Copyright 1999 Federal News Service, Inc.
Federal News Service
OCTOBER 28, 1999, THURSDAY
SECTION: IN THE NEWS
LENGTH:
839 words
HEADLINE: PREPARED TESTIMONY OF
EDWARD
HAMBERGER
PRESIDENT & CEO
ASSOCIATION OF AMERICAN RAILROADS
BEFORE THE HOUSE COMMITTEE ON TRANSPORTATION AND
INFRASTRUCTURE
SUBCOMMITTEE ON GROUND TRANSPORTATION
SUBJECT - OVERSIGHT
OF AMTRAK
BODY:
Chairman and Members of the
Subcommittee, the Association of American Railroads is grateful for the
opportunity to appear before you today. The future of Amtrak is not only a
matter of interest for rail passenger public policy but Amtrak's future
financial viability also affects the interests of the national freight network
over which Amtrak trains operate.
As you consider the future of Amtrak, it
is important to understand the relationship between Amtrak and the
freight railroads.
The Rail Passenger
Service Act of 1970 allowed the railroad industry to exit from the unprofitable
inter-city passenger rail operations. Concessions were exacted at the time, and
have continued since. To be precise, the railroads were called upon to
capitalize Amtrak with an initial infusion of $740 million in 1998 dollars.
Further, Congress lowered the basis of compensation for the use of railroads'
rights-of- way and other facilities. Since 1970, the railroads have not been
permitted to charge a rental based on fair market value, but rather their base
compensation has been limited to payment of incremental costs for the use of
their facilities. One freight railroad calculates that its subsidy to Amtrak, as
compared to fair market prices paid by other railroad users, exceeds $40 million
per year.
The freight railroads do not bring these facts to your attention
with the expectation that the rent Amtrak pays will be increased. They recognize
that would impose an impracticable burden at this time.The context is important,
however, for Congress to bear in mind when looking at the issues that affect the
relationship between freight and passenger service.
Freight railroads are working cooperatively with Amtrak. For
example, one member railroad has developed a partnership with Amtrak and United
Parcel Service to handle increased express business between Kansas City and
Albuquerque. This railroad is also testing markets to handle additional freight
on Amtrak trains between California and Chicago.
Also, Amtrak has developed
a Memoranda of Understanding with some of our members which provide for joint
use of terminals and joint efforts to capture new express business.
As an
industry, freight railroads have also combined forces with Amtrak to urge repeal
of the 4.3 cent deficit reduction fuel tax. The repeal of this tax would save
Amtrak around $4 million a year.And finally, as the Committee may also be aware,
Amtrak has been using the AAR operated Transportation Technology Center in
Pueblo, CO to test the ACELA train sets.
Freight railroads have been, and
are, Amtrak's most important supplier. But the relationship is more than that of
the normal supplier. Railroading is, after all, a service business, and the
manner and quality with which service is provided is paramount. The relationship
must be a productive and cooperative one.
The past decade has provided
changes on both sides of the equation for Amtrak and freight railroads. You have
heard that much has changed for Amtrak. The freight system has also undergone a
significant evolution, one that alters the freight/passenger
relationship.
When Amtrak was launched, the nation's major freight corridors
were underutilized. Its capacity unchallenged, the freight
system could absorb a passenger system operating at
conventional speeds.And, to be rid of monumental passenger
deficits, the freight network undertook Amtrak's operations on
a basis of incremental cost.
Today, plant has been pared and asset
utilization is a crucial management tool. Rail customers no longer can afford to
carry inventory. In order to win and retain business, railroads must meet
shipper requirements for "just-in-time" freight arrival. Rail infrastructure,
crews, and communications operations are geared to meet those requirements.
Indeed, many contracts with shippers require that railroads pay substantial
penalties when delivery is delayed.
The importance of responsive freight
service would become obvious if an assembly line were forced to close because a
freight train was late. In sum, the major freight rights-of-way are privately
owned assets and congestion is a concern.
Compatibility between
freight and passenger service is a concern at conventional
speeds; it becomes a serious operating impediment at high-speed levels.
To
conclude Mr. Chairman, there is a historical context that must be taken into
account when evaluating the relationship between Amtrak and the freight
railroads. Our member freight railroads recognize their statutory obligation to
give Amtrak operational priority over freight traffic. They work diligently to
observe this obligation every day of the week. At the same time the freight
railroads are committed to providing the same excellent service to their other
customers. As you look at the future of passenger rail service
in America, the freight railroads ask that you carefully
consider both the historical context of the Amtrak/freight relationship and the
role freight railroads play in today's economy.
END
LOAD-DATE: November 2, 1999
