.-La.), chair- man of the Surface Transportation Subcommittee of the Senate Commerce Commit- tee. But while Long said "we're going to have to operate a modern system or we PAGENO="0325" 318 better not operate at all," he also mourned the passing of the Southern Crescent, the train from Washington to New Orleans that is eliminated in the Adams plan. Adams contends that the proposed route restructing will save $1.4 billion in subsidies over the next four years, while continuing to provide rail service to 91 percent of those now using the system. He disagreed with suggestions from several senators that Amtrak was needed in times &f uncertain energy availability by saying that "if all of Amtrak's equipment were presently operating on the existing system, it could carry only 1 percent of the intercity trips" made by travelers in the United States. Sen. Harrison H. Schmitt (R-N.M.), whose state would lose Amtrak service to Albuquerque, charged that Amtrak had not adequately tried to sell the service it has and that the new route structure lacked feeders to build up patronage on main lines. "The feeder lines are going to have to be bus and car," Adams said. Sen. Patrick J. Leahy (D.-Vt.) complained about the proposed elimination of the Montrealer, a train that runs in his state; Sen. Warren G. Magnuson (D.-Wash.) noted that four of six trains to Seattle had bean eliminated, and so it went. Nonetheless, Adams' people feel that the route realignment will survive the congressional test. "I think we will be able to persuade both houses to go alone with us,' said Terrence L. Bracy, assistant secretary for governmental affairs. `We're visiting every member of the House and the Senate and explaining the costs involved. Boyd, who said he was willing to operate whatever system Congress dictates, quibbled with some specific details of the Adams plan, but not with the general outline. He said Amtrak could operate within the proposed federal subsidy of $550 million for fiscal 1890, but that guarantees beyond that were difficult. TRANSPORTATION AsSocIATIoN OF AMERICA, Washington, D.C., March 26~, 19711. Hon. RUSSELL B. LONG, Chairmain, Surface Transportation Subcommittee, Senate Commerce, Science and Transportation Committee, Washington, D.C. DEAR CHAIRMAN LONG: Based on long-held policy views on intercity rail passenger service of the Transportation Association of America, I should like to express our general support of the Department of Transportation's proposed restructuring of Amtrak. We fully recognize the controversial nature of such a change and the strong opposition to it from many directly affected interests, but believe 7½ years of experience has been sufficient to show the need for this action. In short, it is time to "bite the bullet". TAA has analyzed on many occasions intercity rail passenger operations through- out the post World War II period, and we have followed with considerable interest the many innovations tried by the railroads to retain traffic being diverted to the private auto and commercial air transport. While some of these efforts proved to be moderately successful in the short run, the fact remained that the vast majority of the American public no longer chose the railroads for intercity travel purposes. The deficits continued to increase, and the burden became so heavy on the railroad industry that it had to be relieved of it through the creation of Amtrak. The Amtrak story is well told in the DOT report. On the plus side, Amtrak has upgraded equipment and facilities-thanks to Government financial support-and has been able to reverse the downward trend in train travel. On the minus side, Amtrak still handles only a fraction of 1 percent of the nation's total intercity passenger-miles, and has been unable to keep expenses from expanding at a far greater rate than revenues. Annual deficits collectively total $4.1 billion, of which $3.2 billion has been paid by direct U.S. grants and the other $900 million paid by loans guaranteed by the Government and which are not expected to be repaid. As pointed out by the DOT, one reason for the rising deficits is the Congressional- ly mandated expansion of Amtrak's route structure, which increased from an initial 23,000 route-miles to 27,500. While this helped boost passenger trips by 22 percent and passenger-miles by 43 percent over Amtrak's life, the addition of more unprofit- able routes and services has simply compounded the overall deficit. As any business- man knows, you don't make your company stronger by adding services that fail to cover direct costs and make some contribution to indirect costs. TAA appreciates Amtrak's potential role as a mover of people along high-density routes, where its energy-conservation and traffic-decongestion benefits can be ex- ploited. The DOT proposal, as we see it, doesn't prevent the advantages of intercity rail passenger service from being utilized. In our view, it improves the chances of PAGENO="0326" 319 this happening, by rationalizing Amtrak's route structure so that it can stress those services with the greatest potential for growth. We note with satisfaction that Amtrak's present management recognizes the need for major restructuring and that it believes it can do a better job if this is done. We are impressed with the supporting data presented by DOT on the probable impact of its restructuring plan. While total route-miles would be reduced by 43 percent-a statistic that unfortunately is being highlighted in the general press without more meaningful related statistics-the remaining 57 percent of the system will be able to handle 80 percent of the total passenger-miles and 91 percent of the total number of passengers. Furthermore, the smaller network would serve 22 of the nation's largest population centers and 39 of the largest 50 cities. Another favorable sign is the intent by DOT to give the Amtrak management as much "flexibility" as possible in deciding on specific routes and services, as well as relieving it from cumbersome service regulations. Amtrak, as you know, already has pricing freedom from ICC regulation not now available to competing airline and intercity bus lines. The competitive threat of a heavily subsidized Amtrak has been clearly recognized by TAA, as evidenced by the following policy formally adopted by our 115-member Board of Directors (see current roster attached). "Amtrak's railroad passenger train service competes with the passenger services of private enterprise. To assure fairness of such competition, the addition, improve- ment, or discontinuance of Amtrak service should be governed by realistic economic criteria. Authorization of funds for Amtrak should require revenue standards and other economic criteria under which the Secretary of Transportation would deter- mine the extent to which particular Amtrak service should be instituted, improved, or eliminated." We believe the Secretary of Transportation has acted in line with the last sen- tence of the above policy. In fact, we believe he has taken a more than reasonable approach when he advocates a gradual increase in the percentage share of total expenses that Amtrak should recover from revenues-from 37 percent at present to only 50 percent by fiscal year 1985. We are sure that the financially hard-pressed intercity bus industry believes that such a goal is far too moderate, because it is the mode most directly affected by Amtrak competition and the one that apparently stands to gain most from a major restructuring such as proposed by the DOT. The last point that we should like to make is the need for reform in the area of labor work rules-which is of particular importance because of the higher speeds of passenger trains, and thus shorter work day based on distance. We realize that this is a very controversial area, yet it is most important if we hope to control expenses and improve services. We can understand why now-employed rail workers want to protect their jobs, as well as demand reasonable compensation if laid off for reasons beyond their control; but they should not be able to force the continuation of any unneeded jobs into the indefinite future. Job reduction by attrition is not an unrea- sonable approach as a solution. This, of course, is not a problem unique with Amtrak; and some improvements are being made by a number of the freight- carrying railroads. We can only hope that this modest trend picks up speed and carries over to Amtrak. In summary, TAA believes the DOT has taken a major step toward strengthening the potential of Amtrak to provide an essential service to the nation, and we urge that your Subcommittee, as well as other members of the Commerce, Science and Transportation Committee support the DOT plan and will urge its approval by the Senate when up for consideration. Sincerely, PAUL J. TIERNEY, President. OHIO RAIL TRANSPORTATION AUTHORITY, Columbus, Ohio, March 27, 1979. RUSSELL LONG, Chairman, Subcommittee on Commerce, Science, and Transportation, Washington, D.C. DEAR CHAIRMAN LONG: Enclosed is the written testimony of the Ohio Rail Trans- portation Authority (ORTA) concerning the United States Department of Transpor- tation (USDOT) Final Report on the AMTRAK Route Structure. ORTA appreciates the opportunity to go on record with testimony strongly urging the rejection of the USDOT Final Report. The Ohio Transportation Authority is the designated state agency responsible for development and promotion of rail freight and passenger service in Ohio. Thus, PAGENO="0327" 320 ORTA is very concerned with the possible detrimental effects of losing numerous AMTRAK routes in Ohio as recommended in the USDOT Final Report. ORTA Board and staff strongly urge Congress to direct the USDOT to more comprehensively study the role of rail transportation in the United States. There- fore, the Ohio Rail Transportation Authority encourages the rejection of the Final Report until such studies can be completed. Both the ORTA Board and the Ohio Senate concur, and consequently have passed resolutions requesting Congress to reject the USDOT Final Report. These resolutions are enclosed. The Ohio Rail Transportation Authority urges your review of these documents opposing the AMTRAK restructuring proposed by the USDOT. Sincerely, NAT SIM0N5, JR., Executive Director. Enclosure. STATEMENT OF THE OHIO RAIL TRANSPORTATION AUTHORITY In Ohio, the Ohio Rail Transportation Authority (ORTA) is the designated state agency responsible for the promotion and development of the state's rail freight and rail passenger service. ORTA was established in December, 1975, and since then has administered the federal rail freight programs in the state. The Ohio Rail Tranpsor- tation Authority is also active in rail passenger planning and is currently working to develop intercity rail passenger service in Ohio. The feasibility phase of the Ohio High Speed Intercity Rail Passenger Program is complete and the preliminary engineering phase is underway. Ohio is developing one of the most comprehensive rail passenger plans produced by a state government. The expertise gained from this planning process in such areas as patronage, costs, revenues, and route selec- tions has provided ORTA with a unique insight into the problems of American passenger trains. It is on the basis of ORTA's experience and study that our recommendations to the Congressional deliberations are made. Every major industrial nation in the world has an extensive rail passenger system supported by public funds. Other countries have recognized the importance of such systems in the overall transportation network of their countries. The decision by Congress to accept or reject the United States Department of Transportation's (USDOT) Final Report will be a crucial one for the future of American rail passen- ger service and indeed for the future of continued ineffectiveness and decline. The Ohio Rail Transportation Authority recognizes that the present AMTRAK system is inefficient and that changes must be made. However, the changes recom- mended in the final plan are not the answers to AMTRAK's problems. ORTA strongly urges the rejection of the USDOT Final Report because it is unresponsive to the direction of Congress that AMTRAK conduct a study "which will provide an optimal intercity railroad passenger system based upon current and future market and population requirements."l ORTA believes that the Final Report did not deter- mine `the role that rail passenger service can play in helping meet the nation's transportation needs while furthering national energy conservation efforts."2 Ohio believes that the Final Report is simply a study of how many routes should be cut from the AMTRAK system to meet an arbitrarily set budget level. A decision affecting the future of rail passenger transportation in the United States must not be made on the basis of incomplete and inadequate data. Congress should demand of the Secretary of Transportation a study dealing with all relevant issues. ORTA is especially concerned with the elimination of routes to 10 Ohio cities leaving the state with virtually no rail passenger service. The recommendations of the Final Report to Congress on the AMTRAK Route System would eliminate the National Limited, the Shenandoah, and the Cardinal, three trains traversing Ohio. The Lake Shore Limited would be rerouted through Canada, eliminating Ohio service also. The Broadway Limited would be rerouted through Cleveland and Toledo, replacing the lost Lake Shore service presently available in theses cities. However, this rerouting would eliminate service to Crestline, and Lima. In all, the following Ohio cities would be eliminated from the AMTRAK system. OHIO CITIES LOSING SERVICE Athens Crestline Canton Dayton Chillicothe Dennison Cincinnati Hamilton Columbus Lima 1 AMTRAK Improvement Act of 1978, House Report No. 95-1182, p. 2. 2 Report No. 95-1182, p. 2. PAGENO="0328" 321 One positive aspect' of the USDOT recommendations for Ohio would be the new Pittsburgh to Cleveland to Toledo corridor with a probable new intermediate station in Youngstown. Although ORTA favors the rejection of the USDOT Report, it does agree that the Pittsburgh to Cleveland corridor has great potential for rail passen- ger service. However, ORTA is very concerned about the timing of the transition from the old route structure to the new route system if the USDOT report is accepted. Presently, Cleveland, Elyria and Toledo are AMTRAK stops on the Lake Shore Limited. They are scheduled to be stops on the restructured Braodway Limited if the USDOT report is accepted. Due to the problems that will inevitably arise in initiating new service between Pittsburgh and Cleveland, it could conceivably take a great deal of time before the restructured Broadway route becomes operational. If the restructured Broadway Limited cannot be put into service by October 1, 1979, (the date the service cuts and restructuring recommended in the Final Report could begin), Ohio could be left with NO AMTRAK service. ORTA strongly believes that this is an intolerable situation. If the report is accepted, Congress must insure continued service to Cleveland, Elyria and Toledo during the transition period. If rail service is temporarily lost or interrupted, the rail passenger market in effected cities will suffer as riders and potential riders shift to other modes. The Ohio Legislature has recognized the adverse effects that would be felt by Ohioans if the USDOT recommendations are accepted. Included as Appendix I to this statement is a resolution passed in the Ohio Senate calling for the rejection of the USDOT report. Also included is a resolution of the ORTA Board that similarily recommends that the Final Report be rejected. Decisions on the restructuring of the AMTRAK system' must be made on the basis of a study which includes an examination of the entire U.S. passenger transporta- tion network. The proper role of rail transportation should be evaluated in relation to other modes. Congress should instruct the USDOT to address the broad issues of travel needs and availability of transportation. Various modes of transportation should be mixed to derive the maximum public good at the most efficient cost. The optimal rail passenger system cannot be designed and implemented until it has been identified. Comprehensive data should be gathered to determine the role of AMTRAK in the American transportation network. Concerns such as the role of regional rail routes, the economic, energy and environmental benefits of a rail passenger system, and cost cutting methods besides route elimination must be examined. ORTA has many objections to the USDOT Final Report. They will be discussed in four major categories: ORTA OBJE~HONS TO THE USDOT REPORT 1. The Report eliminated many routes without providing the public an opportuni- ty for a hearing. 2. The recommendations of the Final Report will not provide a lasting solution to rising AMTRAK deficits because all essential issues were not fully evaluated. 3. The Report ignored the value of regional rail corridors outside the Northeast. 4. The Report provides no apparatus to expand 403(b) service beyond those states which presently use the service if funds are available. The remainder of this testimony expands upon these objections and offers recom- mendations to resolve them. OBJECTION I The Report Eliminated Many Routes Without Providing the Public an Opportunity for a Hearing In May 1978, the USDOT released its Preliminary Report to Congress and the public: "A Reexamination of the Amtrak Route Structure'. The Report recommend- ed that the present 27,500 mile Amtrak system be reduced to an 18,900 mile system. The proposed 18,900 mile system contained, in the words of Secretary Brock Adams, "No `poor' performers"~ In the summer of 1978, 52 public hearings were held in areas where the Prelimi- nary Report recommended service eliminations. Subsequently, the Final Report was issued in January 1979. "A Reexamination of the Amtrak Route Structure," USDOT, May, 1978, p. 2. PAGENO="0329" 322 The Final Report, which Congress is now in the process of evaluating, recom- mended that the Amtrak system be further reduced to 15,700 miles. This represents the elimination of an additional 3,200 miles of Amtrak routes with no public hearings in the effected areas. ORTA questions the justice of depriving citizens of rail service without providing an opportunity for public hearings. The people should be given a realistic opportuni- ty to present their case for retention of service. If hearings in the effected areas were required for the USDOT Preliminary Report on the Amtrak route structure, they are also warranted for the recommendations of the Final Report. The people in the cities served by this 3,200 miles of passenger routes should be given an opportu- nity to question the study that summarily eliminates a public service. RECOMMENDATION: Before any major reductions in rail service are made, adequate public hearings in the effected cities should be provided. OBJECrION II The Recommendations of the Final Report Failed to Provide a Lasting Solution to Risin~g Amtrak Deficits Because All Essential Issues Were Not Fully Evaluated In the Final Report, the USDOT projects that as a result of recommended route reductions the level of funding needed for Amtrak for the next three years will remain nearly constant. This is based on the assumption that the new route struc- ture will improve the ratio of revenues to expenses. The Ohio Rail Transportaion Authority believes this will not be the case. A study, limited only to route structure, ignores too many factors important to the economic stability of a passenger railroad. Decisions made on the basis of route restructure alone will result in simply reducing a large inefficient rail system to a smaller inefficient rail system. Service is the key to reducing deficits. Optimal schedule times, frequencies, reli- ability, and speeds must be determined. Meeting the demands of the travelling public stimulates significant increases in ridership. For example, in Dayton, the schedule of the National Limited was adjusted to provide morning and evening service rather than middle of the night service. The affect on ridership was dramat- ic. In 1976, 7,499 passengers used AMTRAK in Dayton. In the first full year after the schedule change, ridership jumped to 17,173.~ The system that is being recommended by the USDOT cannot be evaluated by examining a map showing proposed routes. The map shows what cities will be connected but gives no indication as to whether or not these cities will receive adequate service. Because the USDOT study proposes one daily round-trip or less for each route, AMTRAK trains would stop at many cities on the routes at odd hours of the night, just as they do today. ORTA questions* whether middle of the night scheduling provides a city with adequate service. For the people of many cities, AMTRAK will be little more than a train station that is always closed during prime travelling and business hours. The USDOT report did not fully explain the quality of service the proposed system would provide. The reliability of the proposed AMTRAK system cannot be ascertained by simply examining the route map. The present AMTRAK on-time performance is dismal, largely due to lack of cooperation by the freight railroads and poor track condition. Although the USDOT report recognized these problems, it provided no suggestions for tangible solutions. If such issues as scheduling, frequency, and reliability issues are not satisfactorily addressed, AMTRAK will continue to be a service primarily for those with consider- able leisure time. Although there are no comprehensive studies available AMTRAK data indicates that currently 62 percent of its riders are on vacation while only 9 percent are on business.~ If AMTRAK is to serve the mainstream of everyday American life, more than routes must be studied. Until the business person and other travellers on time schedules ride AMTRAK, there will be no significant increases in the number of riders per AMTRAK train. Consequently, AMTRAK deficits will continue to rise if revenues from increased ridership remain relatively constant. Unless the USDOT Final Plan is rejected, AMTRAK continues to face the same problems that exist today. A permanent solution will not be found until all funda- mental reasons for AMTRAKs problems are identified. Without a permanent solu- tion, increased deficits will continue and AMTRAK will require increasing subsidies. 1976, 1977 and 1978 AMTRAK Ridership Data. "A Reexamination" USDOT, p. 7-14. PAGENO="0330" 323 RECOMMENDATION: Congress should instruct the USDOT to fully determine all factors influencing the quality of service such as frequency, time schedules, reliability, and speed. Solutions should be derived that would yield the most effi- cient relationship between costs and revenues and most effectively meet the travel demands of the American public. OBJECTION III The Report Ignored the Value of Regional Rail Corridors Outside the Northeast The market for rail passenger service was a critical area that the Final Report failed to fully investigate. The USDOT assumed the AMTRAK should provide long distance service. The relative efficiency of long-distance versus short-distance routes was not evaluated. Short-distance corridors should be more fully explored before any final decision concerning AMTRAK restructuring is made. There is evidence that indicates that regional rail service over short routes of less than under 500 miles provides a more efficient railroad system than national service on long haul routes of over 500 miles. Regional rail systems provide more effective and efficient service than do long- distance routes, especially for the business person. One-day round trip service is possible in a system which concentrates on regional rather than long distance routes. The need for regional rail service in Ohio was clearly demonstrated in the feasibility phase of the Ohio High Speed Intercity Rail Passenger Program. Patronage studies conservatively estimate that by 1985 at least 1,284,000 passen- gers would use rail service in Ohio in the first year of service. This estimate was based on a recommended three-corridor rail system connecting all Ohio's major urban areas and utilizing three interstate connections. An independent study con- ducted for Legislative Service Commission predicted that five million passengers annually would utilize such a system after the program became operational. The feasibility study illustrated a variety of benefits to Ohio from a regional rail system. For instance, by bringing together Ohio's major cities, which contain more than half of the Ohio population, the state will become a more desirable location for business and industry. Regional, short-distance routes encourage citizens to substitute public mass trans- portation for the private auto. As more people use railroads, Americans benefit because scarce fuel is used more efficiently and highway congestion is partially alleviated. For example, the Wisconsin Department of Transportation conducted a survey on the short-distance Chicago to Milwaukee train. Seventy-four percent of riders on this line normally would use a car if rail service was unavailable.6 A survey of passengers on AMTRAK's "Floridian" in July, 1977, showed that 41 percent of the riders would have flown if a train was not available while only 19 percent would have used an automobile.~ Thus, when the option is available the short-distance traveler will often use rail instead of the automobile while most long- distance rail passengers would use air or bus if rail was not available. The short-distance, regional routes also have advantages over long-distance trains in cost effectiveness. In the table that follows taken from the USDOT preliminary draft of the "Reexamination" study some significant statistics are revealed. Combin- ing statistics on cost and revenues for the Northeast Corridor and other short distance trains reveals that short-distance trips generate 42.9 percent of AMTRAK revenue and only 31.5 percent of avoidable cost for 1977. Long-distance routes, however, generate only 57.3 percent of revenue as compared to 68.5 percent of avoidable costs. Thus short-distance trains have a relative advantage over long- distance trains in their revenue to cost ratios. RELATIVE IMPORTANCE OF ROUTE GROUPINGS, FY 1977 1 Short NEC distance Total NEC and short distance Long distance Total Operating revenues 31.3 11.6 42.9 57.3 100 Avoidable Costs 19.2 12.3 31.5 68.5 100 Passenger miles 24.5 10.4 34.9 65.0 100 Passenger trips 58.7 17.4 76.1 23.7 100 8 "AMTRAK: An Experiment in Rail Service," National Transportation Policy Study Commis- sion Special Report No. 2, September, 1978, p. 59. ~ An Experiment" p. 58. PAGENO="0331" 324 RELATIVE IMPORTANCE OF ROUTE GROUPINGS, FY 1977 1-Continued (percent) NEC Short distance Total NEC and short distance Long distance Total Train miles 12.7 16.4 38.1 61.9 100 Fully allocated Costs 24.5 12.5 37.0 62.9 100 1 `A Reexamination", USDOT, Table 3-10, p. 3-17. Short-distance regional rail service (under 500 miles) responds to the most fre- quent travel needs of citizens. Amtrak statistics support this fact demonstrating that the average Amtrak patron travels approximately 225.8 miles per trip.9 Region- al rail routes satisfy the needs of the American rail passenger. Ridership figures for the National and Lake Shore Limited are additional evi- dence that many people use Amtrak for regional service. In 1977 only 36.3 percent of all National Limited patrons travelled over 500 miles while 63.7 percent made short-distance trips.10 In summation, short-haul regional routes are the most efficient use of rail passen- ger travel. They provide more social benefits; they could be less expensive to operate; and they would best fit the travel demands of the public for rail passenger service. RECOMMENDATION: The Congress should instruct the USDOT to fully study the value of regional rail corridors and the relative benefits of short-distance versus long-distance corridors. OBJECHON IV The Report Provides No Apparatus To Expand 403(b) Service Beyond Those States Which Presently Use the Service Presently, there are 11 403(b) Amtrak routes in seven states supported by 50 percent state funding. The USDOT Final Report included most of these routes in its recommended route structure. However, the USDOT report has no provisions for future 403(b) service for states that do not presently have it. The effect of this recommendation is that the states which have 403(b) service maintain it, but states such as Ohio, which have no present 403(b) service would be precluded from using it. This seriously impedes Ohio's rail passenger planning. ORTA is currently study- ing the possibility of linking Ohio cities with high speed rail service. However, high speed trains are prospects of the future (10 to 20 years). As an incremental building block to attain these long range goals, ORTA has seriously been considering 403(b) service. ORTA is currently in the process of examining the legal constraints facing Ohio in regards to this service. Money for 403(b) service has been requested for the 1979-80 biennium but the Ohio Legislature has not yet acted upon this request. Regional rail transportation, such as Ohio's Intercity Passenger Program, en- hances the national Amtrak system. Due to cost restraints, long-distance national runs often can only stop in intermediate cities in the middle of the night. These cities are effectively precluded from adding significant patronage to the Amtrak system. However, the provision of regional service can tie these intermediate cities to the national Amtrak system benefiting both the people in these cities and the Amtrak patronage on long-distance routes. RECOMMENDATION: Apparatus and funding for additional 403(b) service should be provided. ORTA concludes that Congress should return the Amtrak report to the USDOT with instructions to thoroughly investigate all issues relevant to passenger train service. The USDOT should not be limited by an arbitrary budget figure, but by the constraint that their proposed rail system should efficiently and cost effectively complement the transportation provided by other modes and meet the rail needs of the American people. There will be many negative economic consequences as a result of eliminating rail routes at this time. ORTA believes that in the future there will be no alternative but to revitalize rail passenger service. The burden of rehabilitating, or perhaps "A Reexamination", USDOT, p. 3-10. 10 ORTA Calculation using 1977 Amtrak Data. 11 "Amtrak: An Experiment", p. 56. PAGENO="0332" 325 reconstructing anew in the future, a rail system that has been allowed to deterio- rate or disappear must be considered now. The cost signalling systems will be greater than the cost of maintaining the current system. Decisions must be made now while the option of maintaining and improving other rail passenger system is still available. The Ohio Rail Transportation Authority believes that passenger trains will be an important part of America's transportation future. ORTA looks forward to working with Congress, the USDOT and the state to build the most efficient and effective rail system for our needs. THE ATCHISON, TOPEKA AND SANTA FE RAILWAY COMPANY, Washington, D.C., April 4, 19711. Hon. RUSSELL B. LONG, Chairman, Subcommittee on Surface Transportation, Committee on Commerce, Sci- ence and Transportation, US. Senate, Washington, D.C. DEAR CHAIRMAN LONG: On this date I submitted a statement on behalf of the Amtrak contracting railroads in opposition to Section 7 of 5. 712, the "Amtrak Improvement Act of 1979". This section would levy on the railroads an assessment of 50 percent of the systematic average monthly yield per revenue passenger mile as compensation to Amtrak for the transportation of free or reduced rate Amtrak Rail Travel Privilege Cardholders. The statement pointed out on page 2 that, based upon Senator Cannon's introductory remarks March 21, 1979, the charge to the railroads would amount to 3.5~ per mile. Since preparing this statement I have procured a copy of the Interstate Commerce Commission's "Report to the President and the Congress-Effectiveness of the Act-Amtrak, March 15, 1979", indicating that Am- trak's revenue per revenue passenger miles is 9~. A copy of the relevant data is attached. Consequently the charge which Section 7 would impose on the railroads would be 4.5~ per mile. Based upon Amtrak 1978 free and reduced rate transporta- tion statistics, as detailed on page 2 of the statement, Section 7 would have imposed an aggregate charge of $7,925,881 on the railroads. I am attaching a revised page of my statement reflecting this updated calculation. As the statement indicates, Amtrak is currently reimbursed by the railroads for the actual costs incurred by it in providing this free or reduced rate transportation. These costs have been determined by the Interstate Commerce Commission insofar as the actual transportation is concerned and by mutual agreement with Amtrak for the administrative costs incurred in implementing the program. These actual costs, for which Amtrak is fully compensated by the railroads, amount to less than 7 percent of the payment which Section 7 would exact from the railroads. Sincerely yours, RICHARD K. KNOWLTON, Vice President-Law. Enclosures. STATEMENT OF RICHARD KNOWLTON Mr. Chairman and members of the Committee: My name is Richard K. Knowlton. I am Vice President-Law of The Atchison, Topeka and Santa Fe Railway Company. This statement is filed on behalf of the following railroads, all of which are provid- ing services for the National Railroad Passenger Corporation ("Amtrak") under contract: Atchison, Topeka and Santa Fe Railway Company; Baltimore and Ohio Railroad Company; Burlington Northern Inc.; Chesapeake and Ohio Railway Company; Chi- cago, Milwaukee, St. Paul & Pacific Railroad Company; Consolidated Rail Corpora- tion; Illinois Central Gulf Railroad; Louisville and Nashville Railroad Company; Missouri Pacific Railroad Company; Norfolk and Western Railway Company; Rich- mond, Fredericksburg and Potomac Railroad Company; Seaboard Coast Line Rail- road; Southern Pacific Transportation Company; Southern Railway Comany; Union Pacific Railroad Company. This statement is addressed solely to the provisions of Section 7 of 5. 712 relating to free and reduced rate transportation for railroad employees and their depend- ents. The Amtrak contracting railroads are very much opposed to the enactment of such provision in that the proposed legislation would impose arbitrarily upon the railroads the obligation to pay Amtrak, in effect, 50 percent of existing passenger tariff rates for the "space available" transportation of railroad employees, retirees, and their dependents. This levy which would be exacted from the railroads would bear no conceivable relationship to the costs incurred by Amtrak for the transporta- PAGENO="0333" 326 tion of these statutorily mandated riders and would consititute an unconscionable and unconstitutional subsidization of between $5 million and $6 million per year of Amtrak by the railroad industry. Amtrak records indicate that its pass bureau, as of March 19, 1979, had outstand- ing 475,130 Rail Travel Privilege Cards. During 1978 these cards were utilized by railroad employees, retirees and their dependents for an average of 1.1 trips per card, with an average trip distance of 337 miles. Under existing Section 405(f) of the Rail Pessenger Service Act (45 USC 565(f)), which Section 7 of 5. 712 would amend, Amtrak was compensated by the railroads for the costs incurred in providing these transportation services, including the costs of implementing and administering its free and reduced rate transportation program as required by Section 405(f) in the amount of approximately $500,000. Had Section 7 of S. 712 been in effect, such railroad contribution to Amtrak for 1978 would have been $7,925,881, over $7.4 million in excess of the costs incurred by Amtrak.' Prior to the advent of Amtrak, the policies of those railroads operating passenger trains as to pass privileges of employees varied greatly. With some exceptions those railroads generally provided free or reduced rate transportation to certain of their own employees, retired employees and/or dependents. Whatever the policy of the particular railroad in this regard, it was voluntary on the part of the railroad (rather than being required by statute or by the collective bargaining agreements) and subject to change in its discretion, and it applied only to the transportation in passenger trains operated by that railroad. Thus, all such privileges extended by a railroad came to an end when it discontinued all passenger service, as was the case with those railroads contracting with Amtrak on May 1, 1971. The Rail Passenger Service Act of 1970 established Amtrak to provide intercity rail passenger tranportation service and relieved the railroads of any obligation to provide such service, under circumstances specified in the Act. Section 401, in subsection (a)(1), provided that: "On or before May 1, 1971, the Corporation is authorized to contract and, upon written request therefor from a railroad, shall tender a contract to relieve the railroad, from and after May 1, 1971, of its entire responsibility for the provision of innercity rail passenger service." Section 401 also provided, in subsection (a)(2), that: "In consideration of being relieved of this reponsibility by the Corporation, the railroad shall agree to pay the Corporation each year for three years an amount equal to one-third of fifty per centum of the fully distributed passenger service deficit of the railroad as reported to the [Interstate Commerce] Commis- sion for the year ending December 31, 1969." In addition, Section 405 required railroads entering into such contracts to "pro- vide fair and equitable arrangements to protect the interests of employees affected by discontinuances of intercity rail passenger service" [subsection (a)], and that the contracts between the railroads and Amtrak "shall specify the terms and conditions of such protective arrangements" which shall have been certified by the Secretary of Labor as "afford[ing] affected employees fair and equitable protection by the railroad" [subsection (b)]. As required by the Act, the contracts relieved the railroads of their entire respon- sibility for the provision of intercity rail passenger service, called for substantial payments by the railroads to Amtrak, and contained arrangements for the protec- tion of employees which had been certified by the Secretary of Labor as being fair and equitable. The contracting railroads discontinued the intercity passenger trains which they had been operating, on May 1, 1971, and since that date have made the payments to Amtrak required by Section 401 of the Act, and have carried out the labor protective arrangements under the contracts. Neither the labor protective provisions nor any other provision of the contracts between Amtrak and the railroads impose any responsibility upon the railroads to pay for such transportation or to reimburse Amtrak for any part of the cost of such transportation. And, although several labor unions and others contended in Con- gress of Railway Unions v. Hodgson, 326 F. Supp. 68 (D.D.C., 1971), that the labor protective provisions were not adequate in some respects to comply with the re- quirements of the 1970 Act, they did not even suggest that provision should have been made for free or reduced rate transportation and the court rejected the contentions that were made. By the express terms of the Rail Passenger Service Act and the Amtrak contracts, the contracting railroads had been relieved of their "entire responsibility for the provision of intercity passenger service", including free or reduced rate transporta- `Based upon Amtrak's average revenue per revenue passenger mile of 9~. ICC Report to the President and the Congress-Effectiveness of the Act-Amtrak, March 15, 1.97.9. PAGENO="0334" 327 tion of employees. In enacting the present Section 405(f) in June, 1972, imposing the burden upon the railroads to reimburse Amtrak for the costs of free and reduced rate transportation afforded railroad employees, Congress restricted such transpor- tation to a "space available" basis; Amtrak was not to be required to add capacity to accommodate railroad employees. In enacting the 1972 legislation Congress contin- ued to recognize that it had relieved the railroads of any obligation with respect to intercity passenger service. This it did by assuring that nc substantial burden would be placed upon the railroads in connection with the free or reduced rate transporta- tion Congress afforded railroad employees by Amtrak. If, in requiring the railroads to reimburse Amtrak for "such costs as may be incurred" in providing free or reduced rate transportation, on a space available basis, to persons made eligible therefor by the statute, Congress had imposed any substantial burden upon the railroads, the statute plainly would have been uncon- stitutional. As the Supreme Court stated in Thompson v. Consolidated Co., 300 U.S. 55, 80 (1937), there are numerous decisions in which "expenditures directed to be made for the benefit of a private party were held to be invalid ~under the Constitu- tion], although the party ordered to pay was a common carrier.' So, too, it has been held to be unconstitutional for a state to require a transit company to provide free or reduced rate transportation to passengers not entitled thereto under the com- pany's franchise. Detroit United Ry. v. Michigan, 242 U.S. 238, 252-253 (1916); Detroit United Railway v. Detroit, 248 U.S. 429 (1919); Georgia Ry. Co. v. Decatur, 262 U.S. 432 (1923); Georgia Ry. Co. v. College Park, 262 U.S. 441 (1923). A resolution of the issue as to constitutionality of Section 405(f) of the Rail Passenger Service Act of 1970, as amended, was avoided by the legislative history of that section evidencing the intention of Congress 2 not to impose a substantial burden upon the railroads, and by the decision of the Interstate Commerce Commis- sion properly fixing the actual costs of space available transportation and thus the amount to be paid to Amtrak by a railroad. Under these circumstances, even those railroads that gained nothing from the creation of Amtrak have refrained from attacking the consitutionality of present Section 405(f). The railroads which entered into contracts with Amtrak have paid nearly $200 million in cash as their contribution to Amtrak, as the price for being relieved of the burden of the passenger business. It would be grossly unfair, if not unconstitu- tional, for Congress at this point to assess an additional $5 million or $6 million annual charge on these railroads as an afterthought. The railroads were presented with a choice, with the terms clearly stated in the original Amtrak legislation. Some chose to join Amtrak, others chose not to. The choice having been made, the terms should not be rewritten. Congress has already rejected as unconscionable and perhaps unconstitutional a previous attempt to impose this type of burden on the Amtrak contracting railroads by eliminating in committee Section 4 of 5. 3569, a bill introduced in 1974 for the purpose of amending the Rail Passenger Service Act. The reasons, as outlined above, for rejecting such an amendment in 1974 are equally valid today. In the area of costing of the provisions of passenger services and facilities, both Congress and Amtrak are firmly committed to the concept that such shall be restricted to avoidable costs solely related to the services or facilities provided. In its contractural arrangements with the railroads, Amtrak consistently has maintained that its use of railroad services and facilities is strictly incremental in nature and that its obligation to reimburse the railroads is limited to the avoidable costs of providing such services and facilities. Congress, in Section 402 of the Rail Passenger Service Act (45 U.S.C. 562(a)), has directed the Interstate Commerce Commission, in establishing compensation for the provision of services and facilities, to condition any reimbursement to the railroads in excess of incremental costs on quality of service consideratons. Consistent therewith, in implementing the 1972 amendment, the Interstate Commerce Commission determined the actual costs incurred by 2The legislative history of P.L. 92-316 demonstrates this intent of Congress: in its Report the Senate Committee on Commerce states that: "Section 8 further amends section 405 to require Amtrak to grant free or reduced-rate transportation to any active or retired railroad employee or his dependents who were eligible for such privilege on April 30, 1971. The railroads are required to reimburse Amtrak for the cost incurred in providing such transportation. Because Congress is merely continuing pass policies which the railroads themselves developed, it would appear that the railroads and not Amtrak should bear the cost, if any. "The Committee selected the term `cost incurred' concerning reimbursement to make clear its intent that such reimbursement need not, and in all probability should not, be based upon fares. It is anticipated that such cost as may be incurred should not be too substantial, based as it is upon space available and, subject as it is, to being offset by revenues generated by such reduced fares as Amtrak may institute for the beneficiaries of this section. . . . `(S. Rept. No. 92-756, 92d Cong., 2d Sess., at pp. 11-12.) PAGENO="0335" 328 Amtrak in providing free and reduced rate transportation to the pass holders.~ At the suggestion of the Commission, Amtrak and the railroads have negotiated a series of agreements reimbursing Amtrak for the costs incurred by it in implement- ing and administering its free and reduced rate transportation program.4 Thus reimbursement of both Amtrak and the contracting railroads for services provided by the other consistently has been upon an incremental cost basis. There is no justification whatsoever for Congress at this date to mandate by statute an addition- al arbitrary charge against the railroad industry for the benefit of Amtrak. Section 7 of 5. 712 is fatally deficient in several other respect. On its face, Section 7 would impose upon the railroads the obligation to reimburse Amtrak at 50% of the systemwide average monthly yield per revenue passenger mile for those card holders paying reduced fares for their transportation. This, in effect, would afford Amtrak full tariff compensation for this transportation provided on a space availa- ble basis, even though the reduced rate revenue currently received by Amtrak for such transportation grossly exceeds the costs incurred by Amtrak. Secondly, Section 7 of 5. 712 would justify the imposition of the additional charge upon the railroads as being "in lieu of any charges for liability incident" to this transportation. Section 7.2(b) of the Amtrak agreements with the railroads provides that Amtrak shall indemnify and save harmless the railroads, irrespective of any negligence or fault on their part, from any and all liability for casualty incurred by its passengers. In letters of understanding of Section 7.2(b)5 Amtrak agreed that with respect to Section 7.2(b): "[T]he phrase `any person or passenger who has purchased an NRPC-ap- proved ticket' included persons and their property receiving wholly gratuitious transportation services pursuant to pass privileges granted by NRPC." Since the reduced fare card holder passenger was covered by the wording of Section 7.2(b) itself, this portion of the consideration which Section 7 of 5. 712 would afford the railroads is illusory, having already been assumed by Amtrak. As has been indicated hereinabove, the remaining purported consideration afford- ed the railroad by Section 7 of 5. 712, that is, "any other costs incurred by the Corporation (Amtrak) in connection with free or reduced-rate transportation" amounts to approximately $500,000 annually, or roughly 8% of the assessment Section 7 would impose upon the railroads. This reimbursement to Amtrak, result- ing from its agreement with the railroads as to the actual costs of implementing and administering it free or reduced rate transportation program and the ICC determination of the costs incurred by Amtrak in providing such transportation, does not include the additional revenues accruing the Amtrak in the form of reduced-rate fares, sleeping car charges, dining car charges and charges for other services. All such revenues, of course, are made available to Amtrak through utilization by Rail Travel Privilege Card riders of otherwise empty space. Moreover, Amtrak is at liberty to alter its fare structure at any time, which modifications would directly affect the additional charges to be imposed upon the railroads with- out any significant relationship to the costs incurred by Amtrak. The railroads on whose behalf this statement is filed submit that Section 7 of S. 712 should be stricken from the bill. Siphoning off additional millions of dollars of railroad freight revenues to Amtrak would be simply the subsidization of Amtrak by railroad freight shippers and the foregoing of needed improvements in railroad plant and equipment-all in direct contravention of the current efforts of the rail industry and the government, including Congress, to improve the economic stability of the industry. Simply stated, if Amtrak's continued existence warrants its subsidi- zation as an instrument of social necessity, then such subsidy should come from the government and not from the private sector. Finance Docket 27194, Determination of Cost Reimbursement Under Section 405(f) of the Rail Passenger Service Act, As Amended. This proceeding remains open for continuing review of the adequacy of the Commission ~s determination, should Amtrack challenge the adequacy thereof ~The last such agreement terminated on December 31, 1978, and Amtrak, apparently un- aware of this pending legislation, is currently in the process of negotiating a new agreement with the railroads. `Robert S. Medvecky, Amtrak Vice President and General Counsel, to Richard K. Knowlton, Sante Fe Assistant General Counsel, dated May 24, 1972; the understanding further provides that the same understanding shall apply to all other contracting railroads. PAGENO="0336" 329 A COMPREHENSIVE APPROACH IN MARKETING AMTRAK AT THE LOCAL STATION LEVEL AS EVIDENCED AT LITTLE ROCK, ARK., TEXARKANA, USA, AND LONGVIEW, TEX. (Prepared by Randall R. Cookus and Dr. William A. Pollard) SUMMARY A comprehensive marketing and sales program should be of top priority to any company which derives its revenue from selling a service, a product, or even an idea. Only through an effective, all inclusive sales program-conducted at all station levels-can Amtrak ever begin to compete with both private and public transporta- tion. We have demonstrated, with our meager budget for advertising, that even a minimal amount of money spent in smaller market areas can produce a phenom- enal increase in sales. We have shown that by effectively using public service time in all media forms to project a positive image and increase an awareness of Amtrak, that a growth in sales can be expected. We have proven, by creating our own locally developed sales promotion-Hog- train-that hundreds of people will use Amtrak to attend special events, which will significantly increase sales and ridership. We have determined that by making Amtrak more accessible to the potential customer on a local level by using an automatic telephone answering device, dra- matic sales increases will result. And, last but not least, it has been evidenced at Little Rock, Arkansas, Texarkana USA, and Longview, Texas, and documented in this report, that through the dedi- cated efforts of the employees of these Amtrak stations and members of interested rail passenger groups of this area, the same dramatic sales increases experienced here could in fact be witnessed systemwide by using the same comprehensive approach to marketing Amtrak. MEDIA EXPOSURE In May of 1978, with the Department of Transportation's route restructure an- nouncement, the Arkansas Association of Railroad Passengers was afforded many opportunities to effectively use the various media forms to rebuke this plain. In doing so, we were able to project a more positive image of rail passenger service and Amtrak in particular. By presenting a much clearer picture of what Amtrak has to offer, we increased public awareness of Amtrak which increased ridership and consequently revenues did the same. The Arkansas Association of Railroad Passengers found that a considerable amount of public-service time is available to groups of this nature. Although Ark- ARP did not try to sell Amtrak during this time, as you would in a commercial, we did try to present an enticing picture. We explained the various types on equipment offered on the InterAmerican route. We mentioned scheduling, advantages of rail travel, and how more information could be obtained by contacting the local Amtrak ticket office. The two most effective media, in reaching large segments of people, were radio and television. Many hours of public-service time have been logged at various radio stations in both Arkansas and Texas. Much of this time has been in the form of editorial comments, personal interviews, question and answer programs, and live call in programs. We found the live call in programs to be very effective in projecting positive images about Amtrak. Ark-ARP also found the listener to be keenly aware of many of Amtrak's shortcomings. Ark-ARP did several programs of this type. We did one for three hours live from the station, one for 30 minutes via a conference call hook- up, and another for 30 minutes again from a local station. Numerous editorial comments and personal interviews have helped to increase public awareness of Amtrak through radio. The television media, especially the Little Rock ABC affiliate-KATV-7, have been most cooperative. An associate producer with this station has taken particular interest in Amtrak. We have been able to do about a dozen news stories on Amtrak from ridership increases to new types of equipment. We have done news stories on Hogtrain, the effects of the possible loss of the InterAmerican, and how rail passen- ger service could be the answer to our ever increasing dependence of foreign oil and the problems a shortage can bring about to Arkansans. This type of coverage has been of great benefit to improving Amtrak's image. We have also found that most 43-139 0 - 79 - 22 PAGENO="0337" 330 reporters present their stories in a positive light and have found them to be most knowledgable or willing to take time to become so. The newspapers, we have found, will either present a totally positive or totally negative view about Amtrak. A middle of the road approach dosen't seem to exist in either Arkansas or Texas. Little Rock is in a very good position with positive newspaper coverage. The Arkansas Gazette-the largest paper in the state and most respected-has been historically pro-rail and maintains that Amtrak's route through Arkansas be kept. This is evidenced in all of their editorials and editorial cartoons. The Gazette also features a local columnist, Richard Allin, who is known as Mr. Amtrak in Arkansas. He alone has done more for making people aware of Amtrak in Arkansas than anyone in the state. He has travelled extensively and has promot- ed Amtrak over all other forms of transportation. The Texarkana and Lonview papers generally reflect a biase anti-Amtrak senti- ment as does the ARKANSAS DEMOCRAT, the other Little Rock newspaper. The Texarkana papers and the Arkansas Democrat are owned by the same publisher, which may account for their attitude. Their negative stand on Amtrak generally has had some effect on ridership. The Democrat, in particular, has had several headlines which have indicates that service has already stopped in Arkansas. It takes a well mounted "letter-to-the-editor" campaign to have any positive effect on a negative front page headline. We believe the Arkansas Association of Railroad Passengers has been instrumental in counteracting these types of biased journalism. As a direct result of the Arkansas Association of Railroad Passengers effective use of these media forms to depict a more positive, realistic concept of rail passenger service and its inherent advantages, we believe we can associate increases in rider- ship and revenues categorically. NEWSPAPER ADVERTISING During the summer of 1978, the Arkansas Association of Railroad Passengers initiated an advertising program at Little Rock, Texarkana, and Longview, to inform the public about Amtrk service in Arkansas and east Texas. This program was a response to the suggestion of Amtrak agents in these three cities, because of the frequently voiced opinion that ridership on the InterAmerican was being stifled by a lack of advertising. Ridership figures during the first four years of operation had failed to show the route's true potential due to adverse publicity (no air conditioning, chronically late operation, etc.), and perhaps more significantly, be- cause a large segment of the population along the route had never been made aware of the existence of this train. These circumstances exist on numerous Amtrak long- haul routes. Ark-ARP established several goals when the advertising program was developed, the foremost being to increase ridership to provide justification for the InterAmeri- can's continued operation despite the Department of Transportation's proposed route cutbacks. The program was also designed to demonstrate the economic feasi- bility of a modest Amtrak advertising program in smaller markets. The overwhelm- ing results of this program indicate that increased revenues would more than justify the advertising costs. Amtrak's current marketing programs are designed around 5 "hub" markets and about 30 "feeder" markets. The only InterAmerican stations included in either category are Chicago, St. Louis, and Dallas. Significant InterAmerican markets at Little Rock, Texarkana, Longview, Austin, San Antonio, and Laredo are essentially ignored under Amtrak's advertising program, resulting in depressed ridership and revenues for these areas. Advertising in these underdeveloped markets should not be judged by the criteria of cost per thousand people reached. Although theoretically it costs less to reach the same number of people in a large community than in a small one, the factor of diminishing returns must also be considered. Markets which have received repeated Amtrak advertising have reached a saturation leven when compared to the under- developed and untapped markets which exist along large segments of many long- haul routes. With only moderate advertising, these untapped regions should and would produce remarkable revenue increases of a magnitude unheard of in the saturated markets. Newspaper advertising was chosen by Ark-ARP as the primary advertising medium because the cost per advertisement was within the limits dictated by a modest advertising budget funded entirely by individual contributions. A variety of other advertising methods, including radio, billboards, and placards on city buses were considered, but were not utilized due to the higher cost involved. PAGENO="0338" 331 Advertisements were purchased in several sizes, ranging from one column inch to ten column inches (2 columns wide and 5 inches deep). Advertising 2 columns wide and 3 inches long proved to be an optimal size. Ads less than this size were too small to be effective, while the results obtained from larger ads did not justify the increased costs. Repeated coverage was deemed more important than large ad size; full page ads which are carried only once or twice are more costly and less effective than a smaller (2 columns by 3 inches) ad which could be carried repeatedly over a period of months. Potential passengers need to be reminded of their Amtrak travel options when they are considering their trip-and a one time ad cannot fulfill this requirement. All advertising was structured to provide basic information about the schedules and fares of the InterAmerican. Best results were obtained from ads which con- tained an Amtrak herald, or a `tracks' border which directed attention to the contents of the advertisement. All ads except the smallest contained additional information promoting travel by train, and an explanation of the logic and necessity for a nationwide passenger train network. Special artwork and layouts utilized portions of ads appearing in Amtrak timetables and brochures, to reduce art costs incurred in designing camera ready copy. Advertising in Texarkana and Longview appeared once each week, on TV pro- gramming pages, or travel sections of local papers. Due to higher advertising costs in Little Rock, advertising appeared only twice monthly, in the travel section of Sunday newspapers. A once weekly advertisement should be considered minimum coverage for expanding untapped markets. The inadequate frequency of advertising in Little Rock was bolstered by a concerted effort to capitalize on many radio talk shows to publicize Amtrak, as detailed elsewhere in this report. In Texarkana and Longview, where once-weekly advertising was instituted, the newspaper advertising alone was sufficient to bring about revenue increases from 100 to 300 percent over the same months of the previous year. In addition to weekly advertising, and particularly when seasonal discount fares become available, a "saturation week" with advertising each day would greatly increase the public awareness of Amtrak. Amtrak's advertising distribution, as presently dictated by budget constraints, will essentially doom certain routes to oblivion. A modest advertising program, similar to the advertising coverage provided by the Arkansas Association of Rail- road Passengers would significantly boost revenues and would provide a more equitable distribution of Amtrak's advertising budget. NOTE-AS a follow-up to Ark-ARP's summer advertising program, Amtrak agents at Texarkana and Longview funded additional advertising form their own pockets on behalf of Ark-ARP. These ads, which appeared in shoppers guides published by local Chambers of Commerce, resulted in revenue increases comparable to those obtained from advertising in June, July, and August, 1978. HOGTRAIN, INCORPORATED Hogtrain was the result of a brainstorming session of the officers of the Arkansas Association of Railroad Passengers. William H. Eldridge, C.P.A., Dr. William A. Pollard, D.D.S., and Randall R. Cookus, Amtrak Agent at Little Rock, formed this organization to promote ridership and increase revenues on the route of the Inter- American. Our first undertaking was running packaged "football specials", utilizing the existing InterAmerican schedule, to the University of Arkansas away football games. We knew at the outset, that the best way to sell Amtrak in Arkansas was to tie it in with the football spirit or "Hog Fever." We approached Mr. Bill Lewis, Travel Editor of the Arkansas Gazette, and ex- plained to him what we were planning to do with Hogtrain. We needed to know if there was really as much interest in this as we had anticipated, before we started to put Hogtrain together. Mr. Lewis wrote an article (copy is included on pages immediately following this section) which described our intentions and asked that any interested reader drop a letter to Hogtrain. We wanted to know what games they would like to attend, type of service they would prefer on the train (sleeper or coach), and if they would like an all inclusive package (hotel, game tickets, meals, transfers, etc.). During the next two weeks Hogtrain, located in Mr. Eldridge's office for easier public accessibility, received over 150 letters and numerous telephone calls express- ing an overwhelming interest to travel by Amtrak to these games. We immediately began packaging two of the three games under consideration for Hogtrain. We chose the Arkansas versus Baylor University at Waco, Texas (19 miles from the InterAmerican stop at McGregor, Texas) and the Southern Methodist University game to be played in the Cotton Bowl in Dallas. The InterAmerican PAGENO="0339" 332 route is ideal for this, because many of the Southwest Conference schools, which Arkansas plays, are on line or nearby. We did not choose to run a Hogtrain to the Arkansas versus the University of Texas at Austin, because this game was to be televised and the kickoff was set at the same time the southbound InterAmerican was scheduled to arrive in Austin. The Hogtrain special to Baylor was planned for 200 reservations. Since this was our first attempt, we wanted to make sure we had no more than could be handled smoothly and could be assured of getting enough Amtrak equipment to accommo- date comfortably. The Hogtrain package was put together for $97.50 which included railfare, overnight accommodations at the Fort Worth Hilton, all transfers, two meals and the game tickets. The entire 200 reservations were sold out within three weeks after announcing it, without spending a penny on advertising. Almost all of the various local media-radio, television and newspapers-picked up this unusual event and gave it excellent coverage. We did not program any advertising money into the first Hogtrain, because we weren't sure we could get the type of press coverage needed to sell Hogtrain. We did have on hand several promotional items which were sold, such as Hogtrain bumper stickers, Hogtrain hats, Hogtrain patches and even an illuminated drumhead with the Hogtrain logo superimposed to be placed on the rear car. The Governor of Arkansas, David Pryor, also issued a proclamation declaring this weekend "The Hogtrain-Beat Baylor Weekend." The Baylor Hogtrain came off quite smoothly. The only noted exception was that of the train's tardiness. Most Hogtrain passengers were quite impressed with the new Amfleet equipment and couldn't believe the quiet ride on welded rail. The next Hogtrain was to the Arkansas versus SMU game to be played at the Cotton Bowl at Dallas. Because this game was on the Thanksgiving weekend, we could not get the same number of cars used for the first Hogtrain. We allotted ourselves only 100 reservations this time and had a little more difficulty selling this package than we did the first. This was partly due to the Thanksgiving weekend and the fact that the Razorbacks lost two games and all hopes of going undefeated and winning the Southwest Conference and National Championship. The Dallas package included railfare, transfers, hotel accommodations at the Dallas Hyatt Regency which is next to the Dallas Amtrak station, and game ticket. This package sold for $90.00 per person. Since we were running into some difficulty in selling this trip, we decided to put up two reservations in exchange for air time on a local radio station, which gave us a lot of free coverage on the first Hogtrain. This was done by a contest on their top rated morning radio show. The winner, who was to come up with the best "Aggie" joke, only wanted five football tickets instead of two complete packages because of prior commitments. So, instead of costing $180.00 for this promotion, we spent $40.00. We also took Mr. Bill Lewis and his wife on this trip, compliments of Hogtrain, because of the free coverage he afforded us in his column. He had not ridden a train in some time and this gesture would serve to help Hogtrain and Amtrak in the future. Hogtrain, Inc., through this venture, increased revenues at the Little Rock ticket office by about $13,000.00. It also contributed roughly $2,500.00 to the food and beverage service operation on both Hogtrains. Hogtrain also introduced or reintro- duced almost 300 people to the comforts of rail travel on board the InterAmerican. Many of the Hogtrain passengers were so impressed with the total operation of Amtrak passenger service, that they were looking forward to traveling more on Amtrak for business, pleasure and other Hogtrains. Although Hogtrain, Inc. is an Arkansas for profit corporation, none of the officers of this corporation received any monetary compensation. For their volunteer efforts and duties as tour directors, they and their wives did participate in all activities and occupied all accommodations at no charge to themselves. Copies of newspaper coverage of Hogtrain are included. Secondly, we have found that the customer is more inclined to be misinformed by calling the toll-free number than by calling the local Amtrak office. Little Rock, which is served much of the time with Tn-weekly service and arrival and departure times just before and after midnight, has had numerous occasions of passengers arriving at the station to board a northbound train on a night when there is no service. Most of the time, many had been advised of an incorrect schedule after talking to an agent manning the toll-free number. Due to the rather peculiar business hours currently in force at the Little Rock ticket office and the volume of local calls that were going unanswered, we knew from the outset that this device would be an effective tool in both increasing sales PAGENO="0340" 333 and providing information. Almost immediately, after this device was installed, Little Rock revenues and ridership began to climb. Many customers would call back during our business hours, mention that they had called and heard the recording and would request other information and rates that could not be put on the taped message due to time constraints. The Answerphone, because of the minimal cost involved, should become a stand- ard piece of equipment in most Amtrak ticket offices. This is especially true in ticket offices which do not operate during normal business hours or may be under- staffed. Here are some examples of the messages recorded and used on the Answerphone in the Little Rock ticket office: Season's Greetings from Amtrak! The Little Rock ticket office is open Sunday through Friday, from 6:00 P.M. until 2:00 A.M. We are closed on Saturdays and most holidays. The northbound Amtrak InterAmerican-Train No. 22 departs from Little Rock on Sunday, Tuesday and Friday nights at twelve-forty-six for Poplar Bluff-St. Louis- Springfield-Bloomington-Joliet and Chicago. East and west coast connections are available from St. Louis and Chicago. The southbound Amtrak InterAmerican-Train No. 21 departs from Little Rock on Sunday, Wednesday and Friday nights at eleven-forty-nine for Texarkana-Long- view-Dallas-Ft. Worth-Austin-San Antonio and Laredo, Texas. Amtrak's new "Down to Earth" fares, which can help save those dollars during this holiday season, are now in effect. Round-trip coach to St. Louis is $38.00, Chicago $55.00 and Dallas or Ft. Worth $41.00. Please call back this number after 6:00 P.M. for all the conditions and details. Again, we wish you and yours the very best wishes during this holiday season. Bad weather got you snowed in, give Amtrak a try and save money at the same time! The Little Rock ticket office is open Sunday through Friday from 6:00 PM to 2:00 AM. We are closed on Saturdays and most holidays. The northbound Amtrak InterAmerican-Train No. 22 departs for Newport- Walnut Ridge-Poplar Bluff-St. Louis-Alton-Bloomington-Springfield-Joliet and Chica- go on Sunday, Tuesday and Friday nights at twelve-forty-six. East and west coast connections are available from St. Louis and Chicago. The southbound Amtrak InterAmerican-Train No. 21 departs for Texarkana- Longview-Dallas-Fort Worth-McGregor-Temple-Austin-San Antonio and Laredo, Texas on Sunday, Wednesday and Friday nights at eleven-forty-nine. Please call back this number after 6:00 PM for rates and schedules and ask about Amtrak's "Down to Earth" fares with savings up to 47 percent over our regular roundtrip fares. Gas rationing, service stations closed, gas prices going up, why worry! Take Amtrak next time you travel. It's energy efficient, comfortable and could save you money! This recording then repeats the same message, less the bad weather open- ing, as the one above. OTHER PROMOTIONS There have been many other significant promotions on a lesser scale which have had their effect on increased sales, insofar as Little Rock is concerned. LITFLE ROCK ZOO The most amusing of these campaigns was conducted at the Little Rock Zoo during Memorial Day Weekend of 1978. Little Rock agent, his wife and daughter, took several hundred Amtrak engineer hats to be handed out to children as they rode the tiny train that runs through the zoo. These hats were stamped on the inside with the stamp used to stamp the back of timetables. This stamp contains information about location and phone numbers of the Little Rock ticket office. The engineer of the train and ticket agent were both retired railroaders. They were as excited in giving away these hats as the kids were to get them. Although there is no way to measure the effect this promotion had on increasing sales, it did create an awareness of Amtrak. EXPRESS MAILOUT CAMPAIGN A mailout campaign to mortuaries to increase express sales in the handling of remains was conducted. A brochure on Amtrak's express services for handling the shipment of remains, a timetable and cover letter with sample costs and our business hours was sent to over 20 mortuaries. This idea was the least productive of any to date, but we did get several responses and found out why our service is not PAGENO="0341" 334 used. Since both trains come in around midnight and we requre sufficient help to handle a remains, this made the cost with overtime rates to the mortuary more expensive than if the remains went by air. TIMETABLE DISTRIBUTION The Little Rock office distributes to most of the downtown hotels, motels and restaurants connected with the Little Rock Convention Center, current local and national timetables. All timetables are rubberstamped to provide local information. Timetables and other brochures are also available to walk-in prospects at the station, even though the office may be closed. The office also maintains a mailing list of frequent users of Amtrak. When new timetables are issued or interesting brochures featruing special tours or events are received, our customers are sent copies. This is most effective in keeping our preferred customers. LANDLORD PROMOTION The developers of the Union station project also helped to advertise Amtrak by incorporating all of the restaurants, lounges and Amtrak in a very catchy 4-color display ad. The full effect this particular ad could have had on increasing sales was never experienced. During this same period this ad ran, the Little Rock ticket office was open only from 11:00 PM to 7:00 AM Monday through Friday, with an overtime call on Sunday. It was also during this same period that this office posted its worst sales and ridership figures since the station was opened in March of 1974. It should be noted that a copy of this advertisement was sent to Amtrak's Marketing Department when it first opened, and the only comment was, "Who gave us permission to use the Amtrak logo on the train?" ENTERTAINMENT GUIDE The Little Rock ticket office just recently had Amtrak included in the public transportation section of our local entertainment guide. Amtrak is also mentioned in another section of this same publication under "Things Newcomers Should Know" about our city. Examples of these are shown below. This was done at no cost to Amtrak. In talking with the publisher about including Amtrak in this magazine, he mentioned that they had assumed that we had already closed the station. He said after reading various accounts in the paper about the InterAmnerican route being "cut-back" or "cut-off" and no one ever answering the telephone during normal business hours, led him to this conclusion. The publisher has since purchased over $1,000.00 worth of tickets as a result of our conversations. SCHOOL PROMOTION With the help of the Amtrak Public Affairs Department, the Arkansas Associ- ation of Railroad Passengers has begun work on a slide presentation to be presented in the Little Rock Public School System under their Volunteers in Public Schools (VIP) Program. The 30- to 45-minute program will display a pictorial history of railroading from out of the past into the present, and then predict what the future may hold for rail passenger service. Although this project is still on the drawing board, it will serve as an important educational tool in making students aware of current energy problems and how they might best be solved with a convenient, nationwide rail passenger system. It can also be used as a selling tool when present- ed to service groups or civic organizations CUSTOMER COURTESY The Little Rock ticket office answers all its incoming correspondence locally. We then try to follow up our written reply by telephoning the customer several days later. We have found the rate of continued sales to be much greater when this approach is taken and often involves extended trips with superior accommodations. It should be noted that when the customer does take time to write, he is genuine- ly interested in traveling by Amtrak, and deserves a prompt, courteous reply. SKI PROMOTION Although Little Rock may seem too far south to generate much interest in snow skiing, this couldn't be further from the truth. Little Rock has three well-staffed sporting goods stores specializing in snow skiing equipment. PAGENO="0342" 335 In hopes of finding ways to increase sales during our historically slow winter months, we decided to pursue the skiing market. Amtrak now offers several pack- aged ski tours for both eastern and western states. So, in order to "test the slopes", we sent out several "Pick of the Peak-East and West" brochures along with the poster designed to promote these same tours to all of the markets mentioned above. As a result, we have had several inquiris into the tour packages and many are looking forward to trying them. Even though no sales have occurred, we have created an awareness of Amtrak and Amtrak will now be given consideration for future ski tours, which is not what would have happened here otherwise! [From the Arkansas Gazette, July 23, 1978] HOGTRAIN HOG TRAIN MAY RUN THIS FALL If there is adequate demand, Amtrak may run special cars to Arkansas Razorback football games this fall at Austin, Waco and Dallas. William H. Eldridge, treasurer of the Arkansas Association of Railroad Passen- gers, would like all who are interested in such trips to write-not call-him at 8615 Chicot Road, Little Rock 72209, specifying which of the games they would like to attend; whether they require tickets to the games; if they would prefer an all- inclusive package with hotel room included; if they prefer sleeper or chair-coach accommodations aboard the train and any other pertinent information. The written responses are needed as tangible evidence of interest to present to Amtrak officials in requesting additional space aboard the regularly scheduled trains, a function telephone calls could not serve. In each case, the group would leave Little Rock at about 11:25 p.m. Friday preceding the afternoon games on Saturday, arriving at Dallas about 7:20 a.m. Saturday, at Waco at 10:20 a.m. and at Austin about an hour and a half before game-time. Train fares would be whatever rate prevails this fall. Round-trip Amtrak tickets to Dallas are $62 now but Amtrak spokesmen expect a fall excursion rate to be reinstated this fall that might lower the price to about $45. The AARP plans to package whatever kinds of trips appear to be justified by the response, Eldridge said. For any of the games, an overnight stay Saturday would be necessary because of train scheduling. The Arkansas-Texas game at Austin will be October 21; Baylor at Waco Novem- ber 11 and SMU at Dallas November 25. All are afternoon games. [From the Arkansas Democrat, Aug. 28, 1978] STATE BRIEFS BOBO TO UNDERGO SURGERY TODAY University of Arkansas pass receiver Donny Bobo was expected to undergo knee surgery today at Washington Regional Medical Center for a pulled ligament. Bobo injured his knee during the first play of the Razorbacks' scrimmage Satur- day. Trainer Dean Weber Sunday said Bobo, a junior this fall, has an "excellent" chance of playing ball in the spring. He said Bobo might even be ready to play in a bowl game. ANDERSON TAKES PUTrING TITLE Don Anderson putted an 83 Sunday to win the top flight division of the Arkansas Competitive Putters Association Open Golf Tournament at the Southwest City Mall Putt-Putt Golf Course. Bill Smith finished second in the 54-hole tourney after winning a sudden-death playoff with Nolan Spann and Allen Page. All three tied in regulation with 88. In other divisions, Brian Chappel won the novice title with 91 and Gary Haynes took the beginner's crown with 101. HOGTRAIN FOR BAYLOR GAME SET A special Hog-Train trip has been planned for the Arkansas-Baylor football game Nov. 11. The three-coach Amtrak train will depart Little Rock at 11:49 p.m. Nov. 10. It will arrive in McGregor, Texas, by 10:54 a.m. Saturday, Nov. 11. After a contintental PAGENO="0343" 336 breakfast, the group will board charter buses to Glenn Whatley's restaurant for a buffet luncheon before the game. The restaurant is two blocks from Baylor Stadium. After the game, the group will board charter busses for Forth Worth, where they will spend the night at the Hilton Inn. The Amtrak trip to Little Rock will begin at 4:15 p.m. and will arrive at 12:41 a.m. Cost of the trip, which includes railfare, hotel room (double occupancy), football tickets, bus transfer and two meals, is $97.50 per person. Because there are only 200 spaces available, reservations will be accepted on a first-come, first-serve basis. Checks may be sent to Hog-Train Inc., 8615 Chicot Road, Little Rock, 72209. Telephone: 565-6656. Reservations cancelled prior to Sept. 25 will be charge a $10 cancellation fee. MALVERN TO HOST SOFFBALL TOURNAMENT A softball tournament for teams in men's slow pitch leagues will be held at Malvern Sept. 8-10. More information can be obtained by calling Bill Grant at 332-2183 after 6 p.m. OUR TowN (By Richard Allin) Arkansas football fans can finally get back on the rails with the creation of an organization called Hogtrain, Inc. It will provide round-trip Amtrak rail service to Dallas for the Razorback-SMU game November 25, hotel room, football ticket and bus transfer for $90. The address of HOGTRAIN, Inc., is 8615 Chicot Road, Little Rock, 72209. Trains to major atheletic events, especially football games, are part of the Ameri- can folklore that declined with the rise of the private automobile, the Interstate Highway System, and the demise of willing rail service in the United States. Too bad, too. It seems such a logical, plesant and safe way to move people in bulk. There's a special logic in football trains in the Southwest Conference since Amtrak connects Little Rock with Dallas, Fort Worth, Austin and San Antonio, and indirect- ly with Houston. [From the Arkansas Gazette, Aug. 31, 1978] HOrRAIN To TRAVEL TO GAME A "Hogtrain"-three extra coaches and a lounge-bar car-will be attached to the Amtrak train that leaves Little Rock Friday, November 10 at 11:49 p.m., as part of a package trip to the University of Arkansas-Baylor University football game Novem- ber 11 at Waco. The train will arrive at McGregor, Tex., at 10:54 a.m. Saturday, following break- fast (included in the total price) and chartered buses will carry the group to Glen Whatley's Restaurant for a pre-game buffet (also included). The Baylor Stadium is two blocks away, within walking distance of the restaurant. After the game, the group will board buses for Fort Worth and the Hilton Inn, returning on Amtrak at 4:15 p.m. and arriving at Little Rock at 12:41 a.m. The $97.50-a-person cost will include roundtrip rail fare, hotel room (double occu- pancy), football tickets, bus transfer and two meals. Only 200 spaces are available and will be filled on a first-come, first-serve basis. Reservations may be made with "Hogtrain, Inc.," 8615 Chicot Road, Little Rock, Ark. 72209. The telephone is 565- 6656. For those already holding game tickets, the price of the tickets will be refunded if the company can dispose of its extra tickets. [From the Arkansas Gazette, Nov. 19, 1978] HOGTRAIN HEADING TO DALLAS The Amtrak package to Waco for the Arkansas-Baylor football game November 4 was the largest "rail migration" from Little Rock in more than 20 years and required a nine-car train, the largest from Little Rock since the inception of Amtrak, Little Rock Amtrak officials said. An Amtrak package to the Southern Methodist University-Arkansas game at the Cotton Bowl at Dallas this week end (Friday midnight through Sunday) can be only half as large, however, since there will be a shortage of Amtrak equipment for the week end immediately following Thanksgiving. PAGENO="0344" 337 There remain some spaces among the 100 available for the trip, however. Passen- gers may board the train at Walnut Ridge, Newport, Little Rock, Malvern or Texarkana. Dubbed "Hogtrain," the Amtrak train will leave Little Rock at 11:49 p.m. Friday and will arrive at Dallas at 7:30 am. Saturday. Participants will check into the new Dallas Hyatt Regency and will be free until noon, when chartered buses will take them to the Cotton Bowl. The buses will return the group from the game to the hotel and the evening will be free. The return to Little Rock will begin at 5:20 p.m. Sunday, with arrival at 12:41 a.m. Only hand-carried baggage will be accepted. The package, including roundtrip rail fare from Little Rock, hotel room (double occupancy), football ticket and bus transfer is $90 a person. Reservations must be made with Hogtrain, Inc., 8615 Chicot Road, Little Rock 72209 (telephone 501-565- 6656). Hogtrain Inc. was organized to promote travel by Amtrak. [From the Arkansas Democrat, Oct. 29, 1978] Au~ ABOARD FOR THE HOGTRAIN A weekend of football at Dallas-Southern Methodist University and Arkansas- is being offered by Hogtrain, Inc. The train will leave, Little Rock late Friday night, Nov. 24, on board Amtrak. After arrival in Dallas Saturday morning, guests will check in at the Dallas Hyatt Regency. That afternoon is the Razorback game. The evening is free. Guests will board Sunday afternoon for Little Rock, arriving at 12:41 a.m. Cost for the weekend-including round-trip railfare, hotel room (double occupan- cy), football ticket and bus transfers, is $90. 100 spaces are available and reserva- tions are on a first-come, first-serve basis. Checks may be sent to Hogtrain, Inc., 8615 Chicot Road, Little Rock, Ark. 72209. At left is the new look to the Dallas skyline, created by the Hyatt Regency hotel in the Reunion development. [From the Rail Travel News, Nov. 12, 1978] The Hogtrain's Comin'! Hot-Train Inc. of 8615 Chicot Rd, Little Rock 72209 is running a football train to the Arkansas vs. Baylor game on Nov. 10, using 3 Amtrak coaches and a lounge-bar. The train leaves Little Rock at 11:49 pm and arrives in McGregor TX at 10:54 am Saturday morning. Information is available from the designers of the clever logo reproduced below. [From Trains Railway Post Office, January 1979] In response to Mr. Phillips' comments regarding the bland exteriors of Amtrak's trains, we are one jump ahead of you. Because of Amtrak's ineffective advertising and marketing of the Inter-American, I formed "Hogtrain" to help promote ridership on this train. Our first venture was to promote a football "special weekend" for the Arkansas- Baylor football game. Besides designing our Razorback logo, we are also providing bumper stickers, hats for the men, patches for the ladies, a drumhead for the rear coach, and signs for the engine. We sold our allotted 200 tickets within three weeks without spending a penny on advertising. Besides putting over $10,000 in Amtrak's pocket, it will serve to reintro- duce many people to train travel as it now exists. WILLIAM H. ELDRIDGE, Little Rock, Ark. ANSWERPHONE One of our most effective sales tools has been an automatic telephone answering device. The answerphone was installed in the Little Rock ticket office in late October 1978. This unit, a Code-A-Phone Model No. 180-"Minute Man", was pur- chased by Hogtrain, Inc. for $195.65 (about the equivalent of two roundtrip-coach tickets at regular fare from Little Rock to Chicago) and loaned to the Little Rock office. The answerphone came with one 60-second tape and two more of the same type were purchased. A variety of messages have been used on this machine, however the content of all recordings is basically the same. The following format is used for the recorded messages: PAGENO="0345" 338 Generally each message opens with a sales pitch of some type-enticing the prospective customer to want to ride Amtrak or presenting reasons as to why Amtrak should be considered as an effective means of intercity transportation. The customer is then told the local station hours of operation and the days the office is either open or closed. The schedule of both northbound and southbound trains are given. Departure times are presented in such a manner as not to confuse the traveling public. An example of this would be: Train No. 22 departs Little Rock on Sundays, Tuesdays and Friday nights at twelve-forty-six-instead of Train No. 22 departs Little Rock 12:46 a.m. on Mondays, Wednesdays and Saturdays. Most stops on the route are named and if possible east or west coast connections are available at the major stops. The message is then closed with another type of sales pitch and then asks the customer to call back the local number during our business hours for further information. The conclusion is a simple thank you for calling Amtrak. We do not give the toll-free-number for two reasons. The first is that both the toll-free-number and our local number are both listed in the white and yellow pages of the directory. Next to the WATS-number it states: Information and reservations-No charge to calling party. Adjacent to the local listing it states: Package express and passenger station. We then assumed that if the customer wanted to call the toll-free-number for information or reservations, they would have done so when they first opened the telephone directory to look up Amtrak. UNION SQUARE-LITTLE ROCK'S CENTER FOR ENTERTAINMENT Once upon a time, people came to Union Station to catch a train. . . or meet one. People still meet at Union Station, and now there's more to catch. Sometimes a truly fine restaurant is as hard to find as a wood-burning locomo- tive. The natural place to look is Union Station. Billy Gray invites you to enjoy the finest roast beef in Little Rock at his unique Tracks Inn. Incomparable fare and gracious dining at its best. Catch 22. Slick Willy's is right on cue when it comes to the fine art of gamesman- ship plus super sandwiches with a cool one. Whether you play pool, chess, backgam- mon, miniature golf, or darts, you'll find at least 22 ways to sharpen your skills. The only other catch may be living up to your own legend. Catch up. Smooth over a hectic morning with lunch at the Whistle Stop Little Rock's largest little cafe. Unheard of sandwiches, homemade soups, and salads so good even the trains stop here. The Whistle Stop proves a fast lunch can be a great lunch. Catch a train. If you enjoy traveling, you've probably already discovered that a modern train is a rolling resort. Union Station's Amtrak office will serve you with information, reservations, and tickets. Check it out on your way to lunch. Almost any place you want to go, your journey can begin with the short walk from Union Station to your train. Catch a quick one. . . at the Track's Inn bar. Cold beer, tall drinks, and mellow music. People have been getting off at Union Station since Casey Jones was a pup. Get in on the fun at the Tracks Inn bar. Catch yourself returning to Union Station for lunch, an evening of entertain- ment, a train to some yonder destination, or just a stroll through Little Rock's most charming shops. Union Station awaits your arrival. It's a new departure. "All aboard?" If you haven't been to Union Station lately, you've got some catching up to do. U.S. OFFICE OF CONSUMER AFFAIRS, Washington, D.C. Hon. RU55ELI. LONG, Chairman, Subcommittee on Surface Transportation, Russell Senate Office Building, Washington, D.C. DEAR SENATOR LONG: I am pleased to submit testimony on the recommendations set forth by the Department of Transportation in its Final Report to Congress on the Amtrak Route System. I request that my views be made part of the record. Although the Department's final report concentrated on the establishment of a new Amtrak route system, it is also contained recommendations concerning Am- trak's fare policy and quality of service. In my opinion, the resolution of these two PAGENO="0346" 339 issues will significantly affect Amtrak's future financial performance and ultimately the amount of Federal subsidy needed to maintain the rail passenger system. I. Fare Policy Although Amtrak's fares increased approximately 63 percent over its first seven years of operation, the Department's report questioned whether rail passsenger fares were high enough to maximize revenues in order to achieve the Department's goal of having Amtrak's revenues cover 44 percent of its cash expenses in Fiscal Year 1982 and 50 percent of such expenses in Fiscal Year 1985. Emphasizing the need for a new far policy, the Department recommended that Amtrak increase its fares and restrict its discounts in those markets where passengers are not sensitive to changes in price. Since the final report was issued, Amtrak has increased its base fares by 10 percent in the Northeast Corridor and by 6 percent in all other markets. I agree with the Department that Amtrak should price its services so as to maximize revenues, and that one way of achieving this goal is through the imple- mentation of carefully selected price increases. As long as rail passenger demand is relatively inelastic in those markets where fares are increased, revenues should be maximized and the burden on the general taxpayer lessened. However, I believe that Amtrak must use caution in invoking further broad fare increases without first fully analyzing the sensitivity of each route's ridership to changes in price. In promoting the new flexible fare policy, both the Department and Amtrak have appeared to rely heavily on Amtrak's most recent elasticity of demand study. This study collected data on the impact of fare changes on ridership in 217 Amtrak markets and concluded that rail passenger demand overall is generally inelastic. I do not necessarily dispute the study's findings, but there are certain reasons why I think that Amtrak should refrain from wholesale across-the-board fare increases without further market analysis. First, Amtrak's study was conducted under the expansive route structure current- ly in effect throughout the nation. If Congress approves the Department's proposed route structure, however, 43 percent of the route miles of this system will be eliminated. If this happens, Amtrak should conduct further market research instead of basing its new fare policy on market study performed under a route structure which may soon be outdated. This is especially true in light of the fact that the new Amtrak route system would be concentrated in the more densely populated areas of the nation, where demand studies have traditionally shown that rail passenger demand is more elastic. Secondly, the conclusion reached in Amtrak's study that rail passenger demand overall is inelastic contradicts the findings of previous market studies performed by Amtrak and other organizations. From 1976 to 1978, Amtrak conducted four other market analyses to determine the sensitivity of rail passengers to changes in price. Every one of these studies concluded that price is important to rail passengers and that price increases could very well result in revenue losses. Similar results were obtained by the firm of Peat, Marwick, Mitchell and Co. in a 1978 demand study performed at the request of the Department. It is essential that the discrepancies between these elasticity of demand studies be resolved before Amtrak implements further fare increases. The Department itself has emphasized that Amtrak must thoroughly analyze the sensitivity of the rail passenger market before it makes any changes in its fare policy: To help stabilize the financial condition of Amtrak and create a firm base for the long-term improvement of intercity rail passenger transportation, Amtrak must coordinate all the activities involved in operating the Corporation and must specifically consider the effect that decisions made about each of those activities have on the need for Federal assistance. In particular, marketing and pricing decisions must be made only with a full understanding of the financial and operating consequences of those decisions. DOT, Final Report to Congress on the Amtrak Route System at 3-4 (January 1979). In my opinion, Amtrak should not implement further broad fare increases on the basis of one demand study which concluded that rail passenger demand overall is generally inelastic, especially when there are factors which cast some suspicion on the accuracy of this conclusion. Unless further market research is performed, it is possible that many of these fare increases will reduce ridership to such an extent that revenues will also decrease. If this happens, both the intercity-rail passenger and the taxpayer will suffer. II. Quality of Service I am also concerned about the poor quality of service offered on a large number of Amtrak trains. Each year, both Amtrak and the Interstate Commerce Commission PAGENO="0347" 340 receive numerous complaints from Amtrak passengers regarding train delays, disin- terested and rude on-board service personnel, poor temperature control, incorrect fare information, and unclean or malfunctioning equipment. It is apparent that after 8 years of Amtrak operations, passengers are still not able to rely on efficient service and clean and comfortable trains. The Deparment's final report emphasized that Amtrak must improve the quality of service it offers to the public if it is to fully maximize its long-term revenues. To achieve that objective, the Department recommended that Amtrak report on its progress towards improving its service in its annual budget submission to the Department. In addition the Department's Federal Railroad Administration (FRA) is expected to issue quidelines to insure that Amtrak spells out a process for evaluating its service. Both the FRA guidelines and the inclusion in Amtrak's budget of its goals in the service area should enhance Amtrak's motivation towards providing better service to the public. However, I think that Amtrak should also be required to identify, in quantitative terms, any remaining major service problems. This information should help to establish a more solid basis for evaluating Amtrak's performance in order to determine whether Amtrak has achieved its goals. At present, Congress relies on the Interstate Commerce Commission's annual report to Congress on Amtrak for quantitative information concerning the quality of Amtrak's service. In its report, the Commission identifies major service problems on the basis of consumer complaints it receives and onsight inspections it performs under its authority to enforce its "Adequacy of Intercity Rail Passenger Service Regulations". These regulations delineate a Commission-supervised complaint proce- dure and establish specific standards for Amtrak's reservation procedures, on-time performance, conditions of stations, temperature in passenger cars, cleanliness of equipment, baggage handling, and condition of cars, coaches, and track. Recently, however, the Department submitted to Congress an Amtrak authoriza- tion bill which would repeal the Commission's authority to develop and enforce these adequacy of service standards. If Congress approves this legislation, the above- mentioned FRA guidelines would become increasingly important because the Com- mission's ability to identify and report on Amtrak's service problems would be greatly diminished. Therefore, in order to assure that there will continue to be a method for Congress and the Department to accurately evaluate Amtrak's perform- ance, Amtrak must assume the responsibility of providing quantitative information on its major service problems-based on its own consumer complaints and perform- ance data-in its annual budget submission to the Department. In conclusion, I believe that as air pollution, energy shortages, and airport and highway congestion become increasingly prevalent in the future, it is important to preserve an economically viable level of rail passenger service which the public can use as an alternative mode of transportation. However, Amtrak will never be completely successful until it establishes a sound fare policy and improves the quality of serve it offers to the public. We have been advised by 0MB that there is no objection to the submission of this report. However, they point out that the Administration fully supports the Depart- ment's proposed route restructuring as essential to putting Amtrak on an economi- cally sound basis. 0MB further points out that the routes being dropped, constitut- ing 43 percent of Amtrak's mileage, carry only 9 percent of the passengers. Sincerely, ESTHER PE'rERsoN, Djrector. SUSAN E. JOHNsoN, Attorney-Advizor. STATEMENT OF ARTHUR KANEGIS I'm Arthur Kanegis from Jefferson, Maryland. My wife and I moved here from Southern New Jersey in May of 1977 specifically because of the existence of the Amtrak Blue Ridge train. Because of the existence of this train, we targeted our house-hunting in the Harpers Ferry and Brunswick area. Because of the existence of this train, I confined my job hunting to a radius around Union Station. The train offered a unique opportunity for my wife to pursue her farm interests and myself to pursue my political interests at the same time. We can do this nowhere else near D.C. This was so important to us that we were willing to-and did-pay at least $20,000 more for our house and farm than we would have for such a place a similar distance from Washington not along the train line. PAGENO="0348" 341 We bought our farm not as a transitory residence, but as our permanent home. We plan to raise our daughter there. We've planted fruit trees and expect to be still reaping the fruits twenty years from now. We hope to retire there. We were willing to bet all this on the continuation of the train, because we thought we were in a new era. My family thought that the energy crisis had finally made the public aware that the glorious future promised us in the automobile ads, was a blind folly. A dream of power and freedom turned into choked traffic jams and costly repair burdens. We thought our officials had finally become aware that what's good for General Motors profits bears only a random correlation with what's good for Americans. We thought the days were long over when in the 1940's General Motors, Standard Oil of California and Firestone formed a consortium to buy up stocks in city railway lines of Baltimore and many other cities tearing out the old tracks and forcing reliance on buses and cars. We thought the days were over when railroad companies were in the business of discouraging passenger service to make way for more profitable freight. I remember talking to an old timer who years ago worked for the Pennsylvania Railroad, who told me that memo's would actually cross his desk spelling out plans for switching schedules and reducing services with the explicit objective of driving away passen- gers, so the company could petition the ICC to close down lines. My wife and I thought these days were over. We thought the public would no longer stand for having its future determined by two huge industries-an Auto industry pushing us into cars and a railroad industry pushing us out of trains. There was no broad public debate in the late 1940's about the future of the U.S. transportation system. No one asked the public, would you like to get rid of your clean, efficient frequent train service and switch to the nervewracking tension of private automobile commuting. The public was swept blindly along, dazzled by corporate ads and power. The old time conductors will tell you of when more than a dozen through trains stopped in Brunswick everday heading out to Chicago, St. Louis and many other points. The roadbed was better, the trains went faster. I remember as a boy taking the Capital Limited out this way to visit my aunt in Chicago many a time. My brother and I had a great time on the train, trying out the observation deck, eating in the dining room with fresh cooked meals. It was an incredible thrill. No one asked the citizens of Brunswick-or Washington or Chicago-would you rather get rid of all this and have a much more expensive wasteful transportation system based on the private auto? We had 45 billion passenger miles of rail service in this country in 1947. Today it's not much more than 10 billion. We thought in 1971 that Amtrak was going to turn this trend around. During the years of most train discontinuances under the private railroad operators-there was no Department of Transportation. Now, we finally have a DOT which has the responsibility to see to it that our country has an efficient transportation system. How can the DOT justify its position that the skeleton Amtrak network now be reduced? The Blue Ridge-is a new train with a soft confortable ride that makes commut- ing fun. My 4 year old daughter loves it when she can ride in with me to visit her grandparents, or to change trains in D.C. for a trip with me to Philadelphia or other cities. This train is the lifeblood for many communities. Many people ride this train who play key roles serving the nation in Washington. Surely we thought it could not be abandoned. No, instead we looked forward to expanded service in the future. We were thrilled when the Shenandoah first stopped in Brunswick. Now we could go visit my wife's family in Chilocothee, Ohio with ease. We've taken the Shenandoah numerous times, always disappointed that more people didn't know about this wonderful service. Why should this be cut back? Why doesn't Amtrak instead widely advertise it and make schedules more available to people and newspapers in towns along the line. If the Shenandoah is eliminated it will be a real shame for me. It's a shame for the country that DOT is looking to eliminate any trains. But, if the Blue Ridge is eliminated, it will be a great personal crisis for myself and more than 600 passen- gers who take this Amtrak Train. My family will have to face one of four dismal choices: 1. I could drive in, polluting the countryside, wasting energy, fraying my nerves, being late to work and throwing away more than 3 hours a day. 2. I can take the B.& 0. commuter trains, which are presently dirty, unreliable, very old, over-crowded and slow. Ridership on the B. & 0. is way up and the service badly needs modernization. The B. & 0. cannot absorb many additional riders. In PAGENO="0349" 342 many cars the toilets are torn out with holes left in the floor. The badly maintained engines pour dangerous pollution into the cars, making my eyes water, and my lungs choke. Since these trains take ½ hour longer than the Amtrak each way, I would lose an hour a day, the equivalent of 90 evenings a year with my family. Time with my family is very precious, and only the fast, well-scheduled Amtrak really makes it so I can get home at a reasonable time in the evening to share the farm chores and fun with my family. 3. I could give up my job, a job which I feel is important for the country as well as for myself and my family. 4. I could take a big monetary loss and sell our farm and move to the city. Not only would my wife never put up with this option, not only would my daughter be deprived of the kind of future she and her parents want her to have, but the community as well would be disadvantaged. Closing the train would depress proper- ty values in our area, clog the freeways, waste energy and resources, and all for what? For some bureacratic idea that Amtrak is not supposed to be in the interstate commuter business? Why in the world not? What is needed is a new public attitude, a new DOT attitude, a wholistic ap- proach that looks not at what's cost effective for this or that industry or for this or that project, but at what's cost effective for society as a whole. It's time we stopped looking and the little pieces, and saw how things fit together into a society that can survive through the 20th century. STATEMENT OF RETAIN THE TRAIN A FOOLISH TRADE: 10,000 MILES OF RAILS FOR FOUR MILES OF FREEWAY The DOT report fails to list the benefits of passenger trains and the social and economic costs of proposed cutbacks. We urge Congress to reject this report and order DOT to draw up a new report recommending ways to increase revenue and train ridership in a well-planned, cost efficient three year budget. Later we will offer suggestions to this end, such as more flagstops, mail contracts, better advertis- ing, and coordination with bus companies. We list these gaps in the DOT report: 1. Cutting 43 percent of the mileage now served would waste more money than it saves. The DOT's preliminary report of 1977 showed that running more, not less trains would produce the lowest deficit per passenger mile. This is because more people use trains if there are good connections to more places. The DOT has no reliable information about current passenger transfers, and thus does not know the effect of cutbacks on the remaining 57 percent of the network. We predict the severe DOT cuts would cause the surviving trains to lose more passengers and more money, leading to more deficits and cutbacks. 2. The $166 million savings claimed in the DOT report for 1980 equal less than 1 percent of the year's federal Transportation budget-or the building of four miles of southern California freeways, according to the California Transportation Depart- ment. For this we would lose 10,000 miles of rail service. At least $55 million would pay Amtrak employees not to work next year. New equipment already under construction would be sold at a loss. The plan would create glaring inefficiencies. For example, without the National Limited route through Indianapolis, Amtrak would pay $200,000 a year to haul cars to the maintenance center, there. 3. The rails have been bastions of internal defense in emergencies, and an energy crisis is upon us. If Amtrak allows its contracts with participating railroads to expire now, it will take much time and money to draw up new contracts and re- ready the track to passenger standards. 4. The DOT report doesn't consider how withdrawing trains would affect small cities and towns across huge portions of America. Long-distance marketing has been aimed mistakenly at the large cities which are end points for the trains. However, the West Virginia State Rail Plan of September 1977 shows that 94.8 percent of Cardinal riders get on or off between the train's two end points, Washington, D.C. and Chicago. In other words, they are going from Indiana to Ohio, or from Virginia to West Virginia. Small towns are now being deprived of airline service by deregula- tion, and buses are being cut back because of rising costs and cumbersome regula- tions. Lack of public transportation in rural areas isolates not only the poor and autoless. It affects whole local economies, making places less desirable for living and working. 5. Trains are the most energy efficient way to move people, but the proper amount of money has not been invested in an orderly fashion to make Amtrak work. The U.S. has invested more than $525 billion in highways, $50 billion in airways and airports, $30 billion in waterways and only $3.4 billion for rail passen- ger service. Federal employees are encouraged to use airplanes rather than trains for business trips even when trains take equal time and cost less money. PAGENO="0350" 343 United States Transportation Subsidy 1978 6 billion Amtrak * -- *L~7 billion L~cks~ andL Dams (Weatern Rivers System) H H excludes flood control 1.8 billion Air TrafficControl system - - -& - ~ Highway system -I source. California Dept~ of Transportation, U.S.Army Corp. of ~gineers FAA I 5 6 7 C PAGENO="0351" 1970 Intercity Passenger Traffic and Energy Distributions 1970 Intercity Freight Traffic and Energy Distributions TRAFFIC TRAFFICS BUS AND RAILROAD AIRPLANE AUTOMOBILE ENERGY 3, V `4/ / 87%/ * ENERGY 1/ 77 /0 `IA a a Source: E. }Iirst, Energy Intensiveness of Passenger and Freight Transport Modes: 1950-1970, OItNL-NSF- EP-44, OaUkidge National Laboratory, Oak Ridge, Tenn., April 1973. PAGENO="0352" Total fuel for 12 months 12539520 gal. 52750320 gal. 35391216 gal. Passengers Amtrak operating report November 1978. Train miles = Distance X Trips Notes~ -a- Transportation Energy Data Bock(C0N5_7t~05_l) U.S. Dept.of Energy, 1977,p.113 -b- Trips required to move same number of passengers in a Twin Jet Commercial Aircraft, ref.note -a-. -c- Trips required to move same number of passengers in a AutQ, 3 passengers per trip. 345 I 50/cl a 4.) a a a 0 5 a ~d a H ~4 ~i an ON- 0\ a H k 4.) 14 a* I ,0 ~ a 4.) 0 N ~- s~-~ ~ a14 wa ~-o as sa a~ ao NE a a a ~ a 14 a ~ ~ a H H a c H a ~i E4 `d a a p a ~ ~ a a 4) p 0 NE a a H 14 4.) 14 H ~ 9330 156 53880 l077~~ 13.? a C) 4.) a 898 a a 4.) 0 N a a p H a p 94 14 27u604 a a H a a 14 4.) 94 .~ 7 23026 C) c~) 4.) 0 N a H 14 4.) 0 110 a a H a a H 14 4.) 0 4.) ~792780 (1 N N `-4 -d a a *0 H a p N 18618c ~j 4321 ~g 70920 64 37824 85963 L~40 851040 56736 32/33 ~c 60 4744 79 ~7Q~ 65400 70 38150 86704 582 8 57~~79 ~2L~) 60 0 ~Q~QQ~ ~7~Q 638022 ~90 423887 60 20817 347 82140 164280 306 418914 952007 ~40 o50086o 633390 25/26 30/31 14231 32l4j60i15~30 237 257 64860 79440 129720 158880 209 255929 2141283336 513475 643945 744 5144 5128264 6810656 341884 454043 17/18 234~4l6053 617 133800 267600 2~3~~526280 1196090 535~4~l934960 795664 Total fuel for 1 month. 1044960 gal. 4395860 gal. 2949268 gal. 43-139 0 - 79 -23 PAGENO="0353" 346 ENERGY REQUIREMENTS OF PASSENGER TRANSPORTATION MODES Assumed passenger loading Vehicle miles per gallon of fuel or equivalent Passenger miles per gallon of fuel or equivalent Heavy rail transit (subway) car peak load Intercity passenger train Transit bus peak load 135 540-720 75 47 125 4.00 0.50 4.10 6.00 2.00 540 270-360 307 282 250 Intercity bus Commuter rail car, diesel powered Heavy rail transit (subway) car off-peak load 35 4.00 140 Transit bus, off-peak load 30 320 4.10 0.33 123 110 Rail turbine train Standard size automobile interdily, maximum load.... 6 18.00 108 Standard size automobile urban, maximum load 6 14.40 86 Wide-body commercial jet aircraft, 1,000 mile flight 256-385 0.14-0.22 54-60 Twin jet commercial aircraft, 500 mile flight 68-106 0.44-0.54 37-47 Average commuter automibile 1.4 13.5 19 Source: American Public Transit Association, Transit Fact DivA, `75-75 Edition, Washington, D.C., March 1976, p. 46. 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