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S. Hrg. 103-291. Pt. 1 

Senate Hearings 

Before the Committee on Appropriations 

Y4.AP 6/2; S. HRG, 103-291/ 

Depirtnent of Transportition ind Re... 

Department of 
Transportation and Related 

• • 

Agencies Appropriations 

Fiscal Year 




H.R. 2490/2750 

PART 1 (Pages 1-809) 







MM ft yqp4 


S. Hrg. 103-291, Pt. 1 

YEAR 1994 







H.R. 2490/2750 


PART 1 (Pages 1-809) 

Department of Transportation 

General Accounting Office 

National Railroad Passenger Corporation (Amtrak) 

National Transportation Safety Board 

Nondepartmental witnesses 

Printed for the use of the Committee on Appropriations 

68-623 cc WASHINGTON : 1993 

For sale by the U.S. Government Printing Office 
Superintendent of Documents, Congressional Sales Office, Washington, DC 20402 
ISBN 0-16-043223-5 


ROBERT C. BYRD, West Virginia, Chairman 





JIM SASSER, Tennessee ARLEN SPECTER, Pennsylvania 








HERB KOHL, Wisconsin CONRAD BURNS, Montana 
PATTY MURRAY, Washington 

James H. English, Staff Director 

Mary S. Dewald, Chief Clerk 

J. Keith Kennedy, Minority Staff Director 

Subcommittee on Transportation and Related Agencies 

FRANK R. LAUTENBERG, New Jersey, Chairman 

ROBERT C. BYRD, West Virginia ALFONSE M. D'AMATO, New York 




Professional Staff 

Patrick J. McCann 

Peter Rogoff 

Anne M. Miano (Minority) 

Administrative Support 
Joyce C. Rose 




Thursday, March 4, 1993 
high-speed rail issues 


Panel I: National Railroad Passenger Corporation (Amtrak) and nondepart- 

mental witness 1 

Panel II: General Accounting Office and nondepartmental witnesses 39 

Panel III: Nondepartmental witnesses 103 

Material submitted subsequent to the hearing 153 

Thursday, March 11, 1993 

transit needs 

Panel I: 

General Accounting Office and nondepartmental witnesses 159 

Department of Transportation: Federal Transit Administration 159 

Panel II: Nondepartmental witnesses 257 

Panel III: Nondepartmental witnesses 321 

Wednesday, March 17, 1993 

national transportation safety board 

National Transportation Safety Board 365 

Wednesday, March 31, 1993 

implementation of istea 

General Accounting Office 501 

Department of Transportation: Federtd Highway Administration 501 

Nondepartmental witness 501 

Nondepartmental witnesses 567 

Material submitted subsequent to the hesiring 693 

Wednesday, April 21, 1993 

DOT fiscal year 1994 BUDGET REQUEST 

Department of Transportation: Office of the Secretary 699 




U.S. Senate, 
Subcommittee of the Committee on Appropriations, 

Washington, DC. 

The subcommittee met at 10 a.m., in room SD-192, Dirksen Sen- 
ate Office Building, Hon. Frank R. Lautenberg (chairman) presid- 

Present: Senators Lautenberg, Mikulski, and Specter. 

panel I 






Association of American Railroads 
statement of bob blanchette, for the general counsel 

opening remarks 

Senator Lautenberg. I call this hearing to order for the Sub- 
committee of Transportation of the Senate Appropriations Commit- 
tee. The subject today is high-speed rail, a favorite subject of mine. 

In the last few months, there have been a couple of new arrivals 
in Washington, DC, that together, I hope, signal the dawn of a new 
era in passenger rail transportation. 

One arrival that most got a pretty good look at — pictures, TV, or 
otherwise — is the X2000 tilt train. This subcommittee provided 
funding for this new experiment over the Northeast corridor in 
order to demonstrate what new high-tech equipment might mean 
to American passenger rail service. 

Personally, I had hoped that it would serve as a catalyst for re- 
newed interest in rail transportation, but even I have been sur- 
prised at the popularity and the interest in the X2000, both with 
the media and the traveling public. In the X2000, people are seeing 
just how convenient, reliable, and comfortable railroading can be. 


Later this year, Amtrak is going to be testing the German ICE 
train and, possibly, some others. For decisionmakers, experiments 
like these will help demonstrate that expanded investment in rail 
service can promote leadership in rail service, increase ridership, 
and produce benefits that we are fiilly familiar with: reduced high- 
way congestion, reduced airport congestion, cleaner air, and less 
energy dependence on others. 

Of course, the other, and even more important, new arrival in 
Washington, DC, is President Clinton. After 12 years of doing bat- 
tle with the White House merely to keep Amtrak alive, it's been a 
delightful and refreshing change to have a President in the White 
House who believes that a Federal investment in high-speed rail is 
long overdue. 

In addition to all of the environmental, energy, and transpor- 
tation benefits that this investment will yield, it will also yield the 
thing that America needs most: jobs, jobs, and jobs. 

By investing in high-speed rail transportation, we will succeed in 
creating thousands of new jobs across the country. Indeed, evidence 
in Grermany indicates that investments in high-speed rail transpor- 
tation projects produce 1.4 jobs for every one job generated by an 
equal investment in highways. 

Investing in high-speed rail transportation will also enable the 
United States to regain expertise in critical new technologies that 
should create additional well-paying jobs for many skilled techni- 
cians and assembly workers currently facing an unemployment 

Amtrak will soon be developing specifications to procure dozens 
of new trainsets suitable for corridors all over this country that will 
be capable of speeds of 150 miles an hour. I intend to see to it that 
every one of these trains is manufactured here in the United 

Nowhere have we better seen the benefits of high-speed rail 
transportation in the United States than in the Northeast corridor. 
Each year, about 11 million passengers travel by train in the 
Northeast corridor. Sixty-five million commuters depend on the cor- 
ridor to get to work every day. And over 40 percent of all of the 
people traveling between New York and Washington use Amtrak. 
And it's estimated that this committee's effort to attain less than 
3-hour service between New York and Boston will divert an addi- 
tional 2.5 to 3 million passengers from our congested highways and 
sk5rways to rail. 

Currently, almost one-quarter of all traffic out of Boston's Logan 
Airport heads for New York City. Now, compare the $1 billion in- 
vestment that might be required in Northeast corridor electrifica- 
tion with the multiple billions of dollars necessary to expand or 
construct a new airport in Boston. If Amtrak didn't exist between 
New York and Washington, we'd have to invent it, because we sim- 
ply could not accommodate all of those travelers in our airports or 
on our highways. 

We would need at least 40 more shuttle flights a day to service 
the same number of people without rail service. Anyone who flies 
out of National, Newark Airport, or LaGuardia, can tell you that 
our airports just can't handle that additional load. 

They can barely handle the current load. And take it from one 
who knows from experience, I have had longer delays on the 
ground after getting on an airplane than I have had in total flying 

Our experience in the Northeast corridor shows that given even 
moderate high-speed rail service or moderate-speed rail service — 
that is to say, not truly high-speed — people will take the train. Im- 
provements in elapsed travel time, immediately get attention and 
direct response from the traveling public. 

At today's hearing, the subcommittee is going to focus on how we 
can emulate the success of the Northeast corridor through the rest 
of the country. The success of this corridor should be repeated. Sev- 
eral new high-speed corridors have been identified and should be 
developed. Basically, any place that we have major cities within 
200 to 300 miles of one another, rail could provide the type of bene- 
fits that we've seen in Washington and New York. 

The Clinton administration has embraced this goal by calling for 
a coordinated program, combining direct Federal expenditures and 
private sector investment incentives, to establish nigh-speed rail 
throughout the country. 

At last, we have an administration that's prepared to implement 
a truly balanced transportation network. The question that faces 
this new administration, as well as this subcommittee, however, is 
how do we best invest those funds? And how do we maximize pri- 
vate sector involvement and investment in the expansion of high- 
speed rail service? 

Today, we're going to discuss the ways that Federal investment 
can be com seed — can best leverage the maximum level of private 
sector funds for high-speed rail. And I hope that we're also going 
to explore what incentives the private sector might need to increase 
its interest and its investments in rail projects. 

We're also going to hear about the role that the States and the 
freight railroads can play. To address these questions, we have a 
diverse group of witnesses to testify this morning. 

They include representatives of Amtrak and the Nation's freight 
railroads, the Greneral Accounting Office, representatives of several 
fledgling high-speed rail projects across the country, and represent- 
atives from the investment community. 

I welcome all of you here this morning and thank you for your 
willingness to discuss with us how we can best structure our long 
overdue investment in high-speed rail transportation. 

I'm delighted now to ask my distinguished colleague and friend, 
Senator Mikulski, if she would like to make an opening statement. 


Senator Mikulski. Thank you, Mr. Chairman. I'm going to thank 
you for holding this very important hearing on the future of high- 
speed rail in the United States of America. 

I'm going to thank you, also, for keeping Amtrak alive during 
this very difficult decade, when everyone wanted to sell it off, cher- 
ry pick it, and just would have broken up the system. 

We would not be at the point we are at today, had not the U.S. 
Congress preserved Amtrak. And we want to acknowledge the role 
of your leadership in Amtrak and sustaining it. 

Now, I think we will have opportunity to look for what is the 
next generation of Amtrak, what is the next generation of Amer- 
ican trains, and how this will then generate jobs today and jobs to- 

I look forward to listening to our distinguished panelists discuss 
maglev and high-speed rail this morning. 

Mr. Chairman, I'm also here to say — let's bring, however, the 
analysis soon to a close and start making some real rail progress. 
It's time to get moving on maglev. 

I happen to believe in that great line from "Field of Dreams." Do 
you remember when they said, "Build it and they will come?" 

Well, that's the way I feel about high-speed rail. And that's the 
way I feel about maglev. I can't wait until this American-made 
technology is up and running at 300 miles an hour. I can't wait 
until I walk out of my little home in Baltimore, go to my favorite 
diner, pick up coffee and a bagel, zip to Washington, in less than 
12 minutes. I won't even have a chance to say "Good morning," to 
all of those voters of mine. 

We know that President Clinton has proposed a lot, a great deal 
of money for maglev and high-speed rail development. And we 
know that in the Technology Policy Statement, which he and Vice 
President Gore released in February, they called for providing 
funds for a maglev prototype. 

We also know, Mr. Chairman, with your support, this sub- 
committee included $45 million in last year's transportation appro- 
priation for a maglev prototype development program authorized in 
ISTEA. Unfortunately, the House chose to fight us on that. And we 
had to put it aside in conference. 

But you and I know the Federal Gk)vemment has spent $30 mil- 
lion on studies, preliminary assessments of maglev, which find that 
the technology is feasible and it's already moving ahead in other 
countries. However, what we've also found is that there is no one 
really in charge of the maglev policy in the United States of Amer- 

So, Mr. Chairman, that is why I'm saying today, with the sup- 
port of Senator Moynihan and other colleagues, we are sending a 
letter to President Clinton urging the President to put a qualified 
person in charge of the maglev effort, without delay, in the Federal 
Railroad Administration. 

With the appointment of a maglev project director and the estab- 
lishment of a maglev project office called for in ISTEA, we will then 
be able to move on this undertaking. 

I want to be sure that when we look at maglev, we do not see 
it in lieu of the high-speed rail undertakings that are all underway. 
I support those. I look forward to riding with them. I look forward 
to working with you on funding them. And at the same time, I'm 
going to look even beyond the horizon to what maglev could mean 
in the 21st century that would help America and help us have 
something to sell around the world, so we could be the Yankee 
traders and peddlers that we are. 

Thank you very much, Mr. Chairman. And I look forward to lis- 
tening to the testimony of the panel. 

Senator Lautenberg. Thank you very much. Senator Mikulski. 
With that sales pitch, it's obvious to those hearing Senator Mikul- 

ski's dynamic delivery that we have here someone who used to be 
an outstanding salesperson. But what you're going to have to do, 
Mr. Claytor, is make sure that bagels are available on the train, 
because, in that short time, it's hard to move it along. 

We thank you. Senator Mikulski. And I'm delighted that you're 
here with us. I know of your interest in high-speed rail. We share 
a common kind of makeup within our States, urbanized States, 
where relatively short distances can be very congested, and we 
need alternatives. 


Two of my colleagues on the subcommittee, Senator D'Amato and 
Senator Sasser, are unable to join us today. I will, at this point, 
insert their opening statements for today's hearing. 

[The statements follow:] 

Statement of Senator D'Amato 

Mr. Chairman, I join you in welcoming today's witnesses. Todajr's hearing prom- 
ises to be very interesting as we will focus on the development of high speed rail 
and magnetic levitation r^ systems in this country. 

I believe that we are at the crossroads as far as this Nation's involvement in the 
high speed rail program. With leadership and support from Congress, Amtrak, and 
the Administration as well as the involvement of private sector entities, we can fos- 
ter the full utilization of this Nation's rail resources. This would aid the environ- 
ment, reduce airport and highway congestion, and provide better transportation 
service to the public. 

I look forward to hearing from today's witnesses. 

Thank you, Mr. Chairman. 

Statement of Senator Sasser 

Good morning. I join in welcoming all of the witnesses. Today's hearing focuses 
on the role of rml investments in future United States policy. 

Let me begin my comments by saying a few words about Amtrak. It is hardly a 
secret along these corridors that Amtrak's biggest challenge, apart from operational 
self-sufficiency, has been its sheer survival. Whereas in recent years past, Amtrak 
has appeared before this Subcommittee under an ominous 0MB cloud, the change 
in Administrations has favorablv improved Amtrak's budgetary forecast. 

While Amtrak has estabUshed a long, albeit battle-tested, track record, the United 
States' experience with high speed rail and magnetic levitation technologies is still 
evolving even as we meet here today. Clearly, there is great promise in the develop- 
ment and operation of advanced rail technologies. However, a fully operational high 
speed rail and magnetic levitation network will neither come swiftly nor cheaply. 

There are undeniable benefits to transportation, the environment, and energy ob- 
jectives of investing in high speed rail. But the investment is not one that the Fed- 
eral government can reaUsticallv undertake alone. It's going to take a significant 
public-private partnership to make each and every dollar invested in rail today reap 
substantial, and long-lasting economic and social benefits tomorrow. It is against 
this backdrop, this fiscal challenge, that the Subcommittee assesses the role of rail 
investments in U.S. transportation policy. 

The Clinton Administration has already signalled its support for increased gov- 
ernment involvement in rail technologies. The Administration correctly recognizes 
the importance of transportation investments, not onlv in rebuilding America, but 
in the overall global economic climate. As a first step, the Clinton economic stimulus 
package addresses the economic realities of today without losing focus of the kind 
of long-term commitment to infrastructxire that is essential to fiiture economic 

Indeed, the realities of the day dictate a change in the way we move people and 
goods. High speed rail and mag lev promise to refieve congestion, reduce dependence 
on foreign energy resources, and adhere to high air quality standards. Still, many 
questions remain regarding how much the Federal government can do, and how 

much the private sector will do to make advanced rail systems an operational re- 

The United States already lags behind Germany, Japan, and France in this tech- 
nology. Western Europe and Japan have already committed billions of dollars to 
commercial development of advanced rail technologies. As a result, the United 
States now finds itself at a "make or break" point in the development of high speed 
rail technologies. The Clinton Administration's support for rail technologies provides 
an important endorsement at a most critical time in the decisionmaking process. 

One of the most important features of ISTEA was its recognition that community 
transportation needs vary fi-om state to state, and fi-om region to region. The con- 
gested Northeast Corridor and the rapid growth areas of the Sunbelt and Southeast, 
offer uniquely different rsiil challenges from Middle America, or the South. Yet, each 
region's unique rail needs must be balanced in a comprehensive United States inter- 
modal strategy. 

I would hope that we can proceed expeditiously to make the critical decisions re- 
garding high speed rail and magnetic levitation. At the same time, I believe im- 
provements to existing raU providers, notably Amtrak, must fill the mobility void 
of Middle America. Amtrak can accomplish this through station improvements, 
equipment upgrades, increased scheduling, and additional service routes to those 
areas of the country that have for far too long gone without viable rail service. In 
short, the most effective rail strategy is one that meets the unique mobility needs 
of every community. 

I thank the Chairman, and look forward to hearing the testimony. 


Senator Lautenberg. Mr. Claytor, it is always a pleasure to wel- 
come you. We've watched, with admiration, and I must say, some 
trepidation, as the rumors developed that the principal engineer on 
Amtrak may be content one day to just do it with model trains. The 
thought is a forbidding one. We want you to take vitamin C every- 
day, Mr. Chairman, and continue your good work. 

Despite all of the compliments and everything else, we would ask 
you to summarize your statement, as we will Mr. Blanchette, and 
invite you now to proceed. 


Mr. Claytor. Thank you, Mr. Chairman. I'm extremely pleased 
to have the privilege of appearing before this subcommittee today 
to discuss Amtrak's role in the development of high-speed rail 
transportation in this country. 

I have with me, on my right, Dennis F. Sullivan, Amtrak's Exec- 
utive Vice President and Chief Operating Officer. And then follow- 
ing me, on my left, is Bob Blanchette, the General Counsel for the 
Association of American Railroads, who will represent the AAR. 

Mr. Chairman, I will very briefly summarize the main points in 
my prepared statement, but I would like to ask that it be included 
in the record in full. 

Senator Lautenberg. The full statement will be. 

Mr. Claytor. I also ask that my written statement on our fiscal 
year 1994 grant request be included in the record, as well. 

Senator Lautenberg. It will be included, as requested. 

Mr. Claytor. Mr. Chairman, we would not even have a high- 
speed program to discuss today, but for your leadership and cour- 
age in this field. Together with Senator D'Amato, this subcommit- 
tee has really launched the high-speed rail development in this 

Now, at the outset, let me just mention again, as I've done be- 
fore, there are two types of high-speed rail. We must recognize that 
both of them exist separately. 

First, is the 100 to 150 mile-an-hour speeds on existing roadbed 
and tracks. This, I call, high-speed. The press mixes it all up. And 
I try to straighten it out, because one must draw a distinction be- 
tween the two. 

Second, is the over 150 miles an hour and up to 200 to 300 miles 
an hour, requiring a newly constructed dedicated right-of-way. We 
may have service of either steel-wheel on steel-rail, such as the 
TGV or the Japanese bullet train, or magnetic levitation, both of 
which I call ultra-high-speed rail, and both of which Amtrak 
strongly supports. Amtrak hopes to be the operator of any of those 
systems that is finally started. 

Now, Mr. Chairman, where are we today? Amtrak is the only 
high-speed operation in the United States between New York and 
Washington with 125 miles-an-hour Metroliner service. 

As a result of your leadership, we are now constructing the only 
new high-speed rail operation on what has been a largely conven- 
tional speed passenger and freight Northeast corridor line between 
New York and Boston, including electrification of the Amtrak line 
between New Haven and Boston. This very important project will 
serve as a model for high-speed corridors elsewhere in the country. 
And I'm satisfied that that's the way it's going to work. 

Now, what about equipment? Amtrak is in the forefront of devel- 
oping up to 150 mile-an-hour high-speed trainsets for operation on 
existing roadbeds in this country. You have already mentioned the 
Swedish X2000 and the Grerman ICE train, to be tested this sum- 
mer. Both of these are electrically powered for operation on the 
Northeast corridor, but Amtrak is also taking a lead with New 
York State in developing high-speed nonelectric power systems for 
use outside the corridor. This is described in some detail in my for- 
mal statement. 

We would hope to be able to substitute the fossil fueled power 
for the electric power on trainsets that we would design for use on 
the Northeast corridor. In other words, I think the trainsets that 
we are talking about getting first for the Northeast corridor, which 
will be electrically powered, could be powered by fossil fueled loco- 
motives at least 125 miles an hour and, hopefully, higher later on, 
outside of the corridor. 

And, with the State of New York, we are in the process of trsdng 
to develop that technology. That is an advanced technology that is 
not in hand today, but I think it can be. And we are working hard 
to bring it on as fast as possible. 

Now, what steps are needed to move ahead on developing high- 
speed corridors outside of the Northeast corridor? First, while run- 
ning high-speed trains on existing tracks is far less costly than 
building new dedicated roadbeds, significant infrastructure costs 
must still be faced, in addition to the cost of new equipment for 
that kind of an operation. 

What are these costs? These costs include grade-crossing elimi- 
nations, new train control and signal installations, some upgrading 
of track bridges and interlockings. The extent of the latter would 


depend, of course, on the existing condition of the railroad and the 
volume of the existing and anticipated track. 

And before any particular high-speed corridor is to be examined 
in detail, we must have an engineering study of that line, its exist- 
ing situation, the existing and proposed track, and analysis of what 
does need to be done. There are these categories of improvements 
that I've mentioned that will have to be done in all cases. We can- 
not do this in detail without these studies. 

Now, substantial funding will be needed from many sources for 
these improvements. Amtrak must have a dedicated source of cap- 
ital. For example, one penny of the fuel tax could provide for equip- 
ment and for some contribution to track and signal improvements 
in the high-speed corridors, as provided in the Swift bill. 

Mr. Chairman, I was very disappointed to hear that the 0MB 
plans to devote the entire 2.5 cents that's now marked for deficit 
reduction to highway operation. 

I think that would be a bad mistake. It seems to me that this 
2.5 cents ought to be devoted to transportation, but it ought to be 
devoted to the kind of transportation that can preserve the environ- 
ment, save money, and as you have pointed out, address congestion 
in airports and airways and highways. And we ought to do that. 
To take this 2.5 cents and put it back in highways, I think, would 
be a bad mistake. And it would make it very difficult for us to go 
ahead with a lot of these programs. 

So, next, we must also get highway funds for grade-crossing 
eliminations. That could come, in part, from ISTEA, because it's a 
highway problem. It must be done. You cannot operate more than 
100 miles an hour over a grade-crossing with just gates and light 
protection, because we have demonstrated all too graphically that 
in this country, people go through and around the gates and lights. 
And we can't have that. So highway crossing elimination must be 
provided. And that should come from highway money. 

State and local contributions for station, track, and signal im- 
provements have got to be made. 

And, finally and most importantly, we must have reimbursement 
for the costs and liability for potential passenger claims, if we're 
going to operate on somebody else's freight railroad. 

While freight railroads have agreed to work with Amtrak and ap- 
propriate government agencies to accomplish high-speed passenger 
service on the rail corridors that they own, it's plain that Amtrak 
or any other operator must reimburse the freight railroad owner 
for any costs actually incurred by them, and most importantly, 
must indemnify the owner against liability from a passenger train 
accident without regard to fault or the degree of negligence in- 

Without that, we're not going to be able to get on the railroad. 
And I'm perfectly satisfied that that problem must be solved. The 
enormous open-ended potential liability for punitive damages that 
are now growing every day at a greater rate than ever, means that 
the uncompensated freight railroad could not afford to have high- 
speed trains operated without the indemnification. 

And Amtrak, in turn, could not afford to do that indemnification 
for extensive new high-speed operations without, at least, limited 
relief from punitive damages, just for passenger claims. It's the 


passenger claim problem that presents the problem, an insurable 
problem. And that's the one that we've just got to face. 

I believe the problem can be solved, but unless it is, I'm afraid 
that high-speed train operations may be limited to operation over 
Amtrak's own or, at least, government-owned properties. And this 
is a problem we've got to work up to, first, before we actually start 
the operation on such a railroad. 

Now, the above are some of the hurdles we must overcome as we 
move ahead to develop multiple high-speed corridors in this coun- 
try. We look forward to working with this subcommittee to over- 
come them successfully and to continue to move forward with both 
kinds of high-speed rail development. 

Again, Mr. Chairman, we applaud the subcommittee and its 
chairman for forward looking vision and leadership already dem- 
onstrated here. 

And while I have emphasized in this testimony, in this oral testi- 
mony, primarily, the high-speed rail on existing track, as distin- 
guished from the ultra high-speed, I do not mean to underestimate 

It seems to me that we're first going to move into the high-speed 
operation, but we must look at the other two. I think maglev, as 
well as the TGV type of operations that are being proposed in 
Texas, offer a great opportunity in this country. And we need to de- 
velop them both. Amtrak stands ready to be the operator of any of 
those and to work with them on doing this. 

Thank you, Mr. Chairman. 


Senator Lautenberg. Thank you very much, Mr. Claytor. We 
have your complete statement and it will be made part of the 

Statement of W. Graham Claytor, Jr. 

My name is W. Graham Claytor, Jr. I am President and Chairman of the Board 
of the National Railroad Passenger Corporation, better known as Amtrak. I am ex- 
tremely pleased to have the opportunitAr to appear before the Subcommittee today 
to discuss Amtrak's important role in the development of high-speed rail transpor- 
tation in this country. 

I want to state at the outset that were it not for the extraordinarily capable and 
even courageous efforts of the Chairman of the Subcommittee, Senator Frank R. 
Lautenberg, we would not be here today discussing the future of high-speed rail in 
the United States. His vision and leadership in uds area are directly responsible 
for the significant progress we are making in implementing high-speed rail on the 
Northeast Corridor — a project that will point the way to similar developments in 
other high-density rail corridors elsewhere in the country — and in developing state- 
of-the-art high-speed passenger rail equipment. We also appreciate the strong sup- 
port and leadership that Senator D'Amato has provided in the area of high-speed 
rail, particularly his support for both the Northeast Corridor and the criticalW im- 
portant Empire Corridor in upstate New York. I am aware of few public officials 
who have so positively influenced the development of a technology upon which the 
future of American rail passenger transportation is so likely to depend. 

High-speed rail development will greatly impact and in manv areas define Am- 
trak's future in the national transportation system. We intend to pursue aggres- 
sively opportunities to design, build, operate and maintain new high-speed systems. 
While our ability to help fund the cost of these systems is strictly limited, our goal 
is to be the high-speed rail operator of choice in this countrv. 

While I know that the Subcommittee is very knowledgeable about the various cat- 
egories of high-speed rail transportation, there is still some pubhc confiision and 
misunderstanding about this. Accordingly, I think it is worthwhile to make clear for 


the record that there is a substantial difference between what I like to call "high- 
speed rail," with maximum speeds of 125 to 150 mph, and "ultra high-speed rail" 
with maximum speeds as high as 200 to 300 mph. Amtrak has already proven the 
feasibility in this country ofproviding "high-speed rtiil" service on existing tracks 
and roadbeds, built and used tor manv years for conventional-speed freight and pas- 
senger service. The "ultra high-speed" service, however, requires construction of a 
new and dedicated track system. This may involve the steel-wheel-on-steel-rail sys- 
tem such as those used by the French TGV and Japanese bullet trains, or it may 
involve the very different magnetic levitation systems that have been tested in both 
Germany and Japan. 

At the outset, let's take a brief look at where Amtrak is today. This is the starting 
point from which to move into both high-speed and ultra high-speed operations: 
—On the Northeast Corridor between Washington and New York, Amtrak's 
Metroliner Service is the only high-speed rail passenger service operating in the 
western hemisphere. Daily, our trains travel the fastest and highest density rail 
corridor in the country at a top speed of 125 mph, with high reliability and 
growing marketabihty. 
— Amtrak is the only company in the nation actively involved in designing and 
converting an existing passenger and freirfit rail line to a high-speed electrified 
operation. The Northeast High-Speed Rail Improvement Project, initiated 
through the efforts of the Chairman, will dramaticfilly improve transportation 
in the Northeast by reducing travel time between New York and Boston. Am- 
trak has been charged with implementing and managing this important project. 
The project likely will establish the model for upgramng other rail corridors 
around the country to permit high-speed rail service. 
— ^Amtrak is at the forefront of developing the nation's first modem high-speed 
rail equipment, using European developed technology but American construc- 
tion and safety standards. Following the current operational and market testing 
of the Swedish X2000 tilt trtiin and the planned testing of the German ICE 
train this summer, Amtrak expects to procure 26 new high-speed electrically- 
powered trainsets for use on the Northeast Corridor. 'This new generation 
train — capable of a maximum 150 mph operation and with significantly im- 
proved passenger accommodations and ridership quality — will be manufactured 
in the United States and meet this country's strict safety standards. Impor- 
tantiy, Amtrak also plans to design and test a non-electric power system for the 
new trainsets that will permit their use off-Corridor at initial speeds of up to 
125 mph, with the hope that even higher speeds can eventually be achieved. 
Thus, Amtrak will be developing a standardized family of high-speed rail equip- 
ment that can be used nationwide over electric and non-electric rail lines. 
— Finally, Amtrak already provides conventional-speed passenger service over 
most of the potential high-speed rail corridors in the nation, including all of the 
five corridors recentiv identified by the Department of Transportation. As a re- 
sult, Amtrak is the logical operator of high-speed service over these lines and 
may well be the most logical entity to oversee any high-speed rail improvements 
on those lines. 
Amtrak's interest in fast passenger service extends well beyond the 150 mph 
threshold of what we call "high-speed" rail service to the operation of new "ulti-a 
high-speed" — 150-300 mph — systems. The two most promising candidates for ultra 
high-speed rail are the proposed TGV steel-wheel system between Houston, Dallas 
and San Antonio and the 15-mile magnetic levitation system planned at the Orlando 
International Airport in Florida. Amtrak has been designated as the operator of the 
Orlando project and plans to work with the sponsors of the Texas TGV project and 
to ultimately play the same role in Texas. We strongly support both of these 

Amtrak's intention to play a leading role in the high-speed rail revolution is based 
on two key motives. First, both types of fast rail will contribute significantly to im- 
proving the nation's transportation system and in enhancing regional air quality — 
both long-term Amtrak objectives. Our Northeast Corridor experience vividly dem- 
onstrates this. Although Amtrak's long-distance service is being recognized as in- 
creasingly important to the nation, particularly to rural America, we must also ad- 
dress the critical highway, airport and airway congestion and air quality concerns 
in our most densely populated transportation corridors. With our extensive experi- 
ence to date and our nationwide coverage, it is most appropriate that Amtrak as- 
sume a leadership role in the inevitable increase that is coming in high-speed rail. 
Second, our success in the Northeast Corridor demonstrates that high-speed train 
service can generate a substantial operating profit, and such profit wul play an im- 
portant role in Amtrak's continuing efforts to eliminate its need for federal operat- 
ing support. Existing Metroliner Service trains, for example, cover up to 200 percent 


of their long-term operating costs, thus contributing significantly to Amtrak's over- 
head and bottom line. Revenues from Amtrak's growing contract commuter oper- 
ations and from its future high-speed rail operations increasingly contribute to o\ir 
f[oal of covering more of our operating costs. However, as discussed in more detail 
ater in my testimony, our experience also demonstrates that it will be virtually im- 
possible for any high-speed system at the outset to fully cover its cost of capital — 
both construction and long-term infrastructure maintenance costs — without substan- 
tial public assistance. Federal and state funding for these capital costs — from the 
incremental upgrade of existing rail lines to construction of new dedicated rights- 
of-way — will be essential if high-speed rail is to progress beyond the Northeast Cor- 

I think it would be useful to detail to the Subcommittee the progress we are mak- 
ing in high-speed rail development in a number of areas, as well as to discuss sev- 
eral other issues that I believe are critical to the successful development of high- 
speed rail transportation in this country. 

amtrak's northeast high-speed rail improvement project 

Amtrak is making substantial progress towards its goal of reducing travel time 
between New York and Boston to under three hours. As the Subcommittee is aware, 
over the next four years, Amtrak plans to electrify and upgrade this portion of the 
Northeast Corridor to permit up to 150 mph operations. 'The result will be a rail 
line supporting high-speed intercity passenger trains, numerous commuter rail oper- 
ations, and freight rail service. Importantly, between 2.5 million and 3 million addi- 
tional riders are projected to switch from other transportation modes to rail, thereby 
reducing congestion on the region's highways and at its airports and contributing 
to improved air quality. Given the very high cost of building dedicated rights-of-way 
for ultra-high-speed rail systems, this incremental improvement approach is the 
likely scenario for most early high-speed rail systems in this country in densely pop- 
ulated transportation corridors. 

Amtrak has been charged with the responsibility for implementing and managing 
this construction project. We take this responsibility extremely seriously and have 
created a highly competent and efficient project organization. I am very confident 
of Amtrak's ability to achieve all of the project objectives in a manner that will 
make it a model for high-speed rail construction throughout the United States. 

Considerable work is currently underway. This includes: 

— Environmental impact analysis: The environmental review underway by the De- 

f)artment of Transportation should be completed by early autumn following pub- 
ication of the draft Environmental Impact Statement (EIS) in June and the 
final EIS in September. The review will determine if the electrification of the 
rail line poses any significant adverse environmental impacts, and if so, what 
steps Amtrak will have to take to mitigate those impacts. 

— Electrification system: In June 1992, Amtrak awarded a contract to a joint ven- 
ture consisting of Morrison Knudsen Corporation, L. K. Comstock and Spie 
Group to design and construct the electrification system. Thirty percent design 
of the system was completed in February. Initiation of the construction phase 
could begin later this year following completion of the federal environmental im- 
pact analysis and the issuance of permits by Connecticut, Rhode Island and 

— Track improvements: Amtrak is undertaking various track improvements nec- 
essary to permit up to 150 mph train operations and to reduce long-term main- 
tenance of the rail line. These include installation of additional concrete ties 
and new continuous welded rail, undercutting, and installation of four high- 
speed interlockings to permit trains to switch tracks at speeds of up to 80 mph 
(compared to 40 mph today). Amtrak expects to have significant track work un- 
derway during the spring and summer while awaiting completion of the EIS 
and subsequent commencement of actual construction work on the electrifica- 
tion system. 

— Signal system: Amtrak is well on its way to completing installation of a modern 
train and speed control signal system to permit high-speed operations between 
New Haven and Boston on both tracks in either (Erection. This is essential to 
enable the rail line to handle safely and efficiently high-speed passenger trains 
along with slower commuter and freight trains. It also will enable Amtrak to 
remove the existing pole-strung signsS line that now runs along the rail line. 

The Northeast High-Speed Rail Improvement project is strongly supported in the 
Northeast by transportation planners and environmentalists ana is expected to help 
generate important regional economic and job growth. The significant ridership im- 
pact will help regional compliance with the Clean Air Act and could help to avoid 


the enormous cost of local airport and highway expansion projects. While it is inevi- 
table that there will be some opposition to electrification and additional train move- 
ments fi*om some of those living immediately adjacent to the rail line, the concerns 
that have been raised to date are the focus of review by the federal government and 
will be addressed in the Environmented Impact Statement. 


Of equal importance are Amtrak's plans to develop a family of standardized high- 
speed rail passenger equipment components that will result in a consistent high- 
speed rail service in this country and significantly reduce the cost of producing and 
maintaining the cars and locomotives. Amtrak is now in the process of preparing 
specifications for the procurement of the new high-speed trains, resulting in tne de- 
velopment in this country of a broader rail car and locomotive manufacturing capa- 
bility. This will have major implications for national economic development and will 
act as an important spur to development of high-speed rail elsewhere in the country. 
If high-speed rail is to develop outside the electrified Northeast Corridor, however, 
a new generation of non-electnc locomotives capable of high acceleration and sus- 
tained speeds of at least 125 mph must be developed. Until recently there has been 
no market in this country for high-speed rail. Consequently, there has been no in- 
centive for the industry to invest research and development funding for high-speed 
locomotives particularly for the non-electrified corridors outside the Northeast. Al- 
though Congress has appropriated some $14 million to Amtrak to develop such a 
locomotive (with the capability to also operate electrically under third rail power), 
to date Amtrak has not been satisfied with the proposals it has received from its 

As a result, Amtrak has adopted a two-prong strategy to push industry as quickly 
as possible towards development of a satisfactory non-electric high-speed locomotive. 
— Amtrak has strongly endorsed and agreed to participate in a proposal made by 
New York State to develop operating and maintenance data on the latest gen- 
eration turbine engine. Turbine technology, similar to that used to power a jet 
airplane, permits a lighter-weight locomotive, thereby generating a higher 
horsepower-to-weight ratio. This should make it easier to produce higher oper- 
ating speeds. Amtrak's experience to date with its current turbine engines, how- 
ever, is that they are more expensive to operate and maintain. In addition, ac- 
celeration at higher speeds can also be a problem. Under New York's proposal, 
two of Amtrak's existing turbine locomotives would be rebuilt with tne latest 
version of the turbine engine — Turbomeca's Makila. The new engines should en- 
able a trainset of two locomotives (each with seating capacity) and three pas- 
senger cars to operate at 125 mph. Detailed data wUl be collected regarding the 
operation and maintenance of the new engines to determine their capabilities 
and costs versus the most advanced diesel locomotive technology. Because high- 
speed non-electric operations may well depend on turbo technology, this test 
could prove to be an extremely beneficial next step in the development of high- 
speed locomotive technology for non-electrified rail lines. For Empire Service, 
these locomotives will also be able to use the electrified third rail system for 
operation through the Penn Station tunnels to Long Island at acceptable 

New York State has submitted an Expression of Interest for funding from the 
Federal Railroad Administration under the High-Speed Technology Demonstra- 
tion Program (under Section 1036c of ISTEA) in part to undertake such a retro- 
fit of turbine locomotives with the new Makila engine. If New York is awarded 
a grant for this test, Amtrak would fiind the overhaul of the passenger sections 
of the trainset in order to use the test train as a development base for perfect- 
ing new seating and interior components that will be used later this decade in 
the new Northeast Corridor high-speed trainsets and on other Amtrak equip- 
ment. The result would be the first Amtrak owned, non-electrified high-speed 
trainset in revenue service that would be comparable to world standards. 
— Amtrak views procurement of 26 new high-speed electric trainsets for the 
Northeast Corridor as the most important early step in bringing high-speed rail 
equipment to the rest of the country. The technology currently being evaluated 
for these trains includes tilting capability, good acceleration at higher speeds, 
integrated internal communications, standardized power and comfort sub- 
systems, telecommunication, and video systems, and high-speed trucks and sus- 
pension systems. A next step would be to integrate these characteristics into a 
family of high-speed equipment that can be used systemwide, building perhaps 
on the Makila turbine train mentioned above. As a result, Amtrak will consider 
including in its procurement for the electrically powered high-speed trainsets 


the feasibility of substituting acceptable non-electric power units, with a dual- 
power third-rail capability. These power units could be substituted for the elec- 
tric locomotive when used on non-electrified rail lines, such as on the Empire 
Corridor and other routes radiating off the Northeast Corridor, as well as other 
potential high-speed corridors including the five identified by the Department 
of Transportation. The non-electric locomotives will be fossil fueled, with three- 
phase AC drives or hydraulic transmissions to achieve speeds of up to 125 mph, 
depending on the route profile and curvature. The key technological milestone 
will be the ability of the new locomotives — whether diesel or turbo — ^to provide 
extra horsepower for short time periods to generate the high acceleration re- 
quired to reduce travel time on most routes. 
With this strategy, Amtrak hopes to be able to encourage the industry to push 
the technological envelope as far and rapidly as possible in tne development of nigh- 
speed non-electric motive power. In this way, Amtrak will help set the standard for 
high-speed rail equipment development in the nation, much as it is setting the 
standard for upgrading rail lines to permit high-speed operations. Amtrak will work 
closely with private industry and state and federal agencies in this effort to advance 
high-speed locomotive development. With our operating experience and the technical 
know-how in the industry, we believe that this public/private partnership is the best 
and most practical way to achieve the research and development necessary to attain 
high-speea rail service in this country. This is an area tnat holds much potential 
and challenge for American manufacturing and, indeed, the future of widespread 
American high-speed rail may well depend on it. 


A critical issue that remains to be addressed is how to provide the capital nec- 
essary to upgrade existing or build new railroad infrastructure and to acquire the 
expensive high-speed rail equipment for new service. Funding for equipment is of 
particular concern since the same set of equipment may operate in many states and 
hence is less likely to be a candidate for funding under state transportation pro- 
grams. As the Subcommittee is aware, Amtrak has urged establishment of an inter- 
city passenger rail capitel trust fund to support Amtrak's burgeoning capital needs 
and to help support development of high-speed rail. Representative Al Swift last 
year introducea a bill that would have established such a trust fund financed with 
one penny of the federal fuel tax currently allocated to deficit reduction. The bill 
was co-sponsored by some 30 members of Congress and was supported by a host 
of transportation and environmental groups. 

The difficulties that have developed in the past in jump-starting high-speed rail 
service in California, Florida and currently in Texas demonstrate Just how essential 
public financial support for high-speed rail development will be. The Swift proposal 
provides a reasonable and equitable mechanism for meeting both Amtrak's system- 
wide capital needs and some (but certainly not all) of the public infrastructure in- 
vestment so critical to new high-speed rail corridors. I strongly urge members of the 
Subcommittee to consider the merits of the proposal. 


In addition to funding Amtrak's needs for equipment and engineering for off-cor- 
ridor high-speed corridor operations, multiple other sources of funding must be 
tapped to bring these objectives to fruition. As pointed out earlier, while the capital 
costs needed in high-speed operations over existing freight-owned railroad lines are 
far less than the costs involved in constructing the whole new dedicated railroad re- 
quired for ultra high-speed passenger service, these costs are still not small. The 
infrastructure improvement costs for each corridor will be unique to that corridor 
and will depend on a great many different factors — quality of track and bridge 
structure; curvature; signal and train control systems; number of running and pas- 
senger tracks; number, location and control of interlockings; number of grade cross- 
ings; volume and nature of existing freight and passenger traffic, etc. While it is 
not practical to reach generalized conclusions about these costs without detailed 
analysis, it is feasible to list several categories of problems that must as a minimum 
be resolved in all cases. I list the following as a reasonable sampling of these. 

(1) Highway Grade Crossings. — All highway grade crossings over which trains will 
operate at 100 mph or more should be closed or eliminated by overpasses or 
underpasses. At these speeds, the likelihood of a maior derailment with resulting 
passenger casualties from a collision with an automobile or truck is too great, re- 
gardless of the existence of the usual gates and lights protection, which experience 
shows is often bypassed by irresponsible motorists. These are really highway, not 


railroad, problems, and it is believed that the major funding for grade crossing 
elimination should come from highway funds. 

(2) Signal Improvements. — Under present (and we think appropriate) FRA regula- 
tions, passenger train speeds may not exceed 79 mph without signals that register 
in the locomotive cab or provision of an automatic train-stop system. As a practical 
matter today, this means the installation of the essential elements of an Automatic 
Train Control System (ATCS). In many cases this will significantly benefit the 
freight railroad operation as well, but it is quite expensive to install. A significant 
part of this cost must come from appropriate state DOT's, community contribution, 
ISTEA, or FRA. Signal improvements are a critical safety measure. 

(3) Running and Passing Tracks and Interlockings. — The extent of running and 
passing tracks and interlockings needed will depend on the volume and nature of 
the freight and passenger traffic to be accommodated. In a few cases, extensive addi- 
tional trackage on the same right-of-way may be required, and in almost all cases, 
some improvements will be needed if high-speed passenger trains are to be added. 

(4) Rail, Tie, Bridge and Track Improvements. — In many cases, the rail line may 
have good welded rail, good condition wood or concrete ties, satisfactory bridges, 
etc., but again significant expenditures may be required to assure the quality re- 
quired for high-speed passenger use. 

Without a significant assured source of capital funding, Amtrak will not be in a 
position to contribute to the funding required to adapt to existing fi*eight railroad 
tracks for high-speed passenger service. Even with a capital funding source, Amtrak 
could not handle more than a modest fi*action of the infrastructure improvement 
costs on a railroad owned by a fi-eight carrier or anyone else. Other sources must 
be utilized if high-speed corridors are to be developed on existing tracks. 

The freight railroads, through the Association of American Railroads, have indi- 
cated a wulingness to work with Amtrak and others to develop these corridors for 
high-speed passenger service, but only if they can be guaranteed with no net cost 
and adequate protection against liability. 


A final issue, discussed in Amtrak's 1993 Legislative Report, is presented by the 
legitimate concerns of freight railroads about potential passenger injury claims re- 
sulting from Amtrak, future high-speed or other passenger rail operations over their 
tracks. Clearly, the potential cost of an unfavorable jury award as a result of a pas- 
senger train accident could easily exceed (many times over) the revenues or other 
benefits received by freight railroads for high-speed operations conducted by Amtrak 
over their lines. 

The factor most responsible for driving up the cost of liability is the ability of ju- 
ries to award punitive damages when a jury determines, ofl^n on highly conflicting 
evidence, that an employee of a defendant company is giiilty of conduct that is more 
serious than ordinary negligence. Courts have rarely set limits on the amount a jury 
can award to punish the defendant, and examples abound of punitive damage 
awards far in excess of the amount required to compensate an injured person for 
his or her injuries. The threat of such awards often causes defendants (including, 
unfortunately, Amtrak) to agree to large settlements rather than expose themselves 
to the risks of a hostile jury. 

It is perfectly plain that the freight railroads — including those that own the track- 
age in most potential high-speed rail corridors — will not permit high-speed pas- 
senger operations without at least relief fi-om passenger injury liability. Indeed, as 
noted above, the Association of American Railroads, which represents the major rail- 
roads in this country, has conditioned its support for high-speed rail development 
over private railroad lines on a requirement that the owners be totally protected 
from potential exposure to enormously costly passenger injury claims. That condi- 
tion will require an unlimited indemnification by Amtrak or any other passenger 
train operator against passenger liability regardless of fault or degree of fault. 

Amtrak already faces unlimited liability for punitive damage resulting fi-om inju- 
ries it causes to its own passengers. If one were to add to this the liability for puni- 
tive damages incurred from indemnifying freight railroads where the freight rail- 
road was at fault, Amtrak likely would be unable to afford to undertake extensive 
high-speed rail passenger operations outside its own Northeast Corridor. This is 
why relief from punitive damages is so vital. Only a limited exemption is needed 
to cover liability to passengers resulting from a passenger train accident. Amtrak 
is not seeking relief from all punitive damage liability, as is provided for claims 
against the iJnited States and under various state laws with respect to commuter 
agencies, but rather only relief from punitive damage awards resulting from pas- 


senger injuries. I firmly believe that this is essential if we are to extend our oper- 
ations to include high-speed trains over fi-eight-owned rail lines. 

This is an extremely miportant issue with enormous repercussions on the develop- 
ment of high-speed rail on privately owned railroad rights-of-way. Amtrak urges 
Congress to address this issue before liability concerns block the path of high-speed 
rail development in some of the nation's most heavily traveled transportation cor- 


High-speed rail can play an important role in helping to address the nation's 
transportation and environmental needs. For our part, Amtrak intends to be a lead- 
er in developing high-speed rail technologies and in operating the nation's high- 
speed rail systems. We are the most experienced in the country in this area and, 
in many ways, our successful involvement in high-speed rail transportation will de- 
termine our success in the future. Amtrak looks forward to working with the Sub- 
committee in shaping high-speed rail and applauds the Subcommittee, particularly 
its Chairman and ranking minority member, tor the vision and leadership it already 
has demonstrated in this area. 

Amtrak's Fiscal Year 1994 Grant Request 

As President and Chairman of the Board of the National Railroad Passenger Cor- 
poration, better known as Amtrak, I am very pleased to present Amtrak's fiscal year 
1994 request for federal operating and capital assistance and to outline several im- 
portant steps we have taken to improve Amtrak's financial performance as the na- 
tion's economy strengthens. Also, I will provide the Committee further details on 
Amtrak's neea for a supplemental operating appropriation for fiscal year 1993. 


It would be an understatement to report that Amtrak has been deeply impacted 
by the now three-year-old national economic recession. Compared to other compa- 
nies across the nation, particularly in the troubled travel sector, Amtrak has weath- 
ered the slow down in demand for services relatively well. Indeed, when one looks 
at the impact of the recession on the jiirline industry — three bankruptcies and four 
liquidations in three years and losses of $2 billion in 1992 — ^Amtrak s rather stable 
financial performance over this period demonstrates important underlying market 

Nonetheless, for the first time since 1975, revenues actually declined ($34.2 mil- 
lion or 3.3 percent) compared to our record performance in 1991. While this should 
not obscure the fact that Amtrak generated well over $1.3 billion in passenger and 
other revenues during the year, our performance failed to meet even our modest ex- 
pectations for the year. This is the result of several factors: 
— Poor passenger demand: the recession took a serious toll on demand for travel 
services. Passenger ticket revenues fell 3.5 percent, intercity ridership fell some 
3 percent, and passenger miles declined fi*om 6.3 billion to 6.1 billion. Three iso- 
lated events also significantiy undermined ticket revenues: Hurricane Andrew 
virtually wiped out travel to the south for several weeks; a threatened rail pas- 
senger strike and actual freight railroad shutdown forced our passengers to use 
other travel modes; and a fi"atricidal airline fare war devastated long-distance 
rail demand during the peak summer months. 
— Weak real estate performance: the poor rental and leasing market, resulting 
fi"om the recession and significant over-building during the 1980's, seriously un- 
dermined Amtrak's real estate revenues. Revenue fell 11.5 percent under last 
On the other hand, Amtrak's considerable success at reducing corporate expenses 
last year represents an important achievement and bodes extremely well for future 
financied improvement as both passenger revenues and real estate development re- 
bound with a stronger national economy. Expenses declined $44 million from fiscal 
year 1991 — a decrease of 2.1 percent— despite inflation and the costs associated with 
the operation of several new services. Much of this was due to corporate-wide cost 
cutting efforts, which included a management salary fi-eeze, decreased staffing of 
trains and services, and some productivity gains resulting from new labor agree- 
ments. Indeed, with the decrease in expenses, Amtrak actually posted its highest 
revenue-to-cost ratio in its twenty-one year history — .791. 

While I am pleased that we were able to reduce costs so effectively during this 
diflBcult time, I must emphasize that some of the cost cutting actions have degraded 


the quality of service we are trying to — and indeed must — provide if we are to suc- 
cessfully compete with travel alternatives. In particular, we have had to severely 
reduce the number of passenger equipment overhauls at our Beech Grove mainte- 
nance facilities. This cost savings, however, is illusive in the long run. Much of the 
equipment we are running today simply is too old to withstand a delay in overhaul 
work and the result — a significant increase in equipment failures and the use of 
equipment that looks and functions badlv — will severely undermine the market- 
ability of our service in coming years. Delaying the overhaul of equipment simply 
is incompatible with, and directly impacts, achievement of Amtrak's goal of steadily 
improving the quality of its service. 

In order to restore this quality that has been impacted by the short-term need 
to reduce corporate expenses and in order to avoid a potential severe cash shortage 
at the end of fiscal year 1993, Amtrak has submitted to this committee a request 
for supplemental operating funds of $57.5 million for fiscal year 1993, which is with- 
in funding levels approved by Amtrak's reauthorization last year. I want to empha- 
size that requesting additional funding for current year operations is not a step I 
take lightly. Only because continued operation of the system depends on this re- 
quest has Amtrak made the difficult choice to turn to Congress tor further assist- 
ance. Specifically, the request includes $57.5 funding to increase overhauls; restore 
on-board, station and reservation safes office staffing; restore advertising and sales 
support; and restore seriously depleted working capital. 


Despite the setbacks of the past year, I remain extremely bullish on Amtrak's fu- 
ture for the rest of the decade. Interest in the rail passenger alternative — both con- 
ventional and high-speed intercity rail service as well as commuter rail — has never 
been greater in this country, and Amtrak is well positioned to benefit enormously 
from this interest. The tremendous amount of public interest and enthusiasm over 
Amtrak's recent testing of the Swedish high-speed X2000 tilt train is reflective of 
an American public that remains fascinated by the lure of the "iron horse" of yester- 
day and the high-speed one of the future. Amtrak has proven that Americans prefer 
to travel by rail where service is reliable and price and time competitive. The chal- 
lenge for Amtrak, Congress and state governments is twofold: to identify those cor- 
ridors and routes where the energy efficient and environmentally superior rail mode 
makes good transportation and environmental sense; and to provide the funding 
needed to establish reliable, high-quality and time-competitive service over existing 
rail corridors or on new dedicated rights-of-way. 

For its part, Amtrak has taken several critically important steps that will permit 
it to operate new service in the most efficient way possible and with the highest 
level 01 quality. 

Quality Improvement. — Amtrak has begun the critical process of revamping its 
corporate culture to change the way in which its employees manage the corporation. 
Using the tools of continuous quality improvement, Amtrak is beginning the change- 
over to a customer-driven, management-led system in which all employees, working 
in teams, will use a variety of statistical and non-statistical tools to continuously 
improve the processes that drive our operation. The result will be incremental im- 
provements in the quality of Amtrak products and services to meet or exceed our 
customers' expectations. Accomplishing these goals will require an evolution in Am- 
trak's corporate culture to one in which there is more open communication, fewer 
barriers between departments and between employees, a spirit of innovation and in- 
volvement, and a high level of employee satisfaction. 

These will not come easily — particularly in an industry that resounds with the 
phrase: "but that is how it has always been done!" Nonetiieless, I finnly believe that 
Amtrak will succeed in this goal for two reasons. First, senior management is totally 
behind this effort and is willing to take the steps necessary to change its own way 
of doing things. Second, many of the new labor agreements for the first time commit 
the employees to participate in quality improvements. Clearly, Amtrak cannot mas- 
ter the tools of continuous quality improvement without the full commitment and 
fiarticipation of all our employees — ^management and agreement-covered and their 
abor union representatives — to train, strategize, problem solve and work together 
in ways that are innovative for this industry. This will take years to fully imple- 
ment, but it is a key to establishing the cost efficiencies and quality of service that 
will be essential if, as I believe, a genuine renaissance in demand for rail passenger 
service develops. 

The growing interest in and demand for both additional conventional intercity rail 
passenger service and new high-speed rail service is truly breathtaking. Amtrak 
stands to gain enormously fi-om this recent surge in interest as a result of our long 


experience in operating high-speed service on the Northeast Corridor and our steady 
progress in implementing nigh-speed service between New York and Boston. 

Labor Contracts.— One such step was the resolution of new labor agreements, 
which will help lay the foundation tor our future success. After four years of negotia- 
tions, agreements were finally reached with nearly all of Amtrak's 14 labor organi- 
zations. Some were reached voluntarily, while others were a imposed through con- 
gressionally mandated arbitration. While the process was at times divisive, the re- 
sulting agreements achieved important objectives for both Amtrak and its employ- 
ees. Work rule changes, including the right to use part-time workers and increased 
use of shop craft employees across union jurisdictions, will allow Amtrak to struc- 
ture its operations more efficiently and cost effectively. Steps to help control the 
enormous cost of health benefits were also agreed to with the employees. In return, 
wage increases considerably in excess of those received by workers in other indus- 
tries (including freight railroad employees) have been provided. In order to prevent 
the drawn-out contract negotiations process from undermining the financial position 
of our employees, the contract includes a cost-of-living wage adjustment, to be made 
every six months, during the negotiation of new contracts. With negotiations now 
behind us, there is an opportunity for a new commitment by both management and 
labor to jointly focus on an improved Amtrak. 

New Service. — New service between New Orleans and Miami — extending our cur- 
rent Los Angeles-New Orleans Sunset Limited — will start this year, initiating Am- 
trak's first transcontinental route. New routes in California and North Carolina, as 
well as efforts to bring service to Maine, reflect the willingness of states to support 
rail initiatives even during such financially strapped times. The decision by Con- 
gress in last year's Amtrak reauthorization act to authorize separate funding for 
new state-supported rail passenger service sent a clear message to the states that 
the federal government is willing to support efforts to jointly fund new Amtrak serv- 
ice where it makes sense. 

New Equipment. — ^With the support of this Subcommittee, Amtrak has initiated 
several important equipment acquisition orders that will help provide the capacity 
we need to meet growing demandf and help reduce our dependence on federal operat- 
ing support. As the 140 Superliners begin arriving this year, we will gradually be 
able to upgrade the equipment used on the Auto Train, convert the Capitol Limited 
and City of New Orleans to Superliner equipment, increase capacity on numerous 
long-distance routes, and convert the Cardinal to daily service (using single-level 
equipment released as a result of the delivery of Superliners). In October 1992, Am- 
trak ordered the first 50 new Viewliner cars that ultimately will replace nearly our 
entire fleet of Heritage cars. These new Viewliners will begin to arrive two years 
from notice to proceed. Finally, beginning in May of this year, new locomotives will 
be arriving at the rate of 5 per month, providing relief to our exhausted and under- 
sized fleet of diesel and duaf power engines. 

These cars and locomotives represent the first of many that will have to be or- 
dered as we move towards the next decade. They will be coming on line just at the 
right time — as the a strengthening national economv brings a populace eager to 
travel again — and symbolize the vision that Amtrak has for the Future of rail pas- 
senger service in this country. 

Commuter Contracts. — During fiscal year 1992, Amtrak was awarded contracts to 
operate commuter rail service between San Jose and San Francisco, in Northern 
\arginia, and in the Los Angeles area. These contracts are of major importance for 
Amtrak and will provide substantial incremental revenue for the corporation. In ad- 
dition, they further cement Amtrak's role as the commuter operator of choice in the 
nation. Amtrak is now operating all or portions of the commuter rail service in 
many of the nation's major cities including Boston, Providence, New Haven, Wash- 
ington, Baltimore, San Francisco and Los Angeles, and indeed commuter ridership 
on Amtrak now exceeds intercity ridership. We intend to work hard to win addi- 
tional commuter service contracts as plans for new systems in over 20 cities nation- 
wide move toward fi-uition. We are extremely proud of our progress in this area and 
we believe it demonstrates the high level of confidence in Amtrak held by transpor- 
tation planners across the country. 


Amtrak has provided the Subcommittee with its fiscal year 1994 request for fed- 
eral operating and capital support. It disappoints me greatly to report that, as a re- 
sult of poorer revenue growth than projected last year, and continued weakness in 
the national economy, Amtrak will seek its first increase in federal operating assist- 
ance in over a decade. It is essential that the Subcommittee understand that Am- 
trak's request for additional fiinding does not in any way alter our desire and com- 


mitment to reduce our need for federal operating assistance. Nonetheless, as we 
have explained at great length in the past, generating greater revenues relative to 
operating costs requires both a growing market for our service and the ability, 
through capital investment, to expand and improve our service and productivity. 
Clearly, the state of the national economy has deprived us of the strong passenger 
market that so characterized the 1980's, when Amtrak routinely experienced double 
digit revenue growth. While our projected fiscal year 1994 revenues reflect the im- 
proving national economy, growth remains sluggish and is likely to remain that way 
for the rest of the fiscal year. 

For the fiscal year 1994, Amtrak is requesting $381 million in operating assist- 
ance. It is important to note that Congress foresaw the difficulties posed by the 
weak national economy for Amtrak by authorizing an increase in operating assist- 
ance to the $381 million level in the recently enacted Amtrak reauthorization. That 
legislation also provided a separate authorization of $9.5 million for the operating 
losses associated with the initiation of new services, and Amtrak is requesting the 
full $9.5 million for fiscal year 1994. This funding for new services is critical to Am- 
trak's ability to comply with report language accompanjdng recent authorization and 
appropriations bills and directing Amtrak to begin service between New Orleans, 
LA, and Mobile, AL, and between Raleigh and Charlotte, N.C. 

The Amtrak reauthorization recommended federal capital support in the amount 
of $250 million, which is the level we are requesting for the year. This capital, 
which is so vitally important to us, would support, among others, the following: 

— new electric locomotives to augment the fleet, in addition to new high-speed 
trainsets at the end of the decade. 

— overhaul of cars and locomotives that no longer can be delayed. 

— accessibility improvements mandated by the Americans With Disabilities Act 
and waste system improvements required by the National and Community 
Service Act. 

— improvements required to ensure that Amtrak's on-board food service meets 
strict Food and Drug Administration requirements. 

— improvements at Amtrak's maintenance facilities to streamline and modernize 
operations and improve the efficiency of maintenance activities. 

As the Subcommittee is aware, these improvements are essential if Amtrak is to 
provide the capacity it needs to generate new revenues while controlling costs. In- 
deed, it should be no surprise at all that the goal of reducing our operating costs 
simply will be impossible without a significant boost in capital appropriations. Much 
of our revenue growth during the 1980's was due to the increased capacity of new 
equipment, and we believe that capital investment in Amtrak wUl result in those 
types of increases again. 

For the Northeast Corridor Improvement Project, Amtrak is requesting $250 mil- 
lion, the amount authorized in the recent Amtrak reauthorization act. Of this 
amount, $183.7 million will support the ongoing Northeast High-speed Rail Im- 
provement Project. Considerable work is underway in this exciting Amtrak initiative 
and we are extremely grateful that Congress has provided the funding for it during 
this difficult financial period. Ongoing work includes: 

— Environmental impact analysis: The environmental review underway by the De- 

f)artment of Transportation should be completed by early autumn following pub- 
ication of the draft Environmental Impact Statement (EIS) in June and the 
final EIS in September. The review will determine if the electrification of the 
rail line poses any significant adverse environmental impacts, and if so, what 
steps Amtrak will have to take to mitigate those impacts. 

— ^Electrification system: In June 1992, Amtrak awarded a contract to a joint ven- 
ture consisting of Morrison Knudsen Corporation, L. K. Comstock and Spie 
Group to design and construct the electrification system. Thirty percent design 
of the system was completed in February, and initiation of the construction 
phase could begin later this year following completion of the federal environ- 
mental impact analysis and the issuance of permits by Connecticut, Rhode Is- 
land and Massachusetts. 

— ^Track improvements: Amtrak is undertaking various track improvements nec- 
essary to permit up to 150 mph train operations and to reduce long-term main- 
tenance of the rail line. These include installation of additional concrete ties 
and new continuous welded rail, undercutting, and installation of four high- 
speed interlockings to permit trains to switch tracks at speeds of up to 80 mph 
(compared to 40 mph today). Amtrak expects to have significant track work un- 
derway during the spring and summer while a awaiting completion of the EIS 
and subsequent commencement of actual construction work on the electrifica- 
tion system. 


— Signal system: Amtrak is well on its way to completing installation of a modem 
train and speed control signal system to permit high-speed operations between 
New Haven and Boston on both tracks in either direction. Tnis is essential to 
enable the rail line to handle safely and efficiently high-speed passenger trains 
along with slower commuter and freight trains. It also will enable Amtrak to 
remove the existing pole-strung signal line that now runs along the rail line. 

The project is strongly supported in the Northeast by transportation planners, en- 
vironmentalists, and high-speed rail advocates. In addition, this project will contrib- 
ute important regional economic and job growth. Amtrak projects that three-hour 
New York-Boston service will pull between 2.5 million and 3.0 million travelers from 
congested airports and highways onto the train, resulting in important air quality 
improvements and helping to delay the enormous cost of regional airport and high- 
way expansion projects. While there is always some opposition to increased service 
and electrification from some of those living immediately adjacent to the rail line, 
the concerns that have been raised are the focus of review by the federal govern- 
ment and will be addressed in the environmental impact statement. 

Of the funds requested for the project, some $68 million would be used to support 
the acquisition of the 26 new hign-speed Metroliner service trainsets. We currently 
are projecting the trainsets to cost about $450 million. As directed bv the Senate 
report to the fiscal year 1993 transportation appropriations bill, Amtrak will be pro- 
viding the Subcommittee with a report on options for financing the new equipment. 
We wll keep the Subcommittee fully updated on the status of the procurement for 
this new equipment. 

The NECIP request also includes $67 million for improvements south of New York 
on the Northeast Corridor. These include safety improvements to the rail tunnels 
under the Hudson and East Rivers and upgrading of the electric traction and com- 
munication systems. 

The Northeast Corridor is providing the only high-speed rail service in the hemi- 
sphere and, with improved infrastructure and new high-speed equipment, it can be 
a show case for the world. Importantly, it is doing so while at the same time provid- 
ing service to over 65 million commuter rail passengers and numerous freight cus- 
tomers. Americans should be proud of the commitment Congress has made to pre- 
serving and upgrading this enormously important national transportation asset. 


While the past year has brought some disappointments, Amtrak succeeded in set- 
ting the course for what should be a very successful decade. With an improving 
economy and an increase in travel demand, Amtrak revenues should resume the 
high growth rates achieved during the 1980's, provided Amtrak is given the capital 
it needs to invest in new equipment and facilities. We look forward to working with 
the new Congress and Administration in developing a national rail passenger sys- 
tem that meets the country's growing transportation and environmental needs. 

National Railroad Passenger Corporation 1993 Legislative Report 


The National Railroad Passenger Corporation (Amtrak) is required to submit a 
legislative report to the President and to the Congress pursuant to section 302(b) 
of the Rail Passenger Service Act, 45 U.S.C. 548(b). That provision directs Amtrak 
to report on its operations and to recommend desired changes in the law that could 
improve productivity, enable the corporation to operate more efficiently, or reduce 
Amtrak's need for federal financial support. 

Revenue growth over the last ten years has enabled Amtrak to dramatically re- 
duce its dependence on federal operating support. Amtrak now covers about 80 per- 
cent of its operating costs with its own revenues, up from 48 percent a decade ago. 
Given adequate capital investment and a growing economy, Amtrak believes it can 
continue to move toward covering more of its operating expenses. Capital invest- 
ment in the latter part of the 1970's helped Amtrak to average double-digit percent- 
age increases in revenue during the 1980's, allowing revenues to grow at a much 
more rapid rate than costs. Additional capital investment will enable Amtrak to con- 
tinue that type of revenue growth and service expansion. With a healthy infrastruc- 
ture and a stable and fairly compensated work force, Amtrak can play a critical role 
in improving the environment and reducing congestion at tiirports and a on roads 
as we move into the 21st century. , _ , 

On October 27, 1992, Public Law 102-533, the Amtrak Authorization and Devel- 
opment Act, was signed into law. In addition to making changes recommended in 


previous Amtrak legislative reports, this law authorized federal funding for Amtrak 
for fiscal years 1993 and 1994, with a level of $381 million for operating support 
and $250 million for capital investment for each year. Funds for the Northeast Cor- 
ridor Improvement Project (NECIP) were also authorized at $220 million for fiscal 
year 1993 and $250 million for fiscal year 1994. For the current fiscal year, fiscal 
year 1993. Congress appropriated $331 million for operating expenses; $165 million 
for capital expenses; $150 million for mandatory payments; and $204.1 million for 

Amtrak is requesting $381 million in federal operating assistance for fiscal year 
1994. Although this request is an increase in federal operating support over fiscal 
year 1993, the increase is essential in the current economic environment if Amtrak 
IS to operate its existing national rail passenger system and avoid reductions in 
forces and services. Indeed, because of the continued weakness in the national econ- 
omy, and particularly the travel sector, an increase in operating support to $381 
million was contemplated by Congress in the Amtrak Authorization and Develop- 
ment Act. With an improving national economy, Amtrak fiilly expects to continue 
its past success at reducing its need for federal operating support and improving its 
ratio of revenues to costs. 

Amtrak also is requesting $250 million for capital improvements, particularly for 
use in acquiring new equipment and overhauling its existing aging fleet of cars and 
locomotives. Tms capital investment is an essential part of Amtrak's program to 
eliminate its need for federal operating support. Finally, Amtrak is requesting $250 
million under the Northeast Corridor Improvement Project to progress its New 
York-Boston high-speed rail improvement program and to address critical capital 
improvements between Washington and New York. 

There are a number of states that are interested in pursuing new state-supported 
403(b) rail passenger service. Specific states include Wisconsin, Illinois, Nebraska, 
and Iowa in the Midwest; Washington and California in the west; Louisiana, Mis- 
sissippi, Alabama, and North Carolina in the south; and Maine in the northeast. 
Like many new services, these trjiins will suffer operating deficits in the early years. 
As a result. Public Law 102-533 separated funding required to operate new state- 
supported 403(b) service fi-om that required for Amtrak's basic system. With this 
change, Amtrak can continue to minimize its operating losses without limiting the 
ability of states to test the viability of new intercity rail passenger service options. 
Amtrak requests that this provision be funded at the a newly authorized level of 
$9.5 million for fiscal year 1994. 

This report proposes several legislative changes that would permit a more effi- 
cient and less costly operation for Amtrak. First, however, it oners a vision of the 
role Amtrak can play in this country's struggle to stimulate the economy and to 
make long-term investment in the nation's rail infrastructure through the develop- 
ment of high-speed rail and other capital investments in the passenger rail system. 


The nation is at a critical juncture in the development of high-speed rail. Interest 
in and demand for fast rail or magnetic levitation passenger service have never been 
higher, driven by increasing congestion on our highways and at our airports, as well 
as by concerns over the quality of the air we breathe and other environmental is- 
sues. In addition to New York's Empire Corridor and the Northeast Corridor, the 
Federal Railroad Administration has previously identified additional corridors that 
appear to have the potential for successful high-speed rail service. They include 
Washington-Richmond-Charlotte; Chicago to De&oit, Milwaukee and St. Louis; San 
Diego-Los Angeles-Bakersfield-Bay Area-Sacramento; Eugene-Portland-Seattle-Van- 
couver; Tampa-Orlando-Miami. 

At the outset, however, we should distinguish between two different areas of fast 
surface rail passenger operation. The first, which Amtrak has called "high-speed," 
involves the operation of passenger trains at speeds from 100 to not over 150 mph 
on existing railroad tracks and rights-of-way. The second category, "ultra high- 
speed," involves rail or magnetic levitation operations at speeds in excess of 150 
mph; they may operate as fast as 200-300 mph. Ultra high-speed operations will 
a require the construction of an entirely new railroad or maglev guideway and are 
not suitable for operation on existing fi*eight or passenger lines. 

Ultra High-Speed Surface Transportation Systems. — Federal interest in magnetic 
levitation, as well as Bullet train or TGV ultra high-speed steel-wheel rail tech- 
nology, has grown significantly under the Intermodal Surface Transportation Effi- 
ciency Act of 1991 (ISTEA). Since both of these technologies require construction of 
a totally new guideway or roadbed at very considerable capital investment, neither 
has so far been financed nor has construction been started. The two that appear 


closest to fruition are the proposed 15-mile maglev operation between Orlando Air- 
port and International Drive in Florida and the proposed TGV rail operation be- 
tween Houston, Dallas and San Antonio in Texas. Amtrak supports both of these 
projects, as well as others that have been proposed elsewhere. As the only operator 
of intercity passenger service and as a major operator of commuter rail passenger 
service we are well suited to operate and maintain these systems. Amtrak is not, 
however, in a position to provide capital funds for ultra high-speed operations such 
as these. 

High-Speed Rail Passenger Operations on Existing Railroad Rights-of-Way. — ^As 
noted above, these high-speed operations involve maximum speeds in the 100 mph 
to 150 mph range. The Department of Transportation recently identified five exist- 
ing rail corridors, outside the Northeast Corridor, eligible to receive special funds 
to eliminate at-grade highway/rail crossings in order to promote high-speed rail pas- 
senger service on existing freight railroad-owned rights-of-way. Numerous state and 
regional authorities are studying the potential of such high-speed rail operation in 
their regions. In addition, the General Accounting Office is currently completing a 
detailed analysis of the status of high-speed and ultra high-speed rail in the United 
States and is expected to recommend federal actions which could facilitate its devel- 
opment to help meet the transportation needs of the next century. 

In the Northeast Corridor, Amtrak is undertaking an ambitious high-speed rail 
project of its own to reduce the travel time between New York and Boston to under 
three hours. This will be accomplished through electrification of the existing Amtrak 
rail line east of New Haven, improvement of the tracks and signals to permit higher 
average speed and a top speed of 150 mph and reduction in the number of low speed 
segments, and acquisition of a new generation of state-of-the-art American-bvult 
high-speed rail equipment. Amtrak is currently testing a prototype, the Swedish 
X2000, and this Julv another, the German ICE, will also be tested in our Northeast 
Corridor. This Nortneast Corridor project will serve as a test bed for the incremen- 
tal upgrade of existing rail lines located on many of the nation's most densely popu- 
lated transportation corridors. Three-hour New York-Boston service is expected to 
draw up to three million passengers from existing modes of transportation, resulting 
in significant congestion relief and improved air quality in the region. 

Unfortunately, two fundamental issues threaten to undermine the development of 
high-speed rail in this country: funding the significant initial capital infrastructure 
costs of new systems, including equipment, grade crossing elimination, and track 
and signal upgrading- and the potential of liability costs related to high-speed oper- 
ations over existing freight railway lines. Unless these issues are addressed, it is 
unlikely that "high-speecf ' rail passenger service will be able to develop to the extent 
we think both feasible and desirable on potential corridors outside the Northeast 

Funding Both Conventional and High Speed Rail Projects. — Unlike other modes 
of transportation, which are heavily subsidized by dedicated federal funding sources 
such as the Highway Trust Fund, no dedicated capital ftinding has ever been estab- 
lished to support the capital costs of Amtrak's conventional or high-speed rail sys- 
tems. Despite support for rail passenger service, competition for scarce federal re- 
sources in a deficit environment has limited the availability of capital resources for 
Amtrak and has made development of high-speed rail corridor initiatives outside of 
the Northeast Corridor impossible. Similarly, absent federal or state policy that both 
encourages this development and funds substantial capital investment, as well as 
relief of liability concerns, the future of any new high-speed rail project in the Unit- 
ed States remains in question. 

Amtrak has proposed in the past that a mechanism be established to support the 
facilities and equipment costs associated with its existing national rail passenger 
system as well as to provide the initial capital required for equipment and mainte- 
nance for new high-speed rail systems. Last year, H.R. 4414, which would establish 
a capital fund financed by one cent of the current two and one-half cent federal fuel 
tax now allocated to deficit reduction, was introduced in the House of Representa- 
tives with over 30 co-sponsors and was widely supported in the environmental and 
transportation industries. The Bill would have two major impacts. First, under the 
proposal, Amtrak would for the first time have access to a secure capital funding 
source necessary to plan for and acquire modem rail passenger equipment and to 
upgrade and expand its system, resulting in a national system that would be of sig- 
nificantly higher quality than today's system. Second, a funding mechanism of this 
nature is necessary if this country intends to support efforts for the development 
of new high-speed rail corridors. 

As Congress studies ways in which to stimulate job creation, new domestic manu- 
facturing capability, economic development and an improved national transportation 
infrastructure, Amtrak urges it to consider establishment of a dedicated fund that 


will change the nature of rail passenger transportation in this country and at the 
same time create jobs in manufacturing, construction and service industries. For the 
first time, rail passenger service wovud be placed on an even footing with other 
transportation modes, thereby allowing transportation planners to make decisions 
based on the merits of a proposed transportation project and not just the availability 
of federal funding for a particular modal prooosal. In the process, the United States 
could again establish itself as a world leader in the design and manufacture of 
state-of-the-art rail passenger equipment and rail infi*astructure. 

It should be emphasized that such a funding mechanism would and should not 
be the only source of funding for high-speed rail. Indeed, many of the localized rail 
infrastructure improvements that would have to be undertaken to reduce travel 
time should be funded from state transportation programs, particularly those estab- 
lished under the ISTEA. Amtrak believes that the intercity rail passenger trust 
fund would be particularly important as a means of funding equipment capital 
costs — rolling stock that will often operate in several states — and other related fa- 

In this regard, Amtrak supports two recent proposals that would provide an im- 
portant stimulus to the development of high-speed rail systems and a rail equip- 
ment manufacturing capability in this country. The first is an investment tax credit 
that would include investments in conventional and high-speed passenger rail 
equipment. The second would remove barriers on tax-exempt authority for the reha- 
bilitation of rail passenger facilities and equipment. These two proposals would dra- 
matically reduce Amtrak's costs of financing equipment purchases vital to the real- 
ization of high-speed rail in the United States. 

Addressing Liability Concerns. — ^Another fundsimental issue creating a barrier to 
the development of high-speed rail service is the threat of huge damage awards that 
could result from rail accidents. Clearly, the potential cost of an unfavorable jury 
award as a result of a passenger train accident could easily exceed (many times 
over) the revenues received by freight railroads for high-speed operations conducted 
by Amtrak over their lines. 

The factor most responsible for driving up the cost of liability is the ability of ju- 
ries to award punitive damages when a jury determines, often on highly coiilicting 
evidence, that a defendant is guilty of conduct that is more serious than ordinary 
negligence. Courts have rarely set umits on the amount a jury can award to punish 
the defendant, and examples abound of punitive damage awards far in excess of the 
amount required to compensate an injured person for his or her injuries. The threat 
of such awards often causes defendants to agree to large settlements rather than 
expose themselves to the risks of a hostile jury. Indeed, it is for this very reason 
that Congress enacted legislation to make the United States exempt from the award 
of punitive damages in the Federal Tort Claims Act. Regional commuter rail au- 
thorities are also generally protected from such high awards from operations within 
the state, limiting liability concerns and protecting taxpayers against unduly expen- 
sive jury awards because their function is in the public interest. 

It is unlikely that freight railroads — including those that own the trackage in 
most potential high-speed rail corridors — will permit high-speed passenger oper- 
ations without this issue being addressed. The potential exposure to enormously 
costly punitive damage jury awards from passenger train accidents is simply too 
great and too real. In addition to the understandable concerns and expected opposi- 
tion of railroads who own tracks required for operation of passenger services by Am- 
trak and local commuter authorities, the excessive cost of liability exposure contin- 
ues to drain resources from Amtrak and other passenger service providers that 
could better be used to improve safety of operations or expand service. However, 
Amtrak cannot afford to give an unconditional guarantee against risk of liability for 
high-speed service unless it is insulated from the high cost of punitive damages. 

Amtrak will work with the new Administration and the Congress in an effort to 
seek a consensus on the best way to control the liability costs associated with public 
transportation by passenger trains. This issue is extremely important and timely, 
and Amtrak encourages Congress and the Administration to examine the issue. 


Amtrak has identified below several changes that would assist Amtrak in becom- 
ing a more efficient operation. 

Assigning Appropriate Environmental Responsibility. — In 1976, Congress trans- 
ferred to Amtrak title to several properties formerly owned by other reulroads, pri- 
marily the bankrupt Penn Central Railroad. However, neither Congress nor Amtrak 
were aware at that time that these properties would be subject to subsequently en- 
acted federal and state legislation that imposes liability on the title holder for the 


enormous costs of cleaning up contamination and pollution that had occurred prior 
to the transfer of the proper^ in 1976. Amtrak believes that the costs for cleaning 
up pollution that occurred prior to April 1, 1976, should be the obligation of the re- 
sponsible party — ^the owner which caused the pollution. 

Aside from the consideration of fairness, it would be illogical for the federal gov- 
ernment to impose these clean-up costs on federal taxpayers through Amtrak appro- 
priations, particularly if the responsible party can be identified and has the ability 
to pay to clean up the pollution it caused. In the event that the previous owner is 
protected by bankruptcy laws, then Amtrak, and the taxpayers who would eventu- 
ally have to pay the bill, should not be required to pay for cleaning up pollution 
it did not cause on property transferred to it by the federal government. 

Unless some relief is provided, Amtrak may be required by EPA to pay multi-mil- 
lion dollar clean-up costs for a commuter train yard at Paoli, Pennsylvania, which 
was never sought by Amtrak nor used for Amtrak train operations. The PCB pollu- 
tion at this site resulted primarily from operations over several decades by the 
Pennsylvania Railroad, and its successor, Penn Central Transportation Company. 
Any pa5Tnent by Amtrak would have to be appropriated as an addition to its operat- 
ing subsidy. 

Removal of Barriers to Private Financing. — Currently Amtrak is authorized to 
issue various forms of financial obligations, and Amtrak utiHzes this authority in 
connection with private financing initiatives. However, Amtrak must obtain tiie con- 
sent of the Secretary of Transportation to issue even routine obligations with a liq- 
uidation interest superior to the preferred stock held by the Secretary or secured 
by a lien on Amtrak property. Amtrak can compete effectively for funds in the pri- 
vate financial markets only if its ability to incur the necessary obligations is not 
conditioned by a statutory requirement to obtain the Secretary's prior consent. 


Amtrak welcomes the present debate about reinvesting in the nation's infrastruc- 
ture and is eager to work closely with Congress and the new Administration in for- 
mulating a comprehensive plan that will provide immediate economic stimulus 
through job creation, offer long-term economic development, and establish an envi- 
ronmentally sound, energy efficient transportation system. High-speed rail is now 
widely recognized to be an integral part of such a system and, with the suggestions 
included in this report, Amtrak stands ready to develop the full potential of rail pas- 
senger service in this country. 


Senator Lautenberg. Mr. Blanchette, we'd like to hear from you 
now. Again, welcome. 

Mr. Blanchette. Mr. Chairman, Senator Mikulski, thank you 
very much for the opportunity to appear before you. 

My name is Robert Blanchette. I am the chief legal officer of the 
Association of American Railroads, but let me say. Senator Mikul- 
ski, that if you do take that maglev from Baltimore to Washington, 
if you will go by Bethesda, I can assure you that my family will 
be out and waving at you as you munch on your bagel and drink 
your coffee. 

Mr. Claytor is a good, longstanding friend of mine. And I can say, 
in all candor, that I share the desire of everyone in this room that 
I be brief, so you can get on with your questions of him. 

I have my prepared testimony. And I'd ask that it be incor- 
porated in the record of these hearings. 

Senator Lautenberg. Without objection, so ordered. 

Mr. Blanchette. Let me only say that I have spent more years 
than I care to count worrying about the continuation of passenger 
service and high-speed passenger service in the United States. 

I started as general counsel of the New Haven; nursed the 
TurboTrain into creation and extinction. I served, later, as a trust- 


ee of the Penn Central, where we tried to keep the payrolls going 
and maintain Metroliner service. 

I then served as Federal Railroad Administrator and worked 
very closely with Mr. Claytor to bring Amtrak to the commendable 
business basis that it's now on. I later served as the counsel for the 
French TGV interests in the United States. 

So I am delighted to see the way this committee is proceeding 
to look ahead of it and rather than the way it's always proceeded 
in the past, and that has been to look behind and say, "Well, we've 
got to have something. Let's start Tuesday morning at 9 o'clock. We 
don't know what the technology is. We don't know whether it will 
work. We don't know where it's all going to end, but we'll force ev- 
erybody to do it our way." 

I think the deliberate manner in which you have approached it, 
encouraged by Mr. Claytor and his associates, is most commend- 
able. And I do hope it augers a new era and one in which the 
freight railroads of this country would be pleased and proud to be 
a contributor and a participant. 

Thank you, Mr. Chairman. 


Senator Lautenberg. Thank you, Mr. Blanchette. Your complete 
statement will be inserted in the record. 

Statement of Robert W. Blanchette 

Mr. Chairman and Members of the Subcommittee, the Association of American 
Railroads (AAR) is pleased to respond to your invitation to appear today on the sub- 
ject of high-speed rail passenger service. 

Recently, AAR broke new ground with the announcement of a major policy posi- 
tion regarding the railroad industry and the burgeoning high-speed rail evolution 
in the United States. The position was of particular significance in that AAR's mem- 
ber roads include Amtrak, the nation's rail passenger service carrier, and its major 
freight railroads. These roads comprise 92 percent of the route miles operated in the 
United States and they carry over 90 percent of the nation's freight. Apart from the 
Northeast Corridor, Amtrak's passenger trains operate over the national freight sys- 
tem; as a result, close cooperation and coordination are required. In years to come, 
many corridors recommended for high speed development could operate along or ad- 
jacent to intercity railroad rights-of-way. 

In consequence, the recently issued policy statement offers definitive guidelines 
where, in the past, considerable ambiguity existed. 

I attach the policy statement and incorporate it by reference in this testimony. 
It is brief and requires little interpretative comment. I should, of course, be pleased 
to answer your questions. 

In the past, the relationship between freight and passenger service was beclouded 
by historical precedents. Long after passenger service ceased being able to pay for 
itself, its deficit operations were imposed upon the railroads as compelled public 
service obligations. Early experiments into improving rail speeds — the TurboTrains 
on the old New Haven line between New York and Boston, the original Metroliner 
service between New York and Washington on the Penn Central — failed to reflect 
the balance that must be struck between public and private entities in order to cre- 
ate successful partnerships and projects. 

With the formation of Amtrak in the early 1970's, the relationship changed. To 
be sure, there are statutory requirements which affect the relationship between Am- 
trak and the underlying freight system. Nevertheless, the pattern of dealing has be- 
come more businesslike. And that evolution has resulted in better service to the 

Just as high-speed rail is an emergent feature on the American transportation 
scene, the policy statement affords us a new basis for dealing with the relationships 
that can be formed — and with those that cannot be. The new alignment of interests 
is businesslike; it addresses the realities and is promising. 


In conclusion, Mr. Chairman, the Association of American Railroads and its mem- 
ber companies stand ready to assist in the development of any high speed rail initia- 
tive and I welcome your questions. 

High-Speed Rail Passenger and Freight Services: Opportunities for 


executive summary 

(1) Rail transportation offers America significant economic, environmental and 
safety benefits, and is a solution to increasing highway congestion. 

(2) America's freight railroads are ready to cooperate in the extension and ad- 
vance of high-speed rail passenger service, as well as in other rail passenger serv- 

(3) There are distinct types of passenger services: commuter, conventional inter- 
city (Amtrak), high-speed and ultra high-speed. These differences must be under- 
stood because they control the extent to which rail freight and passenger operations 
can operate over tiie same rights-of-way. 

(4) In general, ultra high-speed rail service (over 150 miles-per-hour) cannot oper- 
ate compatibly on the freight railroads' rights-of-way. There are fewer limitations 
on high-speed service (up to 150 mph), but strict safeguards are necessary. Freight 
railroads already accommodate conventional Amtrak service and viable partnership 
arrangements normally are possible. The same is true in most commuter areas. Es- 
sentially, partnership possibilities must be examined on a case-by-case basis. 

(5) The formation of^ partnerships among railroads and sponsors of new passenger 
rail projects will benefit the public. 

(6) The full costs of changes in existing freight rail operations to accommodate 
new passenger operations must be borne by the entity sponsoring the new service. 

(7) Freight railroads must be indemnified and insured against any and all finan- 
cial liability arising from accidents affecting passenger services. 


Greater use of railroads will permit America to alleviate highway and airport con- 
gestion, decrease dependence on foreign oil, reduce pollution, and eliminate injuries 
and fatalities associated with automobile and truck transportation. 

In both urban and rural areas, highway congestion is growing, and many airports 
are taxed well beyond their design capabilities. 

In some areas, railroad rights-of-way offer already assembled corridors that can 
be utilized without the cost and environmental degradation associated with highway 
and new airport construction. 

The public interest favors increased reliance on rail service. Railroads are sub- 
stantially more energy efficient than any form of highway transportation; and en- 
ergy efficiency implies less air pollution. Railroads are far safer than highway to 
move both passengers and freight — and the railroads' safety record has improved 
over the past 10 years. 

For these reasons, policy makers support greater use of railroads to move both 
passengers as weU as freight; similarly, many poUcy makers support the introduc- 
tion of high-speed rail passenger service as a national priority. In fact, the High 
Speed Rail Association nas identified more than 40 candidate high-speed rail cor- 
ridors in the United States and Canada. 

America's freight railroads are ready to cooperate in the advance and introduction 
of high-speed rail passenger service. 

Admittedly, technological and operating differences between various forms of rail- 
roading sometimes impose limitations on the shared use of some track. As America 
moves to increase its use of rail to move both passengers and freight, high-speed 
rail initiatives must be considered on a case-by-case basis to determine their com- 
patibility with existing train operations. 

America's freight railroads are prepared to continue their history of cooperation 
in identifying and solving engineering and operational difficulties, and in assisting 
public policy makers to reach economically sound choices. 


Memy potential high-speed corridors do not appear to have the potential ridership 
economically to justify dedicated rights-of-way, and therefore may seek to share 
trackage with freight operations. 


Launching mixed freight and high-speed rail passenger service on the same tracks 
must, of course, be accomplished without compromising safety or interrupting the 
efiScient movement of freignt. 

The concept of shared use requires an analysis of the four distinct rail passenger 
services that might share rights-of-way with freight railroads: 

(1) Commuter rail provides mass transportation between suburbs and core cities 
and within combined metropolitan areas. Commuter rail is the fastest growing seg- 
ment of raU passenger service, and includes lines operated by regional transit au- 
thorities (New Jersey Transit, South East Pennsylvania Transit Authority, Metro 
North, Long Island Railroad, and Metra) or for such authorities by contract (Am- 
trak, Burlington Northern, Chicago & North Western, and CSX). 

(2) Amtrak is a federally owned company that operates coast-to-coast, primarily 
on rights-of-way owned by freight railroads, and at top speeds ranging from 79 to 
90 mph, depending on the availability of cab signals.^ Apart from its conventional 
trains, Amtrak owns the right-of-way in the Northeast (Jorridor between Washing- 
ton and Boston. Between Washington and New York, Amtrak operates high-speed 
rail peissenger service at speeds up to 125 mph. 

(3) High-speed rail passenger service is well established in Europe and Japan, and 
operates at speeds oi 100-150 mph between cities generally fewer than 300 miles 
apart. Federal funding will permit Amtrak to extend its high-speed corridor from 
New York to Boston. Joining city pairs such as Washington-New York and New 
York-Boston will result in hign-speed service in a corridor of some 500 nules length. 

(4) Ultra high-speed rail passenger service includes the French TGV and Japanese 
Bullet trains that operate at speeds at or above 150 mph. Ultra high-speed rail re- 
quires new rights-ot-way entirely dedicated to this kind of service. It also includes 
transportation systems using magnetic levitation technolom^. Except for existing rail 
lines that are or may be abandoned, it is doubtful that uie freight railroads have 
any assets appropriate for the development of ultra high-speed rail passenger serv- 

In integrating these types of rail passenger services into rights-of-way owned and 
maintained by freight railroads, planners and engineers must focus on four key 

(1) Significantly Different Operating Speeds. — High-speed passenger trains travel 
between 100 and 150 mph, while the speed range of freight trains generally is SO- 
SO mph. This difference of speed constrains the scheduling of freight operations, or 
requires construction of additional track capacity. Accommodation may not be fea- 
sible in all cases. 

(2) Signal Systems. — Generally, signal systems for America's freight railroads are 
visual tracksiae systems. High-speed rail passenger operations require speed control 
and cab signals.^ Most freignt trains, because of their slower operating speeds, do 
not utilize speed control, and not all freight railroads utilize cab signals. Therefore, 
additional investments will be required where high-speed rail can be operated over 
existing rights-of-way. 

(3) Right-of-Way Protection and Grade-Crossings. — High-speed rail passenger op- 
erations require toted raU-highway grade-crossing protection, which generally means 
the construction of highway underpasses or overpasses to prevent highway traffic 
from crossing a rail line at grade. Additionally, high-speed rail corridors may re- 
qviire special protection such as fencing to prevent trespassing and vandsilism. 

(4) Maintenance Requirements. — High-speed rail passenger maintenance require- 
ments are substantially greater than those for freight operations. Obviously, ride 

?[uality is paramount, and for safety purposes more visual inspections are necessary, 
n curves, track elevations vary with speed, and this constraint may further limit 
the areas of compatibihty. 


Because local circumstances and rail transportation goals vary by region, each 
passenger service project must be evaluated on a case-by-case basis. While pas- 
senger and freight operations can be compatible on the same track, the differences 
between freight railroad service and ultra high-speed rail passenger service create 

^ Cab signals allow for continuous display in the locomotive cab of upcoming trackside signals. 
Cab signtus allow the locomotive engineer to acyust speed promptly, rather than waiting until 
the next trackside signal is in view. 

^Cab signals are defined in fh. 1. 

Speed control is a system that detects an overspeed condition by the locomotive and automati- 
cally gives an audible warning. If the locomotive is still not operating within the speed restric- 
tions within 25 seconds, the train automatically is brought to a halt. 


obstacles that cannot be overcome. In other areas, the potential depends upon the 

Recently consummated projects involving commuter rail in Los Angeles, Houston, 
Denver, Salt Lake City and Northern Virginia are evidence that joint-use agree- 
ments can be made that are beneficial to all participants. 

After the facts are known, the nature of the partnership between the fi-eight rail- 
road and the passenger service proponent can be assessed. The partnership must 
be on a business basis. Railroads no longer bear entrepreneurial risk for passenger 
operations and will enter the arena only on a fully compensatory basis. 

It is therefore a matter of equity that the full costs of changes necessary to accom- 
modate high-speed rail passenger service be borne by the public entity sponsoring 
the high-speed rail passenger project. 

Where mixed freight and high-speed rail passenger operations are feasible, leases, 
parallel easements and/or trackage rights agreements should be negotiated in an 
arm's length manner. 

Another matter of importance is liability in the event of accidents. Freight rail- 
roads have no incentive to allow high-speed operations on their lines if they must 
accept potentially catastrophic, uninsurable financial liabilities. Thus, the freight 
railroacfa believe equity demands that they be indemnified against any and all fi- 
nancial liability in the case of passenger operations. 


Senator Lautenberg. Mr. Claytor, I think, to kind of start, we 
may just get a quick summary of what the results have been with 
the 5^000 thus far on the existing railbeds and the character of the 
lines over which it travels. 

Mr. Claytor. There are two phases. The first phase was the en- 
gineering phase to check out the safety, the ability to reach the 
necessary speeds, and the operation. That has all been 100 percent 

We have operated the train at just over 150 miles an hour on our 
track up in New Jersey in the test run. We havQ checked the tilt 
mechanism. And we're now being permitted by the FRA in the 
present market test, to operate at 135 miles an hour, instead of 
just limiting it to 125. 

And, I believe, if we get the trains in this country, they will be 
built in this country. Amtrak is not going to buy anything abroad. 
We import the technology, but we build the trains here. We hope 
that we'll be able to operate at up to about 140 miles an hour. 

It's going to depend, of course, on the ability to accelerate and 
other things like that, that we finally develop in the final model. 
But I'm satisfied that this has been successful. 

Second, we've done a market test to see what the reaction of pas- 
sengers is. So far, it's been almost 100 percent favorable. The pas- 
sengers think it's a great ride. 

My own view is that the somewhat improved running times from 
here to New York are not the big deal. We may get 20 minutes out 
of the schedule, which would be very important if we're talking 
about competing with airplanes. But I think the most important 
factor is that this train rides as smoothly as your desk rides right 
now, not moving. It really does. 

The problem with our existing equipment, all of which was de- 
signed for speeds of basically 80 miles an hour some years ago, be- 
cause there wasn't anything else available, is not really designed 
to ride smoothly at 125 miles an hour. 

So it jiggles and it vibrates and it's noisy. And a businessman 
can't write. That is a great drawback. I think that a lot of busmess- 
men who are still on the shuttle would be on the train, if they 


could ride the X2000 quality of ride everyday. You can have con- 
ferences. You can write. Lawyers can write briefs. And they love 
to get the time to do that on a train without interruption. 

So, I think the market test has been equally good. We plan to 
do exactly the same thing with a competing train that the Germans 
have developed called the ICE, the InterCity Express. And we want 
to test all of the same factors with it, as well as we've done with 
the X2000. 


Senator Lautenberg. You said that there was a savings, a time 
savings, even under the existing conditions. Are you comfortable 
with that reduction in travel time? 

Mr. Claytor. We don't know, until we get the final model and 
we can test it out completely. We'd like to have more power on the 
train than this one has, because we need more acceleration. 

One of the important things is to have a lot of acceleration, so 
that when you slow down — as even the tilt train must do for 
curves, to some extent — ^you can then speed up quickly and make 
up time on the straight. And so there are a number of other things 
that we will be developing. 

I don't think we're in a position to say exactly how much time 
we can save between here and New York with the ultimate model, 
but it obviously will be something significant. 

Senator Lautenberg. Does it presently save time even in its 
demonstration mode? 

Mr. Claytor. We have saved, I believe, above 10 minutes on the 
nonstop run between Philadelphia and New York, for example. 

On tne nonstop runs, we have saved some time, but our regular 
trains, the X2000, is running on a Metroliner schedule. We have 
to leave each station at the same time that's listed in the schedule, 
so we can make up time between stations, to some extent, but not 
in the overall picture. That's the way we're now doing it. 

Senator Lautenberg. OK. By the way, I confirm what the pas- 
senger response has been, since I rode the train. We rode together. 
And it was a wonderful ride. One can write even if one couldn't 
write before one got on it. 

Mr. Claytor. That's right. 

Senator Lautenberg. It's so smooth. But it was an excellent 
ride, very comfortable, and none of the swaying and shaking as you 
made the trip. 

administration's high-speed rail proposal 

Mr. Claytor, President Clinton has called for an investment pro- 
gram of $1.3 billion in maglev and high-speed rail projects over the 
next 5 years. How do you see us allocating these funds in order to 
maximize the expansion of high-speed rail systems across the coun- 
try? Where and how would you see those investments develop? 

Mr. Sullivan. This is the $1.3 billion, Mr. Chairman, that the 
administration is proposing 

Senator LAUTENBERG. Pull the mike closer. 

Mr. Sullivan [continuing]. That the administration has pro- 
posed. We haven't actually sat down and laid out how that money 


should be used from Amtrak's standpoint, but certainly funds 
should be put into high-speed rail corridors, which the administra- 
tion has identified throughout the country. 

We are working with the FRA now to do a demonstration run of 
the X2000 around this Nation, including the high-speed rail cor- 
ridors. And we would encourage consideration of investment in 
some of those corridors. 

New York State is one that we work very closely with. They have 
put in a 1036 application for ISTEA funds to do a demonstration 
project in New York State for high-speed rail. And we're already 
running 110 miles an hour in New York State with our TurboLiner 
trains. And so that could be one corridor in which some investment 
could be made. 

Senator Lautenberg. Do you think that the funds ought to go 
into a couple of high visibility projects or should we use these funds 
to finance several projects across the country? Because you're going 
to have to do some selling, or I'm going to have to do some selling. 
We've tried to get friends from this body and from the House to 
join in. Some of them may not quite see the value in a particular 
congressional district or a State, but we've got something on the 
market here. And that's why I asked that question. 

Mr. Claytor. Well, Mr. Chairman, as I pointed out in my testi- 
mony, a major part of the work that has to be done on a corridor 
has got to come from other than Amtrak and Federal sources. It's 
got to come from highway funds. It's got to come from the local 

For example, I've just learned that the city of Seattle is going to 
put $600,000 right away into rebuilding the Chain Street Station. 
That type of expenditure is going to have to be done in the local 

And my own view is that you can make the greatest progress by 
picking a corridor and worlang on that as the first of the off-cor- 
ridor areas to really develop high-speed, rather than trying to 
spread it over several, because there won't be enough money to do 
very much if you try to do it across the board. 

Now, one of the things we could do is to say, "Which one are you 
going to pick first?" 

We'll pick the one that will produce the most other money from 
the State and the local community. We will not have enough money 
in $l-plus billion over a 5-year period to do all of the work that has 
to be done on these corridors. It must be done locally. And whoever 
comes up with the most money to do the most locally, I would say, 
ought to be given consideration to be the first trial. 


Senator Latjtenberg. It sounds reasonable. You mentioned ear- 
lier that the 2.5 cents that was allocated for deficit reduction would 
be going into highways. I think a small correction there is it's going 
into the highway trust fund. 

Mr. Claytor. Right. There is a highway trust fund. Yes. 

Senator Lautenberg. Right. And, therefore, we might, legisla- 
tively, in the future or through a regulation, be able to call on some 
of those funds for use in rail passenger service. 

68-623 O— 93- 


When we originally drafted the Intermodal Surface Transpor- 
tation Efficiency Act [ISTEA], I proposed making intercity rail eli- 
gible for highway funds. And it passed the Senate, but, unfortu- 
nately, in the conference, it fell off of the table. 

We're going to be here. And we're going to keep working on get- 
ting it back. 

Mr. Claytor. Yes; to me, that's of critical importance, if Amtrak 
is really going to keep going as a vibrant alternate means of trans- 


Senator Lautenberg. I'm with you. Amtrak has worked with the 
private sector to try to finance some of its capital programs. What's 
been the experience to date? Are there any lessons learned that we 
ought to note? 

Mr. Claytor. Well, we are financing a significant amount of new 
equipment, largely, privately. I had said that we ought to try to 
have 50 percent of our new equipment costs paid by a Federsd Ciov- 
emment investment and the other 50 percent raised from private 
sources. Unfortunately, so far, we haven't gotten the Federal Cjov- 
emment investment. We've gone ahead and financed up to 70 and 
80 percent privately. 

The problem is that you've got to service the investment and 
you've got to pay it back. And we don't think we can afford to do 
very much more of that until we can get Federal Grovemment in- 

I think doing more than 50 percent private financing is going to 
put Amtrak in a debt hole that we can't afford. 

potential for high-speed to cover costs 

Senator Lautenberg. In your formal remarks, you stated that 
Metroliner service trains cover over 200 percent of their long-term 
operating costs. 

Mr. Claytor. Most of them do, yes. 

Senator Lautenberg. Do you think it's reasonable to expect the 
100-percent long-term operating result from other high-speed cor- 

Mr. Claytor. I think it would be reasonable to do that. I would 
hope that we would pick a corridor with that potential and that we 
could do that. Remember, that is the long-term operating costs. It 
does not include the necessary contribution to overhead, which in- 
cludes an awful lot of very heavy expenses, especially in the North- 
east corridor. 

Senator Lautenberg. In Amtrak's experience, we've learned that 
it's virtually impossible for any high-speed rail system, at the out- 
set, to fully cover their capital costs without Federal money, public 

Mr. Claytor. Yes. 

Senator Lautenberg. Representations have been made that the 
French TGV system and other European systems will be able to 
fully cover their capital and operating costs. Are those assertions 
ones that hold water? 


Mr. Claytor. Let me comment on that, Mr. Chairman, if I may. 
The capital costs for the TGV construction has already been raised 
by French Government money with bonds. The effort is being 
made, and is successfully being made, to pay those bonds off ex 
post facto. You don't raise the money to start. The government puts 
the money up. And then if the system is successful, you can then 
pay the bonds off. 

Now, France has got a situation that is extraordinarily favorable 
for that, that I'm afraid we don't have. The French Government 
has a national policy that makes a great deal of sense for a country 
the size of France — it's a densely populated country — without any 
domestic source of oil. 

Oil that is used for transportation or anything else has to be im- 
ported. They have developed an electric grid that's entirely owned 
and operated by the government, all nuclear power, all nuclear 
generated power. As a result the power available to pull the elec- 
tric trains — and electrification is very extensive in France — is very 

The attempt to travel by anything else that uses oil is extremely 
expensive. They have taxed the use of oil to the absolute maximum, 
to what would be considered in this country impossible levels, as 
a matter of national policy, because they have to import. 

And they don't want to import it. They want to use domestic 
sources. They want to use their electricity. And the combination of 
making it practically impossible to travel by any other means and 
then making the fuel used relatively cheap, gives you a tremendous 
step up. 

If we prevented people by enormous tax costs from driving their 
own automobiles, which is what happens in France over any dis- 
tance, or from flying airplanes, because air's cost of fuel is much 
bigger than the rail cost of fuel — we would have an additional 

So we don't quite have the situation that they have in France. 
France is unique. The other countries do the same thing, but to a 
lesser extent. France is the best example of a national policy that 
makes it necessary to travel by train. 

And then you make the train travel so superbly good, that it's 
a good thing, too. So it's a combination of the two, but you must 
have the inability to travel other ways, which is one of the things 
that puts it on ice. 

Senator Lautenberg. That's going to be very difficult for some- 
one in our position, I think. 

Mr. Claytor. I'm afraid so. 

Senator Lautenberg. But we can do the positive thing and make 
it so good that it's irresistible. 

Mr. Claytor. Yes. 

Senator LAUTENBERG. And, frankly, I think that can be done at 
a cost that's very competitive with highway construction 

Mr. Claytor. Right. 

Senator Lautenberg. And with improving our national airway 
system. If you've just noticed, there's some sad commentary about 
the investment that we've put thus far in the automated airspace. 
Highway projects, also, traditionally, run way over. 


And we're going to continue to use and build highways in the 
country, as needed, but we've got to make room for a balanced 
transportation network. And that includes an investment in high- 
speed rail, which, on a passenger-mile basis is relatively small, 
compared to the subsidies and encouragement we give the others. 

Mr. Claytor. Mr. Chairman, the point you made is such an im- 
portant one that I'm going to emphasize it, too. The difficulty we 
have is that money assigned for airports and airways is in category 
A. Money assigned to build highways is in category B. 

To try to get the money away from the interests that want to 
spend it on those things is extraordinarily difficult. But, if one 
looks at the big picture, we can actually save money by building 
high-speed rail and not building, as you pointed out, new airports 
that would otherwise be needed, whole new lanes of interstate 

Our whole new interstate highway system is incredibly expen- 
sive. The amount of money that it costs is enormous, compared to 
what it would cost to do what we want to do, but we've gotten in 
the habit of spending that kind of money in those areas. But if we 
look at the overall picture, it is cheaper, as well as more environ- 
mentally sound, to investigate in high-speed rail than to let that 
money continue to go into more new airports and airways. 

The airways are terribly crowded, too; particularly around New 
York, Chicago, and Los Ajigeles. The airways themselves are pre- 
senting a tough problem. 

Senator Lautenberg. If you listen to some of our constituents 
who live on the approaches to the airports, they'd be supporting 

Mr. Claytor. Yes, sir; I'm one of them. [Laughter.] 

Senator LAUTENBERG. In a burst of energy — I, too. 

Mr. Blanchette, before we turn to my colleague, who has been 
very patient — Senator Mikulski, we will get to you in just a couple 
of minutes. I wanted to ask Mr. Blanchette a couple of questions. 

Because we get into the question, and I thought that Mr. Claytor 
handled it very well, of whether or not freight rails can be used ef- 
fectively and whether we can expropriate property here. I mean, 
there has to be some compensation. 

Mr. Blanchette, in your paper on high-speed rail, you state that 
"Railroads will enter the high-speed rail arena only on a fully com- 
pensatory basis." 

One of your member railroads, Conrail, has stated that it must 
be completely reimbursed for any capital improvements, mainte- 
nance and overhead costs associated with passenger service re- 

Isn't it true that track improvements for high-speed rail, how- 
ever, will also enable freight trains to move faster and deliver their 
products quicker than their competitors? 

Mr. Blanchette. Well, I think there may be instances in which 
that is the case. And in that fortuitous circumstance, I would an- 
ticipate there would be a joint venture type of arrangement where 
each would contribute according to his resources and each would 
derive benefit according to his enhanced benefits from the joint 


So I would say that that may be a different use of words, but I 
think that both the Conrail and the general policy statement at- 
tached to my testimony are compatible. 

Senator Lautenberg. Well, then, I don't think — let me not preju- 
dice any point of view here, if I can avoid it. Should the freight rail- 
roads be completely reimbursed for enhancements that also benefit 

It seems that they ought not to be looking to passenger rail serv- 
ice to make improvements for the national good that otherwise 
would not be made, while expecting to get a return that would oth- 
erwise not be there. 

Mr. Blanchette. Mr. Chairman, I think that history will reflect 
that there have been few, if any, subsidies that have worked in the 
direction of the Government's to the freight railroads in respect of 
passenger service within the last 50 years. 

So I don't think that's much of a fear. I think that we ought to 
concentrate our efforts — and Mr. Claytor stated the instances quite 
well — on instances that are kind of beyond the passenger and 
freight railroads to control; for example, grade-crossing protection. 

We know that very few trains have been known to leave the 
tracks in search of an automobile. And consequently, that is really 
a highway problem. And I think that there has to be a contribution 
there that doesn't enhance freight service and it doesn't enhance 
passenger service. It's just a reality of life. Just as you don't have 
truck lanes going across the runways at LaGuardia Airport, you 
shouldn't have automobiles traversing the rights-of-way of high- 
speed rail without some kind of protection. 

So that's something that doesn't benefit the rail mode. It benefits 
the highway mode. So we can take a whole series of things, such 
as single lane and protection and things like that way that don't — 
that enhance the public interest and don't enhance private interest. 

Senator Lautenberg. I think that there's a risk, a high risk, to 
extending that argument, because there are lots of people who 
would say, "OK. If that's a highway enhancement, stop sending 
trains over these things and just let's not have the delays that are 
caused by rail service going through there." 

So is there any operating or maintenance costs for high-speed 
rail for which the freight railroads will not be looking for com- 
pensation? Can you think of any areas? 

Mr. Blanchette. We will not be looking for any compensation. 
I think that — I'd hate to have an exhaustive list of examples, but 
where a freight railroad system is planning, for example, to im- 
prove its dispatching or its cab signal capacity, and the high-speed 
rail system will also require that in those corridors, there could be 
a useful dialog as to combining the investment. 

You wouldn't want the rail mode to make an investment that's 
incompatible with the passenger mode. In those instances where 
rail freight and rail passenger would both serve and benefit by an 
enhancement, then I think there could be a useful joint venture in 
those areas; heavier rail, welded rail. 

So I think that there are instances, without enumerating them, 
where there could be, but I must say, Mr. Chairman, that it be- 
muses me somewhat the concept that anybody would consider that 
the solution to the highway grade-crossing problem would be to 


have the train stop, because if you stop the trains which carry 38 
percent of the intercity traffic in this country, you're going to talk — 
you will not be able to see New Jersey while standing in it. 

Senator Lautenberg. We agree. Ajid that was a counter to your 
commentary about the fact that rail crossings were a highway 
problem and not a rail problem. I mean, you can't shift the burden 
of responsibility that way. 

It's good for everybody if we can eliminate those crossings. And 
that's what we ought to do. 

Mr. Claytor. Mr. Chairman, could I mention just one thing? The 
way I'd like to put this, in general terms, is that the freight rail- 
roads should be reimbursed for their net costs. 

Now, I can give you an example. Suppose we were going to put 
in an automatic train control system that would enormously benefit 
the railroads, that they don't have the money to do, weren't going 
to do, but it sure would be good for them if it were done. We would 
pay for that. 

That's a net plus, but there's some other things that are net 
minuses. I balance them off and look at this as a net — anything 
that's net costs to the railroads has got to be reimbursed, but you 
have to balance that against benefits that they need, that they can 

Now the main benefits they can't use, for example, just putting 
cab signals in, would be of no use at all to the freight railroad. It 
would enable us to run faster under the FRA rules, but that, alone, 
is not an improvement that would save them any money. It would 
not do any good. 

So when I say net, I mean we have to look at what is a real ben- 
efit to the railroad versus the real cost of the railroads and then 
net it out. And that would be the way I'd try to approach it. 

Senator Lautenberg. I think, also, it's important to note that if 
the Federal Government hadn't designated or granted millions of 
acres for rail access, there wouldn't be a freight railroad. So there's 
very few freebies or subsidies that aren't shared along the way. 

Senator Mikulski, thank you for your patience. 

Senator Mikulski. Thank you, Senator Lautenberg. Actually, my 
line of questioning was going to go to freight railroads. 

In Maryland, and particularly the Baltimore-Metropolitan area, 
freight rail is really bread and butter in terms of jobs and keeping 
core industries going. One day's delay of freight delivery to Greneral 
Motors Mini-Van, now, with their new ontime delivery, could be 
very costly to the line as a whole. 

So we're very conscientious about the need to maintain dual 
use — ^what I call dual use compatibility — ^between passenger and 
freight, which then takes me to my question to you, Mr. 
Blanchette, just to be sure I understand your comments to the 

Under the existing system that we now have in the Northeast 
corridor, there is what I think you would regard dual use compat- 
ibility. Am I correct in that? 

Mr. Blanchette. Yes; in which the freight fragment is 

Senator Mikulski. When I say dual use, I mean between freight 
and passenger. 


Mr. Blanchette. Yes; in which the freight aspect of it is increas- 
ingly decreasing and to the benefit of all, in my judgment, so that 
it is not minimal, but it is dwindling and will continue to decrease, 
but it is shared use at present. 

Senator MiKULSKl. Now, but there are issues continually around 
safety, where there is dual use, not only in terms of the scheduling, 
the switching — we all remember the tragedy between Amtrak and 
Conrail, which was both human and technological — but also these 
things at crossings, where there is both a highway and rail inter- 
section, is this correct? 

Mr. Blanchette. Well, between — on the Northeast corridor, be- 
tween New York and Washington, if memory serves, there are no 
longer any unprotected crossings. So the right thing has been done. 

Senator Mikulski. Right. But, nationwide, where we are 

Mr. Blanchette. Well, nationwide, you're right, Senator. There 
are hundreds of 

Senator Mikulski. But when we talk about public investments 
that generate jobs, that save jobs and save lives, this railroad 
crossing issue would be a significant one. 

Mr. Blanchette. It's a significant problem for the freight rail- 
roads alone, much less one in which there's high — and I concur 
completely in Mr. Claytor's analysis that at speeds in excess, I 
think he said, of 100 miles an hour or whatever the threshold 
speed was in his testimony, there ought not to be unprotected 

Senator Mikulski. Yes; but when I'm talking about dual use 
compatibility, my question's now related to the existing system, not 
the high-speed system and not the ultra high-speed. 

Mr. Blanchette. OK. 

Senator Mikulski. Which then, also, to continue that, does the 
freight rail community see any benefits — just to be clear what you 
said to the chairman — to itself, if America moves to the high-speed 
framework, which we are doing; existing tracks, modernization of 
the tracks, new types of cars themselves, which has been amplified, 
do you see benefits to yourselves for really rapid delivery of the 
same product? 

Mr. Blanchette. I think it is more — each railroad can speak for 
itself, obviously, but I think they see more of a business oppor- 
tunity, just as railroads are getting into various aspects of com- 
muter service, where they once eschewed any thought of stajdng in 
that area. Across the country, right around here with MARC and 
with the Virginia Expressway System, you see railroads looking at 
an opportunity 

Senator MiKULSKi. But that would be diversification. I'm talking 
about the actual delivery of freight, 

Mr. Blanchette. I think that probably 

Senator MiKULSKl. Will we look forward to rapid freight trains? 

Mr. Blanchette. Yes; I think. Senator, that in the corridors that 
I can think of, I haven't heard an awful lot of discussion that it 
would benefit the freight service. That does not diminish the enthu- 
siasm which the freight railroads have for increased use on a con- 
tractual basis with the passenger service. The freight railroads al- 
ready do a fairly good job on increased service. 


Now, there's obviously going to be a case where with the addition 
of passenger service, there may be an enhanced opportunity, but 
I'm saying that that has not been the key that turns this policy 

It was an opportunity, a business opportunity, to see greater ex- 
ploitation of the right-of-way, and an opportunity to show that the 
railroads, indeed, can be significant contributors to the reduction of 
pollution and congestion in urban and rural areas. 

Now, in areas where, as Mr. Clajrtor points out — and he is a 
skilled and excellent negotiator and I can see he's already started 
the initial negotiating initiative — in areas where a rail freight serv- 
ice would be materially enhanced by an improvement to the right- 
of-way, we see now what the opening gambit would be in the nego- 
tiation. And I think it's not an unreasonable gambit. 

Senator Mikulski. Well, I don't know about negotiations and 
gambits. What I do know is, I think the Congress is committed to 
the fact that we need two types of rail service in the United States 
of America. 

One to move passengers, and the other to move freight. Both are 
important to our economic development and our economic security. 
What we're looking forward to is what are those things that would 
have dual use compatibility and also attitudes from the private sec- 
tor, as well, that would be trying to look ahead with us, as to what 
those opportunities are and how the private sector would want to 
participate in them. And that's what the chairman was getting at. 

That's what I'm getting at. We want to have freight service, but 
it can't always be looked at that it is a cost to or an obstacle to 
and/or inconvenience about. And whether, in addition to diversifica- 
tion, if they've looked forward to those benefits themselves, rec- 
ognizing issues around safety, the need to invest in new types of 

Mr. Blanchette. Well, I think, Senator, that your point is well 
taken. And I saw among the chief executive officers who partici- 
pated in the formulation of this policy, no negative views or no re- 
luctance to endorse this policy. In fact, it was unanimously en- 
dorsed by the freight railroads and by Amtrak. 

So there wasn't any reluctance to advance the breakthrough 
that's announced in this policy statement. 

Senator Mikulski. I'm glad to hear it. 

Mr. Chairman, I think that kind of — other questions I have will 
be for the next panel, if I can stay. 

Senator Lautenberg. Thank you very much, Senator Mikulski. 
I couldn't agree more than with your statement about — do we have 
to search for ways to have our rail service enhanced, whether it's 
for freight rail or for passenger rail? And they ought not to be at 

And when I talked about compensation, I was talking about com- 
pensation that results as a matter of increased expense for the 
freight line. There are going to be benefits, if we enhance the rails 
for the use of high-speed rail. And they ought not to be done to in- 
convenience the freight lines. 

So, but the worst thing I can imagine would be a tug-of-war be- 
tween the two interests, because a result would not be for the long- 
term well-being of our country. 


Mr. Claytor. And Mr. Chairman, our joint announcement some 
weeks ago, in which all of the presidents of the leading railroads 
to the AAR and myself jointly announced that we are going to be 
working together. 

Two-thirds of our passenger miles come from operations over the 
freight railroads. And, roughly, two-thirds of our revenue does the 

So we are working day in and day out with the freight railroads. 
My experience has been that the only way you're going to do this 
in a way that benefits both parties is we both have to work to- 
gether. We're a team. 

And I think we've developed with the freight railroads a team- 
work approach on, not only our conventional service, but the an- 
nouncement that we are both going to work together to find a fair 
way to put high-speed rail on appropriate corridors. 

And I think that's the key thing, but we do have to do this in 
a cooperative venture. In the early days of Amtrak, we spent all 
of our time litigating with the freight railroads about one thing or 
another. The result was chaos. You can't do that. We have to be 

We were running trains over the same railroad tracks. We've got 
to work together on it. We are now doing that. And I think we're 
going to be able to do it in high-speed rail. And I think that there 
will gdways be differences of opinion. We argue about things. We 
negotiate various arrangements, but together we've got a common 
objective. We've got to stick to that common objective or neither 
one of us is going to get any where. 

Senator Lautenberg. I couldn't agree more. I thank you both. 
We have additional questions which will be submitted for the 
record. We have other witnesses. And at this point, we'll say thank 

Mr. Claytor. Thank you, Mr. Chairman. 






High-Speed Rail Association 
statement of joseph vranich, executive director 

Texas TGV Corporation 
statement of larry salci, president 

URS Consultants, Inc. 
statement of roger faulkner 

Florida Department of Transportation 

statement of charles h. smith, manager, high-speed rail 

introduction of witnesses 

Senator Lautenberg. Mr. Ken Mead, Mr. Joseph Vranich, Mr. 
Larry Salci, Roger Faulkner, and Charles Smith. 

In order to try to move this along, we're going to get somewhat 
more strict about the time for opening statements. And we'll try to 
follow on with shorter questions from the Senators, as well. 

In the following order, we'd like to hear your testimony — 5 min- 
utes. The light will indicate when we've used our time. And I would 
ask you to stop promptly at that point. 

First, let's hear from Ken Mead. 


Mr. Mead. Thank you, Mr. Chairman. Accompanying me is Dr. 
Frank Mulvey, who heads our work in the high-speed rail area. 

We have a very straight forward message today. First, I'd like to 
establish a frame of reference. There are a number of approaches 
to high-speed ground transportation. Not surprisingly, the cost in- 
creases with speed. Incremental improvements to existing rights-of- 
way, such as those planned for the Northeast corridor, will allow 
speeds between 125 mph and 150 mph, at a cost of about $2 to $10 
million per mile. 

Speeds achievable with TGV type of technology, that is between 
150 mph and 200 mph, require new, dedicated, and reasonably 



straight rights-of-way, raising the cost to between $10 and $20 mil- 
lion per mile. 

Maglev systems, which are the top tier, require very expensive 
guideways, which further raise the cost to between $20 and $60 
million per mile. 

For a hypothetical system of about 200 miles in length, achieving 
speeds greater than 150 mph, will range between $2 and $12 bil- 
lion, depending on the approach used. 

A number of systems have been proposed. These proposals in- 
clude the five corridors designated for grade-crossing improve- 
ments, as well as the French TGV style systems, as in Texas, and 
maglev, as proposed for the route between Anaheim and Las Vegas. 

These proposed systems plan to rely mostly on private financing. 
None of these projects have moved much beyond the planning 

We've met with bankers at a number of the major investment 
houses to discuss financing, Mr. Chairman. And this is, I think, 
probably the most important part of my message today. 

They were virtually unanimous in their view that no high-speed 
ground transportation systems will be built in this country without 
a greatly increased Federal commitment. 

There are three key risk areas. The first is that there is no U.S. 
experience with high-speed ground transportation. And there was 
a general view that at least in the near term, revenues will not 
cover capital costs. 

Second, these are very large-scale projects which could be subject 
to construction delays and cost overruns. 

Third, there are major political risks in permitting, obtaining 
rights-of-way, securing environmental clearances, and the like. 

If the Federal commitment were to increase, it could take a num- 
ber of forms. The Federal Government could provide financial as- 
sistance during the high-risk initial development and construction 
phase of the project. This could take the form of equity capital or 
loan guarantees to induce private investment. 

The Federal Government could also exempt high-speed ground 
transportation bonds from the State volume cap on private activity 
bonds thereby, putting high-speed ground transportation on the 
same footing as airports and seaports. I note that there's recent 
legislation on this point. 

Direct loans, through a revolving loan fund, is another option. 
That has been recommended by the recently issued report from the 
Infrastructure Investment Commission. 

Value-capture is another technique. The value-capture relies on 
the use of the expected increase in property values and the use of 
those revenues to repay government investment in a project. 

Because the size of these projects is going to be enormous, some 
combination of financing techniques will be necessary. 

How much the Gk)vemment should invest in high-speed ground 
transport depends on the expected benefits. The Government must 
balance these benefits, of course, with the likely cost of the sys- 
tems. Unfortunately, key data are lacking. And this makes it very 
difficult to forecast traffic diversion, particularly, from the auto- 


This is a very important issue, because the data would bear di- 
rectly, not only on ridership forecasts and how many people will 
pay to ride high-speed rail, but also what impact high-speed rail 
will have on congestion, air quality, and energy consumption. 

A quick word on where we are in terms of the Federal commit- 
ment. Most of the Federal Government's effort has focused on the 
Northeast corridor; $2.5 billion to date, and about $1.3 billion to go 
by the turn of the century to achieve speeds of 150 mph. 

There has been some planning money appropriated under the 
ISTEA legislation that was enacted by the U.S. Congress. For ex- 
ample, $30 million has been authorized, for eliminating grade 
crossings in five potentially high-speed corridors. 

Also, the ISTEA authorized, but Congress did not appropriate, 
$725 million for a national maglev prototype development program. 
And President Clinton has proposed a $646 million program dedi- 
cated to maglev and high-speed rail. Because of the confusion re- 
garding Clinton's proposal, we were not sure whether the $646 mil- 
lion was in addition to the authorized $725 million. 

In summary, we see three tiers of questions facing the Congress, 
Mr. Chairman. First, should the Federal commitment be increased? 
Second, by how much? And third, what type of technology and in 
which corridors? 

Thank you. 


Senator Lautenberg. Thank you, Mr. Mead. Your complete 
statement will be inserted in the record. 
[The statement follows:] 

Statement of Kenneth M. Mead 

Mr. Chairman and Members of the Subcommittee: We appreciate the opportunity 
to testify on the issues surrounding the introduction of high-speed ground transpor- 
tation (HSGT) in the United States. Our work to date on HSGT is based on meet- 
ings and discussions with members of the financial community with experience in 
financing these types of projects, Amtrak and other railroad officials, HSGT project 
planners, and other transportation analysts. We have analyzed the available data 
on the progress of HSGT both in the United States and abroad, and to gain some 
first-hand experience, we have ridden on several of the new systems, including the 
Swedish X2000 train. Our work is being done in response to interests expressed by 
both the Senate and House Appropriations Committees and the House Committee 
on Energy and Commerce. 

By high speed we refer to systems capable of sustained speeds of at least 125 
mph.^ Advanced high-speed rail systems, such as the French TGV and the Japanese 
Shinkansen, have carried millions of passengers over the years at speeds between 
130 and 185 mph, and magnetic levitation (maglev) technology is being developed 
in Germany and Japan that could carry passengers safely and efficiently at speeds 
over 250 miles per hour. Progress toward increased speeds in the United States has 
been limited to incremental improvements to existing Amtrak routes, especially in 
the Northeast Corridor, where Amtrak's Metroliner trains achieve 125 mph speeds 
over some stretches between Washington and New York. (See fig. 1). 

Policy choices with significant financial impacts will have to be made before 
HSGT is developed in the United States. High speed systems, like those of Europe 
and Japan, will be very expensive to bviild and no organization, thus far, has been 
willing to bear the risk of investing in HSGT in America. 

^ In the United States, most Amtrak trains travel at speeds below 79 mph, and often average 
only 50 to 60 mph. 


Figure 1: Relative Top Speeds of High Speed Ground Transportation Systems 

Mils* P*r Hour 



































Typ«t o( High Sp«*d Qround TraniporUtlon Syttami 

Our basic points are as follows: 

— The United States could pursue several levels of technological improvements to 
make HSGT a reality here. Each higher level of improvement would result in 
greater speed, but onl^ at a greater cost. Generally, incremental approaches 
that build on the existing rail infrastructxire would allow increased speeds of 
up to 150 mph and would incvu" the lowest capital cost. This has been Amtrak's 
strategy in the Northeast Corridor. More advanced approaches, such as the 
Frencn TGV or maglev, are much more costly and are perceived as being more 
risky by potential investors. Because these systems are untried in the U.S. envi- 
ronment, there is uncertainty about whether they could generate revenues suffi- 
cient to cover operating costs, repay lenders, and produce an acceptable return 
on investment. 

— In addition to Amtrak's efforts, more than a dozen HSGT projects have been 
proposed around the nation, but none has obtained private mnds to begin con- 
struction and federal support has been minimal. These proposals have tried, un- 
successfully, to rely lar]gely on private capital to fund system construction, but 
our review shows uiat it is unlikely that any major HSGT projects will be built 
if developers must rely primarily on private capital. Until HSGT systems are 
proven to be successful in the United States or until the public sector decides 
that there are sufiBcient public benefits to justify underwriting some of the risk, 
private financing sufficient to launch a major HSGT project will not be forth- 

— If HSGT systems are to be built in the United States, increased federal leader- 
ship and financial commitment will be necessary. To date, federal involvement 
has concentrated on underwriting Amtrak's program to bring about incremental 
improvements in the Northeast Corridor and to authorize funds for further re- 
search on HSGT. The financial community believes that federal commitment, 
especially through substantial financial assistance for the initial HSGT systems, 
is necessary to leverage significant amounts of capital fi-om the private sector 
and to help establish public-private partnerships to develop additional HSGT 


— Both private and public investors require realistic forecasts of potential rider- 
ship. Private investors need the data to project expected returns on investment. 
The public sector requires better data to judge the appropriate commitment of 
public resources. The federal commitment to HSGT must be proportional to the 
expected net social benefits, such as congestion relief and reduced pollution, 
that could result from investment in HSGT. Accurate estimates of the size of 
these benefits also depends on reliable forecasts of ridership. However, some 
data, especially for auto travel, are lacking and without these data accurate es- 
timation of system use and social benefits is problematic. In addition, many so- 
cial benefits are not easy to monetarize making it difficult to compare benefits 
with costs. While the data can never be perfect, there is room for considerable 
improvement. Given the size of the investments at stake, the data bases and 
benefit estimates should be improved. 

I would like to turn to a more detailed discussion of these points. 


Federal participation in developing HSGT in the United States depends on the an- 
swers to some basic questions: who? what? where? and why? Who will elect to ride 
such systems (and how much will they pay)? What kind of system should we build — 
rail or maglev? Where should such systems be built — in densely traveled corridors 
or between airports? Why should the federal government be involved — what are the 
social benefits from such systems? These questions are not easy to answer, and they 
are interrelated. Where we choose to build a system will help determine what tj^pe 
of system we should build. Who chooses to ride the system can help answer what 
public benefits might accrue. There is one other question, however, for which we do 
have at least a qualitative answer, and that is how much will it cost to bring HSGT 
to America? Quite a bit; the exact amounts depend on which technologies are cho- 


Each of the technology options performs differently and carries a different price 
tag. Not surprisingly, the cost of these options increases as the design speed in- 
creases. According to a recent estimate, the capital costs of achieving high speed op- 
erations for a hypothetical 200-mile-long system ranges from $500 million for incre- 
mental improvements to existing tracks that could bring speeds up to 110 mph to 
more than $12 billion for a maglev system that might allow speeds of more than 
200 mph. (See fig. 2.) 


Figure 2: Relative Costs of High Speed Ground Transportation 

70 Millions o( Dollars Per Mil* 

Typ«t of High Sp*«d Ground Trinaportatlon 

I I High Esllmate 

1^^^ Low Esllmate 

The lower cost option would achieve higher speeds by improving the existing 
track, roadbed, and signal systems, and eliminating grade crossings. According to 
the National Research Council, the cost to upgrade an existing rail line to allow 
speeds of about 110 mph would be about $2.7 million per mile.^ For most Amtrak 
routes outside the Northeast Corridor, this would represent a significant improve- 
ment over current conditions. Speeds on most Amtrak routes are restricted to below 
79 mph, and on some sections of track, considerably below 79 mph. To achieve 
speeds of up to 150 mph while continuing to use existing rail infrastructure would 
require electrification of the rights-of-way and construction of additional track to 
permit high-speed passenger trains to pass slower freight and commuter trains. The 
capital cost to achieve speeds approaching 150 mph could range up to $10 million 
per mile. 


To date, most of the improvements in rail operating speeds have been in the 
Northeast Corridor. Metroliner trains travel over electrified rights-of-way between 
Washington and New York at speeds up to 125 mph. North of New Haven, Amtrak 
must use diesel locomotives and speeds are further reduced due to the numerous 
curves between New Haven and Boston. Amtrak is currently experimenting with 
the Swedish X2000 tilt train. Tilt trains can traverse curves at higher speeds and, 
if adopted, can help shorten trip times significantly between New York and Boston 
after Amtrak completes its electrification of that part of the corridor. The X2000 is 
a part of an "incremental" approach to attaining higher speeds, and it is such incre- 
mental improvements that Amtrak plans for other corridors around the nation. By 
using technologies like the X2000 and continuing to eliminate grade crossings, im- 

2 Transportation Research Board, Special Report 233: In Pursuit of Speed-New Options for 
Intercity Passenger Transport (Washington: National Research Council, 1991). 


proving signalling, and making other improvements Amtrak hopes to be able to offer 
150 mph service in the Northeast Corridor by the end of the century. 

The only major segment of the U.S. rail network owned by Amtrak is the North- 
east Corridor. Outside of the Corridor, the railroad network is owned by freight rail- 
road companies. Amtrak recently reached an agreement with the nation's freight 
railroads over the issue of liability for accidents on freight railroad-owned tracks 
where high-speed trains would share the track with freight trains. The agreement 
recognized the need to protect freight railroads from the consequences of accidents 
involving high-speed passenger trains, but does not remove the numerous logistical 
obstacles to operating freight and high-speed trains on the same track. Assuming 
that high-speed passenger service would be relatively frequent, there would be seri- 
ous interruptions to freight operations. In the Northeast Corridor, some freight traf- 
fic is limited to night operations to accommodate passenger trains that operate over 
the same track during the day. Other costs, such as those for maintaining rights- 
of-way, will be higher if heavier freight trains share the track with high-speed pas- 
senger trains. Regardless of who bears the added costs from joint operation, the na- 
tion's privately owned freight redlroads will, understandably, examine the impact on 
their operations before acquiescing to high-speed passenger trains over their tracks. 



Proposals to go beyond incremental improvements have been advanced by groups 
other than Amtrak. While Amtrak is often viewed as a potential operator of these 
systems once built, it has been independent state and regional interests that have 
advanced HSGT thus far. For HSGT service over 150 mpn, new track, new rights- 
of-way, or entirely new guideways will be required. The French TGV, for example, 
operates mostly over a dedicated right-of-way and achieves speeds above 180 mph. 
Tnese types of systems reduce raU travel times so much that they might be competi- 
tive with air travel for many trips shorter than 400 miles. Both the French and the 
Japanese recorded substantial traffic shifts from air to raU following the introduc- 
tion of high-speed rail systems.^ The National Research Council estimated that cap- 
ital costs for a TGV-type system could exceed $3.5 billion for a 200-mile system, or 
more than $17 million per mile. Alternatively, lanes could be added to expand ca- 
pacity of interstate highways. Additional lanes would serve multiple users not just 
intercity travelers — although not at such high speeds. However, there are problems 
with widening highway rights-of-way that could frustrate such efforts to expand ca- 
pacity. In some places where congestion is greatest, the highway is already bounded 
by development making expansion impossible without acquiring more land — often 
an expensive proposition. 

A maglev system could allow even faster speeds, but also would require an en- 
tirely new guideway infrastructure, making maglev more costly than all high-speed 
rail alternatives. Although successfully tested at 320 mph in Japan and 270 mph 
in Germany, no high-speed maglev system has ever been placed in revenue service. 
In fact, the Germans have not chosen to introduce maglev on major routes, but have 
proceeded, instead, to introduce a new high-speed train that uses conventional rail- 
way track — the Intercity Express or ICE trains. A maglev system could cost between 
$20 million and $60 million per mile. The National Research Council estimated a 
cost of $6.4 billion for a 200-mile maglev system, or about $32 million per mUe. 
Some advocates of maglev believe that it is the coming technology and that only 
maglev can offer Americans such a dramatic improvement in speed and service that 
they will switch to HSGT in large numbers. Other supporters believe that if the 
United States chose to develop its own version of maglev, the investment could gen- 
erate new jobs and develop a new high-tech industry. Still, the cost of building a 
200-mile system to serve one route could be twice as high as the $3.1 billion it cost 
to build the new Denver Airport, and while the maglev route serves only one cor- 
ridor, the new Denver Airport connects Denver directly to hundreds of cities around 
the nation and the world. Like highways, however, fiirports face serious restrictions 
on new construction and expansion. 

Any HSGT systems that operate at speeds over 150 mph require dedicated rights- 
of-way except in urban areas, where new rights-of-way are difficult to obtain. There- 

^ European nations and Japan have historically followed policies that favor rail over air and 
auto travel for intra-national trips. Air fares are much higher and investment in the highway 
systems came later than in the United States, and so rail has preserved a higher market share 
than in the United States even in markets not served by high-speed trains. Nevertheless, the 
rail share increased significantly in French and Japanese markets after high-speed service was 


fore, a major part of the cost of such a system will be right-of-way acquisition. As 
reported last year in our study of HSGT right-of-way issues, both high-speed rail 
and maglev systems will require new, relatively straight, and level rights-of-way 
compared with existing rail rights-of-way to eliminate safety and passenger discom- 
fort problems.'' 

Operating and maintenance (O&M) costs of HSGT systems are also likely to be 
high, relative to those for conventional rail for several reasons. Track and guideways 
must be maintained to very high standards, and safe operation of HSGT requires 
expensive signal and control systems. One an£dysis reported that track maintenance 
costs are 5 times higher for 125 mph trains than for trains traveling 60 mph. The 
O&M cost per train mile for a maglev system has been estimated to be about 20 
percent higher than that for a high-speed rail system. However, as there is no U.S. 
experience with operating HSGT systems, O&M costs in the U.S. operating environ- 
ment can only be roughly estimated until a system is actually put in operation. 


A general unwillingness to commit private and public financial resources to Amer- 
ican HSGT projects is the principal reason why no such projects have progressed 
beyond the planning stage. On the basis of the projects and analyses that we re- 
viewed and on discussions with members of the financial community who have expe- 
rience with major infrastructure investment projects, we believe that unless the fed- 
eral government underwrites a large part of the risk and assumes a larger role in 
HSGT financing, these projects are urdikely to be built. HSGT development will re- 
quire a long-term commitment of capital and resources. Because there is little assur- 
ance that these systems can earn a positive return on invested capital, they are con- 
sidered to be very risky investments by private investors. 

Private investors will review HSGT projects to determine if the potential returns 
on investment are commensurate with the level of risk. Equity investors want a cor- 
respondingly high rate of return, as high as 30 percent according to some analysts, 
for investing in a high-risk venture. Providers of debt-capital also want to be certain 
that the system will generate revenues to pay the interest and repay principal. 
Moreover, while the discussion below focuses on the risks to private investors, there 
are also risks associated with public investments. Ridership and revenues may be 
less than projected leading to larger operating subsidies and to fewer social benefits. 
PubUc funds that could have gone for other projects or to deficit reduction would 
be lost. 

According to members of the financial community to whom we spoke, there are 
several sources of risks for these projects that explain why private investors are un- 
willing to go it alone. 

First, because of the lack of experience in the United States with HSGT, ridership 
and revenue forecasts majy be exaggerated. The financial community typically dis- 
counts demand forecasts for demand-sensitive start-up projects, like toll roads and, 
presumably, HSGT projects. Furthermore, projects are usually expected to generate 
revenues sufficient to more than cover their debt service needs. For some projects, 
these "coverage factors" can be as high as 150 percent of actu£il debt service needs 
or greater. These relatively high levels of coverage are desirable because they can 
offset various uncontrollable events that could afiect demand and revenues. Unless 
the financial community believes that HSGT projects can generate enough revenues 
to both cover debt service and provide a return on investment commensurate with 
the risks, it is unlikely that private capital will be forthcoming. 

Financial analysts with whom we spoke agree that in the near term most HSGT 
projects will not generate enough revenues from their operations to pay off their 
capital debt, malang such projects unattractive to debt investors. Moreover, new 
technologies on the horizon, such as tiltrotor and teleconferencing, may compete fa- 
vorably with all forms of transportation including HSGT. 

Second, the large scale of proposed HSGT projects adds to the risk. The larger 
the project, especially when new technologies are being introduced, the greater the 
likelihood that delays and cost overruns will undermine the financial feasibility of 
the project. Generally, projects that issue debt to raise capital will need to begin re- 
paying the debt by a specific date. A concern of potential lenders is that unless ade- 
quate revenues or other cash are available on that date, the project could go into 
default. Furthermore, system start-up delays cause interest to accrue on outstand- 
ing debt. 

* High-Speed Ground Transport: Acquiring Rights-of-way for Maglev Systems Requires a Flexi- 
ble Approach (GAO/RCED-92-82, Feb. 10, 1992). 


Third, large-scale projects like HSGT systems face a number of political risks, in 
part, because many jurisdictions at different levels of government will be involved 
in issuing the permits and other clearances needed to build and operate the system. 
In our review of the problems associated with acquiring rights-of-way for HSGT 
projects, we vmcoverea numerous constraints. For example, the proposed maglev 
route between Anaheim and Las Vegas would face scrutiny by the Bureau of Land 
Management because of possible disruption of the habitat of several endangered 
species. These are not the only risks associated with investing in an HSGT project, 
but they are representative of the concerns of the financial community. 

Obtaining either equity or debt financing from private investors may prove prob- 
lematic for developers of HSGT projects. Investments of equity in a project are often 
needed before commercial lines of credit can be obtained or investment-grade debt 
can be issued. However, equity investors often demand high rates of return and a 
relatively qviick payback. Because HSGT projects will have lengthy development and 
construction periods, it will be difiBcult to provide the timely payback that equity 
investors want. Therefore, HSGT developers may find it difficult to obtain private 
equity for capital purposes. By contrast, bond buyers are generally interested in a 
secure investment witn a guaranteed return over time. Debt instruments are typi- 
cally rated on the probability that they can be paid off by the project. Equity in tne 
project can bolster confidence in the project's chance of success and thus enhance 
the ability to raise capital through debt instruments. 


Members of the financial community familiar with large-scale projects told us that 
in order for major HSGT systems to be built, the federal government must make 
a greater commitment. They stated that until the federal government assumes a 
major role in HSGT development, thereby reducing the perceived investment risks, 
private capital generally will not be available. Government involvement in financing 
could take a number of forms such as providing financial and administrative assist- 
ance and equity capital at an early stage, providing loan guarantees, exempting in- 
terest income from taxation, establishing revolving loan funds, and participating in 
value capture strategies. However, any federal financial involvement would need to 
be evaluated to determine its budget and deficit impacts. If the federal government 
concludes that a greater commitment to HSGT is warranted, it could help lower the 
risk to private investors in several ways. 


The federal government could provide financial and administrative assistance dur- 
ing the initial development and construction phase of HSGT projects. This stage is 
typically a high-risk period for new infrastructure projects because many time-con- 
suming regulatory and financial obstacles must be overcome. FurtJier, several ana- 
lysts suggested that the federal government is the enti^ best suited to be the prin- 
cipal provider of equity capital during the early phase of an HSGT project. The early 
phase---between designing the system and commencing construction — is often the 
most risky period. Pnvate financial markets want the project to have equity in it 
before lines of credit or other private assistance will be extended. The federal gov- 
ernment could also provide financial assistance through loan guarantees and tax ex- 

Provide Loan Guarantees. — The federal government could become a guarantor for 
different components of a project. Under the Intermodal Surface Transportation Ef- 
ficiency Act of 1991 (ISTEA), a loan guarantee program for HSGT was authorized 
as an amendment to the Railroad Revitalization and Regulatory Reform Act of 1976, 
although no appropriations for new commitments have been made under this pro- 
grtun. According to HSGT proponents, contingent loan guarantees such as these 
could induce pnvate debt and equity investments in HSGT. Similarly, the federal 
government could become a guarantor of revenues for HSGT projects. Such guaran- 
tees could be particularly helpfiil during the first few years of operations, giving the 
Sstem time to bmld up ridership and revenues. Again, with sucn guarantees benind 
e project, an HSGT developers ability to secure private financing would likely be 

Extend Tax-Exempt Status. — The Congress could extend tax exempt status to debt 
issued to build HSGT systems. HSGT proponents believe that tax-exempt status is 
critical if these systems are to be bmlt. Tax-exempt bonds are an attractive mecha- 
nism for raising capital because bond issuers pay a lower interest rate than on tax- 
able debt, thereby lowering the cost of capitaL While the current tax code does not 
restrict the amount of private activity, tax-exempt bonds issued for mrports and wa- 


tenvays, it restricts tax-exempt bond issues for high-speed rail. The limitation on 
these bonds was imposed in 1986 in response to a proliferation of such bonds for 
private, profit-oriented projects, and the resultant loss of revenue to the federal gov- 
ernment. However, some financial community representatives believe that HSGT, 
even if developed and operated as a private venture, would clearlv serve a public 
purpose. The Congress last year considered but did not enact legislation to remove 
this restriction for HSGT. The Congress has again taken up removing the restriction 
on using tax-exempt bonds to finance HSGT development. However, the benefits to 
HSGT will need to be weighed against the potentisil impact on the federal deficit 
as well as against other initiatives that may also seek to receive favorable tax treat- 

Create a Revolving Loan Program. — Direct loans, through a revolving loan pro- 
gram, is another option for a federal role in HSGT development. Some members of 
the financial community, as well as the Infrastructure Investment Commission, 
have suggested that the federal government should establish its own revolving loan 
fund for infi-astructure development or help fund state-level funds for the same pur- 
pose. To capitalize such a fund would require a large initial appropriation or several 
smaller appropriations over the span of several years. HSGT projects, however, are 
likely to be so large that only a portion of their financing needs could come from 
such a fund, particularly since HSGT will have to compete with other infrastructure 
projects. However, loans from such a fund would presumably carry below-market in- 
terest rates. Thus, they could help lower the cost of capital for HSGT and enhance 
their financial feasibility. 

Use Value-Capture to Fund Parts of Projects. — Finally, value capture is a way for 
other government entities to assist the development of HSGT. Under a t3rpical value 
capture strategy, a local or state government would provide funding for components 
of an HSGT system, such as a station, in anticipation that property values would 
increase in the vicinity of the HSGT property after the system is in place. Rising 
property values could generate increased tax receipts or other assessments which 
could offset the state's initial expenditure. In this sense, the HSGT system "cap- 
tures" the benefits of higher future property values, and uses them as a source of 
funds. In the past, value-capture strategies have been used successfully to provide 
revenues for several urban transit systems. An innovative value-capture-type fi- 
nancing strategy was used in California, where a new publicly administered but 
mostly privately financed toll road has imposed fees on new construction in the 
areas that will presumably benefit fi"om the toll road. These fees will be used to help 
leverage private capital investments to build the road. 

For HSGT, however, value capture could be used to finance specific components 
of a system, but could not be the major funding source. The plan to build the 
Tampa-Orlando-Miami HSGT system initially relied on a strategy similar to value 
capture as the major source of finance, but found that it would not generate suffi- 
cient funds and has since revised its financial strategy. Furthermore, it may take 
several years to generate any revenue fi"om value-capture strategies, since land 
value increases and development around an HSGT system might not occur until the 
system's construction or operation is well underway. 

Nevertheless, there are a number of options for increased government involve- 
ment at all levels in financing HSGT projects. Furthermore, it seems likely that 
some combination of these options woiild be necessary to bring an HSGT project 
from concept to reality. Different financing methods could be used at different "risk 
points" during a project's development period. For example, the Texas HSR Corpora- 
tion plans to use different financing tecnniques in various pheses of its plan to bring 
TGV-style service to the "Texas Triangle" cities of Dallas, Houston and San Antonio. 
The plan includes using initial equity contributions, tax-exempt debt backed by 
long-term letters of credit, and after operations and revenues become steady, a pub- 
lic stock offering.^ Such a combination of approaches spreads, and therefore mini- 
mizes, risk over time and across investors and creditors, thereby making investment 
in such a project more plausible. 

Regardless of how creative high-speed rail developers are with their financing 
plans, it seems apparent that the private sector alone will not assume all, or even 
a substantial share of, the risks associated with HSGT development financing. 
Many states and localities are experiencing financial difficulties, with little, if any, 
funding resources available for financing high-risk, large-scale infrastructure 
projects. While the federal government is also faced with making difficult spending 
choices, it is the only entity capable of underwriting the sizeable risks associated 

^The system was originally scheduled to begin service in 1998. Obstacles, including financial 
ones, have seen the schedule slip and the start up date is now uncertain. 


with HSGT projects. Therefore, the federal government would need to assume a 
major role in financing HSGT if such projects were to be built in this country. 


The federal government has provided assistance to Amtrak to improve speeds on 
the Northeast Corridor. Amtralc has spent about $2 billion to date and expects to 

Send an additional $1.5 billion to complete improvements which it expects will 
low 150 mph speeds by the turn of the century. 

The federal government has also sponsored the National Maglev Initiative (NMI), 
which is a 3-year effort to assess the potential role of maglev in the United States. 
Funding for the NMI, has totaled $36 million, according to figures provided by the 
Federal Railroad Adininistration (FRA). The report is due in the Spring of this year. 

In 1991, as part of the ISTEA, the Congress authorized $725 million for a Na- 
tional Maglev Prototjrpe Development Program. The Congress has not appropriated 
any fiinds for this program for fiscal year 1993. 

In fiscal years 1991 and 1992, the Congress appropriated $3 million for HSGT 
studies in specific corridors, contingent on matchmg funds. Additionally, FRA has 
used some of its R&D funds to develop safety regulations for HSGT systems. 

President Clinton often offered HSGT as an example of the kind of infi-astructure 
spending that the nation should be making. The new administration has now pro- 
posed to spend $646 million between 1994 and 1997 above and beyond what is al- 
ready been appropriated for HSGT. Whether this increased spending will signal a 
change of commitment to the investment community remains to be seen. 


Federal resources are scarce and becoming increasingly so. At a time of national 
belt- tightening, all new projects must be given careful scrutiny to ensure that they 
are cost-effective. If the federal government decides to invest in HSGT, it will need 
to be certain that such investments are cost-effective over the long term — that is, 
that investing in HSGT is an efficient way to capture desirable social benefits. 

In order to determine the amount of federal resources that might be committed 
to developing HSGT in the United States, the Congress and the Clinton administra- 
tion need good data to determine what social benefits might result from such sys- 
tems. But, the data often do not exist or can not help determine whether HSGT is 
the best way to achieve these benefits. HSGT must be evaluated in comparison to 
alternative approaches. Airport congestion could be relieved by building HSGT or 
it could be relieved by adding another runway. Air pollution emissions could be re- 
duced by diverting auto traffic from congested highways onto HSGT or stricter emis- 
sions standards could be adopted. 

In order to determine the relative cost-effectiveness of HSGT, better estimates of 
potential demand are needed, but there are gaps in the necessary data. The data 
are either too aggregated or do not exist at aJl. For example, diverting auto traffic 
can be an important source of public benefits, but there are virtually no data on 
intercity auto travel that could be useful for forecasting demand for HSGT. In addi- 
tion, there are problems with translating social benefits into comparable monetary 
terms. For example, how much is it worth to remove a ton of automobile-generated 
£iir pollution? How does the fact that the reductions occur over a widespread, often 
non-urbanized area affect the estimates of the benefit? How reliable are the esti- 
mates of the relationships between emissions and health costs? How much, if any- 
thing, beyond the current market price of energy is reduced reliance on foreign pe- 
troleum worth? 

While there are many problems with calculating the potential social benefits from 
investing in HSGT systems, the federal government could consider investing in de- 
veloping better data on which to base demand forecasts for HSGT. Although data 
collection can be costly, the cost will be relatively insignificant compared with the 
size of the investment at stake. Gaining improved prior information on the likely 
success of an investment in HSGT seems to be the prudent course of action. 


The decision to increase spending for HSGT is an important one that must be 
made at a time when efforts to pare down the size of the federal deficit are making 
discretionary dollars increasingly scarce. Yet, without an increased federal commit- 
ment, HSGT will not advance in the United States. 

If the Congress decides to increase the federal role in developing HSGT, the Con- 
gress will need to balance the resources it provides between continued support for 


incremental improvements by Amtrak and underwriting the risks of more ambitious 
projects through forging public-private partnerships. The Congress will also need to 
decide where to target the resources it makes available for specific HSGT projects. 
This will require a fuller understanding of the benefits and costs of individual 
HSGT projects, and gaining that understanding requires, in turn, reasonably reli- 
able data. Better information will help the Congress as it sets priorities for tiie fu- 
ture of HSGT in America. 

Mr. Chairman, that concludes our testimony. We would be happy to respond to 
any questions you might have. 


Senator Lautenberg. Mr. Vranich, you're next, please. 

Mr. Vranich. Thank you very much, Mr. Chairman, Senator Mi- 
kulski. We appreciate the opportunity to appear here today. 

I represent a diverse coalition. We're now named the High-Speed 
Rail/Magi ev Association, because interest in that has been growing 
so much. And our coalition is united in supporting both steel-wheel 
and maglev train systems. 

We have a membership that includes railway suppliers, aero- 
space companies, labor unions, electrical utilities, universities, and 

At the outset, on behalf of our board of directors and members, 
I want to express our appreciation to you, Mr. Chairman, for your 
work to improve Amtrak's Northeast corridor. 

I'm convinced that the demonstration of the X2000 train, which 
is, indeed, drawing rave reviews, is an outgrowth of your commit- 
ment to improving conditions for America's beleaguered travelers. 

And, also, Senator Mikulski, your support of the maglev program 
has been an inspiration to many of our high-technology members. 

We also are pleased that President Clinton has gone on the 
record that he would bring about the development of high-speed 
rail. And this is a new day for us. 

Our submission for the record is not the usual testimony, but it's 
what we call our blueprint for high-speed rail, which we hope you 
will put in the record in its entirety. 

Senator Lautenberg. It's noted. 

Mr. Vranich. The document represents specific proposals to in- 
duce private funding into high-speed rail, public-private partner- 
ships, as well as, of course, sharing the cost through public moneys. 

There are a number of tools that could be used or a menu of 
things, so to speak, like tax-exempt bond financing, a guaranteed 
obligations program, investment tax credits, diversion of defense 
funding and, of course, stable capital funding for Amtrak's North- 
east corridor. 

And I want to offer a specific plug for Senator Bob Graham's bill, 
introduced on Thursday, S. 438, a bill to put high-speed rail tax- 
exempt bonds under the same rules as airport tax-exempt bonds. 

I think the most important sentence I could say here today is 
this: Technology is not the issue. We could build these high-speed 
trains, but to bring them from concept to reality, we need to elimi- 
nate the institutional and the financial roadblocks. 

The interesting thing about our proposals is that the rec- 
ommendations for high-speed rail include only those programs com- 
parable to aviation or highway programs already in place or that 
have served those modes for many, many, many years. 


And also for the record, high-speed rsdl systems can create jobs. 
And I believe that representatives from the Ohio or Texas or Flor- 
ida projects and so forth could better tell that story than I. I think 
this is a way to create jobs in an environmentally benign way. 

If we really want to be serious about reducing oil imports in this 
country, then we ought to get to this high-speed train business. 

If we are serious about providing safer travel, we ought to be 
building high-speed train systems. The most startling virtues of 
these trains is that in Japan, the Japanese bullet trains have oper- 
ated for 27 years; in France, the TGVs for 10 years. Together, 
they've carried almost 3.5 billion passengers. And, Senator, there's 
never been one, not one, passenger fatality. 

If the United States built transportation systems based on safety 
considerations alone, we would have high-speed rail up and run- 
ning in some of our busiest travel corridors. 

Prior to concluding, I do want to, more or less, adlib one point 
here. I'm a very strong supporter of Amtrak. Those of you who 
have read my book, "Super Trains," know I gave no quarter in 
making the case for Amtrak, but, for the record, I do want you to 
know that I get disturbed when I hear Amtrak appear in a public 
forum and make a couple of comments like they made today. 

I have a high regard for Graham Cla3^or. ^d in a couple of in- 
stances, I think he's being not as well advised as he could be. I be- 
lieve that it should be noted for the record that the French TGV 
system, the original line, was built with private funds, indeed, 
through the Grovemment guaranteed loan process. It should be 
known that the second system was built 85/15 percent — 85, private 
funding; 15 percent public. 

I'm saying this, not because I think these same formulas will 
work in the United States, but it plays into the opponents of high- 
speed rail hands when the chairman of Amtrak sits here and lets 
people assume that the whole system, the TGV system, was built 
totally with private funds. And that was an inference that people 
in this room could have drawn. 

I'm also becoming increasingly concerned about the term "high- 
speed rail" for trains as slow as 100 miles an hour. We had trains 
doing 120 miles an hour, 110 miles an hour, back in the 1930's. 
And I think, while I'm in favor of incremental improvements to 
Amtrak, totally in favor of it, I would like to point out that the Am- 
trak organization is now starting to take the term "high-speed rail" 
and water it down. It's watering it down to where I fear it might 
become a low goal kind of thing. 

And what I'm worried about is — ^well, let me put it this way: I 
used to be the Boeing public affairs director in Washington, DC. 
And with Boeing, I never argued for small airplanes for DC-3's to 
land on. No; you argue for big airplanes. When I was with the 
roadbuilders, we didn't argue to build small two-lane country 
roads. We argued to build new interstates, the best. 

And I, as long as I am president of this organization, will define 
high-speed rail as trains capable of traveling at sustained speeds 
of 150 miles an hour and above. True high-speed rail, we can make 
a true contribution to removing people out of our congested avia- 
tion system. 


And I think, with that, Fll simply conclude by thanking you, 
again, for the opportunity to be here. Our members, coast to coast, 
are gratified with your interest, Mr. Chairman. 


Senator Lautenberg. Thank you very much, Mr. Vranich. We 
have your prepared statement and it will be made part of the 

[The statement follows:] 








President Bill Clinton has gone on the record during 
the campaign that he would bring about high-speed rail to 
the United States. The Clinton Administration could assist 
many states and industries that now are in various stages of 
planning high-speed rail systems. 

This paper presents a Federal Action Plan, with 
specific proposals outlined as follows: 

I. Financial and Institutional Incentives 

A. Divert Defense Funding 

B. Tax-Exempt Bond Financing 

C. Guaranteed Obligations Program 

D. Investment Tax Credit 

E. Amtrak Corridors/Stable Funding 

II. Long-Term R&D and Competitiveness Issues 
A. Fund Maglev Program 

This plan is comprehensive. The recommendations for 
high-speed rail include only those programs comparable to 
aviation or highway programs already in place or that have 
served those modes for many years. The Administration could 
consider highlighting the following rationales for 
undertaking a high-speed rail initiative: 

• The need for more transport capacity 

• Job Creation 

• Environmental Benefits 

• Energy Savings 

• Reduction in Pollution 

• Land Savings 

• Safest Form of Travel 

President Dwight Eisenhower is known for establishing 
the Interstate Highway System, President John Kennedy, the 
Apollo program. It's time once again for visionary 
thinking. Bill Clinton has a golden opportunity to be known 
as the President who launched the latest transportation 
innovation in the United States -- high-speed, high-tech, 
super-safe trains. 



President Bill Clinton went on the record repeatedly 
during the campaign as being in favor of a high-speed rail 
program for the United States. He presented the public with 
sound reasons for such a program, saying: 

"I strongly support the development of high-speed rail 
because we need to ensure that we possess a 
transportation system that boosts American productivity 
and international competitiveness." 

"Passenger rail service creates jobs, conserves energy 
and provides an opportunity to avoid airport expansion. " 

"I think we ought to take defense cuts and invest them in 
building an economy of the 21st Century, including . . . 
high-speed rail in particular. A half a million 
Americans would ride fast trains every day if we built 
them ... It will create an unbelievable number of jobs 
and really help our economy. Also, as you know, it will 
be good for air pollution out there in California and on 
the East Coast." 

"A Clinton Administration will use a portion of 
transportation funding and possibly funds transferred 
from defense to create a high-speed rail network between 
our nation's major cities. Bullet trains in five major 
corridors could serve 500,000 passengers a day at speeds 
up to 3 00 miles an hour." 

vice President Al Gore, in his book Earth In The Balance, 
wrote, "We should be emphasizing attractive and efficient 
forms of mass transportation .... New and improved forms of 
mass transit, like the magnetically levitated trains should be 
enthusiastically encouraged." 

The incoming Administration could help numerous programs, 
which generally fall into three categories: 

Planning For High Speed Rail Construction 
Calif ornia -Nevada 

Northeast Corridor 


High Speed Rail Studies Planned/Underway 

Illinois /Wisconsin/Michigan 
New York 
Washington State 


Interest in High Speed Rail Starting 
North Carolina 
South Carolina 


The High Speed Rail/Maglev Association is the umbrella 
group concerned with all forms o£ high-speed surface 
transportation. We offer a wide range of information and 
capabilities because of the broad nature of our coalition. 

Growth in transportation will be so significant that the 
United States will spend hundreds of billions of public and 
private dollars in the next 20 years on expanded transport 
capacity. There is no doubt about that -- all the experts in 
all of the modes agree. The question becomes not will we 
finance transport infrastructure, but how. 

Technology is not the issue. To bring high-speed train 
programs from concept to reality, we need to eliminate 
institutional and financing roadblocks. The Federal 
government needs to put equity into the nation's 
transportation policies. 

The Intermodal Surface Transportation Efficiency Act 
(ISTEA) passed in November, 1991, contained provisions that 
could advance development of high-speed train systems. 
However, they are "enhancing" rather than "enabling" 
provisions. More needs to be done. 

What follows are ideas provided for the benefit of the 
incoming Administration and the benefit of the public, ideas 
distilled from years of research, planning and other activity. 

High-speed rail can lead the way for a new era in public- 
private investment in infrastructure. With that theme in 
mind, the following proposals are oriented to stimulate 
existing private-sector and state and local initiatives. 
These proposals include: 

I. Financial and Institutional Incentives 

A. Divert Defense Funding 

B. Tax-Exempt Bond Financing 

C. Guaranteed Obligations Program 

D. Investment Tax Credit 

E. Amtrak Corridors /Stable Funding 

II. Long-Term R&D and Competitiveness Issues 
A. Fund Maglev Progrsun 


I. Financial and Institutional Incentives 

A. Divert Defense Funding 

The concept of committing defense dollars to investment 
in infrastructure could measurably aid development of high- 
speed rail systems. Such funds could be the basis for direct 
grants to bring high-speed systems from the drawing boards to 
reality. Exeunples of activities that could qualify for such 
grants could be (a) environmental assessments; (b) route 
planning; (c) right-of-way acquisition; (d) preliminary and 
final design plans; (e) construction of fixed facilities and 
rolling stock; and (d) personnel training. 

B. Tax-Exempt Bond Financing 

There is a role for significant private funding for high- 
speed train systems throughout the United States. Projects 
planned in California, Nevada, Texas and Florida all were 
predicated on substantial private investments. However, the 
risks to private investors were too great to go it alone 
without some financing incentives, such as tax-exempt bonds. 
For private financing to play any role, however, a minor 
change is needed in the tax code whereby private-activity 
high-speed rail tax-exempt bonds (which already exist) would 
be put under the same rules as airport tax-exempt bonds. 

Senator Bob Graham has been exceptionally active in 
support of this provision, with support from Senator Arlen 
Specter and others. 

This measure would facilitate the investment of private 
capital into high-speed rail and maglev system construction. 
The bill would remove the requirement that an allocation under 
the state volume cap must be obtained for 25 percent of the 
bonds issued for such systems. Congress already has 
recognized the importance of tax-exempt bonding authority for 
the development of airports, seaports and high-speed train 
systems. However, the cap allocation applies only to high- 
speed train systems. Since many states are already operating 
near their volume caps, the 25 percent limit serves as an 
illogical barrier to the use of tax-exempt bonds to build such 
systems . 

Specifically, an amendment to Sec. 146 of the Internal 
Revenue Code is needed to remove the requirement that an 
allocation under the state volume cap must be obtained for 25 
percent of the bonds issues for high-speed train systems. For 
most high-speed systems, this 25 percent constraint proves too 
restrictive due to the initial capital requirements for such 
systems . 

No transportation technology in the U.S. has developed 
commercially without meaningful Federal participation. Tax- 
exempt financing will facilitate the investment of private 
capital and will provide a limited but effective form of 
Federal involvement to help bring about high-speed train 
systems . 


C. Guaranteed Obligations 

We ought to begin the process that will permit use of 
Federal guarantees for high-speed rail obligations, permitted 
under ISTEA last year, to provide a positive signal to the 
investment community that private financing is welcome in 
high-speed rail infrastructure. Consideration also should be 
given to expanding the program by establishing a guaranteed 
loan program insured through a Federal Infrastructure 
Insurance Corporation. 

High-speed rail planners are often encouraged to learn 
how the overseas experts financed their high-speed lines. Let 
the record show that most of the French TGV lines were 
financed through loans guaranteed by the French government. 
That means private financing from the United States and many 
other countries flowed into France to help build important 
infrastructure. American institutions are earning a profit 
from loans to the French. Let's let America permit American 
investors to do here what foreign governments let American 
investors do overseas. 

Section 1036 of ISTEA made high-speed steel-wheel 
projects eligible for loan guarantees under the Railroad 
Revitalization and Regulatory Reform Act. When Congress 
adopted this provision, it recognized that the Federal 
government has an important role to play in assisting 
developing technologies in attracting private investment. It 
is for this reason that for many years government guaranteed 
loans were available under certain conditions to airlines for 
the purchase of new aircraft. 

Beginning in fiscal 1993, high-speed steel-wheel planners 
should be in a position to apply to the Secretary of 
Transportation for loan guarantees for projects to develop or 
establish high-speed rail facilities. We request that the 
spadework begin in the appropriations process to bring ISTEA 
guarantees to the point where they can be utilized while 
consideration is given to establishment of a Federal 
Infrastructure Insurance Corporation to issue additional 
guarantees . 

Such efforts will send a strong signal to the investment 
community that the Federal government welcomes their 
participation in building an important future component of the 
U.S. transportation infrastructure. 

D. Investment Tax Credit 

As a further inducement to private investment in high- 
speed surface systems, the Federal government should provide 
an investment tax credit for new rail technology. The credit 
could be determined by the purchase price of new equipment 
placed in service during a tax year. It should be noted that 
investment tax credits exist in the aviation industry. 


E. Amtrak -- Corridors /Stable Funding 

Amtrak remains capital starved. Many corridors in the 
nation are not yet quite ripe for all-new high-speed lines, 
but the public deserves the benefits that come from making 
carefully selected "incremental iinjrovements" to Amtrak. 

In particular, it's time to provide adequate capital to 
Amtrak' s Northeast Corridor Improvement Prograun. Amtrak 
requested $272 million in Fiscal 1993 to invest in the entire 
Northeast Corridor, with $220 of that dedicated to 
electrification and other badly needed work between Boston and 
New York. Its appropriation, however, will total $204.1 
million, only $168 million of which is for the Boston-New York 
portion of the route. A Fiscal Year 1993 supplemental 
appropriation could quicken the pace of this Amtrak program. 

We support Amtrak in its goal of initially reducing 
Boston-New York travel time to three hours or less. We agree 
with Amtrak Chairman Graham Claytor's recent testimony before 
Congress that "Completion of the improvement is of utmost 
importance to transportation in the entire Northeastern part 
of the country. ... In an era of $5 billion urban highway 
tunnel projects and $15 billion airports, support for a $1.2 
billion program that is projected to pull three million riders 
off other congested transportation modes makes sound 
transportation and financial sense." 

On a related point, the Bush Administration designated 
five routes around the nation as having potential for high- 
speed service, designations that were required by the 
Intermodal Surface Transportation Efficiency Act. The law 
allocates $30 million over five years to improve safety at 
highway-rail grade crossings and permit train speeds to be 
increased moderately ,on short segments of the routes. For the 
record, the routes are: A three-pronged corridor from Chicago 
to St. Louis, Milwaukee and Detroit; Mi eoni- Orlando -Tampa ; 
Washington-Richmond-Charlotte, N.C.; San Diego-Sacramento via 
Los Angeles and San Francisco; and Eugene-Portland-Seattle- 
Vancouver, B.C. The Boston-New York-Washington and New York- 
Albany-Buffalo routes were also given "special status," 
although that meaning was left unclear. 

On a broader note, to make meaningful progress, we simply 
must find a way to put Amtrak capital funding on a more stable 
basis. We draw attention to a recent bill, H.R. 4414, 
introduced by Representative Al Swift, to put some rationality 
into the Amtrak investment process. He proposes that one 
penny a gallon from the 2.5 cents Federal motor fuels tax now 
collected for deficit reduction be redirected to Amtrak. 

We do have a concern that the bill's language regarding 
funding from the "Intercity Rail Passenger Capital Improvement 
Trust Fund" contains ambiguous language regarding non-Amtrak 
high-speed systems. We believe this measure should apply to 
high-speed rail projects undertaken independent of Amtrak. To 
fail to do so would be to ignore the many public and private 
efforts over the last decade to build high-speed systems. It 
has been estimated that approximately $60 million of primarily 


non-Federal investments have been made to bring high-speed 
rail planning to the point it has reached today. Indeed, such 
efforts have been thwarted by the lack of Federal involvement. 
Let us not now penalize the pioneers who, for two decades, 
forged ahead while Washington ignored high-speed rail; let us 
encourage those pioneers . 

II. Long-Term R&D and Competitiveness Issues 

A. Maglev Proqrcun 

The nation needs to adequately fund the development of 
high-speed magnetic leviation technology to insure a brighter 
technological future for domestic industry and labor. 

We believe the Federal Railroad Administration/Army Corps 
of Engineers' National Maglev Initiative should be brought to 
a speedy close so that the focus of maglev efforts will be 
toward selecting the national maglev prototype pursuant to 
Sec. 1036, ISTEA. We urge that the $45 million authorized in 
ISTEA be appropriated in 1993 for the purpose along with the 
$26 million appropriation for the National Maglev Initiative. 
Only with a Federal program of research and development in 
maglev, just as we have aeronautic R&D, can we as a country 
hope to meet the transportation challenges of tomorrow. 

We are concerned that the Bush Administration zero-funded 
the maglev prototype program for Fiscal 1993. This will 
result in a one-year delay in the issuance of the program's 
first phase Request For Proposals. It is the position of the 
Association that it is not necessary for the National Maglev 
Initiative to issue its final recommendations prior to the 
issuance of the maglev prototype program RFP. Our members 
advise us that American industry is prepared to meet the 
schedule for the maglev prototype program established in 

The nation should, in conjunction with industry, support 
development of a high-speed magnetic levitation train system. 
A maglev program is vital to our long-term technological 
prowess. We hope the Congress will give full support to 
Senator Daniel Patrick Moynihan and others in their drive to 
develop a maglev program. 

The Congress, in passing ISTEA last year, recognized that 
the private sector cannot by itself invest the substantial 
sums necessary to produce a maglev technology in the United 
States. ISTEA offers a necessary financial stimulant to U.S. 
Industry to establish expertise to insure long-term American 
competitiveness. We supported that legislation and we support 
the full funding of the program \inder the timetable 
established by Congress. 


This Action Plan is comprehensive. It should be noted 
that the recommendations for high-speed rail include only 


those programs comparable to aviation or highway programs 
already in place or that have served those modes for many 
years . 

What would help the public debate on this topic is to use 
the same terms to describe government budgeting for aviation 
and rail. A double standard is applied in the appropriations 
process where funding for rail is labeled a "subsidy." 
However, that same appropriations process identifies general- 
fund subsidies to aviation as "investments," "obligations," 
"capital items," or "line items." This double standard put 
advocates for high-speed rail at a disadvantage. 

We call for fair treatment by labeling expenditures for 
rail in the same way, or by labeling all general-fund 
appropriations for aviation as "subsidies." On a related 
point, we endorse the Clinton campaign call to label 
infrastructure spending as "capital items" in the budget and 
not "subsidies." 

In proposing any major initiative, the administration 
could consider highlighting the following rationales for 
undertaking a high-speed rail initiative. These include the 
following benefits. 


Numerous reports are available from transportation 
agencies that identify the need in the United States to 
greatly expand transport capacity in future years. In our 
busiest travel corridors, insufficient space exists for an 
unchecked expansion of airports and highways. High-capacity, 
high-tech, high-speed trains are the answer to mobility 
problems in selected high-travel-density corridors. 


The President is correct that the United States needs an 
investment orientation to infrastructure. Investment is not a 
liability; it is an asset. Federal investment in high-speed 
rail should occur by direct appropriation as well as by 
facilitating the flow of private investment into construction 
of such systems. 

Many new jobs could be created through institution of 
high-speed rail programs. One estimate is that construction 
jobs on five major corridors would exceed one hundred thousand 
full-time positions. 

Approximately 85 percent of all capital expenditures for 
high-speed surface systems are in infrastructure (tracks or 
guideways, stations, parking lots, electrical and signaling 
systems, maintenance bases, etc.) while only 15 percent would 
be expended for the actual trains. Even those, which may be 
of foreign design, would be manufactured in the United States 
to the benefit of domestic industries. 


The Federal government could boost employment related to 
high-speed rail in the following ways: 

Accelerate Construction ; Existing plans to upgrade 
Amtrak's Boston-New York-Washington line (including 
electrification of the Boston-New Haven portion) could be 
accelerated by advancing work schedules. "Incremental" 
improvements could be undertaken to improve schedules on other 
short distance routes, such as New York-Buffalo, Milwaukee- 
Chicago-Detroit and Los Angeles-San Diego. Such incremental 
improvements are worthwhile on selected routes, but would not 
bring about truly high-speed trains, which is defined by the 
Railway Safety Act as trains capable of sustained speeds in 
excess of 150 mph. Other projects such as the Florida maglev 
project, which is proceeding to final design, could be 
accelerated by further Federal investment in a "pre- 
construction funding" program. Short-term employment 
benefits ; Employment would be created fairly quickly in 
engineering and surveying firms and in the grading, 
construction, bridge-building, fabrication, electrical, 
signaling and railway supply industries. Long-term employment 
benefits ; Approximately two years from now, orders could be 
placed for locomotives and passenger cars specifically for use 
on such lines, equipment that would be operated faster than 
equipment in use today. 

Accelerate Planning ; Existing plans to build high-speed 
rail or maglev systems in Florida, Pennsylvania, Ohio, Texas 
and California-Nevada could benefit from an expedited process. 
Methods ought to be examined to expedite the environmental 
review process -- while insuring that all stringent 
environmental requirements are left in place -- as well as 
conduct additional needed route studies. Short-term 
employment benefits : Engineering firms, environmental review 
firms, surveying firms, law firms (because of the permitting 
process) . Long-term employment benefits ; Within a year, 
employment could be created in the grading, construction, 
bridge-building, fabrication, electrical and supplier 
industries for the Florida maglev demonstration project; such 
employment could come within a two-to-five year period for 
other projects. As with other large infrastructure projects, 
the niombers can be sizable. Examples: 

One study showed that if a Pittsburgh-Philadelphia high- 
speed line were built that between 7,000 and 29,000 jobs 
would be created per year over a seven-year construction 
period. After that, additional personnel would be 
required to operate the line, just as staff is require to 
operate an airline. 

The California-Nevada Project would create 25,000 to 
30,000 jobs as well as aid the long-term economies of 
both states. 

In Texas, during a four-year construction period, 
approximately $3.8 billion in direct construction 
expenditures are expected to occur in the counties where 
rail infrastructure will be located, generating 17,000 

68-623 O— 93- 


person-years of direct construction employment. The 
total impact in the Texas economy could result in more 
than 100,000 person-years of work. 

Accelerate Research & Development ; The Intermodal 
Surface Transportation Efficiency Act contained a niunber of 
provisions designed to spark U.S. investment in high-speed 
technologies -- both maglev and steel-wheel -- provisions that 
have gone unfunded. The most visible project is the $725 
million Maglev Prototype Development Program while the others 
are a $25 million Research & Development program and a $50 
million Technology Demonstration Program. Implementation of 
these provisions would create short-term employment in some of 
America's aerospace and computer industries, high-tech firms 
that are reeling from the impact of the recession as well as 
defense-related cutbacks. The provisions would also benefit 
America's railway supply industry, which is lagging behind 
overseas firms in technological development. The same long- 
term employment would result from construction of new high- 
speed surface technologies that would result from the first 
two categories outlined above. 

All of these programs create direct employment, of 
course, but the indii^ect benefits would include jobs in 
various supplier and manufacturing industries, jobs that 
create additional spin-off economic benefits. 

After construction, thousands of additional personnel 
will be required to operate and maintain the trains, tracks, 
signal systems and train stations. Our nation will see the 
growth of a new generation of engineers, conductors, track and 
signal maintainers, and related crafts, necessary for the 
smooth functioning of high-speed train lines. 

An often overlooked benefit is that virtually all of the 
high-speed systems in planning call for placement of train 
terminals in the city centers. On a short-term basis, that 
would create employment in distressed areas. Long-term , the 
location of stations in city centers would help revitalize and 
redevelop such areas as economic activity always is encouraged 
where new transportation terminals are located. 

Further, placement of high-speed train terminals at 
airports could improve operations at the nation's most crowded 
airports by diverting short -distance passengers from planes to 
trains. Using limited landing and takeoff slots could in 
turn, improve the operational efficiency of the airline 
industry. This is an exan^le of how the nation could make 
wise use of transportation technology -- aircraft for the 
longer-distance flights that make sense and trains for the 
shorter-distance trips. Such an "intermodal" spirit is sorely 
needed in our transportation planning process. 


The creation of high-speed rail systems can stimulate the 
economy while bringing about environmentally benign 
transportation infrastructure. 


The benefits of high-speed rail are thoroughly 
documented. Therefore, only a summary need be presented here: 

Energy Savings ; The nation would benefit by shifting 
travelers from oil-dependent air and auto travel to 
electrified trains for selected short- and medium- 
distance travel. No form of intercity travel is as 
energy-efficient as high-speed trains. The Edison 
Electric Institute reports that U.S. powerplants generate 
only four percent of their electricity with oil. 
Therefore, a shift to electrified high-speed trains on 
any one route would benefit the entire nation. (See 
Appendix A. ) 

Reduction in Pollution ; Such trains would reduce air 
pollution in some of our largest urban areas because 
electrical power plants place far fewer pollutants in the 
air than the accumulation of individual auto and jetliner 
exhausts. According to Southern California Edison, 
studies sponsored by the Natural Resources Defense 
Council show that electric high-speed trains are up to 98 
percent cleaner than the autos and planes they displace. 
That is true even in cities heavily reliant on coal- 
generated electricity. 

Land Savings ; High-speed trains are high-capacity 
systems requiring only small amounts of land. Such 
trains would reduce the "land take" required for an 
expansion of transport infrastructure (e.g., the land 
required for the entire French high-speed rail system is 
less than that required for the Charles de Gaulle Airport 
in Paris alone) . 

Safest Form of Travel : High-speed trains are the safest 
form of transportation ever devised. Such systems have 
operated in Japan for 28 years and France for a decade. 
Together, the trains have served more than 3-1/2 billion 
passengers. Yet, there has not been a single passenger 
fatality. If America made transport decisions based on 
safety alone, it would have high-speed trains in service 
on a number of high-travel routes. 


The High Speed Rail/Maglev Association was formed ten 
years ago. We would welcome the opportunity to discuss the 
recommendations contained in this paper with Congress and the 

Our views are based on a wide range of research and 
experience. We are an "umbrella group" with broad support -- 
more widespread than typically found in a trade group -- 
because we include a variety of interests. Active are 
construction firms; railway suppliers; electric utilities; 
aerospace companies; universities; law and engineering firms; 
maglev scientists; labor unions; transit operators; tourist 
boards; railroads; and the investment community. Membership 
also includes every state Commission and Transportation 


Department active in high-speed rail, as well as en5)loyeea 
from city, state, and Federal agencies. 


Long-term, the nation also must reevaluate how it commits 
public investment in transportation, with a review of trust 
funds. This Association has worked to create a new dimension 
in rail funding by leveraging public and private 
transportation financing. One area that needs consideration 
is reorientation of trust fund financing based on need as 
opposed to mode . 

A flexible use of trust funds can aid travel in America's 
skies and on its highways, provided we integrate high-speed 
rail into our existing transportation systems. We should 
remove artificial funding constraints by putting more 
flexibility in aviation and highway trust fund financing so 
that the most appropriate transportation systems can be built 
in appropriate areas. 

This could be termed a strategy of "segmental financing, " 
whereby selected funds would be committed to constructing 
selected portions of high-speed rail projects. 

A recent report entitled In Pursuit Of Speed issued by 
the Transportation Research Board, a unit of the National 
Academy of Sciences, stated that high-speed ground transport 
systems could be an effective alternative in corridors where 
travel demand is increasing, but where adding capacity to 
reduce highway and airport congestion and delays is difficult. 
The study stated that no mechanism exists for introducing a 
new mode based on the savings achieved by reducing the need 
for more airports and highways or extending another mode's 
economic life. It suggested that if public outlays for high- 
speed rail are justified, they could include contributions 
from the aviation and highway trust funds because users of 
those systems will benefit. 

The Aviation Trust Fund specifically should be opened to 
allow funding for access to airports for high-speed trains. 
Airports are intermodal facilities and create significant 
travel demand within their regions. Because most major U.S. 
airports are located within 25 miles of the cities they serve, 
legislative language should require that aviation trust fund 
financing of high-speed rail lines include intermodal stations 
located at airports as well as all terminal, track and signal 
facilities necessary to access and adequately serve aviation 
travelers. Provisions could require that such facilities do 
not exceed 25 miles in length per airport served and that 
maintenance shops, offices and rolling stock would be 
excluded. Facilities constructed with such funds would be 
publicly owned. 

Highway fund financing could be limited to those projects 
that require all-new construction, the very projects that 
benefit grading, construction and bridge contractors (as well 
as their suppliers) experienced in building new highways. To 


further limit the scope of such funding, language could 
require that highway trust fund financing of high-speed 
surface systems be limited to those systems powered by 
electricity that will serve communities now in violation of 
air-quality standards. Financing of maintenance shops, 
offices and rolling stock would be excluded. Facilities 
constructed with highway funds would be publicly owned. 


A substantial number of short-term and long-term efforts 
should be placed on the nation's agenda to improve prospects 
of building and operating successful high-speed rail systems. 
In particular, the program outlined on pages 3 through 11 of 
this report is key to development of high-speed rail. 

Whatever the specific content of a high-speed rail 
program, it is clear that the Clinton Administration and the 
new Congress should set as a goal that America will have the 
world's finest high-speed rail system. It is an achievable 
goal . 

President Dwight Eisenhower is known for establishing the 
Interstate Highway System. President John Kennedy, the Apollo 
program. It's time once again for visionary thinking. Bill 
Clinton has a golden opportunity to be known as the President 
who launched the latest transportation innovation in the 
United States -- high-speed, high-tech, super-safe trains. He 
can do that with the legislative program outlined above. 



Excerpt from: 

Supertrains: Solutions To America's 
Transportation Gridlocl< 

by Joseph Vranich 

U.S. Energy Policy & High Speed Trains 

"Our public fails to utxJerstand that America's 
Achilles Heel is our over-dependence on foreign 
oil." said Ohio's Lt. Gov Paul Leonard, in a 1989 
speech promoting high-speed trains He wants 
to see Americans riding in trains powered by 
electricity, not pumping gas shipp>ed over from 
the Mideast oil cartel. 

According to the Federal Highway Administra- 
tion. California led the nation in 1989 in total 
gasoline use for highway travel. Texas ranked 
second, while Florida took third place. These 
very states are in the forefront of high-speed 
train planning, and any shifts from auto to train 
travel will reduce oil imports. The energy 
savings, as well as reduced p>ollution. on just 
one route will be substantial. Look at the Los 
Angeles-Las Vegas train: 

"Over a million interstate travelers and (between 
1-1/2 million and 2-1/2 million commuters would 
leave their cars to ride this new. last, quiet, 
non-polluting system." sakJ Richard Katz. former 
chairman of the California-Nevada Super Speed 
Train Commission. "Approximately 70 millkjn 
vehicle-miles would be trimmed from the 
region's trips each year, resulting in reduced 
tailpipe pollutants by hundreds of tons and 
saving millions of gallons of fuel. In fact, 
estimates in the Las Vegas to Southern 
California corridor alone are a fuel reduction of 
17 percent." 

Similar savings wilt occur in othier states 
High-speed trains powered by electrfcity in 

Rorida would result in a reduction of 20 million 
gallons of imp)orted oil in one year alone. 

The Senate's 1989 maglev advisory committee 
report said that maglev trains are Twice as 
efficient as autos and four times as efficient as 
airplanes, in terms of gross energy used." 

Trains like the French TGVs are fuel-stingy, too. 
Their per-passenger energy consumption is so 
low that TGVs use atxjut one-sixth as much 
energy per mile as a narrow-body aircraft. Dear- 
ly, the French TGVs help minimize Frances oH 
imports. Considering tfiat gas-guzzling airplanes 
in the United States use about 16 billion gallons 
of fuel annually - much of it wasted on short- 
hop flights better served by fast trains - the 
potential savings are enormous. 

An example of concern over energy can be 
found in Germany Peter Haefner of the German 
Federal Railway explained: "We want major 
independence from oH, especially from imported 
oil. The electric train is the only means capable 
of using all kinds of energy and at the same time 
has the lowest specKic energy consumption of 
all modes. This is why our government believes 
it's sensible to interfere and steer investments 
into rail." 

When it comes to wise use of energy, the United 
States can learn from several of its industrialized 
competitors - Japan, France and Germany. 

Copyright . Supertrains: Solutions To America's Transportation 
Gridlock, published by St. Martin's Press, New York, January 1992. 




FOR IMMEDIATE RELEASE Contact: Joseph Vranich 


The High Speed Rail/Maglev Association applauded 
President Bill Clinton for his endorsement of the high-speed 
rail idea. A statement by the Association's new president, 
Joseph Vranich, follows: 

"We're cheered by the President's inclusion of this 
issue in his State of the Union speech. 

"If President Clinton wants to leave a legacy of 
progress, he started on the right foot regarding high-speed 
rail. As communities are served by all-new trains traveling 
at more than 200 mph, perhaps as early as 1998, we will have 
Bill Clinton to thank. 

"President Clinton may call for change, but this 
initiative is cautious and evolutionary. The President is 
starting to put some equity in transport policies. He is 
opening a door. On the other side of that door high-speed 
rail planners will now find some help, encouragement and a 
prudent investment of public funds to induce private 
investment . 

"His plan includes two excellent proposals. 

"The recommendation to fund high-speed rail-maglev 
development under the Intermodal Surface Transportation 
Efficiency Act would leverage public funding to induce 
private investment. As we understand it, the proposal 
includes an additional $646 million for the 1994-1997 
period. That is helpful. 

"The plan to use tax-exempt bonds to lure private 
investment to high-speed systems would put such bonds on an 
equal footing with tax-exempt airport bonds. The Clinton 
Administration would do this by removing the rail bonds from 
state bond volume limitations just as airport bonds are 
exempted from such limits. 

"Further, a BTU tax also would work in favor of fast- 
train systems. Electrified high-speed rail is the most 
energy-efficient form of transport ever devised. Thus, the 
impact of BTU taxes would be minimal on such systems." 



Senator Lautenberg. Mr. Salci. 

Senator Specter. Mr. Chairman, I wonder if I might say a word 
at this point? 

Senator Lautenberg. Sure. 

Senator Specter. First, I thank the Chair for convening these 
hearings. I believe that high-speed rail transit is a matter of enor- 
mous importance. It's a subject that I've been working on for more 
than a decade. 

Some very substantial leadership has been provided by State 
representative, Rick Geist, from Altoona, on plans for a high-speed 
line, which would travel from Pittsburgh to Philadelphia, illustra- 
tively, in 2 hours and 7 minutes with a number of intermediate 
stops and an additional projection to move beyond to south New 

Pittsburgh has been the center of the development of maglev 
technologies, which is now ready to go on a 19-mile demonstration 
program, which would go to the airport and with an extension 
which would tie into West Virginia and Ohio. 

It is my sense, that given the problems in air travel and the 
problems in fuels, some of which you have referred to, Mr. Vranich, 
and others have in their prepared statements, that this is a line 
which we really ought to proceed on. 

There is no reason that a country with the technology of the 
United States in proposing the super collider and the space sta- 
tions, should not be moving ahead on high-speed rail development. 

High-speed rail and maglev technology are something that I have 
pushed and will continue to push. These technologies are some- 
thing that we have put some funding into the appropriation bills 
in the immediate past, but something that we have to do more of. 

Thank you, Mr. Chairman. 

Senator Lautenberg. Thank you very much. Senator Specter, 
we're from the same region, with densely populated States, and the 
needs of the populations of these States can be very well served by 
high-speed rail. And you have had a long and abiding interest in 
this. We appreciate your participation. 

Senator Specter. Oh, I agree with you about that, Mr. Chair- 
man. Certainly, when you take the eastern end of my State which 
abuts to your State and the very heavy demands for transit into 
south New Jersey, which would tie right into a Pittsburgh-to-Phila- 
delphia line, and the very heavy needs for high-speed transit in the 
Northeast corridor, which traverses both of our States, those are 
items which really command our joint attention. 

Senator Lautenberg. If you look at the map here, one of the 
areas identified as deserving of attention, vis-a-vis high-speed rail, 
was the — indicated there from Philadelphia — I guess that's to Pitts- 
burgh — and just an ideal kind of corridor; Harrisburg, also. 

There are several cities in Pennsylvania that could benefit. And 
we're going to continue to pursue this. I'm delighted that you are 
a new member of this subcommittee, because we have a commonal- 
ity of interest. And it's good to have allies as we work the problem 


And, Mr. Vranich, I don't want to interrupt the flow of state- 
ments, but your testimony, as was Mr. Mead's, was very interest- 
ing. We'll continue along. And then if you can stay, we'll have our 
questions then. 

Mr. Salci, please proceed. 


Mr. Salcl Thank you, Mr. Chairman, Senator Specter. Thank 
you for inviting me to testify before you on behalf of the Texas TGV 
Corp. Mv testimony, as the others, will be submitted for the record. 
And I'll be brief, Mr. Chairman. 

Senator Lautenberg. Without objection, it will all be included in 
the record. 

Mr. Salcl I would like to take just a moment to briefly describe 
the Texas TGV project and move directly to suggestions to promote 
the development of high-speed rail in the United States. 

The Texas TGV will provide nonstop 200-mile-per-hour service 
between Houston and Dallas, between San Antonio, Austin and 
Dallas, and between Dallas DFW Airport and Fort Worth. This is 
a service area, commonly referred to as the 'Texas Triangle." 

The rolling stock will be specially adapted for the Texas TGV and 
will be based on the design of the operationally proven TGV 
Atlantique, the second generation of TGV technology. This was the 
same design which established the world ground speed record for 
fixed guideway vehicles of 320 miles per hour in May 1990. 

The system planned for Texas will go beyond the Atlantique in 
terms of onboard services and amenities to its passengers. I want 
to emphasize, Mr. Chairman, that while the Texas TGV project will 
incorporate French technology through technology transfer from 
GEC-Alsthom of France and the significant United States presence 
of Bombardier Corp., manufacture of the rolling stock will fully 
comply with Buy America requirements. 

Moreover, the engineering and the civil work construction, which 
is by far the largest component of the project's cost, will be per- 
formed by U.S. corporations and managed by our corporate share- 
holder, Morrison-Knudsen. 

Based on our studies, the Texas TGV project is expected to pro- 
vide between 30,000 to 35,000 construction phase jobs and nearly 
10,000 direct jobs once the system becomes operational. 

We would offer the following suggestions to encourage high-speed 
rail development in corridors beyond the Northeast corridor. One, 
Federal assistance for planning, feasibility, ridership and environ- 
mental studies, as well as other Federal mandates should be con- 

Today, every other mode of passenger transportation is eligible 
for Federal assistance in the planning, engineering, and environ- 
mental impact analysis phase of a given project. In the case of 
highways and rapid transit new starts, 80 percent of these costs 
are assisted by Federal grant funds. 

In an effort to reduce modsJ bias, we would suggest a similar 
structure of assistance for high-speed rail projects. Following the 
efforts of ISTEA to minimize the bias among surface transportation 
modes, we believe that Federal funding for these essential steps, 
which minimize engineering and financial problems later, is a rea- 


sonable Federal investment and an appropriate Federal promotion 

Two, high-speed rail transportation trust fund account. Given the 
President's and Congress* dual focus on infrastructure investment 
and reducing the deficit, we would suggest a user fee concept. Spe- 
cifically, in exchange for extending eligibility to high-speed rail pro- 
grams for highway trust funds today, we would propose a plan to 
repay today's investment with a 10-percent ticket tax to be imposed 
on high-speed rail passengers, the proceeds of which would be re- 
turned to the highway trust fund. 

This concept is similar to the user fees employed by both surface 
transportation and aviation modes. 

Three, permit States to use right-of-way revolving funds for high- 
speed rail projects. Mr. Chairman, you will no doubt recall your ef- 
forts in 1991 to have this very concept included in the final version 
of ISTEA. Section 128 of Senate bill 1204, the Senate version of 
what became ISTEA, proposed passenger rail facilities as eligible 
projects for the use of right-of-way revolving account funds. Al- 
though this provision was dropped in conference, we would suggest 
its reconsideration. 

Four, Senior Grade Bond Insurance Program. Last week, the 
Commission to Promote Investment in America's Infrastructure, 
which was established under ISTEA, issued its final report. 

Among its recommendations is a proposal to establish an insur- 
ance mechanism to enhance the rating of infrastructure projects, 
which might include high-speed rail, to attract private capital to a 
project. By providing this bond guarantee, project ratings are 
raised, potentially, to investment grade, attracting investors which 
otherwise might ignore such investment opportunities. 

And five, tax-exempt bond treatment for high-speed rail projects. 
Under current law, bonds issued for high-speed rail projects are 
tax-exempt. They are, however, subject to the State private activity 
volume cap which renders them almost useless because these caps 
are so low, given the scale of the projects. By allowing bonds issued 
for high-speed rail projects to be treated in an identical fashion to 
bonds issued for airports or other surface transportation projects, 
that is, outside these volume caps, significant private investment 
can be attracted to high-speed rail projects. 

Mr. Chairman, these five suggestions are offered as an array of 
ideas which will greatly assist in the attraction of private capital 
to high-speed rail. Clearly, what we are proposing also involves di- 
rect Federal expenditures for high-speed rail, a clear change in the 
Federal policy which has prevailed over the past decade. 

Perhaps the most difficult capital to find is the venture capital 
needed to begin these projects. For this reason, we have suggested 
direct Federal assistance on par with that historically accorded to 
other modes of transportation. 

We have also suggested direct funding for construction. While we 
have not settled on any match levels, it is our assessment that 
overmatches of private funds similar to the overmatch of State or 
local funds for the Federal Transit Assistance Section 3 New Start 
Program might be considered. 

In closing, Mr. Chairman, let me say that while the President's 
leadership in high-speed rail has attracted national interest in this 


technology, I wish to thank you for the many years of leadership 
you have provided in advancing interests of all Americans through 
your support of high-speed rail, new transportation technologies, 
new applications of old technologies and investment in our Nation's 
infrastructure. Those of us who have spent our career in transpor- 
tation know well the important role you have played in improving 
our nation's transportation system. 

I thank you for inviting me to testify. And I'd be pleased to an- 
swer any questions. 


Senator Lautenberg. Thank you very much, Mr. Salci. We have 
your prepared statement and it will be made part of the record. 
[The statement follows:] 

Statement of Larry E. Salci 

Mr. Chairman, and members of the Subcommittee, thank you for inviting me to 
testify before you on behalf of the Texas TGV Corporation. The scheduling of this 
hearing is indeed timely, coming just two weeks after President Clinton's announce- 
ment of important policy initiatives to assist the start-up phase and construction of 
high speed rail projects, this hearing presents the unique opportunity to suggest a 
structure for the President's initiatives. I applaud your quick action in holding this 
hearing and appreciate your hearing our views on Mgh speed rail. 

I would like to take just a moment to briefly describe the Texas TGV Corporation 
and the project we are pursuing. The three major industrial shareholders are Morri- 
son-Knudsen, Bombardier Corporation and GEC-Alsthom. 


The Texas TGV will provide nonstop 200 MPH service between Houston and Dal- 
las, between San Antonio, Austin and Dallas, and between Dallas DFW Airport and 
Fort Worth. This is a service area, commonly referred to as the 'Texas Triangle," 
which contains 60 percent of the state's population and which generates over 75 per- 
cent of the state's gross domestic product. 

Travel between these cities will be on a non-stop schedule with half hour depar- 
tures through most of the day and with fifteen minute departures during peak peri- 
ods. The TGV will provide service at a very high level of reliabihty, comfort, and 
ease of use. Stations or terminals are planned for: 

— Houston, Central Business District; 

— Houston, Northwest Suburban; 

— Dallas/Fort Worth International Airport; 

—Fort Worth; 

— ^Austin; and 

— San Antonio. 

In addition to these principal stations, service is being planned for the cities of 
Bryan-College Station and Waco, and possibly Houston Intercontinental Airport 
though fi-equency and method of service to these communities has yet to be deter- 

The route for the Texas TGV is appended to this statement. 


The rolling stock will be specially adapted for the Texas TGV and will be based 
on the design of the next generation of the operationally proven TGV Atlantique 
which currently operates at 186 M.P.H. This was the same design which established 
the world ground speed record for fixed guideway vehicles of 320 miles per hour in 
May of 1990. The system planned for Texas will go beyond the Atlantique; it will 
initially operate at 200 M.P.H. and the system infi-astructure is designed to accom- 
modate speeds up to 250 M.P.H. Also, in terms of on-board services and amenities, 
features have been specifically developed to enhance the productivity of the Texas 
TGV passenger, and include: 

— Three classes of passenger accommodations: First Class, Business Class and 


— Expanded seat spacing and legroom in all accommodations which approaches 
First Class seat spacing in airlines. 

— Reserved seating for all passengers. 

— Several small group seating arrangements with conference/work tables. 

— High quality commercial phone service available throughout the train. Free 
phone calls may be made to either destination or departure terminal cities. All 
long distance carriers will be accessible for calls outside of the Triangle simply 
by using the "Dial O" service which is available on most public phones today. 

— Business productivity features including on board rental car services as well as 
facsimile transmission and receive capabilities. 

— ^A food and beverage car at the center of train, with in-seat service to First and 
Business Class passengers. 

— Integrated tickets with selected airlines will allow for smooth feeder operations 
to mtgor hub airports, such as DFW. Check in service provided at TGV termi- 
nals by host carrier personnel will include baggage check through and seat as- 
signments for all trip segments. 

— ^A total "Customer Service" approach has been contemplated to provide seamless 
service for all passengers including those with an airport connection. 

— Arrival and departure schedules at half hour intervals throughout the day with 
increased frequency during heavy demand periods. 

— Specially designed seating and other accommodations — including level platform 
access — will enable persons with disabilities to easily board and use the high 
speed train services. 

— Texas TGV expects a fare structure that will be competitive with or less than 
the airline fare structure. 

A detailed analysis of the revenue impacts of these features is currently under- 


With these kinds of amenities and reliable performance, the Texas TGV should 
be highly competitive with all modes of travel between Texas Triangle cities. The 
Texas TGV should also be ideally suited in a feeder role for major hub airports such 
as Dallas/Fort Worth (DFW) and Houston Intercontinental (LAH). Over the next 
twenty years, carriers serving these airports will be looking to ever distant markets 
to serve out of these hubs. New, more efBcient long haul aircraft will accentuate 
this effort. 

On the operational side, airlines will continue to look for better operating effi- 
ciencies. They are finding these efficiencies in their hub operations by considering 
the shift to "continuous" hubbing. This will require high-frequency and high volume 
feeds, particularly on the short haul routes, to make them especially effective. At 
the same time, it is very costly to offer more than twelve to thirteen such short haul 
connections by air. An integrated service using the Texas TGV, on the other hand, 
should be able to dramaticaJly increase service fi-equencies to all Texas cities by per- 
haps a factor of three. This service should also be able to offer this for lower total 
costs than these carriers now incur, and should be able to do so with much greater 
on-time reliability. With highly integrated facilities at the hub airport and a contin- 
ued role for the long haul carriers in selling the tickets and handling passenger 
check in, the Texas TGV should be a highly complimentary — and highly efficient — 
alternative to continued use of aircraft to feed passengers from the Texas Triangle 
cities to Texas' major air hubs. 

This alliance can be crucial in improving the ability of long haul carriers to effi- 
ciently serve more distant markets sooner and existing markets better. 


The Texas TGV Project is expected to provide 30,000-35,000 construction phase 
jobs and nearly 10,000 direct and indirect jobs during its operations phase. High 
speed train technology will utilize many of the telecommunications and aerospace 
skills which have already come to Texas. Further, with an assembly plant in the 
state, Texas TGV will position Texas as a base from which high speed rail skills, 
services, and products can be provided to other parts of the country as they follow 
in their development of intercity high speed rsiil. 

I can not overemphasize, however, Mr. Chairman, that while the Texas TGV 
Project will incorporate French technology, through technology transfer from GEC- 
Alsthom and the significant United States presence of Bombardier Corporation, 
manufacture of the rolling stock will fullv comply with Buy America requirements. 
Moreover, the engineering and civil work construction which is by far the largest 


component of the project's cost will be performed by U.S. corporations and managed 
by our corporate shareholder, Morrison-Knudsen. 

Having provided you with the scope of the Texas TGV Project as a backdrop; I 
would like to turn to the focus of your hearing today: How can high speed rail be 
developed in corridors beyond the Northeast Corridor? We would offer the following 


Today, virtually every other mode of passenger transportation is eligible for fed- 
eral assistance in the planning, engineering and environmental impact analysis 
phase of a given project. In the case of highways and rapid transit new starts, 80 
percent of the planning, engineering and environmental impact statement costs are 
assisted by federal grant funds. In an effort to reduce modal bias, we would suggest 
a similar structure of assistance for high speed rail projects. Following the efforts 
of ISTEA to minimize tiie bias among surface transportation modes, we believe that 
federal funding for these essential steps, which minimize engineering and financial 
mistakes later, is a reasonable federal investment and an appropriate federal pro- 
motion role. The source of these funds could perhaps come through adding some 
flexibility provisions to Section 1036 of the High Speed Rail Ground Transportation 
Program which has already been authorized in ISTEA through 1997. 


Given the President's and the Congress' dual focus on infrastructure investment 
and reducing the deficit, we would suggest a user fee concept. Specifically, in ex- 
change for extending eligibility to high speed rail programs for Highway Trust 
Funds today, we would propose a plan to repay today's investment with a 10 percent 
ticket tax to be imposed on high speed rail passengers, the proceeds of which would 
be returned to the Highway Trust Fund. The amount to be made eligible for high 
speed rail funding could be based upon such factors as conservative ridership projec- 
tions, a repajmient schedule which reflects the useful life of the system, and the 
near-term financial needs of developing other high speed rail projects. This concept 
is similar to the user fees employed by both surface transportation and aviation 
modes. Admittedly, there is a draw on the trust fund in advance of repayment, but 
this investment would be analogous to the federal support provided to highways and 
the aviation industry prior to the establishment of their respective trust fiinds. 



Mr. Chairman, you will no doubt recall your efforts in 1991 to have this very con- 
cept included in the final version of ISTEA. Section 128 of S. 1204, the Senate ver- 
sion of what became ISTEA, proposed "passenger rail facilities" as eUgible projects 
for the use of right-of-way revolving account funds. Although this provision was 
dropped in conference, we would suggest its reconsideration. The revolving fund con- 
cept has saved many millions of dollars in highway construction costs, it could pro- 
vide similar savings to high speed rail projects. 


Mr. Chairman, the initiation of an investment grade bond insurance program for 
infrastructure is really the adaptation of a concept that has worked in attracting 
private sector investments to health care and educational facilities. Last week the 
Commission to Promote Investment in America's Infi-astructure, which was estab- 
lished under ISTEA, issued its final report. Among it's recommendations is a pro- 
posal to establish an insurance mechanism to enhance the rating of infrastructure 
projects (which might include high speed rail) to attract private capital to a project. 
Using the model of the College Construction Loan Insurance Association 
(ConnieLee), the Commission focused on the success that ConnieLee has achieved 
in guaranteeing bonds issued by colleges, universities and teaching hospitals. By 
providing this bond guarantee, project ratings are raised to investment grade, at- 
tracting investors which otherwise might ignore such investment opportunities. A 
bond insurance program, established with a minimum federal investment, could fos- 
ter literally millions of dollars in private investment into high speed rail and other 
infrastructure projects. 



Under current law, bonds issued for high speed rail projects are tax-exempt. They 
are, however, subject to the state private activity volume cap which renders them 
almost useless because these caps are so low. By allowing bonds issued for high 
speed rail projects to be treated in an identical fashion to bonds issued for airports 
or other siirface transportation projects, i.e., outside these volume caps, significant 
private investment can be attracted to high speed rail projects. 


Mr. Chairman, these five suggestions are offered as a array of ideas which will 
greatly assist in the attraction of private capital to high speed rail. Clearly, what 
we are proposing also involves direct federal expenditures for high speed rail, a 
clear change in Qie federal policy which has prevailed over the past decade. High 
speed rail is not a technology still under test and development. It's benefits have 
been demonstrated widely in Europe and Japan. Promoting the development of high 
speed rail in the U.S. will have real and substantive benefits beyond just mobility 
enhancement. Environmental and social improvements, and long-term job creation 
are benefits which will have real impact on our nation. 

We are suggesting a federal role which will serve to attract private capital. We 
will acknowledge that levels of private investment are determined by levels of risk. 
Some of the concepts we have outiined are clearly designed to reduce levels of risk 
which in turn have the inverse effect of attracting private capital. 

Perhaps the most difficult capital to find is the venture capital needed to begin 
these projects. For this reason we have suggested direct federal assistance on par 
with that historically accorded to other modes of transportation. We have also sug- 
gested direct funding for construction. While we have not settied on any match lev- 
els, it is our assessment that "over-matches" of private funds similar to the "over- 
match" of state or local funds for the FTA Section 3 New Start program should be 
considered. While the Federal government would clearly take on the initiad burden 
of establishing project feasibility, as it does in other modes of transportation, we 
would propose that the private sector fund a large share of construction costs in 
terms of absolute dollars. 

In closing, Mr. Chairman, let me say that while the President's leadership on high 
speed rail nas attracted national interest in this technology, I wish to thank you 
for the many years of leadership you have provided in advancing the interests of 
all Americans through your support of high speed rail, new transportation tech- 
nologies, new applications of old technologies and investment in our nation's infira- 
structure. Those of us who have spent our career in transportation know well the 
important role you have played in improving our nation's transportation system. 
Thank you for inviting me to testify. I will be pleased to answer any questions. 




Fort Worth 









San Antonio 


A — Slalions 



Senator Lautenberg. Mr. Faulkner, you're next. 

Mr. Faulkner. Thank you, Mr. Chairman and Senator Specter, 
for this opportunity to testify on our efforts to bring high-speed rail 
to the residents of Ohio. 

I'm here today representing the Ohio Railway Organization, 
which is a private consortium of firms which has developed an im- 
plementation plan for making a privately operated, profitable high- 
speed rail system for Ohio a reality. Our plan was officially accept- 
ed by the Ohio High-Speed Rail Authority on June 23, 1992. 

To begin, let me give you a brief overview of ORO's plan. The 
alignment of the system, commonly referred to as the "3-C cor- 
ridor," cuts diagonally across the State from Cincinnati to Cleve- 
land through Columbus. The entire length of the system is 260 
miles long with nine stations. And most of the alignment is on new 
right-of-way, except where the system enters the major metropoli- 
tan areas. 

The results of our year-long effort concluded with a system cap- 
ital cost estimated at $3.1 billion in 1991 dollars. The annual oper- 
ating and maintenance costs were estimated to be $62 million. And 
the annual projected revenues are estimated to be $88 million, 
based on 1.8 million riders per year. 

I would like to say this ridership estimate is conservative, be- 
cause it was based on our traditional rail ridership patterns as we 
know today in the United States. 

The results of our cost estimates indicate that there is very little 
of the project that could be supported by private investment. The 
resulting $26 million new operating revenues could realistically 
only attract $100 to $150 million of private finances. 

The total estimated economic benefits of developing and operat- 
ing a high-speed rail system in Ohio will amount to $11.1 billion, 
which is over a 3 to 1 investment on the capital expenditures. This 
is creating, in the construction phase, over 71,000 jobs. During the 
operations phase, it is estimated that at least 79,000 jobs over a 
25-year period. 

Like highways, airports, and other transportation facilities, high- 
speed rail provides a vital public service. For the 3-C corridor 
project to be financeable, it will be necessary to fuse public and pri- 
vate finance concepts. 

Rather than implementing a pure privatization model, the goals 
of a financing plan for the 3-C corridor system are to ensure that 
adequate funds are available for planning, development, construc- 
tion, and operation on a basis which minimizes overall construction 
cost and financing cost, and thereby limits the level of public sup- 
port required from the State of Ohio. These goals can be accom- 
plished by maximizing the use of Federal financial assistance, tax- 
exempt financing, and private debt and equity capital. 

Due to the size and magnitude of this program, the State of Ohio 
needs significant support from the Federal Government to proceed. 
Several potential sources of Federal assistance are already incor- 
porated in the Intermodal Surface Transportation Efficiency Act of 
1991, commonly known as ISTEA. 


These sources, if funded, would provide an initial basis of funds 
to allow several projects, such as Ohio's, to at least proceed into the 
preconstruction phase. To date, all of the activities culminating in 
the submission and acceptance of our implementation plan have 
been totally privately funded through sweat equity and cash con- 
tributions by our consortium members. However, continual attrac- 
tion of this private capital will be very difficult unless public fund- 
ing sources become available. 

At the present time. Federal programs specifically aimed at fos- 
tering high-speed rail are primarily concentrated in the area of re- 
search, development, and demonstration. However, ISTEA did initi- 
ate one change in Federal law which, if fully implemented, ulti- 
mately could have important ramifications for the construction of 
high-speed rail. 

ISTEA amended the Loan Guarantee Program under the Rail- 
road Revitalization and Regulatory Reform Act of 1976 to authorize 
Federal guarantees specifically for the financing of high-speed rail 
facilities. Notwithstanding the enactment of ISTEA, the Federal 
Railway Administration has not been given budget authority at the 
present time to enter into any of these loan agreements. 

ISTEA also established a new Federal matching program of 
funds for the highway trust fund. In addition, the traditional high- 
way and bridge projects, STP funds may be used, among other 
things, for transit projects and surface transportation planning pro- 
grams. It is not completely clear what rail systems are eligible for 
assistance under the Federal Transit Act; however, high-speed rail 
proponents should be urging upon FTA to do this. 

Clearly, a favorable resolution of the availability of STP funds 
would facilitate high-speed rail construction by providing a layer of 
Federal equity to supplement debt financing. 

It is preferable to use tax-exempt financing for the debt; how- 
ever, the project may or may not qualify, depending on the owner- 
ship structure of the project. 

Current IRS requirements essentially require that the project 
must be owned and operated by the State in order to qualify for 
tax-exempt financing. 

First, if the facility is set up on a private-ownership basis, only 
that portion of the project which constitutes a high-speed rail may 
be eligible for tax-exempt financing. If it's on a public ownership/ 
private basis, the project may be privately operated, but still qual- 
ify for tax-exempt financing if the operator's contract satisfies the 
management contract rules. 

To summarize, continued development of high-speed rail in Ohio 
will require fulfillment of the Federal Grovemment's commitment to 
high-speed rail. It should be an accepted fact that financing a new 
transportation mode such as high-speed rail must be primarily 
borne by the public. 

Efficient and safe transportation are a vital component of our so- 
ciety. So, should we finally cross the privately funded only hurdle 
facing high-speed rail and move forward with sufficient funding ap- 
propriations and finally acknowledge that the Federal role in lead- 
ing high-speed rail development is long overdue. 

I thank you for the time to testify, Mr. Chairman, And I'll be 
available later for questions. 



Senator Lautenberg. Thank you, Mr. Faulkner. We have your 
prepared statement and it will be made part of the record. 
[The statement follows:] 

Statement of Roger A. Faulkner 

Thank you for this opportunity to testify on our efforts to bring a new mode of 
transportation, high speed passenger reiil, to the residents of Ohio. I am here today 
representing the Ohio Railway Organization, Inc. (ORO), a private consortium of 
firms which has developed an implementation plan for making a privately-operated, 

Erofitable high speed raO system for Ohio a reality. Our plan was officially accepted 
y the Ohio-High Speed Rail Authority on June 23, 1992. 


To begin, let me give you a brief overview of ORO's Plan. The alignment of the 
system, commonly referred to as the "3-C Corridor" alignment goes north from Cin- 
cinnati to Dayton, then east to Columbus and then on north to Cleveland. Essen- 
tially, the alignment cuts diagonally across the state from southwest to northeast. 
The entire length of the system is 260 miles long with nine stations and most of 
the alignment is on new right-of-way except where the system enters the major met- 
ropolitan areas. 

The result of our year long effort concluded with a system capital cost estimated 
at $3.1 billion in 1991 dollars. The annual operating and maintenance costs were 
estimated to be $62 milUon (1991 dollars), and the annual projected revenues are 
estimated to be $88 million (1991 dollars) based on 1.8 million riders. 

An operations model was developed to account for the travel times between the 
stations and yielded travel times of 68 min. between Cleveland and Columbus (com- 
pared to 150 min. auto time), 94 min. between Columbus and Cincinnati (compared 
to 120 min. auto time) and 166 min. between Cleveland and Cincinnati (compared 
to 270 min. auto travel). The fleet size will be eight trains consisting of one power 
unit, one business class ceir and two custom coaches seating 200 passengers. There 
is also the option of adding a separate restaurant car in lieu of having catering in 
the first custom coach. The trains will operate 16 round trips per day in the 3-C 
Corridor on an hourly basis. 

The results of our cost estimates indicate that very little of the project could be 
supported by private investment. The resulting $26 million net operating revenues 
could realistically onJy attract $100-$ 150 million of private finances. 


While the costs of developing and operating the Ohio high speed rail system be- 
tween Cleveland and Cincmnati are substantial, so are the economic, transpor- 
tation, energy and environmental benefits that will accrue to the State of Ohio, its 
communities along the route and the people in those communities. The total esti- 
mated economic benefits of developing and operating a high speed rail system in 
Ohio will amount to $11.1 billion in 1991 dollars. 

A breakdown of these benefits is presented on the following page with a few key 
^-Constructing the high speed rail system will result in over $5.5 billion in direct 
economic output for the state, increasing household earnings by over $1.7 billion 
and creating 71,000 person-years of employment; 
— Ongoing operations activities will result in over $3.2 billion in economic output 
for the state over a 25-year period following construction of the system, increas- 
ing household earnings in Ohio by over $1.2 billion and creating 79,000 person- 
years of employment; 
— Users of the high speed rail system will save the equivalent of $400 million 
through reduced travel times by not using their automobiles for journeys along 
this corridor; and 
— As travellers divert to high speed rail, fewer automobile accidents, injuries and 

fatalities will result in a total savings to society of $200 million. 
As the economy of the state begins its rebound from the recent recession, the high 
speed rail system, even though balanced with other competing interests, would pro- 
vide an economic boost to the manufacturing and service sectors of the economy to 
enable recovery and increase long term development potential within the state. 
Symbolizing effective, progressive state management of its resources, the system's 


prestige value and business and emplovment impact could attract not only concerns 
involved in the development of the rail system itself but also those desiring to take 
advantage of the enhanced opportunities presented by the development of a reliable, 
high speed system of transportation. 


Like highways, airports and other transportation facilities, high speed rail pro- 
vides a vital public service which is the proper concern of state and local govern- 
ment and a proper object of governmental financial assistance. High speed rail is 
also a candidate for a financing structure which relies substantially on private user 
charges — ^in this case, passenger fares. For the 3-C Corridor project to be 
financeable, it will be necessary to fiise public and private finance concepts; as our 
plan reveals, fares and other operating revenues, standing alone, will not be suffi- 
cient to support the full development and construction costs of the system, the ac- 
quisition cost for rolling stock and the necessary competitive return on eauity. It 
will not be possible to look solely to the private sector for the necessary development 
and construction funds. Indeed, substantial public subsidies will be required if the 
pubUc pvuposes served by the 3-C rail corridor are to be met. 

Rather than implementing a pure privatization model, the goals of a financing 
plan for the 3-C Corridor system are to ensure that adequate funds are available 
for planning, development, construction and operation on a basis which minimizes 
overall construction cost and financing cost, and thereby limits the level of public 
support required from the State of Ohio. These goals can be accomplished by maxi- 

— The use of federal financial assistance programs; 

— The use of tax-exempt financing; and 

— The role of private debt and equity capital. 


Due to the size and magnitude of this program, the State of Ohio needs significant 
support fi-om the federal government to proceed. The successful completion of plan- 
ning, design and demonstration activities must depend heavily on governmental in- 
vestment. Several potential sources of federal assistance are already incorporated in 
the Intermodal Surface Transportation Efficiency Act of 1991 (ISTEA) which in- 

— ^A high speed ground transportation technology demonstration program — $50 

— ^A high speed ground transportation research and development program — $25 
million; and 

— The National Magnetic Levitation Protype Development program — $725 million. 

These sources, if fiuided, would provide an initial basis of funds to allow several 
projects, such as Ohio's, to at least proceed into the pre-construction phase. To date, 
all of our activities culminating in the submission and acceptance of our implemen- 
tation plan have been totally privately funded through "sweat equity" and cash con- 
tributions by our consortium members. However, continual attraction of this private 
capital will be difficult unless public funding sources become available. 

At the present time, federal programs specifically aimed at fostering high speed 
rail are primarily concentrated in the areas of research, development, and dem- 
onstration. However, ISTELA did initiate one change in the federal law which, if fiilly 
implemented, ultimately could have important ramifications for the construction of 
high speed rail systems. 

ISTEA amended the loan guarantee program under the Railroad Revitalization 
and Regulatory Reform Act of 1976 to authorize federal guarantees specifically for 
the financing of high speed rail facilities. The law now permits the Secretary of 
Transportation to guarantee obligations of a public or private railroad, including (as 
a resiilt of ISTEA) obligations incurred to estabhsh high speed rail facilities and 
equipment. High speed rail is defined as rail transportation "reasonably expected" 
to reach spee(w of 125 mph. Not more than one biflion dollars of guaranteed debt 
can be outstanding at any one time. 

Any high speed rail facilities and equipment financed with a federally guaranteed 
loan must be at least 85 percent produced or manufactured in the United States, 
unless the Secretary finds that such a requirement would be inconsistent with the 
public interest, that items of satisfactory quality could not be produced in the U.S. 
in sufficient quantities, that the requirement would increase the cost of the facilities 
bv more than 25 percent, or that the requirement would result in a violation of the 
obligations of the U.S. under an international trade agreement. While the federal 
guarantee is outstanding, dividends payable by a privately owned railroad are lim- 


ited. Notwithstanding the enactment of ISTEA, the Federal Railway Administration 
has not been given budget authority at the present time to enter into any loan guar- 
antee agreements. Correction of this situation should be high on the legislative 
agenda of advocat«s of high speed rail. 

ISTEA also established a new federal matching program for use of fvmds in the 
Highway Trust Fund — the Surface Transportation Program (STP). The hallmark of 
this program is flexibility. In addition to traditional highway and bridge projects, 
STP funds may be used, among other things, for: 

— Capital costs for transit project eligible for assistance under the Federal Transit 

— Highway and transit safety improvements programs, hazard eliminations, and 
projects to mitigate hazards caused by wildlife and railway-highway grade 

— Highway and transit research and development and technology transfer pro- 
grams; and 

— Surface transportation planning programs. 

As noted above, it is not completely clear what rail systems are eligible for assist- 
ance under the Federal Transit Act, and thus are an eligible use of funds from the 
STP. However, FTA could reasonably interpret its statutory mandate to allow it to 
direct STP funds toward high speed rail projects, such as the 3-C Corridor. There 
is a rationale for doing so, which high speed rail proponents should be urging upon 
the FTA. 

ISTEA may also open the door to federal funding even of the non-commuter por- 
tions of the rail lines. ISTEA amends the Federal Transit Act to make the terms 
"transit", "public transportation", and "mass transportation" synonymous, and de- 
fines these terms to include publicly or privately owned rail facilities without ref- 
erence to the geographical area served. 

Clearly, a favorable resolution of the availability of STP funds would facilitate 
high speed rail construction finance, by providing a layer of federal "equity^ to sup- 
plement debt financing. 

In addition, ISTEA authorizes each state to lend federal assistence funds to public 
or private developers of specified tolled transportation facilities (bridges, tunnels, 
highways and approaches) and to deposit loan repayments in a revolving fund, 
which may then be reloaned for other eligible transportation projects (including 
mass transportetion, which, as we have seen, arguably includes high speed rail). 
Many stotes are exploring the extent to which they can achieve a rapid first revolu- 
tion of such funds so that federally-imposed restrictions on subsequent fund use will 
be reduced. Assuming that a portion of the proposed Ohio high speed rail facility 
qualifies for transit funding under federal law, amounts contained in any transpor- 
tation revolving fund established by Ohio pursuant to ISTEA could be made avail- 
able for finamcing of the 3-C Corridor. This could prove to be a powerful financing 


It is preferable to use tax-exempt financing for the debt issued by the State due 
to the interest cost savings. However, the project may or may not qualify for tax- 
exempt financing depending on the ownership structure of the project. 

Cvurent Internal Revenue Code requirements essentially require that the project 
must be owned and operated by the State or another govemmentel agency in order 
to qualify for tax-exempt financing. However, in order to develop high speed rail on 
a public/private partnership basis, certain rules may need to be revised. 

First, if the facility is set up on a private ownership and operation basis, only that 
portion of the project which constitutes a "high speed intercity rail facility" may be 
eligible for tax-exempt financing. For purposes of qualifying as a high speed inter- 
city rail facility, the facility must provide fixed guideway r^ transportetion of pas- 
sengers between metropoUtan areas using vehicles expected to operate at speeds in 
excess of 150 miles per hour. However, rolling stock is excluded from the definition 
of a high speed intercity rail facility for purposes of this t3T)e of tax-exempt financ- 
ing. Also the private owner would not be entitled to the depreciation deductions nor- 
mally available to the private owner of a facility of this type. These restrictions do 
not make private ownership of the facUity an attractive option. 

Second, if the facility is set up on a public ownership/private operation basis, the 
project may be privately operated and still qualify for tax-exempt financing if the 
operator's contract satisfies the "management contract" rules. The management con- 
tract rules can be summarized as foUows: 

— The term of the contract cannot exceed five years. 


— The contract must be terminable at the government's option at the end of any 
3-year period within the contract's 5-year term. 

— ^At least 50 percent of the operator's compensation must be on a periodic, fixed- 
fee basis. 

— No portion of the operator's compensation may be based on net profits. 

If a portion of the 3-C project also qualifies as a mass commuting facility, tax- 
exempt financing for that portion of the project will not be subject to the manage- 
ment contract rules. The mass commuting portion of the project must be publicly 
owned, but it may be leased to a private party under a long-term lease. 

The long-term lease effectively gives the operator multi-year operational rights for 
the project. For federal income tax purposes the State as lessor will be considered 
the owner of the mass commuting portion of the project and the private party as 
lessee will not be entitled to claim any depreciation deductions with respect to that 
portion of the project. 

As can be seen, current IRS requirements are not oriented properly to large inter- 
city systems which can only be emcientiy operated on a long-term basis and as one 
system. It is our strong recommendation that these and all rules related to tax-ex- 
empt financing be reviewed to relieve these hindering requirements. 


In order to reduce the need for public financial support, some of the components 
of the high speed rail system might be developed and owned by the private sector. 

Rail cars are well smted to private ownership, since they are not eligible under 
current IRS rules for financing with tax-exempt private activity bonds. Privately 
owned and financed rail cars could then be leased by the private owner to the facil- 
ity operator. 

Stations and terminals are also candidates for private ownership because of the 
potential economic benefits which mixed use facilities present in addition to support 
of the rail facility. Also, right-of-way or space for construction of stations may also 
be donated by landowners wishing to enhance the value of their real estate holdings 
or business enterprises. 

However, the summation of these items in our implementation plan only con- 
stitutes 10-15 percent of the total capital cost of the system. Again, this leads to 
the same earlier conclusion that the majority of the funding for the system must 
come fi*om public sources. 


Continued development of high speed rail in Ohio will require fulfillment of the 
State's commitment since 1975 to implementation of this quality transportation 
service. The time has come for Ohio to agree in principle to go forward with high 
speed rail subject to further advancement of the design. Such a^eement must in- 
clude willingness to invest substantial public funds in the activities necessary for 
project development up to the point of a decision whether to proceed with construc- 
tion. ORO estimates that three years and forty to sixty million dollars may be need- 
ed to complete the design, environmental, financial and other investigations which 
must necessarily precede construction. Not all of the cost must necessarily be borne 
by the state, but a substantial share can be expected to be derived from public 

The other key governmental participant in realization of high speed rail in Ohio 
is the federal government. In 1990 and 1991 the U.S. Congress in both houses has 
indicated strong support for establishment of high speed rail in the United States. 
This support has, in turn, provided to the Federal Railroad Administration funds 
and encouragement that were not in evidence during Ohio's earlier efforts to imple- 
ment high speed rail service. The current highly supportive thrust of federal partici- 
pation in high speed rail offers a great opportunity to seek and define federal part- 
nership for development and construction of the project. 

It should be an accepted fact that financing a new transportation mode such as 
high speed rail must be primarily borne by the public. EfBcient and safe transpor- 
tation is a vited component of our society and economy and our nation's highways 
and airports are facing ever increasing levels of congestion. Our interstate highway 
system was built with public monies as well as our airport system. So we should 
finally cross the "privately fiinded only" hurdle facing high speed rail development, 
and move forwara with sufficient funding appropriations and finally acknowledge 
the federal role in leading high speed rail development. 

Ohio is ready but they caimot do it alone. They need the federal government to 
lead the way and finally add the third component to our transportation infi-astruc- 
ture — ^high speed rail. 







t 3.1BIU.ON 





» 2.2 B«J.ION 
(t 370 BLUON/YEAR) 




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Senator Lautenberg. Now, well hear from Mr. Smith. 

Mr. Smith. Mr. Chairman, Senator Specter, thank you for this 
opportunity to testify on the important subject of high-speed rail 
and maglev transportation. 

Florida has been one of the most active States in pursuing and 
developing high-speed rail and maglev programs for well over 10 
years. With your permission, Mr. Chairman, I would like to submit 
a more comprehensive written statement in a few days. 

Senator Lautenberg. Without objection, we will await receipt of 
the statement, and it should be soon, Mr. Smith 

Mr. Smith. For the record, it will be. All right. In 1981, Senator 
Graham, then Governor of Florida, traveled to Japan and was the 
first foreigner to ride on the Japanese superconducting maglev 
train operating on a test track in southern Japan. 

On that same trip, he also evaluated and piloted the Japanese 
Shinkhansen high-speed bullet train as well. When he got back to 
Florida, he immediately directed the DOT to conduct a feasibility 
study on the possibility of setting up a high-speed rail system in 
Florida. That study was completed in a year. And a public-private 
partnership was recommended to be established using a variety of 
innovative financing incentives. 

This public-private partnership concept was later incorporated in 
the State, enabling legislation. The key incentives provided in this 
enabling legislation were: the opportunity to use real estate as a 
means to finance the system, the use of highway rights-of-way, and 
the ability of the State to issue tax-exempt bonds on behalf of the 
private company. 

After several years of joint planning with two international pri- 
vate consortiums for a 300-mile route connecting Miami, Orlando, 
and Tampa, it was concluded in 1991 that even with these incen- 
tives, the Florida high-speed rail project could not be financed and 
built solely as a private sector sponsored project. 

There were several reasons. The volatility of the real estate mar- 
ket, the savings and loan disaster, and so forth, wiped out real es- 
tate as an incentive for private investment. However, we still be- 
lieve private investment through real estate can help support the 
construction of these systems. 

Second, although high-speed highway corridors and railroad cor- 
ridors were considered in these plans, it was often found that these 
rights-of-way are not suitable for high-speed train operations for 
the reasons that have already been mentioned; numerous grade 
crossings, curvatures, vertical alignments, et cetera. Nevertheless, 
in any event, high-speed trains operating in excess of 110 miles an 
hour are going to need a completely grade-separated route. 

Third, tax-exempt bonds were considered essential for private 
sector investments. We were successful, in 1988, in getting the 
Federal tax code amended, but only to the extent that 25 percent 
of any bonds issued still must be allocated from the State's current 
private activity bond volume. 

Mr. Chairman, we are appreciative of your support and cospon- 
sorship with Senator Graham on the bill to amend that this year, 


Based on our experience in Florida, we believe there are a num- 
ber of areas where Federal legislation, programs, and policies could 
be used to encourage and facilitate high-speed rail and maglev sys- 

First and foremost, high-speed rail needs to have a stable and se- 
cure source of Federal revenue dedicated for this purpose. A trust 
fund modeled on the highway or airport trust fund, based on the 
equivalent of 1 or 2 cents on the gas tax, would be appropriate. In 
any event, without predictable earmarked allocations, high-speed 
rail and maglev cannot compete with highway and airport projects 
funded at 70 to 90 percent from Federal sources. 

Second, we support the passage of President Clinton's economic 
stimulus package, which includes the already authorized $725 mil- 
lion funding for the ISTEA maglev prototype and an additional 
$646 million for the high-speed rail projects. There are a number 
of maglev projects around the country, including several in Florida, 
that are being developed to take advantage of this prototype pro- 
gram and to develop an American-made technology. 

We strongly believe that public-private partnerships should be 
encouraged and developed to deliver high-speed rail and maglev 
systems. The contributions and role of the public sector must be ex- 
panded. It is unrealistic to expect private enterprise to build high- 
speed transportation systems, while, at the same time, public enti- 
ties are financing and building highway and aviation infrastruc- 

We are also pleased the Florida high-speed rail corridor was des- 
ignated by U.S. DOT as one of the five ISTEA section 1010 cor- 
ridors for grade crossing hazard elimination. Although the Federal 
funding of $1 million per year is not great, this is an important rec- 
ognition by Congress and the Federal Government of the value of 
high-speed intercity rail service. 

We are also working with Amtrak to encourage them to operate 
the X2000 tilt train in Florida. And we're encouraged by their in- 
terest in doing that. 

Finally, we are just completing a study to use the median of I- 
4, Interstate 4, between Tampa and Orlando, for high-speed rail. 
This highway is scheduled for rebuild. And Secretary Watts has di- 
rected that the highway design include provisions for a high-speed 
rail line. This will save money, reduce environmental impacts and 
implement the intermodal policy and intent of the ISTEA Act. 

Throughout our work in Florida, we have recognized the need to 
include Amtrak as a partner in proposed intercity passenger oper- 
ations. And we support the efforts to provide Amtrak with a long 
term stable source of funding. 

Mr. Chairman, Florida has been through a full cycle of enabling 
legislation, route planning, technology and operational assessment, 
private sector participation, project development, and financial 
analysis. Although we haven't yet found the precise combination 
for complete success, we have built a solid base of experience and 
data, and will be moving forward with our high-speed rail and 
maglev projects. We are pleased to be able to share our experience 
with others and with the Federal Government. 

Thank you for your interest. 



Senator Lautenberg. Thanks very much, Mr. Smith. We have 
your prepared statement and we will insert it in the record along 
with your more comprehensive statement when it is received. 

[The statements follow:] 

Statement of Charles H. Smith 

Mr. Chairman and members of the Subcommittee, thank you for this opportunity 
to testify on the important subject of high speed rail and maglev transportation. My 
name is Charles H. Smith, Manager of High Speed Transportation for the Florida 
Department of Transportation. Florida has been one of the most active states in 
pursuing and developing high speed transportation programs for well over ten 
years. With your permission, and because of the short notification for this hearing, 
I would like to submit a more comprehensive written statement within the next sev- 
eral days. 

In 1981, Senator Graham, then Governor of Florida, was the first foreigner to ride 
the Japanese superconducting maglev train operating on a test track in southern 
Japan, and he also was able to evaluate and pilot the Japanese Shinkhansen or bul- 
let train which had been in operation since 1964. Upon his return to Florida he di- 
rected the DOT to conduct a statewide high speed rail feasibility study. That study 
concluded that a pubUc-private partnership should be established and that with a 
variety of innovative financial incentives, a high speed raQ system financed largely 
by the private sector through real estate development could be built. 

This public-private partnership concept was incorporated in enabling legislation 
enacted by the Florida legislature in 1984 as the Florida High Speed Rail Transpor- 
tation Act (subsequently amended and streamlined in 1992). The key incentives pro- 
vided in this enabling legislation were: 

— The opportunity for the private sector to use real estate development to finance 
the system, including benefit assessments and tax increment financing, 

— The use of state highway right of way, 

— The ability for the state to issue tax exempt bonds on behalf of the private com- 
pany, and 

— ^A centralized environmental permitting and licensure process. 

After several years of joint planning by the state and two international private 
consortiums for a 300-mile route connecting Miami, Orlando and Tampa it was con- 
cluded that even with these incentives the Florida high speed rail project could not 
be financed and built solely as a private sector sponsored project. 

First, the volatility and general decline in real estate investments in Florida, cou- 

f)led with the national savings and loan disaster and the oncoming recession in the 
ate 1980's wiped out real estate as an incentive for private investment. We still be- 
Ueve the concept of real estate "value capture" can contribute to financing, but 
projects of this magnitude cannot depend on this as a principal source of funds. 

Second, although these high speed rail plans used: highway and publicly-owned 
ran lines, these corridors do not necessarily provide the best alignments for high 
speed systems due to curvature, vertical alignments and at-grade crossings. High 
speed trains operating at speeds greater than 110 mph will need dedicated, grade- 
separated routes. 

Third, tax-exempt bonds were considered essential for private sector investments. 
We were successful in 1988 in getting the federal tax code amended but only to the 
extent that 25 percent of anv bond issue still must be allocated from a state's cur- 
rent private activity bond volume. Unfortunately, this 25 percent requirement is an 
effective barrier to the use of tax-exempt bonds. Mr. Chairman, we are appreciative 
of your support and co-sponsorship with Senator Graham and others of an amend- 
ment to the tax laws that would remove high speed rail bonds from this volume cap 
and allow high speed rail the same treatment as airports and transit systems. 

I would also say that a centralized environmental permitting and licensing proc- 
ess at the state level is essential for the timely and cost effective approval of inter- 
city systems. This centralized process was later incorporated in the 1988 state 
maglev enabling law and the Florida maglev project in Orlando which was subse- 
quently certified for construction in about 18 months. 

Based on our experience in Florida, we believe there are a number of areas where 
federal legislation, programs and policies could be used to encourage and facilitate 
high speed rail and maglev systems: 

— First and foremost, high speed rail needs to have a stable and secure source 
of federal revenue dedicated for this purpose. A trust fund modeled on the high- 


way and airport trust funds based on the equivalence of a penny or two of gas 
tax revenue would be appropriate. In any event, without a secure, earmarked 
allocation, high speed rail and maglev cannot compete with highway and airport 
projects funded at 70-90 percent from federal sources. 

— We support the passage of President Clinton's economic stimulus package, 
which includes the already authorized $725 million funding for the ISTEA 
maglev prototype program and an additional $646 million for high speed rail 
projects. There are a number of prototype maglev projects on the drawing 
boards around the country to develop an American-made maglev system. Two 
private maglev consortiums in Florida have announced plans to begin develop- 
ment of maglev prototypes that could become the new high tech industry for 
the post-cold war era, and employ the expertise of our defense and aerospace 
industries in the process. 

— We strongly believe that while public-private partnerships should be encouraged 
and developed to deliver high speed rail and maglev systems, the contributions 
and role of the public sector must be expanded. It is unrealistic to expect pri- 
vate enterprise to build a high speed transportation system while, at tne same 
time, public entities are financing and building our highway and aviation infra- 
structure with public subsidies. 

— We are pleased the Florida high speed rail corridor was designated by the 
USDOT as one of the five ISTEA 1010 corridors for grade crossing hazard elimi- 
nation. Although the federal funding of $1 million per year is not great, this 
is an important recognition by Congress and the federal government of the 
value of high speed intercity rail service. We have also taken advantage of the 
high speed rail demonstration provisions of ISTEA Section 1036 and requested 
demonstration of the ABB X2000 train in Florida along with several innovative 
grade crossing barrier systems for lines where total grade separation may not 
be possible. 

— ^Finally, we are just completing a study to use the median of Interstate 4 be- 
tween Tampa and Orlando for high speed rail. This highway is scheduled for 
rebuild and Secretary Watts has directed that the highway design include provi- 
sions for a high speed line. This will save money, reduce environmental impacts 
and implements the intermodal policy and intent of ISTEA. Also, we will soon 
be completing a comprehensive statewide high speed rail ridership and market- 
ing study. Preliminary results confirm that Florida has an excellent market for 
intercity high speed rail. 

— Throughout our work in Florida we have recognized the need to include Amtrak 
as a partner in proposed intercity passenger operations and we support efforts 
to provide Amtrak with a long term, staole source of funding for capital im- 
provement. The success of Amtrak's X2000 tilt train test clearly demonstrates 
the potential and need for high speed trains. 

Mr. Chairman, Florida has been through a full cycle of enabling legislation, route 
planning, technology and operational assessment, private sector participation, 
project development and financial analyses. Although we haven't yet found the pre- 
cise combination for complete success, we have built a solid base of experience and 
data, and have learned a lot. We are pleased to be able to share our experience for 
the benefit of others, including the federal government. 

Thank you for your interest. 

Statement of Charles H. Smith 

Mr. Chairman and members of the Transportation Subcommittee, thank you for 
permitting me to submit this written statement to accompany my oral presentation 
to the subcommittee on March 4. This report will proviae additional oetail on the 
high speed rail and maglev projects in Florida. 

For the past ten years, the State of Florida has been aggressively working to es- 
tablish high speed rail and maglev transportation systems as a component of our 
state's transportation network. Not only do we have to accommodate our normal 
population and business activities, but we also have to supply transportation facili- 
ties for the 40 million tourists who visit our state each year. As you can imagine, 
this places an extraordinary strain on our existing highways and airports. High 
speed surface systems must be developed to complement these other modes and 
allow us to minimize the difficult prospect of trying to accommodate all of our travel 
with new or expanded highways and airports. RQgh speed ground transportation, 
whether wheel on rail or maglev technologies, is an energy efficient ancf environ- 
mentally sensitive form of passenger transportation that can reduce our dependence 


on foreign oil and create a new industry with all of the attendant jobs and economic 
stimulus activity. 


Commencing with statewide feasibility and technology studies in 1982, our state 
has moved forward deliberately and systematicallv with environmental, financial 
and technology evaluations for several high speed rail and maglev proposals. In 
1984, a high speed rail feasibility study concluded that implementation of a high 
speed rail system in the state was feasible and that these systems could be bmlt 
and operated profitably by private sector enterprise using innovative financing tech- 
niques. This conclusion was based on the assimiptions that right of way would be 
provided by the state and that tax exempt bonding, real estate development and 
benefit assessment methods would be used to finance the project's infi-astructure 


In 1984, the Florida legislature enacted the Florida High Speed Rail Transpor- 
tation Commission Act which established the authority to solicit private sector pro- 
posals to finance, build and operate high speed rail systems in the State. The Act 
estabUshed a centralized, competitive procurement and licensing procedxire for the 
award of a franchise. Once issued, the fi-anchise was to become the sole authority 
for the rail line, stations, and any real estate developments used for financing the 
system. The Act created a "one-stop permitting process" for all environmental and 
land use requirements. 

In 1987, the State issued a request for proposals which was responded to in 
March, 1988 by two private sector entities, the Florida High Speed Rail Corporation 
and the Florida TGV Company. Both companies proposed to build a high speed rail 
system from Miami to Orlando and Tampa. The Florida High Speed Rail Corpora- 
tion proposed to use the ABB X-2000 technology and the Florida TGV Company 
proposed to use the French TGV Atlantique train. Initiallv, both proposals assumed 
revenues generated fi"om real estate developments would be used to offset capital 
and infi-astructure costs. The local governments' opposition to the expanded use of 
real estate development as the major means of financing this project along with the 
realization by the two proposers that high speed rail systems could not be built 
without public fiinding, led to the withdrawal of the applications fi-om further con- 


A serious shortcoming in the 1984 statutory process was its failure to structure 
decision-m£iking in a progressive, logical sequence that corresponded to business de- 
cisions of any private entity undertaking a major capital investment. The Florida 
legislature, amended the High Speed Rail Act in 1992 to deal with these problems 
and to streamline the application and franchise process. The new law emphasizes 
the need for a stronger public/private partnership. 

Instead of the all encompassing process established by the original act, the 
amended law created a phased approach to the application and fi-anchise process. 
The first phase would be the approval and award of a fi-anchise to a private entity 
to build a high speed rail system based on that entity's business and financial plans. 
Once that is done, the Department, along with other local, regional and state agen- 
cies, would work together with the fi"anchisee to develop the more detailed plans 
such as design, construction and all environmental documentation for the project. 
Formal local and statewide hearings would then be conducted and finally the Flor- 
ida Governor an Cabinet would award certification for the project to move forward 
to implementation. 


Before proceeding with a new request for proposals in accordance with the 1992 
high speed rail act and with the new application and fi-anchise process, the Florida 
Department of Transportation opted to conduct more detailed analysis of both inter- 
city high speed rail ridership potential and of alignments and corridors throughout 
the state that are suitable for high speed rail operation. 

Starting in December, 1991, the Department undertook three study efforts as fol- 

1. Statewide corridor assessment study: This study investigated various corridors 
throughout the state and their potential for high speed rail implementation. The 


study evaluated many existing rail, highway, and utility corridors and identified the 
most promising candidates based on environmental consideration, physical features, 
geometry, operational considerations and potential for capacity enhancement and for 
high speed rail implementations. 

2. Orlando-Tampa Corridor Assessment Study: This study investigated in more 
detail the Orlando-Tampa Corridor and its suitability for high speed rail implemen- 
tation. Because of intensive development and the existence of major wetlands within 
the Corridor, the Orlando-Tampa Study was forced to focus on existing corridors 
connecting Tampa to Orlando — mainly the I— 4/1-275 and the CSX rail corridors. Be- 
cause of the geometric limitations associated with the CSX Corridor and the numer- 
ous at-grade crossings that would have to be separated, the I-4/I-275 corridor is 

f)roving to be the best alternative for high speed rail implementation between Or- 
ando and Tampa. For this reason, the Department has undertaken a bold effort to 
preserve an envelope within the median oi the I-4/I-275 corridor between Orlando 
and Tampa for future high speed rail implementation. Several alternative route 
alignments and station sites have been investigated as shown in Figure 1. 

3. Statewide Market and Ridership Study. The purpose of this study is to docu- 
ment existing intercity travel between Florida's major cities, to assess intercity trav- 
el potential by alternative modes to develop intercity travel forecasting model, and 
to forecast future intercity rail travel using different classes of rail service. As part 
of this study, intercept surveys were conducted at several major highways and air- 
ports throughout the state. 

Data collected from the surveys were used to develop the Total Travel and Mode 
Share Demand Models as shown in Figure 2. Figure 3 shows the 1992 travel market 
analysis results. The largest intercity travel market is the Orlando-Tampa market 
with 12.6 million person trips per year. As expected, the intercity travel market is 
dominated by the automobile mode over short distance trips while bigger portions 
of air trips are evident in longer distance trips such as Tampa — Southeast Florida 
where air trips represent about 24 percent of the total intercity travel for that mar- 

Applying the ridership models developed under this study, the annual ridership 
on an Orlando-Tampa mgh speed rail system ranged from 1.8 to 2.8 million riders 
depending on technology ana alignment, stations served, level of service provided, 
and mode of access to the high speed rail stations. Appljdng the same models for 
a Miami-Orlando-Tampa system, annual ridership estimates ranged from 4.6 to 7.3 
million riders. 

Upon completion of these studies in the spring of 1993, the Department will begin 
implementation of a statewide high speed rail system in accordance with Qie 
amended high speed rail act. 


In addition to its efforts to implement intercity high speed rail in Florida, the 
state, through the enactment of the Maglev Demonstration Project Act by the Flor- 
ida Legislature in 1988, is taking a lead role in furthering the development and im- 
plementation of new high speed ground transportation technologies. The state is- 
sued a request for proposals in 1988 to solicit domestic and international companies 
to submit plans for wnat would likely be the first commercial maglev oneration in 
the world. Responding to this request for proposals, a new Florida-basea company, 
Maglev Transit, Inc., formed a consortium of domestic and international companies, 
organized around the Transrapid maglev technology and submitted a proposal for 
what we now call the Florida Maglev Project. Since its submittal in 1989, the MTI 
proposal has gone through multiple certification reviews, numerous public hearings 
and intense scrutiny by federal, state and local agencies to assure compliance vnth 
every aspect of developing and approving a maior transportation project. 

In June 1991, the Florida Governor and Cabinet issued a final certification order 
which authorized MTI to proceed with project development. As of March 1993, MTI 
has advised the Department that the partnership's financial plans are not process- 
ing as planned and that they may request an extension of the deadlines for submis- 
sion of final financial plans. Whether or not an extension will be granted will de- 
pend on the nature ana extent of the MTI request. 


If the project is built this system willprovide visitors to Orlando rapid access from 
Orlando International Airport to the Cfentral Florida tourist area at International 
Drive, 14 miles to the west. Figure 4 shows the location of this project. 

More than 8 million annual passengers are projected to ride this system which 
will operate around the clock with 15 minute headways during peak periods. The 


13.5 mile trip will take only 6.5 minutes at a top speed of 250 mph. Highlights of 
this proposal are as follows: 

The Maglev Line 

— Ler^th is 13.5 miles. 

— Sin^e track guidewav will be on an elevated structure, minimizing environ- 
mental impact on wetlands. 

— Maintenance facility will be located at the International Drive end. 

— Electromagnetic systems (EMS) Transrapid technology developed and tested in 
Germany. Operational on test track since 1983, with speed capability of 350 

— F*ropulsion is provided by a linear synchronous motor (LSM) constructed as an 
integral part of liie guideway. 

— ^Total project cost of $622 million. Major private financing will be provided by 
Japanese investors. $97.5 million in federal funds were authorized in the Inter- 
modal Surface Transportation Efficiency Act of 1991 for the project. 

— ^Equity financing will be provided through an international partnership of C. 
Itoh, Dai-Ichi Kangyo Bank and others. 

— Project developers also plan a major hotel complex at the International Drive 

— Projected to begin in 1997. 

— 24 hour operations; 4 train sets of 5 cars. Each train has seating capacity of 
400; daily carrying capacity of 51,200. 128 daily one-way trips planned with a 
total annual ridership of 8.4 million in the first mil year of operation. 

— ^Trains operate on 15 min. headways in peak periods. 6 minute trip time be- 
tween stations; maximum speed of 250 mph. 
Implementation Schedule 

— The Department will provide public agency oversight for compliance with all 
certification conditions. 

— The Federal Railroad Administration will have jurisdiction for safety compli- 
ance in accordance with the 1988 Railroad Safety Act. 

— Construction must begin within 3 years of certification (June 1994). 

— Construction will take approximately 2.5 years. 

— ^Vehicle operational testing can be completed in 4 months after construction is 

— Revenue operation must begin no later than 3 years after construction begins. 


Recently two US-based maglev companies have announced plans to begin develop- 
ment of domestic maglev prototjrpes in Florida. The American Magneplane consor- 
tium has initiated plans to construct a 2-3 mile test track in the Lakeland area to 
begin development of the superconducting Magneplane system. 

The American Maglev Star consortium has issued plans to build a 20-mile reve- 
nue line connecting Port Canaveral, Kennedy Space Center and the mainland. Ini- 
tially, the line will be used to develop and test a superconducting maglev technology 
for extension throughout the U.S. 

Both these projects are being initiated with private funding, but expect to compete 
for the maglev prototype program authorized in Section 1036(c) of the Intermodal 
Surface Transportation Efficiency Act. 

Florida is recognized as a progressive center for maglev development because of 
its state legislative initiatives and innovative technical work over many years. The 
State of Florida and the private consortiums developing maglev and high speed rail 
look forward to working closely with other states, the federal government and pri- 
vate enterprise to make maglev and high speed rail a reality for the benefit of the 
entire nation. 































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Senator Lautenberg. I think we've established a record for six 
witnesses, each of whom has finished on time. That talks about 
high speed in the condensed form. 

I assume that you heard some of the questions that were asked 
before of the first panel. And I want to resubmit those questions 
to you. And any one of you who would like to jump in, I would in- 
vite to do so. 

And that is, with the $1.3 billion that President Clinton has pro- 
posed to be available for the development of high-speed rail and 
maglev systems, any comments you'd like to make about how this 
committee should distribute these funds in order to maximize the 
development of high-speed rail systems around the country. 

Are there any volunteers? Ken? 

Mr. Mead. Yes, sir. Do you see this map here, down on the floor? 

Senator Lautenberg. I see it. 

Mr. Mead. There are more high-speed rail corridors designated 
on there than FRA has designated. You would be interested in no- 
ticing that of the five corridors that FRA designated, none of them 
are the corridors for which there is a pending ultra high-speed pro- 

I think the incremental approach definitely ought to be pursued. 
I think that the committee needs to give some attention to higher 
speeds in the nonelectrified corridors. 

And also I think some attention ought to be paid to one or two 
flagship projects in this country. If we try to pursue five or six flag- 
ship projects, you're going to spread the money too thin. The pri- 
vate investors will not be there. 

Senator Lautenberg. Do any of you disagree with Mr. Mead's 

Mr. Smith. Mr. Chairman, if I may, I think there are several 
States that have been very active in high-speed rail planning and 
have gotten their plans well along; certainly Texas ana Florida. 

We're engaged in trying to develop a maglev project right now. 
I mentioned to you that we have plans to preserve and to actually 
design the Interstate 4 median between Tampa and Orlando. To 
me, that illustrates a very, very good place to begin to develop a 
real serious high-speed rail program. 

The market is there. We've done a market study. We think we 
are ready to really move forward, if the funds are there, and would 
do that. 

Senator Lautenberg. I'm not surprised, Mr. Smith, that you rec- 
ommended we consider the initiatives developed by Florida, but if 
one were to argue another side, one could say, well, you have a sig- 
nificant problem with grade crossings in Florida. But I'm not sug- 
gesting tnat your State should not be one of those. 

I think it could be very well served by high-speed rail in the 
State of Florida, but it's hard not to agree that is concentrating our 
relatively limited investment capability in a few areas. Let's get 
these programs going. 

Mr. Mead, I'm struck by the chart that sits on the bottom there, 
that says if you want to get into maglev, the costs per mile are sig- 
nificantly more than the others. And I assume that the other cal- 


culations include the cost for acquiring rights-of-way and so forth, 
which is essential for the TGV kinds of programs. 

Mr. Mead. Yes, sir. 

Senator Lautenberg. OK. Does anyone at the table know of any 
maglev programs that are operational for passenger service on a 
routine basis? Mr. Vranich? 

Mr. Vranich. Mr. Chairman, none are in operation in revenue 
service. I did, about 6 months ago, ride the Grerman Transrapid 
maglev line at 190 miles an hour. 

Senator Lautenberg. The length of that trip was? 

Mr. Vranich. The length of the — oh, it isn't very long. It's only 

Senator LAUTENBERG. It's harder to stop and then start- 

Mr. Vranich [continuing]. Seven miles or something like that. 
But it was remarkable to me how good the ride was. And I think 
what we have with maglev is an emerging technology that I always 
like to say it's a sure thing. It's going to happen. Just like every- 
body was convinced that the Wright Brothers' second flight would 

Senator Lautenberg. Do you know when the first maglev dem- 
onstration was performed? 

Mr. Vranich. Starting 20 years ago, the Germans and Japanese 
began developing these projects and have poured — each country 
has poured more than $1 billion into it. 

The Japanese technology, by the way, is the one that comes in 
at about $60 million a mile, because it's a unique superconducting 
system that has to handle Japan's rugged mountains. And there's 
a lot of tunneling there. 

I always disagree that that is a possible cost in the United 
States, because other than the first line, demonstration line, I 
think the costs for maglev can be brought way down. And experts 
at companies like Gruman say that they could build it for between 
$10, $15, and $20 million a mile, depending on topography. 

Senator Lautenberg. Why wouldn't an inclination be there to 
try to adopt the TGV steel-on-steel type of system? Because it's my 
understanding that in the Northeast corridor section north of New 
York on the way to Boston, that some track straightening could be 
done for a cost of around $1 billion, plus a small sum, maybe a 
total of $1.2 billion, and you could get benefits almost immediately 
upon completion of some of the track realignment? 

Mr. Vranich. Oh, you can. And I'm fond of seeing that there are 
different high-speed surface transportation solutions for different 
parts of the country. 

In brief, I could make an argument to you that we probably 
should go to maglev line from Anaheim, CA, to Las Vegas, over the 
rough mountains, avoid tunneling, save money. Maybe I could 
build that less expensively than a steel-wheel line. 

In a place like Ohio, from Cleveland to Cincinnati, or Texas, Dal- 
las to Houston, trains like the French TGV, German ICE, are per- 
fect. They're fairly flat. And there's a lot of reasons why they work. 
So, I always like to say that there are different trains for different 

Senator Lautenberg. We could have the "love train." [Laughter.] 


That's the counterpart to the boat. What's the distance of the Or- 
lando project, Mr. Smith? 

Mr. Smith. It's 13 V2 miles, Senator. And it's the only project in 
the country that actually has gone through a certification process, 
where the State has actually awarded the rights to a company to 
build that project. 

On its present schedule, it's to go under construction within 2 
years, and would be in operation in 3 years. 

Senator Lautenberg. What would be the mission there for high- 
speed service? Is that the primary reason for doing high-speed 
service or does maglev lend itself to the terrain or the 

Mr. Smith. No; this is a demonstration project. It's in a unique 
market in Orlando going over to the Disney area. And it does have 
a built-in ridership market. The State law that authorized this 
project was a demonstration statute that wanted to demonstrate 
this new technology. 

This system certainly could become the high-speed intercity tech- 
nology, once it's proven, but obviously we'd want to make sure it 
works and gets built. 

Senator Lautenberg. Would it be part of the Disney complex? 
Is the mission to get folks to take an amusing ride? Because for 15 
miles, if you go 60 miles an hour, the arithmetic's pretty simple. 
I mean, it's not the kind of thing that would say, well, let's fly in- 
stead of taking that 15-minute train ride, 

I just wonder whether maybe we ought to call up Michael Eisner, 
whom I know, and see if they would do it out of the Disney funds. 

Mr. Smith. I think somebody called him. And he said no. 

Senator LAUTENBERG. He said no. But what about the question 
of uniformity? Should the systems be the same? Is there an advan- 
tage to having a national standard — of technology A or technology 
B — and having high-speed sections of that system? 

I mean, you're not going to go cross-country at 200 miles an hour 
on a train. It's just not going to be economically feasible. But how 
about the fact that there is an interconnect and you can use equip- 
ment easily, interchangeably, between the different systems? 

Mr. Mead. I think that's an interesting point. The Ministry of 
Research and Development in Grermany sponsors the Transrapid 
maglev. It's interesting to note that the Ministry of Transport 
seems to be supporting steel-wheel on steel-rail, where the research 
arm of the government is supporting maglev. 

And I'm not sure what the answer to your question is, but I be- 
lieve the Grermans are facing this issue. The maglev research and 
development in Grermany is being financed, but has not been put 
into revenue service there. And I don't know of any immediate 
plans to put it into revenue service in Grermany. 

Dr. MULVEY. There's also some trends toward integrating these 
high-speed rail systems with the Nation's airports, so that these 
systems become feeder operations, substituting for many short dis- 
tance air trips and becoming not only part of the Nation's rsiil sys- 
tem, but part of its overall intermodaJ transportation system. 

Senator Lautenberg. The loan guarantees present an interest- 
ing prospect, because it's believed that at least $10 in private sec- 


tor financing can be arranged for every $1 appropriated. That's 
with, again, Government guarantees. 

Does it strike you as reliably the best way to leverage private 
sector dollars toward the development of high-speed rail systems? 

Mr. Salci. I think that to answer that question and to preface 
it by your former question, I think that the project that we're in- 
volved in in Texas, which has been a project where there has been 
certificate of public need established by a public agency and about 
3 years of work and about $30 million of actual private investment 
to complete ridership and environmental studies, is nearing com- 

The ability for any of these projects, like Texas, to be successfully 
financed, obviously depends primarily on what the ridership num- 
bers are going to be, because that's going to generate revenue. 

But getting them off of the ground, as I said in my remarks, the 
venture capital required, the up-front moneys, clearly having the 
capacity of Government-backed guarantees is critical. And to fur- 
ther amplify that, the comment you made earlier to Mr. Cla3rtor 
about the TGV and the financing, it is true that the French have 
a very strong national policy on their ground transport systems, 
but the reality is that setting aside that, yes, there's electrical nu- 
clear power, the system was financed with Government guaran- 
tees — ^the initial system, the Southeast Line — initially on an 11- 
year schedule, and it was repaid in 9. 

And the Atlantique Line, the second line that was put up and 
running in 1989, is undergoing the same kind of payback, even 
with a greater acceleration. 

So the realitv is, under the right environments, yes, these things 
can be privately financed, but this is not France and I don't want 
to represent that. The case in Texas, in particular, is we have a sit- 
uation where there are 19 million people today traveling amongst 
these three major cities, of which about two-thirds of the State of 
Texas live or reside within that Texas Triangle. 

The forecasted ridership for the 1998 timeframe, when this sys- 
tem would be theoretically up and running if it proceeds, is about 
30 million travelers, and by the year 2015, about 60 million. 

So the reality is. No. 1, the existing capacities of highways and 
airports simply can't even begin to meet the growing demand that's 
going to be there. And Texas is a populous and growing State. 

And, second, we believe the project in Texas will be compatible 
with airline travel. In fact, a large part of the forecasted ridership 
analysis is based on the ability to supplant the intrastate ridership 
currently carried by American and Delta Airlines, who have large 
hubs and who don't make a lot of money running these hubs. I 
mean, American Airlines just recently announced they want to get 
out of the short haul business. 

These cities are of ideal distances, about 200 to 300 miles apart. 
And the TGV type of system, we think, is ideal, but up front 

Senator Lautenberg. Has Texas, the State of Texas, decided to 
put any State funding into this project at this juncture? 

Mr. Salci. At this juncture, the State has not. The State, in the 
creation of its authority, indicated that the authority itself would 
be not eligible for State funds, but that doesn't prohibit the cor- 
poration itself from potentially being eligible, but that's an issue 


that we're going to have to address, Mr. Chairman, There's no 
question about that. 

Senator Lautenberg. Could guarantees be a substitute for 
bonds, do you think? Would there be larger appeal for guarantees, 
significantly, than straight bonding issues? 

Mr. Salci. I think that's a function of interest rates and the mar- 
kets at the time you go to market, Mr. Chairman. And today's mar- 
ket rates are very attractive. And tax-exempt bonds versus conven- 
tional, the basis point spread isn't that great, but this current situ- 
ation isn't going to last forever. And having that capacity, I think, 
is very important. 

Senator Lautenberg. The Question is: How do we treat the ac- 
counting here? Is there a standard now by which we charge our op- 
erating budgets with credit guarantees? 

Mr. Mead. Yes; I'll get back to vou on a full response for that 
question for the record, but, you know, several years ago, these 
things, guaranteed programs, were off-budget. 

For example, title 11, Maritime Administration Program had in- 
vested heavily in L and G fleets. It went belly-up. The full faith 
and credit of the United States then was called upon. And Con- 
gress had to keep putting money into this program, but it was to- 
tally off-budget. 

It has been changed, but I'm not sure exactly how it has been 
changed. I don't think it is considered 100-percent outlay. 

Senator Lautenberg. Since I asked Mr. Salci the question: How 
much funding has been provided by the other States who have a 
specific interest represented? 

Mr. Smith. Well, in Florida, Senator, our statute does not pro- 
hibit public funding. Although during the process, the private com- 
panies have come in and evaluated whether or not they could pro- 
vide the financing through their own sources; equity, loan guaran- 
tees from their own sources, as well as the real estate. And they 
pursued that for several years and never did ask the State until 
the very end for funding. 

And at that point, it was a little — politically, it just wasn't pos- 
sible. The State of Florida was in a budget crunch. And we weren't 
able to respond favorably, but they simply weren't able to finance 
it through the private sector process that had been established, but 
we're not prohibited from spending public funds. 

Senator Lautenberg. But there's been nothing so far. 

Mr. Faulkner, is there anything from Ohio? 

Mr. Faulkner. All of the effort, to date, on the implementation 
plan of our consortium has amounted to about $1.5 million, which 
is basically a feasibility plan for moving forward, but we have not 
advanced into the actual preliminary development until the clearer 
signs of the sources are there. 

Senator Lautenberg. How about the involvement of your State 
environmental agencies in supporting the projects and interest in 
compliance with clean air environmental impact statements? What 
kind of response have you seen thus far? 

Mr. Smith. In our process in Florida, we have an environmental 
certification process tnat goes with the project. And all of the State 
agencies and local agencies; in fact, the private environmental 
groups, were very, very supportive of high-speed rail and maglev. 


Probably in the case of the maglev project, it was certified in record 
time, because it was viewed as an environmentally sound project. 

The environmental people would look at it and say the alter- 
native is so much worse, that high-speed rail or maglev systems 
really should be built in environmentally sensitive areas, such as 
Florida and other States as well. 

Senator Lautenberg. Mr. Faulkner, have you had any involve- 
ment at all from your State environmental department? 

Mr. Faulkner. The environmental group has been pretty much 
like Florida. They're very supportive in theory of what high-speed 
rail can do, but to be quite honest, I don't think they see it as a 
near-term reality. So they aren't really taking any official position. 
Most of the effort has been directed more to metropolitan areas 
where they're having to deal with the requirements under the 
Clean Air Act. 

Senator Lautenberg. Mr. Salci, do you 

Mr. Salci. We have made substantial progress. We have- 

through the franchise process in Texas, the authority itself that's 
governing the regulatory aspects — has hired an environmental con- 
sultant, which we, the private consortium, are paying for. The work 
is about one-half complete. 

It basically is work that's being done at the basic level of comply- 
ing with the National Environmental Protection Act. We've had 
about 50 scoping meetings throughout the State, soliciting public 
participation; that includes all of the various State agencies. And 
the Federal Railway Administration has been very deeply involved 
in assisting us in that process. 

Senator Lautenberg. Do any of you believe that — Mr. Smith, in 
your case, I just had visited Florida and I spoke to some of the 
transportation people there. There's a great deal of interest in an- 
other north-south highway adjunct to the turnpike and 95, I guess 
it is, or 195 — I don't remember the number. Do you think your 
State would support your high-speed rail projects with Federal 
highway funds if they had the opportunity to do so? 

Mr. Smith. In principle, if they had the opportunity to do so. I 
guess. Senator, the — unfortunately, Florida is one of the donor 
States where we send a lot more money to Washington than we get 
back. I think it's about 82 cents on the dollar we get back. So it 
makes it difficult. 

However, let me state that our policy in our State and Secretary 
of our Transportation Department, Secretary Watts, about a year 
ago, announced a policy that we would not build anymore inter- 
state or intrastate highways greater than 10 lanes total, 4 of which 
would be HOV lanes; and as part of that policy, said that any time 
we plan or rebuild a highway, we're going to plan to accommodate 
a high-speed rail or transit system in urban areas, depending on 
the location. 

So I think our policy is very clear that we're going to support 
high-speed rail to the extent we can, using the flexibility of provi- 
sions of ISTEA or any other future provisions that may come along. 

The project I mentioned about the Orlando-Tampa 1-4 recon- 
struction, that work is, right now, being funded, obviously, from the 
highway program; however, some of those funds and some of that 
work will, in fact, result in a right-of-way, a grade-separated, fully 


dedicated right-of-way for a high-speed rail line connecting Tampa 
to Orlando on a route of about 75 miles. So, in effect, we are using 
highway funds and planning activities to support the high-speed 
rail effort. 

Senator Lautenberg. Don't you think — and by the way, I sup- 
port rail rights-of-way along our highways, but don't you think that 
it then presents a competitive attraction for the passenger who 
says, "Well, OK. Today the weather is a little bad. I'll hop on the 
train. Tomorrow, if it's a nice day, we'll put the top down and go"? 

The answer I get from your comments, Mr. Smith, is that, yes, 
if we can build highways, we can kind of include some rail service. 

Florida got $97 million, I believe, for its interests, to date. I hope 
that your State doesn't feel short-changed on the terms of donor or 
donee relationship. We had quite a discussion about that during 
the ISTEA debate. And I think that things have been adjusted to 
make sure that our friends in Florida, particularly, are treated fair- 
ly. There's a lot of appeal here. 

Mr. Smith. We appreciate that. And we are, indeed, treated fair- 
ly. My only thought was that we have such tremendous highway 
needs that, probably, it would be very difficult for our highway pol- 
icymakers to just be able to take money that is absolutely essential 
for highways and transfer it to high-speed rail, but where it can 
work, we certainly intend to use the flexibility provisions of the 
highway program. 

Senator LAUTENBERG. Your maglev project was scheduled to have 
all of its financing arranged — I think you mentioned in your com- 
ments — by this June and can start construction within 1993. Is 
that schedule still on track? 

Mr. Smith. Senator, probably, just as — quite recently, it probably 
isn't. We probably will be asked to consider an extension of time 
for that deadline. I think with a project of this magnitude, with the 
new technology and totally a new concept, it's not unexpected, but 
we probably will be asked to extend it, which the department has 
the authority to do. 

Senator Lautenberg. Is the Japanese investment community in- 
terested in financing the project? 

Mr. Smith. Yes; the project is financed, primarily, by Japanese 
investments. The Bank of Tokyo and several other large trading 
companies are involved in the financing arrangement with the — of 
course, the German organization is supplying the technology. And 
that's been somewhat of a difficult set of negotiations, as I under- 
stand, of getting that partnership agreement. 

Senator Lautenberg. Translation. [Laughter.] 

Why isn't the American investment community interested, in 
your view, Mr. Smith? 

Mr. Smith. As a matter of fact, I think they are interested. I 
think that — ^we're going to begin to see and you're going to hear 
very shortly an announcement in Florida of an American consor- 
tium that is going to build the prototype maglev system for the 
United States, the United States of America, using aerospace and 
defense industries. 

A number of companies are beginning to form up. This is a very 
serious effort that's being promoted by the inventors of this 
maglev — originally, Dr. Gordon Danby and Jim Powell from New 


York. And they have been very interested and active in defining 
and designing what they think should be the prototype system for 
the United States, which answers one of your questions you raised 
earlier about should we have a single type of technology. 

Certainly, in the case of maglev. We're probably going to have 
maglev and wheel rail systems in this country. I don't have any 
doubt about that, but for the maglev system that becomes the 
interstate or the intercity system for large regions, clearly, it ought 
to be one technology. And I think that's the purpose of the ISTEA 
prototype program. 

So there are U.S. companies being formed up for that purpose. 

Mr. Mead. Just a prospective point, Mr. Chairman. For the cost 
of these systems, the R&D component is important, but the actual 
hardware is about 20 to 25 percent of the cost. 

Senator Lautenberg. That's a lot of soft costs, if you can de- 
scribe it that way. 

Thank you very much, gentlemen. 


Lehman Brothers 
statement of mr. robert c. brown, senior vice president 

Moody's Investment Services 

statement of kathy evers, assistant vice president, mass 
transit specialty group 

The Hadley Group 
statement of harriet stanley, principal 

Dillon Reed & Co., Inc. 

statement of marc fasteau, managing director, public fi- 
nance department 

Public Securities Association 
statement of micah green, executive vice president 

introduction of witnesses 

Senator Lautenberg. We'd now, at this late moment, like to 
hear from the next panel, the people from the investment commu- 
nity. We're anxious to hear their testimony. 

Thank you very much. 

Take the right name plate, otherwise we'll attribute your state- 
ments to your predecessors here. 

Mr. Brown, Ms. Evers, Ms. Stanley, Mr. Fasteau, Mr. Perez, and 
Mr. Green. Is everybody here? 

Well, we thank you very much. We're anxious to have the testi- 
mony summarized. And we would call first on Mr. Brown, senior 
vice president of Lehman Brothers, where I, in my former iteration, 
had a significant amount of contact. It has nothing to do with my 
favorability, I must tell you, but Lehman Brothers did a lot of work 
with my old company, ADP. 

Now, once again, Mr. Brown, please. 


Mr. Brown. Thank you very much, Mr. Chairman. And I can tell 
you, Lehman Brothers has very much valued its association with 
you during your time in the private sector. 

Just by way of introduction, prior to coming to Wall Street, I was 
assistant director of the Ohio Department of Transportation. And 
one of my responsibilities there was administration of Ohio's work, 



at that time, in the 1980's, in investigating the feasibility of a high- 
speed rail system for the State of Ohio. 

There really are two finance issues, I think, raised by high-speed 
rail. One is the credit question, and the second is revenue suffi- 

There are a number of panelists here today on credit. And I will 
say very little about that, except to say that certainly there are ele- 
ments of a high-speed rail system that — for which credits can be 
fashioned, which will be creditworthy and marketable. 

And those elements could be financed. But the more fundamental 
question for high-speed rail, as you have been hearing from many 
panelists today, is the question of revenues and project economics. 
And we should be blunt about this, Mr. Chairman. 

In the United States, high-speed rail is not a self-financing prop- 
osition. There simply are not enough revenues generated by a 
project to finance the entire program. A 1991 transportation re- 
search board study, which was an excellent and comprehensive 
study, concluded it is unlikelv that any new high-speed rail system 
in a major U.S. corridor would cover its capital and operating costs 
from farebox revenues. 

This is not a situation, but for congressional enactment of liberal- 
izing enabling legislation, the private sector will come forward and 
finance. And by enabling legislation, I include in that category the 
loan guarantees that there's been some talk of this morning. That 
kind of credit enhancement or other enabling legislation is not 
enough to enable one of these projects to be financed. 

What I would propose, Mr. Chairman, is a system of public high- 
speed rail corridors. And by that, I mean corridors that would be 
provided right-of-way that would be provided by the Government, 
drawing on the kinds of lessons that the Federal Government has 
learned from the successful experience with aviation and highway 

The right-of-ways would be constructed through some sort of 
Federal-State partnership, very much like the interstate system. 

The users of the corridor, the operators in the corridor, would be 
private. They would be private carriers, which would lease space. 

The technology could be varied in the corridors. In fact, that I 
would envision would actually make provision for both steel-wheel 
type facilities and the maglev facilities that there's been some talk 
about today. 

The lease payments that private carriers would pay should be 
sufficient to cover operating and maintenance costs. You've heard 
some discussion about that today. There are those kinds of projec- 
tions for usage of these corridors, but operating and maintenance 
costs — and that would include energy costs — could be covered. 
There might be, in addition, some contribution to capital, but cer- 
tainly, clearly, not enough to fully fund all of the capital costs of 
these programs. 

The benefits that I would see from this kind of program are that 
there would be some sort of national uniformity of purpose. And 
you talked a few minutes ago in some of your questions, Mr. Chair- 
man — raised some questions about a somewhat haphazard pattern 
developing as these different projects are being constructed and de- 
signed all over the country. 


With this kind of a program, there would be some national uni- 
formity of purpose and also national uniformity of standards in 
terms of safety and environmental standards. 

At the same time, by having private operators in the corridor, 
you would draw upon all of the private sector benefits that we typi- 
cally find attractive in the American economy; innovation, effi- 
ciency, competition, those sorts of things. 

This kind of program is not a small program. I don't mean to 
suggest that it is not a major effort by the Federal Grovemment. It 
would be an expensive program, but it is the kind of program that 
is in the same order of magnitude as the programs that we have 
had and do have now for the highway and aviation industry. It par- 
allels those programs very much. 

And if we are headed for a major effort in infrastructure, in re- 
building and revitalizing our infrastructure, this is the kind of 
thing that I do think makes sense. It does have elements of user 
financing that the existing programs have. It also has the kind of 
private entrepreneurship that you get in the — for example, the air- 
line industry, by having competing air carriers. 

And, yet, you also have, by virtue of the Federal involvement, 
you do have the kind of national planning and attention to national 
goals, consistent national goals, that is important in any kind of a 
vast public works program like that. 

Thank you, Mr. Chairman. 

Senator Lautenberg. Thank you very much. 


Mr. Brown. I do have a statement for the record that I'd like to 
Senator Lautenberg. We'll include that. 
[The statement follows:] 

Statement of Robert Clarke Brown 

My name is Robert Clarke Brown. I am a Senior Vice President of Lehman Broth- 
ers' transportation group, which is part of the Firm's pubUc finance investment 
banking department. Lehman Brothers provides investment banking and financial 
advisory services to public agencies throughout the United States, particularly those 
engaged in financing transportation and other infi-astructure facilities. 

In assessing the financial capability of high speed rail, the investment community 
will look at two questions: 

(1) Is revenue from the project sufficient to be leveraged into enough debt to build 
the project? 

(2) Is the credit strong enough that the debt can be sold in the bond market? 

As I wUl discuss below, the answer to the first question is No, available revenues 
fall far short of required levels. The answer to the second is more complicated, but 
encouraging: credit structures can be devised for certain elements of a high speed 
rail project to enable it to be financed. 


Let's be blunt. High speed rail in the United States is not a self-financing propo- 
sition. Project revenues alone — in every corridor with the possible, but unlikely, ex- 
ception of Boston-New York-Washington — will not support both capital costs and op- 
erating expenses. As the Transportation Research Board concluded in a 1991 study: 


It Is unlikely that any new [high speed rail] system in a major U.S. corridor would 
cover its capital and operating costs from farebox revenues.^ 

If TRB is right, and I have no doubt that it is, government guarantees and similar 
off-budget fixes will be of no help, for the problem is not with tiie credit. The prob- 
lem is insufficient revenue. 

But TRB's candid assessment does not mean high speed rail has no futxire in the 
United States. It simply means that governmental assistance is necessary. To date, 
infatuation with theories like privatization, joint development, and the like has 
tended to obscure that need. 

Prior to going to Wall Street, I served in the mid-1980's as Assistant Director of 
the Ohio Department of Transportation. One of my responsibilities was to admin- 
ister the state's efforts with regard to high speed rail transportation. It quickly be- 
came clear to me that high speed rail, for all its varied attractions — efficient, envi- 
ronmental, even romantic, was far too expensive to stand on its own. Ohio's project 
could never go forward without substantial state financial support. But there was 
neither the political consensus nor the political leadership necessary to fashion that 
support in Ohio. 

Nor has there been anjnvhere else in the United States. To this day, ovu- country 
has no high speed rail project. And there will be none, I believe, until there is an 
acknowledgment of the need for government support. TTie issue for the Congress is 
how to design that support so that it imposes tne smallest cost on the federal gov- 
ernment while drawing maximum support fi^m other sources. 


Building any transportation system is a costiy undertaking, and many of the sys- 
tem's benefits are too difiuse to be captured and applied to project cost — that is why 
government gets involved. Building a high speed rail system is no exception. It is 
no more realistic to expect the private sector to step forward and alone finance an 
American high speed rail network than it would have been to expect it to finance 
the Interstate highway system. 

The nation's transportation systems are its economic lifeblood. They are enor- 
mously expensive to build, and once built, they affect the way Americans live and 
work for generations. For those reasons, they have been constructed through col- 
laborative efforts of the federal, state and local governments and the private sector. 
These collaborative efforts ensure that the programs are based on both sound eco- 
nomics and wise policies. 

The federal highway system (of which the Interstate system is a part), for exam- 
ple, has been designed and bmlt by a federal-state partnership. The private sector's 
contribution has been in the funding — principally fuel excise taxes. Airports are also 
built bv intergovernmental partnerships, usually between the federal government 
and a local agency. User fees imposed on both passengers and airlines contribute 
a major share of airport costs. "The federal government contributes the "right-of- 
wajr" — the air traffic control system. 

"The collaborative efforts which have produced the highway and air travel systems 
work well for many reasons: 

— Participation of all interested parties forces an economic realism on project 
scope and cost. 

— Federal involvement produces adherence to environmental and safety stand- 

— Local government participation introduces land-use planning considerations. 

But it is the role of the federal government that is most important in shaping 
these programs. Drawing upon a national political consensus, federal leadership cre- 
ates the uniformity of vision and purpose that is critical for an investment of^such 
vast proportion and so pervasive and permanent an effect. 


The federal government can draw upon its successful experience with its highway 
and air programs to devise a collaborative plan that will bring high speed rsul serv- 
ice to the United States. The heart of the plan should be a system of "public high 
speed rail corridors." The corridors would be built, owned, and maintained by the 
government. Transportation service in the corridors would be provided by private 

^ Transportation Research Board, In Pursuit of Speed— New Options for Intercity Passenger 
Transport, p. 8. 


The corridors would be built by a federal-state partnership similar to that which 
built the Interstate highway system. Federal design standards would ensure safety 
and technical compatibility with a variety of types of rolling stock; states would op- 
erate and maintain the system. The federal government and the states would jointly 
determine corridor locations, with substantial input from those likely to use it. 

Initial construction in the corridors would, in all likelihood, be for conventional 
steel-wheel high speed technology. But the corridors should be of adequate size and 
alignment to later accommodate mag-lev technology. Large sections would be 
double- and triple-tracked to allow for multiple users and equipment of differing 
performance capabilities (e.g., different operating speeds). 

Usage of the corridors could be leased by any private party, which in most cases 
would be a common carrier. Such leases would not be financing leases, since use 
of the corridors would not generate sufficient revenues to amortize the capital cost 
of the corridor. Revenues would be at least sufficient, however, to cover both the 
maintenance and energy costs of the governmental owner. They should also be large 
enough to pay debt service on the tax-exempt bonds the states would issue to fund 
their share of the capital cost. 

The private users would supply the rolling stock, just as the airlines supply air- 
craft. Because of its mobility and relative standardization, rolling stock woiUd be 
financable, either by the operator or by a leasing company, as are aircraft. Under 
present law, high speed rail rolling stock cannot be financed with tax-exempt bonds, 
although other tax benefits, such as the investment tax credit and depreciation, 
would be available to a private party. 

Individual private users might build privately owned spur lines connecting to the 

Eublic corridor system, just as there are some private interchanges on Interstate 

Stations could be funded, as are airport terminals, through financing leases with 
the private users of the corridors. Local governments seeking to attract better rail 
service might contribute to the construction of such stations, either directly or by 
lending their credit. Stations can probably be financed with tax-exempt bonds under 
current law. 

Who might the private users of the new high speed rail corridors be? Some would 
be new entrants to the transportation industry, to be sure. But airlines might also 
find it a profitable business, both because it's a business they already know — trans- 
portation — and because it would be a way to collect customers for their air service 
and funnel them to airports — a multi-modal elaboration of the current hub system 
the large carriers all now use. And of course the railroads, which do not want the 
complication of high speed passenger trains on their own right-of-way, might find 
new markets to develop as operators of a high speed rail service. 

But the market for the corridors may well be larger than just passenger carriers. 
Experience teaches that new technology and new services find many new homes in 
the market place. Overnight delivery of small packages has become a staple of mod- 
em commerce. Providers of that service might find it more economical to replace 
some of the aircraft in their fleets with trainsets. The federal government might also 
find ways to support corridor users, as it supported the embryonic airline industry 
at a critical time with mail contracts. 


Some may object to the idea of government provision of high speed rail right-of- 
way, particularly if paid for from general funds. Other modes, they might say, are 
funded by user fees. Unquestionably, user financing is an important and valid con- 
cept in transportation funding. But examples of pure user funding are few and far 

Even though we think of both highways and airports as being "user" funded, nei- 
ther is totally so. While users ■typically pay most of an airport's cost, the airwavs 
provided by the federal air traffic control svstem — the "right-of-way — are paid wr 
in part with general revenues. The federal excise tax on motor fuel is levied on 
every gallon sold, not just those consumed on roads making up the federal highway 
system. Moreover, within each program there are complex cross-subsidies. Most 
studies show, for example, that large trucks pay less than the full cost of their use 
of public roads and thus are the beneficiaries of a cross-subsidy from automobile 
owners. Commercial airlines and general aviation users each believe costs and bene- 
fits are unfairly apportioned between them. 

In effect, the federal role in the case of both highways and air travel has been 
to focus greater resources on the program than the program itself generates. A simi- 
lar focusing of resources on high speed rail, particularly during its start-up phase, 
seems equally appropriate. 



Financings tied directly to project revenues, particularly the first few, will be dif- 
ficult credits in the market. This is so for two reasons. First, any start-up project 
is a test of faith for investors. The large bond issues for the toll roads built in the 
1950's, for example, were all sold without credit ratings because the rating agencies 
would not rate start-ups. Even today, financings for start-up toll roads have a much 
more difficult time of it in the market than do those for expansions of existing toll 
roads. That is particularly so when the toll road is in a new market or represents 
a new type of financing. Just yesterday, bonds were sold for a large start-up toll 
road in California; it was rated by only one of the three major rating agencies. 

Second, the inherent difficulty of start-up financings is compounded by the fact 
that there is no significant American experience with commercial high speed rail 
service. Consequently, ridership forecasts will be viewed even more skeptically than 
are toll road traffic forecasts. 

These kinds of credit concerns can be overcome, however, in the context of a pub- 
lic high speed rail corridor program. By limiting the project elements which are fi- 
nanced and structuring the credit to take advantage of outside credit support, it will 
be possible to finance certain elements of the program. The rolling stock can be se- 
cured by a pledge of the assets themselves, so those financings need not rely exclu- 
sively on project revenues. States may choose to finance their match of federal as- 
sistance by pledging lease revenues from the lessees of the corridor but then but- 
tressing that pledge with a pledge of the state's credit. 


Certainly the standard technical fixes the financial community has called for are 
in order. Liberalization of tax-exempt bonding authority, such as the Clinton Admin- 
istration's proposed removal of the requirement that 25 percent of any bond issue 
for high speed rail must be under the private activity bond cap allocation, would 
help. So would creation of a new category of "public activity" tax-exempt bonds not 
subject to the alternative minimum tax. So would liberalization of the tax treatment 
of non-governmental owners of high speed rail facilities financed with tax-exempt 
bonds and expansion of tax-exempt bonding authority to include rolling stock. 

But these improvements are only marginal. Both the Interstate highway system 
and the air travel system have had profound effects on the American economy and 
Americans' way of life, and so will a high speed rail network. Major change does 
not come about through tinkering with the old way. It requires a clearly articulated 
government policy and a concerted effort to implement it. Until that happens, there 
will be no high speed rail in America. 



Florida was one of the Tirst states torccognlrc that its future transportation needs could 
not be met solely tlirougb the extensive and very fine highway network and airport systems we 
enjoy la this state. In 1982 Governor Bob Graham, by executive order, created a blue ribbon 
committee to begin planning for a statewide high speed rail system. The committee initiated 
»nd completed a comprehensive feasibility study in 1983 which concluded that a high speed 
rail system could be built in Florida and, with innovative financing and incentives, could be 
accomplished largely tbrough private sector initiative. 

In 1984, the Florida Legislature enacted the Florida High Speed Rail Commission Act 
which formalized this public-private partnership and created a seven-member Commission 
within the Florida Department of Transportation (FDOT) to oversee the development and 
implementation of high speed surface lines. 

With the enactment of the High Speed Rail Act in 1984, Florida embarked on an 
Innovative and far-reaching program to meet its future needs for an efficient trnntportatlon 
system by planning for a statewide high speed rail line. Several foreign and domestic 
technology companies with both operating and prototype systems expressed interest in 
competing for a franchise to finance, build and operate the Florida system. The technologies 
included advanced electrified whcet-on-rail systems, magnetically levitated and propelled 
vehicles and linear induction motor technologies using advanced propulsion systems. 

The Act authorized the state to plan and establish a high speed ground transportation 
system for Florida based on the concept of a public-private partnership. This privatization 
approach to pi ovidlng for major transportation facilities and services was unique and exclusive 
to the High Speed Rail Act of 1984 and the subsequent Magnetic Lcvltation Demonstration 
Project Act which was enacted in 1988. Planning for both ot these projects has been underway 
in Florida (0 provide a statewide high speed rail system Initially connecting major urban areas 
with trains capable of operating in excess of 120 mph. The Maglev demonstration project is 
proposed to connect the Orlando International Airport with (he tourist attractions located along 
iDternalional Drive in the vicinity of Walt Disney World. 

Recognizing the difficulty in getting private sector financing for such huge projects, 
the High Speed Rail Act provided several important iooentives for private enterprise to 
consider in planning projects of this magnitadc. The primhry incentive was the opportunity 
to use real estate development as a means of financing the eapital cost of the system. The Act 
authorized the use of joint development, benefit assessment districts, tax increment financing 
and the award of development rights as part of the franchise agreement. All of these methods 
were available to the applicants In developing their proposajs. The Act also made available the 
state's power of eminent domain to acquire corridor property through condemnation if that 
were necessary. 

The Act envisioned the use of already existing highway and rail corridors to minimize 
environmental impact and the cost of land acquisition to thle applicant. Finally, the State was 
authorized to issue tax-exempt bonds on behalf of the applicant Any bonds Issued under this 
provision would have to be secured solely from the assets or revenues of the private sector 
franchisee. No public funds derived from the taxing authority of the state or local jurisdiction 
was to be used to secure any bonds issued for this purpose. 

A« the application process progressed, two companies submitted their plans in 1988 for 
review. The Florida High Speed Rail Corporation submitted » plan using Swedish high Speed 
rail technology with financing based totally on real estati development revenues. The TOY. 
Company of Florida based its'plans on the French developed TOY high speed train systems but 
indicated that It would require publlp funding to* initiate its program. The proposed route 
connected Miami, Orlando, and^he Tampa Bay area. • 

Over the next three years an intensive review process was conducted involving 
numerous public meetings. In 1989, the TGV proposal was li'ithdrawn by the applicant, leaving 
the Florida High Speed Rail Corporation's plan as [he only proposal for continued 
consideration. However, In July 1991, this proposal was also withdrawn due to the Inability 
Of the private consortium to finance their plan. 


On Jonc 6, 1991^ the Florida LcgUInlure abolished Ihe Florida High Speed Rail 
Transportation Commission and integrated responsibilities for all high speed rail and maglev 
programf within the Florida Deparlment of Transportation] This move consolidated highspeed 
rail planning with the statewide rail iraprbvcmcnt prog/am that includes high speed rail, 
commuter rail and intercity (Amtrak) services. In July 19^1, the Governor and the Secretary 
of Transportation announced that the high speed rail franchise process would be reopened 
pending revisions to the HSR Act that would streamline the franchise and certification 
procedures. The revised High Speed Transportation Act df 1992 was enacted by the Florida 
Legislature on March 8, 1992. 

• In accordance with the High Speed Transportation' Act of 1992, the Department will 
proceed to develop intercity rail facilities and services baicd on the following objective?: 

Establish a statewide high speed rail system but perinlt implementation on a segmental 
basis, first building those segments that generate tHe maximum riders and benefits. 

Where appropriate, upgrade existing tracks and serVicc to allow Amtrak and commuter 
rail to operate interim service pending funding abd construction to high speed rail 

Use existing public funding, if available, for the iililial infrastructure and upgrades. 

Conduct necessary riderjhip, market and cnvlroomehtal studies to support project right 
of way, route alignment and engineering. 

Continue efforts to secure federal funding and favorable legislation to support Florida 

Preserve the private sector role and real estate value capture as the bails for the future 


Finally, establish a long term dedicated source of revenue for the total rail Improvement 

Based on the High Speed Transportation Act of 199^, the Department will continue to 
work with private sector intircsU in developing the Floridi high speed transportation system. 


The first operational high speed maglev train project in the United States is being 
planned for the Orlando area in Central Florida. This project will be a 13.5 mile revenue 
service demonstration of the Triosrapld Maglev Technology developed In Germany. The 
Florida maglev train will connect (he Orlando International Airport with the Disney World 
tourist area at a station on International Drive. . 


In 1988 the Florida Legislature enacted the 'Maglev Act" which directed the Florida 
High Speed Rail Transportation Commission' to initiate the planning for a project to 
demonstrate the new state-of-the-art maglev technology and establish Florida as a center for 
the development of this new high-tech Industry. 

In 1988 the Commlesion issued a Request for Proposals and in early 1989 a Florida 
corpofatkuii Maglev Transit, Inc. (MTI) submitted a proposal for the Orlando project. Over a 
two-year period following the appiicallon submittal, MTl's plan went through multiple 
certification hearings conducted by the Commission, local organizations and an independent 
Hearing Officer, These eertiflontion hearings were for the purpose of assuring the project met 
all statutory requirements for financial feasibility, environmental protection, safety, 
consistency with local comprehensive plans, compatibility with other transportation services 
and facilities and numerous other requirements. 

k)n June 6, 1991, the Florida High 5pe<d Rail Transportation Commission was abolished 
by the Florida Legislature and the reBponslblllties for all high speed rail end maglev projects 
were transferred 10 the FPOT. 


On June 12, 1991. the Governor and Cabinet Issued a Tinal certification order which 
authorized MTI lo complele Tina! plans and implement the project tubjeci to certain conditions 
of certification. MTI expects to begin conKruction in 1993 and begin operation by 1996. The 
Florida DepartmcDt of Transportation will have oversight responsibility to assure that the 
project is built and operated pursuant to the certification order, 

SUM^^ARY of the plan 


Length It 13.5 miles. 

Single track gutdeway will be on an elevated structure, mSnimlzing environmental 
impact on wetlands. 

Maintenance facility will be located at the International Drive end. 


Electromagnetic syitens (EMS) Transrapid technology developed and tested In 
Germany. Operational on test (rack since 1983, with speed capability of 350 mph. 

Propulsion is provided by a linear lyncbronous motor (LSM) constructed at an integral 
part of the guldeway. 

FltundnK , 

Total project cost of $62} million. Major private financing will be provided by 
Japanese investors. $97J million in federal funds vi'cre authorized in the tntermodat 
Surface Transportation Efficiency Act of 1991 for the project. 

Item Cost 

Land 30 

. Guideway 115 

Equipment/Stationary Facilities 99 

Stationt/OftMFacUitic* 99 

Freight/Insurance A Guaranty H 

Engineering & Construction Management 32 

Yohiolet . lOS 

Pre-Operation Cost 45 

Others 45 

Contingonoy 35 

TOTAL 622 

Equity financing will be provided through an international partnership of Transrapid 
International, Ino^ C. Iloh Company. Dai-Ichi Kangyo Bank and others. 

• . . Project developert also plan a major hotel complex at the International Drive station. 

Projected to begin in 1996. 

24 hour operations; 4 train sets of 5 cars. Each tralfl has seating capacity of 400; dally 
carrying capacity of 51.200. 128 dally one-way trips planned with a total annual- 
rldershlp of 8.4 million in the first full year of operation. 

Trains operate on 15 min. headways In peak periods. 6 min, trip time between stations; 
max speed of 250 mph 

Implementation Scb^dylt 

The Department will provide public agency oversight for compliaace with all 
eertification conditions. 


the Fcdcrftl Railroad Administrallon will have jurisdiction for safety compliance in 
accordance wltli the 1988 Railroad Safety Act, 

Construction must begin within 3 year* of certification (June 1994), 

Construction will take eppro^Jmately 2.S years. 

Vehicle operational testing oan be oompleted in A months after conatniction It complete. 

Itevcnuc operation wilt begin no later than 3 years after construction begins. 






Senator Lautenberg. Ms. Evers. 

Ms. Evers. Grood afternoon. Thank you very much for inviting us 

I'm Kathy Evers from Moody's Investors Service. At Mood/s, of 
course, we are well acquainted with the issues surrounding large 
transportation projects, as we currently rate bonds that have fund- 
ed construction of new airports, toll roads and, of course, mass 
transit systems. 

The security for these bonds — and I'm going to speak in com- 
ments directly to the issue of credit quality — the security for these 
bonds, of course, varies by project. Airports and toll roads, by and 
large, in this country, have an established track record of generat- 
ing revenues sufficient to pay both the operating and debt service 
expenses associated with them. Their bonds are generally secured 
by the net revenues of their operations. 

Mass transit, of course, is different. And given the history in this 
country of the subsidies required for transit systems, their opera- 
tors have successfully explored alternate security for their bond 
issuances. For example, in some cases, bonds are secured by a gen- 
eral obligation pledge of the State within which the transit system 
operates. A notable example would be the MBTA, providing service 
in the Boston area. 

Other transit agencies have developed financing structures that 
allow leveraging of Federal transit funds, while, at the same time, 
building in protection for bondholders. Certainly, we expect more 
interest in this area with the ISTEA legislation. And we are work- 
ing very closely with issuers in helping them to leverage those 
funds and develop those structures. 

In looking at high-speed rail, there are three general concerns 
from our prospective. And, in fact, we did have an opportunity ear- 
lier this year to talk with a representative from GAO and give our 
input, which my impression is the investment community was fair- 
ly uniform in the feedback to GAO. 

Clearly, we're concerned about the magnitude of investment and 
the level of fixed costs, which will be very high. We also see that 
the use of new technology is likely, not necessarily, but is likely, 
to present additional risk for bondholders. 

And, finally, project feasibility, which Mr. Brown was just ref- 
erencing. The ability of the project to generate revenue sufficient 
to pay both debt service and operating costs is critical, but it would 
be very difficult to establish. And, again, looking at airports and 
toll roads, we do have a track record in place of being able to estab- 
lish the ability of net revenues to cover those expenses. And it's not 
there for high-speed rail in this country. 

Several speakers — in fact, I've modified my comments today to 
follow up on some points that were made earlier. Several speakers 
have mentioned the potential use of revolving funds and loan guar- 
antees. And I'd like to specifically address the issue of revolving 
funds as a way to possibily offset some of the risks for bondholders 
and reach an investment grade rating. 

Our experience with State revolving funds, at Moody's and 
around the country, obviously, for the issuers involved, shows that 


such programs can be very successful in leveraging State and Fed- 
eral funding, as I'm sure you know, Mr. Chairman. 

These programs, by and large, have been set up for clean water 
purposes. We have to keep in mind, though, I think that it's very 
important that water and sewage services are an essential part of 
our everyday lives, unlike high-speed rail, which clearly would 
have competing modes of transportation. 

And also we need to point out, too, from the credit prospective, 
that the success of these funds in the marketplace and their wide- 
spread acceptance and generally high credit quality, it lies in the 
structure of their portfolios, which — the risks in these portfolios is 
mitigated by the number of participants and also the structure of 
the programs where reserves are built in to offset the risk pre- 
sented by any particular participant. 

Obviously, tne likelihood with high-speed rail projects is that 
there will be very few of them, relatively few of them, that will cost 
a tremendous amount of money. And the use of the revolving loan 
concept becomes less useful, because the size of the reserves nec- 
essary to offset the risks would, of necessity, have to be quite large. 

I want to keep this short today. I'm interested in your questions, 
but obviously, at Moody's, we are very much interested in keeping 
in touch with issuers, potential issuers, and working with them on 
developing alternate structures for the issuance of bonds. 

Thank you. 

Senator Lautenberg. Thank you very much. The first two panel- 
ists each had a Lautenberg daughter working for the same compa- 
nies. They're no longer tnere, out — one got married and moved 
south on me. That's why we're so interested in the Florida rail 
project. [Laughter.] 

TTie other one decided to go to law school at a later stage in life. 
That has no prejudice nor favorability, I want you to know. We 
deal totally objectively. 

Ms. Stanley, you're next, and thank you. 


Ms. Stanley. Thank you, Senator. I'm sitting here scrambling to 
see if I can come up with a Lautenberg connection in either Massa- 
chusetts or Texas. 

It's an honor to be here today and to offer some observations 
about the potential role of Federal involvement in high-speed rail. 

My observations are made as a result of having spent 10 years 
in the area of transportation finance, in general, and high-speed 
rail transportation finance, in particular. And because my firm 
serves as financial advisor to the Texas High-Speed Rail Authority, 
I'm involved in some of the operational issues on a daily basis. I 
do need to say, however, that my comments today represent my 
own thoughts and not necessarily those of the Texas board or its 

I believe that the development of a balanced 21st century trans- 
portation system should be a priority for this administration and 
this Congress. The Nation's transportation policy has been fun- 
dsmientally reactive for some time. And continuation of that ap- 
proach will limit our capacity for economic growth in the 21st cen- 
tury, now just 7 years away. 


Even the most conservative growth projections point to a dou- 
bling of passenger trips in the United States during the next 20 
years. And many of those will take place in intercity corridors that 
are already heavily traveled. 

I believe that high-speed rail can play a part in the solution to 
the congestion and relieving capacity in those corridors. Specifi- 
cally, carefully considered use of high-speed rail can increase the 
efficiency of existing transportation systems. It can extend the life- 
time of existing transportation infrastructure. And it can stimulate 
new private investment in a more balanced and more diversified 
transportation system. 

I believe the system of the future involves the X2000, conven- 
tional high-speed rail and maglev as well. 

As you know, Senator, high-speed rail projects are currently un- 
derway in several States. Although each project is unique and they 
have covered various hurdles, almost without exception, the chief 
obstacle is the attraction of private investment capital. Left to pure 
marketplace determinations, one or two State systems may slowly 

Assisted by the Federal Government through a very specific and 
defined set of actions, I believe that the State and regional sys- 
tems, perhaps two or three, can be up and going in 5 years or 
under construction in 5 years. 

Having said that, let me give you five specific Federal actions 
that will assist the timely development of high-speed rail. I want 
to tell you that these are very close to Mr. Salci's. And I assure you 
that I did not steal his speech. 

First, passage of the Graham bill, which allows high-speed rail 
the same access to tax-exempt funding currently enjoyed by air- 

Second would be funding of section 1036(e) of ISTEA, which has, 
at this point, I believe, not been fully funded. I think that the fund- 
ing of that section will help demonstrate to early entry investors 
that there is project completion funding available. 

Third would be implementation of the recommendation that we 
establish a National Infrastructure Corporation, in that revolving 
funds — and I'm well advised by Moody's comments — and bond in- 
surance can provide a buffer for institutional investors. 

Fourth would be activation of a surface transportation trust fund 
very much like the one that was created in 1956, that allowed the 
national highway system to go forward. 

And fifth, the creation of an office of high-speed ground transpor- 
tation, a super- agency, reporting directly to the Secretary of Trans- 
portation. Now, being one who believes that Government, at times, 
should be limited, I think they should have a built-in sunset provi- 

And its charge, its mandate, would be to break ground on two 
or three high-speed rail systems within 5 years. And perhaps a 
model for an effort like that should be drawn from our national his- 
tory, such as the space program. 

I'd like to finish with that thought. I want to thank you very 
much, as well. Your clear interest in these issues is most appre- 
ciated. And I look forward to working with you and your staff in 
being part of the solution. 



Senator Lautenberg. Thank you very much, Ms. Stanley. We 
have your prepared statement and it will be made part of the 

[The statement follows:] 

Statement of Harriett L. Stanley 

Mr. Chairman and Members of the Committee: It is an honor to appear before 
you today to offer observations about the potential role of federal support in the de- 
velopment of high speed rail. 

These observations are the result of more than ten years of active involvement 
with transportation finance in general and high speed rail in particular. Because my 
firm serves as financial advisor to the Texas High-Speed Rail Authority, I am in- 
volved with these issues on a daily basis. 

I believe that the development of a balanced 21st century transportation system 
should be a priority for this Administration and this Congress. The nation's trans- 
portation policy has been fiindamentally reactive for some time and continuation of 
that approach will limit our capacity for economic growth in the next century — now 
just seven years away. Even the most conservative growth projections point to a 
doubling of passenger trips within the United States during the next twenty years 
and much of this growth will occur in inter-city corridors that are already heavily 
traveled. High speed rail can be an important part of the solution to reducing con- 
gestion and relieving capacity problems in a number of these corridors. Carefully 
considered use of the high speed rail mode can: 
— Increase the efficiency of existing transportation systems by moving travelers 

directly between city pairs and, perhaps, to major hub airports. 
— Extend the lifetime of existing transportation infrastructure by reducing normal 
system wear and tear, thus extending the times between construction of new 
— Stimulate new, largely private investment in a more diversified national trans- 
portation system. 
As you know, high speed rail projects are currently under development in several 
states. Although each project is unique, almost without exception the chief obstacle 
is the attraction of private investment capital. Left to pure marketplace determina- 
tions, one or two of the state systems may slowly develop. Assisted by the federal 
government through a defined set of actions, several key state and regional systems 
can probably be under construction in five years. 

Summarized below are a specific set of federal actions that will assist the timely 
development of high speed rail: 

Funding of the Loan Guarantee Program of the Intermodal Surface Transportation 
Act of 1991 aSTEAJ.— Section 1036(e) of ISTEA amended earlier legislation to per- 
mit federal loan guarantees for high speed rail facilities. However, it has not been 
funded. Implementation of Section 1036(e) will help demonstrate the availability of 
project completion funding to early-entry risk investors. 

Implementation of the National Infrastructure Corporation. — ^This recently pro- 
posed body can implement specific programs — such as revolving funds and bond in- 
surance — that will provide a buffer for institutional investors. 

Activation of a Surface Transportation Trust Fund. — This would be modeled after 
the Highway Trust Fund created in 1956, which allowed development of a national 
highway system. 

Creation of an Office of High Speed Ground Transportation reporting directly to 
the Secretary of Transportation. — ^This would be a super-agency,with a built-in sun- 
set provision, that would be charged with breaking ground on three or more appro- 
priately sited high speed rail systems within five years. Perhaps the model for an 
effort like this could be drawn from our national history, with the space program 
as an example. 

I'd like to finish with that last thought. Your clear interest in these issues is very 
much appreciated and I look forward to working with you and being part of the so- 


Senator Lautenberg. Mr. Fasteau. 


Mr. Fasteau. Thank you, Mr. Chairman. I just want to say, by 
way of background that I served on the TRB high-speed rail. De- 
partment of Transportation Research Committee. And our firm, 
Dillon Read, currently serves as one of the financial advisors to the 
Texas TGV project. 

What I'd like to address briefly in my comments is the particular 
importance of direct Federal support during the development 
stages of high-speed rail projects. The development of a financeable 
high-speed rail project requires a number of critical studies, as you 
know; ridership and revenue, land use, noise and vibration, air and 
water quality, and in some cases, intermodal facility analysis, the 
airportAiigh-speed rail connection, as well as design and engineer- 

These studies are expensive, running individually, often well 
over $1 million, and collectively for each project into the tens of 
millions. And they also must be carried out in a preliminary stage 
when the future of the project itself is highly uncertain. In the par- 
lance of the capital markets, this is venture capital money. 

On the other hand, the returns on this investment, if the project 
is successful, are pretty far off into the future, often farther away 
than the usual venture capital time horizon. 

So the results of this are several things. First of all, the develop- 
ment of high-speed rail projects is often delayed directly at this 
point, because the private capital markets are not geared to pro- 
vide this stage of funding particularly well. 

Second, because of insufficient funding at this particular stage, 
required studies are often performed the first one or two times 
through with insufficient rigor, requiring that they be redone again 
at a later stage, before an investment grade proposal is really as- 

This creates additional delays. It wastes a lot of money. And per- 
haps most important, it makes the process that a local or State or 
even the Federal Government goes through to decide which project 
to support or whether a particular project should have larger scale 
public funding, much more difficult and more politically conten- 
tious and controversial. 

Finally, when private capital is raised for these preliminary stud- 
ies, it is very expensive. Investors will demand extremely high re- 
turns on funds invested at this stage. Although the investments at 
this stage largely take the form of equity. 

The equity reserve for these investors reduces the equity avail- 
able for later stage investors. And generally speaking, this will re- 
duce the degree of risk that these later stage investors are willing 
to take and increase the required rate of return on fixed rate in- 
vestments and the minimum projected return on the equity that 
they do get. 

So Federal funding of these development stage studies, again 
through full funding of section 1036(c) of the ISTEA, is an effective 
and efficient way of dealing with these problems and promoting the 
development of sound and well analyzed high-speed rail projects. 

To summarize, it will reduce the time required for this particular 
lengthy stage of project development. It will ensure that these 
studies are carried out with sufficient rigor to serve as the basis 


for private investors, local and State governments, and the Federal 
Government to make sound decisions about future involvement. 

And it will also ensure that the Federal dollars spent at these 
stages are — ^this stage is highly leveraged. For those projects that 
do go forward, again, $1 put in here will reduce— do more than re- 
duce the ultimate ticket price and thus improve the viability of a 
project, than $1 put in at any other single stage. 

And, finally. Federal funding of these studies would parallel Fed- 
eral funding of these — of similar studies for highways and airports. 
And leveling the financial playing field in this way will both facili- 
tate intermodal planning and also, again, make the governmental 
evaluation process more accurate. 

Senator Lautenberg. Thank you very much. Mr. Green. 


Mr. Green. Thank you very much, Mr. Chairman. It's a pleasure 
to be before you today. And I commend you for your leadership over 
the years on this issue. You and other members of the subcommit- 
tee, I know, have sponsored legislation, cosponsored legislation, in 
the area of developing high-speed rail. 

And Senator Moynihan, in his service on environment and public 
works, and now as chairman of the Finance Committee, has been 
a leader. And Senator Graham, from Florida, has also been a lead- 
er. And it's encouraging to see this kind of creative thinking and 
leadership on the part of the U.S. Senate in this area. 

And I think, as a back drop, I would say that the Public Securi- 
ties Association, who I work for and am executive vice president of, 
does not promote one mode of transportation over another. Our 
members trade, underwrite, sell and deal in municipal securities, 
mortgage securities, Grovemment securities, the securities issued 
by Federal agencies to the guaranteed securities. And what we 
strive to do is to ensure that whatever mode of transportation is 
decided to be prioritized by our Nation's leaders and the transpor- 
tation experts, that there is a source of affordable capital to achieve 
those goals. 

And if I may comment on the tax-exempt bond market and the 
roles that the tax-exempt bond market has played in transportation 
finance over the years. The tax exemption has provided, truly, the 
lowest cost of financing for helping to meet the Nation's infrastruc- 
ture needs. And I say the lowest cost, if one looks at the macro 
view of what the sources of funding are, there is no straight cash. 
Everything is leveraged in some way, shape, or form. 

As you mentioned, a Federal guarantee. A Federal guarantee, 
the kinds of securities that would be issued to fund the Federal 
guarantee would inherently be taxable securities. So that, in and 
of itself, would be a more costly route to take than utilizing the 
tax-exempt market. 

So in analyzing the issues, you have to look at cost. And you also 
have to look at what is an appropriate use of the tax exemption. 
And over history, it's been an appropriate use of the tax exemption 
to help fund highway systems, leveraging Federal funds with State 
and local funds, and attracting private capital. 

It's also been an appropriate use of the tax-exempt market to 
help fund the construction, modernization, and expansion of airport 


facilities. And in airport facilities, it's gone one step further to en- 
gaging in broader public-private partnerships, because it's a role 
that the large carriers play. 

And in 1988, Congress did make a decision to expand that defini- 
tion of an allowable use of tax-exempt bonds to the development of 
high-speed rail systems; not rail stock, giving the parallel to air- 
craft, but to the development of high-speed rail systems. 

The law was changed under the Tax Act of then — I think it was 
the Technical and Miscellaneous Tax Act, to allow for the use of 
tax-exempt bonds. Recognizing that there would be a volume cap 
problem, they applied only 25 percent of those bonds to the state- 
wide volume cap. Since that time, it's become very clear that even 
that 25 percent would be inhibitive. And I think as you've heard 
earlier from the various State agencies that are developing these 
systems, it has been an inhibition. 

So the proposal that was introduced by Senator Graham and ac- 
tually passed the Senate last year as part of the energy bill, it 
would remove the bonds issued for high-speed rail from the state- 
wide volume caps and given them like treatment to highway and 
airport development bonds. 

We are very pleased to see that the Clinton economic program 
included further Federal commitments on the spending side, as 
well as an acknowledgement that the bond side must play a role 
to help achieve the goals of financing these projects. 

And I guess, Secretary Peiia testified before you and the Budget 
Committee yesterday, and acknowledged that the reason for that 
bond proposal was an acknowledgment that the Federal funds are 
not sufficient enough and somehow you've got to leverage them. 
And the bond market allows a leveraging of Federal resources with 
State and local resources or credit capacity with attraction of pri- 
vate capital that would otherwise go to other purposes. 

So I sit here today to express our support for this proposal that's 
in the administration's economic plan, because we believe the bond 
market can answer the call. 

And, again, we're not trying to decide between modes of transpor- 
tation, we're just saying that the bond market can answer that call, 
step up to the plate and help finance those needed projects. And 
if you look at the capacity of the bond market right now, last year 
the tax-exempt bond market had absorbed over $230 billion of new 

This year we anticipate volume to be down, but chances are with 
the lower interest rates that volume will go back up. If tax rates 
go up, there will be even greater capacity in the marketplace to 
meet future needs. 

So if there's a concern at all of the ability of the bond market 
to absorb these securities, the professionals that I talk to in this 
marketplace feel very confident that it can. 

So, with that, I'd be happy to answer any questions that you'd 



Senator Lautenberg. Thank you very much, Mr. Green. We 
have your prepared statement and it will be made part of the 

[The statement follows:] 



Mr. Chainnan wid Mcmberi of the Subcommittee, good momli^. My name is Mic«h Greea I 
am the Executive Vice President of the Public Securities Association (PSA). PSA is the 
International organization of banlcs and brokerage finns that trade, acU, and underwrite municipal 
securities, U.S. government and Federal agency securities, mortgage securities, and money 
market iiutmments. I am pleased to be here thii morning to discuss the role of tax-exempt bonds 
in financing the nation'! high speed rail needs. 

Every m^jor industrialized country in the worid either operates a system of high-speed passenger 
rail service or is in the process of developing one^ with the exception of the United States. The 
French TGV, the German ICA. the ItaUan ETTl'SOO, the Swedish X-2000. and the famed 
Japanese Bullet Train all cany passengers saiely. cleanly and comfortably from city cemer to dty 
center, some at average speeds of 200 miles per hour. Meanwhile, the fiutest American passenger 
train, tfie Amtrak Metroliner, csrries passengers between New York and Washington at average 
speeds of just 85 miles per hour, using 1930's technology. 

Other forms of our nation's inter-city passenger trantportatiofl network are approaching thdr 
capacity. Our aiq)orts and highways are crowded to the point where delays are everyday 

occurrences. Gridlock in the system costs our economy billions ofdollars every year. The 
technology exists today to implement in the U.S. the same kind of dean, safe and efficient high- 
speed rail system that is enjoyed by millions of others around the worid. 

In order to develop a viable system of high-speed rail transportation in the U.S., cooperation is 
necessary between the public and private sectors. One of the most efiective ways for the Federal 
government to encourage and assist the development of private high-speed rail is by expanding 
the tax code providon permitting tax-exempt bond ftnandng for these projects. 


The Federal Tax Code generally prohibits tax-«xerapt financing for projects where greater than 10 
percent of tiie bond proceeds would be used by a private party and 10 percent of the d^ service 
would be secured by a private party. However, in recognition that certain public-private ventures 


ire deserving of Fedenl auistince, the Code peninti lo-cailed "private-activity" bond finandng 
fiff t limited number of narrowly defined clauei of these projects. Under the Code, the annual 
volume of pijvate-activity bonds that each state can issue Is limited to the greater of S90 per 
capita or SISO milfion. Each state is permitted to allocate its annual cap in any way it chooses 
among the various pennittcd uses. 

Current Statni 

In 1988, Congrau added to the list of pennitted uses of private-activity bond financing qualified 
Mgb-ipeed r«D projects. Undtr that statute, 25 percent of any bond issue fbr a public-private 
high-speed rail project must be coumed toward a state's private-activity bond volume cap. 
However, it is now clear that because of the size of high-speed rail projects, qjplying even 25 
percent of a project's bond issue towards a vohnie cap can use up the state's entire cap for thai 

Several high-speed rail prcrfects will be inhil>ited in their ability to practicaUy tq) the municipal 
bond imrket These prefects include. Texas, Cafifbmia/Nevada, lUbiois/Mlnnesota. Florida, the 
Northeast Corridor, Ohk), PenraylvanU and Washfaigton. 


Preddent Clioton*s economlo plan faicludes aivenl proposals dealing Tsdth HgMpeed raQ 
development. These proposals are part oftheTresidenfspadcage to increase faivestmentb 
inftistnicture capital Induded in this |4an are additional fimds for Magnetio Leivitation and M^ 
qieed rafl. The Prevdenf s program also indudes a proposal to permit public-private U^i-^ieed 
rail fiuifities to be financed with tax-egcempt bonds outside of the private-actMty bond vohuBs 
caps. This proposal is tfmflar to l^Uadoa introduced by Senator Bob Graham, (D-FLX S.43I. 
A precedent for sueha policy tfretify exisu. Uiider current law, airports, docks and wiiarves oan 
be financed with tsoc-exen^ bonds outside of tfie vohnne cap. fftfaey could not, these piojecti 
would consunN large portions of th^pp in states wfMre they are bulk. The Administntlon's 
proposal would allow states to Issue tax-exempt high-speed raH bonds without threatening other 
progransftrfiich most compete for cap allocatioa In addition, the proposal would demonstrate 
the Fedenl govemmeot's commitniatt to allowing states and locafities flexibility in addressing 


their traniportAtion problemi by petmitting all three major modes of inter-dty tranipoTtitlon; air, 
road and rail, acceti to the low-coit tax-exempt bond market 

PSA commends the President and the Administration fbr lupporting public-private hlgh-ipeed rail 
projects. We also oonrunend Senators LautenberB. D'Amato, and Mikulski of this Subcommittee 
and Senator Graham for their leadership in this eSbrt. PSA would be happy to work with the 
Subcommittee and other Congressional conunittees in trying to address the nation's transportation 
needs, Thank you for the opportunity to testiiy on this cxitical and timely issue. 


Senator Lautenberg. Thank you all very much. What you did, 
and I think was necessary, was to throw a dash of realism on our 
capacity to finance these programs. 

I was particularly struck by the call that Ms. Evers put out when 
you said that you've got to deal with your sewage, your wastewater 
treatment facilities in a realistic fashion. They're there and people 
are going to use them. 

And Mr. Fasteau's comment about the long-term prospects for re- 
turn. We're not going to see anything for a while. These are enor- 
mous capital investment projects. And the time allocated for get- 
ting a return is out there in tne distance. 

And each of you made a significant contribution to the fact that, 
unless the Federal Grovemment's willing to step up and put some 
of the seed money in place, the rest of it is not going to come very 

I guess, Mr. Green, with interest rates down like they are, with 
taxes likely to increase, that the tax-exempt marketplace is going 
to be more appealing. 

Those issues are not going to be settled in this committee, but 
as we examine the economic package that the President has pre- 
sented, there will be further opportunity to examine just what we 
have to do in terms of public financing to get these programs un- 

I wanted to ask you a question collectively that I put forward to 
the other two panels, and that is, we have a job among all of us 
in marketing a concept that gets the financing in place to get these 
programs underway. There seems to be little doubt that there's 
enough interest to get to work on them. 

We haven't, in fact, as was noted yet had an example of long- 
term functioning that says these are going to be good investments 
or attractive programs for garnering capital, like we have with the 
airports and with other programs. 

So should we be focusing on just a few high-visibility projects to 
say, here, this is going to be the testing ground; this is going to be 
the place where we'll determine how interested the investment 
community is, or should we kind of spread it around to get every- 
body involved? Do you have any notions or any response to that, 
Mr. Fasteau? 


Mr. Fasteau. Well, two thoughts. From the investment commu- 
nity's point of view, maglev and steel-wheel are at different stages 
of development. Steel-wheel on rail is in commercial use in several 
countries of the world. It's proven. Maglev is not yet there. So you 
add technology risks to any project that you're really trying to put 
into service in terms of making it financeable. 

Beyond that — so I think you need to think about them differently 
for that purpose. Beyond that, the strategy that seems to me to 
make the most sense — again, I come back to this design stage kind 
of — not bottleneck, but this part of the project development, is to 
fund a wide range of development stage projects, but in the proc- 
ess, with the funding, have a uniform set of standards for the stud- 
ies, so that they can be compared and evaluated. 

And you can end up with a sound selection of a few projects 
where the big money that is available can then be concentrated. It 
would provide a broad opportunity and kind of a level playing field 
to end up with the appropriate project. 

Senator Lautenberg. That then establishes a sequential pro- 
gram, that's going to take somewhat longer to move these along. 
And especially, as you know, with the differences in the technology. 
One is working and the other needs some further development. 
Now, there could be catchup, but that's some years away. 

Is there, in your judgment, a kind of demand for bonds serving 
these purposes that are different than any other? Are we just talk- 
ing about a marketplace that says, OK, here's a risk, here's the op- 
portunity, and whether it's high-speed rail or other programs, the 
evaluation formulas, I assume, are relatively similar, is that cor- 

Are we seeing the enthusiastic marketplace available for financ- 
ing capital projects? I'm not watching the bond markets or the eq- 
uity markets. There's not much here by way of appeal for equity 
placement, I don't think, but is there a pretty substantial market- 
place out there now for bond issues? 

Mr. Fasteau. It all depends on what the particular project looks 
like and what its creditworthiness and how our 

Senator Lautenberg. Risk assessment. 

Mr. Fasteau. How it's assessed and rated. 

Senator Lautenberg. So that we're going to be competing with 
any other source of opportunity. And the purchasers will evaluate 
it accordingly a la Moody's and a couple of the others. 

How would you evaluate the willingness of the private sector to 
lend money for high-speed rail projects with or without a Federal 
guarantee? We've established, I think, at least in the relatively 
brief discussions, that first the Government's got to be there with 
some seed money to get things going. Then, following onto that, 
Federal guarantees are needed. 

Mr. Green, your point about tax-exempt versus simply Federal 
guarantees funding were next in order. Is the Federal guarantee, 
of and by itself, appealing enough, or is that all part of the matrix 
that you bring the instrument to market with? 

Mr. Green. I think it would certainly be a major factor in the 
investor's mind about the Federal guarantee. I think when looking 
at the policy of a Federal guarantee, if there are inherent risks 
that the marketplace doesn't feel comfortable accepting, one has to 

68-623 O— 93- 


ask yourself about the advisability of a guarantee in that environ- 

If the marketplace is willing to accept the risks and there are 
streams of identifiable revenues that can be capitalized and the 
risks are adequately measured, then you step back and look at the 
cost of financing. And then it's a question of the marketplace at the 
time. If the guarantee is less expensive than other options 

Senator Lautenberg. It's a relatively simple mathematic deriva- 
tion. I mean, you get there by — again, risks over here, other com- 
peting instruments over there. Is there any opportunity for equity? 
Is there any opportunity for deferred and improved value later on? 

All of those things have to be put into the computer and come 
up with the yes or no and the scale evaluation accordingly. 

Mr. Fasteau. Mr. Chairman, I think it's useful in thinking about 
this question to think of the financing in different traunches with 
different degrees of risk, and ask the question: Well, guarantee 
which portion, which or all of the portions? You've got the venture 
capital money, really, at the very beginning or even pre- that, the 
sponsors' money, then some venture capital money. 

Then you have equity. And then you're going to have some sec- 
ond stage subordinated financing which may be convertible debt, 
but it's going to be either quite risky debt or less risky equity. And 
then you have senior stage financing. 

And just to make the point, a guarantee of only the senior stage 
financing will be helpful in moving the project forward, because it 
will reduce the cost of that financing, and thus, make the econom- 
ics work better, but it only helps you get the equity and — which is 
the most difficult — and then the subordinate stage financing, 
through the indirect effect of reducing the cost of the project and 
maldng the economics look better. It's not the same thing as guar- 
anteeing the subordinate stage financing or putting equity into it 
so you reduce the amount of equity that you need from the 

Senator LAUTENBERG. Is there a factor for the collateral value of 
rolling stock or does that depend on the uniformity of systems 
around the country? I mean, if these are all unique prototj^ical 
kinds of things, that rolling stock doesn't have a lot of value, if the 

Mr. Fasteau. Turn it into a restaurant if it doesn't work. 
[Laughter. 1 

Senator Lautenberg. Diners are out of— no. I think they're com- 
ing back. 

How about the data availability? GAO says it's difficult to con- 
duct ridership studies with a degree of accuracy, because of lack of 
good data. As private sector investors, you've got to analyze the po- 
tential profitability or chance for return on investment of these rail 

What kind of comfort level do you have for getting the data avail- 
able to determine ridership, project ridership? Anybody? Mr. 

Mr. Brown. Well, certainly, that is one of the major difficulties. 
There is no American commercial experience with this kind of serv- 
ice. And so the investment community does look rather skeptically 
at any kinds of ridership forecasts. I would add to that, though, the 


observation that there is also a fair amount of skepticism about 
any kinds of traffic forecasts for transportation systems. 

There are, for example, all of the turnpikes that were built in the 
1950's, the big roads, like the Ohio and a number of others, were, 
I believe — and Ms. Evers can confirm this, but I believe that all or 
most of those were sold as unrated credits, because the rating 
agencies wouldn't rate them, because no one really knew how they 
were going to turn out. 

And those kinds of problems really still exist today in the high- 
way area. This big California financing that was sold yesterday for 
the San Wakein project, that was rated only by one of the three 
rating agencies. And certainly one of the issues there is — ^there are 
a number of project risks there, but certainly one of them is uncer- 
tainty about traffic. 

So this is not something that is unique to high-speed rail, but I 
think that it is exacerbated by the fact that while we have highway 
experience in the United States, toll road experience, we don't have 
high-speed rail passenger experience. 

Senator Lautenberg. The California project came to market yes- 

Mr. Brown. Yes. 

Senator Lautenberg. What was the rate that they 

Mr. Brown. About 7.15, I think, was the — on some 40-year 
bonds. They were around 7.15, I think. 

Senator LAUTENBERG. 7.15. Were there any guarantees, State 
guarantees or otherwise, included in that package? 

Mr. Brown. There is a Federal guarantee, actually, for 

Senator Lautenberg. For how much? 

Mr. Brown. About $100 million or something. Do you know. 
Marc, about that? I'm not exactly sure how that was structured, 
but there was essential 

Senator Lautenberg. Is that a fairly high rate for issuances 
these days? 

Mr. Brown. In today's market, that is a high market value. Two 
years ago, that was not 

Senator LAUTENBERG. For a 40-year term. 

Mr. Brown. Yes. 

Mr. Fasteau. That's very unusual today, too. 

Mr. Brown. There are many 40-year bonds sold. There were a 
lot of zero coupon bonds — there were lots of different bonds in this, 
but it was 

Senator Lautenberg. Zero coupons 

Mr. Brown. Yes. 

Senator Lautenberg. For 40 years. 

Mr. Brown. No; I don't believe the zeroes were 40 years, but 
there were a number of different 

Senator Lautenberg. I'd buy those if it could be guaranteed that 
I'd be here to collect them. [Laughter.] 

Mr. Brown. That's college savings for your great-grandchildren 
or something. 

Mr. Fasteau. Mr. Chairman, I'd like to comment on the rider- 
ship question. I think that what's been said is accurate, in that 
many ridership studies, as I said earlier, have not been carried out 
as well as they can be carried out. 


And part of the skepticism of, I believe, both the rating agencies 
and investors comes from a history of studies which haven't been 
carried out, again, using the best available methods and tech- 
nology. I think that studies can be carried out — and, again, they're 
expensive to do — which can give you a reasonably good degree of 
confidence in the result. 

I know for the Texas TGV project, they're being carried out by 
an American firm, which is, again, at the cutting edge of the statis- 
tical methods and survey techniques being used, and the French 
operation that has done it for the TGV there. 

Now, that doesn't mean that if $10 million of revenue is pro- 
jected, you can get an investment grade bond issue rated, which is 
$10 million of debt service to be covered on a one-time basis, but 
you might have enough confidence to sell bonds with a two-time 
projected coverage instead of three or four, which, again, makes an 
enormous difference in how much money you can raise on a speci- 
fied projected stream of revenue. 

Senator Lautenberg. Since we're kind of coin tossing here, if we 
have Federal loan guarantees and got some tax exemption, what 
might the cost of capital be for these high-speed rail projects? Does 
anybody want to 

Mr. Fasteau. Overall integrated cost of capital? Couldn't begin 
to guess. 

Senator Lautenberg. These rates, I guess, will differ from other 
infrastructure projects based on, I think, the comment you made, 
and that is, how badly do you need it? 

Mr. Fasteau. Credit rating. 

Senator LAUTENBERG. I was interested in Ms. Stanley of the 
Hadley Group's concept of a national transportation commission. 
Do you just want to repeat that for a minute? 

Ms. Stanley. What I proposed is to create a super-agency. I'm 
not entirely sure that the magnitude of the task in front of us, in 
terms of high-speed rail, can be handled by existing agencies. 

If you want to remove institutional obstacles and you want to 
focus on a goal someplace, I think you need something that reports 
directly to the Secretary of Transportation and has a very specific 
mission. And once that mission is accomplished, that the agency is 
basically disbanded. 

To go back to one of your questions, Senator, I think that the an- 
swer, from my standpoint, is that you do identify several key high- 
speed rail corridors and — or potential high-speed rail corridors and 
invest most of your resources, if not all of your resources, in that 

I would disagree with the gentleman from the GAO who believed 
that incrementalism might be the best way to go. I think that 
incrementalism has been more of a problem from the past, and so 
that you want to concentrate on achieving two or three successes 
and go from there. 

Senator LAUTENBERG. Thank you very much. 

Mr. Brown. Mr. Chairman, could I also respond 

Senator LAUTENBERG. Sure. 

Mr. Brown [continuing]. To the point that Harriet addressed, 
which I know you've been asking all of the panelists, and that is 


this question of how you spread the money around and do you try 
to bullet specific projects. 

I think one of the problems with doing that is that, No. 1, it sort 
of postpones the Federal Government's coming to grips with exactly 
what kind of program structure are you really going to have to 
move this forward if you do sort of ad hoc appropriation or ear- 
marking for specific programs. 

And it also continues the problem that you alluded to earlier of 
compatibility of these different systems. You have different systems 
operating in different parts of the country. At some point, maybe 
there is — ^you do end up with more of a national network and there 
may be some point in having those linked. 

And you do want to make sure that they're compatible. And it 
seems to me that the really threshold interests that are at issue 
for the Congress is to decide what kind of Federal program there 
will be and design a program. 

And then whether that program is started slowly by addressing 
a handful of projects or bringing a larger number of projects up at 
a slower rate around the country, I think, is sort of a secondary 

Senator Lautenberg. That's a very valuable comment. I want to 
thank all of you. I know that you had to travel here. I know that 
none of you were able to come by high-speed rail. I hope that you'll 
be here before we wait for that to be in place. 

It was very interesting. It added a touch of significant realism 
that has to be considered in this. And part of it includes how do 
we plan to bring this to the public and the question of compatibil- 
ity. I mean, if there's any collateral value to the equipment, et 
cetera, and each one is a unique system, that doesn't do us any 

It doesn't help finance these programs. And the desire seems to 
be there. There s a lot of interest. And I calculate that somewhat 
informally by comments that I get from all around the country, but 
I believe it's going to happen. 


And I thank you all very, very much. We will submit some other 
questions to be answered for the record. 

[The following questions were not asked at the hearing, but were 
submitted for response subsequent to the hearing:] 






SENATOR SASSER: In 1991, the Memphis Area Transit 
Authority (MATA) completed a Planning and Feasibility 
Study for renovation of Central Station as an intermodal 
terminal. Amtrak reviewed the document and provided 
comments on September 26, 1991. Does Amtrak still plan to 
be involved in the project if the concerns described in 
the September 26 letter are resolved? 

ANSWER: Amtrak remains supportive of the project to 
renovate Central Station in Memphis as an intermodal 
facility. We are committed to providing guality rail 
service to Memphis, and renovating Central Station appears 
to be the only viable station alternative available. 
Amtrak is hopeful that the station renovation is part of a 
larger redevelopment plan for this area of the city. We 
feel that this is essential in order to address safety 
concerns we have for our passengers and employees. Our 
September 26, 1991 letter to the Memphis Area Transit 
Authority raised some broad issues regarding some of our 
operating requirements. These and other details can be 
worked out as the project moves forward. 

SENATOR SASSER: The City of Memphis is making a 
significant investment in the Central Station renovation. 
Currently, Amtrak provides only two trips per day to/from 
Memphis. What plans does Amtrak have to (a) increase 
service on the current route; (b) add service to connect 
Memphis to other cities; and (c) upgrade its equipment 
once the project is completed? 

ANSWER: (a) In July 1992, Amtrak evaluated extending 
the Chicago-Carbondale mini to Memphis. As this service 
was projected to increase our federal subsidy requirements 
by $2 million, which exceeds our self-imposed limit of $1 
million for new services, this service is not being 
pursued. (b) Amtrak has no current plans to add service 
connecting Memphis to other cities. (c) Beginning in 
late 1994, Amtrak will begin replacing the current 
Heritage Fleet cars on the Chicago-Memphis-New Orleans 
City of New Orleans with new Bi-Level Super liner 
equipment. The entire train will be upgraded to 
Superliner equipment by the end of 1995. 

SENATOR SASSER: What plans does Amtrak have to pay 
for its share of the Central Station renovation? 

ANSWER: As you know, Amtrak has a limited capital 
budget and we have, therefore, had to rely on communities 


to provide for station improvements. Once the new 
facility is built, we fully expect to pay our share of 

operating costs. 

SENATOR SASSER: MATA will begin rail trolley service 
in downtown Memphis in April. Future plans call for 
expansion of service to tracks along the riverfront 
currently utilized by Amtrak (i.e., the Riverfront Loop). 
Does Amtrak foresee any problems co-existing with trolleys 
and jointly using the tracks if the system were to be 
extended to these tracks? 

ANSWER: While we have not seen specific plans for 
instituting trolley service along the riverfront, we 
understand that only one of the two tracks will be used by 
trolleys. This would leave the other track for Amtrak 
use. However, because of the proximity of the two tracks, 
it will be necessary to ensure a safe interface between 
the two services with respect both to patrons and to rail 
operations, particularly since we understand the trolley 
could cross the tracks used by Amtrak. 



SENATOR D'AMATO: How fast will you have the "systems 
approach" specifications on the street for the electric 
locomotive, dual-mode locomotive, and passenger vehicles? 

ANSWER: Public notice to solicit interest from prime 
contractors will be published prior to April 15. The responding 
firms that have adequate technical staff, facilities, qualified 
sub-contractors, and domestic assembly facilities will be invited 
to participate in the technical development program between May, 
1993 and October, 1993. Formal requests for pricing will be made 
once the magnitude of the available funds is known in FY94. This 
process will require the delivering of a fully integrated trainset 
of locomotive( s) and passenger carrying vehicles to meet the 
stated trip times in the New York-Boston corridor and similarly 
improve the comfort and performance in the New York-Washington 

SENATOR D'AMATO: In FY 91, Congress provided $14 million 
for a dual-mode lightweight locomotive for use in designated high- 
speed corridors. Are you now going to sit on this project further 
while we await funding for the 26 Northeast Corridor electric 

ANSWER: Amtrak has been pursuing this project as directed 
by Congress with the principal suppliers of locomotives in this 
country. We issued a solicitation to diesel and turbine 
locomotive builders at the start of the program, and received only 
three expressions of interest. All three turned out to be unable 
to meet the congressionally directed speed goals within the 
operating constraints of America's railway network. We firmly 
believe that the dual-mode locomotive can be developed quickly if 
it is a part of the trainset procurement, because many of the 
systems and sub-systems of the Northeast Corridor trainsets are 
also required for the dual-mode locomotive. The benefit of 
combining the two programs is that the NEC trainsets will be able 


to serve the non-electrified feeder lines of NEC with through 
service, one of the original intents of the FY91 legislation. 
Amtrak has requested adequate funds in FY94 to move this program 
forward. Our goal is to have some of the trainsets delivered upon 
completion of the North End electrification in 1997. We expect 
the non-electric (including dual-mode) versions of motive power 
for the other national corridors to be developed and delivered in 

SENATOR D'AMATO: Dual power means the ability to operate 
either on gas turbine or diesel, and on third-rail electric 
through the New York Tunnels. Developing new dual power 
technology to a point where trains will have the extra horsepower 
to operate onto Long Island is very important. This technology is 
non-existent today. New York State and I fear that from Amtrak' s 
perspective, this is a minor element in the context of the overall 
trainset procurement. 

ANSWER: Amtrak is, and remains committed to, advancing the 
dual-mode technology as fast as the supply industry can reliably 
and economically advance this technology. Amtrak presently has on 
order ten AMD103 dual-mode locomotives from General Electric rated 
at 3200 horsepower that will go into New York/Empire Service and 
can serve Long Island directly . These units are scheduled to be 
delivered in the second half of 1994. Amtrak has actively pursued 
the dual-mode options for our unique environment and has hosted 
meetings with the NEC commuter agencies to stimulate interest for 
additional orders to advance the development of dual-mode 
locomotives, especially in those instances where air quality in 
stations covered by air rights development has become an issue. 
Our thrust continues to be one of promoting more orders, so the 
front end development costs can be apportioned over a greater 
number of locomotives and railway customers. This effort also 
allows us to encourage the supply industry to stretch their 
capabilities as we extend the specified performance envelope of 
each procurement. As a part of the AMD125 procurement, Amtrak 
tried to push the industry to the next logical step which was a 
125 mile per hour version of the dual-mode locomotive. We expect 
that this step can be achieved through the NEC trainset 
procurement . 

SENATOR D'AMATO: Today, I would like a commitment from 
Amtrak that you will immediately move to layout the specifications 
and develop the new dual-mode technology. Will you commit to 
allocating part of the $14 million for this purpose? 

ANSWER: Amtrak is committed to this effort and believes it 
is achievable at this time, when the project can be done in 
parallel with the electric trainset procurement. The large amount 
of commonality in systems and components significantly reduces the 
risk of this development process. We at Amtrak have watched the 
Metro North FL-9 program which is now close to completion. The 
pioneering work by Metro North on this program has helped advance 
the feasibility and confidence level of the locomotive suppliers 
for this type of unit, and that is now allowing the Amtrak 
requests for improved performance to be taken seriously. However, 
to advance the dual-mode program, we require much of the original 
$14 million to be allocated to this program. Amtrak is firmly 
convinced that this approach — essentially combining the dual 
power development program with the NEC trainset development — 
will succeed and that we will end up with a family of high-speed 
rail equipment that can be used effectively nationwide. 

SENATOR D'AMATO: I would also like your assurance that, 
once you have released the overall trainset system specification, 
you will proceed vigorously with the development of the prototype 
dual-mode locomotive. I don't believe there is any reason why the 
dual-mode prototype locomotive should await funding (about 
$450 million) for the 26 trainsets for the Northeast Corridor. Do 
you agree? 


ANSWER; To have a successful program that can be rapidly 
executed with a high level of confidence for success, it is 
imperative that the two programs be treated as one with parallel 
development. Amtrak has requested $68.5 million for FY94 to 
progress the development of the 26 trainsets with electric and 
dual power capability. Amtrak anticipates the need to finance a 
good portion of the total $450 million equipment acquisition, so 
additional congressional funding will be required to complete the 
full procurement. Our goal is to first procure 2 trainsets with 
electric and dual power capability, de-bug the systems, and then 
complete the full 26 trainset order. We would anticipate the 
first two trainsets and the fossil fueled, dual-mode locomotives 
being available at the same time. We believe this approach will 
be the fastest overall program to support both the New York-Boston 
electrification and improvements, as well as the non-electric 
feeder routes and the FRA designated high-speed corridors. 
Supporting this expedited development program will be the New York 
State ISTEA demonstration with the Makila turbine retrofit and the 
development and deployment of the Amtrak AMD103 dual-mode. Never 
at any time in the past have so many separate programs come 

together on a common time line that could move high-speed and 
high-quality rail passenger transportation forward economically 
and expeditiously. It is essential that we do not spend untold 
sums recreating a variant of locomotive and trainset for each 
corridor, diluting the available funding in studies, and re- 
engineering as opposed to spending funds on hardware that can 
deliver better transportation for all regions of this nation. 

In addition, it is important that trainset development in 
the United States be coordinated to ensure standards that assure 
commonality of equipment on the various U.S. high-speed corridors 
to control the after costs of maintenance, inventory and training 
of the work force. 

SENATOR D'AMATO: I am anxious about Amtrak' s ability to 
move ahead with the procurement of dual-powered, high-speed 
equipment. My concern is simple: without dual-mode equipment, 
Amtrak will never provide high-speed intercity rail passenger 
service anyplace other than the electrified Northeast Corridor. 
Since over 95% of Amtrak's 25,000 route miles are non-electrified, 
it is vital that Amtrak actively promote extending high-speed 
service to selected non-electric corridors. Amtrak plans to 
procure 26 electrified, high-speed trainsets for the Northeast 
Corridor PLUS non-electric, dual power equipment. I have been 
informed this procurement could begin late spring, early summer of 
1993. However, Mr. Claytor's testimony says that; "...Amtrak is 
CONSIDERING including in its procurement for the electrically 
powered high-speed trainsets the FEASIBILITY of substituting 
acceptable non-electric power units, WITH A DUAL POWER third rail 
capability." Are you going to procure the dual power equipment or 
not, and when? 

ANSWER; Amtrak has been taking a leading role in the 
procurement of dual-mode locomotives, and the integration of non- 
electric dual power locomotives in Amtrak's procurement for 26 
high-speed Northeast Corridor trainsets is, we believe, the 
fastest and most commercially viable way to achieve the goals set 
forth in the FY91 authorization. Amtrak is committed to making 
this acquisition on a production order basis and not on a one time 
prototype that takes a subsequent three to five years to 
commercialize. The specifications and prequalif ication of 
suppliers for the trainset development program, including the non- 
electric dual power locomotives, are being pursued now. Amtrak 
has set a project milestone of haying competitive technical 
proposals in hand by the end of 1993, so commercial negotiations 
can be completed in the first quarter of FY94. 



SENATOR D'AMATO: NYS has proposed a $5 million demo project 
(funded by the Federal Railroad Administration). Under this 
project, the current RTL turbo trains used on the Empire Corridor 
would be retrofitted from their current turmo 3 or turmo 12 
engines to Makila turbo engines, also the trains would be revamped 
to have a "modern looking" high-speed trainset appearance. 
Mr. Claytor's testimony says that the retrofitted RTL turbo liners 
"will be able to use the electrified third rail tunnels for 
operation through the Penn Station tunnels to Long Island at 
acceptable speeds." However, I understand that the retro-fitted 
turbo liners will not have any change to their electric power. 
How is Amtrak planning to change the existing (poor) third rail 
capability of these trains? 

ANSWER: As part of the retro-fitted turboliner package, we 
intend to include the requirement for a higher horse power 
electric motor and solid state control system in place of the 
existing transit car motor. 

SENATOR D'AMATO: I understand that these trains now must be 
TOWED by 40 year-old FL-9 locomotives to make it up the grade 
through the East River tunnels to reach the Sunnyside Yards in 
Long Island. When will the retrofitted trains acquire this 
improved capability referred to in Amtrak' s testimony? 

ANSWER: Turboliners presently only go into Sunnyside Yard 
as an emergency situation, and they are then hauled by electric 

The retrofit would take over a year to accomplish when 
taking into account realistic procurement and commissioning times 
for the prototype set. Upon receipt of our AMD103 dual mode 
locomotives in the last quarter of 1994, we will then be in a 
position to provide train service through the East River Tunnel on 
to Long Island. 


SENATOR D'AMATO: Are the existing RTL Turboliners able to 
run through the East River Tunnels today? 

ANSWER: They can operate through the tunnels, but the 

maximum speed is well below the normal operating speed of other 

trains, hence they significantly reduce the capacity of the 

SENATOR D'AMATO: These trainsets are 15 years old; is it 
reasonable to expect electrical equipment to operate reliably past 
that age? 

ANSWER: The life of electrical equipment, especially DC 
equipment, is determined by many factors including hours of 
service, exposure to moisture, lubricant contamination, and 
component wear. The trainsets are over fifteen years old, but 
many of the electrical components have been replaced over the 
years as maintenance requirements have dictated. The third rail 
power system is used for very short periods of time when compared 
to the total hours of operation. 

SENATOR D'AMATO: Do the existing turboliner's electric 
motors have enough power, when operating properly as designed, to 
move a train through the East River Tunnels within the maximum 
time period allowed? 

ANSWER: No. The Turboliner design was created for service 
into Grand Central Terminal at a maximum speed of 30 miles per 
hour. The route into Grand Central Terminal is practically level. 


The East River Tunnels have a 60 mile per hour speed limit and 
have gradients of .7% to 1.3%. 

SENATOR D'AMATO: I understand a test run was performed in 
the East River Tunnels. What was the result? 

ANSWER: The test produced results that were reflective of 
the limited design capability of the original design. Speeds in 
the tunnel dropped to 18 miles per hour. 

SENATOR D'AMATO: I am pleased that Amtrak is cooperating 
with New York State's application for ISTEA Section 1036 (c) High- 
speed Demonstration, which would include retrofitting an RTL 
trainset with several upgrades of the propulsion system and 
passenger accommodations. Will this retrofitted trainset be able 
to operate in regularly scheduled through service from upstate to 
Long Island? 

ANSWER: This trainset would be able to operate through the 
East River Tunnel to Long Island in revenue service. 

SENATOR D'AMATO: Will this trainset have any improvements 
made in the third rail propulsion system? (Pick-up shoes, 
controls, drive motor, etc?) 

ANSWER: The full scope of the demonstration project is 
still being researched and defined with TURBOMECA and key 
component suppliers such as VOITH transmissions. Our goal is to 
achieve 60 miles per hour in the East River Tunnels by increasing 
the horsepower of the DC drive motors from 300 Horsepower to as 
much as 900 Horsepower, subject to the limitations of weight, 
balance, and strength of the transmission drive train. To handle 
this added horsepower, a new DC control package will be required 

and the contractors are researching what type would best suit the 
service requirements. 

SENATOR D'AMATO: What will be done that would make this 
retrofitted trainset able to operate reliably through the East 
River Tunnel? 

ANSWER: The third rail shoes have been the subject of on- 
going research for many years and are still one of the most 
vulnerable elements of the DC drive system. We are continuing 
research with several suppliers as is the General Electric Company 
in regard to their responsibility to deliver a dual mode AMD-103 
locomotive in 1994. 

SENATOR D'AMATO: Will something be done to make it less 
failure prone? 

ANSWER: The DC Controls will incorporate considerable solid 
state and chopper technology that is more reliable than open 
contactor controls currently utilized. The new Makila Turbine is 
modular in design with a microprocessor control system that will 
provide advance indication of deteriorating engine performance. 

SENATOR D'AMATO: Will it be more powerful in electric mode? 

ANSWER: Amtrak and TURBOMECA have embarked upon a program 
to increase the horsepower of the DC drive as much as physically 
possible. Each Turbine power unit has a 300 horsepower motor. We 
anticipate going to as much as 900 horsepower, which will 
represent 60% of the turbine horsepower. 



SENATOR D'AMATO: According to the General Accounting 
Office's written testimony, it could cost from $500 
million to upgrade an existing 200-mile stretch of rail 
track to high-speed operations (110 miles per hour) to 
over $12 billion for a magnetic levitation rail system 
(over 200 miles per hour). 

Given these estimates, doesn't it make sense for 
Amtrak and the Federal Railroad Administration to focus 
their efforts on demonstrating high-speed rail on New York 
State's Empire Corridor, the nation's only existing high- 
speed corridor (110 mph, ready for 125 mph with some work) 
outside the Northeast Corridor? 

ANSWER: Amtrak agrees that the Empire Corridor, as 
an existing multi-freguency corridor with high population 
densities and near-high speed track guality, is an 
excellent candidate for high-speed technology 
demonstrations outside of the Northeast Corridor, It 
should be noted, however that other corridors throughout 
the United States are also good candidates, although track 
standards on those corridors may not be as advanced as 
those achieved by the State of New York through its 
ambitious upgrade program. The five corridors designated 
by the Federal Railroad Administration to receive funding 
for track improvements under the Intermodal Surface 
Transportation Act of 1991 are good examples of other 
potential corridors that could benefit from such high- 
speed technology demonstrations. 

Additionally, Section 812 of Public Law 102-533, the 
Amtrak Authorization and Development Act, which was signed 
into legislation on October 27, 1992, outlines certain 
directives relating to experimentation with new high-speed 
technologies. Section 812(c) mandates that Amtrak "in 
order to facilitate efforts to increase train speeds 
throughout the national intercity rail passenger system, 
shall upon request by eligible applicants, consult and 
cooperate, to the extent feasible, with such applicants 
proposing technology demonstrations authorized and funded 
pursuant to federal law." Thus, the Corporation has a 
legislative mandate to demonstrate new technology 
throughout the national system. 

SENATOR D'AMATO: New York State has invested about 
$150 million of its funds to bring the Empire Corridor up 
to high-speed standards. Amtrak serves a high population 
density in this corridor and enjoys an excellent revenue 
stream from this service. What do you think can be done 
to further promote the demonstration of high-speed rail 
operations in this corridor? 

ANSWER: Amtrak has identified three mechanisms to 
address the difficult issue of funding the large capital 
investments required for right-of-way improvements and 
state-of-the-art high-speed rolling stock. 

The first of these is the establishment of a 
continuous, dedicated funding source for rail, similar to 


the Highway Trust Fund. Last year, Representative 
Al Swift, Chairman of the House Subcommittee on 
Transportation and Hazardous Materials, introduced 
H.R. 4414, which would establish a capital fund financed 
by one cent of the current two and one-half cent federal 
fuel tax now allocated to deficit reduction. The measure, 
which was co-sponsored by some 30 members of the House of 
Representatives, was widely supported in the environmental 
and transportation industries, and would for the first 
time provide a secure capital funding source for Amtrak. 
This would allow the Corporation to upgrade and expand its 
current system, and would make possible the establishment 
of high-speed rail on routes other than the Northeast 
Corridor. The Empire Corridor would be an excellent 
candidate for such an upgrade. 

Second, Amtrak fully supports recent proposals for an 
investment tax credit to appropriate capital investments 
to assist in stimulating the economy, including 
specifically such a tax credit for investments in rail 
eguipment, both conventional and high speed. 

Finally, Amtrak recommends removing statutory limits 
on states' and localities' tax-exempt expenditures for the 
rehabilitation of rail passenger facilities and equipment. 
This proposal would dramatically reduce Amtrak 's costs of 
financing equipment purchases. 


SENATOR D'AMATO: Today, the Long Island Railroad accounts 
for over 75% of the passenger and train arrivals at Penn 
Station New York during the AM peak period while it is 
allocated (by Amtrak) ,only 45% of the platform space at 
Penn Station. In fact, some of the track space that LIRR 
relies on regularly (tracks 13-16) are designated not to 
LIRR exclusively but for joint Amtrak and LIRR. 

Does AMTRAK 's James A. Farley Proposal provide any 
significant direct benefits to Long Island Rail Road? 

ANSWER: Amtrak 's James A. Farley Proposal includes a 
major renovation of the existing Penn Station facilities, 
together with the relocation of Amtrak operations to the 
James A. Farley Building. The Long Island Rail Road and 
its passengers will benefit from the reduced congestion 
and enhanced accessibility that will result, as well as 
the ability of the renovated Penn Station complex to 
accommodate projected future passenger utilization. 
Specific improvements benefitting the long Island Rail 
Road are: 

o Corrects numerous fire and life and safety 

deficiencies in the current station, increasing 
the level of safety in the station for all 

o Increases total station platform capacity by 
allowing access to and usage of the mail 
platform for passenger loading; 


o Improves vertical access on Platforms 7 and 8 by 
providing two new escalators, a passenger 
elevator, a passenger/freight elevator and an 
emergency stairway on each platform, which will 
significantly reduce platform clearance and 
dwell tiroes; 

o Improves the environment and passenger 

orientation at the interchange of the West End 
Concourse and the Eighth Avenue Subway; 

o Provides additional access and egress for Long 

Island Rail Road passengers through the James A. 
Farley building concourse via the West End 
Concourse ; 

o Improves the ability of Long Island Rail Road 

passengers to transfer to New Jersey Transit and 
Amtrak trains via the extended West End 

o Increases the capacity of the station's 

mechanical systems, providing the opportunity 
for supplemental service to the Long Island Rail 
Road premises; 

o Increases loading dock capacity by relocating 

Amtrak 's loading dock operations into the James 
A. Farley building. 

SENATOR D'AMATO: Won't the Farley proposal result in less 
access for LIRR given AMTRAK 's better access to tracks 13- 

ANSWER: No. Amtrak has made a commitment to LIRR that 
their usage of the station at track level will not 
decrease from current levels . The project provides 
increased access to all station tracks, including improved 
access for LIRR. Additionally, the project increases 
overall station capacity and efficiency by allowing the 
mail-handling platform, under the James A. Farley 
building, to be used for passenger train handling as well 
as mail operations. 

SENATOR D'AMATO: Does the Farley proposal create any 
capital costs for LIRR? 

ANSWER: No. The expansion proposed pursuant to the 
Farley proposal and the renovation of Penn Station does 
not create any capital costs for LIRR. Although LIRR will 
derive numerous benefits from the Farley proposal, Amtrak 
recognizes that the LIRR is already investing significant 
funds in Penn Station as part of their station renovation 
program. We understand LIRR's position that additional 
capital contributions cannot be budgeted for Penn Station. 

Although LIRR is not being asked to provide funding, 
it is likely that the proposed improvements to the 


station's mechanical and life safety systems, and the ADA 
accessibility improvements at the station's entrances will 
reduce the LIRR's need for future capital improvements to 
upgrade those systems . 

SENATOR D'AMATO: Do MTA and LIRR support the Farley 

ANSWER: MTA and LIRR, along with Amtrak and New Jersey 
Transit, have participated in the two-year Penn Station 
Master Plan process. As a result, they have reviewed 
documents and have commented on the proposal during the 
process. Amtrak has requested the formal support of 
MTA/LIRR for the Farley proposal that was recommended as a 
result of the planning process because the Farley proposal 
provides significant benefits to the city of New York and 
its travelling public, as well as Amtrak, the Metropolitan 
Transportation Authority, the Long Island Railroad, and 
New Jersey Transit. However, the MTA/LIRR has expressed 
concern that the Farley proposal may compete with funding 
for their Grand Central Station Project. 

SENATOR D'AMATO: Today LIRR and Amtrak are working on 
several short term strategies to increase operating 
flexibility at Penn Station. These strategies include: 

(a) the construction of a new connection, known as 5x/6x 
to permit LIRR to access periodically, additional tracks, 

(b) the extension of platform 11 to allow longer LIRR 
trains to access an existing LIRR platform, and (c) and 
operating plan to better manage the train movements of 
LIRR, Amtrak and NJT in the Terminal. 

What is the impact of the Farley proposal on these 
short-term strategies? 

ANSWER: The Farley proposal has positive impacts on the 
short-term strategies enumerated. It provides increased 
vertical circulation and decreases loading and unloading 
time for passengers on trains using tracks 1 through 16, 
thereby reducing train dwell time and increasing platform 

SENATOR D'AMATO: What is the overall progress on these 

ANSWER: Amtrak believes that overall progress has been 
positive. The current status of these strategies is as 

Amtrak engineering conducted a detailed review of the 
preliminary design for the 5X/6X connection and found that 
the proposed geometry was not workable. An alternate 
conceptual layout was proposed which meets the LIRR's need 
to directly access tracks 13 and 14, in the station, from 
the West Side Yard while maintaining Amtrak and New Jersey 
Transit's need for flexibility in accessing the Hudson 
River tunnels for trains bound to New Jersey. Preliminary 
design is in progress on this alternative. Amtrak is 
committed to finding a workable solution to provide the 


LIRR direct access to tracks 13 and 14, in a way that does 
not compromise future capacity needed for New Jersey 
Transit and its own operation into New Jersey. 

Amtrak supports the proposed Platform 11 extension 
because it will contribute to the efficient use of the 
LIRR's portion of the station. The LIRR has retained a 
design consultant for the extension of Platform 11. 
Amtrak has participated in design review meetings on this 
project. Amtrak suggested, and the LIRR has agreed to 
retain tracks in and access to C Yard for continued use as 
a maintenance staging area for the entire station. 
Accordingly, the LIRR and Amtrak are in general agreement 
on the overall design of the Platform 11 extension. 

A draft plan for the current operation of the station 
has been developed, incorporating the operations of all of 
the transportation agencies. Work is underway on the plan 
so that it can be put into effect for the Spring timetable 
changes. This process of review and discussion among the 
agencies is now a regular part of the joint planning for 
operations at Penn Station. 

SENATOR D'AMATO: Amtrak is seeking funding support for 
the Farley Proposal from a number of sources including 
ISTEA, State and local funds. 

Wouldn't the use of ISTEA funds for the Farley 
project inevitably compete with other New York area 
transportation agencies (including LIRR and MTA) needs for 
these same funds? 

ANSWER: ISTEA funding is but one potential source of 
funding for the proposed renovation and expansion of the 
Penn Station project. Our discussions with state and city 
officials have explored the use of a number of economic 
development mechanisms because of the significant 
benefits, in terms of new jobs and increased state and 
city taxes that will result from the proposed project. In 
addition, any infusion of state and city funding can be 
expected to leverage significant funding contributions 
from other sources. Because of the flexible uses of ISTEA 
funding, it is likely that cooperative efforts of transit 
agencies in the region would result in a net increase in 
the portion of ISTEA funds allocated for mass transit, 
rather than intensifying competition for existing 

SENATOR D'AMATO: Have LIRR, MTA and other NY area 
transportation agencies endorsed ISTEA funding in the 
Farley Project? 

ANSWER: No, because these agencies have not been asked to 
endorse any specific funding source and LIRR and MTA have 
been asked to provide their support for the project 
because of the significant benefits that will be provided 
for passengers who use the Penn Station facilities. 


SENATOR D'AMATO: Should the remaining unfunded safety 
needs at Penn Station, including the East River tunnels, 
take precedence over investing in a new facility? 

ANSWER: The Farley Proposal should not be characterized 
strictly as an investment in a new facility. The proposal 
involves a staged expansion of station facilities designed 
to accommodate the needs of passengers using Amtrak, LIRR, 
MTA and NJT services. It also addresses fire, life and 
safety issues. 

The serious fire, life and safety deficiencies need 
to be addressed as soon as possible, and we are working 
toward this end. Representatives of the Long Island Rail 
Road, New Jersey Transit, and Amtrak are working through a 
formal Joint Task Force to formulate program requirements 
and develop a funding and implementation strategy for the 
improvement of the life safety scenario for Penn Station 
and the connecting tunnels. Many life and safety-related 
improvements have been or are nearing completion. Other 
significant projects are progressing through the planning 
and design phases. A fully developed program plan 
describing all components of the Life Safety Program is 
expected to be available at year's end. 

Improvement in passenger egress from the platforms is 
essential to improve safety, as well as passenger 
convenience. The Farley proposal, if adopted, would 
achieve a major improvement in this function by extending 
the existing West End Concourse to the Amtrak side of the 
station thereby improving egress even as LIRR's current 
terminal project improves access/egress to platforms LIRR 
patrons use. 

The LIRR recognized the need to address station level 
safety and capacity issues, and implemented their station 
renovation program. Similarly, the Farley proposal will 
address these concerns for New Jersey Transit and Amtrak 
passengers. Amtrak believes that it is important to fund 
all of these projects. 



SENATOR HATFIELD: Mr. Claytor, first let me say that 
I am roost pleased that the Eugene, Oregon - Vancouver, BC, 
corridor was designated as one of the five high-speed rail 
corridors in our nation. It was a pleasure of mine to be 
a part of the public announcement of that designation at 
the Amtrak station in Portland. 

Through the recently adopted 40 year Oregon 
Transportation Plan, high-speed rail has been identified 
as a critical transportation line to Oregon's major 
population centers. The State of Oregon has just 


completed a passenger rail plan that recommends 
development of high-speed rail by the year 2000. A 
critical piece of this effort is the availability of 
federal funds. Oregon's estimated share of the corridor 
cost is $450 million. The state of Oregon has identified 
$2.6 million of Amtrak projects that would qualify for 
funding under the President's economic stimulus package. 
If the stimulus package is passed by Congress with 
these increases, can you give me some assurance that this 
Oregon request will be met with federal funds? 

ANSWER: Amtrak has recently been made aware of 
several improvements requested by the State of Oregon if 
the economic stimulus package is passed. These 
improvements were not identified, however, until after a 
proposed project list was submitted to Congress. Projects 
benefitting the state of Oregon which were included, 
however, involved improvements to several stations in the 
state. Amtrak will make every effort to ensure that these 
projects are funded. This, of course, depends on the 
amount of funding received, as well as possible 
Congressional mandates on how the funds will be spent. 




SENATOR LAUTENBERG. Mr. Blanchette, as a former 
FRA Administrator, are you aware of any antiquated FRA 
rules that you think unnecessarily inhibit the expansion 
of high-speed rail in the country? Would the repeal of 
these rules require legislative action, or just a 
regulatory change? 

ANSWER. A number of FRA regulations were drafted 
without TGV-type rail operations in mind, much less 
magnetic levitation. The subjects range from the need 
to install grab irons and hand holds to the standards of 
"crashworthiness. " 

It is my understanding that FRA has been studying 
this area for some time. In respect of very high-speed 
service, FRA has elected to begin with proposed rules of 
particular applicability dealing with precise corridor 
projects. From comments received and experience gained, 
the agency will then be able to decide the 
appropriateness of regulations of general applicability. 
It will also be able to judge whether the regulatory 
route alone will suffice. 

In my judgment, this approach seems a sensible one 
since the technologies are new and each corridor may be 

I am not aware of any similar problems that may 
exist in respect of more conventional high-speed 
operations. However, Amtrak's experience in the 
Northeast Corridor with speeds up to 125 m.p.h. should 
provide valuable insights as the Nation looks to the 
future. Amtrak's existing Corridor service has operated 
without the need for legislative action. 


SENATOR LAUTENBERG. Mr. Blanchette, in your policy 
paper on high-speed rail, you state that railroads will 
enter the high-speed rail arena only on a fully 
compensatory basis. One of your member railroads, 
Conrail, has stated that it must be completely 
reimbursed for any capital improvements, maintenance, 
and overhead costs associated with passenger service 
requirements. Should the freight railroads be 
completely reimbursed for enhancements that also 
benefits the freight railroad? 

How, if at all, does AAR's position differ from that of 
Conrail on the whole issue of High Speed Rail over 
freight railroads? 


ANSWER. After shedding deficit passenger service 
which they had been forced to operate for decades, the 
Nation's freight railroads will not re-enter the field 
in any fashion unless they are compensated. 

The policy statement contemplates that the basis of 
compensation would be settled upon in arm's length 
bargaining between a freight road and the passenger 
authority sponsoring the proposed service. Under that 
concept, each negotiating railroad would address the 
issue of "enhancements," presumably capital investments 
desired by the passenger authority which might, in some 
fashion, benefit freight operations in some measure. 
Since cases will arise in a variety of contexts, it is 
impossible at this juncture to predict how individual 
negotiations will deal with these proposed investments. 

In general, however, accommodations of rail 
facilities to permit high-speed service will not benefit 
freight operations. As a result, the presumption of the 
freight railroads is that all enhancements necessary to 
accommodate high-speed passenger service to freight 
operations will be financed by the sponsoring passenger 

The industry policy statement appended to the AAR 
testimony was subscribed to by all AAR member roads, 
including Amtrak. As I testified at the hearing, I 
consider Conrail's position compatible with the industry 


SENATOR LAUTENBERG. Unlike the European high-speed 
rail systems, almost all passenger trains in the U.S. 
outside the Northeast Corridor run over private rights- 
of-way. Amtrak currently compensates the freight 
railroads for its operations over their rights-of-way to 
the tune of roughly $65 million per year. Are you aware 
of any Class I railroads that view high-speed passenger 
operations over their rights-of-way as a significant 
money making , opportunity? Are you aware of any Class I 
railroads that are genuinely interested in seeing high- 
speed rail operations over their track? Separate from 
the issue of maintenance costs, do the freight railroads 
expect to be compensated in a different fashion for 
high-speed operations versus current Amtrak operations 
over their rights-of-way? 

ANSWER. The issue centers upon incremental 
improvements to existing conventional (not exceeding 90 
m.p.h.) passenger service. As noted in the policy 
statement, the major freight railroads do not anticipate 
their participation in TGV-type service requiring 
dedicated rights-of-way. 


There are several factors which make it difficult 
to assess the future profit potential of high-speed rail 
for the underlying railroads. 

First, the railroad industry in this country has no 
substantial body of experience in dealing with mixed 
service involving passenger operations between 90 and 
150 m.p.h. Experiments in the 1960 's and early 1970 's 
on the Northeast Corridor were not profitable for the 
underlying carriers, all of which were eventually 
bankrupted, but the circumstances may well have been 

Secondly, while some corridors have been 
identified, none has been selected. No pro forma 
financial statements of the kind normally associated 
with project financing have been issued. The frequency 
of proposed service and the demands that will be made on 
the roads' essential freight operations are not known. 

Finally, the question of liability must be 
resolved. The freight railroads advise that no 
potential justifies running the risk of uninsurable 
liabilities of great magnitude. 

Those caveats noted, the railroads recognize the 
contributions rail technology can make to alleviate 
modern problems of moving people between America's 
cities. The railroads are prepared to assist in that 
effort. They have made clear, however, that they are 
not willing to assume entrepreneurial risk since 
profitability is neither ensured, nor, in terms of 
social benefits, necessarily relevant. It is for those 
reasons that the policy statement speaks in terms of the 
passenger authority assuming full costs of accommodating 
the proposed service. 

The policy statement does not enumerate precise 
compensation formulas which might serve these 
objectives. It envisages a two-step process. First, a 
determination must be made that the proposed passenger 
service is compatible with freight operations in a 
particular corridor. Thereafter, the nature of this 
joint-use arrangement can be assessed; alternatively, it 
might be practical for the freight service to be 
relocated, thereby allowing purchase of the right-of-way 
for exclusive passenger use. Each step in the process 
should be on a case-by-case basis. Existing contractual 
arrangements with Amtrak or other passenger authorities 
may offer useful guidance, but cannot be determined as 
controlling on an a priori basis. What is salient is 
that the freight railroads anticipate full compensation. 


SENATOR LAUTENBERG. Both the AAR paper and the 
Conrail paper state that high-speed rail operations 
require complete grade separation, which means the 


construction of numerous bridges and overpasses to 
eliminate all grade crossings. As you know, the Swedish 
railway authorities have had great success in using 
special crossing gates that prohibit any traffic from 
gaining access to the track and are relatively 
inexpensive. Do you think that these Swedish crossing 
gates hold promise to greatly minimize the cost of grade 
separation for new high-speed rail corridors? 

ANSWER. AAR is advised that FRA is considering 
research into the Swedish crossing gate technology to 
assess its feasibility in the United States. Subject to 
that agency's own assessments of its budgetary 
priorities, research in this area is meritorious. 

Ultimately, however, high-speed passenger service 
requires the elimination of grade crossings, as was done 
in the New York-Washington corridor. 


SENATOR LAUTENBERG. Do you see any scenario where 
Amtrak would be required to use its condemnation 
authority to gain access to freight rail corridors in 
order to provide high-speed rail service? 

ANSWER. AAR contemplates that where mixed use is 
compatible, the financial arrangements can be 
negotiated. Both Amtrak and the major freight railroads 
subscribed to the policy statement incorporating that 

It is not envisaged that the parties will be called 
upon to test the limits of condemnation authority in 
this area. However, that process as well requires full 
compensation . 


SENATOR LAUTENBERG. It is my understanding that a 
few of the Class I freight railroads are competing 
against Amtrak for the contracts to operate certain 
transit systems. Do you believe this signals a renewed 
interest on the part of the freight railroads in 
passenger service? Are any freight railroads to your 
knowledge considering expansion into inter-city 
passenger service, outside of California? 

ANSWER. The railroads incurred staggering losses 
operating commuter and inter-city passenger services for 
their own account. AAR is aware of no road anxious to 
re-enter the field as an equity venturer. 

AAR has not been involved in the negotiations among 
various railroads and commuter authorities. These 
transactions seem to have in common the perspective that 
the railroads will be adequately compensated for the 
service rendered. AAR is aware of no service, inter- 


city or commuter, which a freight railroad proposes to 
launch other than on a compensatory basis. 


SENATOR LAUTENBERG. Amtrak will be required to re- 
negotiate its operating agreements with the freight 
railroads in 1996. Amtrak currently pays the freight 
railroads for the incremental costs of their operations 
over freight track — roughly $65 million a year. Mr. 
Blanchette, is it true that the freight railroads are 
looking to dramatically increase their compensation from 
Amtrak in 1996? Is this true for all the Class I 
railroads with a current agreement with Amtrak? What is 
the rationale for a significant increase in Amtrak 's 
payments to the freight railroads? What percentage and 
dollar increase will the freight railroads be seeking in 
1996? Is the AAR likely to play a role in these 
negotiations, or will each railroad be negotiating on 
its own behalf? Given Amtrak 's recent revenue and cost 
trends, do you anticipate that the negotiating process 
is likely to increase Amtrak 's requirement for a Federal 
operating subsidy? If so, by how much? 

ANSWER. The renewal of the operating agreements 
with Amtrak has not been discussed in the councils of 
AAR. As a result, the Association is not privy to the 
expectations of the parties. The role, if any, which 
AAR would play in the negotiations has not been 



SENATOR SASSER: One of the important benefits of 
the President's economic stimulus package is its 
potential for job creation. What is the estimated 
employment potential for commercial development of 
magnetic levitation? Will such operation involve any 
training or re-training initiatives? 

ANSWER: A maglev system could generate employment 
during both the construction and operation stage. 
According to the Federal Railroad Administration, if a 
maglev system were built in the Northeast Corridor, it 
might require 15,000 person-years for planning and 
development, 352,000 person-years for construction, and 
2,250 employees in 2020 for the operation of the system, 
However, to the extent that maglev investment replaces 
investments in highways and airports, the net change in 
the number of jobs will be less. 

Because the maglev would be a new technology, a 
certain amount of training and retraining would be 


required, and would probably be similar for a new modern 
transit system, according to the Federal Railroad 
Administration (FRA). 


SENATOR SASSER: The primary market for maglev would 
be densely populated, heavily traveled corridors ranging 
between 100 to 500 miles. The airlines, Amtrak, and 
Greyhound have already established their presence in 
these markets. To the extent that maglev must compete and 
draw ridership away from these sources, specifically with 
respect to airlines, what might be the impact of 
commercial development of maglev on airline hub 

ANSWER: Since there is no experience with maglev 
systems anywhere, the number of passengers that would 
switch from airlines to maglev is difficult to accurately 
forecast. The TGV route from Paris to Lyon is the best 
example available for estimating the amount of travelers 
that might be diverted from air to a system with maglev 
type speeds. However, domestic air fares in Europe are 
much higher than in the U.S. and Europeans have a long 
history of reliance on rail for intra-national trips. In 
addition, the French government directed the airlines to 
reduce service on the Paris to Lyon route after TGV 
commercial operation. Therefore, it is difficult to 
transfer the French experience to the U.S. 

The estimated impact on a hub airport might be 
minimal because the maglev would serve only cities in a 
single corridor while a hub airport by their very nature 
would serve many different destinations. A maglev route 
could affect only air traffic to cities on the route 
served by the maglev system. In a few markets, such as 
the Northeast Corridor, there are numerous shuttle 
flights between principal cities and in these cases, a 
significant number of flights could be affected and the 
available capacity at these airports would increase. 
However, those few airports with shuttle service are 
generally not hub airports. 


SENATOR SASSER: The Office of Technology Report, 
"New Ways" notes "maglev trains already carry passengers 
on short, low-speed transit lines in Germany and 
England." What might be the potential of such trains 
operating in rural areas, and how would you assess the 
economic feasibility? 

ANSWER: The potential of short low-speed maglev 
trains operating in rural areas is probably minimal. The 
low-speed maglev trains travel at speeds less than 50 mph 
and serve urban areas. A car or conventional train could 


travel at speeds faster than the low-speed maglev. in 
addition, travel by car allows more flexibility in 
traveling to many different points. 

To assess the economic feasibility of a low-speed 
maglev train would be similar to completing a cost- 
benefit analysis for any transportation project. That 
is, all costs (planning, construction, and operation) 
would be compared to the estimated revenues and social 
benefits/costs. A sensitivity analysis of key variables 
for both the costs and revenues should also be completed 
For example, a high and low estimate for inflation would 
be used . 


SENATOR SASSER: The vast majority of maglev 's cost, 
between 75 and 90%, is attributed to construction of the 
fixed guideway. The location of the guideway is very 
much dependent on dense population with a high ridership 
potential. Briefly explain the process for determining 
the accuracy of the potential ridership base. 

ANSWER: Ridership is usually projected from 
estimates of total travel demand in a market and then a 
forecast of the proportion that will use the new system. 
These ridership forecasts generally use models that 
assign travelers based on modal characteristics such as 
trip time, passenger comfort, and frequency of trains and 
traveler requirements. These models work well when used 
to forecast transportation demand using existing 
technology. However, for new technologies, such as 
maglev, ridership forecasts are more problematic because 
we lack experience with user response to sets of 
performance characteristics. Attempts are now being made 
to marry "stated preference" models (i.e. what people say 
they will do when given a set of alternatives) with 
revealed preference models (i.e. actual response to a 
condition) . 

The process for determining the accuracy of the 
potential ridership base should include a review of the 
data sources and assumptions for reasonableness. Because 
the data for origin and destination of automobile trips 
are generally not available, proxies are often used. 
Ridership forecasts are based on a number of assumptions. 
Ridership forecasts typically assume that the fare on a 
high speed ground transportation (HSGT) system will be 
less than the competing airline fare. However, an 
airline would likely lower its fares if HSGT offered a 
serious challenge. The ridership forecasts also 
typically assume that a certain percentage of ridership 
will result from trips that would not have occurred in 
the absence of HSGT. Estimates of this ridership, called 
"induced demand," have ranged from 10 percent up to about 
40 percent of the total ridership in the forecast. Some 
analysts believe that any assumption of induced demand 


over 10 percent is too high. Nevertheless, induced 
demand could be important in cases where the project is 
designed to be a part of a broader strategy to affect 
land use. In France, for example, the ridership of TGV 
between Paris and Lyon has been compounded by business 
location and travel patterns. 


SENATOR SASSER: The 1990 Census indicated a shift 
in population from inner cities and rural areas to the 
suburbs. In many instances, the jobs followed the 
people. How have these shifts in population affected the 
maglev planning process? 

ANSWER: To the extent suburbanization has 
decentralized and dispersed the population, fixed 
guideway systems such as maglev are disadvantaged. The 
relocation or addition of stops and increased land 
acquisition would be the primary affects on a maglev 
system. Population shifts to suburbs would indicate that 
more stations might be required. Any such additional 
stop would increase the trip time and lower average 
speeds, which in turn would decrease the number of 
travelers likely to be diverted from other transportation 
modes . 


SENATOR SASSER: The ISTEA legislation provided 
greater input for Metropolitan Planning Organizations 
(MPOs). What has been the involvement of MPOs in the 
potential commercial development of maglev? 

ANSWER: The states and MPOs, transportation 
planning organizations for areas with 50,000 or more 
people, are still trying to define their role with 
regards to the ISTEA legislation. The ISTEA established 
specific criteria for selecting transportation projects 
to be funded and for flexibility in the spending of 
highway trust funds. The states and MPOs are to select 
the projects and determine the funding. 

With the roles of MPOs still undefined, the 
commercial development of maglev by MPOs is still 
undecided. However, prior to the passage of ISTEA, the 
MPO which includes Orlando, Florida, was involved in the 
planning of the potential maglev project from the Orlando 
airport to International Drive. Since, the passage of 
ISTEA, there has been no plans for this maglev project to 
receive funds through the MPOs increased flexibility of 



SENATOR SASSER: There are frequent examples, 
notably with respect to airports, of projects otherwise 
ready to go but stalled due to environmental concerns. 
The environmental review process can be quite lengthy. 
What affect might the environmental review process have 
on the timing of future maglev development? 

ANSWER: The environmental review process or 
environmental impact statement (EIS) would be no 
different for maglev development than for any other major 
projects. A well planned maglev project would start the 
EIS during the engineering planning stage. An EIS could 
take two years or longer. If lawsuits protesting the 
construction of a maglev system were filed, the process 
could take longer. In addition, acquiring new rights-of- 
way often involves changes in land use and could lead to 
encroachment on wetlands and the habitats of endangered 
or threatened species. In our report, " High Speed Ground 
Transport: Acquiring Riqhts-of-wav for Maglev Systems 
Requires a Flexible Approach. " we found that there were 
significant concerns of the impact of this maglev project 
from Anaheim, California, to Las Vegas, Nevada, on the 
desert environment. 


SENATOR SASSER: There is heightened public 
sensitivity to potential health risks of projects 
affecting their communities. While maglev promises a : 
"clean, efficient, and safe energy source," there is 
still uncertainty regarding the health risk of human 
exposure to electromagnetic fields (EMFs). The potential 
risks affect not only riders, but residents along the 
right-of-way. What is the Department of Health and Human 
Service's (HHS) guideline regarding the potential health 
risk from exposure to EMFs, and how will maglev 
development affect such guidelines? 

ANSWER: HHS does not have any guidelines on the 
potential health risk from exposure to EMF. Within HHS, 
the Food and Drug Administration has some performance 
guidelines for specific appliances such as microwave 
ovens. The Institute of Electrical and Electronics 
Engineers (IEEE) has developed some industry standards 
for EMF. However, these are industry standards, rather 
than Federal standards. Also, these standards are 
primarily for workers in electricity-generating 

In 1990, the FRA started a program to define the EMF 
emissions of HSGT, identify and assess potential health 
and safety effects, and determine potential EMF control, 
mitigation, and regulatory options. So far, reports have 
been completed on the magnetic field characteristics 
measured on board the German maglev and at maglev 

152 I 


Senator Lautenberg, The subcommittee stands in recess until j 

Thursday, March 11, at 10 a.m. We're going to hold a hearing then i 

on transit needs involving the Federal Transit Administration, | 

General Accounting Office, and various nondepartmental witnesses. i 

The hearing is now recessed. I 

[Whereupon, at 12:50 p.m., Thusday, March 4, the subcommittee | 

was recessed, to reconvene at 10:04 a.m., Thursday, March 11.] ' 



[Clerk's note. — Testimony from organizations that did not par- 
ticipate in the high-speed rail hearing follow:] 

Statement of Ross Capon, Executive Director, National Association of 

Railroad Passengers 

Mr. Chairman, thank you again for your leadership in developing Amtrak and the 
Northeast Corridor Improvement Project in general, and for your support for fund- 
ing the New York-Boston improvements in particular. 

We support the President's "Vision of Change," especially: 

— ^the $188 million fiscal year 1993 supplemental capital for Amtrak; 

— the increased spending for transit, both short and long term; 

— the $1.3 billion for high speed rail; and 

— the energy tax and its gasoUne emphasis. 

With respect to our issues, "Vision" reflects thinking that is worlds ahead of per- 
haps evenf previous White House. However, we have two disappointments and one 
concern. First, Amtrak desperately needs an expanded long-term capital program, 
which "Vision" does not include. Second, for fiscal year 1993, "Vision" fiinds ISTEA 
at 100 percent for highways but only 53 percent for transit. Moreover, Secretary 
Peiia on March 3 told the Senate Budget Committee that 0MB has approved 
redirecting all of the federal deficit reduction 2.5 cents-a-gallon to highways. 

Now, to our concern. It is simple. We believe the public interest requires spending 
all or most of the "high speed" $1.3 billion on "incremental" improvements to exist- 
ing Amtrak routes and services. 

Incrementalism" means making the best use of existing resources, and increasing 
rail ridership in the near term. This is exactly what a "pro-environment," "pro-cost- 
effectiveness" administration — and an administration that wants to do something 
that benefits travelers before 1996 — shovild be pushing! Incremental improvements 
mean the administration will immediately get credit, ridership will improve and op- 
erating subsidies will decline. 

For years we have heard upbeat discussions of "quantum leaps" — very high speed 
services using mostly-new rights-of-way. We believe development of such services 
depends on prior incremental improvements, just as existing high speed services — 
abroad and in our Northeast — developed in corridors with a pre-existing, high train- 
riding habit. 

In sum, the incremental approach: 

— holds by far the best — perhaps the only — hope of actually providing improved 
service within the next several years; 

— would increase revenues and reduce operating subsidy requirements on the af- 
fected lines and, to a lesser extent, on connecting services; and 

— ^would partially offset "Vision's" failure to provide increased long-term Amtrak 
capital ftmding. 

The public thinks high speed rail means service that is air-competitive, i.e., able 
to attract a significant number of riders fi"om airplanes, with resulting benefits in 
terms of environmental impact, overall U. S. energy efficiency, and reduced conges- 
tion in the aviation — and, to a lesser extent, highwav — systems. 

This definition is market-driven, not technology-driven. Travelers on trains as on 
planes care littie about top speed, onlv about how the modes' total travel times com- 
pare. Amtrak's Metroliners only reach 125 mph. Japan's bullet trains captured the 
world's imagination witii a top speed of 130 mph when service began in 1964. Bullet 
trains did not exceed 142 mph until 1992, and 142 remains the lunit for many such 
trains. However, all of these trains are air-competitive and most people consider 
them "high speed," although Amtrak's equipment compares most unfavorably to the 
X2000 in terms of noise and general ambiance. 

To maintain the program's credibility, to insure that the best projects prevail, and 
to expand the total pool of fiinds available for passenger rail, we urge requiring a 



20 percent non-federal match where any of the $1.3 billion is awarded to states or 
projects. (Twenty percent is the standard, "level-playing-field" ISTEA figure.) The 
match should be cash up front, not a promise to repay a portion of ticket revenues 
in some fiiture year. Such a promise would become meaningless if a project never 
opened or failed to generate anticipated revenues. 

Credibility is an issue because, if a non-federal match is not required, money 
could go to the state with the best lobb3dst or the best-positioned legislators. Cur- 
rently, for example, California is investing substantial sums in its rail passenger 
corridors, whereas Texas is investing nothing. If Texas were to get a major portion 
of this $1.3 billion, there could be tremendous bitterness in California and a chilling 
message to all states: if you spend your own money on passenger rail, you risk hav- 
ing the feds make you look foolish in a few years. 

Thank you for considering our views. 



Mr. Chainnan and members of the Committee, gcxxl afternoon. My name is BU] 
Brown and I am the Chairman of the Board of MAGLEV, Inc., a Pittsburgh baaed 
company which we believe Is the only MAGLEV public/private/labor consortium in tlie 
country. We very much appreciate the opportunity to zppcai before you today, 

MAGLEV, an acronym for Magnetic Levitalion, is a technology that many people have 
only recently become aware. MAGLEV, Inc., however, began to form six years ago, 
when Carnegie-Mellon University established a High Speed Ground Transportation 
Center in Pittsburgh in response to the growing transportation crisis in the United 
States. While crcating a database on High Speed Ground Transportation (HSGT) 
technologies and projects around the world, the Center became aware of the rapid 
development in MAGLEV technologies and recognized that the future of HSGT 
Systems would be highway and airport oriented in addition to helping to revitalize 
passenger service from city center to city center. With Pittsburgh's strategic location 
midway between the east coast and the large cities in the midwest, planners at the 
Center recognized that an opportunity existed to implement an HSGT System to these 
regions out of a Pittsburgh hub. In 1988, the MAGLEV Working Group was formed. 
The Group was a unique public-private partnership which included private firms, labor 
unions, government representation at the City, County, and State level, a large utility, 
and the university. A preliminary feasibility study issued by the group in 1990 
concluded that a MAGLEV system linking Pittsburgh with the surrounding region is 
feasible, and could create a MAGLEV industrial base in the region which could 
providing MAGLEV Systems to world markets. 

In 1990, the Working Group formed MAGLEV, Inc. This unique corporation's 
shareholders include businesses, government, steelworkers, building trades, and most 
recently, USAir. The fust task of the corporation was to complete a more extensive 
Design, Development and Demonstration CDD&D) Study with the following objectives: 

• Plan the Mid-Atlantic Regional System connecting Pittsburgh to West Virginia, 
Ohio, the midwest, the east coast, as well as other cities in Pennsylvania. 

• Develop a financing plan for the System. 

• Develop a manufacturing and assembly plan. 

• Develop, in greater detail, plans and an environmental overview of a 
Demonstration System linking downtown Pittsburgh and the new Pittsburgh 
International Airport The Demonsttation System will prove the technology, 
establish the Pittsburgh Tri-State Region as the American MAGLEV 
manufacturing bcie, be part of the Intermodal solution to a growing local 
corridor congestion problem, and serve as the critical first Unk in the Regional 
System. ! 

Afber rigorous study of alternative technologies, MAGLEV was chosen for the system, 
over conventional High Speed Rail (HSR). MAGLEV is high-speed guided ground 
transportation which depends on magnetic forces for vehicle suspension, guidance and 
propulsion. It operates on electricity, making it clean and quiet. It is also safe, as the 


MAGLEV cars wrap around an elevated guideway and cannot derail. The capital 
cost5, approximately $30 milJJon per mile, are similar to those of new highways, but 
the system is far less damaging to the environment. HSR systems have a lower capital 
cost, but higher operating and maintenance (O&M) cost. Since a MAGLEV system 
has no friction between vehicle and track with its attendant wear and tear, Jong term 
maintenance costs will be low compared to other rail systems. At speeds of 185 mph 
or more, MAGLEV consumes 32% less electricity per seat-mile than otJier types of 
HSR. It can attain higher speeds with much faster acceleration than HSR, which will 
increase ridership by reducing travel times. It can climb much steeper grades and take 
sharper curves than HSR, critical factors in the rugged terrain in our area. The speed 
of such a system (150 to 300 mph) complements the air and auto modes by providing a 
desirable aJiemative for trips in Uie 100 to 600 mile range. Thus, MAGLEV can be 
used to link airports and city centers. This link will ease congestion in the air and on 
the highway. Air travel can then be used primarily for long bips, for which it is most 
efficient, and highways can similarly serve shorter trips with Jess congestion. 

Once MAGLEV was chosen as the technology for the system, a type of MAGLEV 
technology had to be chosen. There are basically two types of high speed MAGLEV 
Systems. The electromagnetic suspension or EMS, commonly referred to as an 
"attractive" system, uses electromagnets to pull the vehicle up toward the bottom of the 
guideway, while elcctrodynamic or EDS systems use superconducting magnets to 
generate magnetic fields to repel the vehicle up from the top of the guideway. Both 
systems use linear motors for propubion. 

EDS technology was first proposed here in the United Stales by Drs. Gordon Danby 
and James Powell in the mid 1960s. Although several models and schemes were 
developed, most research stopped in the mid 1970s as federal funding was halted. The 
Japanese, however, picked up the research and ran laboratory tests of magnetic 
levilation using superconductivity in 1971. In 1979, a test vel)icle without passengers 
achieved a speed of 320 mph on the Miyazaki test track. Since then, however, despite 
the spending of over $1 billion in research and testing, the system has been plagued by 
problems that will prevent it from achieving commercial operation before the year 
2005. Recently, there has been a surge of activity in the United States to develop an 
all- American "leapfrog" MAGLEV, using EDS technology. It must be stressed, 
however, that such a system will require hundreds of milh'ons of research and 
development dollars alone, and cannot possibly be ready for commercial operation in 
this century. This is not in agreement with MAGLEV Inc's. goals to immediately start 
a system which addresses the growing transportation crisis in the region, and to deliver 
badly needed economic development through the creation of a new manufacturing base. 

On the other hand, EMS technology is ready to build today. In fact, a low speed (30 
mph) EMS system has been in commercial operation at Birmingham Airport in the 
United Kingdom smce 1984, This "attractive" system technology goes back to 1922 
when a German engineer, Herman Kemper, first proposed this principle for "floating 
trains". Full scale development of high-speed EMS began in Germany in 1969, and 
culminated in 1988 with the development of the Transrapid TR07, built by a 
consortium of German firms. Over $1 billion has been spent in developing this train, 
but unlike the EDS technologies, it is ready for commercial operation. It has been 
continuously tested on a 20 mile test track at speeds in excess of 270 mph, has 
undergone rigorous tests for safety and reliability by the German government, and has 
been closely scrutiniicd by experts from all over the world, including the United States 
Federal Railway Administration (FRA). Because this technology is ready to put people 


to work and address our transportation problems today, it was chosen by MAQLEV, 
Inc. as the basis for the Regional and Demonstration Systems. In the course of 
preparing final design of such a system, MAGLEV, Inc. wiU Americanize the system 
to meet the unique needs of our market. We believe changes can be made to the 
guldeway to lower the capital costs, and to allow it lo take sharper curves at higher 
speeds, thus maximizing the use of existing highway rights-of-way. The signaJJing and 
communications systems also will be redesigned to make tJiem state-of-the-art 
American systems. It is our intent to manufacture the system here, using American 
labor and material. It can be noted that a double - track MAGLEV system uses one 
ton of steel per linear foot of guideway in terms of the economic impact of 
manufacturing such a system. 

MAGLEV, Inc. is currently completing the DD&D Study mentioned previously. In 
this study, we have developed conceptual alignments, cost estimates and performance 
plans for the Regional System linking Pittsburgh to cities throughout Pennsylvania, 
West Virginia and the Mid-Atlantic Region. The study has also examined, in more 
detail, four alternate alignments for a Demonstration System between the new 
Pittsburgh International Airport and the Downtown Pittsburgh area. This 
demonstration line will serve to prove the technology under commercial operation, and 
to establish Pittsburgh as the MAGLEV manufacturing center in North America. In 
addition, the Demonstration Line will serve as the critical first link in the Regional 
System, and complement other existing and planned transportation facilities in the 
corridor by serving as one of the most effective Intermodal Transfer Transportation 
Systems in the world. The line will link the new Pittsburgh International Airport via 
an 8 minute ride to Station Square near downtown Pittsburgh. At this point, passengers 
can transfer to a light rail system and subway, buses (traveling on exclusive busways), 
water taxis, taxis, park and ride lots, a commuter fiinicular (an inclined railroad up the 
side of Mt. Washington), or can take a short walk to downtown, 

Tlie Demonstration System has widespread community support, including that of local 
governments, business, labor, the academic community, the state legislature and the 
Governor. The ISTEA legislation includes federal funding for design and construcdon 
of a prototyjw system, for which MAGLEV, Inc. is well positioned due to the work 
already completed. The estimated cost of the Demonstration System is $500 to $600 
million, well within the amount authorized in the legislation for a prototype system. 
An economic model prepared during this study indicates Uiat this investment will create 
8,700 person-years of jobs during construction, primarily in the areas of 
manufacturing, construction, transportation and mining. The total economic benefits 
would be $1 billion to $2 billion. It is absolutely the only system which can beat Uie 
ISTEA requirement of being on the ground running within 6 years of starting the 
conceptual design competition, because it is based on a teclinology which already 
exists. Because it is in an existing transportation corridor, die Demonstration System is 
forecasted to generate enough revenue from ridcrship to cover its operating and 
maintenance costs, thus defraying some of the testing expenses that would be associated 
wiU) the prototype system. 

Upon successful completion and implementation of tiic Demonstration System, 
MAGLEV, Inc. is pr^ared to expand Uiis first link into a fully Regional System 
serving all of Pennsylvania, West Virginia and Ohio. The economic model developed 
as part of the study indicates that such a system would, at a minimum, cover its 
operating and maintenance costs out of farebox revenue, and bring tremendous 
economic benefits to the region by creating jobs and improving mobility. A ridcrship 

68-623 0—93- 


model prepared for ihe system uidicates that, when completed, the system would can7 
17 miiiion passengers annually, generating annual revenues of approximately $1 
billion, which is considerably more than the projected annual operating and 
maintenance costs, estimated at approximately $400 million. 

Obviously, considerable public investment is required to generate the capital costs for 
the system, but the benefits are many and diverse. Construction of the system will 
create 675,000 person-years of employment, which translates to 22,000 full time jobs 
over a 30 year construction period. Manufacturing, in a region which desperately 
needs new industries, would account for 34% of this work, with 10% in construction, 
and the rest spread over other industries as the benefits multiply through the economy. 
The improvement in mobility created by the system will be crucial in bringing tlie 
economy of the region into the 2l8t Century. All areas of Western Pennsylvania, West 
Virginia and Ohio will be opened to Increased tourism and a dramatic increase in 
economic activity from tlie east coast. The speed of the system would make all of West 
Virginia and Western Pennsylvania "bedroom communities" to Pittsburgh and 
Washington, D.C. These areas will also have the improved access they need to the 
new Pittsburgh International Airport, forecasted (by the FAA) to be the 8th busiest 
airport in the country by the year 2005. 

In summary, MAGLEV, Inc. is a wclJ established, broad-based organization with the 
support of business, labor, academia, government and the public throughout the 
Pittsburgh and Mid-Atlantic Region. We have studied and selected a system which can 
improve mobility and create jobs now, not 15 years from now, with a technology that 
is more environmentally benign than any other mode of transportation in the world. 
An Investment in this project is an investment in the future of this country. 

In closing, MAGLEV, Inc., is appreciative of the support for high speed ground 
transportation being put forth by the Administration and by Congress. We especially 
laud the efforts of Senators Specter, Wofford, Lautenberg, D'Amato and Mikulsld for 
their tireless efforts to bring the United States back to the forefront of this critical 
technology. We look forward to working with this subcommittee and other members 
of Congress to bring this dream to reality. We thank you for affording us this 
opportunity to testify, and stand prepared to take any questions which you may have. 



U.S. Senate, 
Subcommittee of the Committee on Appropriations, 

Washington, DC. 

The subcommittee met at 10:04 a.m., in room SD-138, Dirksen 
Senate Office Building, Hon. Frank R. Lautenberg (chairman) pre- 

Present: Senators Lautenberg, D'Amato, Domenici, and Specter. 

panel I — methodologies used to determine transit needs 



American Public Transit Association 
statement of jack gilstrap, executive vice president 

American Association of State Highway Transportation 




Federal Transit Administration 



Senator Lautenberg. I will call the Subcommittee on Transpor- 
tation of the Senate Committee on Appropriations to order. 

We are going to try to stay on schedule. There is the possibility 
of a call for a vote in the Budget Committee on which I sit and 
there could be an interruption. If we have one, we will try to make 
it short and in an appropriate place of the program. 

After 12 years of administration budget neglect. President Clin- 
ton has sent to Congress a stimulus package that contains an addi- 
tional $752 million for the Federal Transit Program for fiscal year 



1993. And the President has proposed a long-term investment pro- 
gram of significantly enhanced transit funding. 

This is encouraging news for, as we will hear today, America's 
transit needs are significant, to say the least. We must meet these 
needs if mass transit is to realize its full potential to speed Ameri- 
cans to work, reduce traffic congestion, clear our air, and provide 
access to work, education, and recreation for all Americans regard- 
less of income or disability. 

As we are going to hear today, the various estimates put transit's 
capital financial needs at between $6.4 and $15.7 billion a year. As 
large as those numbers appear, in the context of an annual public 
expenditure in our Nation's airways, airports, highways, rivers, 
harbors, railroads, and transit needs of $96.5 billion, these transit 
needs do not appear to be out of line. 

These projected transit needs are dwarfed by the many more bil- 
lions of dollars of American productivity wasted each year in traffic 
congestion and the preventable health care costs of air pollution, 
not to mention the damage to structures within our communities 
also from air pollution. 

The Intermodal Surface Transportation Efficiency Act [ISTEA] 
was a blueprint, an outline, a sketch, if you will, as to how we 
might level the surface transportation pla3dng field to give transit 
a fair chance, by introducing new ideas regarding funding flexibil- 
ity. It included new programs, such as congestion mitigation, air 
quality relief, and intelligent vehicle/highway systems, and it in- 
creased the overall funding levels for both highways and transit. 

But as sound as these concepts are, they need to be implemented 
and they need to be a reality. To paraphrase an old expression, 
"Man cannot live by bread alone," well, we cannot travel from place 
to place throughout our country by highways alone. The playing 
field must be leveled. We have to think of moving goods and people 
as a problem to be solved with an integrated surface transportation 
system — not mode versus mode. 

President Clinton's proposals are a good start. The short-term 
stimulus funding will not only provide a needed increase but will 
create new jobs for the economy. And I am confident that there will 
be no problem in obligating this new money within the timeframe, 
the 60-day period, called for in the President's stimulus package. 

Lou Gambaccini, the APTA Chairman, also the General Manager 
of SEPTA, provided us earlier with testimony that additional tran- 
sit funding is desperately needed. A survey conducted by the asso- 
ciation identified major needs and stated that new funding would 
be disbursed all across the country and could be put to good use 
on 649 different projects on 98 transit systems in 31 States. 

Thus it can be seen that any transit supplemental would be a 
broad-based stimulus to the economy and would bolster the transit 
infrastructure of this country. I believe that it is a program well 
suited to putting people back to work very quickly, while at the 
same time addressing some very pressing domestic needs. 

Beyond this fiscal year, however, the committee needs to know 
that, whatever the needs are of the transit industry, these figures 
offered by the most recent administrations were significantly dif- 
ferent than those estimates we heard from the associations and in- 
dustries that represent transit. 


This committee needs to have the best available information in 
order to facilitate the decisionmaking process. We need the best in- 
formation available on how individual States and transit authori- 
ties will use the funds that the committee provides. 

There are probably valid reasons on why funding levels sug- 
gested by the various parties have varied. We want to hear them. 
I think it was once said: The facts, just the facts, please. Well, we 
would like to have those facts from as many objective sources as 
we can find. 

Today, the GAO will testify on what needs to be done to improve 
funding level projections. In addition to getting better and more re- 
liable information concerning transit's needs, I believe Congress 
also needs to understand the needs transit operators face due to 
the enactment of the Americans With Disabilities Act [ADA], and 
the Clean Air Act of 1990. These were both very important pieces 
of legislation that I strongly supported. However, from the prelimi- 
nary information that we have, these requirements appear to be 
imposing significant unanticipated costs. We will hear from several 
witnesses on these issues. 

In addition, we will hear testimony on how we can better manage 
transit programs to encourage more private sector involvement so 
that buses, railcars, locomotives, air conditioning, brake systems, 
safety equipment, and the like are made here in the United States 
rather than, as is all too common, relying on foreign manufacturers 
to meet these equipment needs. 

Today's hearing, by examining transit needs and exploring what 
we need to do to get good, accurate numbers, is another attempt 
to make the ideas and the goals of ISTEA a reality, so that we will 
once again employ our people to produce our goods and services, 
supported with the most advanced, balanced transportation net- 
work in the world. 

With that, I am pleased to note that the witnesses are at the 
table. One minor housekeeping rule is that, in order to accommo- 
date the full plan for witness statements, we are going to have to 
limit your comments to 5 minutes. Any record statements that you 
want to be included will be inserted in the record. 


At this point, I will insert in the record an opening statement 
from my colleague. Senator Sasser, who is unable to join us due to 
schedule conflicts 

[The statement follows:] 

Statement of Senator Sasser 

Good morning. I join in welcoming today's witnesses. Although this morning's 
hearing will examine the fiscal needs of transit systems, it's really about the needs 
of people as they go about the various activities of their daily lives. The efficiency 
of work and the quality of leisure are measured, in large part, by the effectiveness 
of transit systems. 

A strong Federal-local partnership is essential to a safe, efficient, and affordable 
transit network. Contrary to the budget rationales of previous administrations, the 
federal government does, indeed, have a stake, a vital interest in transit operations. 
Local transit operations, whether urban or rural, are vehicles to the nation's eco- 
nomic productivity. Failure to invest prudently or adequately in transit stagnates 
tiie economy and stymies the nation's overall competitiveness. 


For the past twelve years, previous administrations have not held up the federal 
end of the transit partnership. Since 1980, federal aid to transit has declined some 
50 percent. Nowhere has the federal disinvestment in transit been more evident 
than in operating assistance. 

Since 1980, the federal investment in transit operations has steadily declined. In 
1980, the federal government invested $1.09 billion in transit operating assistance. 
By 1990, federal support for transit operations had diminished to $0.86 billion. Over 
the decade of the 1980's, the ratio of state and local versus federal funds committed 
to transit operations was 9 to 1. That's nine state and local dollars for every one 
dollar contributed by the federal government. 

As a result, local transit systems have been forced to juggle limited funds to ad- 
dress mounting capital and operating needs. Absent consistent federal support, the 
balance between capital and operating needs becomes a losing proposition. The situ- 
ation is made even more tenuous because local transit systems must also find ways 
to operate under the added weight of compliance with important Clean Air Act and 
Americans With Disabilities Act requirements. 

Enactment of ISTEA promised to end the transit juggling act by making transit 
needs a central component of a balanced, well-planned national transportation net- 
work. Moreover, ISTEA recognized that an investment in transit is an investment 
in people. For people who work, and those who seek work, transit is the vehicle to 
an enhanced standard of living. 

An investment in transit not only maintains jobs, but creates them. And, the Clin- 
ton Administration recognizes the link between transit investments and jobs. The 
Administration's Fiscal Year 1993 Supplemental includes some $750 million for 
transit needs. It is estimated that these funds alone will create some 9,000 as part 
of a long-term strategy to get the country moving productively into the next century. 
An investment in transit today promises substantial, long-term benefits tomorrow. 

In short, America has a vested interest in transit. Every segment of society — the 
poor, the elderly, the socially disadvantaged, those who work and those who want 
to work, all have a shared stake in transit. Indeed, if enterprise zones, as the Ad- 
ministration has proposed, are to have a chance, then transit investments provide 
the key to opening avenues of economic access and opportunity to millions of Ameri- 
cans. It's time to make the ISTEA commitment to transit work for people. 

I look forward to hearing the testimony. 


Senator Lautenberg. I would first call on Ken Mead for his 
statement, again, within the 5-minute limitation. 

You will see the clock go off when the 5 minutes are up. 

Mr. Mead. Thank you, Mr. Chairman. 

We appreciate the opportunity to discuss transit needs projec- 
tions. As Congress decides how to allocate limited transportation 
resources, it needs data that reflect State and local transit needs. 
So I would like to discuss the different transit needs projections, 
the extent to which they varied, what factors could affect future 
transit needs, and opportunities for improving the projections. 

We have a report that was required by the ISTEA legislation. I 
believe it is in your package. It was issued this week. 

If you look at the chart we have made available, you can see pro- 
jections of transit needs from three organizations. FTA projected 
the needs to be $7.5 billion annually; AASHTO projected $20.5 bil- 
lion; APTA provided the largest projection at $32 billion. 

Before explaining the reasons for the variances, I want to com- 
pliment FTA. FTA's 1992 needs report is a significant improvement 
over its past reports since it includes both maintenance and expan- 
sion needs. I think you know that in the 1980's, FTA's needs re- 
ports did not make any needs projections at all. 

The overall variance between the projections is substantial, 
about $25 billion. The largest difference occurred because FTA ex- 


eluded operating needs. AASHTO and APTA project those to be 
about $14 billion and $16 billion, respectively. 

Since operating costs are about 75 percent of all transit needs, 
FTA's exclusion of these costs clearly does not provide a complete 
picture of the needs situation. 

It is not an issue, Mr. Chairman, of whether the Federal Govern- 
ment covers these costs or not. The fact is they are needs. Those 
needs are required to be reported by law. 

Transit needs also include capital, which is broken down into two 
components. First is maintenance and replacement; second is ex- 
pansion. All three projections included costs for those two capital 
components. Annual capital needs were projected at $7.5 billion by 
FTA, $6.4 billion by AASHTO, and $15.7 billion by APTA. That led 
to another substantial variance of about $9 billion. 

The reasons? FTA, for example, calculated a portion of capital ex- 
pansion needs on an assumption by the Highway Administration 
that a portion of needed highway capacity wouldn't be built. The 
assumption was that a portion of the people that would otherwise 
have used those highways would move to transit. 

In contrast to FTA's approach, AASHTO and APTA relied on cost 
estimates for specific transit projects for expansion needs. AASHTO 
relied on the projects that were in FTA's new starts pipeline while 
APTA actually did a survey of its members to ask them what they 
thought would be good projects. APTA included them, regardless of 
whether FTA had approved the projects or not. 

Also, in estimating expansion needs, FTA based the cost of serv- 
ing additional riders on the cost of bus service. The problem with 
that is some expansion would be met by rail service, and rail serv- 
ice tends to be more costly than bus service. 

Factors that can increase these projections include Federal legis- 
lation, such as the Clean Air Act amendments, the Americans With 
Disabilities Act, and the Energy Policy Act. These could cause fu- 
ture transit needs to exceed all the needs projections. 

AASHTO's and APTA's estimates do not include costs associated 
with those laws because they were not passed at the time, or the 
regulations implementing them were not out by the time the esti- 
mates came out. FTA's did include about $260 million per year, I 
believe, for the ADA but not the other laws. 

Our report makes several recommendations, Mr. Chairman. I di- 
vide them into short- and long-term recommendations. 

In the short term, we need to get operating needs factored into 
the estimates, and various other assumptions, such as the mode — 
rail or bus — that transit users will be using, need to be factored in. 

In the longer term, we think the answer is provided by the 
ISTEA legislation. The ISTEA legislation does a couple of things 
that will be very useful in this area. Specifically, you have to have 
a State transportation plan. You also have to have a public trans- 
portation management system. Operating in tandem, these will 
provide actual data relevant to transit needs. 

The new data sources will provide Congress with information on 
what projects are planned given current levels of funding, what the 
implications of those choices are, and what impact increased or de- 
creased funding might have. 

Thank you, Mr. Chairman. 



Senator Lautenberg. Thanks very much, Mr. Mead. Your full 
statement will be made part of the record. 
[The statement follows:] 

Statement of Kenneth M. Mead 

Mr. Chairman and Members of the Subcommittee: It is a pleasure to be here 
today to present our views on the nation's transit needs and the challenges the Fed- 
eral Transit Administration (FTA) and the transit community face in addressing 
these needs. Our testimony today is based on our work at FTA over the past several 
years, including a report'' released this week on transit needs projections, which 
was required by the Intermodal Surface Transportation Efficiency Act of 1991 

In order to make important decisions to support public transit's role in the future, 
the Congress needs the best information available about how states and localities 
intend to use transit to achieve their transportation-related goals. These goals in- 
clude increased mobility, reduced traffic congestion, improved air quality, and eco- 
nomic development. 

Our testimony today will focus on the different transit needs projections provided 
to the Congress, why these projections varied, what factors could affect the transit 
needs, and opportunities for improving FTA's transit needs projections. In summary, 
our work shows that: 
— The Congress has been provided several projections of transit needs which vary 
widely, from $7.5 billion to $32 billion per year. These projections were pre- 
pared by FTA, the American Association of State Highway and Transportation 
Officials (AASHTO), and the American Public Transit Association (APTA). Such 
a wide variation in the need for funds complicates the Congress' decision-mak- 
ing process. 
— The projections varied because each defined transit needs differently by includ- 
ing or excluding certain cost elements and by making different assumptions to 
determine cost. The largest difference occurred because FTA excluded operating 
needs, which AASHTO and APTA projected to be $14 billion and $16.3 billion 
a year, respectively. In addition to operating needs, the key components of tran- 
sit's overall needs are capital expansion needs, and capital maintenance and re- 
placement needs. All projections included some costs for these two needs, but 
FTA possibly understated needs in these categories by making several conserv- 
ative assumptions. 
— Several factors, including federal legislation such as the Clean Air Act Amend- 
ments of 1990 (CAA), the Americans With Disabilities Act (ADA), and the En- 
ergy Policy Act of 1992, could cause future transit needs to exceed all of the 
needs projections. FTA addressed some potential impacts of ADA and CAA, but 
AASHTO and APTA did not include estimates because these laws and regula- 
tions were not yet in place when they prepared their projections. However, none 
of the projections included the increased transit needs that might occur if states 
and localities decide to increase transit services to help meet a broad range of 
transportation-related goals. 
— There are short- and long-term improvements that FTA should make to improve 
its transit needs projections. In the short term, FTA should include operating 
costs in its projections to provide a complete pictvire of transit needs, particu- 
larly since operating costs have historically been more than three times capital 
costs. FTA should also modify certain assumptions and methodologies to better 
reflect future transit costs. In the longer term, since states and localities deter- 
mine transit's role, FTA should utilize the state public transportation manage- 
ment systems (PTMSs) and the state and local transportation improvement 
plans required under ISTEA. The PTMSs will provide transit system condition 
and performance data not currently available nationwide. The state transpor- 
tation plans will include those transit projects that states and localities have 
decideci to fund. By basing needs on state-specific data, FTA will be able to pro- 
vide the Congress better information about needs in individual states and local- 
Let me discuss these issues in more detail. 

^Mass Transit: Needs Projections Could Better Reflect Future Costs (GAO/RCED-93-61, 
March 9, 1993). 



Our report compared FTA's most recent transit needs report, issued in June 
1992,2 AASHTO's September 1988 report, and APTA's October 1990 report, which 

Erojected annual transit needs in constant 1991 dollars to be $7.5 billion, $20.5 bU- 
on, and $32 billion, respectively (see table 1). FTA is required by law to report to 
the Congress on the condition and performance of the nation's transit systems (49 
U.S.C. 308), whereas AASHTO and APTA provided needs projections to contribute 
to the reauthorization debate that resulted in the passage of ISTEA. 

The nation's transit needs include operating costs, such as employee wages, fuel, 
and insurance; capital maintenance costs, such as vehicle and facility replacement; 
and capital expansion costs, such as bus and rail expansion, and previously deferred 
maintenance activities. Annual capital needs, for both maintenance and expansion, 
were projected to be $7.5 billion by FTA, $6.4 billion by AASHTO, and $15.7 bilhon 
by APTA. FTA limited its report to only capital needs, unlike AASHTO and APTA, 
which projected operating needs to be $14.0 billion and $16.3 biUion, respectively. 

[Dollars in billions per year] 

Needs FTA 1992 AASHTO 1988 APTA 1990 

Maintenance/replacement $3.9 $4.4 $6.5 

Expansion 3.6 2.0 9.2 

Subtotal, Capital 7.5 6.4 15.7 

Operating MA 14.0 16.3 

Total 7^5 20^5 32^ 

Note: All figures are expressed In constant 1991 dollars. "NA" indicates that this element was not addressed. 
Source: GAO analysis of FTA, AASHTO, and APTA data. 



The three organizations defined needs differently by including or excluding cer- 
tain cost elements and by making different assumptions. Moreover, the;y relied to 
varying degrees on the two basic data sources currently available — ^historical capital 
and operating data and local plans for future transit services — to project operating, 
capital expansion, and capital maintenance needs. 


The largest difference between the three projections was for operating needs, pri- 
marily because FTA did not include any operating needs. Transit operating ex- 
penses are substantial, costing more than three times the amount spent on capital 
items. Transit services require large expenditures for bus drivers, train operators, 
fuel, tires, and so on. AASHTO and APTA projected operating needs to be $14 bil- 
lion and $16.3 billion, respectively. AASHTO's and APTA's operating needs projec- 
tions differed because they used actual operating expense data from different years. 

Although required to include operating needs in its transit needs reports, FTA has 
not done so. FTA did not include operating needs because including them would 
make its report inconsistent with the highway needs report, which includes only 
capital needs. FTA officials told us that consistent needs definitions are important 
because FTA and the Federal Highway Administration (FHWA) are working toward 
a consolidated report. FTA also cited the complexity and sensitivity of operating 
needs projections as reasons for not including these needs. 

We support the move to a consolidated report and agree that improved consist- 
ency in needs definition is an important component of tiiis effort. We believe, how- 
ever, that operating needs should be included in future FTA reports, because (1) 
transit's operating expenses are a significant portion of transit costs (far exceeding 
capital expenses); (2) FTA's statutory requirement specifically calls for capital, oper- 

2 The most recent highway needs report, The Status of the Nation's Highways, Bridges, and 
Transit: Conditions and Performance (January 1993), also presents transit needs. The transit 
needs in this report are the same as those in FTA's 1992 transit needs report, except that the 
costs to eliminate the backlog of deferred maintenance are distributed over 20, rather than 10, 
years. Out report also includwi FTA's 1991 transit needs report. 


ating, and maintenance projections; and (3) acceptable methodologies for projecting 
operating needs are available. 


The second largest difference among the projections was for transit capital expan- 
sion needs to improve or increase transit services. Annued capital expansion needs 
were projected at $2 billion by AASHTO, $3.6 bilUon by FTA, and $9.2 billion by 
APT A. FTA's expansion needs are based on (1) bringing buses, rail vehicles, and rail 
facilities up to good condition by performing historically deferred maintenance and 
(2) serving additional riders whose highway needs will not be met. FTA potentially 
understates capital expansion needs by calculating the cost of these services on the 
basis of the cost of bus services. However, FTA acknowledges that some expansion 
would be met by rail service, which is more costly than bus service. 

AASHTO's and APTA's reports also included capital expansion, but they based 
their capital expansion projections on cost estimates for specific transit projects, ei- 
ther approved or proposed, rather than on historic average costs (as FTA did). How- 
ever, AASHTO and APTA each made different assumptions about what expansion 
projects to include. AASHTO limited expanded transit services to those included in 
FTA's "pipeline of projects" — those transit projects that FTA has approved for plan- 
ning, engineering, and/or construction — and in a 1983 APTA list of proposed high- 
occupancy vehicle (HOV)/busway projects. APTA limited its capital expansion needs 
to those identified by its operating members in a 1990 survey that asked for esti- 
mates of all ftinds needed to meet their communities' transit goals, whether or not 
these projects were approved by FTA. 


The smallest differences among the three projections (FTA's estimate was $3.9 bil- 
lion, AASHTO's $4.4 billion, and APTA's $6.5 bilUon) were for maintenance needs — 
the costs to maintain existing transit vehicles, facilities, and equipment. FTA's and 
AASHTO's first premise is that the nation needs to maintain the existing vehicle 
fleet, and they both used average vehicle cost and age data to estimate these needs. 
For facilities and equipment maintenance needs, FTA calculated these as a percent- 
age of vehicle costs, whereas AASHTO rehed on 1983 surveys of rail and bus facility 
needs. APTA, on the other hand, projected greater needs than the others because 
its methodology allowed for facilities expansion and used projected future costs rath- 
er than average historic costs. 

Some of FTA's assumptions in determining capital maintenance needs resulted in 
understating these needs. For example, FTA's cost calculations for replacing aging 
vehicles operated by private nonprofit agencies — for programs such as Head Start — 
included only vehicles that FTA had funded, which is about half of the total fleet. 
ITie other vehicles were mostly funded by the Department of Health and Human 
Services, and FTA did not consider them to be a "transit need." 


All three projections excluded several factors that are likely to significantly in- 
crease fixture transit needs. Specifically, none of them fully takes into account the 
following factors: (1) costs for transit vehicles to convert to alternative fuels, due to 
clean tor or energy conservation reqviirements; (2) ADA requirements to make exist- 
ing transit stations and vehicles accessible to persons wiui disabilities and to pro- 
vide expanded special services for the disabled; and (3) expanded transit services to 
meet specific transportation-related goals, such as reduced traffic congestion or im- 
proved air quality. Fiuiiiermore, future transit operating needs may exceed those 
forecasted by either APTA or AASHTO, since these projections did not account for 
the operating needs associated with their projected capital expansion needs. 

Several recently enacted federal laws, such as CAA and ADA, could increase tran- 
sit needs in two ways: by imposing requirements that increase the costs of providing 
existing transit services and by possibly leading to new transit services. For exam- 
ple, costs for transit services could increase because ADA requires transit operators 
to make all services fully accessible, which adds to transit's capital and operating 
costs. Additionally to the extent that new transit services are implemented to im- 
prove air quality and mobility for persons with disabilities, the nation's transit 
needs would increase. 

FTA included projected capital costs to conform to ADA requirements and pre- 
sented some possible impacts of the CAA on the basis of potential regulatory re- 
quirements, but AASHTO and APTA did not address these laws since they had not 


been enacted at the time their projections were prepared. However, none of the pro- 
jections included tiie full range of transit needs that might occur. 



FTA could strengthen its needs projections by improving its methodologies and by 
making use of improved data that will be available imder new ISTEA requirements. 
Our report recommends several specific ways, both in the short and long terms, that 
FTA can improve its projections. In the short term, FTA could improve its meth- 
odologies by including operating needs in its futvu^ transit needs reports. FTA 
should also modify certain assumptions and methodologies to reflect future costs. 
For example, FTA should calculate expansion costs on the basis of a mix of rail and 
bus services rather than estimating these needs using only bus service costs, which 
are lower than those for rail. 

In the longer term, rather than projecting needs based on nationwide averages, 
FTA should use new data sources that better reflect state and local transit situa- 
tions. ISTEA requirements will make available state and local investment plans, as 
well as data on transit systems' physical condition and service effectiveness, which 
better predict fixture transit investment needs than do existing data sources. These 
requirements include a state transportation plan and improvement program docu- 
menting local transit decisions and a state public transportation management sys- 
tem containing transit performance and condition data. In developing regulations 
for these ISTEA requirements, the Department of Transportation can help ensure 
that transit data are collected that will be usefiil in projecting needs. For example, 
FTA now relies on a 1983 physical survey of rail conditions, and the PTMS could 
provide FTA access to current information on actual vehicle and facihty conditions 
without having to periodically conduct survey updates. 

In siunmary, future transit needs will depend upon a complex set of decisions 
made by each state and locality as they determine how their transportation systems 
will address transportation, environmental, economic, social and other goals. Until 
better information about local decisions is available nationwide, our recommenda- 
tions should improve the transit needs projections that are based on historical data. 
Using the ISTKA-required state transportation plans and the PTMS data on the 
condition and efficiency of transit sjystems, when these become available, should re- 
sult in needs reports that better reflect local transit investment decisions. 

Mr. Chairman, this Subcommittee is facing competing demands for funding in 
high speed rail, highways, bridges, mass transit, aviation, Amtrak, and other areas. 
Many of these choices are policy decisions that only the Congress can make. It is 
of the utmost importance that when making these decisions m this time of scarce 
resources, the Congress have the best information available. 

This concludes my prepared statement. I will be pleased to respond to any ques- 
tions you or other members of the Subcommittee may have. 


Mass Transit: Needs Projections Could Better 
Reflect Future Costs 


United States 

General Accounting OfTlcc 

Washington, D.C. 20548 

Resources, Community, and 
Economic Development Division 


March 9, 1993 

The Honorable Donald W. Riegle, Jr. 


The Honorable Alfonse D'Amato 

Ranking Minority Member 

Committee on Banking, Housing and 

Urban Affairs 
United States Senate 

The Honorable Norman Y. Minela 


Tlie Honorable Bud Shuster 

Ranking Minority Member 

Committee on Public Works 

and Transportation 
House of Representatives 

In order to make important policy and funding decisions to support public 
transit's role In Uie future, the Congress needs the best information 
available about how slates and localities Intend to use transit to achieve 
their transportation-related goals. These goals include increased mobility, 
reduced traffic congestion, improved air quality, and econonuc 
development. Since 1988 the Congress has been provided with four 
projections of overall trarisit needs that range from about $3 billion to 
$32 billion per year. The Federal Transit Administration (fta), an agency 
of the Department of Transportation (dot), has prepared two reports as 
required by law; the American Association of State Highway and 
Transportation Officials (aasiito) and the American Public Transit 
Association (apta) — two nonprofit associations representing stale 
transportation and transit Interests, respectively — have each prepared one 
projection to contribute to reauthorization discussions. 

Because of longstanding concerns about existing needs projections, the 
Congress, in section 3028 of the Intermodal Surface Transportation 
Efficiency Act of 1991 (istea), required gao to examine Issues concerning 
estimates of trarxsit needs. In discussions with your offices, we agreed to 
Identify (1) why the projections of transit needs varied, (2) what other 
factors could affect the accuracy of future projectioixs, and (3) any 
opporturUties for improving future transit needs projections. 

Results in Bripf "^^ projections varied because each organization defined transit needs 

differently by including or excluding certain cost elements or by making 
different assumptions to determine cost. Tlie key cost elements that 
determine transit's overall needs are (1) operating, (2) capital expansion, 
and (3) capital maintenance and replacement, fta excluded all operating 
needs in both of its reports, whereas these costs were projected to be 
$14 billion/year and $16.3 billion/year by aasiito and aita, respectively. 
Three of the four projections included capital expansion costs for 
increasing transit services. However, fta's projection possibly understated 
needs by making several conservative assumptions. For example, fta 
assumed that the cost of new transit services would be the same as 
current average costs, while aasiito and ajta relied on cost projections for 
specific new transit services, fta also conservatively estimated human 
service (for the elderly and disabled) capital replacement needs by limiting 
these to capital that fta has historically funded. 


Several factors, including federal legislation such as the Clean Air Act 
Amendments of 1990 (caa), the Americans With Disabilities Act (ada), and 
the Energy Policy Act of 1992, could cause future transit needs to exceed 
all of the needs projections. For example, transit service may be expancUxl 
to contribute to emissions reductions required by tlie caa. Additionally, 
states and localities may choose to Increase transit services In their 
communities beyond projected levels to help meet a broad range of 
transportation-related goals, such as facilitating land use and economic 
development plans. Since these laws and regulations were not yet In place 
when fta's 1991, aashto's, and apta's reports were prepared, tJiese 
projections did not Include the expanded transit needs tliat might rcsulL 
fta's 1992 report did address some potential Impacts of ada, caa, and some 
service expansion. However, none of the projections included Ihc full 
range of Increased transit needs that might occur. 

In the short term, dot could help to ensure that the projections are more 
reflective of potential future costs by including operating costs and tlie 
estimated costs to comply with laws such as caa and ada. In tlie longer 
term, dot could develop more meaningful needs projections by using slate 
and local transit investment plans as well as data on transit systems' 
physical conditions and service effectiveness. These data will be made 
available by three btea requirements: (1) a state transportation plan and 
Improvement program documenting local traiuit decisions; (2) a state 
public transportation mai\agement system (pt»is) containing data on 
traruit performance and condition; and (3) a Bureau of Transportation 
Statistics (BTS) within dot that, among other things, will compile, analyze, 
and publish daU on the availability, use, and condition of transit services. 
In developing regulations for these istea requirements, dot can help 
ensure that transit daU are collected that will be useful in projecting 

History of Transit 
Needs Reports 

fta Is required by 49 U.S.C. section 308 to biennially report to the Congress 
on the current performance and condition of public mass transportation 
systems, Including a complete assessment of all public transportation 
facilities In the United States, fta is also required to include an assessment 
of future capital, operating, and maintenance requirements for 1-year, 
&-year, and 10-year periods at specified levels of service. 

FTA has published five reports to satisfy section 308, although none 
addressed all the required elements. The last two reports (which were 
published in February 1991 and Jtine 1992) discussed transit's 
performance (e.g., ridership and cost trends), and unlike the first three 
reports, these Included an assessment of future traiuit needs for urban and 
commuter rail and for urban, rural, and human service bus services, fta is 
also working toward a Joint traiuit and highway needs report, and the 
January 1993 Federal Highway AdmUnistratlon's (fiiwa) report. The Status 
of the Nation's Highways, Bridges, and Transit CondiUons and 
Performance , is the fust dot needs report to include both transit and 
highway needs, fta oflidals told us that the transit needs in the 1993 niwA 
report are basically those trom fta's 1992 needs report 

AASirro and atta have prepared several projections of the i\atlon's trarult 
needs. Both AASirro's September 1988 and apta's October 1990 needs 
reports, prepared to contribute to the reauthorization debate Utat resulted 
In the passage of btba, concluded that needs exceeded current funding. 
Table 1 presents each report's projected needs. (A more complete 
discussion of the Individual reports and how we compared them are 
Included In app. I.) 

TaMe 1: Summary of Tranilt Needi 

Dollars in billions per year 


FTA 1991 

FTA 1992 


APTA 1990 


$3 210 

$3 9 








Subtotal— capHal 

3 2 to 










$ 3.2 lo 





Note Ail figures are expressed In constanl 1991 doAars Table I 1 (app I) describes how these 
values were calculaied. "NA' irKAcales ihai iNs element was rxM addressed. 


Different Definitions 
of Needs Caused 
Projections to Vary 

Different derinilions of transit needs caused fta's, aasiito's, and apta's 
needs projections to vary from $3 billion to nearly $32 billion per year. 
Each organization operationally defined transit needs by including (or 
excluding) certain cost elements or by making different assumptions to 
determine cost. The lliree key elements that determine transit's overall 
needs are the costs to operate, expand, and maintain/replace existing 
transit services. 

FFA's Reports Did Not 
Include Operating 

Although FTA is required by law to include capital and operating needs in 
its transit needs projections, fta did not include operating needs in any of 
its projections, addressing capital needs only. AASirro and apta, on tlie 
other hand, reported on both capital and operating needs. Because 
aasiito's and apta's operating needs projections were $14.0 billion and 
$16.2 billion, respectively, it is clear why their overall needs projections 
were so much greater than fta's. 

By not including operating costs in its 1991 and 1992 transit needs 
projections, fta omitted the largest experwe category for the nation's 
transit systems. Transit operating exper\ses are substantial, costing more 
tlian three times the amount spent on capital items. Transit services 
require large, continual expenditures for bus drivers, train operators, fuel, 
tires, and so on. 

FTA officials told us that botli fta reports excluded operating needs for 
several reasons. First, since fta is working with fhwa on joint 
highway/transit needs reports, fta seeks a conunon definition of needs 
with FIIWA, which defines highway needs as capital only. Second, fta notes 
that addressing operating needs would require introducing a myriad of 
complex Issues (e.g., fare policies, demand elasticities, etc.) that would 
increase the report's complexity while adding little value. TItird, fta 
believes that the assumptions necessary to project operating needs would 
compromise the capital projection's integrity when presented as an overall 
single need. However, estimating methodologies similar to tJiose used for 
capital projections are available for operating needs, and by Including only 
capital needs in its reports, fta did not provide the complete picture of 
future transit needs as envisioned In its reporting requirements. 

Assumptions About Capital 
Expansion Needs 
Signincantly Affected 

The second largest difference among the needs reports was tl>e treatment 
of expanded tramsit capital needs to Improve or Increase transit services. 
Although fta's 1991 report did not Include any expansion needs, its 1992 
report did address expansion by calculating the capital cost to provide for 
additional transit passenger miles. AASirro's and apta's reports also 
included capital expansion, but each took a different approach to 
calculating these costs. Capital expar«ion needs in the three studies that 
included them ranged from about $2 billion to over $5 billion per year. 

fta's 1992 report presented two types of capital costs in its expanded 
transit service scenario: the costs to Improve conditiotw and the costs to 
improve performance. Improving transit conditions requires bringing all 
bus and rail vehicles and facilities up to "good" condition by performing 
historically deferred maintenance. Improving transit performance requires 
adding transit capacity to meet potential increases in current demand 
trends. This potential increased demand stems from niWA's report entitled 
The 1991 Status of the Nation's Highways and Bridges: Conditions, 
Performance, and Capital Investment Requirements , which forecast that 
about 34,000 lane-miles of needed highways would not be builL fta's 1992 
report assumed that 10 percent of the passenger miles of travel that would 
have been served by these lane-miles could result in additional transit 
ridership. Although fta acknowledged that some of the expanded service 
needs would likely be met by more costly rail service, the report 
calculated only the costs of expanded bus service to meet those needs, 
thereby understating the costs of needs actually met by rail service. 

Both AASirro and apta based their capital expansion projections on 
estimates for specific transit projects, either approved or proposed. AASirro 
quantified Uie capital costs for expanded transit services on tJie basis of 
fta's "pipeline of projects" — those transit projects tliat fta has approved 


and begun to fund — and an apta list of proposed high-occupancy vehicle 
(HOv)/busway projects, ajta based its capital expansion estimate on its 
1990 survey of operating members' needs.' 


Projections Were Similar, 
Some Assumptions 
Underestimated Needs 

The smallest differences among tlie four projections (a gap of $3.3 billion 
for existing capital versus $9.2 billion for capital expansion and 
$16.3 billion for operating needs) were for the costs to maintain existing 
transit capital — the only category of needs that all four studies included 
Although the specific calculation methods differed, there were relatively 
small differences among fta's two maintenance/replacement cost 
estimates and AASirro's because these three projections (1) used average 
vehicle cost and age data to estimate the cost to replace the existing 
operating vehicle fleet and (2) added facilities' maintenance costs as a 
percentage of vehicle costs, apta, which surveyed its members on what 
they need to maintain their existing services, projected greater needs than 
tlie others because its methodology did not limit respondents to the 
current ratio of vehicles to facilities. 

fta's 1991 report calculated the average annual replacement cost of buses 
on the basis of minimum-useful-life standards (the minimum veliicle age or 
mileage for fta to fund replacement) and average vehicle costs; the report 
estimated maintenance facility needs as a percentage of bus purchases. 
However, some of the assumptions that fta made caused it to 
underestimate replacement needs. For example, fta's calculations of the 
cost to replace aging human service fleets included only the vehicles fta 
had funded — about one-half of the total. The other vehicles were mostly 
funded by the Department of Health and Human Services, and fta did not 
consider these to be a "transit need.' fta's 1992 report made the same 

fta's 1992 report treatment of capital maintenance/replacement needs was 
an improvement over its 1991 report. For example, fta's 1992 report 
increased annual replacement costs by 0.8 percent to maintain transit's 
current performance of Increasing ridership.^ However, by using current 
average costs rather than marginal costs (the incremental cost to provide 
new services), fta potentially understated the costs of this ridership 
growth. The marginal costs to Increase ridership are likely to be higher 
than current average costs, because expenses increase (because 
efficiencies decline) as service is extended into less densely populated 

Although AASHTO's maintenance/replacement needs projections closely 
match fta's, aashto's do not include human service and rural needs.' apta's 
report presented the largest projection of existing transit systems' needs 
by allowing operators to include facility needs beyond tlie historical ratio 
of vehicle-to-facility investments. Differences among the projections also 
occurred because apta relied primarily on its own data collection — a 
survey of its operating members expanded to reflect the entire transit 
industry — for its projections, while fta and AASirro both primarily used 
audited historical data. 

(App. 1 provides more detailed information on the four different needs 
projections and the methods used to prepare each projection.) 

New Requirements 
May Increase Transit 
Needs Beyond the 

All four projections excluded several factors that could significantly 
increase future transit needs. Specifically, none of them fully take into 
account the following factors: (1) costs for transit vehicles to convert to 
alternative fuels because of clean air or energy conservation re<|uirements; 
(2) ADA requirements to make existing transit stations and vehicles 
accessible to persons with disabilities and to provide expanded special 
services for the disabled; and (3) expanded transit services to meet 
specific transportation-related goals, such as reduced traffic congestion or 

'APTA operating members actually provide transit services, and these survey resiKimlenls carry wi-c 
90 percent of all persons using urban public transit in the United States. 

This figure Is based on the fact that total transit ridership has increased by 8 percent over thclast 10 
years. Tlie average annual increase, therefore, has been 8 percent 

'AASirrO recognlied human service and riiral transit needs but presented only additional funding 
needs'short/alls (not txjtal needs) Therefore, these costs were n« Included In our report. 


improved air quality. Furthermore, future transit operating needs may 
exceed those forecast by either apta or AASirro, since U>ese projections did 
not account for the operating needs associated wiUi their projected capital 
expansion needs. Until such time as these factors are talcen into account, 
projections may understate future transit needs. 

Additional Capital 
Investments May Be 

To the extent that local communities select transit projects to help meet 
transportation-related goals, such as improved air quality and reduced 
trafric congestion, transit capital needs will increase. None of tlie needs 
reports explicitly projected transit's costs to support all these goals. 
Additionally, several recently enacted federal laws — caa, ada, and Uie 
Energy Policy Act of 1992— impose greater capital costs to maintain 
existing transit service levels. None of these laws had been enacted at Uie 
time the aasiito and apta projections were made, fta's 1992 report 
included projected capital costs to conform to ada requirements and 
presented some possible impacts of caa based on potential regulatory 
requirements. The Energy Policy Act was not enacted prior to issuance of 
fta's 1992 report and therefore was not reflected in the needs projections. 

Trar\sit can contribute to improved air quality, reduced traffic congestion, 
enhanced mobility for the disabled, energy conservation, and land use and 
economic development plans. For example, increased transit is one of 
several caa transportation control measures for making required air 
quality improvements. To the extent that expanded transit services are 
chosen to meet these or otlier goals, the nation's transit needs will 

Even if transit services are not expanded to meet transportation and other 
goals, recently enacted federal legislation Imposes new costs on trar\sit 
operators. For example, ada requires transit operators to make all services 
fully accessible — Including equipping all new buses with wheelchair lifts, 
putting elevators in all transit stations not at grade, and providing 
information in accessible formats — all of which add to transit's capital and 
operating costs. Because the ada regulations were released after fta's 
1991, AASirro's and apta's reports were prepared, the law's effects were not 
Included in these projections, fta's 1992 report, however, included the 
capital costs to comply with ada — $260 million by dot's estimate. The ada 
regulations (49 C.F.R. parts 27, 37, and 38) require each transit operator to 
develop a plan for complying with ada's paratransit (demand-responsive 
service) requirements within 5 years, including cost estimates. These 
estimates provide a new opportunity for fta to include the most complete 
and accurate data available In its needs projections concerning estimated 
ADA costs to be incurred by local transit operators. 

Operating Needs Increase 
With Capital Expansion 

Future operating costs could increase for a variety of reasons, including 
expanded trar\sit services and deteriorating transit equipment. Future 
decisions to expand transit services would increase transit's future 
operating needs, as operating and maintenance exper\ses increase in 
cor\)unction with the additional miles and hours operated. Additionally, if 
routine maintenance and replacement activities are deferred, which has 
occurred In the past, operating costs and inefficiencies will increase 
because poorly maintained and older vehicles are more costly to operate 
(e.g., are less fuel efficient, break down more often). 

If operating costs Increase, local communities may have to reduce transit 
service (which reduces capital effectiveness) or provide greater transit 
subsidies. For example, federal operating assistance declined from 
$1,185 million in 1984 to $845 million in 1990, and while stale and local 
assistance increased from $6.9 billion to $8.7 billion, not all areas were 
able to find sufficient funds to support current transit operatior« and 
reduced service accordingly. Two of the eight states we visited told us tliat 
they have already cut services because of shortages of operating funds, 
and every transit official we spoke witli told us that future service cuts 
were a possibility because of Increased requirements ard potential 
reductions in subsidies from all levels of govemnjenL 


New Requirements 
Offer Opportunity to 
Improve Future Needs 

New opportunities exist for improving national transit needs projections 
by looking to stale and local transit plans as well as data on transit 
systems' condition, performance, and effectiveness, istea's new 
requirements for state-developed transportation plans and improvement 
programs, new management systems, and the creation of the Bureau of 
Transportation Statistics offer an opportunity for ix)t to gatlier Improved 
data on future transit investments and system condition, which can serve 
as inputs to future needs analysis. Tlie processes necessary to collect this 
information are still being developed, but over the next several years, great 
progress could be made to lay the foundation for improvements to future 
transit needs projections. 

ISTEA requires states and localities to prepare transportation plans and 
improvement programs that reflect local assessments of transit needs. 
Previously, such documents were neither required nor standardized; 
therefore, data from all areas were not available for national transit needs 
projections. As a result, all of the projections assumed that current 
services would be maintained, and some would be expanded, without 
considering actual plans. The projections Uierefore included current 
services that are no longer needed and may have understated needs 
exceeding current services. As fta stated in its 1992 report, ita plans to tiy 
to include data from urban area plans and improvement programs in its 
future needs reports. By also looking to the new stale plans, infonnation 
on actual needs, as reflected by new services as well as any planned 
reduction in existing services, could be included in future needs 

Besides new planning processes istea requires all slates to implement 
several transportation management systems, including a public 
transportation management system, before January 1, 1995. A ptms can 
provide fta with access to better local data and decisions from which 
nationwide needs can be better projected. For example, past fta needs 
projections have relied on fta's Rail Modernization Study , which describes 
the 1983 condition of the nation's rail transit systems, fta would have 
access to more recent data on rail systems' condition if the states' itmss 
contained this type of information, dot is still developing tlie regulations 
for these management systems, but its announcement of a notice of 
proposed rulemaking indicates that the ptmss will describe the condition, 
efficiency, and effectiveness of transit systems in each state. However, dot 
wall need to provide descriptive guidance to the states and localities so 
that the data collected will be consistent. If dot's regulations address these 
factors, the ptmss could be an invaluable resource for future needs 

iSTEA also creates, within dot, bts to compile, analyze, and publish a 
comprehensive set of transportation statistics. In doing this work, bts is to 
coordinate with existing dot administrations, including fta, to prepare, 
among other things, (1) statistics on the availability, use, and condition of 
the nation's transit services and (2) infonnation that crosses modes, such 
as variables influencing travel behavior Although fta is working toward 
improving its data in these areas, in part with ntWA, when in place bts may 
provide another opportunity for dot to collect and analyze state and local 
information relevant to trartsit needs projections and to ensure data 
consistency between the modes. 

It is important to note that istea's plemning and management system 
changes vrill not immediately lead to improved needs projections, since it 
will take several years to develop and implement these changes. However, 
by including improved data as tliey become available, fta's national transit 
needs projections can become more reflective of state and local transit 


The four transit needs projections were different because they included 
different cost elements and made different assumptions to calculate costs. 
By not including operating needs in its projections, fta omitted the largest 
expense category for the nation's transit systems. Additionally, fta 
potentially underestimated capital needs in a number of areas For 
example, to maintain the existing human service fleet, fta limited 
replacement needs to only tliose vehicles that were purchased with dot 
funds, thereby leaving out half the vehicles in this fleet 


New federal requirements, which were not nnalized when the needs 
reports were prepared (e.g., ada and caa), will likely Increase costs beyond 
the projections. Additionally, transit needs could potentially exceetl all of 
tlie projections should states and localities choose to increase transit 
services to meet a broad range of transportation-related goals. New 
planning requirements for state and local transit plans could become the 
basis for a nationwide estimate of transit needs. These kinds of data are 
not being collected currently, but dot has an opportunity to facilitate 
future data availability. In developing the requirements for istea mandated 
transportation planning, management systems, and bts, dot can help 
ensure that useful data are collected for future transit needs reports. 


To better assist the Congress and others in the transportation community, 
we recommend that the Secretary of Transportation take actions to 
improve future Federal Transit Administration transit needs reports 
required by 49 U.S.C. section 308 by 

including operating needs (current as well as expanded system) for U>e 

nation's transit systems; 

including vehicle replacement needs for the entire human service operator 

rieet, not Just tlie vehicles dot has funded; 

Including transit operators' cost estimates for ada compliance as reported 

to FTA under 49 C.F.R. parts 27, 37, and 38; 

developing new needs projection methods that are more reflective of 

potential costs, such as estimating the propoition of expanded ridership 

that will use rail versus bus service and projecting costs accordingly, and 

including costs to address caa and the Energy Policy Act of 1992; 

ensuring tJiat standard data requirements for transit needs projectioris, 

such as planned transit expansions and transit systems' condition and 

maintenance information, are included in tlie new istba transportation 

planning and management system regulations that are currently under 

development; and 

considering transit needs data requirements, such as variables that 

influence the selection of transit over other alternative modes, when 

determining bts' future activities. 

Agency Comments 

We discussed the contents of this report willi officials from the Office of 
the Secretary of Transportation; fta's Deputy Associate Administrator, 
Office of Budget and Policy; and other fta officials from the Offices of 
Grants Management and Budget and Policy. We also obtained the views of 
AASirro's Program Director and apta's Director of Policy Analysis and other 
officials from these organizations. Officials from each of these offices 
generally agreed with our findings and recommendations, and we have 
incorporated their comments and clarifications where appropriate. 
However, the dot officials disagreed with our recommendation to project 
operating needs in future dot/fta transit needs reports for several reasons. 
Including that such projections would make tlieir report inconsistent with 
the highway needs report, which includes only capital needs, fta officials 
told us that consistent needs definitions are important because ita and 
FiiWA are working toward a consolidated report. We support the move to a 
consolidated report and agree that improved consistency in needs 
definition is an important component of this effort. However, we continue 
to believe that operating needs should be included in future fta needs 
reports, because (1) transit's operating expenses are a significant portion 
of transit costs (far exceeding capital expenses); (2) fta's statutory 
requirement specifically calls for capital, operating, and maintenance 
projections; and (3) acceptable methodologies for projecting operating 
needs are available. As agreed with your offices, we did not obtain written 
comments on a draft of this report. 

Scope and 

To evaluate tl\e four transit needs reports, examine other factors that 
could affect the accuracy of these reports, and identify opportunities to 
Improve future reports, we obtained Information from fta, AASirro, apta, 
and state and local transportation officials in eight states. Our review was 
conducted between April and November 1992 in accordance witli 
generally accepted government auditing standards. Our objectives, scope, 
and methodology are discussed more fully in appendix II. 


We are sending copies of tliis report to the Secretary of Transportation; 
the Administrator, Federal Transit Adnunistration; the Director, Office of 
Management and Budget; participating organizations; and interested 
congressional committees. We will also send copies to other interested 
parties upon request. 

Our work was performed under the direction of Kenneth M. Mead, 
Director, Transportation Issues, who can be reached on (202) 512-2834. 
Oilier msyor contributors to tliis report are listed in appendix III. 

J. Dexter Peach 

Assistant Comptroller General 

Appendix I 

Comparison of Transit Needs Projections 

The Federal Transit Administration (fta), American Association of State 
Highway and Transportation Officials (aasiito), and American Public 
Transit Association (apta) have prepared projections of the nation's transit 
investment needs. Each projection was prepared at a different time and 
covered different time periods. In addition, each projection made different 
assumptions about what constituted either an existing or expanded transit 
system need. As a result of these differences, the projections' needs 
ranged from about $3 billion to $32 billion per year. 

Overview of Transit 
Needs Reports 

Witliin tlie last 5 years, fta has published two needs reports, and AASirro 
£md APTA have published one each — a total of four reports, fta's 1991 
Report did not quantify needs over a specified time frame, whereas the 
other three reports specified periods from 1 to 33 years. The two fta 
reports were required by federal law, while the other two reports were 
produced for planning and legislative purposes. As table 1.1 shows, fta's 
1991 report presented the most conservative amount for the nation's 
transit needs, as low as $ 3.2 billion per year. At the other extreme was 
apta's projection of nearly $32 billion per year. 

FTA's 1991 Report 

FTA released its fourth transit needs report in February 1991.' This report 
did not specify any time frame for its projections. The report presented 
one scenario of transit needs (replacing existing capital) and reported tlie 
annual cost to maintain Uie conditions of the nation's existing transit 
systems to be between $3 billion and $3.7 billion, fta's 1991 report did not 
include any transit system expansion or operating needs. 


'dot Is required by 49 U.S.C. section 308 to biennially report to the Congress on the current 
performance and condition of public mass tiansportaUon systems, Including an assessment of future 
capital, operaUng, and maintenance requirements for 1-year, B-year, and 10-year periods at specified 
levels of service The requirement was established by 1983 technical correcUons to the 1982 Surface 
TransportaOon Assistance Act; FTA also published reporU In 1984, 1987, and 1988. 


TabI* 1.1: Ovarviaw of Tranall Nmd* Report* 

Dollars in mUHons per year* 

Report lima Iramea 

FTA— 1991 report 
Indonnlta period 

FTA— 1992 report 
1992 through 2001 

AASHTO— 1988 raport 
1988 through 2000* 

APTA— 1990 report 
1992 through 1997 


Slalus quo 

$3.23810 3.994 




ExparKied syslem 











$3,23a to 3,994 





Slalus quo 





Expanded syslem 




Unquanlilled. new 
services would 
Increase needs 

Total need 

13,238 to 3,994 




Source: OAO analysis ol FTA. AASHTO. and APTA dal* 

'Tabla presents constanl 1991 doiart per year lor al studies lor comparative purposes These 
needs are the overai needs profecllons and are not adjusted to rallecl receipts ot individual 
operatori Both of FTA's reports presented rteeds In arvHjel arriounts. wtiereas AASHTO srKl 
APTA presented • total amount for a multiyear llrm period Arviuat amrxjnts for both AASHTO tnd 
APTA were calculeled by dM<Mr>g lotel amounts by Ihe number ol yeers IrKluded in Itie lime 
period FTA s 1991 lepon presented needs In 19IN dolers. FTA's 1992 report presented 1991 
dcaers. AASHTO's report presented 1968 dolars. end APTA's 1990 report presented 1990 
doiars Al values heve lieen convened to corrstent (1991) dollars using 9w Gross Domestic 
Proriuci tmpecti price deHala. Except es oltierwlse noted, doaar velues do not Include Mlebon 

>AASHTO protected transit needs Irom 1968 through XX For this enalysls. AASHTO's 
protections have been sbbrevlaled to reflect only needs tfcm 1988 Itwough 2000 This more 
doeely metches the time frames In FTA's arxf APTA's pro|ectlom However. AASHTO's enalysls 
asstxnes heavy Investmeni from 1968 through 2000 to arldrest the twcWog of deferred 
meMenerKa needs Annual cosu alter 2000 ere protected lo be lower llien those kx 1968 
through 2600 

• NA Indlceles Ihet an alemenl was not arMessed In the slurty. 

•Other cepltel Hems Include service vehicles, computers, tare ca*ectlon systems, and 
communlcetlons equlpmenl. 

■AASHTO'S needs protecHon esstmed a 4.1 percent Inllatlon rale In Us celcitetlon ol IransHs 
operellng needs For comperellve purposes, GAO took AASHTO's bese yeer (1968) needs 
esUmele end converted the estlmele lo Its 1991 doRer equlvelsnt 

'APTAs needs proleclfon staled that 1990 operating needs were SIS 7 tjWon and Ihet nearty 
$100 baion would be needed over the 1992 to 1997 period For comparative purposes. GAO tooK 
APTA's bese yeM( 1990) needs estlmele and converted the estlmete tons 1991 dollar eqiArelenl. 

FTA's 1992 Report 

FTA released a subsequent transit needs report In June 1092. This report 
projected costs over a 10-year period, from 1992 through 2001. fta's 1992 
report presented two difTerent scenarios for transit needs: (1) maintain 
conditions and performance and (2) Improve conditions and performance. 
The first scenario focused primarily on replacing existing capital 
equipment, but also Included costs to modestly Increase transit 
services — coiuistent with transit's ridershlp growth trends. The second 
scenario Included the additional costs to improve transit facilities and 
services over those In the maintain scenario, fta's report discussed bus 
and rail needs within each scenario, fta calculated annual costs for each 
of these elements and then added them to present a total annual cost of 
$7.6 billion to maintain and improve transit conditions and performance. 
The report projected a limited amount of growtli In transit services, but It 
did not project any operating needs. 

AASHTO's 1988 Report 

AASirro's 1988 transit needs report was published In September 1988 as an 
appendix to The Bottom Line report' AASirro's transit needs report 
presented several different categories of transit needs without combining 
them into one total needs requirement The categories presented were 
maintenance of the current system, new starts, operations, rural, and 
specialized services. Within each category, aasiito projected transit needs 
and funding for the 1988 to 2020 time period.' If all of AASirro's categories 
of needs for 1988 through 2000 are added togetlier, a total annual transit 
investment of about $20 billion is required. 

The Bottom line and rrtited reports were part of AASirrO's 2020 efTort, a lr>rig.<enn planning efTort to 
reach consensus on alternatives lor mecUng the nation's transportation reriulrements througii the year 

'For this analysis, AASHTO's projections have been abbreviated to reflect only needs from 1088 in 
2000. This more closely matches the time frames in FTA's arHl APTA's projecUorw- However. 
AASHTO's analysis assumed that higher levels of transit Investment are itukIc immediately (In the near 
term) to restore the condldon of the nation's transit systems to a state of good repair. 11 these higher 
Investments are made, AASI rrO estimates that needed annual expenditures would decrease after the 
year 2000. 


APTA's 1990 Report 

apta's transit needs report was published in October 1990, in time to be 
included in the pre-isrEA congressional debate. Tlie report projected needs 
from 1992 through 1997 for most types of needs, such as maintaining and 
improving current capital equipment and facilities, expanding transit 
services, and operating transit systems. Although apta did not explicitly 
request data on human service transportation needs, some respondents 
may have included human service transit needs in their response to atta's 
survey, atta's total projection was nearly $32 billion per year. 

Assumptions Made 
Regarding Existing 
Transit System Needs 

Although all of the transit needs reports included the costs to maintain 
current transit systems, each projection calculated these costs differently. 
For example, fta and apta collected and generated their own data tliat fed 
their calculations, whereas aashto largely relied on existing sources of 
data. Table 1.2 summarizes the assumptions made about existing transit 
system needs. These needs are divided into bus, rail, and human service 
for comparative purposes, although the original studies may not have 
followed this same organization. 

FTA's 1991 Report 

fta's 1991 report focused on replacing existing capital equipment and 
fcicilities that were already in service. The report categorized needs ii\to 
two types: bus and rail. To quantify replacement needs, FfA calculated the 
annual cost to replace existing fleet vehicles on tlie basis of its information 
on current vehicle fleet age, standards for veliicle useful life, and average 
costs of replacement vehicles. 

Table 1.2: Assumptions Made lo Determine Existing System Maintenance Needs 

FTA— 1991 report 

FTA— 1992 report 

AASHTO— 1988 report 

APTA— 1990 report 

Bus systems: 

Vehicle replacement 

Minimum uselul lile lor 
peak Heel In service 

Average current age lor 
peak Heel, plus ridership 
growth trends' 

Average current age lor 
peak Heel In service 

1990 APTA survey ol 
transit operators polled 
operator needs" 

Vehicle rehab 




1990 APTA survey ol 
Iransil operators 

Service vehicles 




1990 APTA survey ol 
transit operators 

MainI lacililles 

Ratio (1 2) ol vehicle 

Ratio o( vehicle grants 
(1:1 urban) (1:2 rural) 

Urban: 1983 APTA 
survey Rural: (1:2) ratio 
ol vehicle grants 

1990 APTA survey ol 
transit operators 

Operaling lacililles 


included In main! 
lacililies above 


1990 APTA survey ol 
Iransil operators 





1990 APTA survey 
expanded lo include all 

Rail systems 

Vehicle replacemeni 

1987 Rail Modernlzalion 
Study (RMS) (lor 
services In operation in 

1987 (RMS) 

Average current age 
and cost lor peak Heel in 

1990 APTA survey ol 
iransil operators polled 
operator needs 

Vehicle rehab 

1987 (RMS) 

1987 (RMS) 


1990 APTA survey ol 
transit operators 

Service vehicles 


1987 (RMS) 


1990 APTA survey ol 
Iransil operators 

Maim lacililles 

1987 (RMS) 

1987 (RMS) 

1987 (RMS) 

1990 APTA survey ol 
transit operalors 

Operaling lacililles 

1987 (RMS) 

1987 (RMS) 

1987 (RMS) 

1990 APTA survey ol 
transit operators 

Human service systems 

Vehicle replacemeni 

Minimum uselul life for 
1/2 ol DOT-lunded 
operator Heel (estimated 
by CTAA) 

Average lile lor 1/2 ol 
DOT-lunded operator 
lleet (estimated by 

Minimum uselul lile lor 
lleet (estimated by 

Only il included in 1990 
APTA survey ol transit 

Vehicle rehab 





Service vehicles 





Maim lacililies 


Ralio(1 2) ol vehicle 


Only il included in 1990 
APTA sun/ey ol transit 

Operaling lacililies 


Include In main! lacililies NA 


ADA services in place 

ADA requirements NA 

included in bus services 



FTA— 1991 raporl FTA— 1993 repoft AASHTO— 19M npofi APTA— 1990 rapoit 

Non-OOT-funded NA NA NA na 


TTA lieaU conUnued sytlem growth (M rscani hMortcd tavels) as 'malnuinlng ihe petlofmance' 
ol exisling uantH systami, although Ihls doM r«presen< tyilem expansion 

*APTA conducled a survey d al Hs U S oparallng membets behveen Febfuary and June 1990 A 
lolal 01166 Iransll operators. tepreMnting nearty 60 percent o( Ihe US llaet of transit passenger 
vehicles. lesporxled lo Ihe survey The survey asked operalors lo protect caprial needed Irom al 
lunding sources lo meet llieir commur^nies reciulrements lor public transprxtallon Improvements 
Ifom 1992 tNough 1997. Esumated total needs (or aa UansH agencies were protected Irom survey 

<NA Indicates that this etemeni was not addressed 

Bus needs were divided Into urban, rural, tmd human service 
transportation needs, fta calculated the urban bus fleet Inventory on the 
basis of tl>e maximum number of peak-hour vehicles In service.* fta added 
a 20 percent spare ratio (additional buses) to the reported peak-service 
inventory to allow for buses to receive needed maintenance and other 
contingencies, fta then determined the average cost for a new bus on the 
basis of information contained In recent grant applicatioiu. Since fta 
specifies that the minimum useful life for a full-size bus is 12 years, fta 
assumed that urban bus replacement needs were 1/12 of Uie bus fleet 
multiplied by the average bus cost identified above. 

Rural bus needs were calculated similarly, except that fta relied on a 
contractor for fleet size information. Information on rural transit systems 
Is difficult to obtain, since rural operators are not required to report to fta 
in section 16 reports, and many rural o[>erators are small systems (often 
fewer than five vehicles). The Community Transportation Association of 
America ((tfaa) prepared a 1986 fleet inventory of rural transit operators 
under a contract to fta. fta multiplied the fleet, divided by an average 
useful life of 5 years (since rural buses are smaller and less durable than 
urban buses), by the average vehicle cost to determine annual replacement 

Human service bus needs were calculated similarly to rural needs, except 
that FTA limited needs to only those vehicles purchased witli fta/dot funds. 
ctaa prepared the estimate of the vehicles operated by fta section 
16(bX2) recipients — nonprofit human service agencies. However, since 
many of these nonprofit human service agencies also receive vehicle funds 
from the Department of Health and Human Services (liiis), ctaa estimated 
that just over half of the fleets' vehicles were purchased with fta 16(b)(2) 
funds, fta then assumed that only one-half of tJie total vehicle replacement 
represented a "transit need." Replacement costs for these vehicles were 
based on average cost and a 5-year useful life, fta multiplied the annual 
vehicle replacement costs by fta's portion of the total fleet to determine 
the total replacement needs for human service transportation. 

In addition to vehicle replacement needs, fta included an amount for bus 
maintenance facilities (maintenance buildings, etc.). fta assumed capital 
costs for bus facilities to be one-half the annual bus replacement costs for 
urban and rural providers. 

Rail needs were calculated differently than were bus needs, fta based its 
rail needs projections on the 1987 Rail Modernization Study.' The study 
estimated the costs to restore the nation's rail trar\sit systems to a "state of 
good condition" on the basis of the systems' 1983 conditions. Tl>e study 
did not Include the cost of any service or technology improvements to tlic 
systems and was limited to oiJy services In operation before 1983. Costs 
for new rail systems and new extertsions to existing (pre- 1983) systcins 
were not included in Ihe study. 

FTA made two changes to Information in the rail modernization report 
before including It in the 1991 needs report First, fta Inflated the reported 
costs to 1989 dollars, since the rail modernization study used 1983 dollars 

TTA coOecU thb tnfbnnatlon In Ma annual section 16 reporta Ttie 1988 aecUon 16 rrperta wen used 
to rietenntne the wiaadiwum number rrf vehtclea in peak aerrtce (vehicle ta i w entmy ) for the 1991 report's 

It^l Modemliatloo Study F^nal Report . April 19*7. GaniwU FVmlnf Transportation Enflnccra. hit, 
prepared under crmtiact to FT£ 


for its calculations. Second, fta calculated tlie amount of replacement and 
rehabilitation that had occurred since 1983. Because fta was not able to 
identify whether improvements identified in tlie rail modernization study 
had been completed, fta presented a range of remaining rail investment 
needs. The range reflected the percentage of total rail capilal fimds that 
may have been used to reduce Uie backlog of rail modernization needs 
between 1983 and 1989. 

FTA's 1992 Report 

fta's 1992 report included three basic categories of existing transit system 
needs: maintaining current conditions, maintaining current performance, 
and the effects of recent legal requirements, fta assumed tl)at current 
conditions could be maintained by replacing rolling stock according to its 
present age, as opposed to its minimum usefiil life. To maintain current 
performance, fta assumed that transit ridership would need to increase 
8 percent over the next 10 years, which would match actual ridership 
increases over the last 10 years. Finally, fta included the costs to meet 
Americans With Disabilities Act (ada) requirements and discussed 
potential requirements that may be effected by the Clean Air Act 
Amendments of 1990 (caa). 

To maintain current conditions, fta calculated the annual costs to replace 
the nation's bus and rail systems. Bus systems were divided into urban, 
rural, and human service fleets. The urban peak-service inventory was 
obtained from 1990 section IB data. Unlike the 1991 report, which grouped 
all buses together, the 1992 report identified the number and replacement 
costs of several types of buses (full-size, mid-size, and small). Annual 
vehicle replacement costs were estimated to be tlie average bus purchase 
price (by vehicle type) divided by twice Uie current average age of the 
vehicle fleet Tliis resulted in a slower replacement schedule tlian was 
used in tlie 1991 report, e.g., maintaining the current age of Uie fleet ratlier 
than replacing vehicles according to their minimum useful life. For 
example, the 1991 report assumed replacement of full-size buses eveiy 12 
years, fta's minimum useful life. The 1992 report calculates costs based on 
replacing buses every 15 years, thus maintaining the current average bus 
age of about 8 years. 

Since no information was available on the average age of the rural and 
human service operator fleets, fta used average useful life, ctaa's 
estimates of these fleets were used to determine the vehicle replacement 
needs for the rural and 16(b)(2) operators, fta included only about half of 
the 16(bX2) operators fleets' needs in its replacement needs, as It did in its 

1991 report' 

fta's 1992 report treated bus facilities differently from its 1991 report 
Whereas the 1991 report assumed that replacement needs for bus 
malntetwnce facilities were roughly half of annual velJcle purchases, Uie 

1992 report includes both maintenance and notunaintenance facilities 
(e.g., shelters, transit malls, etc.). Tlie costs for both types of facilities 
were estimated to be equal to annual vehicle replacement costs, since fta 
grants for all facilities have averaged about the same as bus purchase 
grants, fta assumed tliat rural and human service bus facilities 
(maintenance and other) are only half of FTA-provided bus purcliase 
grants, since these operators have fewer needs for nonmaintciiance 

Rail systems maintenance needs were based on the 1987 Rail 
Modernization Study Gike the 1991 report). The study identined an annual 
amount of investment needed to bring rail systems to a slate of good 
repair over a 10-year period. Since the Rail Modernization Study provided 
costs in 1983 dollars, fta iriflated the amounts into 1991 dollars and 
included this amount in Its needs report 

fta's 1992 report included cost estimates to comply witli recent legal 
requirements, such as the ada and the caa. ada requires operators to make 
fixed-route systems accessible to the disabled and to provide equivalent 
services for Individuals unable (due to disabilities) to use fixed-route 
service. The caa could require some transit operators to purchase only 

\)nly h»lf of the n«et nwb were Induded becMse CTAA esttiMted U..t Just €>vtr hilf of •!! the 
TChtctes w<« potth«»ed with DOT fuiKto. iniS ttoo provldM »ut»untW MsisUnCT lo <li«« operatora. 


vehicles that could run on alternative fuels, fta Included costs to comply 
witli ADA, such as installing lifts on buses, on the basis of dot's ada 
Regulatory Impact Assessment Since caa requirements for alternative 
fuels had not been determined, for informational purposes fta presented 
costs of converting transit fleets but did not include these costs in its total 
needs projections. 

FTa's 1992 report included costs to maintain the 'performance* of the 
nation's transit systems, defined as continuing Uic recent ridersliip growUi 
trends, in its treatment of existing system needs, fta estimated the 
additional dollars needed to maintain performance levels in terms of 
meeting continuing transit growth. During tlie 1980s transit ridersliip 
increased 8 percent, or about 0.8 percent per year, fta assumed for the 
purposes of projecting needs that a 0.8 percent Increase in the number of 
vehicles would result in an additional 0.8 percent increase in the number 
of passenger miles, fta provided for 0.8 percent annual rail ridership 
growth by including cost estimates for additional rail cars for existing 
systems and some additional capital funds for new-start rail projects. 
However, fta likely underestimated the costs of new rail service, because 
it based its projections on forecast costs that were all exceeded by actual 

AASHTO's 1988 Report AASirro presented several types of needs for maintaining tlie nation's 

transit systems, including capital maintenance, human service 
transportation, and operating assistance. In calculating the costs for these 
different needs, AASirro did not utilize any original sources of data for its 
projectioiw, relying instead on fta section 15 and atta survey data.' 
AASirro's total projections of need differ significantly from tliose in both 
FTA reports because AASirro assumed that transit needs include more than 
Just capital maintenance costs. 

To quantify capital maintenance needs, AASirro assumed that transit 
vehicles should be replaced at a rate that would maintain the current 
average age.' Accordingly, AASirro calculated the annual needed 
expenditure to replace the current bus and rail (car) fleet (similar to the 
methodology used by fta for bus facilities in its 1991 needs report). The 
source of urban fleet iiUormatlon (botii bus and rail) was 1985 fta secUon 
15 reports. The rural fleet size was based on dot's 1986 Directory of Rural 
and Specialized Tramit Operators . 

To determine facilities and equipment needs, aasiito used different 
sources of Information. Unlike fta, AASirro did not assume that bus 
facilities and equipment needs were proportionally related to annual 
vehicle replacement costs, instead, aashto based its bus facilities 
estimates on the results of a 1983 atta survey of transit operators in which 
respondents reported what they considered to be their future needs. For 
rail facilities needs, aashto used fta's Rail ModenJzation Study instead of 
apta's survey. Overall, the different data sources used for calculating 
current capital infrastructure did not result in a large difference between 
AASinX)'s and fta's estimates of capital maintenance needs (see table 1. 1). 

Human service transportation needs were assumed to Include the 
replacement of all vehicles for fta 16(b)(2) operators' fleets. Like fta, 
AASHTO relied on ctaa's estimate of the nation's section 16(b)(2) operators' 
fleets. Unlike fta, aashto included replacement costs for the entire fleet, 
rather than limiting the number of vehicles to those originally purchased 
with DOT funds. Vehicle replacement costs were calculated by multiplying 
average vehicle costs by the number of vehicles needed to maintain the 
current average age of the fleet 

AASHTO Included operating assistance needs in its discussion of 
maintaining existing systems. AASirro obtained actual operating cost 
information from the 1987 Transit Fact Book prepared by apta. To project 
future operating needs, aashto assumed that operating costs would 
increase at an annual rate of 4. 1 percent aashto then presented three 

'aashto acknowtedged In Its report that th« level of accuracy among dliTerent data aourcea varted, 
Bince aofne Infonnatlon was based on surveys while oilier Information came from actual audited filings 
and Aeld studies 

'AASirro also Included the costs to reduce the sverage vehicle sge to one-hsif the minimum useful 


different scenarios for operating revenues. The scenarios assumed tliat 
(1) current funding (federal, local, and passenger fare revenues) would 
remain constant; (2) passenger fare revenues would increase the same as 
tlie cost of inflation, with federal and local subsidies remaining constant; 
and (3) passenger fare revenues and local subsidies would increase at 
4.1 percent, with federal assistance remaining constant. All Uiree scenarios 
for future funding availability predicted that there would be insufTicient 
funds to sustain current operatior\s, resulting in cutbacks in existing 
services should new sources of revenue not be found. 

APTA's 1990 Report 

atta's report presented the largest projection of existing transit systems' 
needs, apta distinguislted needs for passenger vehicle replacement, 
passenger vehicle rehabilitation, service vehicles, maintenance facilities, 
and operating (nonmaintenance) facilities, aita relied primarily on its own 
data collection for its needs report, altltough aita compared its own 
sources with fta's information (e.g., section 15 reports). 

APTA projected needs on the basis of a survey of its operating members. 
Survey respondents were asked to report their total "needs," williout 
considering existing or future flnancial constraints, apta expanded the 
actual reported needs to reflect the entire transit industry on the basis of 
the ratio of respondents to the total U.S. fleet (by vehicle type), not 
including human service transportation other than that provided by fta 
section 9 grantees.' apta's responding operating membership included 
primarily urban operators, which represented most of the nation's rail fleet 
and more than half of the nation's bus fleet. 

Assumptions Made to 
Determine Expanded 
and Improved System 

While all four needs reports generally agreed that the costs to maintain 
existing transit systems should be included in their projections, they 
disagreed on how expansion needs should be included, if at all (see table 
1.3). fta's 1991 report did not Include any expansion needs in its 
projections, fta's 1992 report acknowledged that some unmet highway 
demand could result in greater demand for transit services and attempted 
to develop an estimate of the costs to provide these additional services. 
AASirro's report included the projected costs of completing transit projects 
already approved by fta for planning, apta's report presented the most 
robust projection of future needs by including costs for all projects tltat 
transit operators stated were needed to meet their communities' 
transportation goals. 

FTA's 1991 Report 

fta's 1991 report did not quantify expansion needs and stated that building 
new transit systems goes beyond maintaining the existing transit 
Infrastructure. The report goes on to indicate that several new projects are 
under development, and several appear to have the potential to be 
cost-effective. However, the report does not quantify the costs of these 
projects and does not include them in its transit needs estimate. 

•Limited human service by section 16(b)(2) grantees was included if these grantees were APTA 
members, although only a small number of these operators reported to APTA- 

Table 1.3: Assumptions Made to Determine System 

Expansion and Improvement Needs 

FTA— 1991 report 

FfA— 1992 report 

AASHTO— 1988 report 

APTA— 1990 report 

Bus systems: 

Vehicle replacement 


Reduction ol avg. bus 
age lo one-hall minimum 
uselul lile 

Included in existing 
system maintenance 

1990 APTA survey ol 
transit operators polled 
operator needs 

Vehicle rehab 




1990 APTA survey ol 
transit operators 

Service vehicles 




1990 APTA survey ol 
transit operators 

Maim, lacilities 


Ratio ol vehicle grants 


1990 APTA survey ol 
transit operators 

Operating lacilities 


Included In maint 
lacilities above 


1990 APTA survey ol 
transit operators 

Service expansion 


Added bus capacity to 
serve Incrsased 
passenger trips (10 
percent ol unmet 
highway demand) 

Bus-related new-start 
projects, already 
receiving FTA lunds 
(FTA's pipeline) 

Bus-relaled new-start 
proiecis, (RA's 
pipeline) or 1990 APTA 
survey ol operating 


FT A— 1991 report 

FTA— 1992 report 

AASHTO— 19BB report 

APTA— 1990 report 





1990 APIA survey ot 
operating members 

Rail systems: 

Vehicle replacement 


1987 Rail Modernization 
Study (RIVIS) 

Included In existing 
system maintenance 

1990 APTA survey ol 
transit operators polled 
operator needs 

Vehicle rehab 


1987 (RMS) 


1990 APTA survey ol 
transit operators 

Service vehicles 


1987 (RMS) 


1990 APTA survey ol 
transit operators 

Maint. lacMlles 


1987 (RMS) plus R A 
esllmales lor Improving 
condition ol older rail 

1987 (RMS) 

1990 APTA survey ol 
Iransil operators 

Operating lacilltles 


Included In maint, 
lacllllies above 

1987 (RMS) 

1990 APTA survey ol 
transit operators 

Service expansion 



Rail-related new-start 
prolects, already 
receiving FTA funds 
(RAs pipeline) 

Rail related new-start 
projects. (RAs 
pipeline) or 1990 APTA 
survey ol operating 

Human service systems: 

Vehicle replacement 





Vehicle rehab 





Service vehicles 





Maint lacilltles 





Operating lacililles 





New ADA-requlred 

Regulations did not exist 
when projection was 

Compliance costs taken 
Irom ADA regulatory 
Impact assessment* 

Regulations did not exist 
when projection was 

Regulations did not exist 
when piojeclion was 

Sewice expansion 



Statement that growing 
elderly population could 
Increase needs 







*NA Indicates that INs elemenl was not addressed. 

*FTA calculated thai 10 percenl of ihe unmet demand lo( hlgt^way lane miles could result In 
Increased transll rlderstitp For needs projection purposes. FTA quanlilied the cosis ol providing 
this Increased service via buses, allhough tl acknowledged Ihat some ol Ihe actual Increase in 
ridership would occur on rail systems 

*00T prepared a regulalory Impact assessment lo determine ihe cost lo comply with ADA 

FTA's 1992 Report 

To demonstrate tlie cost to Improve the condition of the nation's bus 
systems, In 1992 fta Included costs to reduce the average age of the bus 
fleet and bus facilities to half their minimum useful life, which requires 
replacing vehicles faster than had been occurring. Using information on 
the average age of the urban fleet from Its section 15 reports, fta 
calculated the accelerated replacement costs tliat would be required to 
achieve the optimal vehicle age (half of the minimum useful life) in the 
urban fleet over a 10-year Investment period. Unlike urban fleet ages, no 
data were readily available on the age or condition of urban bus 
maintenance and nonmaintenance facilities. Therefore, fta assumed that 
the costs of eliminating the backlog of deferred facilities needs would 
equal annual vehicle replacement needs (similar to the assumption made 
in the "maintain" scenario above). As noted earlier, Information on tlie 
average age of the turaU and specialized fleets and facilities was not 
available; thus, costs to eliminate a backlog of needs were not included in 
FTA's 1992 report. 

To improve the condition of the nation's rail systems, fta included costs to 
restore rail cars and facilities to good condition. As noted earlier, the 1987 
Rail Modernization Study identified annual expenditures (in 1983 dollars) 
that were needed to eliminate the backlog of deferred maintenance and 
restore rail systems to "good" condition over a 10-year period, fta inflated 
this amount into 1991 dollars and included it in the report fta 
acknowledged that current standards have changed significantly since the 
old systeins were built. Consequently, fta estimated the annual costs to 
bring these very old systems to current standards over a 20-year time 
period and included tliis amount in its needs assessment 

To improve tlie performance of the nation's transit systems, fta included 
costs to provide added transit capacity to meet potential future demand 


for services. The source for increased future demand stems from tlie 
Federal Higliway Administration's 1991 highway needs report, which 
forecasted Uiat demand for about 34,000 lane-miles of highway capacity 
could be replaced by aggressive system and demand management, fta 
assumed that 10 percent of the passenger miles of travel that would have 
been served by these lane-miles could potentially result in additional 
transit ridership. fta calculated the costs to meet all of this potential 
ridership tlirough expanded bus services, on the basis of the current 
reported average cost per bus passenger mile, fta acknowledged that it is 
unlikely that all new service would be provided by buses and that rail 
costs exceed those for buses, but stated that bus capital costs could serve 
as an estimated amount for increased transit service. In addition, by using 
current average costs rather Uian marginal costs (the incremental cost to 
provide new senices), fta potentially understated the costs of this 
ridership growth. Tlie marginal costs to increase ridership are likely to be 
higher than current average costs, because operating expenses increase 
(because efficiencies decline) as service is extended into less densely 
populated areas. 

AASIiTO's 1988 Report 

AASHTO included tl\e costs of constructing new-start projects in its 
discussion of transit needs. AASirro included those transit projects tliat 
were in fta's "pipeline" — projects that had been approved by fta for 
preliminary planning and analysis, final design, and/or construction as of 
July 1987. In addition, AASHTO included costs to complete a list of 
high-occupancy vehicle and busway projects over the 1988 through 1992 
time period.'" 

APIA'S 1990 Report 

apta's report presented the largest estimate for expanded transit system 
service needs, atta based this estimate on its 1990 survey of operating 
members' needs, apta's survey asked transit operators to report all 
projects tliat were needed "to meet their conununities' trar\sportation 
goals." APIA officials told us that tlie resulting projections represented 
needs without regard to financial constraints. Wliile it is true that apta 
presented the greatest needs estimate, we were told by state and local 
officials we visited that they did not provide apta with an unconstrained 
list of projects. Transit operators stated that they did not provide an 
unconstrained list of needs since their planning efforts refiect financial 
constraints. Nevertheless, apta's projection was tlie largest of tlie four 
projections studied. 

Appendix II 

Objectives, Scope, and Methodology 

The objectives of our study were to identify (1) why fta's, aasiito's, and 
apta's transit needs projections varied, (2) what other factors could affect 
the accuracy of these transit needs projections, and (3) any opportunities 
for improving future transit needs projections. We made our review in 
response to section 3028 (a) of the Intermodal Surface Transportation 
Efficiency Act of 1991 (P.L. 102-240), which requires the General 
Accounting Office to study the extent to which current transit needs are 
adequately addressed and estimate the future transit needs of the nation. 

To fulfill our three objectives, we (1) reviewed the individual needs 
projections and oUier relevant transportation literature; (2) interviewed 
officials at fta (headquarters and one regional office), aasiito, and apta; 
and (3) interviewed state and local transportation officials in 
Massachusetts, New York, New Jersey, North Carolina, South Carolina, 
Alabama, Florida, and California. We chose these areas to provide 
variation by geographic region and types of mass transit available. 

'*The projections were based on an APTA survey of ctjsts to complete proposed HOV and busway 
projects from 1988 through 1992. 


In order to compare and contrast Uic dilTercnt nce(k projections, we 
calculated an annual amount by msgor need category for each transit need 
projection, fta's two needs reports presented annual amounts; tliercfore, 
no change was required. However, AASirro's and a)Ta's needs projections 
present total dollar amoimts for a specific multiyear lime pcrio<l For lliese 
two projections, we divided the total amount by (he number of years to 
result in an average annual need amount, except as oUierwise noted. Since 
all four needs projections were prepared at different times and reported in 
different years' dollars, we inflated all projections into sanie-year 1991 
dollars to allow direct comparisons and to eliminate differences between 
the projections due to Itillation. 

Our review was conducted from April 1992 to November 1992 in 
accordance with generally accepted government auditing standards. 

Ap pendix III 

Major Contributors to This Report 

Rpcni irr'pt: ■'°*^" ^' Anderson, Jr., Associate Director 

resources, ^^^ ^ j^^^^ Assistant Director 

Community, and Uune S. ZelUIn, Assignment Manager 

Economic '^"'^ ^ Heldtman, Evaluator-in-Charge 

Development Division, 
Wasliington, D.C. 


Senator Lautenberg. Mr. Gilstrap. 

Mr. Gilstrap. Thank you, Mr. Chairman. 

My name is Jack Gilstrap. I am executive vice president of the 
American Public Transit Association [APTA]. 

At the outset, let me state that APTA fully supports the Presi- 
dent's short-term economic stimulus proposal as presented by the 
President. As you indicated, it would provide $752 million in much 
needed supplemental transit funding in the current fiscal year and 
would be a positive first step toward our No. 1 priority, full funding 
of ISTEA for mass transit. 

Looking to the longer term, our association did survey our mem- 
bers, as Ken has indicated, to determine their capital needs 
through fiscal year 1997. The capital requirements total approxi- 
mately $90 billion, or $15 billion annually over the next 6 years. 

We have submitted for the record a copy of our study presenting 
these needs in detail, Mr. Chairman. 

Our APTA study shows that an investment at this level is need- 
ed to rehabilitate our old, worn out systems, build new ones, and 
replace overage buses, vans, and railcars. 

Now I must tell you that because of the lack of funding, bus pur- 
chases in the United States are down over 50 percent the past 2 
years. This is having a terrible effect on our bus manufacturing in- 
dustry, which is operating today at only 25 percent capacity. An- 
other important consideration, which has already been mentioned, 
is compliance with national mandates, which carry an enormous 
price tag and seriously complicate the overall funding picture. 


DOT estimates the national cost to comply with ADA ranges 
from $844 million to $1.3 billion a year. This is the cost to put 
wheelchair lifts on all new buses, to make key rail stations, transit 
centers, and railcars accessible, as well as to develop paratransit 
systems, all of which are required under ADA. In addition, the 
Clean Air Act of 1990 requires reduced vehicle emissions. The cost 
to install exhaust cleaners and upgrade fuel is estimated to be $110 
million a year. 

In short, the Nation's transit operators are in dire need of addi- 
tional capital funding, even beyond the authorized levels of ISTEA. 
The principal reason why is that, in addition to the costly new 
mandates, public transit has suffered a 10-year decline in Federal 
transit funding, over 50 percent when adjusted for inflation. 

These cuts, Mr. Chairman, would have been even worse except 
for the heroic efforts of key members, like yourself and your com- 
mittee. But the fact is 10 years ago, transit received $1 for every 
$2 highways received, and today it is $1 for transit for every $4.50 
for highways. 

Well, that is history. What about the future? 

Although President Clinton's proposal does call for increased 
transit aid in the out-years, it calls for full funding of highways but 
not for mass transit. We are deeply concerned about this and want 
to work with you and the administration on this issue. 

The administration also is calling for an extension after 1995 of 
the 2.5-cent gas tax that went to deficit reduction, with the reve- 
nues to be deposited exclusively in the highway account of the 
transit fund, none for mass transit. Gas tax increases in 1982 and 
1987 included a decided portion of revenues for transit. Excluding 
transit from future increases in the gas tax would break with past 
precedent and would have devastating consequences for mass tran- 
sit. Furthermore, excluding transit would clearly be counter to the 
spirit of ISTEA, which was so carefully crafted by Congress to pro- 
vide a balance and a level playing field among transportation 

I conclude, Mr. Chairman, by again expressing our full support 
for the administration's economic stimulus package and for full 
funding of ISTEA. I commend you, Mr. Chairman, and your com- 
mittee for holding this hearing to focus on transit's long-range 
funding needs. Thank you. 


Senator Lautenberg. Thank you very much. Your full statement 
will be made part of the record. 
[The statement follows:] 

Statement of Jack R. Gilstrap 


Mr. Chairman and Subcommittee Members, thank you for giving the American 
Public Transit Association this chance to testify on the need for increased transit 
investment, and on the Federal role in meeting tiiose needs. 

I am Jack R. Gilstrap, Executive Vice-President of the American Public Transit 
Association (APTA). APTA represents the transit systems that provide about 97 per- 
cent of our nation's mass transit services. We also represent many of the manufac- 
turers and suppliers who provide the goods and services to the industry. 



We endorse the President's call for $752 million in additional fiscal year 1993 cap- 
ital funding for the Federal Transit Administration (FTA). This includes $482 mil- 
lion for distribution to states and metropolitan areas through the Section 9, 18, and 
16 formula programs, and a $270 million increase in the Section 3 Bus Discre- 
tionary program. 

This is a very positive first step toward fiill fiinding of the federal transit program 
authorized by the Intermodal Surface Transportation Efficiency Act (ISTEA). The 
approved fiscal year 1993 ISTEA funding of $3.6 billion was far short of the $5.2 
bilLon aul^orized, but the $752 million supplemental goes far toward bridging the 
gap. APTA believes that transit funding should, at a nunimum, be set at ISTEA lev- 
els in fiscal year 1994, and we look forward to working with the Administration and 
Congress to reach that goal. 

The transit industry recognizes that the purpose of these funding increases is to 
stimulate the economy by moving forward with projects that will qmckly create jobs. 
In fact, both the $482 million formula program increase and the $270 million bus 
capital increase are ideally suited to fulnll this objective of the President's economic 
stimulus program. We will now provide more detailed information on our capacity 
to create jobs and provide a quick boost to the economy. We can also play a critical 
role in providing people with transportation to and fi*om new job opportunities. 


The $482 million formula funding increase is especially welcome because it ad- 
dresses the fact that formula assistance was cut this year by $280 million below the 
previous year's level. The Section 9 Urban Formula Program would receive $438.5 
million in additional funds, the Section 18 Non-Urban Formula Program would re- 
ceive $26.4 million, and the Section 16 Elderly/Handicapped Formula Program 
would receive $17.4 million. These increases not only restore these programs to 
their fiscal year 1992 funding levels but bring them closer to the fiscal year 1993 
authorized level. 

The formula program increases will reach all parts of the country where they can 
be spent on ready-to-go projects. Can the transit industnrput these funds to good 
use? The answer is a resounding yes. A partial survey of APTA members has identi- 
fied 649 ready-to-go projects from 98 transit agencies in 31 states, the District of 
Columbia, and Puerto Rico with a federal funding component of $5.19 billion. These 
projects would support 310,000 jobs. We are continuing to compile additional infor- 
mation on ready-to-go projects firom transit agencies across the nation. A copy of the 
latest available list of these projects is included with this testimony. 

In addition to bus purchases, which will be discussed in greater detail below, 
projects range from creation of new park-and-ride lots and high-occupancy vehicle 
lanes to the upgrading of communications equipment and computer systems to the 
addition of facilities needed to comply with federal accessibility, clean air, and en- 
ergy conservation mandates. These proiects can all be auickly started, they will cre- 
ate thousands of jobs, and they are all essential to address unmet needs and im- 
prove the efficiency of the nation's transit systems. 

It is important to note that in today's market we in transit can obtain greater 
value for less money than we could have in the recent past, or probably will be able 
to in the future. 

We view this proposal as a major statement by President Clinton about his inten- 
tion to rebuild the nation's cities and considerably enhance the quality of life for 
inner city poor and other transit dependent individuals. We believe that increased 
transit investment is essential to meeting the nation's environmental and energy 
conservation goals. This investment in transit's capital assets will help to serve tens 
of millions of people today, tomorrow, and for generations to come. 


The $270 million increase in bus capital funding is ideally suited to put people 
back to work, quickly, in a critical segment of the domestic motor vehicle inaustiy. 
The U.S. bus manufacturing industry and its suppliers have factories in many com- 
munities around the country. The industry is now operating at only 25 percent of 
its capacity, so it is in a very strong position to speed up production in short order. 
With these funds, we can replace oosolete buses and speed up compliance with 
Americans witii Ehsabilities Act (ADA) and Clean Air Act requirements for clean- 
operating buses that are accessible to people with disabilities. 

Calendar Year 1992 is the third consecutive year of unprecedented, severely de- 
pressed demand for new standard size transit buses. The 1980-89 average annual 


volume was 3,252 units, while the 1990-92 average annual volume was less than 
half that amount, at 1,560 units. The bus manufacturing industry's capacity is 6,240 
units per year, so the 1990-92 capacity utilization is only 25 percent. 

This situation, cleeirly, is tailor-made for an immediate stimulus. There is more 
than enough idle capacity to put additional funds directly into production. In the 
longer run, the healui of this U.S. industry will depend on continued commitments 
for increased investments. Manufacturers will not add people to their workforces 
and invest in the required plant and equipment if they do not believe there is a 
long-term market for their products. 

If the ability to supply additional buses is there, then so is the demand for new 
buses. The transit industry, nationwide, operates some 55,000 standard size buses. 
An estimated 12,000, 22 percent of the total, exceed the 12-year age at which the 
FTA recommends replacement. Some 40 percent of small buses and vans in use ex- 
ceed age for recommended replacement. 

In the partial survey of transit systems mentioned above, bus and van needs ac- 
count for $833 million worth of orders with the potential to create 35,640 jobs in 
fiscal year 1993. These would be full-time jobs in the private sector and not the re- 
sult of short-term make-work programs. In other words, transit systems are ready 
to place bus orders with U.S. manufacturing firms worth more than three times the 
dollar value of the proposed bus capital funding increase. 

This expanded bus procurement will have other benefits. New buses must be ac- 
cessible to people with disabilities as required by the Americans with Disabilities 
Act, and in many cases they will replace older ones that are not lift-equipped. So 
any acceleration of bus purchases will speed up the process of compljdng with the 

New transit buses can help reduce energy use and air pollution — a full bus is six 
times more energy efficient tnan a single occupant automobile, and transit buses are 
responsible for just 0.3 percent of transportation energy consumption compared to 
72.1 percent for automobiles and trucks. Nonetheless, the $270 million supple- 
mental investment program will hasten the replacement of older buses, which are 
the least fuel efficient, least reliable, and most expensive to maintain. 

Like the $482 million increase in formula capital fiinds, the $270 million increase 
in bus discretionary fiinds is an ideal means of priming the economy. 


As we strive to meet this short-term responsibility, we want to work with Con- 
gress and the Administration for full funding of the ISTEA transit program in fiscal 
year 1994. That is the critical next step in implementing a program of nationwide 
transit investments that will sustain prosperity, enhance mobility, improve produc- 
tivity, and meet the clean air, energy conservation, and other goals that we all sup- 

ISTEA created a carefully balanced program designed to meet the transit needs 
of urban, suburban, and rural EU-eas in every region of the country. Full fiinding of 
each individual program at its authorized level is essential if the transit industry 
is to plan effectively for the next century. 

I must note that even at the levels authorized in the ISTEA, transit funding is 
still well below 1981 appropriations levels in real terms. We recognize the pressure 
to reduce the deficit, but we also believe that we must make the investments re- 
quired to meet transportation needs of the twenty-first century. 

Ease of movement is vital for every American and for the businesses and indus- 
tries that create the nation's wealth. In many ways, our ability to travel is a meas- 
ure of our quality of life and the competitiveness of our economy. 

Today, our ease of movement is severely threatened. Major cities are regularly 
gridlocked, resulting in waste of energy and serious air quality damage. Suburbs are 
clogged throughout the day with traffic. The increasing isolation of rural residents 
is all too commonplace. 

Inadequate public investment in transportation lies at the heart of the problem. 
In particular, we have failed to plan and invest adequately in the most fundamental 
mode of transportation: public transit. 

Between 1992 and 1997, transit will reauire $90.8 billion in capital investment. 
Transit systems will need 63,800 new vehicles and another 29,930 rehabilitated 
buses and rail cars. 

The backlog of transit investment needs continues to mount for two reasons: 1) 
the ten-year decline in federal fimding; and 2) the increasing demand for transit 
service. Because of inadequate fiinding, essential reinvestment in existing transit 
systems is not being made, and service improvements are being slowed or deferred. 
In some areas, service reductions are becoming commonplace. 


Equally important, efforts to add new transit capacity have been stjrmied by lack 
of funds. The following needs demonstrate the size of the funding commitment that 
should be made to public transit through 1997. 


Transit's greatest advantage lies in high-capacity services operating on exclusive 
rights-of-way, including commuter rail, light rail (also known as modem trolleys), 
subway systems and exclusive bus and transitways. Eight major urban centers with 
a long history of rail transit continue to benefit from this investment and seek to 
expand or modernize their systems. Another ten urban areas built fixed-guideway 
transit in the past 15 years. All seek to expand them, forty-eight cities in 29 states 
plan new or expanded fixed-guideway systems, either rail lines or busways. These 
include 1,770 miles of rights-of-way, 2,400 rail cars, and 830 stations. 

Capital investment needs for new fixed-guideway (rail and bus) transit services 
between 1992 and 1997 totals $30.1 billion including $3.9 billion for the necessary 

These needs are broken down as follows: 1) $1.4 billion for busways and high oc- 
cupancy vehicle (HOV) lanes; 2) $3.5 billion for commuter rail; 3) $9.7 billion for 
heavy rail; 4) $13.5 billion for light rail; and, 5) $2.0 billion for related capital facili- 


To ensure top quality service, an additional $17.7 billion in capital investment is 
needed. These dollars are needed to purchase a wide range of capital items includ- 
ing service vehicles, computers and systems for fare collection and communications. 



Capital Investment by itself is not enough to ensure efficient effective service. 
Day-to-day maintenance and operations require a stable and reliable major financial 

The Federal Government, and State and localities, have already made a huge in- 
vestment in the transit infrastructure. It is important that we properly maintain 
that investment, which includes everything from rail systems to buses and garages. 
If we are to make increased investment in facilities we must also have the funds 
to operate the additional buses and trains so the benefits of increased transit rider- 
ship can be realized. 

Today, maintenance and operations of the nation's transit systems require an in- 
vestment of $15.7 billion per year, of which seven percent is fi-om the federal gov- 
ernment. Operating todays systems through 1997 will cost nearly $100 billion in 
current dollars. As transit systems offer both expanded and new services to meet 
new passenger demand, increased support for operations, as well as capital, will be 


As transit systems continue to provide current services as well as offer new ones, 
a variety of new bus facilities will be needed. 

Through 1997, $5.6 billion is needed to build the following bus facilities: 1) 280 
terminal/transfer centers; 2) 130 maintenance and repair shops; 3) 95 storage facili- 
ties or garages; 4) 45 administrative offices; 5) 590 parking structures for transit 


Comfortable, convenient and efficient transit service requires a wide range of sup- 
port facilities and up-to-date equipment. 

Through 1997, $17.1 billion is needed to modernize: 1) 450 maintenance and other 
facilities; 2) 880 rail and bus stations; 3) 1,230 miles of rights-of-way 


Through 1997, transit authorities will require $16.8 billion in new vehicle invest- 
ment for existing services plus $4.9 billion for vehicles for new-fixed guideway 
routes and extensions; a total of $20.7 billion for new vehicles. 


Total New Vehicle Requirementa 1992-1997 

Type Number 

Bus 49,610 

Van 9.130 

Heavy Rail 1,940 

Light Rail 1,500 

Commuter Rail 1,220 

Other 400 

Total 63,800 

Buses are truly the workhorse of public transit. They carry 64 percent of the na- 
tion's transit passengers and are responsible for 51 percent of passenger miles. 
Through 1997, new bus needs total $12 bilUon. 

Rail transit, defined as light, heavy, or commuter, carries passengers longer dis- 
tances. Rail accounts for 36 percent of all transit trips and 49 percent of total pas- 
senger miles. The percentage of passenger miles on rail is increasing every year. 
Rail transit c£irries more than 10 million passengers an average of 65 million miles 
each weekday. Rail transit is probably the mode that is least damaging to the envi- 
ronment and the most energy-efficient. 

Through 1997, new rail vehicle needs for existiiig service are $4.8 billion and $3.9 
biUion for new fijEed guideway systems and extensions. 


Rehabilitation is a cost-effective way to extend the life of transit vehicles. A sound 
rehabilitation program can add six years to the 12 year useful life of a bus and 15 
years to the 30 year average life of a rail car. 

Through 1997, $3.5 bilhon is required to rehabilitate: 1) 18,570 buses; 2) 11,360 
rail cars (heavy, light and commuter). 


Over the past several years. Congress has enacted several comprehensive pieces 
of legislation that are imposing great costs on the transit industry. Both the Ameri- 
cans with Disabilities Act (ADA) and the Clean Air Act Amendments of 1990 impose 
mandates without providing the financing to carry them out. 

The transit industry supports these laws and the policies they represent because 
the ADA will increase mobility for all people with disabilities and the Clean Air Act 
Amendments will help reduce air pollution and conserve energy. However, full fund- 
ing of the ISTEA is necessary to properly implement the mandates estabUshed in 
both of these laws. 

For example, in the provision of services to people with disabilities, there is a 
growing and alarming trend toward health and human service agencies discontinu- 
ing their transportation services for their clients and "dumping" them on the local 
public transit system who must provide service under the ADA. This practice adds 
a tremendous burden to an already challenging financial struggle. 

The U.S. Department of Transportation estimates the national, annual cost to 
comply with the Americans with Disabilities Act of 1990 (ADA) ranges fi-om $844 
milhon to $1.3 bilUon. The costs covers proposed lifts on buses, making key rail sta- 
tions, transit centers and rail cars accessible as well as developing paratransit sys- 

The Clean Air Act of 1990 requires reduced vehicle emissions. The annual cost 
to install exhaust cleaners and upgrade fuel is $110 million. One nationwide survey 
of transit systems found that installation of particulate traps on the U.S. bus fleet 
would cost an estimated $522 million. 

We are hopeful that Congress and the new Administration recognize the value of 
helping the industry with me costs of federally mandated operating and capital in- 
creases resulting from federal mandates. If transit operators are forced to raise fares 
and reduce service to pay for federal mandates, there will be a corresponding reduc- 
tion in transit ridersnip. This will undercut transit's abUity to fulfill its role in 
achieving national goals related to the environment, congestion, mobility, energy 
conservation, and the economy. For every 10 percent increase in fares there is a 4 
percent reduction in ridership. 


APTA has heard that President Clinton's long-term investment program caUs for 
extension of the 2.5 cents per gallon gasoline tax currently scheduled to expire in 

68-623 O— 93- 


1995, with the revenues to be deposited exclusively in the Highway Account of the 
Highway Trust Fund. 

The entire transit industry firmly believes that a portion of any increase in the 
gas tax should continue to be dedicated to the mass Transit Account of the Highway 
Trust Fund. Gas tax increases for surface transportation purposes in 1982 ana 1987 
included a dedicated portion of revenues for transit. Breaking with past precedents 
and excluding transit from future increases in the gas tax would have devastating 
consequences for our industry. It may also send the wrong signal to those who feel 
that increased transit use can reduce pollution and energy consumption. 

Annual transit capital needs far exceed available resources, and we strongly be- 
lieve that the proceeds of any future gas tax increase be distributed equitably 
among surface transportation modes. Transit funding declined fi-om $4.6 buLion in 
1981 to $3.8 billion in the current yeeu", while funding for Title 23 highway pro- 
grams went from $9.1 billion to over $18 billion. We urge that some of the revenues 
from future gas tax increases be used to provide a stable, reliable source of funding 
for the federal transit program. 


Thank you for this opportunity to testify on transit's needs. I want to again ex- 
press our support for the economic stimulus proposal and for full funding of ISTEA 
in fiscal vear 1994 and bevond. 

As pollution grows, highway traffic is at a standstill, and energy consumption in- 
creases, we believe we must invest more in public transit: a rational solution to each 
of these national concerns. APTA looks forward to working with this Committee to 
meet our nation's infrastructure needs and prepare us for the 21st Century. 

We also feel strongly that funding for all surface transportation modes be in- 
creased in an equitable manner. Past inequities between highway and transit pro- 
grams must be reversed so that the people of this nation have real transportation 
alternatives. We urge Congress and the Administration to adhere to the funding pri- 
orities established m the ISTEA at whatever funding level Congress establishes in 
Appropriations Acts. 



Summary of a Survey of Transit System 
Members of the American Public Transit Association 

The American Public Transit Association (APT A) was requested by the U.S. 
Conference of Mayors (USCM) to support their effort to answer a request by Federico 
Perta, U.S. Secretary of Transportation, and Henry Cisr>eros, U.S. Secretary of Housing 
arxJ Urban Devekjpment, to gather information concerning "ready-to-go" transportation 
and community development projects from USCM members. APTA distributed a revised 
format of the USCM survey to its transit agerKry members by facsimile on February 2. 
1993. This summary describes results received as of February 7, 1993. 

According to the cover memorandum of the USCM survey dated January 27, 1993, 
the Secretaries "requested mayors to provide examples of ready-to-go projects in the 
transportation arxJ CDBG (community development block grant] areas, where federal 
assistance (when provided) would be obligated within a maximum of 120 days and 
completion of the ready-to-go project would be finished within the 1993 calendar year.' 

The results of the APTA survey as of Felxuary 5, 1993 were provided to the USCM 
in order to help meet the Socretaries" request. The results of this survey as of February 
8, 1993 were also forwarded to all members of the U.S. Senate and the U.S. House of 


A total of 96 responses have been received. This report will be updated to include 
later submissions, which we expect to receive. The 98 respondents refjorted 649 transit 
projects. These projects would spend a total of $5.2 billion in federal funds and create 
310,CXX) direct and indirect jobs through the life of the projects. 

In addition to transit projects, other surface transportation projects for which APTA 
member agencies are responsible were included in the responses. These projects add 
an additional $1.3 billion needed for ready-to-go projects bringing the total to S6.5 billion 
reported for all types of ready-to-go projects by responding agencies. 

Table 1 summarizes the number and value of projects reported stratified by the 
amount of time they require for obligation. Table 2, listing each project in alphabetical 
order by state/city, follows the summary. Some of the responses are edited as described 
in the section "Description of Survey Parameters." that follows, for conformity of 


Table 1 : Ready-To-Go Projects by Obligation Period 

Time Required for 

Number of 

Federal Dollars 

, — ~— ^^ — ^-| 

Total Jobs 


(as reported) 

30 Days or Fewer 




31 to 60 Days 


$296 8 


61 to 90 Days 


$ 755.3 


91 to 120 Days 


$ 1,823.9 


More than 120 Days 


$ 919.0 


Uncertain/Not Specified 


$808 7 


Total Transit 




Road and Other 


$ 1.304.3 


Total Reported 


$ 6.494 6 


Comparison to Prior Surveys 

These responses are a sample that illustrate the types of projects that transit 
agencies could go forward with if funding were available. The total amount of federal 
funds thai transit agencies would be able to spend in Fiscal Year 1993, beyond the 
amount of funds available, was determined by a survey conducted by APTA in November 
and December of 1992 that resulted in a report titled Survey of Ability to Spend Federal 
Transit Funds During Fiscal Year 1993. That report found that transit agencies could 
spend $7 billion dollars in additional federal funds during Fiscal Year 1993. Spending was 
defined as obligating capital funds or actually spending operating funds. The amount 
included an additional $5.6 billion in capital funds and $1.4 billion in operating funds. The 
amount is a projection for the entire U.S. transit industry. The results of the Ready-To-Go 
Capital Projects survey indicate that transit agencies can obligate at least the S5 6 billion 
capital amount previously projected and possibly an even greater amount. 

The ability to spend an additional total of $7 billion was estimated from detailed 
statistical analysis of responses from 113 APTA member transit agencies. The agencies 
sampled for that analysis operate over 69 percent of all transit vehicles operated by APTA 

Description of Survey Parameters 

Investment in transit infrastructure includes not only rights-of-way and buildings, 
but also vehicles, maintenance equipment, communications equipment, and other capital 
items. Only the information in the original facsimile (see Appendix One) was available to 
respondents unless they contacted APTA by telephone for additional information. 
Respondents who requested additional information were advised to consider infrastructure 
to be any project that would qualify for capital assistance under the Federal Transit Act 
Any separately identified portion of a project directed toward operations was deleted from 
survey responses. When the same project is reported by both a local and a regional 
agency, the duplicated amount is not included in Table 1 summation but all reported 
amounts are included in individual agency reports on Table 2. 


When respondents identified a "federal share" amount for project cost this amount 
is Hsted on Table 2. If only a total amount without a federal share was reported, the total 
amount is listed on Table 2. The requirement for local funding participation in an 
administration supplemental program was not known when this survey was conducted. 
Current funding sources used by transit agencies require from 20 percent down to no 
local match, with a waiver applicable to the requirement in some cases. 

Many respondents were unable to estimate the job impact of their projects. If the 
1993 job impact was left blank on a response, APTA calculated a number for that 
response. The numljers calculated by APTA are indicated by an asterisk (•) on Table 2. 
Total direct and indirect jobs from capital projects are estimated at a rate of 53 3 jobs per 
one million project dollars. 

When obligation time periods where not exact, the longest reported time-period 
was used in summarizing for Table 1 . Some projects with an uncertain time period for 
obligation could be obligated within 30 days or 60 days. 

Productive Capacity for Reported Bus Demand 

One of the most frequently reported needs, in terms of number of respcnce'-is is 
for additional or replacement buses and other road vehicles. Current bus manu'a::-ring 
capacity in the U.S. is estimated at 6,200 standard-size (35 and 40 foot) units ce- .ear 
Production capacity for small buses and vans is not estimated, but is known tc ce 3'ge. 
Only about 25 percent of the standard-size bus capacity is currently be^; ^sed. 
f^anufacturers report that full capacity production could be reached after approximately 
four months but employment benefits of increased orders would be felt quickly both at 
the manufacturing site and at the locations of a large number of component and 
subsystem suppliers. A substantial 'ramping-up" of standard-size bus production can be 
accomplished during Calendar Year 1993, but full production for the remainder of 1993 
requires early approval of an infrastructure or economk: stimulus program. 

Mechanism for Distribution of Funds 

It is important to note that the Fiscal Year 1993 transit appropriation of $3.8 billion 
substantially underfunded the transit program when compared to the fully authorized level 
of $5.2 billion. More than $1.1 billkxi of this shortfall occurred in the formula program, 
which is distributed to each urbanized area as well as small urban and rural areas through 
sections 9, 18, and 16(b) of the Federal Transit Act. On average, this actually produced 
a 14 percent cut in each recipient's formula funding in Fiscal Year 1993 compared to 
Fiscal Year 1992. These funds are normally used for routine capital replacement needs. 

Given the response APTA has received to this and other surveys, we believe that 
the section 9, 18, and 16(b) formulas represent a fair and equitable method of distributing 
short-term economic stimulus funds provided through a Fiscal Year 1993 supplemental 
appropriation. A supplemental appropriation would normally be apportioned to or be 
available for grant requests from all transit agencies, not just agencies reporting projects 
in this or other surveys. We believe virtually every recipient of these funds would be able 
to utilize them in a reasonable period of time with an emphasis on job creation projects. 


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Appendix One 
Facsimile Survey Request 

Sent 9:00 a.m. February 2, 1993 

To: APIA U.S. Transit System Members 

From: Jack R. Gilstrap, Executive Vice President 

Subject: Ready-to-Go Projects: Urgent Information Request 

We have had an urgent information request from the U.S. Conference 
of Mayors to provide information to the Clinton Administration on 
"Ready-to-Go" transit projects by close of business on February 4. 
The request was made personally by Federico Pena, Secretary of 
Transportation, and the information we provide will help shape 
Administration proposals for a short term economic stimulus 
package. For purposes of this survey, "ready-to-go" means a 
project for which funds can be obligated within 120 days and the 
project will be finished within calendar 1993. 

If you have such a project or projects, please answer the questions 
set out below and FAX your response to John Neff by COB February 4. 
FAX number (202) 898-4049, or if you have questions please contact 
Mr. Neff at (202) 898-4112. APTA will develop a response for all 
APTA members. 

For each project please supply, in the order listed, the following 

1. Description: (Be brief) 

2. 1993 funding needed: 

3. Number of days needed to obligate funding: 

4. Potential 1993 jobs: 

5. Employment potential beyond 1993: 

Note: All projects listed must have completed all necessary local 
approval processes, such as engineering and environmental reviews, 
and be able to move forward immediately to obligate funding within 
a maximum of 120 days and complete construction within calendar 

Thanks for your help. 

68-623 O— 93- 





Transit Agenclaa NecKl and Can Spend $7 Billion 

of Additional Federal Funds Creating 

405,000 New Jobs During Flsdal Year 1993 

Transit agencies can spend $7 billion dollars h new federal funds during Fiscal 
Year 1993 If additional federal funds are made available. 

This Is in addition to $4.6 billion in federal funds currently available to transit 
agencies from all federal sources during Fiscal Year 1993. 

Tna $7 billion in additional federal funding would result in 405,000 Jobs, directly and 

Nearly 40 percent of the needed funds are for jransit vehicles to replaoe over-age 
buses, vans, and rails cars. The additional $ii2 billion of federal funds for buses 
and vans woUd purchase 8,370 more vehiqies. These buses and vans are 
urgently needed to replace expenslve-to-malnt^in vehicles currently In service and 
to provide vehicles to meet the requirements of ^he Americans with Disabilities Act. 

o Full appropriation of the intermodal Surface Transportation Efficiency Act (IStea) 
authorization for Fiscal Year 1 993 would have f^ovlded $1 .6 billion of the additional 
funds transit agencies could spend this year, i Full appropriation of ISTEA would 
also provide an additional $105 million for research and training, administration of 
the transit program, and grants to social servipe agencies. 

Transit Agencies Expeet to Speiid $4.8 Biaion 
In Currently Available Funds Durlnfj Rsoal Year 1903 


Transit agencies expect to spend over $4.8 sllHon dollars in already available 
federal funds during Rscal Year 1893. These expenditures include funds appropriated 
to the Federal Transit Administration (FTA) fbr Rscal Year 1993, carry-over funds from 
previous years' appropriations that have not yet t>i^n obligated, flexible funds from 
Federal Aid Highways appropriations transferred tb transit use In accordance with 
provisions of the Intennodal Surface Transportation EffWency Act (ISTEA), axl funds from 
other federal agencies used for transit purposes. ' 

The federal funds will be spent for a variety ofi purposes. Fifteen percent of the 
expenditure is plarwied for operations, 17 percent for riew buses and vans, 23 percent fbr 


new start flxed-guideway system Infrastructure, 17 pBrcent for modernization of existing 
fixed-guldeway systems, 2 percent for new rail cars, 17 percent for other new buildings 
and facilities, and 10 percent for other capital purposes. 

Transit Agencies Need and Can Spj»nd an Additional 
$7.0 Billion In Federal Funds During Fiscal Year 1993 

Transit agencies could spend an additional $7 billion In federal funds during Fiscal 
Year 1993 for maintenance and operations, to buy capital equipment and build 
infrastructure, to Increase service to meet federal rtiandates, and provide Increased 
service demanded by growing communities. The fiinds would be spent for the wide 
variety of uses shown on Table 1 . 


Use of Funds 


Percent of Funds 


$1.49 ttllllon 


Buses and Vans 

1.23 bflllon 

17.1 % 

Other VelTlcles 

1,5J) billion 


Rxed-OuWoway Modernization 

1.10 billion 


New Starts billion 

7.1 % 

Other FacliKles 

O.ej) billion 


Other Purposes} billion 



7.04 billion 

100.0 % 

Funds that can be expended include 20 percent for operations, 39 percent for 
buses, vans, and rail cars, 1 7 percent for fixed-guldew^y modernization, 7 percent for new 
start fixed-guldeway construction, and 17 percent |for other capital purposes.' This 
distribution of needs is different from the way federal fqinds already available are projected 

to be spent. j 


A larger percentage of expenditure would beidirected toward new vehicles and 
operations arid a smaller percentage for fixed-guideway new starts, other facilities, and 
other capital purposes. Although this shift reflects in! part the needs of transit agencies, 
it is also a recognition of the purposes for which junds can be most quickly spent. 
Survey respondents were restricted to reporting only needed federal funds that could be 
spent by the end of Fiscal Year 1993 or for which corttracts for capital projects could be 
signed and work begun before the end of Fiscal Ye^r 1993. 

Rgure 1 shows the amount of additional funds! that could be expended compared 
to available funds by use. Transit agencies could sfjend a total of $2,0 billion for flxed- 
guideway modernization, 148 percent more than the amount available from all federal 
sources. Potential expenditures of $2.2 billion for operations are 192 percent more than 
available federal funds, of $3.6 billion for new veilicles are 305 percent more than 
available, and of $4.1 billion for new Infrastructure are 70 percent more than available. 



Mo49calt«lioD Opvcatlon* 

■•4 ■•> 

V«hi«l** I nf I • • t rur tu I < 

Addltloial rg4«iil ruadt Thtt C>> t« Sptit 
Avillibl* r*dii>l rundi 

, . _J : — 

The Additional Spending Would Create 405,000 Jobs 

Additional federal funding of $7 billion would result In an additional 405,000 jobs 
with each Job equal to one person-year of employment, The Jobs created include both 
direct employment by transit agencies and In Industrie^ providing goods and services and 
building infrastructure for transit agencies and indirect Jobs resulting from the effects of 
those expenditures In the economy. • 

Approximated 58,(X)0 Jobs are created for each $1 billion of transit spending. The 
number of Jobs created by specific use of additional trpnsit spending are shown on Table 
2. Investment In operations has the greatest potential for rapid Job creation and creating 
the largest number of Jobs. Spending for operations results in 68,000 Jobs per $1 billion 
while capital investment results In 53,000 to 57,000 Jobs per $1 bdlllon. 

The Job creation potential of transit projects iS estimated by APTA using input- 
output analysis techniques. Other researchers hav^ described the positive impact of 
transit Investment on the economy. Michael Renner of the WorldWatch Institute has 
described German studies showing light rail track construction generates up to 64 percent 
more Jobs than highway construction.^ 

The Urban Institute has found that shutting down the Southeastern Pennsylvania 
Transportation Authority (SEPTA) which employs 9,250 persons would result In a long- 
term loss of 175,000 Jobs throughout Pennsylvania.* Economist David Aschauer has 
found that investment In transit Infrastructure has mpre potential to stimulate long-run 
economic grovrth than does highway spending.' 




— — . , — . 

Use of Funds 

Funding In Bllllone 
o( Dollars 

Jpbs Per Billion 
: Dollars (a) 

Total Jobs 





Busaft and Vans 




Other Vehicles 




FIxed-QuWeway Modernization 




N6W 6uin« 


j 55,000 


All Olher Capital 








(a) Direct and Indirect job* equivalent to one person ye^r of omploynient. 

An Additional $2.7 Billion Can Bo Speint for Vehicles, 

$1.4 Billion for Operations! and 

$2.9 Billion for OUier CapitalJNeede 

The use of additional federal funds would vary between types of transit agencies. 
Medium size bus systems would use 38 percent of add tlonai funds for operations wlille 
larger bus systems, rail systems, and small bus systems' would use only 18 to 19 percent 
of additional funds for operations. Table 3 shiows the percent of additional funds needed 
by purpose for three groups of transit systems. 

"nie first grouping Is large bus systems which owi|i or lease 501 or more buses and 
vans, any system operating only rail cars or ferry boats, and multi-modal systems 
operating any number of buses and vans plus three or more rail cars, trolley coaches, or 
ferry boats. The second group Is medium size bus only systems which own or lease 151 
to 500 buses and vans. The final group is small bus 6nly systems which own or lease 
150 or fewer buses and vans. 


Use of Funds 


Multi-Mode, Rail, 
and Large Bus 

Type pf Transit System 



Medium Bus Only 


Small Bus Only 


Buses and Vans 




Other vehtdes 




Rxed-Guldeway Modernization 




New Starts 




Other Facimias 





7 1 % 


The primary need for small and medium size blis systems is for buses and vans. 
Medium size bus systems would spend 49 percent of additional federal funds for buses 
and vans, and small bus systems would spend 55 percent for buses and vans. Larger 
systems would still spend 10 percent of their funds foi* buses and vans but would devote 
26 percent of additional funds to purchasing rail cars and other vehicles. The small 
percentage of funds designated for "other vehicles;' by medium size and small bus 
systems is for service vehicles such as tow trucks ar)d dispatcher vehicles. 

The Additional Spending Would Buy 8,37(1) New Buses and Vans; 
Even Including Buses and Vane Thai will be Bought with Available . 
Funds, 60 Percent of Bus and Van Need^ Would Still Qo Unmet 

The additional $1.2 billion that would be spent fdr buses and vans would purchase 
approximately 8,370 new vehicles of all sizes. If the nlimber of vehicles by size Is in the 
same proportion as Federal Transit Administration-fuhded vehicles were in Fiscal Year 
1991, the additional funds would provide for 4,110 ftjll size buses of 35 feet or longer, 
1 ,820 small buses of 30 feet or shorter, and 2,440 vahs.'' This number of vehicles also 
assumes the deferral of state and local matching funds. If state or local matching funds 
are also included, the number of vehicles would be greater. A larger number of vehicles 
of any size could, of course, be purchased with a redaction in the number o( vehicles of 
other sizes purchased. j 


As of January 1, 1992 there were 12,400 full sizb buses, 2,800 smaller buses, and 
4,400 vans being operated that were older than their ebonomically useful lives as defined 
by the Federal Transit Administration. Over age vehidles are not reliable, are expensive 
to maintain, end because they are expensive to maintain are used only when necessary 
while new vehicles are Intensively used and wear out npore quickly than necessary. New 
vehicles that meet the requirements of the Americans with Disabilities Act and The Clean 
Air Act increase mobility for the transit dependent arid reduce air polluting emissions. 
APTA estimates that transit systems will also need i)p to 7,500 more vans and small 
buses to meet new mobility requirements recently riiandated by the Americans with 
Disabilities Act. | 

Approximately 3,500 buses and vans are expe;cted to be ordered In Fiscal Year 
1993 with already-available funds. Even if those vehicles are added to the 8,370 that 
would be bought with additional funds, less than 40 percent of the buses and vans 
needed to meet ADA mandates, replace over age vehicles, and replace vehicles that will 
exceed their economic life this year will be purchased! The $1.2 billion additional funds 
for buses and vans is only a portion of the funds needed to bring America's bus and van 
fleets to acceptable standards. \ 

These numbers exclude a portion of vans needdd for use by social service or other 
agencies eligible for Federal Transit Act Section I6(b|) funding for elderly and disabled 
special services. On average over the past six years, |the Federal Transit Administration 
has funded 1 ,400 to i ,500 of those vehicles. Becauie a very limited number of these 
agencies are APTA members, funds and vehicles for th^eir use are not fully included in this 
projection. Full appropriation of the Fiscal Year 1993 aLJthorlzation of the transit program- 
as proposed by APTA-would provide funds for an additional 650 vans for Section 16(b) 
service providers beyond those Included In this report. 


Full Funding of ISTEA Would Provide $1.5 Billion 
of Additional Funds for Transit Agencies 

Transit appropriations in Fiscal Year 1993 werb $1.6 billion less than the amount 
authorized by the Intermodal Surface Transportation efficiency Act. Of that amount, $1 .5 
billion is authorized for transit system uses and $100 fnillion Is for research and training, 
Federal Transit Administration operations, and vehicles for social service agencies. APTA 
supports full appropriation of ISTEA as an essential j goal In federal support of transit. 
Even if, however, ISTEA were appropriated at fully buthorized levels, transit agencies 
would still be able to spend an additional $5.5 billion; during Fiscal Year 1993 to create 
Jobs and improve America's infrastructure. 


Figure 2 shows the uses of additional funds fr6m a fully appropriated ISTEA and 
the additional amount transit systems could spend beyond full appropriation of ISTEA 
The additional $231 million tiiat would be available for operations from full appropriation 
of ISTEA is 16 percent of the amount that can be sp^nt, $90 million for new starts is 18 
percent of the amount that can be spent, $146 milllori for fixed-guideway modernization 
Is 12 percent of the amount that can be spent, and $1] billion for other uses Is 27 percent 
of the amount that can be spent. I 


S ' 


Idilltlonil fundi X«sd>d OVtt ISTtt L9v*lt 


ISTEA Shoitfgll of Aithoilizasd LtT«l« 

Survey Results Are Estimated From Data From 113 APTA Members 
Operating 69 Percent of Trarisit Vehicles 

The amounts reported for transit systems' ability to spend additional funds In Fiscal 
Year 1993 are based on responses by APTA memberb to a survey distrlbuied at the end 
of October 1992. The survey asked each participant t{) identify (1) the amount of existing 
federal funds they anticipate spending in Fiscal Year 1993, I.e., amounts already 
apportioned or earmarked for their use and other fiinds they expect to receive from 
successful grant applications; and (2) of additional furi'ds they could spend In Fiscal Year 
1893. The local match for additional funds was assuhied to be waived for capital uses 
for at least two years but not waived for funds us^d for operations. Spending was 


defined as the actual outlay of operating funds and j the signing of contracts or other 
instruments of obligation for capital funds that would allow contractors to commence wori< 
and create Jobs. i 

Responses were received from 113 APTA merrjber partidpants. Responses were 
solicited from all of the largest multi-modal transit systems and from e sample of other 
systems. The responding systems own and lease 69 percent of all transit vehicles 
operated by APTA members. APTA-member transit systems provide approximately 97 
percent of all U.S. transit ser^^ice. I 


Data from respondents was expanded to estimated totals for all transit systems In 
five categories of systems In order to account tor thej variation In needs between types 
of transit systems Identified by vehicle mode and slz^. Those categories were (1) very 
large multi-modal transit systems wliere data was Obtained from all identified transit 
systems, (2) other multi-modal and all rail-only systemi, (3) large bus and van only transit 
systems, (4) medium size bus and van only transit systems, and (5) small bus and van 
only transit .«;ystBms. ! 

Information was also requested in an open encjed format about any Impediments 
transit systems face in spending federal funds that Vesult from federal regulations or 
procedures and what the effect Is on their system of ithe 14 percent reduction in transit 
formula fund appropriations In Fiscal Year 1993 contrasted to Fiscal Year 1992. 

i . 


These Survey Results Are Cot^sistent With 
Studies Of Long-Term Transit Needs 

This survey identified $4.8 billion in federal furids that transit systems anticipate 
spending in Fiscal Year 1993 plus $7 billion in additional federal funds that could be spent 
for a total of $11,8 billion dollars in federal funds thalt could potentially be spent. This 
amount of federal funds that transit systems report ttjey can spend In Fiscal Year 1993 
is consistent with other estimates of transit system fujiding needs. 

An APTA proposal for reauthorization of federal kransit legislation called for eventual 
program growth to $11 billion in 1991 dollars.* In 1993 dollars this amount would be 
approximately $11,9 billion, almost the exact amoun predicted by the Ability to Spend 
Survey. The proposed level of $11.0 billion in 1991 dollars was based on a model of 
investment required for long-term nationwide growth irt transit riderstilp to levels achieved 
in the most transit Intensive U.S. and Canadian cities with ridershlp goals stratified by 
population size. { 

An APTA survey of long-term Investment needs In mid-1991 projected an average 
need for $15 billion In capital funds from all sources over the following six years.* with 
standard capital grant matching ratios of 80 percent of, funds from the federal government 
and 20 percent from state and local governments, this Is an average need for $12 billion 
In federal capital funds. The Ability to Spend Survey ekimates transit systems can spend 
a total of $9.7 billion In federal capital funds in Fiscal Year 1993 out of the total $11.8 
billion, somewhat less than the average long-term need. 

The U.S. Department of Transportation has isjsued several studies that support 
transit's needs for funds for specific uses. The Office of The Secretary estimated that the 
additional annual cost of compliance with provisions of the Americans with Disabilities Act 
Is up to $628 million for operations and $310 for venicles and capital improvements.^ 
The Federal Transit Administration estimates that on average $1.7 billion (1991 dollars) 
will be needed annually for fixed guldewey modernization over the next decade.* In 1993 


dollars this amount would be approximately $1.9 bllllbn, slightly less than the $2 billion 
transit systems report they would be able to spend Iq Fiscal Year 1993. The FTA study 
does not, however, include relatively smaller fixed-guidev/ay operations in 10 urbanized 
areas that received fixed-guideway apportionments fro^ Fiscal Year 1993 appropriations. 

The Federal Transit Administration has estimated a need for over $10 billion in 
federal funds to complete new start fixed-guldeway projects that had advanced to at least 
the alternatives analysis stage.* Only a portion of this iamount can be spent immediately, 
however, dependent upon the stage of development of individual projects, because of the 
large scale and complex nature of their constructlc|n. The Ability to Spend Survey 
projection that transit systems can spend $1.6 billion in Fiscal Year 1993 indicates a 
reasonable six plus year average to complete all llste^ projects. 

Federal Transit Pundlnd Has 
Declined Substantially In Pad 12 Years 

Federal funding for transit has declined sigr ificantly over the past 12 years. 
Measured In today's dollars, the Fiscal Year 1981 feceral transit program of $4.6 billion 
has a value of $7.4 billion. As show on Figure 3, the value of the program measured m 
1992 dollars declined to $3.4 billion In Fiscal Year 1990 and has only returned to $3 8 
billion in Fiscal Year 1993. The real value of the federal transit program is now only 52 
percent of its value in Fiscal Year 1981. 

The decline in the real value of federal operating assistance has been even greater. 
Operating assistance for urbanized areas in Fiscal Yeal- 19B0 was $l.i billion which would 
have a real worth of nearly $1.9 billion in 1992 dollars. The actual limit on operating 
assistance In Fiscal Year 1993 Is $802 million, a decline to 43 percent of the real value of 
operating assistance since Fiscal Year 1980. in 1980, federal assistance from all 
programs represented nearly 17 percent of all transit operating funds while In 1991, 
federal assistance accounted for less than six percent of transit operating dollars. 




Fiscal Year 1993 Reductions In Fiscleral Formula 
Funds Havo Hurt Many Transit Agencies 

Survey participants were asked in an open end 3d question to describe the effects 
they are experiencing from the 14 percent reduction; of federal formula funds In Fiscal 
Year 1993, contrasted to Fiscal Year 1992. Respor^dents reported problems in both 
operating and capital financing, compounded by the c(j»sts of new federal mandates of the 
Clean Air Act and the Americans with Disabilities Act.j 

Difficulties financing capital purchases, especleilly regular bus and van purchases, 
were the most frequently cited negative effect. Inadequate funding for replacement and 
expansion of bus and van fleets will cause difficulty In Innpiementing service to comply with 
the Americans with Disabilities Act and the Clean Air Act. Without the ability to buy new 
buses many communities will not be able to meet Increased demands for service, forcing 
potential riders to continue to depend upon expensive private transportation. The gradual 
decline transit systems are experiencing In their ability to replace worn out equipment or 
expand service is the same situation that forced privajte operators out of business In the 
19508 and 608. The continued use of old vehicles (increases maintenance costs and 
causes service to become less reliable and less saf^, a vicious cycle that discourages 
ridership end increases future costs to pay for today's mistakes. 

Capital improvement budgets also are being strained. Facilities cannot be 
Improved to take advantage of technological Improvements. New communication 
systems that Improve the efficiency of operations, (ar^ collection system Improvements, 
and automation are being deferred by many systems. Lack of capital investment reduces 
the potential for productivity Improvements In transit system operations. 

Lack of growth In federal operating funds Is forcing many transit systems to 
increase fares, increase local financial assistance, or reduce service. Fare increases and 
service reductions are, of course, counterproductive qind Increase the cost to individuals 
and local governments. Even transit systems that aje able to get by v/ithout reducing 
service or raising fares are making cuts in other activities such as training and advertising. 
Although hidden, these cuts have a serious, long-term effects because the quality of 
employee performance can deteriorate without training and a system's market share can 
drop if the public is not aware of services offered, j 

Many transit systems that are fortunate enougli not to be affected this year noted 
that continued low levels of federal funding will affect ithem next year. Systems making 
up operating funds from reserves will use up their reserves and be forced to find funds 
from other sources or cut service. Almost all respondents have experienced or expect 
a negative effect from the reductions In federal formula funds. 

Other Federal Actions Could Spe^d Up Spending 

Rapid spending of Increased federal funding tjy transit systems would be much 
easier If a number of activities that are now viewed as ifnpeding the process are modified. 
Respondents were eisked to identify changes In ; current federal regulations and 
procedures that would aid them in the rapid spending bf the additional federal funds they 
need. Their responses resembled a check list of hearly all federal regulations and 
procedures that applied to transit. One respondent noted that ail federal regulations 
Impede spending. The following list summarizes recurring responses: 


o Required approval of local Transportation lmprc|vement Programs at the state level. 

o Failure of the Federal Transit Administration to fully implement the Uke-Klnd Bus 


o Delays by regional Federal Transit Administration staff In processing grant requests. 
Some systems suggest this is due to a tack of an ad equate size staff In Federal Transit 
Administration regional offlcee. 

o Routine Federal Transit Administration revisions of requirements for a granl 
application. The Federal Transit Administration does rjot have clearly defined procedures 
for grant applications. Unclear procedures result In requests for additional material that 
seriously delay the grant process. 

o Slowness of the grant amendment process ancj requiring amendments when only 
simple changes in a grant are required. 

o Spare ratio requirement prevents acquisition \>i new buses without first retiring 
existing buses. 

o New pre-award/post-dellvery audits are eMremely complicated and time 

o Department of Labor delay In review and approval of 13(c) agreements that have 
been signed and approved by ail parties. ' 

o The application of Buy America requirements to all purchases. 


o Slow processing of Letter Of No Prejudice requests. 

o Federal Transit Administration policy of releasing funds on a quarterly cycle delays 
funds that are ready to go before the end of a quarter. 

o Bus testing for medium and small buses Is 4n excessive expense and delays 


1 . Michael Renner. Jots In a Sustainable Economy, WorldWatch Paper 104. Washington: 
WorldWatch Institute, 1991. 

2. Public Transportation Renewal as an Investment: 7pe Economic Impacts of SEPTA on 
the Regional and State Economy. Washington: Th^ Urban institute and Cambridge 
Systematics, Inc., 1991. 

3. David Alan Aschauer. Transportation Spending ai\d Economic Growth. Washington: 
American Public Transit Association, 1991. 

4. 799T Statistical Summaries, Grant Assistance Programs. Washington: U.S. Department 
of Transportation, Federal Transit Administration, 1992. Tables 41 and 44. 

5. Reauthorization Proposal for the Federal Putfllc Transportation Act of 1991. 
Washington: American Public Transit Association, February 1991. 


6. Public Translt'-Souna Investment for tne 21 st Cenkiry. Washington: American Pubiic 
Transit Association, August 1991. | 

7. Final Regulatory Impact Analysis Assessing the National Compliance Costs of the 
Department of Transportation's Final Rule Implementlhg the American's with Disabilities 
Act of 1990 Surface TronsportatJon Accessibility ftequfrements. Washington: U.S. 
Department of Transportation, Office of the Secretary| November 1991. 

8. The Status of the Modernlzaiion of the Nation's RallTransit Systems. Washington: U.S. 
Department of Transportation, Federal Transit Administration, June 1992. 

9. Report on Funding Levels and Allocation of Funds. Washington: Department of 
Transportation, Federal Transit Administration, June iggz. 



To Members of the American Public Transit Association and Users and Supporters of 
America's Public Transportation Systems: 

My best wishes to you on the occasion of your Annual Meeting in San Diego. With only 
days left before the election, I firmly believe that we are on the threshold of a new era 
for public transportation. 

In traveling throughout the nation. Senator Gore and I have seen firsthand a hunger for 
new ideas and new leadership to put our nation back on course. We cannot move 
America into the 21st century by relying on past policies and programs, or by further 
diminishing federal attention to national transportation needs. Our competitors around 
the world have certainly learned this lesson and are making extraordinary investments in 
a new generation of integrated, multi-modal transportation systems that rely heavily on 
high-occupancy, high-technology passenger transportation services. 

Accordingly, we must introduce a builders agenda into our 21st century national 
transportation policy. It will be essential to expand the role of public transportation in 
this agenda, and I ask for your help and support as we move ahead. 

Improving public transportation is an essential element of a larger, essential commitment 
to rebuild Americas crumbling infrastructure and revitalize our communities. Already, 
through your industry's leadership and foresight, despite a decade of neglect and hostility 
by two successive Administrations in Washington, a new era in public transportation has 
been launched in America. I see the evidence all across the country. Yet there is more 
that must be done, and competing transportation interests must come together in the 
effort. Metropolitan and rural transit, commuter rail, high speed rail and community- 
based services must be expanded and fully integrated as part of tomorrow's surface 
transportation system. 

In addition, I am keenly aware of the enormous potential of the Intermodal Surface 
Transportation Efficiency Act of 1991 to serve as a catalyst to spur long overdue 
investment in our surface transportation system, and in public transportation in 
particular. I strongly support full funding of ISTEA and the flexible local decision- 
making that is the hallmark of the bill. 

Your industry's strategic objective - to enhance mobility and assure a better balance 
among the transportation options available to every American - is entirely consistent with 
the broader goals we all share. These include economic and productivity growth, job 
opportunities, energy conservation, clean air and improved access for disabled 

For us to make meaningful progress, however, our national leadership must recognize 
and act on these coimertions too, and it is my intention that we do so. ISTEA and the 
commitment of inspired and dedicated leaders around the country have already launched 
a new era in public transportation in community after community, both urban and rural. 
The challenge to a new Administration - a challenge I intend to meet fully - will be to 
enhance, and to guide, and to enable you and the people you serve to fully realize the 
enormous potential of public transportation as we enter the 21st century. Our goal for 
transit will be to add resources, to remove barriers, to catalyze partnerships and to instill 
a new ethic based on the value of moving together. 

I applaud your ongoing efforts to move us in this direction and look forward, beginning 
next January, to your help in building an Administration that will serve as a strong ally 
and advocate for enhanced public transportation across America. 

7W <?ftiujto.r^ 

Bill ainton 




Ease of movement is vital for every American and for the businesses and industries that create the nation's wealth. 
In many ways, our ability to travel is a measure of our quality of life and the competitiveness of our economy. 

Today, our ease of movement is severely threatened. Major cities are regularly gridlocked, resulting in waste 
of energy and serious air quality damage. Suburbs are clogged throughout the day with traffic. The increasing 
isolation of rural residents is all too commonplace. 

Inadequate public investment in transportation 
lies at the heart of the problem. In particular, we 
have failed to plan and invest adequately in the most 
fundamental mode of transportation; public transit. 

• Between 1992 and 1997, transit will require $90.8 
billion in capital investment. 

• Tiransit systems will need 63,800 new vehicles and 
another 29,930 rehabilitated buses and rail cars. 

If transit capital funding from the federal gov- 
ernment continues at the current level, only 
16% of transit's capital needs will be met. 

• $17.1 billion will be necessary to modernize bus 
and rail facilities. 

• Forty-eight metropolitan areas in 29 slates are 
planning new fixed-guideway rail and busway sys- 
tems or extensions. 

• Between now and 1997, transit operations and 
maintenance will require $100 billion. 

Today, more than at any other time in recent his- 
tory, America's public transit systems and services 
should be upgraded and expanded. 

The Problem: Lack of Investment in Transit 

Budgetary decisions made by the federal govern- 
ment have led to inadequate investments in Ameri- 
ca's public services and facilities, its infrastructure. 

Percent of Total Transit Funding From 
Federal Assistance, 1981-1989 

1981 19B2 19B3 1984 1985 1986 1987 1988 I9B9 

The Value of Federal Funding for Transit Has 
Decreased 53 Percent In the Past Decade 

1981 Funding: 
$4 66 Billion 

1991 Funding: 
$2.18 Billion 
In 1981 Dollars 

hR ' 

Overall investment in the U.S.'s public infrastruc- 
ture, including transit, is in a 20-year decline. 
In the ten years since 1981, as transit ridership 
increased, federal transit funding declined 53%, 
adjusted for inflation. 


Tomorrow's Problem: Addressing New National Priorities and 
Telling Trends 

Increased investment in public transit is essential. 

Consider these trends. 

• The number of vehicle-miles we travel are growing faster than both population and the number of vehicle 

• The era of massive highway construction is over. Between 1984 and 1988, vehicle-miles travelled increased 
more than four times faster than the number urban freeway miles built. 

• The U.S. Department of Transportation estimates that annual total vehicle delays will exceed 3.9 billion 
hours by the year 2005. 

• Transportation uses 63% of our oil and is the only sector of the economy where oil consumption continues 
to increase. 

• America's population is changing. An older, more diverse workforce will be more dependent on public 
transit. The needs of disabled persons must also be served. 

Ttansit is proud of its role in achieving clean air and broader service to the disabled, but new national 
priorities in these areas carry a substantial price tag. 

The Cost o( Accessibility 
for Disabled Persons 

The U.S. Department of Transportation esti- 
mates the national, annual cost to comply with 
the Americans with Disabilities Act of 1990 
(ADA) ranges from $844 million to $1.3 billion. 

The cost covers proposed lifts on buses, mak- 
ing key rail stations, transit centers and rail cars 
accessible as well as developing paratransil 

The Cost of Transit's Flole 
In Achieving Clean Air 

The Clean Air Act of 1990 requires reduced 
vehicle emissions. The annual cost to install 
exhaust cleaners and upgrade fuel is $110 mil- 
lion. One nationwide survey* of transit systems 
found that installation ol particulate traps on 
the U.S. bus fleet would cost an estimated $522 

'The S522 mWion represenls the additional costs ot the traps on new buses 
when they are brought (nio use. Based on a 12-year reptacemeot cycle, ttie 
cost pef year would t»e approximalely $44 million. 
Additional diesel fuel costs per year are estimated to be $56.6 million. 
Source: Southern Calilornia Rapid Transit District. 

Six-Year Transit Investm.ent Needs: $90.8 Billion 

The backlog of transit investment needs contin- 
ues to mount for two reasons; I) the ten-year decline 
in federal funding; and 2) the increasing demand for 
transit service. 

Because of inadequate funding, essential rein- 
vestment in existing transit systems is not being 
made, and service improvements are being slowed 

or deferred. In some areas, service reductions are 
becoming commonplace. 

Equally important, efforts to add new transit capac- 
ity have been stymied by lack of funds. The needs 
cited here show the size of the funding commitment 
that should be made to public transit for the next six 


Transit agencies will require $90.8 billion' in capital funding from 1992 through 1997 in order to 
satisfy their communities' mobility needs. 

Transit Capital Needs 1992-1997 Capital Needs by Mode, 1992-1997 

(Millions of Dollars) (Millions of Dollars) 

MolcM BusA/an 

New FIxedGuldeway 

Modeinl7Bllon of eus/-^.^^ 
and Rail Facililles: / ^\^ 
J17.I00 / ^^ 

— ■'^\ New Bus Facililles: 
\ .^— -^^ »5.600 

Heavy Raw: / 
$27,700 / 


\ \ ^^^'y^hef Capllal Needs 



Vehicle RehablWallon: 


Commuler Rail 

Total Needs: $90,800 Million Total Needs: $90,800 Million 

New Bus Facilities: $5.6 Billion 

As transit systems continue to provide current services as well as offer new ones, a variety of new bus 
facilities will be needed. Between 1992 and 1997, $5.6 billion is needed to build these bus facilities: 

• 280 terminal/transfer centers 

• 130 maintenance and repair shops 

• 95 storage facilities or garages 

• 45 administrative offices 

• 590 parking structures for transit passengers 

'Source Oala summarized in this paper Is drawn Irom a comprehensive, nationwide survey ol Iraruil systems, conducted In 1990 by the American Public 
Transit Assoclatloo The survey requested transH systems 1o IrKlude all tunds the systems would nr^ed to meel their communtlies' reoulremenls lor public 
transportation Improverr^ents Irom 1992 through 1997; H is not Imlled by what Ihey thought lundlng levels would be based on current lurking trends. The 
mastmum lederal assistance portion (current law) is 60% or $12 billion per year ($90 billion - six years.. $15 billion per year x 60% -$12 brllion per year) 


Modernization of Existing Bus and Rail Facilities: $17.1 Billion 

Comfortable, convenient and efficienl transit service requires a wide range of support facilities and up-to-date 
equipment. Between 1992 and 1997, $17.1 billion is needed to modernize: 

• 450 facilities 

• 880 stations 

• 1,230 miles of rights-of-way 

New Vehicle Needs For Existing Services: $16.8 Billion 

Between 1992 and 1997, transit authorities will 
require $16.8 billion in new vehicle investment for 
existing services plus $3.9 billion for vehicles for 
new Fixed-guideway routes and extensions; a total 
of $20.7 billion for new vehicles. 

Total New Vehicle Re< 









Heavy Rail 


Light Rail 


Commuter Rail 






Buses are truly the workhorse of public transit. 
They carry 64% of the nation's transit passengers 
and are responsible for 51% of passenger miles. 
Through 1997, new bus needs total $12 billion. 

Rail transit, defmed as light, heavy, or commuter, 
carries p.issengers longer distances. Rail accounts 
for 36% of all transit trips and 49% of total passen- 
ger miles. The percentage of pas.senger miles on rail 
is increasing every year. Rail transit carries more 
than 10 million passengers an average of 65 million 
miles each weekday. Rail transit is least damaging 
to the environment and most energy-efficient. 

Through 1997, new rail vehicle needs for existing 
service are $4.8 billion and for new fixed guideway 
systems and extensions are $3.9 billion. 

Transit Vehicle Rehabilitation: $3.5 Billion 

Rehabilitation is a cost-effective way to extend the life of transit vehicles. A sound rehabilitation program 
can add six years to the 12 year useful life of a bus and 15 years to the 30 year average life of a r.iil car. 
Between 1992 and 1997, $3.5 billion is required to rehabilitate: 

• 18,570 buses 

• 11,360 rail cars (heavy, light and commuter) 


Fixed Guideway New Starts and Extensions: $30.1 Billion 

Transits greatest advantage lies in high-capacity 
services operating on exclusive rights-of-way, includ- 
ing commuter rail, light rail (also known as modem 
trolleys), subway systems and exclusive bus and 
transilways. Eight major urban centers with a long 
history of rail transit continue to benefit from this 
investment and seek to expand or modernize their 
systems. Another ten urban areas built fixed-guideway 
transit in the past 15 years. All seek to expand them. 
Forty-eight cities in 29 states plan new or expanded 
fixed-guideway systems, either rail lines or busways. 
These include 1,770 miles of rights-of-way, 2,400 
rail cars, and 830 stations. 

Capital investment needs for new fixed-guideway 
(rail and bus) transit services between 1992-1997 
totals $30.1 billion including $3.9 billion for the 
necessary vehicles. 

• $1.4 billion for busways and high occupancy 
vehicle (HOV) lanes 

• $3.5 billion for commuter rail 

• $9.7 billion for heavy rail 

• $13.5 billion for light rail 

• $2.0 billion for related capital facilities 

Urban Areas Constructing, Planning, or 

Investigating New or Expanded Fixed-Guldeway 

Transit Investments 

Otiier Capital Investment Needs: $17.7 Billion 

To ensure top quality service, an additional $177 billion in capital investment is needed. These dollars are 
needed to purchase a wide range of capital items including service vehicles, computers and systems for fare 
collection and communications. 

Support of the Capital Investment: 

$100 Billion for Maintenance and Operations 

Capital investment by itself is not enough to ensure efficient, effective service. Day-to-day maintenance and 
operations require a stable and reliable major financial commitment. 

Today, maintenance and operations of the nations transit systems require an investment of $15.7 billion per 
year, of which seven percent is from the federal government. Operating today's systems between 1992-1997 
will cost nearly $100 billion in current dollars. As transit systems offer both expanded and new services to 
meet new passenger demand, increased support for operations, as well as capital, will be required. 





The mobility challenge facing the nation 
demands immediate attention. If we are to 
move freely in the 21st century, we should 
begin now to provide major increases in fed- 
eral transit investment. 

$90.8 billion in total capital needs between 
1992-1997 translates into a $12 billion annual 
federal funding program if the federal share 
is maintained as in current law. Today, how- 
ever, federal capital funding is about $2 bil- 
lion per year. 

To prepare for the 21st century, we should: 

• Redirect transportation spending to sup- 

port expanded transit services; 

• Restore, at a minimum, federal transit 
funding to the 1981 level, $6.5 billion per 
year in today 's dollars; 

• Provide an additional $1.5 billion annu- 
ally to achieve the transit-related goals of 
the Clean Air Act of 1990 and the Ameri- 
cans with Disabilities Act of 1990; and, 

• Increase federal transit investment in the 
decade ahead to $11-15 billion per year to 
support a national goal of increased transit 

For further information on transit planning and investment needs, contact the 
American Public Transit Association or your local public transit authority. 

American Public Transit Association 

1201 New York Avenue, N.W. 

Washington, DC 20005 

(202) 898-4000 




Senator Lautenberg. I just want to ask one question here. 

In these projections — and either Ken Mead or Jack Gilstrap can 
answer — for capital requirements, are these estimates those funds 
needed not only to catch up but to stay abreast of our capital re- 
quirements, or are these for a specific number of years? For exam- 
ple, is it a 5-year program to catch up and then so much in capital 
for maintenance? I ask because there is kind of an inconsistency 
here. Otherwise, what we are saying is, over the last years we have 
not had enough of an investment in the capital side, so we have 
to catch up with that backlog of needs. And what about the future? 

Would either one of you respond, so that, as we continue this dis- 
cussion, we have a frame of reference? 


Mr. Gilstrap. Well, I believe that our APTA recommendations 
are gleaned, as indicated, from a survey of our members of their 
current capital needs and the needs that they see in their various 
proposals for the next 5 years. 

Senator LAUTENBERG. So we are talking about just for the next 
5 years? 

Mr. Gilstrap. Yes, sir; 5 or 6 years, I guess it is. 

Senator Lautenberg. Are all of the parties in agreement? Does 
AASHTO's figure for capital needs contemplate a 5-year plan, or 
something longer, Mr. Francois? 

Mr. Francois. Mr. Chairman, we were looking at an annualized 
cost over a number of years beyond that. But the assumptions 
were, basically, status quo. We did not take into account growth. 
I will talk more about that. 

Mr. Mead. The difficulty here, Mr. Chairman, is that different 
people have different views and get the information about what 
constitutes expansion needs from different sources. 

FTA did not ask communities what their needs were whereas 
APTA did. So, obviously, you are going to get a different figure. 

Senator Lautenberg. It would be helpful if we could conform all 
of these projections with one side, to say, you know, this is to make 
up for what we missed in the past several years and something 
that we think will be virtually an annualized figure. After all, cap- 
ital needs are going to go on as long as systems operate. 

OK. I did not mean to interrupt the flow here. 

Now, Mr. Francois, if you would, proceed. 


Mr. Francois. Thank you, Mr. Chairman. I am Francis B., or 
Frank, Francois, executive director of the American Association of 
State Highway and Transportation Officials. We have given our 
statement to the record, together with some backup documents. So 
I would just take my 5 minutes and try to summarize that a bit. 

First of all, AASHTO strongly believes that we must increase our 
investment in transit. From our examination of our transit needs, 
we have already identified both short- and long-term needs that 
should be addressed. Finally, we support a continuing and ex- 
panded Federal role in financing transit, both for capital and oper- 
ating purposes. 


Now we have provided in our testimony comments from the re- 
cently sent to Congress "Status of the Nation's Highways, Bridges, 
Transit Conditions, and Performance Report" of the USDOT and 
have noted some of the projections for transit expenditure in there, 
which do substantially exceed what we are now doing, obviously, 
as all these numbers do. 

I think GAO has served us all well. The first time I saw this re- 
port was this morning, but table 1 I think is very important in that 
it does do one thing that none of the others do. It states everything 
in terms of 1991 dollars. So at least we do have comparable data. 

Now the work that AASHTO did — and we have outlined that to 
you in the bottomline report and in the backup document to that 
report — from a capital viewpoint, we looked in terms of ranges. The 
low range that we used was one that simply said patch it up and 
keep it running — not an acceptable way to run a transit system, 
but that is a bare, minimum need that you would have to have just 
to stay operating. You will lose customers and you will not be able 
to expand service. 

Our higher level of investment assumed a replacement of the bus 
fleets so that we would get down to an acceptable average age; the 
same with respect to rail mod, et cetera. 

In both of tnose cases, the goal was simply to try to retain the 
current share of passenger transport carried on transit. 

Obviously, if you want to increase the amount of transit usage, 
we must talk in terms of substantially greater investments than 
any of these numbers before you. 

Now that leads directly, of course, into the ISTEA and into the 
Clean Air Act amendments of 1990. All of us know that, as we 
begin to do comprehensive, intramodal planning, the needs for ad- 
ditional transit services will be clearly identified, and we will have 
to find ways to finance those needs. 

We do not yet know what the full impacts of the conformity regu- 
lations will be that will ultimately be adopted by EPA and that the 
Clean Air Act amendments will impose. But, very likely, it is going 
to call for substantial increases in transit carrying capacity. 

If this occurs, there is no question but that the current systems 
will not be able to handle the load. We will then be talking in 
terms of much larger investments. 

This is why I say that, currently, we are looking at simply main- 
taining current share. But if this Nation really wants to move to 
a much larger share, we must have much larger funding. How 
large? It depends upon what the plans are. So it is very difficult 
at this time to even estimate what those costs are. 

Fortunately, the ISTEA, and particularly the STP portion of it, 
does provide flexibility in the use and in the allocation of funds. 
This will allow us, I think, to grow into these new needs. But it 
will take time to reach that point. 

Let me turn now to one other document and then I will quit. We 
also provided to you a copy of our 1992 survey of what the States 
are investing in transit. I think that document may be more impor- 
tant than any other one as to how the States view transit funding. 

The bottom line of that document is that in 1992, the States col- 
lectively invested $6.2 billion in transit, which is considerably more 
than the Federal investment. 


Tables 14 and 15 of that document indicate what the capital lev- 
els of expenditure are, respectively, for urbanized and for non- 
urbanized areas in 1992. In our urbanized areas, direct capital as- 
sistance was $1.7 billion, operating assistance was $2.2 billion, cap- 
ital or operating assistance — ^the choice being up to the user — a lit- 
tle over $446 million. 

On the rural side, it was $22 billion for capital, $40 billion for 
operating assistance, and $37 billion for capital or operating. 

What is most instructive is if you compare those 1992 numbers — 
I did this this morning before coming over — with our similar report 
for 1997. Remember, it was a 1997 concept of transit that basically 
shaped AASHTO's 1988 report. 

What a comparison of those two documents show is this, that 
total urban assistance increased 54 percent from the States over 
that 5-year period of time. Of that increase, 118 percent was in 
capital assistance. Operating assistance increased only 18 percent, 
and capital or operating, 155 percent. 

So the State legislatures and Governors clearly see a growing 
capital need in urban areas, and that is even more pronounced in 
rural areas. 

In rural areas, there was a 107-percent total increase in State 
funding. With respect to capital assistance for rural properties, 
there was a 189-percent increase in that 5-year period, a smaller 
increase in operating assistance, et cetera. 

So, Mr. Chairman, I think we have demonstrated that the States 
clearly are involved. We see a need both for ongoing assistance at 
both the Federal and State level. Obviously, in the judgment of the 
States, the rural area needs are growing rapidly, and that is where 
we especially think we need Federal assistance. But over all, the 
bottom line is what do we want transit to do. Thank you. 


Senator Lautenberg. Thank you very much. Your full statement 
will be made part of the record. 
[The statement follows:] 

Statement of Francis B. Francois 

Mr. Chairman, I am Francis B. Francois, Executive Director of the American As- 
sociation of State Highway and Transportation Officials, commonly called AASHTO. 
AASHTO is a unique transportation organization, in that it is concerned with all 
of the major modes of transportation, including highways, transit, rail, aviation, and 
water transportation. 

On behalf of AASHTO, we are pleased to respond to your invitation asking our 
views on the need for increased transit investment, the short and long term transit 
needs of the country, and the federal role in financing transit. 

Let me first provide a short response to each of the subjects just listed, after 
which I will comment further on each. 

The Association believes that we must increase our investment in transit. From 
our examination of our transit needs, we have identified both short and long term 
needs that should be addressed. Finally, AASHTO supports a continuing and ex- 
panded federal role in financing transit, both for capital and operating purposes. 


The total transit expenditure for 1990 in our nation is reported to have been $19 
billion according to the January, 1993 report to Congress by the U.S. Department 
of Transportation, titled The Status of the Nation's Highways, Bridges, and Transit: 


Conditions and Performance. Of that amount $14.7 billion was for transit service, 
and capital expenditures were $4.3 billion. 

As to the source of this funding, turning first to transit services, 43 percent came 
from the fare box, 52 percent from state and locsd governments, and 6 percent from 
the federal government, according to the U.S. DOT report. The U.S. DOT report also 
states that the federal share of capital expenditure was about 60 percent, or $2.58 

Turning to needs, the U.S. DOT report finds that over the period 1992-2011 the 
annual capital investment in transit from all sources should be at least $3.9 billion 
to maintain conditions and performance at current levels, and $6.6 billion to im- 
prove conditions and performance. Both capital expenditure levels include metropoli- 
tan expansions, and are stated in 1991 dollars with no allowance for inflation. As 
to what the $6.6 billion level would accomplish, the report states that it would: 

"(1) eliminate the backlog of bus and rail deficiencies; (2) maintain current transit 
market share; (3) add additional service to accommodate anticipated urban demand 
not included in the highway analysis; (4) improve transit stations to current stand- 
ards; and (5) meet statutory requirements to serve disabled Americans." 

The findings of this recent U.S. DOT report are compatible with AASHTO's find- 
ings contained in our September, 1988 The Bottom Line report, which summarized 
the Association's findings as to surface transportation investment requirements over 
the 1988-2020 period. A copy of this report is being submitted with this statement, 
for your convemence. 

In The Bottom Line, the approach taken was to establish a range of needed in- 
vestment in transit, for urban areas above and below 200,000. As shown in TABLE 
C of the report, the estimated needs were as follows: 


[1988 dollars in billions] 

Program area 

Investment range 

Low High 

Capital Urban Above 200,000 

$2 6 $3 2 

Capital Urban Under 200,000 

.1 .2 


7 7 .•?4 

Not included in these requirement estimates were rural capital needs, capital 
needs in the service to elderly and disabled persons program, and capital neeos to 
meet the requirements of the subsequently enacted Americans With Disabilities Act 
(ADA). According to the U.S. DOT report, the annual capital requirements gen- 
erated by these three need areas under a maintain current conditions scenario are 
as follows: 


Rural vehicle replacements and facilities $.112 

Services to elderly and disabled persons, vehicle replacement and facilities .107 
ADA generated capital needs 255 

Total 0.474 

If these additional estimated capital needs are added to the needs estimates in 
AASHTO's table, and if the AASHTO totals are stated in 1991 dollars, then the As- 
sociation's capital need estimates are similar to those contained in the U.S. DOT 


The methodology to develop the transit needs included in The Bottom Line report 
is discussed in Appendix 2 to that report titled Public Transportation Needs, a copy 
of which is also attached for your use. Public transportation data were analyzed to 
estimate the capital and operating condition, performance and funding requirements 
of the nation's transit systems at interim periods through the year 2020. Transit 
systems were divided into three categories: systems serving urbanized areas over 
200,000 in population; systems serving urbanized areas of 50,000 to 200,000; and 
specialized and rural transit systems funded through Section 16 and Section 18. 

Much of the analysis was developed based on the 1985 Urban Mass Transpor- 
tation Administration (UMTA) Section 15 report, the UMTA Rail Modernization 


Study, the American Public Transit Association's (APTA) Transit Passenger Vehicle 
Fleet Inventory, and the APTA Transit Capital Needs: 1984-1988 report. 

It needs to be emphasized that the estimates in the AASHTO The Bottom Line 
report were deliberately conservative. Both AASHTO and the U.S. DOT report as- 
sume that generally transit will retain its current share of urban travel. If the 
Clean Air Act Amendments of 1990 result in efforts to greatly increase transit rider- 
ship in urban areas, then a corresponding increase in the capacity of the nation's 
transit systems will need to occur. Similarly, the costs to implement the Americans 
with Disabilities Act (ADA) are additions to the funds needed for transit. Both of 
these legislative initiatives could in turn generate a large need for additional cap- 
ital, to levels much larger than those currently estimated by U.S. DOT and 

In the short term, we have need now to reduce the average age of bus fleets to 
acceptable levels, and to assure adequate maintenance of transit systems. These ac- 
tions are necessary to assure the acceptability and reliability of service, both of 
which are essential if we are to keep our current riders and attract more. Once the 
backlog is eliminated, then any long term program must assure that todays prob- 
lems do not again occur. 

As to the long term, the Congress and many in our nation want to sharply in- 
crease transit use. To do this will require a much larger investment in transit. It 
is not possible now to predict where and when those investments should be made. 
Rather, this is one of the products that should flow out of the new transportation 
planning provisions of the ISTEA, both the urban and state Transportation Im- 
provement Programs (TIPs). In addition, the Clean Air Act Amendments of 1990 
will influence the future of transit in major ways, depending on the area of the na- 
tion. While we cannot now predict the long term needs of transit, it is safe to say 
that they will probably be much larger than we now project. 

State transportation departments are playing a growing role in public transpor- 
tation. State transit directors for each of the state transportation departments par- 
ticipate in the AASHTO Standing Committee on Public Transportation, which has 
been active in networking information among the states to assist these transit direc- 
tors in their expanding roles. 

The states recognize that transit funding must be increased, and they are increas- 
ingly placing their own funding behind that belief. AASHTO has recently published 
its 1992 Survey of State Involvement in PubUc Transportation report, a copy of 
which is being submitted with this statement. As shown on TABLE 3 of the report, 
AASHTO found that in fiscal year 1991-92 the states collectively provided at least 
$6,054 billion in fiinding to transit. Of our 52 member departments 50 responded 
to the survey, and of the 50 only five states reported providing no transit funding. 
The comparable amount for fiscal years 1990-91 was $4,651 billion, and in every 
year since 1987 the combined state investment in transit has exceeded the federal 
transit program, as shown in FIGURE 1 of the AASHTO report. 

As to how the state funding was applied in fiscal years 1991-92, this is shown 
in TABLE 14 for urbanized areas, and in TABLE 15 for non-urbanized areas. 

In urbanized areas, a total of $1,734 billion went toward capital, $2,230 toward 
operating assistance, and $447 million for either capital or operating assistance. The 
comparable amounts for non-urbanized areas were $22.5 million for capital, $40.7 
million for operating assistance, and $37.2 million for either capital or operating as- 

The findings of the 1992 AASHTO report indicate the need felt by the states for 
increased transit investments, and that the states interest in supporting transit has 
increased since the 1988 The Bottom Line report. 


AASHTO supported the increased transit authorizations contained in the 1991 
Intermodal Surface Transportation Efficiency Act (ISTEA), as well as the flexibility 
to use certain funding for either highways or transit, according to decisions made 
in the planning process. We also supported other transit-related features of the 
ISTEA, such as establishment of a transit research program, and efforts to provide 
better data regarding current activities and future needs for all modes of transpor- 
tation. We continue to support these features of the ISTEA, and in particular full 
funding of the authorized levels of the Act for both highways and transit. 

Our member departments believe there is need and justification for federal sup- 
port of transit, for both capital and operating support. A sound transit system is 
clearly in the national interest, and the best way to assure such a sound system 
is with continuing federal support and involvement. 


AASHTO's support for additional federal funding for public transportation applies 
to both urban and rural areas of the nation. In rural areas, state transit officials 
have been working closely with the FTA Section 18 program. Under Section 18, ap- 
proximately 94 million transit trips a year are provided by the rural transit net- 
work, with the t3T)ical agency providing between 25,000 and 30,000 trips a year. 
While in 1989, 1,161 Section 18 providers operated 10,107 vehicles across the na- 
tion, there were still over 1,200 counties that had no Section 18 program. 

The Section 18 rural program should continue to be supported at the levels pro- 
vided under ISTEA. This is particularly true in light of figures produced by the 
Community Transportation Association of America, which indicate that while Con- 
gress in fiscal year 1993 allocated $35 per capita in large urban areas, the equiva- 
lent in rural areas is $1.50 per capita. While we certainly need to continue our com- 
mitment to transit in our major urban areas, we also need to focus on the transit 
needs in rural parts of our nation as well. 

We have been pleased to hear Secretary Federico Pena support full funding of the 
ISTEA, and we welcome the $752 million in additional funding included in Presi- 
dent CUnton's economic stimulus proposal for transit. A shorter term package to 
boost the economy and funding for transportation infrastructure projects is vitally 

We also need to look at the longer term as well, and the importance of a major 
investment to meet the nation's transportation infrastructure needs, including tran- 
sit. This investment is an important part of a longer range effort to support our na- 
tional economy and to be competitive in the global economy. 

We look forward to working with you and the members of your committee on ef- 
forts to provide adequate funding for transit needs in both the short term and over 
the longer term. 

Mr. Chairman, we appreciate this opportunity to provide the Association's views 
on the future of our nation's transit programs. We are available to respond to any 
questions that you may have. 

[Clerk's note. — Mr. Francois' statement was accompanied by a 
report (with executive summary and detached appendix) entitled, 
"The Bottom Line: A Summary of Surface Transportation Invest- 
ment Requirements 1988-2020," and by a 1992 "Survey of State 
Involvement in Public Transportation." Both documents will be 
kept on file by the subcommittee.] 


Senator Lautenberg. Mr. McManus, we now look forward to 
hearing from you. 

Mr. McManus. Thank you, Mr. Chairman. I have submitted an 
extended statement for the record and I should like to highlight it 
in these few remarks. 

Senator Lautenberg. It shall be included in the record. 

Mr. McManus. The Secretary has been required, beginning in 
January 1984, to report biennially to Congress on the condition and 
performance of mass transportation in America and to provide esti- 
mates of the dollars needed to sustain these systems over 1-, 5-, 
and 10-year periods. 

The submissions in 1984, 1986, and 1988 focused primarily on 
transit performance and did not address the subject of transit 
needs. The last two reports, issued in 1991 and 1992, addressed 
transit needs, where the 1992 report provided what we believe for 
the first time is a complete assessment of capital needs from the 

The statute explicitly calls for providing future capital needs at 
various levels of service. The 1992 report complies with this re- 
quirement by defining two scenarios of performance for which cap- 
ital investment costs are estimated: investments needed to main- 


tain condition and performance and investments needed to improve 
condition and performance. 

In our first scenario, we have defined maintain conditions as the 
kind of investments that are required to sustain today's physical 

In the second scenario, we have defined improve conditions as 
those investments needed to address past disinvestment and return 
transit equipment and facilities to a state of good repair. 

The other half of our scenario is performance, and by this we 
mean the performance of transit in terms of the amount of transit 
service provided. 

During the 1980's, transit patronage grew 0.8 percent per year. 
We have included in our estimate of maintaining current perform- 
ance the capital costs needed to expand capacity at this rate. 

We have defined improve performance in a way that com- 
plements a key finding of the FHWA needs report. In its two most 
recent highway needs reports, FHWA has said that, despite the 
fact that all the numbers say the travel demand will be there, it 
will not be possible to build highways to accommodate that de- 
mand, and that 34,000 lane miles of needed highway construction 
will have to be forgone and replaced by travel management meas- 
ures, traffic operational improvements, changes in vehicle occu- 
pancy, and increased transit use. 

We have taken 10 percent of the travel demand that is rep- 
resented by those 34,000 lane miles of forgone construction and 
built our estimates for improved transit performance around the 
assumption that this 10 percent will require new transit capacity 
to satisfy the mobility needs. As to the investment needs that this 
methodology generates, our estimates are: to maintain current con- 
ditions and performance, an annual capital investment of $3.9 bil- 
lion in mass transportation is needed over a 10-year period; and, 
to improve conditions and handle 10 percent of the travel from the 
forgone highway lane miles, an additional $3.6 billion a year for 10 
years is needed, for a total of $7.5 billion per year. 

If the $7.5 billion estimate of annual capital needs in our 1992 
report to Congress is used as a benchmark, then it is evident that 
the full annual authorization levels for the transit capital program 
in the ISTEA, together with substantial overmatching by State and 
local authorities, would be required to put us on a reasonable path 
toward meeting those investment needs. 

The ISTEA authorized level for fiscal year 1993, for example, 
would finance about 55 percent of the need, or about $4.1 billion, 
including WMATA, leaving 45 percent for local match and over- 

The budget authority provided in fiscal year 1993, however, was 
short of the authorized level for capital by over $1 billion. 

The President's economic stimulus package would restore $752 
million of this $1 billion shortfall. 

Apart from this brief review of our own report, I would like to 
make reference to the varying dollar figures for need, depending on 
who is doing the estimating. Frankly, I do not find the variations 
troublesome, as long as they are explainable. The seemingly wide 
variation between FTA needs estimates and those of other organi- 
zations are not nearly as far apart as they may at first seem to be. 


The GAO, in my opinion, is performing a real service in explain- 
ing the differences accurately and in assessing the several needs 
estimates. In fact, I am willing to stipulate to the accuracy of their 

This is the extent of my opening remarks, Mr. Chairman. I would 
be pleased to take questions. 


Senator Lautenberg. Thank you very much. Your full statement 
will be made part of the record. 
[The statement follows:] 

Statement of Robert H. McManus 

Mr. Chairman and Members of the Committee. My name is Robert McManus and 
I am the acting Administrator of the Federal Transit Administration. 

I welcome this opportunity to appear before you today to discuss the general ques- 
tion of mass transit investment needs in our country. 

If we are going to take the position that investment in mass transportation is im- 
portant for the social and economic well-being of our cities, our states, and our coun- 
try, we should bring to our discussion information that is as clear and compelling 
as it possibly can be. 

The Secretary has been required, beginning in January 1984, to report biennially 
to Congress on the condition and performance of mass transportation in America, 
and to provide estimates of the capital dollars needed to sustain these systems over 
one, five, and ten year periods. The submissions in 1984, 1986 and 1988 focused pri- 
marily on transit performance, and did not address the subject of transit needs. The 
last two reports, issued in 1991 and 1992, addressed transit needs, with the 1992 
report providing what we believe for the first time is a complete assessment. 

We believe that the 1992 report presents an objective and dispassionate estimate 
of total transit needs. The report does not, however, indicate whether these needs 
are to be funded from Federal, State, local or private sources. Investment needs and 
Federal spending are two very separate, and separable, issues. 

In order to advance this purpose and to establish some consistency in the ap- 

S roach of the Department's agencies to reporting on the subject of capital needs, we 
ave paralleled our latest report with the method of presentation of the Federal 
Highway Administration in its own biennial needs report to the Congress. 

In reality we are doing more than simply presenting the FTA's Section 308 Report 
in a methodology similar to that used by FHWA; we have actually moved toward 
combining these two needs assessments into a single surface transportation report. 

The FHWA report to Congress is due each odd-numbered Januarj', ours each 
even-numbered year. This year, 1993, the FHWA Report that you received in mid- 
January contains new and updated highway information since the last FHWA re- 
port was issued two years ago; it also contains all the information that was in the 
FTA report for 1992. 

Ovir goal is to have a single report, prepared every two years. We recognize it will 
take legislative action before we can satisfy both statutory requirements with the 
issuance of such a single biennial report; meanwhile, our intention is to have each 
mode's formal report cover both modes, and, as in the 1993 Highway Conditions and 
Performance Report, contain the other's data and information. 

Much more important than the format of presentation is the methodology we used 
to develop our estimates. The statute explicitly calls for providing future capital in- 
vestment needs at "various levels of service." The 1992 Section 308 Report complies 
with this requirement by defining two scenarios for which capital investment costs 
are estimated: investments needed to Maintain Condition and Performance, and in- 
vestments needed to Improve Condition and Performance. 

Each scenario has two parts, consistent with the approach that FHWA has long 
used. We distinguish the condition of mass transit facilities fi-om their performance. 

Condition is an engineering description; it talks about how the physical state of 
the existing infrastructure is. In our first scenario, we have defined 'maintain condi- 
tions" as the kind of investments that are required to sustain today's physical condi- 
tions. In our second scenario, we have defined "improve conditions" as those invest- 
ments needed to restore the backlog of past disinvestment and return transit equip- 
ment and faciUties to a good state of repair. 


The other half of our scenarios is performance. By this we mean the ability of 
transit to meet overall transportation demand. Performance has implications for the 
level of transit service required. 

We have defined "current performance" in a djmamic way; by it we mean that 
mass transportation is expected to grow at rates experienced in the 1980's. During 
the 1980's, transit patronage grew 0.8 percent per year, reflecting a growth in popu- 
lation and a continuing rise in travel. To estimate mass transportation investment 
needs, we have included in our estimate of maintaining current performance the 
capital costs needed to expand capacity at this rate. 

We have defined "improved performance" in a way that complements a key find- 
ing of the FHWA needs report. Over the years, FHWA has gained a solid reputation 
among transportation professionals for its ability to forecast future travel demand. 
In years past, once the demand was known, it was a relatively simple arithmetic 
procedure to determine how many miles of new highways would be needed to handle 
that demand, and from that, a dollar figure representing highway needs. 

Such an approach no longer works, though, because in many areas we have 
reached a real- world limit on the amount of new highways our economy can afford, 
our environment can tolerate, our cities can endure, and, frankly, our people want. 

So in its two most recent highway needs reports, FHWA has said that despite the 
fact all the numbers say the travel demand will be there, it will not be possible to 
build highways to accommodate that demand. In fact, FHWA says that there will 
be 34,000 lane miles of needed highway construction that will have to be foregone, 
replaced by travel management measures, traffic operational improvements, 
changes in vehicle occupancy, and increased transit use. 

Using this FHWA estimate as a base, FTA projected an increased level of transit 
service to compensate for a portion of this foregone lane mileage. It then estimated 
the capital investment that would be necessary to permit such transit performance 
to happen. Based on a broad-scale review of the kind of travel which would be rep- 
resented by these foregone lane miles, FTA took 10 percent of the travel demand 
that is represented by those 34,000 lane miles of foregone construction, and built 
our estimates for improved transit performance around the assumption that this ten 
percent will require new transit capacity to satisfy its mobility needs. I must caution 
that this is not a prediction; we are not saying that mass transit in America will, 
in fact, register such performance increases. 

In sum, the Section 308 Report attempts to be true to its statutory mandate 
which calls for estimates at various levels of service: Level one is a continuation of 
current conditions and performance; and level two is an improvement of conditions 
and an improvement in performance through an increase in transit level of service 
sufficient to handle 10 percent of the travel that FHWA estimates would have re- 
quired the construction of 34,000 additional lane miles of highway. 

As to the investment needs that this generates, our estimates are: to maintain 
current conditions and performance, an annual capital investment from all sources 
of $3.9 billion (in 1991 dollars) in mass transportation is needed; and to improve 
conditions and handle 10 percent of the travel from the foregone highway lane miles 
an additional $3.6 billion a year for ten years is needed from all sources, for a total 
of $7.5 billion per year. 

These needs estimates are structured on the basis of an analysis geared to speci- 
fied transit service levels and related forecasts of travel demand. And, as stated, the 
estimates take an approach which is consistent with FHWA. However, they are also 
consistent with empirical estimates of need which come from sources such as spe- 
cific studies of rail modernization and bus maintenance facilities needs which we 
have recently completed. 

With respect to rail modernization, it was this very committee that requested the 
Urban Mass Transportation Administration some years ago to conduct an extensive 
evaluation of how much it would cost to restore all rail transit systems in America 
to a condition of good repair. 

That study was performed almost 10 years ago and estimated that it would cost 
$17.8 billion in 1983 dollars over a ten year period to accomplish this goal. Just this 
past year we retained the same consultant who performed the original work and 
asked them to update their original findings. 

This follow up study reached the general conclusion that while rail modernization 
needs on our older transit systems remain extensive, we have begun to make 
progress in improving conditions on these systems. The study found, however, that 
the capit£il cost needs which remain total $15.5 to $17 billion in 1991 dollars. 

With respect to bus needs, simple engineering estimates form the basis for the 
bus vehicle replacement needs estimates in the Section 308 report. Detailed fleet in- 
ventory information is collected annually through the Section 15 Reporting System. 


Estimating bus facility needs in the Section 308 Report was not so simple, but 
a recently completed consultant evaluation gives credence to the Section 308 esti- 
mates. This study found that transit operators are programming $2.1 billion in bus 
facility projects over the next five years. 

Apart from this review of our own report, I want to make reference to the general 
phenomenon of varying dollar figures for need depending on who is doing the esti- 
mating. Frankly, I do not find the variations troublesome, as lon^ as they are ex- 
plainaole. The seemingly wide variations between FTA needs estimates and those 
of various constituency organizations are not nearly as far apart as they may at first 
seem to be. The GAO, in my opinion is performing a real service in explaining the 
differences accurately, and in critiquing tne several needs estimates. 

To summarize, FTA's estimates have been at the macro level; they are intended 
to provide a factual basis for a long term program of Federal investment. Such esti- 
mates need to be objective and reasonable. Supportable needs estimates are useful 
to inform decisions about authorization levels, program structure and annual budget 
authority and ideally to guide policy design of the appropriate roles of the different 
levels of government in financing the transit function. Supportable needs estimates 
also provide information on how well we are doing in maintaining and improving 
our transit systems. 

If the assumption that transit service capacity must grow above historical rates 
in order to meet a portion of the travel demand that cannot be accommodated by 
highway construction is accepted and the resulting $7.5 billion estimate of annual 
capital needs in FTA's 1992 report to Congress is used as a benchmark, it is evident 
that the full annual authorization levels for the transit capital program in the 
ISTEA, together with continued overmatching by State and local authorities, would 
be required to meet that investment goal. The ISTEA authorized level for fiscal year 
1993, for example, would finance about 55 percent of the need ($4. 125 billion includ- 
ing WMATA) leaving 45 percent for local match and overmatch. 

The budget authority provided in fiscal year 1993 for capital purposes, however, 
was short of the authorized level for capital by over $1 billion although the Adminis- 
tration has requested an additional $752 million in capital funds for fiscal year 
1993. In addition to the amounts appropriated to the Federal Transit Administra- 
tion, about 70 percent of Federal-aid Highway funding is eligible to be used for cer- 
tain transit projects at the discretion of State and local decisionmakers. 

Mr. Chairman thank you very much for this opportunity to appear before the com- 


Senator Lautenberg. I would say that that is a good array of 
professionalism. Everybody finished before the allotted time. 

It reminds me of a time when I was on your side of the witness 
table. I was running a computer service company that I helped 
build. I think Senator McClellan may have been the chairman. 
Someone here did me a favor, they thought, by dragging out my 
testimony. It was almost bizarre in terms of the time that I had 
expected to be talking and also the philosophical treatise that I was 
presenting. It shows you the difference when experience is there. 

I thank everybody. 

For Ken Mead, I want to ask you this question. But first, I do 
want to make note of the fact that Mr. McManus in his testimony 
kind of confronted the question I asked with my question of how 
do you catch up with the disinvestment and so forth. 

Now that is not reflected in this analysis here, obviously, because 
this talks about a 1992 review, and I am still not sure about how 
we got AASHTO from 1988, APTA in 1990 and FTA in 1992, even 
though those figures are expressed in constant 1991 dollars. The 
fact is, if the estimates were made based on that period of time and 
those conditions, how do we adjust for current needs and current 

How do you see that? 


Mr. Mead. That is so, Mr. Chairman. For example, capital ex- 
pansion, AASHTO's was done in 1988. We did all the adjustments 
that we could possibly do to reconcile the three. But in AASHTO's 
case, they relied on a pipeline of grants applications that people 
had submitted to FTA. 

Now, if you recall that period of time, this was not exactly a pro- 
gram that was undergoing expansion. If you took 1991 grant appli- 
cations, it might very well be different. But these organizations did 
do their estimating in different years, and there are some imperfec- 
tions, as you point out. 

Senator Lautenberg. I would ask each one of the people from 
the two non-FTA organizations whether this information is not 
available on a more current basis? 


Mr. GiLSTRAP. We have recently conducted a survey of our mem- 
bers in regard to the questions asked by the administration about 
what we could do in terms of economic stimulus and how many 
jobs might be created, how many projects might be gotten under- 
way within the next 6 months. 

We have submitted a report to that question. We have not up- 
dated this one beyond what you have now. But I must say, Mr. 
Chairman, I think we have a good deal of confidence in what we 
have submitted to you because it goes into quite a bit of detail as 
to the specific kinds of projects and the expansion programs and 
proposals that our members have in mind. That has been submit- 
ted for the record to you. 

Senator Lautenberg. Mr. Francois. 

Mr. Francois. Mr. Chairman, it is difficult to do transit projec- 
tions currently because of the many factors I have noted that are 
still to be decided. Overall, we do rely heavily on the section 15 re- 
ports, obviously, that the FTA does. 

The future I think will change sharply in this regard. As a result 
of the ISTEA, the MPO plan with its transportation improvement 
program must address both highways and transit in very real 
terms in a relatively short timeframe, a 3-year time period. That 
in turn, must be reflected in the newly required State transpor- 
tation plan, which also must take transit into account. 

So, in my judgment, by this time next year we are going to have 
some very hard numbers to work with. 

Senator Lautenberg. I would hope that would be the case be- 
cause it gives me a little more confidence as I look at the numbers. 
I come to a conclusion, perhaps incorrectly arrived at, that these 
needs might be significantly higher based on ISTEA, based on an 
understanding of where we are going, based on the recognition 
within the various State transit agencies, transportation agencies, 
that it's possible to get funding for projects, which gives them a lit- 
tle encouragement to ask for the grants. There is such a keen inter- 
est by private parties in getting involved with this that it expands 
the horizons. 

Mr. Mead, one of the things that I wanted to ask you is if you 
have a kind of thumbnail view of the disparity between these needs 
projections. Where do you see them? I mean, FTA's, in sum total, 
is much different than the other groups' projections. 


Mr. Mead. Yes, sir; I think the climate is right. There is an air 
of constructiveness. I think you are going to see a much greater 
commonality between the projections of these organizations in the 

FTA does need to include operating costs. It is a separate issue, 
as I said, whether or not Congress decides to fund those. They are, 
in fact, a need. There is no point ignoring that. And, as Mr. Fran- 
cois said, the ISTEA transportation plans and the underlying sys- 
tems that feed into that plan will provide you with actual data 
from transit authorities. You do not have that information now in 
terms of prospective need in the FTA estimate. 


Senator Lautenberg. Do you want to comment on the validity 
of AASHTO's or APTA's operating needs projections? There is a de- 

free of closeness there, but, nevertheless, we are still talking about 
2 billion. What kind of perspective is that? 

Mr. Mead. AASHTO used a different base year for calculating 
operating needs than did APTA. That accounts, I think, largely for 
the difference between those two. 

Actually, the dollars for operating needs reflect mostly historical 
costs without much accommodation for any expansion. It is almost 
an auditing exercise. 

Senator Lautenberg. But is there an estimate of need resulting 
from ADA or Clean Air? 

Mr. Mead. Only in the FTA estimate, and I would not go to the 
bank with that one. It is about $260 million a year. It is based on 
a highly generalized regulatory cost estimate with no projections 
from State and local jurisdictions as to what it might cost. 

Mr. McManus. I just could add a comment, Mr. Chairman, if it 
would be helpful. 

Senator Lautenberg. Yes, please. 

Mr. McManus. In the regulatory impact analysis for the ADA 
regulation, there was an analysis of operating cost implications of 
that regulation and the law. The figure used I believe was some- 
thing like $230 million a year, beginning at the beginning of the 
period of adjustment to the ADA, going up to as much as $500 mil- 
lion in the latter part of the 5-year period in which the grantees 
have to adapt to the requirement for trie paratransit plans. 

But it was a rough estimate. It does, nevertheless, indicate that 
there are costs generated by that Federal requirement. 

Senator Lautenberg. I assume that once the present inventory 
of buses, railcars, et cetera, are dealt with, the ADA costs will be 
more of normal capital costs and not require the catchup costs. 

Mr. McManus. The ADA capital costs are included within the 
context of the FTA needs report, and they are estimated to run 
roughly, including both bus and rail systems, at about $255 million 
a year. 

Senator Lautenberg. Jack. 

Mr. GiLSTRAP. Mr. Chairman, I would also point out that one of 
the important new services mandated by ADA is the paratransit 
door-to-door service which all transit systems must now provide as 
a supplement to the regular line haul operation. We are finding 
those services to be extremely expensive in terms of operating 


costs. That, of course, is an ongoing thing. Unlike the capital, we 
are faced with that permanently. 

Senator Lautenberg. Yes; tnat we recognize. There is a service 
to which we are committed, and when you make a commitment to 
have the service, you also, whether you choose to or not, make a 
commitment to provide the funds to supply those services. 

But I was interested in the capital siae because one day there 
will not be buses manufactured, I assume, that do not have the ap- 
propriate facility for the disabled. So also with railroad cars, and 
I assume that changes will be made in stations, et cetera, that are 
going to be more or less one-time modifications. It may take some 
years to catch up, but, once done, that is the way we are going to 
live our lives in the transportation world. 

In trying to determine expansion needs, what would any of you 
say in terms of what kind of a system, what kind of matrix do we 
lay out for ourselves to try to estimate expansion needs? They 
ought to be really dealt with. But they ought to be dealt with sepa- 
rately because those are so specific in terms of requests by mem- 
bers, requests by organizations — ^you know, do we want to expand 
city A, city B, area D, whatever. So what can we do to anticipate 
what these might be in timely fashion? 

Mr. Mead. I think one possibility, Mr. Chairman, is that in im- 
plementing regulations over the coming months for what should be 
in these transportation management systems at the local level and 
what should be in the State plans, DOT could prescribe some cri- 
teria so that you would not get expansion estimates that were to- 
tally unconstrained. You would not want expansion needs that 
were simply wish lists. On the other hand, you do want realistic 
expansion needs within possible ranges of funding availability. 

Mr. McManus. Well, we think we have done a major thing in 
this 1992 needs report in picking up on the methodology used by 
FHWA, where they use travel demand forecasts and then convert 
those forecasts into capacity requirements. 

We have done the same thing with the transit needs estimate, 
and we are collaborating with FHWA so that, within the next cou- 
ple of years, we expect to be putting together a common needs re- 
port on surface transportation that is based on a common meth- 
odology for forecasting expansion requirements. 

FHWA has used that technique for years and years, and it does 
result in taking into account things like the requirements of the 
Clean Air Act, the impacts, and some judgment about to what ex- 
tent transit has to pick up on providing some of the capacity re- 
quirements that the highway construction will not be able to ac- 

I think that is a very big breakthrough in our approach to esti- 
mating demand. 


Senator Lautenberg. I think the ADA and Clean Air are rel- 
atively easy things to introduce into the formula. When you get 
into, you know, where is the growth going to come from, the projec- 
tions about the population movement closer to the coasts, like Sen- 
ator D'Amato and I have those beautiful places of ours, how do you 
deal with population growth in different areas? What is the respon- 


sibility to some of the more remote areas for transit and transpor- 
tation needs? 

Mr. Francois. Mr. Chairman, I would underline what Mr. 
McManus has said here. I think we need to emphasize it again. 

In our judgment, the splendid cooperation that has developed 
over the last 4 years between FTA and FHWA is extremely impor- 

Senator Lautenberg. I agree. 

Mr. Francois. The need number that FTA is including here I 
would underline again is based in large part on the FHWA's judg- 
ment that some 34,000 lane miles of projected highways in urban 
areas will never be built. Ergo, transit had to pick up that. 

Now that is what we are going to find more and more as these 
planning processes move forward. 

With respect to ADA costs, it is true from a capital standpoint 
ves, it is a one-time cost, but not really, because every time you 
buy a replacement bus in future years, it, too, will cost more. So 
that keeps rolling through the process also. 

But I think that the important thing is that we are beginning to 
come to grips with looking at highways and transit as part of a sys- 
tem more in context with land use patterns, which gets to another 
issue that you are touching on, growth and how do you accommo- 
date it. The new transportation plans that will come out of ISTEA 
are going to look very different tnan anything we have seen before. 

Senator Lautenberg. Jack, did you want to comment on that? 

Mr. GiLSTRAP. Senator, I think Frank's final comment here is 
certainly on the money. I think we have to be very careful about 
relying too much on demand forecasts because that does not take 
into account other national priorities. We have already mentioned 
the Clean Air Act. We have energy considerations. There is a whole 
array of other issues, and it raises the question in land use, as 
Frank said, it raises the question of do we attempt to constantly, 
constantly, forever, forever respond to the single-occupant auto- 
mobile demand. 

I think that is probably the crux of the issue, and we have to 
somehow get on top of that vehicle-mile travel issue. I think to 
focus too greatly simply on demand and try to continue to build to 
satisfy a demand without trjdng to adjust that curve would be a 


Senator Lautenberg. Mr. Francois, you produced a number that 
was the State, the collective States' share of capital investment. It 
was $6.2 billion, I think. 

Mr. Francois. Right. $6.2 billion counts everything, both operat- 
ing and capital. 

Senator Lautenberg. Right. In the number that you presented 
for this chart, you include, I assume, the States' share when we 
look at a figure for AASHTO of $20.5 billion? 

Mr. Francois. Yes; all sources would be in that number. 

Senator Lautenberg. Is everybody agreed on that? I mean, do 
the others also include it? 

Mr. Mead. [Nods affirmatively.] 

Mr. McManus. [Nods affirmatively.] 

68-623 O— 93- 


Senator Lautenberg. So this is not a request by any stretch of 
the imagination. 

Mr. Francois. No; that is not the Federal program, Mr. Chair- 

Senator Lautenberg. I just wanted to be sure. 

Mr. Francois. We would like it, though. [Laughter.] 

Senator Lautenberg. Mr. Francois, in terms of the FHWA num- 
bers that are produced, do they accurately, do you think, depict the 
economic development and cost tradeoffs between highways and 

Mr. Francois. Mr. Chairman, they have been working with that 
issue for several versions of this every 2 year document. I do not 
think they are there yet, either. They are certainly doing far better 
than they were. They are doing better than we are doing. 

We have some research underway in this £irea right now. We 
think that their work is adequate, given the knowledge that we 
had to work with. 

Senator Lautenberg. Thank you very much. 

We were joined earlier by my colleague from New York, Senator 
D'Amato, the ranking member of this subcommittee. 

Senator D'Amato, we are delighted, as usual, to have you with 
us. The witnesses are there to question, or if you would like, make 
a statement. 

statement of senator D'AMATO 

Senator D'AMATO. Mr. Chairman, I am going to ask that my 
statement be included in the record. 
Senator Lautenberg. Without objection. 
[The statement follows:] 

Statement of Senator D'Amato 

Mr. Chairman, I join you in welcoming our many witnesses today. Although we 
do not yet have a fiscal year 1994 budget proposal K>r the Federal Transit Adminis- 
tration, the FTA and transit advocates have estimated general progranunatic needs. 
Transit authorizing l^iislation, the Intermodal Surface Transportation Assistance 
Act (ISTEA) has provided for the basic $30 billion, 6-year fundii^ program. 

ISTEA authorizes transit funding of rou^y $5 billion per year though fiscal year 
1996, with an increase to $7.25 biUion in fiscal year 1997, the final year of the bill. 
The Department of Transportation has estimated that $3.9 billion per year is need- 
ed simply to maintain current transit conditions, and $7.5 billion per year would 
be needed to improve conditions. The fiscal year 1993 Transportation Appropriations 
Bill provided $3.8 billion for the Federal Transit Administration, including $802 mil- 
lion in operating aid. 

The Administration's fiscal year 1993 Stimulus proposal would increase cvirrent 
year transit fiinding by $752 million ($482 million for formula capital grants and 
$270 million for discretionary capital bus grants) up to a total of $4.55 billion. If 
enacted, the new funds would still leave transit about $685 million short of the 
$5,235 billion authorized for this year. No additional operating funds were re- 

According to DOT, the transit program now has $1,125 billion unobligated in the 
Section 9 ftrmula capital and operating aid program, and $2.87 billion unobligated 
in the Section 3 discretionary capital grants program. 

The Section 9 money can be expected to spend down fairly quickly during this fis- 
cal year; however the $2.87 billion in Section 3 is slower spending capital for new 
starts, rail modernization, and large bus-related projects. 

Even though transit investment needs are significant, it is especially hard to jus- 
tify the additional $270 million for discretionary bus projects in the stimulus pro- 
posal given the cvurent Section 3 backlog, and our more pressing need to reduce the 
deficit and cut spending. 


Mr. Chairman, I am interested in hearing fi-om our many, varied witnesses on to- 
dajr's panels. 


Senator D'Amato. I would be remiss if I did not tell you that I 
am looking forward to this forthcoming session with you, as we 
have these past years, in a cooperative effort to see that we man- 
age our resources and meet some of the pressing needs that the 
witnesses have testified to as they relate to moving people in the 
most cost effective and efficient manner and in a manner environ- 
mentally that makes sense. 

Although this committee, probably going back 6 years ago, 4 
years ago, and even 2 years ago, has done as much if not more in 
the area of encouraging alternative fuels — natural gas buses, et 
cetera — I would hope that, together, we could even do more in that 

I do not like to come down on anyone in particular. Some of the 
transit properties, for example, in my own home State, have dem- 
onstrated a great concern and flexibility and have undertaken 
these programs, albeit maybe in small steps, particularly our up- 
state communities of Rochester, Buffalo, and S3n'acuse, and down 
in Long Island, Nassau. But the major offender of these operations 
in terms of running diesel buses that spew out all kinds of toxins 
into the air is our own local transit authority in the city of New 
York. You cannot get these people to even begin to look at what 
has taken place. 

I have to tell you that I am determined, and because you have 
shown a keen leadership, with your help I hope not to yield to the 
same old, tired local rhetoric, which are such that well, "we will 
put on a trap to catch all the stuff," or "it is too costly." 

It is not too costly. We have to deal with this now because sooner 
rather than later we are going to have the EPA come in and start 
really doing some dreadful things that the law requires if we are 
not in compliance with these clean air standards. 

I am looking forward to working with you, Mr. Chairman, and 
making that a very real push. I know that Senator Mo3niihan 
shares my concern. He has been a leader in the area of basic envi- 

I know that you have demonstrated a keen awareness in leader- 
ship in the environment. I just look to my city of New York and 
it is disgraceful to see those machines operating the way they do 
almost 24 hours a day, spewing forth that stuff. It is not right and 
we should not be funding it. 

I don't know if anybody wants to comment on that. I would be 
very interested if they do. 

Senator Lautenberg. I do not, but perhaps a witness does. 

Senator D'Amato. Mr. Gilstrap, do you care to comment? I put 
you in a ticklish position, didn't I? 

Mr. Gilstrap. Senator, we are trying very hard as an industry 
to respond. 

Senator D'Amato. Jack, tell them I may not be successful, but 
don't bet against me. I am going to look for ways to limit the use 
of dollars as it relates to buses unless we begin to bring in at least 


certain percentages, particularly in the big properties, that use 
clean burning fuels. 

Mr, GiLSTRAP. I will tell them, Senator. 

Senator D'Amato, We cannot continue business as usual. If we 
can do it cooperatively, fine. 

Let me tell you that I don't care if I lose a fight. But I am bound 
and determined, and I win as many as I lose. I am telling you that 
I am not going to let it go. This just has to stop. I mean, this is 
long enough. 

Now, obviously, it is easier for any and all and most institutions 
to do business as usual, and the people who run these properties 
are good people. They are not bad people. And there are problems 
attendant with change. 

The President has talked about the need for change. By gosh, if 
there isn't a need for change the way these properties operate, I 
mean they are soot producing, grimy machines. That is what they 
are. It is wrong. 

And, by the way, we are importing most of that stuff. So if we 
want to make a sound, rational policy, why don't we use fuels that 
we produce for the most part, whether it is natural gas or other 
alternatives, and hold down on the importation, improve the envi- 
ronment, and move in the right direction. 

So I don't know if you want to invite me to be your speaker. You 
used to do it. [Laughter.] 

Mr. GiLSTRAP. We'd love to have you. Senator. 

Senator D'Amato. They used to also have a small stipend at- 
tached to it. So I used to love to come — off the record, of course. 

I mean, that is no longer the case. 

Now I want you to know I didn't really say that. Ann sitting be- 
hind me is a ventriloquist. [Laughter.] 

That is the end of my little D'Amatoesque joke. 

Senator Lautenberg. One of the things that I certainly would 
agree with is you win more fights. Senator D'Amato, than you lose. 
Being on the other side of an issue with you is not a lot of fun. 

Senator D'Amato. We have not been on too many opposite sides 
of things. 

Senator Lautenberg. Oh, no, no. But I have seen other people 
fall in the aisles against you. [Laughter.] 

But I would say this, that you are not wrong in demanding clean- 
er emissions because there is a toll, as yet unmeasured but signifi- 
cantly there, on human health. There is a toll, as yet not signifi- 
cantly measured, on buildings and structures, facilities, infrastruc- 
ture. It's enormous. 

Senator D'Amato. That's right. 

Senator LAUTENBERG. I guess the only people who disagree with 
you might be an auto laundry association or something. They 
would like to keep things as they are. 

Thank you very much. Thank you. Senator D'Amato and thank 
you all at the witness table. 



Southeastern Pennsylvania Transit Authority [SEPTA] 
statement of lou gambaccini, general manager 

Portland Tri-Met 
statement of tom walsh, general manager 

City of Portland Transportation Bureau 


South West Transit Association and Louisiana Public Transit 




Senator Lautenberg. We will now hear from the next panel, in- 
cluding Lou Gambaccini, Tom Walsh, Patrick Judge, and Earl 

We invite you to give your testimony under the same rules and 
conditions. The clock is a menacing thing, but we want to hear 
what you have to say in very serious fashion. We have your formal 
statements submitted for the record. Any who have not presented 
them, we invite you to do so. We would ask that Mr. Gambaccini 
be the first to testify. Welcome. 

Mr. Gambaccini. Thank you, Mr. Chairman. It is a pleasure to 
be here and to talk about SEPTA's problems, particularly as they 
relate to financing and physical infrastructure. 

SEPTA operates five modes of service. It is a very extensive sys- 
tem which includes service into Trenton and West Trenton, NJ, as 
well as into Wilmington, DE. We operate some 1,400 buses, 13 
commuter rail lines, 5 trackless trolley routes, 3 high-speed rail 
systems, and 7 light rail routes. 

We are a multimodal system, much like the other major cities of 
New York, Chicago, Boston, Cleveland, and the like, and we have 
many of the problems — in some cases worse — in the physical dis- 

We have been suffering in recent years a decline in ridership, 
which is a direct result of a decline in population, decline in jobs, 
and out-migration of population. The overall state of the economy 
has contributed to it. 

In our city division, we have lost 16 percent of our city ridership 
in a 4-year period. We have had to reduce service by 10 percent in 
the same period, and this fiscal year we cut 10 percent — $65 mil- 



lion^-out of our budget. We were able to do it for most of one-half 
of that saving through other than service cuts. We exhausted every 
possibility to pick up savings, including a major successful attack 
on fraudulent claims, which has reduced claims exposure and out- 
lays by close to 50 percent in the last 3 years. 

We have reduced administrative staff by 300 people. We have re- 
duced benefits to our employees by $7 million in the first year's ef- 
fort, thanks to the cooperation of the union, which has helped to 
offset the pressures of our budget. 

The Federal operating contribution is now less than one-half of 
what it was 12 years ago. Twelve years ago, it was $61 million. 
Today it is $27 million. 

We have gone from about 18 percent of our operating budget to 
less than 4 percent of our operating budget supported by the Fed- 
eral Government. 

You mentioned earlier ADA and mandates. This year, despite a 
$65 million budget cut and service cuts to the basic operation, we 
are increasing our operating costs to serve the requirements of the 
disabled under ADA by $7 million and our capital costs by $5 mil- 
lion. We expect our operating costs to rise $3 to $5 million a year 
over the next 4 to 5 years until we get to full compliance with ADA 

We believe that our passengers are already paying substantial 
fares. We are among the highest for operating recovery ratio sys- 
tems in the country and, given the decline in ridership, the ex- 
treme condition of unemplo3anent, and poverty in our region, we 
believe that increasing fares is not a constructive way to go, given 
all the other realities. 

The single biggest crisis confronting us is the operating budget 
currently. But in the background is the physical disrepair. 

When I first arrived at SEPTA 4V2 years ago, I was determined 
to lay out a 10-year rehabilitation program which we estimated at 
$4.5 billion, or about $450 million a year. We were then getting 
about $100 million a year. So we were deficient $350 million in 
order to rebuild the system to an adequate level. 

I would mention, by the way, that of the $4.5 billion, well in ex- 
cess of $1 billion is the disrepair of the former Conrail passenger 
service, which we took over responsibility for 10 years ago and still 
have a massive reconstruction effort to accomplish. 

We were successful in getting 2 years ago a State dedicated fund 
which doubled our capital funding from $100 to $200 million a 
year. This is a significant step forward. It is still, however, overall 
far less than is needed. 

If I could digress from the testimony for a second just to tell you 
about one project. Rail Works, which is in the process of replacing 
25 bridges affecting six of our commuter rail lines, this is on the 
former Conrail service. This has been a model, in my opinion, of 
what we should be looking at in economic stimulus around the 
country. It is vitally needed work, replacement of 25 bridges, well 
within budget with all kinds of beneficial community benefits, in- 
cluding substantial achievements in jobs for local, minority, and 


We strongly support the economic stimulus. Our needs far exceed 
the stimulus money. But, nevertheless, again, it is a step in the 
right direction. 

We are dismayed to hear discussion in Washington currently 
about the allocation of the 2.5-cent gas tax which previously went 
to the deficit reduction and now proposed all to be put in the high- 
way account. This would be a travesty, given the extreme needs of 
transit and the historic allocation of 20 percent of gas tax refunds 
to transit. 

In short, let me just say that we support the economic stimulus 
package. We strongly support full funding for ISTEA. We support, 
indeed we almost insist, that at least the maintenance of 20 per- 
cent of gas tax revenues be preserved for transit. We really believe 
that it should be increased. We are prepared to delay discussion of 
that into a deeper future. But we do oelieve maintenance of the 
status quo is essential. 

We have got to attack new problems — for example, suburb-to- 
suburb commute, reverse commute. We have done some innovative 
things in our area, which I will be happy to discuss if there is any 

Mr. Chairman, as general manager of SEPTA and as chairman 
of the American Public Transit Association, we applaud your efforts 
in being such a leader in support of transit and particularly in 
keeping us alive on the operating assistance front. We look forward 
to working with you in the future. Thank you. 


Senator Lautenberg. Thank you very much, Mr. Gambaccini. 
We have your complete statement and it will be made part of the 

[The statement follows:] 

Statement of Louis J. Gambaccini 

Good morning. My name is Louis J. Gambaccini. I am the General Manager/Chief 
Operations Officer of the Southeastern Pennsylvania Transportation Authority 
(^PTA). SEPTA provides public transit service in Philadelphia and the four adja- 
cent Pennsylvania suburban counties. We also provide commuter rail services to 
Trenton and West Trenton, New Jersey, as well as to Wilmington, Delaware. 

We are a large multi-modal system with over one million boardings a day on our 
1400 buses, 13 commuter rail lines, five trackless trolley routes, three high speed 
rail systems and seven light rail routes. 

Similar to the systems in New York, Chicago, Boston, Cleveland, and San Fran- 
cisco, septa's infrastructure is old and continues to suffer from the disinvestment 
practiced by our predecessors from the private sector and from the substantial de- 
cline of assistance from the Federal Government over the past 12 years. 

In spite of this, SEPTA delivers nearly 70 percent of Philadelphia's central busi- 
ness district work force to their jobs each day. We have also been able to develop 
a "reverse commute" clientele of Philadelphia residents who utilize our system to 
get to jobs in the expanding suburban employment centers. 

Like most transit systems in the nation, SEPTA faces a number of challenges. We 
confront difficulties in the areas of operating, capital and in the basic structure of 
the transit services we operate. I would like to take a few moments to describe the 
nature, magnitude and possible solutions in each of these areas. 

Perhaps most illustrative of SEPTA's operating budget difficulties is the situation 
which confronted us during the current fiscal year. Transit as a business is ex- 
tremely sensitive to economic downturns. If there are no jobs for people to go to, 
they do not need transit to get there. If consumer confidence is low, people do not 
take transit to shop. As a result, SEPTA, like most other transit systems, has expe- 
rienced a decline in ridership. In fact, SEPTA's City Transit Division ridership today 


is approximately 16 percent below what it was four years ago. Although we have 
seen a slight improvement in the last two months, we are not yet confident that 
the trend will be permanently over until the economy fully recovers. In addition, due 
to the decline in revenues as a result of this ridership loss and the failure of subsi- 
dizing governments at the federal, state and local levels to provide sufficient funds 
to fill the gap, SEPTA has also been forced to reduce service. In the last four years 
we have reduced service by about 10 percent. This has led to further reductions in 
ridership. In terms of actual operating expenses, SEPTA has reduced its expendi- 
tures this year by 65 million dollars, to a level of $600 million. Last fiscal year, we 
spent $628 million to provide transit service. 

We attempted to minimize the disruption to our riders while we cut these ex- 
penses. Before we made any service cuts, we reduced administrative staff by 300 
people. We worked with our unions to reduce benefit expenses by $7 million in the 
first year. In addition, we restructured many SEPTA functions, to reduce costs. We 
met more than half of our required reductions without reducing service levels. How- 
ever, we were forced to reduce service in order to meet our budget constraints. 

The federal operating subsidy to SEPTA today is less than half of what it was 
more than 10 years ago. In fiscal year 1981, SEPTA received approximately $61 mil- 
lion from the federal government toward our operating expenses. This fiscal year, 
we will receive slightly more than $27 million. When it was enacted, the Intermodal 
Surface Transportation EfBciency Act (ISTEA) recognized the declining role the fed- 
eral government played in supporting mass transit operation. It provided, for the 
first time in 10 years, a mechanism to increase operating subsidy to reflect transit's 
increased cost of doing business. However, the funding necessary to allow this in- 
crease has never been made available. 

As we begin to prepare our budget for next year, SEPTA is again confi*onting a 
difficult situation. We believe it is counter-productive to cut service any further. In 
addition, we believe that it would be difficult for many of our passengers to pay 
higher fares. That leaves us with the final segment of our budget as a solution — 
increased subsidy fi-om our govemmentel sponsors. And yet, Philadelphia remains 
in a difficult fiscal situation itself, just beginning to recover from near bankruptey. 
The State of Pennsylvania is experiencing slight growth in revenues and vet it must 
fund reauired increases in many social service programs to address problems which 
receive less federal funding today than they aid a few years ago. Recognition by 
Congress of the ISTEA provisions allowing for inflationary growth in operating sub- 
sidy would contribute to a solution of the operating difficulties confi-onting us. 

The next major difficulty confi-onting SEPTA is the deterioration of our physical 
plant. Many of SEPTA's fixed assets, such as track bed, elevated structure and rail 
stations date from the end of last century and the beginning of this century. As pri- 
vate operators became less profitable, they ceased investing in the future of their 
assets. Thus, when SEPTA came into existence to acquire and operate the formerly 
private systems in the Philadelphia region in the 1960's, it was presented with a 
severely deteriorated system. 

When I got to SEPTA, one of the first things which I attempted to define was 
the overall capital needs of the system to bring it into safe operating condition and 
to begin to make improvements to encourage ridership and meet new travel de- 
mands. At that time, we identified a 10-year capitel need of $4.5 billion — $450 mil- 
lion a year. Available resources were primarily available through the federal pro- 
gram and totalled approximately $100 million per year. 

Together with the other transit systems, large and small, Urban and rural, in 
Pennsylvania and in unison with the highway industry, SEPTA sought a dedicated 
source of funding for capital investment at the stete level. We succeeded in obtain- 
ing a funding source which provides SEPTA with approximately $100 million in new 
money every year. However, this still leaves us woefully short of the total need. 

At approximately the same time, Congress passed the ISTEA reauthorizing pack- 
age. It promised great aid in finally being able to restore our system. However, as 
you are well aware, ISTEA has not been funded at its fully authorized levels. We 
anticipate with great hope the passage of the President's proposed economic stimu- 
lus package which will bring SEPTA approximately $15 million in formula money 
and from which SEPTA also will seek ninding of it's Midvale garage project — a re- 

?lacement facility for which SEPTA has had an application on file with the Federal 
ransit Administration since 1989. It has never oeen approved because there has 
never been sufficient funding available in the Section 3 bus Category to do so. 

However, the need for capital funding exceeds the need for a one-time shot of 
extra federal money. Although we are grateful for the economic stimulus proposal, 
I should point out that the moneys proposed bring the highway program to the level 
of full funding under the ISTEA, while the level of funding proposed for mass tran- 
sit takes us only halfway fi-om current levels to the fiilly-fiinded level. In addition. 


although the Administration's expressed support of mass transit has made us very 
hopeful, the proposal to extend the two and a half cent gas tax which is currently 
devoted to deficit reduction and dedicate it to highways causes us some concern. We 
believe that the money should be used for transportation purposes, however, we be- 
heve that the money should not abrogate the hard fought sharing arrangement 
which transit was able to achieve in the 1980's — 20 percent of the funds for transit 
with the remaining 80 percent going to highways. Yet, that is what the Administra- 
tion has proposed. 

In summary, transit is seeking Congressional action in three areas to support re- 
investment in transit infi-astructvire: Quick enactment of the economic stimulus 
package; fiill funding of ISTEA for the remainder of the authorizing period; and 
dedication to transit of at least V2 cent of the two and a half cent gas tax which 
the Administration has proposed to extend and convert fi-om deficit reduction to 
highway uses. 

The final difficulty which confronts SEPTA is the need to restructure its role and 
its services to meet the demands of the future and to allow transit to meet the chal- 
lenges of such social goals as clean air, reduction in congestion, and economic vital- 
ity. Most older large transit systems like SEPTA were built to accommodate a com- 
muting pattern from the suburbs to the city — in radiating spokes fi-om the down- 
town area. Today, the largest increase in commuting is fi-om suburb-to-suburb. Tra- 
ditional bus services cannot compete because they must travel in the same con- 
gested traffic as the automobile. Aiid travel patterns are not easily serviced by tradi- 
tional transit because of dispersed patterns of residential and commercial property 

Some of this challenge can be met through simply restructuring routes. Other as- 
pects of it must be met through a revised view of what is needed to provide mobility 
for the citizens of our urban areas. ISTEA went a long way toward doing that by 
allowing localities to determine whether transit was a better solution to mobility 
needs than more highways — by creating the ability to "flex" funds from the highway 
program to mass transit projects. However, to date, many states, such as Pennsylva- 
nia, have not taken advantage of the flexibility created by ISTEA. They have contin- 
ued to do business as usual, or they have simply been unable to proceed in any di- 
rection due to the newness of the concepts in ISTEA. 

Some of the problems in fully utilizing the ISTEA provisions will be cured simply 
by the passage of time and greater familiarity with its mechanisms. Some, however, 
may take further urging from Congress to truly level the playing field by measuring 
the benefits of competing projects clearly in terms of their ability to meet Congres- 
sional mandates for clean air. 

I look forward to working with you on these various issues, both in my role as 
General Manager of SEPTA and in my current role as Chairman of the American 
Public Transit Association. I believe that transit plays a role in a number of areas 
that are of critical importance to this country. However, I also believe that we may 
need your assistance in order to be able to play that role effectively. 

Thank you for your attention. I would be happy to answer any questions you 


Senator Lautenberg. We are joined by our colleague from our 
neighboring State, Senator Specter, Senator Specter has an active 
interest in this subject. 

Mr. Gambaccini. I'm sorry. I did not see Senator Specter arrive, 
or I would certainly have mentioned him in connection with the 
support we have had, which has been great. 

Senator Lautenberg. I'm sure of that. 

Senator Specter has been a vigorous proponent of funding for the 
SEPTA system and very helpful on transit funding. I know that he 
wanted to be here to greet you. 

With that, Senator Specter. 

Senator Specter. Thank you, Mr. Chairman. I appreciate an op- 
portunity to say just a word or two at this time. I did want to stop 
by and pay my respects to the Chair for convening these important 
hearings and to the witnesses who are coming in, and to give spe- 


cial greetings to Lou Gambaccini, who has done such an extraor- 
dinary job as the head of SEPTA. 

It is a lonely iob being a subcommittee chairman, which Senator 
Lautenberg is here. You may wonder where all the other sub- 
committee members are. I can assure you that I just came from an 
Energy Committee hearing and on the floor with health care. There 
are just so many other items. 

But the transportation needs are very important, and I am de- 
lighted to see that the supplemental appropriations bill is going to 
have increased funding. I am delighted that the new President, 
President Clinton, is making the infrastructure a priority item. 

I am just hopeful that we can come to the day where we have 
the entire trust fund from the gas tax dedicated in part to mass 
transit to be used for that purpose because those issues are enor- 
mously important. 

The chairman has been very diligent in proceeding with a num- 
ber, of hearings. This is the fourth so far this year, which is the 
most of any subcommittee, to my knowledge, and I am on five sub- 
committees, of the Appropriations Committee. Some have not met 
at all, and this is our fourth meeting, which is a good sign of the 
focus of activity. 

I have staff here who will follow closely what is being done. We 
will work very hard with the chairman and others to try to get in- 
creased funding for mass transit. 

Thank you very much, Mr. Chairman. 

Senator Lautenberg. Thanks very much, Senator Specter. One 
of the things that transportation seems to do veir readily is attract 
bipartisan support. I was delighted and thankful for Senator Spec- 
ter's support of the stimulus package proposed by the administra- 
tion ana by ourselves here. 

We are going to work hard to get it. I, too, share Mr. 
Gambaccini's dismay in terms of portraying the 2.5 cents that will 
become available to us as solely highway funds. I think there may 
be some question of terminology here. But since the public state- 
ment, the Secretary knows very well that there is a good deal of 
interest in getting a share of those funds for transit. It is des- 
perately needed. 

In the last few years, Senator Specter and I shared a very com- 
mon interest in what happens in the Philadelphia area and in the 
region, generally, because what is good for New Jersey, is good for 
Philadelphia, and vice versa. We have traffic going back and forth, 
and we are distressed that only Senator Spedter has been the sin- 
gle leader trying to keep the Philadelphia Navy Yard going with its 
employment base solidly in place. We work together on that and on 
the transportation side of things also. 

It is very important that we have the kind of unity that you have 
heard from Senator D'Amato and now from Senator Specter and 
from others on our side. 

We thank you very much. 

Now we will hear ftt)m the Portland folks. I don't know whether 
you want to divide the time. You have 5 minutes to share. Does 
one of you want to testify and the other provide backup? 

However you want to do it, you have 5 minutes. If you want to 
toss a coin, we are allowed to do that here. 



Mr. Walsh. Mr. Chairman, we will split the time. My name is 
Tom Walsh. I am the general manager of Tri-Met. 

In modest contrast to Lou, I come from the opposite coast. I come 
from a transit system which is thriving, and I am new to the indus- 

I come out of 30 years as a private contractor. As I joined this 
almost unique public agency, four things struck me as very similar 
to experiences I had had in the private sector. 

It is a group that operates by common sense. We have an ethic 
that says do it right the first time. We think ahead practically and 
we treat our customers well. 

We have entered into the record and put before you a document, 
our strategic plan, which is also a business plan. In it we empha- 
size not only what it cost but what does the investment buy. 

A hallmark of that document is our concept of partnership. We 
have 27 local governments, 3 State agencies, including our Depart- 
ment of Transportation, our statewide land use agency, and our 
Department of Environmental Quality, who are crucial partners to 
us in making transit thrive in Oregon. 

We see a transit system which has three active rail lines by the 
year 2005 and three other lines in construction and planning. With 
help which you gave us a year ago, we will, 60 days from now, 
place an order for the first low floor light rail vehicles in North 

Our system will expand from 500 buses to 1,500 buses of all sizes 
and all flexibility over the next 12 years. We have made a commit- 
ment enthusiastically and aggressively to complying with ADA. 

Like all agencies, like all growing concerns, we look to funding. 
Our needs are principally capital funding. We will, in the current 
rail line that we have under construction, make aggressive use not 
only of section 3 appropriations but under the first full funding 
grant agreement negotiated with FTA under ISTEA include STP 
funds in the construction of that line. 

We have simple rules for our capital projects. We finish them on 
time, under budget, and without litigation. 

This committee and the Congress have given us significant help 
over the years. You, Senator Lautenberg, and your colleagues, in- 
cluding Senator Hatfield, have been superb partners with us. For 
a continuation of the efforts that you have put in place, we specifi- 
cally urge full funding of ISTEA. We ask, last, that you continue 
to demand not only of our agency but of all agencies real coopera- 
tion both from transit and highway, that you require us to set ex- 
pectations high and to meet those with performance. 

PREPARED statement 

Thank you, Mr. Chairman, I will submit my prepared statement 
to be inserted in the record. 
[The statement follows:] 



Mr. Chairaan, Members of the Committee. I am Tom Walsh, General 
Manager, of Trl-Met In Portland, Oregon. I an honored and 
privileged to appear before you today to discuss transit Issues 
In our community. 

We have been asked about transit needs and the federal role. 

Clearly, we, like other systems, need financial help for the 
maintenance and preservation of our fleet and for long term 

To put it quite succinctly, we need: 

1. $110 million a year for the next four years to finish 
the Wests ide light rail project 

2. $19.5 million for bus replacements next year, and we 
have made the application to FTA's regional office as part of the 
President's stimulus package 

3. Strong Section 3 new start appropriations and FHWA 
Surface Transportation Program appropriations so that we may 
finish a region wide twcstale Light Rail Transit system that 
will cost over $4 billion 

Innovation. Plexibllitv and Partnership 

But today I would like to emphasize that our help from the 
federal government can't be limited to funding. We need support 
and help with innovative strategies that make transit work 
better. We need more flexibility in using what funds are 
available and we need encouragement to form partnerships with 
federal as well as local agencies in forming solutions to the 
problems of a growing urban environment. 


We are a mid-sized community. There are slightly more than one 
million people in the Portland area. 

We have 5B2 transit vehicles, 26 of them light rail vehicles. We 
employ 1,750 persons, over 1,000 are bus and rail car. operators. 

For seven years, since the start up of light railln 1986, we have 
been riding a tide of success. Ridership la up, public approval 
is in the 90 percentile. Development has surged around the rail 
line. Transit Is seen as a key factor in housing, development/ 
clean air, economic development and congestion control. 

Portland's comnitment to public transportation is now intense, 
visible, and accepted. 

But this hasn't always been the case. Public transit in Portland 
has gone through a resurgence. Transit had 60 million riders a 
year In 1946, but only 17 million in 1969. 

How it has reappeared as an important ingredient In the Portland 
area landscape, with 44 million passengers a year, an efficient 
bus system, an elderly and handicapped system that carries 
560,000 rides a year, and a modern and attractive rail line. We 
carry 200,000 boarding riders a day, up front about 150,000 in 


Three years ago the American Public Transit Association, awarded 
Tri-Met the honor of being named "America's Best." 
But it is not simply a love affair with trains and buses that 
caused this resurgence. 

Instead, it is a belief that the community of the future will be 
a product of the wise use of the land and sensitive development 
of the economy, innovation in investment and market strategies, 
creation of strategic partnerships, and a commitment to well run 
organizations. In short, a vision for the future and a plan to 
get there. 

These notions depend upon the presence of a transportation system 
that balances the application of roads and public transit in a 
tightly compact emerging community. The concepts that led to the 
present commitment were: 

1. The community's underlying values; what it has wanted 
to be. 

2. The development of transit as a strategy in a system 
that supports density and orderly growths. 

3. Establishing governmental partnerships as a tool for 
community goals. 


Much has been said of Oregon, that we're conscious and 
protective of our native environment, protective of our 
neighborhoods, committed to conserving energy, and worked 
hard to prevent urban sprawl. 

The fact of the matter is that until 1972, the Portland 
area's vision of itself was one that cut up the central city 
and its neighborhoods with 54 urban freeways, turned its 
back on the central business district in favor of suburban 
development, in fact sprawl, and demanded the support of an 
auto reliant transportation system that relied heavily on 
fuel consumption from foreign sources, casting the transit 
system adrift in a sea of inefficiency. 

There was a revolution of sorts starting in 1972 that caused 
the community to look at itself hard. 

The transportation plan on the books at the time was the 
Portland-Vancouver Metropolitan Area Transportation study 
PVMETS). With 54 new freeways and expressways, it literally 
would have cut up the community. 

One of its freeway projects had just been added to the 
interstate system, the Mt. Hood freeway. When the community 
began to realize that it would remove one percent of the 
housing stock of the city, and still not reach Mt. Hood, a 
freeway revolt ensued, 

A citizens' group called S.T.o.P. (Sensible Transportation 
Options for People) was formed to kill the freeway. 

At the same time as this uprising was causing a political 
stir in Portland, the Environmental Protection Agency was 
pressuring the city regarding the high level of air 
pollutants and a constant day-to-day stream of violations of 
federal standards- 


Meanwhile/ development pressures were subdividing suburban 
and even rural land, as residential coiwnunities, commercial 
areas, and even In one glaring example, the campus of a 
community college moved further away from the central city 
into raw farmland. 

The community took a good look at itself at about the time 
of Neil Goldschmidt's election as mayor, and didn't like 
what it saw. It. wanted something better for, its people. It 
began to express that wish through countless hearings, and 
finally, through the elective process. 

As a result, a new city administration, the county, the 
governor of the state, and the legislature, in the period 
between 1972 and 1974, felt compelled to institute some 
sweeping changes. 

These changes envisioned a new and vibrant community that 
would never be the same again. 

Some of those changes were: 

In 1972 - the adoption of the new Downtown Plan, followed in 
1973 by the passage of the state's comprehensive land use 
law, end the first steps taken to establish county-wide 
zoning. (Figure 1) 

These efforts directly described the kind of community the 
people wanted to have. County-wide zoning actively began to 
preserve farmlands with restrictions against selling off 
parcels of large acreages. The downtown plan established a 
people orientation with its requirement of 50 percent retail 
use on all ground floor properties within a described area. 

The comprehensive land use laws reflected the Interest in a 
healthy urban environment with its emphasis on urban infill 
and requirements for the establishment of an urban growth 
boundary, beyond which there could be no subdividing. 

The state land use laws as such, however, went far beyond 
the narrow definition of land use. The 19 planning goals 
for the state to which all communities must respond is a 
statement of what the citizens of the state want for 
themselves and all of its communities. 

The city comprehensive plan emphasized densif icatlon as 
opposed to sprawl in neighborhoods as well as downtown. Its 
goals were to enhance the downtown as the retail, office, 
and cultural and entertainment center of the metro area, it 
called for a greater Increase In the number of residential 
units downtown, required open spaces, and a return to the 
Willatmette river as a central focus for the city. 

Clearly, this meant amending the plan for more expressways 
and freeways. As a result, In 1975, the metropolitan area 
adapted an "Interim Transportation Plan." This plan relied 
on large park and ride lots adjacent to freeways and other 
major corridors. These corridors were then planned to have 
special lemes for mass transit. (Figure 2) 


The strategies that supported the community vision in 
Portland acted to reduce the broad political conflict over 


This is an inportant concept. In the absence of a clear set 
of community goals, the conflict over land use would rage on 
unabated. A key notion: land use conveys benefits, both to 
private and public entities. A land use plan can state some 
of the conununity's assumptions about itself and begin to 
channel the discussion. The ultimate political decision 
that had to be made was then served by a reduction in 
conflict over alternatives. 

When the Portland area started land use plemning efforts, 
several Key assumptions led to strategies that had United 

The notion that farmlands and tiraberlands need protection 
led to the objectives to limit growth in non-urban areas. 
This led to a strategy that actually prohibited urban 
development in a non-urban setting. With the adoption of 
the urban growth boundary around the metro region in the 
late 70 's the conflict ceased. No development was allowed 
outside the growth boundary. (Figure 3) 

The downtown plan in 1972-1974 insisted on a greater people 
emphasis. Thus, it was decided that between Third and 10th, 
Alder and Salmon streets, 50 percent of the ground floor 
development would be retail. The conflict over other uses 
for that 50 percent, such as parking, office space, and 
warehousing was, in effect, finished. 

The concentration of retail development in the core, and the 
limits on growth up to the boundary, served to resolve the 
argument about what happened in between. In fact, it forced 
the conclusion. And development of residential, commercial, 
and industrial areas began to focus there. 

It wasn't easy. Residents sometimes were restive at the 
obvious implications of ♦'urban in-fill." The community was 
going to get more dense. There were still conflicts, such 
as "How dense is dense?" , but they were reduced, limited, 
and focused. 

In the central city, this meant zoning amendments would 
allow mother-in-law apartments In old established single- 
family neighborhoods. 

In the core, it meant increased land values and high rise 

For transportation, it meant a new system to support 


The new transportation system finally grew out of the 
political catharsis of the mid 1970's that surrounded the 
community's struggle to establish a vision for the future. 
This system canceled the freeways, extended bus service, 
sited a Central Hall, established a parking lid and finally. 
Instituted high capacity rail service. 

1. The plan for freeways and expressways was abandoned. 
This was a noisy and politically contentious decision. 

But by withdrawing two segments of the Interstate, 
significant monies were availeible for other 
transportation projects, including rail transit. 


Eventually 141 projects were built instead of two 

2. Bus service was greatly expanded.. In 1974, the hours 
of service district-wide were increased 40 percent and 
the fleet was greatly expanded. A strong, viable 
alternative to the car was provided just as the air 
pollution index in the city started to become 

3« Transit Mall - Two city streets were dedicated to 

exclusive transit use along the north-south spine of 
the downtown area. It was in this area that the 
downtown plan called for the city's highest densities. 
Of Tri-Met's 71 lines, 45 run on the Mall. Even before 
MAX, Tri-Met began to deliver 43 percent of the 
downtown workers into the Hall. Private development 
along the §17 nilllon Mall, since its conception, is 
valued at $1.3 billion. (Figure 4) 

4. A downtown parking lid was established. The policy of 
requiring new buildings downtown to have a miniraura of 
parking spaces was reversed. Now, they have a naxinun. 
And that maximum is given at the consent of City Hall, 
The application of the lid had two results: use of 
mass transit dramatically increased, vehicular traffic 
into the downtown remained at about the 1975 level for 
10 years, with only slight increase since then. 

But the roost import factor was that employment 
increased about one-third while traffic into downtown 
remained the same. 

5. Rail service was established from Portland's downtown 
eastward to the suburban community of Gresham. 

Ridership on the new system was immediately nearly one- 
third more than expected and has grown steadily at 
about 14 percent a year in the peak periods. 

Two things have happened. 1) Interest In development 
along the rail line, or as Portlanders call it the MAX 
line (Metropolitan Area Express) has soared, and 2) 
Interest in more rail lines, including vintage trolley 
lines, has virtually consumed the attention of 
planners, politicians, and ordinary citizens. 

Development along the MAX line since the decision to 
construct was made and has resulted in 5.9 million 
square feet of commercial and retail development valued 
at $690 million. Another $440 nilllon is being 

This has led directly to an interest in rail service to 
six other suburban communities surrounding the city. 
This will cost at least $4.0 billion and seems 
unattainable to many. However, this first leg of the 
expansion, a Westward extension, has already received 
funding from your committee, it will open in September 
1997. (Figure 5) 

Innovation and Partnership 

Transit has to be a strategy, not a goal. It's not just the 
efficient running of the bus and rail operations we concern 


ourselves with, but also clean air, disabled access, the strength 
of the central business district. 

This has taken partnership with others, and the development of 
innovation in our own service to help meet community goals. We 
have brought on compressed and liquid natural gas buses with the 
help of the Northwest Natural Gas Co.; developed a proposal for 
low floor light rail wheels with the assistance of the disabled 

We have kept a high base of off-peak service hours to help with 
shopping tripS/ as well as the work trips served in the peaks. 
We developed timed transfers to speed up suburban service during 
the peak. We successfully developed an honor fare system for use 
on the rail system, which greatly adds to its efficiency at 
little cost. At the same time we tried the honor fare system- 
wide, and found that it didn't work well. An example of the idea 
that if you don't fail once in a while, it means you didn't try. 

A number of our goals would not have been attainable without the 
following federal innovations: 

- 90 percent match for ADA compliance 

- Flexibility for Surface Transportation funds. One- 
third of the Hillsboro segment of our new rail line will be 
built with STP funds. 

- Flexibility of the previous Interstate Transfer 
program. Without that program's flexibility the current LRT 
line could not have been built. Our Section 3 usage there 
was limited to 29 percent. 

What would help in the future would be these further actions: 

1. Increase funding for the surface Transportation Program 
in order to Increase flexibility and the ultimate funding of 
transit capital. 

2. Incentives iri funding that reward land use actions. 
Transit projects are more effective and highway expenditures are 
needed less with land use actions that encourage density. 

3. Evaluation of transit projects for federal funding 
should give greater consideration to community land use rules, 
particularly urban containment and density rules, 

4. Funding incentives, such as Increased match ratios, 
could encourage greater utilization of the pongestion mitigation 
and air quality authority in the ISTEA. 

5. Assistance with cash flow problems. The state's 
revolving loan fund can only be replenished by toll revenues. If 
authority existed to replenish these funds with any revenues, 
this program could be more useful. 

Similarly, the contingent commitment authority in the ISTEA 
would be extremely helpful If it were possible to use it as a 
back up for contracted but not yet appropriated funds. The final 
slowdown that might be experienced by limited yearly 
appropriations could then be alleviated. 

6. Communities contemplating entire rail systems should be 
encouraged to do so, particularly when offsets to highway 
construction are contemplated. The present one-corridor-at-a- 
time rule is an obstacle In timely system development. 



Mr. Walsh. I would like to introduce Commissioner Earl 
Blumenauer from the city council in Portland. 

Mr. Blumenauer. Thank you, Mr. Chairman. I will use the re- 
mainder of our time to just give you three brief messages. One is 
to express our appreciation from the Portland region for the flexi- 
bility we had 20 years ago that rescued us from a transportation 
plan that doomed us to an auto-dependent solution where 1 out of 
every 10 people in our community would either live next to a free- 
way or be displaced by one. 

We traded those freeways in. We built the first leg of our light 
rail system. We renovated existing facilities. And, most impor- 
tantly, we spent 57 percent of that money outside Portland, with 
our regional partners, tr3dng to manage the system. For that flexi- 
bility and that resource, we thank you. 

Second, I am here to report that we are using the flexibility and 
the resources under ISTEA as the cornerstone of our State trans- 
portation financing package. Using that flexibility to be the 
linchpin, we are putting all of those flexible resources into transit, 
backfilling with increased proposals for transportation funding 
which will enable us to put together a balanced system that brings 
together rural and urban, highway transit, bicycle, and pedestrian 
issues I think in the best tradition of what you were seeking with 
ISTEA. We are absolutely committed to following through on that 
principle, and it is making a great difference in our State already. 

Finally, I am here to plead that if, in fact, you go forward with 
the stimulus package — which we all do, there are tremendous 
unmet needs in our community and around the country for tran- 
sit — to plead that you force local governments and State govern- 
ments to prove that they are integrating transportation, land use, 
housing, into an integrated package to coax the most out of those 
resources. Demand of us — whether it is through a bonus provision 
or a threshold requirement I am not here to speak — but demand 
that we prove that we are achieving the partnership that Mr. 
Walsh talked about, that we are making sure that we are spending 
those dollars in effect two, three, four times over — for cleaner air, 
for greater mobility, for sounder land use, for getting the most out 
of all our resources. 

I think that is what leverage is about. The Federal Government 
is uniquely positioned to carry us in that next generation of activi- 

What you have done is made the difference for our community, 
allowing us to trade in the freeway. ISTEA is making the dif- 
ference in bringing us together. We hope that you will challenge us 
for the next step with a stimulus package. Reward us for doing the 
right thing. 

prepared statement 

~~~~ SenatorJLAUTENBERG. Thank you. We have your complete state- 
ment and it will be made part of the record. 
[The statement follows:] 



Mr. Chairman and nenbers of the Committee, thank you for this 
opportunity to appear before you today. I am honored to be here 
today representing the Portland region. I want to start by 
congratulating you on the innovative surface transportation bill 
passed by Congress in Deoenber, 1991. The Intermodal Surface 
Transportation Efficiency Act (ISTEX) has had a trenendously 
positive inpaot on transportation policies and investment in the 
State of Oregon and In the Portland region. 

Oregon's use of the ISTEA's flexible fund provisions began 
shortly after the bill was enacted. In the spring of 1992, the 
Portland region and the State of Oregon each committed $22 million 
of Surface Transportation Program (STP) funds for the extension of 
the Hestside Light Rail Project to Hillsboro. The commitment of 
STP funds to this one highly visible project was soon translated 
into a broader vision for financing the state's transportation 

In September 1992, the state, in partnership with cities, 
counties, and other transportation stakeholders completed the Oregon 
Transportation Plan. This plan, which was developed over a year 
and a half, is Oregon's first long range, comprehensive, multi- 
modal transportation plan. The Plan describes a system of road, 
transit, rail, port and aviation improvements for the State of 
Oregon. The Oregon Transportation Plan and a biennial review of 
unmet road and bridge needs, have resulted in the development of 
a transportation financing package which is now before the Oregon 
Legislature. What Is unique about the transportation finance 
package is the way in which the federal flexibility will be used. 

The Constitution for the state of Oregon, like many other 
states, limits the use of revenue collected from the ownership. 


use, or operation of notor vehicles to expenditures in roads and 
bridges. With a daunting $19 billion unmet need for Oregon's roads 
and bridges over the next twenty years, battle lines are quickly 
drawn when talk turns to using revenues currently dedicated to 
roads, for alternative oodes of transportation. The challenge for 
transportation stakeholders was to devise a financing package that 
invests in transit, denand, management and bicycle and pedestrian 
paths but not at the expense of roads. The ISTEA has provided a 
unique solution for Oregon. Stakeholders have agreed -to dedicate 
federal Surface Transportation Program funds to alternative modes 
of transportation, in combination with a substantial increase in 
the gas tax. Part of the gas tax increase will "backfill** STP funds 
transferred to other nodes, the remainder will be used to meet road 
and bridge needs. 

Another central feature of the state transportation finance 
package is a vehicle emission fee. This fee, is passed, will be 
a key component of the state's ozone maintenance plan for the 
Portland region that is required by the Clean Air Act Amendments. 
The emission fee will bo based on the emission rating of the vehicle 
and the vehicle miles travelled per year. The idea of the emission 
fee is to promote a market based solution to air pollution and to 
move away form regulatory actions. Revenue from the fee will bo 
used to make transportation improvements that clean the air. A 
substantial portion of the fee revenue will go towards transit 

Opportunities for innovation such as those opposed in Oregon 
exist in every state. Federal programs and funding can be used 
as leverage at the local level to complement and shape the programs 
that the states implement. The ISTEA and the clean Air Act 
amendments are helping the Portland region achieve long standing 
goals for maintaining a liveable community. 


Transportation systems are one of the nost Inportant elenents 
in helping coBnunities remain livable. Light rail is at the core 
of the Portland region's strategy for maintaining a livable 
coBiMunity. In the next twenty years the Portland region's 
population is expected to increase by half a nlllion people. That 
is slightly more than the total number of people who reside in the 
City of Portland today. The way in which we accommodate the 
increase in travel demand that will accompany this growth will 
determine the livability of our community. 

We know that the transportation system alone will not make a 
livable community. Through Oregon's land use planning program, now 
over twenty years old, and Washington state's Growth Management Act, 
the region is developing an efficient urban form that reduces the 
need to travel, preserves inportant greenspaces, provides affordable 
housing and conserves energy. 

In the late 1970 's the region took its first major step toward 
this livable future when it used the federal freeway withdrawal 
program to invest funds in the construction of the first 15 miles 
of a light rail system known as MAX - the Metropolitan Area express. 
Nothing has contributed more to the renaissance of downto«m Portland 
and the close-in east side area than the existence of MAX — a 
comprehensive, transit-oriented transportation facility that 
supports our land use goals. In 1990, voters of the Portland 
Metropolitan Area affirmed its support for accommodating growth with 
high capacity transit when they passed by 74 percent a $125 million 
general obligation bond measure to finance the local share of the 
Westside Light Rail Project. 

With the help of Congress, we have authorization for the 
Westside Project and will begin construction soon. Currently, this 
Region is in the process of selecting corridors for a north/south 
light rail line that will rxin from Clark County, Washington to 


Clackamas County Oregon -- the end of the Oregon Trail, whose 
sesquicentennial the nation celebrates thia year. 

The Portland region is committed to continuing, and exceeding, 
past efforts to develop a livable and efficient region: 

* We will continue and expand our regional partnership with 
our neighbors in Washington state for a bi-state 
partnership for both light rail between the two states 
and for the establishment of high rail speed rail from 
Seattle to Eugene. 

* We will seek local financial coonitment to the north/south 
light rail line through enactment of legislation in Oregon 
and the creative use of Surface Transportation funds. 

* We will continue to be creative in our growth management 
and transportation programs by considering further use 
of parking management and through the investigation of 
congestion pricing. 

* We will continue to act now — before the traffic 
congestion and air quality problems become a brake on our 
growth and our quality of life. 

Federal innovation has made the difference for our region from 
the freeway funding transfer in the 1970 's to ISTEA in the l990's. 
We stand willing to go the extra mile with you to prove the power 
and wisdom of this federal partnership. 

It is not just a question of more money. (But make no mistake, 
we do need more money in our community and around the country.) 
The question is how to wisely spend those additional dollars 


aoaording to plans integrating land use, housing and transportation. 
Our light rail system has proven to be a catalyst leading to cleaner 
air, energy conservation, more efficient infrastructure investments 
and more money from more partners. All this means aore and better 
choices for how our coninunity manages growth and change. 

The parade of people coming to Portland looking at how we've 
put the pieces together suggest we are doing something right. He 
could not be a national model without innovative federal help. We 
respectfully suggest that by rewarding this type of investment 
strategy and innovation in Portland you will be sending the right 
signals to the nation and you will show the way for federal dollars 
to have more impact. 




Strategic Plan 

Pursuing a 
Shared Vision 


Quality of Life: 
A Matter of Choice 

The case fi)ra regional vision 
and strirtcgy 

Lessons learned from Seattle; 
Vancouver J B.C. 

A Vision for Growth and 


' One vision of the re>*ion 20 years 
from now 

Growth and a Sense of 

Pactntrships to acliieve a livable 

The Challenge to Tri-Mef 

Tri'Met's role in achieving llie 

Tri-Met's Mission and 
Goals ^ 

A foldout of Tri-Met's draft 
' Strategic Plan 

Business Plan . 

December 1992 



Tri-Met Board of Directors 

Loren Wyss, President ■ Robert Bocci . 

Pl)il Bogue Nita Brueggeman >' 

Sliirley Huffman 3M Robertson 

Ron Tonkin - ' ' . 

Strategic Plan Working Group 

!Tom Walsh I BoG Post 

Bill Robertson Nita Brueggeman ' 

Bruce Marder , . Dick Feeney ^ 

DougCapps: . Bill Allen 

Dan Hoyt David Calver 

G. B. Arrington,, Project Manager . 

Karl Maflantes, Consultant . '' . ' - 

Paula Coppel, Consultant 

•., - ■ • -• ■■ , '; « . 

' ' t ; * 

5-Year-Plan Working Group ' ' i 
RickGerhart .Ken Zatarain" 

Claire Cushman ,' Ross Roberts 

. / 

I - "• N • . 

- I ^ - , . 

Production and Design ^ 

Warren Schlegel JeffFrane v 

Diana Smith 

\ |'MiiH"lf f Hr. ^.i(-1I' 11.^ 


Dear Friend, 

The Portland metropolitan area is facing a critically important decision: 
How call we accommodate 500,000 more people over the next 20 years without 
sacrificing our high quality of life? 

A number of local jurisdictions and public agencies have been trying to 
address that question through their long-range plans and strategies. The attached 
docuinent expresses Tri-Met's view, and suggests one way all of us in the region can 
join efforts to create the kind of future we want. 

This document is the second draft of Tri-Met's strategic plan. You may he 
one of tiic 5000 individuals who received and reviewed the first draft. Most of the 
people who commented on the first draft encouraged us to pursue the vision laid out 
in the plan; they also recommended some changes and additions. This new version 
reflects the helpful feedback we received from people throughout the region as well 
as our own employees. 

. The main focus continues to be on maintaining rnobility and livability as the 
region grows. Specifically, the new draft: 

• • Has a stronger regional orientation; • . ' . . 

• Provides more detail on obr suggested vision and ho\y to achieve it; 

• Recognizes moreTully the essential role our employees will play in achieving tlie 
vision and Tri-Met's specific goals; • 

• Describes in more detail the land use implications of the vision, and Tri-Met's 
anticipated role in that arena; - 

• Includes a separate section on regional partnerships to underscore the impor- 
tance of mutual support and cooperation; and 

' • ■ Describes the funding that will he needed to support the level of transit service 
implied by the vision, as well as possible sources of funding. 

We have tried to address most of the concerns raised by those who reviewed 
draft one. If you have comments on this draft, please contact Tri-Mct Public 
Affairs, 4012 SE 17th Avenue, Portland, OR 97202. or call 238-4960T The plan will 
be presented to the Tri-Met Board of Director^ for a public hearing Jan. 27, 1993 - 
at 3:30 p.m. In Room C of the Portland Building, 11 20 SW Fifth Avenue, Portland. 

While this report is Tri-Met's strategic plan, it is clearly a regional document. 
We hope it will be refined, shared and "owt^ed" by our partners throughout the 
metropolitan area. 

Circulating this second draft gives us a chance to ask: Is this what you want from 
Tri-Met.' And, if so, are you willing to help pay for it? 

"Tliank you for taking the time to work with us on this document. Your thought- 
ful comments and suggestions will help us develop a final strategic plan that is 
supported by the region and reflects the wants "and needs of the>customers we serve. 

Loren Wyss ^ Tom Walsh 

President of the Board General Manager 


Quality of Life 

A matter of choice 

Today the Portland metropolitan area — .from Forest 
Grove, to Troutdale, Vancouver to EstacaJn — ofTcis a (|tiality 
of life that is the envy of much of the nation. Vibrant commu- 
nities, beautifiil parks, stable neighborhoods, cultural opportu- 
nities, inrwvative development, model transportation and 
trend'Settir^g environmental initiatives all contribute to a way 
of life that is cherished and ufiique, 

"Y^e^' ^ t^^ region's population increases, 
our quality of life is at risk. There is a . 
■ real danger that rapid growth could 
diminish much of the progress and good 
deeds that have shaped this area into the 

' special place it is today. : ' 

The people of our region are becoming increasingly 
concerned. They know that, over the next 20 years, even 
at historic rates of growth^ the region's population is 
expected to increase by 500,000 : — the equivalent of . , 
another city the size of Portland. That's faster than the 
entire state of Oregon grew in the 1980s. , . • 

The most common fear Is that.major and rapid growth 
could cause our region tp lose its livability. Even citizens 
who welcome the economic benefits of grbwth worry that 
it will make our cities and towns less people-friendly. 

That's what has happened to other-gtpwing metropoli- 
' tan areas: Livability declined as the population increffaed. 
' Unbridled growth led to urban sprawl, traffic jams, dirty air 
atxl decaying downtowns.' . 

That needri't be the case in our region. \X/e can hw\d on 
oi4r post iuccaxs m growth 'manag<iment. Traffic congestion, 
air pollution, and other urban problems are not an inevi- 
table part of growth — they are the result of growing tlie 
wrong way. 


The fact is: Wq have a choice. W.^can accommodate 
growth in ways the^t wi)l allow us to maintain our quahty of 
life even as the population grows: But if we as a region 
don't make a conscious choice to follow that path, we will 
.inevitably fall prey to the same forces that have ruined the - 
livabilitypfother major American cities, y 

• The first step is to recognize the challenge before us. 
TTien we as a region lAust rise to meet it. . ■ ' 

Current Trends ^re Troubling . - ■ >. 

Despite, the region's past achievement^, some of the ; ' 
current trends are. troubling. 

• I raf/ic congestion is increasing. A recent Vurvey of . 
residents in Washington and Clackamas counties shqwed 
traffic was the number one concern. Light, rail on the'west 
side will alleviate some of the traffic in Washington 
County, but it cannot do the job alone. Light rail will 
mainly just keep cohgestiori from getting wane. . • 

\4 ost disturbing is tbe fact that even if the 
, region is successful in.carrying out its cur' - 
■ rent land use and transportation plans, traffic' 

congestion could still more than double. . ' ; 

The fact that our highways are overloaded underscores a 
second major concern: InKginc investment in public works 

Regional Rail System 

f / 


p3 ■ -^S^v^^RT 


■• 1^ .-[ 

\ Z, AIRPORT^'^ 


1 ^^ ■ 


^^^S^ WE9T8IDE MAX - jKk 

\ — (_ -^^^ EXISTING MAX 







Opening the Westside 
Project in 1998 i< the next > 
link in' the development b( , 
(he proposed regional light 
rail syatem. 


San Francisco Bay Area 

Traditional Neighborhoods 

Made 42% Fewer 

Automobile Trips 

9 Trips 
Per Day 

11 Trips 
Per Day 




, Traditional 





Source: Fehr & Peers Associalies, 1992 

Compact growth can cause a reduction in total 
trips and an increase in traiisit use! ' 

; — IncluJing' transportation, wastewater, storm sewers an«J 
other utilities. In transportation alone, according to the 
Oregon Department of Transportation, the region as a' 
whole is $10 billion shorj of the funding needed to restore 
and maintain its deteriorating roads. 

The question at this point is not whether we will fall short 
in necessary investments like new roads and transit, but by 
how miich. The mote carefully we plan for growth, the more 
efficiently we can provide these public services to our citizens. 

Air quality is another source of concern. The number 
of vehicle miles traveled in our regioii has been growing by ' 
about 6 percent a year. To keep the air clean and safe and 
meet federal clean air guidelines, we will need to reduce 
that to only 2" to 4 percent a year — or face tough federal 
mandates and higher costs to industry to force compliance, 
which could lead to loss of jobs and slower economic 
growth. ■ - 

< While the pressure is mounting to reduce vehicular, 
travel in the region, the current pattern of growth will 
result in more trips and more travel by automobile. 

Growing Outward Means 

More Travel, Less Transit 

Our region is currently growing outward rather than 
inward, through compact "development. TTie pattern that 
is emerging is one of sprqwl within the urban growth 
boundary (UGB). Growth is generally being contained 
within the UGB, but, according to a State of Oregon 
' study, it is occurring on average at only 70 percent of 
pla.nned densities, intetisifying the pressure to expand the 
UGB. If current patterns continue, future growth will 
maiiily occur on the fringes of the UGB — or, if the 
existing boundary is expanded, onto neighboring farm and ' 
forest lands. ^ • ' * 

Spreading out presents two problems: First, it causes ' 
the number of vehicular trips to increase at a fate even 
faster than the population. In Oregon in the 1980s, the 
nuinber of vehicle miles traveled increased eight times 
" faster than the population. , ^ ■ ' 

Second, this land use pattern cannot be served cost- 
effeCtively by transit. Buses and light rail are simply not an 
^ efficient choice for low-density, dispersed development. 

A study.of different neighborhoods in the San Fraii- 
cisco area revealed the dramatic difference in the number 
of automobile trips between people living in low-density '■ 
standard suburban developments and those in compact 


traditional neighborhoods. Residents in pre-1950 tradi- 
tional neighborhoods made 42 percent fewer trips by car 
" than their suburban counterparts. The San Francisco study 
found that a doubling of density resulted in a 30 percent 
drop in the number of vehicle miles traveled. . -• 

In our region, current projections show the number of" 
total trips within the suburbs will increase by 72 percent 
over the next 20 years. Evenjvith a majbr increase iri .^ . 
transit service, the percentage of those trips served by 
transit, will stay at today's level of 1 percent. Unless 
development in outlying areas becomes more clustered and ■ 
transit-oriented, the percentage of suburban trips being 
taken on bus and light rail is not expected to change at all. 

Contained growth -^ moving "in" rather than "out" -~ 
can allow a community to fully use transit as a way to • . ' 
maintain mobility while accbmmodatihg growth. / 

Two West Coast citief — Seattle and Vancouver, B.C., 
-^ provide striking examples of how mobilityand livability 
arc affected when a community grows outward instead of 

Seattle: 'Paradise Lost' , ■ 

In the early 1980t, Seattle was considered one of the 
most livable cities in the country. Now, just a decade . 
later, it is listed as the sixth mojt Congested urban area in 
the United States. In recent times, the Puget Sound.arca , 
has been referred to as "paradise lost." 

What happened tft cause such a dramatic decline in 
one decade? Ppmarily, rapid, uncontrolled growth. The 


.Rx for Gridlock 

Seattle: F*ercent Growth Irom 1970 

Source: Pufl«l Sound Cowtdl oLGovwnmoon 















Developed Land Vehicle Miles Traveled 

Portland is currently , 
following the same trends 
that overtook Seadle: land < 
consumed at a faster rate 
than population growth, 
increased dependence on the 
automobile, and an explo- 
sion in vehicle miles 
traveled. / 


Seattle region grew by 500,000 people in the 1980s. How- 
ever, it had no overall vision or strong planning to guide 
its growth. As a result, the region slid into a pattern of 
sprawl. From 1970 to 1990, die population grew by 38 
percent — while the amount of larid developed increased 
by 87 percent. 

Outward growth (ed to greater reliance on the auto- 
mobile. Consequently, vehicle miles traveled went up 136 
percent from 1970 to 1990 — almost four times as much as 
. the population. At the same time, the level of funding for 
transportation dropped in terms of real dollars. 

Seattle is now trying to play "catch-up," but the costs 
are enormous. Once a community has spread out, it is 
nearly impossible to reverse the trend. Tlic Seattle region 
has identified the need for more than $20 billion in capital 
investments and $10 billion in opera'tions and mainte- 
nance to improve transportation over the next 30 years: ■ 
That total of^30 billion would not reduce today's level of 
congestion, but would only keep it from getting signifi- 
(cantly worse. ' , " 

. - Seattle did not have the advantage the Portland .' 
. region has of well-established lahd use planning. It grew 
"out" not "in" — and has paid dearly in terms of traffic 
jams, gridlock and lost liyability. 

Vancouver: A Better Way To Grow 

The Vancouver, British Columbia, area has managed 
its growth differently. 'Through careful planning, clustered 
development and a pervasive commitment to transit, the 
metropolitan area has become a thriving, growing region 
that works — a bustling place as renowned for its charm, 
mobility and livability as its spectacular physical beauty. 

Tlic characteristics of the Vancouver area today are 
similar to what we might expect or hope fof in the Port- • 
land area by the year 2020. • ' 

XTancbuver currently has one-third 
more people than Portland; only one- 
third higher density; and three times the 

transit ridership. . * • 

In Vancouver, 10 percent of all trips and 17 percent of 
work trips are taken on transit. In Portland, while over 40 
percent of downtown Portland work trips are on" transit, 
only 3 percent-of all trips and 7 percent of work trips arc 
taken on transit. ' 


Vancouver's progress can be traced to its citizens' 
longstanding support for transit and land use planning. 

In the 1960s, when many cities^were investing in the 
construction of freeways, the people of Vancouver opposed 
them. They preferred expanding their bus and trolley 
scrvite and, eventually, adding the ScaBus cross-iharbor 
ferry system, and the Sky Train advanced light rail system. ■ 
TcxJay Vancouver is the only city in North America with 
less than one mile of freeway within its city limits. 

Vancouver is Canada's fastest growing city. Thai; growth 
has brought problems, but Vancouver's population continues 
to make choices that support compact development and 
transit use.' Under the area's "Livable Region Strategy," 
growth has been focused in large regional town centers that are 
linked to Vancouver by Sky Train and buses. . ' . 

A Matter of Choice 

The Portland metropolitan area is at a critical cross- 
roads. We can grow like Seattle, or we can grow like • 
Vaticouver. We have a choice. . - !• ■ • 

However, judging by the experience of other cities, we ' 
need to act now. We cannot rest on our past successes. If 
we do, our future will be decided for us. Inerti^ will lead us 
into the same fate of undisciplined growth, traffic jams, 
dirty air and lost livability that has befallen other growing 
American cities. 

Sprawling, congestion-cldgged cities like Los Angeles 
and Seattle are the way they are today not because their ■ 
people want them that way, but because they missed the 
chance to make their choice. 'Seattle had its opportunity 
in the mid-1970s to plan for growth, and let it slip away.- 

Now it is our turn. We have already applied sothe tech-, 
hiques that work. Downtown Portjand, like Vancouver, 
provides ^n example of growing the right way. The key ele- 
ments in Portland's success were the downtown plan and an 
investment in transit. Tlie downtown area has grown from 
56,000 jobs in 1975 to 86,000 plus jobs today — an increase of 
more than 50 percent. At the same time, air quali^ has - 
improved and traffic congestion has not increased. 

The challenge now is to build on our successes. There ij a ; 
way to grow and still keep our livability, and we as a region can ■ 
achieve it ^ — if we have the collective will to do so. - 

A Vision for 
Growth and 


To de'cide how to grow, the region must first determine 
what it wants to look like. What follows is one vision o"f 
how the Portland metropolitan area might look 20 years 
from now: 

Our region is a bustling metropolitan, area with 
some 2 million people, set off fron^ surrounding farm 
and forest lands by a distinct, unchanging urban 
growth boundary. The air is clean and the landscape 
a striking balance of attractive, well-planned devel- 
opment and natural beauty> 

The region has retained its unique charm and 
llvability, despite substantial growth in recent years. ' 
People enjoy working, playing ahd living here. 
Ample parks and open spaces complement vibrant 
urban centers. The comfortable pace of life contrib- 
utes, to people caring about and interacting with one 
another to a degree unheard of in other fast-growing 
metropolitan areas. . 

Cars, buses and light rail trains move throughout 
the region at a steady, continuous pace.' The trans- 
portation network, including.a five-line light rail 
system (with one more line under construction) and 
major transit corridors, accommodates travel be- 
tween and within our cities, and provides the back- 
bone connecting develofJment throughout the . 
region.- In all parts of the area, development is lo^ . 
cated near and afouhd transit stops. 


Source: Catthorpe Associates 

68-623 O— 93- 



A 11 of the region's cities have used their 

land carefully to avoid sprawl. The 

• - ''_-.■' 
downtown areas of cities like Beaverton, 

' ■ ' - 

Hillsboro and Gresham are thriving, 

people-oriented places, where jobs, » , - 

shops, services, schools and parks are 

conveniently located together within 

. walking or biking distance of transit - 

stops and a variety of housing options 

that surround the downtown core. 

Portland's central city, redeveloped land and revital' 
ized neighborhoods have strengthened and 
reinvigorated the city. Much of the new development - 
along Portland's major streets and rail lines consists of 3> 
or 4'rstory multi-family units over street level .shops. 
There is good pedestrian access to services and shop- 
ping, and good transit access to employment. 

In other parts of the region, new communities 
have been created around major transit stops. At 
stations such as the Sunset Highway/2 1-7 interchange 
and Clackamas Town Center, the development is 
self-contained, offering local choices of services and 
schools within walking distance. The center of 
many of these "villages" consists of a transit staUon • . 
and central park, surrounded by a main street or 
square of shops, offices, restaurants, smaller busi- 
nesses, child care facilities and recreational opportu- 
nities. . In some locations^ multi-family housing is 
located near the central park. Walking paths and - 
bike paths connect the entire community, g 

- The region's commitment to sensible growth and _ 
transit-oriented development has provided practical 
alternatives to the automobile aiKl the attendant air 
pollution and traffic jams. 

The percentage of total trips taken on transit 
(including buses, light rail, pbuttles and van pools iu 
well as. taxis) is as high'in our inelh>politan ■rea.aa 
anywhere else in the country. ^ • . •' ' 

Residertts find the lifestyle here stimulating and 


Rldtoril Pouil*. AIA 


satisfying. They enjoy the amenities of a major city 
wtthout^e associated sprawl, congestion, crime, 
crowding and tensions found elsewhere. In our 
fegion, livability is still prized, and 'citizens and juris' 
dictions w6rk together to protect and enhance it. 

As fof Tti-Met itself, we envision: 

An agency that leads the nation ini the 

quality, integrity and success of its tran' 
sit system. Tri-Met operates an excep- 
tional regional rail system, comple- 
mented by a network of major bus corri-, 
dors that provide fast, frequent, conve- . 
nient service to key destinations. The 
' agency also provides personalized service 
With its neighborhood mini-buses that ' 
link residents to the bps corridors and 

regional railif ' -" 

Tri-Met works closely with Ipcal jurisdictions, 
decbion-makers,and developers to encourage land 
use and transportation patterns that enhance the 
region's mobility and livability. The agency's public 
approval rating is high. Tri-Met is well-funded and 
Well-supported at both the state and local levels, and 
at the federal level, where Tri-Met is considered a • 
model for the country. - " " 

Tri-Met's employees are ^mong the best and 
brightest in the Northwest. They are actively in- 
volved in problem-solving within the agency, and 
find their ideas for improvement are frequently 
implemented. Two-way communication is integral 
to the agency's method of operation. Managers 
freely and openly share information with each other 
and with employees, and employees continually 
' contribute ideas for improving customer service. 

Each employee understands Tri-Met's mission 
and goals, the obstacles that^ overcome to 
achieve them, and what he or she can do to contrib- 
ute to Tri-Met's success. ' ' . ' 


Outstanding customer 'service is a shared passion, . 
and employees roif tinely ask themselves, "What will 
this do to help us attract br keep more customers?" 

Tlie philosophy at Tri-Met is: "Customers, one at a 
time." While the agency serves the endre region, it 
treats its customers as individual, and strives to satisfy 
them just that way: one at a time. 

■ ■• 'i • 

■'.■■■ ■ , > . ■ 
■ •**"■'. . ' .■ t 

■■'■ 1 '.: ..•• 


Growth and a 
Sense of : 

/Ttie vision suggests ways ,in which we as a 
region can enjdy ithe economic benefits of 
growth while still preserving our smiall-' . 
town cha^ and livability. Through well- » 
planned communities, our region can^c- 
commodate more residents while still offer- 
' . ing a lifestyle that is pleasant and comfort- - 
able. Whether in the suburbs, downtown 
Portland ojr in a new mixed-use neighbor- 
hood, people can live in places where they 
know their neighbors and' local merchants, , . 
and can walk to schools, parks, the comer' . 
grocery, heigjiborhbod restaurants, the post 
pfficej-transit stations, shops and other . 

' ■ ^ services. •, , 

This clustering of development offers other benefits as 

; welhTheopportunity for all of us to breatheclean air; get 

where we want to go quickly and easily; live in the type of 

housing we want and cap afford; rriinimize our tax dollars 

for public servjces; enjoy safer streets and neighborhoods; 

■ and take greater advantage of green and open spaces iti our 

. communities. Such a pattern would not only enhance our 
eyeryplay life, it would put this region on the niap as one of 

. the only mettopolitan areas in the country that has been , ' 
able to groxy while actually improving its livability. ^ 
V^hile achieving the vision would be a significant 
,accomplishment,-it would not require a major departure 
from some of tRe things we are doing today. Many of the 

' cothponents for the.visibn already exist throughout the 
region. For example, state law already requires that half of 
all new housing in the metropolitan area be multi-family 
bousing. Foi; the last 10 years, the real estate market has 
been meeting that goal. However, many of the multiple 
family housing developntients have been located on the 

■ fringes of the urban erowth boundary, and arc difficult to , 


serve by transit. The vision would have us meet those 
same customer needs, improve on the response by mixing 
in other uses (such as retail, commercial, and recreational), 
and locate the new development in a transit corridor. The 
resulting mixed-use communities will be attractive places 
to live, work, shop, play, fall in love and raise children. 
Otherwise, the market will not support them because v 
people won't want to live there. 

Whose Vision Is It? 

While the vision as stated here has been proposed by ' , 
Tri-Met, many of the same principles and values have been 
advanced by others throughout the region. A number of 
local jurisdictions and state and regional agencies.have 
been developing long-range plans. 

'T'he common thread in each of theoi is a 
recognized need to change current patterns 
of growth which, if unchecked, will lead to a 

serious deterioration in the region's livability. 

• , The City of Beaverton in its Downtown Development 

Plan calls for promoting downtown Beaverton "as a • 
public transit and pedestrian-oriented district"; for 
concentrating new commercial development in a " 
compact area to facilitate pedestrian access; and for 
increasing the supply of close-in multi-family housing, 
linked to the downtown core by transit. ^ 

• In its vision for the future, the City of Gresham calls . 
for the creation of a downtown mixed-use center 
organized around light rail that includes a high-density 
reuil core with multi-stOry office buildings, surrounded 


Beaverton Civic Center: Transit PUza Concept 

(Soanet B an ttaa DvwMowii Ptw) 


Metro 2040: 

Alternative Growth Concepts 

Continuing with Current Poiicies 

Growing Inside the Urban Growth 

Communities Growing at the Edg6 

Metro's 2040 process is the (orum for 
developing a consensus on a vision for how 
the region wants to grow, ~ 

by residential and commercial buildings. CJresham's 
plan also calls for neighborhood comttiunity tenters 
and "liye-wbrk" communities linked to downtown 

■ Gresham via trarisit, mixed-use development along the 
light rail corridor, and expanded public, transit includ- 
ing a downtown light rail loop, bus service, shuttles 

■ and park-and-rides. ■ ^ 

• 1000 Friend_s of Oregon, in its LUTRAQ (Making the 

Land Use Transportation Air Quality Connection) 
' study, envisions a new land use developmrnt pattern 
that encourages a reduction in the number of auto trips 
and vehicle miles traveled "by creating opportunities 
to walk, bike and use transit." LUTRAQ also strongly 
.advocates transit-oriented development and "the 
maximum use of existing urbanized areas accessible to 
transit through sensitive infill and rfedevelopment." 
Clearly, there is no shortage of support for carefully- ' 
managed growth. But with so many organizE^tions tackling 
the issue fipm different perspectives, the question arises: 
How can we-as a region coordinate our efforts and work 
together to achieve one overall vision for this metropoli- 
tan area?" The answer lies in one word: Parinerships. 
• . - ■ ' 

Regional Partnerships: Working 
Together to Shape Our Future 

Tri-Met is eager to work with its regional partners to 
achieve a vision we all agree on. Leaders, organizations 
'and citizeris in the metropolitan area will need to wor|c 
together to pursue ^he deSired changes. 

TTiree areas requiring cooperation are of partidular 
concern to Tri-Met: 
l.« Defining the vision, 

2. Identifying funding for traiisit expansion, and . 

3. Achieving the desired land use patterns. 

Defining the ^^ion . .^ \ , • 

While there is some healthy overlap among many of the 
plans being put forth in the state and region, the metropolitan 
area as a whole has not yet reached a coiisensus on Its vision, 
for the future. The proper forum for developing that consen- 
sus is Metro's Region 2040, at) effort now underway to plan for 
the region's future thrpu^ the year 2040. The 2040 activities 
provide a vehicle for the community to discuss alternative 
ways to grow and address the txade-offs jh 
approach over another. ' . - 


Metro has circulated a publication that presents three 
development patterns to be evaluSited in 1993 through the 
Region 2040 process. One of the concepts offered — 
•Concept B — includes many of the same principles advo- 
cated by Tri-Met. Concept B would accommodate growth 
within today's urban growth boundary by using land more 
effectively, increasing redevelopment, mainly along major 
transportation corridors, and encouraging clustered, com- 
munities with mixed uses and pedestrian amenities. 

But before tTJese or any other ideas can be pursiied, 
agencies and jurisdictions in the region must be committed ' 
to a cornmon vision. 

For its part, Tri-Met will modify its strategic plan to 
reflect the results of 2040 and expects the rest of the region 
to do the same with their plans. Tri-Met will need a clear 
understanding of what the region wants and expects from 
its transit agency. Then Tri-Met 'will need the help of its 
regional partners in meeting those expectatioris. 

•' The support and involvement of others espe- 
cially important in two key areas: identifying funding for, 
transit and achieving desired land use patterns. 

Identifying Funding for Transit 

To achieve the level of transit expansion suggested in all of 
the region's currently adopted plans, or any of the Metro 2040 
concepts, Tri-Met will need additional funding. ■ 

Tip move ahead. with its own Strategic 
plan, Tri-Met will need>assurances from 
its regional partners that they agree with 
the proposed level of transit expansion 
and will help Tri-Met secure the funding 

to achieve iti 

The agency will need $45 million more a year in 
, operating revenue starting in fiscal year 1995 and an 
additional $30'million a year starting in pY 1998 in order 
to achieve the strategic plan and increase mobility as the 
population grows. Those amounts represent a major . 
infusion of additional support — equal to about 70 percent 
of Tri-Met's operating bXidget today. " 

It is unlikely that all of those funds will come from a 
single source. Rather, it i> expected that they will come 
■ from a number of sources oyer time, and will likely involve " 



placing ballot measures before the voters to secure transit 
financing measures. Seeking additional funding in incre- 
ments will help Tti-Met stay attuned to voters' concerns 
and desires. • ,1 

Some efforts to increase transit funding are already 
underway. A number of agencies are working on an 
overall transportation finance package to help fund both 
highway and transit needs! The Oregon Transportation 
Commission, the Governor's Task Force on Vehicle 
Emissions and Metro's Joint Policy Advisory Committee 
on Transportation (JPAQT) are developing a cooperative 
state and regional strategy for transportation financing. 
Transportation '93 — a statewide group of government, ^ • 
business and community interests — is reviewing all of the 
funding proposals and will-act as the final clearinghouse to 
recomnriend to the 1993 Oregon Legislature a broad trans- 
portation strategy that includes a transi,t financing pro- 

. The current transportation strategy under consider- 
ation is based on the Oregon Transportation Plan ap- , 
■proved by the Oregon Transportation Commission. That 
plan, like the new federal Surface Transportation Act, 
"contains first-time-ever provisions for flexibility and 
balance between highway and transit funding. 

1-Jalf of the federal transportation money 
allocated to Oregon can now .^be used for 
either highway or transit projects. The 
investments, are interrelated. According to 
the State, more than $11 billion in road 
investments can be avoided by shifting land 
use patterns and.expariding transit, For the 
. Portland region, that's a savings of nearly 

$10,000 for every household. 

Looking beyond the 1993. legislative session, possible 
sources of funding being considered for tr£(psit include: 

• A systems development charge imjxKed on the con- 

'_ .• struction of new parking spaces to support transit;'arid 

• A general obligation bond for light rail and bus capital 
expansion. » . ■ 


In general, Tri-Met would prefer transportation-related 
sources of funding for transit than general purpose taxes. 
The agency will be seeking voter, legislative and jufisdic- 
tional support for transit expansion. . 

^ ' " ,1 

Achieving Transit-Oriented ' 

Land Use Patterns , - 

We will all need to work together to avoid the pattern of 
sprawl that has plagued most growing American cities. 

Tri-Met has no formal autlAority in the land use arena, nor 
does it want any. Nevertheless, the agency's ability to efffec- 
tively meet the regipn's transportation needs depends heavily 
on the pattern of land use here. Transit cannot serve a pattern 
of low -density development efficiently or .economically. 

As land use issues are debated, Tri-Met will emphasize 
that compactly developed areas are given the highest • 
priority for transit service. The lower-density development 
in outlying areas may have to wait as operating efficiencies 
permit and may not be serviced by large buses and light rail 
at all. 

Tri-Met will advocate three major pubbc policy initia- 

1. Containing growth within the existing UGB; 

2. Substantially increasing development in transit corri- ■ 
dors; and 

3. Helping to assure development is designed to be served 
efficiently by transit. 

The agency will generally support the concepts of 
building "in" rather than "out"; developing self-contained 
comriiunities-, and encouraging pedestrian-friendly urban 
and suburban centers. These patterns help the region get 
the best return on its public investment in not only ex- 
panded transit service, but all forms of public works, in- 
cluding sewers, schools, parks and roads. 

Tri-Met will aisp work with local jutisdictiotu to help 
them comply with the new requirements under the trans- . 
portation goal of the state's planntt)g regulations. As an 
example, the hietropolitan area must reduce vehicle miles 
traveled per capita by 20 percent in the next 30 yrars. . , 
Jurisdictions also must change their planning and zoning 
codes to allow for transit-oriented development and must 
find ways to achieve a lOpercent reduction in the number 
of parking spaces per capita over the next 30 years. Trl- 
Mct's mission of improving mobility fits precisely with 
these state-mandated goals. 

Tri-Met will support the concepts of building 
"in" rather than "out" ind developing pedes- 
. trian-lriendly centers. (Sourcei Calthorpc Awociawj) 


The vision not only implies major challenges for the 
.-.region; it also has significant iipplications for Tri-Met. , 

to ' I l*l««rViCt First of all, it suggests that Tri-Met ha? ar\ overriding 

, purpose beyond the provision of bus and rail service. 

The Challenge 

'"Tri'Met's job, as stated in the vision, is 
to help this Tegiop stay livable as it '. 

; - grows by making sure citizens can get 
> \ where thfey want to go quickly, easily ' 

and safely.. , - « . . 

That me^ni Tri-M^t's role is not only to provide bus, ■ 
. special needs, -carpool and tight rail service, but also to - 
help citizens access other alternatives to the single-occu- 
pant vehicle. such as biking ahd walking. 
\ Second, the vision implied the need for a dramatic 
increase in Trj-Met's service to enhance mobility. If the ' ' 
■ agency's service .continues fo grow at the recent rate of 
only 1 to 1 Vi percent a year, a visiorv of growth without . • 
increased congestion cannot be achieved. • -. 

Tri-Met has developed a new strategic plan to rise to these 
two challenges ^ broadening the ways in whichit contrib- 
~utes to enhanced mobihty, and dramatically increasine its 
service and ridership tQ keep the region livable. 

According to the ne\^ strategic plan, Tri-Met's mission 
is "to assure people increased mobility irv our growing, , 
compact urban region." The agency has set six strategic 
goals to steer its course. A detailed strategy for achieving 
the goals will corne later in Tri-Met's Five Year Transit ' 
Development Plan and individual program^ strategies. The 
goals can be grouped into three categories: Getting more 
riders, getting more funding, and achieving tnobility- 
Oriented land use. 

. ■ ■ . - ' ■ .>7 

Getting More Riders 

•The surest way to reduce traffic congestion as the > 
■ population grows is for mor? people to bike, walk, carpool, 
or use transit. Tri-Met's ridership goal calls for an aggres* 
sive but achievable leap in the nupnber of customers 
.^served: from today's 200,000 riders per day' to 690,000 
riders' by 2005— si hnotp than .three-fold jump. 

To achieve th6 ridership goal, Tri-Met must attract as " 
well as retain more customers. The entire agency will be ^d- ■ 
cused on making transit so convenient, so easy-to-use, so eco- 
nomical and so appealing that customers simply can't resist it 


Particular emphasis will be placed on further improving 
the reliability of Tri-Met's service, and on assuring that the 
transit system is safe and secure. Customers should be able 
to virtually set their watches by the arrival of a Tri-Met 
vehicle. In addition, they should feel assured when they . 
board a Tri'Met bus or train, that they will travel in safety. 

Customer service will be a driving ethic at Tri-Met. 
Employees will be highly trained and oriented to meeting 
the needs of customers. Hiring, communications, team 
building and employee development will all underscore the 
strongest possible customer orientation- 

In addition, Tri-Met will initiate a full range of. market- - 
ing activities to understand and address the needs of its 
customers. Market research will be used to help the agency 
find out who its future customers are and how it can serve 
them with tratuit. ' 

New Types of Service Planned 

Two new types of service are being planned to help Tri- 
• Met reach out to more customers. They are "lO-minute 
corridor service" and "neighborhood mini-bus service." 

The lO-minute corridors will provide a network of 
service from transit center to transit center throughout the 
region, replicating the attractiveness of regional light rail. 
Tlie corridors will become the backbone of Tri-Met's bus 
s^tem.. They will consist of major transit routes where 
service and capital improvements have been made (such as 
traffic signals that give preference to buses, special bus 
bypass lanes at intersections, curb extensions at bus stops, 
etc.) so that a bus can arrive at least every 10 minutes. 

t • 

Strategic Plan Ridenhip Curve 


5 7(K) 





8 600 

' ^^^^^ 

4lh Rail 

S c~. 



£ 500 


'ard Rail 


2^ 400 

• j^r^ 





S 300 

j^^ Open* 

? 200 




5 . 100 





92 SS ,. 



D^nutically Increased ridenhip If critical for 
.Tri-Met to achieve Its mlstlon o( enhanced 
regional mobility. 


Capital improvements to the transit lanes will allow the 
buses to'mov^ faster th^n nearby automobiles. 

"The lO^minute ggrridor service will be easy to use. , . 
Custotners will not have to use schedules because of the • 
frequency of service. 

• . ; Pilot projects will initially be tested on a few key 
routes. The first 10-minute corridor could begin operating 
in fiscal year 1 995. .' • ^ -, 

Tri-Met is also proposing to mtrtxlu<;e "neighborhood 
mini'bus service." This service Xvould be an outgrowth of ' 
the special needs transportation service Tri-Met provides- 
to' disabled people. It will operate in a given neighborhod 
like a local shuttle service or in low.-density areas inappro- 
priate for big buses. 'These smaller buses — possibly elec-' 
trie — will take passengers to local destinations, 10-mi_nute 
corridor stops or light rail stations. ^ 

'Xb help keefi the region mobile, Tri- 
Met is planning a piajor service cx|>an- 
'; • sian over the hext 13 years -^ from \ 

.' some 30,000 weekly hours of bus and 
rail service toiday, to almpst 87 »Q.90 - ' 

weekly hours of sfei"vice by IJY 2005; - 

■ This will include expansion of the regional tail system' ' 
and increases in tradittpnal bus and mini-bus service to ' 
feed into the rail lines and 10-minute. corridors. Tri-Met 

A new concept, "10- 
minute" corridors will 
provide the backbone ot 
Tri-Met servicf , creating 
(he bua and rait equiva- 
lent of an above ground 

lO'Minute Corridors Concept 


' lUS 




will also promote other modes of transportation, such as 

biking and walking to improve regional mobility. ^ : i 

The accelerated development of a six'line regiohal rail' 
system will be a top priority. Tri-Met's most important ' •, 
short-term objective will be completing the Westside light • 
rail project on time and within budget. The agency fore- 
casts 20,000 riders on Westside MAX when the line opens 
In September of 1997. The line will extei^d to Hilisboro by . • 

1998. A third rail corridor should be ready for final design 

• in 1996 anda fourth in 2000. Bus and mini-bus services 
will grow at a complementary pace. ^ * 

Where. will Tri-Met place its additional bus service? 
Tlie agency will continue to make specific service decisioiu 

' in consultation with local jurisdictions, neighborhoods ainl 
cominunity groups, as part of the preparation of Tri-Met's • . * . 
annual service plan. Toppriority will be given to provid- 
ing additional service to those parts of the regioo that have > 
compact, transit-supportive land Use patterns. , • . _ 

' > ^- . .."''.■ 

Getting the Funding ' ^ . 

Tri-Met will not be able to do its part in improving 
regional mobility unless it can obtain additioiul funding tg ,' . 
serve more riders.. • . , ■.•■.. 

The fiscal stability goal focuses Tri-Met on: l)Ob- 
..taining additional funding; and 2) Getting the best return , 
for each dollar spent. • 

To secure' additional funding, Tri-Met will need sup- 
port throughout the region /or a collective vision of com- 
pact urban growth served increasingly by transit. It will • 
need to achieve a regional consensus on a finance package, 
mobility goals, expansion of the tf;^nsit system and adop- ^ < ' 

tion of land use plans that fGster mobility. , 

To get the best retutn on each dollar spent, Tri-Met ' * . 
will carefully target its 6wn spending toward achieving the "" ' 
vision, and will emphasize efficiency throughout its opera- 
tions. Tl»e most effective way to steadily reduce the cost of 
each ride is to steadily increase the number of riders. 
Hence, steady ridership growth will be essential for increas- ', , • 

ing efficiency. Tri-Met will work with its customen and its 
regional partners to identify the most valuable service lines ' . - ' 

and reallocate resources as appropriate.' 

The fiscal stability goal also calb for Trf-Met to main- . -. 

tain three months o( working capital for operations, in ' ' 

order to stay closely attuned to risk, keep capital replace- V 

mcnt and operating needs in harrnony and assure wise. ' 

spending and the care and maintenance of funding vjurces. • 
The agency is well aware of the need to spend'wisfly: If it 


, doesn't, it could lose. its public support and its base of 
„ 'Operations.. ; ' . 

Getting the Land Use " 

Tf i-Met's lar^d use goal calls for working with public .', 
and private, interests to help assure that 75 percent of all • 
new housing anti jobs inside the region's urban growth 
boundary are served by a designated major transit corridor - 
within a 5-minut!e walk. ' ' ' ^ ' 

, More detail on Tri-Met's involvement in the regional 
approach to land use is provided in the "Partnerships" 
sedtion of this report.. . ' ' .' 

Tri-Met's Peoplfe Make the Difference ' 

■ To provide the level of service called for in its strategic 

• plan, Tri;Met will need a workforce of sortie 4500 employ- , 

■ ees by ,2pp5, compared to its 1800 e;nployees today. The 
agency will neejd to dramatically increase its recruitment, 
training and retention activities to attract and retain a top 

■ quality workforce. , ■ .. ' - 

Employeeis will need to be trained to not Only operate 
• the agency's equipment; but also to be Tri-Met's niajor 
source of contact with customers.- A dedicattort to out-' 
standing customer service will be the oveniding ethicat 
, Tri-Met. The philosophy of "custome'rs, one at a time" will 
require that Tri-Met employee^ be attuned to fiustorrier 
needs and that they be empowered to help the agency find 
]W&ys to serve customers even better. • . .' • 

■ ■ . To make full use of the skills and talents' of its people, 
Tri-Met will enhance its mechanisms for obtaining and . > 
.using information from Employees to improve service and 
efficiency. Tri-Met has already begun stepping up its 

- communitations activities to listen to epiployeei and help . 
. Jthem understand the Strategic Plan and relate .their work ' 
to it. , • .. 

In addition, a human resources pUn is being prepared 
to determine how Tri-Met can give its people more oppor- 
. J;unities to contribute to achieving the plan. Tri-Met is 
investigating such possibilities as increased employee ' 

■ training and education, total quality improvement tech- ' 
niques, two-way communication activities and incentive ' 

. and recognition programs. At the san;ie time, individual 
^ . departments within Tri-Met are looking at ways to involve 
' employees specifically In generating ideas to improve 
service ^nd attract more riders. • ' 


♦ ♦ 







I ill 

z . 

— (/) V - 2 = C^ 


Tri-Met's .mission: To assure people increased mobility 
in our growing'^ compact urban region. 

Goal I 

Customer Service: 

Steadily increase system reliability and ■ 
decrease the number of customer , 

complaints. • 

Overall Approach: 

Tri-Met will be driven by an eihic 
of superlative customer service." A 
sinmc oricntatinn to ciKtumcrs and tn . 
(KHstanJing service will b^ ftistercd 
tluoueliour the agency The agency's 
principle will he satisfying customers- 
"onc at^ time." 

Tri-Mct will alw iinprove the 
transit system Itself by making it more 
cimvenicnt, reliable, easy-touiKJefsiarKJ 
and appealing to customers. Particular 
emphasis will be given to system safety 
and security. 

Capital improvements will include 
creation (»f lO-minule conidor's (where 
faster, more frequent service will be 
prijvideil on primary routes), ar*d 
improvements in and aroumj trarvsit 
stops, including park-and-ridc lols. 

Tri-Mei will strive to increase 
c»sti>mer satisfactii»n and reduce 
customer complaints regarding regular 
and special service It will improve its 
wa)-s of listening ntxl responding to 
customed, and will enhance its system 
for organizing ar»d responding to • 
customer complaints. C^tomcr, 
community arnJ Tri-Mct erpployee 
input will be used t(> improve ser\'icc. 

Tri-Met will also fix:us tm meeting 
or exceeding the criteria set forth in 
Trl'Mel's Service Siandnrtis for on-time 
performance in fixed-rinjte bus service. 
Tlie reli;ibilitv of the system will be , 
assured by maintaining adequate levels 
of service arwj vcliicle maintenance. 
. The agency will expand its efforts to 
help more pct»ple learn Ik»w ti> use 
transit Omtinuing emphasis will be 
placed (Ki providing the kind of high 
qiinlity scr\'ice that keeps custimicrs 
coming back. 

Goal 2. : ■ 

Ridership: . 

Increase transit ridership to 690,000 

riders per day by 2005. 

Overall Approach; » 

Til e goal represents a- dramatic' 
increase from the 200,000 daily riders 
who now use transit. This Increase will 
be accomplUhcd irt incremental stagei?. 
By the end of fiscal year 1997, Tri-Met 
plarw to achieve an average of 310,000 
riders per day. - . . 

Bus service will continue to be th^ 
mairwtay of Tri-Met's tratisit service, arvJ 
will be bolstered by two new concepts; 

1 ) 'Ten-minute corridors" )vill be 
created on two dozen major transit ■ 
corridors, where Tri-Met will increase . 
bus frequency ar>d speed so that a bus 
comes by every 10 minutes (c;eating the 
bus equivalent oTan abovc-gtijurvl 
subway system). Tri-Mct will work witK 
Its regional partners td determine the - 
location of the lO-minute corridors, and 
will begin implcmentmg therri oy fiscal 
year 1995. Tri-Met will also work with 
local jurisdictions to achieve road 
treatmepts that give prefercrice lo 
trarvsit. , ' , 

2) Nei|rhb«>rhood mini-bus service 
will provide service to customers close 
to home, offering^fllmtst door-to-door 
pickup and delivery to link customers 
with light rail and the lO-minutc' 

■ Tri-Met will itKrease the riumbcrof 
hours-of bqs arvd light rail service to \ 
50,000 per Week froth tiw current level of 
30.000 per week - a 67 percent increase ' 
in weekly vehicle hours --by the end of 

Tfi-Mct wilt use marketing, 
advertising, customer service, promfv- 
tions ar>d pricirig sttateglcs to boost 
transit ridership. It will also strive to 
Increase trarisii ridership by elderly and 
disabled citiicris..O\'erall, the agency 
will work to substantially increase 
system reliability, operating speeds,' 
capacity, frequency, security znd 
.convenience. Attracting and retaining 
more custtwners will be the primary , 
focus of every Tri-Met employee. 

Goal 3 ' 

Human Resources: 

Attract, (raio and retain 4,500 
employees by 2005 who wil! provide 
superior customer service- Refine 
internal systems for using Information 
from employees to improve service and 
efficiency. \ 

Overall Approach: 

Tri'Met will, frrsj, njsure that it has 
the number and quality of employees it 
needs, and, second, make sure it is 
managing them to achieve (^timym 
results. The agency will expand its 
recruitment, training and retenil()n 
activities to attract and retain.ihe best - 
employees: ' ' 

A strong emphasis will be placed 
on orienting all employees to the 
Strategic gi»aU aml4Jn particular, to . . 
customer service. "Custoiucr" can qienn 
an external Tri-Mct cuslomer, or 
someone within Tri-Met who serves 
external customers 

Management's role i'; to sup(iort 
employees and help them do their hest. 
Employee training arxJ etiucarion will be 
cxpar>deti as neevled- Mutual resncct, 
rbamwork arul open communication will 
be rcinforceU as key values thnniglxHit 
Tri-Met. Significant emplinsis will be 
placed on achieving diversity at all levels 
of the agerKy. 

Specific initiative* will include: 

• Develop n human rcstnirces plan. 

• Revise arul improve the classificatitm 
and compensation system as nccilctl. 

• Expand recognition pri>grams. 

• Investigate the potential for total 
quality management at Tri-Met. 

• Focus employees on key Issues related 
lo customer service improvement. 
-Develop a systCrn or management 
apprtXKh that empowers employees to 
take the initiative to solve pri>lilcms. 

• Assure that all employees understaiKl 
tl»c Strategic Plan and their role In 
helping to achieve it. Help managers 
assume a stronger role in twivway 
comnmnication witli employees. 


Goal 4 

Fiscal Stability: , \ 

Steadily decrease the cost of each 

originating ride provided, maintain the ' 

equivalent of three mboths' working 

capital, and increase the continuing 

revenue base by $14? million per year 

by 2005. 

Qyefall Approach: ' 

' To iichfev* this gool,Tri-Met will 

fticuson: s 

1 ) Obtaining ncklitioiial funding; 

2) Getting the best returri for each 
(Itilliir .spent. 

. To iJitain mklitionpl binding, Tri- 
Mct will need support ihroughotit the- 
region for a sh:ired vision of compact "^ 
urbitn growth and a regional rail system. 
It will be critical to achieve regional 
consensus on mobility goals, finance ) 
p:ickaging, expansion of the transit 
system and adoption of bmd use plai>s' 
that foster mobility. 

Tri-Mct will seek legislative 
,:iuihority on one or mtvtt taxing j 
mcMsiirc:) ami pl^n.s to secure a major 
new VHitce o( fumling for operatioru 
ami riHitine capir;il.hy July of 1994- 
Voter a|^ov:d will be sotii^ht foe a * 
funding mechanism ftw construction of- 
a third mil corridor in 1999 and ft»r the 
local share of support for the 20-ycar 
rail ilevelopmcnt plan. It is unlikely 
that those funds will come from a single 
source. Tltey are imnc likely to cctfne 
fnmi a numbtr of sofirces over time. 

Tri-Mct will increase efficiency 
aiul get the best return f<if e;Kh dollar 
spent by incre:ising ridershipanj 
consistently apf^lying cstahlishetl 
fmancial controls Main(»lning three 
months' capital will provide a control / 
mechanism for keeping Tri-Met on \ 

track financially. ^ 

Goals * 

Service Expansion: 

By 2005, expand dnd diversify service 
to t ,650 buses and mini'buses and 
three operating rail corridors; with one 
rail corridor in construction and one 
in final design. Double the percentage 
of carppol, bike and walk trips.. 
Overall Approach: 

Tri-Met will seek to accelerate 
development ofo six-line regional'TuI 
system. ' 

Plans cnll for completing Wcstside 
light rail within budget ami serving 
20,000 daily hoarding riders when the 
line opens in September 1997. The 
extension to Hillsboro is to be added lo • 
the projecMn 1994, with completion in 
1998., Th^ ihirj rail corridor -- to *" 

Nj Clackamas County and possibly north 
to Vancouver'-- should be /eady for 
construction in 1999, with completion 
in 2003. TrI-Mct will also work with 
Oark County's iransir agehcy, 
C-TRAN, to strengthen the integratii>n 
of the two systems to better meet hl- 
state travel needs. The capital ctwt of 
system expansion will be $) to $4 

Tri-Met will exparvl its Uts service 
to support the lO-minute corridors arxl 
existing ami future rail lines. The - 
agency will increase its fixei.l-route bus 
fleet by 208 conches ( 1 1 8 to meet 
service st;mdard$; 90 Tor the lO-mintite 
corridors). '*> a total of 734 fixed-route 
Kises by the end of FY 97 

To house aruJ ^rvtce its bus ami ' 
rail cars, Tri-Met will expand its 
existing operating and main teriance 
centers, or add a new one. 

- Tri-Met will also explore new 
service possibilities to better meet 
customer needs- It will work with itj 
regional partners to obf ain rmwe 
funding arnl -staffing for carpotMing 
programs, ar>d Increase employer 
vanpnojlng. T^ic agency will also work 
to achieve attractive, iratuit-supponive 
pedestrian arxl hiking environments. 

Goat 6, ' 
Land Use: 

Using public and private partncrshlptt. 
help assure that 75 percent of all new 
bousing and jobs inside the region's 
Urban Growth Boundary (UGB) are 
served by a designated transit corridor 
within a S-mlnute walk. 
Overall Approach: ^ 

Tri-'Mei is not a laixJ use^agency. 
Rather, it Ciin act as an advocatl* jnd 
catalyst for shaping land tise patterns in 
ways that Improve inttbtlliy. The 
agency will wtirk with others to achieve 
Irtnd use plans that can be civ^t -effec- 
tively sen-eJ by transit. Tri-Met will 
adv(x:ate three major Initiatives: 

1 . Contalnirf^ groi/vth within the 
existing; ttrhan growth li^mndary 
(UOB); , , 

2. Substantially Increasing development 
in ttansit corridors; and 

3. 1 telping to, ,issure that new develop- 
ment is ilesigped tt) be scrveil .effi- 
ciently by transit. 

Tri-Met will cimsi^ler thew three' 
factors in deciding where to proviile 
service. Trattsit service and land use are 
Interrelilexl. Tri-Mct caninH achieve 
Its rider^bip gtmis without changes In 
larvjusoi' The agency's scrvjte Stan- 
ibrds ami Five Year Plan will lie 
changed to inc«>rponite land use 
coruiilerathms intt> service expansion 
decisitMis. , ' 

On a regional level. Tri-Met will be 
initiating a C(K>pcrative priKCss with 
local jurisdKiions to select the "desig- 
nated tninsit ct»rrUlttrs" callcil for ip the 
gtxil Because the cifrridors will he 
limited In nuirtlxT, tt>p priority will Ik* 
placed on locating ihein in areas with 
lurid use p;itterns comp;itibl^ with 
transit. '* 

' '- V 

Tri-Met will enc<Hir.igc the irKliisi«Hi 
of its land use initiatives In the region's 
l;irHJ UM.* ami tran.s|ionation plan* 
(Mein>'s<^cgi«»n 2040 Plan ami revlseil 
RcgiiKial Tr.insf^>nhtion Plan) arvJ in 
k)c;il cofiiprelK'iisive plans. Tl»e agency 
will also strive to achieve* rectignition ■ 
from the ikvelopinent community tliai 
tr.tfult-urienieil development is hnh 
a<.hievable aixl profitable. | , 



Senator Lautenberg. I am sorry that Senator Hatfield did not 
have an opportunity to be with us. He has a full agenda. He want- 
ed to make sure that he conveyed his interest in your being here 
and his pleasure at knowing that his State was so well rep- 
resented. He also asked that I insert a statement in the record on 
his behalf. 

We thank you both for joining us. 

[The statement follows:] 

Statement of Senator Hatfield 

Mr. Chairman, I want to thank you for holding this hearing today. As you said 
in your opening statement, "we can't travel by highways alone," and your commit- 
ment to addressing transit needs makes this Nation a better place to live. 

I also salute President Clinton's emphasis for light rail funding as demonstrated 
by his $752 million request in the stimulus package. I look forward to working with 
this administration and this subcommittee to address the estimated $6.4 billion to 
$15.7 billion needed per year for the Nation's transit capital needs. 

Through the support of this subcommittee, Portland, Oregon's westside light rail 
project is ready for construction. Last fall, FTA signed the Westside Full Ending 
Grant Agreement and contracts for the construction of the tunnel and low floor cars 
are due this spring. 

As you know, Mr. Chairman, Portland's growth management serves as a labora- 
tory for city planners worldwide. Traffic congestion, air pollution, and other urban 
problems are not an inevitable part of growtii — they are the result of growing the 
wrong way. 

As Tom Walsh, Tri-Met's general manager, and Earl Blumenauer, Portland's 
transportation commissioner, will point out, the Westside will build on our past suc- 
cesses in growth management. These two gentlemen demonstrate the type of vision- 
ary leadership that has blessed Portland for many years. 

Working together, we will bmld a system to serve the growing, compact urban re- 
gion while maintaining the growth management practices that nave made Portland 
a model. 


Senator Lautenberg. Mr. Judge, you are the last of this panel. 

Mr. Judge. Thank you, Chairman Lautenberg. I truly appreciate 
the opportunity to be here today. 

My name is Pat Judge. I am manager of transit development for 
the Regional Transit Authority in New Orleans. 

On behalf of the smaller transit operators, I am speaking as 
president of the South West Transit Association [SWTA] and presi- 
dent of the Louisiana Public Transit Association. 

Before I start on the substance of my remarks, I would like to 
commend and thank the chairman and this subcommittee for your 
efforts in restoring operating assistance in last year's appropria- 
tions bill. Many of SWTA's systems owe their survival to that 

On behalf of small operators, I want to focus on the cuts in the 
transit formula programs, operating assistance, and the cost of 
Federal mandates, such as the ADA, as they relate to small opera- 

Most small transit operators rely almost exclusively on Federal 
formula funding when it comes to support of their capital and oper- 
ating costs. Both operating assistance and formula funding overall 
has been stagnant for most of the last decade. Since 1988, operat- 


ing aid has been stuck at about $800 million, and funding for 2dl 
formula programs was at $1.7 billion this year. 

Suffice it to say that transit operators can barely afford to main- 
tain current services, let alone buy new buses or service if they 
cannot count on operating assistance being predictable and grow- 
ing. I hold the strong belief that the Federal Government should 
protect its massive investment in transit as it does its highways by 
providing some assistance for its upkeep. 

This year was particularly tough because transit funding under 
the formula program declined by some 15 percent for all operators, 
and that, coming on top of census adjustments, spread a small 
amount even thinner. 

We like the fact that the President proposes in his supplemental 
funding plan to devote the majority of the new funding to the for- 
mula program. Additionally, we join with the American Public 
Transit Association hoping that this action will be followed through 
to fiscal year 1994 by funding the transit program according to the 
ratio set within ISTEA. 

By way of examples, I would like to stress to you the value of 
operating assistance to communities in our region. In Louisiana, 
operating assistance accounts for nearly 20 percent of the Shreve- 
port system's service budget, and in Lafayette, that ratio is at 50 

While the level is only 5 percent of the New Orleans RTA budget, 
it represents 5 percent of a barebones budget that has just suffered 
through a major service reduction, layoffs, and two fare increases 
in the past 3 years. 

Other SWTA systems, such as the Central Arkansas Transit Au- 
thority of Little Rock, utilize Federal operating assistance for 25 
percent of their support, and Lubbock, TX, depends on it at 35 

Many of these and other systems across the Nation would not 
survive without the support from the Federal Government. 

We are also trjdng to meet the costs of the Americans With Dis- 
abilities Act. The Department of Transportation has estimated that 
ADA costs run somewhere between $800 million and $1.3 billion 
annually. Little Rock's Central Arkansas Transit Authority expects 
its paratransit costs to grow from 5 percent of their current budget 
to 11 percent by the date of full ADA compliance. 

Similarly, Shreveport's commitment will increase to 8.2 percent 
from the present 4 percent, while the New Orleans paratransit 
budget will go from 2.8 to 7 percent by 1996-97. 

Assuming no growth in Federal, State, or local support, which, 
unfortunately, we must consider a likely scenario, all of this growth 
must come out of the regular fixed route service budget. AJl this 
and the Clean Air Act, drug testing, bus testing, and health care 
cost increases are already here or just around the comer. 

Meanwhile, many of the smaller section 18 systems in rural 
areas are truly going through severe adjustments. Due to the im- 
pact of this year's reduction in the formula programs. Panhandle 
Community Services, a section 18 agency based in Amarillo, TX, 
will reduce their budget by 54 percent, a loss of 35 percent of their 
employees, and a service reduction to the community of almost 40 
percent. The Arkansas Public Transit Program expects a 15-per- 


cent cut in rural transit operating budgets, resulting in probable 
layoffs and/or reductions in people served. 

While we are grateful to this subcommittee and the Congress for 
preserving the transit program these past 12 years, we are anxious 
that the spotlight now on domestic problems and programs will 
shine on and include financial support for transit in an equitable, 
comprehensive, and complete approach. 

In any case, we would like to urge those of you on this committee 
to support all transit funding at the authorized levels. I know how 
difficult it is to fiind fast-spending programs, such as the operating 
program, but I would ask that you make every effort to fund oper- 
ating assistance at the authorized level. To be quite honest, while 
you and I may know the relationship between authorizations and 
outlays, that concept cannot be readily explained to the rider who 
must pay more or even who now must find another way to work. 

South West Transit Association strongly supports the President's 
proposals for increased funding in the current year, although we 
would have preferred the levels in your bill, particularly the match 
requirements. We hope that transit funding can be increased in fu- 
ture years. 

I would ask and hope that we have some predictability from year 
to year. 

Mr. Chairman and members of the subcommittee, I want again 
to thank you for this opportunity. I will be happy to try to answer 
some questions. 


Senator Lautenberg. Thank you very much, Mr. Judge. We 
have your complete statement and it will be made part of the 

[The statement follows:] 























93 CUTS. 








The South West Transit Association supports equity and balance in the funding of federal 
transit programs, with the primary aim of ensuring full funding for all formula 
programs. This balanced approach will help retain existing jobs and create new 
employment in the public transit industry to help contribute to national economic growth. 

Economic Stimulus Package 

The South West Transit Association supports the Clinton Administration's proposal 
to Increase funding for public transit by $750 million In Fiscal Year 1993. This short- 
term boost in funding for projects that can be initiated before September 30 will give 
transit systems of all sizes the opportunity to fulfill their immediate capital needs, further 
contributing to job creation and economic growth. Consideration should be given to 
waiving local match requirements, as many transit systems would otherwise be unable 
to match the new funds. 

Full Funding at ISTEA Levels 

The South West Transit Association supports fully funding the federal transit 
program in FY94 at the $5,325 billion amount authorized In the Intermodai Surface 
Transportation Efficiency Act (ISTEA). This level of support would maintain the 
integrity of transit formula programs, including operating assistance, at the fully authorized 
level of $2,865 billion. If funding does not reach the ISTEA authorization level, SWTA 
supports funding the formula program at $1.36 for every $1 spent on the major capital 
investment program (Section 3). 

Primary emphasis should be given to providing full funding at the authorized levels for 
transit formula programs aimed at the elderly and disabled and the rural areas of 
the country, since these systems are most dependent on the funds for their continued 
existence. The FY94 I ST EA-authorized funding level is $153.8 million for Section 18 rural 
programs, $68.7 million for Section 1 6 (b) programs for the elderly and disabled, and $7.7 
million for the Rural Technical Assistance Program. These three proqrams combined 
comprise only 4.3% of the entire FY94 transit budget at its fully authorized level. 

The South West Transit Association is a regional transit association formed in 1979 
to represent transit operators and others interested in public transit issues in the states 
of Arizona, Arkansas, Kansas, Louisiana, New Mexico, Oklahoma, and Texas. Its goals 


To provide forums for professional development, including the exchange 
of experiences, and the discussion and study of problems common to the 
public transit industry, through convenient and inexpensive training seminars 
and conferences held throughout the SWTA region; 

To provide advice and counsel to the executive and legislative branches 
of the federal government on transit-related issues and legislative and 
regulatory matters of importance to SWTA members; 

To emphasize the Importance of public transportation and the necessity 
of encouraging the improvement and use of public transit systems; 

To compile and collect data and information related to public 
transportation in the region; and 

To promote research, investigation, and study toward improving public 

SWTA has regular voting members who are representatives of public transit systems in 
the region, including municipalities that operate some form of public transit; associate 
(vendor) members; and professional members, including universities, regional coundls 
of govemments, state departments of transportation, state transit associations, and transit 
systems and individuals from outside the SWTA region. 

For more infomiation, contact the SWTA office at the address or phone number listed 



President Patrick R. Judge 
Manager of Transit Development 
Regional Transit Authority 
6700 Plaza Dr. 
New Orleans, LA 70127 
504/569-2725; fax 504/941-3105 

Vice President Keith Jooes 

Executive Director 

Central Arkansas Transit Authority 

901 Maple St. 

North LitUc Rock, AR 72114 

501/375-6717; fax 501/375-6812 

Secretary-Treasurer John Bartosiewicz 

General Manager 

Fort Worth Transportation Authority 

P.O. Box 1477 

Fort Worth. TX 76101 

817/871-6223; fax 817/871-6217 

At-Large Member Larry Hall 
Transit Director 
Kibois Area Transit 
310 E. Main 
SUgler. OK 74462 
918^67-3325; fax 918/967-8660 

At-Large Member Craig Cole 
General Manager 
Topeka Transit 
201 N. Kansas Ave. 
Topeka. KS 66603 
913/233-2011; fax 913/233-3063 

Arizona Transit Associaticn 

President Bruce Behocke 

General Manager 

Sun Tian 

P.O. Box 26765 

Tucson, AZ 85726-6765 

602/623-4301; fax 602/791-2285 

Arkansas Transit Association ■ 
President Betty Bradsbaw 
AiAA of Southeast Arkansas 
P.O. Box 8569 
Pine Bluff, AR 71601 
501/534-3268; fax 501/534-2152 

Kansas Public Transit Association 

President's Alternate Steve Fcigenbaum 

Executive Director 

Kansas Public Transit Association 

10250 Gamett 

Overland Park, KS 66214 

913/492-9092; lax 913/492-9094 

Louisiana Public Transit Association 

President's Altemale Eugene R. Eddy 

General Manager 


P.O. Box 7314, Industrial Station 

Shreveport.LA 71137-7314 

318/674-2670; fax 318/674-2678 

New Mexico Transit Association 
Acting President Jobo Parker 
Manager of Development 
Sun Tran 

601 Yale Blvd. SE 
Albuquerque. NM 87106 
505/764-6105; fax 505/764-6146 

Oklahoma Transit Association 

President's Allemate Steve Klika 


Central Oklahoma Transportation and 

Parking Authority 

300 S.W. 7th 

Oklahoma City. OK 73109 

405/297-2484; fax 405/297-2111 

Texas Transit Association 

President Tom Niskala 

GerMral Manager 

Corpus Christ! Regional Transit Authority 

P.O. Box 23040 

Corpus Christi, TX 78403-3040 

512/883-2287; fax 512/883-9938 


Cindc Wcalherby. Executive Director 
Tim Baldwin, Associate Executive Director 
P.O. Box 2100 

Waxahachie, TX 75165-1200 
214/937-0052 FAX 214/937^707 



Senator Lautenberg. I think it was important for the record and 
for those who are here today to hear the appeals made on a prac- 
tical or a functional basis that exist for small systems and more 
rural areas, as well as for the large urban areas. This bias that was 
developed in the past, and I think was unfair to transportation 
needs generally, but it also, in the process, was trying to pit the 
smaller areas against the larger areas. The smaller areas are more 
dependent, even, on Federal assistance. But the numbers in the 
large areas are so, so enormous. 

I want to ask Mr. Gambaccini a couple of questions. 

You talked about the decline in ridership and the reasons that 
you enumerated, such as declining population, et cetera. Is any 
part of that due, in your view, to lack of service, poor quality of 
service, that kind of thing? Are conditions discouraging ridership? 

Mr. Gambaccini. There is no question of that. Senator. 

When we introduced new cars or replaced the fleet on the Broad 
Street line of the subway system and the new cars on our West 
Philadelphia light rail, traffic surged. 

On the existing lines that are in the worst shape, there is a high- 
er level of decline. There is no question that the conditions are 
abominable. In fact, I have shown a slide presentation to a number 
of congressional groups here, particularly to the delegation from 
Pennsylvania, and challenged the group to show me conditions in 
any Third World country worse than the conditions, for example, 
on our Market-Frankfort line. It is deplorable. It is a national dis- 
grace, and there is no question it contributes to the decline in 

Fares are another thing. Regarding our fares, we did an analysis. 
Right now, Senator, the price of gasoline adjusted for inflation is 
$1 less per gallon that it was 10 years ago, and it's 40 cents a gal- 
lon less than it was 40 years ago. 

The price of a fare in Philadelphia, adjusted for inflation, is 65 
percent greater than it was 40 years ago, and the level of service 
is substantially less. So we have really adversely impacted the very 
people most dependent and most in need of public service. 

Senator Lautenberg. That has discouraged ridership. There is 
no doubt about it. 

Mr. Gambaccini. Absolutely. 

Senator Lautenberg. It also has enormous social consequences. 
The ftiU impact of transportation in our society is too often looked 
at in terms of the specific numbers related to transportation. 

When you hear the Portland story, it includes land use and it in- 
cludes total planning, and it makes a difference in the world in 
which we live. 

operating expenses covered by farebox 

What percentage of the operating expenses now, Lou, are covered 
by the farebox? 

Mr. Gambaccini. In our city, it ranges plus or minus 1 or 2 per- 
cent at around 55 percent, which puts us right at the top. New Jer- 
sey, New York, and Philadelphia are right at the top. The average 


around the country is about 38 percent, ranging down to about 20 
percent or below. 

Senator Lautenberg. State and local assistance represents what 

Mr. Gambaccini. It's about one-half of our operating budget. It's 
close to one-half of our operating budget. 

Share of the total budget, do you mean? 

Senator Lautenberg. Operating. 

Mr, Gambaccini. It's on the order of 40 percent. 

Senator Lautenberg. Small, relative to other systems around 
the country maybe? 

Mr. Gambaccini. Our State is substantially greater than most 
other States. I think there is only one other State that is higher. 

Senator Lautenberg. Is that a relatively new phenomenon or a 
relatively new program? 

Mr. Gambaccini. It has been progressive through the last 10 
years, largely displacing the decline in Federal support. However, 
as you know, the city of Philadelphia is in extreme fiscal distress. 

Senator Lautenberg. Right. 

Mr. Gambaccini. Therefore, the State has picked up the slack. 
Local governments do not have the latitude and are strapped. They 
are overwhelmed by the offload of other functions to local govern- 
ment support. So, in our case, unlike many other, in fact most 
other, States, the State has been the principal provider. 

Senator Lautenberg. I see. I thought there was a question in 
Pennsylvania about State share of transit needs. 

Mr. Gambaccini. Well, yes. We made a major push, and, in fact, 
this spilled over to the Federal scene, where there was an effort to 
hold back highway funds until and unless the State created this 
dedicated fund. 

Senator LAUTENBERG. Right. 

Mr. Gambaccini. The dedicated fund was enacted in mid- 1991. 

Senator Lautenberg. Has that been helpful? 

Mr. Gambaccini. Very. It doubled our capital capacity. It was 
very, very helpful. 

Senator Lautenberg. Can we take the difference between the 
farebox contribution of State and local and attribute the remainder 
to Federal assistance? We have 95 percent accounted for thusly, 
and that would leave 5 percent, roughly, from the Federal Govern- 
ment for operating assistance. 

Mr. Gambaccini. It's 4 percent Federal for operating assistance. 
It was up, as I said, at 18 percent 10 years ago. 


Senator Lautenberg. It is not as significant a share, in my view, 
as it ought to be. The question is how do we change it. 

What areas of your budget are growing most rapidly? 

Mr. Gambaccini. I'm sorry? 

Senator Lautenberg, What areas of your budget are growing 
most rapidly — operating expenses, capital expenses, or expansion? 

Mr, Gambaccini, At the moment, ADA is growing. It is the sin- 
gle, it is the only growth service. Everything else is declining in 
volume of service. 


Senator Lautenberg. But is not that a relatively small portion 
of the growth of expense? 

Mr. Gambaccini. Yes, it is. 

Senator Lautenberg. But it is the largest single one. You are 
saying on a percentage basis here, not in absolute dollars? 

Mr. Gambaccini. No. That's right. 

My point, though, is we are in a state of retrenchment and have 
been for several years. We are operating with an operating budget 
the same as 4 years ago. When you can take into account inflation 
and other pressures for improvement in service, including a sub- 
stantial increase in police, one of the areas — not currently, but in 
the last 4 years — one of the largest percentage increases has been 
police. We have gone from on the order of, we have doubled from 
about 150 to 325 the police officers. We reduced crime 50 percent 
in most of the serious crime categories in that same period. 

Senator Lautenberg. What has been the cost to SEPTA of de- 
ferred maintenance? 

Mr. Gambaccini. I'm sorry. 

Senator Lautenberg. What has been the cost and the penalty on 
quality of service as a result of deferred maintenance? 

Mr. Gambaccini. This is the single biggest tragedy. We have dis- 
ruptions, frequent breakdowns of equipment, including support 
equipment, power catenaries. Catenaries are constantly being 
pulled out. That has been a contributing factor to the decline in 
ridership, the unreliability. 

We do not believe there are any serious immediate safety con- 
cerns. But we have gotten close a number of times and had to do 
extraordinary things to keep the system safe and operating. But it 
is pervasive. 

We are paying a dear price. We are paying an extraordinary 
amount for wasteful maintenance merely to keep things afloat, put- 
ting on patches, literally, steel patches, to keep conditions from 
falling apart. The prudent thing, obviously, is to fix it. 

We have one line. Senator, if I might, our busiest line on the sys- 
tem — the Market-Frankfort elevated system — which we undertook 
to start rehabilitating, the elevated structure, several years ago. It 
would have been a 6-year $400 million project. It is now a 21-year 
$950 million project. Because of the lack of funding, we have had 
to stretch it out. And, rather than completing it on a systems ap- 
proach, section by section, which we began and then ran out of 
money, we had to go through and put a complete new 
understructure to hold the thing from collapsing, go back and do 
the track work, go back and do the stations, disrupting the commu- 

It is maddening, the wasteful nature of that expenditure and the 
disruption of the community. 


Senator LAUTENBERG. What do you think this committee might 
do, Lou, to help the larger transit systems in the country — and a 
short answer, if you would? 

Mr. Gambaccini. Senator, this is probably not the appropriate 
place to say this or do this, but I would love to invite your commit- 

68-623 0-93— 11 


tee to come up and see the conditions for yourself and then ask you 
to develop the political will to help us out on an urgent basis. 

There are hundreds of thousands of daily riders on that line, 1 
million a day, that are affected. The original concept of the UMTA 
program was capital grant for rail modernization. It has since been 
evolved into a variety of other things. A shrinking fund has been 
expanded to cover many, many more objectives, and that is the 
heart of the problem. 

We have a unique set of problems. South West particularly is 
looking to develop new starts and the like. Both are needed. 

I would submit that the single best thing you could do is to come 
and see for yourself and then do the appropriate thing in terms of 
followthrough down here. 

Senator Lautenberg. Mr. Walsh, Tri-Met is somewhat unique in 
that transit is being used as a tool for some significant social 
change — cultural change, actually. That is a very positive direction. 

It appears as though, through a combination of strict zoning and 
land use planning, you hope to manage future development so that 
certain corridors of your region can be served by your rail system 
and not just blight the land by pouring concrete, et cetera. 

Is this a fair assessment of what you are attempting to do by de- 
veloping and building this new rail system? 

Mr. Walsh. Very much so, Senator. I think two keystones to 
that — statewide land use planning regulations were put in place in 
1971 that require urban growth boundaries to be drawn around 
each urban area in the State and to be maintained. That has fos- 
tered compact, urban growth. With that comes moderate densities. 
With those moderate densities come all the efficiencies of a transit 

Second, we have had just significant support not only from our 
citizens, generally, but from the business community to grow this 
transit system. It is a grand experiment and so far it is working. 
Our ridership is up 35 percent over 7 years ago. 

Senator Lautenberg. It is a wonderful part of our country. I 
think the citizens in Oregon, and particularly the Portland region, 
want to maintain a certain quality of life that brought them there 
in the first place. We would like to see that happen across the 

Do you believe that FTA's assessment of your system fairly ap- 
preciates what you are trying to do by using transit in this grand 

Mr. Walsh. Moderately. The evaluation of new start projects 
places a real emphasis on curing massive problems, and our focus 
is to stay ahead of those problems. Our cost effectiveness index is 
clearly acceptable, but it is not, by those FTA standards, in the 
very best range. But we work well with them, as I indicated in my 
opening comments. Within 9 months after the new ISTEA, we had 
negotiated the first new full funding grant agreement under that. 
Bob McManus and Brian Clymer were of significant help. We have 
an extension to that. Language will come by way of amendment to 
that full funding grant agreement. The cost effectiveness index on 
that is not as favorable as the baseline. But I expect those negotia- 
tions to be successful. 


Senator Lautenberg. It may be a little immodest of me, but 
ISTEA was a significant change in our thinking in our transpor- 
tation culture in this country. 

Mr. Walsh. It was an absolute sea-change. 

Senator Lautenberg. Senator Moynihan and my former col- 
league, Congressman Bob Rowe, worked so hard. I joined in as did 
Senator D'i^ato. We worked very hard. It is heartening to me to 
hear of the kinds of use that can be made under that structure, the 
kind of applications that can be developed that really make sense 
for our country. 

I am delighted to have this witness panel here because you rep- 
resent some different aspects of what it is that we need in our 
transportation matrix. It is very helpful. 


Mr. Judge, what do you think the most pressing issues are that 
face operators of medium and small city transit services? 

Mr. Judge. From our viewpoint, it is just consistency in the ef- 
fort and, hopefully, some growth on particularly the operating as- 
sistance, which I know is always a tough issue. But for the smsdler 
systems, we could have all the capital money in the world, but if 
we do not have the money to operate it, that capital money will go 
wanting. That is unfortunate. 

Senator Lautenberg. These are symbiotic forces. One really can- 
not operate without the other and maximize the value that we are 

I have always argued for increased transit operating assistance, 
and opponents have argued that the smaller sized systems should 
not provide service if they have to depend so heavily on Federal op- 
erating help. How do you answer the critics of that? 

Mr. Judge. The critics could be right in some instances or some 
locations where the local government has not quite gotten around 
to supporting the function as well as they could. But in all due re- 
spect, many of those same systems have gone through economic 
hard times. They are very small. The transit systems are aimed 
just toward a certain population, whether it is fortunate or unfortu- 
nate, that oftentimes is not represented at the local level. Whatever 
incentives can be made to promote local sources to fund it, funding 
is one thing. But the realities of economics back home will dictate 
what is reality. 

Senator Lautenberg. I think the critics are not intending to 
simply level a negative message, but, rather, to try and get some 
yardstick by which you measure local interest. The Federal Grovem- 
ment just is not going to take over and do all these things. But that 
does not necessarily mean that the requirements, match require- 
ments, et cetera, have to be precisely the same. 

You are not going to get a passenger-per-mile equivalent typi- 
cally in smaller systems. But you cannot isolate populations and 
you cannot say to everybody OK, come on, move into town and we 
are going to abandon the rest of the area. 

Mr. Judge. If I could use one example very briefly, I will use 
New Orleans. We have a dedicated, we have a one penny sales tax. 
We have increased our fares, as I said, 2 times in the last 3 years. 
And the FTA, or UMTA at the time, proposed to eliminate operat- 


ing assistance for cities 1 million and above. But when they cast 
a net that big, they got us. But within our region, we have 3 other 
providers. The New Orleans Economic Commission, the last figures 
I have seen show that 45 percent of that population is at the pov- 
erty level or below. We have a transit dependency of 20 percent. 

There is no way to get more money out of them or out of the city 
budget, which has lost block grants in the form of urban renewal 
grants and that kind of thing. 

Senator Lautenberg. Mr. Blumenauer, did you want to add any- 

Mr. Blumenauer. Mr. Chairman, just on your previous question, 
it seems to me one of the serious problems we have is that people 
are not comparing apples and oranges in the transportation sys- 
tem. We have done some calculations about the degree of subsidy 
for the automobile in our community which is in the neighborhood 
of some $5,000 per vehicle. Forty percent in Pasadena — our col- 
leagues have analyzed the impact on their police system and 40 
percent of the law enforcement budget goes to the consequences of 
the automobile. 

I would think that if we were able, with your help, to have a 
transportation system that looks at all of the pieces and looks at 
comparable degrees of subsidy, both for operations and for capital, 
we would find, in fact, that it is far more cost effective to take the 
direction in which you are leading us. 

Senator Lautenberg. Thank you. I think we have to throw avia- 
tion in there and take a look at what it costs to operate the system. 
This is not to criticize the system. We have a dam good aviation 
system. I would like it supplemented by a high-speed rail, as I 
think most people know. We are going to continue to work on that. 

Thank all very much for being with us. 



Georgetown University 

statement of rev. william l. george, s.j., assistant for fed- 
ERAL relations 

H Power Corp. 

statement of dr. art kaufman, president 

Transportation Manufactitring Corp. 

statement of eugene tunila, executive vice president 


Senator Lautenberg. Next we have Dr. Arthur Kaufman, Rev. 
William George, and Mr. Eugene Tunila. 

Reverend George, it is nice to see you. We are not going to dis- 
cuss Seton Hall, none of that today. We are not going to discuss 
the important issues. We are going to discuss other things. 

Reverend George. I'm going to be there. 

Senator Lautenberg. I flew up to New York, funny enough, with 
the Georgetown team a couple of weeks ago and sat next to a 
young man whose first name was Vladimir. He is from Yugoslavia, 
actually I think Croatia, as is one of the star players for the New 
Jersey Nets, Petrovic. It was quite interesting. 

Reverend George. Vladimir has parents and grandparents on 
both sides, Serbian and Bosnian. 

Senator Lautenberg. We had a long talk. 

Reverend George. He is a wonderful kid. 

Senator Lautenberg. Yes, a wonderful person. Wonderful. 

OK. We are pressed for time, as always. We are down to the 

I would ask Father Greorge to give his testimony first. Welcome. 
It is nice to see you again. 


Reverend George. Thank you, Mr. Chairman, members of the 
committee, and staff. I am Father George, assistant to the presi- 
dent of Georgetown. It is nice to be here at the table with Mr. 
Tunila and Art Kaufman from TMC and H-Power, people we have 
worked with for quite a while. It is nice to be with competent pro- 

Behind us are Dean Price and Sam Romano. Sam is our expert 
on the bus program at Georgetown, directing it now. Dean is the 



person who had the genius to recognize the value of phos-acid fuel 
cells for buses. 

The program started way back in 1984, when the committee pro- 
vided funds to do a study. We estimated after it was deemed fea- 
sible that it would cost about $17 million over a 5- or 6-year period 
to get a fleet of 30 foot buses. 

We have kept to that budget. It is going to end up being about 
$17 million over the years, but we will end up with fewer buses. 
That is how we kept the price down of the research project and de- 

It was a marriage between a university that, because it believes 
in a liberal education, figured out how to solve a problem of buses 
and cleanliness, with the industry that we worked with, and the 
Department of Transportation, actually in those days with the 
Urban Mass Transit Authority, and the Department of Energy, 
which in those days was way back to ERTA. 

So with all those pieces together, it was quite a wonderful act to 
juggle. It was a lot of juggling but it really worked because the De- 
partment of Energy, being more interested in research, would 
never have gotten a bus in my opinion. But the Department of 
Transportation, wanting a real vehicle in production, and with the 
industry to keep it read and actual, we have ended up where we 
are going to have a white book approved — not approved, but a vehi- 
cle that fits the white book standards of the Federal Transit Ad- 
ministration — ready to drive this October. 

We cannot drive it on the roads yet because of legal problems 
when that happens. But we would invite you to drive it if you 
would like to come October or November. It would be neat if you 
could invite some other people. Think big. Ask the President. 

Senator Lautenberg. Friends or colleagues. 

Reverend George. We are so confident that it is going to be 
there. It is not a theoretical bus. It will fit the Transit Administra- 
tion's guidelines. We are grateful for that. 

When we started this program, it was all American. Then 
Engelhard sold its patents to Fuji. Well, in the meantime, we fig- 
ured out a way to get those patent licenses back. So we are sort 
of reversing that trend. It is a stimulating thing to do. 

That is almost everything I want to say except that these buses 
are so clean. I was listening to Senator D'Amato. Hundreds of these 
buses pollute as much as one diesel bus. That is a tremendous step 
forward. It is real. The technology is better than we ever antici- 

I would like to thank you for that. 

One quick aside. The phos-acid fuel cell is really do-able for 
trains. When I went to Japan a while back, they were going to use 
these phos-acid mechanisms to run the alternative energies, like 
the air conditioning, the lights, the microwaves, or whatever on a 
train because they did not want to put up a whole new line of 
power lines for electricity. So it is a very viable technology. 

I think once we get it on the road, the world will be believing 

Thank you, Mr. Chairman. 



Senator Lautenberg. We will all watch it with interest, Father 
George. We have your complete statement and it will be made part 
of the record. 

[The statement follows:] 



Dear Mr. Chairman and Subcommittee Members: 

I am Father William L. George, SJ, Special Assistant to the President of Georgetown 
University, the Reverend Leo J. O'Donovan, SJ. Thank you for the opportunity to testify 
before your Subcommittee. 

The fuel cell bus development program is well underway to producing working 
prototypes of a methanol fueled phosphoric acid fuel cell bus. These buses meet the 
Department of Transportation's (DoT) white book standards for buses and will be 
demonstrated in the fall of this year, 1993. See Exhibit I . 

This is a consortium effort of the Department of Transportation, the Department of 
Energy (DoE), Georgetown University (coordinating manager), H-Power Corporation in New 
Jersey and TMC, bus manufacturing firm in New Mexico. 

Since 1984 the appropriation committees for DoT and Interior have jointly funded this 
prototype production. The invested federal funds by DoT is approximately $7 million and 
DoE is approximately $10 million. 

The emissions from this bus are far less than the requirement of the Clean Air Act. 
The provision in the Clean Air Act for urban buses states that clean fuel bus emissions of 
PM not exceed 50 percent of emissions allowed for conventional heavy duty vehicles or 
engines beginning in May 1994 and thereafter (.05 grams per brake hph). See Exhibit 2 . 

As a comparative example: several hundred fuel cell buses will emit less pollutants 
than one current diesel powered bus. 

The next essential step is to get this bus to market. The Transportation 
Appropriation Committees wisely provided $5.1 million for the development of 
manufacturing process of this fuel cell bus with a promise of funds to follow in Conference 
Report 102-924. The need for commercialization funds to do production preplanning and 
engineering is critical. Other countries have produced below standard prototypes but are 
serious in their efforts to capture a market. The U.S. is a few years ahead, but any delay 
and we could be importing buses. 

As a result, the Department of Transportation and Georgetown University in a 
coordinated effort are in a process of planning to arrange for production of an initial fleet of 
about 30, 40ft. buses with H-Power and TMC. The program will provide robotic production 
of fuel cell plates and assembly. TMC would gear a robotic production line to produce the 
first Heet. After this initial fieet they would go into production. 

FY 1994 and 1995 pre-production funds are essential in the range of $12-15 million 
per year. See Exhibit 3 . Specific state and regional transportation authorities have stated 
they will arrange for purchase of the initial fleet in 1996, once close to commercial levels of 


Rev. William L. George, S.J. y 











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Clean-Air Act 

Title II PL-101-549 

Urban Buses * 

• EmissioB* atAadards for cleaa-foel buses. Requires the 
administrator to promulgsie by Jan. 1. 1992, emissions standards 
for dean-fuei buses for MY 1994 and thereafter. The standards will 
be based on the best technolo^ that could reasonably be anuci- 
pated to be available at the time the standards are implemented. 
Lakinf into account cost, safety, enerfy, lead time and other 
relevant factors. Except for the specific requirements referred to in 
the next parafiaph, the standards must require compliance with 
emissions standards for conventional heavy-duty vehicles ot the 
same type and model year. 

• Specific requirements for buses. Requires that clean-fuel 
bus emissions of PM not exceed 50 percent of the emissions allowed 
for convenuonai heavy-duty vehicles or engines m MY 1994 and 
thereafter. Tht administrator could exceed the 50 percent level if it 
was technoloficaily achievable but could not increase allowable 
emissions above 70 percent. 

• Additional fuel requiremenL Requires the EPA adminis- 
trator annually to test urban buses subject to the PM standard to 
determme if they comply over their fuU useful life. If nou the 
administrator must require that all buses purchased or put into 
service in meuopolitan statistical areas (MSAs) or consolidated 
metropolitan statistical areas (CMSAs) with a 1980 population of 
750.000 be operated on dean fuels (methanol, ethanol. propane, 
natural gas or any comparably low-polluting fuel). The adminis- 
trator must phase in the requirement over five years, beginning 
three years after the administrator's determination above. 

• Existing urban buses. Require that the foregoing clean-fuel 
regxilations also apply to existing buses that have their engines 

rebuilt or replaced after Jan. 1. 1995, and that operate in the areas 
• PM. Requires that emissions of PM from buses before 1994 not 
•xceed 0.25 gram per brake horsepower hour in MY 1991 and MY 
L992 and 0.10 gram per brake horsepower hour in MY 1993 and 

Summary. CQ - Nov. 24, 1990. Pg. 3941 





This document contains the Program Plan for the development of a U.S. produced fuel 
cell system for transit buses. The program is designed to provide the front end engineering and 
development activities necessary to make U.S. manufacturers and suppliers ready for 
production of fuel cell powered buses in the 1996 period. The Program Plan is responsive to a 
Congressionally mandated program as submitted by the Senate Appropriations Committee for 
the Department of Transportation and confirmed in the joint House Senate Conference Report. 


The Departments of Transportation and Energy have been conducting a multi-phased 
program to develop a phosphoric acid fuel cell (PAFC) powered bus for the transit industry. 
The program which is jointly funded through the Federal Transit Administration (FTA) of The 
Department of Transportation and the Electric and Hybrid Propulsion Division of the 
Department of Energy's Office of Transportation Technology is presently in the Phase II stage 
where three 30 ft fuel cell powered buses are being built. The program, which has been 
underway since 1987 will have the first bus operating in 1993. Phase I of this program 
produced and tested a fuel cell power system which demonstrated the feasibility of the concept. 
The phosphoric acid fuel cell (PAFC) being used in this program was developed by Englehard 
Industries in earlier programs using NASA and DOE fund as well as their own. Prior to the 
official start of Phase I, Englehard sold the development and manufacturing rights to Fuji 
Electric of Japan. 

This Program Plan is focused on reinstating the U.S. lead in fuel cell development and 
preparing for the serial production of units by U.S. manufacturers. 


Georgetown University initiated the fuel cell bus program and under the auspices of the 
Department of Transportation's Urban Mass Transportation Administration (now FTA) 
managed the initial feasibility study. At present Georgetown provides the technical and 
program management for the ongoing three bus development program. It is proposed to 
continue Georgetown in this role to direct the introduction of a U.S. supplier for Fuel Cell 
Buses production. 

To assist Georgetown TMC, the bus manufacturer presently conducting the design 
study for a fuel cell powered 40 ft bus under the ongoing contract, will share the management 
role for this program. TMC is the largest transit bus manufacturer in the U.S. Their expertise 
in bus manufacturing and their experience in the fuel cell bus program will provide a 
significant cost and time advantage in configuring a U.S. produced FC bus system. 

The first step, as shown in Figure 1 will be for Georgetown to prepare a program 
definition and requirements document and request proposals for a study. One or more U.S. 
fuel cell developers will be given a 6 month Phase O study contract to prepare plans to develop 
and produce a domestic PAFC system and submit a proposal for the plan. The program will 
be divided into three phases to carry out the plan proposed by the selected contractor. The 


phased program will develop a domestic fuel cell for a 40 ft transit bus, build fuel cells and 
buses for testing, build a limited number of 40ft. pre-prototype fuel cell buses for evaluation 
and prepare plans and organize the infrastructure needed for the production phase. Upon 
completion of this program, pilot production can begin and buses procured under the FTA 
capital grant funding program. 

The phases and duration are as follows: 

Phase I, Preliminary Design of Prototype Production Units 

This will be a 12 month program and will also include the configuration of the 
40 ft. bus for the PAFC power system. 

Phase II, Fabrication of Two PC Test Units and One 40 Ft. Bus System 

This is a 12 month program which will confirm the FC design and proceed to 
integrate it with the bus. 

Phase III, Test Bus Evaluation and Fabrication of Three Pre-Prototype Bus Systems 

This phase is 18 months long and will evaluate the test buses and produce pre- 
production systems for further evaluation. It will confirm the design is ready for 
pilot production. 

Figure 2 is the funding plan which indicates the distribution of the funds and the 
phasing of funding requests for the additional funds over and above the $5. 1 M authorized. 



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STATEME^^^ of dr. art KAUFMAN 

Senator Lautenberg. Dr. Kaufman, welcome. 

Dr. Kaufman. Thank you, Mr. Chairman and members of the 
subcommittee and staff. 

I am Arthur Kaufman, president of H-Power Corp., a small busi- 
ness located in Belleville, NJ. Thank you for the opportunity to 
speak with you today about our company and about our views on 
transportation needs in this country. 

We at H-Power have been active in the development of fuel cells 
and commercialization activities for that since 1988. H-Power is 
pursuing phosphoric acid and membrane electrolyte fuel cells for 
certain vehicular and stationary applications. One major emphasis 
is in low wattage, battery replacement type devices that take ad- 
vantage of the high energy density of hydrogen, as stored in metal 
hydride cartridges. 

H-Power is also engaged in the development of subsystems for 
fuel processing and energy storage in conjunction with integrated 
fuel cell systems. One approach of particular promise involves re- 
acting steam in a bed of iron particles to generate hydrogen in situ, 
safely and inexpensively, to produce zero emissions fuel cell power 
or, alternatively, ultra low emissions I.C. engine power. 

Most pertinent to today's discussion is the methanol-fueled, liq- 
uid-cooled phosphoric acid fuel cell power source for vehicular ap- 
plications. H-Power is the prime contractor for the current DOE 
phase II project to implement such a power source in transit buses. 
This contract will result in the fabrication, testing, and deplo3rment 
of three 29-foot test bed buses as well as the conceptual design for 
a full-size 40-foot fuel cell powered transit bus. 

The fuel cell technology being applied by an overseas subcontrac- 
tor in this project is based on technology developed by myself and 
H-Power colleagues while we were at Engelhard Corp. in New Jer- 
sey. It is H-Power's objective to become an integrator and supplier 
of fuel cell based propulsion systems for transit buses and other ve- 
hicles, and we shall seek to manufacture substantial portions of the 
fuel cell subsystem itself. 

What we are advocating, Mr. Chairman, is not business as usual 
in relation to what was said earlier by Senator D'Amato. H-Power 
advocates that the phosphoric acid fuel cell bus program be recog- 
nized for its outstanding potential in creating a reasonably near- 
term environmental asset for our cities. 

Furthermore, we often use the term "pathfinder" for this pro- 
gram since its commercial success would be expected to foster the 
acceptance and implementation of other fuel cell technologies in 
various transportation and related applications. 

Specifically, the existing DOE fuel cell phase II program and its 
logical successors, leading to the construction and evaluation of 
small fleets of fuel cell powered buses, should be fully supported. 
Equally important, however, is strong support for the DOT pro- 
gram to provide funding for manufacturing engineering and tooling 
that will enable such construction to proceed at reasonable cost, 
starting in 1996. 

Other key government actions to stimulate commercialization of 
this vital technology would be: (1) high DOT subsidies, say 90 per- 


cent, for purchase of fuel cell powered buses by transit properties 
nationwide; (2) requirements for including such vehicles in Federal 
fleet purchases; and (3) examination of possible alterations in Fed- 
eral, State, and local laws and regulations to facilitate demonstra- 
tion and commercialization of such fuel cell powered vehicles. 

We also wish to highlight the role of small business in this sce- 
nario. H-Power, as a prime contractor in the phase II fuel cell pow- 
ered bus project, does not profit from this position. In fact, our com- 
pany is required to contribute dearly to accommodate built-in cost- 
share obligations. 

We believe that this is an acceptable price to pay in fostering this 
highly desirable transportation technology, providing that there is 
an opportunity for profitability down the road. We, as a product- 
oriented small business, can move responsively to address the mar- 
ket. We are not constrained by market-size concerns. We seek to 
exploit domestically created technology that we, as a company and 
as individuals, helped establish. 

Our business sector is responsible for the overwhelming portion 
of job creation in this country in recent years, and this transpor- 
tation technology has great potential for enhancing this trend. 

In conclusion, Mr. Chairman, our country has the opportunity to 
foster a transportation technology that can greatly improve air 
quality in our cities and make a salient contribution toward our 
meeting Clean Air Act goals. 

Furthermore, noise would be significantly reduced and high fuel 
efficiently can be realized while utilizing domestic fuels. 

Finally, this transportation initiative can help bolster our coun- 
try's position in fuel cell technology, create domestic jobs, and, es- 
pecially because of substantially nigher energy pricing overseas, 
provide an attractive export opportunity. 

Thank you very much, Mr. Cnairman. 

Senator Lautenberg. Thank you. That was done with engineer- 
ing precision in 5 minutes. I am sure that that is your background. 

Dr. Kaufman. I plead guilty. 


Senator Lautenberg. We have your prepared statement and it 
will be made part of the record. 
[The statement follows:] 

Statement of Arthur Kaufman 

Dear Mr. Chairman and Subcommittee Members: I am Arthur Kaufinan, Presi- 
dent of H Power Corp., a small business located in Belleville, New Jersey. Thank 
you for the opportunity to speak with you today about our company and our views 
on transit needs in this country. 

We at H Power have been active in the development of and pre-commercial activi- 
ties for fuel cell power systems since 1988. I, personally, and some of my colleagues 
at H Power, have over 25 years of experience in the fuel cell field. 

H Power is pursuing phosphoric acid and membrane electrol3rte fuel cells for cer- 
tain vehicular and stationary applications. One major emphasis, in addition to the 
phosphoric acid fuel cell based vehicle propulsion systems that wUl be discussed 
here today, is in low-wattage, battery-replacement type devices that take advantage 
of the high energy density provided by hydrogen as stored in metal hydride car- 
tridges. We are cvurently making initial shipments of such units (at the nominal 
25 W level) as demonstration devices. 

H Power is also engaged in the development of subsystems for fuel processing and 
energy storage in conjunction with integrated fuel cell systems. One approach of 


particular promise involves reacting steam in a bed of iron particles to generate hy- 
drogen in situ — safely and inexpensively — to produce zero-emissions fuel cell power 
(or, alternatively, ultra-low emissions I.C. engine power). The iron for such a process 
represents an alternative fuel since it can be formed through the use of a broad 
range of domestic fuels and waste-derived fuels. 

Most pertinent to today's discussion, however, is the methanol-fueled, liquid- 
cooled phosphoric acid fuel cell power source for vehicular applications. H Power is 
the Prime Contractor for the current DOE Phase II project to implement such a 
power source in transit buses. This contract will result m the fabrication, testing 
and deployment of three 29-foot test-bed buses as well as the conceptual design for 
a full-size 40-foot fuel cell powered transit bus. 

The fuel cell technology being applied by an overseas subcontractor in this project 
is based on technology developed oy myself and H Power colleagues while we were 
at Engelhard Corporation in New Jersey. It is H Power's objective to become an in- 
tegrator and supplier of fuel cell based propulsion systems for transit buses and 
other vehicles, and we shall seek to manufacture substantial portions of the fuel cell 
subsystem itself 

Permit me to offer my perspective on the application of fuel cells in transit appli- 
cations at this point. Ever since I was involved in the application of such technology 
in forklift trucks in the 1980's, I have been convinced that the methanol-fueled, liq- 
uid-cooled phosphoric acid fuel cell, in conjunction with a surge battery, comprises 
an outstanding system for transit buses (and other vehicle applications as well). The 
system integrates well and our current projections indicate that performance will 
readily meet diesel bus benchmarks. Here is a fuel cell technology that is virtually 
ready (pending a modest degree of system optimization) and an application that 
truly makes commercial sense, provided that initial economic barriers can be over- 

H Power advocates that the phosphoric acid fuel cell bus program be recognized 
for its outstanding potential in creating a reasonably near-term environmental asset 
for our cities. Furthermore, we often use the term "pathfinder" for this program 
since its commercial success would be expected to foster the acceptance and imple- 
mentation of other fuel cell technologies in various transportation and related appli- 
cations. Specifically, the existing DOE Phase II program and its logical successors, 
leading to the constiniction and evaluation of small fleets of fuel cell powered buses, 
should be fully supported. Equally important, however, is strong support for the 
DOT program to provide funding for manufacturing engineering and tooling that 
will enable such construction to proceed at reasonable cost, starting in 1996. This 
dual-pronged approach will help break the vicious cycle that so often prevents costs 
of new technology from being lowered because of insufficient volume, while volume 
remains low because costs are too high. 

Other key Gfovemment actions to stimulate commercialization of this vital tech- 
nology would be (i) high DOT subsidies (90 percent) for purchase of fuel cell powered 
buses by transit properties nationwide; (ii) requirements for including such vehicles 
in federal fleet purchases; and (iii) examination of possible alterations in federal, 
state and local laws to facilitate demonstration and commercialization of such fuel 
cell powered vehicles. These actions would serve to boost the new technology over 
the introductory commercialization threshold and then allow normal market forces 
to take over with respect to long-term commercialization. 

We also wish to highlight the role of small business in this scenario. H Power, 
as Prime Contractor in the Phase II ftiel cell powered bus project, does not profit 
from this position. In fact, our company is required to contribute dearly to accommo- 
date built-in cost-share obligations. We believe that this is an acceptable price to 
pay in fostering this highly desirable transportation technology, providing that there 
is an opportunity for profitability down the road. We, as a product-oriented small 
business, can move responsively to address the market. We are not constrained by 
market-size concerns. We seek to exploit domestically-created technology that we, as 
a company and as individuals, helped establish. Our business sector is responsible 
for the overwhelming portion of job creation in this country in recent years, and this 
transportation technology has great potential for enhancing this trend. 

In conclusion, our country has the opportunity to foster a transportation tech- 
nology that can greatly improve air quality in our cities (the methanol-fueled fuel 
cell powered bus being virtually non-polluting) and make a salient contribution to- 
ward meeting Clean Air Act goals. Furtiiermore, noise would be significantly re- 
duced, and high fiiel efficiency can be realized while utilizing domestic fuels. Fi- 
nally, this transportation initiative can help bolster our country's position in fuel 
cell technology, create domestic jobs, and — especially because of substantially higher 
energy pricing overseas — provide an attractive export opportunity. 



Senator Lautenberg. Mr. Tunila, it is nice to see you. We invite 
you to testify. 

Mr. Tunila. Thank you, Mr. Chairman. I am Eugene Tunila, ex- 
ecutive vice president of Transportation Manufacturing Corp. 

Senator Lautenberg. If you pull the microphone a little closer, 
we'll hear you a bit better. Thank you. 

Mr. Tunila. Thank you for the opportunity to testify before your 
subcommittee. My subjects discussed this morning will be, first, a 
brief resume of the past history of the transit bus industry, concep- 
tual proposals for investments and needs as well as their benefits, 
and, finally, ideas that can generate significant investment savings 
for operating as well as the passengers' properties and manufactur- 

The bus transit industry in the 1970's has been characterized as 
a national effort to achieve a strengthened transportation infra- 
structure oriented toward major population mobility in order to 
minimize the anticipated gridlock and improve the general eco- 
nomic welfare. 

In the late 1970's and early 1980's, a multitude of offshore manu- 
facturers entered the U.S. market in anticipation of growth and 
perceived opportunities, such as the European manufactured, expe- 
rienced in more reliance on urban transportation. 

M.A.N., Volvo, and Saab entered and exited our market and left 
behind a fleet of orphans which has, in turn, eventually increased 
the properties' operating costs as the offshore fleet aged. 

The 1980's and the 1990's reflected a trend of funding erosion in 
the face of needs, as evidenced by ISTEA and additional regula- 
tions mandated by requirements for cleaner air and further product 
enhancements for the disadvantaged. 

The present unit cost impact of providing an alternate fueled bus 
in compliance with ADA regulations is $50,000 per vehicle of in- 
creased capital cost, which does not include the operating cost pen- 
alty. Other consequences include 2,000 to 3,000 pounds of addi- 
tional weight on a clean air bus, reduced seating capacity per bus, 
from about 50 to 45 people, which, in return, requires more buses 
and/or bus utilization per passenger trip, in spite of the increasing 
number of same. 

Third is increased training in new technologies on the supply as 
well as the user side. 

OEM development funding diversions have occurred toward the 
regulations that have been mandated at the expense of new prod- 
uct development and enhancements. 

Six, increased transition funding for conversion to new alter- 
native fueling stations at the properties. 

Seven is more weight, less passengers, cleaner air, and less fuel 
economy equate to higher operating costs to be borne by all, most 
especially in the nonattainment areas. 

To further compound our situation, our fleets are aging since 
funding levels forced us to abandon the recommended replacement 
cycle. For example, during the 1980's, the average age of our fleets 
has increased to over 8 years on average versus a desired 6-year 
average. We are currently trapped in a whirlpool of obsolete tech- 


nology and product. We are past the point of prudent deferral, and 
a planned effective program to minimize capital and operating 
costs while maximizing intermodal service is required. 

TMC has basically four priority recommendations. One, funding 
program available with a consistent flow and predictability that 
supports a replacement cycle of an average fleet age of 6 to 8 years. 
The replacement cycle would equate to a U.S. volume of approxi- 
mately 3,000 to 4,000 units per year plus or minus growth. 

Two, to update our fleets by a transition or bridge program pro- 
viding a framework within ISTEA to remanufacture aged buses 
and incorporate the latest ADA and clean air standards at approxi- 
mately 60 percent of the cost of a new bus but with a new war- 
ranty. This program will also stretch the public's dollar. 

Three, support R&D efforts on the 21st century technology, such 
as the fuel cell project, which can achieve ZEV status and also be- 
come the vanguard for eventual bus exports from the United States 
with U.S. built fuel cells. In addition, the program has the advan- 
tage of utilizing the existing fueling stations being put in place for 
alternate fuel vehicles — no throw-away investments in the fuel cell 

Fourth, fund a total systems approach to coordinate, evaluate, 
and manage all the interfaces for transportation R&D, the 
intermodality network, exportable product and technology goals, 
product recyclability, IVHS, clean air and energy dependency. Such 
a proposal already exists and is being sponsored Toy Sandia Na- 
tional Laboratories. 

Areas where TMC recommends for your consideration on capital 
and operating savings include: one, replace the 80 to 90 percent 
funding for bus purchases with a fixed per unit funding level to 
discourage specification proliferation and provide incentives to min- 
imize unnecessary specifications and government controls, all with- 
in accepted heavy duty bus standards. 

Two, provide a stimulus for a remanufactured bus program at 60 
percent of new bus cost on properties or for properties whose appli- 
cations do not require a new bus, perhaps rural use. 

Three, reassess trolley bus funding and divert to the purchase of 
alternate fueled vehicles as well as alternate fueled fueling stations 
as an interim step toward the implementation of fuel cell tech- 
nology. The trolley product is not only imported, but it is also obso- 
lete technology and will become even more obsolete after the intro- 
duction of the fuel cell. 

Four, mandate that all new buses produced after 1997 must be 
capable of being remanufactured to accept fuel cell technology. 

Five, foreign aid should be tied directly to the purchases of U.S. 
manufactured goods, for example, new or used buses to create a 
transportation infrastructure for emerging Nations. 

Six, reevaluate the duplication on the proposed R&D projects, 
such as CALSTART, Chesapeake, the Houston-New York Consor- 
tium, and ATTB, and focus more efforts on the fuel cell. 

Seven, afl^er transaction prices are established between the man- 
ufacturer and buyer, mandate that progress payments are to be 
utilized with the manufacturer to pass through the capital cost sav- 
ings to the buyer. This is a 2-percent potential reduction to the 
total capital program. 


Last, trade parity with Canada for transit buses is basically non- 
existent, as currently one-third of the United States market for 
transit buses is Canadian export versus no exports to Canada by 
United States manufacturers for transit buses. 

I sincerely appreciate this opportunity to share our vision, Sen- 
ator. I believe with the fuel cell, we are on the cutting edge of tech- 


Senator Lautenberg. Thank you, Mr. Tunila. We have your pre- 
pared statement and it will be made part of the record. 
[The statement follows:] 


Dear Mr. Chairman and Sub Committee Members: 


(Status and Needs) 

I AM Eugene F. Tunzla, Executive Vice President of Transportation 
Manufacturing Corporation, division of Dial Corp. Thank you for the 
opportunity to testify before your sub committee. 

The SUBJECTS discussed this morning will be first, a brief RESUME 
of the past history of the transit bus as well as the CURRENT 

What I will not address are quantitative funding sources and levels 


The BUS transit industry in the 1970 's has been characterized as a 


turn eventually increased the properties operating costs as the 
offshore fleet aged. 

The 80 '5 were also characterized as a continual erosion of funding 
levels in spite of an awareness of societies needs for cleaner air 
and transportation mobility for the disadvantaged. 

The 90's continued this trend of funding erosion in the face of 
needs as evidenced by istea and additional regulations mandated by 
requirements for cleaner air and further product enhancements for 
the disadvantaged. as a consequence, the present unit cost has 



alternate fueled bus in compliance with ada regulations 1$ $50,000 
per vehicle of increased capital costs. 

Other consequences include: 

two to three thousand pounds of adoztzonal weight. 

Reduced seating capacity per bus from about 50 to 45 people 
which in turn requires more buses and/or bus utilization per 


o Increased training in new technologies on the supply and user 


expense of new product development and enhancements. 
Increased transition funding for transition to new alternative 




The TOP FOUR investment priorities are: 

o Funding program available with a consistent flow and 
predictability that supports a replacement cycle of an average 
fleet age of 6-8 years. The replacement cycle would equate to 
A U.S. volume op three to four thousand units per year +/- 


To update our fleets by a transition OR bridge program 
providing a framework within ISTEA to rehanufacture aged buses 

and incorporate the latest ADA and cleaner air STANDARDS AT 

approximately 60% of the cost of a new bus, but with a new bus 

investment DOLLAR. 

o Support R & efforts on the 21st century technolocy such as 



alternative fueled vehicles. no throw away investment in this 

Fund the total systems approach for transportation R&D 


Areas where TMC recommends for your consideration on capital and 


Replace the 80 to 90% funding for bus purchases with a fixed 
per unit funding level to discourage specification 


specifications and government controls all within accepted 
heavy duty bus standards. 

Provide stimulus for remanufactured bus program at 60% of new 




o Foreign aid should be directly tied to purchases of U.S. 



PROJECTS, SUCH AS CALSTART, Chesapeake, Houston, New York 
Consortium, and ATTB. 

After transaction prices are established between the 
manufacturer and buyer, mandate that progress payments are to 
be utili2ed with the manufacturer to pass through to the buyer 


on the total capital program. 

Trade parity with Canada for transit buses is non existent - 
as currently one-third of the u.s. market for transit buses zs 
Canadian export versus no exports to Canada by U.S. 





Senator Lautenberg. We are pleased to be joined by Senator Do- 
menici, our colleague, who is knowledgeable and very much inter- 
ested in transportation matters. He wanted to have a chance to say 
a word. 

Senator DOMENICI. Thank you so much, Mr. Chairman. I wanted 
to make sure that my friend from TMC in Roswell knew that I am 
a member of this subcommittee, but I am upstairs marking up the 
budget resolution. We have another 5 hours to go, so I have to re- 

But I wanted to thank you for coming up here and sharing your 
expertise with this subcommittee. It is good to see the other two 
witnesses. I know Father George quite well. So two out of the three 
witnesses I know very well, and I welcome you also. 

Reverend GEORGE. Thank you. 

Senator DOMENICI. Let me speak to you for a moment, Mr. 
Tunila, and congratulate you on the effort that TMC is involved 
with in trying to use modern technology and modern research, in- 
cluding some research that can be supplied by the Federal Govern- 
ment's excellent national laboratories to move ahead. With this ef- 
fort, our buses will be not only more competitive, but serve their 
purposes better, and be more durable and of higher quality. I con- 
gratulate TMC for taking the lead on this important initiative. 

Last, we are delighted that you are in New Mexico, in Roswell, 

I think at one point you told me that Roswell, NM, was a small 
New Mexico city that produced more buses than any other city in 
the United States. I don't know if that is still the case, but that 
was a very exciting plus for New Mexico. 

Mr. TUNILA. If it isn't. Senator, it will be. 

Senator DOMENICI. Thank you. 

Senator Lautenberg. By the efforts of this committee, Mr. 

Senator Domenici. Yes; I will help you, Mr. Chairman. 

Senator Lautenberg. Thank you very much, Senator Domenici. 

One of the things that we want to try to do is to move, as you 
noted in your comments, some of this manufacture back here to the 
United States where most of this was begun. We ought not to have 
lost this important manufacturing opportunity. 

We would like to find out how the Federal Government can bet- 
ter promote and encourage domestic content in transit equipment, 
see what kind of reforms need to be made to encourage more Amer- 
ican manufacturers to get involved with transit manufacturing, and 
review what kind of technologies seem to be the most promising for 
transit applications in order to make our transit operations more 

I have one word to Dr. Kaufman. I don't know whether you know 
where Washington Avenue is in Belleville. 

Dr. Kaufman. Yes; I certainly do. 

Senator Lautenberg. Do you know where Girolovan Street is? 

Dr. Kaufman. Oh, yes. 

Senator Lautenberg. Well, I lived off the comer, upstairs, over 
my father's store. 


Dr. Kaufman. Oh, a neighbor. 

Senator Lautenberg. That was with my family and a lot of 
years ago. It was en route to getting here that I worked behind the 
counter of that store with my parents. 

alternate energy systems for city buses 

Father George, your university is involved in a very exciting and 
promising area of research for the development of alternate energy 
systems for city buses. How did Georgetown get involved in this 

Reverend George. Well, I have been asked that on a number of 
energy issues, Mr. Chairman, and it is the value of a liberal edu- 
cation. You study history so that you do not make the mistakes of 
the past. You study philosophy so that you do not try to rework 
how people philosophize on how to live, so that you can make 
progress. And you learn logic so you can solve problems. That is 
the purpose of a liberal education, to get you to think for yourself 
so that you are not manipulated out of ignorance. 

Well, we have all kinds of energy problems. We are just a small 
city, really, when you get down to it. And we had an aging fleet 
of buses. My thought was — actually, it was Dean Price's thought — 
that we could either just buy some more Mercedes diesel buses, 
like we had, or think of something imaginative that would serve 
the purposes of the university and the Federal Government. We 
came to the conclusion that this technology, which had been stud- 
ied at Los Alamos, was really feasible, but nobody seemed to recog- 
nize that if you pushed it, you could actually have clean buses and 
we could get a fleet of buses out of this. That was my original 
thought — to get a fleet of buses for Greorgetown. 

It ended up much more than that. It got to the point where at 
times I would say is it really worth all this for 12 lousy buses. You 
know, why don't we just buy some Fords? 

But we understood that if you get your car behind a diesel bus 
with your air conditioner on and your windows up, that soot still 
gets inside the car. 

Now I don't smoke and I would smell that stuff. I said if we could 
do this, it would really benefit our cities and the world. 

I just made some friends in Mexico. I could not believe that city 
and what clean buses would do there. So then it became that it is 
the right thing to do. True to form, we could not solve the problem, 
but we could think through how to solve the problem. That is how 
we ended up with H-Power and TMC. These are the experts. You 
do not have to solve the problem yourself Just find the right ex- 
perts. That is how we got involved with it and found the answer 
to the solution. 

Fortunately, the wisdom of this committee has seen that. We 
thank you. 

Senator Lautenberg. That is very interesting. 

Do you know what advantages the technology you are pursuing 
offer for lower operating costs and meeting the Clean Air Act re- 

Reverend GEORGE. Well, I would bow to the experts on that, but 
I am certain that we have read the Clean Air Act law. I thought 
you might ask that question. 


The fuel cell bus — I checked this out with Sam — puts out NOX 
at 0.18. A diesel bus puts out 5.0. The carbon monoxide in these 
buses is 0.55. A diesel's is 15.5. That is how we come to the conclu- 
sion that it takes hundreds of these buses to pollute as much as 
one diesel. 

Just think about that. It is phenomenal. 

Senator Lautenberg. It is incredible. If you ever want to get a 
first-hand opinion of the effect of the emissions from diesels, go to 
talk to people who work in toll booths, who collect. Whether it is 
at the Washington Bridge, the Lincoln Tunnel, the New Jersey 
Turnpike, you name it. Wherever there is a traffic stop where hu- 
mans are involved, they will tell you about what an unpleasant as- 
signment that is. So we would like to see your success, all of you. 
Continue to work on this. 

We have to find out how the Federal Grovemment can help. What 
can wc do besides giving money, which is a very hard thing to do 
these days. But we have to do it. We have to invest in the future, 
just like any company. 

I ran a company and our investments in the future were made 
every day, often off the sweat of our backs because we could only 
afford to do things that our own labor and our own intellect could 
supply. But it took a long time to get it going. 


What can the Federal Government do. Dr. Kaufman, do you 
think, to promote more research and development in energy? 

Dr. Kaufman. We had alluded to some of the factors beyond the 
funding of these key DOE and DOT programs in terms of regu- 
latory issues and legal issues that are on the State, Federal, and 
local levels that tend to be impediments to introducing new tech- 
nology, things that tend to get in the way of progress. Redtape just 
slows things down so much. We already have been faced with an 
awful lot of that type of thing. 

So it is that type of thing. It is the requirement of Federal fleets 
to utilize this new technology appropriately so it can be dem- 
onstrated and get over this introductory commercialization hurdle 
that the Federal Government can to do help over and above the 
funding of these programs that I alluded to earlier. 

Reverend George. Mr. Chairman, just on one thing there, this 
program is — really, we could have had a bus 2 years ago. But be- 
cause of bureaucratic problems between the Urban Mass Transit 
Authority and the DOE, and moneys going back and forth, and the 
contracting procedures, and the protests here and there, it delayed 
things to where the window for us capitalizing on this industry is 
shorter. I think people estimate that we have a 4- or 5-year lead 
on other countries with this technology, but that window will get 
shorter as it takes or goes a bit longer. 

What I have noticed in my brief— not too brief anymore — history 
at Georgetown is that we are really good at developing good tech- 
nology. I mean, the space program has done it. There is a variety 
of ways. 

It is the industry, it is the getting of this stuff to where the Unit- 
ed States captures the market that is where we break down. Sort 
of the Government forgets about things. It's oh, good, we can create 


phos-acid fuel cells good enough. They can run trains and buses? 
Forget it. 

Well, you cannot do that if you don't want to be buying foreign 
buses because the other people will capitalize on that technology 
and how to get those early prototype factories going. That is where 
we have to take the next step. 

Senator Lautenberg. So there is always the question of whether 
or not the product leads the market or the market leads the prod- 
uct. Very often, in matters that include science and technology, it 
is the product that leads the market. And if vou do not get going 
on it and you don't say hey, listen, we can ao it, if what we are 
going to do is wait for our industry to be protected from others, I, 
frankly, do not think that is the right way to go. I think what we 
have to do is encourage the Government to encourage research, to 
encourage development, to get out there and make the awareness 
factor a larger one in terms of wh^t kind of opportunity exists out 

We have been delinquent. It has been easier for a lot of compa- 
nies in this country to shift their jobs overseas and buy the prod- 
ucts there, instead of putting the time, the effort, and the funds in 
to making the product here. We have the creativity. That is the 
great thing about this country. That is the resource. In addition to 
our wonderful physical condition in this world, we have the ingenu- 
ity and the creativity that this disparate population of ours brings. 
It is an energy force, and it has not been properly used. 

So we would like to see that change. 

Father George, I have only one significant question further for 
you. How is Georgetown going to do in the next round of the Big 
East Tournament? 

Reverend George. You could be in trouble Tuesday night. You 
could really be in trouble. No; it's Friday afternoon. We think our 
freshmen are coming of age. [Laughter.] 

I mean, Seton Hall definitely has seniority, and we do respect 
our elders. [Laughter.] 

Senator Lautenberg. Are you saying to wait for next year? 

Seton Hall has such a place in New Jersey's heart. I must tell 
you that it is a proud institution. They have worked very hard. 
They have developed a wonderful law school up there. 

By the way, is De Lello a familiar name to you. Father Alex, or 
Andrew? He comes from New Jersey and teaches maybe Semitic 
language or something? Is it not familiar to you? 

Reverend George. It's ringing, but I don't know why. 

You know, Seton Hall is the best in the Big East this year. But 
we love to upset people at Georgetown, you know. 

Senator Lautenberg. They'll never lie down. Never. [Laughter.] 


Mr. Tunila, you have been working in the private sector and 
manufacturing transit equipment for some time. Why do you think 
we have seen, over these past years, such a decline in the number 
of American manufacturers involved in the transit field? 

Mr. TUNILA. Well, the cost of entry is very expensive with all the 
mandated changes, and with uneven funding and unpredictable 


source of funds for the transit buyer, you end up not having a very 
attractive industry to attract competent engineers and professional 
people. And you do not have a career path to follow. 

It is almost the same exodus that has occurred in other indus- 
tries where we have exported our manufacturing jobs for a variety 
of reasons. The instability of the marketplace is such that we had 
mandated changes. Everybody bought buses to avoid the cost of 
mandated changes in terms of some of the properties, which cre- 
ated a boom or bust situation. Well, the bust took some people out. 

The low bid process allowed degradation of product, which, in 
turn, hurt the high value or severe service vehicle manufacturers. 
So it is not any one thing, Senator. It is a whole combination of 

It is not a good business environment to be in. 

Senator Lautenberg. It could be made better. 

Mr. TUNILA. Oh, yes. 

Senator Lautenberg. Do you think the Federal Grovemment can 
lead that charge, then? 

Mr. TUNILA. Well, yes; I think we can make an exportable prod- 
uct. We do not export any buses from our country to other coun- 
tries, any transit buses. That is a testimony to the type of tech- 
nology we have today in our buses and what is required, versus the 
rest of the world. 

Senator Lautenberg. So we are behind. 

Mr. TUNILA. Yes; there isn't any doubt about that. 

Senator Lautenberg. Is there any tariff or trade restrictions 
that you are aware of that keep us from getting a share of the ex- 
port market, or does the problem lie principally in the product? 

Mr. TUNILA. Well, I think somehow transit buses have a great 
national pride, not national but State also. 

Senator Lautenberg. Do we have the capacity here to meet our 
transit capital needs for rolling stock, subsystems, brakes, air con- 
ditioners, and the like? 

Mr. Tunila. We have more than enough capacity in this country 
for the foreseeable future. In fact, we have too much capacity. 

Senator Lautenberg. We just have to develop the appropriate 
technology and the marketplace, then. 

Mr. Tunila. That's right. We need an exportable product. We are 
a very small business. We have to take advantage of ancillary in- 
dustries, such as heavy duty trucks, and use their components, 
which have 20, 30, 40 times the volume we have. So we have to 
do a different concept of development within our industry. 

As it stands right now, all our development funds have gone to 
meet mandated changes, such as the Clean Air Act. We do not 
have a focused policy on clean air. We have too many alternatives 
to explore. It is just like some of the R&D proposed projects. There 
are too many alternatives. We should focus and have a national en- 
ergy program on exactly where are we going. 

This does not mean we have to make a choice of one. We should 
have several alternatives. But we have too many today. You cannot 
keep up with them all — at least we can't. Let's put it that way. 



Senator Lautenberg. Thank you all very much for being here. 
I will submit some other questions to be answered for the record. 

[The following questions were not asked at the hearing, but were 
submitted for response subsequent to the hearing:] 



SENATOR LAUTENBERG: Even though FTA is, by statute, 
required to project the transit needs in both the capital, 
maintenance, and operating areas, your agency has not done 
so for operating. Why is that? 

ANSWER: We believe that it is better for the Section 
308 Report to focus on capital costs, rather than include 
operating needs. "Needs" generally refers only to capital 
costs. The Highway Needs study which we parallel focuses 
needs exclusively on the capital costs. Other 
infrastructure needs studies similarly focus only on 
capital. Addressing operating costs would increase the 
complexity of the report. It would require FTA to make 
decisions on fare policies, elasticities of demand with 
respect to fares, the proper role of fares versus public 
subsidies, and other similar concerns. Most of these 
decisions are controlled by local decisionmakers. For 
example, Washington Metro has variable fares of up to 
$3.00 for rail trips, while Atlanta charges flat fares. 
Inclusion of operating costs is likely to decrease the 
reliability of the estimates included because of the large 
number of assumptions which would have to be made in these 

SENATOR LAUTENBERG: The two previous administrations 
did not believe that it was the responsibility of the 
Federal government to provide operating assistance for the 
larger transit operators of this country. Is this the 
reason why FTA's projections do not include the operating 
needs in its report. 

ANSWER: No. . Our decision to focus on capital needs 
was based on the technical issues only. 

SENATOR LAUTENBERG: The Federal Highway 
Administration projects future highway demand when 
determining highway maintenance and expansion needs. How 
does your needs estimate address future demand? 

ANSWER: Our estimates of capital needs are based on 
two scenarios for future transit demand. The Maintain 
Conditions and Performance scenario includes the cost of 
expanding service at a rate equal to recent trends in 
patronage growth (0.8 percent per year). Under this 
scenario, transit use would increase by 17 percent over 
the next twenty years to 44 billion passenger miles, 
compared with 38 billion today. The Improve Conditions 
and Performance scenario includes increased transit demand 
based on FHWA's estimate in its 1991 Highway Needs Study 
that, over the next twenty years, 34,000 lane miles of 
additional highway capacity would be foregone, replaced by 
increased high occupancy vehicle use, improved traffic 
operations, and transit use. Under this scenario, transit 
use would increase by 65 percent over the next twenty 
years, to 64 billion passenger miles. 


SENATOR LAUTENBERG: All the methodologies appear not 
to adequately reflect the cost of Federally-imposed 
requirements such as the Clean Air Act and the Americans 
with Disabilities Act. Please explain how you arrived at 
your figures? 

ANSWER: For the Americans with Disabilities Act, the 
report used the Regulatory Impact Analysis for the 
Department's Final Rule to develop the estimates. The 
costs to Maintain Conditions and Performance include an 
incremental annual cost of $42 million to make fixed route 
buses accessible, $90 million per year to acquire the 
vehicles and ecjuipment necessary to provide supplemental 
paratransit service, and $123 million per year to make 
rail systems accessible. 

As far as the Clean Air Act is concerned, the report 
estimates an annual need of $150 million for alternative 
fuel buses and $100 million for the costs of retrofitting 
maintenance facilities to deal with alternative fuels. 
However, the costs are not added in the total estimated 
needs because it is not yet clear whether or not "Clean 
Diesel" technology will be able to meet EPA's emission 
standards for buses. If "Clean Diesel" is capable of 
meeting the standards, then alternative fuel buses will 
not be required and the costs of meeting these standards 
will be significantly less. 

While we believe that these estimates are accurate, 
we are making efforts to improve the reliability of the 
data for the 1994 Section 308 Report. We expect to use 
the contents of the ADA Transition Plans, which are now 
being reviewed by FTA, to determine the currently planned 
costs of complying. On the Clean Air Act, we will have 
better information on whether or not alternative fuel 
buses will be required. In addition, in subsequent 
reports, we expect to use the contents of the State and 
Metropolitan Transportation Plans and Transportation 
Improvement Programs to determine how State and local 
governments assuring that these plans are in conformity 
with air quality requirements. We expect that transit 
will become increasingly important in these plans due to 
air quality concerns. 

SENATOR LAUTENBERG: Some argue that we should 
actually reduce the Federal share of transit capital 
investment, since the current levels encourage localities 
to amass capital that they do not need and cannot afford 
to operate. Do you agree with this assertion? 

ANSWER: No. There is clear evidence that the amount 
of Federal funding provided is not excessive. First, even 
though the statutory share for Federal capital assistance 
is 80 percent, in reality State and local governments are 
investing substantially in excess of the minimum non- 
Federal share on transit. In 1991, the Federal 
government's share of total capital spending of 
$5.1 billion was only 50 percent. 

Second, the total amount of capital spending on 
transit is well within the needs estimated in the 
Section 308 Report, and additional funding could be put to 
productive use. At present, spending is adequate to 


Maintain Conditions and Performance and make some strides 
toward restoring the backlog of past disinvestment to 
Improve Conditions. The President's Economic Stimulus 
Package is likely to increase total capital spending to 
about $6.2 billion per year, still within the overall 
needs estimated. 

Third, the new requirements for financially- 
constrained Transportation Plans and Transportation 
Improvement Programs should go a long way to assuring that 
States and local governments have adequate resources to 
operate the capital stock which they acquire. Since 1987, 
FTA has used its Financial Capacity Circular to review 
plans and programs in a similar manner. Also, FTA's Major 
Investment Policy requires a strong local financial 
commitment to projects, including both the local share of 
capital costs as well as the long term operating cost 
component . 

SENATOR LAUTENBERG: How is FTA ensuring that Federal 
capital investments are optimized, and what criteria are 

ANSWER: For major capital investments. Section 3(i) 
of the Federal Transit Act and our Major Investments 
Policy require projects to undergo an analysis of 
alternatives and preliminary engineering, pass a project 
justification test, and be supported by an adequate degree 
of local financial commitment. Project justification 
includes cost-effectiveness, mobility improvements, and 
operating efficiencies. The policy statement calls for 
cost-effectiveness to be measured in terms of the cost to 
attract a new transit rider. We believe that this is a 
representative measure of the benefits of transit 

All projects must result from the ongoing 
transportation planning process. The Intermodal Surface 
Transportation Efficiency Act of 1991 (ISTEA) strengthens 
the planning process considerably. This will improve the 
quality of the projects which are included in the required 
Transportation Plans and Transportation Improvement 

SENATOR LAUTENBERG: How do you determine if 
individual transit systems are making optimum use of 
Federal capital investment funds? 

ANSWER: We do not second guess the decisions made 
by transit operators on the allocation of the funds made 
available to them by formula. However, we do assure that 
the projects are eligible for Federal funding and are the 
result of the planning and programming process. Since the 
amount of formula funds available is still short of the 
total which could be used for cost-effective projects in 
most areas, we believe that the transit operators and 
Metropolitan Planning Organizations have a strong 
incentive to use the funds for the best projects. 

For major investments, we use the Section 3(j) Report 
to describe the merits of the projects in the New Starts 
pipeline. We also make recommendations on which projects 
are the best candidates for New Starts funding in the next 
fiscal year. These recommendations are designed to assure 

68-623 O— 93 12 


that projects which are ready to go, or are already 
underway, receive an amount of funds sufficient to allow 
them to proceed on an efficient construction schedule. 


SENATOR SASSER: Please describe the 
Administration's proposed Fiscal Year 1994 electric 
vehicle program. 

ANSWER: The ISTEA provided $12 million for an 
Advanced Transportation and Electric Vehicles Research 
and Development Program. Four consortia were selected 
for funding in FY 1992 and their progress is being 
monitored: (1) Calstart is developing advanced electric 
vehicle components and subsystems; will demonstrate and 
evaluate components and issues concerning the necessary 
infrastructure support systems; and will develop 
advanced prototypes and specifications for Electric 
Vehicle (EV) buses; (2) the Chesapeake Consortium is 
developing an advanced powertrain for electric vehicles 
that will be demonstrated and evaluated in 10 prototype 
electric vehicles; (3) the New York State Consortium 
will develop and demonstrate a low floor, full sized bus 
with a hybrid electric propulsion system; and (4) the 
Advanced Lead Acid Battery Consortium (ALABC) is 
developing rapid recharging systems and battery 
monitoring and control systems. 

Work efforts will continue with the Electric 
Transit Vehicle Institute (ETVI) of Chattanooga to 
promote the design, production, and use of electric 
vehicles in transit. The ETVI will continue to serve as 
the facilitator and resource center for electric vehicle 
development for the transit industry. 

FTA will increase its involvement and assume a 
greater role in the joint Fuel Cell/Battery Bus Program 
that is being conducted with the Department of Energy. 
Three prototype fuel cell/battery buses will be placed 
in demonstrations: two of these buses will use methanol 
fuel as the source for the hydrogen used in the fuel 
cell, one of these will be used in Los Angeles in 
coordination with the South Coast Air Quality Management 
District efforts and the other will be located at 
Georgetown University; the third prototype will use 
ethanol fuel and will be demonstrated in revenue service 
at PACE in Chicago. Data collection and evaluation of 
the operation and maintenance of these buses will be 
conducted. We will also initiate a project to examine 
the issues with regard to the safe use and storage of 
hydrogen as a fuel for fuel cell applications. 

SENATOR SASSER: Will the Administration's budget 
request include this fundi