Statement of Joseph H. Boardman, President and CEO - Amtrak

TESTIMONY
OF
JOSEPH H. BOARDMAN
PRESIDENT AND CHIEF EXECUTIVE OFFICER
AMTRAK
60 MASSACHUSETTS AVENUE, NE
WASHINGTON, DC 20002
(202) 906-3960
BEFORE THE
COMMITTEE TRANSPORTATION & INFRASTRUCTURE
OVERSIGHT HEARING ON
“A REVIEW OF AMTRAK OPERATIONS PART 2:
THE HIGH COST OF AMTRAK’S
MONOPOLY MENTALITY IN COMMUTER RAIL
COMPETITIONS”
TUESDAY, SEPTEMBER 11, 2012
10:00 A.M.
2167 RAYBURN HOUSE OFFICE BUILDING

Mr. Chairman, Ranking member, and members of the Committee, good morning.
Amtrak has been involved in the commuter rail business since the early days of our
company. When we acquired the Northeast Corridor in 1976, we became responsible for
dispatching and maintaining the tracks used by hundreds of commuter trains each day, most of
which were then operated by Conrail. In the Northeast Rail Services Act of 1981, Congress
relieved Conrail of its obligation to provide commuter service and stated that Amtrak should be
available to operate commuter trains for commuter authorities that chose not to provide their own
operations. We began operating what is now MARC’s Penn Line between Washington and
Baltimore on January 1, 1983. During the 29 years we’ve operated that service, it has grown
from 4 to 57 weekday trains. Amtrak has also operated a number of other commuter services. In
some cases, we have since helped to inaugurate new services. In others, we became involved in
commuter services as a contract carrier for agencies that needed to find a capable replacement
for freight carriers who wished to exit the commuter business, or were dissatisfied with their
current operator. Currently, we operate 3 commuter services: the MARC Penn Line in
Maryland, the Shore Line East in Connecticut, and Metrolink in Los Angeles. We maintain
equipment for the Sounder service in Seattle and we dispatch South Florida’s Tri-Rail. We also
provide access, dispatching, equipment maintenance and/or other services for Long Island
Railroad, New Jersey Transit, Metra in Chicago, and Boston’s MBTA, among others.
The American Public Transit Association lists 26 commuter carriers in America. Of
those, eight operate their own commuter rail services; the remainder contract with another carrier
to provide them. The largest commuter carriers are typically run as integrated railroads,
maintaining and operating their own track and trains. Several of the next largest services are run
by the railroads whose tracks they use – so Metra contracts with BNSF and UP to operate
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services on their routes. On a slightly smaller scale, Amtrak runs the MARC NEC service while
CSX currently operates the MARC trains on their Camden and Brunswick Lines. Amtrak
operates the CDOT Shore Line East trains that use our Northeast Corridor. The remainder of the
agencies contract with independent carriers to run their services. Those carriers and the freights
have the vast majority of the U.S. commuter rail business. Amtrak-operated services generate
fewer than 6% of the nation’s annual commuter passenger-miles.
From Amtrak’s point of view, the contract commuter business has both costs and
benefits. It can generate net revenue, which allows us to reduce our dependence on Federal
operating support. Because we do not use Federal funds to cross-subsidize these agencies, our
bids can be more expensive than those of private companies that may underbid to enter the
market or to build a market for other services such as capital replacement. Whatever the cause,
profit margins have decreased significantly in recent years.
Liability is also a major challenge. As you know, while Amtrak must maintain $200
million in liability insurance, other commuter operators are not subject to this requirement.
When we take on a service, we must ensure that we don’t take on a liability obligation that could
leave us vulnerable to a judgment or an award that could impact our financial viability. There
are a lot of companies competing for the commuter business, and we are finding that agencies
are increasingly asking them to take on much greater liability exposure in the event of an
accident rather than having the agency purchase its own insurance to cover the risk. Amtrak
cannot assume that risk. When responsibility for liability exposure is passed to a private
commuter service operator that does not have adequate insurance, and can be constructed so that
it can escape an unaffordable liability judgment through bankruptcy, the risk is in effect
transferred to the riding public. If Amtrak assumes that liability, then the costs generated by a
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single commuter operation are transferred to the federal taxpayer, an option we do not believe is
in our best interest.
Over the past two years, we have lost two operations, VRE and Caltrain, and gained a
third – Metrolink in Los Angeles, which asked us to take over its rail operations in the wake of
the Chatsworth collision. Amtrak will remain in the commuter rail business, and we are taking
some of the lessons learned from recent events into account. We will continue to work with
agencies that are a “good fit” for both Amtrak and the agency. This is an exciting field right
now, and there is plenty of competition and many opportunities for both carriers and agencies to
find suitable partners. Amtrak will continue to look at the opportunities on a case-by-case basis,
and we will be guided by the need to provide our partners with the support they’re looking for
and our need to generate revenues that can be used to reduce Amtrak’s dependence on Federal
operating support.
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