Stephen Gardner, Vice President, Policy and Development SCORT Meeting, March 14, 2011

1. Stephen Gardner, Vice President, Policy and Development SCORT Meeting, March 14, 2011

2. The Amtrak System Cascades Chicago Hub Long distance routes connect major hubs and corridor services Northeast Corridor (NEC) California corridors

3. Record Ridership and Revenue • YTD FY11 Continues record pace • increased public appeal and popularity of rail travel • continued high gasoline prices which are trending higher • general consumer dissatisfaction with air service • continued strong Acela business travel with the value-add of Wi-Fi service • Record Ridership in FY10 • 28.7 million riders in FY 10 • 7 of last 8 years have been records • 37% growth since 2000 • Record revenue of $2.5 billion in FY 10 • Covered 85% of operating cost • Our FY 10 farebox recovery was 76% - highest recovery in US

4. FY10 Revenue and Ridership Breakdown • NEC makes up over half of Amtrak revenue and requires most of Amtrak capital funding • State Corridors make up nearly half of Amtrak ridership • Long Distance trains require bulk of Federal operating subsidy NEC NEC

5. Continuing Focus on Cost Control Source: Page A-22, Amtrak January 2011 Monthly Performance Report, amtrak.com

6. FY10 Air-Rail Shares – Top Ten Corridors

7. FY11 YTD (Oct – Feb) Market Share Due to the weak economy and high unemployment, particularly in the northeast, the total size of the intercity travel market for all modes combined (rail, auto, air, and bus) has shown some erosion; However, consistent with ridership trends, Amtrak market shares have grown due to service/product improvements, continued television and print advertising, and high gasoline prices; The national market share for Amtrak increased by 42 percent between 2006 and 2011, rising from a share of 1.4 to 2.0 percent, while Amtrak’s NEC market share increased sharply against other travel modes

8. The Near-Term Funding Situation • Amtrak and HSIPR grants: • FY 11: • House-passed CR cut Amtrak to $1.413B – slightly more than FY 08 – and eliminates HSIPR funding • Sessions amendment to further cut to $966 million defeated on bipartisan vote • FY 12: • Amtrak requested $2.2B – right around the authorized funding level • Detailed discussion on this budget won’t start for some time – but will be protracted • If FY11 baseline is lower, FY12 increases will be harder • Surface Transportation Reauthorization: • Administration proposes merging Amtrak/HSIPR into new consolidated rail program: • $4 billion for System Preservation (initially Amtrak) • $4 billion for Network Development (competitive) • Hinges on ability to raise revenues

9. State Partnerships… • States are vital partners for Amtrak and together, we form a cooperative system • States provide: • Service initiatives and planning • operating funds - $191 million annually, or 23% of total costs (with revenues and state payments, 76% of fully allocated costs) • Capital investments (stations, equipment, etc) • Intermodal integration • Service focus and innovation • Amtrak provides: • ~25% of fully-allocated costs of all corridor services • Railroad access • Liability arrangement • Major systems (reservations, etc) • Equipment & facilities • Service planning

10. ….. are Amtrak’s Future • trains less than 750 miles, most in partnership with 15 states • Are only service at 203 of Amtrak’s 528-served stations • 220 daily trains – more than half our total! • We are dedicated to working with states to: • Improve current services • Develop plans for the future • Pursue joint processes (Sec. 209 & 305) • Support and pursue investment opportunities (HSIPR) • 2011 Partner Satisfaction Program: • Annual survey of partner satisfaction • Integrated local teams to focus on partner top priority issue • Responsiveness and empowerment

11. Top Ten Performers – Ridership Growth Piedmont +46% Blue Water +18.7% Vermonter +16.5% Missouri River Runner +14.4% Alb-N Falls-Toronto +13.8% Adirondack +13.4% Chicago-St. Louis +13.1% Cascades +13.0% Heartland Flyer +11.1% Carolinian +11% Top Ten Performers – Revenue Growth Piedmont +39.1% Cascades +31.6% Missouri River Runner +24.4% Vermonter +19.1% Carolinian +17.9% Chicago-St. Louis +17.6% Hoosier State +17.5% Blue Water +15.3% Adirondack +14.0% Heartland Flyer +13.5% Corridor Trains are the Key to System Growth

12. $2.4 B: Re-award Process • Secretary LaHood announcement on Friday (3/11) • $1.6B is ARRA funds (no match), $800M is FY10 (20% match) • We want to work with you • Update ridership data, develop agreement in principle (AIP) • Work with host railroads on service outcome agreements before applying • Amtrak may apply directly • Applications due April 4

13. Partnerships with Host Railroads • Most Amtrak train-miles (70+%) run on freight railroads • We have longstanding relationships with all Class I carriers • Work with them on grant agreements, as well as daily service issues • All Amtrak trains on host railroads rely on Rail Passenger Service Act access authority to any US railroad: • Amtrak gets access in exchange for host railroads not having to offer passenger service • Basis for entry is contractual – but a host railroad cannot simply refuse to permit: • new or additional trains • higher speeds • Can’t insist unilaterally on dedicated tracks as long as Amtrak and states willing to make improvements needed for safe and practicable service • Access is at incremental cost not market rates • Passenger trains receive preference over freight • Hosts increasingly seeking to modify arrangement based on concern over freight growth and capacity.

14. PRIIA Section 212: Northeast Corridor Infrastructure and Operations Advisory Commission • Members include • Amtrak • USDOT • NEC States’ Governor-designees • Non-voting freight RR reps • Statutory Requirements • Goals for future of NEC • Cost allocation • Progress to Date • 2 organizational meetings • Next meeting – March 23 • New state members (NY, DE) and new non-voting reps (VT, NH, ME, potentially VA) • Soon to have staff to drive statutory requirement work products

15. PRIIA Section 305 Next Generation Equipment Pool Committee Ken Uznanski Amtrak Policy and Development SCORT Washington Meeting Washington, DC March, 14, 2011

16. Section 305 Next Generation Equipment Committee • Purpose: • To design, develop specifications for, and procure standardized next generation corridor equipment • Functions: • Determine number of different types of equipment required • Establish a pool of equipment for use on routes funded by participating states • Subject to agreement, utilize Amtrak-provided services to design, maintain and remanufacture equipment • Cooperative Agreements • Amtrak and participating states may enter into agreements for funding, procurement, remanufacture, ownership and management • May apply to current or new equipment • May establish a corporation to perform these functions • Participants • Amtrak, States, FRA, host railroads, equipment manufacturers, other operators as appropriate

17. Section 305 Executive Committee • Executive Committee Membership • Amtrak • Federal Railroad Administration • States (CA, GA, IA, LA, MD, MO, NC, NY, WA, WI) • Officers • Bill Bronte, California - Chair • Mario Bergeron, Amtrak - Vice-Chair • DJ Stadtler, Amtrak - Treasurer • Rod Massman, Missouri - Secretary • Subcommittees/Task Forces • Financial • Technical • Heavy involvement from industry • Administrative

18. Section 305 Deliverables • Committee established January 2010 • Year One Work Plan • Complete Single Level specifications for corridor services • Complete Bi-Level Specifications • Diesel Locomotive Specifications • Develop ownership and organizational structures • Determine appropriate procurement strategies • Fleet management strategy • Be prepared for initial procurements • Rolling stock procurements using federal funds will be subject to “Buy America” requirements

19. Section 305 Current Activities • Executive Committee has met five times in Washington DC and additionally via webinar • FRA has provided $2 million grant for Section 305 activities • Grant agreement between Amtrak and FRA • Amtrak administered under direction of NGEC Executive Board • AASHTO providing Support Services to NGEC and working groups • Minutes, Action Items, Logistics, • Section 305 Website www.highspeed-rail.org • Sub-Committees have been established and meet regularly • Administrative Task Force • Development of polices and procedures • Issues associated with liability, intellectual property • Alternative methods of organization/incorporation • Financial Subcommittee • Exploring funding mechanisms • Gaining better understanding of potential markets

20. Section 305 Technical Subcommittee • Technical Subcommittee has performed bulk of the work to date • Specification Development • Established working groups from the industry, states, FRA, and Amtrak • Structural, Mechanical, Electrical, Vehicle/Track Interface, Interiors • An intensive Effort • Draft Specification is reviewed by Executive Board Review Panel and Independent Assessment before Executive Board consideration • PRIIA 305 Bi-Level Specification approved by Executive Board August 31, 2010 • PRIIA 305 Single Level Car Specification approved by Executive Board February 15, 2011 • PRIIA 305 Diesel Locomotive Specification under final Executive Board Review • THOUSANDS of cooperative, collaborative work hours from the industry • States must use these specifications if obtaining new equipment with federal funds

21. Section 305 Next Steps • February 15, 2011 NGEC Annual Meeting held at USDOT • States, Amtrak, FRA and Industry • Milestones • Single Level Car Specifications approved • Work Plan and Budget Development for upcoming year • Discussion(s) on Standardization • Systems Engineering • Ongoing Work (Year Two) • Financing recommendations • Structure/Incorporation Opportunities • Single Level Trainset Specification to be completed summer 2011 • Potential Dual-Mode Locomotive Specification • System Engineering • Standardization • Business Plan Development

22. PRIIA Section 209 Update John Bennett Amtrak Policy and Development SCORT Washington Meeting Washington, DC March, 14, 2011

23. Brief Review of Section 209 requirements: (a) General Passed Oct 16, 2008: 2 years = Oct 16, 2010 Amtrak and States have agreed to continue working until at least April 16, 2011 Amtrak Board of Directors’ responsibility “in consultation with”: collaborative process Single, nationwide, standardized methodology: all corridors treated equitably (a) IN GENERAL.—Within 2 years after the date of enactment of this Act, the Amtrak Board of Directors, in consultation with the Secretary, the governors of each relevant State, and the Mayor of the District of Columbia, or entities representing those officials, shall develop and implement a single, nationwide standardized methodology for establishing and allocating the operating and capital costs among the States and Amtrak associated with trains operated on each of the routes described in section 24102(5)(B) and (D) and section 24702 that— 22

24. Brief Review of Section 209: (a) (1) & (2) Passed Oct 16, 2008: 5 years = Oct 16, 2013 Transition period “allocates” – Amtrak Performance Tracking (APT) “costs incurred only for the benefit of that route” = Direct Costs “costs incurred for the common benefit of more than 1 route” = Shared Costs (1) ensures, within 5 years after the date of enactment of this Act, equal treatment in the provision of like services of all States and groups of States (including the District of Columbia); and (2) allocates to each route the costs incurred only for the benefit of that route and a proportionate share, based upon factors that reasonably reflect relative use, of costs incurred for the common benefit of more than 1 route. 23

25. Brief Review of Section 209: (d) Chapter 244 Funds Chapter 244, Title 49: Capital grants can be used to pay capital charges Amtrak and State Working Group (SWG) are exploring options for obtaining Federal support for capital charges SWG will be working with State partners to consider and develop these options (d) USE OF CHAPTER 244 FUNDS.—Funds provided to a State under chapter 244 of title 49, United States Code, may be used, as provided in that chapter, to pay capital costs determined in accordance with this section. 24

26. Current Financials and Section 209 Intent Currently 15 States provide ~$190 million per year to support 22 routes (74 weekday trains) 5 routes (36 weekday trains) currently unsupported by States  PRIIA Section 209 establishes a policy whereby Amtrak will allocate in a fair, equitable, and consistent manner to the affected States the operating expenses and capital charges to support all 110 weekdays trains on these 27 routes The current 36 trains (historically paid by Amtrak) will become State-supported trains in a manner consistent with the other 74 State–supported trains. Section 209 State Working Group established to develop this policy with Amtrak: (CCJPA, NNEPRA, NCDOT, VDRPT, WSDOT, AASHTO) 25

27. Segmentation of Amtrak’s National Train Service No service currently paid by states 26

28. SWG Pricing Concept Proposal • SWG proposed method: • ‘Bottom-up’ definition of Route Costs: costs that States can see and touch on the route • Incorporate identifiable management charges as Additives (% of Route Costs) • Include Third Party Costs (Host RR, fuel) as actuals • Former method: • ‘Top-down’ exercise • Start with fully-allocated costs and subtract • In States’ view, shift from Amtrak cost recovery to Amtrak charging States for specific services • SWG/States believe this approach will encourage Amtrak to control non-route (shared) costs that are less visible/measurable by States • SWG and Amtrak general consensus that capital charge is: • Limited to route-specific assets • Reduced by amount of past State investments • Reserved for future investments jointly programmed with States

29. General Acceptance of SWG Pricing Concept Proposal • Amtrak Board of Directors has reviewed and accepted the pricing concept policy approach—subject to agreement on the specific values/rationales in the policy statement • March 4, 2011: State Working Group and Amtrak jointly presented “additive approach” to AASHTO Leadership Group • Audience: State Secretaries of Transportation or other CEO level State transportation officials • State Working Group pricing concept proposal widely accepted at the meeting • Appreciation from SCORT for Amtrak’s willingness to collaborate with States and jointly develop a Section 209 policy approach

30. Amtrak Next Steps • Conduct due diligence to develop appropriate additive/overhead rates for operating costs • Internal review/discussion regarding Route Cost and Additives definition and values • Route-specific Additive values • Evaluate/develop capital cost estimation procedures and concepts for reinvestment of proceeds into route improvements • Linkage to Federal capital investment programs • Design standard contract outline and specific language as an adjunct to final Section 209 Policy • Review and response to outstanding issues • Letter to STB requesting two-month extension

31. Questions and Comments? Thank you