[Senate Hearing 105-113]
[From the U.S. Government Publishing Office]


                                                S. Hrg. 105-113, Part I
 
REAUTHORIZATION OF THE INTERMODAL SURFACE TRANSPORTATION EFFICIENCY ACT

=======================================================================

                                HEARINGS

                               BEFORE THE

                            SUBCOMMITTEE ON
                   TRANSPORTATION AND INFRASTRUCTURE

                                AND THE

                              COMMITTEE ON
                      ENVIRONMENT AND PUBLIC WORKS
                          UNITED STATES SENATE

                       ONE HUNDRED FIFTH CONGRESS

                             FIRST SESSION

                               __________

                                 PART I
     FEBRUARY 13 AND 26, MARCH 6, 13, AND 19, 1997--WASHINGTON, DC

                                PART II
                  MARCH 22, 1997--COEUR D'ALENE, IDAHO
                 MARCH 26, 1997--KANSAS CITY, MISSOURI
                   MARCH 28, 1997--LAS VEGAS, NEVADA
                   APRIL 7, 1997--NEW YORK, NEW YORK
                 APRIL 21, 1997--WARWICK, RHODE ISLAND
                 MAY 7 AND JUNE 6, 1997--WASHINGTON, DC

                               __________

  Printed for the use of the Committee on Environment and Public Works

                               ----------

                      U.S. GOVERNMENT PRINTING OFFICE
42-369 CC                     WASHINGTON : 1999

_______________________________________________________________________
            For sale by the U.S. Government Printing Office
Superintendent of Documents, Congressional Sales Office, Washington DC 
                                 20402


               COMMITTEE ON ENVIRONMENT AND PUBLIC WORKS

                       ONE HUNDRED FIFTH CONGRESS
                 JOHN H. CHAFEE, Rhode Island, Chairman
JOHN W. WARNER, Virginia             MAX BAUCUS, Montana
ROBERT SMITH, New Hampshire          DANIEL PATRICK MOYNIHAN, New York
DIRK KEMPTHORNE, Idaho               FRANK R. LAUTENBERG, New Jersey
JAMES M. INHOFE, Oklahoma            HARRY REID, Nevada
CRAIG THOMAS, Wyoming                BOB GRAHAM, Florida
CHRISTOPHER S. BOND, Missouri        JOSEPH I. LIEBERMAN, Connecticut
TIM HUTCHINSON, Arkansas             BARBARA BOXER, California
WAYNE ALLARD, Colorado               RON WYDEN, Oregon
JEFF SESSIONS, Alabama
                     Jimmie Powell, Staff Director
               J. Thomas Sliter, Minority Staff Director
                                 ------                                

           Subcommittee on Transportation and Infrastructure

                   JOHN W. WARNER, Virginia, Chairman

ROBERT SMITH, New Hampshire          MAX BAUCUS, Montana
DIRK KEMPTHORNE, Idaho               DANIEL PATRICK MOYNIHAN, New York
CHRISTOPHER S. BOND, Missouri        HARRY REID, Nevada
JAMES M. INHOFE, Oklahoma            BOB GRAHAM, Florida
CRAIG THOMAS, Wyoming                BARBARA BOXER, California

                                  (ii)



                            C O N T E N T S

                              ----------                              

                           FEBRUARY 13, 1997
                 TRANSPORTATION REAUTHORIZATION ISSUES
                           OPENING STATEMENTS

Baucus, Hon. Max, U.S. Senator from the State of Montana.........    10
Bond, Hon. Christopher S., U.S. Senator from the State of 
  Missouri.......................................................    24
Boxer, Hon. Barbara, U.S. Senator from the State of California...    62
Chafee, Hon. John H., U.S. Senator from the State of Rhode Island     9
Inhofe, Hon. James M., U.S. Senator from the State of Oklahoma...    30
Kempthorne, Hon. Dirk, U.S. Senator from the State of Idaho......    12
    Report, Our National Laboratories and Transportation Research    13
Moynihan, Hon. Daniel Patrick, U.S. Senator from the State of New 
  York...........................................................    11
Reid, Hon. Harry, U.S. Senator from the State of Nevada..........    26
Smith, Hon. Robert, U.S. Senator from the State of New Hampshire.    62
Thomas, Hon. Craig, U.S. Senator from the State of Wyoming.......    25
Warner, Hon. John W., U.S. Senator from the Commonwealth of 
  Virginia.......................................................     1
    Letter, to Senate Budget Committee...........................     5

                               WITNESSES

Card, Andrew H., Jr., president and CEO, American Automobile 
  Manufacturers Association......................................    42
    Prepared statement...........................................   107
    Responses to additional questions from Senator Chafee........   109
Downey, Hon. Mortimer L., Deputy Secretary, Department of 
  Transportation.................................................    32
    Prepared statement...........................................    63
    Responses to additional questions from Senator Chafee........    83
    Report, 1995 Status of the Nation's Surface Transportation 
      System: Condition and Performance..........................    84
Kulash, Damian, president and CEO, ENO Transportation Foundation, 
  Inc............................................................    51
    Prepared statement...........................................   211
Pisarski, Alan E., author........................................    45
    Prepared statement...........................................   109
    Report, Commuting in America................................119-169
Rensink, Darrel, president, American Association of State Highway 
  and Transportation Officials...................................    47
    Prepared statement...........................................   205
    Responses to additional questions from Senator Chafee........   209

                          ADDITIONAL MATERIAL

Reports:
    Commuting in America........................................119-169
    Economic Returns from Transportation Investment.............169-205
    1995 Status of the Nation's Surface Transportation System: 
      Condition and Performance..................................84-107
    Our National Laboratories and Transportation Research........ 13-22
                                 ------                                

                           FEBRUARY 26, 1997
         ADMINISTRATION'S TRANSPORTATION POLICIES AND PROPOSALS
                           OPENING STATEMENTS

Baucus, Hon. Max, U.S. Senator from the State of Montana.........   220
Boxer, Hon. Barbara, U.S. Senator from the State of California...   222
Chafee, Hon. John H., U.S. Senator from the State of Rhode Island   219
Kempthorne, Hon. Dirk, U.S. Senator from the State of Idaho......   222
Reid, Hon. Harry, U.S. Senator from the State of Nevada..........   225
Smith, Hon. Robert, U.S. Senator from the State of New Hampshire.   224
Thomas, Hon. Craig, U.S. Senator from the State of Wyoming.......   224
Warner, Hon. John W., U.S. Senator from the Commonwealth of 
  Virginia.......................................................   219

                               WITNESSES

Dittmar, Hank, executive director, Surface Transportation Policy 
  Project........................................................   261
    Prepared statement...........................................   285
Fay, William D., president and CEO, American Highway Users 
  Alliance.......................................................   259
    Prepared statement...........................................   280
Slater, Hon. Rodney E., Secretary, U.S. Department of 
  Transportation.................................................   226
    Prepared statement...........................................   271

                          ADDITIONAL MATERIAL

Letter, to Senator Chafee from Commonwealth of Massachusetts,....   289
                                 ------                                

                             MARCH 6, 1997
                TRANSPORTATION INFRASTRUCTURE FINANCING
                           OPENING STATEMENTS

Baucus, Hon. Max, U.S. Senator from the State of Montana.........   296
Reid, Hon. Harry, U.S. Senator from the State of Nevada..........   298
Chafee, Hon. John H., U.S. Senator from the State of Rhode Island   291
Warner, Hon. John W., U.S. Senator from the Commonwealth of 
  Virginia.......................................................   314

                               WITNESSES

Costantino, James, president and CEO, ITS America................   331
    Prepared statement...........................................   387
    Responses to additional questions from:
        Senator Chafee...........................................   393
        Senator Reid.............................................   392
DeLauro, Hon. Rosa L., U.S. Representative from the State of 
  Connecticut....................................................   291
    Prepared statement...........................................   294
Flanagan, Daniel V., Jr., chairman, Commission to Promote 
  Investment in America's Infrastructure.........................   328
    Prepared statement...........................................   376
    Responses to additional questions from Senator Reid..........   384
Downey, Mortimer, Deputy Secretary, Department of Transportation; 
  accompanied by Jane Garvey, Deputy Federal Highway 
  Administrator and Christine Johnson, Director, Joint Program 
  Office, Intelligent Transportation Systems.....................   299
    List of Principles, ITS of America...........................   348
    Prepared statement...........................................   341
    Responses to additional questions from:
        Senator Boxer............................................   352
        Senator Reid.............................................   349
Pfeffer, Gerald S., senior vice president, United Infrastructure 
  Company........................................................   326
    Prepared statement...........................................   370
    Responses to additional questions from:
        Senator Chafee...........................................   374
        Senator Reid.............................................   376
Scheinberg, Phyllis F., Associate Director, Transportation and 
  Telecommunications Issues, General Accounting Office; 
  accompanied by Joseph Christoff, Assistant Director, and Yvonne 
  Pufahl, Senior Evaluator.......................................   316
    Prepared statement...........................................   353
    Report, Urban Transportation--Challenges to Widespread 
      Deployment of Intelligent Transportation Systems, General 
      Accounting Office..........................................   358
    Responses to additional questions from:
        Senator Chafee...........................................   369
        Senator Reid.............................................   369
        Senator Warner...........................................   369
Skinner, Robert E., Jr., executive director, Transportation 
  Research Board, National Academy of Sciences...................   333
    Prepared statement...........................................   395
    Responses to additional questions from Senator Reid..........   398

                          ADDITIONAL MATERIAL

Intelligent Transportation Society of America, letter to 
  Secretary-Designate Rodney Slater............................348, 386
                                 ------                                

                             MARCH 13, 1997
                  PROGRAM ELIGIBILITY AND FLEXIBILITY
                           OPENING STATEMENTS

Baucus, Hon. Max, U.S. Senator from the State of Montana.........   416
Bond, Hon. Christopher S., U.S. Senator from the State of 
  Missouri.......................................................   416
Boxer, Hon. Barbara, U.S. Senator from the State of California...   422
Chafee, Hon. John H., U.S. Senator from the State of Rhode Island   406
Graham, Hon. Bob, U.S. Senator from the State of Florida.........   421
Lautenberg, Hon. Frank R., U.S. Senator from the State of New 
  Jersey.........................................................   419
Moynihan, Hon. Daniel Patrick, U.S. Senator from the State of New 
  York...........................................................   406
Reid, Hon. Harry, U.S. Senator from the State of Nevada..........   423
Warner, Hon. John W., U.S. Senator from the Commonwealth of 
  Virginia.......................................................   403

                               WITNESSES

Biden, Jr., Hon. Joseph R., U.S. Senator from the State of 
  Delaware.......................................................   408
    Prepared statement...........................................   410
Donohue, Thomas J., president and chief executive officer, 
  American Trucking Associations, Inc............................   441
    Letter, response to chart used at hearing....................   482
    Prepared statement...........................................   476
    Response to additional questions from Senator Chafee.........   483
Downs, Thomas M., chairman, president and chief executive 
  officer, National Railroad Passenger Corporation (Amtrak)......   444
    Prepared statement...........................................   486
Huerta, Hon. Michael, Associate Deputy Secretary, Department of 
  Transportation.................................................   424
    Prepared statement...........................................   458
    Responses to additional questions from Senator Chafee........   462
Jeffords, Hon. James M., U.S. Senator from the State of Vermont..   413
    Prepared statement...........................................   414
Loftus, William E., president, American Short Line Railroad......   437
    Prepared statement...........................................   472
McCain, Hon. John, U.S. Senator from the State of Arizona........   414
Phillips, Karen B., senior vice president, Association of 
  American Railroads.............................................   439
    Prepared statement...........................................   490
Roth, Jr., Hon. William V., U.S. Senator from the State of 
  Delaware.......................................................   404
White, Leslie, chairperson, American Public Transit Association, 
  on Behalf of the Clark County Public Transportation Benefit 
  Area Authority.................................................   434
    Prepared statement...........................................   464
    Responses to additional questions from Senator Chafee........   467

                          ADDITIONAL MATERIAL

Letter, Rails to Trails program, Vincent B. Mancini..............   517
Recommendations, American Public Transit Association.......484, 492-512
Statements:
    American Public Transit Association.........................493-512
    Association of American Railroads............................   513
    Midwest Intercity High Speed Rail............................   519
                                 ------                                

                             MARCH 19, 1997
            ENVIRONMENTAL PROGRAMS AND METROPOLITAN PLANNING
                           OPENING STATEMENTS

Baucus, Hon. Max, U.S. Senator from the State of Montana.........   526
Boxer, Barbara, U.S. Senator from the State of California........   570
Chafee, Hon. John H., U.S. Senator from the State of Rhode Island   521
Graham, Hon. Bob, U.S. Senator from the State of Florida.........   547
Inhofe, James M., U.S. Senator from the State of Oklahoma........   543
Reid, Hon. Harry, U.S. Senator from the State of Nevada..........   544
Smith, Bob, U.S. Senator from the State of New Hampshire.........   570
Thomas, Hon. Craig, U.S. Senator from the State of Wyoming.......   526
Warner, Hon. John W., U.S. Senator from the Commonwealth of 
  Virginia.......................................................   533

                               WITNESSES

Cooke, M. Michael, chair, Board of County Commissioners, Douglas 
  County, CO.....................................................   564
    Letters to Senators Allard and Chafee.......................635-644
    Prepared statement...........................................   631
Dahms, Lawrence, D., executive director, Metropolitan 
  Transportation Commission......................................   562
    Letter to Representative Shuster.............................   628
    Prepared statement...........................................   626
    Recommendations to amend title 23, U.S.C.....................   630
Dittmar, Hank, executive director, Surface Transportation Policy 
  Project........................................................   555
    Prepared statement...........................................   620
Gardiner, David M., Assistant Administrator for Policy, Planning, 
  and Evaluation, Environmental Protection Agency................   527
    Article, The Emission Reduction Potential of the Congestion 
      Mitigation and Air Quality Program.........................   594
    Prepared statement...........................................   582
    Responses to additional questions from Senator Chafee........   590
Garvey, Jane F., Acting Administrator, Federal Highway 
  Administration.................................................   523
    Article, Florida Highway Travel Demand--Current and Future...   581
    Letters to Senators Thomas and Graham........................   580
    Prepared statement...........................................   574
    Responses to additional questions from Senator Chafee........   578
Hiemstra, Hal, vice president of National Policy, Rails to Trails   552
    Prepared statement...........................................   609
Kenison, Leon, S., Commissioner, Department of Transportation, 
  State of New Hampshire.........................................   557
    Prepared statement...........................................   623
    Responses to additional questions from Senator Chafee........   625
Maguire, Meg, president, Scenic America..........................   553
    Prepared statement...........................................   616
Stowe, Timothy S., vice president, Anderson and Associates, 
  Incorporated; on behalf of American Consulting Engineers 
  Council........................................................   567
    Prepared statement...........................................   649
Vidal, Guillermo, executive director, Department of 
  Transportation, State of Colorado..............................   566
    Letter to Senator Chafee.....................................   648
    List, ISTEA reauthorization principles.......................   646
    Prepared statement...........................................   644
Walker, Thomas, executive director, Wisconsin Road Builders 
  Association, on behalf of the American Road and Transportation 
  Builders Association...........................................   549
    Prepared statement...........................................   602
    Responses to additional questions from Senator Chafee........   606

                          ADDITIONAL MATERIAL

Letters:
    Carpenter, Margaret..........................................   640
    Cooke, M. Michael............................................   635
    Danish, Paul D...............................................   637
    Erker, Cynthia...............................................   635
    Flaum, Martin J..............................................   637
    Hollaway, Patricia B.........................................   638
    Jones, Donald K..............................................   638
    Lasater, Gary................................................   640
    Lawrence, Michelle...........................................   638
    Mendez, Jana.................................................   637
    O'Boyle, John R..............................................   639
    Page, Polly..................................................   636
    Stewart, Ron.................................................   637
    Stone, John P................................................   638
    Tauer, Paul E................................................   638
Report, Emission Reduction Potential of the Congestion Mitigation 
  and Air Quality Potential......................................   594
Statements:
    Civil War Trust..............................................   658
    Environmental Defense Fund, by Michael A. Replogle, Federal 
      Transportation Director....................................   652


REAUTHORIZATION OF THE INTERMODAL SURFACE TRANSPORTATION EFFICIENCY ACT

                              ----------                              


                      THURSDAY, FEBRUARY 13, 1997

                               U.S. Senate,
         Committee on Environment and Public Works,
         Subcommittee on Transportation and Infrastructure,
                                                    Washington, DC.

                 TRANSPORTATION REAUTHORIZATION ISSUES

    The subcommittee met, pursuant to notice, at 2 p.m. in room 
406, Senate Dirksen Building, Hon. John W. Warner (chairman of 
the subcommittee) presiding.
    Present: Senators Warner, Kempthorne, Bond, Inhofe, Thomas, 
Moynihan, Reid, Baucus, and Chafee [ex officio].

OPENING STATEMENT OF HON. JOHN W. WARNER, U.S. SENATOR FROM THE 
                    COMMONWEALTH OF VIRGINIA

    Senator Warner. The subcommittee will come to order. Even 
though our witnesses haven't arrived, I think we'll go ahead 
and get started.
    We recognize the presence of the senior Senator from New 
York, who was the father on the Senate side of ISTEA.
    The purpose of these series of hearings is to enact a 
follow-on piece of legislation.
    This first hearing was intended by the distinguished 
ranking member and myself to discuss the changing 
transportation needs of both commercial traffic and personal 
traveling habits; the anticipated funding requirements for our 
surface transportation system; and the benefits our economy 
receives from our investments in transportation.
    The subcommittee's next hearing will be February 26, where 
we will receive the testimony of the new Secretary of 
Transportation, Mr. Slater. He will present the 
Administration's perspective.
    I look forward to working with him. Speaking for myself and 
I think almost everyone that I know on this subcommittee, we 
have a very high professional regard for the Secretary, and for 
that reason I'm optimistic that we can have a meeting of the 
minds between the goals of the Administration and certainly the 
Senate side of the Congress.
    We are well aware of the amount of work ahead of us, and we 
want to meet a September 30 deadline. We know the consequences 
of not doing that, and I'm hopeful that perhaps we can even get 
a step ahead of it.
    About the level of funding, I was joined by distinguished 
colleagues such as Senator Graham and the distinguished 
colleague from Montana and others to put out a letter saying 
that we feel a level of 26 billion authority for this program 
is a satisfactory level for this year. Fifty-seven Senators 
have joined in that letter.
    Now, we all know what's in the highway trust fund. Even if 
we were to take this sum out, according to my calculations, 
between $5 and $8 million would remain.
    It does not require any more taxes. It does not require $26 
billion trying to readdress this tough issue of the 4.3 cents 
now going to the general fund. It's there.
    Now, when I went through law school there was a very clear 
definition of the word ``trust.'' You are a fiduciary. You hold 
it as a trustee for the benefit of others.
    We have represented to the American public, ``When you pay 
your gas taxes, they come to Washington to a trust fund to be 
redistributed back to you for the purpose of improving your 
existing highway system and road system and possibly adding 
newer sections.
    We should hold to that concept of the trust. If we're not 
going to follow the concept of the fiduciary and the trust, 
then I suggest we rename this the ``jailhouse fund,'' and your 
money is sent and it's locked up.
    So let's just be honest with the American public, and I'm 
going to fight very hard, and I'm very glad six other members 
have joined me in this effort--particularly my distinguished 
colleague from Montana.
    Every statistic shows transportation is a very sound 
investment in the United States. For every dollar invested, 
economists anticipate a return of $2.60. The future of our 
country depends on the ability of the American worker to 
compete in a world market.
    How many times have all of us visited our industrial plants 
and asked the question? I did in Luray, VA, in a plant that 
makes blue jeans--I know that sounds prosaic, but it's an 
important economic entity in that rural community of Virginia. 
As I exited, I said, ``Where do I find the basis for your being 
able to compete with Asia?'' And he simply pointed to a truck 
and he said, ``That order came in this morning. We turned it 
around in 2 hours. It's back on that truck and it's on the 
shelf of the merchant the next morning.''
    That, Senator is turn-around time which makes this company 
competitive with the world's cheap labor markets. I hasten to 
say that the laborers in that plant were being paid a fair wage 
for a good day's work.
    I'm also concerned about safety--safety and structural 
integrity of the present system. I'm going to, I hope, be 
joined by others who impress upon Secretary Slater the need for 
the level of funding over and above what the Administration has 
indicated today.
    As yet, our Budget Committee has not responded to my 
request, joined by others, in giving us a higher level of 
funding, but they haven't said no, so there is hope there.
    Goals for ISTEA--I say ISTEA because I supported ISTEA-I. I 
think it's not wise to name this ISTEA-II because, while I 
intend to work toward preserving many of the strides and 
accomplishments in ISTEA-I, I still feel we can make further 
strides, particularly in the area of lessening the control over 
the expenditure of funds in our States.
    As I mentioned earlier this week, Senator Graham and I put 
in the STEP 21 bill. This legislation responds to America's 
need for a strong national transportation system. STEP 21 is a 
reasonably balanced, multi-modal approach that will increase 
our Nation's mobility and permit American products to 
effectively compete again in the global marketplace. It 
recognizes that all regions of the Nation have significant 
transportation requirements and they're different. They're 
different.
    The program for the first time responds to our 
transportation demands using current needs information. This 
approach will address the inequities that have persisted in the 
funding formulas.
    We won't open that fight here today, but let me tell you 
that is serious business to many of us. I'm heartened by the 
fact that the distinguished majority leader has said to me in 
no uncertain terms that he will support me as strongly as 
possible in trying to get an equitable readjustment of a 
formula which is long since outdated. We all know that.
    If there ever were in the history of the Congress a witch's 
brew that was mixed by the legislators, that's that formula 
using criteria that go back to the days just following the 
conclusion of the Pony Express. The time has come. Fortunately, 
I think there are forces in fair and objective minds in the 
Senate today to rework that formula.
    So we're not retreating in any way from ISTEA. We're 
picking out what I hope will be the strongest parts of that. 
We'll continue to work toward greater flexibility of State and 
local decisionmakers to invest their resources in non-highway 
alternatives such as transit and, indeed, commuter rail.
    Gentlemen, I think I will put the balance of mine in so 
that we can shorten our statements.
    [The prepared statement of Senator Warner follows:]
     Prepared Statement of Hon. John Warner, U.S. Senator from the 
                        Commonwealth of Virginia
    I want to welcome Deputy Secretary Downey and our other witnesses 
to the subcommittee today as we continue our work to reauthorize the 
Intermodal Surface Transportation Efficiency Act--or ISTEA.
    For the information of members on the subcommittee and others, the 
purpose of the first hearing is to discuss changing transportation 
trends, both commercial traffic and personal travel habits, the 
anticipated funding requirements for our surface transportation system 
and the benefits our economy receives from our investments in 
transportation.
    The subcommittee's next hearing will be February 26th, where we 
will be pleased to have Secretary Slater present the Administration's 
proposal for ISTEA reauthorization.
    I look forward to working closely with the Department to devise a 
bill that meets our shared goals of improving the mobility of all 
Americans.
    We are well aware of the very significant challenges ahead of us in 
order to enact new legislation before ISTEA expires on September 30. 
Failing to do so will cause serious disruption in project construction 
and planning as no funds will be provided to states after October 1 
until a new surface transportation law is enacted.
    I am committed to meeting that deadline and will work to ensure 
that the subcommittee reports legislation in a responsible timeframe.
    Certainly, an adequate level of Federal funding available from the 
Highway Trust Fund in the next 5 years is critical to our 
reauthorization efforts.
    We must find ways to begin to meet the significant financial 
demands identified by the Department of Transportation to maintain our 
highways and bridges at their current level.
    I was pleased to work with Senator Baucus and other members of the 
subcommittee on a letter to the Budget Committee requesting $26 billion 
in contract authority for this program. The support of 57 Senators 
indicates the strong bipartisan support for a healthy investment in our 
surface transportation program.
    This level of funding can be supported by the revenues in the 
Highway Trust Fund without depleting the balances. It does not depend 
on transferring the 4.3 cents of the gas tax now going to the general 
fund or other additional revenues.
    As the Highway Trust fund consists of taxes collected on the users 
of the system--American drivers--we must use this revenue to maintain 
our transportation system.
    It is also evident that transportation is a sound investment for 
the American taxpayer. According to DOT, for every $1.00 invested, we 
receive an economic return of $2.60.
    I am concerned that the funding levels proposed in the President's 
budget cannot meet the serious structural, safety and capacity demands 
we have today.
    As the subcommittee begins it's work to reauthorize ISTEA, I remain 
committed to a surface transportation system that:
     effectively moves people and goods;
     provides for the safety of the traveling public;
     fosters a healthy economy; and
     ensures a consistent level of performance and service 
among the 50 states.
    These are national priorities that must be met.
    Earlier this week, Senator Graham, a member of this subcommittee, 
and I introduced the so-called STEP 21 bill.
    This legislation responds to our need for a strong national 
transportation program.
    STEP 21 is a regionally balanced, multimodal approach that will 
increase our nation's mobility, and permit American products to 
effectively compete in the global marketplace.
    It recognizes that all regions of the Nation have significant 
transportation needs.
    It is a program that, for the first time, responds to our 
transportation demands using current needs information. This approach 
will address the inequities that have persisted in the funding 
formulas.
    In doing so, we provide a program that acknowledges that sparsely 
populated states with large land areas or states with small populations 
cannot ``go it alone.''
    As Important, STEP 21 does not retreat from the principles of ISTEA 
to provide a surface transportation program that is intermodal, 
responds to our environmental needs, and maintains our commitment to 
safety.
    We continue the flexibility of state and local decisionmakers to 
invest their resources in non-highway alternatives--such as transit or 
commuter rail.
    We continue the important role of metropolitan planning 
organizations.
    We recognize that a full and open planning process stimulates 
public participation--which in turn fosters transportation solutions 
that respond to larger community goals.
    We provide a program that is environmentally sound, recognizing 
that transportation plays an important part in our national commitment 
to improving the quality of the air we breathe.
    STEP 21 also continues the Enhancements program that invests in 
alternative forms of transportation--bike paths and pedestrian 
walkways--and mitigates the impacts of past transportation choices.
    With that brief description of my legislation, I want everyone to 
be clear, however, that I intend for the subcommittee's work to be a 
collective process of ideas.
    I look forward to working with all members of the subcommittee, and 
particularly the Ranking Member, Senator Baucus to draft legislation 
that provides a surface transportation program that can respond to the 
demands of the next century.










    Senator Warner. We'll turn to our distinguished chairman 
here for a few opening comments.

OPENING STATEMENT OF HON. JOHN H. CHAFEE, U.S. SENATOR FROM THE 
                     STATE OF RHODE ISLAND

    Senator Chafee. Thank you very much, Senator Warner, 
distinguished chairman of the subcommittee. I want to thank you 
for holding this first hearing on the reauthorization of the 
Intermodal Surface Transportation Efficiency Act, which we did, 
as you remember, in 1990. And I want to pay tribute to Senator 
Moynihan, who was such a tremendous leader in that effort in 
that year.
    I think it's terribly important that we remember what the 
name of that legislation was and what the legislation is we're 
working on today, and that is it's the Surface Transportation 
Efficiency Act. It's not a highway bill; it's a surface 
transportation act.
    I believe that what we've got to do is make the most 
strategic possible investments into transportation.
    During the 1950's and 1960's it made sense to build an 
interstate highway system. Today I think we have to be more 
creative. We must carefully plan and allocate limited 
resources. Yes, we seek more resources. We've applied to the 
chairman of the Budget Committee, but who knows how much we'll 
get. And no matter how much we get, it won't be enough.
    It's like a general in the war. He never had enough 
ammunition. And so will be the programs that we're dealing 
with.
    So I'm interested in hearing what our panelists have to say 
about which transportation projects and programs will provide 
the greatest economic benefits in the future.
    Wise transportation investment decisions are largely a 
question of what will generate the most efficient flow of 
people and goods. ISTEA was a major step in reorienting the 
focus on personal and commercial travel. Transportation 
decisions have now become part of a larger planning process--a 
process that recognizes how transportation touches every corner 
of our lives.
    Obviously, we're a different Nation now than we were when 
the interstate system was created. We must maintain the 
strengths of the transportation system we have in place, but we 
must build upon them, too, so I look forward to hearing more 
about these important issues.
    We thank the chair.
    [The prepared statement of Senator Chafee follows:]
  Prepared Statement of Hon. John H. Chafee, U.S.  Senator  from the 
                         State of Rhode Island
    Thank you, Mr. Chairman. I welcome the opportunity to take part in 
this, the first hearing of the new Congress on reauthorization of the 
Intermodal Surface Transportation Efficiency Act. Let me point out that 
ISTEA expanded the focus of national policy, recognizing that the 
individual transportation modes function best as a cohesive and 
interrelated system. It transformed what was simply a highway program 
into a surface transportation program dedicated to the mobility of 
passengers and goods.
    The purpose of today's hearing is to receive testimony on 
transportation trends, funding requirements, and the impact of 
transportation on the economy. Transportation plays a critical role in 
the national and global economy. In the United States, it employs more 
than 12 million people; consumes one of every five dollars of total 
household spending; and accounts for 11 percent of the nation's gross 
domestic product.
    There has been a great deal of emphasis on the level of funding for 
transportation, but minimal attention to the question of which 
transportation investments will yield the highest return in the future.
    Now more than ever, strategic investment in transportation is 
critical. During the 1950's and 1960's, it made the most sense for the 
Nation to build an interstate highway system. Today, we need to be more 
creative. We must carefully plan and allocate limited resources. I am 
interested in hearing what our panelists have to say about which 
transportation projects and programs will provide the greatest economic 
benefits in the future.
    Wise transportation investment decisions are largely a question of 
what will generate the most efficient flow of people and goods. Along 
those lines, we must keep a watchful eye on travel trends as we make 
tough transportation policy choices.
    ISTEA was a major step in reorienting the focus on personal and 
commercial travel. Transportation decisions now have become part of a 
larger planning process. A process that recognizes how transportation 
touches every corner of our lives. Policy makers and planners must be 
flexible in adapting to constantly changing transportation needs.
    We are a far different nation than we were when the Interstate 
System was created. The way we live, the way we travel, and even the 
amount of money we have to spend on transportation all have changed--
and will continue to change. We must maintain the strengths of the 
transportation system we have in place--but we must build upon them, 
too.
    I look forward to learning more about these very important issues. 
Thank you.

    Senator Warner. Senator Baucus.

  OPENING STATEMENT OF HON. MAX BAUCUS, U.S. SENATOR FROM THE 
                        STATE OF MONTANA

    Senator Baucus. Thank you, Mr. Chairman.
    I want to echo your words, as well as the words of the 
distinguished chairman of the subcommittee, in recognizing the 
achievements of the Senator from New York. The distinguished 
senior Senator from New York is the one who amazingly put this 
together.
    I can remember a few years ago watching him put the various 
pieces of legislation together in a way that was very 
accommodating. The various parts of the country were very 
appreciative of his utmost grace and style, as befitting the 
Senator from New York, and I just want to thank him publicly 
here very much for the great work that he did.
    Frankly, he set the stage for us. Most people would agree 
that we have a very good surface transportation program. There 
may be a few wrinkles in it, but essentially it has served us 
very well.
    Let's be reminded about the large portion that 
transportation is of our U.S. gross domestic product. I was 
surprised to see what a large percentage it is when this table 
was given to me.
    Housing is No. 1 in our country, about 24 percent. After 
housing, health care is about 15 percent GDP, and then food 13. 
The next-largest function is transportation. It's huge.
    Frankly, as huge as it is, it's clear that we have a great 
need for more dollars, if we can find them, to maintain our 
current program.
    The Department has a needs assessment, which we all know 
about, but the Department of Transportation needs report states 
that almost $50 billion per year will be needed in order to 
maintain current highway conditions--just to maintain. That's 
not in addition.
    The chairman of the subcommittee mentioned that many of us 
are encouraging the Budget Committee and the Appropriations 
Committees to use the full $26 billion that's available in the 
trust fund for each of the next 6 years. Senator Warner 
mentioned that 57 Senators have signed the letter. Actually, 
there are two more Senators that have signed to it. It's 59 
Senators, at least.
    We should do all we can to maintain the transportation 
needs of our country--the various components of the programs, 
in addition to highways. It's all the different forward-looking 
features of an interconnected transportation system that we all 
are working on, and particularly as begun by the Senator from 
New York.
    Thank you, Mr. Chairman.
    Senator Warner. Thank you, Senator.
    Senator Moynihan from New York, who is the ranking member 
of the subcommittee which is conducting this hearing today--
Senator Moynihan.

OPENING STATEMENT OF HON. DANIEL PATRICK MOYNIHAN, U.S. SENATOR 
                   FROM THE STATE OF NEW YORK

    Senator Moynihan. Thank you, Mr. Chairman, and thank you 
for your generous remarks about the ISTEA. I thank my colleague 
from Montana. I thank Senator Warner.
    As we ask ourselves, ``What do we do now?'' it doesn't do 
great harm to pause a moment and say, ``We've not done so badly 
in the past.''
    We're going to hear testimony this morning that the return 
for the highway investments prior to 1970 was 35 percent. 
That's an aggregate for the private sector of 17 percent. If we 
spend this money well, we get a lot back from it.
    Senator Warner's clothing factory is a good example of a 
highway system that made just-in-time inventory and delivery a 
possibility that has enormously affected the economics of the 
private sector quite apart from the convenience of the roads, 
themselves.
    I would much agree with Senator Chafee that we are dealing 
with the Surface Transportation Act. The era of the 
construction of the interstate system has ended, as it was 
intended to do. We got the job done. And we moved on in this 
last legislation to a more general surface transportation 
concept, and we have a lot to show for it.
    I continue to think that the idea of efficiency in these 
matters is hugely important. There is no such thing as a free 
ride. That idea is taking hold and we're showing results. I 
think $26 billion is absolutely a minimum for highways. I think 
there should be money for transit, too.
    I would just leave one last note, because it was something 
we thought about 5 years ago.
    The magnetic levitation was invented, thought up in 1960 by 
a young nuclear engineer coming back from Brookhaven Lab on the 
east end of Long Island. He was on his way back to MIT for a 
beer party, I suppose. Between the time he slowed down at 
Frog's Neck Bridge and the time he paid his toll he'd thought 
up mag lev. Well, that's what it means to be 28 years old and a 
nuclear engineer.
    It's the most important change in surface transportation in 
history, except the wheel, because it does not rely on 
friction.
    In Japan, in Germany they're roaring ahead with 
development. I think our distinguished chairmen are going to 
have a look at the operation.
    I would hate to accept a world in which things are invented 
in the United States and made elsewhere, and it remains to be 
seen, but it's not to be forgotten.
    Thank you very much, Mr. Chairman.
    Senator Warner. Senator Kempthorne.

 OPENING STATEMENT OF HON. DIRK KEMPTHORNE, U.S. SENATOR FROM 
                       THE STATE OF IDAHO

    Senator Kempthorne. Mr. Chairman, thank you very much for 
your leadership in the process as you've outlined how we will 
proceed on the reauthorization of ISTEA. I ask to place my 
statement in the record.
    [The prepared statement of Senator Kempthorne follows:]
Prepared Statement of Hon. Dirk Kempthorne, U.S. Senator from the State 
                                of Idaho
    Thank you, Mr. Chairman. I appreciate that you are holding this 
hearing today as we begin the reauthorization of ISTEA. It is very 
appropriate that we begin this process by receiving testimony about 
transportation trends for the future and how we will pay for them.
    When I speak with the Director of the Idaho DOT and my State 
legislators about ISTEA the first thing they want to know is if there 
will be more funds available to support the new National Highway 
System.
    They want to know if Congress is going to return more of the gas 
tax dollars collected at the pump to States to build and maintain 
Federal highways.
    The want to know if Congress will continue to recognize and support 
the concept of a ``National'' highway program that benefits all 
Americans regardless if you live in a large urban area or a sparsely 
populated rural western State.
    They want to know if Congress will financially support research for 
the development of new and more efficient modes of travel, alternative 
fuels and vehicles.
    These priorities are my priorities. That is why the testimony of 
these witnesses today is so relevant and timely.
    We must return more dollars of the gas tax ``user fee'' back to the 
States for use on long deferred maintenance instead of building up a 
balance in the trust fund that serves no transportation purpose.
    We must structure ISTEA II so that it fulfills the objectives and 
goals of ISTEA. One while we streamline and improve the original 
program based on its track record of performance. We must never lose 
sight however, of the intent and purpose of the original Federal 
Interstate Highway System which was established more than 40 years ago 
. . . we are one country with one national system of roadways that 
people must be able to depend upon. We cannot allow the Intermodal 
Surface Transportation Efficiency Act or the National Highway System to 
become programs of have and have-nots, and winners and losers.
    We must be innovative and creative not only in developing 
transportation technology for the future but, also in developing 
creative ways to finance them.
    We are at a critical crossroads of our nation's transportation 
future. We must seize it as an opportunity for success and not let it 
slip away.
    Mr. Chairman, in closing I would like to submit for the record a 
report entitled ``Our National Laboratories and Transportation 
Research.'' This is an excellent document which was prepared to address 
the question ``What is the role of our National Laboratories in 
transportation research?'' We are very proud to have one of these 
laboratories, The Idaho National Engineering and Environmental 
Laboratory, located in Idaho. I am hopeful that members of the 
committee will review this important report.
         Our National Laboratories and Transportation Research
  the civilian and military perspective the energy and environmental 
           perspective the transportation safety perspective
(By David Albright, The Alliance for Transportation Research Institute, 
     The University of New Mexico; Lewis S. Roach, Sandia National 
 Laboratories; Basil A. Barna, Idaho National Engineering Laboratory; 
 Adrian Tentner, Argonne National Laboratory Our National Laboratories 
                      and Transportation Research)
Introduction
david albright, the alliance for transportation research institute, the 
                        university of new mexico
    There are challenges we face as a nation that require extraordinary 
means to achieve a solution. Sometimes called ``Grand Challenges'' 
these problems are characterized both by potential impact on society 
and complexity of the problem. Urgent needs of the current 
transportation system, and innovative solutions for sustainable 
transportation in the next millennium, represent a Grand Challenge. A 
meaningful response will require full and effective use of the science 
and technology base of the United States of America.
    The National Laboratories are an essential part of our science and 
technology base. As a result of a half-century of public investment, 
exceptional capabilities are available to support basic research and 
achieve significant breakthroughs. The areas of transportation research 
in which the National Laboratories can contribute the most are those 
which are relevant to their core mission, support their strategic 
objectives, and in which they have accumulated considerable expertise. 
While some laboratories have developed transportation programs, there 
are competencies in each National Laboratory that may help address the 
transportation Grand Challenge.
    Grand Challenges arise periodically in the history of nations. 
Meaningful response to these challenges. or the lack thereof. can have 
a dramatic military or economic impact on the global balance of power. 
Perhaps the prototypical example of a Grand Challenge is the 
development of nuclear weapons during the World War II.
    There are many equally important. albeit less dramatic, challenges. 
Mapping the human genome, forecasting the global climate, and 
maintaining leadership in high-speed computing will have a major impact 
on society and our nation's ability to compete on a global basis.
    In almost all cases, we rely upon the nation's science and 
technology base to lead in solving these problems. While universities 
and free-market resources are an important part of this base, alone 
they may be unable to provide the best solutions. Our system relies 
upon a broadly based research and education mission for our 
universities, and a near-term, competitive mindset for private-sector 
laboratories.
    The need for longer-term, higher risk and higher payoff research 
responding to Grand Challenges was recognized as the fundamental reason 
for the establishment of a National Laboratory System in the United 
States. The National Laboratories have an important function in the 
nation's science and technology base. The laboratories address selected 
problems that require a highly expert, interdisciplinary approach. and 
at its very best is based exclusively on the public interest. In 
addressing these problems, the laboratories have in the past, do in the 
present, and must in the future work closely with universities and 
private industry.
    The triad that composes our nation's science and technology base 
has been tested by time and events. Each leg, whether private sector, 
university or National Laboratory. has its strengths. It is important 
to set national policy in a way that allows each component to serve and 
develop, while constantly seeking improvement. Research consortia 
involving the National Laboratories are a means of fully engaging the 
science and technology base, and are important in addressing the 
transportation Grand Challenge.
    There are several areas in which our present and future 
transportation system can be understood as a Grand Challenge, and in 
which the National Laboratories are critically needed. Military and 
civilian transportation needs and capabilities are inexorably linked--
and this linkage forms the first area. Colonel Lewis Roach. Sandia 
National Laboratories. addresses this area of transportation research. 
Energy and environmental research is the second area in which the 
National Laboratories are critically needed to achieve a sustainable 
transportation system. Mr. Basil Barna, Idaho National Energy 
Laboratory. develops this need. Mr. Barna also made a significant 
contribution to these introductory comments. Safety is the third area 
of transportation research. Dr. Adrian Tentner, Argonne National 
Laboratory, explores this subject and role of the National 
Laboratories.
    These three statements are not intended as exhaustive discourse on 
the ways in which the National Laboratories should support 
transportation. These statements are intended to present a clear and 
compelling basis for the intentional. thoughtful inclusion of our 
National Laboratories in addressing the transportation Grand Challenge.
    The transportation Grand Challenge can be expressed as the civil 
and military, energy and environment, and safety needs of our current 
and future transportation system. While developed in general terms, the 
impact of these needs is felt by each individual and each community 
across the nation. To respond to individual, community, and national 
concerns, our science and technology base should be fully and 
meaningfully employed in transportation research.
                                 ______
                                 
  Civil/Military Transportation Research and the National Laboratories
              lewis s. roach, sandia national laboratories
    There exists today an unprecedented level of commonality between 
this nation's military and civilian transportation research needs. The 
current view of United States national security centers on both our 
defense and economic security. Transportation, a central element of 
both of these aspects of national security. requires optimization by 
the best available means. The national military strategy has undergone 
a significant change from the cold war posture of containment of the 
Soviet Union utilizing a large standing military force. much of it 
forward deployed in Europe. The military establishment has been reduced 
both in personnel and bases, particularly those abroad, and we now rely 
on the concept of ``power projection'' of forces from the Continental 
United States. The execution of that military strategy places 
exceptional requirements on the nation's transportation system at a 
time of expanding international trade and domestic economic activity 
and increasing passenger traffic and congestion. A robust, high-
capacity transportation system is a common requirement for each of 
these issues. The nation needs a careful focus on the interplay between 
civilian and military transportation requirements so that improvements 
can be made via a closely coordinated transportation research policy. 
The National Laboratories are uniquely positioned to perform 
exceptional service in this national interest.
    Transportation has become the linchpin holding together the means 
of executing the national military strategy. That strategy protects our 
vital national interests with the capacity to respond to two nearly 
simultaneous major re tonal contingencies. Military forces are 
comprised of vast quantities of equipment, supplies. and troops. and 
this assemblage must be moved on short notice to very distant 
locations. The challenge is to project the bulk of this combat power 
with many fewer forward-based forces and limited propositioned 
equipment. This is a significant shift from the cold war era military 
posture. The implications of this shift for the transportation system 
require both policy and technology solutions to ensure successful 
defense of our vital national interests.
Information Technologies
    The current environment of global competition and heightened 
reliance on foreign trade has direct implications on the ability to 
efficiently move goods into and out of the country. Modern 
manufacturing approaches often cause finished goods. individual parts. 
and work in process to be transported into and out of the country 
multiple times. With the widespread application of just-in-time 
logistics, accurate status and carefully moderated flows of material 
are imperative for profitable manufacturing operations. This is true 
whether or not export/import is a feature of the distribution plan. 
Forward thinking transportation companies have realized that providing 
their customers with accurate, timely information flow regarding their 
shipments' status and expected delivery is nearly as important as the 
actual movement of the goods.
    The military has a corresponding information requirement. 
particularly during emergency deployments involving hundreds of 
thousands of personnel and large volumes of equipment moving vast 
distances by multiple modes. Maintaining visibility and control of such 
massive and complicated operations requires new tools somewhat similar 
to those used by commercial industry. The difference is the critical 
synchronization requirements and the multimodal aspects of military 
deployments, which in reality are the disassembly of large forces, 
their transportation over long distances, and their reassembly at 
destination. This causes heightened requirements for not just shipment 
data that tracks individual items in transit. Rather. it envisions the 
roll-up of that data into meaningful information from which is derived 
critical knowledge of the transportation system. Additionally, there is 
a need to anticipate bottlenecks and transportation system capacity 
shortfalls before the impacts occur. along with decision support 
mechanisms to help select corrective actions and model the outcomes for 
validation and execution. Cutting-edge research in this area of 
military logistics requirements could have application to United States 
industrial competitiveness if defense and civilian interests are 
mutually considered.
Infrastructure Development
    The condition and continued development of the nation's 
transportation infrastructure is relevant to the efficient movement of 
people and goods. Several examples illustrating this point impact 
civilian and defense transportation. As foreign trade plays a larger 
role in the United States economy. commercial ports are changing to 
accept the more specialized intermodal cargo flows. The types of port 
facilities that support the military's ship of choice for unit 
deployments--roll on/roll off (RORO)--are characterized by large, open 
spaces for cargo staging and uncluttered waterside space for the large 
ramps these ships lower to the wharf. However, modern container 
terminals often have large equipment blocking access to the waterfront, 
in addition to mountains of empty and loaded containers staked nearby. 
This trend to specialization and development of commercial port 
property may have particular impact on the military as it divests 
itself of military-operated ocean terminals under the 1995 round of the 
Base Realignment and Closure (BRAC) process.
    Investment in the upkeep and expansion of our road network is 
necessary in both a growing population and economy. Technology is 
needed that delivers more accurate and precise data for the assessment 
of road and bridge condition and projected deterioration of the 
infrastructure. Dual use technologies that could be focused on 
intelligence collection regarding war time degradation of an opponent's 
transportation network, could also prove effective for performing 
comprehensive assessments of our domestic roads and bridges.
    Such technologies could aid the decisionmaking process for 
federally funded highway projects. Although these decisions are by 
their nature in the political arena, with strong state and local 
influence they benefit by accurate assessments of actual conditions. 
Along certain specific routes, the U.S. Department of Defense (DoD) has 
a critical stake, yet limited influence. The concentration of military 
forces in relatively few major bases places added urgency on having 
solid transportation infrastructure from those bases to the strategic 
seaports of embarkation. Rail is the preferred mode for moving heavy 
and/or oversized equipment: and rail is also preferred for lighter 
wheeled vehicles and accompanying supplies, where the convoy distance 
to the port exceeds a day of road march. However, placing sole reliance 
on rail would be imprudent considering the potential vulnerability of 
fixed rail lines to sabotage.
Transportation System Protection
    A series of catastrophes, some involving transportation, has 
prompted President Clinton in July, 1996, to appoint a commission to 
examine critical infrastructure protection. Although some incidents 
were of natural causes or unintended manmade causes, others included 
suspicious air crashes. mass transit bombings and lethal gassings, and 
railway tampering. Together, they provide painful recognition of our 
vulnerability to domestic terrorism, sabotage, and serious disruption 
to orderly society. Given our military basing policy, with its reliance 
on power projection. providing security to our domestic transportation 
system is imperative to ensure the capability to deploy forces under 
emergency conditions. A comprehensive systems approach to the question 
of infrastructure protection is required to cover the range of 
vulnerabilities and safeguards systems. Examining the major parts of 
the transportation system and building in protections as facilities are 
under design utilizing the concept of surety--the safety. security. and 
reliability of a system--could provide an appropriate framework for 
attacking this challenge. The National Laboratories have historically 
provided the nation's foremost capability in providing a total systems 
view of ``high consequence'' operations. These include nuclear power 
plants, nuclear weapons research and development. air traffic control 
systems, and others. An exceptionally wide variety of science and 
technology disciplines are resident in these institutions.
Civil/Military Cooperation
    Recognition of the degree of military reliance on the civilian 
transportation system is fundamental to understanding the interplay 
between civilian and military transportation research needs. Currently, 
the military ships over 85 percent of cargo via commercial carriers in 
peace time and a higher percentage during contingency operations. Once 
the BRAC process is complete, the only strategic defense seaports in 
the country under day-to-day military control will be the ammunition 
ports. As a result, deployments of military unit equipment will occur 
almost entirely through commercial ports. Maintaining a forward look at 
new commercial technologies and their military implications is a firm, 
continuing requirement.
    With the reliance on commercial transportation comes a sensitivity 
to potential disruption of commercial activity during a large military 
deployment through the transportation system. Given the manufacturing 
industry reliance on just-in-time logistics techniques, in addition to 
reduction in finished goods inventory via responsive transportation 
services, the potential for significant, military-induced economic 
impacts must be considered. In a short notice crisis situation, it 
cannot automatically be assumed that all required commercial 
transportation capacity can be made instantly available. Research on 
potential economic disruptions and effective methods to minimize their 
effects would clearly be prudent.
    Utilizing the civilian transportation industry for military 
strategic lift has been a necessity since World War II. Formal 
agreements with air and ocean carriers? such as the Civil Reserve Air 
Fleet program and the Voluntary Intermodal Shipping Agreement, provide 
heavy supplementation to the limited cargo aircraft and ships under DoD 
control. The arrival of this civilian equipment in a hostile theater of 
operations brings into question the safety of the carrier's equipment 
and personnel. Consideration should be given to a more complete 
integration of commercial conveyances into military communications 
networks. military air traffic control systems, and force protection 
systems such as friendly fire avoidance technology. Recent trends in 
military logistics outsourcing to commercial firms in theaters of 
operation provide additional reason for examination.
Conclusion
    The several areas of overlap in civilian and defense 
transportation, above described, are a subset of potential areas where 
joint technology could be applied to these important national needs. 
Advances arising singly in government or private sectors must be 
examined for crossover application. With further recognition of the 
interrelationship of civilian and defense transportation, actively 
seeking areas of joint research to solve common problems is good public 
policy in a time of declining resources. The development of advanced 
transportation technologies holds the promise of significantly 
contributing to achievements in both the economic and defense 
dimensions of national security.
                                 ______
                                 
              Transportation, Energy, and the Environment
         basil a. barna, idaho national engineering laboratory,
              the challenge of sustainable transportation
    Sustainable transportation for the Nation in the 21st century 
certainly qualifies as a Grand Challenge. The basis of the problem has 
it roots in simple physics. Mobility requires energy. Current energy 
use patterns for transportation result in significant economic. 
national security. and environmental impacts. Even though this is 
recognized. we can't simply replace the system because of the 
investment in the infrastructure. the lack of suitable alternatives, 
and the key role that transportation plays in the development of the 
economy.
    This challenge is made even more complex by a strong interaction 
between the potential technological solutions and the human aspects of 
the problem. Because of this. transportation solutions for the next 
century will be characterized by an integration of both technical and 
political concerns. The nature of this integration will affect the 
quality of life of each individual and community in the nation.
    The wise direction of science base resources to this problem will 
require a fundamental understanding of the relationship that mobility 
has with energy resources, the environment. and the nation's social and 
economic processes. In short, research must treat the system as a 
whole. Perhaps even more importantly, research must be conducted within 
the framework of new partnerships that recognize the importance of 
multiagency coordination and the development of regional solutions that 
result in a national system.
Energy and Environmental Impacts
    Few human activities affect the environment as dramatically as 
transportation. Every highway, every pound of particulate emissions 
from diesel engines. every discarded vehicle tire is part of an 
emerging global problem that is generally not perceived as a series of 
related events. It is time to begin treating these problems as part of 
a larger system so that technology and policy development can be 
steered in a direction that is sustainable and improves the quality of 
life globally.
    Transportation is so integrally woven into the fabric of day-to-day 
life that we rarely see the connections between trucks, barges, 
pipelines, the corner junkyard. and the lingering haze that is part of 
every significant metropolitan area in the world. The political reality 
is that we deal with immediate and easily identified problems such as 
potholes and gasoline prices. The real message is that more efficient 
and environmentally responsive transportation systems must be invented 
or the United States' standard of living will decline as we loose our 
global competitive edge.
    In the time it takes to read this sentence, the nation's 
transportation system will burn over 30.000 gallons of oil. Ninety-
seven percent of the transportation fleet is powered by petroleum based 
fuels, and over 25 percent of America's total energy usage is consumed 
by transportation (Transportation energy data book: Edition 15, May, 
1995). Fueling the economy, the national security and personal freedom, 
this system is one of the fundamental elements of the nation's 
infrastructure.
    Unlike other industries however. transportation is singularly 
dependent on petroleum. This dependence on a single source of fuel, 
much of it imported, adversely affects national security and balance of 
payments. It also creates a situation in which even small gains in 
efficiency can have major payoffs.
    The transportation infrastructure is also chronically overburdened 
as traffic volume is at an all time high. Added to this are new global 
challenges, competition for limited resources, and a need to minimize 
regulatory burden while ensuring its effectiveness. The United States 
can no longer afford the luxury of increasing capacity by just doing 
more of what has been done before.
The Critical Role of Interagency Coordination and Regional Partnerships
    Historically, transportation has not been developed as a system 
that requires integration of diverse individual interests. The science 
base has been focused on many aspects of the problem, but not in an 
integrated fashion. National Laboratories in particular have for the 
most part been utilized to examine energy efficiency, oil imports, and 
the development of enabling technologies in the areas of materials, 
energy storage and conversion, and alternative energy sources.
    While this is not wrong, it does not take advantage of the 
tremendous potential of having the laboratories address the broader 
issues and serve as a resource for development of an integrated, 
optimally efficient national transportation system. It is time to 
utilize the National Laboratories as both regional technology resources 
and as resources that assist in the coordination of research across 
Federal agencies.
    Stronger linkage between the laboratories and the U.S. Department 
of Transportation (US DOT) would compliment the existing laboratory 
missions while providing a powerful tool in developing a sustainable 
transportation system. The US DOT, for example, should have an office 
specifically charged with the purpose of interfacing with the National 
Laboratories. As the success of this approach is proven, the lessons 
learned could serve as a template to expand the coordination to all 
agencies with a transportation role.
    A broader interagency collaboration is not, however, a complete 
solution. If the science base is to be effective in meeting this Grand 
Challenge, research must be conducted in a new and challenging way. To 
this end, the National Laboratories should be utilized to promote 
regional partnerships focused on transportation needs. Such 
partnerships would include state and local agencies, universities, the 
laboratories, and the private sector. In a very real sense these 
partnerships would connect the research with the day-today reality of 
how the Nation achieves mobility, equity and economic development. 
Properly designed, these alliances could demonstrate a major advance in 
how the science base creates national opportunities.
Technical Issues in Transportation--The Role of Fundamental Research
    The Grand Challenge of sustainable transportation will require the 
nation's science base to systematically address the entire scope of the 
transportation system. This approach will transcend traditional 
methods, which tend to focus on solutions for specific aspects of the 
problem such as congestion management, fuel efficiency, and highway 
infrastructure. A truly sustainable transportation infrastructure must 
be based on the relationships between the economy, the environment, and 
future energy supplies.
    Approaching the problem in this fashion requires a broad, 
interdisciplinary skill base that is primarily accountable to the 
public interest. For this reason, the National Laboratories are an 
essential ingredient in achieving a solution. Perhaps even more 
importantly, the laboratory system should be utilized as an instrument 
of synergy for common interests across Federal agencies.
    To accomplish this, fundamental research is needed in these primary 
areas:

    First there must be an effort to develop the tools that allow 
    policymakers to work with the transportation system as an entity. 
    While complex and composed of many diverse but related elements, 
    there is a single purpose to the transportation system: the 
    movement of physical objects and information. (It is important to 
    recognize that people are often transported when the primary 
    objective is moving information.)
    Increase the efficiency of energy conversion methods. While much 
    work is currently underway to increase the efficiency of internal 
    combustion engines and selected alternatives such as electric 
    propulsion, there is a need to better coordinate this development 
    with known problems of congestion, mobility, and pollution.
    Reduce environmental impact from emissions, limited recycling, and 
    waste transportation. Transportation is a significant contributor 
    to the nation's waste stream in the form of emissions and abandoned 
    materials and is also the primary method for relocation of many 
    other waste streams.
    Conduct research to increase the diversity of transportation 
    options and linkage between these options. This is more than 
    intermodalism. It includes new modes and methods of information 
    transfer.
Example of Potential Integration: Freight
    As an example of how an integrated approach can be applied, 
consider the following. While the nation's freight transportation 
system has made improvements in engine efficiencies and aerodynamics. 
the freight sector has not been able to match the strides made in 
passenger transportation. manufacturing, and building energy 
efficiency.
    In large part the gains have been offset by an overall shift away 
from transportation modes that use less energy per ton of freight 
movement. From 1960 through 1993, the ton miles of freight moved by 
rail increased by 193 percent compared to an increase of 309 percent 
for intercity trucking (Bureau of Transportation Statistics. National 
Transportation Statistics, 1993). Since it takes 2.946 BTUs to move a 
ton mile by truck versus 344 BTUs by rail. the overall freight system 
efficiency is heavily dependent on the share of freight for each mode.
    The nation's transportation system has not begun to exploit the 
benefits that can be achieved by technologies that better coordinate 
transportation modes. Even within specific modes. there are significant 
opportunities for greater efficiencies through improved information 
systems, lightweight materials, and better engines. Diesel engines. 
which are the primary power source for rail, trucking, and busses, are 
significant contributors to emissions.
    An integrated approach would establish the measures and tools that 
would allow all modes to be developed as part of a system. In addition, 
commodity flow data would be used to identify areas where high payoffs 
could be obtained from mode shifting or automation technologies.
Needed Actions
    If progress is to be made in answering the Grand Challenge of 
sustainable transportation. action is required in the following areas:

    Utilization of the National Laboratory System he all Federal 
    agencies involved in the nation's transportation system--This means 
    developing new policies that can allow sister Federal agencies such 
    as the US DOT, the U.S. Department of Energy. the U.S. Department 
    of Defense. and the Environmental Protection Agency to coordinate 
    research at the National Laboratories.
    Creation of regional transportation research partnerships that 
    strengthen the connection between the National Laboratories and the 
    real needs of the nation's transportation system--State and local 
    transportation agencies would play a lead role in these 
    partnerships and the laboratories would serve as an important new 
    resource for developing local solutions that address the national 
    issues.
    Congressional and executive branch support for developing a 
    sustainable and dramatically improved transportation system--Such 
    support would only arise from a recognition that the existing 
    transportation system and its expected evolution will not 
    effectively compete in global markets in the 21st century.
    Effective involvement of the science base--The National Laboratory 
    System must be given a clear mission and mandate to represent the 
    public interest in basic research. This mission should be defined 
    to compliment the skills of the university and private-sector 
    elements of the nation's science base.
                                 ______
                                 
The Role of the National Laboratories in Ensuring Transportation Safety
               adrian tentner argonne national laboratory
Introduction
    Ensuring the safety of our national transportation system has 
always been one of the most important missions of the U.S. Department 
of Transportation (US DOT). Considerable resources have been allocated 
both by the US DOT and private industry for safety research and the 
development of ever safer vehicles and roads. This sustained emphasis 
on transportation safety and the cooperation of public agencies and 
private industry has resulted in the United States having one of the 
safest transportation systems in the world. But inexorable growth in 
traffic constantly challenges the infrastructure capacity, and new 
solutions relying on advanced technologies are needed to maintain and 
enhance the efficiency of our transportation system. The trend toward 
increased transportation reliance on information technologies and 
system integration applies to all modes of transportation. The US DOT's 
plan for an Intelligent Transportation System (ITS), for example, has 
been developed to provide solutions to some of our surface 
transportation problems by combining advanced technologies with 
traditional transportation systems. With the advent of transportation 
systems relying on advanced technologies, new opportunities and 
challenges in ensuring and enhancing the safety of our national 
transportation system stand before us. The convergence of advanced 
sensors, communications, and computing technologies with traditional 
transportation systems promises to create an advanced transportation 
system that will not only reduce traffic congestion and associated 
negative environmental impacts, fuel consumption, and travel times, but 
will also reduce the number of accidents that continue to occur on our 
roadways. At the same time, reliance on many new technologies and 
components will require additional safety research and analysis to 
avoid or minimize new potential risks. The close interaction between 
vehicles and infrastructure through wireless communications. for 
example, will result in a more tightly connected transportation system, 
in which a component failure could have greater adverse consequences 
than in today's system. The planning and design of our future 
transportation system should therefore involve, at an early stage, an 
evaluation of the risks associated with the system. Through the early 
identification of the primary sources of risk, the opportunity exists 
to develop cost-effective approaches to avoid or minimize the risk of 
adverse consequences before system development and deployment.
    The safety analysis of an integrated national transportation system 
is a challenging task, requiring considerable technical expertise and 
resources. The National Laboratories have successfully fed the safety 
analysis and research in the development of other complex technological 
systems of national interest, such as advanced weapons systems, naval 
submarines and nuclear reactors. Today the National Laboratories can 
serve as a valuable resource to US DOT and to the Nation in the 
development and implementation of an integrated safety analysis plan 
that will coordinate the transportation safety research activities of 
the industry, universities, and laboratories as we pursue the 
development and deployment of advanced transportation systems in the 
United States.
Background
    The trend toward increased reliance of our transportation system on 
advanced technologies. stimulated by the national ITS Program, is 
likely to continue and accelerate as we approach the next millennium. 
This trend provides new opportunities for increasing the transportation 
system safety by assisting drivers in making better informed decisions. 
expanding the role of automatic control systems in accident prevention, 
optimizing the management of roadway systems. and providing faster help 
in emergencies through improved communication between the vehicles and 
control centers. Work on many related demonstration projects is 
currently underway' under ITS DOT's leadership. with active 
participation from industry. universities, and National Laboratories. 
The National Laboratories provide a wealth of advanced technologies, 
including sensors, computing, communications. and control technologies 
that can play an important role in increasing the safety and 
reliability of our future transportation system.
    At the same time, the growing interdependency between the vehicles 
and the roadway infrastructure. and the increasing reliance on advanced 
technologies are combining to create a new challenge in ensuring the 
safety of the emerging transportation system. Safety improvements in 
this system will depend upon the accuracy and timeliness of data and 
communications and upon the proper functioning of control systems. In 
addition to the usual safety issues encountered in transportation, 
issues of safety? correctness. security. and fault tolerance of system 
components (software and hardware) become important when automatic 
digital control systems are used.
    Where there is greater reliance on advanced technologies, there is 
also potential for new types of adverse consequences in terms of 
vehicle accidents, misrouting of vehicles. or increased travel times. A 
software error or hardware failure in a vehicle control system. for 
example, could have more serious consequences in an Automated Highway 
System than in today's transportation system.
    To be acceptable to the public. any change in transportation system 
technology must present a very low probability of causing conditions 
worse than would apply without the change. Planning and design of a new 
transportation system should therefore involve, early in the design 
process, an evaluation of the risks associated with the proposed 
system. Through early identification of the primary sources of risk, 
the opportunity exists to incorporate cost-effective improvements that 
eliminate or minimize the risk of adverse consequences before the 
system design is completed. These improvements may be in hardware and 
software component specifications. hardware and software design 
features, operation or maintenance procedures. personnel training, 
contingency planning. means of protecting the system from external 
threats' etc. Fail-safe features should be incorporated at key points 
of vulnerability, which a proper hazard evaluation would identify.
    The National Laboratories have experience addressing the safety of 
large-scale, safety-critical, complex control systems for nuclear 
reactors. weapons systems, and robots used in weapons production and in 
decontamination and decommissioning. Moreover, the National 
Laboratories have long conducted research in computer science and in 
modeling and simulation of complex systems. and they have developed 
tools such as automated reasoning systems and program transformation 
systems that can be used for the development of reliable software for 
safety-critical applications. Several specific areas of expertise 
available at the National Laboratories that could contribute directly 
to the safety of our future transportation system are listed below.
Hazards Analysis and Risk Assessment
    The National Laboratories have experience in hazards analysis of 
complex systems involving hardware, personnel, and procedures. In 
addition, the National Laboratories have capabilities to perform 
computerized fault tree and event tree analyses, including 
quantification of the frequency of key system failures, common cause 
analyses, and human reliability analyses These techniques have been 
used in the design of nuclear reactors and in the assessment of the 
risk and reliability effects of plant modifications. equipment aging. 
procedure changes. and changes in technical specifications. Risk 
assessments estimate the probability of failure of a system and 
determine the most likely contributors to that failure. and they may be 
used to guide the system design with regard to safety-related features. 
Such methods have been applied at the National Laboratories in the 
design phase of systems to evaluate the effectiveness of various design 
options in reducing the risk of accidents, and have also been used to 
assess the safety of existing systems.
Computer Modeling and Simulation
    Computer modeling and simulation have been used extensively at the 
National Laboratories to analyze the behavior of complex systems and to 
explore the effects of alternative designs on system safety and 
efficiency. The use of computer simulation can greatly reduce the need 
for costly and time consuming experiments The National Laboratories 
have a wealth of experience in the use of advanced computational 
methods. high-performance computing architectures. and computer 
simulation environments that integrate hardware and software 
components. They have developed computer models for the analysis of 
large-scale transportation systems and simulation environments for the 
detailed modeling of ITS that could be used in the safety analysis of 
advanced transportation systems.
    The risk assessment process discussed above requires not only an 
estimation of the probability of events, but also an estimation of the 
consequences of these events. This consequence analysis often requires 
an understanding of the physical effects of accidents. which can be 
obtained through a combination of experiments and computer simulation 
of the physical events. The National Laboratories have considerable 
experience in vehicle crash simulation and analysis of accident 
consequences. They have cooperated with private industry in using 
computer simulations for the analysis of crash response of various 
automotive structural components. The use of similar analyses to assess 
the safety of drivers and passengers and the efficiency of various 
roadway safety barriers would be a natural extension of these 
capabilities. The National Laboratories have extensive high-performance 
computing and communications resources that can support such a large-
scale transportation safety modeling and simulation effort.
    Modeling and simulation might also be used to estimate, in real 
time, the severity of specific accidents and to guide the decisions of 
the emergency response team. Several ITS operational tests already 
include plans for making accident information, such as accelerometer 
data, available to the emergency response agencies in real time. In the 
future we can expect to see this data used in a real-time accident 
computer simulation to provide the emergency response team with 
estimates of accident consequences. The National Laboratories' 
capability to integrate real-time data into process simulation codes 
for predicting system response will be valuable in such a system.
System Safety Experiments
    Large-scale experiments and demonstrations are an integral part of 
the safety analysis of complex technological systems and are essential 
in the validation of computer modeling and simulation results. The 
National Laboratories have extensive experience in the design, 
assembly, instrumentation, execution, and analysis of such experiments. 
Experimental teams at the National Laboratories have worked closely 
with computer simulation and analysis teams to minimize the number and 
cost of experiments by using the results of computer simulations to 
guide the design of experiments and to maximize the amount of relevant 
information obtained from each experiment.
Reliable Software and Fault-tolerant Hardware
    In the area of software development, the use of good software 
development practices and tools can provide assistance in producing 
correct software; but only the use of Formal Methods, which prove 
mathematically that a program correctly implements the specified 
system, can provide assurance that the program is correct.
    The National Laboratories are in a position to undertake 
considerable research in developing practical Formal Methods for use in 
ITS control systems. They have developed program transformation systems 
and automated reasoning systems, which can be used to help produce 
correct software from specifications economically. Further whorl; needs 
to be conducted to develop and demonstrate techniques for applying 
these systems to digital control systems. Several National Laboratories 
are currently working jointly on a High-Integrity Software project to 
apply these techniques to such systems.
    Software security is also an important issue that needs to be 
investigated in conjunction with safety. For example, if centralized 
control. or even traffic density information, is provided to vehicles, 
subversion of the communication software could be used to direct 
commercial vehicles to take an out-of-the-way route. where they might 
be attacked and robbed. An important aspect of software security is to 
prove that a program does not have certain properties (such as a ``back 
door'') that permits someone to take over control of the software. 
Almost no research has been done in this area, and the National 
Laboratories, particularly using their background in automated 
reasoning, could take the lead in performing such research.
    The development of fault-tolerant hardware, such as multiprocessor 
fault-tolerant computers, is another area of expertise available at the 
National Laboratories that, combined with reliable software, can play 
an important role in increasing the safety and reliability of advanced 
transportation systems.
System Control and Accident Management
    The National Laboratories have accumulated considerable expertise 
in the areas of automated system monitoring, system malfunction 
diagnosis, and recommendation of system control alternatives in order 
to minimize the effects of malfunctions or accidents. Artificial 
intelligence technologies, including expert systems and neural 
networks, have been successfully applied to malfunction diagnosis and 
accident management for electrical power plants and other complex 
technological systems. The early diagnosis of sensor or system 
malfunction and the recommendation of system management alternatives 
will be an important element in ensuring the safety of an ITS that 
could utilize the advanced computing and analysis methodologies 
developed by the National Laboratories.
Operational Readiness Review
    An important element of system safety is the assurance that the 
system (comprised of hardware. software, personnel, and procedures) is 
fully ready prior to deployment or implementation. Applying formalized 
operational readiness review methods can greatly help to reduce the 
potential for hazards caused by faulty system operation that result 
from failure to recognize that certain components of the system were 
absent, incomplete, or inadequately integrated into the system. The 
National Laboratories have considerable experience in utilizing such 
methods to ascertain the operational readiness of a new process 
facility involving complex arrays of newly designed hardware and 
software, many new procedures, and personnel who may require 
specialized training and qualification.
Conclusion
    Ensuring the safety and reliability of the national transportation 
system presents new challenges resulting from the continuous increase 
in the number of travelers and volume of freight, the increasing 
reliance on advanced technologies and complex components, and the 
increasing interaction between various modes of transportation. A 
tightly coupled transportation system, relying more and more on 
advanced sensors, computing, and communication technologies, requires 
additional research and analysis of system safety, to ensure that 
transportation presents only very low risks to travelers and that fail-
safe features have been incorporated at key points of vulnerability.
    The National Laboratories have considerable expertise and 
experience in the safety analysis of complex technological systems such 
as complex weapons systems, naval submarines, and nuclear reactors. The 
National Laboratories have demonstrated a sustained interest in 
transportation safety research and development in general, and ITS in 
particular, by participating in national and regional advanced 
transportation research activities and operational tests. They are 
working closely with Federal and state transportation agencies, 
industry, and universities in promoting the development and deployment 
of ITS.
    The combined analytical and experimental capabilities of the 
National Laboratories represent a unique resource that can help ensure 
the safety and reliability of our transportation system. This resource 
could, and should, be used by the US DOT in the process of designing 
and deploying increasingly safer transportation systems of the United 
States.
    Senator Kempthorne. I, too, want to salute Senator Moynihan 
for his vision in the development of the first ISTEA. 
Tremendous.
    Mr. Chairman, when I speak to the director of the Idaho 
Department of Transportation and my State legislators about 
ISTEA, the first thing they want to know is if there will be 
more funds available to support the new national highway 
system.
    They want to know if Congress is going to return more of 
the gas tax dollars collected at the pumps to States to build 
and maintain Federal highways.
    They want to know if Congress will continue to recognize 
and support the concept of a national highway program that 
benefits all Americans, regardless if you live in a large urban 
area or a sparsely populated rural western State.
    They want to know if Congress will financially support 
research for the development of new and more efficient modes of 
travel, alternative fuels in vehicles.
    These priorities are my priorities. That's why the 
testimony of these witnesses today is so relevant.
    We must return more tax dollars of the gas tax user fee 
back to the States for use on long-deferred maintenance instead 
of building up a balance in the trust fund that serves no 
transportation purpose. We must structure the reauthorized 
ISTEA so that it fulfills the objectives and goals of ISTEA, 
while we streamline and improve the original program based on 
its track record of performance.
    We must never lose sight, however, of the intent and 
purpose of the original Federal interstate highway system, 
which was established more than 40 years ago.
    We are one country with one national system of roadways 
that people must be able to depend upon. We cannot allow the 
Intermodal Surface Transportation Efficiency Act or the 
national highway system to become programs of have's and have-
not's, and winners and losers.
    We must be innovative and creative, not only in developing 
transportation technology for the future, but also in 
developing creative ways to finance them.
    We are at a critical crossroads of our Nation's 
transportation future. We must seize it as an opportunity for 
success, not let it slip away.
    Mr. Chairman, in closing I'd like to submit for the record 
a report entitled, ``Our National Laboratories in 
Transportation Research.'' This is an excellent document which 
was prepared to address the question: what is the role of our 
national laboratories in transportation research?
    We're very proud to have one of these laboratories, the 
Idaho National Engineering and Environmental Laboratory, 
located in Idaho. I'm hopeful that members of this committee 
will be able to review this very important document.
    Senator Warner. Thank you very much, Senator.
    At your recommendation, Senator Kempthorne, it's the 
intention of the chair and the ranking member to hold a hearing 
on this legislation. I believe we're going to do it in your 
State, in Coeur d'Alene, ID, at a date to be determined.
    Senator Kempthorne. Mr. Chairman, I'd appreciate that 
greatly.
    Senator Reid. How about one in Searchlight, NV?
    Senator Warner. Beg your pardon?
    Senator Reid. How about holding one in Searchlight, NV?
    Senator Warner. If you'll turn it on, we'll come.
    [Laughter.]
    Senator Baucus. How about in Montana?
    Senator Bond. And on the way back you can stop off in 
Missouri.
    [Laughter.]
    Senator Moynihan. Mr. Chairman, I have to object. The idea 
of interstate highway system began in the 1939 World's Fair in 
Flushing Meadows, NY, and I think Flushing Meadows is it.
    [Laughter.]
    Senator Warner. I remember it, and remember the GM exhibit.
    Senator Moynihan. Futurama.
    Senator Warner. Yes, sir.
    Senator Moynihan. That's correct.
    Senator Warner. In order of the ``early bird'' rule, we'll 
shift to Mr. Bond.

  OPENING STATEMENT OF HON. CHRISTOPHER S. BOND, U.S. SENATOR 
                   FROM THE STATE OF MISSOURI

    Senator Bond. Thank you very much, Mr. Chairman.
    It is a real pleasure to join with you and members of this 
committee as we work on what is a vitally important measure for 
my State. To say that we have made progress is obviously the 
first step, and I do join with the others in commending the 
leaders of this committee, Senator Moynihan and others, who 
have brought us to where we are today to make the United States 
the most mobile society in the world and in history.
    Frankly, we've gone from the horse and buggies on dirt 
roads to the interstate systems that we know can carry such 
heavy volumes of passengers and products.
    To make the case briefly for the hearing in Missouri, I 
would just note that Missouri has long been a leader in 
transportation. In 1808, King's Highway from St. Louis to 
Southeast, Missouri, was the first legally designated road west 
of the Mississippi. In 1919, Missouri was the first State to 
protect and earmark funds for highway purposes. In 1956, 
Missouri became the first State to accept and begin 
construction on the Dwight Eisenhower Interstate Highway 
System, and the first stretch of interstate actually began work 
on Interstate 70 in St. Charles.
    These roads, these highways have been vitally important for 
our State's growth, for convenience, and, most of all, for 
safety of our people.
    The 1991 Intermodal Surface Transportation Efficiency Act 
provided the road map for our vision to the future, and that is 
easy access for every community of any size to a modern, safe 
road; roads that connect into a grid in the national highway 
system.
    The steps that you have taken in this committee before I 
even joined the committee--when I was merely an officious 
inter-meddler--have enabled us to make tremendous strides in 
transportation.
    I would--I can assure Senator Kempthorne that the questions 
he heard in Idaho about the return, how much money is going to 
come back, how much money is going to be available for badly 
needed roads in Idaho are exactly the same questions I hear in 
Missouri.
    I agree with the chairman, the ranking member, that it is 
time that we put the trust back in trust fund.
    People keep saying, ``What are you doing with the money?'' 
They think we're probably using it----
    Senator Warner. We locked it up.
    Senator Bond [continuing]. For our personal benefit. I 
think that it is time that we get back.
    We are working with the chairman of the full committee on 
means to do that, and I certainly am proud to support your 
efforts on STEP 21.
    We have a long way to go to meet the challenges of the 21st 
century, resolving congestion problems, continuing research and 
development, recognizing the changing demographics, and looking 
at the financing options that are available. These are going to 
be important, as well.
    We've heard from the chair of the subcommittee about the 
importance of good highways for an economy in a globally 
competitive situation, but I want to emphasize a fact that I 
guess I've known before. It was just brought to my attention 
recently that highway, road, and bridge accidents are the 
leading cause of death of children under 18 in my State, and 
good highways, good safe highway systems, roads, and bridges 
are vitally important if we're going to assure that safety.
    Highway authorization funding debates are always exciting. 
There are some who have even talked about taking charitable 
contributions to watch the activities in the highway debates. 
That might be a good way to get some additional funding for 
highways.
    But funding formulas are serious business and we intend to 
work to see the fair and objective Senators who have been 
referred to before have an opportunity to work on some of the 
wrinkles, the few remaining wrinkles in the existing ISTEA 
which include the rate of return for certain of us who have had 
the pleasure of giving as donor States and would like to work 
with our colleagues to even up the playing field.
    I thank you, Mr. Chairman, the ranking members, and the 
leaders on this committee who have brought us to the point 
where we are today.
    Senator Warner. Thank you very much, Senator.
    Senator Thomas.

 OPENING STATEMENT OF HON. CRAIG THOMAS, U.S. SENATOR FROM THE 
                        STATE OF WYOMING

    Senator Thomas. Thank you, Mr. Chairman. I shall be brief.
    I notice in here the purpose of this hearing is to receive 
testimony, so I will----
    Senator Warner. If you haven't been listening, I gave a 
little testimony in the beginning.
    [Laughter.]
    Senator Warner. And I look forward to your strong support.
    Senator Thomas. Yes, indeed, and now it's my turn for a 
little testimony.
    First I must, of course, recognize Senator Moynihan. I 
wouldn't want to be the one who failed to do that, sir.
    Let me just be very brief. I have a statement.
    Forty-four percent of the roads in my State of Wyoming are 
fair to poor, according to the highway assessment, so we have a 
great deal to do. The Federal Government owns 50 percent of 
Wyoming, and so a great many of the roads are on the Federal 
establishment. Yellowstone Park has a deficiency, $250 million 
worth of road funding they believe. They get $8 million a year 
now. That doesn't work well.
    The national highway system, of course, is very important 
to a State like Wyoming, a bridge State where people go 
through. We have not too many folks. We're a small town with 
very long streets, and they're terribly important to us.
    So I look forward to working with you. I'm delighted to be 
on the subcommittee, Mr. Chairman.
    Thank you.
    [The prepared statement of Senator Thomas follows:]
Prepared Statement of Hon. Craig Thomas, U.S. Senator from the State of 
                                Wyoming
    Mr. Chairman, thank you for holding this hearing today. It is 
important that the subcommittee examine our country's transportation 
infrastructure finding requirements because they are significant and we 
should be doing more to meet them. In fact, 44 percent of the roads in 
my State of Wyoming are in fair to poor condition. In addition, the 
State's highway repair and maintenance needs total $50 million per 
year, which is more than the State can address. Those figures do not 
include Wyoming's infrastructure needs in the Federal lands highway 
program. The Federal Government owns 50 percent of the land in my State 
and those roads have substantial funding requirements as well.
    I am also concerned about the infrastructure needs in our national 
parks. I met recently with the Superintendent of Yellowstone National 
Park and discovered that the majority of Yellowstone's road 
structurally deficient. As one of the crown jewels of the national park 
system and host of more than three million visitors annually, this 
situation is unacceptable. In fact, the Park's 10-year plan includes 
$250 million in road funding requirements. However, Yellowstone only 
receives roughly $8 million annually to meet these needs. I certainly 
hope this shortfall is an issue the committee will address during the 
reauthorization of ISTEA.
    I also am pleased today's hearing will focus on the national 
economic benefits of the country's transportation infrastructure. 
Wyoming is a ``bridge'' State; goods are transported from their source 
across Wyoming, and to their final destination. A set of efficient and 
well maintained roads are as important to the cities that export goods 
across the country and around the world as they are to the people in 
Wyoming. The former director of the Wyoming Department of 
Transportation, Don Diller, said last year, ``On I-80 in Wyoming, more 
than 50 percent of the traffic is trucks, and those trucks are not 
serviced in Wyoming. The goods are not manufactured in Wyoming, and the 
economy of Wyoming is not improved by their manufacture. The goods are 
not delivered in Wyoming, but add to the economy of some other area.''
    Again, Mr. Chairman, I am pleased you are holding this hearing so 
the subcommittee can explore these important national issues. I look 
forward to working with you to address some of these pressing national 
needs.

    Senator Warner. Thank you very much.
    Gentlemen, should we recognize Senator Reid? I realize 
every now and then we ought to slip over here.
    The lighthouse is on, the searchlight.

  OPENING STATEMENT OF HON. HARRY REID, U.S. SENATOR FROM THE 
                        STATE OF NEVADA

    Senator Reid. Thank you, Mr. Chairman.
    I've sat through a couple of these authorization bills and 
my friend from Missouri says that maybe we could get people to 
pay. Well, I've watched Seinfeld and sat through these. There's 
no comparison.
    [Laughter.]
    Senator Reid. I don't think we'd make much money.
    Mr. Chairman, the dynamic flow of commerce and individuals 
is continually subject to change. While our transportation 
policies may not always be able to anticipate these changes, 
they must be flexible enough to accommodate them.
    All of us have varying opinions about the best way to meet 
these changes. I believe there are some areas of common ground 
that all of us can agree, as we establish the framework of 
reauthorizing ISTEA.
    Our transportation policies must recognize the importance 
of providing adequate dollars for improvement and maintenance 
of our infrastructure. The policy should not favor one region 
over another. Funding formulas should provide States with 
sufficient funding to meet the changing infrastructure needs 
they face.
    While some push for devolution, all of us agree that 
Federal regulations have to recognize the need for greater 
flexibility at the State level. Because we have a national 
transportation policy, we must recognize there are often unique 
interstate needs that otherwise would not be addressed but for 
a Federal program. I think we started doing that, and I think 
we did it quite well in the last bill that we passed.
    I believe the unique regional perspectives, though, will 
bring this issue ultimately to a coherent national policy.
    Mr. Chairman, I represent a State that is 650 miles from 
one corner to the other corner. It's a long way. We have in the 
Las Vegas area 5,000 new people moving into that relatively 
small area every month. We have tremendous infrastructure 
problems.
    Because funding formulas are based on old census data, it's 
nearly impossible for States like Nevada to receive the proper 
financing necessary to accommodate this growth.
    I heard my friend from Wyoming say that his State is 50 
percent Federal land. Ours is almost 90 percent Federal land, 
and we have some unique problems because of that.
    Between our interstates, you can fit the States of New 
Jersey, Connecticut, Massachusetts, Rhode Island, Vermont, New 
Hampshire, and Delaware. That's just between our interstates. 
We have a lot of territory to cover. That's because of all the 
Federal land and because we're sparsely populated, even though, 
Mr. Chairman, Nevada now is the most urban State in the Union--
more urban than New York, more urban than California, any State 
in the Union. We have almost 90 percent of the people that live 
in Reno and Las Vegas metropolitan areas.
    We have some very unique problems.
    Because the Federal Government owns about 90 percent of the 
lands in Nevada, Nevada receives little or no taxes from these 
lands but still must provide for intercontinental activity 
across these areas. In order for all States to enjoy the 
benefits of our economy, we must be able to build and maintain 
these lines of commerce, and Federal land programs is a source 
of much of the funding for these areas.
    Nevada is a bridge State. Most of the traffic that comes 
across Nevada highways is interstate traffic. We play an 
important role in interstate commerce. But the need for 
improving and maintaining these interstates arises out of the 
damage caused by non-Nevada traffic.
    It's difficult for me to explain to my constituents why 
we're under-funding basic maintenance projects when we see 
firsthand the infrastructure degradation caused by out-of-state 
travel and out-of-state travelers.
    Now, Mr. Chairman, I'll just take a minute. I know that----
    Senator Warner. Take your time, Senator.
    Senator Reid [continuing]. There's almost unanimous 
disagreement with me on this committee. I've tried it before. 
But I'll tell you, we are going to have demonstration projects 
in this bill. There's always everybody that stands up over here 
and says, ``We're not going to have any demonstration 
projects.'' We're going to wind up having them.
    Bud Shuster is the chairman of the committee in the House. 
He has demonstration projects. His members want demonstration 
projects. They're going to wind up having demonstration 
projects, just like the last bill we had.
    I think that we should recognize that there are certain 
areas of this country that we need to go outside the basic 
formula. I think that we have the ability, as much as my State 
director, to determine where there are some needs. So I just 
say that we should be aware of that.
    We are going to wind up in this bill with demonstration 
projects.
    I would also say a couple of members have already mentioned 
that we need more money spent on infrastructure. I say let's 
spend all the money that comes into the highway trust fund 
then. And if people believe this, join with me in my 
legislation.
    I have a bill that has been introduced that says that we 
should spend all of the highway trust fund money doing work for 
surface transportation.
    Finally, I'm concerned that we haven't consistently 
articulated coherent national policy and we need to do that. 
We're doing much better. I think this last bill we passed is 
really a good one.
    I'm troubled, though, sometimes by the budgetary gimmickry 
being played with, as I've mentioned, with the highway trust 
fund. We should get these highway trust fund moneys off budget.
    Our Nation's infrastructure represents a lifeline that 
fuels our economy. When we neglect to adequately provide for 
the health of this lifeline, all of us suffer. Whether it's 
unsafe and degraded roads or pollution caused from over-
congestion, all of us are affected. The price is not only 
inconvenience of traversing a dilapidated infrastructure; 
indeed, the real price is increased costs all of us pay for 
goods and services because of the burdens placed on us because 
of the steady flow of commerce.
    It's similar, I guess, to a cholesterol buildup in the 
arteries. Eventually we have a steep price to pay.
    I also, Mr. Chairman, would like to recognize and pay 
tribute, for lack of a better description, to Senator Moynihan. 
I enjoyed very much 5 years ago working on the legislation. For 
example, Senator Moynihan said in this committee that building 
more roads isn't the answer, and a number of us said ``prove 
it,'' and he did. There have been a number of articles that 
have been written showing just because you have a lot of 
traffic, building more roads isn't necessarily the way to 
handle the problem.
    I think that many of the things that we tried to do last 
time we were unable to do, but I think we have to give some of 
those theories which have now been developed with 5 more years 
of research and development, I think we need to develop some of 
them.
    I believe, Mr. Chairman, that even though our bill was a 
good one, I think we can improve upon it by doing some unique 
things like we tried to do in the last bill.
    So thank you all very much. I look forward to working with 
each of you in the coming months. It's not going to be easy, as 
we all know.
    Senator Warner. Thank you, Senator. Your statement I think 
very forcefully brought home to us the unique qualities of your 
State, and I mentioned in my opening statement that there is a 
strong diversity here and we've got to recognize that. We do 
have our differences, however, on the question of the 
demonstration projects, and I think that what remains of the 
highway trust fund should be a matter that remains on budget.
    [The prepared statement of Senator Reid follows:]
 Prepared Statement of Hon. Harry Reid, U.S. Senator from the State of 
                                 Nevada
    Mr. Chairman, there is little doubt that the issues we will address 
in today's hearing are issues that are of great interest to every 
member of both bodies. Transportation represents a truly national 
concern. All of us have a stake in ensuring that America's 
transportation policies are coherent and efficient. More importantly, 
all of us have a vested interest in ensuring that the goals of our 
transportation policies are capable of being achieved.
    This session of Congress will likely include extensive 
consideration of not only how we finance our national infrastructure 
but also what our transportation policies should aim for as we head 
into the 21st century.
    The dynamic flow of commerce and individuals is continually subject 
to change. While our transportation policies may not always be able to 
anticipate these changes, they must be flexible enough to accommodate 
them. All of us have varying opinions about the best way to meet these 
changes. However, I believe there are some areas of common ground that 
all of us can agree on as we establish the framework for reauthorizing 
the ISTEA.
     Our transportation policies must recognize the importance 
of providing adequate dollars for improvement and maintenance of our 
infrastructure.
     The policies should not favor one region over another, as 
the steady flow of commerce across State lines is in the nation's best 
interests.
     Funding formulas should provide States with sufficient 
funding to meet the changing infrastructure needs they face.
     While some push for devolution, all of us agree that 
Federal regulations have to recognize the need for greater flexibility 
at the State level.
     Because we have a national transportation policy we must 
recognize that there are often unique interstate needs that otherwise 
would not be addressed but for a Federal program.
    I believe the unique regional perspectives all of us bring to this 
issue will ultimately allow us to forge a coherent national policy. I 
represent a State that just happens to be the fastest growing State in 
the country. We have 5,000 new people moving into the State of Nevada 
every month. Because funding formulas are based on old census data it 
is nearly impossible for Nevada to receive the proper financing 
necessary to accommodate is growth.
    Nevada is also unique in that 87 percent of the land is owned by 
the Federal Government. To appreciate how much land this is consider 
the fact that in the areas in between our interstates, you can fit the 
States of New Jersey, Connecticut, Massachusetts, Rhode Island, 
Vermont, New Hampshire and Delaware. That's a lot of Federal land. 
Because the Federal Government owns these lands the State of Nevada 
receives little or no taxes from these lands but must still provide for 
intercontinental activity across these areas. In order for all States 
to enjoy the benefits of our economy we must be able to build and 
maintain these lines of commerce, and Federal lands programs is the 
source of much of the funding for these areas.
    Nevada is also a bridge State. Much of the traffic is interstate 
traffic. We play an important role in interstate commerce. But the need 
for improving and maintaining these interstates arises out of the 
damage caused largely by non-Nevada traffic. It is difficult for me to 
explain to my constituents why we are underfunding basic maintenance 
projects when they see firsthand the infrastructure degradation caused 
by out-of-State traffic traveling on our interstates.
    Finally, I am concerned that while we have consistently articulated 
a coherent national transportation policy, we have failed to provide 
the adequate funding necessary to support these policies. Specifically, 
I am troubled by the current budgetary gimmickry being played with the 
Highway Trust Funds. The games being played with the highway trust fund 
are penny-wise and pound-foolish. I have introduced legislation to take 
the highway trust fund off budget and believe this action is necessary 
if we are serious about meeting our transportation objectives.
    Our nation's infrastructure represents the lifeline that fuels our 
economy. When we neglect to adequately provide for the health of this 
lifeline all of us suffer. Whether its unsafe and degraded roads or 
pollution caused from over congestion, all of us are affected. The 
price is not only the inconvenience of traversing a dilapidated 
infrastructure. Indeed, the real price is the increased costs all of us 
pay for goods and services because of the burdens placed on a steady 
flow of the stream of commerce. It's similar to cholesterol buildup in 
the arteries--eventually there is a steep price to pay.
    I look forward to being an active participant in rewriting a bill 
that will allow us to continue into the next millennium as the world's 
foremost economic powerhouse. By providing coherent, efficient and 
flexible transportation policies we will surely rise to the great 
challenges of the 21st century.

    I thank our distinguished colleague for being very patient. 
Senator Inhofe.
    Senator Inhofe. Thank you, Mr. Chairman. I will submit a 
statement for the record.
    Senator Warner. You go right ahead.

 OPENING STATEMENT OF HON. JAMES M. INHOFE, U.S. SENATOR FROM 
                     THE STATE OF OKLAHOMA

    Senator Inhofe. I'll just make a couple comments.
    Certainly I pay tribute to Senator Moynihan, who has 
brought us to the point where we are today and had the vision 
and foresight to look beyond our old scope, and I have been 
here just long enough to remember what that was, having spent 8 
years in the House of Representatives serving on the Public 
Works and Transportation Committee.
    I look around and I see that we have broadened our scope. 
Not many people are aware that we in Oklahoma are navigable. We 
actually have--Tulsa, OK, is the most inland port. I know that 
Mr. Card knows that and a few others maybe are aware of that, 
too. So we have a diverse transportation currently and 
transportation potential.
    In looking at the committee up here, of the nine members 
that are sitting before you today, six of us are donor States, 
and I think this will become a more lively debate.
    I introduced legislation in the past, both in the House and 
in the Senate, to put some bench mark, maybe 80 percent, beyond 
which a State could go ahead and have some money and make the 
decision on a local basis as to whether it would go into mass 
transit or go into roads.
    So I see that there should be differences of opinion, and 
I'd say to my good friend, Senator Reid, I fought that battle 
against the demonstration projects for 8 years, lost it every 
year to Bud Shuster, and I'm not optimistic about winning it 
this time, but I'll still try.
    So I'm looking forward to a very active and beneficial 
debate on this most significant piece of legislation.
    Senator Warner. Thank you, Senator.
    [The prepared statement of Senator Inhofe follows:]
     Statement of Hon. James M. Inhofe, U.S. Senator from Oklahoma
    Thank you Mr. Chairman for holding this hearing today. As we begin 
the important process of reauthorizing ISTEA, the legislation that 
represents the most sweeping change to this nation's transportation 
policy, we need to take the time to examine current transportation 
trends across the United States.
    The fact is that people are becoming more mobile every year. City 
limits are expanding and the population in the Midwest and beyond are 
booming. With urban sprawl, rural travel becomes urban travel and 
highway and transit traffic increase as people move to and from work. 
The passage of NAFTA and the globalization of the economy augmented 
international trade as well, bringing with it an increase in movement 
of foreign goods to all corners of the country. These goods travel on 
our highways, waterways, and railroads.
    Oklahoma maintains all modes of transportation. Just north of 
Tulsa, is the Port of Catoosa, an inland international seaport. Barges, 
with loads of cargo ranging from metal products and building materials 
to wheat, use this port as a gateway to communities further inland. In 
the heart of America, Oklahoma's rails, highways and air space are 
constantly in use.
    But the interstate transportation system is not just about 
Oklahoma. It is about the Nation being interconnected as a unit for the 
free flow of domestic as well as foreign commodities and people. That 
means a truck filled with Oklahoma peanuts can travel quickly and 
efficiently to a customer in Maine.
    The entire transportation industry is estimated to comprise 17 
percent of the United States economy. If for no other reason, we need 
to make sure that our programs are workable, efficient and 
intelligently funded. Transportation has shaped what our nation is 
today, and to continue to operate successfully, the system needs to be 
maintained.
    I was a member of the House Public Works and Transportation 
Committee back when ISTEA was crafted in 1991. I think we did an 
admirable job. However, the changing needs of our nation and its 
transportation system need to be reflected in updated formulas and 
programs. Last year I introduced a bill that would guarantee an 80 
percent return on a State's transit funds. Oklahoma, like other States, 
is classified as a donor State in both highways and transit dollars. As 
we move through this reauthorization process, I will look forward to 
reworking the formulas established under ISTEA to make sure that donor 
States see a fair return on their contributions to the Highway Trust 
Fund and Mass Transit Account. Calculations used in the past served our 
nation for the time, but population growth and movement warrants a new 
approach.
    I look forward to hearing from today's witnesses on just how the 
population has shifted and their recommendations on ways to meet the 
new demands as a result.

    Senator Warner. Senator Moynihan, do you wish to have a 
moment or two rebuttal?
    [Laughter.]
    Senator Moynihan. I think Senator Inhofe has been there 
with Bud Shuster, and so have I, sir. I'm happy that this year 
it will be you.
    [Laughter.]
    Senator Warner. Thanks.
    Well, we'd better get started here. We're having too good a 
time.
    Mr. Secretary, would you join us, please?
    We have very good attendance. We're anxious to get the 
perspectives of the Department, and we recognize that we're 
departing from--should we say some tradition of having the 
Secretary first? But we value you as a professional and what 
you've done. You've made very important contributions to 
transportation in your public service.
    You just proceed. We'll place into the record your entire 
statement, and perhaps you can summarize it so that we can move 
to questions early on.
    Thank you.

    STATEMENT OF HON. MORTIMER L. DOWNEY, DEPUTY SECRETARY, 
                  DEPARTMENT OF TRANSPORTATION

    Mr. Downey. Thank you, Mr. Chairman, and I will summarize 
my statement. My longer statement for the record does deal with 
the three issues that were named as the topics of this hearing 
in detail: infrastructure needs, transportation benefits to the 
economy, and trends in transportation. I'll just try to 
highlight some of the issues.
    This week opens the official debate on ISTEA 
reauthorization. This will be a major challenge, and we look 
forward to working with this committee and with all of the 
Congress in renewing this important legislation.
    Incoming Secretary Rodney Slater and I, our administrators 
from the various modal administrations within DOT, are ready to 
work with you. We'll present our proposal for reauthorization 
in a few weeks, and we look forward to the debate on it and to 
other proposals, as well.
    ISTEA authorized $157 billion for fiscal years 1992 through 
1997, and we certainly should ask what did we get for all that 
money. That investment is producing results, even with many of 
the projects still under construction. But funding was not the 
only benefit from the ISTEA legislation. It changed the nature 
of the transportation planning process. It introduced new ideas 
with respect to intermodalism and technology. It gave us new 
financial choices. And we believe it strengthened the 
partnerships among State and local governments and with the 
private sector.
    The result is that the transportation system is getting 
better. The physical condition of bridges and pavement which 
had been deteriorating has stabilized across the Nation, and in 
many areas actually improved--especially on the National 
Highway System.
    Peak hour congestion in our largest urban areas has 
stabilized, and the rate of highway fatalities has declined 
since the enactment of ISTEA, although not as much as we would 
like to see. It is now steady at 1.7 fatalities per 100 million 
miles traveled.
    The conditions and performance of our transit systems has 
also improved.
    These trends suggest that we are keeping pace with the 
maintenance requirements of our infrastructure system. We have 
stopped the tide of accelerating deterioration. We are seeing 
positive results from our safety programs, and we have begun to 
tie our system together through ISTEA's emphasis on 
intermodalism.
    Despite this progress, though, we are still confronted with 
an infrastructure deficit. Over the long term, to maintain 
current conditions on our highway and transit systems will 
require significantly higher funding from all sources--Federal, 
State, and local governments. That's why over the last 4 years 
we have stepped up the level of infrastructure investment. 
We've averaged $25.5 billion a year for infrastructure in the 
last 4 years. That's 20 percent higher than the preceding 4 
years. We've committed in the 1998 budget to continue that 
level at $25.6 billion, slightly above the average of the past 
4 years.
    Under the Administration's plan, $24 billion would be 
available next year for highway and transit capital, the core 
ISTEA programs, and in our proposed legislation we would 
request authorization levels somewhat above the 1998 proposal 
in hopes that economic conditions and budgetary progress would 
enable us to support higher obligation levels in future budget 
and appropriation actions.
    But we also recognize that Federal grant funding cannot 
meet all of our infrastructure needs. We need to continue 
working with you to develop new financial tools such as the 
State infrastructure banks that we began 2 years ago and 
innovative financing techniques to attract new sources of 
funding from the private sector.
    We need to increase the use of technology to make our 
current infrastructure more efficient and less costly.
    The priority given to transportation investment reflects 
the vital role that transportation plays in assuring America's 
economic prosperity and quality of life. Senator Baucus spoke 
of the significant contribution to the gross domestic product 
of transportation. That's one measure of its importance.
    Another is the fact that nearly 10 million Americans are 
employed in industries that provide transportation-related 
goods and services, and these are good jobs with the highest 
wage level of any sector in the economy.
    Our Bureau of Transportation Statistics, a creature of 
ISTEA, has found that, as a result of greater efficiency in the 
transport systems, Americans now enjoy higher levels of 
transportation output for the same level of input, an overall 
improvement in productivity.
    Another recently completed DOT-sponsored study has clearly 
documented the substantial economic returns on highway 
investments. Senator Moynihan referred to this study, showing 
that the private sector return on investment from improved 
transportation is a substantial one, even higher than the 
investment earned by the private sector on their own 
investments.
    We find, not surprisingly, not all spending is the same. 
Investments in transportation infrastructure pay long-term 
dividends. If the Nation's economy is going to grow in the 
years ahead, we cannot short-change ourselves and under-invest 
in essential infrastructure.
    But to make the right investment choices, we need to take 
account of the factors affecting our transportation system. 
This country is facing major changes in personal and business 
travel, new patterns of freight shipments, regional population 
shifts, fast-growing elderly populations, and teenage 
populations, and an explosion of information technology. All of 
this will change the nature of demand and use of the 
transportation system, and we need to respond to that.
    One of the most significant trends in recent years has been 
simply the increase in travel. U.S. passenger travel has nearly 
doubled in the last 25 years. Much of that has been in the 
highway modes, but we also have stabilized public transit. It 
is no longer declining, and elements of it, like commuter rail 
and light rail, have increased appreciably.
    Many different factors have contributed to the growth in 
travel: demographic and labor force changes, income growth, and 
changes in the makeup of metropolitan areas. Much more of the 
travel in America is suburb-to-suburb, less of it is suburb-to-
downtown.
    Our population trend changes will also affect the demand 
for transportation services.
    The number of Americans over age 65--today there are 33.5 
million such Americans. That number could increase by over 50 
percent, and that will require public transportation and 
highways to be more user friendly with better signing, facility 
modifications, and other improvements.
    With respect to freight movement, again there has been 
substantial change. To gain better knowledge of that, our 
Bureau of Transportation Statistics worked with the Census 
Bureau to re-initiate a commodity flow survey so we have 
measures of what is going on in the freight system. We find 
that the system continues to be dominated by trucks, especially 
for short-distance movements. We find that flexible forms of 
transportation such as express and inter-modal movements are 
increasingly important.
    While there are economic and social benefits to increased 
travel and freight transport, at the same time there are costs 
in terms of safety and environmental harm, and these challenges 
must be met in future legislation.
    Transportation injuries and deaths still impose a 
substantial drain on the economy.
    Taking into account the current level of Federal and State 
highway programs, projected increases in miles traveled would 
mean that the number of Americans killed in crashes would 
increase. A conservative estimate projects up to 51,000 deaths 
a year by 2005, compared to about 41,500 last year. We should 
not allow this to happen. We need to reduce the fatality rate. 
We need to reduce the actual number of traffic fatalities.
    The key to much of this is improving our behavior on 
highways: increasing safety belt usage, increasing child safety 
seat use, reducing drunk driving, and increasing compliance 
with the established traffic laws.
    We will propose in our legislation tools to achieve these 
goals. We also will propose changes with respect to 
environmental protection so that we can strengthen our efforts 
to mitigate the effects of transportation on the economy.
    We cannot achieve these key national priorities linking 
Americans to jobs, health care, and education without efficient 
transportation, and the challenges we face in the areas of 
safety and the environment do not stop at State borders.
    ISTEA was visionary legislation, and its central elements--
intermodalism, flexibility, inter-governmental partnership, a 
strong commitment to safety, environmental protection, enhanced 
planning, and strategic investment--should be preserved and 
should be the foundation for the next surface transportation 
reauthorization.
    With those tools, we should be able to respond to these 
trends and the challenges, and, in partnership with our 
partners in the States and in local communities and with the 
private sector, I believe that we at the Federal level can play 
a leadership role in meeting these challenges.
    Mr. Chairman, that completes my statement, and I would be 
pleased to answer your questions.
    Senator Warner. Thank you very much.
    You're familiar with this document?
    Mr. Downey. Yes.
    Senator Warner. I'm just going to read a little bit.
    ``In 1994, an estimated $49.9 billion in highway and bridge 
capital investment would have been required from all sources 
just to maintain the 1993 conditions and performance.''
    Now, I would hope that your Department--and I would like to 
request the Secretary, in his testimony, to provide this 
committee with some charts showing one curve, the amount that's 
needed to maintain the current system in a safe and effective 
and economic manner, just maintenance. Then, if we are to 
increase the funding, what funding increase would be required 
to enhance this system?
    For example, this goes on to say, ``An estimated 68.2 
billion would be required in 1994 to provide a higher quality 
of service on highway and bridge systems.''
    Do you want to take a look at that? It's the second 
paragraph there.
    Now, we need to show to the American public just exactly 
what's going on. I'm not trying to fault the Administration or 
fault the Congress. I just want to get the facts out there. 
We're the trustees. They're paying the dollars in.
    In my judgment, this curve is going to show a downward 
trend as to what's needed just to maintain the current system, 
when, in fact, much of the public thinks that the payment of 
this significant tax is improving what they already have.
    So could you convey that to the Secretary?
    Mr. Downey. Mr. Chairman, I will. And, in fact----
    Senator Warner. Would you like to comment a little bit on 
it?
    Mr. Downey. Yes, sir. The Conditions and Performance Report 
is a departmental document. It's an analysis we do at the 
request of the Congress every 2 years. We will be submitting a 
new one later in 1997.
    I think it sets----
    Senator Warner. I think it's due out in about April or May.
    Mr. Downey. Yes.
    Senator Warner. But we're going to be well along in our 
legislative work on this particular piece of legislation.
    Mr. Downey. I think its findings will be similar to the 
1995 findings. It will indicate how additional resources will 
be needed over time to maintain the performance of the system. 
It will also point to the progress that we have made. We 
believe it will show that with some good choices that have been 
put in place, we are holding our own, but that we could, in 
fact, with that additional investment, achieve good returns to 
the economy. I think that's the conclusion of the combination 
of the studies that we have done.
    And the Conditions and Performance Report suggests that 
greater investment--Federal, State, local, and private--would 
pay returns to the economy.
    Senator Warner. Well, you're not the one to--you've got to 
salute and march off with your budget figures from OMB, as 
approved by the President, so we're not going to get into that 
debate today.
    But you're very articulate. You say we do need more. You 
recognize that. The other professionals recognize it. I think 
everyone around this dais recognizes that. So who, when, and 
where is going to make the decision to begin to turn this curve 
around?
    Well, I'm suggesting it has to be made here by the 
Congress, and we put in place steps to do it.
    Let's talk about--to what extent can you--and if you're not 
able to deal with this, do ask the Secretary to include it in 
his--where are our major trading partners in terms of their 
transportation system and their level of expenditures?
    We need a comparison in this country, because we're in a 
day-by-day struggle around the world to remain competitive and 
to make our economy strong.
    Mr. Downey. On that point, I would--we'd be pleased to 
provide that kind of an analysis. I think the point it will 
make is that our trading partners are investing heavily in an 
effort to catch up.
    Senator Warner. Catch up.
    Mr. Downey. And they recognize that they need to catch up.
    One study that I'm familiar with showed that in India, 
where wage levels are such that their product could be very 
competitive, they suffer a 30 percent disadvantage immediately 
after the product leaves the factory because their 
transportation system is so far below the efficiency of ours.
    So the efficiency of our transportation system, as it 
exists today, is clearly a competitive advantage for this 
country, and other countries are investing heavily because they 
want to catch up.
    Senator Warner. My last question--here in the metropolitan 
area in Washington, our analysis shows that many, many people 
are spending up to an hour behind the wheel in transportation. 
This, of course, contributes to gridlock, but it's a loss of 
their time from other productive activities--namely, their job 
or their family, both equally important.
    Do you foresee that the Administration will be forthcoming 
in some solutions as to how to rework that problem in this 
bill, legislative solutions?
    Mr. Downey. I think there will be proposals, both proposals 
that are nationwide in scope but can also be put to work in 
this region, things like intelligent transportation systems, 
improvements in traffic flow. We will also have proposals for 
some of the specific needs of this region such as the Woodrow 
Wilson Bridge, and our continued commitment to the METRO 
system.
    Senator Warner. Yes. I hadn't intended to get into the 
bridge situation. That's very important to this Senator, and it 
seems to me another day and another time to get into that.
    My distinguished colleague.
    Senator Baucus. Thank you, Mr. Chairman.
    Mr. Downey, you said other countries are trying to catch up 
with us, and I think to some degree that's true. At least it's 
my understanding that Japan spends about four times what we do 
as a percentage of gross domestic product, and I suspect that 
maybe some European countries spend more as a percent of their 
GDP than we.
    But we shouldn't help them catch up by, at best, running in 
place, or perhaps even spending less.
    As I look at the Administration's budget, the highway 
budget, highway portion only, looks like the request is $500 
million less than currently we're spending.
    Are we going to help other countries catch up?
    Mr. Downey. We certainly don't want to help them catch up. 
I think our budget for 1998 should sustain the level of 
investment we're currently putting in place, and hopefully 
maintain the performance of the system. But over time we are 
going to need to invest more.
    We believe some of the aspects of our budget, especially 
the Federal credit program and the State Infrastructure Bank 
program, will allow us to make some of those strategic 
investments in major new projects that will, in fact, sustain 
our advantage against these other countries.
    Senator Baucus. When will the Administration submit a bill?
    Mr. Downey. I hope within a few weeks.
    Senator Baucus. As you know, we have another hearing, I 
think the 26th of this month.
    Mr. Downey. Yes.
    Senator Baucus. It doesn't sound like your bill will be 
ready by that hearing.
    Mr. Downey. We know of the date of that hearing and 
certainly are working toward being ready.
    Senator Baucus. Yes. Could you just convey back to OMB, or 
whomever, we've got to get cracking here.
    Mr. Downey. I will do that.
    Senator Baucus. OK. I appreciate that.
    Your comments on proposed turn-back legislation submitted 
by some Members of Congress--I'm very much opposed to that. I 
think it undermines the Federal nature of the program. I think 
it's very short-sighted. I don't think we should fall victim to 
the excessive States' rights claims. I mean, it sounds good. 
It's good for home consumption. But, frankly, I think it's a 
disservice to the national character of the program.
    Your thoughts on the economic or the safety or mobility 
implications of that legislation if it were to be enacted?
    Mr. Downey. Certainly it would be a major shift from what 
has worked well over the last 50 to 75 years, which has been a 
national system of partnership between the Federal Government 
and the State governments. We are concerned about the concept 
of breaking that system apart with the turn-back proposal.
    Were that to fall into place, there's no assurance that at 
the State levels the taxes would be reenacted at their present 
amounts.
    There's no assurance that in a State-only approach to our 
transportation system we would get the linkages that we need, 
the common safety standards that we need, or the applications 
of technology that, in fact, have made our system better.
    We gave some thought to this concept in putting the 
Administration's proposal together before we decided on the 
course we have in place. We said, ``Should we consider a turn-
back? Should we consider other options?''
    Our endorsement of the present approach, with some 
modifications to make it work better is, in our view, the best 
way to go.
    Senator Baucus. So you rejected the turn-back?
    Mr. Downey. We rejected turn-back.
    Senator Baucus. Could you give the committee some more 
reasons why you rejected it?
    Mr. Downey. There are safety considerations.
    Senator Baucus. What are some of them?
    Mr. Downey. The considerations of making the system 
consistent across the country in areas of signage, in areas of 
civil design, and in some of the incentives that we can put in 
place.
    We are not supportive of mandates on some of the safety 
issues, but we think there are incentives that can be put in 
place to assure that people who drive in this country, wherever 
they might be, will have the same degree of protection and 
concern for drunk drivers, for safety belt use, and the like.
    I think there is a lot to be gained from a national system. 
This is a single society. People have mobility. People learn to 
drive in one State but move to another. People travel. I think 
a single system from both a safety standpoint and an economic 
standpoint is critical to the Nation.
    Senator Baucus. I appreciate that.
    I'm a little concerned, as I think some are, that the 
President's budget submission generally is just sort of a 
maintenance budget. It's clear we have to work to balance the 
budget, but it just seems to me that, as we drive toward a 
balanced budget, we have to still be more creative to look for 
ways to meet our Nation's needs, and whether that's additional 
revenue, tax revenue, or whether it's additional private 
financing techniques, or whatever it is, I think we're being a 
little bit pedestrian in our approach to infrastructure needs 
in this country, generally--particularly surface 
transportation.
    I just urge you and others in the Administration, as I'm 
urging all of us here in the Congress, to be a little more 
creative than I think we are being as we attempt to grapple 
with all of these.
    Mr. Downey. Certainly, as we work on this bill that's 
something we would be looking to explore--to see if there 
aren't new ways to do it.
    I was with the President last week when he met with the 
Governors, who raised this same issue, and his message to them 
was, ``I want to work with you on all of the priorities in the 
budget, and the outcome will be what makes sense for the 
American people.''
    Senator Baucus. I think it's clear we want to work 
together, but the challenge or the charge here is to be more 
aggressive, more creative to come up with something more 
quickly.
    Senator Warner. Senator Baucus, thank you very much.
    Senator Thomas.
    Senator Thomas. Thank you, Mr. Chairman.
    Mr. Downey, I'm kind of new at this. You had 24 pages in 
your statement. Here's part of it: ``We cannot achieve other 
key national priorities linking Americans to jobs, health care, 
without efficient transportation. The challenge we face is in 
safety, environment. Do not stop. Significant challenge is 
ahead.''
    We all agree with that, but if you were to say in four 
things what is it we ought to be doing this year, what would 
they be? I'm afraid I don't quite understand, from all of your 
statement, what it is you think are the priorities.
    Mr. Downey. From the standpoint of legislation, the key 
priority is reenactment of the Federal surface transportation 
program, a piece of legislation that has been known as ISTEA 
over the last 6 years, whatever it will be known as in the 
future.
    I think it's important to reenact that, and to do it in a 
timely way.
    Senator Thomas. What does that mean?
    Mr. Downey. To hopefully have it in place by the 1st of 
October.
    Senator Thomas. OK.
    Mr. Downey. The States need that lead time to put their 
programs in place, and we'd like to get started on implementing 
it.
    Within that piece of legislation I think it's important to 
create a climate in which good investment decisions can be made 
so that State and local areas can pick the projects that are 
most important and get on with them, connect them up in a 
useful way.
    That's one of the reasons why we supported the National 
Highway System legislation, because it will concentrate a 
significant portion of the dollars on a small portion of the 
system that carries the majority of inter-city and local 
traffic, particularly commercial traffic.
    The third priority, which really is first in terms of 
importance, is safety. The legislation and the way we implement 
the program really has to focus on safety. We are very 
concerned by the fact that the rate of traffic fatalities, 
while it had declined substantially over the past decade to 15 
years, has now leveled out. If we don't do something about that 
rate, increasing population and increasing travel will mean an 
upturn, a significant upturn in traffic deaths.
    Senator Thomas. So what's the solution to that?
    Mr. Downey. Solution is construction, better vehicles, and 
behavior-related measures such as increasing the rate of safety 
belt use, and decreasing the rate of drunk driving.
    Senator Thomas. So your main interest would be in 
construction? You're not really in charge of safety belts, are 
you?
    Mr. Downey. Through our programs, we have had a role in 
increasing use of safety belts, and we would propose continuing 
that, working through the States on both legislation and 
enforcement, to ensure that the public travels safely.
    And then the last piece is technology. We'd like to invest 
in new technology to make these transportation systems work 
better.
    Senator Thomas. You indicated in one of the reports, I 
think on page 3, 50 billion would have been required at all 
levels of government to maintain current conditions--only 70 
percent of what was needed in 1993. Is that still the case?
    Mr. Downey. We have--as I said to the chairman, we have not 
completed the 1997 report, but I think it will be in that 
range. It may be a little--it should be a little bit better, at 
least at the Federal level, and we hope that State and local 
governments have followed through with some additional 
investment.
    We are still probably below that level----
    Senator Thomas. So generally you're still saying----
    Mr. Downey [continuing]. To maintain systems----
    Senator Thomas [continuing]. The combined resources would 
only provide 70 or 75 percent?
    Mr. Downey. From 70 to maybe 75 percent of the long-term 
need.
    Senator Thomas. I see.
    Mr. Downey. If we continue at that pace, we will see 
physical deterioration, and, as traffic grows, performance 
would degrade. You would have additional congestion and delays 
and inadequate performance.
    Senator Thomas. Finally, would you comment on what would be 
your solution to the public land roads like national parks, 
specifically? How do you think we should deal with those 
backlogs?
    Mr. Downey. We will propose in our legislation continued 
Federal funding for the national park roads and other Federal 
land roads. The Federal Highway Administration carries out 
those programs. We think they should continue to play an active 
role.
    Senator Thomas. Would you care to guess, if the others are 
75 percent funded, how would you say the national parks are?
    Mr. Downey. I would like to provide that for the record.
    Senator Thomas. Please.
    Mr. Downey. I think we do have an analysis of that.
    Senator Thomas. All right, sir. Thank you.
    Senator Warner. Senator Inhofe.
    Senator Inhofe. Thank you, Mr. Chairman.
    Mr. Downey, I'm the chairman of the subcommittee called 
Clean Air, Property Rights, Wetlands, and Nuclear Safety. As 
you know, right now we're looking at--we've had two hearings so 
far concerning the changes in the national ambient air quality 
standards, and it has become quite contentious.
    During your analysis of the future transportation needs, 
did you take into consideration any potential changes in these 
standards?
    Mr. Downey. We have been working with the Environmental 
Protection Agency on the new standards. Of course, they are the 
lead agency and would establish the standards.
    Working with them, we have identified what the potential 
impacts would be on States, counties, municipalities, what 
additional populations and areas might, under those standards, 
fall into non-attainment. And we will propose in our 
legislation additional allocations of funding to those areas to 
help them build the transportation system changes that will be 
needed to help reach attainment.
    Senator Inhofe. Well, what kind of transportation systems 
could you build that would help reach attainment if you find 
that an area is out of attainment?
    Mr. Downey. For example, we have found in the existing non-
attainment areas that measures to improve traffic flow, which 
are really short-term in their benefits, measures to improve 
public transit use, measures to encourage land use development 
that would have less travel associated with them, all can 
contribute.
    Some urbanized areas have experimented with freight 
movement improvements to reduce the use of trucks and increase 
the use of rail.
    All of these have individually fairly small impacts on air 
quality, but they do help toward achieving the air quality 
goals, and we'd like to continue that approach.
    Senator Inhofe. Part of what we're talking about here today 
is trying to project into the future what our future needs are 
going to be. Of course, we had a little discussion with Senator 
Baucus. I didn't agree with some of his analyses about where 
these decisions are best made.
    But it would seem to me that if you're looking at some 
massive changes, as have been proposed by the Administration, 
that you would have either as into your plan now or as an 
alternative should those become a reality as to what the future 
needs would be throughout the country on the transportation 
system.
    I'm wondering if, first of all, you have plugged that into 
your current analysis. And second, if not, are you coming up 
with a stand-by plan to take those things into consideration?
    And if the second answer is yes, would that have an effect 
on what you would feel the needs would be around different 
parts of the country?
    Mr. Downey. In our proposed legislation we will have some 
responses. Some of them will be, as you described, stand-by.
    We don't fully understand yet when the impacts of some of 
these changes would occur, and certainly we at the Federal 
level would not be designing the transportation system changes. 
That would happen at the State and the regional level through 
the metropolitan planning organizations, through State 
governments, in the inter-connection of the air quality 
implementation plans and their transportation plans.
    But we would be prepared to work with the States in the 
event that changes have to be made.
    Senator Inhofe. I'm really thinking about an allocation of 
funds and preparing for the future as we step into this next 
age, and what we're doing right now is very, very significant, 
but I wanted to kind of explore a little bit where we would go; 
what effect, if those were to pass, that would have on the 
overall plan in terms of use on the system and in terms of 
deterioration.
    In other words, I could see, quite frankly, a shift in 
funding if non-attainment areas were mandated to car pooling or 
some alternative means of transportation, as you just 
suggested, that could very well work--have a negative effect as 
to how projects were funded in the future.
    And if you haven't gotten into it, I would, because it 
would have very, very serious, serious, serious effects on 
future transportation needs from location to location.
    Mr. Downey. When we submit our legislation, I think there 
will be some reference and----
    Senator Inhofe. What I'd like to see----
    Mr. Downey [continuing]. And we will be working with EPA on 
implementation plans.
    Senator Inhofe. Well, by the time you submit your 
legislation I have an idea that we'll pretty much know where 
that's going to go, and in which case we ought at least to have 
an alternative plan as to how it would be affected as a result 
of adopting that change in standards.
    Senator Kempthorne [assuming the chair]. Senator Inhofe, 
thank you very much.
    Mr. Downey, I noticed on different occasions during this 
testimony you've referenced, of course, safety, and you've 
talked about seat belt usage, and, of course, the objective to 
lower fatalities. I've not heard you make any reference to the 
current air bags and air bag standards. Is there a reason 
you've not referenced that?
    Mr. Downey. Only that that's not really part of the ISTEA 
legislation insofar as this committee is involved, but it 
certainly is a concern. We are aware of your interest and your 
concern. I know Secretary Designate Slater is, as well, and 
will be responding to you.
    Senator Kempthorne. All right. Mr. Downey, thank you very 
much.
    Mr. Downey. Thank you.
    Senator Kempthorne. I'd like to call the next panel 
forward.
    Before the next panel begins, I'd just note for the record, 
Mr. Downey, that Federal motor vehicle safety standard 208 
dealing with air bags was modified in ISTEA, so it certainly 
does pertain here.
    OK. With that, I'd like to welcome our next panel of 
distinguished guests. We have: Mr. Andrew Card, who is the 
president and CEO of the American Automobile Manufacturers 
Association; Mr. Darrel Rensink, who is the president of the 
American Association of State Highway and Transportation 
Officials; Mr. Alan E. Pisarski, who is the author of 
``Commuting in America,'' and Mr. Damian Kulash, who is the 
president and CEO, ENO Transportation Foundation, Incorporated.
    Welcome all of you.
    With that, Mr. Card, if you'd please give us your opening 
comments.

 STATEMENT OF ANDREW H. CARD, JR., PRESIDENT AND CEO, AMERICAN 
              AUTOMOBILE MANUFACTURERS ASSOCIATION

    Mr. Card. Thank you very much, Mr. Chairman. It's good to 
be with you.
    I was pleased you referenced FMVS 208 as being part of 
ISTEA. I happen to have been secretary when the mandate under 
that provision of ISTEA took effect, and I had to put forward a 
notice of proposed rulemaking on the current air bag 
technology.
    My name is Andrew H. Card, Junior. I am the president and 
chief executive officer of the American Automobile 
Manufacturers Association, whose members are Chrysler 
Corporation, Ford Motor Company, and General Motors 
Corporation. I thank you for the opportunity to testify today 
in the reauthorization of the Intermodal Surface Transportation 
Efficiency Act, known as ISTEA.
    The automotive industry has a keen interest in and a unique 
perspective on a safe and efficient highway system. Good roads 
are vital for both the production and the use of our products.
    The automotive industry sells mobility. Some years ago a 
former GM chairman characterized the role of the industry in 
this way: we may think we sell cars and trucks, but what we are 
really selling is mobility. Our cars and trucks must be well-
designed and well-built, but if they cannot be used efficiently 
and enjoyably, they will be of no more value than a canoe in a 
desert.
    While our customers need good roads for the safe and 
efficient use of our products, we, as manufacturers, must also 
have good roads to build and distribute our products.
    Global economic competition has changed the way we conduct 
every aspect of our business, and that includes how we use our 
highways.
    U.S. maps may show that Interstate 75 goes from Sault Ste. 
Marie to Key West, and that Interstate 95 runs from Maine to 
Florida; however, for America's car companies, these roads 
extend directly from our 276 manufacturing facilities to 
Europe, to South America, to Asia, and beyond.
    In order to compete in our global economy, AAMA member 
companies have instituted quality control and lean 
manufacturing processes to reduce costs and increase 
productivity. These improvements have resulted in a significant 
change in the auto industry's material delivery network. Auto 
manufacturers now ship the majority of their parts and 
components just in time to meet very precise production 
schedules.
    The data dramatically illustrates this change. In a decade, 
just-in-time deliveries have increased, on average, from 25 
percent to 95 percent of all deliveries. For example, at one of 
our member companies 32 plants operate on just-in-time 
inventory system. That means that throughout every single 
working day about 2,500 trucks travel more than one million 
miles on the Nation's highways delivering parts and components 
to those 32 plants just at the point they're needed in the 
production process.
    At another one of our member companies' plants, one typical 
plant receives and unloads an average of 120 truck loads of 
components, parts, and supplies daily.
    The plant then ships approximately 480 vehicles, one-half 
of its daily production, directly to dealers using 60 haul-away 
trucks.
    An additional 480 vehicles leave the plant site loaded on 
multi-level rail cars destined to rail unloading ramps located 
in major market areas. Upon arrival, the rail cars are unloaded 
and the 480 vehicles are delivered to dealers by another 60 
haul-away trucks.
    Finally, at another plant trucks pick up parts at suppliers 
within a 30-minute window and deliver them to the 
manufacturer's plant under the same time constraints. The 
objective is to have no more than 2 hours' inventory on the 
line at any one time.
    It is clear that any disruption in highway service, such as 
congestion or bad roads, will cause disruption in the 
manufacturing cycle. That results in production loss, sales 
loss, and even sometimes job loss.
    As Henry Ford put it, ordinarily money put into raw 
materials or into finished stock is thought of as live money. 
It is money in the business. It is true. But having a stock of 
raw material or finished products in excess of requirements is 
waste which, like every other waste, turns up in high prices 
and low wages.
    Just-in-time was a goal in the 1980's, but in the 1990's it 
is truly a necessity in order to be internationally 
competitive.
    Mr. Chairman, I would now like to address some specific 
issues related to ISTEA. I want to compliment Senator Moynihan 
in the role he played in developing the original ISTEA 
legislation.
    Senator Kempthorne. Mr. Card, I tell you what. The reason 
you've seen an absence is there's a vote that is currently 
taking place.
    Rather than have you have to rush so that we would dash 
off, I'm going to take a brief recess, because out of courtesy 
to all of you gentlemen we want to hear what you have to say, 
so, rather than having the time clock pushing us, I'm just 
going to recess and I'll be back in just a few moments.
    Mr. Card. Thank you, Mr. Chairman.
    Senator Kempthorne. Thank you.
    [Recess.]
    Senator Kempthorne. Again, for those of you on the panel, 
we appreciate your indulgence here.
    Mr. Card, you were about ready to get specific.
    Mr. Card. I'm trying to get specific.
    Senator Kempthorne. All right.
    Mr. Card. Thank you, Mr. Chairman.
    Senator Baucus, good to see you, and thank you for the 
accommodations you gave me when I was Secretary of 
Transportation.
    As you said, Mr. Chairman, we would now like to get into 
more of the specific issues related to ISTEA.
    One of the most critical responsibilities for Congress in 
the reauthorization process is to provide adequate funding for 
the highway program. We all know that there is a need. I think 
that's indisputable. We also all know that there is money in 
the highway fund, in the highway trust fund, and that money 
should be spent. I think that is the simple approach that we 
should use to address all of the debate over this very 
important ISTEA legislation.
    I know the subcommittee is very well aware of the problems 
associated with our surface transportation infrastructure. In 
fact, subcommittee members signed--and I was pleased to see 
that, the letter that Senator Warner mentioned, now with 59 
Senators--signed a letter to the Budget Committee chairman 
urging the committee to provide a $6 billion increase in 
highway funding for fiscal year 1997.
    AAMA's members strongly support the objectives of that 
letter, and we sincerely appreciate the efforts that were put 
into getting that letter with so many signatories on it.
    As a global industry, the automobile industry also believes 
that the future U.S. competitiveness must address global 
transportation trends. With the national commitment in some 
major overseas markets to advanced surface transportation modes 
and ITS systems, we know that more must be done if we're going 
to remain competitive.
    In this context, the automobile industry supports the 
development of ITS in a mix of both vehicle and highway 
technologies which are designed to assist all roadway users in 
the smooth movement of traffic in congested areas.
    I note that the debate over ISTEA will not only center 
around the size of the pot--I think the most important part of 
the debate is the size of the pot--but it will also center 
around how that pot would be allocated.
    I know that the CMAQ program is of particular concern and 
will come up in the debate.
    GM, Ford, and Chrysler are very, very interested in being 
partners as we address the problems of congestion mitigation. 
We also know that we have societal responsibilities to help 
improve air quality.
    I feel personally that the CMAQ program is in desperate 
need of reform, but the goals of CMAQ are very important for us 
to remember when we consider ISTEA.
    Congestion mitigation is important not only because it 
relates to what happens to individual travel, but also to the 
commerce of America. Congestion does slow down just-in-time 
delivery and we would like to work with you to reform the CMAQ 
program to best reflect the needs of the transportation system.
    ITS would be one area where we think it makes sense for us 
to work together on advanced technologies to help mitigate 
those problems, but America's car companies truly believe that 
maintaining and improving our Nation's highway system must be 
one of the national priorities.
    If we are to compete effectively in the 21st century, our 
transportation must be up to the competition and up to the 
challenge.
    We will work with you. We would welcome the chance to work 
with you as you craft the next ISTEA, and our goal is to 
reauthorize an ISTEA that is good for America and good for 
American workers so that they can compete in markets around the 
world.
    With that I say thank you, and I'd be glad to answer any 
questions that you might have.
    Senator Kempthorne. Mr. Card, thank you very much.
    Senator Kempthorne. Let me turn to Mr. Pisarski. Your 
comments, please?

    STATEMENT OF ALAN E. PISARSKI, AUTHOR OF ``COMMUTING IN 
                           AMERICA''

    Mr. Pisarski. Thank you, sir. Mr. Chairman, it's an honor 
to be here at this first Senate hearing on ISTEA 
reauthorization. I recall with great pride that I participated 
in the first Senate hearing at the inception of ISTEA 6 years 
ago.
    My focus today will be on commuting trends, their economic 
and demographic determinants, and their implications for our 
transportation future.
    I should say that the other members of the panel were all 
participants in the development of the document ``Commuting in 
America.'' AASHTO led and chaired the 14 public agencies that 
participated in its development and support of ISTEA. One of 
the funders was Mr. Card's group. The ENO Foundation was the 
publisher. The Department of Transportation was very important 
in developing the information that I used in my document.
    I'll be referring to some of the graphics here. I think 
that may be the simplest way to get through some of the 
material.
    In the early work of ``Commuting in America'' back in the 
1980's we talked about three booms in America with respect to 
commuting--the worker boom, the automobile boom, and the 
suburbanization boom.
    I'm going to talk a little bit about the virulence of those 
trends, whether they have persisted into the present and how 
will they develop out into the future, and also I would like to 
discuss some emerging trends that are important for us to focus 
on.
    With respect to workers, the main point is that the great 
boom in population and workers with the advent of women joining 
the labor force in extensive numbers, with the baby boomers 
joining the labor force, is at an end. This big surge that we 
felt of commuters in the 1970's and into the 1980's is behind 
us. It's kind of like a python that swallowed a pig. It's 
working its way through the system, as the baby boomers age, 
and so the large numbers of workers that were added in that 
period are very much behind us.
    We will be having steady additions to the labor force out 
into the future, but not of extraordinary scale that we saw in 
the past.
    With respect to the automobile boom, the dramatic shift to 
the single occupant vehicle is, in a sense, almost complete. We 
saw a tremendous surge to the single occupant vehicle, 
basically at the expense of all alternatives. Car pooling, 
transit, walking--all of the other alternatives declined in 
both share and in absolute numbers as the population shifted to 
the single occupant vehicle.
    That trend has stabilized at very high levels. We've got 
saturation effectively in auto ownership in America, and 
saturation with respect to driver's licenses, with some 
important exceptions that I'd like to mention later.
    The third part of the booms of the past that I want to look 
at is one that has retained its virulence and will grow in the 
future, and that is the shift of the population to our suburbs.
    Suburbanization continues at a very strong pace, in terms 
of population, workers, and jobs. This is still a dominant 
force. I would say there's no end in sight with respect to the 
shift to the suburbs.
    What we've seen is about two-thirds of job development 
going into our suburbs, and the dominance of the new 
circumferential kinds of commuting, the suburb-to-suburb 
commute.
    Other patterns that I think are of significance are inter-
metropolitan commuting, where more and more we're seeing people 
moving from areas like Baltimore to Washington, moving from one 
suburb of a metropolitan area to the suburbs of another 
metropolitan area.
    Another factor is so-called ``reverse commuting'' that I 
think is important for us to consider. The President mentioned 
in his State of the Union Address the importance of central 
city workers and getting them to the jobs that are more and 
more located in our suburban areas. In fact, we had greater 
growth in reverse commuting than we did in commuting within our 
central cities in the last 10 years.
    Among forces of change that are emerging and that are going 
to be critical in commuting, the first of these is immigration. 
Immigration is now a dominant factor in national population 
growth trends. Our overall population growth is at very low 
levels, about the same as our depression years. But about 40 
percent of our population growth is in immigrant populations. 
The big difference is when we add one to our population with a 
new birth, we get a commuter 20 years later. When we add one to 
our population by immigration, we get almost instant commuters.
    About 80 percent of immigrants come to the United States at 
working age. Of course, one of the reasons they're here is to 
join the labor force and to join the commuting stream.
    Where will they go? Where will they work? Where will they 
live? That's going to be a very important set of factors in how 
commuting patterns develop.
    The final point that I'd like to focus on is ethnic and 
racial patterns. I mentioned earlier that we had something like 
saturation with respect to driver's licenses and auto ownership 
in America. That's misleading. When we get closer to the 
information, what we find is that, although we have only 11 
percent of our households in America without automobiles that 
breaks into about 7 percent of the white, non-Hispanic 
households without vehicles, but in the black population we're 
talking about 30 percent of households without vehicles, and in 
Hispanic populations we're talking about 20 percent of 
households without vehicles, and in our central cities those 
numbers are considerably higher.
    With respect to driver's licenses, the same thing is true--
that we have saturation in the sense of 96 percent of white 
male non-Hispanics of driving age have driver's licenses. But 
within the black population, black males have 80 percent 
driver's licenses, black women 70 percent.
    So a lot of our growth in the future, the future automobile 
buyers, the future participants in commuting patterns are going 
to be coming from racial minorities and ethnic minorities in 
the future. This is going to be one of the patterns that we're 
going to have to focus on.
    One of the patterns that we've seen grow is the immense 
pressures of time on people, and we are seeing their reaction. 
One of the reasons so many people, particularly women, shifted 
to the single occupant vehicle was the immense pressures of 
time. Although actual travel times did not increase that much, 
what we've seen is a shift into something we call ``trip 
chaining,'' where more and more people, instead of just going 
to work and coming home, are making stops on the way to work 
and are making stops on the way home, particularly women.
    This kind of ties the work trip together with the whole 
social pattern of the household and has immense influence on 
traffic patterns. There's good news and bad news in that 
pattern, as you might suspect.
    I think I'd like to stop there, Senator, and would be 
delighted to answer any questions if I can.
    Senator Warner [resuming the chair]. Thank you.
    Senator Warner. I'm sorry I wasn't here for the entire 
testimony, but I shall read it. I appreciate it very much.
    Mr. Pisarski. Thank you, Chairman.
    Senator Warner. All right. We'll have our next panelist 
now. Thank you.

STATEMENT OF DARREL RENSINK, PRESIDENT, AMERICAN ASSOCIATION OF 
           STATE HIGHWAY AND TRANSPORTATION OFFICIALS

    Mr. Rensink. Thank you, Mr. Chairman. My name is Darrel 
Rensink. I am the president for the American Association of 
State Highway and Transportation Officials and director of the 
Iowa Department of Transportation.
    On behalf of AASHTO, I am pleased to accept your invitation 
to testify on issues relative to reauthorization of the surface 
transportation programs.
    As members of the Environment and Public Works Committee, 
you are well aware of both the benefits from and the need for 
transportation as we head into the 21st century. So, what I am 
about to say will come as no surprise. However, the importance 
of transportation for this Nation's future requires that we 
focus our attention directly on transportation.
    America's transportation network has played a major role in 
our Nation's economic success. Just as in our Nation's past, 
our future is greatly dependent on how well we support our 
transportation system. The legislation you will be considering 
is, therefore, very important to the people of America as we 
rapidly approach the 21st century.
    Perhaps no other Federal investment has such far-reaching 
implications or influences the daily quality of our lives as 
does our transportation systems. It serves all of our citizens 
daily in traveling to their jobs, day cares, and markets, in 
providing goods to wholesale and retail outlets, in traveling 
to recreational activities, and in a wide range of activities 
in which we all participate.
    Most importantly, transportation is the backbone for our 
State, national, and international economies. Transportation is 
our Nation's economic engine, which is built on an efficient 
transportation system, a key component to our global 
competitiveness.
    Industry, much of which now rely on ``just-in-time'' 
delivery of raw materials, must have an effective and efficient 
transportation system.
    I recognize that a central point of the debate on 
reauthorization will be funding formulas and the distribution 
of funds among the States.
    As the director of the Iowa Department of Transportation, I 
understand the importance of Federal funding for my State's 
highway and transit programs, and I also understand that the 
discussion of formulas is important. However, as the debate 
begins, we must remember that without transportation there is 
no State or national economy, there is no quality of life, 
there is no economic development, and therefore there is no 
future.
    We must evaluate the discussion of transportation beyond 
the funding formulas and focus on the importance of 
transportation to our Nation and its citizens.
    Our Nation has thrived largely in part, due to 
transportation and its systems, which we currently enjoy and 
often take for granted. People and freight would not move if it 
were not for our highways, railroads, airports, and waterways 
that we now have in place.
    Just as important are the transportation services provided 
by the transit systems and the trucking or motor carrier 
industry.
    The Interstate System and the National Highway System are 
the two most visible components of our transportation system 
and serve as the backbone of our transportation infrastructure. 
We must not reduce our commitment to maintaining this backbone, 
our Nation's primary economic foundation.
    I often hear that to compete in the global economy we need 
a good transportation system. I believe that concept is 
included in my formal testimony submitted to your committee. 
However, competing in the world economy is not good enough. As 
it is in sports, we can compete and still lose.
    We cannot afford to lose when it comes to our 
transportation systems. This Nation must be the leader, and to 
lead we must have a transportation system second to none. To be 
in the forefront, we must invest in our transportation systems.
    In my remaining comments today I will touch on AASHTO's key 
recommendations and respond to the themes you have stated for 
this hearing.
    AASHTO agrees that the Intermodal Surface Transportation 
Efficiency Act was landmark legislation. It improved our 
ability to provide better transportation for the Nation in many 
ways. The planning and decisionmaking processes for surface 
transportation were changed by ISTEA, moving decisionmaking the 
States and local governments and emphasizing State and local 
cooperation, intermodal planning, and public participation.
    Greater flexibility was provided in utilizing Federal 
funds, allowing States and local governments to better target 
resources to match State, local, and citizen priorities.
    AASHTO's support for ISTEA doesn't mean that there are not 
areas for improvement. The detailed policy recommendations for 
reauthorization which were provided to the committee identify 
areas where the Association believes changes could be made.
    You asked that we respond to three areas: future 
transportation trends, transportation benefits to the economy, 
and infrastructure funding requirements.
    Mr. Chairman, looking at the trends for transportation, it 
is clear that it continues to play a major role in the well-
being of this Nation. This role is demonstrated by the growth 
in the number of drivers, vehicles, and passengers on our 
highway and transit systems, and the reliance of industry and 
economic development on the availability of efficient 
transportation.
    An example, just-in-time production, is one of the most 
significant trends in U.S. manufacturing in recent years. This 
trend has allowed many businesses to sharply reduce or 
eliminate inventories.
    In 1990, just-in-time manufacturing accounted for 18 
percent of U.S. production, by 1995, this percentage had 
increased to 28 percent. However, just-in-time production and 
the resulting reduction in inventories require dependable and 
efficient transportation facilities. These trends will continue 
placing an ever-increasing demand on our systems.
    The benefits to the economy--Mr. Chairman, throughout the 
history of our Nation, transportation has been a key driving 
force in building and maintaining our economy. A copy of a 
report prepared by AASHTO and FHWA, entitled, ``The Economic 
Importance of Transportation, Talking Points and References,'' 
has been provided to your committee.
    Industry estimates that logistic and transportation costs 
account for 20 to 25 percent of the value of a product on the 
shelf. This results in a direct relationship between what our 
citizens pay for products and the cost of transportation.
    In addition to the efficiency and production benefits for a 
manufacturing sector, investments in transportation are also 
important for job creation and employment mobility.
    The Federal Highway Administration's most recent report on 
job generation for highway investment finds that $1 billion of 
investments in the Federal highway program supports more than 
42,000 full-time jobs.
    Also, according to the U.S. Department of Transportation, 
every dollar invested in the highway system will return more 
than $2.60 in benefits to the economy.
    As indicated in the few examples shown above, investing in 
the Nation's transportation facilities is important to ensuring 
long-term economic growth.
    Mr. Chairman, you also requested testimony on 
infrastructure funding requirements. Simply described, our 
needs for investments to adequately support the Nation's 
surface transportation systems are well documented and far 
exceed the current investment levels.
    AASHTO analyzed the investment requirements of our 
transportation systems based on information received from the 
U.S. Department of Transportation. This analysis is detailed in 
our report, ``The Bottom Line: Transportation Investment Needs, 
1998 to 2002.'' Copies of this report have also been provided 
to the subcommittee.
    To summarize the report, over the next 5 years total 
highway investment needs to maintain the current conditions and 
performance capabilities are $264 billion, an additional 
investment of $94 billion is needed to improve the condition 
and performance of this essential system, for a total 
investment need of $358 billion over 5 years.
    Transit needs to maintain and improve are identified at $39 
billion and $33 billion, respectively, for a total of $72 
billion over 5 years.
    While the estimated amounts to maintain and improve our 
highway and transit systems are daunting, significantly more 
funding is being collected from highway users but is not 
available for transportation.
    If we could access all the funds now flowing into the 
Highway Trust Fund and the 4.3 cents per gallon now used to 
support the general fund programs, we could at least maintain 
the current conditions of our surface transportation system.
    AASHTO and the National Governors' Association share this 
recommendation to fully use highway user fees for 
transportation purposes. We commend you, Senator Warner and 
Senator Baucus, and the 55 Senators who joined you in writing 
to Senator Domenici, Chairman of the Senate Budget Committee, 
seeking a higher highway program level. We also commend 
Senators D'Amato and Moynihan for their similar letter urging 
higher transit funding levels.
    So, in summary, Mr. Chairman, AASHTO believes that there 
will be no more important legislation before the Congress for 
the future of America than the reauthorization of our surface 
transportation program. We must either meet our investment 
needs or face a decline in American mobility as we enter the 
21st century.
    During your hearings and during the debate on 
reauthorization, you will receive testimony from many groups, 
individuals who are interested and concerned about 
transportation and its funding. As you prepare your list of 
witnesses, I hope you will hear from the users of 
transportation systems, including the members of industries 
that rely on transportation for their financial future. This 
includes: General Motors, Sears, Wal-Mart, Federal Express, 
United Parcel, only to name a few. These companies recognize 
the true importance of transportation to our economy and our 
future.
    We have provided you with AASHTO's recommendations for your 
authorization and stand ready to provide any further 
information which would be of assistance as you move forward in 
the legislative process.
    Mr. Chairman, I have one more thought. As a State 
transportation official, I have been bothered by some time that 
transportation is not higher on the national agenda, the 
public's radar screen. Other activities and issues such as 
welfare reform, health care, crime, budget deficit, and 
education have occupied higher positions on the national 
agenda. These are all important issues, and I don't want to 
downplay their importance, but at a time when good news seems 
hard to come by, transportation is good news.
    Because of this concern and to further the cause of 
transportation, as President of AASHTO I have initiated 
discussions between AASHTO and the National Governors 
Association to plan and convene a National Transportation 
summit to be held this spring or summer. Its purpose is to 
bring together State, Federal, and local officials, along with 
the users of the transportation system, to bring attention to 
the importance of transportation for the future of this Nation.
    Mr. Chairman, this concludes my remarks. Again, thank you 
for the invitation to present our views, and I would be pleased 
to respond to questions now or in writing.
    Senator Warner. Thank you very much, Mr. President.
    Senator Warner. I would hope that that meeting could be 
held in a timeframe that the work product and recommendations 
can be taken into consideration by this subcommittee, and, 
indeed, the Congress as a whole. I commend you for your 
testimony.
    Mr. Rensink. Thank you very much.
    Senator Warner. Thank you.
    Now, Mr. Kulash.

      STATEMENT OF DAMIAN KULASH, PRESIDENT AND CEO, ENO 
                TRANSPORTATION FOUNDATION, INC.

    Mr. Kulash. Thank you, Mr. Chairman.
    Senator Warner. Thank you.
    Mr. Kulash. You've heard from the other witnesses and you 
certainly know from your own work about the tremendous 
importance of transportation to the economy.
    Some of those linkages are very obvious. Transportation is 
clearly very important to the industries that make heavy use of 
it. The site-specific benefits of transportation--of 
investments made in one place versus another--are brought to 
your attention in all the decisions you make.
    What may not be so obvious is the effect that 
transportation has on the economy, as a whole. We got some new 
and important evidence on that this past year in an analysis 
done by M. Ishaq Nadiri of New York University.
    In my testimony on page 4 there is a graph in there that 
shows what he found, and it is striking. This analysis examined 
the return to the Nation's economy, as a whole, of the 
investments made in the capital stock over the period 1950 to 
1990.
    In the early years of this period, Prof. Nadiri found a 
very striking return. The returns were something in the order 
of 30, 35 percent, and some years even higher. That means that 
a dollar put into this program repaid itself within 3 years, 
before the period of the authorization was even over--a very 
stunning return.
    In more recent decades, these returns have fallen ending 
the period at about the same level as private investment, 
namely down around 10 percent.
    I think that pattern is very surprising, in two respects. 
No. 1 is how large the returns were when the investment was 
working at its peak. I think it's surprising also at how big a 
difference there has been over the decades in terms of what 
those returns have been between the 1950's, for example, and 
the late 1980's.
    To figure out what led to those patterns and whether they 
have implications on today's investments, we at the ENO 
Foundation convened a forum of economists and industry 
representatives and others to see if there was a rationale for 
which investments worked and which did not.
    The bottom line of our discussions was that these large 
returns came about because of network effects. A network effect 
is a type of consequence over and above the site-specific 
benefits of transportation. A network effect comes about 
because you create growing room in the economy to allow 
entirely new businesses to spring up--things that didn't happen 
before.
    We've heard about some of those network effects from the 
other witnesses today, with their very impressive statistics on 
just-in-time, on other industries such as catalog stores that 
have come into business, intermodal freight operations, 
relocations to central plant, and ability to achieve new 
economies of scale there.
    Such consequences show up in many, many companies across 
the Nation. One thing that the Nadiri analysis pointed out was 
that they occur throughout every sector of the economy, not 
just the big highway using communities.
    Which programs now will have these sorts of network effects 
today and create growing room for the economy now? There is a 
lot of speculation about this. No one really knows. But I think 
there are four areas that warrant specific consideration in 
this regard, the interstate highway system certainly being one.
    The very large returns realized during the 1950's and 
1960's happened to coincide with the era when the interstate 
system was built. If we disinvest in this system now, either 
functionally or physically--by letting the condition 
deteriorate, or by letting congestion defeat the function--then 
the disinvestment could trigger negative returns at the same 
rates, some very high rates, that our early investment showed 
positive returns.
    The national highway system--like the interstate system, 
would target the investment around those roads that are most 
heavily used, most vital to the economy. Investments here might 
similarly show larger than normal returns.
    The Nadiri analysis did separate out non-local roads, and 
found that even though the pattern for the entire highway 
investment had come down in recent decades to the level of the 
private sector return, the investment on non-local roads, a 
system that is probably roughly equivalent to the national 
highway system, was still about 50 percent higher than that 
private sector return. That means it's around 15 percent or so, 
not the same as the high rates found in the 1950's but not bad, 
either.
    Another promising area are investments to fill intermodal 
gaps. The intermodal feature of ISTEA did open a new focus on 
these gaps. Since the formation of the Department of 
Transportation there has been one policy statement after 
another that alludes to the need for integrated national 
transportation system. That has always been much easier to say 
than to do.
    One of the reasons that it has been difficult to do is that 
the specter of such a large Federal role came off like a 
command and control structure imposed on this large system. 
This was very scary to the many economic interests that depend 
on the transportation system and find it working well.
    Intermodalism, by not trying to be a command and control 
structure for the whole transportation network, but by 
concentrating only on the worst points of coordination of the 
overall system--namely, those points of contract between the 
modes--is a way of achieving better efficiency out of the whole 
transportation network without a greatly expanded Federal 
presence.
    Finally, the greater coordination capabilities that are 
offered through intelligent transportation systems also are an 
area that may create economic growing room through systems 
improvements in transportation.
    So as you go into the reauthorization cycle and look at 
which programs can do the most to fuel the Nation's economic 
performance, the very large differences we've seen in the past 
certainly point out that this is a significant area, that some 
investments are much, much better than others.
    I recognize there are many other social concerns that you 
must take into concern as you reauthorize the bill, but the 
economic returns are too big to ignore. They're much bigger 
than the site-specific benefits, and selecting investments that 
fuel the Nation's economy ought to be one of the top priorities 
as you move forward.
    Thank you, Mr. Chairman.
    Senator Warner. Thank you very much.
    We'll now proceed with questions.
    First, Mr. Secretary, we welcome you back again. You've 
been before our committee many times.
    Mr. Card. Thank you, Mr. Chairman.
    Senator Warner. We value highly your insights into this 
problem.
    Now, I want to talk a little bit about intermodalism. We 
want very much--I'm speaking for myself--very much to have this 
bill incorporate and advance those concepts that were put into 
ISTEA.
    Now, what can we do, in your judgment, to make further 
strides toward intermodalism which brings in efficiencies--not 
only cost, but I think transportation.
    Mr. Card. Thank you, Mr. Chairman. I think that it would be 
good to look at the choke points in our transportation system 
today, and that's where we should target some of the 
opportunities for greater efficiency.
    We clearly have a choke point, if you will, at the Mexican 
border. The bulk of our transportation network has been east-
west, not so much north-south. However, because of the North 
American Free Trade Agreement, we are finding a lot more 
commercial traffic moving north-south, and we do have some 
intermodal choke points, specifically at the Mexican border, 
and I think it would be good to facilitate greater 
interconnectivity at our border, and that should not just be 
with regard to truck traffic or motor vehicle traffic, but also 
with regard to our rail traffic.
    Also, the disputes of the past that use to rage between 
highways and railroads have lessened somewhat over the last 
several years because of ISTEA, and that's because we now have 
a closer working relationship in the movement of goods from 
railroads to our highways and highways to our railroad systems.
    So my counsel would be that you ask the Department of 
Transportation to help identify particular choke points in our 
transportation network.
    While congestion was an object of significant discussion 
during the original ISTEA debate, congestion mitigation relief 
really hasn't materialized the way we had hoped it would now 6 
years into ISTEA.
    During my testimony I talked about our belief that 
congestion mitigation is a proper and appropriate goal under 
the Intermodal Surface Transportation Efficiency Act. 
Unfortunately, some of the programs that were instituted under 
the CMAQ program did little to mitigate congestion, and we have 
found that congestion actually increased over the last 5 years 
rather than decreased.
    I think that there should be a recognition of the role of 
highways and highway construction in congestion mitigation. 
There was a--I think a knee-jerk presumption that congestion 
mitigation would mean no highways and no interchanges and no 
off-ramps, and I hope that that would be something that could 
be done so that congestion mitigation would also include the 
ability to spend money to better use our highway networks.
    If you have other particular questions, I'd be glad to try 
to respond.
    Senator Warner. President Rensink, I raised the report here 
earlier, the 1995 Conditions and Performance Report, and in it 
it reflects that in that particular fiscal cycle 46.9 billion 
was contributed by States and 23.4 billion by local 
governments. This compares to 18.2 billion provided by the 
Federal Government in that particular cycle.
    Now, I perceive that the Congress is trying to put more and 
more responsibility--and I'm very much a part of that movement 
here in the Congress--onto the States, wide range--welfare, may 
well end up in the medical area, also.
    Given that, do you think that, if we're held to this level 
of just the 20 billion, that the States can increase their 
revenue portions to the highway problem? Or should Uncle Sam 
awaken to the fact that we're sending enough down to the States 
already and maybe it's now our responsibility to increase the 
highway and not to lessen theirs but at least recognize that 
their dollars are being stretched in many different directions 
as a direct consequence by the Congress?
    Mr. Rensink. Mr. Chairman, the States have a good history 
and are proud of the fact that on many, many occasions they 
stepped up to the plate to provide transportation resources. We 
are proud of the partnership that we've had with the Federal 
Government in making our transportation system what it is 
today. It has been a good partnership. It has worked out well.
    Each State, in some unique or distinct way, has its own 
capacity to do things and/or to raise revenues.
    I'm quite sure, Mr. Chairman, that States are aware and 
support some of the events and objectives that are set out here 
in Washington, as you look at balancing a budget, etc.
    But I also believe that before States are going to come 
back and carry a big bat and step up to the plate, that they're 
expecting some answers from Washington concerning the 
unobligated balances that are in the trust fund, as well as the 
4.3 cents that currently is being directed toward general fund 
and deficit reduction purposes.
    Certainly States are going to be ready to do their share. 
But at this point, given perhaps some of the difficulties that 
some would have in taking a heavier share, that they would 
expect Washington and the Federal Government to look at those 
two situations I just referenced.
    Senator Warner. Have you had the opportunity to consult 
with the National Governors Association? And, if not, would you 
undertake to explore that? It would be very helpful----
    Mr. Rensink. Yes, we have been.
    Senator Warner [continuing]. If the Governors across the 
United States would come in and support the concept of moving 
up to hopefully the 26 billion.
    Mr. Rensink. Mr. Chairman, in my remarks I referenced our 
partnership with the Governors, through the National Governors 
Association at a national summit on transportation. More 
recently, when they were in Washington at their annual winter 
meeting, we were pleased that the National Governors 
Association did appoint a special task force on transportation. 
It is the intention of AASHTO to partner very closely with them 
in looking at these issues including the 4.3 cents and the 
trust fund balance. We plan to work with them very closely.
    Senator Warner. Well, working with them is fine, but, mind 
you, this train is out of the station, this bill, and it's 
moving.
    I think the likelihood of having significant impact on this 
bill from organizations such as yours--you've made your 
contribution today, but the NGA has got to come in a timely 
fashion.
    This is a very, very significant undertaking to present to 
the President and to the Congress, as a whole, the necessity to 
increase significantly this highway funding.
    I'm pleased that the gentlemen here at this table are with 
me on that, but we need all the help we can get.
    Mr. Rensink. We're ready to help.
    Senator Warner. Fine.
    Now, this is fascinating, and I must tell you I've got to 
go back and rethink some things here, but we want to take this 
into consideration.
    Given the significant trends in this area, do you think 
they're going to continue to move more strongly in this area--I 
mean, this pattern of particularly the female worker and the 
need to stop coming and going, which we understand fully? What 
should we be putting in this bill to recognize this trend and 
begin to facilitate that mode of transportation?
    Mr. Pisarski. Well, first, sir, there's no question that 
these patterns are going to continue. I think they're getting, 
in fact, more virulent. They're getting stronger.
    Senator Warner. Let me make sure, you said more pronounced 
and stronger?
    Mr. Pisarski. Yes. More pronounced in the future.
    One of the things, the new technologies that are coming 
along--computers, telecommunication--are pushing us toward 
greater potential dispersal of the population, greater 
dependence on these kinds of flows.
    And I think the kinds of patterns that we're going to see, 
the immense pressures of time, particularly on women, are just 
the factor that, in effect, drives all of these patterns.
    Senator Warner. Chances are they're working both parents, 
or the household, both of them are gainfully employed, 
sometimes in three jobs, some having two jobs.
    Mr. Pisarski. One of the keys here is that 70 percent of 
the workers in the country are in households with two or more 
workers, and so we don't have the kind of Ozzie and Harriet 
situation of the past of the sole worker getting in the car in 
the suburbs and going downtown.
    It's much more a case of people having, in effect, 
competing activities where they have to make arrangements for 
the household, for children, for their other activities, and 
balance their entire household requirements.
    So I think that set of factors is going to be very much a 
part of our future.
    With respect to the response to the system, I'd say there 
are two things. I mentioned that there's kind of good news and 
bad news in this. The good news is, from an air quality point 
of view, you have fewer cold starts because people make the 
rounds rather than make individual trips, and they are bunching 
the trips together, and so we don't have go home, go back, go 
home, go back. That's kind of good news.
    The bad news is that this is not a kind of pattern that 
transit can respond to. It's not a kind of a pattern that car 
pooling can respond to. And it also tends to pull into the peak 
period those other activities that--going to the supermarket, 
stopping at the dry cleaners--that historically we didn't put 
in the peak periods.
    So now we've got some people competing with the commuter in 
the peak period.
    The response of the system--we're going to have to have a 
highly flexible system. I think the ability of transit to 
respond to this and to the suburb-to-suburb commute is going to 
demand a tremendous amount of flexibility, and the historical 
notion of suburb-to-center-city is just not going to help us.
    Senator Warner. One last question to you. Have you done any 
analysis on HOV lanes? We're trying that more and more in this 
greater metropolitan area.
    Mr. Pisarski. One of the things we've seen is almost a 
complete collapse of car pooling, quite astonishingly so.
    What has happened is the big car pools have just about 
dissolved. They're about half of what they were years ago.
    Senator Warner. By ``big'' do you mean three or more?
    Mr. Pisarski. Three, four, five, six. You still see them in 
the very long trips, West Virginia to Washington, trips like 
that, but most car pooling today is husband/wife car pooling, 
parent and child car pooling. It's a family activity rather 
than an association of neighborhoods or co-workers.
    It's increasingly internal to the household, so it's not 
really car pooling in the sense that I think of those terms.
    Car pooling has a big advantage when there's heavy 
congestion on the main roads and you can put something like the 
HOV lanes on 395, but there is a penalty to car pooling, 
itself. Basically there's a chart in ``Commuting in America'' 
that says that for each person you add to the car pool you add 
5 minutes to the travel time, and so the congestion on the 
alternative routes has got to make it worth that extra 5 
minutes for each person to make car pooling worth people's 
while.
    Senator Warner. That's an interesting statistic.
    My time has expired.
    Senator Baucus. Thank you, Mr. Chairman.
    I have just one basic question of Mr. Card.
    Mr. Secretary, I was wondering what the big three can do to 
help my little campaign here on the Budget Committee and 
Appropriations Committee to increase our appropriations. You've 
got a lot of folks behind you and a lot of power.
    I'm remind of--who was it? One of GM's former chairman, 
``What's good for GM is good for the country.''
    Mr. Card. Senator, I prefer to think I only have three 
members--GM, Ford, and Chrysler.
    Senator Baucus. Right.
    Mr. Card. And they have a lot of momentum behind them, and 
I'm subject to that momentum several different times.
    We definitely support Senator Warner's letter that all of 
you signed, along with 58 of your colleagues. That is a very 
important step. You have given us something that we can point 
to that would allow us to go forward and encourage others to 
support the position that you've taken.
    AAMA will go on record and will try to solicit support from 
others to the cause that you've so appropriately identified.
    It's very important that the pot of money available to meet 
our surface transportation needs be as large as possible. It's 
a pot of money that, quite frankly, belongs to the users, and 
the users have put their money in that pot and they've told us 
to take good care of the money, to spend it wisely, but to 
spend it.
    We would like to work with you to make sure that all of 
Congress understands that responsibility, so I pledge to work 
with you, and we can talk about particular strategies that 
might be important.
    Senator Baucus. Thank you. I'd encourage you to kind of 
send the message back up the pipeline. Thank you very much.
    Thank you, Mr. Chairman.
    Senator Warner. Thank you very much.
    Senator Kempthorne. Mr. Chairman, thank you.
    Mr. Card, when Secretary Slater was before this committee 
for his confirmation hearing, one of the points that he made, 
which I appreciated, was that safety was his No. 1 priority.
    As you know, I have a great interest in motor vehicle 
safety, and particularly in the issue of air bag safety. As you 
know also, I've placed a high priority on the elimination of 
the current unbelted testing standard because it results in the 
manufacturing of air bags that are too aggressive, that are 
causing the deaths of children, small-statured people, 
particularly women.
    As you're also aware, on December 4 of 1996, I petitioned 
the Department of Transportation to include in their proposed 
rule changes an immediate moratorium on the unbelted test.
    Your organization has been on record several times in 
support of the proposal, and as recently as January 30 of this 
year, when you stated in a letter to NHTSA,

    The immediate elimination of the present FMV SS208 
unrestrained dummy test remains the single-most direct action 
that would allow manufacturers to quickly initiate air bag 
design changes that can further reduce the injury risks related 
to air bag inflation.

    Would you elaborate on your support of my efforts to get 
this standard changed?
    Mr. Card. Thank you, Senator Kempthorne.
    The automobile industry--and I would point out that it's 
the world's automobile industry, it isn't just the domestic 
manufacturers, but all of the manufacturers of automobiles 
throughout the world--believes that bringing a less-aggressive 
air bag into the marketplace as quickly as possible would help 
to mitigate problems associated with air bags.
    At the same time, all of the world's manufacturers also 
recognize that the most optimal design criteria that we could 
bring to our vehicles for safety would come with a presumption 
by the Government that the occupants of a car are wearing their 
safety belts.
    Clearly, the unbelted test requirement that is currently 
the regulation at the Department of Transportation results in 
overly aggressive air bags, and it restricts the ability of the 
automobile industry to design their vehicles in an optimal 
fashion to meet the safety requirements of the occupants.
    We have a goal to do no harm to any of the occupants in the 
car. We feel that that is our paramount concern. Clearly, our 
objectives are to do no harm to those who are properly buckled 
up. When people are buckled up, you can better judge their 
location in the vehicle. They also recognize that the safety 
systems in the automobile or truck today include the crumple 
zones in the structure of the vehicle, the safety belt, and the 
air bag. They are not separable systems. They work as a system.
    Yes, we fully endorse an effort to eliminate the unbelted 
regulation. We compliment you, Senator Kempthorne. But I would 
point out that it is incumbent upon the National Highway 
Traffic Safety Administration to move as expeditiously as 
possible to allow us to bring less-aggressive air bags into the 
marketplace, and they can do that by approving the sled test 
protocol and approving that rule such that we can begin to 
bring less-aggressive air bags into the marketplace in a matter 
of 6 to 9 months.
    Senator Kempthorne. OK. I agree with you that they should 
approve the sled test, and we are in agreement that that is an 
incremental step and that they should then proceed with 
eliminating the unbelted test. That is the ultimate most direct 
route.
    Mr. Card, I know, because of your background as former 
Secretary of Transportation, it has to be as upsetting to you 
as it is to myself, and I'm sure to the Chairman, that we have 
a standard, a Government standard, that was predicted would 
kill children, and today there are at least 32 dead children 
because of that Government standard.
    Do you see any reason why the Administration would need to 
slow down implementing the sled test as it moves forward to 
issue a proposed rulemaking change that would do away with the 
unbelted test?
    Mr. Card. Senator Kempthorne, there is absolutely no reason 
why the Government should not be able to proceed quickly with a 
sled test protocol that would allow for depowered air bags.
    There is now a consensus among the safety community, the 
world's manufacturers of automobiles, and I'm going to say even 
regulators, that the sled test protocol is the quickest way to 
allow for a depowered air bag to come into the marketplace.
    At the same time, no regulation should be held up while the 
debate goes on about the question of unbelted test 
requirements.
    It's imperative that the Government move quickly with the 
sled test proposal so that less-aggressive air bags come into 
the marketplace. That is a transition to a better policy, we 
think, that would be a test protocol recognizing belted 
occupants.
    But let's get the interim solution out there as quickly as 
we can, while we work together to get a better solution. The 
better solution would be a belted test requirement and advanced 
technology.
    Senator Kempthorne. All right. I appreciate that.
    Mr. Chairman, I would just add to that the chairman of the 
National Transportation Safety Board also agrees that we should 
do away with the unbelted standard, and so I'm doing all that I 
can with the Department of Transportation so that they will 
issue that proposed rule change.
    It is appalling to me that March of last year, before the 
Commerce Committee, the administrator of NHTSA testified that 
there are 15 dead children because of that standard. Ten months 
later that administrator testified there were now 32 dead 
children because of that standard.
    I do not understand the reluctance of NHTSA to move forward 
so that we no longer risk the lives of kids.
    Enough said on that topic. I'm going to pursue it.
    To all of the other members of the panel, I appreciate 
greatly the information you have provided. I'm going to have to 
excuse myself because of another hearing that I will be going 
to, but it is very helpful as we now move forward in the 
reauthorization of ISTEA, and I can tell you that we're in 
extremely capable hands with Chairman Warner, who has fashioned 
an appropriate process that will be inclusive so that we're 
going to come up with an excellent reauthorization.
    I thank all of you.
    Senator Warner. I thank the Senator, and I look forward to 
supporting you in your endeavors on resolving this air bag 
thing.
    Senator Kempthorne. Thank you very much.
    Senator Warner. I'm going to have one last question to the 
president here, and I've got to tell a little story to try and 
frame it.
    Eighteen years ago I was privileged to be elected to the 
U.S. Senate. I was anxious, after my re-election, to get back 
to my State and visit and thank the people. And I expect my 
colleagues have this experience.
    Anyway, there was a big parade in this community that 
prides itself in being the peanut capital of the world.
    Don't you folks leave yet. It's a good story.
    [Laughter.]
    Senator Warner. It's the peanut capital of the world.
    So I arrived down there, brand new U.S. Senator, and all of 
us who have gone to the parades, there's the big marshaling 
area on the high school grounds, and we were all there, and the 
cars had all been placed in order.
    You don't have to put all this in the record.
    I started looking for my car, thinking that I'm the U.S. 
Senator, I'm going to be in the head of the parade.
    Well, I found my car, and it was behind the sheriff and the 
mayor and three or four State legislators, so I didn't become 
indignant but I decided to figure out just exactly what was the 
formula by which these cars were located.
    It was a particular State legislator ahead of me with whom 
I'd had some encounters with--it so happens he's of the other 
political persuasion--and I was somewhat indignant about that 
man particularly.
    I found out that that parade was ordered in terms of what 
those folks had done for the community, and several of those 
legislators had gotten a new road for that community, and 
that's what decided the position in the parade.
    Now, I'd just as soon be omitted parades in my next term, 
but anyway, I'll be down there.
    But the point of this story is that people contend that in 
our interstate system, Mr. President, we're falling into some 
poor condition because the States are putting too great a 
percentage of their assets into new highway construction rather 
than maintaining what's in place.
    Do you have any comments on that?
    Mr. Rensink. Well, Mr. Chairman, I'm not sure I've got all 
the available data to respond, at least as it pertains to other 
States, but I can speak to my own State as it relates to the 
interstate system and other parts of the primary system, and 
the priority that we give to maintenance versus capacity.
    It can be tempting and sometimes very tempting to defer 
from and to move away from maintenance, be it on the interstate 
or any other parts of the primary, to respond to the pressures 
that we all face as DOT directors in our individual States for 
some expansion programs, some new roads, something new that you 
can put a ribbon across and cut. It's got that flavor that it 
seems to be a dollar better spent.
    What I've tried to do in my State, and something that I 
certainly hope we can do throughout the industry, is to create 
an awareness that a dollar spent for maintenance is a dollar 
that's just as valuable and just as important as a dollar for 
new capacity.
    Senator Warner. I'm glad to hear that, because we're going 
to have to look at various options. I'm the last here to want 
to try and put more directives to the States, but for every 
State legislator to get his or her new road at the expense of 
the maintenance, we've got to do something about that.
    Mr. Rensink. We agree.
    Senator Warner. And I thank you.
    I want to ask Mr. Kulash the wrap-up question here. With 
the limited resources to invest in a large network of highways 
and transit systems with growing needs, how can we be sure to 
make the right investments so that taxpayers receive the same 
high rate of economic return that we experienced in building 
the interstate system?
    Mr. Kulash. Mr. Chairman, I'm not sure that is possible. 
The very high rates that we got from the interstate system were 
wonderful. I'm not sure that equally high rates could be 
achieved today, but it is important to try to target Federal 
investments on those programs that can produce the best 
returns, and these are the ones that make the national network 
stronger.
    You described very graphically how most political leaders 
see the investment in the road system. They see what's in their 
back yard. What they don't see is how an investment that gets 
rid of a bottleneck in St. Louis benefits somebody who's 
growing oranges in Florida and benefits a manufacturer in 
California who is shipping cross-country.
    Those are the network effects--they are created by 
improvements that make the whole system perform better; not 
just by weighing what has an immediate district benefit for us.
    These network effects were most apparent following the 
Nation's investment in the interstate. Keeping the interstate 
in good repair, making sure that the developing bottlenecks on 
the interstate are somehow dealt with, is certainly a high 
priority.
    The national highway system has that potential, as well.
    The whole intermodal area offers a potential to produce 
national transportation benefits, not just highway benefits, 
that have those same network features.
    As you're aware, even though ISTEA created the capacity to 
start to deal with intermodal investments, without sufficient 
funding they're in competition with other priorities. As a 
result, there has been some disappointment at the small amount 
of money that has actually found its way into intermodal 
projects. Using intermodal investments to improve the national 
transportation system is a question of both money and how 
responsibility for this activity is structured within the 
Department.
    Finally, intelligent transportation systems also have the 
potential to offer these kinds of benefits.
    Senator Warner. Well, I thank you very much, and I thank 
the panel, as a whole.
    We've had an excellent hearing today, and we've got a 
tremendous challenge facing the Congress, and we're fortunate 
to have the expertise that each of you brings to the resolution 
of these issues.
    The subcommittee stands in recess until the call of the 
chair. Thank you.
    [Whereupon, at 4:34 p.m., the subcommittee adjourned, 
subject to the call of the chair.]
    [The prepared statements of Senators Smith and Boxer, and 
other material submitted for the record, follow:]
 Prepared Statement of Hon. Bob Smith, U.S. Senator from the State of 
                             New Hampshire
    Thank you, Mr. Chairman, for holding this first in a series of 
hearings on reauthorization of our major surface transportation law, 
otherwise known as ISTEA. I was a proud supporter of this legislation 
in 1991 and continue to support its goals today.
    ISTEA represented a revolutionary change from past transportation 
legislation and a shift toward an integrated, intermodal transportation 
system to promote efficiency and economic growth. Some of its major 
provisions included: greater planning authority for State and local 
governments, increased research for innovative technologies such as 
intelligent vehicle highway systems, and funding for environmental 
protection activities.
    A reauthorized ISTEA should continue to recognize regional 
differences, but at the same time, recognize that our transportation 
system is a national system. Certainly, every State wants to get its 
``fair share,'' and we will need to balance each State's needs with the 
needs of the Nation as a whole.
    While there is some merit to having various funding programs, we 
should refrain from creating any new funding categories or setasides, 
and allow for maximum flexibility between the various programs. It is 
also important that we reduce or eliminate any onerous mandates or 
sanctions on the States.
    From New Hampshire's perspective, it will be important to ensure 
that small States continue to receive adequate funding for their 
infrastructure needs. New Hampshire strongly supports certain programs, 
such as the Bridge Rehabilitation, Scenic Byway and Recreational Trail 
programs, that other States may not utilize as much. The strength of 
ISTEA is that it recognizes these varying needs and provides States 
with the flexibility to direct funding as they see appropriate.
    There are many challenges before us as we take steps toward a 
balanced budget--something I have fought long and hard for. Our needs 
will always outweigh our resources. But, we also have to recognize how 
critical transportation is to our economy and social well-being.
    Thank you, Mr. Chairman, and I look forward to working with you in 
this reauthorization process.
                                 ______
                                 
 Prepared Statement of Hon. Barbara Boxer, U.S. Senator from the State 
                             of California
    I want to thank Chairman Warner and Sen. Baucus, our ranking 
member, for beginning our ISTEA hearings early this year. We have a lot 
of work to do.
    Now is the time that we make ISTEA a solid blueprint for surface 
transportation policy into the next century.
    Transportation is an increasingly major concern for the people of 
California. The Bay Area survey recently found a third of the residents 
surveyed last fall cited the most important problem is transportation, 
surpassing crime as the region's chief worry.
    Our system is running at over-capacity. While California has 
finally emerged from economic recession--jobs growth is up and 
international trade is flourishing--our continued recovery is 
jeopardized by the strains on our transportation system.
    Cargo handled by the Los Angeles International Airport--already the 
third busiest cargo airport in the world--may nearly triple into the 
next century. Expansion at San Francisco International Airport could 
add up to 75,000 cars on peninsula highways. California has identified 
about $1 billion of transportation infrastructure improvements needed 
to adequately serve future commercial vehicle traffic crossing the 
California-Mexico border as a result of NAFTA.
    Trade-related jobs now surpass aerospace jobs in Los Angeles. The 
Los Angeles Customs district is the largest in the country. More than a 
billion tons of cargo move out of, into and within the State every 
year. A survey of shippers and carriers reported last year that 
congestion was the key issue limiting their ability to provide 
efficient transportation. This freight-related congestion, as well as 
the explosion in single-occupant vehicles, impacts our consumers and 
air quality as well. Lack of grade-separated railroad crossings cost 
consumers in travel time and shippers in efficiency. And, those idling 
cars and trucks are spewing poisons into our air.
    As I said, we have a lot of work to do, and I look forward to 
working my colleagues to fashion a revitalized ISTEA that encompasses 
the economic benefits of a safe and efficient transportation system.
                                 ______
                                 
  Prepared Statement of Hon. Mortimer L. Downey, Deputy Secretary of 
                             Transportation
    Mr. Chairman, Senator Baucus, members of the committee: Good 
afternoon. Thank you for inviting me here this afternoon to testify 
about reauthorization of the Intermodal Surface Transportation 
Efficiency Act of 1991 (ISTEA). I welcome this opportunity and I am 
excited by the prospects for building on ISTEA. It seems we have all 
been talking about this subject a great deal. At DOT, we have done 
extensive public outreach over the past year. We have heard from all 
parts of the transportation community, in all regions, at all levels of 
government, as well as from the private sector. The response has been 
heartening. It is now 1997, the year of decision, when we must move 
from generalities to specifics. Armed with a wealth of information and 
viewpoints, we can now get down to the business of developing 
successful legislation. On behalf of incoming Secretary Rodney Slater, 
and the Administrators of DOT's operating Administrations, I want to 
express our willingness to work closely with this committee and, of 
course, with all the others in Congress.
    This week opens the ``official'' debate on ISTEA reauthorization in 
the 105th Congress. I think we all recognize how big a challenge this 
year will be. It is time for the discussion to get down to real terms 
with real solutions in the context of a real deadline, September 30, 
the expiration of the current authorization. We know we will not all 
agree on every aspect of the next bill--what I have been referring to 
as ``NEX-TEA''--but I believe we can reach consensus in a way that 
builds on the important themes of ISTEA: intermodalism, planning, 
flexibility, safety, environmental protection, investment and 
innovation.
    In a few weeks, we will present to you the product of our 
deliberations, the Administration's proposed reauthorization bill. It 
will reflect our firm belief that ISTEA has been a success and that the 
next authorization cycle should continue its programs and policies. 
Because of ISTEA, including its innovative programs authored by this 
committee like the Congestion Mitigation and Air Quality improvement 
(CMAQ) program, our transportation system is getting better and we are 
addressing its environmental impacts. We, along with our old and new 
partners in State and local governments and in the private sector--both 
in industry and labor--are making good choices. Within the context of a 
balanced Federal budget, we are making progress on most of our most 
pressing infrastructure needs.
    I noted the goal of a balanced Federal budget--a goal shared by the 
President and Congress. The theme of ``balance'' may be a useful one to 
remember during 1997. In fashioning a successor to ISTEA, we will have 
to achieve a balance among competing interests, between requests and 
available resources, between short-term and long-term solutions, 
between donor and donee States, between demands for greater mobility 
and higher productivity and the costs of such activity to our 
environment and to safety. This bill will also weigh the balance of 
power and responsibilities among levels of government. Achieving a good 
balance will not be an easy task, but it is a task that has been made 
easier by the record already established under ISTEA. ISTEA has given 
us both a foundation and a blueprint for the future.
    As we begin the legislative process, I want to reemphasize that the 
Administration's long-term vision of the Nation's transportation system 
is spelled out in our DOT Strategic Plan. It envisions a ``seamless'' 
intermodal transportation system that effectively ties America together 
and links it to the world--a system that will provide safe, efficient 
and environmentally friendly movement of people and the products they 
use. And it is always important to underscore that we need a 
transportation system equipped to meet our national security needs--to 
respond to disasters, and to move people and goods, for both military 
and civilian purposes, in times of national emergency.
    Today, you have asked me to address three topics: infrastructure 
funding needs, transportation benefits to our economy, and trends in 
transportation. In addition, I would like to briefly mention how the 
President's budget proposal will respond to our needs. I believe it 
demonstrates the Presidents continued commitment to transportation 
priorities and will allow us to build that bridge to the 21st century.
                          infrastructure needs
    ISTEA authorized a total of $157 billion over the period of fiscal 
years 1992-1997. The appropriations process over that period actually 
made $145 billion available for ISTEA programs. We all should ask 
``What did we get for that money?'' That investment is producing real 
results, even with many of the projects still under construction.
    The physical condition of bridges and pavement, which had been 
deteriorating, has stabilized and, in many areas, actually improved. 
This is especially true on the 161,000-mile National Highway System 
(NHS), our premier national and regional network of principal routes 
that provide the greatest economic, defense, and personal mobility 
benefits. Peak-hour congestion in our largest urban areas has 
stabilized. Also, the rate of highway fatalities has declined, although 
not as much as we would like to see. These trends suggest that, while 
the successes of ISTEA may not make the daily headlines, overall, we 
have kept pace with the maintenance requirements of our infrastructure 
system; we have stopped the tide of accelerating deterioration of the 
system; and most importantly, we have begun to tie our transportation 
system together through ISTEA's emphasis on intermodalism.
    And this success has extended to transit nationwide. In the last 4 
years we have helped buy nearly 26,000 new buses and nearly 600 new 
rail cars for State and local transit agencies. Most of these meet 
requirements that they be accessible to persons with disabilities. We 
have also helped to fund more than 100 miles of new transit lines, 
serving more than 100 new stations, and our data show improved 
conditions and performance of our transit systems.
    We are making progress. According to the Department's 1995 
Conditions and Performance Report: *
---------------------------------------------------------------------------
    * The 1995 Status of the Nation's Surface Transportation System 
Condition and Performance Report of the Secretary of Transportation to 
the U.S. Congress (Comm. Print 104-30, March 1996). This report 
compares 1993 data with data for 1991. The Department's 1997 report 
will be published later this year.
---------------------------------------------------------------------------
     The number of structurally deficient bridges has dropped.
     The amount of pavement in poor condition has stabilized at 
a manageable level.
     The percent of transit fixed facilities and rolling stock 
in good condition has increased.
     Since 1984, the passenger-mile weighted average speed 
improved by about 10 percent on our Nation's transit systems.
     Well over half of all riders report wait times of 5 
minutes or less. Fifty-one percent of transit trips involve one or more 
transfers.
     Less than one-third of all transit trips involve standing 
for at least part of the trip.
     About 25 percent of all transit users report trip times of 
10 minutes or less.
    Over the long run, to maintain current conditions on our highway 
and transit systems, it will require significantly higher funding from 
all sources--Federal, State, and local governments. Our most recent 
report to Congress suggests the shortfall may be as high as 40 percent. 
To improve conditions to optimal levels based on economic and 
engineering criteria would require us to double our current capital 
investment in highways and transit.
    President Clinton recognizes the importance of sound infrastructure 
to America's prosperity and international competitiveness, and he has 
addressed infrastructure needs even as he has reduced the budget 
deficit. That is why he, drawing on ISTEA resources, increased 
investment in highways, transit systems, airports, and other 
infrastructure to an average of $25.5 billion over the past 4 years, 
more than 20 percent higher than during the previous 4 years.
    Federal grant funding cannot meet all of our infrastructure needs, 
and so 2 years ago we created the Partnership for Transportation 
investment, which has cut red tape, produced new financial tools, and 
attracted new sources of funding. That has accelerated over 70 projects 
worth more than $4 billion, including $1.2 billion in increased 
investment above and beyond that available through conventional 
financing. These projects have moved an average of 2 years ahead of 
schedule, saving interest and inflation costs and producing benefits 
faster. The `97 budget built on this progress by providing $150 million 
in seed money for the first State Infrastructure Banks, or SIBs, which, 
thanks to action by this committee, were established under a pilot 
program under the NHS Act. SIBs will leverage private and other public 
funds through a variety of new financial strategies. The new budget 
proposes to expand this effort by providing another $150 million in 
seed money for SIBs, and $100 million for a new Federal Credit Program. 
The Credit Program will be similar to the SIBs in its support of 
innovative financing, but it will fill a different need--the support of 
projects which, by virtue of their magnitude or multi-state benefits, 
are of national significance but which might not fit into the programs 
of individual States. That will enable us to make loans and apply other 
financing arrangements for such projects.
    We can also invest in intelligent transportation technologies that 
will make our current infrastructure more efficient--and less costly. 
Indeed, we believe that as much as two-thirds of the new capacity that 
we will need in the coming years in our Nation's most congested 
corridors can be provided by intelligent transportation systems and at 
much less cost than for normal construction.
    The challenges before us are national in scope, and they require 
national solutions. Traffic congestion and bottlenecks in major trade 
centers like Los Angeles and Chicago not only impose delays on local 
commuters and regional freight, they also interfere with the speedy and 
reliable cargo movements essential to enhance our global 
competitiveness. Efficient mass transit systems are essential for our 
regional economies to compete with business centers around the world, 
and to assure that all our citizens have access to health care, 
education, and job training. And the members of this committee are well 
aware of the significance that we, as a Nation, have placed on 
improving the environment and upgrading safety. These challenges cannot 
be solved on a piece-meal basis, but rather require coordinated 
national strategies, in partnership with State and local governments, 
industry, labor and other transportation customers.
    Also national in scope are the public roads that serve the 
transportation needs of national parks, forests, tribal lands, and 
other areas under Federal jurisdiction. We propose spending $512 
million in fiscal year 1998 to support efforts coordinated by FHWA's 
Federal Lands Highway Program to develop necessary transportation 
infrastructure on Federal lands that protects natural resources, serves 
tourism, provides access for Native Americans, and supports economic 
development in rural areas.
    President Clinton's proposed Fiscal Year 1998 budget for the 
Department of Transportation reflects the President's commitments both 
to balancing the budget by 2002 and to a safe, secure, and efficient 
transportation system--one which supports economic growth while 
preserving our natural environment. Therefore at a time when the 
overall Budget is decreasing, the President has protected 
infrastructure by requesting a steady discretionary spending level of 
$25.6 billion.
    For example, our highest priority within DOT is improving the 
safety and security of our transportation system. Although it is 
already the safest in the world, much of what we do is aimed at making 
that system even safer--even as travel growth and demographic changes 
create new challenges. That is why we want to raise direct Federal 
safety spending by $200 million--to $2.9 billion, a record 7.5 percent 
of our total budget. A major focus will be on reducing highway crashes, 
which account for nine of every ten transportation fatalities. About 
41,500 travelers died in such crashes last year, a slight reduction 
from 1995. This toll is far too high and we must redouble our efforts 
to reduce it.
    In order to cut the fatality rate, we have to focus not only on 
making safer cars and safer roads, but also on working to assure that 
drivers do their part. We need increased education and enforcement, and 
to do that we want to raise highway safety spending by NHTSA by 11 
percent--to $333 million. While the details of our efforts will be 
included in our ISTEA reauthorization bill, I can tell you that our 
plan includes:
     $9 million for a new occupant protection grant program to 
encourage States to increase safety belt use, the single best way to 
protect a vehicle's occupants;
     a $9 million increase--to a total of $34 million--in 
funding to help States enact tough drunk driving laws;
     $8 million for a new research and education program to 
reduce air bag risks for children and small adults, while still 
preserving the benefits of air bags for all motorists; and,
     $2 million for a pilot program for pre-license drug-
testing, as the first step in launching the President's new initiative 
to combat drug-impaired driving.
    Along with a greater emphasis on safety, the President has also 
indicated his continuing commitment to infrastructure investment. The 
fiscal year 1998 budget proposal of $25.6 billion--slightly above the 
average of the past 4 years--would sustain the current investment that 
has produced significant results in terms of the performance of our 
transportation system. Under the Administration's plan, $24 billion 
could actually be obligated next year for highway and transit capital. 
Under ISTEA's successor bill, we will be proposing higher authorization 
levels for fiscal year 1998 and subsequent years in case the 
Administration's economic growth and deficit projections prove too 
conservative, as they have in the recent past. If the budget situation 
were to improve in future years in this manner, we would look toward 
increasing the obligation levels. We will work with Congress on NEX-TEA 
funding issues this year, and each year, through the normal budget and 
appropriations process.
    As part of the President's Budget, we propose to support Amtrak--
including improvements for the Northeast Corridor--from the Highway 
Trust Fund. That includes $767 million in fiscal year 1998--$344 
million for operating and $423 million for capital, an increase of $27 
million over last year's level minus one-time costs. The Administration 
will work with Congress, Amtrak management and labor, State 
governments, and other interested parties in the coming year to develop 
an affordable long-range plan that eliminates Amtrak's dependence on 
Federal operating subsidy.
    As part of a comprehensive plan to increase flexibility and improve 
efficiency in transit, we hope to integrate formerly disparate formula 
capital, formula operating, discretionary bus, and fixed-guideway 
modernization grants into a streamlined Formula Programs account. For 
urbanized areas over 200,000 population, we plan to replace transit 
operating assistance with increased capital funding and a more flexible 
capital assistance definition that would include preventative 
maintenance. Areas under 200,000 population--those most dependent on 
Federal assistance for operating costs--would be able to use their 
formula grants for all transit expenses, including operating 
assistance. Also, transit providers in any size area would be eligible 
for a new Access to Jobs and Training program that targets Federal 
transit assistance to low-income individuals, including current and 
former welfare recipients.
    Moreover, in the future, we are looking to technology to provide 
many of the improvements we need in safety and efficiency. That's why 
we want to increase investment in transportation research and 
development by 9 percent, to $1 billion. That includes $250 million for 
Intelligent Transportation Systems (ITS), which apply advanced computer 
and communications technologies to travel. About $150 million will fund 
research, development, and technology transfer activities, and $100 
million is for grants to encourage State and local governments to begin 
to invest in the integrated, intermodal deployment of the electronic 
infrastructure necessary to support ITS services. These include 
regional traffic information services and coordinated traffic control 
on both freeways and arterial streets.
    Finally, transportation, like all human activity, affects the 
natural environment, and we have an obligation to mitigate its impacts. 
That is why we're proposing a 5 percent funding increase in our 
environmental programs--to $1.53 billion. Much of this would be for 
CMAQ which State and local governments use to cut pollution through 
transit projects--traffic flow improvements--and alternatives such as 
ridesharing. CMAQ funds would be authorized at $1.3 billion a year, up 
30 percent from their level under ISTEA.
    I believe this budget will allow us to continue to improve our 
transportation networks.
                  economic benefits of transportation
    This committee is well aware of the vital role that transportation 
plays in assuring America's economic prosperity and quality of life. 
From the colonial post roads and canals that expanded our frontiers, to 
the railroads and Interstate Highways that linked a growing country, to 
the transit systems that made possible the development of our great 
cities and provided important linkages in rural areas--America's 
economic progress has always been closely tied to advances in 
transportation. And this progress has accrued to all those 
participating in this vital industry, including those engaged in its 
construction and operation.
    And along the way, transportation became more than just a means to 
prosperity--it became a big economic player in its own right. One 
measure of transportation's role in the economy is its contribution to 
the gross domestic product (GDP). In 1995, the portion of the GDP 
attributed to transportation-related demand was $777.2 billion, or 10.7 
percent of overall GDP. Thus, transportation ranks fourth among 
economic sectors in its share in GDP, not far below health care and 
food. Nearly 10 million Americans are employed in industries that 
provide transportation-related goods and services, and these are good 
jobs--with the highest wage level of any sector of the economy.
    We find that, as a result of greater efficiency in our transport 
systems, Americans now enjoy higher levels of transport output for the 
same level of input, an overall improvement in productivity.
    As our national economy becomes more fully integrated and as 
America increasingly becomes part--of a larger global economy, 
transportation will only become more important to our standard of 
living. Logistical innovations such as intermodalism and flexible 
`just-in-time'' delivery systems have been essential in maintaining our 
productivity advantage worldwide against other countries that compete 
on the basis of lower wages. This process continues to accelerate and 
translates into tower costs for businesses and for consumers, who pay 
less at the checkout counter as a result. In 1990, 18 percent of 
production was just-in-time; by 1995, it was 28 percent. In this and in 
other ways, transportation continues to contribute to our growing 
productivity.
    Under ISTEA, Americans got more for their transportation dollars 
because ISTEA provided a strategic investment framework. It did so 
through stronger planning requirements and through programs, such as 
the National Highway System, that focused resources on roads of high 
national priority; it also provided for completion of the Interstate 
construction program. And ISTEA's authors had the vision to create the 
Surface Transportation Program, which provided unprecedented 
flexibility to State and local officials in determining transportation 
solutions that meet the unique needs of their communities.
    We all know that investments in transportation systems and 
infrastructure can have a powerful effect on business activity. Until 
recently, however, our information about the economic consequences of 
such investments has been largely anecdotal. This is no longer the 
case. A recently completed DOT-sponsored study--and, I might add, the 
most carefully done study ever undertaken on this subject--has clearly 
documented the substantial economic returns on highway investments. As 
comprehensive as this study is, it is important to understand one other 
fact about it: the authors examined the economic returns on highway 
investments; they did not attempt to estimate the consumer benefits of 
highway investments, a major component of the public benefits.
    The DOT study estimated how increased spending on highways lowered 
costs to those private companies that rely on highways. The results of 
the study are dramatic: between 1950 and 1989, the authors estimated 
that the average rate of private sector return on highway investments 
was 28 percent, a figure substantially higher than the average rate of 
return on investment earned by the private sector during this 40-year 
period (13 percent or so). While the rate of return on highway 
investments varies depending on the time period or highway system, the 
rate of return for total highway capital for the most recent period 
studied (1980-1989) was comparable to the average rate of return earned 
in the private sector (11 percent or so).
    Other nations do not have the transportation infrastructure that we 
sometimes take for granted in the United States. It is transportation 
that has set us apart from the rest of the world. The Economist 
recently tracked the slow travel of Wrigley's chewing gum on a 1,000 
mile trip from a factory in China's Pearl River delta to a consumer in 
Shanghai--a trip that took several months and involved freighters, 
trucks, tricycle carts and bicycles. Most manufacturers in Asia could 
not even imagine ``just-in-time'' production; an Indian exporter's cost 
advantage over western competitors is eroded by around 30 percent, 
simply because of costs and delays in transportation. Gridlock is 
common in parts of Asia--for goods and for people. Greater Jakarta, for 
example, is home to 16 million people, and it has no subway. The annual 
cost of gridlock in Bangkok is estimated at $3.2 billion.
    Many nations around the world have also identified large 
infrastructure investment requirements, although the financial capacity 
to make the necessary investments varies by country. In Japan, 
transportation capital investment by the government, as a proportion of 
Gross Domestic Product, is about four times that of the United States. 
And our European allies invest at a rate substantially above ours. 
Asian governments hope to invest upwards of one trillion dollars on 
infrastructure by the century's end, half of which will be for 
transportation-related infrastructure. European governments are 
spending even more on a continent-wide system of high-speed rail and 
motorways. Our global competitiveness hinges on the efficiency of our 
transportation system--in part because of the very size of our Nation: 
in Japan, the average journey from manufacturer to the export shipping 
point is 50 miles; in the U.S., it is about 450 miles. We are examining 
transportation improvements, particularly in north-south corridors and 
along our borders with Mexico and Canada, that will facilitate enhanced 
trade resulting from the North American Free Trade Agreement (NAFTA). 
Another significant factor in freight movement has been the shift to 
east-west-Pacific-oriented flows, affecting not only the size and 
direction of rail traffic, but causing ports in Los Angeles and Long 
Beach to increase their market share. On a broader scale, it is 
critical that we assure that our connections across the country--to 
ports, airports and major transportation facilities--effectively link 
us to our global partners.
    The benefits of an efficient, interconnected national 
transportation system are clear. It is therefore vital that we 
understand the factors that contribute to and affect the performance 
of-that system. While it may not make for the most dramatic testimony, 
I believe it is important to understand recent trends in transportation 
so that we may make the best choices for the future.
                         transportation trends
    The United States is facing major changes in personal and business 
travel, new patterns of freight shipments, regional population shifts, 
fast-growing elderly and teen populations, and an explosion of 
information technology. Across the Nation, there are growing demands 
for speed and efficiency, especially from businesses, but also from 
individuals struggling to preserve time for family and community 
alongside demanding work lives. Congestion and pollution are two 
problems that are increasing. Both present new challenges for the 
transportation community and force us to devise innovative solutions 
for dealing with them. We must meet the demand for increased mobility 
for all our citizens--rich and poor, elderly and young, disabled and 
able-bodied, in urban and rural areas--to ensure their full 
participation in community life. Let me outline a few aspects of 
current trends in transportation that will direct our future policy 
decisions on ISTEA reauthorization.
    Much of this information is from the Bureau of Transportation 
Statistics (BTS) which, as you all know, was established by ISTEA. 
Their work of compiling, analyzing, and disseminating information on 
the nation's transportation systems will lead to a better understanding 
of the performance of the transportation system and the potential for 
its improvement.
Passenger Travel
    Between 1970 and 1995, U.S. passenger travel nearly doubled, 
growing by an average of 2.7 percent a year. Annual passenger miles of 
travel per person averaged 17,200 miles in 1995--nearly 6,000 miles 
further than in 1970. Automobile travel grew by almost 1 trillion 
passenger-miles, reaching 2.8 trillion passenger-miles in 1995, 
overshadowing all other modes in absolute terms. Passenger travel in 
light-duty trucks (including pickups, sport-utility vehicles, and 
minivans) grew nearly fivefold over this period raising concerns over 
the fuel efficiency of the light-duty fleet. With regard to public 
transportation, over the past 15 years, transit travel has remained 
relatively stable. However, passenger-miles traveled on commuter rail, 
light rail and demand-responsive services have increased appreciably.
    Many different factors have contributed to the growth in travel, 
including demographic and labor force changes, income growth, and 
changes in the makeup of metropolitan areas:
     In the quarter of a century between 1970 and 1995, the 
U.S. population grew by nearly 58 million people. More than 16 million 
people immigrated to the United States during this period. A high 
proportion were working-age adults who have joined the labor force and 
live in metropolitan areas. These factors have influenced urban travel 
demand.
     Baby boomers and women poured into the workplace. The 
civilian labor force grew by 59 percent, from 83 million in 1970 to 132 
million in 1995. More people working means more people commuting, and 
more travel. In 1990, employed persons with licenses drove an average 
of 15,280 miles compared with 8,048 miles for people with licenses who 
are not employed.
     The number of households increased by 53 percent, nearly 
twice as much as the increase in population would suggest. The reason: 
household size decreased from 3.14 people in 1970 to 2.65 people in 
1995. Smaller households mean fewer people to share responsibilities 
for shopping, recreation, and child care, and thus more travel per 
household.
     The number of automobiles and light trucks grew from 107 
million in 1970 to 191 million in 1994. This increase is partly related 
to income growth. Rising income also generates demand for long-distance 
travel, especially international travel.
    Changes in development patterns also have affected travel. In 
metropolitan areas, the locations where people live, work, and shop 
have become more dispersed, and travel and dependency on private 
vehicles have increased. Metropolitan areas grew from 140 million 
people in 1970 to 189 million in 1990, but between 1980 and 1990, the 
central cities lost half a million people, while the suburbs gained 
17.5 million. Between 1970 and 1990, the suburban share of metropolitan 
population rose from 54 percent to 62 percent, and during the second 
decade of this period, the suburban share of jobs rose by almost the 
same proportion, from 37 percent to 42 percent.
    Shifts in the location of jobs have changed travel patterns. 
Suburb-to-suburb commutes in 1990 accounted for 44 percent of all 
metropolitan commutes, while suburb-to-downtown made up only 20 
percent. As metropolitan areas expanded and low-density suburbs spread 
into rural areas, mass transit struggled to provide the same level of 
service as in higher density city cores. Thus, private vehicle trips 
soared, as they offered the most direct connections for many suburb-to-
suburb commutes by occupants.
    Although the increase in mobility over the last quarter of a 
century has brought major benefits to American society, not all share 
fully in the benefits. For example, for many Native Americans, 
inadequate transportation infrastructure has hindered economic 
progress, health care, jobs, and schools in Indian Country. This must 
change. President Clinton has proclaimed a government-to-government 
relationship with American Indian Nations to foster Indian self-
determination and economic independence. Investment in the future of 
Indian Country, including investment in infrastructure, will ensure 
long-term dividends to our partners in this special relationship. The 
jobs created through this investment may provide some of the most 
impoverished areas of the United States an opportunity for economic 
prosperity.
    In addition, as many available jobs have shifted to suburban and 
exurban areas, low-income workers who cannot afford to live in those 
communities or own a car are often left with inadequate resources to 
reach their places of employment. Alternatively, they cannot find work 
because the travel times involved are prohibitive. Also, if welfare 
reform is to be successful, low-income inner city residents must have 
the means to access jobs in suburban communities. Efforts such as our 
Department's fiscal year 1998 $100 million access to jobs initiative, 
and HUD's Bridges to Work initiative, will contribute to enhancing 
welfare-to-work opportunities.
    Mobility for older Americans and people with disabilities is a 
critical and growing need that must be addressed. The elderly are the 
fastest growing component of the U.S. population, with nearly 13 
percent of the population over the age 65. The number of Americans over 
age 65--33.5 million in 1995--could increase by over 50 percent by 
2020. The majority of these individuals are accustomed to independent 
mobility in self-operated vehicles. The aging of the population will 
require important modifications to the transportation system to make it 
safer for those with less keen eyesight, hearing and responses. 
Adjusting our public transportation systems to bring them into 
compliance with the Americans with Disabilities Act is a mandate that 
must be fully implemented to serve better the needs of elderly persons 
and persons with disabilities. Public transportation and highways must 
be made more user-friendly through better signing, facility 
modifications and other improvements. We will have to give increased 
attention to mobility alternatives for these segments of our 
population, as their mobility may be a significant social, economic, 
and health concern. Appropriate and acceptable approaches to achieving 
these objectives will have to be addressed in ISTEA reauthorization.
    Traffic congestion in the nation's 50 largest cities costs 
travelers more than $40 billion annually. Without a strategy that uses 
multi-modal solutions to this problem, delays are likely to increase 
over the next two decades as travel nationwide increases by a projected 
60 percent. These delays translate directly into growing costs to 
business and ultimately are passed along to consumers.
The Movement of Freight
    Freight transportation grew substantially between 1970 and 1994 in 
all land modes and air cargo. The ton-miles carried by Class 1 
railroads increased 57 percent, while ton-miles carried by oil 
pipelines increased 41 percent. Using vehicle-miles of travel by 
combination trucks as a surrogate for ton-miles, freight transportation 
by truck increased 210 percent. The number of commercial motor carriers 
has also increased from 180,000 in 1989 to over 400,000 in 1996. The 
biggest relative growth was in air cargo ton-miles, which increased 434 
percent.
    This growth has been uneven, responding to general fluctuations in 
the economy. In response to the need for better data on freight 
movements, BTS worked with the Bureau of the Census to conduct the 
Commodity Flow Survey (CFS) in 1993. Results from the CFS (with 
adjustments by BTS) show that the nations freight transportation system 
carried more than 12 billion tons of goods, generating a total of 3.6 
trillion ton-miles in 1993.
    The CFS confirms the dominance of trucks in our nation's freight 
transportation system, especially for shipping distances under 500 
miles. Trucks moved nearly three-quarters of the value and just over 
half of the weight of all shipments. In terms of ton-miles, the split 
among truck, rail, water, and pipeline is more even because of the 
greater distances large shipments move in the nonhighway modes. Growth 
in truck use has been particularly dramatic. According to the Bureau of 
the Census Truck Inventory and Use Survey, the number of trucks used in 
for-hire transportation increased by 24 percent between 1982 and 1992. 
Vehicle-miles grew even faster: for-hire trucks traveled approximately 
58,000 miles per vehicle in 1992 compared with 46,000 miles in 1982. 
Also, the truck fleet appears to be getting heavier as well as 
traveling farther.
    Fast, flexible forms of transportation have become more important 
in recent years. In 1993, parcel, postal, and courier services carried 
more than 9 percent of the value of shipments of processed or 
manufactured goods that were measured by the CFS. When shipments 
carried by more than one mode are added to moves by parcel and courier 
services, intermodal freight exceeded 208 million tons, valued at about 
$660 billion. In particular, about 41 million tons, valued at $83 
billion, moved by the classic intermodal combination of truck and rail. 
Assuming 50,000 pounds of payload per truck, this means that more than 
1.6 million large trucks were diverted from our nation's highways for a 
major part of their trips.
    Intermodal shipments tend to be high in value: goods shipped by 
parcel, postal, and courier services have an average value of $14.91 
per pound, while truck-rail intermodal shipments average $1.02 per 
pound. Although these numbers are far less than the $22.15 per pound 
average for air and air-truck shipments, they are significantly higher 
than the 34 cents per pound for truck-only shipments and the less than 
10 cents per pound for railroads, water transportation, and pipelines.
    The importance of interstate transportation was also demonstrated. 
Much of the freight was shipped over long distances. According to CFS 
data, out-of-state shipments accounted for 62.3 percent of the value of 
all shipments in the U.S. By weight, out-of-state shipments accounted 
for 35.3 percent. These figures do not fully reflect certain categories 
of shipments (such as imports from foreign countries) that were out of 
the scope of the survey. Hence, the above figures on out-of-state 
shipments are probably conservative. Another indication of the 
significance of interstate travel is that 49 percent of the vehicle 
miles traveled by for-hire trucks in 1992 were outside their base 
State.
    Freight transportation has changed in response to many factors. We 
are moving lighter goods, either because traditional products like 
automobiles are being manufactured with lighter materials, or because 
the economy is emphasizing inherently light products such as consumer 
electronics. Just-in-time logistical systems have placed new demands 
for faster and more reliable service to support manufacturing, 
wholesale, and retail. The combination of toll-free telephone numbers 
and overnight parcel delivery services has allowed small retail 
establishments to serve national and international markets, resulting 
in more growth for carriers specializing in small shipments.
    International trade will probably continue to place increasing 
demands on the domestic transportation system. Although overall global 
economic growth rates are likely to be uneven, economic growth in 
regions such as Asia, the Pacific Rim, and Latin America may continue 
to be significant. This growth will provide new markets for U.S. 
products, and be the source of both imports and tourists to be carried 
on the domestic U.S. transportation system.
    As I noted earlier, NAFTA has added a north-south focus to 
traditional concern with east-west freight movements for international 
shipments. Based on information from the BTS Transborder Surface 
Freight Dataset, collected through the Census Bureau, $273.56 billion 
in goods moved by surface transport between Canada and the United 
States in 1995, an increase of 10.2 percent from 1994. In terms of 
value, 74 percent of this trade move by truck, 22 percent by rail and 4 
percent by pipeline in 1995.
    In 1995, $96.36 billion in goods moved by surface transport between 
Mexico and the United States, an increase of 6.4 percent from 1994. In 
terms of value, 85 percent of this trade moved by truck in 1995; 
virtually all the rest moved by rail.
    Finally, although transborder land crossings are important, most 
international trade moves in and out of the United States through 
ports. Seaports handled international cargo valued at $619 billion in 
1995, compared to $49 billion in 1970 (in current dollars).
Safety
    We have made great safety progress in the face of increasing 
travel. Even so, transportation injuries and deaths still impose a 
substantial drain on the U.S. economy, along with emotional devastation 
for surviving family members and friends. Transportation accounts for 
roughly half of the accidental deaths in the United States, as it has 
for at least 25 years. And approximately 95 percent of transportation 
deaths resulted from crashes involving motor vehicles. These crashes 
are the leading killer of America's youth. Yet the reduction in the 
highway death toll is one of the great success stories of the last 
quarter century. Had the 1969 death rate--five fatalities per 100 
million vehicle-miles traveled (vmt)--persisted, more than 120,000 
people would have died from motor vehicle crashes in 1995, nearly three 
times the actual number of fatalities. Not only the death rate, but the 
absolute number of deaths from crashes involving motor vehicles has 
declined dramatically.
    Nevertheless, a close look at recent statistics allows little room 
for complacency. As I noted earlier, about 41,500 lives were lost last 
year on our nation's highways. These deaths are only part of the 
picture; crashes result in costly injuries, productivity losses, lost 
travel time and increased congestion, placing a huge burden on our 
economy--an estimated $150.5 billion in 1994. The cost of medical 
treatment alone is estimated to be more than $14 billion a year. The 
American taxpayer pays more than one-quarter of that amount to cover 
the Medicaid and Medicare costs associated with these injuries. The 
American taxpayer also has to make up for the lost tax revenue 
resulting from injuries and fatalities, estimated at nearly $8 billion 
a year.
    Taking into account the current level of Federal and State highway 
safety programs, projected increases in miles traveled will mean that 
the number of Americans killed in crashes will increase; a conservative 
estimate projects up to 51,000 deaths a year by 2005. This must not 
happen. We must reduce the fatality rate, and reduce the actual number 
of traffic fatalities. Improvements in vehicle and highway design will 
help. But the key is to improve our behavior on the highways by 
increasing safety belt and child safety seat use, by reducing drunk 
driving, and by increasing compliance with established traffic laws. 
Greater community involvement, and public and private sector leadership 
will lead directly to improved traffic behavior. National research and 
development also will continue to play a critical role in developing 
more effective countermeasures and delivery systems.
    Over a year ago, DOT began to develop an Action Plan to Reduce 
Highway Injuries and Related Costs. We are assisting States in setting 
and evaluating their performance goals and providing a wide range of 
technical and financial assistance to assure that States have the 
tools, such as adequate data, to identify their problems and pursue the 
best strategies to resolve them. The Action Plan is an ongoing effort 
of the Department directed toward saving lives and taxpayer dollars. 
That plan, together with the safety measures I noted earlier that are 
included in our budget plan, will help communities respond effectively 
to these safety problems.
Environment
    Transportation, like all human activity, also affects the natural 
environment. Because of its enormous size, it is inevitable that our 
transportation system will have some undesirable environmental impacts. 
Many, but by no means all of these impacts, stem from reliance on 
fossil fuels, especially petroleum. Because transportation energy use 
is increasing and domestic oil production continues to decline, U.S. 
reliance on imports is likely to continue. Gains from past 
technological change and fuel economy standards have tapered off.
    Transportation activities can affect the quality of surface and 
groundwaters. Under some circumstances water quality may be affected 
when oil, fuel, and other chemicals emitted or dropped from vehicles is 
washed from highways by rainfall. These contaminants can eventually 
reach streams, lakes, or groundwater. The movement and storage of fuels 
and other substances used for transportation also has the potential to 
cause water quality problems.
    With regard to air pollution, the effort to control vehicle 
emissions has been an environmental success story. Far less pollution 
is emitted from cars and trucks today than 25 years ago. These dramatic 
improvements in air quality would never have occurred without a strong 
Federal role. Coordination between transportation and air quality 
planning has improved. More than one-quarter of the areas that did not 
meet ozone standards in 1990, and a few areas not meeting carbon 
monoxide standards, have met air quality goals. The Environmental 
Protection Agency has reclassified these areas as in attainment. 
Nevertheless, many large cities continue to have problems meeting air 
quality standards and compliance will continue to be a significant 
challenge. Transportation officials must continue efforts under ISTEA's 
successor and the Clean Air Act to reduce air pollutant emissions from 
transportation.
    Moreover, the United States continues to be the world's largest 
producer of greenhouse gases--both absolutely and on a per capita 
basis--and transportation accounts for 32 percent of U.S. carbon 
dioxide emissions, the key emission from anthropogenic sources. This is 
of ongoing concern because, as vehicle miles traveled and single 
occupancy vehicle rates continue to increase, transportation is the 
fastest growing sector for greenhouse gas emissions. The threat posed 
by global climate change must continue to be addressed through efforts 
to encourage travel in higher occupancy modes such as mass transit and 
carpools, to help reduce the growth in vehicle miles traveled.
    Finally, efforts to mitigate environmental impacts and improve air 
and water quality, to protect open space, wetlands, and wildlife 
habitat, and to support other options that reduce the need for travel, 
such as pedestrian-friendly developments, must be continued and 
strengthened through programs such as CMAQ and transportation 
enhancements and through comprehensive and integrated transportation 
planning. Transportation planning decisions should also take into 
account efforts to redevelop ``brownfields,'' particularly urban areas 
that have been abandoned or underutilized due to contamination risks.
                lessons learned and the challenges ahead
    ISTEA marked a turning point in developing an interconnected 
national transportation system, and its successor should be based upon 
that same vision. The question is: how do we get there, in an era of 
tight budgets? We believe ISTEA has provided a solid framework for us 
to build upon. The successor to ISTEA must retain the core elements 
that have made ISTEA such a success in just a few short years.
    While we can be justly proud of the national progress made under 
ISTEA, there are still significant challenges ahead--ones that will 
require fresh thinking and creative solutions--and continue to require 
Federal investment and guidance. If we are to maintain our quality of 
life and remain competitive in the global marketplace, we must 
aggressively meet the challenge of continued growth while mitigating 
unwanted safety and environmental affects.
    As ISTEA's Declaration of Policy specifically acknowledged, we 
cannot treat our transportation infrastructure as a collection of 
individual modes competing with each other. We need to see our 
transportation facilities as a national system, with each mode 
complementing the others, and working together as a whole for the 
benefit of all users. ISTEA brought us closer to that goal, in several 
ways. First, it gave State and local governments the responsibility for 
planning all aspects of their State and regional transportation 
systems, and gave them more funding flexibility to pursue the goal of a 
more efficient, integrated transportation system. Second, ISTEA created 
mechanisms for funding projects connecting the different components of 
our transportation system. Through the CMAQ program--the flexible, 
environmentally oriented category in ISTEA--we have, for example, 
funded an innovative truck-rail transfer facility in Stark County, 
Ohio, and projects in Portland, Oregon, and Seattle, Washington, 
designed to unsnarl traffic and improve rail and truck access to the 
commercial waterfront. These projects--which help reduce vehicular 
congestion, improve safety and air quality, and provide better access 
into the port area so we can accommodate the increased volume of 
trade--show that there does not have to be a tradeoff between jobs and 
the environment.
    In regard to Indian reservation roads, ISTEA implemented our 
special government-to-government relationships by establishing a policy 
of consultation with tribal governments concerning the development of 
transportation systems for Indian reservations. For years, a lack of 
transportation infrastructure ``chilled'' economic development on 
Indian reservations. But ISTEA has begun to address reservation 
infrastructure needs and we need to continue to include tribal 
governments as partners in this effort.
    In Miami, efforts are underway to plan a transit facility, known as 
the Miami Intermodal Center, to link Miami International Airport to the 
Port of Miami, a major cruise ship center. This is a good example of 
how the private sector and all levels of government--city, county, 
State and Federal--together with officials from different modes of 
transportation--the air, maritime, port, transit and highways--can work 
together to accomplish mutual goals.
    Sound transportation systems cannot be created without the 
involvement of those affected. ISTEA brought new players to the table. 
The goal was to make the process of setting transportation priorities 
more informed and more inclusive. And State and local governments are 
responding. Efforts have been made throughout the country--in Atlanta 
and Boise to name a couple of leading examples. Also, Federal land 
management agencies and tribal governments are increasingly involved in 
statewide and metropolitan transportation planning.
    And a more inclusive process does yield results--in the form of 
better, more feasible and more publicly acceptable plans. The plans 
being developed by States and Metropolitan Planning Organizations 
(MPOs) through the ISTEA processes are more viable. The fiscal 
constraint requirements ISTEA applied to these Transportation Plans 
mean they reflect the reality that planning requires hard choices based 
on available funding.
    The comprehensive planning and public participation requirements 
established by ISTEA help to assure that a full range of social, 
economic, and community impacts are taken into consideration as 
investment decisions are being made. They connect transportation 
decisions with other community concerns--land use, environment, and 
quality of life--to make communities more livable. There should be no 
question of turning back. ISTEA's successor must continue to guarantee 
that investment decisions are the product of a systematic, inclusive 
planning process--an informed political decision.
    In order to meet the transportation challenges of the 21st century, 
we will have to draw upon the talents and creativity of all levels of 
government and the private sector. In the past 3 years, we have taken 
major steps in that direction. For example, in Glendale, California, a 
public-private partnership of the Glendale Transportation Management 
Associates, Nestle USA Inc., and Commonwealth Land Title took on the 
challenging question: how can private companies help clean the air? In 
June 1993, in a program partly supported by CMAQ funds, Nestle and 
Commonwealth Title began rewarding employees who voluntarily chose 
alternatives to driving alone. An evaluation of this demonstration 
program found that, with a modest investment of startup funds, the 
average vehicle occupancy increased by approximately one-third, 
suggesting the possibility of achieving dramatic reductions in the 
number of vehicles clogging the roads of the Los Angeles basin.
    ISTEA strengthened the traditional Federal-State partnership and 
expanded it to include local governments, metropolitan planning 
organizations, and the private sector. Post-ISTEA legislation should 
build upon these successful relationships. We also need to bring in all 
the resources and talent available.
    Finally, cleaner, safer, and more efficient transportation has 
often come because of new technologies--some entirely new, such as the 
automobile, and some that have made previous advances safer or more 
efficient, such as seat belts. Continued development and use of 
advanced technology are vital if such progress is to continue. Under 
ISTEA, there is a renewed emphasis on applying technology that will 
close the gap between the state-of-the-art and the state-of-the-
practice. And a reauthorized ISTEA must harness technology to serve a 
new century, through intelligent transportation systems, high speed 
rail, magnetic levitation, and other new technologies. By emphasizing 
deployment of technologies such as ITS, we can translate innovation 
into improved safety, system capacity, efficiency and travel time. 
Investment in research and development has been expanded, both through 
increased funding and through new partnerships with the private sector.
                               conclusion
    ISTEA is visionary legislation, and its central elements--
intermodalism, flexibility, intergovernmental partnership, a strong 
commitment to safety, environmental protection, enhanced planning and 
strategic investment--should be preserved. These elements should serve 
as the foundation for the next surface transportation reauthorization. 
Over the course of the next several months, all parts of the 
transportation community, from both public and private sectors, will 
examine the merits of ISTEA and debate the details of the new 
legislation. I look forward to that debate.
    Efficient national cargo movement is key to our ability to benefit 
from expanding trade opportunities. Truckers and other freight 
operators need national uniformity in both facilities and regulatory 
standards. We cannot achieve other key national priorities--linking 
Americans to jobs, health care and education--without efficient 
transportation. And the challenges we face in the areas of safety and 
the environment do not stop at State borders.
    There are significant challenges ahead with a lot of work to do. In 
partnership with our colleagues in the States and local communities, 
and with the private sector, I believe that we at the Federal level 
have a leadership role in meeting those challenges.
    Mr. Chairman, that concludes my prepared statement. I look forward 
to working with you and other committee members on reauthorization of 
these important surface transportation programs. Clearly, we can all 
agree that investment in our nation's transportation infrastructure is 
vital to preserving our competitive advantage throughout the world and 
to maintaining the well being of our citizens. I will be happy to 
answer any questions.




















     Responses of Mortimer Downey to Questions from Senator Chafee
    Question 1a. According to a Department of Transportation (DOT) 
study, the rate of economic return on highway investments has declined 
somewhat over the last decade.
    Do you foresee this slightly downward trend continuing in the next 
century?
    Response. The rate of return on highway investment has declined 
over the last decade in part because a larger share of total highway 
investment has been devoted to improving highway conditions and a 
smaller share to improving the capacity and performance of the highway 
system. Industry thus has not realized the kinds of improvements in 
highway accessibility and levels of service that it did during the 
period when the Interstate System was under construction. Recently, 
FHWA and its partners have focused much greater attention on 
incorporating freight considerations into the highway planning process 
to identify the types of highway and intermodal transportation 
investments needed to improve the efficiency and level of service of 
freight transportation. Increased funding for the National Highway 
System (NHS), the backbone of national surface transportation systems, 
should also contribute to providing the transportation services needed 
by an increasingly dispersed economy. Furthermore, as State and local 
transportation agencies accelerate the implementation of intelligent 
transportation initiatives, the performance of highway and related 
transportation systems can be expected to improve significantly, 
allowing industry greater opportunities to reduce overall logistics 
costs thereby increasing their productivity. We cannot expect the kinds 
of economic returns that we realized during the Interstate construction 
era, but technological innovations such as ITS and adequate funding for 
the NHS should slow and perhaps reverse declines in the rates of return 
on highway and intermodal transportation investment.

    Question 1b. If highways alone no longer yield the highest rate of 
return, where in the area of transportation should we direct limited 
resources?
    Response. We are not aware of any comparative analysis of highway 
investment versus other infrastructure or alternative government 
programs currently available to answer your question.

    Question 2. For obvious reasons, the term ``intermodalism'' is used 
repeatedly in the context of surface transportation policy. Indeed, 
your testimony emphasizes the goal of a ``seamless'' intermodal 
transportation system. There are countless examples of ``intermodal 
connectors'' with respect to freight, but intermodalism with respect to 
passenger travel is overlooked at times.
    Can you share some specific examples of how intermodalism is 
working to move people more efficiency?
    Response. Although the term ``intermodalism'' refers to a well 
defined segment of the freight industry, its meaning is less precise 
when applied to passenger transportation. Fundamentally, intermodalism 
is about designing solutions which make the most sense for the 
passenger--regardless of mode.
    The goal of ``seamless transportation'' refers to one common 
definition of intermodalism: improving connections between the modes. A 
trip that requires a passenger to change modes typically is slower, 
less convenient, and less reliable than one where no change is 
required: the more changes, the greater is the delay and inconvenience. 
Easing and, where possible, eliminating the barriers which complicate 
intermodal passenger travel improves the efficiency and capacity of the 
overall transportation system. The Department is helping to fund a 
variety of such initiatives. We are also encouraging State and local 
institutions needed to facilitate passenger intermodalism to engage in 
the cooperative efforts which make this goal a reality.
    The Department supports a number of initiatives to encourage and 
foster passenger intermodalism. In Albany, New York, the State spent 
Federal Highway Administration funds to build park and ride lots in the 
congested I-87 ``Northway'' Corridor to link with the regional transit 
operator's buses, which are being funded by our Federal Transit 
Administration. In Miami, Florida, the eight-mile long South Dade 
Busway provides the city's Metrobuses with an exclusive connection to 
the city's rapid transit network. FHWA funding provided 80 percent of 
the cost of the project to extend the transit system to the suburbs.
    Around the country, numerous intermodal terminals are being 
planned, built and/or rebuilt using a variety of ``modal'' funding 
sources to link rail, bus, and taxi services. Examples include 
Richmond, Virginia's Union Station linking intercity and intracity rail 
services as well as bus services; Dallas, Texas's Union Station linking 
Amtrak, taxis, and the city's new light rail system; and Baltimore's 
Pennsylvania Station linking intercity and intracity rail as well as 
commuter rail and bus services. St. Louis, Missouri is developing its 
own plans for a new intermodal center. New York City's Metropolitan 
Transportation Authority is developing a farecard which will allow 
commuters to use either bus or subway services.
    Good intermodal connections improve system capacity by providing 
travel alternatives. In San Francisco, California, the extension of the 
Bay Area Rapid Transit system to San Francisco International Airport is 
seen as providing an alternative to highway access. By doing so, BART 
is helping to relieve access constraints that threaten the airport's 
ability to service the region. In Houston, Texas, a regional mobility 
program incorporates freeway improvements, transit and carpool lanes, 
park and ride lots, and a regional travel information system. Since the 
program began, transit ridership has increased significantly, as have 
average highway speeds.
    Finally, in addition to these activities, the Department's 
reauthorization proposal, NEXTEA, will seek to foster intermodalism by 
increasing the ability of State and local governments to flex Federal 
funds for publicly owned, and certain privately owned, transportation 
facilities. This flexibility will allow State and local governments to 
improve connections that often are the bottlenecks impeding regional or 
local mobility. Coupling this flexibility with innovative financing is 
expected to give the public sector additional tools and potential 
sources of revenues that otherwise would not be available under 
traditional grant programs.
 1995 Status of the Nation's Surface Transportation System: Condition 
                            and Performance
Introduction
    This pamphlet provides a summary of the 1995 Status of the Nation's 
Surface transportable System: Condition and Performance Report to 
Congress (C&P Report). It is the latest in a series of biennial reports 
that track changes in transportation physical and operating 
characteristics, finance, and usage patterns. Also included are 
estimates of capital investment required from all sources to meet 
specified levels of system performance in future years. The current 
report combines information about our highway, bridge, transit, and 
maritime systems.
    This report is the second in the C&P Report series that combines 
documents satisfying statutory requirements for the Department of 
Transportation to provide Congress with information on the condition, 
performance, and capital investment requirements of the Nation's 
highway and transit systems. For the first time in the report series 
history, information is provided on maritime infrastructure. Maritime 
reports are not, however, statutorily required.
    This report is in keeping with the Department's commitment to a 
truly intermodal perspective of the Nation's transport system. 
Combining modal information provides a valuable intermodal perspective 
as we seek to make the best use of each mode in satisfying our Nation's 
needs. We will continue the expansion of modal coverage in this report 
series to provide the breadth of information needed to deal with our 
increasingly complex transportation requirements.
    The report finds that personal and freight transport demands on our 
systems are at an all time high and are expected to increase with 
population and economic growth, but at a slower rate than experienced 
in past decades. While the U.S. population has increased 1.16 percent 
annually since 1980, the number of trips per person and miles per trip 
have increased about three times as fast. Reasons for the per capita 
increases include changes in trends related to employment; the number, 
size, makeup, and location of households; the number of licensed 
drivers; and the number of household vehicles.
    The physical condition of the surface transportation system has 
generally been stable, with States and local governments investing at 
rates approximately equal to the cost of maintaining the physical 
plant. Improved highway conditions have, to some extent, resulted in a 
significant decline in highway fatality rates over the past decade.
    In contrast, highway system performance has been declining; this is 
reflected in various measures of congestion. The quality of transit 
performance has improved with increases in average speed, reductions in 
wait tunes and number of transfers as well as reductions in trip times.
    Although all units of government and private industry are currently 
investing at record levels to maintain transport services and 
efficiency, demands continue to outpace investment. In 1994, an 
estimated $57.2 billion capital investment would have been required 
from all sources just to maintain 1993 conditions and performance on 
our Nation's highway, bridge, and transit systems. In 1993, all levels 
of government actually invested $40.5 billion in these systems.
    An estimated $80.0 billion would have been required in 1994 to 
provide a higher level of service by correcting sting and accruing 
deficient highway, bridge and transit conditions. The highway component 
of this estimate based on a new procedure that focuses on the services 
that the system provides to the users rather than on physical condition 
of the infrastructure. All highway improvements included in this 
estimate generate direct r and agency benefits in excess of the initial 
cost of the improvement.
                                 ______
                                 
                         document organization
    This document provides a summary of the 1995 Status of the Nation's 
Surface Transportation Conditions and Performance Report to Congress. 
It is presented in two parts. The first contains material on highway 
and transit facilities, the second covers the maritime industry.
    Part I begins with a discussion of highway and transit system and 
user characteristics:

   Who uses the system?
   Why do they use it?
   What does the system need in order to meet current and 
    future personal transportation requirements?
   What does the system look like?

    The second chapter provides information on highway and transit 
finance:

   Who pays for the system?
   Where do the revenues come from?
   How are highway and transit funds spent?

    The third chapter provides an indication of how well the highway 
and transit systems are working:
   In what physical condition are the Nation's highway and 
    transit systems?
   How much congestion are highway users facing?
   How has the transit system been performing?
   How safe is the highway system?
   What has been the impact of highway transportation on the 
    quality of our environment?

    The next chapter provides estimates of the investment required, by 
all units of government, to either maintain or improve the condition 
and performance of the highway and transit systems over the next 20 
years. These estimates are expressed as average annual requirements, 
that is the 20-year investment total divided by 20 years. The final 
chapter in Part I provides a linkage between the 20-year investment 
estimates and actual recent capital outlays by all units of government 
for highway, bridge, and transit capital improvements.
    Part II summarizes information describing the maritime system. 
Material is also provided on system condition and performance. This 
section does not provide estimates of future investment requirements.
    Readers will note that this summary contains a number of boxes 
labeled ``Drawing Conclusions.'' This convention is intended as a 
vehicle for providing background information that may be useful in 
interpreting the report's statistical information.
                               __________
                      PART I: HIGHWAY AND TRANSIT
                        1993 System Report Card
                                highway
System Characteristics
    Highway vehicle miles traveled reached 2.3 trillion (up 2.2 percent 
per year since 1989); highway passenger miles reached 3.9 trillion (an 
increase of 2.3 percent per year since 1989).
    The extent of rural center-line mileage declined since 1983 due 
primarily to the expansion of Federal-aid urban area boundaries based 
on the periodic census.
Conditions and Performance
    Pavement condition improved throughout the 1980's and continued to 
do so into the early 1990's. However, because the States are 
transitioning to a new method of rating pavements, it is impossible to 
determine if overall pavement condition changed in 1993 relative to 
prior years.
    The severity of congestion (as measured by the percent of travel 
congested in the peak hour) increased through most of the 1980's, but 
stabilized between 1989 and 1991. The 1993 data indicates that the 
severity of congestion has continued to remain relatively constant. 
However, the change in urban area boundaries shifted a number of 
formerly rural highway sections into the urban category--diluting 
congested urban mileage. In urban areas, the extent and duration of 
congestion has increased steadily since 1983.
    Highway safety has improved since 1983; the overall highway 
fatality rate has declined steadily from 2.58 fatalities per 100 
million vehicle miles traveled (VMT) in 1983 to 1.75 per 100 million 
VMT in 1993, with the Interstate system continuing to be, by far, the 
safest system.
    Since 1990, the percent of deficient bridges has decreased. In 
1994, bridges classified as either structurally or functionally 
deficient accounted for 24 percent of Interstate bridges, 28 percent of 
other arterial system bridges, and 28 percent of collector system 
bridges.
Finance and Investment Requirements
    All levels of government provided $88.5 billion for highway 
programs. The Federal Government provided $18.2 billion; the States, 
$46.9 billion; and counties, cities, and other local government 
entities funded the remaining $23.4 billion.
    The $88.5 billion provided for highway programs was distributed as 
follows:

   Capital investment: $39.0 billion
   Noncapital expenses: $41.9 billion
   Debt retirement: $5.2 billion
   Reserve: $2.4 billion

    Of the $39.0 billion invested in capital improvements, $34.8 
billion was for projects intended to improve the physical condition or 
performance of the system. The remaining $4.2 billion was spent on 
improvements that were not triggered by condition or performance 
deficiencies (e.g., environmental mitigation and expenditures for 
economic development).
    Federal funds accounted for $17.1 billion of the $39.0 billion in 
capital outlay, or 44 percent.
    In 1994, an estimated $49.9 billion in highway and bridge capital 
investment would have been required from all sources just to maintain 
1993 conditions and performance. Actual capital investment in 1993 (the 
latest year for which expenditure data is available) was 70 percent of 
what was required to maintain conditions.
    An estimated $68.2 billion would have been required in 1994 to 
provide a higher quality of service on highway and bridge systems. Not 
all existing and accruing highway deficiencies would have been 
eliminated, but those highway improvements that generated direct 
benefits in excess of the initial cost would have been made.
                                transit
System Characteristics
    A total of 508 local public transit operators provided transit 
services in 316 urbanized areas. An additional 5,010 local and regional 
organizations provided publicly accessible transit services in rural 
and small urban areas.
    On rail, transit patronage was 17.9 billion passenger miles (up 0.7 
percent per year since 1983); on bus systems, transit patronage was 
18.4 billion passenger miles (down by 0.5 percent per year since 1983).
Conditions and Performance
    Between 1984 and 1992, the percent of transit maintenance yards, 
maintenance buildings, stations, and bridges in good or better 
condition improved significantly. However, one-third or more remain in 
less than good condition. As of 1992, 76 percent of rail cars were in 
good or better condition.
    The perception of quality among customers and potential customers 
is an important determinant of transit use, often more important than 
the fare levels:

   Since 1984, the passenger-mile-weighted average speed 
    improved by about 10 percent.
   Well over half of all riders reported wait times of 5 
    minutes or less. About 80 percent of riders wait no longer than 10 
    minutes. Fifty-one percent of transit trips involve one or more 
    transfers.
   Twenty-nine percent of transit trips involve standing for at 
    least part of the trip.
   About 25 percent of all transit users report trip times of 
    10 minutes or less, and nearly 76 percent of transit trips were 
    reported to take less than half an hour.
Finance and Investment Requirements
    Total transit revenue, from all sources, was $22.6 billion. Public 
funding for transit was $15.5 billion. The Federal share of this 
support was $3.3 billion, the State and local share was $12.1 billion. 
Fares and other system-generated revenue accounted for $7.1 billion.
    Of the $22.6 billion in funding provided for transit, $21.7 billion 
was expended for capital investment and operating requirements. Capital 
investment accounted for $5.7 billion and $16.0 billion was spent to 
satisfy operating costs (the remainder was placed in reserve).
    Overall, Federal funds contributed only 6 percent to meeting 
transit operating costs, while contributing just under 42 percent of 
transit capital expenditures.
    In 1994, an estimated $7.3 billion in transit capital investment 
would have been required from all sources just to maintain 1993 
conditions and performance. This level of investment included a $5.1 
billion requirement in system preservation and $2.2 billion to expand 
capacity. Capital investment in 1993 was $5.7 billion, or 78 percent of 
what was required.
    An estimated $11.8 billion was required in 1994 to provide a higher 
quality of service on transit systems. Of the $11.8 billion investment 
requirement, $7.1 billion would have been spent on system preservation 
and $4.7 billion would have been used to correct capacity deficiencies.
                               __________
        Chapter 1: System Description and Usage Characteristics
    The United States enjoys an extensive surface transportation system 
that includes 3.9 million miles of roads, 576,000 bridges, and over 
166,000 route miles of transit.
    In 1993, the number of vehicle miles traveled on highways reached 
2.3 trillion, up 3.4 percent per year since 1983. On rail, transit 
patronage was 17.9 billion passenger miles in 1993, up at an annual 
rate of 0.7 percent from 1983. On bus systems, transit patronage was 
18.4 billion in 1993, down by 0.5 percent per year since 1983. In 1993, 
total highway passenger miles traveled (PMT) reached 3.9 trillion, up 
at an annual rate of 2.3 percent since 1989 (the first year that 
highway PMT statistics were available).
    The interaction of complex societal forces over the last two 
decades has resulted in important changes in the Nation's travel-
trends. These changes will place new demands on our transportation 
system in the future.
    A major trend noted is the transition to a service economy and the 
associated increase in the flexible labor force. Commuter trips will be 
increasingly spread over a longer day, with a sizable minority of 
travelers having variable work schedules.
    A number of important demographic trends may also impact future 
travel patterns and service requirements. For example, the significant 
growth in the number of married women who work outside the home 
suggests large numbers of commuters who may need to drive alone due to 
their need to balance multiple responsibilities such as dropping 
children at day care on the way to work or grocery shopping on the way 
home.
    Finally, rapid suburbanization of the population and employment has 
important transportation implications. In general, the lower the 
density of a community, the fewer concentrated origins and destinations 
and the fewer corridors of high density demand. These kinds of patterns 
require decentralized transportation facilities and services.
                       classification by function
Highway
    The 3.9 million miles of public roads and streets in the United 
States are functionally classified as arterials, collectors, and local 
roads, depending on the type of service they provide. These major 
systems are further subdivided into both rural and urban areas. Exhibit 
1-1 provides an overview of the system and displays mileage and travel 
system and displays mileage and travel shares by functional 
classification.
            Arterials
    The arterial system, which includes the Interstate as well as the 
recently designated National Highway System, provides the highest level 
of mobility, at the highest speed, for long uninterrupted distances. 
These facilities generally have higher design standards than other 
roads, often with multiple lanes and some degree of access control.
            Collectors
    Collectors provide a lower level of mobility than arterials at 
lower speeds and for shorter trips. Collectors are usually two-lane 
roads that collect and distribute travel to and from the arterial 
systems. They provide the highest degree of mobility for a variety of 
local travel requirements.
            Local Roads
    The majority of public road and street mileage is classified as 
local. Local roads provide the access between residential and 
commercial properties and the higher functional systems. These roads 
and streets provide a high level of access to abutting land but limited 
VMT.
Transit
    All public transit services in the United States may be 
functionally classified according to the public policy purposes served 
by individual trips: low-cost mobility, congestion management, and 
supporting livable metropolitan areas. Exhibit 1-2 provides an 
organizational overview and displays trip shares by functional system.
            Low-Cost Mobility
    All transit systems in the United States devote a portion of their 
services to providing low-cost mobility for people who, for reasons of 
low income, youth, old age, or disability, do not or cannot operate 
personal motorized transportation. The most important characteristic of 
such services is the provision of regular access to as many 
destinations in the service area as possible for a fare that passengers 
from low-income households can afford.
            Congestion Management
    Transit services that are competetive with the automobile most 
effectively serve the congestion mitigation function. The most 
distinctive characteristic of these transit services is consistently 
rapid door-to-door travel speeds encouraging a large proportion of 
people who own automobiles to choose transit thereby avoiding the 
unreliability and delays of congested highways.
            Livable Metropolitan Areas
    Transit services that provide motorized access to and from 
pedestrian oriented and multiple purpose central business districts and 
communities serve the function of supporting livable metropolitan 
areas. The most distinctive characteristic of these services is design 
for pedestrian access rather than access by automobile. Transit's role 
in supporting a livable metropolitan area is strongest where pedestrian 
access to transit and to other services via transit enable households 
and businesses to function with reduced use of automotive transport. 
Although most such areas are very large cities, communities with very 
large college campuses exhibit similar characteristics.
                       system extent and capacity
Extent
            Highway
    In 1993, total National public road and street mileage was 3.9 
million miles. Exhibit 1-3 compares current (1993) mileage with 1983 
mileage. The share of total miles in rural areas decreased slightly, 
from 83 percent to 79 percent.
            Bridge
    In 1994, there were more than 576,000 bridges on our Nation's 
highways, compared to about 573,000 bridges in 1984.
            Transit
    In 1993, 508 local public transit operators provided transit 
services in 316 urbanized areas. An additional 5,010 local and regional 
organizations provided publicly accessible transit services in rural 
and small urban areas. In 1993, there were 129,317 total transit 
vehicles, 7,439 miles of rail track, 2,271 rail stations, and 1,172 
maintenance facilities. Route miles of transit rail grew 15.7 percent 
from 1983 to 1993, or 1.5 percent per year. Nonrail transit includes 
buses, ferry boats, vans, and other conveyances, which in 1993 reached 
158,799 route miles, an annual increase of 2.0 percent since 1983.
                          drawing conclusions
    Comparison of previous year data with the 1993 data used in the 
current C&P Report has the following difficulties:

   Expansion of the urban area boundaries as a result of the 
    1990 census resulted in reclassification of certain rural highway 
    facilities to urban, causing miles and travel to shift from rural 
    to urban classification.
   The States have reclassified certain U.S. Forest Service 
    roadways to nonpublic roadways (which are not included in the 
    National statistics).
   As a prelude to designation of the National Highway System, 
    the States functionally reclassified their roads.
Capacity
    Highway and transit capacitor comparisons are found in Exhibit 1-4. 
In 1993, there were .1 million lane miles of highways in the Nation. 
Over the Midyear period from 1983 to 1993, lane mileage increased 0.2 
percent annually. Transit rail and bus capacitor is defined as the 
average number of miles traveled by each vehicle multiplied by the 
number of vehicles, expressed as standardized ``bus equivalent 
vehicles.'' In 1993, transit rail capacitor consisted of 15,945 rail 
passenger vehicles providing 1,564 million bus equivalent vehicle 
miles, an annual increase of 2.2 percent since 1983. Transit bus 
capacitor, from 1983 to 1993, increased 1.5 percent annually.
                 aggregate and per capita travel growth
    The 1990 Nationwide Personal Transportation Survey shows that in 
1990 Americans made 250 billion personal trips in a car or truck, or by 
bus, train, subway, or airplane, or by walking, biking, or riding a 
motorcycle. In 1990, Americans took over 91 percent of work trips and 
over 87 percent of all trips in a car or truck or other personal 
vehicle and only 2 percent to 4 percent of all trips in a bus, subway, 
or train. However, the transit share is much higher in urban areas, 
particularly the largest areas.
    In 1990, Americans made 72 percent more person trips and traveled 
65 percent more person miles than they had in 1969. This remarkable 
growth in travel is a function of aggregate travel growth and per 
capita growth.
    Aggregate travel growth is related to total growth in the U.S. 
population; as the population increases the aggregate number of trips 
made and miles traveled increases, even if no one person takes more 
trips or travels farther than before. However, as shown in Exhibit 1-5, 
from 1969 through 1990 the total number of trips taken by all Americans 
increased over three times as fast as the population. It is clear that 
other factors, in addition to population growth, account for much of 
the increase in total trips.
    In 1990, the average trip length for all purposes was 9.4 miles 
compared to 8.7 miles in 1983, while the average commute increased to 
10.7 miles from 8.5 miles, or a 26 percent increase.
Highway Vehicle Miles Traveled (VMT)
    Highway VMT comparisons are found in Exhibit 1-6. In 1993, total 
highway VMT reached 2.3 trillion. For the 10-year period from 1983 to 
1993, total travel increased at a compound annual rate of 3.4 percent. 
Travel growth in urban areas outpaced rural areas. However, as noted 
earlier, part of this growth is the result of expanding urban 
boundaries, i.e., rural travel becoming urban travel.
Highway and Transit Personal Miles Traveled
    On rail, transit patronage was 7.9 billion passenger miles in 1993, 
up at an annual rate of 0.7 percent from 1983. On bus systems, transit 
patronage was 8.4 billion in 1993, down by 0.5 percent per year since 
1983. In 1993, total highway passenger miles reached 3.9 trillion, up 
at an annual rate of 2.3 percent since 1989 (the first year that PMT 
statistics were available). Person miles of travel trends are provided 
in Exhibit 1-7.
                    personal travel characteristics
    While almost all indicators of travel are up, there is substantial 
diversity within aggregate travel trends. There are important 
differences in the travel patterns of men and women, the young and the 
old, those in urban and rural areas, and among those of different 
racial and ethnic backgrounds.
    Changes in travel patterns during the last two decades result from 
the interaction of complex societal forces that constrain and shape how 
American households organize all aspects of their lives. In order to 
recognize the demands that will be made on the Nation's transportation 
systems in the future, we must recognize how American households 
respond to the pressures created by these linked forces, and how their 
responses lead to wide variations in individual and aggregate travel 
patterns.
                            economic trends
    In the next decade most job growth will be in service rather than 
production industries. Retail trade will soon replace manufacturing as 
the second largest source of total U.S. employment, generating over 5 
million jobs by 2005.
    A key component of the service sector is the flexible labor force, 
which contains as much as one fourth of all American workers. The 
flexible labor force is characterized by temporary employment, variable 
work schedules, workers with multiple employers, and work weeks of less 
than 40 hours.
    In addition, the change to a service industry has brought 
Reconcentration of employment sites, creating a wide variety of 
dispersed work destinations. Industries do not need to be near one 
another or in a central area, average firm size is smaller, and firms 
are less likely to locate along heavily traveled corridors.
    These changes have substantially altered the trip patterns of many 
workers, who are now traveling at different hours, along different 
routes, and on different days of the week than comparable people two 
decades earlier. Commuter trips are now spread over a longer day, with 
a sizable minority of travelers having variable work schedules.
                           demographic trends
    The major societal trends highlighted in Exhibit 1-5 appear to have 
affected certain groups in society differentially.
Ethnic Diversity
    Large and growing numbers of the U.S. population are from different 
cultural, racial, or ethnic backgrounds. For reasons ranging from 
differing cultural norms to varying employment opportunities and income 
levels, these groups appear to have distinct travel patterns.
The Elderly
    American society is rapidly aging. In 1990, more than one fourth of 
the entire population was over age 60. By the first decade of the next 
century almost half of all elderly people will be over age 75, and 
almost 5 percent of the entire U.S. population will be over age 80.
    A number of factors related to the aging of society have profound 
implications for our Nation's transportation system. First, there are 
larger numbers of elderly drivers today. Between 1983 and 1993 the 
increase in licensing among both older men and women was substantial. 
As a result the elderly are driving far more than they did two decades 
ago.
    Second, the travel patterns of older people are strongly influenced 
by residential patterns. Because most older people age in the places 
they lived while working, elderly people are concentrated in low 
density or rural areas, where alternatives to automobile transportation 
are limited.
    Third, there are central city concentrations of older people with 
special needs. Those elderly people who live in the central cities of 
metropolitan areas are more likely to be members of ethnic or racial 
minorities or women living alone.
    One of the major implications of the aging of society is that there 
will be fewer younger workers available to pay for, or to directly 
provide, services for the rapidly growing number of seniors who require 
assistance. The overall level of care required by our aging population 
is much more physically and psychologically demanding than that needed 
four decades ago, in part because of the increased number of cognitive 
diseases among the growing number of people older than age 80.
Women
    Today women account for close to half of those in paid employment. 
There has been significant growth in the number of married women who 
work outside the home as well as the participation of women with 
children, many with very young children.
    The ways in which salaried women balance their domestic and 
employment responsibilities impact the modes they choose, the hours 
they travel, the routes they take, and how they organize and combine 
their out-of-home activities. For example, because they retain multiple 
responsibilities when they enter the paid labor force, women often 
``link'' trips together, dropping children at day care on the way to 
work or going grocery shopping on the way home.
    Women with children often have to make trips solely to meet the 
needs of their children and therefore may be less able to use 
alternative modes. Many workers report that they must drive alone 
because they need access to a car immediately before and after work to 
accomplish their child care needs and are concerned that they might be 
faced with a family emergency during the middle of the work day.
               population movements and land use patterns
    Over the last three decades, the United States has experienced 
large shifts in employment and population that have resulted in rapid 
suburbanization of the population and employment as well as 
concentration of poverty in central cities. At the same time, local 
land use regulations have interacted with these factors to continue to 
increase the expansion of single purpose neighborhoods and low density 
communities.
    These patterns all have strong implications for how, where, and how 
often people travel. The majority of Americans today live and work in 
metropolitan areas with low density land use and housing patterns. In 
general, the lower the density of a community the fewer concentrated 
origins and destinations and the fewer corridors of high density 
demand. These kinds of patterns require decentralized transportation 
facilities and services.
                               __________
                          Chapter 2: Financing
    All levels of government provided $88.5 billion for highway 
programs. The Federal Government accounted for 21 percent; the States 
53 percent; and counties, cities, and other local government entities 
funded the remaining 26 percent.
    In the past two decades (since 1973), the Federal share of highway 
funding has gradually dropped from 28 percent to 21 percent. 
Alternatively, the percentage of highway receipts contributed by local 
governments has steadily increased during the same period, increasing 
from 19 percent in 1973 to 26 percent in 1993.
    Ihe $88.5 billion in highway revenues does not include revenues 
collected from highway users but used to finance transit and other 
nonhighway activities. For example, State highway user revenues from 
motor fuel taxes, motor vehicle fees, and tolls actually generated 
$46.1 billion in revenues in 1993, but only $36.7 billion was actually 
used to fund highways.
    The $88.5 billion provided for highway programs was distributed as 
follows:

   Capital investment: $39.0 billion
   Noncapital expenses: $41.9 billion
   Debt retirement: $5.2 billion
   Reserve: $2.4 billion

    During the past two decades, in constant (1970) cents per unit of 
travel, total expenditures have dropped from 1.88 cents per vehicle 
mile of travel (VMI) in 1970 to 1.12 cents per VMT in 1993, a 40 
percent reduction.
    Total transit revenue, from all sources, was $22.6 billion. Public 
funding accounted for slightly over two-thirds and system-generated 
revenue (e.g., fares, advertising, etc.) accounted for almost one-
third.
    Of the $22.6 billion in funding provided for transit, $21.7 billion 
was expended for capital investment and operating requirements. Capital 
investment accounted for $5.7 billion and $16.0 billion was spent to 
satisfy operating costs.
                     funding by level of government
Highway
    In 1993, all levels of government provided $88.5 billion for 
highway programs. The Federal Government funded $18.2 billion; the 
States, $46.9 billion; and counties, cities, and other local government 
entities funded the remaining $23.4 billion. The Federal share of 
funding for highways increased dramatically between 1956 and 1960 
following passage of the Federal-Aid Highway Act of 1956 and the 
establishment of the Highway Trust Fund. However, since 1960 there has 
been a gradual trend downward in the Federal share of funding. The 
percentage of highway receipts contributed by local governments has 
been steadily increasing over the past several decades. For example, as 
illustrated in Exhibit 2-1, the local share of highway funding has 
increased from 19 percent in 1973 to 26 percent in 1993.
    While the Federal Government provided 21 percent of the funding for 
highways in 1993, its direct share of actual total expenditures was 
only $0.9 billion, or less than 1 percent. This is because almost all 
of the funds that the Federal Government provides for highways are 
transferred to the States under the Federal-Aid Highway Program for 
State and local governments to expend. Most of the remainder is spent 
on federally owned roads and research.
Transit
    Public funding for transit in 1993 was $15.4 billion. The Federal 
share of this support was $3.3 billion, remaining at about the same 
level in current dollar terms since 1985. The State and local share was 
$12.1 billion in 1993.
    The state and local share of transit assistance has climbed 
steadily since reaching a low of 45 percent in 1980. This is due to a 
reduction in Federal operating assistance in the 1980's, an increase in 
State and local assistance over the same period, and a continued 
increase in transit service provided.
                   sources of public sector financing
Highway
    The $88.5 billion provided for highway programs in 1993 came from a 
number of sources including highway user charges, property taxes and 
assessments, general funds, investment income, other taxes, 
miscellaneous fees, and bond issues. Exactions, development fees, and 
special district assessments provided additional revenue.
    At the Federal level, motor fuel and motor vehicle taxes are the 
primary source of funds for highways. Motor fuel and motor vehicle 
taxes also provide the largest share, 72 percent, of highway funds at 
the State level.
    Over one-third (36 percent) of highway funding at the local level 
is provided through the General Fund. Investment income and bond issue 
proceeds account for 32 percent. Property taxes, assessments, and other 
fees contribute almost 24 percent. The remainder (7 percent) is 
provided by highway users (motor fuel taxes, motor vehicle taxes, and 
tolls).
Transit
    Federal support for transit comes from two sources: the Mass 
Transit Account of the Highway Trust Fund and the General Fund. The 
Transit Account now receives 2.0 cents per gallon of Federal motor fuel 
tax receipts.
                          drawing conclusions
Funds Collected for Highways but Spent for Nonhighway Purposes
    The highway revenues cited in this report do not include revenues 
collected from highway users but used to finance transit and other 
nonhighway activities. For example, State highway user revenues from 
motor fuel taxes, motor vehicle fees, and tolls actually generated 
$46.1 billion in revenues in 1993. However. only $36.7 billion was used 
to fund highways.
    Although local governments I actually raised $2.4 billion from 
highway user taxation, only $1.7 billion was expended for roads and 
streets. The difference in highway user revenues went for a variety of 
highway purposes.
                  capital and noncapital expenditures
Summary of Expenditures
    Of the $88.5 billion in funding provided for highways in 1993, 
$86.1 billion was expended for highway programs and $2.4 billion was 
placed in reserve. Of the total highway expenditures, $80.9 billion 
went for current expenditures and $5.2 billion was used for debt 
retirement.
    In constant (1970) cents per unit of travel, total expenditures 
dropped from 1.88 cents per vehicle mile of travel (VMI) in 1970 to 
1.12 cents per VMT in 1993.
    Of the $21.7 billion expended for transit in 1993, $5.7 billion was 
expended for capital and $16.0 billion was for operating costs.
Capital Expenditures
            Highway
    All levels of government spent over $39.0 billion on highway 
capital improvements. Of total expenditures, capital outlay represented 
53 percent in 1973 and 48 percent in 1993. In constant (1970) cents per 
unit of travel, capital outlay dropped from 1.04 cents per VMT in 1970 
to 0.56 cents per VMT in 1993, a 46 percent decline.
    Of the $39.0 billion spent on capital outlay in 1993, State and 
local governments spent $38.7 billion, including $17.1 billion in 
Federal funds. Federal direct expenditures were $0.3 billion. Federal 
funds accounted for 44 percent of total highway capital outlay in 1993, 
down from a high of 56 percent in 1980.
    State and local governments supplied 55 percent of all funds for 
highway capital improvements in 1993. With the exception of the period 
from 1976 to 1986, the State and local government share has been 
consistently more than 50 percent.
    Exhibit 2-5 summarizes the distribution of highway capital outlay 
by improvement type and functional system for nonlocal roads.
    Capital outlay on all local roads was $7.1 billion in 1993. Local 
roads have the highest level of spending per unit of travel of all the 
functional systems. Improvement type data, however, are not available 
for this functional class.
Transit
    While Federal capital assistance has remained relatively stable 
between 1988 and 1993, the level of State and local contribution to 
transit capital assistance has grown. Thus, investment in transit 
capital assets, both for existing and new systems has increased from 
$4.1 billion in 1988 to $5.7 billion in 1993. Federal capital 
assistance levels in fiscal years 1994 and 1995 were substantially 
higher than in past years.
    The largest single component of transit capital expenditures in 
1993 was rail facilities, reflecting a general preponderance in capital 
investment for facilities. Rolling stock accounts for just 27 percent 
of transit capital expenditures. This is due primarily to the greater 
investment required for rail facilities, which includes the rights of 
way, track, and structure over which the service operates. Bus 
facilities, while far more numerous, can be much simpler and require 
less substantial investment.
Noncapital Expenditures
    Since 1956, in both current and constant dollars, spending for non-
capital highway expenditures has increased. The noncapital share of 
expenditures for highways was $41.9 billion in 1993, or 52 percent of 
highway expenditures.
    Constant dollar growth from 1960 through 1993 for the noncapital 
category of expenditures was 122 percent compared to a 60 percent 
growth in total expenditures for both the capital and noncapital 
categories. In constant dollars, 1993 maintenance and traffic services 
expenditures were 78 percent higher than in 1960. Exhibit 2-6 
demonstrates the increase in the proportion of total highway 
expenditures directed toward noncapital requirements. A total of $22.9 
billion was spent by State and local governments in 1993 to keep all 
highways, roads, and streets in 1993 to keep all highways, roads, and 
streets in serviceable condition. The maintenance and traffic services 
share of total expenditures was 26 percent in 1960 and 28 percent in 
1993.
    Other noncapital highway expenditures include administration, 
highway law enforcement and safety, and interest on highway debt. The 
relative share of these other noncapital expenditures to total 
expenditures has increased from 12 percent in total expenditures has 
increased from 12 percent in 1960 to 24 percent in 1993. In constant 
dollars this category of spending has increased dramatically (216 
percent) since 1960.
Transit
    Operating (noncapital) expenditures increased significantly between 
1983 and 1992, from $8.4 billion to $16.0 billion. Most of the 
percentage increase took place between 1983 and 1986. From 1987 to 
1993, the annual increase in operating expenses, in real terms, was 
less than 1 percent The earlier increases result, largely, from more 
complete reporting of costs, particularly in the rail transit sector as 
well as from significant increases in service supplied.
    Although real operating costs per unit of service have remained 
relatively stable in recent years, expenditures per unit of travel have 
increased due to a decline in the rate of service utilization. 
Specifically, real operating costs per passenger mile increased 31 
percent from 1983 to 1993, an average annual increase of 3 percent. The 
decline in service utilization rates can largely be explained by the 
increase in real fares of 41 percent during this period, an annual rate 
of an annual rate of 4 percent.
                               __________
                 Chapter 3: Conditions and Performance
    Because of investment targeted to system preservation, our 
highways, bridges, and transit systems are in better physical shape 
than they were a few years ago, and they are safer than ever:

   The number of structurally deficient bridges has dropped.
   The amount of the pavement in poor condition has stabilized 
    at a manageable level.
   The percent of transit fixed facilities and rolling stock in 
    good condition has improved.
   The overall highway fatality rate has declined steadily from 
    2.58 fatalities per 100 million vehicle miles traveled (VMT) in 
    1983 to 1.75 per 100 million VMT in 1993, with the Interstate 
    system continuing to be, by far, the safest system.

    However, highway congestion continues to worsen. More travelers, in 
more areas, during more hours are Acing high levels of congestion and 
delay than at any point in the history of the country. This means we 
are more susceptible to massive traffic backups as a result of 
accidents and even minor incidents.
    The quality of transit service has improved:

   Since 1984, the passenger-mile weighted average speed 
    improved by about 10 percent.
   Well over half of all riders report wait times of 5 minutes 
    or less. Fifty 1 percent of transit trips involve one or more 
    transfers.
   Less than one-third of all transit trips involve standing 
    for at least part of the trip.
   About 25 percent of all transit users report trip times of 
    10 minutes or less.
                           system performance
Highway Performance
    Highway performance refers to the quality of service provided to 
system users. Highway operating performance, on a given facility or 
system, is a function of the quality of traffic flow. ``Congestion'' is 
a term often used to describe poor highway performance. There are 
substantial costs to the economy of the Nation as a result of 
congestion. A report by the Texas Transportation Institute, Roadway 
Congestion Estimates and Trends--1990, March 1993, estimated the total 
cost of congestion for the 50 urban areas studied at $43.2 billion. 
Delay accounted for approximately 85 percent of this amount, while 
excess fuel consumption accounted for 15 percent. Eight of the top ten 
urban areas had total congestion costs exceeding $1 billion.
    While there is no widely accepted definition of congestion, 
congestion has three attributes: severity, duration, and extent. These 
three attributes affect system reliability. The severity of congestion 
refers to the magnitude of the problem, measured primarily by the 
average overall travel speed, travel time delay, or the maximum length 
of a queue behind a bottleneck. The extent of congestion is defined by 
the geographic area, the portion of the population, or the portion of 
total travel affected. The duration of congestion is the length of time 
that the traffic is congested. This report presents an assessment of 
severity. However, data to quantify the duration and extent of 
congestion are currently unavailable. A discussion of daily vehicle 
travel per lane mile is provided to give the reader a sense of travel 
density.
Peak-Hour Severity
    The volume to service flow ratio (V/SF) may be used as a measure of 
severity. The V/SF is the ratio between the volume of traffic actually 
using a highway facility during the peak hour and the theoretical 
capacity of that facility to accommodate the traffic.
    A V/SF of greater than 0.80 indicates the beginning condition of 
congestion. This level is a cost effective level of operation, but 
small increases in traffic beyond this point will generally cause 
operational problems.
    Beyond a V/SF of 0.80, delay increases rapidly and system 
reliability is impaired because of an increase in nonrecurring delay. 
In general, as the traffic flow and density increase, any interruption 
is increasingly likely to cause disruption to the smooth flow and 
create a stop-and-go situation, resulting in lower throughput.
    A V/SF of 0.95 or higher indicates the onset of severe congestion. 
Vehicle operating costs, fuel consumption, emission, and aggravation 
increase dramatically. Commuting time increases, worker productivity is 
lost, and trip quality declines.
    The percentage of daily peak-hour urban travel in 1993 occurring 
under congested or highly congested (near stop-and-go) conditions is 
presented in Exhibit 3-1. It is noteworthy that of the peak-hour travel 
on Interstates and other freeways and expressways that is congested to 
some extent, 77 percent is occurring under severely congested 
conditions.
    Due to changes in urban area boundaries and reclassification of 
some rural facilities, it is difficult to assess trends related to 
peak-hour congestion. However, the percent of peak-hour travel on urban 
Interstates with V/SF ratios greater than 0.80 increased from about 55 
percent to about 70 percent between 1983 and 1989, and has remained 
relatively constant since that time.
                          drawing conclusions
Congestion
    ``Congestion'' is a term often used to describe poor highway 
performance. However, there is no widely accepted specific definition. 
It results from the inability of an individual highway section or 
system to accommodate adequately the volume of traffic that attempts to 
use the facility or system.
    The results of congestion are interruptions in the traffic flow, 
delay, increased travel time, increased fuel consumption, increased 
vehicle emissions and reduced air quality, increased user costs, 
increased cost of goods transport with resultant increased costs to the 
consumer, increased aggravation to the driver, and other effects.
    The perception of what constitutes congestion varies from place to 
place. What may be perceived as congestion in a city of 300,000 
population may not be considered congestion in a city of 3 million. For 
that reason, this report does not attempt to specifically define 
congestion. instead, it looks at the peak-hour volume of--raffic 
relative to the calculated capacity.
Nonrecurring Delay
    Incidents such as vehicle breakdowns and accidents, including minor 
fender benders, have the potential to create nonrecurring delay. Where 
congestion levels exceed volume to service flows of 0.80. the 
likelihood: of nonrecurring delay increases significantly. High levels 
of nonrecurring delay result in system unreliability and are the 
economic reason that high levels of congestion should be avoided.
    Questionable system reliability can severely restrict the adoption 
of advanced production and distribution techniques. Justin-time 
delivery is only one example of many innovative practices that depend 
on the efficiency and reliability of highways. Although the absolute 
amount of time taken for a trip is important, what is more important is 
the assurance that the time for the trip will not be outside a 
specified range.
Highway and Bridge Data Sources
    The highway information on condition and performance is based on 
data supplied by State highway agencies via the Highway Performance 
Monitoring System (HPMS) and the National Bridge Inventory (NBI) data 
bases. The HPMS data is a: updated annually and includes information 
about pavement. roadway cross-section, alignment, and usage for more 
than 110,000 sample sections of arterial and collector highways 
nationwide. The NBI contains records on each of approximately 575,000 
bridges and is updated continuously.
Calculating Capacity
    The volume to service flow ratios (V/SFs) reported in the current 
1995 C&P Report are consistent with the capacity calculation procedures 
presented in the 1985 Highway Capacity Manual (HCM), Special Report 209 
of the Transportation Research Board.
    The 1985 HCM was revised in 1994 to reflect the increased volumes 
of traffic that are now being accommodated by freeways and, to a lesser 
extent, by other roads. Current research shows that more traffic can 
move through a freeway lane per hour than ever before because drivers 
have become willing to travel at closer headways (less than 2-second 
intervals) and at higher speeds at higher rates of flow than 
previously.
    The new HCM suggests a capacity increase of 10 percent to 15 
percent on freeways and means that less highway mileage and s travel 
will be reported as occurring under congested conditions than is 
currently reported using the old procedure.
    It is anticipated that the 1995 HPMS data furnished by the States 
and reported in the 1997 C&P Report will reflect the new capacity: 
calculation procedures.
Daily Vehicle Miles of Travel per Lane Mile (DVMT)
    There has been a consistent increase in travel relative to the 
capacity of the highway system to accommodate the travel. Exhibits 3-2 
and 3-3 illustrate the changes in DVMT per lane mile for each 
functional system, from 1983 to 1993.
    These exhibits demonstrate the continuing increase in travel 
density on the higher functional systems, particularly the Interstate. 
DVMT per lane mile on the rural Interstates increased an average of 3.6 
percent annually. On the urban Interstates, travel per lane mile 
increased 2.6 percent annually.
    This increase in travel relative to the slower increase in supply 
of highway capacity suggests increasing congestion on the higher 
functional systems in the urbanized areas. Rural travel has not yet 
saturated the facilities to the degree that has occurred in the large 
urbanized areas. The greatest extent of congestion on highways in the 
rural category often occurs on those highways adjacent to urban areas 
or on facilities with heavy recreational travel.
Transit Performance
    The perception of quality among customers and potential customers 
is an important determinant of transit use, often more important than 
the fare levels.
User Travel Speed
    One of the most important dimensions of transit performance is 
speed of service, as perceived by the user. Overall speeds have 
improved since 1984 for both rail and bus service. Average rail speed 
improved from 24.8 miles per hour in 1984 to 26.3 miles per hour in 
1993. Bus speed, on average, was 12.9 miles per hour in 1984 and 13.7 
miles per hour in our in 1993.
Transfers and Waiting Times
    The latest data (1990) indicates that the majority of transit users 
do not spend much time waiting for service. Well over half of all 
riders (59 percent) reported wait times of 5 minutes or less. About 80 
percent of riders wait no longer than 10 minutes.
    The need to transfer between transit vehicles en route to one's 
travel destination also influences transit patronage. Fifty-one percent 
of transit trips involve one or more transfers. In addition, 
approximately 17 percent of transit trips involve a transfer from a 
private vehicle, e.g., park-and-ride situations.
Available Seats
    The presence of standees, even one or two, tends to convey a sense 
of crowding. This is especially true from the perspective of those who 
must stand. Passengers often consider a vehicle to be crowded when it 
is operating with a load factor above seated capacity but still 
significantly below full capacity. As shown in Exhibit 3A, 29 percent 
of transit trips involve standing for at least part of the trip.
Travel Times
    According to data collected in 1990, about 25 percent of all 
transit users reported trip times of 10 minutes or less, and nearly 76 
percent of transit trips were reported to take less than half an hour.
                            system condition
Highway Conditions
            Highways
    Highway physical condition is a function of pavement condition, 
lane width, alignment, drainage adequacy, and other measures that 
relate to the road's physical integrity or level of safety. Pavement 
conditions degrade because of normal use and weathering, increases in 
traffic or vehicle sizes and weights, as well as levels of maintenance 
and capital spending.
    Pavement rated as poor usually requires vehicles to travel more 
slowly than the posted speed limit, with more acceleration and 
deceleration to avoid potholes or other sections of bad pavement. 
Vehicle slowdown and rough pavement driving reduces fuel efficiency, 
wears out brakes and shock absorbers more quickly, and can lead to more 
frequent front end alignments.
    Exhibit 3-5 shows the 1993 mileage and travel distribution by 
category of pavement condition as well as the percent of unpaved 
mileage.
    Pavement in poor condition requires immediate improvement, usually 
reconstruction, to restore serviceability. Reconstruction involves 
removing and replacing paving material down to (and perhaps including) 
the subbase.
    Mediocre pavement is expected to need improvement in the near 
future, generally within the next 5 years, depending on pavement 
design, environmental factors, and traffic loading. Pavement rated as 
mediocre can be improved by pavement management programs. The life of 
the highway surface for these pavements can be prolonged with lower 
cost, 3R types of pavement improvements (resurfacing, restoration, and 
rehabilitation).
    Pavement in fair condition will likely need improvement in the 5? 
to 10-year horizon. The pavement in good condition will not likely need 
improvement for 10 years to 15 years or more.
    The pavement information for the higher functional systems is, for 
most States, based on the International Roughness Index (IRI) pavement 
rating system. Ratings for the lower order functional systems reflect, 
for the most part, Pavement Serviceability Rating (PSR)-based 
assessments. However, to some extent, the distribution of pavements by 
condition rating reflects a mixture in each functional system of the 
PSR and IRI procedures.
            Bridge
    The proportions of bridges that are classified as being 
structurally or functionally deficient are found in Exhibit 3-6. In 
general, the higher functional systems have fewer deficient bridges.
    A structurally deficient bridge is not necessarily unsafe or one 
that requires special posting for speed or weight limitations. It is a 
bridge that is designated as needing significant maintenance attention, 
rehabilitation, or sometimes replacement. Some of these bridges are 
load-posted so that heavier trucks will be required to take an 
alternate, longer route.
    Functionally deficient bridges are those that do not have the lane 
widths, shoulder widths, or vertical clearances adequate to seine the 
traffic demand; or the waterway of the bridge may be inadequate and 
therefore allow occasional flooding of the roadway,
                          drawing conclusions
Assessing Pavement Condition
    Pavement condition evaluations have in the past been based on the 
Present Serviceability Rating (PSR) system. However, a transition is 
being made to ratings based on the international Roughness Index (IRI). 
This change from PSR to IRI invalidates any comparison of 1993 pavement 
condition data with that of preceding years. Several years of 
measurements using the IRI procedure are needed to define a trend.
    IRI is an objective measure of pavement roughness developed by the 
World:Bonk, and is accepted as a standard in the pavement evaluation 
community. It has been adopted as the measurement of pavement roughness 
by FHWA because (1) it uses a standard procedure and can be replicated, 
(2) it provides a consistent measure across jurisdictional lines and 
diverse functional systems, (3) it is an objective measurement, and (4) 
it is consistent with accepted worldwide pavement roughness measurement 
procedures.
    The PSR measure is more subjective, and its application was subject 
to variation among jurisdictions and over time in the same 
jurisdiction, so it was difficult to compare accurately the trends in 
pavement.
                           transit conditions
Bus and Paratransit
    Vehicle age is used as a surrogate for condition and provides the 
basis for evaluating bus and Paratransit fleet conditions.
    Exhibit 3-7 displays urban bus and Paratransit vehicle conditions, 
in terms of the percentage of fleet in excess of the Federal Transit 
Administration (FTA) guideline age for each type of vehicle.
    There is a significant number of overage vehicles of all types in 
the rural Section 16 and Section 18 fleets. The Section 16 fleet 
includes all vehicles owned by private nonprofit human service agencies 
that are recipients of Section 16 funds, not just those acquired with 
FTA funds.
            Bus Maintenance Facilities
    According to transit operators, more than half (57 percent) of 
urban bus support facilities are in ``good or better:'' condition for 
their current mission. The remaining facilities are categorized as 
``adequate'' (18 percent), ``substandard'' (14 percent), and ``poor'' 
(10 percent).
    Of those facilities owned by rural operators, 74 percent are 
reported to be of adequate size and 68 percent adequately equipped. Of 
leased facilities, 61 percent are reported to be of adequate size and 
55 percent are considered to be adequately equipped.
            Rail
    The areas reported to be in most need of improvement in 1984 have 
improved significantly. Maintenance yards went from only 17 percent in 
good or better condition to 64 percent, and maintenance buildings went 
from only 28 percent to 52 percent. Also, stations improved 
significantly from 29 percent to 66 percent, and bridges from 33 
percent to .61 percent. ' A substantial portion of rail infrastructure 
is still in need of investment to return it to good condition. Most 
significantly, over 73 percent of elevated structures need major 
investments. In addition, overhead (43 percent), third rail (41 
percent), and maintenance facilities (48 percent) also have significant 
shares in less than good condition, requiring major investments.
                          drawing conclusions
Minimum Transit Asset Age Requirements
    For the purpose of managing the Federal investment in transit, the 
Federal Transit Administration (ETA) has established minimum require 
meets for the period of time an asset must remain in mass transit 
service before it will be considered eligible for funding of a 
replacement. These guidelines are based on such factors as industry 
practices, manufacturer recommendations, and studies of the tradeoff 
between capital investments and operating costs. On this basis. the 
following are the minimum useful life guidelines for vehicles used in 
bus and paratransit service: =

   Standard Full Size Transit Bus: 12 years
   Medium Duty Transit Bus: 10 years
   Small Transit Bus: 7 years
   Urban Paratransit van: 4 years
                             highway safety
    A significant improvement in highway safety occurred during the 
period from 1983 through 1993. The overall highway fatality rate 
declined steadily from 2.58 fatalities per 100 million in 1983 to 1.75 
fatalities per 100 million in 1993. Accident and fatality rates are 
affected by many factors other than highway condition and performance, 
including weather conditions, occupant protection use, number of 
intoxicated drivers, extent of police exposure, law enforcement, 
vehicle speed variations, and driver performance.
               selected highway environmental indicators
    The environmental consequences of transportation arise from both 
construction and usage. Indices of performance pose both conceptual and 
practical challenges. However, an initial set of categories has been 
identified and includes air quality, water quality, wetlands, energy, 
noise, land use and open space, threatened and endangered species, and 
community impacts.
    Progress is being made in each of these categories. As an example, 
there has been significant progress in reducing the overall levels of 
four major transportation-related air pollutants over the last decade.
    Transportation sources are credited with most of the emissions 
reductions during the decade, even though travel increased by 33 
percent. Improvements in air quality are attributed to Federal limits 
on gasoline volatility; replacement of older cars with newer, less 
polluting ones; and increased usage of unleaded gasoline.
                               __________
                   Chapter 4: Investment Requirements
    Investment requirement estimates are developed for two scenarios. 
The Cost to Maintain conditions and performance provides the cost to 
keep the system functioning at its current level. The Cost to Improve 
conditions and performance provides the cost to bring the system up to 
a specified level of condition and performance.
    The average annual Cost to Maintain overall 1993 highway, bridge, 
and transit conditions and performance, for the period 1994 through 
2013 is estimated at $62.7 billion. The average annual Cost to Improve 
highway, bridge, and transit conditions and performance is $86.8 
billion over the same period.
    Seventy percent of the highway and bridge investment reported as 
necessary to either maintain or improve conditions and performance 
would be required in urban areas where about 55 percent of the cost 
would be directed to capacity expansion.
    Somewhat over half of the investment necessary to either maintun or 
improve transit conditions and performance would be required to correct 
rail deficiencies; the remainder would be directed to the bus system. A 
significant portion (85 percent) of total transit investment 
requirements would be spent in areas having populations greater than 1 
million.
    The investment requirements provided above reflect the adoption of 
policies, within the most populous urbanized areas, to locally manage 
and satisfy future travel demand given environmental, fiscal, and 
social constraints.
    The highway component of the Cost to Improve scenario was developed 
using a new simulation model, the Highway Economic Requirements System. 
This procedure uses marginal benefit/cost analysis to optimize highway 
investment. All highway improvements selected for implementation 
generate direct user and agency benefits in excess of the initial cost 
of the improvement.
                          analytical overview
Investment Scenarios
    Total capital investment required from all sources to achieve 
certain specified levels of overall condition and performance on the 
Nation's highway, bridge, and transit systems is provided for two 
scenarios: (1) the Cost to Maintain current conditions and performance 
and (2) the Cost to Improve current conditions and performance.
    Both scenarios are implemented over a Midyear beginning in 1994 and 
include the cost to selectively repair pavement, bridge, and transit 
deficiencies; eliminate unsafe conditions; and add capacity.
    Under the Cost to Maintain scenario, some facilities will get 
better and some will get worse but overall system condition and 
performance will stay the same throughout the analysis period. In 
contrast, under the Cost to Improve scenario, overall system 
performance is improved by correcting existing and accruing system 
deficiencies.
Methodology
    The centerpiece of the highway investment requirements estimation 
procedure is the Highway Performance Monitoring System (HPMS), which 
includes a comprehensive national data base and sophisticated 
investment/performance simulation models.
    The HPMS data base provides information describing the current 
state of the highway system in terms of condition and performance.
    The coordinated simulation models--the Analytical Process (AP) and 
the Highway Economic Requirements System (HERS)--simulate investment 
decisions and estimate the resulting level of system condition and 
performance. The AP was used to evaluate the Cost to Maintain scenario. 
This approach is founded on engineering principles. That is, 
engineering standards determine deficiency levels for various system 
attributes and potential improvement options are identified and 
considered for implementation based on engineering judgment and 
practice.
    The HERS was used to evaluate the highway Cost to Improve scenario. 
This marks the beginning of a significant transition from the 
traditional engineering-based approach to one that incorporates 
economic considerations. The Cost to Improve investment requirements 
estimate now incorporates an economic efficiency test that each 
candidate improvement must pass before being selected for 
implementation.
    The highway Cost to Improve scenario is now referred to as the 
Economic Efficiency scenario to highlight its economic component.
    Where the traditional engineering-based analysis systematically 
implements all appropriate improvement options identified, regardless 
of economic merit, HERS evaluates each potential improvement to assure 
that direct user and agency benefits generated by the project will 
exceed the initial cost of the improvement.
    Bridge investment requirements for both the Cost to Improve and 
Cost to Maintain scenarios are estimated using an engineering-based 
procedure, analogous to the HPMS AP. The bridge investment requirements 
do not reflect explicit benefit/cost considerations.
    For both scenarios, the transit analysis is based on current 
infrastructure extent and condition and an estimate of the cost of 
system preservation and added transit capacity required to satisfy the 
objectives of each scenario. Explicit benefit/cost procedures are used 
to validate service level assumptions and certain unit costs.
                          drawing conclusions
Investment Requirements
    Estimates of investment required to either maintain or improve the 
Nation's highway, bridge, and transit systems over the next 20 years 
are intended to serve as benchmarks for policy development.
    The Cost to Improve highway, bridge, and transit conditions and 
performance suggest the upper limit of appropriate national investment, 
based on either engineering or economic criteria. Alternatively, the 
Cost to Maintain conditions and performance estimates provide a sense 
of the lowest reasonable level of investment; investment at levels less 
than the Cost to Maintain benchmark will result in system 
deterioration.
    The investment scenarios do not represent comprehensive alternative 
national investment policies. No policy priorities have been assumed 
regarding either the strategic importance of individual facilities, 
classes of facilities, or mode of transportation. In actual practice, 
however, State and local transportation agencies do target.
The Highway Economic Requirements System (HERS)
            An Overview
    An important goal of highway capital investment is to reduce the 
total cost of transportation, including costs occasioned by public 
agencies as well as highway users. User costs vary according to highway 
physical conditions and system performance, and these factors are 
directly affected by the level of highway investment.
    The HERS model estimates the national highway investment required 
to achieve a specified user cost level or the user cost level resulting 
from a given level of highway investment. Its simulation procedure 
assumes that project-level selection practices will optimize (given 
varying constraints) the relationship between public investment and 
direct user costs.
    The HERS uses as input the HPMS data base and employs benefit/cost 
analysis (BCA) to evaluate the attractiveness of potential highway 
improvements that have been identified to correct deficient prototype 
sections. The BCA decision rule is straightforward: invest only when 
benefits exceed costs.
    In the current version of HERS, benefits include reductions in 
direct user and agency costs. Highway user benefits are defined as 
reductions in travel time costs, accidents, and vehicle operating 
costs. Agency benefits include;reduced maintenance costs and the 
residual (salvage) value of a project. Costs refer to expenditures 
associated with implementing the project such as design, right-of-way 
acquisition, and construction.
    For each alternative, a time stream of constant-dollar costs and 
benefits is estimated for the lifetime of the project. Future benefits 
are measured relative to the base, or do nothing alternative, and 
discounted to allow for the opportunity value of resources with respect 
to time.
    When analyzing the Economic Efficiency Investment scenario, the 
HERS corrects all system deficiencies having associated improvements 
that generate direct user and agency costs exceeding the initial cost. 
Investment beyond that indicated by the Economic Efficiency scenario 
includes projects having negative net benefits. Investment short of 
this point is a ``second best'' alternative because constraints, such 
as funding exclude some project:s having benefits greater than costs.
    When funding is not available to achieve ``optimal'' spending 
levels, HERS will prioritize economically worthwhile potential 
improvement options according to relative merit (that is, benefit/cost 
ratios) and select the best set of projects. Subsequent editions of the 
C&P Report series will include the results of such analysis.
            Limitations
    An intensive, independent review of HERS in 1994 indicated that, 
while the model was fundamentally sound, it could be improved by 
consideration of a number of issues.
    Static System. The current version of the model does not consider 
network interactions, new construction on new alignment, traffic 
diversion, or induced travel. Many of these limitations are a function 
of the data base, which consists of statistically sampled discrete 
highway sections.
    Inefficient Pricing of Facilities. Because highways (and 
transportation in general) are not efficiently priced, highway users do 
not consider the marginal costs--increased travel times--they impose on 
all other drivers using the facility. Future versions of HERS will have 
the capability of simulating the impact of alternative pricing 
strategies.
    Direct User Costs. While the direct benefits included in the 
current version of HERS constitute the major impacts of highway 
improvements, the HERS accounting is not comprehensive. Most 
significantly, externalities (e.g., changes in air quality) and 
''real'' As opposed to pecuniary) productivity improvements (e,g., 
benefits from improved system reliability) arising from system 
improvements are not addressed. Work is under way to incorporate 
externalities into the HERS framework.
    Uncertain Value of Travel Time. One of the most significant 
benefits associated with many highway improvements is travel time 
savings. Although much research has been conducted in this area, there 
is still disagreement on the proper values that should be applied to 
the various types of travel: commercial, commuting to work, and 
personal. Future editions of the C&P Report will include detailed 
results of sensitivity analysis.
Travel Growth Assumptions
    For the current 1995 C&P Report, the travel forecasts underlying 
the highway and transit investment requirements for the 33 most 
populous urbanized areas (UZAs) are derived from the Metropolitan 
Planning Organization (MPO) planning process. Highway travel growth 
projections for facilities outside these areas are based on state-
supplied, facility-specific forecasts as provided in the HPMS data 
base.
    Social, fiscal, and environmental concerns are most pronounced in 
these areas and transportation modal alternatives are more prevalent as 
well. For example, approximately 90 percent of transit ridership occurs 
in the 33 most populous UZAs.
    The MPO highway and travel forecasts must be in conformance with 
Clean Air Act requirements and consistent with the fiscal capability of 
the area to implement the proposed transportation investments.
    Exhibits 4-1 and 4-2 illustrate the divergence from historical 
patterns implied by adoption of MPO travel growth assumptions. Highway 
travel is projected to increase at a dampened rate (1.5 percent 
annually) relative to past experience. The growth rate would naturally 
decline in the future as the VMT base grows; however, the MPO forecast 
implies a sudden shift to a lower rate.)
    Alternatively, transit travel growth trends are assumed to shift 
from a continually constant level of travel to one in which travel will 
grow at a compound annual rate of 2.4 percent. These trends are 
consistent with MPO plans that seek to reduce highway travel through 
various demand and supply oriented measures that encourage higher 
transit use.
    However, without significant and widespread demand-shaping 
policies, which have yet to be implemented in any American city, it is 
not likely that the MPO forecasts will be achieved. To the extent that 
actual future experience exceeds the highway travel forecasts, the 
resulting investment requirement estimates may be understated. 
Analogously, the degree to which the transit travel forecasts are not 
realized, the estimates of future transit investment requirements may 
be overstated.
           additional assumptions and procedural improvements
    The data base, as well as the associated models are under 
continuous review. Procedures are routinely developed, external to the 
models, to keep the investment requirement estimation procedures 
consistent with current information. Efforts to incorporate these 
external procedures into the model structure are underway but may take 
several years to complete.
    Exhibit 4-3 provides an overview of the external revisions to the 
model inputs and outputs that were implemented for the current report.
                        investment requirements
Cost to Maintain Conditions and Performance
            Highway and Bridge
    The average annual Cost to Maintain overall 1993 highway and bridge 
conditions and performance on existing arterial, collector, and local 
systems through 2013 is estimated at $54.8 billion.
    Under this strategy, the overall miles of roadway in poor or 
mediocre condition would remain essentially unchanged over the analysis 
period. System performance would be maintained at its current level on 
most rural and many urban miles.
    The current total number of structurally deficient and functionally 
obsolete bridges would also remain about the same.
            Transit
    The average annual Cost to Maintain current transit conditions and 
performance, for the period 1994 through 2013, is estimated at $7.9 
billion.
    This level of investment would maintain facilities and equipment in 
their current state of repair and expand service to meet the demand 
increase forecasted by the MPOs.
    At this level of investment, transit vehicles would be replaced at 
about the current rate, which is slightly slower than what is generally 
regarded as optimal. Existing rail systems would be maintained in about 
their current condition, with no major improvements. Transit operators 
would meet the requirements of the Americans with Disabilities Act 
(ADA) and the Clean Air Act Amendments (CAAA).
Cost to Improve Conditions and Performance
            Highway (Economic Efficiency)
    Under this scenario, system deficiencies are identified and any 
investment that creates positive net benefits is considered worthwhile. 
Implementation of this scenario resulted in an average BCR of greater 
than 2.6. Some improvements resulted in BCRs significantly higher than 
2.6 and some were lower; no improvement was implemented that had a BCR 
of less than 1.0.
    The average annual Cost to Improve highway conditions and 
performance for the period 1994 through 2013 is, given Economic 
Efficiency standards, $65.1 billion.
            Bridge
    The Cost to Improve bridge conditions scenario provides cost 
estimates for achieving and maintaining predefined Minimum Condition 
Standards for physical conditions on bridges that are currently 
deficient or expected to become deficient at some point during the 
analysis period. This scenario represents a significant improvement in 
nationwide bridge conditions.
    The modeling procedure used to develop the investment estimates for 
this scenario does not employ economic considerations in the evaluation 
of potential improvements.
    The Cost to Improve bridge conditions for the period 1994 through 
2013 is $8.9 billion annually.
            Transit
    The average annual Cost to Improve transit conditions and 
performance is estimated at $12.9 billion for the analysis period.
    Of the total annual investment requirements, $7.9 billion 
represents the Cost to Maintain current conditions and performance, 
$2.0 billion to correct existing deficiencies, and $3.0 billion to 
improve transit service levels in terms of system speed, comfort, and 
convenience. These estimates reflect investment requirements imposed by 
the CAAA and the ADA.
    At this investment level, sufficient capacity would be available to 
provide transit patrons with seats for all but those trips occurring at 
the peak of rush hours. In addition, wait times and the need to 
transfer would be reduced. Finally, the backlog of deferred rail and 
bus modernization and rehabilitation requirements would be eliminated.
       schematic: development of highway investment requirements
Adjustments to the Highway Performance Monitoring System Analytical 
        Process and Highway Economic Requirements System Simulated 
        Investment Requirements
    1. The analysis of 1994-2013 highway and bridge investment 
requirements began with an assessment of the 1993 Highway Performance 
Monitoring System (HPMS) data base. The States provide section-specific 
estimates of future travel at the end of the analysis period.
    2. The first major adjustment was to revise the HPMS State-supplied 
travel forecasts in the 33 most populous urbanized areas to reflect MPO 
planning considerations. This adjustment resulted in less highway 
travel being projected over the 20-year analysis period and therefore 
lowered capacity requirements, especially in the most populous 
urbanized areas.
    3. In the face of increasing congestion, many drivers will adjust 
their schedules to make more intensive and efficient use of available 
highway capacity. Therefore. peak travel periods will extend for longer 
periods of time and in more locations. To reflect this phenomenon a 
spreading of the peak was simulated, resulting in lower capacity 
requirements.
    4. The model-based results were adjusted to reflect the latest 
edition of the Highway Capacity Manual (HCM). which assumes a larger 
number of vehicles per lane per hour are now being accommodated than in 
the past [effectively increasing capacity). The impact of this 
adjustment was a reduction in projected capacity requirements.
    5. Where appropriate, capacity enhancements other than constructing 
additional lanes were simulated. Such enhancements include freeway 
surveillance and control, High Occupancy Vehicle facilities, ramp 
metering, incident management, signalization improvements, traffic 
channeling, and restriping existing pavement. The impact of 
implementing an aggressive Transportation System Management program 
reduces the requirement for additional lane miles of capacity.
Investment Requirements Added to the Model-Based Estimates
    6. To incorporate the basic infrastructure requirements in 
expanding suburban areas, the expected population growth in and around 
urbanized areas is translated into basic network infrastructure. 
Incremental metropolitan expansion requirements are estimated at $8.5 
billion per year (beyond estimates for increased demand on existing 
facilities).
    7. The HPMS data base does not contain condition and performance 
information for the approximately 2.7 million miles of roads 
functionally classified as local. Local road investment requirements 
are estimated at $1.0 billion per year, based on a Department of 
Agriculture study.
    8. The military relies on the highway system for peacetime movement 
of military shipments, as well as for wartime or emergency mobilization 
and deployment of military units. For these purposes, a subset of 
Interstate and other principal arterial systems has been accorded 
certain design specifications in order to accommodate large and heavy 
military vehicles. Capital requirements necessary to achieve these 
specifications, above and beyond what would normally be required to 
accommodate nonmilitary traffic, are estimated at $30 million annually.
    9. In their HPMS submittal, the States are no longer required to 
provide information on rural minor collectors. The investment analysis 
of rural minor collectors was based on information included in the 1992 
HPMS data base.
                               __________
        Chapter 5: Investment Requirements Versus Capital Outlay
    In 1994, $57.2 billion in capital investment would have been 
required, from all levels of government, just to maintain 1993 
conditions and performance on our Nation's highways, bridges, and 
transit systems. This estimate includes $34.8 billion in system 
presentation and $22.4 billion to expand capacity to prevent increased 
congestion.
    In 1994, $80 billion would have been required to provide a higher 
quality of service. This estimate includes $50.7 billion for system 
presentation and $29.3 billion for expanded capacity. Under this 
scenario, highway deficiencies would not be eliminated, but those 
highway improvements that generated a benefit/cost ratio of one or 
greater would be made.
    Currently (1993), all levels of government spend $40.5 billion 
annually on highway and transit capital investment triggered by 
condition and/or performance deficiencies. Highway investment accounted 
for $34.8 billion and transit investment accounted for $5.7 billion.
    Just to maintain current conditions on our highway and transit 
systems will require 41 percent higher funding than Federal, State, and 
local governments are currently investing. To improve conditions to 
optimal levels based on economic and engineering criteria would require 
us to double our current capital investment in highways and transit.
    Investment by all units of government has never been sufficient to 
maintain overall system condition and performance. However, highway and 
transit systems have not fallen apart because the States are investing 
strategically so that the most important deficiencies are addressed. As 
a result of overall disinvestment, highway system performance continues 
to decline. Motorists now face more congestion, in more places, for 
longer periods of time, than at any point in history. Maintaining the 
highway and transit infrastructure at an acceptable level will become 
increasingly difficult unless adequate funding is provided.
    Investment estimates are developed for a 20-year analysis period. 
To provide linkage between these 20-year investment estimates and 
actual current year investment, this section offers a comparison of 
1994 investment requirements and actual recent capital outlays by all 
units of government. This analysis requires that only 1993 
disbursements related to condition and performance deficiencies (as 
opposed to total capital outlay) be compared to investment required in 
1994 (in contrast to the average annual requirement).
    It was reported earlier in this pamphlet that a total of $38.7 
billion was spent by State and local governments on highway and bridge 
capital improvements in 1993. However, not all of this spending was 
occasioned by condition and performance deficiencies.
    Of the $38.7 billion in capital expenditures, $34.8 billion was 
spent to correct condition and performance deficiencies. The balance 
was spent on capital improvements intended to satisfy other objectives 
such as environmental impact mitigation or economic development. 
Exhibit 5-1 provides a comparison of total capital outlay with that 
portion invested to correct condition and performance deficiencies.
    Because of projected increases in highway and transit travel over 
the 20-year analysis period, the investment requirement estimate for 
any given year (except the midpoint) will be different than the average 
annual investment requirement reported in Section 4. Investment 
required for capacity expansion to maintain or improve system 
performance is assumed to grow at a rate equal to the rate of travel 
growth. Therefore, the investment required for each year during the 
first 10 years of the analysis period will be lower than the average 
annual; and the investment required for each year during the second 
half of the analysis period will be higher than the average annual.
    Exhibit 5-2 compares the investment required in 1994 to maintain or 
improve highway, bridge, and transit conditions with the comparable 
1993 capital outlay. Readers will note that the highway and transit 
investment required in 1994 is indeed lower than the average annual. 
Bridge investment is generally directed at system preservation and is 
therefore assumed to be insensitive to travel growth estimates.
                               __________
                           PART II: MARITIME
                  Chapter 6: Waterborne Transportation
    The U.S. waterborne transportation system serves the needs of both 
international and domestic commerce and also includes the port 
infrastructure and shipbuilding industry. Together its segments play a 
critical role in meeting national security requirements and 
contributing to economic growth.
    The world merchant fleet amounts to over 25,000 vessels with a 
capacity of 686 million deadweight tons (DWELL. The U.S. ranks tenth 
among countries of registry with 20 million DWT. The domestic fleet 
includes nearly 40,000 vessels with a cargo capacity of more than 67 
million short tons.
    The January 1, 1995, world orderbook for merchant vessels consisted 
of 1,527 vessels totaling 66.6 million DWT. The Major U.S. Shipbuilding 
and Repair Base is comprised of 101 private building and repair 
shipyards, and the U.S. ranks 26th among the world's shipbuilding 
nations.
    U.S. oceanborne foreign trade amounted to 898 million long tons 
with a value of $566 billion in 1994 and is projected to grow 4.5 
percent annually through 2005.
    The cargo carried on U.S.-flag vessels increased steadily from 25.1 
million long tons in 1970 to 35.2 million long tons in 1994, a 40 
percent increase, reflecting the deployment of larger, more productive 
vessels.
    Total domestic trade amounted to approximately 1.1 billion short 
tons annually during the 1987 through 1993 period.
    There are 1,917 major U.S. seaport terminals, and 1,789 river 
terminal facilities located in 21 states on the 25,000-mile U.S. inland 
waterway system. Of the 343 ports that handled waterborne trade during 
1993, the 50 leading coastal and inland ports accounted for 89 percent 
of the total traffic. In 1994, 44 percent of the world merchant fleet 
tonnage called at U.S. ports.
    World oceanborne trade is projected to approach 5 billion tons by 
2005. The demand for new buildings worldwide will approximate $267 
billion in current dollars over the next 5 years, $150 billion 
attributable to replacement requirements and $117 billion to trade 
growth.
    Future investment in the U.S. waterborne transportation system will 
need to continue to be a blend of public and private money, as the 
industry remains essentially privately capitalized.
                  system characteristics and condition
    The U.S. waterborne transportation system serves the needs of both 
international and domestic commerce. It includes the international 
liner (scheduled), nonliner (unscheduled dry cargo) and tanker 
segments, the domestic inland waterways, Great Lakes and ocean 
segments, the port infrastructure, and shipbuilding industry. Together 
these segments play an important role in both the global and domestic 
economy, and a critical role in meeting our national security 
requirements and contributing to economic growth.
World and U.S. Oceangoing Fleets
    Characteristics The world merchant fleet of oceangoing vessels 
1,000 gross tons and over, as of January 1, 1995, amounted to just over 
25,000 vessels with a capacity of 686 million deadweight tons (DWT). 
Only 15 nations have more than 10 million DWT registered under their 
flags, and together these 15 account for 75 percent of the world total. 
The five largest registry 'days are Panama, Liberia, Greece, Cyprus, 
and the Bahamas, accounting for 46 percent of the total world fleet. 
The U.S. ranks tenth with 20 million DWT. Tanker vessels make up the 
largest part of the world fleet, accounting for 5,994 vessels and 297 
million DWT. Dry bulk carriers account for 5,291 vessels and 250 
million DWT. The United States has a significant presence in the world 
intermodal fleet; its containership fleet ranks third in the world.
            Condition
    The U.S. oceangoing fleet is older and less fuel efficient than the 
overall world fleet.
U.S. Domestic Fleet
            Characteristics
    The domestic fleet includes nearly 40,000 vessels with a cargo 
capacity of more than 67 million short tons. The predominant vessel in 
the domestic fleet is the dry cargo barge, 87 percent of which operate 
on the inland waterways. Total capacity of the 26,953 dry cargo barge 
fleet is 39 million short tons.
    In 1993, the tank barge fleet consisted of 3,862 vessels with a 
capacity of nearly 11 million short tons. About 82 percent of these 
operated on the inland waterways. The domestic towboat/tugboat fleet 
amounted to 5,224 vessels in 1993, 62 percent operating on the inland 
waterways. The self-propelled U.S.-flag Great Lakes fleet consists 
almost exclusively of dry bulk vessels, most of which carry ores. 
Ferries constitute a small segment of the domestic fleet, 150 in 
number, with a total passenger capacity of just over 87,000 (580 per 
vessel average).
            Condition
    An age profile of selected portions of the domestic fleet is shown 
in Exhibit 6-3.
Port Infrastructure
    The U.S. port system is comprised of deep-draft seaport and Great 
Lakes port facilities and the inland waterway system. Each of these 
elements include both publicly and privately owned marine terminal 
facilities which are the interface between water and surface 
transportation modes.
    There are in total 1,917 major U.S. seaport terminals comprising 
3,173 berths. The general cargo class is the predominate berth type in 
all regions except the Great Lakes, where the majority of facilities 
are for dry bulk cargoes.
    There are 1,789 river terminal facilities located in 21 states on 
the 25,000-mile U.S. inland waterway system. The inland system is less 
concentrated geographically and provides almost limitless access points 
to the waterways.
U.S. Shipbuilding
    The Major U.S. Shipbuilding and Repair Base is comprised of 101 
private shipbuilding and repair shipyards--21 shipbuilding yards, 32 
major repair yards, and an additional 48 yards that are capable of 
performing topside work on large vessels.
                          drawing conclusions
Intermodal Transportation
    Intermodal transportation uses sophisticated equipment (vessels and 
inland delivery systems) linked through information technology to meet 
shippers' needs. Compared to traditional breakbulk services, Intermodal 
transportation provides shippers with lower transportation costs, 
reduced inventory and warehousing costs, just-in-time logistics 
support, reduced damage and pilferage, and increased market 
opportunities. U.S.-flag carriers pioneered the development of marine 
container terminals, double stack trains, and cargo and equipment 
tracking systems to provide the total logistics support required for an 
efficient transportation network.
U.S.-flag Shares
    U.S.-flag vessels carried approximately 3.8 percent of U.S. 
waterborne foreign trade in 1994, down from 5.3 percent in 1970. 
However, the cargo carried on U.S.-flag vessels has increased steadily 
from 25.1 million long tons in 1970 to 35.2 million long tons in 1994, 
a 40 percent increase. This absolute increase in cargo carried on U.S. 
flag vessels reflects the deployment of larger, more productive U.S.-
flag vessels in the in the 1970's and 1980's.
                           system performance
International Trade
    In 1994, world oceanborne trade (imports) amounted to about 3.1 
billion long tons, with the United States accounting for 18 percent. 
Total oceanborne U.S. foreign trade (exports and imports) in 1994 
amounted to 898 million long tons with a value of $566 billion, an 
increase of 3.2 percent in tonnage and 12.8 percent in value from the 
previous year.
    U.S. finer trade expanded at an annual rate of 6.8 percent between 
1985 and 1994. In 1994, approximately 78 percent of all U.S. liner 
cargoes gong tons) were containerized. Highly specialized line-haul/ 
feeder services, connecting carrier services and vessel-sharing 
arrangements have become the norm in these trades.
    U.S. non-liner shipments declined at an annual rate of 1 percent 
between 1985 and 1994. The U.S. tanker trade grew at an average annual 
rate of 7 percent between 1985 and 1994, due largely to rising U.S. 
petroleum imports (occasioned in part by declining domestic crude oil 
production).
    In 1994, 7,206 vessels, or 29 percent of the world merchant fleet, 
called at U.S. ports. In terms of capacity, these ships represented 44 
percent of the deadweight tonnage in the world fleet.
U.S. Domestic Trade
    Total domestic trade (inland waterways, Great Lakes, and domestic 
ocean services) amounted to approximately 1.1 billion short tons 
annually during the 1987 through 1993 period.
    The total volume of cargo carried on the Great Lakes has been quite 
stable over the last several years, and amounted to nearly 110 million 
tons in 1993. More than 90 percent of this traffic moved in dry bulk 
ships.
    One out of every eight tons of goods transported domestically moves 
via the inland or intracoastal waterway systems, and more than half of 
U.S. states are tied to a waterway system.
    Total cargo moving in the domestic ocean trades, which include 
Alaska, Hawaii and Puerto Rico, has been declining steadily for the 
past several years, reflecting the decline in Alaska North Slope crude 
oil shipments.
Port Traffic
    The movement of domestic and foreign waterborne commerce through 
the U.S. port system is highly concentrated. A total of 343 ports 
handled waterborne trade during 1993. The tonnage handled by the 50 
leading coastal and inland ports amounted to 89 percent of the total 
water-borne trade in that year. Despite the high degree of 
concentration, there were 145 ports that handled over 1 million short 
tons of cargo, which demonstrates the broad base on which the U.S. port 
system is built.
    Container traffic through U.S. ports, which increased by 12 percent 
from 1993 to 1994, is also highly concentrated. The top ports accounted 
for 79 percent of the total. In terms of port calls, the top ports 
accounted for approximately 75 percent of the vessel calls to all U.S. 
ports in 1994.
Shipyard Production
    As of January 1, 1995, the world orderbook for merchant vessels 
1,000 gross tons (GRI) and over consisted of 1,527 vessels totaling 
million DWT. Japan and South Korea are by far the leading world 
merchant shipbuilders with combined 64 percent share (based on DWT) of 
the January 1, 1995 orderbook. The United States ranks 26th among the 
world's shipbuilding nations.
    U.S. shipbuilding industry has a long history of commercial 
construction. However, as a result of the suspension of Federal 
construction assistance, the U.S. shipbuilding industry's commercial 
orderbook fell from 77 vessels (approximately 4.7 million GRT) in the 
mid-1970's to zero by 1988. Since the enactment of the National 
Shipbuilding and Shipyard Conversion Act of 1993, U.S. shipyards have 
been aggressively competing for re-entry into the domestic and foreign 
commercial shipbuilding markets. The newly expanded Federal mortgage 
guarantee program Title XI) has been a major impetus to the shipyards.
National Security Aspects
    In the past, the United States relied on a huge fleet of relatively 
small commercial ships to provide sealift support; now, that fleet has 
been superseded by an infinitely more sophisticated network of 
interrelated, intermodal equipment and large vessels. These assets, 
located throughout the world, serve both U.S. commercial and military 
requirements.
Demand for Water Transportation and Shipping Capacity
            Oceanborne Trade
    World oceanborne trade expanded from 2.3 billion long tons to 3.1 
billion long tons between 1985 and 1994 (3.9 percent annually), and is 
projected to grow at 4.3 percent annually to approach 5 billion tons by 
2005. U.S. oceanborne foreign trade grew at a slightly slower rate over 
the last 10 years, but is Projected to grow 4.5 percent annually 
through 2005. Oceanborne trade is expected to grow at higher rates than 
gross domestic product due to reduction in trade barriers and advances 
in transportation and communications. Countries will be trading a 
larger share of what they produce.
Demand for Ocean Shipping Capacity
    Demand for shipping capacity is largely a function of world trade. 
However, given the age profiles of the existing world fleet, the 
principal new building demand in the 1990's will come from the 
requirement to replace existing vessels. Thus, total shipbuilding 
demand has a replacement component and a trade-induced component. Since 
trade forecasts may vary widely, there is much more certainty 
associated with the replacement component, which reflects the physical 
deterioration of ships over time. Exhibit 6-7 shows the world demand 
for newbuildings in the 1995-2000 period. Nearly two-thirds of the 
total demand for newbuilding through the year 2000 will be for 
replacement vessels. The demand for newbuildings worldwide will 
approximate $267 billion in current dollars over the next 5 years, $150 
billion attributable to replacement requirements and $117 billion to 
trade growth.
    Considering the high percentage of the world fleet that serves the 
U.S., this demand for newbuilding is important to the Nation, as both a 
shipbuilder and a consumer of transportation services.
System Investment Requirements
    Future investment in the U.S. waterborne transportation system will 
need to continue to be a blend of public (Federal, State, and local) 
and private money, as the industry remains essentially privately 
capitalized.
    Significant investment in replacement tonnage will be required. 
Where the replacements are built and what flag they fly will be largely 
a function of the level of Federal commitment to maintaining a U.S.flag 
presence in international trade and a U.S. shipbuilding capability. 
Federal funds invested in the maritime industry tend to be highly 
leveraged. Thus, an annual investment of $100 million in the proposed 
Maritime Security Program would maintain an operating liner fleet of 50 
U.S.-flag ships operating in international trade (a small fraction of 
the total operating costs of such a fleet). Similarly, the Title XI 
ship financing program (which guarantees up to 87.5 percent of vessel 
cost) requires that only a small portion of the guarantee amount (5 
percent to 10 percent) be held as a reserve against default.
                               __________
     Statement of Andrew Card, Jr., President, American Automobile 
                       Manufacturers Association
    Good afternoon, I am Andrew Card, President and CEO of the American 
Automobile Manufacturers Association (AAMA). AAMA's members are 
Chrysler Corporation, Ford Motor Company and General Motors 
Corporation. Thank you for the opportunity to testify today on the 
reauthorization of the Intermodal Surface Transportation Efficiency Act 
(ISTEA).
    The automotive industry has a keen interest in and a unique 
perspective on a safe and efficient highway system: good roads are 
vital for both the production and use of our products.
    The automotive industry sells ``mobility.'' Some years ago, a 
former GM chairman characterized the role of the industry in this way: 
``We may think we sell cars and trucks. But what we are really selling 
is mobility. Our cars and trucks must be well designed and well built, 
but if they cannot be used efficiently and enjoyably, they will be of 
no more value than a canoe in the desert.''
    While our customers need good roads for the safe and efficient use 
of our products, we as manufacturers must also have good roads to build 
and distribute our products. Global economic competition has changed 
the way we conduct every aspect of our business and that includes how 
we use our highways. U.S. maps may show that Interstate 95 runs from 
Maine to Florida and that Interstate 80 goes from New York to San 
Francisco. However, for America's car companies, these roads extend 
directly from our 276 manufacturing facilities to Europe, to Asia and 
beyond.
    In order to compete in our global economy, AAMA member companies 
have instituted quality control and lean manufacturing processes to 
reduce costs and increase productivity. These improvements have 
resulted in a significant change in the auto industry's material 
delivery network. Auto manufacturers now ship the majority of their 
parts and components just-in-time to meet very precise production 
schedules. The data dramatically illustrate this change: in a decade, 
just-in-time deliveries have increased, on average, from 25 percent to 
95 percent of all deliveries.
    For example, at one of our member companies, 32 plants operate on a 
just-in-time inventory system. That means that throughout every single 
working day, about 2,500 trucks travel more than one million miles on 
the nation's highways delivering parts and components to those 32 
plants just at the point they re needed in the production process.
    At another one of our member companies, one typical plant receives 
and unloads an average of 120 truckloads of component parts and 
supplies daily. The plant then ships approximately 480 vehicles (one 
half of its daily production) directly to dealers using 60 haulaway 
trucks. An additional 480 vehicles leave the plant site loaded on 
multilevel rail cars destined to rail unloading ramps located in major 
market areas. Upon arrival, the rail cars are unloaded and the 480 
vehicles are delivered to dealers by another 60 haulaway trucks.
    Finally, another manufacturer uses a scheduled delivery process to 
assure that parts and materials are delivered to its plants in just the 
right quantity, at the right time. Trucks must pick up parts at 
suppliers within a 30 minute window and deliver them to the 
manufacturer's plant under the same time constraints. The objective is 
to have no more than 2 hours inventory on the line at any one time.
    It is clear that any disruption in highway service, such as 
congestion or bad roads, will cause disruption in the manufacturing 
cycle, resulting in lost production and sales. As Henry Ford put it: 
``Ordinarily, money put into raw materials or into finished stock is 
thought of as live money. It is money in the business, it is true, but 
having a stock of raw materials or finished goods in excess of 
requirements is WASTE which, like every other waste, turns up in high 
prices and low wages.''
    Just-in-time was a goal in the 1980's, but in the 1990's, it is a 
necessity in order to be internationally competitive.
    Mr. Chairman, I would like now to address some specific issues 
related to ISTEA. One of the most crucial responsibilities for Congress 
in the reauthorization process is to provide adequate funding for the 
highway program. There are sufficient funds in the Highway Trust Fund 
but they have not been spent in the past several years, to the 
detriment of our roads and bridges. I know the subcommittee is well 
aware of this problem. In fact, all of you signed the recent letter to 
Budget Committee Chairman Domenici urging the committee to provide a $6 
billion increase in highway funding for fiscal year 1997. AAMA's 
members strongly support and appreciate your efforts.
    As a global industry, the automobile industry also believes that 
future U.S. competitiveness must address global transportation trends. 
With the national commitment in some major overseas markets to advanced 
surface transportation modes and to Intelligent Transportation Systems 
programs, continued U.S. development of innovative highway 
transportation approaches is important in assuring the long-term 
viability of the U.S. transportation system. In this context, the 
automobile industry supports development of Intelligent Transportation 
Systems, or ITS, a mix of both vehicle and highway technologies which 
are designed to assist all roadway users in the smooth movement of 
traffic in congested areas. ITS can help improve air quality, increase 
safety for highway users, as well as help reduce fuel use.
    America's car companies believe that maintaining and improving our 
nation's highway system must be one of our national priorities if we 
are to compete internationally in the 21st century. We know you will 
work toward that same goal as you authorize ISTEA this year.
                                 ______
                                 
   Responses of Andrew H. Card, Jr., to Questions from Senator Inhofe
    Question 1. Do you see the EPA's proposed ozone and particulate 
matter standards as having an economic effect on transportation trends 
in this country in general? And specifically on the transportation 
industry?
    Response. If EPA's proposed standards for ozone and particulate 
matter are adopted, there is likely to be a significant increase in 
non-attainment areas in the country. Any area in non-attainment would 
be restricted in how it allocates Federal highway funds, so there would 
clearly be a negative effect on transportation. In addition, there 
would likely be additional controls imposed on mobile source emitters 
which would have a negative effect on both personal mobility and the 
just-in-time delivery system on which manufacturers depend.

    Question 2. What would you like to see in an ISTEA reauthorization 
proposal concerning the CMAQ program?
    Response. The CMAQ (Congestion Mitigation Air Quality) program 
currently does little to reduce congestion on America's highways and 
therefore little to improve air quality. The CMAQ program should be 
reformed so that funds could be used for highway projects which would 
allow traffic to move more freely and provide improved access from 
highways to our manufacturing facilities.
   Responses of Andrew H. Card, Jr., to Questions from Senator Chafee
    Question 1. I think we can all agree that investments in 
transportation yield a high return in terms of economic productivity, 
efficiency and job creation. However, we are unlikely to have adequate 
public resources to address all transportation needs. Strategic 
transportation investment is therefore critical. In your opinion, which 
transportation investments will yield the greatest rate of return in 
the future?
    Response. The best return on our investments in transportation 
comes from highway expenditures, especially where funds are used to 
mitigate traffic congestion and improve access to our manufacturing 
facilities.

    Question 2. Your testimony recommends that the reauthorization 
should provide increased funding for highways and innovative highway 
programs. What about other modes of transportation? How much does your 
industry rely on rail and other modes to build and distribute your 
products?
    Response. The auto industry is heavily dependent on all modes of 
transportation, including rail. As a result, intermodal connectivity--
efficient connections between modes--is also very important to the 
industry.
                                 ______
                                 
 Prepared Statement of Alan E. Pisarki, Author of Commuting in America 
                                   II
                              introduction
    It is an honor to be here at this first Senate hearing on ISTEA 
reauthorization, with the opportunity to address important 
transportation trends in America today. I recall with great pride that 
I participated in the first Senate hearing in the advent of ISTEA 6 
years ago.
    My focus today will be on commuting trends, their economic and 
demographic determinants, and their implications for our transportation 
future. This will be based largely on my recent study, Commuting in 
America II. At the outset, I want to thank the 14 sponsoring 
organizations and other agencies that assisted in this effort, 
particularly the leadership of the American Association of State 
Highway and Transportation Officials.
    The materials provided are in two parts: this testimony, and a set 
of supportive graphics. Copies of the complete report, Commuting in 
America II, have also been made available.
                            the worker boom
    Previous study has identified three factors operative in the worker 
boom of the seventies: large job increases, the baby boom, and the 
rapid increases in women's participation in the work force. Each of 
these three forces has diminished. The trends depict a clearly visible 
``bubble'' of growth in both the labor force age population and the 
actual labor force over the past period that explains the great 
commuting surge of the seventies and early eighties and its relative 
decline in the nineties.
    Although the rates of change show a sharp drop, the total increase 
for the period is still substantial, over 18 million workers, actually 
about 300,000 more than in the seventies yielding two decades of very 
substantial increase with which our transportation system has had to 
deal.
    There is substantial foundation for the belief that the 1990 census 
results may have signaled the closing of the worker boom. Future trends 
depict a period of relative calm low overall growth in total population 
and population of working age for the remainder of the decade and into 
the next century. Labor force growth rates will decline to about half 
of the rate in the eighties, but are still projected to produce an 
absolute increase in labor force of between 17 and 18 million for the 
decade, or only a little less than the number in the eighties.
    Some key points:
     The 1980-1990 decade saw the lowest rate of population 
increase in our nation's history, save for the depression decade, and 
the only other time that growth over a decade has been below 10 
percent. Absent extensive levels of immigration that rate would have 
been much lower.
     There is a period of relative calm ahead about 10 percent 
overall growth in population and population of working age for the this 
decade moving in tandem with continuously declining rates of growth out 
to the year 2050.
     Women's labor force growth rate surged through the sixties 
and seventies and is just now tapering off, but still remains at high 
rates relative to men. Total labor force increase in the 1980-1990 
decade was clearly down from the previous decade, for both men and 
women, with women contributing 11 million to the labor force in 
contrast to about 14 million in the previous decade.
     Women's share of total employment rose from below 30 
percent in 1950 to 45 percent in 1990.
     It is expected that the 18 year old age-group, the source 
of new workers, new commuters and new drivers, will have declined to 
its nadir in 1995 and then slowly begin recovering, but will not reach 
4 million again until 2008 under present projections.
     In many respects the fundamental unit of metropolitan 
travel is the household. There are about 100 million households in 
America today. The average household size in 1950 was 3.37 persons, 
declining rather dramatically to 2.63 persons by 1990, with the 
greatest changes occurring in the sixties and seventies.
     There continues to be a close parallel between household 
and labor force growth; the overall growth rate from 1950 to 1990 for 
the labor force was 200 percent and for households, 211 percent, 
indicating that labor force (or workers) per household changed little 
in the period.
     Seventy percent of workers live in households with two or 
more workers, suggesting that tradeoffs between home and work locations 
are critical.
     The effect of all this is to say ``yes,'' but to the 
question of the influence of the worker boom in the future of 
commuting. The strong growth rates characteristic of the boom period 
are over, but given the large size of our national work force resulting 
from the strong growth of the past, future growth will continue to 
yield large numbers of new commuters that will challenge our 
infrastructure and public policy.
                             the auto boom
    As in the worker boom, there is a qualified answer to the question 
of the persistence of the trend in private vehicle ownership and use.
    Arrayed on one side is the astonishing fact that we added more 
vehicles than people to our population in the eighties. Beyond the 
surge in ownership is the fact that the private vehicle continued to 
absolutely dominate the choice of mode of transportation to work. All 
alternatives to driving alone to work by private vehicle declined 
between 1980 and 1990. The increase in the number of commuters in 
single occupant vehicles exceeded the total increase in commuters. 
About 19 million workers were added, and over 22 million single 
occupant vehicle drivers. Effectively, all new workers chose to drive 
alone and a few million additional workers shifted from other modes to 
the single occupant vehicle. Some alternatives, such as walking and 
carpooling, declined precipitously, while others, such as transit, 
declined less dramatically. Only working at home showed growth.
    Arrayed on the other side, it is difficult to see continued shifts 
to the private vehicle, on average, across the Nation beyond the 
present surge. A number of factors are involved in this:
     The shares of auto ownership by households show clear 
signs of stabilization at very high levels.
     The ratio of cars to workers has actually declined 
slightly.
     Most significantly, the number of vehicles available 
exceeds the number of drivers; and there is apparent saturation, on 
average, of drivers licenses. The important exception to these points 
will be treated later.
    The prospects for further shifts to the private vehicle seem minor 
if only because commuting travel is now so overwhelmingly oriented in 
that direction. It seems infeasible to believe that carpooling or 
transit levels could drop further fewer than one in ten cars has an 
occupant other than the driver, and transit is used by one in 20 
commuters. On the other hand the precipitous declines in carpooling in 
the last decade were unanticipated as well.
    The forces that impel personal vehicle use continue. Among the 
factors that will govern private vehicle use for commuting in the 
future are these:
     continued dispersion of jobs and population to the suburbs 
and beyond;
     continued pressures of time on multi-worker households;
     continued low levels of vehicle operating and ownership 
costs.
    Of these, the pressures of time, particularly on working women, has 
immense influence. The fact that 70 percent of commuting households 
have two or more workers suggests that living near work is no longer a 
simple option, and the trip chain taking care of household needs on the 
way to and from work (children, food, laundry, etc.) is central in 
contemporary lifestyles.
    Among the key findings were:
Vehicle Ownership
     While population grew by less than 10 percent and 
households by about 14 percent between 1980 and 1990, total vehicles 
available to households jumped by over 17 percent. Nothing depicts 
better the scale of vehicle growth than that the number of vehicles 
added in the decade exceeded the number of people added.
     The majority of U.S. households have two or more vehicles, 
with an average vehicle availability of 1.66 vehicles per household, up 
from 1.61 in 1980. It is more impressive when it is recognized that 
these increases in vehicles per household are occurring against a 
backdrop of declining persons per household.
     The case for stabilization of vehicle ownership can still 
be made despite the significant growth numbers just cited; there has 
been a decrease in the share of households with three or more vehicles 
from 1980 to 1990
     It will not matter how many vehicles people own as long as 
the number of driver's licenses are stable.
     The proportion of all households that are without vehicles 
has been in continuous decline since at least 1960. In 1960 21 percent 
of households were without vehicles, dropping to just above 11 percent 
by 1990.
     In absolute numbers, the number of zero-vehicle (vehicle-
less) households has remained roughly constant for 30 years at about 10 
to 11 million.
     Census data indicate that about 5.3 million workers live 
in vehicle-less households. Thus at most half of the vehicle-less 
households have workers.
     The New York metropolitan area held about 20 percent of 
all zero-vehicle households in 1980. Despite the fact that New York 
lost zero-vehicle households in the 1980-1990 decade, it still obtained 
approximately a 20 percent share of a fifth of all such households.
     The American vehicle fleet is aging rather substantially. 
The present fleet's average age is approaching 8 years (7.7 years), in 
contrast to less than 5.6 years in 1969.
     New cars typically have less than 20 percent of their 
travel allocated to commuting whereas older vehicles have upwards of 
24-25 percent of their travel in commuting.
     Trends in the transportation cost index, composed of the 
cost trends in owning and operating private vehicles, and with 
proportional inputs from taxi, transit, and airline fares, as well as 
other transport costs closely track the general consumer price index, 
composed of a weighted ``marketbasket'' of all consumer purchase items.
     The cost of vehicles in terms of the number of weeks of 
median family earnings needed to pay for them showed a stable pattern 
throughout the seventies at about 20 weeks pay, rising to about 25 
weeks pay, a 25 percent increase, by 1991. Thus, the average vehicle 
costs about half a years pay to the family earning the median national 
income.
     If improvements in vehicle fuel efficiency are added to 
declines in fuel costs the price of fuel per mile of travel has dropped 
substantially. Fuel costs have dropped from above nine cents a mile in 
the high cost 1980-1982 period to the 5\1/2\ cent range in 1992.
Modal Shares
     The short description of the long term trend is that there 
is a continuation of the increasing orientation to personal vehicles 
for commuting. The number of single occupant private vehicle users 
increased by over 22 million between 1980 and 1990 exceeding the number 
of new commuters. The pattern is uniform across the Nation by region, 
State, and metro area.
     The linking together of trips serving the household as 
part of the journey to work trip, so called work-trip chains, such as 
dropping children at child-care facilities, dropping off cleaning, 
picking up fast-foods, etc., is very much a family/household 
characteristic, and an increasingly important factor in choice of 
transportation.
     Auto use increases with age until the mid-fifties age 
group and then slowly tapers. This pattern is replicated when men and 
women are analyzed separately.
     There are only slight differences between men and women in 
mode choice that are still discernible; these differences have tended 
to diminish over time as women's work characteristics have become more 
like men's.
     The most evident effect of income is that driving alone 
increases from about 60 percent to over 80 percent with increasing 
income; correspondingly, carpooling decreases.
     Central city renters, constituting about 17 percent of 
households, are the least auto-oriented group, although still with a 70 
percent private vehicle share. While all home owners are highly private 
vehicle-oriented, suburban home-owners are the most, with over 90 
percent use of the private vehicle.
     The number of carpoolers has dropped from 19 million in 
1980 to less than 15.4 million carpoolers in 1990 out of a total of 115 
million declining to 13.4 percent of commuters. A major factor in the 
decline of carpooling, accounting for two-thirds of the loss, is the 
decline in large carpools.
     Carpooling is increasingly a household activity.
     Public transit use remained relatively stable from 1980 to 
1990 with almost exactly 6 million riders in 1980, declining by about 
100,000 to roughly 5.9 million users in 1990. Transit's share of 
commuters declined from 6.3 percent to 5.1 percent.
     While bus, the major mode used in transit, lost ridership, 
other transit modes, specifically subway and commuter railroad, gained 
riders. Much of the total increase, almost 40 percent of it, occurred 
in New York.
     Metro area size is a critical factor in transit use. Metro 
areas of over one million population, which account for half the 
national population, are responsible for 88 percent of the nation's 
transit use; areas over 5 million account for 61 percent. New York 
alone accounts for 37 percent. The concentration of transit use in the 
largest metropolitan areas has increased since 1980.
     Working at home was the only category, other than the 
single occupant vehicle, that increased in share. The overall gain was 
dramatic, over a 50 percent increase, growing from 2.2 million in 1980 
to 3.4 million in 1990.
     Among the groups that are most oriented to working at home 
are women, home owners, older populations, non-metropolitan residents 
and the white non-Hispanic population. Non-metropolitan residents, with 
20 percent of all commuters, constitute 30 percent of those who work at 
home.
Commuting Times and Travel Trends
     Overall, commuting travel time for all modes averaged 22.4 
minutes one way in 1990, up by only about 3 percent, from 21.7 minutes 
in 1980 an increase of roughly 40 seconds.
     Seventy percent of Americans reach work in less than half 
an hour.
     Metropolitan size is also a major factor in travel times, 
varying from an average of 17 minutes for those areas below 100,000 in 
population to over 27 minutes for those over 3,000,000 in population a 
10-minute swing. The average for the areas over 1 million is just above 
25 minutes.
     Most States cluster around the national average with the 
greatest deviations being New York State (1.24 times the national 
average) and North Dakota (58 percent of the national average).
     On average, a suburban resident commuting to the same 
suburb has a 7 to 8 minute travel time advantage over commuting to the 
central city of the same metro area.
     The central city oriented trip appears to increase in 
travel time far more rapidly as metro size increases than do trips to 
suburbs or to other central cities or suburbs. This suggests one reason 
for the growing significance of suburbs in large metro areas.
     Reverse commutes, at 23 minutes, take about 3 or 4 minutes 
less in the non-peak direction than does the inbound direction.
     Suburb to same suburb travel is almost completely 
explained by driving alone, walking and working at home.
     Suburban and non-metropolitan flows are very similar in 
regard to the dominant share of the private auto and two-person 
carpools. After that, larger car pools are key in non-metropolitan to 
central city flows, while transit plays a bigger role in suburb to 
central city flows.
     The flow between central cities shows a striking use of 
larger carpools and of railroads. This is a major role for commuter 
rail.
     The percentage of commuters with travel times beyond 60 
minutes is just below 6 percent. The average for all metro areas over a 
million is 7.5 percent. Three areas have percentages over 10 percent 
New York (16.5), Chicago (10.7), and Washington, DC. (10.7).
     The 60-or-more minutes travel time group has the lowest 
drive alone share, while still significant, but with extensive use of 
large carpools and transit, especially commuter railroad.
     There is an even peak from 7 a.m. to 7:30 a.m. and from 
7:30 a.m. to 8 a.m., consisting, of a male-oriented worker peak and 
then a female oriented peak.
     Even in the peak period, the period from 7:30 a.m. to 8 
a.m., the majority of travelers have trip times of under 20 minutes. 
The half hour segment just before it has many more long distance (in 
time) travelers.
     The early morning hours are much more heavily oriented to 
long distance travelers. A high proportion of workers with trips longer 
than 60 minutes leave for work before 5 a.m.
    Travel time changes support the changing flows patterns observed 
earlier. While both increased in average travel time, the time 
advantage of suburb to suburb commuting over suburb to central city 
commuting has actually increased.
    The average trends tend to imply that things are going relatively 
well in commuting, but that is clearly not the case everywhere. Nothing 
is so distorted by averages as measures of travel time. Many areas, 
particularly those undergoing substantial growth, notably the 
metropolitan South and West, have seen sharp increases in travel times. 
One part of the explanation for the small increases in average travel 
times is provided by the shifts from slower modes to faster, e.g. from 
transit to carpooling or from carpooling to driving alone. This is 
obviously a one-time solution that will be available to only a few in 
the nineties. Neither will the surplus system capacity be available to 
absorb additional travelers. As a result the search for reasonable 
commuting times will likely lead to further dispersal.
                         the surbanization boom
    In regard to the geographic flow patterns of commuting the trends 
are unequivocal; the suburban boom continues. Because of Bureau of the 
Census definitional changes, this trend requires some statistical 
manipulation to confirm.
    Overall, the suburbanization of population and jobs not only 
continues but has accelerated in pace. Today the dominant commuting 
flow pattern is suburban, with half of all the nation's commuters 
living in suburbs and over 41 percent of all jobs located there, up 
from 37 percent in 1980.
    Suburban areas, defined here as the balance of metropolitan areas 
after subtraction of the central city, are now the main destination of 
work trips. The suburbs were the location of 13 million of the 19 
million new jobs created between 1980 and 1990; about a 70 percent 
share of all job expansion. This is an increase in share of job growth 
from the 1970 to 1980 period.
    If the focus shifts to commuting within metropolitan areas only, 
and non-metropolitan areas are excluded, suburbs contain two thirds of 
all metropolitan workers and slightly more than half of metropolitan 
job destinations.
    The flow patterns with a suburb as a destination account for 
substantial shares of growth in recent times. Suburb to suburb 
commuting accounted for 44 percent of metropolitan commuting flows in 
1990. That share is destined to increase given that suburb to suburb 
commuting obtained more than 58 percent of all commuting growth from 
1980 to 1990 as it did in the 1970 to 1980 period.
    A substantial increase in growth share was also obtained by central 
city to suburb commuting, so-called ``reverse commuting,'' rising from 
a 9 percent share of growth to over 12 percent. Its share of growth 
actually exceeded the share of central city to central city flows.
    Of further note is that the ``traditional commute,'' the suburb to 
central city component of flows, decreased its share of growth, 
accounting for less than 20 percent of all increase in the 1980-1990 
period, down from a 25 percent share in the previous decade.
    Inter-metropolitan commuting has shown substantial growth. In both 
1980 and 1990 the dominant part of inter-metropolitan commuting was 
``cross suburb commuting''--that is, commuting from one suburb to the 
suburb of a different metropolitan area. This flow pattern grew at more 
than twice the rate of suburban commuting growth in general.
    As one measure of the suburban effect, the number of Americans who 
commute outside their county of residence has almost tripled since 
1960.
    Some key trends:
                          population patterns
     If the geographic definitions that applied in 1980 are 
retained for 1990, central city population across the Nation has 
actually declined, all of the metropolitan growth of 17 million 
therefore was in the suburbs. In this structuring of the data non-
metropolitan areas gained 5.2 million. Some of the key points in the 
suburbanization trend are:

           In the 1980-1990 period, using 1980 definitions, 
        central cities showed a slight decline of .7 percent, losing 
        roughly half a million people.
           Central cities lost in the range of 2.5 to 3 million 
        persons per year in net terms to the suburbs during the 
        eighties. These flows were somewhat softened by foreign 
        immigration to central cities in the range of 750,000 per year. 
        Thus central cities continue to experience net outward 
        population shifts, almost exclusively to suburbs, in excess of 
        2 million per year.
           The 1980 to 1990 growth pattern contributed to a 
        further increase in suburban population share; the 1990 
        suburban share of metropolitan population now stands at over 60 
        percent.

     Metropolitan population growth rates have been highly 
variable from area to area. All of the high growth metro areas were 
Western or Southern, with the exception of Minn.-St.Paul. Conversely 
almost all of the low growth areas were Northeastern.
     As in the seventies, all areas losing population still 
show substantial overall worker growth and even more dramatic suburban 
worker growth, although not as extreme as in the earlier decade.
     Non-metropolitan areas are again experiencing something of 
a growth renaissance. Although less than half of the nation's non-
metropolitan counties were growing in the eighties, almost three-
quarters were gaining population in the nineties, with a major factor 
being in-migration. Many of these growth areas seem to be recreational 
and retirement based.
     Actual domestic migration rates appear to have continued 
unslackened in the eighties, despite the aging of the population, with 
most moves remaining in the same area.
     There is evidence of a lessening of the shift to the 
sunbelt that has dominated national migration patterns since the 
1950's. Taken together the South and West, with 52 percent of the 
nation's 1980 population, obtained 94 percent of population growth in 
the 1980-1985 period, dropping off to about 83 percent of growth in the 
1985-1990 period. In the nineties the rate has dropped further to an 
estimated 76 percent of all growth by 1993, but their share of the 
nation's population still rose to 56 percent.
Job/Worker Patterns
     Suburbs now house half of all workers in the country. Most 
of the workers reside within the heavily urbanized inner ring of the 
suburbs.
     The data indicate that there has been a significant 
alteration in the location of jobs over the 10 year period. Suburban 
areas constituted 42 percent of the job locations in 1990, up from 37 
percent in 1980, obtaining a two-thirds share of national job growth in 
the period, (equivalent to 75 percent of metropolitan job growth). The 
remarkable point is the substantial share of growth taken by the 
suburbs and central cities outside the metropolitan area of residence 
of the commuter. One quarter of the growth was obtained by such areas.
     Of 115 million commuters, about 90 million are in 
metropolitan areas, of which 80 million commute internally and 10 
million leave the metropolitan area, often bound for other metropolitan 
areas.
     The remaining 25 million commuters are non-metropolitan, 
for the most part remaining in non-metropolitan areas to work, with 
about 3 million entering metropolitan areas every day to work.
     The tendency to work within one's home county declines as 
the size of the metropolitan area increases. Seventy-six percent of all 
commuters work within their county of residence, with a remainder of 
somewhat more than 27 million who leave. This is almost triple the 
number who commuted beyond their county of residence in 1960. 
Intercounty commuting varies sharply by metropolitan area as a function 
of the local geography.
     Central city residents are more home-area oriented, with a 
percentage approaching 85 percent working in their home county, while 
suburbanites are much less so-oriented, with slightly more than 71 
percent remaining in their residence county. Those living in places of 
above 5,000 population in non-metropolitan areas, i.e. small cities and 
towns, are the most locally oriented, with 85 percent remaining in 
their county to work.
     The dominant flow pattern is suburban, with half of all 
metropolitan commuters living in suburbs; and with suburb to suburb 
commuting accounting for 44 percent of metropolitan commuting flows. 
Suburban areas are now the main destination of work trips.
     The available data indicate that outbound flows to other 
metropolitan areas and to non-metro areas amounted to about 5.4 percent 
of all commuting in 1980 and rose to over 7.5 percent in 1990. 
Moreover, inter-metropolitan commuting increased at a rate more than 
double that of metropolitan growth.
     In both 1980 and 1990 the dominant pattern of inter-
metropolitan commuting was ``cross suburb commuting,'' that is 
commuting from one suburb to a suburb of a different metropolitan area. 
It amounted to about 31 percent of all inter-metropolitan commuting in 
1980, rising to almost 39 percent in 1990. This flow pattern grew at 
more than twice the rate of suburban commuting growth in general.
     Overall the national job/worker ratio for central cities 
is 1.36, i.e., 136 jobs for every 100 workers. The overall national 
job/worker ratio for suburbs is 0.83 and for non-metro areas 0.92. 
Review of national patterns suggests that something closer to balance 
is occurring in both central cities and suburbs.
                            emerging trends
    In addition to the persistence, in varying degrees, of the trends 
of the past, new trends are emerging that will sharply modify commuting 
patterns into the future.
Immigration
    The scale of foreign immigration has become prodigious; perhaps, 
the dominant factor in national population growth patterns. Total 
immigration to the United States in the 1980-1990 period was about 8.7 
million persons; thus the foreign born share was almost 40 percent of 
total population growth. Recent data indicate the pace continues at 
that rate, with 4.5 million arriving in the 5 year period from 1990 to 
1994, twice the rate of the 1970's.
    Foreign immigrants tend to go to where Americans are, but with a 
somewhat greater focus on central cities. It is the most populous 
States that receive immigrants.
    The arrival of immigrants has affected the numbers of households 
without vehicles in the areas with major foreign immigration. Many 
sunbelt cities had greater percentage increases in population than in 
vehicles; all had significant increases in the number of households 
without vehicles. Even the suburbs of many of these areas saw large 
increases in households without vehicles.
    In obvious contrast to new births most immigrants arrive at labor 
force participation age; they are instantaneous additions to the 
traffic scene. About 80 percent of immigrants were of labor force age.
    Thus immigrants impact the commuting scene in many ways. They are a 
direct addition in population, and an even more substantial increment 
to labor force, equaling greater than a third of all new commuters, and 
their volatile modal patterns will affect future flows in several 
modes. Of acute interest will be the timeframe in which they shift from 
initial patterns of behavior upon arrival to patterns more like the 
national average.
    The fact that immigration factors can be altered by congressional 
action at any time tends to create additional uncertainties with 
respect to future commuting patterns.
Ethnic and Racial Patterns
    Previous discussion has emphasized the tendency toward saturation 
in many areas vehicle ownership, driver's licenses, and the use of the 
auto to work. These tendencies can be overstated because of a failure 
to examine these patterns in sufficient demographic detail. Saturation 
is a characteristic almost exclusively among the white non-Hispanic 
population. There is still substantial room for growth in these 
characteristics among the Black, Asian, and Hispanic populations.
    The key factor is households without vehicles. The proportion of 
all households that are without vehicles has been in continuous decline 
since at least 1960 dropping from 21 percent to just above 11 percent 
by 1990. In terms of absolute numbers, the number of zero-vehicle 
(vehicle-less) households has remained roughly constant for 30 years at 
about 10 to 11 million. The slight increase in this number from 1980 to 
1990 is almost certainly attributable to immigrant population effects. 
Census data indicate that about 5.3 million workers live in vehicle-
less households. Thus at most half of the vehicle-less households have 
workers.
    In stark contrast, the black population averages over 30 percent 
non-vehicle owning households and in central cities the number is over 
37 percent. Many individual central cities have extraordinary levels of 
black vehicle-less households New York with 61 percent, Philadelphia 47 
percent, Chicago and Washington, DC, 43 percent.
    Hispanics, with an overall rate of vehicle-less households of 19 
percent, have a rate of 27 percent in central cities. Among the central 
cities in metropolitan areas with very high levels of Hispanic vehicle-
less households are New York with over 62 percent and San Diego with 37 
percent.
    It is clear that central city renters are the predominant group of 
non-vehicle owning households; and as a general rule renters are more 
likely to be zero vehicle households than home owners. The New York 
metropolitan area held about 20 percent of all zero-vehicle households 
in 1990.
    One of the most pertinent aspects of this is the variation among 
racial and ethnic groups with regard to availability of driver's 
licenses. The White, non-Hispanic population is near, or at, effective 
saturation, especially among men (circa 96 percent); whereas the rate 
among all other racial and ethnic groups of men is on the order of 80 
percent.
    The disparities among women of different racial and ethnic groups 
and between women and men, are even greater. A point worth focusing on 
is that the sharp disparities between men and women among Hispanics and 
Asians is considerably greater than that between either Black or White 
men and women.
    All of these differences have effects on the opportunities for work 
locations, travel times, choice of mode, etc. A predominant part of the 
population that walks to work, or uses transit, and taxi are drawn from 
the households without vehicles.
    These groups constitute the major sources of growth in vehicle 
ownership and use in the future. It cannot be assumed that the 
differences between these groups and the national average are racial, 
or ethnic, or gender-based in character. Rather, age, income level, 
household size, and the location and type of residence will be the 
governing factors in future commuting patterns. It must be assumed that 
as the socio-economic profile of these groups change there commuting 
behavior will shift accordingly. That is likely to mean an auto-
oriented suburban-based working style.
    Some key findings:
     Black and Hispanic drive-alone commuters have very similar 
patterns, with White non-Hispanics exhibiting a similar pattern but 
with a higher overall utilization rate.
     A major difference is the exceptional use of transit modes 
by the black population. The pattern is similar in both suburban and 
central city locations.
     Black households lag both white non-Hispanic and Hispanic 
households in the use of bicycles, motorcycles and working at home.
                                closing
Mode Choice
    There is little basis for adopting any view that suggests that 
there will be a significant reversal in the private vehicle orientation 
of commuters based on present patterns of behavior and demography. The 
dominant factor here is the continued dispersal of populations out from 
our metropolitan areas and the pressures of time on workers. As long as 
the private vehicle remains at all affordable to own and operate the 
pattern will continue. The shifts in age structure of commuters abets 
this trend.
    This does not suggest that all is lost for public transit or other 
alternatives. The cases where transit, carpooling, walking and biking 
have been successful need to be studied and clues found regarding the 
appeal to the commuters that have proven effective. Those areas where 
transit is a major factor, predominantly in the center of our major 
metropolitan areas, need to sustain and intensify services. Where 
transit use is significant, most users indicate happiness with the 
services provided, which is a sound starting point. This market needs 
to be preserved. Transit providers will need to be very innovative to 
sustain or gain in markets. Some of the innovative work responding to 
suburban demands in the Chicago, Philadelphia, and New Jersey areas may 
yield successful models.
    It is difficult to be optimistic regarding a renaissance in 
carpooling. Most carpooling today is not carpooling in the sense we 
knew it just a few years ago a voluntary arrangement among co-workers 
or neighbors. That is dying most of the surviving ``carpool activity 
consists of family members with parallel destinations and timing. Maybe 
these need a new name ``fampools''? The advantages in carpool lanes are 
significant where average traffic speeds are very poor, but there are 
time costs to carpooling as well. Thus it is a changing environment 
which needs continuous exertion, as jobs change, work patterns shift 
and travel times change.
Density and Dispersal
    Continued dispersal toward the fringes of our metro areas seems a 
given for both jobs and population. Rapid growth on the metropolitan 
fringes has been masked by definitional changes. Census modified 
definitions shifted 6 million of the new population growth in the 
eighties from the suburbs to the central city and four million from 
non-metro to metro areas.
Variations on a Theme
    We are becoming increasingly conscious of a set of developments 
that add to the volatility of commuting. Simply described, this is a 
tendency for greater variability in the location, path, time and mode 
of travel to work. It is difficult to say whether this tendency is 
increasing or that it has just become more evident to researchers in 
recent times. Our data collection approaches focusing on 1 day's travel 
by a set of selected individuals or households would typically not 
catch this kind of phenomenon. Surveys would have to track daily travel 
of an individual over the course of several weeks to establish some 
sense of the scale and character of variation.
Economic and Social Factors
    The nature of work is changing. More work can be done in small work 
units of a few people or even one. This adds to the potential for 
dispersal of jobs. It also adds to the greater freedom in many cases of 
people to set their hours of work to match their personal preferences.
    Paralleling this factor is that many jobs are services oriented, 
where workers must be available to customers, requiring odd hours of 
work and weekend schedules. This adds to the greater potential 
dispersion of jobs in time as well as space.
    The powers of communications and data processing are only beginning 
to be felt. They are becoming ubiquitous.
    All of the power of telecommunications is focused unintentionally 
on permitting greater dispersal of populations and jobs. It 
fundamentally reduces the penalty of distance.
    The effects of women in the work place has been unmistakable and 
will further influence trends in the future. There seems to be a 
greater understanding of people's needs to care for children, and to 
take time off for other family needs as well. This has led to greater 
work scheduling flexibility in many firms, both large and small. That 
flexibility supports variation in work arrivals, and departures, as 
well as work days. Certainly, part of this is the sharp competition 
among firms for highly skilled employees, many of them women.
    It is to be expected that this willingness to be flexible on the 
part of management will only increase in the future as some skills 
become even scarcer and firms compete for the best. This also means 
that firms will tend to relocate where their scarcest resource, skilled 
employees, are located. Being a short commute away will be a benefit 
that firms can offer. This will tend to push firm locations to where 
people want to be, generally pushing employers toward higher income 
neighborhoods, and leading to longer commutes for lower income workers. 
Regionally, it means the outer edges of the metropolitan area; 
nationally, it means those areas that are pleasant and attractive to 
live in. This will keep national growth focused on the sunbelt and 
West. This could lead as well to increasing growth in smaller areas, 
university towns, for instance, rather than in the very large 
metropolitan areas of the Nation.
Immigration
    The scale of immigration, and in some respects its character, is a 
product of a stroke of a pen in Washington. Immigration will be the 
dominant population factor in many areas of the Nation, in the large 
population centers in general, and in particular in the centers of the 
West and South. Material presented earlier shows that immigrants are 
heavily oriented to the labor force years. Their bimodal distribution 
in education will create strange frictions in the national labor force, 
competing both at the highest and lowest skill levels.
    Not surprisingly, their orientation to the private vehicle is less 
than that of other Americans. The question is how long will it take 
before their behavior patterns are symmetric with others of similar 
income and age characteristics. Or, are there substantial cultural 
variations that will manifest themselves?
The Democratization of Mobility
    The private vehicle has become the tool of mass mobility. While we 
tend to think of auto ownership as all-pervasive in this society, this 
study has shown that this is strongly skewed by race and ethnicity, and 
other factors. One has to believe that the expansion of opportunity in 
America to immigrants and those born here will expand ownership and use 
of private vehicles as well. This will provide the great sources of 
growth of private vehicle ownership and travel in the coming years.
    The growth in vehicle travel in the remaining years of this decade 
and into the next century will be predominantly a product of new access 
to personal vehicle use on the part of young people, the older 
population, women in general and racial and ethnic minorities the 
mobility ``have-nots'' of our society.
    Just as we have cited the competition for skilled workers at the 
high end of the job spectrum, there will likely be more workers than 
jobs at the low end. This will mean workers traveling great distances 
for not particularly attractive jobs. The dramatic growth in 
intermetropolitan travel and in reverse commuting from the city out to 
the suburbs are both products of that reality.
    Society then is faced with an unpleasant challenge. So much of 
current public policy in commuting is aimed at suppressing auto 
ownership and use. Those policies are unintentionally aimed squarely at 
those on the margin of the ability to own and operate a vehicle, 
particularly those policies aimed at increasing the cost of driving. It 
is clear that those most affected by such policies will be those on the 
lower rungs of the economic ladder. Often these people will be those 
who are most auto-dependent.
Public Policy and Commuting
    Much of public policy today is focused on modifying societal 
behavior in commuting, specifically the preference for driving alone. 
These policies have proven at best dramatically ineffective. At worst 
they can be directly antagonistic to the goals they are intended to 
support.
    It must be clear by now that the notion that there is an American 
``love-affair'' with the automobile is missing the point. Those who 
promote this idea seem to imply that love is some kind of aberration, 
and with enough psychiatrists we can solve America's commuting 
problems. Americans love their automobiles about as much as they love 
their microwave ovens. They have them and use them because they are 
very efficient tools they are time saving devices. The desire for the 
personal vehicle in other countries follows this same pattern.
    The center of all of these issues is the burden of time pressures 
that most Americans feel. It is time pressures, particularly on women, 
that increases personal vehicle use trip chaining, and many of the 
other patterns we have examined. Decisions regarding household location 
and mode to work are not made frivolously. People have sound reasons 
for their choices.
    Public policies that try to increase the costs of auto use or 
increase travel times and congestion to force behavioral shifts to more 
preferred modes of behavior or locational densities will simply force 
people to make painful decisions. Many of these will result in the 
shift of households and jobs to areas where congestion is less 
obtrusive and where other costs are less; inevitably this will mean 
greater dispersion of the population, not less. The American commuter 
is a resilient and innovative character.
    Those who see the solution of so many of our present ills by 
reorganizing society into living at higher densities miss the point. 
People do not live ``efficiently'' in order to optimize some imposed 
societal goal, certainly not commuting. Residential density is one of 
the most fundamental of choices that households make. It is clear that 
most people, given the choice, opt for lower density living when income 
permits. As the society changes and choice patterns evolve, the market 
place must be ready to respond with development that is responsive to 
household choices. Any public policies that inhibit a market trend 
toward higher densities must be addressed. But the market place must be 
the final arbiter in a free society.
    The focus of public policy in this area must be on improving 
commuting for all workers with better walking and biking opportunities, 
better transit, and better roads. My proposed goal would be to reduce 
commuting to an unimportant topic of conversation and public policy.
    One effect that needs identification in closing is that many of 
these trends lead to room for greater optimism regarding commuting 
solutions. Technological responses increasingly respond effectively to 
energy and environmental concerns, and congestion, while still a major 
problem, in many areas is addressable in its new patterns. The 
beginning of the solutions lie in recognizing that the American public 
is in charge.
    It would be attractive to think that commuting will eventually 
become an activity of no particular personal or public policy interest. 
It would be quick and effortless with no detrimental public side-
effects. That day will not be arriving soon.
                        COMMUTING IN AMERICA II
   (Prepared by Alan E. Pisarski under the direction of the Steering 
              Committee for the National Commuting Study)
           Eno Transportation Foundation, Inc. Lansdowne, VA
                                foreword
    This report, titled Commuting in America II, is a followup to the 
first national report on commuting patterns and trends in the United 
States, published in 1987 and titled Commuting in America. As such, it 
is subtitled The Second National Report on Commuting Patterns and 
Trends. The 1987 report was based on data gathered during the 1980 
Federal census, and this report makes use of similar data obtained in 
the 1990 Federal census. The 1990 census data show substantial changes 
in how and why Americans moved about in their daily activities over the 
decade.
    Both reports were prepared at the initiative and under the 
direction of a group of public and private-sector organizations 
concerned with national transportation issues, with the member 
organizations for this report differing somewhat from, and being larger 
in number than, the organizations that sponsored the 1987 report. Each 
of the cooperating organizations is active in the development and 
implementation of public policy. The basic purpose of the report is to 
provide information that will be of use to them and others in the 
establishment of transportation policies affecting our metropolitan 
areas and states.
    The list of sponsoring organizations is contained in the report, 
together with the names of the persons serving on the Steering 
Committee and the Technical Advisory Committee in early 1996 that 
directed and guided the effort. The report was prepared by Alan E. 
Pisarski, who served as both consultant and author. During his many 
meetings with the two committees, he repeatedly displayed his extensive 
command of transportation data, his penchant for both accurate and 
understandable presentations, and his seemingly endless patience. 
Funding for preparation of the report was provided by several of the 
sponsoring organizations, which are also identified in the report.
    Some of the trends in national commuting between the 1980 census 
and the 1990 census have persisted in some cases, shifted in character 
in others, and have been affected by emerging new patterns in still 
others. Commuting continues to grow and to change. This study is 
intended to be an objective, factual resource that presents and 
analyzes key trends, without drawing programmatic or policy judgments. 
It is a working resource document designed to inform its users.
    An extensive array of specialized resources were utilized in the 
preparation of the study. The primary source was the decennial Federal 
census of 1990. All of the historical census material, going back to 
the first statistics of commuting in 1960, was also employed. The 
Census Transportation Planning Package (CTPP) products were made 
available from the census, with funding and support from the American 
Association of State Highway and Transportation Officials (AASHTO) and 
the Federal Highway Administration. This document is larger than the 
1987 report mainly because of the extensive new material made available 
by the 1990 Federal census and its specialized tabulations prepared for 
local, state, and national use. All interested persons and 
organizations are encouraged to use these data further. They are major 
national statistical resources.
    The editing and publication of Commuting in America II was 
undertaken on behalf of the sponsoring organizations by the Eno 
Transportation Foundation Inc., which also published the 1987 report. 
The contributions made by the foundation toward release of the study 
have permitted the document to be broadly distributed at reasonable 
cost. The foundation has the deep appreciation of the sponsors.
    In conclusion it should be noted that this report was undertaken 
only to provide an information base from which varied interests can 
work. It does not purport to reflect the policy positions of any of the 
sponsoring organizations, and it should not tee interpreted in this 
manner. Furthermore, where the author has expressed his personal views 
in the report, it is to be understood that such views are his and are 
not necessarily subscribed to by the sponsoring organizations.
    The extent to which the sponsoring organizations, with often 
disparate views of policy, have been able to come together to prepare 
this report is a measure of its success in providing a substantive, 
unbiased source of information. The report is intended to serve as a 
common resource of factual information upon which policymakers can draw 
in developing and implementing transportation policy and decisions, as 
our nation moves into the next century.
                                        Francis B. Francois
      Chairman of the Steering Committee for Commuting in America; 
     Executive Director, American Association of State Highway and 
                                           Transportation Officials
                               __________
                            acknowledgments
    This document really qualifies as a group effort. From the funding, 
to the data development needed for input, to the planning and 
preparation of the document and its final production, many thoughtful 
and dedicated people have been involved.
    The document had many sponsors. They are listed in the report, and 
most of them had representatives on the Steering Committee. It is a 
hallmark of the document that many organizations see value in it and in 
what it can contribute to public understanding. I deeply appreciate 
their faith in the document and wish to thank them all for their 
support--financial and otherwise.
    The document received valuable technical support. Agencies such as 
the Bureau of the Census and the U.S. Department of Transportation 
(USDOT) provided specialized data development from which the document 
benefited greatly. Phil Salopek and his staff at the Journey to Work 
Division of the Bureau of the Census have produced a valuable national 
analytical data base that many will use in the future. Richard 
Forstall, perhaps America's most knowledgeable scientist in matters of 
commuting and urban geography, and now retired, gave graciously of his 
time and interest.
    The work of the Office of Information Management of the Federal 
Highway Administration (FHWA) of USDOT in the production of specialized 
tabulations from the 1990 census was a giant step ahead for national 
understanding of the commuting phenomenon. I thank Elaine Murakami and 
Bryant Gross. David McElhaney, former director and now retired, was, as 
always, a great supporter.
    The Technical Advisory Committee formed by the Steering Committee 
provided valuable support and patient interest over a long period of 
data development, design, and review. Its leader, George Wickstrom, 
kept us pointed in the right direction. Thank you, George.
    Of all the players in this process over the years, the late Jim 
McDonnell was the most responsible for forging the consortium of US 
DOT, Bureau of the Census, American Association of State Highway and 
Transportation Officials (AASHTO), and others to make the Census 
Transportation Planning Package (CTPP) a reality. He never diverted his 
attention from the goal of a national CTPP, and he would not let the 
rest of us get too far away from that goal either. The strong, 
continuing program relationship between the Bureau of the Census and US 
DOT, dedicated to providing better transportation planning data, is his 
legacy.
    The process that produced the document enjoyed tremendous 
leadership. To Frank Francois, his incredible staff, and AASHTO, I am 
especially grateful. During the report's almost 5 years in the making, 
Frank was unstinting in his support. Tom Brahms of the Institute of 
Transportation Engineers and all the people at the Eno Transportation 
Foundation and their editor, Kathryn Harrington-Hughes, who helped put 
the document together, were wonderful. I thank you all.
                                           Alan E. Pisarski
                           executive summary
    The first Commuting in America, published in 1987, discussed the 
need to replace the public's stereotypical images of commuting with a 
more appropriate picture. Most of the images derived during the 1950's 
and 1960's and involved a suburban worker leaving a dormitory-like 
suburban neighborhood to go to an office downtown. Although some 
commuters still fit that pattern in 1987, a more current picture of 
commuting was required to make possible the kind of substantive 
understanding needed for sound public policy.
    Commuting in America sought to replace that image with one that was 
more sound--one that was based on the realities of contemporary 
commuting characteristics and patterns. The new understanding had three 
parts: a boom in workers, often from two-worker households; a boom in 
suburb-to-suburb commuting, becoming the dominant flow pattern; and a 
boom in the use of private vehicles, as America's vehicle fleet 
exceeded the number of drivers.
    As Commuting in America II comes to print, that fundamental pattern 
shift is widely recognized by public officials and the general public. 
To further dispel wornout perceptions is one of the goals of this 
report.
    Commuting's impact on land use patterns, urban form, and society in 
general has been discussed extensively in the policy literature and the 
public press. The questions then become: ``Are the patterns observed in 
the 1980's still effective descriptors of contemporary patterns of 
commuting?'' and ``Are new patterns emerging?'' These are important 
questions that this report seeks to answer.
    Amajor part of this report reassesses the strength of these trends 
as we move into the mid-1990's, to determine whether they are still 
strong forces in defining the character of commuting patterns and 
whether new forces of change have come forward, either replacing, or 
joining, previous trends.
                     the persistence of past themes
The Worker Boom
    The previous study identified three factors operative in the worker 
boom of the 1970's: large job increases, the baby boom, and rapid 
increases in women's participation in the work force. These three 
forces have diminished. The trends depict a clearly visible ``bubble'' 
of growth in both the working-age population and the actual labor force 
during the 1970's and 1980's that explains the great commuting surge of 
that period and its relative decline in the 1990's. Although the rate 
of change shows a sharp drop, the total increase for the period is 
still substantial, over 18 million workers, actually about 300,000 more 
than in the 1970's--yielding two decades of very substantial increase 
with which our transportation system has had to deal.
    There is reason to believe that the 1990 census results may have 
signaled the closing of the worker boom. Trends depict a period of 
relative calm--low overall growth in total population and working-age 
population for the remainder of the decade and into the next century. 
Labor-force growth rates will decline to about one-half of the rate in 
the 1980's, but are still projected to produce an absolute increase in 
the labor force of between 17 million and 18 million for the decade, or 
only a little less than the increase that took place in the 1980's. It 
is expected that the 18-year-old age-group, the source of new workers, 
will have declined to its nadir in 1995 and then slowly begin 
recovering; but it will not reach 4 million again until 2008, under 
present projections.
    The growth rate for women in the labor force surged through the 
1960's and 1970's and is just now tapering off, but still remains high 
relative to that for men. Total labor-force increase in the 1980-1990 
decade was down from the previous decade, for both men and women, with 
women contributing 11 million to the labor force in contrast with about 
14 million in the previous decade.
    The effect of all this is to say ``yes, but--'' to the question of 
the worker boom influence in the future of commuting. The strong growth 
rates characteristic of the boom period are over, but given the large 
size of our national work force resulting from the strong growth of the 
past, future growth will continue to yield large numbers of new 
commuters that will challenge our infrastructure and public policy.
The Private Vehicle Boom
    Again, as in the worker boom, there is a qualified answer to the 
question of the persistence of the trend in private-vehicle ownership 
and use.
    Arrayed on one side is the astonishing fact that we added more 
vehicles than people to our population in the 1980's. In addition, the 
private vehicle continued to absolutely dominate the choice of mode of 
transportation to work. All alternatives to driving alone to work by 
private vehicle declined between 1980 and 1990. The increase in the 
number of commuters in single-occupant vehicles exceeded the total 
increase in commuters. About 19 million workers were added, and over 22 
million single-occupant vehicle drivers were added. Effectively, all 
new workers chose to drive alone, and a few million additional workers 
shifted from other modes to the single-occupant vehicle. Some 
alternatives, such as walking and carpooling, declined precipitously, 
while others, such as transit, declined less dramatically. Only working 
at home showed growth.
    Arrayed on the other side, it is difficult to see continued shifts 
to the private vehicle, on average, across the Nation beyond the 
present surge. A number of factors are involved in this:
    The shares of automobile ownership by households show clear signs 
of stabilization at very high levels.
    The ratio of cars to workers has actually declined slightly.
    Most significantly, the number of vehicles available exceeds the 
number of drivers; and there is apparent saturation, on average, of 
driver's licenses.
    The prospects for further shifts to the private vehicle seem minor, 
if only because commuting travel is now so overwhelmingly oriented 
toward that direction. It seems unfeasible to believe that carpooling 
or transit levels could drop further--fewer than 1 in 10 cars has an 
occupant other than the driver, and transit is used by 1 in 20 
commuters. On the other hand, the precipitous declines in carpooling 
during the last decade were likewise unanticipated.
    The forces that impel personal vehicle use continue. The factors 
that will govern private vehicle use for commuting in the future 
include the following:

   Continued dispersion of jobs and population to the suburbs 
    and beyond
   Continued pressures of time on multiworker households
   Continued low levels of vehicle operating and ownership 
    costs

    Of these factors, the pressures of time have immense influence. The 
fact that 70 percent of commuting households have two or more workers 
suggests that living near work is no longer a simple option, and the 
work trip chain--taking care of household needs--daycare, food, 
laundry--on the way to and from work is central in contemporary 
lifestyles.
The Suburban Commuting Boom
    In regard to the geographic flow patterns of commuting, the trends 
are unequivocal: the suburban boom continues. Because of changes in the 
Bureau of the Census definitions, confirmation of this trend will 
require some statistical manipulation.
    Overall, the suburbanization of population and jobs not only 
continues but has accelerated in pace. Today the dominant commuting 
flow pattern is suburban, with 50 percent of the nation's commuters 
living in suburbs and over 41 percent of all jobs located there, up 
from 37 percent in 1980.
    Suburban areas--defined here as metropolitan areas outside of the 
central city--are now the main destination of work trips. The suburbs 
were the location of 13 million of the 19 million new jobs created 
between 1980 and 1990--about a 70 percent share of all job expansion. 
This is an increase in share of job growth from the 1970-1980 period.
    If the focus shifts to commuting within metropolitan areas only and 
nonmetropolitan areas are excluded, suburbs contain two-thirds of all 
metropolitan workers and slightly more than one-half of metropolitan 
job destinations.
    The flow patterns with a suburb as a destination account for 
substantial shares of growth in recent times. Suburb-to-suburb 
commuting accounted for 44 percent of metropolitan commuting flows in 
1990. That share is destined to increase, given that suburb-to-suburb 
commuting obtained more than 58 percent of all commuting growth from 
1980 to 1990, as it did during the 1970-1980 period.
    Asubstantial increase in growth share was also obtained by central 
city-to-suburb commuting, so-called ``reverse commuting,'' which rose 
from a 9 percent share of growth to over 12 percent. Its share of 
growth actually exceeded the share of flows from central city to 
central city.
    The ``traditional commute,'' the suburb-to-central city component 
of flows, decreased its share of growth, accounting for less than 20 
percent of total increase during the 1980-1990 period, down from a 25 
percent share in the previous decade.
    Intermetropolitan commuting has shown substantial growth. In both 
1980 and 1990, the dominant part of intermetropolitan commuting was 
``cross-suburb commuting''--that is, commuting from one suburb to the 
suburb of a different metropolitan area. This flow pattern grew at more 
than twice the rate of suburban commuting growth, in general.
    As one measure of the suburban effect, the number of Americans who 
commute outside their county of residence has almost tripled since 
1960.
Emerging Trends
    In addition to the varied persistence of past trends, new trends 
are emerging that will sharply modify future commuting patterns.
Immigration
    The scale of foreign immigration has become prodigious. It is a 
major, if not the dominant, factor in national population growth 
patterns. Total immigration to the United States during the 1980-1990 
period was about 8.7 million persons; thus the foreign-born share was 
almost 40 percent of total population growth. Recent data indicate the 
pace continues at that rate, with 4.5 million arriving during the 5-
year period from 1990 to 1994, twice the rate of the 1970's.
    Foreign immigrants tend to locate where Americans reside, but with 
a somewhat greater focus on central cities. It is the most populous 
states that receive immigrants.
    The arrival of immigrants has affected the number of households 
without vehicles in the areas with major foreign immigration. Many 
sunbelt cities had greater percentage increases in population than in 
vehicles; all had significant increases in the number of households 
without vehicles. Even the suburbs of many of these areas saw large 
increases in households without vehicles.
    Most immigrants (80 percent) arrive in the United States at labor-
force participation age. They are instantaneous additions to the 
traffic scene.
    Immigrants thus impact the commuting scene in many ways. They are a 
direct addition in population and an even more substantial increment to 
the labor force, equaling greater than one-third of all new commuters. 
Their modal patterns will affect future flows in several modes. Of 
acute interest will be the rate at which these households 
``mainstream,'' i.e., obtain vehicles and begin moving to the suburbs.
    The fact that immigration factors can be altered by congressional 
action at any time tends to create additional uncertainties regarding 
future commuting patterns.
The Democratization of Mobility
    Previous discussion has emphasized the tendency toward saturation 
in many areas--vehicle ownership, driver's licenses, and the use of the 
automobile to commute to work. These tendencies can be overstated 
because of a failure to examine these patterns in sufficient 
demographic detail. Saturation is a characteristic almost exclusively 
found among the White non-Hispanic population. There is still 
substantial room for growth in these characteristics among the Black, 
Asian, and Hispanic populations.
    The key factor is households without vehicles. The proportion of 
all households that are without vehicles has been in continuous decline 
since at least 1960, dropping from 21 percent to just above 11 percent 
by 1990. In terms of absolute numbers, the number of zero-vehicle 
(vehicle-less) households has remained roughly constant for 30 years 
(10 million to 11 million). The slight increase from 1980 to 1990 is 
almost certainly attributable to the immigrant population. Census data 
indicate that about 5.3 million workers live in vehicle-less 
households. Thus at most one-half of the vehicle-less households have 
workers.
    On average, more than 30 percent of Black households do not own 
vehicles, and in central cities the number is over 37 percent. Many 
central cities have extraordinary high levels of Black households that 
do not own vehicles--New York City with 61 percent, Philadelphia with 
47 percent, and both Chicago and Washington, D.C., with 43 percent.
    Hispanics have an overall rate of vehicleless households of 19 
percent; that rate rises to 27 percent in central cities. The central 
cities in metropolitan areas with very high levels of Hispanic 
households without vehicles are New York City (more than 62 percent) 
and San Diego (more than 37 percent).
    It is clear that renters in central cites are the predominant group 
of nonvehicle-owning households; as a general rule, renters, rather 
than homeowners, are more likely to be zero-vehicle households. About 
20 percent of all zero-vehicle households were in the New York City 
metropolitan area in 1990.
    One of the most pertinent aspects of this is the variation among 
racial and ethnic groups regarding the availability of driver's 
licenses. The White non-Hispanic population is near, or at, effective 
saturation, especially among men (circa 96 percent); whereas the rate 
among all other racial and ethnic groups of men is about 80 percent.
    All of these differences have effects on the opportunities for work 
locations, travel times, choice of mode, and so forth. A large part of 
the population that walks to work or uses transit or taxi is drawn from 
households without vehicles.
    These groups constitute the major sources of growth in vehicle 
ownership and use in the future. It cannot be assumed that the 
differences between these groups and the national average are racial, 
ethnic, or gender-based in character. Rather, age, income level, 
household size, and the location and type of residence will be the 
governing factors in future commuting patterns. As the socioeconomic 
profiles of these groups change, their commuting behavior will shift 
accordingly. That shift will likely mean an auto-oriented, suburban-
based commuting style.
Closing
    One element of change in commuting that needs to be addressed in 
closing is the effect of increased commuting on travel times. 
Surprisingly, with the sharp increases in automobile use, average 
travel times did relatively well; average travel times to work 
increased by 40 seconds, from 21.7 minutes in 1980 to 22.4 minutes in 
1990. Seventy percent of Americans reach work in less than 30 minutes.
    Only about 6 percent of commuters take longer than an hour to get 
to work, rising to about 7.5 percent in metropolitan areas with 
populations over 1 million. In only three areas--Washington, D.C., 
Chicago, and New York City--do 10 percent or more of commuters travel 
for more than an hour. This is strongly affected by mode choice; 
commuter rail and large carpools make up the bulk of this group. 
Metropolitan size is also a major factor in travel times, varying from 
an average of 17 minutes for those areas below 100,000 in population to 
more than 27 minutes for those over 3 million in population--a 10-
minute swing. The average for areas over 1 million is just above 25 
minutes.
    Travel time changes support the changing flows patterns observed 
earlier. Although both increased in average travel time, the time 
advantage of suburb-to-suburb commuting over suburb-to-central city 
commuting has actually increased.
    The average trends tend to imply that things are going relatively 
well in commuting, which is clearly not the case everywhere. Nothing is 
so distorted by averages as measures of travel time. Many areas, 
particularly those undergoing substantial growth--notably the 
metropolitan South and West--have seen sharp increases in travel times. 
One reason for the small increases in average travel times is because 
of the shifts from slower modes to faster modes--for example, from 
transit to carpooling or from carpooling to driving alone. This is 
obviously a one-time solution that will be available to only a few in 
the 1990's. Nor will surplus system capacity be available to absorb 
additional travelers. As a result, the search for reasonable commuting 
times will likely lead to further dispersal.
    It would be attractive to think that commuting will eventually 
become an activity of no particular personal or public policy interest 
and that it would be quick and effortless with no detrimental public 
side effects. That day will not be arriving soon.
                               __________
        Chapter One: Understanding Commuting Patterns and Trends
    The introduction to the first edition of Commuting in America, 
published in 1987, talked about the need to replace stereotypical 
images of commuting with a more appropriate picture. Most of those 
images derived from the 1950's and 1960's and involve a a suburban 
worker leaving a suburban neighborhood for an office downtown. While 
there were still those who fit that pattern in 1987, the first edition 
of Commuting in America sought to replace that image with one that was 
more sound--one that was based on the realities of contemporary 
commuting characteristics and patterns. This updated view of commuting 
had three parts:

   A boom in the number of workers, accompanied by an increase 
    in worker households;
   A boom in suburb-to-suburb commuting, which had become the 
    dominant flow pattern; and
   A boom in the use of private vehicles, with the number of 
    vehicles having exceeded the number of licensed drivers.

    Now, with Commuting in America II, that fundamental shift in 
commuting patterns is widely recognized by both public officials and 
private citizens. Commuting's impact on land use, urban form, and 
society in general has been discussed extensively by policymakers and 
the media. The questions have become, ``Are the patterns observed in 
the 1980's still effective descriptors of contemporary patterns of 
commuting? Are new patterns emerging?'' This report seeks to answer 
those questions.
                            report structure
    This chapter introduces the subject of commuting. Its purpose is to 
provide an understanding of commuters and commuting, given the 
complexities of the subject and the vagaries of the available data. The 
first concern of this chapter is to place commuting activity in context 
with other travel, so that the role of commuting in the overall 
structure of transportation policy and planning can be understood. The 
second concern is to provide definitions for the terminology used in 
this study.
    Data sources that form the basis for this report are identified, 
including a discussion of their particular strengths and weaknesses in 
terms of this report. The final part of this chapter discusses the 
difficult topic of geography. Because of its spatial character, 
commuting analysis is especially sensitive to the geographic units used 
to aggregate and present data. This is particularly a concern in a 
national analysis, where comparability between areas is crucial.
    Understanding commuting and commuters requires knowledge of 
demographics, economics, geography, and other tools. Because commuters 
are a moving target, they are difficult to capture statistically. 
Commuting, like all passenger travel, is a social phenomenon, an 
economic phenomenon, and a technological phenomenon. Each has its 
influences, and they interact to create new and fascinating behavioral 
patterns.
    Commuters and commuting activity can be described from one of three 
vantage points:

   The origin of a work trip, usually the home.
   The destination end--the job site.
   The patterns formed by trips between a multitude of origins 
    and destinations.

    Each of these perspectives is almost an area of study in itself.
    Chapter 2, Commuters in the 1990's, addresses commuters and their 
characteristics. It includes a discussion of whether the growth that 
has occurred since World War II, paralleling the post-war baby boom, 
has slowed. Chapter 2 also focuses on the changes in demographics of 
job holders, particularly whether the explosive increases in working 
women seen in the 1980's will persist into the 1990's. Immigration is 
also considered, in the context of declining overall rates of 
population growth. This is followed by a look at where most commuters 
now live and where their jobs are located in the nation's regions and 
metropolitan areas. A key issue to be discussed is whether the suburban 
boom in population and jobs has slackened and whether there are signs 
of a new revitalization of central city growth. Has the 1980's been 
like the 1970's, or more like the 1960's? Where do we go from here? The 
``demography'' of the automobile and the other vehicles that are so 
much a part of our commuting lives is also discussed.
    Chapter 3, Commuting Flow Characteristics, looks at commuting 
flows--their patterns and scale. Commuting patterns are examined from 
the perspective of how commuters travel between central cities, 
suburbs, and exurban areas. Modes of transportation used for commuting 
in different markets are described. The emerging boomlet in working at 
home is examined. The availability, for the first time, of census data 
on worker starting times permits a discussion of the new patterns of 
job schedules. Finally, the distances, travel times, and speed 
characteristics of the new commuting patterns are discussed.
    Chapter 4, Closing Perspectives, looks at how these changes might 
affect commuting itself, the infrastructure that supports commuting, 
and the broader community. This chapter contains the author's views and 
speculations on the character of the trends identified and the future 
directions of commuting, with the goal of encouraging further 
discussion and analysis of this important topic.
                      commuting and overall travel
    In this report, ``commuting'' refers to travel to and from a 
workplace, including trips to temporary work sites, which are 
customarily taken by construction workers, household workers, and 
others with no fixed work location. It does not include travel 
associated with related work activities--going to a meeting, seeing 
clients, delivering goods, and so forth.
    Although a crucial part of passenger travel, commuting is by no 
means the entire picture. It is only one of a large number of purposes 
that generate daily travel activity. It is important to place commuting 
in the proper overall context so that the material presented here can 
be fully appreciated.
    Commuting exists in a continuum of transportation activities. While 
it often dominates public discussion about transportation, commuting is 
just one part of the demand that we make on our transportation system. 
In a metropolitan area, transportation activities include the following 
eight categories:

   Commuting
   Other resident travel
   Visitor travel
   Public vehicle travel
   Urban services
   Urban goods movement
   Passenger through-travel
   Freight through-travel

    It is uncertain what commuting's share of this total activity is, 
because of the mix of freight and passenger activities. For instance, 
there are no comprehensive sources of data on freight movement or 
visitor travel. The mix of transportation activities will clearly vary 
with a metropolitan area's size and levels of activity. Despite 
existing pressures for comprehensive planning and data collection at 
the state and metropolitan level, there is probably no metropolitan 
area in the country that can comprehensively describe all eight 
transportation activities in their region.
    Commuting can be placed in context with travel by residents in 
metropolitan areas by focusing on only the ``commuting'' and ``other 
resident travel'' categories. The Nationwide Personal Transportation 
Survey conducted in 1990, the same year as the population census, 
permits timely analysis of commuting in the context of other travel 
demand. According to the Nationwide Personal Transportation Survey, 
work travel constitutes just under 20 percent of all persontrips (Table 
1-1).
    Work travel can be measured as a proportion of person-trips or as a 
proportion of person-miles of travel, which weights the trio shares by 
the distance of the trip. Because work trips tend to be longer than 
most other local trips, the work trip share of travel is greater than 
its share of trips. The share for work trips has evidenced a slight 
downward trend over the years, from about 20.7 percent in 1983 to 19.3 
percent in 1990. Yet the share of person-miles increased significantly, 
from 20.1 percent to 23.2 percent, during that time, apparently as a 
result of increases in average trip length.
    Work travel can also be measured as a share of personal vehicle 
trips or as a proportion of the total miles traveled by personal 
vehicles. As a proportion of vehicle trips, work travel amounts to 
slightly above 26 percent of activity; as a proportion of vehicle miles 
traveled, it is about 33 percent. These numbers reflect the heavy 
utilization of personal vehicles for longer work trips, and work trips 
are typically longer than other local trips.
    Work travel is even more important to transit, accounting for about 
43 percent of all transit travel.
    Commuting bears an importance to transportation beyond its share of 
total travel for a number of reasons. The first is attributable to the 
impact it has on the economy and on the development of communities. The 
second is due to the concentration of work travel in certain time 
periods and locations, in contrast to the more dispersed patterns of 
other trips. Commuting is a major factor in determining peak travel 
demand and therefore serves to define the capacity and service 
requirements of our transportation system. In certain climates and 
under certain weather conditions, morning travel generates more air 
pollution, particularly ozone. In the peak morning hours (6-9 a.m.), 
work-related travel, which includes work trips and work-related trips, 
accounts for more than 47 percent of all person-trips and for about 62 
percent of vehicle trips and vehicle-miles of travel. Both the morning 
and afternoon peaking characteristics of work travel seem to be abating 
both in location and duration. The Nationwide Personal Transportation 
Survey data and the patterns discernible from the census indicate that, 
perhaps as a product of work-pattern shifts or congestion pressures, 
the proportion of work travel in the peak hours is declining; work 
travel is now spreading into other time periods. The spatial dispersion 
of the origins and destinations of work trips is a fundamental aspect 
of contemporary work travel.
    Other aspects of commuting are changing in ways that affect other 
parts of travel and the transportation system serving it. One of these 
is the increased tendency for commuters to make a work trip part of a 
trip chain--i.e., taking children to school, picking up necessities, 
and running household errands in an effort to more efficiently use time 
(Figure 1-1). Although this increases the efficiency of overall travel, 
it also increases the number of non-work-related trips occurring in the 
peak period.
    Two other matters are important to an understanding of the commuter 
and commuting. The first is the information source--the statistics 
needed to fully understand the complex character of commuting. To 
identify and analyze trends, comprehensive, detailed information on a 
national scale is needed.
    The second matter is the geography used to assemble and present the 
statistics. Commuting is a spatial phenomenon, and the geographic units 
used to aggregate individual trips are key to a correct representation 
of its character.
                         terms and definitions
    One of the obstacles to a better understanding of American 
commuting is the technical language used by the statisticians and 
analysts who work in the field. Although that language has value to 
those professionals, it can hinder the average reader's understanding 
of the subject. The glossary that begins on page 5 should help in that 
regard. The more formal definitions of these terms are contained in 
special guides prepared by the Bureau of the Census for the 1990 
census.
                              data sources
    The fundamental sources for this report are the journey-to-work 
data and related characteristics from the 1990, 1980, 1970, and 1960 
decennial censuses. These are the sole nationwide sources of detailed 
data on commuting patterns, and hence the starting point for all 
credible evaluations of commuting. The census data are a rich source of 
work travel characteristics, including auto availability, mode, 
detailed residence and workplace geography, and associated 
socioeconomic descriptors of travelers and households.
    Although these data support national scale reports, such as this 
one, they are a minor function of the census journey-to-work data set. 
The main strength of the data set is that it provides small-area 
statistics, including neighborhoods and even blocks, to support local 
planning and analysis. While a broad national sample would probably be 
adequate for this report, small-area statistics are invaluable for 
local planning.
    The work-related travel questions in the census survey are limited 
because of constraints on the length of the survey and the broad range 
of topics covered. The questions represent a minimum data set, 
particularly for those accustomed to the richer information derived 
from traditional urban transportation surveys.
                                glossary
Demography
    Household--A group of persons sharing a separate housing unit, 
characterized by eating together and sharing other activities, as 
differentiated from persons living in ``group quarters,'' such as 
barracks or dormitories. Families constitute the majority of 
households. Single individuals living alone, or unrelated persons 
sharing a housing unit, also constitute households.
    Immigrants--As used here, immigrants include foreign-born persons 
who entered the United States between 1980 and 1990. Persons born 
abroad of American parents are not considered immigrants. As of 1990, 
the United States had a foreign-born population of 19.8 million, of 
whom 8.7 million arrived between 1980 and 1990.
    Jobs--In this report, the count of workers is sometimes used as a 
surrogate for the count of jobs. This is useful only as an estimate. 
Because multiple jobs are not counted in the census, the number of jobs 
and therefore of commuters is sometimes underestimated.
    Labor Force--The labor force is defined as that part of the 
noninstitutionalized population aged 16 or over that is working, 
temporarily absent from work, or actively seeking work.
    Vehicles--Between 1960 and 1980, vehicle counts were determined by 
the number of automobiles available at occupied housing units. In the 
1980 census, vans and trucks of 1-ton capacity or less were, for the 
first time, also counted in a separate category. The 1990 census merged 
the two counts into one. All vehicles available at home for use by 
household members, including company cars and leased vehicles, are 
counted. Accordingly, the count does not necessarily conform with the 
number of vehicles owned by the household, but rather with the broader, 
more valid concept of vehicles available to the household. The census 
survey separately identifies households with 1 through 6 vehicles and 
then aggregates households with 7 or more vehicles.
    Workers--Workers are defined as that part of the population at work 
or temporarily absent from work. In the U.S. census, a person is 
defined as a worker if he or she worked full- or part-time during the 
week prior to the taking of the census. A worker is counted once, 
regardless of the number of jobs held. Multiple jobs are not counted 
separately.
    Working Age Population--That part of the population of an age 
considered to be eligible for the labor force. In this report, the 
working age population is defined as being between the ages of 16 and 
65. Although other studies define this category as all persons over the 
age of 16, the age-group from 16 to 65 is a very useful estimator of 
the potential labor force.
Geography
    Census Region--The United States is subdivided into four main 
regions, and the regions are further subdivided into nine divisions 
(Figure 1-2).
    Census Tract--The Bureau of the Census defines a census tract as a 
relatively homogeneous area within a metropolitan area containing about 
1,000 households. The geographic size of each tract is dependent on 
population density.
    Central Business District--The central business district is the 
commercial core of a central city. This term is no longer used by the 
Bureau of the Census.
    Central City--In general, the central city is defined as that part 
of the city with the densest population, around which the metropolitan 
area is structured. There have been some cases where more than one 
central city existed within a metropolitan area. The 1990 census 
defined any city inside a metropolitan area having a population greater 
than 25,000 as a ``central city'' if it met certain other criteria. 
This resulted in an increase in recognized central cities (525 central 
cities in 1990 versus 429 in 1980).
    Consolidated Metropolitan Statistical Area (CMSA)--The term 
consolidated metropolitan statistical area refers to large metropolitan 
complexes with populations over 1 million that comprise identifiable, 
separate metropolitan groups that might otherwise be freestanding. Each 
individual component of these clusters is called a primary metropolitan 
statistical area. For instance, the New York consolidated metropolitan 
statistical area consists of 12 separate primary metropolitan 
statistical areas. There are now 20 consolidated metropolitan 
statistical areas with 71 component primary metropolitan statistical 
areas.
    Metropolitan Area--The definitions and names for metropolitan units 
were revised in 1983 for use in the 1990 census. This statistical 
aggregation of counties around a major city or cities identifies areas 
with strong social and economic interrelationships, serving as a 
``commutershed'' for the central city. The building blocks of 
metropolitan areas are counties, and a metropolitan area's 
configuration may thus vary substantially. Changes in the criteria for 
a county to be included in a metropolitan area have resulted in 49 
counties no longer being considered part of metropolitan areas since 
1980; 60 other counties have, however, taken their place. This makes it 
difficult to compare data from the 1980 census with that from the 1990 
census.
    Metropolitan Statistical Area (MSA)--Metropolitan statistical areas 
are freestanding, as distinguished from clusters of metropolitan areas 
known as consolidated metropolitan statistical areas. The 1990 census 
identifies 264 metropolitan statistical areas.
    Rural Area--As defined by the Bureau of the Census, the term rural 
area is almost devoid of useful meaning. Parts of metropolitan areas 
may be rural. Nonmetropolitan areas are predominantly rural, but they 
may also contain urban nonmetropolitan units.
    Traffic Zone--Metropolitan transportation planning agencies 
designate traffic zones based on the configuration of the road system 
and traffic patterns--i.e., a traffic-based neighborhood. At about one-
third to one-quarter the size of a census tract, traffic zones do not 
evidence specific population characteristics, but tend to have 
populations of about 1,000.
    Urbanized Area--An urbanized area consists of the built-up area 
surrounding a central core, generally exhibiting a density of at least 
1,000 people per square mile. The area is defined by development and 
population, without respect to jurisdictional boundaries. Urbanized 
areas are thus generally wholly contained within a metropolitan area, 
which uses county boundaries. That area of the metropolitan area 
outside the urbanized area may be quite rural in character, although 
still metropolitan by definition.
Transportation
    Auto/Vehicle Occupancy--The number of people in a vehicle, 
including the driver. This number is generally lower for work trips 
than for other trips. An auto occupancy of 1.5 means that a vehicle 
would, on average, carry a driver and half a passenger. The 1990 census 
tracked occupancy singly through 6, then grouped vehicles with 7 to 9 
occupants and with more than 10 occupants. Increasingly, the term 
``single-occupant vehicle'' is used to describe a vehicle containing 
only the driver.
    Carpool--This term is increasingly used to describe any vehicle 
carrying more than one person to work, rather than in the more specific 
sense of a group of persons sharing the cost of the trip or taking 
turns driving.
    Mode--A transportation mode refers to a means of transportation. 
Mass transit can be considered a mode, with bus, subway, and commuter 
rail as submodes, or each can be considered modes of travel in their 
own right. In this report, the categories used by the Bureau of the 
Census to identify how people usually get to work are treated as 
separate modes. The census data do not permit identification of 
multimodal work trips, such as auto to bus to train--which are 
sometimes referred to as intermodal trips. In such cases, the mode used 
for most of a trip distance is used to describe the total trip. Walking 
is considered a mode only if it is the sole means of travel to work.
    Origin-Destination--Trips are described in terms of their starting 
(origin) and ending (destination) points. For most, but not all, the 
origin is the home, and the workplace is the destination. Exceptions 
include situations involving students working after school and workers 
traveling to various client locations or construction sites.
    Reverse Commute--This term is often used by transportation 
professionals to denote travel from the center city to suburban 
locations in the suburbs, going counter to the main volume of traffic 
flow.
    Start Time--A new data item in the 1990 census, start time 
identifies the time (to the minute) at which the commuter left home for 
work. This information permits better analysis of traffic loadings 
around peak periods for local traffic modeling of travel demand and air 
quality analysis.
    Traditional Commute--The pattern of commuting from a suburb-like 
area outside the city to a downtown work location.
    Travel Time--A commuter's estimate of the time (in minutes) it 
``usually'' took to get from home to work in the previous week. This 
data item was first collected in 1980; the 1990 census thus allows an 
opportunity to evaluate trends for the 10-year period.
    Trip End--A trip end is either end of a trip. The term is used to 
describe trips in terms of their common origins or destinations, such 
as all work trips with a destination in the suburbs.
    Work at Home--In the census survey, a person who said his or her 
residence was the usual place of work in the week prior to the census 
was counted as working at home. Workers who have variable work 
locations or who periodically work at home are not included in the 
work-at-home group. A related, increasingly popular term is 
telecommuter, which refers to someone who has a regular workplace away 
from home, but occasionally works at home (for instance, once or twice 
a week).
                                 ______
                                 
    The census travel data are something of a compromise. Data quality 
and scale of coverage are unequaled, but there is less detail than 
desirable. For example, no information is obtained on:

   work trips using more than one mode of travel,
   travel to a second job, for those with more than one job,
   variations in ``usual'' travel patterns, such as occur with 
    workers who work at home 1 day per week, or
   other trips linked to the work trip--a ``trip chain,'' such 
    as dropping children off at school picking up laundry, or shopping 
    for groceries.

    Nonetheless, the census data are a rich source of fundamental 
national work travel characteristics. Each census has yielded more 
comprehensive data on commuting. In 1980, questions on time spent 
commuting were added to the survey, and questions on vehicle ownership 
and mode of travel to work were expanded. In 1990, a question about the 
starting time of the work trip was added, and a question that 
separately identified trucks and vans was deleted.
    There are serious questions about the design of the next census 
(2000) and its ability to provide crucial journey-to-work data. The 
census data set has become embedded in the transportation planning, 
analysis, and policy review fabric of national, state, and metropolitan 
governments. The 1990 data were compiled in a large-scale package of 
tabulations to meet both state and metropolitan needs.' Viewed at a 
very fine level of detail, such as down to small traffic zones, the 
data permit the kind of detailed analysis required in our contemporary 
policy framework for both transportation planning and energy and air 
quality evaluations. Loss of these data would impede progress toward 
many of the goals in the 1991 Intermodal Surface Transportation 
Efficiency Act and the 1990 Clean Air Act Amendments, as well as other 
national priorities, such as the National Energy Policy. Work is 
already under way to define the needs for the data set in 2000.
    This report is based on information provided by the Bureau of the 
Census, as well as data compiled by the Bureau of the Census and the 
U.S. Department of Transportation (DOT) to summarize national trends. 
The Bureau of the Census data have changed over time, but the 
definitions have not; thus it is possible to make meaningful 
comparisons of commuter travel over the 30 years that the Bureau of the 
Census has collected commuting data.
    Although the primary source of data for this report is the 
decennial census, other data sets have been used as necessary. Among 
these data sets are those from the Nationwide Personal Transportation 
Survey, conducted by the U.S. DOT in 1969, 1977, 1983, 1990, and 1995. 
The American Housing Survey conducted by the Bureau of the Census and 
the Consumer Expenditure Survey conducted by the Bureau of Labor 
Statistics have also provided important information. Together, the 
three surveys provide information useful in depicting trends for such 
important factors as trip lengths, travel speed, and vehicle operating 
costs.
                               geography
    Perhaps no aspect of the commuting topic creates more confusion and 
difficulty than questions of geography. Several aspects of geography 
need to be considered:

   The geographic units into which commuting data are 
    aggregated;
   The level of detail in trip patterns;
   The comparability over time of areas defined by the Office 
    of Management and Budget; and
   The comparability at the national level between various area 
    systems in use from place to place.

    The main geographical unit used in this report is metropolitan 
area. In this report, metropolitan area refers to the metropolitan 
statistical areas (MSAs) and consolidated metropolitan statistical 
areas (CMSAs) identified in 1990, when the census data were collected.
    This report uses current definitions to summarize data for 
metropolitan areas, and it separates data on the central city from data 
on the remainder of the metropolitan area. The non-central-city area, 
often called the suburbs or the suburban ring, may evidence 
considerably different kinds of development and travel behavior from 
one metropolitan area to the next. Areas outside metropolitan areas are 
referred to as nonmetropolitan or exurban areas.
    To allow consistent comparisons and to minimize any misleading 
effects of changes in geographic definitions, the 1990 data were 
tabulated using the definitions in place when the 1980 data were 
collected.
    When referring to work trips in the metropolitan area, three terms 
are used in this report--central city, suburbs, and surrounding 
nonmetropolitan area--to create a matrix that tracks nine movements. 
Although something of an oversimplification, the matrix keeps the 
constituent parts of the metropolitan commuting phenomenon readily 
understandable. In addition, sophisticated tabular analyses conducted 
by the Bureau of the Census make it possible to distinguish trips 
ending in the suburbs or central city of a metropolitan area other than 
the one in which the commuter resides.
    In the decennial census, both origins and destinations of work 
trips in metropolitan areas are identified at very fine levels of 
detail, such as individual blocks, which permits assembly to differing 
area units. Worktrip origins (the home) are relatively easy to 
identify. The census data are based on households, and each respondent 
is identified by address.
    Work locations are, however, another matter. Because transportation 
planners need detailed identification on work locations, an entirely 
separate system is needed to locate and identify work addresses, 
according to a set of geographic codes compatible with other census 
geography and computer operations. The system is not perfect. For 
example, some workers fail to provide sufficient information on their 
work location; a Bureau of the Census system is thus used to distribute 
work locations in proportion to known destinations.
    For small-area statistical needs, the Bureau of the Census 
aggregates the block level data into areas called census tracts. 
Transportation planners use similar areas--called traffic zones--keyed 
to the configuration of the road system. A large metropolitan area 
might have more than a thousand such zones or tracts. Trip origins and 
destinations must be sufficiently detailed to be assigned within one of 
these areas, in order to be useful for traffic planning and many other 
local purposes, such as school redistricting and development zoning. 
The detailed data are assembled in a format facilitating comparison by 
local agencies.
    Although these detailed data are crucial to transportation models, 
they are not very useful to an understanding of what is happening in a 
city or region. For that purpose, the detail needs to be aggregated 
into larger areal units, such as metropolitan areas or urbanized areas. 
This must be done with great care, for the process of aggregation can 
conceal as well as reveal.
    There are fundamentally two choices when it comes to aggregating 
data at the national level:

   Aggregate to areas that have boundaries demarcating a legal 
    geographic unit such as a county, township, or state.
   Let the shape and size of the areas be defined by the nature 
    of the data.

    Each approach has its strengths and weaknesses. Clearly, it is 
necessary to use political units of geography for many purposes--for 
instance, to relate to other data and to match the boundaries of 
jurisdictional authority. On the other hand, modern conditions have 
demonstrated that many problems, such as pollution and transportation, 
do not respect political boundaries. For transportation purposes it is 
clear that a metropolitan region does not stop at the city, county, or 
state line.
    The Bureau of the Census and the Office of Management and Budget 
have responded to these needs with a number of systems of aggregation. 
They have sought to clearly define a metropolitan area. The definition 
has changed over time, but the key elements are a major central city 
and the surrounding related counties. Because it is composed of 
political units (counties), a metropolitan area will evidence 
substantial variation in size, shape, and features.
    The 1990 census designated 284 metropolitan areas, representing all 
of the major and some of the relatively minor metropolitan units in the 
United States. Of these areas, 71 were grouped into 20 larger units 
called consolidated metropolitan statistical areas, reflecting the 
immense scale some metropolitan complexes have reached. Over time, the 
concept of the metropolitan area has become imbedded in Federal 
programs well beyond any statistical role. Concurrently, the definition 
of what constitutes a metropolitan area has been relaxed, thus 
qualifying more and more areas for that title. As a result, the concept 
of a metropolitan area has lost meaning. Almost 80 percent of the U.S. 
population now resides in a metropolitan area. With anything remotely 
urban now being defined as an official metropolitan area, new 
constructs are needed to more clearly discriminate what is actually 
happening.
    New terminology and new definitions for metropolitan areas were 
adopted by the Office of Management and Budget in 1983. These were more 
nomenclature changes than definitional modifications, but several of 
the changes have severely impacted the ability to analyze trends in 
transportation.
    Most serious of these changes is the redefinition of what is meant 
by a central city.
    On average now there are two central cities for every metropolitan 
area. This means that many metropolitan areas have several so-called 
central cities, often small suburban centers that were once 
freestanding units but that have been engulfed by suburban expansion. 
To include these in the central cities classification corrupts the 
concept of metropolitan area. Many users of the census data, not 
realizing the implications of the redefinition of central city, have 
noticed that the data indicate a revitalization of central city growth 
beyond what is actually happening. In this report, the notion of a 
central city as the major place at the center of the region has been 
maintained, and other cities have been subsumed under the suburban or 
noncentral city label. In many cases, 1980 definitions have been 
retained for 1990 data to avoid the misleading effects of the new 
definitions. Ultimately, we will need to recognize the rise of suburban 
activity centers, in some better form, as elements of the metropolitan 
fabric.
    The other areal unit used extensively by the Bureau of the Census 
is the urbanized area, which takes the second approach to area 
definition. An urbanized area is the area surrounding a central city 
and comprising all of the built-up parts of the region, generally 
defined as that area within which the average population density 
exceeds 1,000 persons per square mile. The key point about this 
definition is that it is independent of political boundaries. Its 
extent is determined by the data itself. Although urbanized area 
statistics are not extensively used in this report, they have real 
value--particularly in transit analysis, which often predominantly 
focuses on the densely built-up parts of a metropolitan area. An 
attractive concept is the joining of metropolitan areas and urbanized 
areas to establish a ring-like geography. Until recently, this was not 
feasible except in special cases because of difficulties in identifying 
work trip destinations within urbanized areas. Such joined areas are 
used here whenever the data permit their use.
    Figure 1-3 shows the ``typical'' structures and relationship of a 
standardized metropolitan statistical area and an urbanized area. But 
it cannot depict all the potential problems caused by the definitions 
and their interrelationships with local political boundaries. The 
following issues can affect the statistical conclusions drawn from data 
using these typical units:
    Many metropolitan areas extend into two or more states, thus adding 
additional boundaries.
    Counties, which vary widely in size, are generally larger in the 
West, with the result that a Western metropolitan area may wholly 
reside within one county. Such large counties will often contain vast 
rural territories within the metropolitan construct.
    Boundaries and sizes of cities are often dependent on rules about 
annexation.
    As metropolitan areas grow, they increasingly come into contact 
with other metropolitan areas also expanding from a distant center, so 
that the outer areas of metropolitan complexes may serve as a 
commutershed for more than one center. The growth of suburban 
complexes, or once-minor towns and cities on the periphery of an urban 
center, into major centers of economic activity creates multicentered 
regions that are not easily statistically defined.
    These issues suggest that the concept of a metropolitan area is 
probably clearer than its definition. This further suggests that great 
care must be used when examining data based on metropolitan aggregates, 
and particularly when data from all metropolitan areas, with all their 
local variations in character, are summarized and analyzed at the 
national level.
    One of the more serious consequences of these issues is that the 
concept of the suburb is not clearly defined. Current definitions are 
simply inadequate for capturing the spatial boundaries of a suburb. In 
this report, the suburbs are defined as that part of the metropolitan 
area outside the central city. This is a rather arbitrary construct 
determined by the nature of the geographic identification of available 
data. If a city is large, a large amount of suburb-type development 
will exist within its boundaries. If the city and surrounding counties 
are small, the suburbs may extend out through two or three counties. 
Depending on their size, counties outside the metropolitan area may 
generate substantial amounts of commuting to the metropolitan area. 
These areas may constitute an increasingly important ``exurban ring'' 
beyond the suburban area, because suburban areas are increasingly 
becoming the major destination of work trips. These exurban ring 
counties are prospective additions to the metropolitan area. These 
realities are not readily captured statistically.
      new concepts in the geographic representation of travel data
    Much of the logic used to define metropolitan areas is based on 
commuting patterns. In fact, one of the many justifications for 
collecting commuting data is the Office of Management and Budget's use 
of the data in defining and determining metropolitan areas. It is 
ironic that these geographic constructs are not very useful for 
commuting analysis.
    If we were not restricted to geographical boundaries, we would 
probably define a commutershed around important economic and social 
centers that serve as destinations for most commuters. Rings at given 
radii from the center would be defined based on their degree of focus 
on the center, an increasingly tenuous quality of the large 
contemporary metropolitan unit. This would still leave problems of 
overlap between the areas of commuting influence on large urban 
complexes and would probably generate new problems. A series of 
overlapping rings with different centers would result.
    New geographical information system techniques and capabilities 
make possible very impressive analytical tasks, which have been decades 
in development. Grid systems using latitude and longitude coordinates 
provide a strong graphical capability, and they have been used as the 
basis for planning in some major metropolitan areas, including New York 
and Chicago.
    Overall, the areal units used in this report--jurisdictionally 
based geographical units, consisting of counties as building blocks--
are substitutes for that yet-to-be-defined more-perfect system. We must 
be conscious at all times of the potential ``tyranny of geography'' and 
its ability to mislead, as well as to enlighten.
                                 ______
                                 
                  Chapter Two: Commuters in the 1990's
    The 1970's and the 1980's saw volatile demographic change. Today, 
some of these trends are losing steam and are having less of an 
influence on commuting. These trends include population growth, labor 
force growth, vehicle growth, and geographic shifts of workers and 
jobs. Although not at peak level, some of these trends still have 
substantial impact, notably labor-force growth trends. And there are 
other trends that are just emerging as potential major forces of 
change. Notable among these is the growth in immigration; however, 
other trends, particularly the aging of the population and the 
disparate travel needs of different racial and ethnic groups, will also 
be factors of great concern in the future.
                         end of the worker boom
    The first edition of Commuting in America described at some length 
the great job boom of the 1970's that contributed so forcefully to the 
dramatic increase in commuters. A major factor behind that boom was the 
tremendous increase in persons of labor-force age--as a product both of 
the coming of working age of the baby-boom generation and of the surge 
in women's participation in the labor force. Of course, the U.S. 
economy deserves the greatest credit--by creating jobs on such a 
mammoth scale, it permitted persons of working age to find jobs. For 
almost 20 years, between 1970 and 1990, the work force grew by an 
average 2 percent a year in the United States far exceeding the total 
job growth in all other developed nations combined.
    The 1940 census may have documented the high point of the growth 
period of population and workers and signaled the end of the worker 
boom. The number of workers grew to 115.1 million in 1990, an increase 
of 18.4 million workers from the 1980 census and about 300,000 more 
than the number of new jobs generated between the 1970 and 1980 census 
periods (Table 2-1). The 19.2 percent increase in workers was 
substantial, but down significantly from the 23 percent growth rate 
seen in the 1970's. By the mid-1990's, job growth had been slowed by an 
economic recession, but also because there were fewer people in the 
labor force. Overall, the number of workers (and thus prospective 
commuters) has almost doubled since 1950.
Workers and Population
    Population change contributed to the decreasing labor force. Table 
2-1 shows the continuing decline in the pope growth rate from the baby-
boom years to the present. The 1980-1990 decade saw the lowest rate of 
population increase in our nation's history, except for the depression 
of the 1930's, which was the only other time that population growth 
fell below 10 percent.
    More significant for commuting concerns is the rate of population 
growth by age-group (Figure 2-1). The increase in total population is 
gradually declining, but the increase in working-age population (16 to 
65 years of age) and the labor force is dramatically subsiding. As 
shown in Figure 2-1, a clearly visible ``bubble'' of growth in the 
working-age population and the actual labor force in the 1970's and 
1980's explains the substantial surge in commuting during that period. 
The sharp drop-off in both labor force and working-age population 
signals the last of the baby boomers entering the labor force in the 
mid-1980's and the tapering of the surge of women joining the labor 
force later in the decade.
    Although the rate of increase sharply dropped, the total increase 
for the period is still substantial (more than 18 million workers).
    The Bureau of the Census projected increases in working-age 
population growth and labor-force growth for the 1990's are also shown 
in Figure 2-1. It depicts a period of calm--about 10 percent overall 
growth in population and in the working-age population for the decade 
moving in tandem. In fact, this is the product of a brief growth blip 
of about 1.1 percent a year for the first 5 years of the decade, and 
then a return, based on projections, to the same rate as the late 
1980's, with continuously declining rates of growth to the year 2050. 
Labor-force growth rates continue to decline to a rate of just below 15 
percent, about half of the rate in the 1980's, but are still projected 
to produce an absolute increase in labor force of between 17 and 18 
million for the decade, or only a little less than the increase that 
took place in the 1980's.
    Figure 2-2 makes this more apparent by differentiating the labor-
force growth rates of men and women. The growth in male workers has 
moved in tandem with the growth in the working-age population. The 
growth in female workers, on the other hand, has followed a separate 
course, surging through the 1960's and 1970's and just now tapering 
off, but with rates of increase considerably higher than those for men.
    Looking at the actual changes, rather than rates of change, 
provides a clearer understanding of what is happening. Figure 2-3 shows 
the slow tapering in population increases, the precipitous drop in the 
population aged 16-65 between 1980 and 1990, and the labor-force surge 
and decline. Of special note is that in 1980 the actual increases in 
each of the three factors were almost identical.
    The most direct way to make the point concerning the end of an era 
of rapid working-age population growth is to depict the number of 
people reaching 18 years of age (Figure 2-4). These are the new 
entrants to the labor force, the new workers, and the new auto drivers 
who fuel the economy. Figure 2-4 shows the number of persons turning 18 
years old in this decade. The number of 18-year-olds peaked at slightly 
above 4 million in 1990 and had declined almost 5 percent by mid-1993. 
The age-group is projected to decline to its nadir in 1995 and then 
slowly begin recovering, but it will not reach 4 million again until 
2008.
    Furthermore, census projections \1\ indicate that those aged 18-
21--the primary group of entrants into the work force--peaked at 17.4 
million in 1980, declined to 15.2 million in 1991, and declined further 
to 14 million in 1995; the group is expected to increase to 15.5 
million by 2000 and to reach 18 million by 2010.
---------------------------------------------------------------------------
    \1\ This study always uses middle series projections. Current 
Population Reports, 1992, J. Chesseman Day.
---------------------------------------------------------------------------
    This discussion has identified the trends in the labor force age-
group and the actual labor force, as background to a discussion of 
workers and job locations. \2\ As shown in Table 2-1, the number of 
workers almost doubled between 1950 and 1990, adding more than 56 
million workers to reach a total of 115.1 million workers.
---------------------------------------------------------------------------
    \2\ This document continues a convention adopted in the first 
edition of Commuting in America, in which the counts of work trips at 
their destination ends, as measured by the census, are considered to be 
a count of jobs. But they are in fact an incomplete measure of jobs. 
Holders of multiple jobs reported only one job in the census. Thus the 
journey-to-work data undercount actual jobs. However, they are the most 
comprehensive national source of at-workplace statistics on the 
demographics of workers and their travel behavior.
---------------------------------------------------------------------------
    The Bureau of Labor Statistics places 1990 employment at about 120 
million; it dipped sharply to below 117 million in the second quarter 
of 1991. Employment did not return to 120 million until 1993, reaching 
122 million in the second quarter of 1994. Thus in census terms the 
Nation in mid-1994 was just about 2 percent ahead of the 1990 
employment level. It will be difficult, but not impossible, for job 
growth in the 1990's to reach the 18 million per decade levels seen in 
the 1970's and 1980's.
An Aging Working Population
    The baby boom has been a bubble making its way through the nation's 
demographic structure, sharply affecting society at each stage. The 
baby boomers clogged our grammar schools in the 1950's and our high 
schools and colleges in the 1960's and 1970's; they are now clogging 
our transportation system. The baby boomers are in their most 
productive years, and from a transportation point of view, their most 
active years. According to the Nationwide Personal Transportation 
Survey (NPTS), people in the 35-55 age-group, which is the group the 
baby boomers fall into in the 1990's, have the highest propensity to 
travel.
    The long-term population trends by age-group, including Bureau of 
the Census projections to 2000, are shown in Figure 2-5.
    The population below 16 years of age clearly rose during the baby-
boom years and dropped to a stable level of about 50 million. All 
growth has been attributable to the over 16 years of age population.
    The median age of the population has shifted from 28 in 1970, to 30 
in 1980, to 32.9 in 1990, and to over 33 in 1992. \3\ Census 
projections indicate that the median age will reach 35.7 by 2000 and 
will hover between 36 and 37 through the first half of the next 
century.,
---------------------------------------------------------------------------
    \3\ The median is that number which is the central item in a 
distribution when ranked from low to high--thus half the numbers are 
higher and half lower than the median. It is often used instead of the 
average in cases where a few high numbers have the potential to distort 
understanding.
---------------------------------------------------------------------------
    As shown in Figure 2-6, population declined in all age-groups below 
25-29, except for those below school age. All but six states (Alaska, 
Arizona, Florida, Georgia, Nevada, and New Hampshire) had fewer people 
in the 20-24 age-group in 1990 than in 1980. Worth noting is the 
arrival of the ``depression babies'' at the 65-year-old age point. This 
group was exceptionally small because of the bad economic times when 
they were born and then the war years; its size accentuates the size of 
the baby-boom bubble.
    The older population of working age is of interest. In 1980 there 
were 21.7 million persons aged 55 to 65. This number dropped slightly 
to 21 million by 1990, but is projected to reach 23.7 million by 2000 
and to jump to 34.5 million by 2010, as the baby boomers begin to reach 
retirement age.
Women in the Workforce
    Earlier, this chapter noted that women had been the major factor 
behind the surge in the labor force from 1960 to 1990. Between 1950 and 
1990, the number of workers in the Nation almost doubled. In that 
period, women's share of total employment rose from under 30 percent to 
45 percent.
    In 1990 about 192 million people were 16 or older; about 99.8 
million (52 percent) were women. Of that group, 56.6 million women were 
in the labor force--an all-time high for women. These figures mask the 
participation rates for women in the younger age groups--over 77 
percent of women aged 35 to 44 worked, in contrast to about 40 percent 
in 1960. Furthermore, the number of working women with children is very 
high--almost 75 percent of married women who work have children over 5 
years of age, and almost 60 percent have children under 6. In contrast, 
74.4 percent of men were in the labor force at that time.
    Since 1990 the labor-force participation rate for women has 
continued to increase whereas that for men has continued to decline. 
According to the Bureau of Labor Statistics, the participation rate for 
women reached 59.2 percent in August 1995.
    The relative contribution of men and women to the labor force in 
the latter half of this century is shown in Figure 2-7. The total 
labor-force increase in the 1980-1990 decade was clearly down from the 
previous decade, for both men and women; women contributed 11 million 
to the labor force, compared with 14 million in the previous decade. 
Women's share of the labor force increase in the different periods grew 
from 58 percent in the 1970-1980 period to 61 percent in the 1980-1990 
period.
    The 56.6 million women in the labor force in 1990 represented about 
46 percent of the total labor force. Figure 2-8 traces women's share of 
the labor force throughout the period.
                      residential and job patterns
Population Distribution Patterns
    The nation's population grew by only 22.2 million (9.7 percent) 
between 1980 and 1990, about 1 million less than the number added 
between 1970 and 1980. Since 1990 that pattern has continued, with 
about 2.8 million persons added each year. The estimated population 
reached 265 million in dune 1996, with 2.7 million additional people 
added in 1995. The population is projected to reach more than 276 
million in 2000, yielding a growth rate for the decade of just above 10 
percent, with declining growth rates in all decades thereafter until 
mid-century. Table 2-2 summarizes long-term national population trends 
and their distribution by metropolitan geographic category.
Metropolitan Patterns
    Using current metropolitan definitions, the 22.2 million increase 
in population between 1980 and 1990 occurred almost exclusively in 
metropolitan areas, with 21 million of the growth occurring there. Of 
that amount, 15.6 million, or about 75 percent, occurred in suburbs, 
and the remaining 5.4 million occurred in central cities--a substantial 
improvement in growth rates for central cities. However, the adjusted 
column in Table 2-2 clarifies that all of this growth is a statistical 
artifact. If the definitions that applied in 1980 are retained for the 
1990 data, the data show that central city population has actually 
declined and that all the metropolitan growth of 17 million was in the 
suburbs. In this restructuring of the data, the nonmetropolitan areas 
gained 5.2 million rather than 1.2 million. Of most interest is that 
overall population growth in metropolitan and nonmetropolitan areas was 
effectively identical to the national average. Given that the suburban 
share of the metropolitan population was 58 percent in 1980, the 1980-
1990 growth pattern contributes to a further increase in suburban 
share. As a result, the 1990 suburban share now stands at almost 62 
percent.
    The national long-term distribution between the three major 
groupings is presented in Figure 2-9 (using adjusted 1990 figures), 
showing that the suburban share of total national population continues 
to grow--from 43 percent to 47 percent between 1980 and 1990. \4\ The 
central city share of population declined to 29 percent.
---------------------------------------------------------------------------
    \4\ The share held by suburbs varies little under either 
definition: 46 percent under standard 1990 definitions, 31 percent for 
central cities, and 23 percent for nonmetropolitan areas.
---------------------------------------------------------------------------
    Overall migration flows are instructive. In the late 1980's 
nonmetropolitan areas lost small amounts (100,000-250,000) each year to 
metropolitan areas. Otherwise, nonmetropolitan areas held constant with 
flows to and from central cities roughly in balance. The flows between 
central cities and suburbs were more substantial. Central cities lost 
in the range of 2.5 to 3 million persons per year to the suburbs. These 
flows were somewhat softened by the 750,000 or so immigrants arriving 
in the central cities each year. Thus in net terms, central cities 
continue to experience outward shifts, almost exclusively to suburbs, 
in excess of 2 million per year. Recent data indicate that 
nonmetropolitan areas are again experiencing something of a growth 
renaissance. Less than half of the nation's nonmetropolitan counties 
were growing in the 1980's. In the 1990's almost three-quarters were 
gaining population, spurred by immigration. \5\ Many of these growth 
areas are in recreational and retirement communities.
---------------------------------------------------------------------------
    \5\ K. Johnson and C. Beale. American Demographics, July, 1995.
---------------------------------------------------------------------------
    Actual domestic migration rates appear to have continued 
unslackened in the 1980's, despite the aging of the population. Most 
moves involve remaining in the same general area. Three-fourths of 
suburban of nonmetropolitan moves are within the same geographic 
category. Central city movers are less devoted to category, with only 
about two-thirds remaining in a central city.
    Figure 2-11 takes this a step further by dividing the suburbs into 
two zones. The first, the urbanized ring, is defined as the census-
defined urbanized area minus the central city; the second, the metro 
ring, is the metropolitan area minus the urbanized area. The urbanized 
ring consists of the highly built up areas around the central city, 
i.e., the inner suburbs; the metro ring is that area outside the 
urbanized area, but still within the metropolitan area, which can be a 
large area given the shape of the county boundaries that define 
metropolitan areas. It typically consists of lower-density developing 
areas, which often contain heavily rural populations. In fact, 75 
percent of this ring's population is defined as rural.
    One further point of interest is the shifting in population growth 
between metropolitan areas of different sizes. An important question is 
whether population growth is concentrating in the largest metropolitan 
areas or in smaller geographic areas. This will have implications for 
the feasibility of certain modes and policies, choice of mode, and 
commuters' comfort level.
    Figure 2-12 shows the population trend by size of metropolitan 
area. More has happened than is apparent in the figure, because of 
compensating shifts among the groups. A major shift occurred when San 
Francisco joined the over 5 million population group in 1980. In 1990, 
another compensating change occurred when Atlanta and Seattle moved 
into the over 2.5 million group. A large number of metropolitan areas 
are poised to join the over 2.5 million group in the 2000 census 
(Phoenix, Baltimore, St. Louis, Minneapolis-St. Paul, and San Diego). 
No change, absent a joining of the Washington-Baltimore areas, would 
move any area into the over 5 million club.
    The change in population of the major metropolitan areas is shown 
in Table 2-3. With the national growth rate from 1980 to 1990 at 9.7 
percent, the five metropolitan areas with over 5 million population 
barely held their share in the 1980-1990 period. However, it should be 
noted that the growth rate for the group was the product of three 
eastern areas (New York City, Philadelphia, and Chicago) with minuscule 
growth rates (approximately 2 percent for the three areas combined) and 
two western areas (Los Angeles and San Francisco) with a combined 
growth rate more than double the national average. Future growth in 
this group will thus clearly be a product of the growth rates in the 
Western areas, unless some major reversal of trend occurs in the East.
    The nine metropolitan areas in the 2.5 to 5 million range grew the 
most rapidly of all size groups, increasing by over 14 percent. The 
West-East dichotomy was again crucial to understanding the underlying 
character of the trend. In particular, two metropolitan areas in the 
group from the East (Detroit and Cleveland) placed a drag on the group 
with population losses. Otherwise, the Western areas in the group had 
very high growth rates.
    The two groups in the 0.5 to 2.5 million range had almost identical 
rates of change, about midway between the national average and the rate 
for the 2.5 to 5 million group. All areas less than 0.5 million had 
rates close to the national average.
    This suggests that there has been little change in shares of 
metropolitan population among the different population-size groups. 
There has been a small shift, less than a 1 percent change in share, 
from the over 5 million group to the 2.5 to 5 million group.
    There was also a small shift from the smallest groups, those below 
0.25 million, toward the middle-size groups. The groups from 0.5 to 2.5 
million gained slightly in share. All of these overall gains are at the 
expense of nonmetropolitan areas.
Signs of Moderation in the Sunbelt
    The long-term trend in population growth by census region has 
continued without substantial change since 1970, as shown in Figure 2-
13. Notably, the Northeast, showing little growth, has been surpassed 
in total population by the West. The West appears likely to surpass the 
Midwest, which has shown similar lack of growth. The South continues to 
grow and to lengthen its lead over all other regions; it now represents 
more than 35 percent of the U.S. population.
    Examination of the regional growth rates shows that no region has 
been immune to the decline in growth rates, but the South is the only 
region with its current growth rate approximating that observed in the 
19501960 period. The West, with higher rates of growth than the South, 
has also held steady, after a sharp decline in rates from 1960 to 1970. 
These shifts provide some evidence of a lessening of the shift to the 
sunbelt that has dominated national migration patterns since the 
1950's. Together, the South and West, with 52 percent of the nation's 
1980 population, obtained 94 percent of population growth in the 1980-
1985 period. This growth dropped to about 83 percent in the 1985-1990 
period, as the Northeast and Midwest showed some growth, primarily a 
result of foreign immigration. The South and West, together, still 
represented over 55 percent of the national population by 1990. In the 
1990's the rate has dropped further, to an estimated 76 percent of all 
growth by 1993, but the regions' share of the nation's population still 
rose to 56 percent.
    Further recent evidence of slowing occurred when California, for 
the first time in 20 years, grew at a slower rate than the Nation as a 
whole. Between July 1992 and July 1993, California grew 1 percent, 
slightly less than the national rate; it was the slowest growing state 
in the West, contrasting with the overall rate of 1.7 percent for the 
Western states as a group. To place this in perspective, in the 1980's 
California grew at double the national rate.
    If detailed data for annual immigration and emigration are examined 
by region, the picture is rather glum for the Northeast and the 
Midwest. In no year in the 1980-1990 decade did the Northeast have a 
positive net flow of migrants, excluding immigration from abroad. (In 6 
of the 10 years foreign immigration overcame negative net domestic 
flows to create an actual increase in population.) The Midwest picture 
was not quite as bleak. For the first 5 years of the decade, migration 
flows were negative despite positive migration from abroad. In the more 
recent 5-year period, migration flows were positive. In 2 of the 5 
years they were even positive in purely domestic terms.
The New Factor of Immigration
    Changing population and labor-force growth rates and changing 
patterns of internal distribution of the population have been, and will 
continue to be, strongly affected by the size and character of foreign 
immigration. Because these trends are fundamentally a product of 
congressional and administrative policies, they make reliable 
projection of future trends virtually impossible.
    The scale of foreign immigration has become prodigious. It is a 
major, if not the dominant, factor in national population growth 
patterns. According to the Census Bureau, about 8.7 million immigrants 
entered the United States in the 1980-1990 period. Given a total 
population increase of about 22 million, the foreign-born share was 
almost 40 percent of total growth. \6\ Recent data indicate the pace 
continues at that rate, with 4.5 million arriving in the 5-year period 
from 1990 to 1994, twice the rate of the 1970's. Figure 2-14 traces the 
historical trend in immigration using a more conservative estimate 
based on Immigration and Naturalization Service statistics. This figure 
does not show the peak decade of American immigration, 1900-1910; 
almost the same number of immigrants arrived--8.8 million--in the 1900-
1910 period as in the most recent decade, but they arrived to a nation 
consisting of approximately 75 million--less than one-third of today's 
population. In 1910 almost 15 percent of the population was foreign 
born, dropping to only 4.8 percent in 1970. It has now returned to 8.7 
percent, well below the peak immigration years but substantially above 
the post-war years.
---------------------------------------------------------------------------
    \6\ National statistics are not usually presented in this way. 
Generally, they are expressed net of emigration by U.S. citizens. These 
figures are from the 1990 census and are considerably larger than 
official immigration statistics, which place immigration for the period 
at 7.3 million. The official percentage of foreign-born people in the 
United States for the decade is closer to 34 percent.
---------------------------------------------------------------------------
    There are several ways in which immigration may be critical to 
transportation in general and commuting in particular. The first 
obvious point is that without immigration, the total population 
increase would have been much smaller in the decade. A somewhat less 
obvious point is that additions to the population in 1995 via births 
will produce prospective commuters in 2011 or later, but most 
immigrants are old enough to join the labor force when they arrive in 
the United States, and most are intent on becoming commuters and 
vehicle drivers. They are instantaneous additions to the traffic scene. 
For example, almost 80 percent of the 1.5 million arrivals from abroad 
in the years 1990-1994 were of labor-force age. The median age of 
arrivals in that period was 26 years.
    Another factor to consider is the immigrants' geographic location. 
Where do these immigrants go? To what parts of the country? What parts 
of metropolitan areas?
    Previous discussion has stated that immigrants from abroad have 
been a factor in all census regions of the country, acting to reverse 
losses in the East and Midwest (the number of foreign immigrants 
arriving in the East and the number of persons leaving the East for 
other regions are generally symmetrical) and, in the South and West, 
acting to substantially expand existing growth trends. The states that 
received more than 200,000 foreign immigrants in the period from 1985 
to 1990 are shown in Figure 2-15. The chart can be characterized in 
this way: Foreign immigrants tend to go to heavily populated areas. The 
most populous states tend to receive immigrants.
    Foreign immigrants have had direct impact on the growth patterns of 
many states. Some traditionally rapidly growing states, such as 
California and Florida, have had their growth expanded--in the case of 
California, dramatically so. Other states, such as Texas, Pennsylvania, 
and Massachusetts, have had their population losses reversed by 
immigrants. Others, such as New York and Ohio, have had their declines 
reduced, but not reversed. National migration trends differentiated by 
domestic net flows and foreign immigration are shown in Figure 2-16. 
Domestic net flow is the difference between flows into and out of a 
state. Changes in population due to births and deaths are not included 
in the figure.
    The case of California is worth detailing. It has consistently 
received one-third of all immigrants. In the 5-year period 1975-1979, 
California received 1.1 million foreign immigrants, more than one-third 
of the nation's arrivals. In the 1980-1984 period, California received 
almost 1.5 million immigrants, again more than one-third of national 
arrivals. In the 5-year period 19851990, it received almost 2 million 
immigrants, well above one-third of national arrivals. In the most 
recent 5-year period (1990-1994), California received more than 1.5 
million immigrants, almost exactly one-third of all immigrants.
    The current group of immigrants tend to locate in central cities, 
as did the many immigrant groups before them. This acts to balance the 
emigration of the resident populations. In recent years, more than 90 
percent of foreign immigrants were destined for metropolitan areas, 
with a preference favoring central cities over suburbs--roughly a 55/ 
45 split in favor of the central cities. Some metropolitan areas, such 
as New York City and Chicago, had their population losses reversed by 
foreign immigration.
    One effect of the arrival of immigrants has been the number of 
households without vehicles in cities with large numbers of foreign 
immigrants. For instance, Phoenix, Los Angeles, Sacramento, Houston, 
and Dallas all had greater percentage increases in population than in 
vehicles. And all had significant increases in the number of households 
without vehicles. The places with highest increases in zero-vehicle 
households were Miami, San Diego, and Phoenix. The suburbs of many of 
these areas saw large increases in households without vehicles.
    Of great interest will be the rate at which these households 
``mainstream,'' i.e., obtain vehicles and begin moving to the suburbs. 
Historical data indicate that foreign-born persons reach levels of 
income approximately the same as native-born citizens in about 15 
years. Foreign immigrants are not unlike others moving within the 
United States. The average foreign immigrant had 12.9 years of 
education in 1989-1990, almost identical to the average years of 
schooling for all migrating residents. More recent data indicate that 
this average has an unusual distribution because foreign-born persons 
over 25 years of age have a greater likelihood of having a college 
degree than native-born citizens; however, they are also more likely 
not to have a high school degree.
Job and Worker Patterns
    Worker and job location data from the 1990 census indicate that the 
patterns have continued to follow their historical trends. Workers are 
counted at their residences, and jobs are counted at their work 
locations (which could be the residence). The number of workers equals 
the number of jobs.
    A simple way to summarize the locations of workers and jobs is 
shown in Table 2-4. This breakdown of metropolitan area worker data 
also depicts a suburban division between the urbanized ring (urbanized 
area minus the central city) and the metro ring (metro area minus the 
urbanized area).
    Aseries of figures portrays the patterns behind these data. Figure 
2-17 shows the distribution of workers by major geographic area. Half 
of all workers reside in the suburbs. Figure 2-18 shows these data in 
greater detail, indicating that most of the workers reside within the 
urbanized ring. Figure 2-19 compares the share of workers with share of 
population by jurisdiction. Central cities have a lesser share of 
workers than population; this is sharply reversed in the urbanized 
ring, which has a high proportion of workers to population. The 
nonmetropolitan area also has a low population/worker relationship.
    Figure 2-20 shows the growth in workers between 1980 and 1990 by 
broad geographic areas. As can be seen from comparison with Figure 2-
17, growth in workers has Predominantly occurred in suburban areas, 
with two-thirds of all worker growth there; although the growth is in 
excess of its present share, it is still not as strongly 
disproportionate as its share of population growth. Both central cities 
and nonmetropolitan areas shared the remaining worker growth about 
evenly, but both areas lost share to the suburbs.
    Figure 2-21 provides similar data for worker growth at the work 
location end (i.e., jobs). The first chart represents the distribution 
of job locations in 1980; the second chart shows job locations in 1990, 
and the third chart shows how the distribution of shares of jobs 
changed from 1980 to 1990.
    These figures use a slightly different geographic structuring of 
the data than in the preceding discussion--one that recognizes how 
commuting patterns work in the 1990's. It differentiates those who work 
in the central city of a different metropolitan area from those who 
work in the central city of their own area, and similarly 
differentiates suburbs. The data indicate that there has been a 
significant alteration in the location of jobs over the 10-year period. 
When the two suburban areas are added, they constitute 42 percent of 
the job locations in 1990, up from 37 percent in 1980, obtaining a two-
thirds share of the growth in the period. As shown in the charts, a 
substantial share of growth (one-quarter) occurs in suburbs and central 
cities outside the residence area of the commuter.
Detailed Metropolitan Trends
    Over 95 percent of metropolitan population growth and about 66 
percent of jobs in the 1970's were absorbed in the suburbs. In the 
1980-1990 period, if 1980 definitions are retained, all population 
growth occurred in the suburbs, with central cities showing a slight 
decline of 0.7 percent, losing roughly half a million people. Almost 75 
percent of metropolitan job growth took place in the suburbs. \7\
---------------------------------------------------------------------------
    \7\ If 1990 definitions are used, suburbs gained about 75 percent 
of population and 51 percent of jobs.
---------------------------------------------------------------------------
    Metropolitan growth rates have been highly variable from area to 
area. Table 2-3 provided detailed population growth rates in the 1980's 
by metropolitan area size group. Figure 2-22 displays the distribution 
of metropolitan areas over 1 million by population growth rate. Those 
areas with under 5 percent growth, roughly half the national growth 
rate, are designated as ``low growth,'' and those with a growth rate 
above 20 percent, roughly double the national rate, are designated as 
``high growth.'' All the high-growth metro areas were in the West or 
the South, with the exception of Minneapolis-St. Paul. Conversely, 
almost all the low-growth areas were in the Northeast. The two 
exceptions were Portland, Oregon, and New Orleans, Louisiana.
    In percentage terms, overall worker growth rates exceeded 
population growth rates by substantial amounts, as expected. Suburban 
worker growth rates were even greater--in some cases double the 
population growth rate. Figure 2-23 provides the detail on these 
patterns. The general decline in the overall rates from the 1970-1980 
high-growth areas is worth noting. In that period, the lowest suburban 
growth rate among the high-growth areas was just about 60 percent. In 
the 1980-1990 period, only two areas exceed 60 percent in suburban 
growth.
    The 12 low-growth areas shown in Figure 2-24 have growth patterns 
more like the patterns of the previous decade, although there is 
apparent softening of the extremes here as well. Many of the population 
losers in the 1970's continued to be population losers in the 1980's--
Pittsburgh, Buffalo, Detroit, and Cleveland. As in the 1970's, all but 
Pittsburgh showed substantial overall worker growth and even more 
dramatic suburban worker growth, although the contrast in suburban 
worker growth and overall worker growth rates is not as extreme as in 
the earlier decade. New York and Portland actually show overall rates 
equal or better than suburban rates.
    Even when areas have declining or limited population growth, worker 
growth (particularly suburban worker growth) is still an important 
transportation growth factor. Perhaps the best example is Buffalo, 
which in 1980 had seen an 8 percent population loss, but still 
sustained a 7 percent increase in suburban workers. In 1990 it incurred 
a loss in population, this time of about 4 percent, but again obtained 
a 7 percent increase in suburban workers. New Orleans and Detroit were 
also notable in this regard. Four of the areas obtained suburban worker 
growth rates in the range of 20 percent. Table 2-5 summarizes the 
overall data for all areas over 1 million population.
                        households and vehicles
Trends in Household Size
    In many respects, the fundamental unit of metropolitan travel is 
the household. Incomes and vehicles are typically household-based 
rather than person-based. Many trips can be attributed to household 
activities such as food shopping, appliance repairs, and laundry. Child 
care and children's needs, such as medical visits or music lessons, are 
a significant part of the pattern of travel demand. The linking of 
trips serving the household to the journey-to-work trip--so called trip 
chaining--is very much a family/household characteristic, and an 
increasingly important factor in transportation policy issues. Also, 
the potential for linking persons to form carpools is strongly related 
to household size, which will be discussed later.
    Given these factors, it is important that the interrelationship 
among the trends in population, households, \8\ and workers be clear. 
The basic relationship is shown in Figure 2-25, which portrays the 
trend in growth in population, households, and labor force from 1950 to 
1990, indexed to 1950. The chart shows a close parallel between 
household and labor-force growth; the overall growth rate from 1950 to 
1990 for the labor force was 200 percent and for households 211 
percent, indicating that labor force (or workers) per household changed 
little in the period.
---------------------------------------------------------------------------
    \8\ Not all of the population is in households. Those members of 
the population not in households are in group quarters, such as college 
dormitories, army barracks, prisons, nursing homes, and psychiatric 
institutions. Only 6.7 million of the almost 250 million persons in the 
1990 population were in group quarters. Between 1980 and 1990 this 
group grew almost twice as fast as the population in general.
---------------------------------------------------------------------------
    The greater growth in households relative to population (211 
percent vs. 164 percent) continues the trend toward smaller household 
size. The average household size in 1950 was 3.37 persons; by 1990, it 
had declined rather dramatically to 2.63 persons, with the greatest 
changes occurring in the 1960's and 1970's.
    Two factors that affect household size are pertinent to 
transportation planning. The first factor concerns shifts in family 
structure; the second concerns the changing distribution of households 
by number of persons per household.
The Structure of Households
    In 1990 there were 242 million people living in 91.9 million 
households. Of these households, 64.5 million were families with about 
204 million people. The remainder of the population was living in 27.4 
million nonfamily units, 22.6 million of which were composed of single 
persons living alone and 4.8 million were nonfamily units of more than 
one person. Table 2-6 summarizes these patterns for 1980 and 1990 and 
shows the rates of change in the elements. Several points are worth 
emphasizing:

   Although population increased by less than 10 percent of the 
    households increased by almost 14 percent.
   Population in family households increased only 4 percent. 
    The major growth occurred in non-family households, which increased 
    almost 30 percent.
   Of the total increase in population of 22 million, over 13 
    million, or 60 percent, occurred in nonfamily households. The share 
    of the total population represented by nonfamily households rose 
    from 11 percent to over 15 percent.
   Great growth was registered in nonfamily households 
    consisting of persons living alone and, in particular, in 
    multiperson nonfamily households.
   A significant portion of those living alone are over 65 
    years and female.

    These trends suggest that the notion that incomes and vehicles are 
household-based rather than person-based may be changing somewhat, 
because if increasing shares of households are nonfamily households, it 
would be more likely that incomes and possessions could remain separate 
and not function as a shared asset.
    Since 1990, family households with children have grown at the 
minuscule rate of 0.2 percent per year, while nonfamily households grew 
at the rate of 1.2 percent per year. The impacts of these changes are 
just being revealed in terms of travel patterns. Although considerably 
greater than the rate for family households with children, the rate for 
nonfamily households has declined considerably from its high levels in 
the 1970's, which were almost 6 percent per year.
    If households are distinguished by the number of persons per 
household, as depicted in Figure 2-26, it is evident that large 
households--those of five, six, or more persons--are declining as a 
component of all households. Most growth in households is occurring 
among one- and two-person households. This is confirmed by the previous 
discussion of nonfamily households.
    These household trends tend to have negative effects on the 
potential for family carpooling and support increased use of single-
occupant-vehicular travel. But remember, a significant portion of those 
in single-person households are over 65 years of age and therefore not 
likely to be commuters. The following discussion expands on this point.
Workers Per Household
    Figure 2-27 shows the number of workers per household, according to 
location. This chart says a great deal about commuting and commuting 
possibilities:
    Seventy percent of workers live in households of two or more 
workers. This indicates that the option for workers to live closer to 
work is a two-way or more tug-of-war, even if workers were interested 
in living closer to work.
    It tells us a great deal about carpooling potential among 
households.
    Most households with workers have two workers.
Workers Per Family
    Although nonfamily households have distinct worker characteristics, 
with many single-person/single-worker households, the family household 
is of special interest. Only 13 percent of family households have no 
workers, while more than 40 percent of those living in single-person 
households are over 65 and are therefore less likely to be working. 
Table 2-7 shows the distribution of workers in family-based households, 
and also identifies the subset of those family households containing a 
husband and wife.
Stabilization of Vehicle Ownership Trends
    Although population grew by less than 10 percent and households by 
about 14 percent between 1980 and 1990, total vehicles available to 
households jumped by over 17 percent.
    Nothing better depicts the scale of vehicle growth than the fact 
that the number of vehicles added in the past decade exceeded the 
number of people added. The majority of U.S. households have two or 
more vehicles, with an average vehicle availability of 1.66 vehicles 
per household, up from 1.61 in 1980. These increases in vehicles per 
household are occurring against a backdrop of declining number of 
persons per household.
    At the same time there are indications that the rate of growth in 
vehicles in America is diminishing. As shown in Table 2-8, the number 
of vehicles grew slower than the growth in workers (17.4 percent vs. 
19.1 percent), with the result that vehicles per worker actually 
declined slightly, from 1.34 to 1.32, after jumping from 0.85 vehicles 
per worker as recently as 1960. Still, the fact that every worker has, 
on average, 1.3 vehicles available for work travel suggests that almost 
everyone who wishes to commute by vehicle has the means to do so. 
Source data from the 1990 NPTS indicate that the reality goes well 
beyond simple averages, because the majority of one-worker households 
have one or more vehicles, the majority of two-worker households have 
two or more vehicles, and the majority of three-worker households have 
three or more vehicles. This clearly indicates that vehicles tend to be 
where the workers are. Total households by vehicles available are 
identified in Figure 2-28. Note that the growth in households is almost 
exclusively in households with two or more vehicles.
    The case for stabilization of vehicle ownership can still be made 
despite these growth numbers:
    There has been a small decline in vehicles per worker, following 
years of rapid growth.
    The share of households with three or more vehicles decreased from 
1980 to 1990. Although only a 1 percent drop, the drop is significant 
after periods of extraordinary growth (jumping from 1.3 million 
households in 1960 to over 14 million in 1980). Despite the percentage 
drop, the number of households with three or more vehicles grew by 1.8 
million between 1980 and 1990.
    The number of vehicles now exceeds the number of licensed drivers, 
suggesting that there is a saturation setting in because there is 
saturation of the number of licensed drivers independent of the number 
of vehicles. It will not matter how many vehicles people own as long as 
the number of licensed drivers remains stable. There is clear evidence 
of saturation in licensed drivers.
   As shown in Figure 2-29, the share of households by vehicle 
    ownership does seem to have stabilized, remaining relatively 
    unchanged since 1980.
Households Without Vehicles
    The proportion of all households that are without vehicles has been 
in continuous decline since at least 1960. In 1960, 21 percent of 
households were without vehicles, dropping to just above 11 percent by 
1990. However, the percentage decline between 1980 and 1990 was just 
slightly more than 1 percentage point--from 12.9 to 11.5 percent--
supporting the viewpoint regarding the trend toward stabilization.
    In terms of absolute numbers, the number of zero-vehicle (vehicle-
less) households has remained roughly constant for 30 years, as shown 
in Figure 2-28. In fact, the number of zero-vehicle households rose 
slightly from 10.4 million in 1980 to 10.6 million in 1990--not far 
from the 11.4 million households without vehicles in 1960.
Who Are The Vehicle-Less?
    A number of demographic factors that are contributing to the 
stability in the number of vehicle-less households also help explain 
who these households are.
    One of these is the increase in single-person households, 
particularly those consisting of older women. In 1990 there were 22.6 
million households consisting of an individual living alone, 8.8 
million of which were over 65--almost 80 percent of this group were 
women, who, as a group, have the lowest ownership of drivers' licensee. 
These women are most likely to be vehicle-less and also in a retired or 
otherwise nonemployed situation. This confirms that although vehicle-
less households represent 11.5 percent of households, they represent a 
much smaller percentage of the population.
In Search of the Three-Vehicle Household
    The number of households with three or more vehicles has grown by 
almost 1.8 million households, despite a declining share of all 
households. Almost 16 million households are in this category today.
    Who are these people and where are they? For the most part they 
appear to be large households with two or three drivers and are 
frequently located in rural farming communities. The following table 
lists the states with the highest percentage of households with three 
or more vehicles.
    The midwestern farm states also tend to be above the average. New 
York, the state with the lowest overall level of vehicle ownership, is 
lowest in this area as well, with only 11 percent of households in the 
three-vehicles-and-above category. Only California seems to have high 
shares of urban households with three or more vehicles.
    Census data indicate that about 5.3 million workers live in 
vehicle-less households, which means that, at most, one-half of the 
vehicle-less households have workers.
    Another factor to consider is the surge of immigrants in the 
period, most of whom are unlikely to have vehicles in their first years 
of residence. One way to observe this trend is to look at the patterns 
in the major immigration centers. A particularly effective measure is 
the ratio of population growth to vehicle growth. On a national basis, 
vehicle growth exceeded population growth, but in many metropolitan 
areas--including Phoenix, Sacramento, Los Angeles, and Houston--the 
population growth exceeded vehicle growth.
Where Are the Vehicle-Less Households?
    Most households without vehicles are located in central cities. 
Figure 2-30 expands on this fact by adding the factor of housing type. 
In the figure, working households without vehicles are stratified by 
both area and home ownership. It is clear that central city renters are 
the predominant group of nonvehicle-owning households; as a general 
rule, zero-vehicle households are more likely to be renters than home 
owners.
    The New York metropolitan area accounted for about one-fifth of all 
zero-vehicle households in 1980. Despite the fact that New York lost 
about 90,000 zero-vehicle households in the 1980-1990 decade, it still 
accounts for one-fifth of all such households.
    Another one-fifth of zero-vehicle households are located in the 
seven major metropolitan areas listed in Figure 2-31. The remaining 
metropolitan areas with populations over 1 million contained another 
one-fifth, and the rest of the country was responsible for the 
remaining two-fifths.
    Another way to look at the location of the vehicle-less is 
presented in Figure 2-32, which shows that almost 60 percent of 
vehicle-less households are in the central places of urbanized areas, 
typically the central city. Another 18 percent reside in the fringe of 
these urban areas--i.e., the inner suburbs. About 11 percent reside in 
urban areas too small to qualify as urbanized areas, and a similar 
percentage reside in the remaining rural nonfarm areas of the country. 
Farm areas account for a minuscule part of vehicle-less households.
Racial and Ethnic Factors in Vehicle Availability
    The preceding discussion on vehicle availability was, for the most 
part, based on national averages. Many of the perspectives require 
sharp reappraisal when viewed in light of the vehicle ownership 
characteristics of different racial and ethnic groups.
    One of the most pertinent characteristics is the variation in 
licensed drivers among racial and ethnic groups. The nation is, on 
average, near saturation with regard to license holding. But as shown 
in the top part of Figure 2-33, the White, non-Hispanic population in 
urban areas is near, or at, effective saturation, especially among men 
(96 percent); in contrast, the rate for men in all other racial and 
ethnic groups is about 80 percent. The disparities among women of 
different racial and ethnic groups and between women and men are even 
greater. Rural license holders, shown in the same figure, exhibit a 
parallel pattern, but with all groups having higher rates of license 
holding than their urban counterparts.
    As shown in the figure, sharper disparities exist between Hispanic 
men and women and between men and women in the ``other'' groups than 
between Black or White men and women. Whether this is a product of 
cultural factors, such as gender-based roles, or other factors, such as 
age, remains to be determined.
    As noted earlier, 11.5 percent of all households are without 
vehicles. Figure 2-34 shows the racial and ethnic composition of those 
households. Although White, non-Hispanic households account for 59 
percent of all vehicle-less households, the rates among the groups are 
much more revealing. The most remarkable attribute of the table is that 
the Black population as a whole averages over 30 percent nonvehicle 
households, and in central cities the number is over 37 percent. Many 
central cities have extraordinary levels of Black households without 
vehicles--New York with 61 percent, Philadelphia with 47 percent, and 
Chicago and Washington, D.C., with 43 percent. However, these 
households may not be as transportation disadvantaged, given the 
availability of transit services, as others in smaller areas, such as 
Wheeling, W.Va., with 57 percent vehicle-less households, or Utica, 
N.Y., with 44 percent.
    Hispanics have an overall rate of vehicle-less households of 19 
percent, and a central-city rate of 27 percent. Among the central 
cities in metropolitan areas with very high levels of Hispanic 
households without vehicles are New York, with over 62 percent, and San 
Diego, with 37 percent. Hispanic rates tend to follow the pattern of 
high rates in the East, where densities are high, and low rates in the 
more spread out cities of the West.
                    the aging of the commuting fleet
    Information on the age of the vehicle fleet is not available from 
the census, but it is available from NPTS. In combination with other 
data from the 1990 NPTS, insight can be gained about the vehicle fleet 
used for commuting. This information could be critical in dealing with 
important questions such as air quality and safety.
    The main NPTS finding on vehicle age is that the American vehicle 
fleet is aging rather substantially. The fleet's average age now 
exceeds 8 years, in contrast to less than 5.6 years in 1969. Perhaps 
more noteworthy is the fact that older vehicles not only exist but are 
actively used--vehicles that are 6 or more years old account for almost 
one-half of all travel.
    Figure 2-35 describes the age of the vehicle fleet as observed in 
the four NPTS survey cycles. The size of the fleet that is less than 2 
years old has changed little over the 20-year period. The immense 
increases in the vehicle fleet since 1969 are not so much the result of 
increasing vehicle sales, but the result of fewer aging vehicles being 
scrapped. Older vehicles are being retained and used as second or third 
cars by more-affluent households or are being sold as used cars, 
fueling the supply of low-cost vehicles that is making vehicle 
ownership accessible to lower income groups.
    The NPTS data show that the high-income segments of the population 
own most of the older cars, which serve as second or third vehicles 
(i.e., not the primary vehicle). Older vehicles owned by lower income 
groups are usually the only house hold vehicle. For instance, 60 
percent of all travel by persons with incomes under $10,000 in 1990 was 
produced by vehicles of 1983 vintage or older, whereas such vehicles 
provided only about 30 percent of the travel of those households 
earning more than $40,000. Black and Hispanic households tend to also 
own older vehicles than do White households.
    The NPTS data indicate that older vehicles are used differentially 
for commuting--not surprisingly, the older the vehicle, the more it is 
used for commuting. Many work trips are reasonably short and over known 
terrain, making commuters more willing to use a car that is ``reliable 
transportation'' and that can be left all day on the street or in a lot 
or garage without concern. The data indicate that newer vehicles tend 
to be used for longer trips, such as vacations, and by women 
transporting children (safety concerns and the new family van designs 
are undoubtedly factors here). On average, commuting accounts for 21.6 
percent of vehicle travel. New cars typically have less than 20 percent 
of their travel allocated to commuting, whereas older vehicles have 
upwards of 24 percent of their travel allocated to commuting. This is a 
significant concern because the older fleet is more likely to release 
more pollutants and to be less fuel efficient.
                            commuting costs
    A major part of the cost of commuting is associated with the cost 
of owning and operating a vehicle. Roughly 100 million of the 115 
million commuters each day use a private vehicle, and the cost of 
owning and operating a personal vehicle is one of the major factors in 
determining the financial viability of the other commuting 
alternatives.
    Except for some special cases, it is not possible, or appropriate, 
to separate vehicle commuting costs from general vehicle operating 
costs. Therefore, most of the following vehicle cost discussion is 
based on total annual averages. Special commuting costs are discussed 
later in this chapter.
    Figure 2-36 provides an overall context for an investigation of 
household-based transportation costs. The two lines that closely track 
one another are the consumer price index, composed of a weighted 
``marketbasket'' of all consumer purchase items, and the transportation 
cost index, composed of the costs of owning and operating private 
vehicles and also proportional inputs from taxi fares, transit fares, 
airline fares, and other transport costs. Since 1986, transport costs 
have been rising slower than overall consumer costs. By 1992, 
transportation costs had risen to 3.5 times 1970 costs.
    The other two lines in the figure trace new and used vehicle 
purchase costs. New car costs have risen appreciably less rapidly than 
general costs and far less rapidly than used car costs. New car costs 
increased about 2.5 times since 1970, while used car costs rose 4 
times. This increase is largely attributable to the increased longevity 
of the typical vehicle. With the average vehicle age approaching 8 
years today, a 3- or 4-year-old vehicle is only part way through its 
useful life rather than close to its end.
New Car Costs
    Average new car prices are traced in Figure 2-37. In current 
dollars (the price in dollars prevalent in each year of the 22-year 
period observed), the price of the typical new car rose from around 
$4,000 in 1970 to almost $18,000 in 1992. Restating these values in 
1990 dollars, after inflation has been removed, shows that the prices 
hovered around $12,000 throughout the 1970's and rose to around $16,000 
by 1992. Thus, in constant dollar terms, the increase in price was only 
about 33 percent.
    Figure 2-38 helps to explain the rising trend in vehicle prices. 
The lower tier of the area depicted in the chart tracks the slowly 
rising price trend of a basic vehicle, comparable in design and 
equipment to a 1967 vehicle. This trend takes vehicle prices from 
around $3,600 to about $8,400. The second layer, bringing the price to 
about $11,500, is the increased cost due to the modifications and added 
equipment required to bring the vehicle into compliance with mandated 
safety and pollution emissions regulations. The final tier represents 
the price increases attributable to improvements and amenities that 
consumers increasingly demand be standard items on new vehicles, such 
as air conditioning, power-assists, and sound systems.
    Figure 2-39 places all of these patterns and trends in perspective 
by expressing new car prices in terms of the number of weeks of median 
family earnings needed to pay for them. This figure shows a similar 
pattern to the constant 1990 dollar pattern in Figure 2-37--a stable 
pattern throughout the 1970's at about 20 weeks pay, rising to about 25 
weeks pay (a 25 percent increase) by 1991. Thus, an average vehicle 
costs about 6 months pay for the family earning the median national 
income.
Vehicle Operating Costs
    The major component of operating costs that varies per mile of 
travel is the price of fuel. The price of unleaded regular fuel has 
substantially declined in both current dollars and inflation-adjusted 
dollars. In 1990 dollars, the price of unleaded regular gasoline 
reached an effective price of $2 per gallon after the oil shortages in 
1979-1980. Since then, it has descended to almost half that value.
    If improvements in vehicle fuel efficiency are taken into account, 
the cost of fuel per mile of travel drops even farther. Figure 21 shows 
that fuel costs per mile of travel dropped from above 9 cents a mile in 
the high-cost 1980-1982 period to 5.5 cents in 1992.
    The overall operating costs of automobiles are shown in Figure 2-
42. Variable costs are shown in three categories: gas and oil, 
maintenance, and tires. As shown in the figure, fuel costs dominate 
variable costs. Fixed costs, including the depreciation of vehicle 
purchase costs, interest costs, insurance, and other fees, are the 
dominant factor in total costs. This chart may be somewhat misleading 
because assumptions about depreciation were modified after 1984, 
shifting from 4 years to 6 years, to respond to the increase in 
longevity of new vehicles. Of note is that fuel and oil costs, as a 
percentage of total vehicle operating costs, declined from over 26 
percent in 1975 to about 13 percent by 1992.
Commuting Vehicle Costs
    One way to allocate overall vehicle costs to commuting would simply 
be to allocate the percentage of total vehicle miles traveled for 
commuting relative to all vehicle travel in a household. This would 
yield a value of 23 percent of total costs. This could be understating 
the cost to the user in a number of ways:

   Because commuting often occurs in congested peak periods, 
    fuel and other costs per mile would tend to be higher than average 
    vehicle costs. If relative time shares were used to allocate costs, 
    the values would vary sharply; roughly two-thirds of time spent in 
    vehicles would be attributable to commuting.
   Because vehicle ownership is closely linked to workers and 
    commuting needs, it may be argued that a greater share of the fixed 
    costs of owning a vehicle should be allocated to commuting, rather 
    than simply using its proportionate share of total travel as the 
    basis for allocation.

    If only out-of-pocket costs are considered, as the typical commuter 
seems to do, then daily commuting costs would consist of variable 
vehicle costs, as identified above, plus any toll and parking costs. 
National statistics are not available on either parking or toll costs 
for commuters that can be reliably reported. It can be generally stated 
that these factors are small and, in most cases, do not figure into 
commuting costs. For example, according to NPTS, only about 5 percent 
of commuters pay to park.
    The Federal Highway Administration's most recent study (1991) of 
overall operating costs places parking costs at about 4 percent of 
total costs, or roughly 1 cent per mile. The 1992 Economic Census 
places total annual parking revenues in tax-paying establishments at 
about $3.66 billion per year, which is a relatively minor sum compared 
with the scale of the fleet. Of course these costs are highly variable 
geographically. In central cities, parking would be a far greater 
factor, both in terms of the prevalence of paid parking and, more 
particularly, the price.
    Tolls have a similar characteristic: in most cases, they are not 
significant, and where they do exist, they are not high cost. However, 
where they exist in large metropolitan areas, such as New York and San 
Francisco, they clearly are a factor. However, the total national 
revenue of toll roads and bridges, even including major intercity 
routes, is not substantial alongside the national scale of commuting. 
Table 2-10 summarizes these data as of 1993. Most of the state-
administered toll revenues are produced on intercity routes, such as 
the New York Thruway and the Pennsylvania and Ohio turnpikes, which do 
not serve as key commuter routes.
    The American Automobile Association (AAA) provides detailed vehicle 
operating cost information every year, which many organizations and 
government agencies use in their work. In the second quarter of 1994, 
AAA placed total average operating costs at 39.4 cents per mile for a 
vehicle traveling 15,000 miles per year. These costs vary by region of 
the country, with the lowest costs typically in the Midwest and the 
highest costs in New England. The detailed elements of that cost for 
selected years in the 1990's are shown in Table 2-11. Costs have risen 
appreciably over the 5 years since 1990 and are roughly the result of 
proportionate increases in all cost areas.
Transit Costs
    Transit fares are presented in Figure 2-43. The rates shown in this 
figure represent a composite fare based on weighted averages of fares 
by type of transit and location. Between 1960 and 1992 transit fares 
grew fivefold. Tracing the pattern since 1970 would place it just below 
the range of the overall consumer price index and transportation cost 
index. Fares operated well below the consumer price index and remained 
almost constant throughout the 1970's, but gained rapidly in the 
1980's.
Time Costs
    One of the real costs of commuting is the amount of time spent in 
the activity. Only the broad aspects of travel time trends are 
summarized here. Detailed travel time data are presented in Chapter 3, 
which traces travel times for each mode of transport for specific 
commuting flow categories and socioeconomic groups.
    Overall, commuting travel time for all modes averaged 22.4 minutes 
one way in 1990, up by about 3 percent, from 21.7 minutes, in 1980--an 
increase of roughly 40 seconds. This qualifies as a trivial amount 
given that the total increase in travel was prodigious--an increase in 
total commuting vehicles of 30 percent. First, of all the statistical 
measures that may be distorted by using national averages, average 
travel times are the most obviously susceptible to this problem. Many 
areas showed large swings in travel times, both upward and downward. 
The most pertinent fact about these relationships is the more specific 
the area of observation--that is, the smaller the area--the more likely 
it is that large swings will be observed. For example, the average for 
the 39 metropolitan areas with populations over 1 million was 25.2 
minutes, in contrast to 19.3 minutes for the balance of the nation. The 
State of New York had the worst travel time, at 27.8 minutes; the New 
York metropolitan area was at 31.1 minutes and New York City itself was 
at 35.3 minutes.
    At the broadest scale, most states cluster around the national 
average, with the greatest deviations being New York State (1.24 times 
the national average) and North Dakota (13 minutes, 58 percent of the 
national average). Several states showed actual improvements in overall 
travel times between 1980 and 1990, including New York, Pennsylvania, 
Alabama, Kentucky, Wyoming, and North Dakota. These improvements in 
travel times were often not positive events, because they often 
accompanied declining populations and economic difficulties.
    The rates of change are also volatile. Although travel times 
increased nationally by only 3 percent, some areas saw substantial 
increases; for example, California, Hawaii, and New Hampshire all had 
gains above 10 percent.
    Overall national patterns are shown in Table 2-12. About 3 percent 
of commuters work at home and thus have effective travel times of zero. 
The travel times in the table are for those who work away from home. 
About 16 percent of the nation's commuters, roughly 13 percent in 
metropolitan areas and 26 percent in rural areas, are at work within 10 
minutes of leaving home. It may be overstatement, but it does not seem 
inappropriate to infer that for these people commuting is not much of 
an issue. If we add those who work at home, commuting is thus a minor 
factor for about one-fifth of the worker population. It is difficult to 
know where to draw the line and say that any time spent in commuting 
less than a specified amount is a ``reasonable commute.'' If one 
accepts less than 15 minutes, then another roughly 16 percent of the 
population is added to the ``no problem'' category. If less than 20 
minutes is the threshold of acceptability, then one-half of the 
population (almost two-thirds in rural areas) is enjoying a reasonable 
commuting situation, as far as time goes.
    If we shift to the other end of the table and begin to work down 
from the longest trips, we see 12.5 percent of the population has a 
commute of more than 45 minutes; in fact, the average for these people 
is 58 minutes. For those in rural areas who commute more than 45 
minutes, the average is over 1 hour, suggesting that rural commuters 
have the best and the worst of commuting. That group of rural commuters 
who work locally have very short work trips, but those who commute the 
long distances into metropolitan areas have very long travel times.
    The proportion of commuters with travel times beyond 60 minutes is 
just below 6 percent. The average for all metropolitan areas over 1 
million population is 7.5 percent. Three areas have percentages over 10 
percent--New York (16.5), Chicago (10.7), and Washington, D.C. (10.7).
                 the notion of acceptable travel times
    Attitudes toward commuting travel times are relative. Anecdotally, 
at least, it is clear that people can complain about unacceptable 
commuting times at almost any level of actual travel time. Much of the 
problem is a product of what the actual travel time is versus what it 
``ought to be,'' as determined by the commuter. Thus a 1hour commute 
can be acceptable, and a 10-minute commute can be unacceptable. In many 
instances the commuter has made the mental tradeoff of what nominal 
travel time is acceptable in relation to housing costs or other 
amenities, and when that perceived time is violated, dissatisfaction 
becomes evident. This is evidenced by the different speeds people find 
acceptable in using different modes for the same trip. If a commuter 
walked to work in 10 minutes 1 day and drove the same distance in 10 
minutes another day, that would probably be cause for serious 
dissatisfaction.
    A better public policy question is, ``Is there an acceptable travel 
time or speed that governments owe their electorate?'' Stated another 
way, ``At what speed do commuters start voting against elected 
officials?''
    There are very real issues. Travel times have important economics 
and social consequences, involving household tradeoffs between housing 
location and cost and with other activities such as community 
participation. On the business side, they impact employers' access to a 
pool of skilled employees in an acceptable travel time range. It is 
clear that in a world that places increasing value on time, even the 
same levels of travel time from one period to the next will be less 
tolerable.
                               __________
             Chapter Three: Commuting Flow Characteristics
                              modal share
    Commuters' choice of mode of travel and the resultant split among 
the different modal sectors is a key issue in commuting analysis. The 
data on modal share are often viewed as the ``Dow-Jones average'' for 
commuting and are closely watched for changes or evidence of a new 
trend. This is largely because modal share is seen as having 
substantial bearing on energy consumption, environmental quality, 
facility operation, and investment needs. In no other area of commuting 
is public policy so focused on affecting commuter behavior; modal choke 
data are thus seen as a barometer of the effectiveness of that policy. 
The data are not always easy to decipher because of the inherent 
measurement complexity of the subject.
Deficiencies in the Data on Modal Share
    Modal choice is a complex topic, with variations that are difficult 
to capture statistically.
    In the Bureau of the Census data, the single mode used for most of 
the distance is recorded as the mode choice for the total trip. 
However, in some areas, the use of multiple modes to get to and from 
work (e.g., automobile to transit and rail transit to taxi) can be a 
significant factor. The Nationwide Personal Transportation Survey found 
that the use of multiple modes (excluding walking, which is a part of 
every trip) is a small factor at the national level, but can be 
significant in selected large metropolitan areas. Part of this issue 
has particular bearing on the submodes within transit (bus versus 
rail).
    Where workers have more than one job, the census survey collects 
travel data for only the main job. Mode choice for trips to second jobs 
is unknown, although it is probably very similar to the choice for the 
primary job.
    The census survey collects information on the mode usually used 
last week. This precludes the counting of modes that are only 
occasionally used, which, given the heavy orientation toward the 
automobile, can have substantial impact on other modes with small 
shares. The incidental and occasional use of transit by auto users, 
such as when vehicles are in repair, will have a much greater effect on 
transit share than will the incidental use of autos by transit users. 
In some areas, this can add 15 percent to transit and carpool used, 
Census responses can be misconstrued to lead to the assumption that 
everyone in the United States who has a job goes to work every day, 
when of course they do not. Total reported commuting travel must be 
adjusted downward because of absenteeism, vacations, illness, and so 
forth. These factors reduce total work travel to about 85 percent of 
the total for all workers, varying by month. It does not appear to vary 
significantly by mode on average, but can vary substantially on any 
given day. \1\
---------------------------------------------------------------------------
    \1\ Studies by the Washington, D.C., Council of Governments and the 
Delaware Valley Regional Planning Commission (Philadelphia) adjust 
carpools and transit upward by about 15 percent and single-occupancy 
auto use downward by about 8 percent for a given day's actual travel 
activity.
---------------------------------------------------------------------------
Broad Modal Share Trends
    The increasing orientation toward private vehicles for commuting is 
continuing Figure 3-1). Between 1980 and 1990 the number of total 
commuters increased by almost 19 million; in the same period, the 
number of commuters using single-occupant private vehicles increased by 
over 22 million. One way to understand what has happened is to consider 
that even if all the new commuters are assumed to be exclusively using 
single-occupant vehicles, about 4 million commuters (almost 12 percent 
of all commuters that do not drive alone) must have shifted from other 
modes to the single-occupant vehicle. The statistical reality in net 
terms follows this characterization very closely. No other mode of 
travel increased in the period. Some modes, such as carpooling, 
motorcycles, and walking, saw dramatic reductions; others, such as 
transit and bicycling, evidenced less reduction.
    The one category of behavior (not a mode of travel) that gained in 
absolute numbers and in share was working at home, which is evidence, 
perhaps, of what has been the long-expected boom in working at home, 
brought on by the microcomputer. Figure 3-2 shows the broad modal 
changes in net terms between 1980 and 1990.
    The swing to single-occupant vehicles raised the share of this mode 
from 64.4 percent to 73.2 percent. The overall personal vehicle share 
only shifted from 84.1 percent to 86.5 percent as a result of the 
extraordinary decline in carpooling shares (from 19.7 percent to 13.4 
percent, about a one-third loss in share). Other significant swings in 
shares were a loss of 1.1 percentage points for transit (from 6.4 
percent to 5.3 percent) and a loss of 1.7 percentage points for walking 
(from 5.6 percent to 3.9 percent). In relative terms, the roughly 17 
percent loss in share for transit was better than the results among 
other alternatives to the auto, as indicated by the 30 percent loss in 
walking share. Figure 3-3 shows the overall modal shares for 1980 and 
1990.
    When these trends are investigated below the national level, it is 
clear that the patterns are not the product of distorting events in one 
area of the country; they are consistent across the nation. Figure 3-4 
shows the broad modal share patterns for the nation's four census-
defined regions for 1990. The four regions closely track the national 
values. The exception is the greater use of transit in the older, 
denser Northeast.
    Overall, the modal shift pattern is consistent nationwide. Figure 
3-5 makes this clearer by showing the net changes from 1980 to 1990. 
This chart must be interpreted with some care. It shows the difference 
in percentage points from 1980 to 1990, thus measuring the depth of the 
swings observed. For example, single-occupant vehicles in the Northeast 
gained almost 10 percentage points from 1980 to 1990 (from 58 percent 
to 68 percent, as previously shown in Figure 3-4). The chart does make 
clear that the pattern is uniform. The only case that could be made for 
deviation from the pattern is that the West does not exhibit as strong 
a pattern of change as the other regions.
Current Detailed Modal Shares
    In broad outline, the current \2\ statistics on modal share are as 
follows:
---------------------------------------------------------------------------
    \2\ Although these data are for 1990, the decline in workers in the 
early 1990's and the slow recovery afterward brought the number of 
workers only back to 1990 levels by early 1994.

   There are about 115 million commuters, based on the Bureau 
    of the Census definition.
   About 100 million commuters use a private vehicle--roughly 
    85 million in single-occupant vehicles and 15 million in carpools.
   Of the remaining 15 million commuters, about 8 million walk 
    to work or work at home, 6 million travel by transit, and 1 million 
    use other alternatives.

    The national values and percentage shares for the most detailed 
modal categories are shown in Table 3-1. Because of changes in the 
census questions on travel mode, there is not strict comparability 
between the two periods. Most of the differences are the result of 
attempting to clarify the various submodes of transit uses.
    The remainder of this topical area will focus on the significant 
demographic variables that affect mode choice and then undertake 
individual treatment of each modal area. It will describe the nature of 
the trends in each area, and examine the factors that formed the 
foundation for the trends. It is hoped that this examination will 
permit isolation of those factors that will guide the trends in the 
future.
                major demographic factors in mode choice
    This report can only begin to examine the major demographic factors 
involved in mode choice. The availability of new data sources provides 
an exciting opportunity to expand our research and analysis and hence 
our understanding.
    The dominance of the private vehicle, with almost a 90 percent 
share in many areas, often overwhelms the ability to depict other 
patterns effectively. The approach that is least misleading is to 
provide overall coverage and then treat the smaller modes as a group. 
These data include many surprises that suggest the variety in behavior 
that constitutes national commuting patterns.
Mode Choice Patterns by Age and Sex
    As shown in Figure 3-6, the private vehicle, whether used for 
driving alone or carpooling, predominates in all age-groups. Its use 
increases with age until the mid-fifties age-group and then slowly 
tapers off. This pattern is repeated when men and women are analyzed 
separately. As auto use declines among the older age-groups, walking to 
work and working at home gain. Although auto use has tended to decline 
with age, it is not apparent that the pattern will be repeated by 
today's workers.
    The discernible differences between men and women's mode choice 
have tended to diminish over time as women's work characteristics have 
become more like men's. Figure 3-7 provides a comparison of mode choice 
behavior. Men and women have very similar tendencies to drive alone and 
to carpool. Men show a greater tendency to commute by rail and are the 
predominant users of motorcycles and bicycles, while women more 
frequently use transit and taxis and are more likely to work at home. 
The only areas where there are enormous differences are in motorcycling 
and bicycling.
Older Commuters
    As the general population ages, commuting travel patterns will 
undergo related shifts. Auto use tends to decline with age, and walking 
and working at home tend to take its place. Figure 3-8 details that 
pattern, with the patterns displayed as percentage shares of travel in 
each age-group. Thus, although the over-75 age-group shows a greater 
than typical tendency toward working at home, that age-group, because 
it is such a small component of total workers, represents only a very 
small share of all those who work at home. The heavy shift among older 
workers toward walking to work and working at home is accentuated by 
the heavier participation of nonmetropolitan workers in the older work 
force, among whom these modes are heavily used. This may also have some 
effect on transit. In metropolitan areas, transit use shows some 
tendency to increase with age of the commuters. \3\
---------------------------------------------------------------------------
    \3\ There is a semantics problem with these descriptions. We 
usually say that this tendency increases with age. This is accurate as 
far as the graph is concerned--that is, as one's eyes traverse the age-
groups, the factor does increase. However, this does not mean 
causality--namely, that as an individual ages, his use will increase. 
People over 75 years of age may have the same characteristics that they 
had at 55.
---------------------------------------------------------------------------
Mode Choice Patterns by Household Structure
    A number of variables can be included under the household structure 
label. Among those examined here are the type of housing, the number of 
workers, and the number of vehicles available to the household.
    One element of Figure 3-9 presents modal travel choices by a 
segment of the population that is often overlooked--namely, the 1.6 
million people that do not live in households but rather in group 
quarters, such as college dormitories and military barracks. (People 
who are in institutionalized group quarters, such as prisons or health 
care facilities, are not included.) This group evidences an 
extraordinary use of walking.
    The mode choices of renters and homeowners are also shown in Figure 
3-9. When the overall owner-renter choices are stratified by 
metropolitan area category, there is clearly a strong interaction 
between the categories. Figure 3-10 shows how renters and homeowners 
are distributed across the metropolitan rings.
    Figure 3-11 depicts the mode choice shares by the six own-rent 
groups. As a group, renters drive alone less and use transit more than 
homeowners, wherever they are. But location is an important intervening 
factor. Central city dwellers are less auto oriented and more transit 
oriented than suburbanites and those in nonmetropolitan areas. Thus, as 
expected, central city renters, constituting about 17 percent of 
households, are the least auto-oriented group, yet still with a 70 
percent private-vehicle share. Although all homeowners are highly 
oriented toward the use of private vehicles, suburban homeowners are 
the most so, with over 90 percent use of private vehicles. The 
importance of working at home to nonmetropolitan workers (often 
farmers), whether renters or owners, is also evident.
    The number of workers in the household also has some bearing on 
selective elements of mode choice. Driving alone is not one of them, 
with only a slight tendency to drive alone less as one reaches three- 
and four-worker households. Carpooling, transit, and some other modes 
are more affected. To understand these patterns it is necessary to go 
back to the demography of these households, and perhaps best to see 
them from the perspective of the household with two workers. This is 
often the husband-and-wife, both-working household, with or without 
small children. Three- and four-worker households tend to be households 
with working parents and their grown working children. One-worker 
households are more difficult to characterize: they can be younger or 
older and central city oriented, or fit the standard 1950's suburban 
commuter image.
    Mode choices reflect this demographic structuring. Two-worker 
households, representing 50 percent of all workers, are slightly more 
likely to carpool and to carpool together, and much less likely to use 
transit or any other auto alternative, except for working at home. 
Three- or four-worker households, with 20 percent of workers, are the 
most likely sources of carpooling (typically within the family) and, 
particularly among four-worker households, the source of transit users 
and bicyclists.
    The one-worker household is the most difficult to characterize 
because of its varied composition. The worker is highly unlikely to 
carpool (30 percent of workers and only 20 percent of carpoolers). One-
worker households compensate for the carpooling void by a mix of 
means--with some greater emphasis on transit, much greater reliance on 
taxicabs (accounting for over 45 percent of taxicab users), and 
somewhat greater than typical use of motorcycles, bicycles, and 
walking. One reason for the complexity of patterns in one-worker 
households is the sharp division between those in central cities, about 
one-third of all such households, and all other one-worker households. 
Those in central cities are much more likely to use transit and not to 
use an auto, while the reverse is true among the suburban and 
nonmetropolitan one-worker households. Figure 3-12 shows the carpooling 
pattern for households by number of workers per household.
    Another facet of household structure that affects mode choice is 
the number of vehicles per household. The presence of vehicles tends to 
parallel the number of workers, and it adds an additional dimension to 
modal choice. As depicted in Figure 3-13, after the first vehicle, 
modal choice shows little variation, being almost exclusively oriented 
to the private vehicle. Transit use and walking, as expected, are 
almost exclusively concentrated among the zero-vehicle and one-vehicle 
households. Households without vehicles depend on transit for 40 
percent of their work travel, dropping dramatically to 8 percent among 
one-vehicle households. The one-vehicle ownership pattern is most 
typical of one-worker and central city households.
    A closer inspection of the mode choices of those without vehicles 
is imperative, especially when mode choices for households without 
vehicles are disaggregated geographically by residence. Not 
surprisingly, those in central cities are more heavily oriented toward 
transit than the average of 40 percent cited above; more than 51 
percent of work travel by those in central cities without vehicles is 
by various transit modes. Even suburban zero-vehicle households show 
extensive use of transit (almost 20 percent). Nonmetropolitan use 
remains limited (about 3 percent). Walking is of great importance to 
those without vehicles, with rates between 15 percent and 20 percent in 
the different geographic areas. Taxicab use in each of the three 
geographic areas, while still small in share, is 10 times the level of 
all workers. With the exception of central city dwellers, the private 
vehicle still provides the majority of work travel for households 
without vehicles; even in central cities, it handles about 25 percent. 
Figure 3-14 compares the mode choice pattern at the central city, 
suburban, and nonmetropolitan levels for households without vehicles.
Mode Choice Patterns by Income Group
    Figure 3-15 shows the mode choice distribution by income category. 
The most evident effect of income is that as income increases, so does 
driving alone (from about 60 percent to over 80 percent); 
correspondingly, carpooling decreases. However, it is worth noting that 
after the $25,000 level, the differences are minor. The detailed chart 
(Figure 3-16) for nonprivate-vehicle-oriented modes shows some 
surprises. As expected, walking and biking decline with income, but 
working at home and to some extent taxicab use are more prevalent at 
the extremes of income. Interestingly, transit does not appear to be 
oriented toward the low-income population, as is commonly thought. 
Although bus use does decline with income, the use of other transit 
modes, particularly commuter railroads, increases with rising income.
    The very high income groups represent very small segments of the 
population and therefore do not substantially affect total ridership in 
any mode.
Mode Choice Patterns by Race and Ethnicity
    The topic of racial and ethnic mode choice patterns takes on a 
different dimension than the previous demographic perspectives on the 
subject. The value of this dimension is to develop a status report on 
the choice patterns of different racial and ethnic groups; it is not to 
suggest that these choice patterns are either racially or ethnically 
determined.
    The factors that affect modal choice--age, income, geographic 
location of residence and workplace, and household structure--all vary 
substantially by race and ethnicity. A question of some interest is 
whether, after all these factors are taken into account, any residual 
difference in behavior can be attributed to race or ethnicity. The more 
important function here is to identify the linkages that support the 
trends and to understand them better.
    The variations by race and ethnicity in licensed drivers and in 
vehicle age and availability were presented and discussed in Chapter 2. 
Location is another key factor in modal choice. The distribution of the 
nation's population by location of residence for selected racial and 
ethnic groups is shown in Figure 3-17, which basically provides a sense 
of scale. Figure 3-18 shifts these data to a distribution of the 
selected racial and ethnic groups for the same geographic areas. With 
this figure, the percentage shares of each group by residence area can 
be established. As shown in the figure, American Indians are the most 
oriented toward nonmetropolitan areas; Asians, on the other hand, are 
the least oriented toward nonmetropolitan areas. Black households are 
least oriented toward the suburbs and most likely to reside in central 
cities. Hispanic and Asian households tend to have relatively similar 
geographic locations.
    When driving alone is examined for the main racial and ethnic 
groups, the patterns follow similar tracks. Black and Hispanic drive-
alone commuters have very similar patterns, with White non-Hispanics 
exhibiting an identical pattern but with a higher overall utilization 
rate. Carpooling shows a similar pattern except for the stronger 
tendency to carpool among Black nonmetropolitan residents. Figure 3-19 
depicts the drive-alone and carpooling tendencies for White non-
Hispanics, Hispanics, and Blacks.
    Shifting the analysis to the nonprivate-vehicle modes reveals an 
exceptional use of transit modes by the Black population. Hispanics, 
and particularly White non-Hispanics, lag in overall transit use by 
considerable margins. The pattern is similar in both suburban and 
central city locations. Black households also lead in taxicab use in 
both locations. Black households lag both White non-Hispanic and 
Hispanic households in the use of bicycles and motorcycles and in 
working at home. Figure 3-20 shows these patterns in detail. Figure 3-
21 adds a depiction of mode choice among nonmetropolitan workers. 
American Indians are included in the nonmetropolitan areas. The strong 
role of walking is noticeable, but the predominance of the private 
vehicle is the main characteristic.
                               mode usage
    This segment addresses each major modal group and summarizes some 
key demographic and geographic factors. Figure 3-22 provides an overall 
guide to the income distribution of users of each mode. Note that the 
bar labeled ``All Commuters'' shows the income distribution for the 
entire commuting population and serves as a gauge as to whether a given 
mode serves certain income segments more than others.
    Each modal discussion follows a relatively standard format, 
identifying key user groups in the following two ways: those that are 
more oriented toward the mode than the average for all groups, and 
those that make up a dominant share of users of the mode.
Private Vehicle
    Private vehicles dominate commuting travel, used by 100 million of 
the 115 million commuters. Between 1980 and 1990, more than 18 million 
private vehicle users were added to the commuting ranks, about a 22 
percent increase; however, because the number of carpoolers decreased 
substantially, almost 21 million cars were added during that time. The 
number of vehicles used in the commuting fleet reached over 91 million 
vehicles, a 30 percent increase from 1980.
    The overall male/female split in the use of the private vehicle has 
now become almost exactly proportional to each group's share of all 
commuters. Men, who compose 54.8 percent of all workers, account for 
55.3 percent of private vehicle users.
    The single-occupant vehicle category most closely parallels the 
general income distribution of the worker population (as shown in 
Figure 3-22), indicating that its large user group is drawn in almost 
equal proportions from all income segments. This group is the 
predominant mode for commuting travel in almost all demographic 
sectors. Among the exceptions are those workers in group quarters and 
those workers in households without vehicles. The drive-alone mode is 
no longer dominated by men.
    The drive-alone shares for the nation, metropolitan and 
nonmetropolitan areas, central cities, and suburbs are shown in Table 
3-3. When individual metropolitan areas with populations over 1 million 
are reviewed, several areas stand out at either end of the spectrum 
(Table 3-4). Most notable is that after New York City, drive-alone 
shares look more alike than not. The average drive-alone rate for all 
metropolitan areas over 1 million population is 71 percent, which is 
not that different from the national average of 73.2 percent. Excluding 
New York, the variation across all 39 areas with populations over 1 
million is very narrow, from 11 percent below average to 17 percent 
above. There is a tendency for areas to decrease in drive-alone share 
as area size increases, but with significant exceptions, such as Los 
Angeles, Detroit, and most of the larger cities in the West.
Carpooling
    One of the central questions in this review of commuting modal 
choice is, what happened to carpooling in the 1980's? There were over 
19 million carpoolers in 1980--almost 20 percent of all commuters. By 
1990 that number had dropped to less than 15.4 million carpoolers, 
accounting for 13.4 percent of all commuters (Table 3-5). What accounts 
for this one-fifth decline at a time when the total number of commuters 
increased by one-fifth? Table 3-6 shows the auto occupancy rates for 
1970 through 1990.
    Table 3-6 indicates that the downward trend in vehicle occupancy 
rates is long term and widespread, reaching across metropolitan 
boundaries and accelerating. Carpooling in America is now fundamentally 
a two-person phenomenon, as shown in Figure 3-23. Although two-person 
carpools account for 10.1 percent to 11.4 percent of all commuting, 
depending on the area, all other groupings of persons in carpools 
account for only another 2.8 percent to 3.8 percent of activity, 
depending on the area of residence. More to the point, the decline in 
carpooling seems most pronounced among the larger carpools (Table 3-7). 
In fact, the larger the carpool category, the more decline is 
sustained. While two-person carpools had less than a 10 percent 
decrease, three-person carpools declined by over 40 percent, four-
person carpools by more than 50 percent, and carpools with five or more 
people by 40 percent.
    It is clear that a major component in the decline of carpooling, 
accounting for two-thirds of the loss, is the decline in large 
carpools. That loss can be partially explained by the fact that 
residents of nonmetropolitan areas are heavily involved in carpooling, 
and in particular large carpools. These residents showed the largest 
decrease in carpooling. This may be a product of rising incomes, which 
make vehicles more accessible, or of declining operating costs, which 
encourage driving alone. Or it may be that as employers and residences 
become more dispersed, it is more difficult for nonmetropolitan 
residents to match up with other commuters traveling in the same 
direction at the same time.
    Another component behind the decline is that workers are less 
likely to join a carpool of strangers. The Nationwide Personal 
Transportation Survey data indicate that carpools are usually composed 
of workers from a single household, and that carpooling among nonfamily 
members is increasingly unlikely. This favors smaller carpools, most 
likely two-person groups. Two-person carpools are the only carpool 
group in which persons in two-worker households are disproportionately 
likely to participate. They are underrepresented in all other carpool 
groups.
    In the 1983 Nationwide Personal Transportation Survey, two persons 
from the same household constituted about one-half of all two-person 
carpools; by 1990, the percentage had increased to over 60 percent. 
Households with more workers are responsible for a large share of 
carpoolers. A person in a four-worker household is more than twice as 
likely to carpool than a person who is the sole worker in a household. 
Three- or four-worker households, which account for 20 percent of 
workers, are the source of 26 percent of all carpoolers. Almost 60 
percent of commuters in three-person carpools are all from the same 
household, and more than one-half of four-person carpools are from the 
same household.
    Some metropolitan areas seemed to counter the national trend and to 
limit the decline in carpools. Salt Lake City was the only area that 
actually saw an increase in carpool average occupancy (from 1.07, well 
below the average of 1.15 in 1980, to 1.09, the national average, in 
1990). Notably, Salt Lake City has the highest household size of all 
metropolitan areas with populations over 1 million (3.04 persons/
household versus the national average of 2.63). The other area that 
managed to limit the decline was Los Angeles (with 2.91 persons/
household), where the occupancy rate managed to stay above the national 
average, dropping only from 1.12 to 1.11. Washington, D.C., had mixed 
results: it is the national carpool leader, with an average occupancy 
of 1.13, but it lost the greatest share (down from 1.23 in 1980).
Public Transit
    Public transit use remained relatively stable from 1980 to 1990. 
About 6 million riders used transit in 1980; by 1990, the number had 
dropped by only 100,000, to roughly 5.9 million. Overall, the transit 
share of all commuters declined from 6.3 percent to 5.1 percent (Table 
3-8). Table 3-9, which provides summary data, shows that although bus 
service, the major mode used in transit, lost riders, other transit 
modes, specifically subways and commuter railroads, gained riders. Much 
of the total increase (40 percent) occurred in New York City. The 
remaining gains were largely attributable to new or expanded systems in 
San Francisco, Washington, D.C., Baltimore, Miami, and Atlanta.
    The size of the metropolitan area is a critical factor in transit 
use. Areas with populations over 1 million, which account for one-half 
the national population, are responsible for 88 percent of the nation's 
transit use; areas over 5 million account for 61 percent. The 
concentration of transit usage in the largest metropolitan areas has 
increased since 1980. For instance, New York had a 32 percent share of 
all transit in 1980 and now has a 37 percent share. In Figure 3-24, 
transit shares are compared by population size for 1980 and 1990. Most 
notable is the decline in transit usage in areas with populations below 
1 million (from 18 percent of transit to 14 percent).
    Figure 3-25 places these changes in perspective by showing the 
actual transit share in metropolitan areas with populations over 1 
million in 1990. The New York area stands alone at over 26 percent; 
Chicago and Washington, D.C., are in a second cluster at roughly one-
half that level, and Boston and Philadelphia round out the number of 
areas with a share greater than 10 percent. Seven areas are in the 5 
percent to 10 percent range, with all others below 5 percent. Of these 
39 metropolitan areas, about two-thirds lost total transit riders and 
one-third gained. Overall, there was almost no change.
    Among the gainers were important markets such as New York, Los 
Angeles, San Francisco, and Washington, D.C. Most of the gainers were 
areas that had added rail service. Some important exceptions were 
rapidly growing Western areas, such as Houston, Phoenix, and San Diego, 
which saw their very small bus systems achieve substantial percentage 
gains. Areas losing riders mostly encompassed large Eastern areas, such 
as Philadelphia, Chicago, and Detroit. Figure 3-26 shows the net 
changes for bus riders for the major metropolitan areas of the nation. 
Figure 3-27 provides the bus and rail detail for areas with more than 
10,000 rail transit users.
    In terms of share of total commuting, two areas did not have a loss 
in transit share in the 1980-1990 period; Houston gained share (from 
2.85 percent to 3.67 percent), as did Phoenix (from 1.96 percent to 
2.01 percent). All major East Coast areas saw their shares decrease; 
notably, New York's share declined from 29.61 percent to 26.85 percent. 
Other East Coast areas also lost about 3 percentage points.
    If transit shares are examined by geographic area of residence, the 
patterns show negative shifts in both metropolitan and nonmetropolitan 
areas and in the central cities and suburbs of the metro areas, as 
shown in Figure 3-28. Although the central city loss looks larger, the 
suburbs had a greater proportionate loss, and nonmetropolitan areas had 
the greatest proportionate loss of all. The figure also shows the 
variation in use of transit by area type. Central cities, with 20 
percent of workers, account for 69 percent of transit use, while 
suburbs account for 29 percent of transit users, in contrast to their 
50 percent share of workers.
    Many of the key points regarding the composition of transit users 
have already been made. Transit users disproportionately do not own 
vehicles, and they are also disproportionately renters, central city 
residents, female, and non-White. They frequently are drawn from 
single-person households or from households with many workers. Given 
the influence of New York City on the averages, this characterization 
is not surprising. Table 3-10 identifies the socioeconomic factors that 
generate higher proportions of transit users.
Walk to Work
    Commuters in several groups are more likely to walk to work--
namely, the young and the old, women, third and fourth workers in a 
household, and those living in group quarters. Between 1980 and 1990, 
the number of people who walked to work declined by almost 1 million 
(from 5.4 million to 4.5 million). As a share of commuters, walkers 
dropped from 5.6 percent to 3.9 percent (Table 3-11). As shown in 
Figure 3-29, about two-thirds of the losses were in nonmetropolitan 
areas, where walkers declined by about one-third. The remaining losses 
were almost entirely in the suburbs; central cities showed almost no 
decline at all, with a loss of less than 2 percent.
    Walkers are heavily represented in the lower income ranges. More 
than one-half of walkers earn less than $10,000 per year, and 80 
percent of walkers earn less than $25,000 per year. Much of this may be 
a product of young workers with limited work schedules. Slightly more 
women than men walk to work; this is partly attributable to the fact 
that women seem to prefer walking over bicycling, which is the other 
mode commonly used for short distances.
Work at Home
    Working at home (Table 3-12) was the only category, other than the 
single-occupant vehicle, that has increased in share since 1980. The 
overall gain was dramatic--a 50 percent increase (from 2.2 million in 
1980 to 3.4 million in 1990).
    The groups most oriented toward working at home include women, 
homeowners, older people, Nonmetropolitan residents, and the White non-
Hispanic population. Nonmetropolitan residents, who compose 20 percent 
of all commuters, constitute 30 percent of those who work at home. 
Suburbanites have a slightly greater share of those who work at home, 
compared with their proportion in the total population. However, in 
terms of growth, the picture was quite different. Nonmetropolitan areas 
showed little growth, exhibiting only an 8 percent increase, while 
central city workers, who had been the smallest component of the work-
at-home group, more than doubled, from 400,000 in 1980 to more than 
800,000 in 1990. Suburban workers also exhibited substantial growth, 
increasing more than 80 percent. Almost 60 percent of the 1.2 million 
increase occurred in the suburbs. Figure 3-30 depicts these trends.
    In every metropolitan area with a population over 1 million and 
with comparable data for 1980 and 1990, the increase in people working 
at home outpaced the total increase in workers. Several high-growth 
areas, such as San Diego, Phoenix, and Atlanta, saw the percentage of 
home workers double.
    Working at home appears to be a lower income activity. This 
seemingly contradicts the generally held belief that those working at 
home are involved in high-tech, computer-based activities.
    Women, who constitute 45 percent of all workers, make up 52 percent 
of those working at home. Given the following, it can be inferred that 
working at home is often a secondary activity:

   Neither female nor male workers living alone are an 
    important component of those who work at home; the percentage of 
    single individuals who work at home is much lower than the national 
    average.
   Persons identified as ``the householder'' have work-at-home 
    rates that are just about average, but the persons listed as 
    ``spouse of householder'' have work-at-home rates twice the 
    national average.
Other
    Although the share of commuters using motorcycles is very small, 
the number has precipitously declined since 1980. Motorcycling as a 
mode of commuting declined more than any other mode in the 1980-1990 
period (from 419,000 to 237,000 users and from a 0.4 percent share to a 
0.2 percent share) (Table 3-13). Some of this decline is certainly due 
to the aging of the population, because most motorcycle riders are in 
the younger age-groups. In addition, the decline in the relative cost 
of owning and operating an automobile, and particularly small pickup 
trucks, could be a factor.
    The aging population also certainly affected the number of 
commuters opting to bicycle to work. Most bicyclists are young, male, 
and the third or fourth worker in a household. Bicycle use declined 
only slightly between 1980 and 1990, to about 468,000, equaling about 
0.4 percent of all commuters, down from 0.5 percent in 1980.
    Location is a major factor in bicycling. Certain areas of the 
country, particularly metropolitan areas with large concentrations of 
university students or military personnel, tend to have higher than 
typical usage rates. Metropolitan areas with populations over 1 million 
that have significant amounts of bicycle commuters (more than 1 
percent) include San Diego, San Francisco, Sacramento, Phoenix, and 
Tampa. Among non-Black central city dwellers, commuters without access 
to an automobile have a greater tendency to travel by bicycle.
    Taxi use is also worth a brief reference, particularly because of 
its nonintuitive use characteristics. The 180,000 taxi riders are 
largely female, Black, and residents of central cities. Low- and high-
income groups make greater than average use of taxis. The most notable 
fact about taxi use is that more than one-third of all taxi commuters 
are in New York City.
Summary Data
    If the walking, bicycling, and working at home categories--i.e., 
the categories that do not rely on motorized conveyance--are 
aggregated, they provide some insight into the range of energy 
efficiency in American commuting. Figure 3-31 depicts this distribution 
for metropolitan areas with populations over 1 million. Notably, the 
areas with heavy military employment--San Diego and Norfolk--lead in 
share, with San Diego's 10 percent exceeding the national average of 
7.3 percent. Figure 3-32 shows the sharp break in these categories by 
income class, with households with $10,000-$15,000 incomes at one-half 
the level of those below $5,000. However, a notable increase in both 
walking to work and working at home is evident in the higher income 
brackets.
    Another measure of overall modal distributions is the average 
vehicle ratio, which indicates the ratio of all commuters to the total 
number of private vehicles used to transport them. This value was about 
1.26 nationally in 1990 (down from 1.37 in 1980)--i.e., the total 
number of coTrnuters amounted to 1.26 times the number of private 
vehicles used to get people to work. In 1990, the average vehicle ratio 
for all metropolitan areas over 1 million was 1.31, varying from 1.76 
in New York City to 1.14 in Detroit. This value is interesting because 
it has many components. New York City clearly leads because of heavy 
transit use; other areas gain from higher carpooling levels. Despite 
the highest level of nonmotorized vehicle use, San Diego did not score 
high because of low transit and carpool use.
    The average vehicle ratios for the largest metropolitan areas are 
listed in Table 3-14. All areas other than New York City fall roughly 
in a band of 1.30+10. In fact, without New York City, the average for 
all metropolitan areas drops to the national average of 1.26.
                       current commuting patterns
    This section of Chapter 3 presents a detailed picture of commuting 
patterns and trends. The first edition of Commuting in America 
described how commuting patterns in metropolitan regions had shifted 
from an orientation on the metropolitan center to a more dispersed and 
circumferential pattern, heavily influenced by the travel of suburban 
workers to suburban jobs. This edition examines the persistence of that 
pattern and seeks to quantify its growth. \4\ Furthermore, it describes 
the shares of commuting gained by each available mode of transport, 
based on the flow ``markets'' identified, describes the socioeconomic 
characteristics of the users of the different modes, and examines the 
travel time patterns of commuting movements.
---------------------------------------------------------------------------
    \4\ The 1990 data benefit from census-allocated distributions of 
worker destinations in cases in which the respondent did not provide 
detailed address data. These allocations are superior to the previous 
process, which required that 8 percent to 10 percent of commuter trips 
be dropped from the analysis.
---------------------------------------------------------------------------
    Commuting flows are best described at the individual metropolitan 
level. At this level, complex patterns can be individually treated and 
qualified. \5\ Many readers are familiar with geography at this level, 
if not with the actual routes and patterns. At the national level, the 
process must be more abstract; metropolitan areas must be grouped in 
convenient clusters, and the flows need to be synthesized into 
homogeneous groupings that overcome the singularities of individual 
areas.
---------------------------------------------------------------------------
    \5\ Perhaps the best example of this can be found in Census Mapbook 
for Transportation Planning, published by the Federal Highway 
Administration, U.S. Department of Transportation.
---------------------------------------------------------------------------
    The pattern analysis system employed includes the following four 
flows within metropolitan areas, which form a two-by-two flow matrix:

   Central city to central city
   Suburb to suburb
   Central city to suburb
   Suburb to central city

    This basic matrix expands to include the following patterns flowing 
beyond the metropolitan area:

   Central city to nonmetropolitan area
   Central city to other metropolitan area--Central city--
    Suburb
   Suburb to nonmetropolitan area
   Suburb to other metropolitan area--Central city--Suburb

    The matrix includes residents of nonmetropolitan areas who work in 
their own area or commute into a metropolitan area:

   Nonmetropolitan area to central city
   Nonmetropolitan area to suburb
   Nonmetropolitan area to nonmetropolitan area

    These elements can be displayed in a comprehensive matrix, such as 
shown in Figure 3-33. The increase in commuting from one metropolitan 
area to another requires this more extensive treatment. The flow 
elements are treated in logical parts: first, commuting within 
metropolitan areas; second, commuting across metropolitan borders; and, 
third, commuting to a nonmetropolitan area.
    Table 3-15 provides a breakdown of workers by location of 
residence. The table indicates that about 90 million of the 115 million 
commuters live in metropolitan areas, with the remaining 25 million 
living in nonmetropolitan areas. \6\ Almost 80 percent of workers live 
in metropolitan areas, with the remainder residing in nonmetropolitan 
areas. America's suburbs are now the residence of one-half of all 
workers, up from 47 percent in 1980. Most of the shift came from 
central cities, where the share of commuters declined from 30 percent 
to 28 percent; nonmetropolitan areas declined in share from 23 percent 
to 22 percent.
---------------------------------------------------------------------------
    \6\ For purposes of comparability in flow measurements, these 
numbers vary from those appearing elsewhere. They are based on the 1980 
definitions, rather than the revised 1990 definitions that distort 
geographic flow patterns. They also exclude the small number of U.S. 
workers who work outside the United States.
---------------------------------------------------------------------------
    Table 3-16 identifies the major internal patterns of metropolitan 
travel.
    In this flow pattern, suburb-to-suburb commuting accounts for 44 
percent of metropolitan commuting activity; commuting from suburb to 
central city, the ``traditional'' commute, accounts for 20 percent. 
Central city commuting accounts for 28 percent, and commuting from 
central city to suburb, known as ``reverse commuting,'' accounts for 8 
percent. The suburbs now account for the majority of metropolitan job 
destinations, with more than 41 million of the 80 million 
intrametropolitan flows.
    Almost 9 million commuters cross metropolitan borders as they 
travel to work (1.94 million leave the central city and 6.79 leave the 
suburbs). The details on cross-metropolitan commuting are provided in 
Table 3-17.
    The largest segments of these flows center on suburbs and may 
include short trips from one suburb to the nearby suburb of an adjacent 
metropolitan area; however, they could also represent very long trips. 
Trips from one central city to another, presumably in an adjacent 
metropolitan area, involve a very small contingent of travelers taking 
long trips. \7\
---------------------------------------------------------------------------
    \7\ Some of these travelers might be temporarily working in cities 
other than their home residence.
---------------------------------------------------------------------------
    The remaining group of commuters to consider is that group living 
in nonmetropolitan areas. These commuters' travel destinations are 
shown in Table 3-18.
    The overall metropolitan pattern indicates that the typical 
commuter travels within his or her own central city or suburban area, 
with most residents working in the same area as their residence. The 
Nonmetropolitan pattern further accentuates the point that residents 
tend to stay in their local areas for work, with 87 percent of 
Nonmetropolitan residents working in Nonmetropolitan areas.
    Although the proportion of commuters staying in their own area is 
high, the number of those leaving the area is increasing rapidly; they 
are important beyond their numbers alone because their long trip 
lengths have a disproportionate effect on total travel. For example, 
the approximately 1.4 million commuters from nonmetropolitan areas who 
have destinations in central cities traverse an entire suburban ring to 
get to work. So do the 1.9 million central city residents who work 
outside their metropolitan area. Commuters who leave a metropolitan 
area and commute to a job location within an adjacent metropolitan area 
are significant not only for the length of their trips, but also 
because their trips have an impact on two areas, once outbound and once 
inbound. When all individual crossmetropolitan-area flows are tallied, 
metropolitan borders are found to be crossed 10.6 million times in the 
inbound direction each morning--which represents a major commuting 
segment.
    These tabular segments are assembled to produce Table 3-19 (The 
Table is presented in map form in Figure 3-34).
County-to-County Flows
    A different statistical approach helps refine our understanding of 
the tendency to commute to other areas. In this case, the home area is 
defined as the county of residence, and all commutes crossing the 
county boundary are tallied. These data indicate that 76 percent of 
commuters work within their county of residence. The percentage for 
metropolitan counties and for nonmetropolitan counties mirrors the 
national average. However, significant variation exists among those 
living in central cities or suburbs. Central city residents are more 
home-area-oriented, with almost 85 percent working in their home 
county, while suburbanites are much less oriented in this way, with 
slightly more than 71 percent remaining in their home county. Within 
nonmetropolitan areas, those living in small cities and towns 
(populations above 5,000) are the most locally oriented, with 85 
percent working in their home county.
    The tendency to work within one's home county declines as the size 
of the metropolitan area increases. Figure 3-35 demonstrates that point 
for both central city and suburban counties, showing that the 
percentage of commuters leaving their home county roughly doubles in 
areas with populations below 100,000 or over 1 million. This is 
significant because crossing county boundaries implies that trips are 
longer than trips wholly inside the county borders, although it is not 
conclusively determined.
Commuting Pattern Summary
    About 90 million of the 115 million workers live in metropolitan 
areas; about 80 million work within the metropolitan area and 10 
million work outside it, often in other metropolitan areas.
    The remaining 25 million workers live in nonmetropolitan areas and 
for the most part work within the same nonmetropolitan areas; about 3 
million enter metropolitan areas every day to work.
    Most travel takes place in the suburbs, with one-half of all 
metropolitan commuters living in the suburbs and with suburb-to-suburb 
commuting accounting for 44 percent of metropolitan commuting flows. 
Suburban areas are now the destination of most work trips.
Commuting Flow Pattern Trends
    More than 87 million commuters--76 percent of all commuters--work 
within their county of residence. More than 27 million leave their 
county of residence--almost triple the number who commuted beyond their 
county of residence in 1960. The percentage of those commuting outside 
their residence county has risen steadily from 14 percent to 24 percent 
since 1960.
Metropoutan Area Trends
    As a group, the 88.4 million commuters who both live and work in a 
metropolitan area are more than double the number of metropolitan 
commuters in 1960. The top portion of Figure 3-37 depicts the long-term 
growth trend in metropolitan commuting, divided into its four flow 
elements.8 The dominant growth element has been suburb-to-suburb 
commuting, as shown in the bottom portion of Figure 3-37. Suburb-to-
suburb commuting has almost quadrupled since 1960.
    Figure 3-38 presents the share of 19801990 growth in commuters 
obtained by the individual flows and indicates flows with significant 
growth. By comparing the shares of growth to the shares of current 
total flows, the flow categories that are the prospective growth areas 
in the future can be determined.

   Suburb-to-suburb commuting, with 44 percent of metropolitan 
    commuting, accounted for more than 58 percent of the growth.
   Commuting from central city to suburb, which had an 8 
    percent share in 1990, accounted for 12 percent of the total 
    increase in metropolitan commuting.
   Commuting from central city to central city, which 
    represents 28 percent of all commuting, accounted for only 10 
    percent of the overall increase in commuting.
   The ``traditional'' commute (suburb to central city) 
    accounted for about 20 percent of the growth in commuting.

    The suburbs obtained an overall share of 78 percent of commuting 
growth--a decline from the 83 percent share in the 1970-1980 period. 
But it is the changes in the components that are of most interest. The 
suburb-to-suburb share of growth (58 percent) was identical to its 
share of growth from 1970 to 1980, but the suburb-to central-city share 
of growth was significantly less--a 20 percent share, in contrast with 
the 25 percent share in the 1970-1980 period. The suburb-to-central 
city commute thus kept pace with overall growth, but did not gain share 
in the period. The suburbs were the location of 13 million of the 19 
million new jobs, or about a 70 percent share of the growth in jobs--an 
increase from the 1970-1980 period.
Intermetropolitan Area Trends
    The geographic detail is not available to permit extensive 
historical analysis of intermetropolitan trends. It is clear, however, 
that the pace of activity has clearly accelerated since the 1970's. The 
data indicate that outbound flows to other metropolitan areas and to 
nonmetropolitan areas amounted to about 5.4 percent of all commuting in 
1980 and rose to over 7.5 percent in 1990. Moreover, intermetropolitan 
commuting increased at a rate more than double that of metropolitan 
growth.
    One-half of all intermetropolitan commuting was to a suburb, with 
the remainder split between central cities (two-thirds) and 
nonmetropolitan areas (one-third). This contrasted with about a 41 
percent share in 1980. In both 1980 and 1990, the dominant pattern of 
intermetropolitan commuting was cross-suburb commuting--that is, 
commuting from one suburb to a suburb of a different metropolitan area. 
It amounted to about 31 percent of all intermetropolitan commuting in 
1980, rising to almost 39 percent in 1990. This flow pattern grew at 
more than twice the rate of suburban commuting growth in general.
Trends by Metro Area Size Groups
    Commuting flows vary significantly among metropolitan areas of 
different sizes, as shown in Table 3-20. If each flow category is 
considered a commuting market, then the scale of the different markets 
begins to emerge. As noted earlier, the suburb-to-suburb flow is the 
predominant metropolitan market, but the table shows this to be true 
only in the larger metropolitan areas. Areas with populations below 
one-half million are central city dominant, but in more populated 
areas, suburb-to-suburb travel predominates. This confirms earlier 
observations about declining orientation to the central city as a 
function of the size of the metropolitan area.
    The pattern between areas can be better observed when the values in 
Table 3-20 are converted to percentages, as shown in Figure 3-39.

   As a share of total commuting, the flow from central city to 
    central city tends to decline as an area's size increases, with the 
    dramatic exception of metropolitan areas over 3 million in 
    population. This pattern is consistent with 1980 findings.
   The reverse pattern occurs in suburb-to-suburb commuting, 
    increasing with area size and with a sharp drop in the largest area 
    grouping--again a parallel to the 1980 pattern.
   The other flows from central cities are most significant 
    among the smallest size areas, as might be expected, although 
    patterns from central city to suburb are more stable across size 
    groups.
   Suburb-to-central-city patterns are more variable than in 
    the past. In 1980 all areas tended to cluster around 20 percent of 
    all commuting. There was greater variability across areas in 1990.

    If all the different commuting flows in each metropolitan area size 
group are viewed as distinct markets, the major markets in commuting 
can be identified. Table 3-21 presents the top 10 markets in descending 
order of size. The biggest market is the suburb-to-suburb market within 
metropolitan areas with populations ranging from 1 million to 3 
million. The top-10 pattern has been very stable. The top 4 markets 
have the same ranking as in 1980, and the only changes are that the 
markets in fifth and sixth place have switched places and the market 
that was in ninth place has jumped to seventh place. The two markets 
moving up in rank are both suburb-to-suburb markets. As in 1980, only 1 
of the top 10 markets has a suburb-to-central city commuting flow, 
dropping from fifth to sixth place. The top-10 markets' share of total 
commuting has declined slightly from roughly 70 percent in 1980.
Commuting Destination Patterns
    When commuting flows are summarized at the destination end they 
provide a unique demographic perspective. \9\ Table 3-22 summarizes 
total flows by commuter destination to establish the basic perspective 
on destinations.
---------------------------------------------------------------------------
    \9\ Socioeconomic analysis is based almost exclusively on the 
residence of the subjects. Commuting analyses permit an inversion of 
the data so that the working population can be studied in groups, based 
on their workplace. This opportunity is only mildly realized here. The 
census data permit aggregation by age, sex, race, income, numbers of 
vehicles, occupation, industry, etc., at the workplace. Daytime 
population estimates differ from all other population data, which are 
based on counts where people sleep.
---------------------------------------------------------------------------
    If these categories are subdivided into their intermetropolitan 
elements, the 38 percent of commuters who work in a central city 
consist of those traveling within the same metropolitan area (34 
percent) and those commuting to the central city from outside the 
metropolitan area, including both nonmetropolitan areas and other 
metropolitan areas (4 percent). Similarly, the suburban destination 
category consists of 36 percent from the same metropolitan area and 6 
percent destined to a suburb from outside their residence area.
Central Cities as Destinations
    The top part of Figure 3-40 provides a sense of scale as to where 
commuters to central cities live. The details are provided in Table 3-
23, which indicates that about 24 million of the roughly 44 million of 
those who work in a central city, or about 55 percent, are residents of 
that city. An additional 10 percent arrive from outside the 
metropolitan area, with the balance from the suburbs of the same 
metropolitan area. These locational characteristics have implications 
for workers' trip lengths and choice of travel mode.
Suburbs as Destinations
    The middle part of Figure 3-40 illustrates commuting flows into the 
suburbs. Suburbs are more self-contained than central cities because 
almost 75 percent of commuters to a suburb are residents of the 
suburban portion of the same metropolitan area in which they work. The 
inflow is almost equally divided between central city residents 
commuting outbound and inbound commuters from other metropolitan and 
nonmetropolitan areas.
    Of course, suburbs are large places, often spreading out from the 
central city across several counties and even tiers of counties. One 
mechanism that can help qualify the high percentage of intrasuburb 
workers is to examine county-level data from metropolitan areas with 
populations over 1 million. Such an examination reveals that 60 percent 
of those working in suburbs work in the same suburban county as their 
residence, with 15 percent working in a different suburban county. The 
60 percent figure is not that different from the 55 percent figure for 
central cities. The intercounty figure indicates an increase in share 
of intercounty commuting since 1980, when that share was just above 13 
percent. Areas vary significantly in intersuburban county commuting; 
for example, in the New York City area, almost 25 percent of commuters 
travel between suburban counties, while in Los Angeles, fewer than 7 
percent do. \10\
---------------------------------------------------------------------------
    \10\ Obviously this is sharply affected by the size and number of 
counties in the area. New York City has more than 20 suburban counties; 
Los Angeles has 4 very large counties. Seattle and Orlando are perhaps 
the most exceptional in geography, with each having 2 suburban counties 
separated by the central city county; less than 1 percent commute 
between suburban counties.
---------------------------------------------------------------------------
Nonmetropolitan Areas as Destinations
    Figure 3-40 illustrates that the pattern in Nonmetropolitan areas 
is relatively straightforward--almost 94 percent of workers in 
Nonmetropolitan areas are residents of a Nonmetropolitan area.
                           commuting balance
    The concept of ``balance'' in commuting has gained importance in 
recent years. Balance refers to the relationship of the number of jobs 
to the number of workers in a selected area. This relationship is 
clearly a product of scale. In a metropolitan region the ratio is 
generally close to one--that is, one job per worker--which might be a 
viable mechanism for defining a metropolitan area. But the broad-scale 
use of the job-worker ratio is rather meaningless in this case. The 
statistic is significant because of its variation in relatively small 
areas (counties or smaller units, such as individual communities or 
emerging centers).
    Historically, small towns in nonmetropolitan areas evidenced a 
rough balance between jobs and workers. This pattern holds true today. 
Central cities nearly always had more jobs than workers, which could be 
construed as the definition of a city. Cities were job rich, importing 
workers each day. Suburban counties tended to be, and still are, 
bedroom communities with more workers than jobs. The metropolitan 
pattern has changed as suburban job growth has dominated development in 
recent decades. More important, skills-mix issues became more 
significant as employers competed for skilled employees and sought to 
locate in areas most attractive to employees with skills that are in 
short supply. Communities in suburban residential areas more readily 
accepted these new employment centers because the jobs were generally 
technical services that were cleaner and more attractive than the 
noisy, polluting jobs of the past.
    New York's central county, Manhattan, has a job-worker ratio of 
over 2.5; Washington, D.C., has a ratio of about 2.3. Overall, the 
national job-worker ratio for central cities (note the differentiation 
from central counties) is 1.36. The overall national job-worker ratio 
for suburbs is 0.83 and for nonmetropolitan areas 0.92. Review of 
national patterns suggests that something closer to balance is 
occurring in both central cities and suburbs. The number of workers is 
increasing faster than the number of jobs in central cities, and the 
number of workers is increasing slower than jobs in the suburbs.
    The physical conjunction of jobs and workers does not reveal 
everything we need to know about the linkage between residences and job 
sites. It does not answer the critical question about the match-up of 
skills with job requirements. If the workers do not have the necessary 
skills, it does not matter that jobs are nearby. Skill levels and 
salary levels do not necessarily correspond with job requirements. 
People tend to not limit their job searches to only those jobs close to 
home, nor do they necessarily seek to live near work. One reason for 
this is that workers do not change their residences as frequently as 
they change their jobs. Few workers, and particularly those in 
households with two or more workers (70 percent of worker households), 
hold much hope for a job located close to home. Some workers may even 
still hold the view that living too close to work has negative 
connotations, associated with unattractive living conditions and 
factory-spawned pollution. Today's high-mobility workers have the 
option to live and work where they choose. How they exercise that 
option and how tradeoffs are made between home and job locations 
requires more extensive research. Nonetheless, the key point is that 
decisions on where to work and live are often viewed and made 
independently, with commuting an implication of those decisions.
    Figure 3-41 seeks to provide some understanding of the balance 
question by using a specific example. In this case, the example is 
Fairfax County, a rapidly developing Virginia suburb in the Washington, 
D.C., metropolitan area. The figure provides the basis for the 
following key statistics for the county.

   The job-worker ratio is almost 0.79 (79 jobs per 100 
    workers). \11\ Thus, if all jobs were taken by residents, 21 
    percent of workers residing in the county would have to leave the 
    county to travel to work each day. This is a dramatic increase over 
    1980, when the ratio was 0.54; jobs in the county have increased by 
    about 100,000, a substantially greater increase than in the number 
    of workers.
---------------------------------------------------------------------------
    \11\ In this example, ``job'' is defined as a commuter destination 
in the county ``Destination'' only counts those residents in the 
metropolitan area who had a job destination in Fairfax County. The 
actual job count would be slightly higher if residents from outside the 
metropolitan area were counted. ``Workers'' equals the number of 
commuters counted in the 1990 census.
---------------------------------------------------------------------------
   Of course, county residents do not work exclusively in the 
    county. In reality, about one-half of working residents work in the 
    county, a considerable increase from the 35 percent in 1980. The 
    share of all jobs in the county filled by residents has changed 
    little as job growth outpaced worker growth. In 1980, about 64 
    percent of county jobs were filled by residents of the county; in 
    1990, this figure was down slightly, to about 62 percent. The 
    remainder of county jobs are filled by nonresident workers, who 
    travel to the county every day.
   The net effect is that about 240,000 Fairfax County 
    residents work outside their home county each day, and at least 
    140,000 people come into the county to work. These numbers 
    represent significant changes from 1980 (206,000 leaving the county 
    to work and 61,000 entering the county to work), but the changes 
    are small compared with overall growth.

    Many believe that if the job-worker balance were closer to one and 
a larger share of workers worked in their home counties (that is, if 
more of those 240,000 workers leaving each day filled some of the 
140,000 jobs now filled by nonresidents), then commuting, 
infrastructure, and other costs could be appreciably reduced. Fairfax 
County is moving closer to that pattern, whether as a result of 
conscious planning or the play of market forces.
    Figure 3-42 shows the central county job-worker ratios for the 
major metropolitan areas. Surprisingly, few central counties have high 
job-worker ratios; 18 have ratios below 1.1, and some counties have 
ratios around 1. \12\ Of course, central counties, in contrast with 
central cities, generally have more territory and encompass part of the 
suburbs. This supports the idea that suburban job development is 
shifting metropolitan job location patterns to bring job-worker ratios 
in all areas closer to being in balance.
---------------------------------------------------------------------------
    \12\ San Diego and Phoenix are one-county metropolitan areas, but 
Providence, San Antonio, Sacramento, and Buffalo are not.
---------------------------------------------------------------------------
Modal Shares by Flow Pattern
    The destinations of commuting trips, and more particularly the 
origin-destination flow patterns involved, can reveal a lot about why 
particular modal choices are made and what travel times those choices 
will yield. This part of Chapter 3 addresses these questions.
    The majority of commuters work in the same area in which they live. 
Figure 3-43 illustrates this point, showing that 56 percent of those 
who work in a central city are residents of that central city, 74 
percent of those who work in a suburb are residents of that suburb, and 
94 percent of those who work in a nonmetropolitan area are residents of 
that nonmetropolitan area. These factors are affected by the population 
of the metropolitan area, which also has a significant effect on mode 
choice and travel times. As shown in Figure 3-44, the role of the 
central city declines and the role of suburbs increases as the 
population of the metropolitan area increases.
Central City Destinations
    Significant differences appear when the five categories of flow 
into central cities are examined for modal choice patterns, as shown in 
Figure 3-45. Note that the relative share of total commuters for each 
flow segment is shown at the top of each bar. This helps to maintain a 
sense of scale about the relative role of each flow. In each case, the 
private automobile is dominant, but the variances are of interest. 
Private automobile use is least dominant in the flows from central city 
to central city, where transit and walking are more visible. The 
suburban and nonmetropolitan flows have very similar shares of private 
automobile use and two-person carpools. Larger carpools are key in 
central city flows from nonmetropolitan areas, while transit plays a 
larger role in the flow from suburb to central city. The flow between 
central cities shows a striking use of larger carpools and railroads.
    Modal Composition. Figure 3-46 shows each mode of travel into the 
central city, where its users come from, and what part of total travel 
they represent. The drive? alone and carpool segments have similar 
compositions, except the carpool segments show a greater share of 
intermetropolitan components as the size of the carpool increases. 
Transit origins and destinations are heavily oriented toward the 
central city, with the dramatic exception of railroad commuting, which 
is dominated by suburban and other metropolitan flows. The ``bicycle or 
walk'' and ``other'' categories dominate the central city flow.
Suburban Destinations
    Figure 3-47 shows the modal shares of the commuter flows to 
suburban areas. One factor is immediately clear--namely, the greater 
similarity among the modal choice patterns of the suburban flows than 
among comparable central city flows. Variation occurs in the modes that 
supplement the vehicle use pattern. Travel within the same suburb is 
almost completely represented by driving alone, walking, and working at 
home. Carpool use is greater in all flows except travel within the same 
suburb. The reverse-commute flow (i.e., from central city to suburbs) 
shows some variation in carpooling and transit use. The commute from 
central cities of other metropolitan areas also exhibits stronger use 
of transit and carpools.
    Modal Composition. The modal composition chart for suburbs, which 
parallels that for central cities, is shown in Figure 3-48. This figure 
supports some of the observations above. The role of the central city 
becomes more important as carpool size increases. The role of the 
central city in transit is substantial, and the role of other areas 
becomes a major element in the rail modes. Figure 3-49 shows the 
relative scale of each mode.
Nonmetropolitan Destinations
    The nonmetropolitan destination pattern is easier to depict and 
describe, as shown in Figure 3-50. Nonmetropolitan destinations have 
only three elements, dominated by flows from one nonmetropolitan area 
to another (94 percent of all commuters). Central city flows to 
nonmetropolitan destinations are heavily oriented toward private 
vehicles, with a strong carpool component and some bus use.
    Modal Composition. Modal composition is overwhelmed by the trips 
within the same area. Only transit modes have some significant role in 
flows from central city or suburban areas. All other modes have less 
than a 10 percent component for travel from other areas.
Destination Summary
    Table 3-24 summarizes mode use by destination from all origins. 
Only flows to the central city show drive-alone shares of less than 70 
percent; carpooling tends to be relatively stable among all 
destinations, with a somewhat greater tendency exhibited by the 
intermetropolitan flows. Transit use is center-oriented, as noted 
previously. The short-distance and work-at-home modes exhibit the 
expected patterns, with greatest shares in nonmetropolitan areas.
    A final depiction of modal patterns is presented in Figure 3-51. 
This three-dimensional figure provides a relative scale of national 
patterns. Modal shares are presented in absolute terms, grouped by size 
of metropolitan area. A number of points stand out. The focus on 
driving alone in private vehicles is obvious, but more significant 
perhaps is the limited role of all other modes, such as carpooling and 
transit, except in the largest areas. Work at home is not shown in this 
figure.
                          travel time overview
    Aspects of travel time as a component of commuting costs were 
identified earlier in this chapter. The following discussion takes a 
more extensive look at travel times, although hardly exhausting the 
topic.
    General statements about travel time are not very useful. On the 
average, the capacity of the U.S. transportation system is excellent, 
and travel times, on average, are also excellent. But the average is 
not a particularly good guide to commuting--most people do not go to 
work at 3 a.m., when there is a lot of spare capacity in the 
transportation system. It is the variation--in mode, flow pattern, size 
of metropolitan area, area, and time of day--that is the key to 
understanding.
                           modal distribution
    Table 3-25 summarizes the census information on travel time for the 
major modes. The average travel time for all modes is strongly 
influenced by the drive-alone travel time, given the high proportion of 
the population that drives alone. Carpool travel time increases as the 
size of the Carpool increases--partially because of the time spent 
picking up members of the carpool. Transit modes tend to have longer 
travel times than automobile modes, with railroad the longest of all. 
Walking and bicycling tend to have the lowest travel times, indicating 
upper limits on the use of those modes.
    There is a certain self-selection in these travel times that may 
not be apparent. For instance, people are more likely to join large 
carpools when they have very long distances to traverse; a similar 
situation applies to railroads. These modes are rarely selected for 
very short trips. Thus it is partially the typical trip distances for 
these modes that are being observed, rather than the effects of 
relative speeds.
    Figure 3-52 illustrates this point by looking at the modal 
composition of different travel-time groups. For example, the 10 
minutes-or-less range is characterized by drive-alone commuters, two-
person carpools, and walking; in contrast, the 60 or more minutes 
category has the lowest (but still significant) drive-alone share, with 
extensive use of large carpools and transit, especially commuter 
railroad. Driving alone is most dominant in the 15-30 minute 
categories; its share declines with travel times above 30 minutes.
Male-Female Differences
    Table 3-25 lists the travel times by mode for men and women, as 
well as the ratios of men's travel time to women's. In almost every 
case, men's travel times exceed women's, most likely because men's work 
trips tend to be longer in distance than women's.
    The ratios for the private vehicle modes place men at about 20 
percent greater travel time than women. Transit modes place them at 
very similar levels of travel time.
Within-Mode Travel Distributions
    Figure 3-53 displays the elements of the modes used by travel time. 
Note that the travel time distribution by all modes parallels the 
drive-alone mode. Both modes show about 16 percent of users in the less 
than 10 minutes travel range and exhibit similar values throughout all 
travel times. As carpool size increases, the distribution shifts toward 
the high end. The bus mode exhibits very few users in the less-than-15-
minute categories. More than 60 percent of railroad commuters spend 
more than 60 minutes traveling to work. Just over one-half of walkers 
and bicyclists have travel times under 10 minutes. The median travel 
time for each mode can be estimated by tracing the 50 percent point in 
the figure. \13\
---------------------------------------------------------------------------
    \13\ The median is a measure of central tendency, like the average. 
It is the central item in the high to low distribution--i.e., half of 
the items in the distribution are higher and half lower. It is free of 
the distorting effects of a few high values. In a travel time 
distribution, the median will be lower than the average.
---------------------------------------------------------------------------
                 travel time by metropolitan area size
    The size of the metropolitan area is critical to travel time 
characteristics. Previous figures have shown that commuters are heavily 
centered in the larger metropolitan areas, which tend to be areas with 
long travel distances and times, significantly affecting overall 
averages. In particular, the transit modes are disproportionately 
centered in the largest areas, where travel times by all modes tend to 
be high. Travel times for all modes range from less than 17 minutes in 
areas with populations under 100,000 to approximately 27 minutes in 
metropolitan areas with more than 3 million population--a 10-minute 
difference. Figure 3-54 shows the almost linear trend in travel time 
for all modes and for some of the major modes of travel. The stability 
of walking times is noteworthy, ranging above 10 minutes only in the 
largest areas. Also to be noted is that the slope of change is greatest 
for bus.
    Figures 3-55 and 3-56 provide additional detail on the individual 
modes. The carpool travel time factors are addressed later and are 
shown to be a product of travel flow patterns. The transit figure must 
be considered in light of the sharply skewed locations of transit 
users, particularly rail commuters.
    Figure 3-57 shows the distribution of drive-alone travel times by 
metropolitan area population. The percentage of commuters driving alone 
for more than 60 minutes is small, except in areas with populations 
over 3 million.
    The significance of the over-60-minutes group is displayed for all 
modes in Figure 3-58, which shows the percentage of commuters traveling 
over 60 minutes for all areas with populations over 1 million. Only 
about one-third of those areas have more than 5 percent of commuters 
traveling more than 60 minutes, and only three areas (Washington, D.C., 
Chicago, and New York) have above 10 percent. Metropolitan areas are 
ranked in descending order of population in the figure, which points 
out that although population size is a factor, it is certainly not the 
only factor, in determining long travel times. In a number of areas 
(New Orleans, Baltimore, Houston, and Washington, D.C.), the percentage 
of commuters traveling for more than 60 minutes is inappropriate for 
the population size. Other areas, particularly the so-called rust-belt 
cities of the Northeast--Milwaukee, Buffalo, Detroit, Cleveland--
exhibit very low values for their size. This may be a product of 
declining jobs in the central city or a heavier than typical 
orientation to the private vehicle.
                      traveltime by flow patterns
    Auseful way to further understand these patterns is to look at the 
flows that were identified earlier in this chapter and examine their 
effect on travel times. Table 3-26, which uses the same standard 
summary form used earlier to depict commuting flows, presents the 
average travel times for various flow patterns. The following factors 
in the table are of interest:

   Internal flows have the lowest travel times, with flows from 
    one nonmetropolitan area to another the shortest (16.5 minutes), 
    followed by flows within the same central city (18.iS minutes) and 
    then within a suburb (19.4 minutes).
   On average, a suburban resident who commutes to a job within 
    the same suburb has a 7--minute travel time advantage over a 
    commuter to the central city of the same metropolitan area.
   With an average travel time of 23 minutes, reverse commutes 
    take 3 or 4 minutes less in the nonpeak direction than in the peak 
    direction.
   All other moves (i.e., between metropolitan areas and 
    nonmetropolitan areas) involve average travel times well above 30 
    minutes and above 40 minutes in some cases.
    Figure 3-59 presents the travel time distribution of commuters 
destined for central cities, suburbs, and nonmetropolitan areas. The 
nonmetropolitan areas are notable in that more than 25 percent of 
commuters arrive in less than 10 minutes, whereas only 10 percent in 
central cities enjoy that travel time. Eight percent of commuters to 
central cities travel more than an hour; in the nonmetropolitan areas, 
the proportion is about 4 percent. Suburban arrivals occupy a position 
midway between the extremes of the central city and the outer rural 
areas.
Flows and Modes
    One effect of metropolitan flows on modal travel times is shown in 
Figure 3-60, which compares travel times by area of trip origin. For 
all modes but ferry, taxi, and bike/ walk, the suburban trips take the 
longest. For most modes, nonmetropolitan trips are shorter than either 
suburban or central city trips. The exceptions are important. For each 
of the carpool modes, nonmetropolitan area trips are quite long 
relative to other areas, indicating the long distances traveled by 
carpools in nonmetropolitan areas.
    Figure 3-61 further traces the effect of carpool size on travel 
time, with revealing results. The four private-vehicle modes are traced 
by travel time for each of the nine flow categories. The flows tend to 
group into two distinct families. One family consists of the internal 
flows (nonmetropolitan area to nonmetropolitan area, central city to 
central city, suburb to suburb, and central city to suburb) and centers 
around 20 minutes of travel time for driving alone. Another group 
centers around 35 minutes and consists of the intermetropolitan flows. 
In each case, carpooling adds about 3 to 4 minutes for each person 
added to the carpool, regardless of flow category. The internal flows 
reach an average of about 32 minutes for large carpools, and the 
intermetropolitan flows reach almost 50 minutes.
Flows and Metropolitan Area Size Group
    The combination of trends in flows and in metropolitan area size is 
difficult to depict clearly. But useful observations can be made. Trips 
to the central city appear to increase in travel time far more rapidly 
as metropolitan size increases than do trips to suburbs or to other 
central cities or suburbs, as shown in Figure 3-62. This suggests one 
reason for the growing significance of suburbs in large metropolitan 
areas.
                           travel time trends
    The 1980 census was the first census to collect travel time data. 
The travel time data collected in 1990 allows trends to be compared 
across the 10-year period. The overall national average travel time in 
1980 was 21.7 minutes, rising by 40 seconds to 22.3 minutes in 1990. 
This is a tribute to the American transportation system, given the 
prodigious increases in the number of commuters in the period.
    Table 3-27 shows the 1980 and 1990 flow trend travel times; note 
that the 1980 data did not differentiate between central cities and 
suburbs in the same or other metropolitan area.
    These numbers are interesting, if not astonishing. They convey the 
following messages:

   Contrary to conventional wisdom, travel times have not 
    changed much, despite large increases in commuting, particularly 
    with private vehicles.
   Some travel flows have seen improved travel times, albeit 
    only as related to Nonmetropolitan flows.
   Flows from one Nonmetropolitan area to another saw no change 
    in travel time.
   The greatest increases in travel time occurred in the flow 
    from suburbs to central city (a 3.6 minute increase)--a larger 
    increase than in the flow from suburb to suburb (a 2.5 minute 
    increase).
   The 7-minute advantage of the suburb-to-suburb trip over the 
    suburb-to-central-city trip increased to 8 minutes.
   Central city trips within the central city or to the suburbs 
    increased little (about 1.3 minutes), gaining some advantage over 
    the suburb-to-suburb trip.

    Although it is hard to accept that travel times have improved, it 
must be remembered that the shift to the automobile, particularly to 
driving alone, by former carpoolers, transit users, and walkers led to 
improved travel times for many, despite the fact that actual travel 
speeds on roadways may have declined.
    Drive-alone travel times are perhaps the best basis for comparing 
travel times between periods. They do not involve dealing with other 
people or a mix of modes that can vary the time of travel. Figure 3-63 
compares 1980 and 1990 drive-alone travel times by flow pattern. The 
figure shows that travel times for a number of flow patterns actually 
improved. In general, driving alone increased in travel time, but not 
as much as other modes. Drive-alone travel times for flows from suburb 
to suburb and from suburb to central city increased, but not as 
significantly as did other modes. Drive-alone travel times for other 
flows decreased.
    Figure 3-64 shows the average travel times for 1980 and 1990 for 
metropolitan areas with populations over 1 million. Many of the 
metropolitan areas show only limited increases in travel times, with no 
apparent pattern. Some of the largest increases in travel time occurred 
in areas with significant population increases in the period. Areas 
such as San Diego, Sacramento, Orlando, and Los Angeles had increases 
of over 12 percent. Several areas had small decreases in travel times, 
including Pittsburgh, New Orleans, and Salt Lake City. The most notable 
improvement was New York City, with almost an 8 percent decrease in 
overall travel times.
                    starting times and travel times
    For the first time, in 1990 the Bureau of the Census collected 
starting times--that is, the time the commuter left home, rather than 
the time the commuter began working. There was considerable interest in 
obtaining data on the time the commuter left for work because of its 
effect on congestion. The peaking characteristics of commuting have 
tremendous bearing on travel congestion, facility planning, and so 
forth. Moreover, there was suspicion that congestion was pushing 
travelers into earlier or later ``shoulder'' periods of the peak, thus 
broadening the peak.
    Figure 3-65 shows the commute starting times for men and women. 
Men's starting times are considerably earlier than women's. As more men 
and women enter the work force, the peak tends to broaden. The causes 
are open for further analysis. One factor is women's shorter trip 
distances, which allow them to depart later than men yet arrive at 
about the same time at the work site. Occupational differences in work 
hours and family needs are also factors. The data presented in the 
figure are absolute quantities. If the data are looked at as percentage 
distributions, there is a small but significant shift in the shapes of 
the distributions. The peak period for women commuters, from 7:30 a.m. 
to 8 a.m., contains a greater share of total women's travel than does 
the peak period for men. Men's travel is spread more throughout the 
peak. Surprisingly, women's total travel from noon to midnight is less 
than men's, yet as a percentage of total travel is greater than men's--
i.e., a higher percentage of women's work trips take place from 4 p.m. 
to midnight. The reasons for this may include a statistical artifact, 
because women have such a small share of their starting times from 
midnight to 5:30 a.m.
    Figure 3-66 shows the travel time distributions for all commuters 
by start time. Although complex, the chart is worth inspection. There 
are two equal peaks (from 7 a.m. to 7:29 a.m. and from 7:30 a.m. to 
8:59 a.m.), consisting of a male-worker peak followed by a female-
worker peak. Even in the peak period, the majority of commuters travel 
less than 20 minutes. The half-hour segment just before the peak period 
has many more long-distance (in time) travelers. After 8 a.m., the 
pattern follows the short time trend. The early morning hours are much 
more heavily oriented to long-distance travelers.
    Another way to reveal some of the factors at work here is to invert 
these data and show the start time composition of different trips by 
trip length and by sex. The tendency of these patterns to rise to the 
right for both men and women is because a greater share of total travel 
in each travel time period begins early in the morning. For example, a 
high proportion of workers with commutes longer than 60 minutes leave 
for work before 5 a.m.
                               __________
                   Chapter Four: Closing Perspectives
    In this report, we have examined the dominant trends in commuting 
today. While this examination may have seemed comprehensive, it is 
clear, to me at least, that a wealth of information that can bring 
light on the subject remains to be tapped. Even if we restrict our 
focus to data already available, there is valuable material waiting to 
be examined. If the data that are needed but that are not now available 
are brought into consideration, the work to be done is monumental.
    Throughout this report, I have rigorously tried to stay within the 
bounds of what the data can tell us. The sponsors of this research 
recognize the benefit to public policy in assembling the facts 
regarding commuting into a common resource, which each organization can 
employ for its own purpose. While the sponsors may disagree from time 
to time on policies regarding commuting, their sponsorship of this 
report affirms their belief that public policy can only benefit from a 
common understanding of the basic facts of the matter.
    This final section is a bit more relaxed in content and tone. It 
allows me to speculate on what the trends mean and where they are 
going. Any perspectives or interpretations of trends contained herein 
are mine alone.
                        direction of the trends
    In 1987 the trends were readily discernible, summarized as three 
dominant patterns: a boom in workers; a growing orientation to the 
suburbs; and increased use of the automobile. The trends now seem less 
clear in some respects, perhaps because the patterns are so much a part 
of us that they no longer seem exceptional.
    But it is also true that the course of some of those patterns are 
no longer so clear. Furthermore, as new patterns emerge, they modify or 
even replace the dominant patterns.
New Commuters
    The boom in workers is at an end. The two demographic surges that 
fed it--the baby boomers coming of working age and the entry of large 
numbers of women into the working world--have run their course. This by 
no means suggests that there will be a sharp decline in annual 
increases in workers, only that the scale of the trend will not be so 
extreme, particularly as a proportion of the population. It will not 
stress the transportation system so dramatically. The oft-discussed 
baby-boom echo is but a pale shadow of the original. The total numbers 
of workers expected to be added each decade in the future are not that 
different from past numbers.
    Notions that there would be a great swing of women out of the labor 
force and back to the home have not been substantiated by events. It 
has been more a case of younger women drifting in and out of the labor 
force in response to educational activities and childbearing events, 
rather than a permanent shift in labor force status.
    The great question mark is the factor of immigration, which could 
dramatically change the number of commuters in some areas and modify 
the nature of commuting patterns.
New Auto Users
    There is little in present patterns of behavior and demography to 
suggest that there will be a significant reversal in the private 
vehicle orientation of commuters. The dominant factor here is the 
continued dispersal of populations out from metropolitan areas and the 
pressure of time on workers. As long as the private vehicle remains at 
all affordable to own and operate, the pattern will continue. The 
shifts in age structure of commuters abet this trend.
    This does not suggest that all is lost for public transit or other 
alternatives. The cases where transit, carpooling, walking, and biking 
are successful need to be studied for clues to their appeal to 
commuters. Those areas where transit is a major factor (predominantly 
in the center of major metropolitan areas) need to sustain and 
intensify transit service. In areas with significant transit use, users 
are generally happy with the services provided. This market needs to be 
preserved. Transit providers will need to come up with innovative ways 
to sustain or gain market share. Some of the innovative responses to 
suburban demands in the Chicago, Philadelphia, and New Jersey areas may 
yield successful models.
    It is difficult to be optimistic regarding a renaissance in 
carpooling. Most carpooling today is not carpooling as we knew it just 
a few years ago--a voluntary arrangement among coworkers or neighbors. 
That type of carpooling is dying; most of the surviving ``carpool'' 
activity consists of family members with similar destinations and 
timing. Maybe these need a new name--fampools? Carpoolers using 
restricted carpool lanes have significant advantages on roads with low 
average traffic speeds, but as noted in Chapter 3, there are time costs 
to carpooling as well. Carpooling is a changing environment that 
requires continual attention from the commuter as jobs change, work 
patterns shift, and travel times change.
Density and Dispersal
    Continued dispersal toward the fringes of metropolitan areas seems 
a given for both jobs and population. The cloaking of these patterns by 
the vagaries of redefinition of metropolitan boundaries has not helped 
our understanding of these trends. Rapid growth on the metropolitan 
fringes has been masked by definitional changes. By modifying 
geographical definitions, the Bureau of the Census shifted 6 million of 
the new population growth in the 1980's from the suburbs to the central 
city and 4 million from nonmetropolitan areas to metropolitan areas.
    Prospects for a reformation in land preferences toward higher 
densities are limited, but have several avenues of potential 
development. The first is that as the population ages, there may be 
greater interest in higher density housing clusters, where walking is 
convenient and automobiles are not a necessity. The second is the 
growing interest in family oriented communities that provide more 
opportunities for walking and greater control over vehicle access. 
Developers are responding to both these interests. If these concepts 
are successful, they will be quickly copied by others in the 
marketplace. Whether this becomes a minor market niche or the basis for 
retrofitting our suburbs remains to be seen. There still seems to be a 
strong aversion to high-density development on the part of most 
households, which becomes a motivator in housing choice as soon as 
family finances permit.
    The future of local nonwork travel belongs to the auto and to 
walking. The American public will embrace opportunities to visit areas 
where walking is pleasant and secure. Shopping malls, the new main 
streets of America, have responded to this need. These preferences 
could begin to have substantial bearing on work travel patterns as 
well.
Variations on a Theme
    We are becoming increasingly conscious of a set of developments 
that add to the volatility of commuting. Simply described, this is the 
tendency for greater variability in the location, path, time, and mode 
of travel to work. It is difficult to say whether this tendency is 
increasing or whether it has just become more evident to researchers in 
recent times. Our data collection approaches, which focus on 1 day's 
travel by a set of selected individuals or households, would typically 
not catch this kind of variability. Surveys that track an individual's 
daily travel over the course of several weeks would be needed to 
establish some sense of the scale and character of variation.
Locational Variability
    There have always been those whose workplace is not fixed. 
Construction workers and cleaning people come to mind. The new factor 
is the worker who occasionally works at home. Although there have 
always been those who work at home--and this group is growing--the 
interest here is in those who have a workplace elsewhere, but who 
occasionally work at home, either as a regularly scheduled event (e.g., 
once a week) or sporadically, as events demand. Much has been made in 
the press and elsewhere of the ``boom'' in telecommuting. Many of the 
reports have been overstated and exaggerated out of all sense of scale, 
raising very unrealistic expectations. But there is still an important 
element in telecommuting that we need to get a better sense of, 
preferably without all the hyperbole. If 10 percent of workers work at 
home once a week, that would cut commuting flows by 2 percent. The 
result would be a reduction in peak-hour commuting conflicts--and a 
greater dispersion of population.
    Working at home (where home is not a farm) is a factor to be 
considered in future transportation planning, even when it is only an 
occasional activity. We need to know more about it. Part of the 
stimulus for working at home is that knowledge workers can function 
readily at home and may in fact be more productive there. Another 
factor centers on concern about child care. The costs and frustrations 
of commuting may also be factors for many, especially those commuting 
long distances. As noted earlier, workers who have more than an hour's 
commute have a higher propensity to change jobs than others.
    Time. There is a sense, supported by limited research, that the 
public is increasingly aware of congestion bottlenecks and its effects. 
There are also increasingly better means to communicate to travelers 
information about emergencies and other incidents affecting travel 
times. This has led many workers to start for work and to return home 
at times that are more responsive to actual traffic patterns than to a 
fixed schedule. This is in many ways the goal of the intelligent 
transportation systems (ITS) programs--namely, to permit the traveling 
public to respond to events based on better information.
    Path. The same point made just above can be made regarding the 
choice of path to work, specifically for private vehicles. As people 
become more aware of the effects of congestion, they are more able to 
consider alternate paths to work. This again is one of the elements of 
ITS technology, wherein new techniques are employed to direct travelers 
to less congested routes. But it is unlikely that computers will 
surprise commuters with new ways to get to work that they hadn't 
already tested. Particularly for work trips, people generally know all 
of the available alternates and understand their characteristics.
    The more significant factor in path determination may be the 
phenomenon of trip chaining--the linking of the work trip with trips to 
meet household needs. This has the effect of shifting the direction and 
path of work trips as events dictate, creating situations, for 
instance, where the trip to work and the trip back home are not 
symmetric.
    These trip patterns have proven highly time efficient to commuters 
and may be energy efficient and environmentally efficient as well. They 
are the key to understanding future commuting behavior.
    Mode. Variability in modal choice is not a major factor in overall 
commuting patterns. Nonetheless, as a product of the increasingly 
disproportionate relative shares of travel obtained by the private 
vehicle, relatively small shifts out of the private vehicle, even on 
the most sporadic and limited basis, can have substantial effects on 
other modes. For instance, transit operators have long been aware that 
a significant part of their ridership is composed not of regular users 
but of those who use transit only a few times a year--such as when a 
household vehicle is unavailable. If 1 percent of the vehicle fleet is 
in the shop for repairs on a given day, that can cause a 10 percent to 
20 percent swing in transit use. Similar factors affect carpooling, and 
even walking and bicycling.
    Planners need to be more conscious of these variabilities in 
behavior, whether they are tending to grow as a factor or not, and what 
implications they might have for transportation planning.
Sources of Change
    Economic and Social Factors. The nature of work is changing. More 
work can be done in small work units of a few people, or even one. This 
adds to the potential for dispersal of jobs. It also adds to the 
greater freedom, in many cases, for people to set their hours of work 
to match their personal preferences.
    Paralleling this trend is the fact that many jobs are services-
oriented, requiring workers to work odd hours and on weekends. This 
adds to the greater dispersion of jobs in time, as well as in space.
    The power of communications and data processing are only beginning 
to be felt. These tools are becoming ubiquitous. [I recall a recent 
experience in which an upscale, national chain restaurant had to send 
diners away because the ``computers were down.'' I wonder how many 
restaurants had computers 5 or 10 years ago.] The power of 
telecommunications is accidentally focused on permitting greater 
dispersal of people and jobs; it reduces the penalty of distance.
    The effect of women in the workplace has been unmistakable and will 
further influence trends in the future. One of these effects is the 
growing humanization of work activities. There seems to be a greater 
understanding of people's needs to care for children, and to take time 
off for other family needs as well. This has led to greater work 
scheduling flexibility in many firms, both large and small. That 
flexibility supports variation in work arrival and departure times, as 
well as work days. Certainly, part of this is the sharp competition 
among firms for highly skilled employees, many of them women.
    It is to be expected that this willingness to be flexible on the 
part of management will only increase in the future as some skills 
become even scarcer and firms compete for the best workers. This also 
means that firms will tend to relocate where their scarcest resource--
skilled employees--is located. Being a short commute away will be a 
benefit that firms can offer. This will tend to push firm locations to 
where people want to be, generally pushing employers toward higher 
income neighborhoods and leading to longer commutes for lower income 
workers. Regionally, this means the outer edges of the metropolitan 
area; nationally, it means those areas that are pleasant and attractive 
to live in. This will keep national growth focused on the sunbelt and 
on the West. This could also lead to increasing growth in smaller 
areas, such as university towns, rather than in the very large 
metropolitan areas of the nation.
    Immigration. Immigration is the great wild card in all this. The 
scale of immigration, and in some respects its character, is a product 
of a stroke of a pen in Washington. Immigration will be the dominant 
population factor in many areas of the nation, in the large population 
centers in general, and in particular in the centers of the West and 
South. Immigrants are heavily represented in the labor force. Their 
bimodal distribution in education will create strange frictions in the 
national labor force, competing at both the highest and the lowest 
skill levels.
    Not surprisingly, their orientation to the private vehicle is less 
than that of other Americans. The question is, how long will it take 
before their behavior patterns are symmetric with others of similar 
income and age characteristics? Or are there substantial cultural 
variations that will manifest themselves?
    The Democratization of Mobility. The private vehicle has become the 
tool of mass mobility. While we tend to think of auto ownership as all-
pervasive in this society, this study has shown that this is strongly 
skewed by race, ethnicity, and other factors. One has to believe that 
the expansion of opportunity in America to immigrants and to those born 
here will expand ownership and use of private vehicles as well--
generating growth in private vehicle ownership and travel in the coming 
years.
    The growth in vehicle travel in the remaining years of this decade 
and into the next century will be predominantly a product of new access 
to personal vehicle use on the part of young people, the older 
population, women, and racial and ethnic minorities--the mobility 
``have-nots'' of our society.
    Just as we have cited the competition for skilled workers at the 
high end of the job spectrum, there will likely be more workers than 
jobs at the low end. This will mean workers traveling great distances 
for not particularly attractive jobs. The dramatic growth in 
intermetropolitan travel and in reverse commuting (from the city out to 
the suburbs) is a product of that reality.
    Society then is faced with an unpleasant challenge. Much of current 
public policy on commuting is aimed at suppressing auto ownership and 
use. These policies are unintentionally aimed squarely at those on the 
margin of the ability to own and operate a vehicle, particularly those 
policies aimed at increasing the cost of driving. It is clear that 
those most affected by such policies will be those on the lower rungs 
of the economic ladder. Often these people will be those who are most 
auto-dependent.
    Public Policy and Commuting. Much of public policy today is focused 
on modifying societal behavior in commuting, and specifically the 
preference for driving alone. These policies have proven dramatically 
ineffective, at best. At worst, they can be directly antagonistic to 
the goals they are intended to support.
    It must be clear by now that the notion that there is an American 
``love-affair'' with the automobile is missing the point. Those who 
promote this idea seem to imply that that love is some kind of 
aberration, and with enough psychiatrists we can solve America's 
commuting problems. Americans love their automobiles about as much as 
they love their microwave ovens. They have them and use them because 
they are very efficient tools--they are time-saving devices. The desire 
for the personal vehicle in other countries follows this same pattern.
    At the center of all of these issues is the burden of time 
pressures that most Americans feel. It is time pressures, particularly 
on women, that increase personal vehicle use, trip chaining, and many 
of the other patterns we have examined. Decisions regarding household 
location and mode to work are not made frivolously. People have sound 
reasons for their choices.
    Public policies that try to increase the costs of auto use or 
increase travel times and congestion to force behavioral shifts to more 
preferred modes of behavior or locational densities will simply force 
people to make painful decisions. Many of these will result in the 
shift of households and jobs to areas where congestion is less 
obtrusive and where other costs are less; inevitably this will mean 
greater dispersion of the population, not less. The American commuter 
is a resilient and innovative character.
    Those who see the solution of so many of our present ills by 
reorganizing society into living at higher densities miss the point. 
People do not live ``efficiently'' in order to optimize some imposed 
societal goal, certainly not commuting. Residential density is one of 
the most fundamental of choices that households make. It is clear that 
most people, given the choice, opt for lower density living when income 
permits. As society changes and choice patterns evolve, the marketplace 
must be ready to respond with development that is responsive to 
household choices. Any public policies that inhibit a market trend 
toward higher densities must be addressed. But the marketplace must be 
the final arbiter in a free society.
    In this environment, transit has to compete with speed, 
reliability, and security. The focus of public policy in this area must 
be on improving commuting for all workers, with better walking and 
biking opportunities, better transit, and better roads. My proposed 
goal would be to reduce commuting to an unimportant topic of 
conversation and public policy.
    Many of these trends leave room for greater optimism regarding 
commuting solutions. Technological responses increasingly respond 
effectively to energy and environmental concerns, and congestion, while 
still a major problem, in many areas is addressable in its new 
patterns. The beginning of the solution lies in recognizing that the 
American public is in charge.
                           patterns to watch
    There are a number of patterns that bear watching over the coming 
years, as they signal the direction some of the trends will take. The 
patterns to watch are:

    1. Will the force of immigration continue, or taper off?
    2. Will immigrants join the typical patterns of vehicle ownership 
and travel behavior, or will new patterns emerge?
    3. Will greater balance of jobs and workers occur in the suburbs, 
or will things stabilize at present levels?
    4. Will racial and ethnic minorities fully join the mainstream car-
owning classes?
    5. Will technological fixes continue to be effective in responding 
to environmental concerns?
    6. Will telecommunications and growth in working at home abet 
dispersal and take the edge off commuting problems in many areas?
    7. Will ITS technologies begin to assert an influence on travel 
times or other factors of commuting?
    8. Will aging commuters generate shifts in mode of commuting?
    9. Will population growth shift toward the lower end of the 
metropolitan size spectrum?
    10. Will the public find new, higher density communities attractive 
alternative lifestyles?
                      the sources of understanding
    A final word about data is needed. There is something of a 
renaissance in transportation data under way. The creation of the 
Bureau of Transportation Statistics (BTS) at the U.S. Department of 
Transportation has reinvigorated interest in better data by many in the 
profession. That influence goes well beyond BTS's own programs.
The Data
    The sources of data that will be available to us for monitoring the 
questions posed above are strong and improving, with one gigantic 
``if.''
    The Nationwide Personal Transportation Survey has been established 
in a strong, steady program, and adequately sized surveys are conducted 
every 5 years. Data collected in 1995 will soon be available to address 
many of the questions posed here. This survey is now the preeminent 
source of travel behavior information in the country.
    As part of its monitoring of housing conditions, the American 
Housing Survey (AHS) obtains journey-to-work data every other year for 
a national sample. This provides very valuable trend information. The 
cessation of journey-to-work data collection for individual 
metropolitan areas in the AHS cycle is a great loss.
    The 1990 census has been the dominant source of information for 
this report and for metropolitan analyses across the nation. The work 
of the Bureau of the Census and of the states, working through the 
American Association of State Highway and Transportation Officials, has 
been incredibly valuable. For the first time we have had national, 
comprehensive coverage of commuting in detail.
The Future of Data
    The great ``if'' is the 2000 census, which is in greater jeopardy 
than any census has ever been in our era. This transcends the usual 
disinterest regarding the census when it is 4 years away. There is 
pressure to reduce the data collected to the absolute minimum needed 
for legislative redistricting. While all would agree that streamlining 
and improvements in efficiency would certainly be in order, the 
collapse of the census would be a disaster for public understanding of 
our society. The journey-to-work questions are of unquestioned value to 
public policy and public investment decisions in the range of hundreds 
of billions of dollars. But it is the fundamental small-area 
demographic data that underlies the specialized questions that are most 
critical to effective public policy at the local level.
    There is a sense that we are on the cusp of major shifts from old 
methods of data collection to new means just emerging--means that 
promise greater efficiency and speed. We must not lose the continuity 
of the data resources we depend on as these new techniques evolve.
                               __________
            ECONOMIC RETURNS FROM TRANSPORTATION INVESTMENT
 (By Jeffrey Madrick, Eno Transportation Foundation, Inc., Lansdowne, 
                               VA, 1996)
                                preface
    From the time of the nation's first transportation plan--the 
Gallatin Report at the beginning of the 19th century--U.S. political 
leaders have recognized the developmental and economic benefit of 
investment in transportation. As different ports competed to be the 
supplier of the original colonies, as different routes competed to be 
the gateway to the west, as the first national system of post roads was 
designated, and as the Interstate Highway System was designed, states 
and regions have competed for access. Transportation facilities are 
more than magnets that draw growth to one point instead of another: 
they also create economic growth that is shared by the Nation as a 
whole.
    This national economic benefit has been measured in a recent study 
by M. Ishaq Nadiri, an economist at New York University. He found that 
there is a strong relationship between the capital stock of highways 
and the net social rate of return. During the 1950's and the 1960's, 
the net social rate of return of the nation's highway network was very 
high, while in the 1970's and 1980's the returns on highway investment 
were lower--roughly the same as that realized on private capital in 
those decades. What led to the extremely high returns in the 1950-1970 
period, and what future public investments in transportation 
infrastructure might have similarly massive impacts? Can public policy 
be targeted to produce such high returns in the future, and continue to 
benefit the nation's economic health, its international 
competitiveness, and its quality of life?
    The Eno Foundation held a public policy forum on July 23, 1996 to 
explore these important questions. Leaders in government and industry, 
specialists on economic development, investment analysts, and other 
experts came together to examine recent research on this subject, to 
discuss its possible policy implications, and to identify ways to make 
such analysis more useful to policymakers.
    We are deeply indebted to all the thoughtful leaders, listed at the 
start of this report, who contributed to these discussions. We are 
especially thankful to Professor M. Ishaq Nadiri for his stimulating 
analysis and his willingness to defend this work before a diverse 
community of interested professionals; to Professor Jose A. Gomez-
Ibanez who chaired the forum; to Jeffrey Madrick, who prepared the 
forum report; and to Jennifer Clinger, who organized the forum and 
oversaw all the arrangements. We are also grateful to the Federal 
Highway Administration, the relational Cooperative Highway Research 
Program, and the American Association of State Highway and 
Transportation Officials for their financial and professional support. 
Thanks are also due to the forum participants who reviewed the draft 
report and made useful corrections.
    The message that came through loud and clear at the forum is that 
the economic impacts of transportation are important, and that new 
findings bearing on them deserves serious attention. The Eno Foundation 
is pleased that the insights contributed by participants at our forum 
are now publicly available, and that this report will help to give the 
economic consequences of transportation the consideration that they 
deserve.
                                             Damian Kulash,
                   President and CEO, Eno Transportation Foundation
                                 ______
                                 
                                summary
    Economic productivity is key to maintaining the nation's global 
competitiveness and a rising standard of living. However, productivity, 
along with overall economic growth, has slowed considerably in the U.S. 
since the 1970's. Investments in transportation infrastructure benefit 
economic productivity by allowing more efficient processes, economies 
of scale, changes in distribution or logistics patterns, and reduced 
costs. Although the impacts of the system surround us, few attempts 
have been made to estimate the overall, program-wide economic benefits 
of public investments in transportation facilities.
    Recently, Dr. Ishaq Nadiri, an economist at New York University, 
has found that there has indeed been a significant positive rate of 
return from public investment in highways in the United States in 
recent decades, although the magnitude of this return tapered off in 
the 1980's. As the Nation prepares to design highway legislation for 
the next 5 years, the implications of this most recent work on economic 
returns could have major implications.
    The Eno Transportation Foundation convened a public policy forum to 
discuss the economic return on transportation investment. About 35 
people with varied perspectives on this issue attended this day-long 
discussion on July 23, 1996.
    The Federal Highway Administrator, Rodney Slater, opened the forum 
by saying that the FHWA has made fostering productivity growth through 
investment in highways one of its primary goals. He emphasized the 
importance of high-quality economic research to find the linkage 
between highway investments and economic performance.
    Professor Nadiri described that there has indeed been a significant 
positive rate of return from public investment in highways in the 
United States in recent decades, although the magnitude of this return 
has tapered off in later decades. During the 1950's and 1960's, the 
social return on these investments--the total return to business less 
depreciation--far exceeded those earned on private capital. During the 
1980's, these returns were roughly equivalent to the rate of return 
earned on private capital investment over the same period. Investment 
in national systems in particular, which usually involve larger 
networks of roads and highways than local projects, had a higher rate 
of return than private capital over this period.
    The high rates of return in earlier years and their rapid decline 
in subsequent years were largely the result of at least three factors. 
First, in the 1950's and 1960's, transportation demand was strong as 
the American economy expanded rapidly. The investments in the 
Interstate Highway System naturally produced high returns because the 
rapid growth in the post-war economy required an expansion in 
infrastructure to accommodate it. Second, unlike for private capital, 
the benefits of public investment in transportation were shared by many 
industries. Third, as initial needs were met and the highway system 
matured, it was only natural that subsequent investments produced lower 
rates of return. Nevertheless, recent returns, although lower, are 
positive and significant.
    Nadiri also concluded that investment in highway capital made a 
significant positive contribution to the economy's rate of productivity 
growth. But the declining rate of growth in highway capital made only a 
minor contribution to the slow rate of growth in economic productivity 
in the 1980's. This refuted the conclusions of earlier studies which 
showed that there was a dramatically higher contribution to 
productivity from infrastructure investment than from private capital 
investment.
    While existing studies generally report a positive contribution 
from infrastructure investment, there is a wide variety of results. 
Rates of return on public infrastructure investment clearly vary 
significantly over time, place, and according to the economic context 
of the region or nation in which the investment is made. Future 
research should be directed toward determining which kinds of 
infrastructure investment will make the largest contributions to 
aggregate and sector productivity growth.
    An overriding issue is how to continue to make significant 
investments in transportation infrastructure in an era of scarce public 
resources. The use of public-private partnerships may be able to make 
up for shortfalls in new capacity in the Federal, state and local 
transportation programs. Innovative financing methods involving both 
public and private sectors may also be effective in a time of more 
limited public resources.
    In general, forum participants agreed that a public awareness must 
be created for thinking about how infrastructure investment can promote 
the growth of the nation's productivity. These impacts are significant 
and of a national, not local, character. They should be at the center 
of the debate, yet public policy discourse does not yet take into 
account these far reaching impacts. Participants urged policymakers to 
apply the results of new economic research to their decision-making 
processes and to develop new ways to present the case to legislators 
and to the public that infrastructure investment can improve 
productivity and economic growth.
    While the results of the new research analysis are powerful and 
promising, it would be self-defeating to exaggerate the new research 
findings. The new research has corrected many of the flaws of earlier 
studies, but its results need to be presented cautiously and 
understandably.
    Professor Jose Gomez-Ibanez, chairman of the forum, summarized the 
main points of the forum as follows:
    First, the Nadiri research shows that there have been significant 
returns to public highway investment. While these returns have declined 
over time, they are still significant. They are the equivalent of 
returns to private capital.
    Second, these returns vary significantly, and we do not always 
understand why this is so. They vary over time. In the 1950's and 
1960's, the interstate highways replaced the open-access roads that 
came before them, which may explain much of the decline in returns. But 
they also vary according to place. Additional highway investment may be 
useful in some regions or areas and not in others.
    Returns can also appear to vary according to where in the overall 
sequence they are made. The first roads or highways in a region appear 
to generate higher returns than subsequent ones.
    Returns can also vary depending on the institutional context. If 
trucking in a nation is a monopoly, the benefits of infrastructure 
investment will accrue to truckers rather than the economy as a whole. 
50, for the potential returns of transportation to be fully realized, 
the context must permit the interacting institutions to exploit new 
efficiencies.
    Infrastructure investments can produce sizable returns, but only if 
they are the right investments at the right time--investments that 
create growing room. The fact that policymakers appear to have selected 
such investment in the 1950's and 1960's does not tell us much about 
what the best opportunities are today.
    Third, we may never know the full effects of highway investment on 
productivity. This is not merely because our statistical tools are not 
perfect. Flew infrastructure creates a context for further innovation 
that cannot usually be predicted. People are enabled by the new 
infrastructure to create different ways of doing things that are subtle 
and have long lead times. They are the sorts of things that can never 
really be traced out beforehand--or sometimes even after the fact. For 
example, we still have difficulty disentangling the effects the 
railroads had on 19th century America.
    Finally, how can the new research be used? To be valuable to 
policymakers it must be phrased in plain English and must not 
exaggerate findings, which would undermine their credibility. It must 
also communicate a vision or story that is credible, specific, and 
moves beyond the abstraction inherent in measures like the rate of 
return. Such a vision may be more complex and harder to communicate 
than the case made to Justify the interstate highway system in the 
1950's. Nevertheless, the public may be prepared for a more 
sophisticated vision than they were a generation or two ago.
                                 ______
                                 
                           forum proceedings
Background and Introduction
    A national debate is gathering momentum over whether the U.S. 
economy can grow faster than it has over the past two decades. During 
the 1970's and 1980's, the economy's rate of growth slowed dramatically 
from its historical average. Between 1870 and the early 1970's, the 
best data show that the American economy grew at an average rate of 
nearly 3.5 percent a year. Since 1975, the economy has grown at only 
2.4 percent a year.
    Whether the Nation is better off in the future depends on whether 
the rate of growth of productivity can be raised. Productivity is the 
main source of economic growth and a rising standard of living. Its 
growth has slowed even more dramatically over the past two decades than 
did overall growth. Labor productivity--the output of goods and service 
per hour of work--grew at a rate of more than 2 percent a year since 
just after the Civil War. Since 1973, it has managed to grow at only 1 
percent a year. Total factor productivity--the output per unit of labor 
and capital--has slowed down to a similar degree.
    Had productivity grown at its long-term rate since 1973, another 
$13 trillion in national income would have been produced by the 
economy. As a consequence, tax revenues would have risen so much that 
there would be no Federal deficit today. In fact, at current levels of 
Federal spending, there would be a substantial budget surplus.
    Investments in infrastructure, particularly transportation 
projects, may have significant impacts upon economic productivity. 
Governments make investments in transportation facilities to support 
development, to spur economic growth, to alleviate existing 
deficiencies, or to increase public convenience. In the 19th century, 
the large positive economic value derived from investments in 
transportation systems was taken to be self-evident, and major 
investments in roads, railroads, and canals were made on this basis. As 
the U.S. developed, transportation investments were used to transform 
the economic environment profoundly. Similarly,historians attribute the 
Industrial Revolution to various transportation investments that 
preceded it. Today, developing nations view transportation investments 
as key ingredients for economic development and growth.
    No one living in contemporary America can overlook the profound 
changes brought about by the Interstate Highway System on where people 
live, work, and shop. It has expanded the range over which goods can be 
marketed, has created opportunities for economies of scale and for 
increased specialization, and has brought the efficiencies of just-in-
time inventory systems to businesses across the land. Although the 
impacts of the system surround us, few attempts have been made to 
estimate the overall, program-wide economic value of public investments 
in transportation facilities.
    Because of the importance of productivity growth to the economy, 
and in anticipation of the reauthorization of the nation's surface 
transportation programs next year, the Federal Highway Administration 
(FHWA) and the American Association of State Highway and Transportation 
Officials (AASHTO), through the National Cooperative Highway Research 
Program (NCHRP), asked the Eno Transportation Foundation to call a 
conference of transportation experts and policymakers from the public 
and private sectors and academia to discuss whether transportation 
infrastructure investment can play a critical part in improving 
America's productivity.
    In the 1950's, the rate of growth of highway capital surged. After 
declining slightly in 1950 and 1951, the capital stock grew at an 
annual rate of 6.2 percent until 1959. But beginning in the 1960's and 
on through the 1970's, the rate of growth slowed continuously. Since 
1982, highway capital stock has been growing at an average rate of 1.2 
percent a year.
    This increased rate of growth has not kept pace with the increase 
in demand for highway transportation. The slow rate of investment has 
contributed to increased congestion and poor maintenance. It has also 
resulted in fewer large-scale transportation projects, and required 
proportionately more funding from state and local levels of government 
for transportation improvements.
    But has the lower rate of investment in transportation 
infrastructure since the 1950's contributed significantly to the 
general slowdown in productivity growth? Can raising the rate of 
investment in transportation infrastructure enhance overall 
productivity for the entire nation? The Eno policy forum addressed 
these fundamental questions.
    The starting place for this discussion was a new econometric study 
by M. Ishaq Nadiri of New York University and the National Bureau of 
Economic Research and Theofanis P. Mamuneas of the University of 
Cyprus. It is a comprehensive analysis of how investment in highway 
infrastructure affects the nation's output, the commercial sector's 
costs of doing business, and private sector productivity in general. 
The expert participants agreed that the Nadiri model had corrected the 
most important flaws of earlier studies on this subject. The general 
consensus, among both skeptics and supporters of this type of analysis, 
was that Nadiri's analysis was one of the most comprehensive pieces of 
work that has been done in the infrastructure area in the last 10 
years, which is when the main growth of literature has occurred.
    Approximately 35 professionals from academia and the private and 
public sectors participated in the forum, including top government 
officials, academic leaders, and industry executives. There were three 
general areas of discussion. The first concerned Professor Nadiri's 
model, and an interpretation of its results. The second concerned the 
policy implications of new research, and ensuring that investments in 
highway infrastructure are targeted to have the maximum net benefits. 
The third area of discussion concerned how to frame public policy 
issues in light of the new research, as well as how to make the public 
understand potential contribution to the economy's productivity of 
infrastructure investment.
The Need for this Forum
    Federal Highway Administration (FHWA) Administrator Rodney Slater 
introduced the topic of the forum by observing that FHWA has 
traditionally focused its attention on the direct benefits to travelers 
and commuters of better, faster, safer roads and highways as well as 
the employment generated by construction and maintenance. But now, FHWA 
is intensifying its focus on a third area: the benefits that 
infrastructure investment has for industry, business and the economy in 
general.
    ``Until recently, discussions about the relationship between public 
capital, and economic performance were based on evidence that was 
largely descriptive in nature,'' Slater said. However, descriptive and 
anecdotal evidence is not sufficient to support public investment 
decisions that have significant social, environmental, and economic 
impacts. In a fiscally stringent time when every Federal expenditure 
requires justification, he said, ``the objective here is to gain the 
evidence we need, and to carry forth the strong message.''
    Slater explained that this was why the FHWA funded the Nadiri 
study. Now that it is completed, the discussion needs to focus on three 
questions: ``What do these findings mean? How are industries affected 
by what we discover? And what are the implications for future 
transportation policy?''
    Administrator Slater said that he was ready to use well-done 
research to make the case for infrastructure investment if it is 
justified. ``If truth was self-evident, there would be no need for 
eloquence,'' he said. The Job, Slater concluded, is, ``to create a 
story that people can understand, buy into, and give themselves to, 
much as we have given ourselves to creating a rail system, an aviation 
system, a highway system, and all of the transit facilities that exist 
around this country. Many people would like to rest on those 
accomplishments. Well, we are gathered here today to examine the 
question of why we cannot rest on those accomplishments.''
New Research on the Economic Returns from Transportation Investment
    Professor M. Ishaq Nadiri, the Jay Gould Professor of Economics at 
New York University and a member of the National Bureau of Economic 
Research, explained that his research in how infrastructure investment 
affects economic output was initiated by several well-known studies in 
the late 1980's that concluded that infrastructure investment had a 
dramatic impact on the rate of economic growth. These original studies 
were done, most notably by Professor David Aschauer, now of Bates 
College, and later by Alicia Munnell of the Boston Federal Reserve Bank 
(now on the Council of Economic Advisers). Before Aschauer, Nadiri 
noted, many applied economists had not estimated how public investments 
affect the nation's productive capacity. They focused almost 
exclusively on how private-sector decisions with respect to output, 
employment, and capital accumulation contributed to economic 
productivity growth.
    The methodology of these first studies was widely challenged by the 
academic community and the conclusions were severely scaled back. An 
extensive list of new research then followed. If criticized, however, 
the Aschauer and Munnell work did serve as a challenging beginning.
    Aschauer's model rested on a form of economic analysis known as a 
production function. It assumes that the output of the economy (Gross 
Domestic Product) is a function of the total supply of labor hours and 
available private capital stock as well as the rate of technological 
progress. In trying to measure the impact of infrastructure capital, a 
production function can be expanded to include the supply of 
infrastructure investment as a variable as well. If the relationship 
between changes in infrastructure investment and the economy's output 
is one possible interpretation is that infrastructure investment is an 
important determinant of economic output.
    The main criticism of this methodology is that even though there 
may be a close relationship between the rate of infrastructure 
investment and the economy's output, this does not necessarily imply a 
causal relationship between the two. There can be many other reasons 
why the rate of change in infrastructure investment and the economy's 
output would rise and fall simultaneously. When other academic 
researchers factored out the possible simultaneity and ``auto-
correlations,'' which are especially significant when comparing 
investment and growth, they concluded that infrastructure investment 
had a much smaller impact on the economy's output than Aschauer 
initially maintained.
    To avoid such ambiguities, Professor Nadiri took a different 
approach to the issue that bypasses the problems usually associated 
with production function studies (refer to Appendix A for the complete 
study). His analysis did not use generalized production functions to 
represent the economy. Rather, it used a series of cost functions for 
all the individual industries that make up the economy (there are 35 
industry categories in the model). This determines how the costs of 
doing business are affected by many factors, one of which is the stock 
of public infrastructure capital. In the case of this model, highway 
capital is used. In general, this econometric research attempts to take 
account of all the major factors that might potentially affect 
productivity growth. It then isolates the contribution made by 
investment in highways, covering the years of 1950 to 1989.
    What are cost functions? The costs of an industry are a function of 
several key factors, including the cost of capital and labor, the 
prices of raw materials and other inputs, the level of the industry's 
output, and the stock of infrastructure capital. Nadiri's analysis also 
included the rate of technical change and capacity utilization rates. 
As each of these elements change, so do the costs of production for an 
individual industry.
    But to avoid spurious correlations, the factors that affect costs 
are not simply taken as constants. Just as it occurs in the real world, 
a change in one variable in the model will affect the other variables 
in the equation. For example, if capital stock goes up, there may be 
less need for labor. The share of labor and its cost will therefore 
carry less weight in the cost function. Nadiri adjusted for these 
interrelated changes among all the key factors that affect an 
industry's costs. In the language of economists, cost factors are 
arrived at endogenously rather than exogenously.
    The Nadiri research also estimated independently a demand function 
for each industry, allowing for likely changes in the demand for the 
output and productivity of a particular industry. If the output of an 
industry changes, its costs will also change.
    A complex series of regression equations were also run in several 
stages to arrive at a final relationship between the factors that 
determine supply and demand. Output and cost elasticities with respect 
to highway infrastructure capital were calculated for each industry. 
Elasticity is defined as the amount that output would rise or costs 
fall for each percent increase in the nation's highway capital stock. 
The analysis also calculated rates of returns for total highway 
investment by relating cost reduction benefits to the opportunity costs 
of public roads. These were then aggregated to arrive at results for 
the entire economy, which is called the social rate of return. These 
results were checked against a model for the entire economy as well.
    The analysis also broke down the components of the nation's 
productivity growth so that the contribution made by highway capital 
could be compared to the contribution made by other factors. Total 
Factor Productivity (TFP) is the output of the economy per factor of 
input--specifically, per hour of work and dollar of capital. The model 
decomposed TFP growth into four basic determinants. One is exogenous 
demand for goods and services, which is a function of changes in 
population and aggregate income on the demand side. A second is the 
change in relative prices of such key inputs for an industry as raw 
materials and intermediate products. A third is autonomous 
technological change, a residual number that includes things that 
economists usually can't specify. The fourth is, the level of the 
highway capital stock. The analysis shows the degree to which each of 
these factors contributes to the nation's productivity growth.
    Professor Nadiri points out that his analysis is ``a work in 
progress.'' As we shall see, there are still certain inconsistencies in 
results that require explanations. And there is the underlying question 
that all statistical studies utilizing even the most rigorous 
regression analysis raises: even when a relationship is found between 
infrastructure investment and productivity, we cannot be certain based 
on such techniques alone whether more investment has caused 
productivity to rise or whether rising demand in the economy has raised 
the returns on such investments.



                                   Annual Rate of Return by Type of Investment
----------------------------------------------------------------------------------------------------------------
                                                            1950-89    1950-59    1960-69    1970-79    1980-89
----------------------------------------------------------------------------------------------------------------
Total highway capital....................................       28 %       35 %       35 %       16 %       10 %
Non-local highway capital................................       34 %       48 %       47 %       24 %       16 %
Private capital..........................................       13 %       13 %       14 %       12 %       11 %
----------------------------------------------------------------------------------------------------------------

    Nevertheless, the Nadiri analysis is one of the most comprehensive 
econometric studies of its kind. As noted, the study circumvents many 
of the problems with former studies, including spurious correlations. 
It has made key variables endogenous rather than exogenous--that is, 
rather than being constant, key variables are allowed to change as they 
are affected by other changes in other variables. This better reflects 
the real world than do many models based on production functions.
    The study's conclusions are also subject to a variety of checks. 
The study aggregated both the demand and supply sides of his industries 
to be sure they tally. Bottom-up industry aggregates were compared to 
an economy-wide model, and they were also in accord. Statistical tests 
were made to avoid basic errors about spurious correlations.
    The social rates of return on public investments in highway capital 
were positive and significant throughout the 1950's to the 1980's. In 
the 1980's, these returns were competitive with returns on private 
capital. Both the returns on highway capital and private capital 
averaged 10 percent a year in the 1980's. This suggests that public 
highway investment in all classes of roads should at least be increased 
at the same rate as total private capital investment.
    The rate of return on highway investment in the 1950's and 1960's 
was much higher than in the 1980's, averaging about 35 percent a year, 
much higher than the return on private capital, which averaged about 14 
percent a year in this period. The average rate of return on highway 
capital over the entire 40-year period was 28 percent.
    Nadiri also estimated the effects of highway capital invested in 
non-local roads. These larger systems of interconnected higher-order 
roads make up the network that essentially serves commercial interests. 
Such investments may presumably contribute more to productivity because 
their benefits are shared by so many users over a wide geographical 
area. These may be an example of network effects. The return on this 
capital, called non-local highway capital, was significantly higher 
than it was on total highway capital or on total private capital. Even 
during the 1980's, it averaged 16 percent a year.
    Of the four factors that determine the nation's total factor 
productivity, the most important by a significant margin was exogenous 
demand for goods and services. It accounted for more than half the 
change in total factor productivity. Highway investment is the second 
most important contributor to productivity of the four, ranking well 
ahead of either changes in factor prices or autonomous technological 
change as a determinant of TFP. It is noteworthy that when TFP was 
growing fastest, between 1952 and 1973, infrastructure investment 
accounted for a larger portion of the gain than when TFP growth slowed 
between 1973 and 1989. Come interpret this as a suggestion, which still 
needs further corroboration, that large infrastructure programs 
resulting in added capacity may have contributed more to economic 
growth and productivity than highway programs focused on preservation 
and maintenance. Alternatively, the differential in TFP contribution 
over time implies a synergistic effect between public policy decisions 
and the general economic condition.
    Nadiri also examined the elasticity of highway investments, but did 
not reproduce the stunning results arrived at by earlier economists. 
For every additional dollar of infrastructure capital stock, the output 
of the economy (in terms of physical goods and services) rises by 5 
percent (output elasticity = 0.051). The costs of doing business (cost 
elasticity) fall by about 4 percent in response to a 1 percent increase 
in highway capital stock (cost elasticity = 0.044). These elasticities 
are significant, but they are only about one-eighth of the elasticities 
previous studies estimated.
    An important conclusion of the study is that an increase in 
infrastructure investment reduces costs in almost all manufacturing 
industries and in many service industries. In some industries, however, 
costs are raised, though only slightly. This apparent inconsistency 
provoked considerable discussion among the participants, as is 
amplified later in the report. Nadiri and most of the forum 
participants agreed that this is an area where further research should 
be targeted.


                       Contributions of Highway Capital and Other Factors to Productivity
                                               Annual Growth Rates
----------------------------------------------------------------------------------------------------------------
                                                            1952-89    1952-63    1964-72    1973-79    1980-89
----------------------------------------------------------------------------------------------------------------
Total Factor Productivity................................      .68 %      .94 %     1.03 %      .13 %      .42 %
Exogenous Demand.........................................      .60 %      .30 %      .60 %      .75 %      .84 %
Highway Capital..........................................      .17 %      .30 %      .26 %      .03 %      .03 %
Price Changes............................................     -.06 %     -.06 %     -.10 %    -1.70 %      .07 %
----------------------------------------------------------------------------------------------------------------

    While the direct local and regional benefits of highway investments 
are immediately recognized, investments in a network of facilities may 
produce productivity gains to entire industries nationwide. Are there 
efficiencies and productivity gains that result from the fact that 
resources are pooled by the government to build a broad, flexible 
system of roads and highways that serves many users simultaneously 
Nadiri's work suggests that they do.
    What would happen to costs of production if the private sector 
undertook its own infrastructure investment? Nadiri's analysis created 
a counter-factual situation in which each industry is responsible for 
building its own roads, bridges, and highways. For most industries, the 
returns on such investment would have been negative. Therefore, most 
industries would not have built the infrastructure. Based on this 
counterfactual evidence, the system of infrastructure as it currently 
exists would simply not have been developed.
    Since the large majority of industries benefited from the 
infrastructure system built by government, most industries would have 
lost the advantages of such a system had it been left to themselves to 
build one. Without government investment, these network benefits would 
have been lost.
    The forum participants generally applauded the new research. But 
there were concerns. While Nadiri's analysis accounted for network 
effects, it did not reflect the possibility that some network benefits 
can subside over time. Early in the development of a highway system, 
the second highway in a region usually makes the first highway more 
valuable by efficiently feeding it traffic from a wider geographical 
area. In this early stage, highway investment is usually complementary 
and highly beneficial. But as new transportation investment is made, 
new roads and highways eventually become substitutes for rather than 
complements to existing roads and highways. The benefits of new 
investment naturally diminish. 50, while infrastructure investment may 
well be a public good with significant network benefits, these benefits 
may diminish rapidly over time. When making new infrastructure 
investments, such dynamic network effects must be taken into account.
    One of the more technical concerns was that infrastructure 
investment appeared to have no positive impact on the transportation 
industry itself. If any industry benefits directly from such 
investment, it should be the transportation industry. Yet the model 
showed that infrastructure investment raised costs in this industry, if 
only slightly. The seeming inconsistency had to be explained, though 
analytic experts pointed out that such complex models often have some 
inconsistencies; indeed seasoned analysts feel if there are no such 
problems, they would question whether the analysis is intricate enough. 
Nevertheless, such inconsistencies may suggest there are inaccuracies 
in the model.
    In fact, infrastructure investment has a negative impact on service 
industries in general, according to the Nadiri model. This is counter-
intuitive, although there may be several technical explanations for 
this result. One explanation is that the model is based on average 
slope variables for classes of industries. The actual production 
functions of each individual industry may often differ from this dummy 
variable.
    In some cases these negative impacts may be sensible. For example, 
some kinds of services might suffer if transportation was improved. 
This is because in service industries, the impacts of transportation 
costs fall on the customer rather than the business itself, unlike in a 
manufacturing industry. In addition, some industries do not utilize 
transportation infrastructure as intensely as others, although this 
does not mean that they do not benefit from highways at all. For the 
most part, the negative effects for service industries found by the 
model are small.
    Another technical concern was that highway capital was not broken 
down according to its quality or the changing nature of the investment 
over the course of nearly 40 years. For example, facilities built 
during the 1950's and 1960's were built using specifications that would 
be considered deficient by today's standards, such as standard lane 
widths, slope gradients, and curve radii. These standards impact the 
total capacity of a facility, especially as it reaches congested 
levels. If highway capital could be decomposed according to the types 
of project or by quality, it could provide more useful information.
    In general, the historical patterns of the rates of return--high in 
the 1950's and 1960's, and lower but equivalent to private capital 
returns in the 1980's--suggest that the types and categories of 
investments undertaken may be crucial. In the first 20 years covered by 
Nadiri's analysis, the Nation was making major expansions in the 
highway network. The question is whether the Nation can find similarly 
productive investments in terms of capacity additions in the future.
    Professor Nadiri agreed that a careful assessment of future 
infrastructure needs is essential. But he concluded that, because the 
rates of return on infrastructure and private capital were similar, the 
stock of public investment in infrastructure should at least keep pace 
with the accumulation of private capital in order to achieve balanced 
growth.
Methodological Issues
    Dr. Randall Eberts, who has long done economic research in this 
field, pointed out that earlier studies he had completed based on local 
rather than national data were consistent with the findings of the 
Nadiri study. In general, he found an elasticity of 0.03.
    Dr. Eberts said that we need more research to find out ``what is in 
the black box.'' In other words, we need to know how improved 
infrastructure is specifically translated into higher productivity for 
firms. Infrastructure investment in general must make business inputs 
more productive. For example, companies should be able to get their 
workers to the workplace more quickly. Better infrastructure should 
allow them to draw from a larger labor pool. inventory can be 
transported more quickly and inexpensively as well. Improved 
infrastructure also attracts more companies because, he said, highway 
infrastructure is probably the No. 1 attraction in the minds of local 
economic developers. It should also be kept in mind that infrastructure 
investment is a direct stimulus to growth for most regions. Most of the 
funding usually comes from outside the community.
    Companies orient themselves spatially to the infrastructure that 
exists. It takes about 10 years for a metropolitan area to adjust fully 
to a large infrastructure investment. There is evidence that high 
levels of public capital can raise productivity locally through 
economies of scale due to agglomeration, through higher land prices, 
and the ability to pay higher wages.
    Research on whether infrastructure investment leads or lags 
economic growth has shown diverse results. One study found that 
economic growth in the southern U.S. would have occurred anyway even 
without infrastructure investment. That is, in the south, 
infrastructure investment may have followed growth. In northern states, 
however, it appeared to be the other way around. Infrastructure 
investment was more influential in raising the rate of growth. Eberts 
also found a correlation between infrastructure investment and openings 
and expansions of business. Such infrastructure investment also seems 
to also slow down the pace of business closings.
    Professor Charles Hulten warned about making broad conclusions 
based on what he calls ``uncut econometrics.'' The new statistical 
analyses produce an average constant relationship between 
infrastructure investment and productivity. But there is no reason to 
think that the average relationship is actually constant. In actuality, 
the relationship can vary across geographical regions, over time, and 
in different segments of the economy. Depending on all these criteria, 
infrastructure investment can produce high or low rates of return.
    Dr. Hulten said that more research must be done in these areas. He 
suggested that public policy analysts and economic researchers should 
take into account three different mechanisms for determining how public 
investment may specifically affect productivity. The first is location 
theory. Why do companies locate where they do? Reduced transportation 
costs is one reason. There are also economies of scale and scope that 
accrue to agglomeration. But this might be offset if a company's demand 
is spread over a large area. It will make sense to disperse locations 
under such circumstances. The rate of return on infrastructure 
investment may depend on the interaction of these three factors.
    A second consideration is that infrastructure investments are long-
lived and ultimately serve users well into the future. In other words, 
capacity being built today is partly being banked for the future. Any 
correlation with contemporaneous growth is therefore questionable 
because much of the capital is not expected to be consumed until the 
future. Isolating such time-dependent effects will require more 
research. Also, it must be kept in mind that public and private 
investments may have different useful lives. This timing difference 
should be factored when comparing rates of return between the two.
    The third consideration is how the network effect works. It is 
difficult to assess these effects. The same amount of capital devoted 
to two different locations may well result in vibrant network effects 
in one area and almost none in another. Early on in the development of 
such a system, as noted earlier, the network effect may provide large 
returns on investment as new roads make existing roads even more 
valuable. But there will often come a point when capital merely 
involves a substitution of new or different roads for older ones. At 
this point, returns can fall dramatically or even turn negative.
    Professor Jose Gomez-Ibanez noted that Professor Nadiri appeared to 
have solved the essential problem associated with production-function 
studies. He observed that for the study to be praised even by skeptical 
and vociferous critics of previous studies, Professor Nadiri appears to 
have done an excellent job. But he also noted that this was nonetheless 
a pioneering effort, with some unexplainable features such as negative 
returns to service industries. Additional research in the following 
areas could further substantiate Nadiri's analysis:
    Disaggregating total infrastructure investment by the quality of 
investment to determine whether some kinds of projects, perhaps those 
that are larger in nature, are likely to provide bigger economic 
payoffs than others projects.
    Adjusting for the longer time spans of infrastructure investment to 
determine the degree of long-term payoffs that may now be mismeasured. 
Assessing the many ways in which network effects can build upon each 
other and the duration of network benefits as regional economies 
mature.
    Micro-level assessments of how transportation affects productivity 
utilizing location theory, assessing economies of scale, and other 
factors.
Historical and International Experience
    The World Bank has been involved in more than 1,000 transport 
projects throughout the world totaling about $50 billion of investment. 
For the most part, the World Bank assesses these projects on a 
``micro'' rather than a ``macro'' basis. The objectives are to reduce 
transportation costs for the distribution of products, to improve 
access to the workplace for workers from a wide geographical area, and 
to improve access to the site for materials and other inputs. The World 
Bank also finances projects that specifically develop links from the 
farm to the factory, ports and onto international markets. To the World 
Bank, transportation investment is a key engine of economic 
development.
    Colin Gannon, a senior transport economist at the World Bank, 
provided a table (shown below) of the rates of return on World Bank 
transportation investments that have been completed. ``In general, 
there has been a high social value from transportation investment'', he 
concluded. The projects documented below were largely undertaken in the 
late 1970's and early 1980's and the disbursement of funds was 
completed by 1994. The annual rates of returns are calculated at the 
time the project was completed, and then brought forward by making a 
forecast of supply and demand and the expected rate of return in the 
future.



        Estimated Returns from World Bank Transportation Projects
------------------------------------------------------------------------
                                      Number of
          Type of Project              Projects    Annual Rate of Return
------------------------------------------------------------------------
Airports...........................            8  21 %
Highways...........................          306  26 %
Rail...............................           72  14 %
Ports..............................           96  20 %
All Transport Projects.............          482  22 %
All Sectors........................          n/a  15 %
------------------------------------------------------------------------

    The average annual return for all transport projects was 22 
percent, similar to that reported by Nadiri. This was higher than the 
average annual return of 15 percent for all World Bank projects (within 
all sectors) over this period.
    In many countries the role of government is shifting from being the 
provider of infrastructure to being an enabler of infrastructure 
development. Creating too many governmental institutions can be 
inefficient. Maintenance is being badly neglected. The best route to 
the improvement of institutions may be carefully managed participation 
by the private sector with appropriate regulations. The role of the 
private sector as a partner or initiator of projects was embraced by 
several forum participants. In recent international research, the 
efficiency of local institutions appears to be highly important in 
determining the rate of return on infrastructure projects. Looking 
backward in time, transportation investment was a key determinant of 
economic growth in the 19th and 20th centuries. During these formative 
years, transportation investment contributed significantly to growth. 
However, history also reveals many instances in which the Nation made 
poor transportation investments. The most rewarding transportation 
projects were often the first and most innovative ones, such as the 
first canals end the early railroads. In retrospect, however, there has 
probably never been any one optimal transportation scheme. Many 
combinations of roads, canals, highways and rails lines may have worked 
as well or better than what was eventually built (Appendix B contains a 
bibliography of key historical works.)
    An overview of international research on the effectiveness of 
transportation investment since the 1940's shows that these investments 
have often had substantial economic impact. This research was carried 
on in the U.S. and in a variety of countries. The use of production 
functions dominated the older research, but cost functions were 
occasionally also used. The standard measure of results were cost and 
output elasticities. Within the U.S., research was done on an aggregate 
nationwide basis as well as on a state-by-state basis. Similarly, 
research overseas was done on both a national and regional basis. Total 
public capital, transportation and highway capital, and other 
variations of infrastructure investment were the variables most 
frequently measured in these studies.
    Statistical research was done as early as the mid-1940's to 
determine the influence of infrastructure investment on a nation's 
growth. The initial studies found that infrastructure was a positive 
catalyst for economic development in eastern Europe and Third World 
countries. In the early 1970's, research done in Japan was the first to 
show that public infrastructure investment could contribute to a 
nation's productivity. This study concluded that the elasticity of 
output was high. The first study to find that public capital 
contributed to productivity in the U.S. was undertaken in the early 
1980's. The elasticity of output was 0.05, similar to that reported by 
Nadiri. Aschauer's, and similar studies, such as those based on state-
by-state research done by Alicia Munnell, were undertaken in the late 
1980's. They concluded that elasticities were as high as 0.4 and 0.5.
    The critical reaction to the Aschauer and Munnell studies has been 
intense, but has also provided positive results. Some of the critical 
studies yielded significantly lower cost and output elasticities, as 
well as lower rates of return than those found by Aschauer and Munnell. 
Nevertheless, many of these showed that infrastructure investment made 
a positive contribution to productivity. In sum, a wide variety of 
research shows that infrastructure investment is productive at the 
margin. Studies in other countries reinforce this suggestion.
    Nevertheless, the wide range of different results for rates of 
returns and elasticities tends to diminish the confidence in this 
research. Dr. T.R. Lakshmanan of the Bureau of Transportation 
Statistics summarized this wide variation in previous studies conducted 
internationally. Appendix C contains a table which summarizes this 
information, part of which is included in the exhibit below.



                              Variation of Elasticities Among International Studies
----------------------------------------------------------------------------------------------------------------
               Country                         Sample              Type of Capital       Range of Elasticities
----------------------------------------------------------------------------------------------------------------
United States.......................  Aggregate..............  All public............  Output: .05 to .39
                                      By States..............  Highway...............  Output: .19 to .26
                                      By States..............  All Public............  Output: .19 to .26
Japan...............................  Regions................  Transport,              Output: .35 to .42
                                                                Communications.
India...............................  Aggregate..............  Roads, Rail, Electric.  Cost: -.01 to .47
----------------------------------------------------------------------------------------------------------------

    Some, but probably not all, of these variations might be explained 
by such effects as spill-overs from state to state and region to 
region. One of the contributions of the Nadiri model has been to 
resolve some of the fundamental concerns of earlier studies. Dr. 
Lakshmanan predicted, based on his reading of the new study, that 
``from now on there is going to be a fundamental distinction of before 
Nadiri and after Nadiri'' in the literature on economic impacts of 
infrastructure investments.
Investments Must Fit The Context and Create Room for Growth
    Forum participants were eager to get beneath the broad, aggregate 
impacts and to determine how specific infrastructure investment 
decisions may affect the economy today. More complex times today stand 
in stark contrast to the simpler, more straightforward decisionmaking 
of the 1950's that was required to build the interstate highway system.
    One major problem in applying the results of econometric research 
is that even rigorous regression analyses cannot unequivocally 
determine the nature of cause and effect. As noted by Robert Gallamore 
of Union Pacific Railroad, the ancient Greek philosopher Democritus 
said, ``I would rather discover a single causal connection than win the 
throne of Persia.'' The question the forum faced is whether investment 
causes productivity to rise or is fulfilling existing demand that is 
generated by other forces, even though the research has demonstrated a 
clear-cut relationship between infrastructure investment and economic 
productivity. Citing the Princeton economist Albert Hirschman, Dr. 
Molten noted that the rate of return is not necessarily what matters 
most in determining how important investment is for economic growth. 
What may matter most is whether investment ``leads growth or follows 
it.''
    A good example is the high social returns on infrastructure 
investment in the 1950's and 1960's. Dr. Hulten said that the time may 
have simply been ripe for such investment as the American economy 
expanded rapidly toward the west and the south. How does one determine 
whether the same kinds of opportunities exist today? The forum agreed 
that more research into the value of specific projects and how they 
improve productivity is necessary. There was also widespread agreement 
that what should be avoided is a ``field-of-dreams'' approach--that is, 
Just because we construct a facility does not mean that people will 
automatically come to use it to its full capacity.
    Tests and studies can be undertaken to try to isolate the question 
of cause and effect. For example, Dr. Eberts has conducted additional 
economic research to try to determine whether infrastructure investment 
leads or lags economic growth. 50 far, the research has found the 
effect can work both ways. According to one study, the growth in 
America's south would have occurred without infrastructure investment. 
In the north, however, it appeared that infrastructure investment did 
produce more growth. His research has also found a significant 
correlation between infrastructure investment and more openings of new 
business as well as expansion of existing businesses. he found evidence 
of the opposite relationship as well. Such infrastructure investment 
seems to slow down the pace of business closings. In general, however, 
research aimed specifically at isolating the cause-and-effect issue has 
found evidence that infrastructure investment both leads and lags 
economic growth, and may be both a cause and an effect.
    It should be clear that the same questions about cause and effect 
also apply to other types of investment, including private capital 
investment. Those who claim today that America does not invest enough 
in plant and equipment, for example, face the same issue. Is private 
capital investment a cause of growth or a consequence of it? One 
significant difference between infrastructure investment and private 
capital investment, however, is the time span of economic payoffs. 
Infrastructure investment creates conditions for growth that can extend 
well into the future. To measure the true pay-off of such capital 
investment is difficult. But it is clear that more than private capital 
spending, infrastructure investment, as Professor Nadiri noted, creates 
room for future growth.
    What must be analyzed is whether creating conditions for future 
growth will be necessitated by demand. The Interstate Highway System is 
a successful example. It was underutilized initially, but created room 
for rapid future growth. But we do not truly know what would have 
happened had there been no such system. Further complicating these 
questions is the increasing role of services and telecommunications in 
the economy. This may reduce the need in the future for traditional 
means of transportation. Yet, an argument can also be made that they 
might increase demand more than expected.
    The forum participants generally agreed that this is where the 
debate about economic returns centers. How do we utilize transportation 
best? Which transportation investments fit the ``growing room'' of 
today? This need should be coupled with the need to invest in new 
technologies--what Stanford economist Paul Romer has called 
``wetwear''. One example of wetwear is the groundbreaking spreadsheet 
package Lotus 1-2-3. Another is intelligent transportation systems 
(ITS) technology. These new tools create whole new fields of economic 
opportunity. Many argue that privatization may be the best way to 
maximize the benefits of infrastructure investment.
    Transportation shares many of the characteristics of new software. 
It has enabled corporations to take advantage of their existing 
technologies, as well as new technological developments. So investing 
in it is much like investing in wetwear--such improvements have the 
potential to have widespread impacts on many sectors of the economy.
    The complementary relationship between transportation and 
communications, as noted, also needs to be better understood. Many of 
the benefits of infrastructure improvements have come from its 
complementarity with the information infrastructure. Looking to the 
future, particularly to the potential of intelligent transportation 
systems, this link could be crucial.
    How do you select those investments that offer the most growing 
room for the economy? Looking to past experience, some government 
investments have been quite rational, but others not at all. 
Participants identified numerous examples which they felt were ill-
timed. Econometric research cannot yet distinguish between periods of 
rational public infrastructure investment and irrational periods when 
specific investments are not fruitful. There were many similar mistakes 
made in the 19th century, often provoked by pork-barrel decisionmaking 
but also simply by duplicating what had already existed or once seemed 
to work. For example, many of America's early canals proved to be poor 
investments.
    Ms. Gloria Jeff, the associate administrator for policy in the 
FHWA, pointed out that sometimes we do know what the alternatives would 
have been had the government not made the kind of investments it did. 
We don't always have to speculate about field-of-dreams exercises that 
are fictitious in nature. ``There are living, breathing examples of 
alternatives,'' she pointed out. The southeast Michigan area and the 
metropolitan Toronto area were almost ``twins'' until after World War 
11. But Toronto did not invest in highway infrastructure to the extent 
Detroit did. Rather it invested in public transportation. ``We know the 
results'', she said.
    The participants noted, however, that what might be right for one 
environment is not necessarily right for another. Detroit may have 
suffered from highway investment, but Seattle has thrived because of 
its highway system. What might be right for Phoenix is not necessarily 
right for Philadelphia. Solutions must be tailored to the local 
conditions that exist.
    The World Bank tries to take such local considerations into account 
when determining what kind of infrastructure investment to make in 
developing countries. Cities in developing countries are growing 
rapidly and putting in durable infrastructure capital. But will they 
grow like Los Angeles or like Amsterdam? These are difficult issues to 
sort out, and only time will tell the results.
    The distinction between visionary targeting of ``growing room'' and 
wishful ``field-of-dreams'' targeting may be even more difficult to 
make in advanced industrial nations. Transportation decisions have 
become extraordinarily complex in Western Europe, where roads are now 
crowded with trucks. Should these nations encourage short-sea shipping 
to reduce this congestion? More than at any other time in history, 
participants believed that vision is now required to make the right 
investment choices.
    Obviously it is not always possible to accurately predict future 
conditions, but economists are typically very conservative, one 
participant noted. They want to know exactly what is going to happen 
Nevertheless decisions must be made in real time, and in a different 
framework now than in the past. Therefore some level of uncertainty 
must be accepted as policymaking proceeds.
Industry Examples
    Private industries must also make projections about where 
transportation investments are most needed and most likely to occur. As 
a manufacturer of enzymes, Glenencor International must analyze 
carefully where to place its distribution centers, for example. As the 
company has grown this has increasingly become an international 
question. There are four criteria the firm applies when seeking a 
location. The first and most pertinent is the quality of the 
infrastructure that is already in place in the area. Glenencor situates 
distribution centers only in locations with a highly dense 
transportation infrastructure. The other criteria are the ability and 
availability of the work force, the sophistication of information 
systems, and taxes, customs and other trade regulations.
    One reason Glenencor placed a distribution center in Rotterdam, for 
example, was that it was able to find enough information to give 
confidence that the infrastructure was adequate. The company could 
judge the density of infrastructure, including the number of seaports 
and activity in those seaports, measured for example by the number of 
containers that go in and out. Information regarding the freight 
tonnage handled by the airport allowed Glenencor to make an ``educated 
decision'' rather than merely a guess about the merits of the location. 
In sum, Glenencor will only locate where infrastructure is currently 
adequate, not where it must await further development.
    General Motors spends about $4 billion a year in direct outlays to 
transportation companies. GM utilizes about 15,000 vehicles daily, many 
of them tractor-trailers, to handle GM products in the 50 states. Speed 
of delivery is now the driving force behind many of GM's decisions 
because of the emphasis the industry places on inventory control and 
the resulting need ``to synchronize transportation with manufacturing 
cycles.''
    Highway congestion is becoming an ever-bigger problem for GM as a 
major shipper. GM is trying to encourage railroads to improve their 
efficiencies in order to create competition for motor carriers and also 
to relieve congestion on the road. Currently, shipments to GM via rail 
average a speed of only about 6 miles per hour on some links. GM would 
like to increase that to 25 miles per hour.
    On the other hand, GM makes highly efficient use of motor transport 
to meet their just-in-time inventory requirements. One truckload of 
materials now travels between Windsor, Ontario and Detroit eight to ten 
times a day. A truck can make the trip across the Ambassador Bridge and 
through Windsor and Detroit in only 40 minutes. This is remarkable 
given the density of both Windsor and Detroit. One main reason for the 
efficiency are the improvements that have been made to the Ambassador 
Bridge. GM is working with the city and state to improve further the 
access to the highways that serve the bridge. This will not only 
improve speed, but also increase safety by reducing the number of tight 
turns.
    Another example of how important transportation infrastructure is 
to making location decisions for plants in the auto-manufacturing 
industry is Toyota's decision to build in Indiana and West Virginia. 
These decisions-were probably driven by transportation considerations. 
Intermodal transportation promises to be increasingly important for the 
auto industry in the future. GM has a joint effort underway with the 
three U.S. auto companies to put up a facility that can coordinate rail 
and motor vehicles.
    GM is not putting more effort into trying to relieve congestion on 
the roads because it believes that congestion is inescapable. For 
example, some forecasts predict that Dayton, Ohio will be completely 
gridlocked by the year 2000 or 2010. The ensuing discussion pointed out 
that new railroad lines may still be stuck with local congestion to and 
from the railhead.
    Some investment firms are working with private companies to build 
their own infrastructure. Lehman Brothers has teamed up with Walt 
Disney Co. In Florida, for example, to put up infrastructure rather 
than the local government. GM has long put in lanes and bought property 
around their plants to ease access, although the company has not yet 
looked into private investment in order to reduce bottlenecks along the 
delivery lines.
    The results of some of the research suggest that the use of general 
obligation bonds to finance local and regional projects makes sense. 
The research implies that there are significant network benefits, as 
noted earlier. An entire community benefits from such pooled 
investment. However such investments are usually financed through 
revenue bonds. These bonds are often backed by toll revenue or other 
user fees. But given that they may have broad benefit for the 
community, as the new econometric research suggests, other ways to 
finance them may be practicable. hew financial tools such as Section 
1012 loans and state infrastructure banks can be used. One important 
new trend is to get private industry involved, show them how they will 
benefit, and encourage them to pool together to make a project.
    The Stark County Intermodal Facility in Ohio is an example of such 
a public-private partnership. One company in this area threatened to 
move out of the community if it couldn't get a $35 million intermodal 
service facility built. But this company alone could not provide 
sufficient demand to convince the railroads that they should make the 
investment A group of companies was ultimately combined to guarantee to 
the railroads that demand was sufficient to make a $24 million 
investment in the project. The remaining $11 million was borrowed from 
the state DOT. Every time a box moves through the intermodal facility, 
the state DOT is now paid a dollar.
    One concern expressed at the forum was that much of the discussion 
focused on the manufacturing industry while the U.S. economy is now 
dominated by services industries. Participants noted that service 
companies might well assess a location decision differently than a 
company such as GM would.
    But others indicated that because services industries require large 
numbers of workers, or often serve many customers, efficient 
transportation could Dick Budge of Apogee Research and Cameron Gordon 
of the University be even more important to them than of Southern 
California to manufacturers. In fact, many services companies have 
benefited from better transportation systems. Walmart, for example, has 
become the world's largest retailer in part because of its 
transportation logistics. The slow growth in consumer price inflation 
in the economy in general may partly be the consequence of improved 
logistics at retail outlets.
    Indeed, logistics costs as a percentage of GNP have fallen from 
17.2 percent in 1980 to 10.4 percent in 1995. This has resulted in a 
$68 billion a year savings to the economy. What accounted for this? 
Much of it may have been attributable to the deregulation of trucking, 
according to one participant. But participants pointed out several 
other contributory factors. Logistics costs were driven down by the 
building of hundreds of industrial parks across the country with 
efficient transportation systems. High interest rates in the 1980's 
especially motivated businesses to seek more efficient transportation 
in order to keep inventory costs low. There are many other examples of 
how industries have changed the way they do business to accommodate 
their transportation needs, including new transportation systems, as 
well as new technologies involving everything from electronic just-in-
time inventory controls to high-speed coordination between suppliers 
and manufacturers.
    Nevertheless, different kinds of transportation systems might be 
necessary for services industries. The FHWA has recently initiated a 
program to improve the estimates of service sector total factor 
productivity. This may improve future research in this area.
Implications For Future Policy
    While participants agreed that there is more research to be done, 
there was widespread agreement that the new research has important 
implications for future policy. Does the research change the emphasis 
the government should place on its own transportation objectives? How 
can the government ensure that the right kinds of infrastructure 
investments are being promoted? Finally, how can the importance of 
infrastructure investment to the economy as a whole be articulated to a 
larger audience, especially as we face the reauthorization of ISTEA?
    The new research doesn't only imply that new infrastructure 
investment can promote economic growth and productivity. It also 
implies that if capital stock in infrastructure falls, productivity 
will be reduced. The cost and output elasticities imply that a dollar 
less capital stock will reduce output, income and consumption as much 
as a dollar of increased investment will raise it.
    The FHWA finds that demand is vastly exceeding additions to highway 
capacity, even though this capacity is rising by 3 percent a year. 
Capacity is also being raised by the addition of HOV lanes and local 
projects. Nevertheless, Ms. Maria Jeff of FHWA pointed out that we 
don't know what will happen if the Nation doesn't invest more in 
capacity but simply concentrates on maintenance and improving 
efficiency. Other participants noted that we are not thinking about 
requirements in 15 or 20 years, not to mention in just 5 years.
    The FHWA has made economic prosperity one of its five main 
principles for future transportation policy. These objectives are:
     Improving the quality of life
     Enhancing the environment
     Raising the level of safety
     Ensuring national security
     Promoting economic prosperity
    In determining how to meet the last objective, participants agreed 
that it is not necessarily aggregate demand that is most important. The 
key question is whether transportation investments are targeted in the 
right locations and times in order to achieve the highest returns 
within their respective contexts. Another participant urged the 
government to keep economic research in ``context, context, context.'' 
In the current environment, he pointed out, maintenance and managerial 
issues are what keep coming up. Rather than more investment, people are 
increasingly talking about disinvestment.
    Ms. Jeff noted that the FHWA traditionally has taken a ``micro'' 
view of the impact of infrastructure investment. This has usually 
involved a cost-benefit analysis of specific projects and their 
immediate effects on localities. In the past, FHWA asked how highway 
system users would benefit directly from transportation systems. 
Inflow, the agency must take a more macroeconomic point of view. The 
agency asks not only how a transportation system can help companies and 
workers live better and safer lives, but also how it affects their 
economic well-being in general.
    How can the advantages for the general economy of infrastructure 
investment be better communicated both to lawmakers and the public? One 
example of the difficulty is that transportation did not appear as an 
issue in the Presidential primaries nor has it appeared in the 
Presidential election race, either. One reason is that transportation 
issues rarely if ever appear on national polls. This stands in stark 
contrast to the interests of local communities, where transportation 
issues do often rank high in the polls. New roads, widenings, truck 
traffic volumes, congestion and related issues come alive and are 
concrete at local levels. Localities often vote to finance such 
projects. When they are raised to a national level, however, these 
concerns become generalized, abstract, and vague.
    This wasn't true historically. In the 1920's, for example, people 
knew what they wanted from roads. We had to get America out of the mud. 
In the 1950's, America knew it needed highways. Today, with the 
Interstate system completed, it is more difficult to explain why 
investment in highways makes sense. Safety and congestion are two 
issues that carry weight with people in general, but little else does.
    On the other hand, some participants said there is a demand for 
more information that would demonstrate the impact of infrastructure 
investment on economic growth. Frank Francois of AASHTO reported that 
his organization believes economic returns should be part of the 
argument. He has found that Congressional leaders are beginning to ask 
how productivity can be improved by highway investment.
    This most recent research, and the work of others, can be used to 
fill this gap. In the Nadiri model, social returns for non-local 
highway investments averaged well above returns on private capital 
investment, as noted. In general, even though returns have fallen over 
the past 40 years, they are the equivalent of returns on private 
capital.
    For all their encouragement, however, participants urged that the 
results of the new research should not be overplayed. Credibility is 
very important. The results should be neither oversimplified nor 
exaggerated.
Conclusions
    After several years when research about the effects of 
infrastructure investment on U.S. economic growth, productivity, and 
rates of return had little credibility, new research has now reinforced 
the view that infrastructure investment plays a significant role in the 
nation's economic health. The new work by Professor Ishaq Nadiri, in 
addition to a wide range of historical and international studies, finds 
that social rates of return on infrastructure investment are 
significant and positive. They were very high in the 1950's and 1960's, 
and comparable to returns on private investments in later decades. The 
research concludes that infrastructure investment has helped raise the 
nation's productivity and reduce its costs of doing business.
    The impacts of transportation vary widely from time to time and 
from place to place. Rates of return and cost elasticities that come 
from economic analysis represent average relationships that, in fact, 
usually vary over time. Most notably, social rates of return have 
fallen rapidly during the period under study. These returns also vary 
according to place and the economic environment. The first roads in a 
region may provide especially strong returns, for example, but 
eventually new roads are merely substitutes for older ones as 
localities mature. Returns naturally fall. To maximize the positive 
economic impacts of transportation investments, we must examine how and 
when this effect is likely to occur.
    Network benefits are especially hard to measure. The new research 
strongly suggests that they exist--that is, that industries benefit 
from shared capital investment. But there are dynamic effects that are 
difficult to assess. One of the most important of these is that 
infrastructure investment, more than most other types of investment, 
creates conditions for future growth well into the long run. Idiot only 
are these benefits especially hard to estimate: because the total 
payoffs for such public investment are rarely immediate, they also do 
not receive much attention from the political system. But they are the 
key to making successful transportation investments.
    In sum, transportation investments have had broad positive impacts 
upon the economy in general. Future infrastructure investments can also 
produce sizable returns, but only if they are the right investments at 
the right time--investments that create growing room; investments 
compatible with the institutional context. The fact that policymakers 
appear to have selected such investment in the 1950's and 1960's does 
not tell us much about what the best opportunities are today. The 
challenge facing the Nation now is to determine how to choose the best 
infrastructure projects to enhance our growth and productivity.
    There are several implications of these results for future 
transportation policy. First, the objective of public investment in 
infrastructure is not simply to solve a locality's immediate 
transportation problem--be it potholes or congestion. Rather, it is to 
enhance the general prosperity of a region and the Nation as a whole. 
Neglecting public investment in infrastructure can retard economic 
growth and diminish the nation's productivity. Second, more analysis 
should be undertaken about the specific conditions needed to maximize 
the value of investment projects. Third, new means of financing can be 
linked to the broader economic payoffs of such investments. Finally, 
these conclusions need to be phrased in a credible, specific vision to 
guide future transportation policies and investment decisions.
                                 ______
                                 
                               APPENDIX A
                Highway Capital and Productivity Growth
    (By M. Ishaq Nadiri, New York University and NBER Theofanis P. 
               Mamuneas, University of Cyprus June, 1996)
    Recent discussions have emphasized inadequate growth of 
infrastructure capital as a cause of the slowdown in productivity at 
the aggregate and industry levels. Numerous studies have been 
undertaken to clarify the relationship between productivity growth and 
public infrastructure capital. These studies can be broadly classified 
as those which estimate a neoclassical production function augmented to 
include the publicly financed infrastructure capital stock as a factor 
of production, and those which utilize the dual approach to production 
function analysis by estimating cost or profit functions. The level of 
aggregation used in estimating production and cost functions varies 
considerably among the different studies. Some studies use highly 
aggregate national or international data and others use regional or 
state level data. Some studies use cross-section-time series data 
covering metropolitan SMSAs, while others employ industry-level data. 
Studies often differ in their coverage of industries, geographic 
regions, modeling methodology and use of econometric estimation 
techniques. Because of such analytical differences and data 
limitations, the statistical results reported in the literature 
measuring the effects of infrastructure capital on the economy are 
often quite diverse and sometimes contradictory. Clearly, no consensus 
has yet emerged on the precise causes of the productivity growth 
slowdown and the specific contribution of public infrastructure capital 
in this process.
    To provide a context for this study, a literature review is 
included in the following section. The analytical framework used in 
this study possesses several advantages over existing models reported 
in the literature:
   The effect of aggregate demand on the productivity growth of 
    individual industries is explicitly taken into account. That is, 
    the effects of changes in aggregate income and population on 
    industry demand and, consequently, on its productivity growth are 
    estimated.
   Account is taken of the contribution of changes in real 
    factor prices, including wages and capital rental prices, on 
    productivity growth;
   The direct and indirect effects of an increase in highway 
    capital on total and industry output and productivity growth are 
    estimated;
   The impact of highway capital, both total stock and the the 
    subset, on demand for inputs such as demand for employment and 
    private sector physical capital are estimated.
   The industry level estimates are aggregated up to obtain the 
    determinants of aggregate productivity growth.
    A unique feature of this study is its comprehensiveness.\1\ This 
study estimates a model which encompasses both demand and supply 
factors that may influence industry and total economy productivity 
growth and uses data on 35 industries that covers the entire U.S. 
economy for the period 1950-1989. The focus of the study is to identify 
the contribution of highway capital to productivity growth. Two 
measures of highway capital are used: total highway capital including 
roads under Federal, state, and local government Jurisdiction; and the 
stock of upper level roads excluding local government investments in 
roads and streets.\2\ Since the results of our study did not change 
much except with respect to the magnitude of some elasticities 
whichever of these two measures of highway capital are used, the 
discussion here after will focus on total highway capital. The major 
changes in the results when non-local highway system (ICILY) capital 
stock is used as a measure of highway capital will be noted at the 
concluding section.
    The relevant policy questions addressed in this research are as 
follows:
   What is the productivity of highway capital and what is its 
    overall social rate of return?
   Is there any evidence of over- or under-supply of this 
    capital in the postwar period?
   If a shortage of highway capital is evident, can it explain 
    some of the decline in the aggregate productivity growth? If so, by 
    how much?
   What is the optimal level of highway capital from the 
    perspective of the private production sector and how does it 
    compare to its actual level?
   What is the effect of highway capital on the private sector 
    cost of, and demand for, labor, capital, and intermediate inputs?, 
    and
   What are the marginal benefits to the private sector of an 
    increase in highway capital and how do they differ across 
    industries?
    Literature Review
    A brief review of the literature on the contribution of public 
infrastructure (highway) capital suggest that:\3\
    1. Early estimates based on aggregate production function analyses 
are likely to have overstated the magnitude of the effects of public 
infrastructure capital on output and productivity growth;
    2. Estimates based on state level data indicate a relatively 
smaller contribution of infrastructure and that the composition of 
infrastructure capital matters; some types of infrastructure may have a 
greater effect on productivity than others;
    3. There are serious estimation problems in both aggregate national 
level time series studies and state and regional level studies that 
lead to highly disparate results; and
    4. Overall, it seems that the recent studies point to a positive 
but lower elasticity of output with respect to public infrastructure 
capital of about 0.20 to 0.30 at the national level and possibly a 
lower range at the regional level.
    Similarly, from the view of cost and profit function studies\4\ the 
following statements may be in order:
    1. There is a preponderance of evidence that suggests that 
infrastructure capital contributes significantly to growth in output, 
reductions in cost and increases in profitability. The magnitude of 
these contributions, however, vary considerably from one study to 
another because of differences in econometric methodology and level of 
data aggregation.
    2. There appears to be a convergence toward a much lower estimate 
of the magnitude of the contribution of infrastructure capital to 
output and productivity growth than suggested in earlier studies. 
Output elasticity estimates of infrastructure capital at the national 
level in the range of 0.16 to 0.25 appear to be in order. Estimates 
based on state and metropolitan level data suggest elasticities of 
approximately 0.06 to 0.20.
    3. Most studies indicate an under-investment in public 
infrastructure capital, the degree of which varies among different 
studies. Most of the cost function studies suggest a substitutional 
relationship between private capital and infrastructure capital, 
although some studies report a complementary relationship.
    4. The available studies are either too aggregate or partial in 
their coverage of the economy. Most of these studies, particularly 
those at the national level, use real GDP, a value-added measure, as 
the dependent variable. However, the appropriate measure for an 
analysis of the contribution of infrastructure (highway) capital is 
gross output. Gross output includes purchases of intermediate inputs, 
along with primary inputs private capital and labor. Because highways 
are used to transport intermediate inputs, the relationship between 
public capital and intermediate purchases can be taken into account.\5\
    5. Studies at the industry level are generally confined to the 
manufacturing sector or a specific subset of this sector. 
Infrastructure capital, however, may have important effects on other 
industries outside the manufacturing sector as well. It is very 
important to undertake a comprehensive study that includes all sectors 
of an economy in order to study the role and degree of externalities 
generated by publicly financed infrastructure capital such as highway 
capital.
    Most of the studies of both production function or cost function 
have been challenged on conceptual and econometric grounds.\6\
    Estimation Framework and Descriptive Data
    The approach developed in our study explicitly incorporates demand 
and supply forces, including the contribution of highway capital, that 
may affect industry productivity performance. For each industry, cost 
and demand functions are estimated separately and the parameter 
estimates of the model used to decompose Total Factor Productivity 
(TFP) growth. The critical estimates for decomposition of TFP are the 
price and income elasticities of output demand and the degree of scale 
and input substitution derived from the cost function. In formulating 
industry output demand, changes in quantity demanded in an industry are 
related to its own price movement in comparison to the GRIP deflator 
and changes in the level of aggregate income and population of the 
economy. The estimates show that the price elasticity of output demand 
is negative and statistically significant in almost all industries, and 
with few exceptions, less than one.
    The parameters of the underlying cost function are estimated by 
using a system of input-output equations which include a labor to 
output equation, a capital to output equation and an intermediate input 
to output equation. These input-output ratios functionally depend on 
private input prices, level of industry output, industry's capacity 
utilization rate, time trend, and level of total highway capital stock. 
In order to capture industry specific effects we introduce industry 
specific intercept terms and a limited number of slope dummy 
variables.\7\ There are of course other more elaborate ways to take 
account of inter-industry differences that could be undertaken in 
future research.\8\
    Previous studies have been criticized on modeling and econometric 
estimation issues. This study has responded to these criticisms by 
accounting for several estimation problems in the estimation process. 
We examine the possibility of spurious correlation by estimating our 
model in first difference form. A flexible form for the cost function 
is used to allow interaction between highway capital and private sector 
output and inputs. No a priori restrictions, such as constant returns 
to scale are imposed, on the parameters of the cost function. The issue 
of simultaneity is addressed by estimating the model using appropriate 
econometric estimation techniques. Extensive hypothesis testing was 
also carried out to test the specification of the model and the 
stability of its results.
    The data used in this study covers the entire U.S. economy for the 
period 1947-1989. The industry coverage is derived from a detailed 80 
industry classification that Jorgenson, Gollop and Fraumeni carefully 
aggregated into 35 larger categories.\9\ Data for the value of gross 
output and costs of labor, capital services and intermediate inputs as 
well as their price indices for all industries are from Jorgenson, 
Gallop and Fraumeni.\10\ Data on capacity utilization rate for the 
manufacturing industries for the period 1950-1966 have been obtained 
from Klein and Summers (1966) and for the period 1967-1989 from the 
WEFA group (1992). Data on real GNP and population, used to estimate 
the demand functions, are obtained from the Bureau of Economic Analysis 
and the Bureau of the Census, respectively.\11\
    Data on net highway capital stock are from Apogee Research, Inc., 
which was constructed using Federal Highway Administration's investment 
expenditure data on highways from 1921 to 1990. Total net highway 
capital and non-local net highway capital (ICILY) are constructed using 
the perpetual inventory method with an assumed economic rate of 
depreciation of 0.9. Capital expenditures are distributed in the 
following way; 52 percent to paving, 26.5 percent to grading, and 21.5 
percent to structures. The average lives of paving, grading, and 
structures are assumed to be 14, 80, and 50 years, respectively.
    An examination of the data indicate substantial diversity among the 
35 industries examined in the study. The size of the industries, 
measured by total cost, vary considerably among industries. Factor cost 
shares also vary considerably across industry sectors. For example, 
labor's share ranges from a low of about 0.06 in petroleum refining to 
a high of 0.51 in trade. Capital's share of total cost ranges from 0.04 
in apparel and other textile products to 0.38 in crude petroleum and 
natural gas. Generally, capital's share in total cost, with few 
exceptions, is less than labor's share. Material inputs, on the other 
hand, have the largest share in total cost in almost all sectors or 
industries, ranging from 0.86 in petroleum refining to 0.25 it other 
transportation equipment.


    The growth rate of total highway capital is shown in Figure 1. 
After an initial decline between 1950 and 1951, the growth rate of 
highway capital surged growing at the average rate of 6.2 per cent 
during 1952-1959. From 1960 onward, the growth rate declined 
continuously until 1979. It grew very little during 1979-1981. Since 
1982 the high way capital stock has been growing at an average rate of 
1.2 percent per annum.


Results at the Industry Level
    The model used in this study built up from industry-level estimates 
to obtain appropriate results for the economy as a whole. Therefore, 
the careful estimation of the structure and propertied of the 
disaggregated industries plays a critical role in the design of this 
research The following sections present some of the basic industry-
level results before describing the contribution of highway capital to 
the aggregate economy. Them results include the impact of highway 
investments on industry cost reductions and economies of scale; effects 
upon labor, capital and material inputs; the marginal benefits of 
highway capital to industries; and the analysis of growth if total 
factor productivity (TFP).
    Cost Reduction and Degree of Scale--The first column in Table 1 
shows the elasticity of cost with respect to highway capital (hcs). 
magnitudes of the cost elasticities vary among the industries. The cost 
elasticities in manufacturing industries range from -0.146 to 0.220 
while in the non-manufacturing industries they range from +0.02 to 
+0.06. Positive cost elasticities imply that the demand for highway 
capital services in these industries is less than the available supply 
at the price the industries are willing to pay. This does not mean that 
these industries do not demand highway capital services. What is 
implied is that these industries face ``excess capacity'' in highway 
capital, a situation similar to the notion of excess capacity in 
private capital stock in a private firm. If the firm cannot freely 
dispose of this capacity and is instead required to keep its capital 
stock fully utilized, regardless of changes in demand for its product, 
the cost to the firm will rise. In the case of highway capital, the 
entire capital stock enters the cost function of each industry. The 
optimal level of these services can be estimated from the model which 
is the level at which the marginal benefit of highway capital is equal 
to an industry's marginal cost or willingness to pay. As noted later, 
these estimates imply a set of national subsidies and taxes that would 
allow industries to use the optimum amount of highway capital services.
    The cost elasticities h and h* shown in column 2 and 3 of table 1 
have a returns to scale interpretation. The inverse of h represents 
internal returns to scale, or the effect on output of an equal 
proportional increase in all inputs except highway capital. Similarly, 
the inverse of h* represents total returns to scale, meaning that an 
equal proportional increase in all inputs, including highway capital, 
yields a 1/h-proportional increase in output. The results show that 
both 1/h and 1/h* are greater than one for all industries except 
agriculture, indicating increasing internal and total returns to scale. 
The degree of internal returns to scale in each industry is smaller, as 
expected, compared with the degree of total returns to scale which 
accounts for the contribution of highway capital.
    Effects on Labor, Capital and Materials--Highway capital has both 
direct and indirect effects on the productivity of the private sector. 
The direct effect of infrastructure capital is measured by the 
magnitude of the cost reduction due to an increase in highway capital. 
The indirect effect is given by the magnitude of its effect on the 
demand for private sector factors of production.
    Conditional input demands refer to the demand for labor, capital, 
and intermediate inputs holding output constant. Elasticities of 
employment, private capital and intermediate inputs with respect to 
highway capital vary considerably across industries.', The general 
conclusion that arises from the empirical results is that changes in 
total highway capital have significant effects on the demand for 
private sector inputs in all industries. The conditional demand for 
labor, private capital and material inputs in the manufacturing 
industries will decline when investment in highway capital is 
increased. In the non-manufacturing industries, however, demand for 
labor and material is increased while demand for private capital is 
decreased in response to an increase in highway capital. However, if 
the level of output is free to change, the demand for employment, 
capital and materials inputs in each industry will increase as a 
consequence of an increase in highway capital. This arises because the 
direct cost reduction effect of highway capital will in turn lead to 
the expansion of output. This expansion in output will require more 
inputs which will likely offset the substitutional effects at a given 
level of output.\13\


    Marginal Benefits--Table 2 reports the average marginal benefit 
(MB) of highway capital in current dollars for each industry over the 
sample period. The marginal benefits indicate how much each industry is 
willing to pay for an additional unit of highway capital services. The 
magnitudes of the marginal benefits yam, considerably across industries 
and over time. After taking into account price changes, however, the 
marginal benefits in real terms appear to increase from 1950 to 1969 
but decrease from 1970 to 1989 in each industry. Another interesting 
feature is that all manufacturing industries have positive marginal 
benefits, i.e., they would be willing to pay a positive amount for 
additional highway capital services, the amounts ranging from 0.02 in 
the leather and leather products industry to 0.029 in primary metals. 
Nonmanufacturing industries, on the other hand, are willing to pay 
negative amounts, i.e., require a subsidy, to use the entire stock of 
highway capital. That is, the estimated demand for highway capital 
services in these industries at a price they are willing to pay, falls 
short of the available supply.


    The implied taxes and subsidies for various industries are shown in 
Table 2. These refer to the differences between the amount an industry 
is willing to pay for highway capital services and the actual price 
required to use the entire amount of available capital. These estimates 
are calculated at the optimal level of highway capital services 
demanded for both manufacturing and non-manufacturing industries. The 
magnitudes of taxes and subsidies vary considerably. The largest taxes 
in manufacturing are in food and kindred products, chemicals and 
chemical products, primary metals, machinery (except electrical), and 
motor vehicles. Construction, trade, finance, insurance, real estate, 
and other services require relatively large subsidies to encourage them 
to use the entire highway capital. Those that would ``pay'' the lowest 
taxes are tobacco manufacturing and leather and leather products. The 
lowest subsidies are in three industries: metal mining, coal mining and 
nonmetallic mineral mining.
    More careful analysis is required to examine further the size and 
pattern of these implied taxes and subsidies. It is important to note 
that the benefits of highway capital vary across industries. Demand for 
highway services are likely to diverge over time and the degree of 
benefits of any new highway capital expansion may differ considerably 
among industries. That is, there is an important distributional effect 
of the public highway capital across industries
    Industry TFP Growth Decomposition--The decomposition of TFP growth 
estimates at the industry level are provided in Table 3. These 
estimates reflect the effects of:
    Exogenous Demand: This refers to increased demand due to growth of 
real national income, aggregate population and changes in the 
utilization rate.
    Relative Input Price: This factor captures the growth of input 
prices.
    Highway Capital: This factor captures the combined direct and 
indirect effects of the growth of highway capital.


    In general, changes in exogenous demand contribute over half of TFP 
growth, mainly in the manufacturing industries. Its contribution in 
agriculture, extractive and mining industries and government 
enterprises are rather small. In construction, instruments, 
transportation equipment and trade and finance, the contribution of an 
increase in demand is relatively large. The contribution of relative 
input prices could be positive or negative depending on whether 
industry factor price changes exceed those of the general economy. When 
an industry's rate of input price inflation exceeds the national 
inflation rate, productivity growth is hampered. Generally, growth in 
relative input prices contributes negatively to TFP, and the magnitude 
of its effect varies across industries. Compared to the contribution of 
exogenous demand, the effects of relative input prices on TFP growth 
are small.
    The contribution of highway capital to TFP growth is positive in 
all the manufacturing industries. In some of these industries its 
contribution is relatively large, accounting for almost one-third of 
TFP growth. In non-manufacturing sectors, growth in highway capital 
contributes negatively to productivity growth. As explained earlier, 
this indicates that the supply of highway capital exceeds the demand at 
the prices these industries are willing to pay. When the effects of 
exogenous demand, relative input price changes, and highway capital are 
accounted for, the rate of technological change is much smaller than 
conventionally calculated. In general, the main causes of TFP growth in 
the manufacturing industries are exogenous shifts in demand, relative 
price changes, and highway capital, while in the non-manufacturing 
industries the dominant factor is the scale effect, or exogenous 
technological change. Highway capital plays only a minor role in the 
acceleration or deceleration of TFP growth at the industry level.\14\ 
The evidence supports the notion that total highway capital contributes 
at varying degrees to the long term growth of TFP in different 
industries, and its contribution to the short run acceleration or 
deceleration of industry TFP growth over the sub-periods is negligible.


    Contribution of Highway Capital at the Total Economy Level
    To calculate the contribution of highway capital stock to the total 
productivity of the aggregate economy, we explored two different 
approaches: (1) the individual industry elasticity estimates were 
averaged (using industry input and output shares as weights) to obtain 
the ``aggregated' estimates; (2) the industry level data were summed to 
the national level and the model was re-estimated with the aggregate 
data to obtain the ``aggregate'' estimates for the cost and demand 
equations. The results were quite similar. In what follows we present 
the results based on the ``aggregated'' estimates.
    Aggregate Output and Cost Elasticities--Table 4 presents the effect 
of the total highway capital stock, respectively, on aggregate private 
sector cost and aggregate input demand functions. The ``aggregated'' 
cost elasticity is about -.044, which is considerably smaller than 
estimates from previous studies. The elasticity of labor with respect 
to highway capital is negative, which suggests that any increase in 
highway capital is labor-saving at the aggregate economy level when the 
level of output is held constant. The elasticity of private capital 
with respect to total highway capital is also negative and slightly 
higher than that of labor. The elasticity of intermediate inputs with 
respect to total highway capital is negative and very small. Cost 
elasticities (h and h*) suggest increasing returns to scale and the sum 
of marginal benefits (SMB), shown in last column is approximately 0.18. 
The output elasticities of inputs, the utilization rate, and the rate 
of technical change at the aggregate economy level show that the output 
elasticity of material inputs is large (around 0.60 to 0.70), followed 
by that of labor (approximately 0.40 to 0.45), and private capital 
(approximately 0.20). The rate of autonomous technical change is 
comparatively small (about 0.001). The output elasticity of highway 
capital is also relatively small compared to materials, labor, and 
private capital, averaging 0.051 for the period as a whole.


    Compared to the results reported in the literature, this estimate 
of output elasticity of highway capital is very small. In fact, the 
elasticity estimates originally reported in Aschauer (1989), Holtz-
Eakin (1991) and Bunnell (1990) are about eight times as large as our 
estimates for the national economy. Our estimates are more comparable 
to output elasticities of public capital reported in Duffy Deno and 
Eberts (1989) and Eberts (1986) for the highly disaggregate level of 
the Metropolitan Area. In particular, the output elasticity of private 
sector capital is clearly larger than the output elasticity of highway 
capital. The results indicate that a 1-percent change in private 
capital stock contributes almost four times as much to economic output 
as a 1-percent change in highway capital stock to growth of output of 
the economy.
    Net Social Rates of Return--Past literature has questioned whether 
public capital is over- or under-supplied. One way to determine whether 
public capital is provided optimally is to compute the rate of return 
to highway capital and compare it with the rate of return to private 
capital for the whole economy. The optimal provision of public capital 
requires that the rates of publicly provided and private capital be 
equalized. Thus, if the rate of return of highway capital is higher 
than that of private capital, highway capital is under-supplied and an 
increase of public investment is necessary. The net social rate of 
return of highway capital can be derived as the ratio of the sum of 
industry marginal benefits to cost minus the depreciation rate of 
highway capital. This calculation assumes that the user cost of highway 
capital includes the acquisition price, the relative discount rate, the 
depreciation rate of highway capital, and the price distortion effect 
of taxes levied to finance highway capital.\15\


    Table 5 presents the net social rate of return to total highway 
capital, the net rate of return to private capital stock and interest 
rates for four different sub-periods. The social rate of return on 
total highway capital was very high during the 1950's and 1960's, 
reflecting the shortage of highway capital stock during the 1950's when 
the Interstate Highway System was under construction. This rate has 
declined continuously since the late 1960's and in 1989 it is barely 
above the level of the long term interest rate. The time profile of the 
net social rate of return for total highway capital is presented in 
Figure 2. The rate begins at a relatively high level, rises to its 
maximum level in 1955, and fluctuates around 37 percent until 1968. 
Thereafter, the rate starts to decline and falls from 10 percent in 
1985 to about 5 percent in 1989. When the net rate of return is 
compared to the long-term interest rate on government securities from 
1950 to 1989, the gap between the two is very large until the 1970's. 
The gap narrows considerably and almost disappears in the 1980's. The 
net rate of return on private capital averaged approximately 14 percent 
from 1950 to 1969, and then declined in the 1970's and 1980's. However, 
it exceeded the interest rate over most of period, as shown in Figure 
2.


    Our estimates of the rate of return on highway capital are much 
lower than reported in previous literature. Recently, Fernald (1992) 
estimated the rate of return to investment in roads using essentially 
the same set of data as used in this study. He concluded that ``a 
conservative statement--is that the data strongly supports the view 
that roads investments are highly productive, offering rates of return 
of 50 percent to 100 percent, perhaps more.''\16\ Our results suggest 
rates of return well below Fernald's lower bound estimated rate of 
return. Our average rate of return for the period of 1950 to 1989 is 28 
percent, about half of his rate of return of 50 percent. The rate of 
return over the postwar period has still been quite impressive, 
although in recent years the returns to highway capital are more 
similar to those estimated for private capital stock.
    Optimal Highway Capital Stock--The optimal level of highway capital 
is obtained by comparing the industry marginal benefits for each year 
to the actual level of highway capital. The average ratio of optimal 
highway stock to actual highway capital is reported in Table 6. The 
striking result that emerges from this comparison is that the ratio is 
very high during the 1950's, then declines dramatically thereafter 
until 1989, when the ratio is approximately one. This suggests that 
there was significant underinvestment in highway capital immediately 
after World War II but the gap between optimal and actual capital 
stocks narrowed between 1959 and 1969 as the Interstate Highway System 
and other road systems were completed. The ratio of optimal to actual 
stock of highway capital declined by about 50 percent from 1960 to 1969 
and further decreased from 1970 to 1979. Interestingly, in the 1980's 
there is no significant evidence of overall under- or overinvestment in 
the highway capital stock.


    The decline in the ratio of optimal to actual highway capital shown 
in Figure 3 is due in part to public investment decisions and to 
economic and demographic changes. (growth in the stock of highways and 
streets, as shown in Figure 1, rose sharply from 1955 to 1975, the 
period when the U.S. Interstate Highway System was under construction, 
and leveled off since that time as construction of the Interstate 
slowed and previously built highways depreciated. The net stock of 
total highway capital grew at an annual rate of approximately 5 percent 
from the mid-1950's to the late 1960's. It began to decline in the 
1970's, reaching a minimum growth rate of 0.7 percent in 1983. Since 
then it has gradually increased, but the growth rate of 2.3 percent in 
1993 is still less than half the average growth rate of the mid-1950's 
to late 1960's period.\17\
    Decomposition of Aggregate Total Factor Production (TFP) Growth--
The results in Table 7 indicate that growth in exogenous demand is the 
most important contributor to aggregate TFP growth between 1950 and 
1989, as almost 87 percent of TFP growth is accounted for by changes in 
aggregate demand. input price movements contribute negatively to TFP 
growth (about 8 percent) while highway capital contributes positively 
(about 25 percent) to TFP growth. The contribution of the capacity 
utilization rate is very small (about 1 percent). Table 8a and 8b 
demonstrate that the same patterns are evident over different sub-
periods. The contribution of highway capital to TFP growth was much 
larger in the early periods, but has declined significantly since 1972. 
This reflects two sets of factors: the pattern of marginal benefits of 
highway capital stock; and, more importantly, the growth rate of 
highway capital stock exhibited in Figure 1. Highway capital's 
contribution to TFP growth was less than 0.18 until 1953 when the 
investment in Interstate highway System started; its contribution rose 
to almost twice as much during the period of 1954 to 1967. After 1967, 
the contribution declined considerably until reaching about .001 in 
1981. After 1981, the contribution of highway capital to TFP growth 
grew to about 0.06 in 1989.
    A central issue in the debate on the role of infrastructure or 
highway capital is its contribution to the deceleration of TFP growth 
in the period 1973-1979. Aschauer (1989), Munnell (1990a) and others 
claim the decline in this period was mainly, if not exclusively, due to 
the decline in growth of infrastructure capital. Hulten and Schwab 
(1991a), Gramlich (1994) and others have argued for minimal 
contribution of infrastructure capital to productively slowdown.
    When TFP growth is decomposed into trend and deviation from the 
trend, the trend TFP growth is highly correlated with the trend 
contribution of highway capital, trend exogenous demand and trend in 
relative factor prices. The deviation from trend of TFP growth is 
correlated with deviation of the exogenous demand and relative prices 
from their trend. The conclusion to be drawn is that highway capital 
stock contributes to growth of total factor productivity; its 
contribution is much smaller in comparison of the contribution of 
exogenous demand.
    Most of the contribution of highway capital to productivity growth 
occurred in the 1950's and 1960's. Since 1973, highway capital has made 
a small contribution to trend TFP. Highway capital, whether measured by 
total highway capital or P1L5 (non-local system) capital, does not 
contribute much to the acceleration or deceleration of TFP growth.


    These results stands in contrast to those reported by Aschauer, 
Munnell and other proponents of large contributions to infrastructure 
and also to those reported by researchers who have denied any role for 
infrastructure in enhancing the growth rate of productivity. Our 
analysis suggests that highway capital stock has contributed to the 
expansion of the productive capacity of the economy. It has contributed 
to total TFP growth of the U.S. economy, although its contribution has 
been much smaller than has been claimed in the production function 
research. Expansion of highway capital has had significant effects on 
the pattern of, and demand for, labor, capital and material inputs in 
different industries.
    Summary and Policy Implications
    Summary of Main Results--The specific quantitative results of this 
report can be briefly summarized as follows:
   Total highway capital and NLS capital contribute 
    significantly to economic growth and productivity at the industry 
    and national economy levels. Their contribution varies across 
    industries and over time. The magnitude of the elasticity of output 
    with respect to total highway capital at the aggregate level is 
    about 0.05, which is much smaller than comparable estimates 
    reported in previous literature.
   The contribution of highway capital to TFP growth is 
    positive in almost all industries, except in some non-manufacturing 
    industries. In these nonmanufacturing industries, the supply of 
    capital exceeds that which the industries are willing to pay at 
    that price. The magnitudes of the contribution varies among 
    industries, although the most significant contribution of highway 
    capital is to the productivity of manufacturing industries. At the 
    aggregate level, highway capital contribution to TFP growth is 
    about.\17\
   There is some evidence of increasing returns to scale in 
    most industries and at the national level. Both at the industry and 
    national levels, the contribution of private capital to economic 
    output dominates that of total highway capital or FILE capital by 
    almost four times. This is in sharp contrast to the results 
    reported in the literature.
   Total highway capital and NLS capital have a significant 
    effect on employment, private capital formation and demand for 
    materials inputs in all industries. For a given level of output, an 
    increase in highway capital and FILE capital can lead to a 
    reduction in demand for all inputs in manufacturing, while in non-
    manufacturing industries the pattern is mixed. The magnitude of 
    these effects varies among the three inputs in a given industry and 
    among the industries, and does not consider output expansion 
    aspects of lower costs.
   The marginal benefits of total highway capital and NLS 
    capital at the industry level were calculated by using the 
    estimated cost elasticities. Demand for highway capital services 
    varies across industries as do the marginal benefits. The marginal 
    benefits are negative for all non-manufacturing industries, but 
    their magnitudes are small suggesting that the demand for highway 
    capital services at the price these industries were willing to pay 
    (if free disposal condition was operative) is slightly less than 
    the available supply. This issue, however, requires further 
    research (Appendix B includes a summary of important issues that 
    require future research).
   The results indicate that net social rate of return on total 
    highway capital was high (about 35 percent) in the 1950's and 
    1960's, then declined considerably until the 1980's to about 10 
    percent. The same pattern holds for NLS capital although the net 
    social rates of return are higher for NLS, approximately 16 
    percent. In the 1980's the rates of return on total highway capital 
    and private sector capital seem to have converged, and are 
    basically equal to the long term rate of interest.
   The ratio of optimum to actual highway capital, measured by 
    either total or FILL highway capital, was high in the 1950's and 
    then declined throughout the 1960's as construction of the 
    Interstate Highway system neared completion.
   The main contributor to productivity both at the industry 
    and aggregate level is aggregate demand. Relative prices, the 
    capacity utilization rate and technical change also contribute to 
    the growth of TFP, but their contributions are generally smaller 
    and vary across industries. The contribution of highway capital is 
    to long run trend TFP growth and only minimally to its acceleration 
    or deceleration over different periods such as the period 1973-76.
    Policy Considerations--The results of this research suggest a 
number of policy implications:
   To have high and sustained TFP growth both at the industry 
    and national level it is very important that aggregate demand be 
    sustained and Pectoral input price inflation rates are kept in 
    check. This would require appropriate fiscal and monetary policies 
    to maintain growth rate of the aggregate demand in conjunction with 
    public infrastructure policy.
   The analytical challenge is to see whether the quantity and 
    quality of services provided by this type of infrastructure is 
    adequate to meet future needs. Two sets of policies are needed: one 
    is to look specifically at the quality of services and potential 
    utilization of the existing highway capital network. To achieve 
    this aim a more intensive look at quality adjustment of highway 
    capital stock and construction of a more appropriate index of 
    utilization of this capital. The other challenge is to elaborate 
    the future needs for highway capital to potential growth of the 
    economy and the spatial distribution of economic activities.
   The distinction between gross and net investment in highway 
    capital require proper estimation of the depreciation rate of the 
    capital stock. If the depreciation rate is under estimated, the net 
    expansion of highway capital for the future will be understated. 
    Adequacy of investment allocations can be best evaluated if the 
    replacement investment for highway is correctly determined first. 
    This would require an evaluation of existing and future policies 
    for repair and maintenance of the highway network.
   Since the benefits of highway capital services differ across 
    industries, one policy consideration is the need of the industries 
    in planning of future highway services.
   The externalities of highway capital services to the 
    production has been well documented but two further policy issues 
    require attention. They are the benefits of highways to generate 
    public (consumers) and the geographical distribution of these 
    benefits among different states and localities. The contribution of 
    highways to local and regional areas is an important issue for 
    policy decision process because of the rate of this type of 
    infrastructure to regional economic development.
   Finally, policies for investment allocation and financing of 
    highway capital require closer attention. Such assessments require 
    that highway capital investment be compared in terms of importance 
    and rates of return to long term private sector capital investment.
    Future Research
    This study raises a number of important issues which should be 
addressed in future research. These issues include: adjustments for 
additional variables not included in this research; examining the 
productivity effects of highway capital under varying levels of output; 
estimated depreciation rates; further detail about industry types; and 
the welfare benefits of highway capital to groups other than private 
sector industries.
    Omitted Variables--One of the most important issues to consider in 
future research is the effect of omitted variables on our results. Two 
types of adjustments are desirable: one related to quality changes in 
highway capital stock and the other is the contribution of 
infrastructure capital other than highway capital. The quality 
adjustments can take different dimensions. For example adjustments are 
needed to account for the effects of congestion and other environmental 
factors such as noise, smog, etc. The highway capital stock needs to be 
adjusted for quality of roads, degree of maintenance and intensity of 
use. Besides these types of adjustments, the effects of infrastructure 
capital other than highway capital should be specifically introduced in 
our model. Clearly there is considerable evidence that other types of 
public infrastructure contribute to growth of output and productivity. 
Including the ``other'' infrastructure capital may affect the 
magnitudes and even sign of the elasticities and marginal benefits of 
highway capital (or NLS) reported in this study.
    Allowing Output to Vary--In this study we have evaluated the 
productivity effect of highway capital and its effect on demand for 
labor, capital and materials under the assumption that the level of 
output is given. This assumption needs to be relaxed to take account of 
output expansion induced by investment in highway capital. Highway 
capital investment reduces costs, i.e. the average cost shifts downward 
(productivity effect). This in turn, given a downward sloping output 
demand curve, leads to a decline in output prices and an increase in 
quantity demanded. The Induced output expansion leads to Increases in 
demand for each of the private sector inputs. This indirect expansion 
effect of highway capital investment will likely to offset any 
potential substitution effects on demand for labor, capital and 
materials. This issue is an important challenge to be taken up also in 
future research.
    Depreciation of Highway Capital--Another issue is to examine more 
closely the depreciation rate estimates that are used to generate the 
total highway or NLS capital. If the depreciation rate is not an 
accurate measure of the decline in production services then the results 
on marginal benefit, net social rate of return and productivity 
contribution of highway capital reported here will be affected. 
Analytical models are available to estimate the depreciation rate from 
available investment data. Also, availability of data on maintenance 
expenditures and other relevant data may allow estimating a more 
precise measure of the depreciation rate and thus better measures of 
total highway and NHS capital stocks.
    Further Industry Detail--In this study, industries were divided 
into three broad categories. A more refined classification such as that 
used by Fernald may be necessary to capture the industry variations in 
demand for highway capital services. As a result, our measures of 
industry marginal benefits, social rate of return and contribution to 
productivity at the industry and aggregate level are likely to be 
affected. Also, we need to Improve our estimation of the output demand 
function. Furthermore, the demand and cost functions are estimated 
separately. What is required is to jointly estimate the two functions 
and allow for the effect of highway capital on the demand for output of 
an industry.
    Benefits to Other Groups--Finally, in this study we have 
concentrated on the benefits of highway capital to private sector 
industries. The welfare benefits of highway capital services to the 
consumers have not been addressed. To do so requires modeling the 
consumption sector of the economy and integrating it with the 
production sector in a general equilibrium model. Such an attempt, 
though extremely important, at present remains outside the scope of our 
current research.
                               references
    Aschauer, David Alan (1989), ``Does Public Capital Out Private 
Capital?'' Journal of Monetary Economics 24, 171-188.
    Duffy-Deno, K.T. and R.W. Eberts (1991), ``Public Infrastructure 
and Regional Economic Development: A Simultaneous Equations Approach,'' 
Journal of Urban Economics 30, 329-43.
    Eberts, Randall W. (1986), ``Estimating the Contribution of Urban 
Public Infrastructure to Regional regrowth,'' Federal Reserve Bank of 
Cleveland Working Paper 8610, December.
    Fernald, John (1992) ``How Productive Is Infrastructure'' 
Distinguishing Reality and Illusion with a Panel of U.S. Industries.'' 
mimeo.
    Gramlich, E. (1994) ``Infrastructure Investment: A Review Essay,'' 
Journal of Economic Literature, September, 1176-1196.
    Holtz-Eakin, D. (1991), ``New Estimates of State-Local Capital 
Stocks by State,'' Syracuse University, mimeo.
    Jorgenson, D., (1990) Dollop and B. Fraumenl (1987) Productivity 
and U.S. Economic Growth, Cambridge, MA: Harvard University Press.
    Jorgenson, D. (1990) ``Productivity and Economic Growth,'' in 
Berndt, E. and J. Triplett, (eds) Fifty Years of Economic Measurement, 
FIBER Studies in Income and Wealth Volume 54, Chicago: The University 
of Chicago Press.
    Jorgenson, D.W. and Kun-Young Yun (1990) ``The Excess Burden of 
Taxation in the U.S.,'' Harvard University Discussion Paper #1528.
    Klein, L. and R. Summers (1966) ``The Wharton Index of Capacity 
Utilization,'' Studies in Quantitative Economics, No. 1, University of 
Pennsylvania.
    Bunnell, A. H. (1990), ``Why Has Productivity regrowth Declined? 
Productivity and Public Investment,'' New England Economic Review, 
Jan./Feb., 3-22.
    Nadiri, M. Isheq and Theofanis P. Mamuneas (1993), ``The Effects of 
Public Infrastructure and Capital on the Cost Structure and Performance 
of U.S. Manufacturing Industries,'' C.V. Starr Center RR #91-57.
    --(1996), ``Contribution of Highway Capital Infrastructure to 
Industry and Aggregate Productivity Growth,'' March, a report prepared 
(Apogee Research Inc.) for the Federal Highway Administration Office of 
Policy Development, Work Order Mo. BAT-94-008. WEFA regroup, (1990), 
Industrial Analysis Quarterly Review, July.
                                 notes
    \1\For a full description see Nadiri and Mamuneas, ``Contribution 
of Highway Capital Infrastructure to Industry and Aggregate 
Productivity regrowth,'' March 1996, a report prepared (Apogee Research 
Inc.) for the Federal Highway Administration Office of Policy 
Development, Work Order flo. BAT-94-008.
    \2\The latter includes the Federal-ald highway system, with the 
exception of expenditures on secondary rural roads, and represents 
approximately 70 percent of total highway capital stock. It is referred 
to in this paper as the non-local highway system.
    \3\See Nadiri and Mamuneas, (1996) ``Contribution of Highway 
Capital to Industry and National Productivity Growth,'' opt. cit. for a 
more comprehensive survey of substantive and technical issues.
    \4\Opt. cit.
    \5\Use of value-added data can be Justified If there Is no 
substitution between intermediate inputs such as materials and energy 
and the primary factors of production like capital and labor. If 
intermediate input prices are relatively stable, the use of value added 
in productivity analysis can be justified on practical grounds. 
However, on price shocks substantially affected the course of the U.S. 
economy in the 1970's and 1980's. Similar effects to a lesser extent 
were associated with price increases In other Intermediate inputs. 
Therefore, It is important to explicitly include energy and material 
inputs in the productivity analysis.
    \6\See Nadiri and Mamuneas, ``Contribution of Highway Capital 
Infrastructure to Industry and Aggregate Productivity Growth,'' 
opt.cit., 1996 for further discussion.
    \7\In principle, we could introduce a full set of slope dummy 
variables (102 additional parameters) but it not possible in an already 
complicated model. Rather, we classified the 35 industries into three 
groups--manufacturing (industry codes 7 through 27), service industries 
(industry codes 28 through 35), and other industries (industry codes 1 
through 6).
    \8\An interesting approach is suggested by Fernald (1992). He uses 
``vehicle Intensity'' as a proxy for use of road infrastructure. It Is 
measured as the ratio of the stock of trucks and cars in an industry to 
its total output. If an industry is vehicle-intense, then presumably it 
receives a lot of direct productive services from roads.
    \9\See Nadiri and Mamuneas, ``Contribution of Highway Capital 
Infrastructure to Industry and Aggregate Productivity Regrowth,'' opt. 
cit. for further details.
    \10\For a description of data construction, see Jorgenson, Gallop, 
and Fraumenl (1987). Also see Jorgenson (1990).
    \12\ The magnitudes of the labor elasticity ranges generally from 
0.06 In Industry 29 to a high of 0.97 in industry 16. The elasticities 
are generally small in industries 28 through 35 except for Industry 31. 
The elasticities of private capital with respect to total highway 
capital are larger in magnitude in the manufacturing Industries than in 
non-manufacturing Industries. The magnitudes of elasticities of 
intermediate Inputs with respect to total highway capital are generally 
small, particularly in industries 1 through 6. They are relatively 
larger and positive In transportation, trade, and services. The pattern 
that emerges from these elasticities is that highway capital Is a 
substitute for private capital In all Industries, a substitute with 
labor in all manufacturing (industry codes 7-27) and services (industry 
code 28-35) while it is a complement to labor in other Industries 
(Industry codes 1-6). Finally, highway capital and Intermediate inputs 
are complements in non-manufacturing industries and substitutes in the 
manufacturing industries.
    \13\In the next phase our study the level of output will be allowed 
to vary and the new set of results will separate the likely 
substitutional and expansion effects on private sector Inputs of a 
given increase In highway capital.
    \14\ The sample period was divided Into four sub-periods: period I, 
1952-1963; period II, 1964-1972; period III, 1973-1979; and period IV, 
1980-1989. In a few Industries, the contribution of highway capital to 
the deceleration of TFP growth between periods 11 and 111 was fairly 
large, but In the majority of industries, there was little or no 
systematic relationship. The magnitudes of the contribution of highway 
capital between to the rate of change of TFP periods III and IV were 
generally very small.
    \15\ See Jorgenson and Yun (1990). This distortion effect arises 
because no country relies extensively on head taxes to finance 
Infrastructure capital. Distortionary taxes (e.g., an income tax) are 
often used to fund public investments. Therefore, the social cost of 
additional public capital, the sum of the direct burden of the taxes 
needed to pay for the Infrastructure and the dead weight cost 
associated with these taxes. The Issue of an appropriate cost of 
Investment of highway system require a careful aralysis in future 
research.
    \16\ Bernard (1992) p. 26
    \17\ One factor contributing to the growth pattern In highway 
capital was the sharp rise In the price of gasoline in the 1970's that 
increased the cost of travel significantly.
                               APPENDIX B
  Economic Returns from Transportation Investment: Nineteenth Century 
                  Experiences and Contemporary Issues
        (by Charles David Jacobson, Morgan, Angel & Associates)
    This short bibliography represents a sample of some of the more 
important works in what is a vast economic and historical literature on 
19th century transportation infrastructure. More recent scholarship on 
post World War II infrastructure development is not included.
    Fishlow, Albert, American Railroads and the Transformation of the 
AnteBellum Economy (Cambridge: Harvard University Press, 1965)
    In this volume, Fishlow attempts to ``quantify the social savings 
of the railroads and their impact through forward and backward linkages 
on the various branches of the economy . . . ''\1\ Whereas Fogel's 
Railroads and American Economic Development (published at about the 
same time) was concerned with whether U.S. could have developed without 
the railroad, Fishlow asks ``How much stimulus did the railroad afford 
to the economy of the United States and by what means?''\2\ Fishlow 
identifies three major ways in which transportation Innovation can be 
expected to benefit other areas of the economy:
    1) Innovations have direct consequences in lower costs of carriage. 
When costs are lower, resources can be applied to other tasks.
    2) Increased size of markets affects production decisions of 
manufacturers and farmers, by making possible greater specialization 
and ability to exploit economies of scale elsewhere.
    3) Resource demands of building and operating transport systems can 
themselves stimulate other areas of economy. These in turn might create 
benefits elsewhere.
    Fishlow concludes that before 1859 the direct advantages of the 
railroad were fairly modest because of the prior development of the 
canal and the steamboat. These innovations lowered transport costs far 
more than did the railroad in its turn. But even during this early 
period, Fishlow concludes railroad investment paid off in social terms.
    ``. . . railroad returns to capital, in the shape of net earnings 
and transport cost savings alone, fully justified the investment even 
before 1860. Fifteen percent per annum on the investment despite the 
arbitrary time horizon, and the limited calculation of returns is 
impressive. It is difficult to imagine the country doing much better 
than that in any reasonable alternative.''\3\
    Fishlow concludes that railroad development played a role in 
stimulating agricultural expansion and specialization. Demands on the 
part of railroads themselves, Fishlow concludes, also played a role in 
disseminating industrial skills through out the economy and afforded 
stimulus to the development of iron and steel industry.\4\ However, 
these effects were limited.\5\ Nor did railroad development stimulate 
ante-bellum industrialization in the South despite hopes that it do so.
    Overall, Fishlow concludes, railroads can not be said to have 
caused economic growth. Indeed the benefits of railroad development 
were so great in some cases only because other human and geographical 
and institutional conditions for growth were already present. Fishlow 
also concludes that government subsidy and competition amongst 
railroads themselves tended in some cases toward over-building and 
wasteful expenditure of resources. \6\
    Fogel, Robert William Railroads and American Economic Growth: 
Essays in Econometric History (Baltimore: Johns Hopkins, 1964)
    This is a controversial and Influential book. Fogel evaluates the 
claim that railroads were essential to economic growth in the 19th 
century by setting forth a hypothetical world in which railroads do not 
exist. Fogel concludes that while railroad development and rates 
structures could determine the destinies of individual firms and even 
entire cities and regions, railroads were not indispensable to the 
economy of the United States during the 19th century. Other forms of 
transportation could and would have been developed more intensively in 
the absence of railroads. More broadly, Fogel asserts that economic 
growth can best be understood not as the product of any single kind of 
technology but of knowledge applied to development of multitude of 
innovations in a broad range of domains.
    Emphasis on the multiplicity of opportunities does not mean that 
the particular nature of the solutions society selects are without 
significance. Cheap inland transportation was a necessary condition for 
economic growth. Satisfaction of this condition did not entail a 
specific form of transportation. The form by which the condition was in 
fact satisfied did effect, however, particular features of the observed 
growth process. In other words, the fact that the condition of cheap 
transportation was satisfied was satisfied by one innovation rather 
than another determined, not whether growth would take place, but which 
of many possible growth paths would be followed.\7\
    Goodrich, Carter, Canals and American Economic Development (New 
York: Columbia University Press, 1961)
    Goodrich's collection, first published in 1961, was the product of 
Columbia University's (graduate workshop on the Economic Development of 
the Industrial Countries. The aim of the workshop was to reexamine the 
economic history of developed industrial areas of the world in light of 
contemporary concerns with Third World development. The essays conclude 
that, overall, development of canals did make a significant 
contribution to economic growth in the United States. While the Erie 
Canal was a spectacular success, many other canals were almost 
certainly failures no matter how evaluated. Causes of failure included 
ill conceived and poorly designed protects and railroad competition.
    Hay, Suellen and Michael C. Robinson, Public Works History in the 
United States: A Guide to the Literature (Nashville, TN: American 
Association for State and Local History, 1982)
    This annotated bibliography is an indispensable resource. The work 
does not cover railroads but contains a good selection of entries on 
the history of roads, streets, and highways in the United States.
    Lee, Susan and Peter Passes, A New Economic View of American 
History (New York: W.W. Norton, 1979)
    This textbook written for advanced undergraduates contains good 
overview on debates amongst economic historians concerning 19th century 
transportation and economic development. The book also contains 
extensive bibliographical material.
    Rostow, Walter, The Stages of Economic Growth (Cambridge: Cambridge 
University Press, 1960).
    Rostow suggests that largely because of demand for materials, 
railroads played a leading role in propelling industrial take-off in 
the United States during the 1840's. The book is largely important as a 
foil for subsequent scholars who found that elements of the chronology 
do not fit. Much industrial development took place in the United 
States, for example, before railroads were significant as either a 
source of demand for materials or as a form of transportation itself.
    Rauch, James E., ``Bureaucracy, Infrastructure, and Economic 
Growth: Evidence from U.S. Cities during the Progressive Era'' American 
Economic Review Vol. 85, No. 4 September 1995.
    On the basis of a regression analysis, Rauch finds that investment 
in road, water, and sewer systems in early twentieth century American 
cities was statistically correlated with growth in manufacturing 
employment.
    Rose, Mark H. Interstate: Express Highway Politics, 1941-1956 
(Lawrence: The Regents Press of Kansas. 1979)
    This is a detailed historical account of the political maneuvering 
that culminated in passage of laws establishing the Interstate highway 
System. Rose describes tensions amongst engineers concerned with moving 
the traffic, economic and regional interest groups, and those who 
viewed highways as means to realize broader planning and urban 
redevelopment objectives.
    Scheiber, Harry N., The Ohio Canal Era: A Case Study of Government 
and the Economy. 1800-1861 (Athens: Ohio University Press, 1969)
    This is a richly detailed account written by an historian of the 
development of a major system of canals in Ohio before the Civil War. 
The book contains much discussion of the effects of canal and later 
railroad development on patterns of trade. Scheiber finds that the Ohio 
and Erie Canal completed in 1827 was a ``spectacular success'' in its 
contribution to population growth and economic development in the 
region served. Population and land values increased, farmers enjoyed 
higher prices for grains and turned to commercial agriculture, and 
development of manufacturing was stimulated due to lower prices for raw 
materials and development of water powers from the canal itself. Canals 
completed in other parts of the state, Scheiber maintains, had similar 
effects.
    ENDNOTES
    \1\ Alexander Gerschenkron, ``Foreword'' in Albert Fishlow, 
American Railroads and the Transformation of the Ante-Bellum Economy 
(Cambridge, Mass, Harvard University Press, 1965) viii.
    \2\ Albert Fishlow, American Railroads and the Transformation of 
the Ante-Bellum Economy (Cambridge, Mass, Harvard University Press, 
1965) ix.
    \3\ Albert Fishlow, American Railroads and the Transformation of 
the Ante-Bellum Economy (Cambridge, Mass, Harvard University Press, 
1965) 301.
    \4\ Albert Fishlow, American Railroads and the Transformation of 
the Ante-Bellum Economy (Cambridge, Mass, Harvard University Press, 
1965) 302.
    \5\ Albert Fishlow, American Railroads and the Transformation of 
the Ante-Bellum Economy (Cambridge, Mass, Harvard University Press, 
1965) 303.
    \6\ Albert Fishlow, American Railroads and the Transformation of 
the Ante-Bellum Economy (Cambridge, Mass, Harvard University Press, 
1965) 310.
    \7\ Robert William Fogel, Railroads and American Economic Growth: 
Essays in Econometric History (Baltimore: Johns Hopkins, 1964) 237.
                               __________
 Statement of Darrel Rensink President, American Association of State 
Highway and Transportation Officials \1\ and Director, Iowa Department 
                           of Transportation
    Mr. Chairman, my name is Darrel Rensink, I am President of the 
American Association of State Highway and Transportation Officials and 
Director of the Iowa Department of Transportation. On behalf of AASHTO, 
I am pleased to accept your invitation to testify on issues related to 
the reauthorization of the surface transportation programs, and to 
provide the views of the Association.
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    \1\ Founded in 1914, AASHTO represents the departments concerned 
with highways and transportation in the 50 States, the District of 
Columbia and Puerto Rico. Its mission is a transportation system for 
the Nation that balances mobility, economic prosperity, safety and the 
environment. AASHTO is the only national public sector association that 
represents all transportation modes--air, highways, public 
transportation, rail and water--and it works to foster the development, 
operation and maintenance of an integrated national transportation 
system. The active members of AASHTO are the duly constituted heads and 
other chief directing officials of the member transportation and 
highway agencies.
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    As members of the Environment and Public Works Committee you are 
well aware of both the benefits and needs of transportation into the 
21st century, so what I am about to say will come as no surprise. 
However, the importance of transportation for a competitive America and 
for the nation's future requires that we continue to focus our 
attention on transportation.
    America's transportation network has played a major role in our 
nation's economic success. Just as in the past, the future of America 
will depend to a great extent on how we support our transportation 
system. The legislation you will be considering is therefore of great 
importance to the people of America as we approach the 21st century.
    Perhaps no other Federal investment has such far-reaching 
implications on every aspect of our quality of life. Transportation 
serves all of our citizens daily in traveling to their jobs, day care 
centers and markets; in providing goods to wholesale and retail 
outlets; in traveling to recreational activities; and in a variety of 
other activities in which we all participate. Welfare reform will only 
succeed when wage-earners have access to places of employment. Quality 
health care depends upon the ability of the patient and the care-giver 
to come together.
    Most important, transportation is the backbone for our State, 
national and international economies. Transportation is our nation's 
economic engine which is built on an efficient transportation system, a 
key component to our global competitiveness. Industry, much of which 
now relies on ``just in time'' delivery of raw materials, must have an 
effective and efficient transportation system.
    Mr. Chairman, we commend you and the subcommittee for undertaking 
the reauthorization of our surface transportation program. We have 
provided to the subcommittee copies of the documents that AASHTO has 
prepared outlining our policy on many of the issues that we will be 
addressing. In my comments today I will summarize the Association's 
views and respond directly to the themes you have stated for this 
hearing.
                     aashto's reauthorization views
    The enacted Intermodal Surface Transportation Efficiency Act of 
1991 (ISTEA) was important legislation, and it improved our ability to 
provide better transportation in many ways. Some additional funding was 
provided, although not all that was authorized has been made available. 
The planning and decisionmaking processes for surface transportation 
were changed by the ISTEA, to move more decisionmaking to States and 
localities, to encourage looking intermodally at the whole system, and 
to allow for tradeoffs. Greater flexibility in utilizing Federal 
funding was provided under the ISTEA, allowing States and localities to 
better target transportation facilities they and their citizens believe 
are important. And very importantly, the National Highway System sought 
by AASHTO's member departments was authorized in the ISTEA, and has 
been established by Congress with the enactment of the National Highway 
System Designation Act of 1995.
    These concepts and features have increased our ability to address 
the nation's transportation needs, and AASHTO believes that the 
reauthorization legislation should continue to support them. At the 
same time, AASHTO believes there are a number of areas that can be 
improved as you reauthorize ISTEA. These areas are described in the 
policy documents we have provided to you, and were discussed by AASHTO 
President William G. Burnett in his September 11, 1996 testimony to 
this subcommittee. For the convenience of the subcommittee, a copy of 
that September 11, 1996 testimony, which outlines our views on the role 
of Federal, State and local governments in surface transportation, is 
attached.
    With respect to our recommendations for reauthorization, I want to 
refer you to our Transportation for a Competitive America report, 
copies of which have been provided to the subcommittee. This report 
details our recommendations, which are summarized in four key 
recommendations:
     The maintenance needs of the nations's highways and 
transit systems outstrip the funds currently available. The 4.3 cents 
per gallon in user taxes collected from motorists should be deposited 
in the Highway Trust Fund and be spent on system maintenance, rather 
than diverted to the General Fund.
     State and local governments should be given more 
flexibility in determining how, when, and where transportation 
resources are spent, to maximize the benefit to mobility, safety, and 
the environment.
     Many of the key concepts of ISTEA, such as State and local 
cooperation, intermodal planning, and public participation, should be 
retained.
     Burdensome and unnecessary provisions imposed by ISTEA and 
earlier laws should be eliminated or reduced. The National Highway 
System Designation Act was a first, and major, step in this direction.
    To further explain AASHTO's position on issues in reauthorization 
of the Federal highway and transit programs, we refer you to the 
attached one-page document ``Summary of AASHTO Recommendations on the 
Reauthorization of the Federal-aid Highway and Transit Programs,'' 
which was included in a brochure we recently sent to all Members of the 
Congress.
    Mr. Chairman, you have focused this hearing on three topics, 
transportation trends, transportation's benefits to the economy, and 
infrastructure funding requirements. Let me now address each of these.
                         transportation trends
    Mr. Chairman, the most important transportation trend to note is 
that transportation continues to play a major role in the well-being of 
this nation. This role is demonstrated by the growth we have seen in 
the number of drivers, vehicles and passengers on our highway and 
transit systems and the reliance of industry and economic development 
on the availability of efficient transportation.
    Vehicle miles of travel on our highways increased 40 percent in the 
1980's. If the 1990 to 1994 trend continues, total miles traveled may 
increase by more than 20 percent in the 1990's. At the present time 
over 6 billion miles of vehicle travel are logged on the nation's 
highways every day. The number of passengers utilizing transit services 
has also increased with over 6.8 million Americans using mass transit 
each day, with over 30 million people depending on it.
    Just-in-time production is one of the most significant trends in 
U.S. manufacturing in recent years. This trend has allowed many 
businesses to sharply reduce or eliminate inventories. In 1990 just-in-
time manufacturing accounted for 18 percent of U.S. production; by 1995 
this percentage had increased to 28 percent. Just-in-time production 
and reduced inventories require dependable and efficient transportation 
facilities, and are major sources of increased productivity in our 
economy.
    These trends are expected to continue, placing an ever increasing 
demand on our transportation systems.
    Our highway system is suffering from increased congestion in many 
areas of the nation. The urbanization of America is creating new 
challenges for urban areas while at the same time rural transportation 
needs are continuing to increase. New demands are being placed upon the 
highway system by shifts in both the volume and direction of world 
trade. For example, the focus of our major highways are essentially 
east-west, in keeping with the movement of goods between the east and 
west coasts. However, the North American Free Trade Agreement (NAFTA) 
has required us to evaluate and improve our systems to accommodate an 
increasing number of north-south transportation patterns.
    Our nation's transit systems remain vital in most areas of the 
nation. Today, a variety of passenger mobility needs, and efforts to 
solve our air quality problems across America, require transit to do 
even more.
    In short, Mr. Chairman, while our nation still has the best 
transportation system in the world, current trends demonstrate that it 
is aging and is not keeping up with the mobility needs of our citizens, 
our commerce, our industries and our economy.
                transportation's benefits to the economy
    Mr. Chairman, throughout the history of our nation transportation 
has been assumed to be a key driving force in building and maintaining 
our economy, based on what Americans have seen and experienced. In 
recent years some have requested documentation of this assumption, and 
in particular have asked whether or not our nation is receiving a fair 
return on its investment in our highway system. In response, AASHTO, 
through our National Cooperative Highway Research Program (NCHRP), the 
Federal Highway Administration, and other transportation agencies have 
sponsored many efforts to determine the economic value of 
transportation, and investments in our highway system.
    A copy of Chapters I and II of a report prepared under AASHTO's 
sponsorship by the NCHRP entitled The Economic Importance of 
Transportation: Talking Points and References is attached, without the 
voluminous materials of Chapters III and IV. The following are a few of 
the significant findings in this report, all of which demonstrate the 
benefits of transportation to our economy:
     Reliable transportation is essential for America's 
businesses to achieve their objectives of reduced inventories and 
improved distribution systems. It is estimated that logistics and 
transportation account for 20 to 25 percent of the value of a product 
on the shelf.
     Wal-Mart has become the largest retailer in the U.S. by 
demanding that manufactures deliver products reliably and ready for the 
selling floor. Wal-Mart has only about 10 percent of their square 
footage devoted to inventory compared to 25 percent for the average 
retailer.
     To remain competitive, American companies and businesses 
demand quick turnaround and are reducing the time it takes for products 
to reach their markets.
    The NCHRP report refers to recent studies of the economic effects 
of highway investment conducted by Professor Ishaq Nadiri of New York 
University. Professor Nadiri's work indicates that investments in 
highways have a strong effect on productivity. He found that 
transportation improvements lower distribution costs, allow the 
shrinking of inventory that saves money, improves firms' access to 
labor, and lowers production costs. Overall, Professor Nadiri's studies 
show a 28 percent return per year between 1950-1989 for total highway 
capital.
    In addition to the efficiency and production benefits for the 
manufacturing sector, investments in transportation are important for 
job creation. The Federal Highway Administration's most recent report 
on job generation for highway investment finds that every $1 billion of 
investment in the Federal highway program supports more than 42,000 
full-time jobs.
    Also, according to the U.S. Department of Transportation, every 
dollar invested in the highway system will return more than $2.60 in 
benefits to the economy.
    As indicated in the few examples shown above, investing in the 
nation's transportation facilities is important to ensuring long-term 
economic growth. Americans have longed believe this, and we are now 
finding through research work by several economists and other experts 
that what we intuitively believe is in fact true.
                  infrastructure funding requirements
    Mr. Chairman, you also requested testimony on infrastructure 
funding requirements. Simply described, our need for investments to 
adequately support the nation's surface transportation system far 
exceeds current investment levels.
    AASHTO has comprehensively analyzed the investment requirements of 
our transportation systems, based on information received from the U.S. 
Department of Transportation. This analysis is detailed in our report 
The Bottom Line: Transportation Investment Needs 1998-2002, copies of 
which have also been provided to the subcommittee.
    To summarize the AASHTO report, over the next 5 years, total 
highway investment requirements just to maintain the current condition 
and performance of the system are $264 billion. An additional 
investment of $94 billion is required to improve the condition and 
performance of this essential system, for a total investment 
requirement of $358 billion over 5 years. Transit investment 
requirements to maintain and improve are identified as $39 billion and 
$33 billion, respectively, for a total of $72 billion over 5 years. 
Attached are three pages from the folder AASHTO recently sent to 
Members of Congress, titled ``Our Transportation Needs.'' They provide 
more details on our findings, with the third page displaying the 
summary information in graphic form.
    While the estimated amounts to maintain and improve our highway and 
transit systems are daunting, the situation is made troublesome because 
significantly more funding is being collected by the Federal Government 
from highway users than is being made available for transportation. If 
we could fully utilize the funds already going to the Highway Trust 
Fund, it would improve the situation. If we could also add to this the 
4.3 cents per gallon now used to support general fund programs, as 
shown on the attached bar graph we would then just have enough funding 
to maintain current highway and transit conditions.
    It is very difficult to explain to highway users who are paying 
fuel and other taxes into the Highway Trust Fund why we do not have 
access to all the funding that is being collected, when our 
transportation investment needs far exceed current funding levels. If 
we could simply have access to all the funding flowing into the Highway 
Trust Fund and the revenue from the 4.3 cent tax, we could at least 
maintain current conditions.
    As stated earlier, it is AASHTO's position that:

        ``The 4.3 cents per gallon in user taxes collected from 
        motorists should be deposited in the Highway Trust Fund and be 
        spent on system maintenance, rather than diverted to the 
        General Fund.''

    AASHTO commends Senators John Warner and Max Baucus and the 55 
Senators who joined them in writing to Senator Pete Domenici, Chairman 
of the Senate Budget Committee, seeking a highway program level of $27 
billion, which has been demonstrated to be sustainable by the Highway 
Trust Fund. We also commend Senators Alfonse D'Amato and Daniel Patrick 
Moynihan for their similar letter, which also urges a transit program 
of $5 billion.
    AASHTO hopes that these funding levels will be approved, and that 
the revenue from the 4.3 cent fuel tax will be placed in the Highway 
Trust Fund and utilized to meet our highway and transit investment 
requirements.
    When the nation's Governor's met in Washington last week, they 
addressed the transportation funding situation and adopted resolution 
EDC-21, ``Surface Transportation Financing.'' It included the following 
paragraphs, and a full copy of EDC-21 is attached:

          ``Growing Highway Trust Fund revenues will permit 
        significantly higher Federal spending for transportation 
        programs over the next 5 years. A much greater share of Highway 
        Trust Fund revenues can and should be spent for transportation 
        investments than is implied in recent Congressional and 
        Administration budget proposals. Governors are aware of and 
        support the movement in Congress for increased transportation 
        spending.''
          ``Governors are aware that Federal fiscal circumstances 
        require prudence in setting spending priorities and continue to 
        support efforts to balance the budget. However, reducing 
        Federal transportation investment and allowing our nation's 
        transportation infrastructure to fall further into disrepair 
        will result in lost profits, jobs, and productivity, and 
        ultimately lower tax revenues to the Federal Government.''

    The NGA resolution then goes on to urge that the Federal 
Government:

          ``Reinstate the nation's long-standing policy of dedicating 
        Federal transportation-related motor fuel taxes and excise 
        taxes exclusively for transportation purposes. If the 4.3 cents 
        per gallon of fuel tax that is currently being used for General 
        Fund purposes continues to be assessed, it should be deposited 
        in the Highway Trust Fund and used for transportation 
        purposes.''
          ``Restore the integrity of the dedicated trust fund. All 
        dedicated user fees and the interest accrued on trust fund 
        balances should be promptly distributed for their intended 
        purposes.''

    Mr. Chairman, we share the view of the Governors.
                                summary
    In summary, AASHTO believes that there will be no more important 
legislation before this Congress for the future of America than the 
reauthorization of our surface transportation program.
    We must either meet our investment needs, or face a decline in 
American mobility as we enter the 21st century.
    We have provided you with AASHTO's recommendations for 
reauthorization and stand ready to provide any further information 
which would be of assistance as you move forward in the legislative 
process.
    Mr. Chairman, this concludes my remarks. Again, thank you for the 
invitation to present our views and we will be pleased to respond to 
questions now or in writing.
                                 ______
                                 
      Responses by Darrel Rensink to Questions from Senator Chafee
    Question 1. I think we can all agree that investments in 
transportation yield a high return in terms of economic productivity, 
efficiency and job creation. However, we are unlikely to have adequate 
public resources to address all transportation needs. Strategic 
transportation investment is therefore critical. In your opinion, which 
transportation investments will yield the greatest return in the 
future?
    Response 1. As we look to establishing our investment priorities, 
the partnerships established through ISTEA with local governments and 
the public must be used to help guide our investment decisions. At the 
Federal level, the congressionally identified National Highway System 
(NHS), including the Interstate system, must remain a focus of Federal 
involvement and investment in highways. The NHS is the backbone of the 
nation's transportation system, and the efficient operation of this 
system is essential to the nation's well-being. Recognizing that there 
is no one definition of what is of national importance, Federal 
investments in the other modes should also focus on those systems of 
international, national or regional importance.
    Historically, Federal investment in our nation's transportation 
infrastructure has focused on capital improvements. State and local 
governments have the primary responsibility for the maintenance and 
preservation of the systems. While the need for capital investments 
which expand the capacity of our systems will remain, we need to 
recognize the long-term benefits which we can achieve with proper 
preservation and maintenance of our infrastructure.
    A key principle to help guide the discussion of investment 
priorities is the need to also focus on ``safety.'' The public deserves 
both a safe and efficient transportation system. Investments necessary 
to improve safety must receive a high priority.
    The responsibility for addressing our critical transportation needs 
does not solely rest with the public sector. As public resources fall 
short of meeting critical needs, we must partner with the private 
sector as we look toward the future. We must explore innovative 
financing opportunities in partnership with the private sector.
    The public expects and demands a first-rate transportation system. 
The challenge is providing the best we can with the resources at hand.

    Question 2. One of the four principle recommendations made in 
AASHTO's Transportation for a Competitive America study is that States 
and local governments should be given more flexibility in determining 
how, when and where transportation resources are spent. In your view, 
what aspects of the current program inhibit the flexibility of State 
and local government in spending transportation resources?
    Response. Since the enactment of ISTEA we have been working to 
achieve the balance between the flexibility necessary to effectively 
administer the transportation program within our States and the 
oversight responsibility at the Federal level. We are still learning 
and beginning to implement the many changes brought about by ISTEA and 
the NHS Designation Act. We will continue to explore how, when and 
where the Federal investments can be directed within the context of 
ISTEA or Federal regulations and areas where additional flexibility 
would result in a more efficient and effective delivery of 
transportation services.
    While we continue to look for that balance, we are encouraged by 
the list of changes included in the Administration's reauthorization 
proposal in the areas of program delivery and project oversight. Many 
of these areas are consistent with the ASHTO reauthorization 
recommendations. The following changes would bring us closer to that 
balance.
     Annual program-wide approval for Surface Transportation 
Program (STP) projects, rather than the current quarterly project-by-
project certification and notification.
     Remove a restriction which applies Federal share to each 
progress payment to the State and allows a variable Federal share on 
progress payments.
     Remove a restriction that prohibited reimbursement of 
certain indirect costs to the States, thereby making Federal-aid 
highway funding more compatible with grants from Federal Transit 
Administration (FTA) and other Federal agencies.
     Permit merger of Plan Specifications and Estimates (PS&E) 
approval and Project Agreement execution and provide for obligation of 
Federal share on a project when the Project Agreement is executed.
     Expand flexibility to States and FHWA to mutually 
determine the appropriate level and extent of State and FHWA oversight 
on NHS projects.
     Provide that FHWA's oversight responsibilities shall not 
be greater than they are under Certification Acceptance and ISTEA, 
unless the State and FHWA mutually decide otherwise.
     Provide that States must assume Title 23 oversight 
responsibilities on non-NHS projects. (FHWA would retain oversight 
responsibility for non-Title 23 requirements, e.g. NEPA, on all 
projects.)
    An additional item which has been the subject of considerable 
concern is the fiscal constraint requirements for long-range plans, 
State Transportation Improvement Plan (STIP) and Transportation 
Improvement Program (TIP) documents.
    The States believe in fiscal accountability and, prior to the 
enactment of ISTEA, have recognized that planning and programming 
documents must consider the availability of fiscal resources. In 
developing long-range plans, anticipating funding beyond a 5-year 
future timeframe is very much of a crystal ball. As a result, the 
absolute requirements for fiscal constraint should be made more 
flexible.
    The regulations for the STIP and TIP require the States' program be 
balanced by type of funding and the year of expenditure, with no over-
programming to allow for project delays or cost under-runs. However, 
States only know how much funding will be available through the annual 
appropriations cycle. The programming documents become little more than 
a ``stapling'' exercise, or the States have been forced into endless 
rounds of amendments as projects are delayed, costs change, or the 
funding mix on projects changes. The STIP fiscal constraint should be 
based on total Federal funds anticipated each year, rather than 
requiring constraint by fund or categorical program.
                                 ______
                                 
 Statement of Damian J. Kulash, President and CEO, Eno Transportation 
                            Foundation, Inc.
    Good morning, Mr. Chairman and members of the committee. My name is 
Damian J. Kulash, and I am the President and CEO of the Eno 
Transportation Foundation, Inc. The Eno Foundation is a 501(c)(3) 
operating foundation. William Phelps Eno started the Foundation in 1921 
to improve traffic control and highway safety. Most of the Foundation's 
initial work dealt with improved traffic-control techniques and 
development of more effective safety policies during the 1920's when 
the Nation was rapidly turning to automotive transportation. As times 
have changed, the Foundation's activities have evolved to meet emerging 
needs. Today, the Foundation remains dedicated to transportation 
improvement, and has become truly multimodal in its activities, its 
Board of Directors and its Board of Advisors, and in the many 
contributions of professional effort that advance its work. Its 
activities have earned an excellent reputation for objectivity and 
reliability. Most of the Foundation's work is supported from its 
endowment; about a third of its work is supported by contracts or 
grants from government and industry. The Foundation operates 
educational study programs, publishes technical monographs, produces a 
quarterly journal dealing with transportation policy, and conducts 
policy forums which bring together people from different perspectives 
to share their views in a neutral, constructive setting. One of the 
topics that we addressed in the policy forum series this past year is 
very close to the focus of this hearing, namely how transportation 
investment can be targeted to produce the greatest economic return.
    The next surface transportation authorization bill will have far-
reaching effects. All Americans have a massive, shared interest in the 
total economic benefits of the transportation system: it increases the 
productivity of each industrial sector, it boosts our competitiveness 
in the global economy, it increases the market for goods and services, 
and it widens the market for labor and for the other factors of 
production. Too often in the authorization process, these shared 
objectives are left unstated, and the discussion immediately turns to 
the distributive implications of the subject: which programs go up and 
which go down; which States get more and which less; which modes and 
regions will grow; which States will be net donors, and the like. These 
are important issues that are closely watched by transportation 
interests, but the overriding goal should be to select an investment 
strategy that gives the greatest boost to the nation's economy and 
which targets that investment on the most effective programs.
    Clearly transportation investments influence the location of 
economic activity. From the time of the nation's first transportation 
plan the Gallatin Report at the beginning of the 19th century political 
leaders responsible for transportation investment have been keenly 
attentive to the substantial regional impacts of such investments. Even 
earlier, as different ports competed to be the supplier of the original 
colonies, then as different routes competed to be the gateway to the 
west, as the first national system of post roads was designed, and 
later as the Interstate Highway System was designed, States and regions 
have vied for access. Transportation facilities are major magnets for 
growth. Many kinds of economic growth will be attracted to one of these 
magnets or another, at the expense of points in between. States and 
regions do not want to be left in those gaps. These local economic 
consequences are obvious and important, but they are not the key to 
developing an effective national investment strategy.
    Developing countries place high priority in investments in rail, 
port, highway, transit, and other transportation facilities, 
recognizing the strong ties between transportation infrastructure and 
overall economic performance. Many historians and developmental 
economists believe that the Industrial Revolution was a direct 
consequence of the transportation development that preceded it. One 
study found that the reason there was an Industrial Revolution in 
England during the 18th century but not in France can be traced partly 
to their different transportation policies. Specifically, England had a 
flexible system for investing in turnpikes and canals as opportunities 
emerged, while France clung to a system of regulations and central 
plans that could not keep up with changing economic opportunities. (1.)
    The economic history of the United States can be traced from its 
transportation investment history from the initial dominance of eastern 
port cities like New York and Boston, to the growth of railheads like 
Chicago and Omaha, to the boom in the Sunbelt which is possible because 
of ubiquitous air and road access. The linkage between the overall 
economy and investment in power supply, water supply, and 
transportation has been of particular interest to developmental 
economists. All industrial revolutions have been accompanied by 
development and expansion of such infrastructure. While there has 
always been a vigorous debate about how to trace the linkage between 
public investment and economic return, the British economist A. J. 
Youngston sums the matter up by noting that the vital significance of 
improved transportation to economic development is ``one of the few 
general truths which it is possible to derive from economic history.'' 
(2.) Surprisingly, this ``general truth'' often gets ignored in the 
economic analysis of national budget issues.
    A recent study by the World Bank found that the importance of 
transportation does not diminish as countries industrialize. (3.) The 
growth of Japan, Korea, Taiwan, Malaysia, and Thailand has been spurred 
by globally integrated production and assembly chains that depend 
critically on high quality domestic, regional, and international 
transportation. The World Bank report observes that cross-country 
studies have confirmed that investment in transport raises growth by 
increasing the social return to private investment without ``crowding 
out'' other productive investment. The Bank's transport investments at 
completion have shown a rate of return of about 22 percent, comparing 
favorably with a rate of about 15 percent for all World Bank 
investments.
    Investments in transportation infrastructure in the United States 
have also stimulated sizable economic returns. Several years ago, Bates 
College economist David Aschauer performed a simple analysis in which 
he separated the economic investment in infrastructure from other 
government, and he found a high rate of return on such public 
investments. (4.) This study flew in the face of the prevailing 
economic assumptions used in budgetary analysis, which was, in effect, 
that the return on investments in infrastructure are no different from 
any other government spending, and could be lumped in with other 
government spending when economic impacts are being estimated. This 
analysis stirred up considerable controversy, both about the methods 
used and the significance of the findings. Although the methodology can 
be refined in various ways, this work nonetheless helped to focus 
renewed attention on the returns from public investments in 
infrastructure.
    It also pointed out that this topic has not received adequate 
attention. In most cases, economists do not separate public investments 
in transportation from other Federal spending, implicitly assuming that 
such investments cannot yield rates of return higher than those 
produced by private investments. But historical experience casts doubt 
on this assumption, as do other recent economic analyses. They show 
that the return on transportation capital has in fact been higher than 
that of other government spending, and also higher than what private 
capital has earned. To ignore these differences is to sell the Nation 
short.
                              new findings
    This past year, M. Ishaq Nadiri, an economist at New York 
University, developed a cost-function model to estimate the 
relationship between the capital stock of highways and the net social 
rate of return. (5.) He found that during the 1950's and the 1960's, 
the net social rate of return of the nation's highway network was 
extremely high around 35 percent, which is far above the rate of return 
that could be expected from private investments. This means that public 
funds invested in transportation in the 1950's were paid back, through 
growth realized by private industry, in only three to 4 years. Around 
1970 this changed. In the past two decades, the net rate of return fell 
to levels that were comparable to those earned by private capital. (see 
Figure)


    These patterns are important for two reasons. First, they show that 
transportation investments can have a profound effect on the economy, 
if they are targeted on the right projects and programs. Second, they 
show that the targets change over time.
    What are right targets for government investment in transportation 
today? Will future investments in the highway system yield returns 
above 30 percent, as in the 1950-1970 period, or 10 percent, as in the 
last decade? Was it the building of the Interstate Highway System that 
caused the high rates of return, and are there similar public 
investments facing us today? Do the National Highway System or the 
widespread introduction of Intelligent Transportation Systems have 
similar potential? Do investments in airports, transit, ports, 
intermodal facilities, and other forms of transportation promise 
similar economic benefits? This past July the Eno Transportation 
Foundation, with sponsorship from the Federal Highway Administration, 
the American Association of State Highway and Transportation Officials, 
and the National Cooperative Highway Research Program, held a forum to 
examine the implications of this work in the current context. We 
brought together a group of economists, industrial representatives, and 
government officials to explore what led to the very high net social 
rates of return that resulted from highway investment in the 1950's and 
1960's, and whether public investments could be targeted to produce 
such high returns in the future.
    This forum concluded that the social rates of return on 
infrastructure have been significant and positive. It also concluded 
that the high returns found in earlier decades trace from what are 
called network and dynamic effects things that create growing room in 
the economy; investments that fit the economic conditions of the time. 
They pointed out that the objective of public investment in 
infrastructure is not simply to solve a locality's immediate 
transportation problem, be it potholes or congestion. Rather, it is to 
enhance the prosperity of the region and the Nation as a whole. They 
also recognized that this does not really answer the question of which 
programs best serve this goal, and that additional analysis is needed 
to pinpoint the specific conditions needed to maximize the value of 
investment projects.
           the interstate highway system and network effects
    As we search for possible causes of the pattern of returns shown in 
Figure 1, by far the most obvious change during the period was the 
building of the Interstate Highway System, a huge program of 
unprecedented proportions. Some 45,000 miles of multilane, limited 
access freeways linking coast to coast and north to south. We all know 
that this system has profoundly reshaped our economy and our lives. 
Trips and shipments that formerly were long and unreliable have become 
routine. Although the new system added barely more than 1 percent to 
the nation's total road mileage, today nearly one mile in four of all 
our highway travel takes place on this system. It made high speed 
travel possible in many areas where it had not been possible before. 
The biggest changes in door-to-door speeds probably came from 
eliminating urban bottlenecks. You can now ship goods from Richmond to 
Hartford without wondering if you would ever get through Washington, 
Baltimore, Wilmington, New York, and New Haven. One quarter of our 
personal travel and our truck freight now occurs on these roads that 
were not here 40 years ago. The Interstate has not only changed where 
we live, work, and shop: it has also allowed industry to reduce 
inventories, achieve economies of scale, access broader markets, and 
operate plant and equipment more economically.
    The economic consequences that are most critical are network and 
dynamic effects. Transportation investments do more than change where 
economic growth happens: they also influence how much growth occurs. 
They should be weighed in terms of the social rate of return they 
create for the Nation as a whole; not just their impacts on specific 
affected areas.
    The nations successful companies reap these benefits every day. 
(6.) For example, the Coca Cola Midwest bottling plant has been 
shipping its product over highways using ``double bottoming,'' a tandem 
trailer arrangement that reduces handling costs, reduces overall 
mileage, and increases driver productivity. Special refrigerated 
``Rolling Warehouses'' make it possible for the Coca Cola plants to 
pre-load trailers to meet orders at the point the product is 
manufactured. Drivers come with their tractors and have the trailers 
ready to deliver, with exactly the right mix of products. The Wal-Mart 
Stores, Inc. quick response program works out of a set of distribution 
centers located on key north-south and east-west routes on the 
Interstate Highway System. It has improved its ability to schedule 
production and reduce its inventory, as well as improve customer 
service. General Motors' Just-in-Time production system uses about 
7,000 trucks to provide daily support to its 29 domestic assembly 
plants. A typical plant unloads about 120 truckloads of parts and 
supplies each day, and speedy, reliable highway access allows General 
Motors to meet very precise production schedules. This system has 
reduced inventory costs and improved competitiveness. Campbell Soup 
Company is also using Just-in-Time delivery, together with its Select 
Supplier program, to reduce inventory, cut waste, and reduce handling 
costs. It has also allowed the company to improve product quality by 
using fresher ingredients.
    As these illustrations show, the benefits of the nation's highway 
system are felt by a diverse array of industries. One of the key 
findings of the Nadiri analysis, which examined the rate of return of 
the highway stock on 35 different industries, is that the economic 
benefits are distributed widely, across almost all sectors of the 
economy.
    Throughout the economy, highway transportation is doing things 
today that it could not do before the Interstate System was built. 
Elimination of congested urban bottlenecks allows intercity shipments 
to extend for longer ranges with greater reliability. This allows 
consolidation of production and warehousing facilities, lets industries 
reach broader markets, and creates economies of scale. Companies are 
able to locate facilities on lower-cost land, reach larger labor 
markets, and cut inventory, storage, and handling costs. By reducing 
the costs of haulage, transportation investments have broadened the 
market area for industry, both domestically and internationally. 
Improvements in the speed and reliability of transportation permit the 
uninterrupted supply of raw materials, components, and finished goods, 
allowing plants and equipment to run more efficiently. Reliable 
transportation is key to Just-In-Time inventory systems, which diminish 
the need for large inventories.
    Productivity improvements like these have been stimulated in all 
transportation-using industries, and that means virtually every sector 
of the economy. These are network effects: the key economic benefits 
come through the provision of a national network. Additions to the 
system not only benefit the localities affected, but they also permit 
the entire network to perform better. Thus elimination of a bottleneck 
in St. Louis may benefit a manufacturer in San Francisco or a retailer 
in Orlando. The interstate interdependency of haulage is reflected in 
the pattern of ever longer shipments. An average shipment by truck 
traveled 416 miles in 1995, up by 77 percent above the average shipment 
length of 235 miles in 1950. The substitution of highway transportation 
for other factors of production is also reflected in total trucking 
tonnage, which grew by 324 percent between 1950 and 1995, while the GNP 
grew by 273 percent during that same period. (7.)
                 which investments create growing room?
    Pressures to balance the budget mean that any investments in 
surface transportation infrastructure must compete for the limited 
funds available. Public funds have often fallen short of the mark, and 
throughout our nation's history we have augmented direct authorizations 
of public funds by using land grants, tolling authorities, bonding, and 
numerous other devices to make long-term investments without being 
unduly constrained by short-term financial limitations. With today's 
intense concern about budgetary pressures, the pendulum appears to have 
swung to the other extreme, however: the nation's highway program is 
increasingly being used to bankroll deficit-reduction efforts. Is it 
sound policy to fund deficit reduction at the expense of transportation 
investment? No, if you can select investments in transportation that 
outperform public and private investments, as was the case in the 
1950's. Yes, if there are no such opportunities to create growing room 
in the current context. That is the crux of the issue at this juncture.
    The nation's stake in this matter is vast, and it pervades every 
sector of the economy. The nation spent $1,150 billion on 
transportation in 1995--about one sixth of the GNP. This includes $348 
billion in trucking expenditures; $599 billion that people spent to buy 
cars, gasoline, tires, insurance, parking, and the like; $70 billion 
for passenger airline fares; and $127 billion that Federal, State, and 
local governments spent on transportation services and facilities. (7.) 
The U.S. total transportation bill is about three quarters the size the 
Federal Budget. The reauthorization of surface transportation programs 
will have profound effects not only on this huge sector, but on the 
entire economy. The efficiency, speed, and reliability of 
transportation have vital consequences on agriculture, construction, 
manufacturing, service industries, and every other sector of the 
economy. Public investments in facilities and private investments in 
vehicles, communications, and control systems are key to continued 
economic growth.
    The economy and the transportation system will continue to grow. If 
the past is a guide, this growth will be substantial. During the past 
decade, freight transportation, measured in ton-miles, grew by 37 
percent and passenger transportation grew by 44 percent. The highway 
portions of these totals grew even faster: intercity truck ton-miles 
increased by 50 percent, and intercity automobile passenger miles 
increased by 44 percent. If these growth rates persist throughout the 
next decade, both passenger and freight volumes on the nation's roads 
will be more than double what they were 10 years ago.
    Which transportation investments will yield the greatest economic 
benefits? One of the morals of recent economic explorations of this 
question is that the investments must fit the context, and the context 
is constantly changing. Public investments in transportation in the 
past appear to have been most successful when they could create a new 
environment that bred new uses of the system. These appear to have been 
to network improvements rather than stand-alone projects. Four parts of 
the program authorized in the previous surface transportation bill 
deserve special attention in this respect: preservation of the 
Interstate System, the National Highway System, the capacity to fill 
intermodal gaps, and Intelligent Transportation Systems.
                 preservation of the interstate system
    Although the Interstate System has been completed and most program 
attention is rightfully focused on other needs, the maintenance of the 
Interstate System, both physically and functionally, continues to be of 
prime economic importance. The initial investment in this system 
produced very high social rates of return. Disinvestment in this system 
could cause correspondingly large economic disruption. While it is 
difficult to interpret historic studies of economic impacts in terms of 
today's programs, one of the most applicable inferences is that keeping 
the Interstate in good repair is a top priority.
    Closely tied to this is preserving the functional capacity of the 
system. Local traffic congestion threatens national network performance 
in many places. There are no easy solutions. The strong economic 
performance of past investments on this system, however, also signal 
the high looming costs of not keeping ahead of the needs.
                      the national highway system
    The participants at the Eno Forum on the Economic Returns from 
Transportation Investment noted that the Interstate Highway System was 
underutilized at first, but it created room for rapid future growth. 
New tools or new capabilities can create unanticipated new fields of 
economic opportunity. Investments of this sort do not simply meet an 
existing demand. They create new demands by opening the door to 
entirely new activities. This is perhaps most easily seen in the case 
of computers, where applications that appeared exotic a few years ago 
have become commonplace components of household appliances and 
automobiles. Similarly, new transportation system capabilities have 
contributed to the creation of catalog businesses, overnight package 
delivery services, and just-in-time manufacturing. Many of these new 
businesses or capabilities were not foreseen before the supporting 
communications, computing, and transportation investments to support 
them were made: the new businesses seized the ``growing room'' that the 
new investments created.
    The National Highway System, like the Interstate Highway System, 
could improve the reliability and throughput of those parts of the 
surface transportation system that will be most heavily used. Just as 
the creation of the Interstate Highway System brought important network 
benefits by tying together the leading centers of production and 
activity, so too might the National Highway System have similar effects 
by targeting national priority on the key routes selected for the 
National Highway System. Is this the right investment for today's 
context? Nadiri's analysis sheds some encouraging light on this 
question. He separately examined the net social rate of return from 
investments in non-local roads, using the same general approach that he 
used for his analysis of total highway capital stock. He found that 
returns had fallen over the decades in both cases, but that capital 
invested in non-local roads always showed a return about which was 
about one and one half times that estimated for the total highway 
stock. Even in recent years, the investment in non-local roads showed a 
return of 16 percent, or paid back the public investment in 6 years. 
This compared favorably to private investments in general, which showed 
a return of 11 percent.

                         Table 1--Percent Annual Net Social Rate of Return on Investment
----------------------------------------------------------------------------------------------------------------
                    Net Social Rate of Return                      1950-1959   1960-1969   1970-1979   1980-1989
----------------------------------------------------------------------------------------------------------------
Total Highway Capital Stock.....................................      35.2        34.8        16.1        10.0
Non-local Highway Capital Stock.................................      47.9        47.4        23.8        16.1
Private Capital Stock...........................................      13.4        14.0        12.0        11.0
----------------------------------------------------------------------------------------------------------------


    These findings, which apply to the actual investments made in non-
local roads during the 1980's, do not necessarily apply to the 
investments the National Highway System in future years. Nevertheless, 
they do suggest that one key target of opportunity lies in expansion of 
the national network to include additional heavily traveled routes.
                            intermodal gaps
    Most transportation is planned, managed, and run one mode at a 
time. Things that happen between the modes have been outside the scope 
of most companies or organizations. Customer demands are changing this. 
In the case of freight transportation, huge investments in ports, 
containers and terminals that have made intermodal freight traffic one 
of the fastest growing parts of the overall transportation scene. In 
the case of passenger transportation, government agencies are 
increasingly seeing their role tied to improving overall performance, 
not merely building infrastructure or running a certain kind of 
vehicle.
    The ``intermodal'' emphasis in the Intermodal Surface 
Transportation Efficiency Act (ISTEA) of 1991 targeted an important 
feature of the overall network the often neglected edges between the 
modes. Rather than tightly limiting the way that Federal funds for 
infrastructure can be used, ISTEA allowed flexibility in substituting 
other projects that would increase system performance. It encouraged 
planning that embraced all the modes. It created new program categories 
to address emerging needs.
    Intermodalism brings a new solution to an old problem. The fact 
that individual modes are poorly coordinated parts of a larger system 
has been recognized for years. It was this insight that drove the 
creation of the U.S. Department of Transportation in 1966. 
Administration after administration has called for an integrated, 
national transportation system, but the challenge has proven far easier 
to repeat than to meet. Every individual and every business in the 
country has a stake in transportation, and the organizations and 
topical jurisdictions that have evolved reflect pervasive interests. 
Parts of transportation are private, parts public; parts are Federal, 
and others State or local. Earlier calls for an integrated national 
transportation system appeared to hint at some sort of command and 
control superstructure, a specter that spread paralyzing fear among 
virtually every firm and organization involved. Intermodalism 
represents a strategy for getting better coordination without the 
threat of excessive central control. It targets the rough edges between 
current divisions of responsibility. It may offer a strategy for 
achieving the economic benefits associated with network effects, not 
just for the highway network, but for the transportation network as a 
whole.
                intelligent transportation systems (its)
    The stunning rate of progress in communications, computer, 
automated identification, global positioning systems, and other areas 
have opened vast new windows of opportunity in the degree of 
coordination that is technologically and economically viable. 
Activities that were too complex to manage previously show great 
potential today. Continued advances in Intelligent Transportation 
Systems could yield great benefits in efficiency, safety, and service. 
These emerging systems could potentially improve the coordination of 
transportation services, permit better use of existing facilities, 
introduce new navigational capabilities, make travel safer, lead to 
more efficient management of highway incidents, and bring many other 
benefits. With or without government investment here, there is little 
doubt that the vehicle/highway system 50 years from now or even 20 
years from now will embody products and capabilities that are 
unimaginable today. Like the Interstate Highway System, which created 
unanticipated growing room for many economic opportunities, ITS has the 
potential to bring radical change to how the nation's surface 
transportation affects the economy.
                               conclusion
    This is a critical period in the evolution of the nation's surface 
transportation programs. The current reauthorization comes at a time of 
intense budgetary pressures. It comes at a time when the national stake 
in transportation is not clearly defined and not well recognized. The 
Interstate Highway System has been completed, but keeping it in repair 
and preserving the type of service it provides will continue to be top 
priorities. As this system has been completed, other highway and bridge 
programs have not generated the same commitment to common purpose that 
characterized the Interstate System. The National Highway System, which 
focuses on the principal routes of interstate commerce and travel, is 
still emerging and the funding to maintain this system has yet to be 
provided. Intermodalism, which might offer an effective strategy for 
setting priorities and focusing resources on key opportunities in the 
overall transportation network, still represents only a very small part 
of the program. Without additional resources, this set of opportunities 
will appear to be a diversion from existing highway and transit 
programs, which are struggling to deal with their traditional scope. 
Intelligent Transportation Systems promise many benefits, but most of 
these will take years to realize. In the absence of a strong and 
unifying interest in the nation's transportation programs, rivalries 
between States, modes, or projects are eclipsing the fundamental 
questions.
    Growth in the economy will continue to hinge on wise transportation 
investments. Budgetary pressures will make it exceedingly difficult to 
free the funds that are needed for investment. The Congress will have 
to make the difficult allocation of resources between transportation 
investments, deficit reduction, and other priorities. The new 
investments are made will have immense economic consequences, as will 
any net disinvestments that result if the service provided by existing 
systems is allowed to deteriorate. It is essential for continued 
economic health that you target the available funds on those programs 
and systems that will do the most for economic growth.
    Recent economic analysis has shown that the returns from investment 
have varied widely in recent years. Sometimes they have been 
dramatically stronger than what private investments have earned, 
sometimes about the same. Finding investments that produce maximum 
economic growing room appears to be key to effectiveness. Forty years 
ago, that meant channeling funds into the creation of the Interstate 
Highway network, an investment which generated very high economic 
returns. It is not clear which, if any, programs would yield similar 
benefits today. Inasmuch as past experience suggests that network 
effects are at the core of effectiveness, four programs preservation of 
the Interstate Highway System, improving the National Highway System, 
filling intermodal gaps, and Intelligent Transportation Systems appear 
to warrant special consideration. These programs have the potential to 
afford the growing room that has characterized effective programs in 
the past. In the current struggle for funds, however, these programs 
particularly the newer ones are apt to be shortchanged and cast as 
diversions. That would be unfortunate. To achieve the high rates of 
return that history shows to be possible, it is important to look past 
the immediate, site-specific consequences of the program and support 
the program elements that fuel the nation's economy as a whole.
                other works referenced in this statement
    1. Rick Szostak, The Role of Transportation in the Industrial 
Revolution: A Comparison of England and France, 1991
    2. A. J. Youngson, Overhead Capital: A Study in Development 
Economics, 1967.
    3. The World Bank, Sustainable Transport: Priorities for Policy 
Reform, 1996.
    4. David Aschauer, Is Public Expenditure Productive?, 1989
    5. M. Ishaq Nadiri and Theofanis P. Mamuneas, ``Highway Capital and 
Productivity Growth,'' in Economic Returns from Transportation 
Investment, Eno Transportation Foundation, 1996.
    6. Apogee Research, Inc., Case Studies of the Link Between 
Transportation and Economic Productivity, 1991.
    7. Eno Transportation Foundation, Transportation in America: 
Historical Compendium, 1939-1985, 1989 and Transportation in America: 
1996, 1996.


REAUTHORIZATION OF THE INTERMODAL SURFACE TRANSPORTATION EFFICIENCY ACT

                              ----------                              


                      WEDNESDAY, FEBRUARY 26, 1997

                               U.S. Senate,
         Committee on Environment and Public Works,
         Subcommittee on Transportation and Infrastructure,
                                                    Washington, DC.

         ADMINISTRATION'S TRANSPORTATION POLICIES AND PROPOSALS

    The committee met, pursuant to notice, at 9:34 a.m., in 
room 406, Dirksen Senate Office Building, Honorable John W. 
Warner (chairman of the committee) presiding.
    Present: Senators Warner, Smith, Kempthorne, Inhofe, 
Thomas, Wyden, Moynihan, Reid, Graham, Boxer, Baucus, and 
Chafee [ex officio].

           OPENING STATEMENT OF HON. JOHN W. WARNER, 
         U.S. SENATOR FROM THE COMMONWEALTH OF VIRGINIA

    Senator Warner. The Subcommittee on Transportation and 
Infrastructure will come to order.
    We are convened today to receive testimony from the 
Honorable Rodney Slater, Secretary of Transportation, on the 
Department of Transportation's ISTEA reauthorization proposal 
and program performance. In our second panel we will hear from 
Mr. William Fay of the American Highway Users Alliance, and Mr. 
Hank Dittmar of the Surface Transportation Policy Project.
    Before we receive the Secretary's testimony, let me turn to 
the distinguished chairman of the full committee, Senator 
Chafee, for any opening remarks he may care to make.
    Senator Chafee.

           OPENING STATEMENT OF HON. JOHN H. CHAFEE, 
          U.S. SENATOR FROM THE STATE OF RHODE ISLAND

    Senator Chafee. Thank you, Mr. Chairman.
    Mr. Secretary, welcome. We have had the pleasure of working 
with you over several years now and we look forward to 
continuing that.
    I might say, Mr. Chairman, during the recess I had the 
privilege of going to Germany to see the magnetic levitation 
train that Senator Moynihan has been talking about and urging 
us to go see. It was a wonderful experience. I urge any of our 
colleagues who can to go over there and take a look at that 
train. It has a 20-mile run they have set up in the test 
facility. It was cruising along at 430 kilometers per hour, 
which works out to 250 miles per hour, with no friction because 
it is raised up off the track. Therefore, there is no metal on 
metal.
    Mr. Chairman, I want to commend you for these hearings and 
commend the Department for preserving and building upon the key 
goals of ISTEA, which we passed in 1991. This is a 
reauthorization of that.
    I am pleased that, in your materials you are presenting to 
us, you have several strong innovative finance provisions. It 
seems to me with the fiscal constraints that are upon us, we 
have to reach out for creative ways of financing our 
substantial infrastructure needs. The Administration's decision 
to expand the State Infrastructure Bank--so-called SIB--and to 
create a new infrastructure credit program demonstrates a solid 
commitment to do this. These ideas, along with others, will 
encourage the private sector participation. Senator Warner, 
Senator Moynihan, Senator Bond, and I introduced legislation to 
permit and encourage private sector participation.
    I would like to just mention the controversial issue of 
funding formulas. I am concerned that much of the current 
discussion focuses on gasoline taxes and other trust fund 
contributions. I believe that gasoline taxes are a simple and 
efficient way to raise revenue for transportation. In fact, 
Senator Bond and I are cosponsoring a bill to strengthen the 
relationship between gas taxes and other trust fund 
contributions and transportation spending. We make that nexus, 
that connection.
    It seems to me, however, that gasoline taxes and other 
contributions should not drive national policy. Our national 
transportation program should focus on needs--what do we need 
out there--as do almost all the other Federal programs. The 
other Federal programs are based upon need. Using gas tax 
contributions is a primary means of distributing funds. It 
seems to me if you can only get out what you put in, that 
undermines incentives to be more frugal in the use of gasoline. 
We will be able to discuss that at greater length when we 
discuss the formula.
    So what I see out of this ISTEA and what we did in 1991 was 
very innovative. I hope we can continue that innovation with 
the reauthorization this year.
    Thank you very much, Mr. Chairman.
    Senator Warner. Senator Baucus.

  OPENING STATEMENT OF HON. MAX BAUCUS, U.S. SENATOR FROM THE 
                        STATE OF MONTANA

    Senator Baucus. Thank you, Mr. Chairman.
    I would like to say a word about the levels of funding 
which the Administration and the Budget Committee apparently 
are proposing for ISTEA. I think those levels are inadequate.
    I mentioned at our last ISTEA hearing my disappointment 
that the Administration's fiscal year 1998 budget proposed a 
$500 million decrease in highway programs, not level funding, 
but effectively a $500 million decrease. I was further 
disappointed when I learned that the Administration's ISTEA 
reauthorization bill would be proposing authorization levels 
far below that which the highway trust fund could sustain. 
These authorization levels actually decline each year of the 
bill.
    It has been estimated that the balances in the fund will be 
$44 billion to $48 billion at the end of the authorization 
period. I think we all agree that is unacceptable. I have long 
been an advocate for spending these balances, plus the revenue 
we collect every year. We are cheating the American taxpayers 
every time we shortchange them in transportation spending.
    We made a deal with motorists that the user fees they pay 
in Federal fuel taxes would be used to improve our 
transportation system. Sadly, this has not been the case. And 
it appears the Administration bill will come up short again.
    This is unfortunate. While many of the priorities of the 
Administration you will discuss today, Mr. Slater, deserve 
praise, without the necessary resources these priorities will 
not be realized. Enhancing and protecting the environment, 
increased safety standards, and welfare to work programs all 
may suffer because funding is not available to achieve these 
goals and still maintain our thousands of miles of highways and 
bridges.
    There is a very broad support for increased transportation 
funding from the highway industry to organized labor to the 
environmental community. I can guarantee my colleagues that 
this may be one of the only areas during reauthorization where 
there is agreement among competing interests. We should not 
lose this opportunity to capitalize on this consensus.
    So with my colleagues on this committee, I intend to 
continue to push the Senate Budget Committee to understand the 
importance of transportation spending. We all want to balance 
the budget--and we will--but let's be smart about it.
    Mr. Slater, I have other questions which I will ask you at 
other times, but I urge you to take this message back to the 
Administration and to all those who have something to say about 
how many highway dollars we spend. I think right now we are 
missing a major opportunity and we are, in fact, shortchanging 
Americans who pay for gasoline and diesel fuel and expect that 
those payments will go to the highway program, when we are not 
doing that thus far.
    Senator Warner. Thank you very much, Senator Baucus.
    I wish to associate myself with your remarks with regard to 
the higher expenditures which the highway trust fund can 
sustain, and I hope will sustain. I have joined with my 
colleague from Montana and we are going to have a fun, 
relenting drive against all to get a higher level of funding 
for America's highways.
    I regret that the Administration, Mr. Secretary, has not 
submitted this morning its proposed bill. Nevertheless, we are 
glad that you are here to give us certain highlights of that 
bill. Some parts of that bill have been shared with me. I must 
say that I wouldn't pronounce it dead on arrival, but Mr. 
Secretary, it falls short in my judgment unless major changes 
are made in the next few days reflecting what I believe is the 
proper role of leadership for the President and for yourself. 
And I say that most respectfully to my good friend.
    This particular bill--call it what you wish, ISTEA renewal, 
or whatever it is, I think it is neither ISTEA renewal or a new 
one--it is building on certain goals in ISTEA, but recognizing 
that other parts of ISTEA require change. I will address the 
formula as a particular example momentarily. But we need more 
active leadership from the President and yourself.
    This is the largest money bill going through the Congress, 
and that is really the Department of Defense bill, a single 
piece of legislation uncontrolled by entitlements or otherwise. 
Therefore, it is going to require the strong leadership from 
the Administration and from the Congress to do what is proper 
and fair for the American people.
    I urge you, and I know you well, and I think you are up to 
it. It is only a question of whether those to whom you report 
will give you that free reign. I hope they will.
    On the formula, I disagree with my distinguished college 
very strongly about your approach to it. Senator, as I listen 
to you, maybe we ought to repeal the gas tax and see if we can 
start all over again. The legislative history on the Federal 
highway trust fund is very clear. It was put on the log books 
to take care of America's highways and not an ever-expanding 
array of other needs. If it is the intention of Congress to go 
back on those commitments when this law was written, then I 
think we had better take it off the law books and start over 
again.
    I say that most respectfully to my distinguished colleague 
from Rhode Island.
    We are limiting ourselves to just a few minutes here, 
gentlemen.
    The gentleman from Idaho.

          OPENING STATEMENT OF HON. DIRK KEMPTHORNE, 
              U.S. SENATOR FROM THE STATE OF IDAHO

    Senator Kempthorne. Thank you very much, Mr. Chairman.
    I would just like to publicly congratulate our new 
Secretary of Transportation. I was proud to support his 
nomination. In light of your urging that we get to the 
questions, I would withhold further comments and will point to 
some of my areas of concern through the questioning.
    Thank you.
    Senator Warner. Fine.
    Senator Boxer.

           OPENING STATEMENT OF HON. BARBARA BOXER, 
           U.S. SENATOR FROM THE STATE OF CALIFORNIA

    Senator Boxer. Mr. Chairman, I would like to submit my 
statement for the record. I would like to make about 2 minutes 
worth of comments because for me, despite some of the 
negativity--and I know we all have problems with this--it is a 
very exciting day because I view transportation as the life 
blood for California, and I know it is true for many other 
States. I do look forward to working with our new Secretary, 
for whom I have the greatest respect, and with you, Mr. 
Chairman, and our ranking member, and our full committee chair 
so that we come up with a formula that is fair.
    Of course, as the representative from the largest State of 
the Union, I would like to see it based on population and the 
actual miles of highway. So I will of course be taking a 
position that is best for my State, as we all will do.
    But I think truly that what is best for California in many 
ways, as the largest State of the Union, is good for our 
country--and I will tell you why. I think the future of our 
country rests on our ability to be a global economic leader. To 
do that, we have to make sure that we can move goods, we can 
move people, we don't waste time in gridlock. I will tell you, 
Mr. Chairman, right now that NAFTA has brought with it a lot 
more trade, but also the most incredible gridlock you have ever 
seen. I would hope that some of you may be able to accompany me 
to the border so that you can see it for yourself. We just did 
not think ahead.
    I have spoken to the distinguished Secretary and I am 
pleased he has some initiatives to share with us about this, 
but our border checkpoints are becoming border choke points. If 
we are going to continue to lead in the world, this cannot be 
the case.
    So there are many other comments I have. I will withhold 
them for the questions, but Mr. Chairman, I am so pleased to be 
on this subcommittee. I want to thank Senator Baucus for his 
incredible help in giving me some advice so that I could get 
onto this subcommittee. Hopefully, I will be a productive 
member.
    Thank you.
    [The prepared statement of Senator Boxer follows:]

    Prepared Statement of Hon. Barbara Boxer, U.S. Senator from the 
                          State of California

    Today is an exciting day for me because I view the 
reauthorization of our surface transportation law as an 
absolutely critical part of our country's economic growth 
strategy. In California transportation is our life-blood. And I 
know that is true for many other States.
    I look forward to working with my colleagues on this 
committee and with Secretary Slater to do what is best, and I 
truly believe what is best for California is really best for 
the entire country. Why do I say that? Because California's 
economic future and America's economic future are tied to the 
efficient movement of goods and people both in and out of our 
country and across our country. We cannot be the economic 
leader of the world if gridlock wins the day. America's main 
ports are working at capacity. Expansions are planned or 
underway at every major airport, seaport, and border point of 
entry in the State to meet the challenge of global economic 
competition. And we need to improve access to those ports by 
rail and highway.
    That is why I am pleased to see that the Administration's 
next TEA plan focuses in part on enhancing trade movement with 
the Border Crossing and Trade Corridor Grant Program. The 
Administration is proposing to allow more highway spending for 
rail-related transportation facilities to enhance the movement 
of goods.
    The plan is to expand the flexibility of States and local 
agencies to fund publicly owned rail and rail-related passenger 
and freight projects, such as passenger rail terminals and 
transfer facilities for freight. These must demonstrate a 
public benefit such as improved air quality and reduced 
congestion.
    The Administration also proposes a $100 million 
transportation credit enhancement program that will help fund 
nationally significant transportation projects.
    The Alameda Transportation Corridor, serving the ports of 
Los Angeles and Long Beach is a perfect example. It will 
eliminate 200 rail and street intersections that tie up 
southeast Los Angeles and raise pollution from idling car 
emissions. There are similar projects needing assistance in 
California and other States.
    I would like to see more assistance for our international 
border chokepoints. They should be checkpoints, but they are 
actually chokepoints. Providing safe and efficient trade 
corridors at our borders is a responsibility that was neglected 
when NAFTA passed. We must correct this in the Next TEA, and I 
will offer a plan for the committee's consideration.
    In addition to slowing down trade, gridlock greatly impacts 
commuters. The annual Bay Area survey in San Francisco recently 
found a third of the residents cited transportation as the most 
vexing problem, surpassing crime as the region's chief worry.
    Four of the 10 most congested urban areas in the country 
are in California--San Francisco, San Bernardino and Riverside 
counties, Los Angeles and San Diego--according to one 
congestion study released last year. Commuting times are 
slowing to a crawl. It's no surprise that Los Angeles tops the 
list of cities in the U.S. in terms of traffic delays. We lose 
productivity from our workers in these traffic snarls and we 
waste fuel, too.
    Now is the time to strengthen our national transportation 
commitment. We need to fine-tune ISTEA, in ways that we can 
provide efficient transportation for commuters and freight. We 
should consider ways to streamline the permitting process for 
transportation projects, and we should adequately fund the 
Congestion Mitigation and Air Quality Program which provides 
flexible spending on clean transportation alternatives.
    We should also put a higher premium on maintenance. In 
California, maintenance and operations for highway and traffic 
is underfunded by about $1.5 billion a year, according to a 
private study. We all know that we pay a heavy price for 
neglect.
    I look forward to a spirited discussion of all these 
issues.

    Senator Warner. We are delighted to have you, Senator. 
Thank you very much.
    Senator Smith.
    Senator Smith. Thank you, Mr. Chairman.
    I will submit my statement for the record, but just say on 
the record my congratulations to the Secretary and to say that 
we look forward to working with you.
    [The prepared statement of Senator Smith follows:]

    Prepared Statement of Hon. Robert Smith, U.S. Senator from the 
                         State of New Hampshire

    Thank you, Mr. Chairman, for holding this hearing today on 
the Administration's proposal for ISTEA reauthorization. I 
first want to welcome and congratulate Secretary Slater on his 
confirmation and express my desire to work with him and his 
department in developing a fair, common sense, forward-looking 
reauthorization bill that meets both our local and national 
transportation needs.
    While I am disappointed that the Administration could not 
complete its work in time for this hearing today, I trust that 
Secretary Slater will be as forthcoming as possible about the 
details of their proposal. I have some general concerns about 
the Administration's budget request for our highway program, 
including DOT's suggestion to fund certain entities such as 
Amtrak from the Highway Trust Fund. I hope to hear from 
Secretary Slater as to the rationale for some of these policy 
decisions.
    I think we can all agree that an efficient and well-
maintained transportation system is critical to our nation's 
economy and personal mobility. ISTEA was certainly landmark 
legislation in a number of ways, particularly in the area of 
giving States and local communities increased input and 
flexibility in the transportation planning process. In that 
regard, I will be interested in hearing from our witnesses how 
we can make improvements in the area of flexibility and 
devolution of decisionmaking authority without compromising our 
national interests.
    With that, Mr. Chairman, I will yield so that we have 
sufficient time to hear from the Secretary and the other panel 
of witnesses.

    Senator Warner. Thank you.
    Senator Thomas.

 OPENING STATEMENT OF HON. CRAIG THOMAS, U.S. SENATOR FROM THE 
                        STATE OF WYOMING

    Senator Thomas. Thank you, Mr. Chairman.
    I, too, want to say how pleased I am to be in this 
subcommittee and am glad to have you here, Mr. Secretary. I 
entered just in time to hear my friend from California talk 
about a formula based on population.
    [Laughter.]
    Senator Thomas. I have a little different point of view.
    [Laughter.]
    Senator Boxer. We will work together.
    [Laughter.]
    Senator Thomas. I would like to talk a little bit about 
miles and about Federal land and some of the other 
peculiarities that do go with the various States we have.
    I submit my statement for the record, too, Mr. Chairman.
    [The prepared statement of Senator Thomas follows:]

    Prepared Statement of Hon. Craig Thomas, U.S. Senator from the 
                            State of Wyoming

    Mr. Chairman, thank you for holding this hearing today. Two 
weeks ago the subcommittee examined our country's 
transportation infrastructure funding requirements and the 
national economic benefits that result from a good 
transportation system. I look forward to the discussion at this 
hearing regarding whether the current ISTEA program structure 
is meeting these needs and how the Clinton Administration's 
proposal addresses these issues.
    In my view, the current ISTEA law was a helpful first step 
toward shaping transportation policy to take this country into 
the 21st century. It maintained a national commitment to 
transportation, but made some necessary changes to surface 
transportation policies. However, it failed to address 
important issues that will make our transportation program more 
flexible and efficient in order to respond to changing 
transportation needs.
    I look forward to listening to the Secretary today 
regarding the administration's proposal to address these 
concerns. I must say that I am not enthusiastic about what I 
have heard so far, but I will reserve judgment until I examine 
the final proposal and have heard from the Secretary.
    Some of the issues I am concerned about include: a 
substantially stronger investment in our transportation 
infrastructure, a strengthened Federal Lands Highways Program, 
reducing regulations and streamlining program structure. Any 
reauthorization proposal I ultimately support must address 
these critical issues.
    Again, Mr. Chairman, I am pleased you are holding this 
hearing so the subcommittee can explore these important 
national issues.

    Senator Warner. Thank you, Senator. I also place in the 
record the statement of Senator Reid.
    [The prepared statement of Senator Reid follows:]

     Prepared Statement of Hon. Harry Reid, U.S. Senator from the 
                            State of Nevada

    Mr. Chairman, there is little doubt that the issues we will 
address in today's hearing are issues that are of great 
interest to every member of both bodies. Transportation 
represents a truly national concern. All of us have a stake in 
ensuring that America's transportation policies are coherent 
and efficient. More importantly, all of us have a vested 
interest in ensuring that the goals of our transportation 
policies are capable of being achieved.
    This session of Congress will likely include extensive 
consideration of not only how we finance our national 
infrastructure but also what our transportation policies should 
aim for as we head into the 21st century.
    The dynamic flow of commerce and individuals is continually 
subject to change. While our transportation policies may not 
always be able to anticipate these changes, they must be 
flexible enough to accommodate them. All of us have varying 
opinions about the best way to meet these changes. However, I 
believe there are some areas of common ground that all of us 
can agree on as we establish the framework for reauthorizing 
the ISTEA.
     Our transportation policies must recognize the 
importance of providing adequate dollars for improvement and 
maintenance of our infrastructure.
     The policies should not favor one region over 
another, as the steady flow of commerce across State lines is 
in the Nation's best interests.
     Funding formulas should provide States with 
sufficient funding to meet the changing infrastructure needs 
they face.
     While some push for devolution, all of us agree 
that Federal regulations have to recognize the need for greater 
flexibility at the State level.
     Because we have a national transportation policy 
we must recognize that there are often unique interstate needs 
that otherwise would not be addressed but for a Federal 
program.
    I believe the unique regional perspectives all of us bring 
to this issue will ultimately allow us to forge a coherent 
national policy. I represent a State that just happens to be 
the fastest growing State in the country. We have 5,000 new 
people moving into the State of Nevada every month. Because 
funding formulas in the past have been based on old census data 
it has been nearly impossible for Nevada to receive the proper 
financing necessary to accommodate this growth. Therefore, I am 
delighted to hear that the Administration is proposing to use 
the most up-to-date information available in the 
reauthorization package.
    Nevada is also unique in that 87 percent of the land is 
owned by the Federal Government. To appreciate how much land 
this is, consider the fact that in the areas in between our 
interstates, you can fit the States of New Jersey, Connecticut, 
Massachusetts, Rhode Island, Vermont, New Hampshire and 
Delaware. That's a lot of Federal land. Because the Federal 
Government owns these lands the State of Nevada receives little 
or no taxes from these lands but must still provide for 
intercontinental activity across these areas. In order for all 
States to enjoy the benefits of our economy we must be able to 
build and maintain these lines of commerce, and Federal lands 
programs are the source of much of the funding for these areas.
    Nevada is also a bridge State. Much of the traffic is 
interstate traffic. We play an important role in interstate 
commerce. But the need for improving and maintaining these 
interstates arises out of the damage caused largely by non-
Nevada traffic. It is difficult for me to explain to my 
constituents why we are underfunding basic maintenance projects 
when they see firsthand the infrastructure degradation caused 
by out-of-State traffic traveling on our interstates.
    Finally, I am concerned that while we have consistently 
articulated a coherent national transportation policy, we have 
failed to provide the adequate funding necessary to support 
these policies. Specifically, I am troubled by the current 
budgetary gimmickry being played with the Highway Trust Funds. 
The games being played with the highway trust fund are penny 
wise and pound foolish. I have introduced legislation to take 
the highway trust fund off budget and believe this action is 
necessary if we are serious about meeting our transportation 
objectives.
    Our nation's infrastructure represents the lifeline that 
fuels our economy. When we neglect to adequately provide for 
the health of this lifeline all of us suffer. Whether its 
unsafe and degraded roads or pollution caused from over 
congestion, all of us are affected. The price is not only the 
inconvenience of traversing a dilapidated infrastructure. 
Indeed, the real price is the increased costs all of us pay for 
goods and services because of the burdens placed on a steady 
flow of the stream of commerce. It's similar to cholesterol 
buildup in the arteries--eventually there is a steep price to 
pay.
    I look forward to being an active participant in rewriting 
a bill that will allow us to continue into the next millennium 
as the world's foremost economic powerhouse. By providing 
coherent, efficient and flexible transportation policies we 
will surely rise to the great challenges of the 21st century.

    Senator Warner. Mr. Secretary, it is your moment. Your 
prepared statement will appear in the record.

 STATEMENT OF HON. RODNEY E. SLATER, SECRETARY, DEPARTMENT OF 
                         TRANSPORTATION

    Secretary Slater. Thank you, Mr. Chairman.
    Mr. Chairman, Senator Baucus, and members of the committee, 
I am honored to appear before the Senate Environment and Public 
Works Committee, the committee that confirmed me in 1993 as the 
Federal Highway Administrator, my first Federal position. 
President Clinton has entrusted me with the significant 
responsibilities that come with the Secretary's job, but I 
would also like to note that the Senate has entrusted me with 
that responsibility as well, having confirmed the President's 
nomination of me as Secretary of Transportation.
    I accept these responsibilities humbly, but with full 
confidence gained over the past 4 years in the outstanding 
staff of the Department of Transportation, who will work with 
me as we respond to you and the needs and concerns of your 
constituents as we move America forward and as we provide a 
transportation system that responds to the needs of our 
citizens in the coming century.
    I appreciated the opportunity to appear before you on 
January 31 to talk to you prior to my confirmation as Secretary 
about the future of transportation in our country. You know, 
therefore, that I consider transportation to be vitally 
important to our Nation, as has been stated by all of you from 
your individual perspectives as well. Its historic development 
has played a part in our Nation's historic development. Its 
current relationship to our economic strength and military 
security as a Nation are also apparent; and transportation's 
future and its ability to help us compete and win in a global 
economy are also important.
    Sometimes I think we lose sight of the fact that 
transportation affects every citizen in the United States. Our 
transportation network has sustained not only the strongest 
economy in the world, but it has also helped to make us the 
most mobile society in human history. But this same 
transportation network that supports our national defense needs 
also serves us in our most personal moments: rushing to the 
hospital for the birth of a child, going on vacation, or going 
to a rewarding and fulfilling job that enables each and every 
one of us to provide for the needs of our families.
    Through the cooperation in years past of succeeding 
congresses and administrations, in partnership with State and 
local officials and with the private sector, the United States 
has built a transportation network that is second to none in 
the world. In fact, second to none in all of human history.
    This committee can be proud of what it has contributed to 
this record of achievement, and we will talk a lot about that 
as it relates to ISTEA as we go through this hearing. The 
Department of Transportation can be proud as well, and we are 
certainly proud of the dedicated men and women throughout the 
transportation community who have worked with us to make all of 
this possible.
    On a personal level, I am humbled yet proud to have been 
part of the President's first Administration wherein we worked 
with all of our partners to make this committee's vision of 
ISTEA a reality in practice. Yet I say to you, for all that we 
have accomplished, the best is yet to come. I think I echo the 
comments and the sentiments expressed by the Chairman earlier 
in his remarks in that regard.
    More than ever, we understand that transportation is about 
creating access to opportunity for all Americans and about 
empowering Americans in their enjoyment of life, liberty, and 
the pursuit of happiness. The echoes of history tell us the 
story. George Washington understood, as all Presidents must 
understand. At the dawn of our new Nation, he understood that 
to hold the western settlements along the Ohio Valley to the 
eastern States, we must do certain things. He said, ``We must 
open a wide door and make smooth the way for the produce of 
that country to pass to our markets before the trade may get 
into another channel.'' Yes, George Washington understood.
    President Thomas Jefferson understood. In 1806, he opened 
that wide door even wider by approving legislation to build a 
national road that would knit what was even then a diverse 
nation together in what he called a ``union of sentiment'' 
brought on by commercial interests, but I also have to believe 
brought on by his understanding of the true meaning of the 
ideals found in the Declaration of Independence that he wrote, 
especially dealing with the whole question of the pursuit of 
life, liberty, and happiness.
    For that same reason, he dispatched Lewis and Clarke to 
explore the vast expanse of the Louisiana Purchase from the 
Mississippi River to the Pacific Coast, partly in search of a 
water route that would bind those uncharted territories to the 
Nation that now owned them.
    President Abraham Lincoln understood as well. In July 1862, 
even while trying to hold a Nation together in war, he took an 
important step to hold it together in peace by signing the 
Pacific Railroad Act that made the Transcontinental Railroad 
possible. He knew it would not only link a Nation, but enhance 
the lives of people on both ends of the line.
    And yes, President Woodrow Wilson understood. When the 
Federal Aid Road Act of 1916, which created the Federal Aid 
Highway Program, reached his desk, he was happy to sign it 
because this new law, ``tends to thread the various parts of 
our country together.''
    And yes, Franklin Delano Roosevelt also understood. When we 
faced the worst economic catastrophe this Nation has ever 
experienced, transportation was an integral part of our 
recovery. Public Works would provide jobs to the unemployed and 
create a revenue stream to help businesses. But he also had a 
vision of a national network of superhighways that he nurtured 
throughout his presidency. This was the dawn of the interstate 
era.
    But there was really probably no President who better 
understood, than President Dwight David Eisenhower. His words 
speak to us across the generations and also across political 
parties as eloquently and as true today as they were when he 
uttered them to Congress asking for support of his interstate 
highway program. He said, ``Our unity as a Nation is sustained 
by free communication of thought and by easy transportation of 
people and goods. Together, the united forces of our 
communication and transportation systems are dynamic elements 
in the very name we bear, United States. Without them, we would 
be a mere alliance of many separate parts.''
    Members of the committee, I take my cue from these great 
leaders as well as from the visionary individual whom we today 
call Mr. President. For these are individuals who recognize 
that the tools of transportation--concrete asphalt, and steel--
are but means to an end, and that the end is the unity of our 
Nation and the mobility and prosperity of our people.
    On January 20, during his inaugural address, President 
Clinton talked about the choice we faced at the start of the 
20th century to harness the industrial revolution to our values 
of free enterprise, conservation, and human decency. He said, 
``Those choices made all the difference.'' Today, as we 
approach the 21st century, the President described a choice we 
now face ``to shape the forces of the information age and the 
global society to unleash the limitless potential of all our 
people and, yes, to form a more perfect union.''
    On February 26, when Vice President Gore administered my 
oath of office, I could not help but recall the President's 
words because there right before me was a man whose family 
reflected those choices as well. His father, Senator Albert 
Gore, Sr., was one of the chief authors of the bill that 
launched the Eisenhower Interstate System, and thereby did more 
to shape the second half of the 20th century than perhaps any 
other. Yes, that bill was the Federal Aid Highway Act of 1956.
    The son who stood before me, Vice President Albert Gore, 
Jr., is an apostle of a new transportation network, which he 
has coined the information superhighway, that will transform 
the 21st century in ways we cannot yet even imagine. For their 
example as a family, we see how one family can make a 
difference. We see how much difference a piece of legislation 
that emerges from this committee can make a difference as well.
    And through the leadership of a President who has 
challenged us to rebuild America and to put people first, we 
also see how important the business that I have come before you 
today to discuss really is. That business is the 
reauthorization of the Intermodal Surface Transportation 
Efficiency Act of 1991. I respectfully submit to you that the 
ISTEA reauthorization is the most important transportation bill 
the 105th Congress will consider. But I also respectfully 
submit that it is simply one of the most important bills of any 
type that will come before the 105th Congress. Its scope and 
its impact will be that important.
    The President has challenged all of us to play a role in 
building a bridge to the 21st century. Nowhere is that metaphor 
more real than this vital piece of legislation. It is indeed 
the bridge between the 20th century interstate era and the 21st 
century intermodal transportation network era that will be 
essential to sustain our economy, our economic growth, our 
international competitiveness, and our freedom of mobility.
    I am pleased to be here today to talk to you about this 
Administration's legislative proposal, which will be submitted 
to you shortly. It is a piece of legislation that we style the 
National Economic Crossroads Transportation Efficiency Act of 
1997, NEXTEA. In this statement, I want to outline the key 
provisions of this proposal, but I ask that you consider them 
with the backdrop I have laid before you speaking to the very 
difficult decisions that congresses and administrations have 
had to make in the past to ensure that investment in 
transportation infrastructure was sufficient, was effective, 
and was forthcoming.
    With your permission, I am also providing a lengthier 
discussion of the proposal for the record.
    Let me quickly move through the specifics of our proposal.
    As I talk to you today, you may recall that my three 
highest priorities in leading what I want to see as a visionary 
and vigilant Department of Transportation I discussed before 
you on January 31. They are: safety as our No. 1 priority, the 
north star, the moral imperative by which we will be guided. 
Also we talked about working to ensure that America's 
transportation system meets the needs and desires of the 
American people in the 21st century. And then finally using a 
common sense approach to running a Government that works better 
and costs less.
    These priorities are important to me because they are 
critical to achieve that which the President has called upon us 
to do, namely to unleash the limitless potential of all our 
people and yes, to help form a more perfect union. NEXTEA 
reflects those goals and is an important step in that 
direction.
    Let me now move through the particular provisions.
    In the last decade of the 20th century, ISTEA has given us 
the tools and the flexibility to respond not only to our vital 
transportation needs, but also to respond to many of the 
economic, environmental, safety, and social challenges we face. 
For that, this committee is to be commended. It recognized that 
Federal investment must do more than build roads and mass 
transit systems, but that it must build a seamless intermodal 
system in which each mode can do the work it does best. At the 
same time, it must help strengthen communities, improve 
productivity, preserve our environment, and protect the safety 
of all Americans.
    Under the leadership of this committee and the vision given 
forth to us through ISTEA, and under the leadership of 
President Clinton, we have tried to make good the promise of 
ISTEA. Working with the Congress, we have increased 
transportation infrastructure investment to record levels. 
These investments have paid off in substantial improvements to 
the condition and performance of our highway and mass transit 
systems.
    But from my prior vantage point as Federal Highway 
Administrator, I also want to say to you that the Federal 
Highway Administration has changed in response to the 
legislation that you have given us to direct us and to guide us 
in our way. The FHWA has become an agency committed not only to 
building highways, but to building a transportation system, to 
building communities and to building bridges with our partners 
and other modal administrations within the Department of 
Transportation as well as State transportation departments, 
local governments, and the private sector. The FHWA today is 
truly a visionary and vigilant agency not only committed to the 
words of ISTEA but to its ideals as well.
    This was not always easy. You as much as anyone understand 
that ISTEA rocked the boat, but the Federal Highway 
Administration, with its offices in every State, working with 
the Federal Transit Administration, has worked to balance the 
playing field through which many of our important 
transportation decisions are made. Its transformation of the 
State-wide and metropolitan planning process is at the core of 
this change and transformation. It balanced the highway and 
transit programs to give State and local officials balanced and 
real choices.
    Thanks to ISTEA and with the encouragement of the Federal 
Transit and Federal Highway officials, we have seen an 
unprecedented transfer of highway funds to transit projects, 
approximately $3 billion.
    In creating this flexibility, and in granting this 
authority, and in requiring the responsibility of choice, ISTEA 
laid the groundwork for State and local officials to begin 
thinking in intermodal terms. We want to continue that with 
NEXTEA. And to begin thinking about how transportation can best 
serve communities--we want to continue that as well.
    Under Secretary Pena's leadership, we in the Department 
have looked closely at the planning process and all aspects of 
ISTEA. I can tell you that we have listened, learned, and we 
have tried to respond, as reflected in the specifics of our 
proposal. Again, a proposal that you will receive in the near 
term.
    The challenge is now to create and shape the vision of 
transportation for the future. To prepare for the future, 
Congress and the Department reached out to the transportation 
community last year and to State and local officials, the 
private sector, academia, individual citizens, and others 
across the country. The clear message that emerged from that 
outreach effort--all those forums--really was no surprise to 
us, that ISTEA is working and is working better as the days go 
by.
    Therefore, in preparing NEXTEA for submission to Congress, 
we have listened to what we have heard and seen and responded 
with a bill that builds on and enhances the very best aspects 
of ISTEA. That was a point that was made in your introductory 
remarks.
    Our proposal will enhance the partnerships that are already 
growing and growing stronger, will increase flexibility while 
retaining accountability, will advance development of the 
intermodal transportation network that is already taking place, 
will ensure that transportation serves not just trips but 
people of all walks of life--whether they live in rural, urban, 
or suburban areas--and will enable this Congress and this 
President to find common cause and common ground for the 
betterment of our Nation, even as a Republican President, 
Dwight Eisenhower, found common ground and common cause with a 
Democratic Congress in 1956.
    My long statement will describe many features of NEXTEA, 
but I would give just a few more to highlight.
    One of the biggest changes we face is to provide adequate 
resources and sufficient flexibility to maintain and improve 
our surface transportation system while moving toward a 
balanced budget. Senator Baucus, you speak to this issue when 
you challenge us--as you do as well, Mr. Chairman--to seek to 
provide more resources for this very important piece of 
legislation. This Administration is committed to that end, 
providing as much in the area of resources as possible as we 
also seek to fulfill a commitment to balance the budget.
    Through the cooperation of the Congress and the President, 
we have been fortunate in raising Federal expenditures for 
surface transportation to record levels under ISTEA, but we 
must continue this effort. NEXTEA will authorize a total of 
approximately $175 billion for surface transportation programs 
over a 6-year period. This funding will sustain our core 
programs such as the National Highway System, the Interstate 
System, bridge reconstruction and rehabilitation, and transit 
programs. I repeat the amount again, approximately $175 
billion.
    We also are expanding the innovative finance measures that 
have been so successful over the last few years. Here I would 
like to note the very special effort on the part of my Deputy 
Administrator, who was recently named to be the Acting 
Administrator of the Federal Highway Administration, Jane 
Garvey, who along with Louise Stoll, head of our Budget Office, 
and Mort Downey, our Deputy Secretary, and others within the 
Department, have really put forth a very aggressive, 
thoughtful, and innovative financing strategy. This strategy 
proposes now to expand the seed money available for State 
Infrastructure Banks and to dedicate $100 million to a new 
credit program that will support multi-State projects of 
national significance.
    We also are proposing to invest in the research and 
technology that are vital to building that bridge to the 21st 
century. Today's network is really just a stage in the 
evolution of a constantly changing transportation landscape, 
from stagecoaches to railroads, from bicycles to automobiles, 
from ships to airplanes, and from the telegraph to the 
internet. We hope that our proposals reflect our understanding 
of these various stages and our commitment to be eternally 
vigilant in offering forward the kinds of proposals that will 
move us from a state-of-the-practice that is an exception 
today, to a state-of-the-art that will be the rule of tomorrow.
    Through NEXTEA, we will continue to build the future by 
sound investment in intelligent transportation systems. 
Chairman Chafee, I do believe that that means focusing on 
maglev in the long term. I say that also to you, Senator 
Moynihan.
    These major public/private initiatives are already paying 
dividends, our investment in intelligent transportation systems 
efforts. These dividends are coming forth based on a relatively 
small investment thus far, but its potential is tremendous. 
Think about how President Eisenhower talked about two systems: 
transportation and communications. When we add the concrete, 
asphalt, and steel of transportation to the innovations of ITS, 
we really have a smart information-based transportation system 
that allows us to do, as President Eisenhower said we were 
doing in his day, and that is to be a United States rather than 
a mere alliance of separate States.
    These are but a few examples of the hardware of NEXTEA. If 
you would permit me, I would now like to talk about some 
programs that are also vital, those dealing with safety, the 
environment, and community.
    I have said that safety must be our north star, must be our 

No. 1 priority, and must be the one thing that guides us in all 
of our decisions and in all of our activities. We have seen 
progress in recent decades as the fatality rate has fallen to 
new lows and as the number of fatalities has hovered in the low 
40,000's, if you will, for the first time in decades, even as 
motor vehicle usage has tripled. We commit ourselves to the 
fact that this figure is yet too high.
    In return for the great freedom brought to this Nation by 
the motor vehicle, we have paid a terrible toll of suffering of 
lost potential and lost dreams. Even though we have done much 
over the last few years to improve the safety of our 
transportation system, we still have more to do, for the loss 
of one life is one life too many.
    To improve safety, NEXTEA proposes to move aggressively and 
forthrightly on three fronts: driver behavior, vehicle design, 
and roadway design. I will just cite a few examples in that 
regard.
    We are increasing authorizations for our drunk driving 
prevention grant program and proposing new programs to 
encourage seat belt usage and to reduce drug-impaired driving. 
We also are proposing research to explore the demographic 
factors that affect the safety of young drivers and senior 
citizens. As the President announced recently, we are proposing 
a new research and education program to reduce air bag risk for 
children and small adults. Senator Kempthorne, I know that is 
of great importance to you. And to address highway design, we 
propose a $500 million infrastructure safety program that 
replaces and improves upon the current STP safety set-aside 
program.
    NEXTEA also builds on the environmental sensitivity of 
ISTEA. Under ISTEA, the congestion mitigation and air quality 
improvement program, CMAQ, has helped States and communities 
across this country address the air quality problems that stem 
in part from the mobility of our citizens. Our proposed changes 
to the CMAQ Program will enhance the flexibility of this 
program in addressing evolving air quality concerns.
    Transportation enhancement activities founded under the 
surface transportation program allow officials to target funds 
to projects that blend transportation with a sense of 
community. Local officials and private groups have responded 
enthusiastically to this opportunity. We want to work with you 
to ensure that this opportunity continues.
    Senator Reid. Mr. Chairman, could I ask a question?
    Senator Warner. I would hope you would defer.
    Senator Reid. I don't mean of him. I mean of you.
    Senator Warner. Yes.
    Senator Reid. I have been in Congress going on 15 years. I 
have never heard a statement this long before. I like Mr. 
Slater. He is one of my favorites. But he is about to wear me 
out. Could we have some time to ask some questions?
    Senator Warner. I think that feeling might be shared with 
others, but this is his first appearance as a cabinet officer 
and we thought that we would indulge.
    But I think you feel now that perhaps there is some 
sentiment that perhaps we do know a little of the history?
    Secretary Slater. Yes.
    Senator Reid. And we can read his statement.
    Senator Warner. So if you could kind of wrap it up, we 
would appreciate it.
    Secretary Slater. I will. And let me also offer this: in 
the room back stage I apologized to the committee because we 
had not submitted our statement as early as we had planned. 
Because I knew that the committee had not had time to read the 
details of the draft proposal, and also because we have failed 
to present the proposal, I wanted to take the amount of time I 
have taken to offer some details about the program.
    Senator Warner. I would note that we have every member of 
the subcommittee, save one, here quite anxious and we have a 
scheduled vote in the Senate at 11 o'clock. I want each member 
to have a full 5 minutes of their questions in the first round.
    Secretary Slater. I will close with this point.
    President Jefferson once said that if truth were self-
evident there would be no need for eloquence. This committee 
gave us a piece of legislation that clearly was eloquent in its 
language and in its hope and in its promise. I sit before you 
representing a Department that over the last 4 years has worked 
every day in every way to ensure that the prose and the poetry 
captured in the vision of this piece of legislation is made a 
reality in the lives of the American people. I think that we 
are a stronger Nation because of it. And I do believe that the 
best is to come.
    Thank you.
    Senator Warner. Mr. Secretary, how soon do you anticipate 
the Administration will authorize you to submit that bill to 
Congress?
    Secretary Slater. Very soon.
    Senator Warner. You have said that three times. Can you 
define it?
    Secretary Slater. I would say that I would hope we would 
have the legislation before the committee in the next 7 to 10 
days. I do believe that we will probably learn some things by 
virtue of this hearing and the hearing before the House 
committee tomorrow. That amount of time will allow us to take 
into consideration those points that will be raised.
    Senator Warner. Mr. Secretary, let's turn directly to the 
question of the level of funding.
    Your own analysis--and that's the 1995 conditions and 
performance report--specifically indicates that the United 
States is spending some $20 billion less per year than 
necessary to maintain our Federal Aid system. The distinguished 
ranking member, myself, and many others--59 Members of the U.S. 
Senate have indicated to the President and to you that we need 
a higher level.
    I would like to have your personal opinion. I understand 
that you have an allegiance to your President and to a lesser 
extent to OMB. What is your personal opinion as to what level 
of funding is necessary?
    [Laughter.]
    Secretary Slater. Let me just say first of all that you 
have cast the question of allegiance in the proper order.
    Senator Warner. I have been here 18 years doing it, so I 
have an idea.
    Secretary Slater. Let me just say that I am firmly 
committed to the broader objectives of the Administration. I 
think investing in the human capacity of our people has to be 
our No. 1 priority as we move into the new century. The 
transportation we have seen throughout the course of history--
and I tried to lay out some of those examples in my statement--
has been recognized as a very powerful tool in tying the Nation 
together, in giving us the ability to attract business, to 
compete and win in the global economy, and the like.
    This Administration understands the importance of 
infrastructure investment. Over the last 4 years, we have seen 
a 20 percent increase. We have worked hard to fully fund ISTEA. 
And in the proposal we will offer, we will have as our goal an 
expenditure of approximately $175 billion over 6 years. That is 
roughly a 12 percent increase over the amount that was in 
ISTEA, as offered forth in 1991.
    So there is that commitment on the part of the 
Administration. We will also come forth with a number of 
innovative financing techniques and we will challenge our State 
and local partners and the private sector to be participants in 
this initiative as well.
    Senator Warner. Your rhetoric is interesting, but how does 
that reconcile with your own statement that you are $20 billion 
short? We have to be honest with each other. If you're saying 
your hands are tied, then the fight is going to shift to the 
Congress, and we will have to accept that, and we will take 
that leadership role. We will try to force that issue among our 
colleagues, resolve it hopefully with a higher funding level, 
and get on with the business.
    Is that about how this ball game has to be played?
    Secretary Slater. Clearly the Congress will be a partner in 
this process.
    Senator Warner. You bet. Thank you.
    [Laughter.]
    Secretary Slater. And the Senate has already, in a powerful 
way, expressed its opinion about this. But I do think in the 
final analysis we will find common cause and common ground and 
will come up with a figure we can all agree on.
    Senator Warner. If we're going to come up with a figure we 
can all agree on, it looks like we are going to come up.
    I read you as saying yes. Thank you.
    [Laughter.]
    Senator Warner. Proceeding now to the funding formulas, 
when you were up for confirmation, the record reflects that I 
asked the following question. ``I think we're going to have to 
say we're moving around here with too many softball questions, 
so let's skip to hardball questions.'' That was my statement.
    Secretary Slater. Yes, sir.
    Senator Warner. Let's get down to the formula.
    Do you think the formula should be revised in such a way as 
to reflect current data as opposed to so much of the old 
archaic data now being used?
    Secretary Slater. Yes.
    Senator Warner. Where is that in your current presentation?
    Secretary Slater. In the longer statement, we make a 
comment about the whole issue of apportionments and the 
difficulty of finding common ground in that regard. But we do 
look forward to working with the Congress.
    Senator Warner. So again the initiative is going to come 
from the Congress?
    Secretary Slater. No. We will offer----
    Senator Warner. My light is on so just 1 second.
    Secretary Slater. Yes, sir.
    Senator Warner. But it seems to me the old saying, ``The 
Lord giveth with one hand and taketh with the other,'' you sort 
of give us a few new criteria, but then you turn around and you 
say you propose equity adjustments to ensure that the States 
receive essentially the same amount as they received under 
ISTEA. Where is progress?
    Secretary Slater. I think progress is using up-to-date 
information. Progress will----
    Senator Warner. But then if you have this little fudge 
factor at the end it all comes out the same.
    Secretary Slater. Not necessarily. The fudge factor at the 
end recognizes the fact that, notwithstanding what everyone is 
putting into the trust fund, there are still national interests 
that have to be taken into account, issues pertaining to 
safety, connectivity, and the like.
    Senator Warner. I thank you. My time is up.
    Mr. Chairman.
    Senator Chafee. Thank you, Mr. Chairman.
    Mr. Secretary, it seems to me that any formula should have 
some reflection of needs.
    Secretary Slater. Yes, sir.
    Senator Chafee. Every formula, every distribution we make 
from the Federal Government--nearly every one--is based upon 
need. And yet the Federal Highway Administration and the 
Department of Transportation don't seem to have been able to 
develop what are needs and a way of assessing it. So we are 
left debating a set of formulas that are only peripherally 
associated with needs.
    Secretary Slater. Yes, sir.
    Senator Chafee. Has your Department--particularly in your 
prior job--been able to develop any formula factors that would 
focus on needs or give us some suggestion of what are needs?
    Secretary Slater. Senator, I think when the proposal comes 
forth and we can talk about it in more specific terms, you will 
see that we have in fact done that. But I will say that it is 
not an easy task because for the last 40 years--and really 
longer than that--we have evolved in our thinking, which 
resulted in the development of a transportation system to 
support a national economy.
    But then over the last decade in particular, we have 
realized that the national economy is significantly impacted by 
the global economy. During the last term alone of the Clinton 
administration, we had some 200 trade agreements, we had NAFTA, 
GATT--about 12 of those alone with Japan--we are now putting in 
place the dynamics of an economy that respect our role on the 
international stage. We have to have a transportation system to 
support that, to undergird that.
    In many ways Jefferson understood that with the doubling of 
the size of the United States with the Louisiana Purchase that 
we needed to build the national road system, or President 
Lincoln understood the same need with the Transcontinental 
Railroad.
    Senator Chafee. Let me get into this formula business 
again.
    The apportionment formula is primarily based upon gasoline 
taxes, in other words, gasoline consumption.
    Secretary Slater. Right.
    Senator Chafee. But it seems to me that we are kind of 
working against ourselves there because on the one hand we are 
encouraging vehicles that get more mileage, thus reduce the 
gasoline consumption. On the other hand, we are saying that if 
you are a State with a lot of gas guzzlers, you are going to 
get a lot of money back.
    Aren't those policies in conflict?
    Secretary Slater. In some ways they are, but let me just 
use a personal example to make the point that we have to be 
very sensitive in weighing the competing interests here.
    I am from a rural State, a very small State, and people 
have to travel sometimes great distances to enjoy economic 
opportunities. For many of these individuals a new car for them 
is a second-hand car. It is just that simple. Their areas are 
not served by public transit, so they have to drive.
    I think that our formula should reflect that reality, but I 
also think that you make a good point, which is that in order 
to deal with environmental concerns, we have to ensure that as 
we take into account that kind of factor, we don't overly and 
unnecessarily reward that kind of consumption where there is 
little sensitivity to environmental concerns. When we come 
forth with the specific components of the formula, I do believe 
that will be reflected.
    Senator Chafee. Let me briefly say that I heard Senator 
Boxer say that she was for a formula based on population.
    Secretary Slater. Right.
    Senator Chafee. That made me a little bit nervous.
    [Laughter.]
    Senator Chafee. So I am not sure I am entirely for a 
population-based formula.
    Secretary Slater. Sure. I think Senator Thomas joins you in 
that point.
    Senator Chafee. He would have one perhaps based on size. I 
am not sure I am for that, either.
    [Laughter.]
    Senator Chafee. I believe you have a provision in your 
proposal that would permit the reinstatement of tolls on 
interstates. Could you briefly describe your suggestion? I am 
for the tolls, but how would that work?
    Secretary Slater. Under current law, we actually have the 
right to install tolls around bridges and tunnels, even on the 
interstate, when improvements are being made to those 
facilities. Our proposal is consistent with that.
    Senator Chafee. My time is up.
    Thank you, Mr. Chairman.
    Senator Warner. Our distinguished ranking member, Senator 
Baucus?
    Senator Baucus. Thank you, Mr. Chairman.
    Isn't it true, Mr. Secretary, that the Department's needs 
assessment is that we need nationwide about $50 billion a year 
in highway spending?
    Secretary Slater. That's correct, Senator.
    Senator Baucus. Isn't it also true that the amount the 
Administration is going to be recommending is somewhat in the 
neighborhood of $21 billion or $22 billion? Is that correct?
    Secretary Slater. It is approximately $25 billion or $26 
billion.
    Senator Baucus. How much of that will be strictly highway?
    Secretary Slater. About $21 billion.
    Senator Baucus. And the $50 billion need is primarily 
highway and bridges?
    Secretary Slater. Primarily, yes, sir.
    Senator Baucus. Which means we have an annual shortfall of 
about $28 billion a year, each year?
    Secretary Slater. Yes, sir, roughly.
    Senator Baucus. Is it also true that other nations--Japan 
and Europe--spent a greater percentage of their GDP on 
transportation?
    Secretary Slater. That is true.
    Senator Baucus. Is it true that Japan spends about four 
times its GDP compared to the United States on transportation?
    Secretary Slater. I would say approximately four times.
    Senator Baucus. Do you know what the Europeans spend?
    Secretary Slater. Not as much as the Japanese, but still 
they are very aggressive in dealing with this issue.
    Senator Baucus. So could one logically reach the conclusion 
that we are not meeting our needs in America with the 
Administration's budget proposal?
    Secretary Slater. I would state it differently. I would say 
that these countries are, in effect, trying to catch up with 
the United States. But clearly, if we fail over a long period 
of time to meet our obligations first to preserve the system we 
have and second to enhance it in a strategic and thoughtful 
fashion, we could find ourselves in the 21st century at a 
disadvantage.
    Senator Baucus. Why are they catching up if the Department 
still says we are deficient in needs about $28 billion a year? 
That doesn't sound like catching up. That sounds like the 
Department says we are deficient. It doesn't sound like they 
are catching up. It sounds like the United States is deficient.
    Secretary Slater. But they don't have an Interstate System. 
They don't have the kind of national road system we have. They 
don't have an aviation system that is any way comparable to 
ours. There are places where we lag. I think there are a number 
of countries around the world where their rail system----
    Senator Baucus. Some countries' rail systems far surpasses 
ours, some countries' surface transportation in some areas 
surpasses ours. So it is a mixed bag.
    I just want to underline the importance. We Americans are 
being irresponsible if we don't, in a more direct way, meet our 
transportation needs. We are being irresponsible. I think it is 
incumbent upon the Administration to go back and look again to 
figure out some way to meet our responsibilities as it is upon 
this Congress to do the same. I strongly urge the 
Administration to meet the needs of the American people.
    I would like to say a word or two about formulas, which is 
always a bit difficult around here.
    It is important to realize that some States already have 
very high State gasoline taxes and are doing their best to meet 
their surface transportation needs. I see Senator Reid here 
from Nevada. I think they are first or second in the Nation in 
State gasoline taxes. We in Montana I think are third in the 
Nation in State gasoline taxes. We make a huge contribution to 
our State highway program.
    In addition, we have many, many more miles per capita than 
do some other States. So if we have a national highway system, 
we have to remember that some States have many, many more miles 
per capita. And don't forget those folks are spending more on 
State gasoline taxes than do folks in high population States. I 
hope that the formula you have recognizes that some of our 
States just can't pay anymore.
    Let me just point out that we have in Montana 12 residents 
per mile of public roads, whereas California has 177, New York 
has 161. Those are folks paying gasoline taxes that could help 
support those States' programs and we have so few people paying 
to make up for the low number of people. We pay much higher 
State gasoline taxes.
    I would strongly urge the Administration to take it into 
mind when you submit your proposal.
    Secretary Slater. Senator, your point is well taken in that 
regard.
    I would also add that you represent a State, as is the case 
with many States in the west, with a large Federal land 
presence. That, too, impacts----
    Senator Baucus. That's right. It's huge. Nevada is even 
more huge. Nevada is about 87 percent, Montana about 33 
percent.
    Secretary Slater. Senator Reid and I have talked about this 
issue--and I have also been to the West.
    Senator Baucus. You have been to the more populous part of 
the West. I have to get you to the unpopulated part of the 
West.
    Secretary Slater. Yes, sir.
    Senator Warner. And you have an invitation to hopefully 
come to an ISTEA hearing of this subcommittee being hosted by 
our distinguished colleague from Idaho, Mr. Kempthorne.
    I would like to put in the record that Virginia is eighth 
in paying taxes and gives 78 cents back for every one of its 
dollars in highway taxes.
    Senator Kempthorne. Mr. Secretary, let me followup on this 
discussion of the Federal Lands Program.
    I note that you do have an increase in that funding 
category. Again, we are talking about the large land masses, 
relatively little population--67 percent of Idaho, for example, 
is federally owned so it is tax exempt. Why is it, though, Mr. 
Secretary, you have increased the categories that are eligible? 
So while you have given the money, you have added more 
categories so that it diminishes? What is the rationale there?
    Secretary Slater. Anytime we offer flexibility it is really 
to empower decisionmakers at the State and local level. I think 
that is a philosophy that drives some of the discussion 
regarding devolution. But we do so in our proposal with an 
understanding that there are yet national concerns that have to 
be taken into account.
    In this particular instance, our objective is merely to 
give those at the State and local level more opportunity to 
make decisions based on their own judgment about their own 
needs. But we would welcome a discussion with you about this 
particular matter because I know when it comes to the Rails to 
Trails Program you have clearly been a strong voice in that 
regard. We want to be sensitive to that.
    Senator Kempthorne. Mr. Secretary, as I look at this 
proposal, I would like you to address your Department's 
proposed funding levels for three similar recreational 
environmental programs. You have the transportation 
enhancements, scenic byways, and recreational trails. You 
increase enhancements by more than $180 million up to $587 
million, an increase of 43 percent. You increase scenic byways 
by a 7 percent increase. But you decrease recreational trails 
from the past 2-year funding level of $15 million to $7 
million, a reduction of 53 percent, and 76 percent less than 
what was authorized in the original ISTEA.
    I would like you to help me understand why in this proposal 
you decimate recreational trails, which is the only user pay 
program in this entire category?
    Secretary Slater. I have shared with you what our overall 
objective has been. Recreational trails and the like are 
eligible for other resources. So clearly the amount could 
ultimately be more than $7 million. But I think frankly your 
point is well taken. We have had $15 million in years past and 
we also worked very hard with you to reestablish the program. 
Your point is also well taken that the resources come from a 
user fee that is charged to those who use over-the-road 
sporting types of vehicles on the trails. I think the point is 
well taken. Why don't we visit about it and maybe before we 
present the final proposal we can come up with a better 
recognition of that point.
    Senator Kempthorne. Thank you. I appreciate that.
    Senator Kempthorne. Mr. Secretary, I was not going to get 
into this this morning, but because of your emphasis on safety, 
because of your use of the term that this is your north star 
and your moral imperative--you went on to say that to lose one 
life is one too many--I could not agree more. You have a 
standard that this Government has predicted will kill children. 
It is still on the books. Now there are over 32 dead children.
    We do want to get seat belt usage up. When this standard 
first came about, it was a usage of about 11 percent. Now we 
are at 68 percent. No change in the standard. So we are still 
protecting an adult male, who chooses not to wear his seat 
belt, when 49 States have it as the law of their State that you 
are supposed to wear that seat belt. We know seat belts save 
lives. To save Dad, we are killing the child.
    That is an unacceptable public policy. January 9 we had a 
hearing dealing with this where the NHTSA Administrator pointed 
out that he didn't have the legal authority to make the change. 
We provided two different legal opinions. One was from the CRS 
American Law Division stating that absolutely. And I have 
provided this to your office. February 5 I sent a letter asking 
for your legal opinion that is contrary. I still don't have 
that legal opinion.
    I do not understand this. I am going to say that this was 
not occurring on your watch. You are new. But I am asking you 
to personally get involved in this because this standard is 
flawed and it must be corrected.
    Secretary Slater. Senator, on the occasions you have 
brought that issue to my attention, either I was the nominee of 
the President seeking confirmation or the confirmed Secretary 
seeking an opportunity to be sworn in. Both of those have now 
occurred and you can rest assured that I will make this a 
priority and we will address this issue in an effective and 
efficient and timely manner.
    Senator Kempthorne. Mr. Secretary, please. Children's lives 
are on the line and it has been predicted by this Government 
that they will die and they are dying. You used the term 
``moral imperative''. Nothing is more moral than to correct 
this standard and to stop killing these kids.
    Secretary Slater. I did use the language and I will echo 
the quote that you just made.
    Senator Kempthorne. Thank you very much.
    Senator Warner. It is the intention of the chair to 
recognize Senators for questions in order of their arrival. 
However, I think in fairness we will go from one side to the 
other. We will now go to Senator Boxer.
    Senator Boxer. Thank you very much.
    I just want to compliment my colleague from Idaho on his 
deep concern.
    I want to say that the biggest cause of death of children 
in California and the second leading cause of death in 
America--thousands of children--are gun shots. I hope we can 
work together for child safety locks. I think we work together 
on the car seats, the air bags--all these things.
    I understand what is happening here. I feel for you in a 
way because you will be presenting your budget within the 
context of deficit reduction. What you're getting here is 
frustration because we are all on this subcommittee because we 
think this is a priority. So you have to think about the bigger 
picture as well.
    But I think there are ways that we can find more resources. 
I was just reading the Los Angeles Times clips today. The GAO 
Report says that the Government overpaid HMOs by $1 billion 
just in California alone. I think we are going to have to do 
our best to find more savings where there is waste, fraud, and 
abuse, and pump it into something that is important to our 
future and to our economy. This is certainly one area. I just 
found out that 6,000 children a year are killed by gun shots.
    Let me say--and you and I have worked closely on this--that 
we have to look at our areas in the country that have been 
impacted by trade. Many of us represent States that are so 
impacted. I mentioned in my opening statement briefly about 
what it looks like at the border between Mexico and California.
    Have you been down there?
    Secretary Slater. I have, Senator.
    Senator Boxer. It is extraordinary. They have a highway 
that goes like this--one lane, and one lane back. And we have 
billions of dollars of goods going each way, and we can't 
handle it. We don't even have a lane, Mr. Chairman, so that 
police emergency vehicles can go alongside. So when we passed 
NAFTA, at that time I was very concerned that we weren't 
looking at this. I think my concerns have been borne out.
    You have taken some steps to address this, but I want to 
put some hard dollars on the table with you, Secretary Slater. 
California had identified $1 billion of improvements needed at 
the Mexican border to serve commercial vehicle traffic, which 
is expected to double by the year 2000. Texas has identified $2 
billion of needed improvements, and Arizona $270 million.
    You are putting forward the first proposal to help our 
areas that are overwhelmed with the trade with Mexico and 
Canada because of NAFTA. But you are providing $45 million a 
year for 14 States which share a land border with Mexico or 
Canada.
    I know that better efficiencies and traffic management are 
important, and I know that you are pushing those. But I would 
hope you would work with this committee on establishing a 
broader program. Maybe in your answer you can give me some 
reassurance on that point.
    Also, you have come out with a loan guarantee program 
through the State Infrastructure Banks. Could you explain that 
to us?
    Secretary Slater. Sure.
    First of all, Senator, I want to thank you for your 
longstanding interest in this issue and issues connected and 
related to international trade.
    Your point is well taken. Frankly, in your State you have 
to be concerned about that because in many respects California 
represents not only a gateway to Asia but also to other 
international trade points around the world for the United 
States. I am reminded how important it was for us to move 
expeditiously to reconstruct the Santa Monica Freeway, I-10, 
and I-5 which were downed after the Northridge earthquake, and 
how it was costing about $1 million a day as long as I-10 was 
down and about $500,000 for every day I-5 was down.
    Clearly, I think some of your concerns have been borne out 
about the increase in traffic and trade resulting from NAFTA. 
We have been fortunate over the last 4 years to be led by a 
Secretary of Transportation who knew very well the pressures of 
the border, having been raised in south Texas and having been 
born there.
    I commit to you the same degree of sensitivity and a 
willingness to learn even more about the dynamics of this new 
emerging development that is increasing as a result of the 
passage of NAFTA. Also, as we come forth with more details 
about our funding and financing proposals, you will see 
reflected therein a commitment to make more resources available 
through primarily innovative financing techniques for border 
crossing activities and initiatives. We will work with you and 
others who represent States along the border to build on that, 
to improve on it, and the like.
    We do believe that our credit program, which is primarily 
for large multi-State type initiatives, will also be a good 
resource for funding. The private sector has also shown a great 
interest in this area and we believe we will be able to engage 
them to a greater degree as well.
    Senator Boxer. Mr. Chairman, I know my time has been used. 
I would just say that if you look all up and down our coastal 
areas and major ports, we are in desperate need. If we are 
going to continue this economic leadership, we need to be bold. 
I think we need to be bold here. I think I hear that from both 
sides.
    I will submit some other questions which deal with my 
Governor, who likes the turn-back proposal, which would really 
do away with the national program. I would certainly want to 
hear your comments on that. I am very happy that you are going 
to continue the air quality program.
    Thank you.
    Senator Warner. Thank you very much.
    Senator Smith.
    Senator Smith. Thank you very much, Mr. Chairman.
    Mr. Secretary, there has been a lot of concern expressed 
within the transportation community about the 10 percent set-
aside in the enhancement section of STP. We may hear some 
testimony on this later, but your testimony indicated that you 
support the requirement that these activities have a ``direct 
link'' to surface transportation.
    I received a letter from a State legislator in New 
Hampshire, Gene Chandler, who had a very interesting comment on 
this subject. In his letter he says, ``You and many others may 
not realize that in the State of Maine highway funds were used 
to purchase oyster shell heaps left in piles by Indians many 
years ago. The rationale was that the Indians were traveling by 
canoe, and since it was an historic method of travel, these 
shell heaps were eligible for ISTEA funds.''
    I have no idea how prevalent that kind of thing is or what 
in the world the justification would be--and I know that didn't 
happen on your watch. But are you going to be recommending any 
changes in the enhancement portion of the formula?
    Secretary Slater. First of all, let me just say that that 
may have in fact occurred on my watch. I was Federal Highway 
Administrator for 4 years.
    Senator Smith. Don't take responsibility for it if you 
didn't.
    Secretary Slater. But the point I want to make is that I am 
willing to accept responsibility. We have, I believe, been a 
lot more direct with States in making the point to them that 
there has to be a direct link between an enhancement 
expenditure and transportation. Otherwise the programs loses 
credibility. We did in midstream send out more detailed and 
specific directives as it relates to the use of enhancement 
resources.
    But we also recognize that with these dollars as well as 
with others, when you provide flexibility and you drive the 
decisionmaking to those at the State and local level--those 
closest to the problem--there has to be some give-and-take. But 
as they receive that opportunity and responsibility there is 
also the commensurate obligation for accountability. We have 
tried to stress that point as we have gone forward.
    I think the program is better, and it is getting better all 
the time.
    Senator Smith. But you will look at that?
    Secretary Slater. Yes. We thank you for bringing that to 
our attention.
    Senator Smith. Let me move to another subject we talked 
about when you visited my office regarding some controversy in 
the sense that you are now bringing Amtrak under the trust fund 
umbrella. We are looking at roughly $750 million plus if you 
use current numbers of operating and capital expenses.
    What impact is that going to have on the trust fund? And do 
you believe it is fair to put Amtrak under the trust fund which 
contributes nothing to the trust fund as compared to gasoline 
taxes, which of course deal with highways?
    I believe that it is proper to say that railroads certainly 
fall within the category of intermodal surface transportation, 
but I also think that we need to look at this very carefully 
because of the impact it will have on the fund.
    What impact would it have on the fund? And do you think it 
is fair to do that without any taxes or revenues collected?
    Secretary Slater. Senator Smith, actually that question is 
somewhat akin to a question or a challenge put to us by the 
Chairman earlier in his comments. We need to be bold as an 
Administration and at least be willing to put issues forward, 
whether it is a question about formulas or other controversial 
issues--even though we may put it forth in the form of a 
concept that we then work with you to find common ground and 
common cause in moving forward. This relates to the issue of 
Amtrak.
    Your point is well taken in that it is a part of the 
surface transportation system, especially when you view it in 
an intermodal context. There are legitimate arguments on both 
sides regarding whether it is a justifiable expenditure from 
the trust fund. But I do think as an Administration we should 
be forthright and open enough to come forth with a proposal. We 
are wrestling internally with just that challenge. Hopefully in 
the near term we will have something to say about that.
    I will offer the following as some explanation for the use 
of trust fund dollars to fund this kind of initiative.
    No. 1, I don't think we can have a transportation system 
for the 21st century that does not include a national passenger 
rail component. That doesn't speak to the issue of how we fund 
it. That is an open question. But on the point of how we fund 
it, a lot of people who use Amtrak--or who may use it on 
occasion--also drive and fly. The point I want to make is that 
they also drive.
    That means that in those instances they are contributing to 
the trust fund. Arguably, when they are making choices about 
what mode is the most appropriate, they would not think about 
the categories of funding that go toward making possible an 
improved portion of the system. They just see themselves as 
citizens wanting to enjoy life, liberty, and the pursuit of 
happiness. And we have to take that into account as we seek to 
reconcile all of these arguments, wants, and desires.
    I am just saying that I am open. The Administration is open 
to working with this committee and others who are very 
interested in this issue.
    Senator Warner. Senator Reid, would you yield for an 
observation by the chair?
    I intend to vote now in the hopes that we can continue this 
hearing uninterrupted through the period of the vote. So 
Senators awaiting their turn, if one or two could come----
    Senator Reid. Mr. Chairman, I would be the next Democrat. I 
yield my turn to Senator Moynihan. He came right after I did. 
Let him go first and I will go next.
    Senator Warner. Senator Moynihan.
    Senator Moynihan. You are very generous, sir.
    Mr. Secretary, I have just one territorial point and then 
one general one.
    Just for the record, the border crossings in Niagara and 
Buffalo are real issues right now. The value of the trade that 
crosses the Canadian/New York border is larger than that of 
California, Arizona, New Mexico, and Texas combined.
    Point made?
    Secretary Slater. Yes, sir. Point well made, sir.
    Senator Moynihan. The other thing I would like to say is 
thank you for keeping to the spirit of the legislation we 
enacted 5 years ago. But in that spirit, Chairman Chafee 
mentioned using tolls on the interstate. That is in the spirit 
of pricing. There is no such thing as a free way. Pricing will 
get you efficiency in markets. Don't be afraid of it.
    But I would hope we would look to innovation. The 
Interstate Highway System, was thought up in 1938 and modeled 
in the World's Fair. It was a way of selling automobiles. The 
chairman of the subcommittee having departed, I can say that 
the first internal combustion automobile was exhibited in 
Vienna the day Grant took Richmond. It is not a new idea. Nor 
is our railway. It's been about a century since we began 
airplanes, not quite.
    And not to be specific about this one thing, but the one 
truly new idea in transportation in the half-century since we 
began the interstate system is maglev. You may not like it, but 
it is new. It is a sister of surface transportation that does 
not work on the principle of friction.
    It is an idea. Nothing like that has happened, ever. We 
invented it by a nuclear engineer. They are building it all 
across Germany and they're building it all across Japan. A 
formula for failure is to stick with a success past its prime. 
We are sticking with that four-lane highway and that four-
wheeled car past its prime as a mode of transportation. Our 
Chairman here was traveling at 248 miles an hour on the surface 
level.
    The Department has been wonderfully responsive to ISTEA and 
it has changed our thinking, but we still haven't decided to do 
something nobody else has done.
    Secretary Slater. Senator, let me say first of all that I 
personally--and I believe I speak on behalf of all the members 
of the Department of Transportation--consider it an honor to 
have you say that we have tried to be true to the spirit of 
ISTEA. We have worked hard in trying to make it real.
    To get to the heart of your point, I read an article in the 
Post shortly after the President had nominated me and some of 
the other individuals who came in the second round of nominees 
for cabinet posts. It was suggested that because many of us had 
been a part of the first term that this would not be a period 
of ingenuity, innovation, excitement. I personally took--not 
offense--but I was charged by that because I can assure you 
that to not be a part of the President's effort to unleash the 
limitless potential of the American people and to work to 
create a more perfect union would be a disservice to the honor 
he has entrusted in me and to the interests of the American 
people.
    We will be innovative and we welcome the opportunity to 
work with you and Senator Chafee, who just returned from 
Germany, and others who are interested in this proposal.
    Senator Moynihan. Very well stated, sir. Good luck to you.
    Senator Chafee. Senator, I look on you as a prophet.
    Senator Moynihan. I am beginning to look like a prophet.
    [Laughter.]
    Senator Chafee. You sounded the theme that I so agree with, 
that the solution of these transportation problems isn't just 
more concrete.
    I would like to have somebody prove to me--there is a lot 
of talk around here about some compact between the gas tax 
payers and that every nickel that goes into the trust fund must 
come back and be spent on highways. I have never heard of that 
compact. I look on the gasoline tax as a convenient way of 
raising money. It goes into the trust fund, which then can be 
used for improvements in transportation, perhaps better 
highways, perhaps maglev. It doesn't all have to be used for 
concrete.
    That is a theme you and I have been preaching for a long 
while.
    Senator Reid?
    Senator Reid. Thank you, Mr. Chairman.
    I would say to our new Secretary, I think the record of 
Secretary Pena is an outstanding record. I think those holding 
his nomination up for some nuclear waste issue should be 
ashamed of themselves.
    Now for my question.
    One of the things I hope the new bill will bring to us is 
giving States incentives for spending their own money. I think 
there has been too little of that. I think if a State is 
willing to spend money--or a subdivision of the State--on 
transportation, the Department of Transportation should give 
them some credit for that.
    To use an example, we in southern Nevada with our rapid 
growth have really done some innovative things to raise money. 
We have room taxes, gasoline taxes, sales tax--all that kind of 
stuff. I would hope that you would take that into consideration 
with your new bill.
    Secretary Slater. Senator, we will. I would just state for 
the record that Nevada has actually been a leader in that 
regard. You have done an excellent job there. And we should 
make it more of an incentive program.
    The other point I wish to make is that State and local 
governments already spend the great majority of resources on 
our transportation infrastructure system. We are not the 
majority player there, but our resources can be used to 
stimulate activity.
    Senator Reid. Do you think your legislation will give some 
incentives?
    Secretary Slater. Yes.
    Senator Reid. I also have introduced legislation to say 
that all the money in the highway trust fund should be spent 
and not saved and used for other purposes. Do you have a 
feeling about that?
    Secretary Slater. I can say that, as an Administration, we 
have considered that as well as other options. We have been, as 
a Department----
    Senator Reid. Let me interrupt you for a minute.
    I know that you can't push forward on that. But I do say, 
Senator Baucus, that is where there is some more money. There 
is $20 billion more money. Not enough to handle all the 
problems, but certainly a step in the right direction.
    I would ask everyone here to give some consideration to my 
legislation. I think we should spend that money.
    We are also very concerned about Federal lands. It has been 
brought up on a couple of other occasions here, but we in 
Nevada are 87 percent federally owned. Last year, we didn't get 
anything. We didn't get anything. Last year, neither Alaska, 
which has more Federal land than we do, nor Nevada received 
anything under this provision. I don't think that is right. I 
think you should take a look at that.
    Secretary Slater. Is that our discretionary program?
    Senator Reid. Yes.
    Secretary Slater. That should not have been the case. I can 
tell you that over the past 4 years I believe we have done a 
good job working together, but if that was the case last year, 
hopefully in the coming years we will have occasion to make up 
for that.
    Senator Reid. The other thing I would like to bring to the 
attention of the Secretary of Transportation and the members of 
this committee is that we have a real serious problem in 
Nevada. We have heard about border crossings with NAFTA and 
Niagara and all that stuff. Boulder Dam was completed in the 
early 1930's. The same little road that was in existence then 
is still being used to haul the hundreds of thousands of people 
a week from Arizona to Nevada. There are lines there 3 and 4 
miles long waiting to get over that dam.
    It is dangerous. Talk about terrorism--somebody drives and 
you could look right down in the spillways of the dam and the 
generators. We need to do something to get another way to 
travel over that river. This is not working. It is dangerous. 
It has been authorized before, but there has just been no money 
appropriated. I would ask that there be some concern given to 
that. This is not a Nevada problem. This is a problem I think 
we have for our country.
    Secretary Slater. Senator, that is an issue I am not as 
fully up to date on, but I appreciate your comments here today 
and I look forward to the opportunity to work with you on this 
issue.
    Senator Reid. Thank you, Mr. Secretary.
    Thank you, Mr. Chairman.
    Senator Chafee. Thank you.
    Senator Graham.
    Senator Graham. Thank you, Mr. Chairman.
    I would like to make two brief comments and then ask a 
question or two.
    I agree with the observations about the deficiency in 
funding for surface transportation. Unfortunately, surface 
transportation isn't the only area of our Nation's capital 
needs that are severely under-funded. We have enormous deficits 
in areas such as school construction, for rehabilitation of 
existing schools, and to build new schools to meet population 
growth. We have deficiencies, as this committee well knows, in 
various environmental areas in terms of meeting the needs for 
adequate water and sewer systems.
    I would suggest that while the focus of today is certainly 
appropriate, we ought to step back and look at how we are going 
to meet our broader needs for investing in the capital stock 
that is critical to the economic future and to the quality of 
life of our citizens.
    Second, I also agree with the comments of Senator Moynihan 
about the importance of not just reinventing the technology of 
the 19th century, but to look aggressively as to how we get to 
the 21st century. I think the challenge as it relates to 
magnetic levitation is whether that is a one giant step from 
where we are to magnetic levitation, or if it should not have 
an intermediate step analogous to that which Japan and Europe 
have done, which is efficient high-speed rail systems using 
known commercially applied technology which will then create a 
public acceptance of going to high-speed rail with a technology 
that is still not broadly in commercial application.
    I agree with the observation. I think we need to think 
about the strategy to get to that goal.
    I have been looking at a report developed by the General 
Accounting Office in November 1995 evaluating the current 
highway distribution system. In the executive summary of that 
report on page four there is a sentence which I will slightly 
paraphrase which states that each State's total share of 
funding for these four programs--the interstate maintenance, 
bridge replacement and rehabilitation, national highway system, 
and the surface transportation program, which collectively 
represent 70 percent of total funds allocated--must equal the 
adjusted share of funding the State received for those same 
programs in fiscal years 1987 through 1991.
    Do you agree with the General Accounting Office's 
conclusion that the results of the 1991 ISTEA bill, which would 
require that for 70 percent of the highway funds allocation, 
that they be the same as they were in 1987?
    Secretary Slater. Senator, I am not familiar with the 
specific language of the report that you cite, but I would say 
in general that I think the report captures what the objective 
was by those who were involved in putting together the formula 
at that time.
    Senator Chafee. I would just like to break in quickly.
    We are now in the last part of our vote. If you would be 
good enough to stay, Mr. Secretary, Senator Inhofe has voted, 
so he can ask his questions at the completion of Senator 
Graham's questions.
    Senator Graham. Please be so kind to tell the people at the 
desk that I am on the way.
    [Laughter.]
    Senator Chafee. That depends on how close the vote is.
    [Laughter.]
    Senator Graham. I am certain that with his wisdom Senator 
Chafee's vote and my vote will complement each other.
    [Laughter.]
    Senator Graham. If that GAO report is accurate--and I would 
request that you might specifically evaluate it--then I am 
concerned about what has been suggested as what might be some 
provisions in the NEXTEA that have been suggested at the 
briefing that was held on Monday were first a 90 percent of 
apportionment provision, which would guarantee that all States 
would receive 90 percent of the apportionment they received 
from the previous year. Second--and I don't know if this was in 
the alternative or supplemental--was that the States would 
receive no less than 95 percent of the average apportionment 
which they received over the years of ISTEA since 1991.
    If either of those two is in fact what is being 
recommended, it seems to me essentially we are saying that we 
have a formula that was adopted in 1991, which essentially 
locked in the apportionments to 1987. Now in 1997 we are about 
to pass a bill which will lock in those same numbers through 
the year 2003.
    That seems to be inconsistent with the statement that we 
are going to be using new and updated factors as the basis of 
allocation, if in fact the year 2003 we will essentially be 
allocating on the same basis we did in 1987.
    Secretary Slater. Let me just say, Senator, that I think 
you really make a good point here. You have actually set the 
question up very well.
    I think in 1991 the objective was to bring about some 
change, but to also be sensitive to the conditions as they had 
existed prior to that point. I think in the briefing that was 
held earlier we tried to express an interest in the same kinds 
of dynamics.
    Let me assure you that as we come forward with a specific 
proposal that we will seek to be a player at the table, 
prepared to engage in the discussion and debate about this 
important issue. We will also seek to be guided by a sense of 
fairness. Clearly the Step 21 initiative that goes to the heart 
of this issue has been one that we paid very, very close 
attention to. We would hope that what we come forth with would 
reflect our sensitivity to that fact. But this is a very, very 
difficult issue.
    Let me close my comments on it with this point. There was a 
great attorney who once said that really the challenge of the 
law is to reconcile the wants and desires of each individual, 
each equally entitled to life, liberty, and the pursuit of 
happiness. It is a very difficult balance. Clearly, we have 
that same kind of challenge and need present here as seek to 
establish a formula that will allow everyone representing the 
divergent, dynamic interests of all the States of the United 
States to feel that we have been fair and that all of their 
needs and concerns have been adequately addressed.
    I think we can get there, but it will be very difficult.
    Senator Graham. I would just conclude with this statement. 
The reality is that we are dealing with an inadequate total 
amount of funding. Just as happens in nature, when animals are 
starved, it tends to bring out their most combative instincts. 
All 50 States are starved and they are in combat.
    No. 2, if that is the reality in which we are going to be 
operating--that is, inadequate resources and this starvation 
reaction--then it becomes particularly incumbent upon you, who 
are able to look at the entire Nation, as opposed to each of us 
who are responsible for the Nation but particularly accountable 
to our specific constituents, to be able to give us a 
recommendation that begins this debate with the maximum amount 
of rationality to carry out the allocation of the Nation's 
needs.
    I know that you are doing so, but I just underscore the 
central importance of the recommendation that you are going to 
be making, which has the potential of shaping a rational 
allocation that will justify public and congressional support.
    Secretary Slater. Senator, your point there is well taken. 
We will try to accomplish that end. But we know that ultimately 
we all have to work together to find common cause and common 
ground on this issue.
    I would also add that your point at the outset about the 
resource question--the size of the pot part from which we are 
to select--is also well taken. That is frankly why we have 
tried to increase the authorized amount to approximately $175 
billion. That is about a 12 percent increase over ISTEA. 
Hopefully, that will give us some room to balance these 
interests about which you speak.
    Senator Graham. Thank you, Mr. Secretary.
    Secretary Slater. Thank you.
    Senator Inhofe [assuming the chair]. I get you all to 
myself now.
    Secretary Slater. Yes, sir.
    Senator Inhofe. First of all, let me tell you, Mr. 
Secretary, how pleased I am you are doing what you are doing. 
As you well know, I have singled you out as being one of the 
persons I really have a lot of faith in and have enjoyed 
working with over many, many years. I look forward to doing it 
in this new capacity. I think from my neighboring State, we 
have many fellow Razorback fans who are wondering what next he 
is going to do with the pig trail, and other major arteries 
going to Fayetteville and Little Rock for those Razorback 
games.
    I chair the Clean Air, Property Rights, Wetlands, and 
Nuclear Safety subcommittee of this committee, Mr. Secretary, 
as I am sure you are aware.
    Secretary Slater. Yes, I am.
    Senator Inhofe. We have been having extensive hearings on 
the proposed changes in the national ambient air quality 
standards, as proposed by the Administration and articulated 
very effectively by Ms. Browner.
    When you have put together the CMAQ funding, are you doing 
that on current standards or proposed standards?
    Secretary Slater. We are doing it on current standards, but 
we do have a provision in the law that would allow us to 
respond to changed standards if that were to come about.
    Senator Inhofe. I haven't seen that, but I am very, very 
interested. That is a major thing. In fact, I want to bring 
that up when we have a field hearing with a lot of 
participation by both Arkansas and Oklahoma this coming Monday. 
We are very much concerned about that since the proposed 
standards would kick into effect around 1999 or the year 2000, 
and we are looking at funding here up to 2002.
    I would be interested in your telling this committee what 
preparations you have made for that, should those standards be 
adopted. You say that there is a provision, some type of 
escalation?
    Secretary Slater. Right. We call it a trigger provision, 
which would result in more moneys being made available. Also, 
we would make a commitment to provide technical assistance to 
the cities and communities that would be impacted thereby.
    Senator Inhofe. Would be the source of this additional help 
that would go to the various cities and counties?
    Secretary Slater. Those resources would come from the same 
general pot of resources. We would just have a larger category 
for CMAQ activities.
    Senator Inhofe. So there would be some type of allowance 
for transferring funds from other programs?
    Secretary Slater. Yes.
    Senator Inhofe. Where would the States figure into this in 
terms of using their judgment as to where this transfer should 
take place?
    Secretary Slater. We would make the program as flexible as 
possible. Again, our objective is always to put more 
responsibility and more decisionmaking power in the hands of 
State and local officials as they make their transportation 
decisions. Clearly, it would be reflected in the planning 
process and the involvement of MPOs and the State DOTs and the 
community in that regard.
    Senator Inhofe. I know with your background and your 
philosophy that you would want to have as much of that go to 
the States and local entities. I just hope you will be able to 
sell that idea to the rest of the Administration.
    Secretary Slater. In that regard, Senator, we have worked 
very closely with the EPA on this issue. I think we will be 
able to accomplish that end.
    Senator Inhofe. The EPA--I have the figures that they have 
used and what they are anticipating should the particulate 
matter and the ozone standards changes be adopted. In the area 
of ozone, currently there are 106 counties throughout America 
out of attainment. That would increase to 335. On particulate 
matter, it goes from 41 to 162. So the total would go from 147 
to 502.
    We have had extensive research done on this and our 
calculations are that those are very, very conservative 
figures. I think it is going to be three times that many. I 
really believe this is the time to be looking at that. And I 
would be glad to share with any of your staff how we arrived at 
that, because I am absolutely convinced that we are right. Of 
course, I have a selfish concern about Oklahoma because we seem 
to have an inordinate number of counties that would be affected 
by the changes in those standards.
    Secretary Slater. We would welcome the opportunity to work 
with you. I can tell you that we have not really reviewed the 
estimates of EPA as conservative. But clearly if you have 
evidence in that direction, we would welcome an opportunity to 
review that and to work with you and your staff and other 
members of the committee to be prepared.
    Senator Inhofe. I believe it would be better now to be 
prepared than to wait and find out that I am right and they are 
wrong later on.
    Secretary Slater. Your point is well taken. We should do 
this in a proactive fashion.
    Senator Inhofe. Senator Smith brought up the issue about 
Amtrak. Of course you know that Oklahoma is one of two States 
that has no presence of Amtrak at all. I noticed that always 
before we have had part of the--I am not sure whether it is 
operating or capital funding coming from the general budget, I 
think it is operating--we have done away with that and it will 
be totally supported through the revenues we have from the 
trust fund.
    Of course, I would ask the same question that has already 
been asked about the justification for that since there is no 
contribution made. I heard your answer, but I wanted you to 
know that Senator Smith is not the only one who is concerned 
about that.
    Senator Boxer from California commented that there is a 
concern on the States that join the Mexican border--I suggest 
that it goes beyond just the States that border. Oklahoma, for 
example, in I-35--since it has been designated as a NAFTA 
corridor--there is a great expectation in Oklahoma. I have a 
hard time explaining to them that there is not funding there 
now. Could you give me a message to carry back concerning those 
non-border NAFTA corridor States?
    Secretary Slater. First of all, I appreciate the message 
you have brought forth to this discussion, and that is that 
there are a lot of interior States in the Heartland that will 
be impacted by the full implementation of NAFTA. I-35 is going 
to be a major workhorse route when it comes to making real the 
promise of NAFTA.
    We have a provision in our proposal that will allow us to 
begin to focus on major NAFTA corridors. We are going to work 
with States as they align themselves in a very natural way to 
try to address those needs. We do think our credit program, 
which allows us to deal with multi-State, large project 
initiatives, may be a source of resources for this kind of 
activity.
    Senator Inhofe. I would like to visit with your office to 
get as many specifics as possible so that I can carry those 
back.
    Secretary Slater. Thank you, sir.
    Senator Inhofe. The only Senator yet to ask questions is 
Senator Wyden.
    Senator Wyden. Thank you very much.
    I just want to thank my colleagues, particularly on the 
other side, Chairmen Chafee and Warner, for giving me the 
opportunity to come because this is an issue of special 
importance, as Mr. Slater knows, to our State.
    As you know, Mr. Slater, we have done some of the most 
innovative work in the country in the transportation area. I 
will tell you that there is certainly an appreciation of the 
budgetary predicament you are in, still great concern about the 
reduction in the New Starts Program. It seems to me that if we 
are really going to be creative and innovative--as our 
colleagues have said--as we go into the 21st century, that new 
starts program is one of the best ways to make a concrete and 
tangible difference.
    What is your sense about how we can shore that up? I gather 
the Administration made something of a tradeoff in terms of 
trying to protect CMAQ and some other programs and new starts 
took a hit. But I can tell you in terms of our most congested 
areas in Oregon--areas that have made a huge political judgment 
to try to deal with congestion and the like when it wasn't very 
easy--they are concerned about the reduction in new starts.
    Secretary Slater. First of all, Senator, I would like to 
offer words to join the chorus of those who speak very 
favorably of Oregon and the new initiatives that you have taken 
as it relates to transportation infrastructure investment. You 
have been a leader in innovative types of approaches.
    You are correct in noting that we have engaged in a number 
of tradeoffs. That will become more obvious as the proposal is 
made public. But I can say that new starts represent one of the 
areas of great achievement of the Administration during the 
first term. I will say that Gordon Linton with his team--first 
with Grace Crunican, who is now your Secretary of 
Transportation, and then later with a team that included Gordon 
and Janette Sadik-khan who has served as his deputy--we have 
moved forth aggressively on new starts. The number escapes me 
now. I think it is 12. But the point I want to make is that we 
have invested about $7 billion, but States and locales have 
come back to invest in the neighborhood of $5 billion.
    So it shows that there is that willingness on the part of 
States and locales to be players in this regard as well.
    In our proposal, we will ensure that that partnership 
opportunity remains. But again, your point is well taken that 
we have tried to balance some of these priorities with an 
understanding that we can't do all that we want to do. But we 
will try to do the best we can.
    Senator Wyden. It is not exactly in your purview, but I 
heard this week at home that people picked up in the budget 
that there were going to be five new fighter aircraft that go 
over $300 billion, and then there is going to be a cut in the 
new starts program, which they think is central to the 21st 
century. It is not exclusively within your purview to make 
those decisions, but know that that is the concern.
    I also wanted to ask about your thinking at this point 
about how States that have been willing to make tough decisions 
in terms of promoting good growth management and sensible land 
use could be rewarded in the ISTEA process. I have been 
troubled that not only does the Federal Government not reward a 
local jurisdiction for doing sensible growth management, the 
Federal Government will actually penalize these jurisdictions. 
It is sort of stupefying in that a local jurisdiction can pass 
a set of criteria for dealing with growth management, and then 
along comes the Federal Government and says that we must repeat 
it for ISTEA purposes, for NEPA purposes, et cetera.
    Do you all have any proposals at this time that you can 
discuss that would reward a community for doing the heavy 
lifting in terms of growth management?
    Secretary Slater. Senator, there again, I think your point 
is well taken.
    We believe that through our regulatory reform effort that 
at least we have been able to remove and address a number of 
those initiatives that have penalized States and locales in the 
past. We will continue in that regard.
    We are looking at some proposals that might allow us to 
more incentivize the process. Again, that will become more 
apparent as we talk about the specifics of our proposal. We 
hope to do that in the very near term.
    Senator Warner [resuming the chair]. Senator, we are about 
over here. We thank you for joining the subcommittee today.
    Senator Wyden. When you were gone, I was expressing my 
thanks to you and Senator Chafee for inviting me and giving 
such graciousness. I will break it off right now.
    Senator Warner. It was the express desire of the Chairman 
and myself to include all members, and the ranking member 
likewise.
    There is a consensus here, gentlemen, that we will have one 
more question each.
    Mr. Baucus.
    Senator Baucus. I will be creative and put my question in 
two parts.
    [Laughter.]
    Senator Baucus. Our country is not homogenous. Some parts 
of the country are obviously much more densely populated than 
some others. There should be disproportionate additional aid in 
terms of highway dollars to those parts of the country which 
are more thinly populated than densely populated. The main 
reason we have donor and donee States is because some parts of 
the country have very dense populations. The densely populated 
States are going to be the donor States, by definition, because 
there are so many more people there as a function of fewer 
miles of highways. It is clear.
    Other States--the so-called donee States--should be donee 
States because they are States that are very thinly populated, 
as part of the National Highway System, and are just unable to 
pay as much as the densely populated States.
    I have a table here which shows per capita contributions to 
highways and highway infrastructure. The first column is 
Federal highway trust fund contributions. That is ranking of 
contributions per person. The State that leads the list is 
Wyoming with $198.15 per person. That is, Wyoming residents pay 
in the Federal portion of the highway tax that goes to 
infrastructure.
    Another table is State motor fuel tax contributions to 
infrastructure. Montana is first with $175. Wyoming is down the 
list.
    Some States have higher gasoline taxes than others, but 
mostly it is because they have to in order to pay for their 
needs. Some States have high gasoline taxes, a portion of which 
is not paid for highways. But if you discount that out and take 
only the portion of State highway gas taxes that goes to the 
trust fund, I think that would be a pretty good standard to 
decide what the Federal allocation should be.
    As to Amtrak, I am very much surprised that the 
Administration wants to finance Amtrak out of highway user 
fees. The statement was made here that sometimes folks can ride 
Amtrak. That is not true for most people. Amtrak is not an 
alternative. It is not an alternative for 99 percent of the 
population, at least in the west. I would urge the 
Administration to look for some other way to finance Amtrak 
needs--whether out of the mass transit account with a $4 
billion or $5 billion surplus--or to take some portion of the 
4.3 cents of gasoline tax that now goes to deficit reduction.
    Senator Roth has a proposal, which I may agree with, which 
would take that 4.3 cents and split some of it up to pay for 
Amtrak and the other portion to increase the highway trust fund 
so that we are in fact spending more dollars on infrastructure. 
With that proposal, we still may not use all the funds that are 
in the balance, but we still pay a few more dollars than we are 
now paying for infrastructure. That goes not only to concrete, 
but to enhancement, CMAQ portions, safety enhancements--all the 
different parts of the highway program we are trying to 
participate in.
    I would urge you very strongly to go back to the drawing 
board and find some other way to finance Amtrak. Again, look at 
Senator Roth's proposal and see if there is some way we can 
skin this cat.
    Secretary Slater. Senator, let me just say that population 
will be a key factor in the formula proposal that will come 
forth.
    Senator Baucus. Population or lack of population?
    Secretary Slater. That is what I am saying. The whole issue 
of population reflecting that in some instances it may be 
helpful to a State because they have either a larger or smaller 
number of people. The point I am making is that it will be a 
factor in the formula. Hopefully, it will be dealt with in a 
way that you will appreciate and respect.
    Senator Baucus. Also, you have to remember that there is no 
other alternative in these States. There is no barge traffic. 
Often there is no air service. There are no busses. There is no 
inter-city bus service. It is minute. There is no Amtrak except 
in very rare cases. There is no other alternative.
    Secretary Slater. Right. No other alternative, and as you 
say, in many instances----
    Senator Baucus. And we pay much more than do other States 
per capita.
    Secretary Slater. But what I want you to know is that we 
understand. In some areas there is limited opportunity to use 
other modes of transport and the like, but still there are 
people who live there who want to enjoy what is promised: life, 
liberty, and the pursuit of happiness. And we do have to be 
sensitive to that as we come forth with our proposal--and we 
will be. I want to assure you of that.
    The last point I want to make is that your points about 
Amtrak are well taken. We are trying to come forth with 
something that will be acceptable. All the suggestions you have 
raised--the transit account--all of those things have been 
considered and are being weighed. I just wanted to make that 
point.
    Senator Baucus. That sort of adds insult to injury. A lot 
of the folks in the west pay 2 cents out of the Federal 
gasoline tax to mass transit and don't get a penny back.
    Secretary Slater. I understand.
    Senator Warner. Thank you very much, Senator.
    Senator Chafee?
    Senator Chafee. I would like to start off with a statement 
here.
    We need to give serious consideration to what we are trying 
to do in this country. Are we trying to move people from point 
A to point B in the most efficient fashion? The idea that this 
lucrative fund--namely, the taxes on gasoline that are coming 
into the highway trust fund--may only be used to pour concrete 
it seems to me to be missing the point. The fact is that a 
gasoline tax is a very lucrative and simple way of raising 
money. Should some of it go into reducing the deficit? Yes, I 
support that. I have been for that 4.3 cents.
    If maglev is a very efficient way of moving people from San 
Francisco to Los Angeles to San Diego, some of the great 
growing cities of our Nation, instead of pouring more concrete 
to widen the highways evermore so that more vehicles can get 
down those roads, I think it is a perfectly accepted way of 
using this fund.
    I know we have a basic difference of philosophy here, but I 
don't look on that fund as something sacred. In my State, we 
traditionally have taken our gasoline taxes and put them into 
the general fund. Then they are available for highways, if 
highway has top priority. They are available for health care, 
if health care has top priority.
    But in this situation, at least we are restricting the fund 
to transportation. I think as a country, as we look back to 
this time at some future date and say, ``No, they wouldn't 
spend any money on a better railroad system, a better passenger 
system. All they could do was pour more concrete and widen 
these highways.'' I think we will look back and say that we 
failed.
    I can understand in some of the rural States that they 
don't have Amtrak come through there. That doesn't mean that it 
couldn't come through there at a better rate than it does now. 
But in some of the growing metropolitan areas, I feel it 
perfectly proper for us to subsidize rail or maglev.
    Mr. Secretary, I don't have a question for you, but I would 
strongly encourage you to put the substantial resources of the 
Department to help identify needs. We do this in every other 
program. You just don't distribute funds under our welfare 
system, for example, based on population. We do it based on 
needs. Whether it is HeadStart or whatever the program is.
    I would hope that you could come up with needs. I know to a 
considerable degree it is subjective, but there ought to be 
some criteria you could use.
    Thank you, Mr. Chairman.
    Senator Warner. Thank you.
    Secretary Slater. Mr. Chairman, although Senator Chafee's 
comment was not a question, I would like to provide a short 
response to it, if I may.
    Senator Warner. Surely.
    Secretary Slater. Senator, I think your point is well taken 
about the need to focus on need. In the beginning of my 
statement, when I dealt with Washington and Jefferson and 
Lincoln and Roosevelt and the like, and all the people that 
they had to work with in the various congresses, that is the 
point I was trying to make. Whether trying to open a door or 
trying to find some union of sentiment or the like, connecting 
us as a house united--all of that was a representation of the 
fact that these individuals in their time were focused on the 
needs of the American people.
    I have one idea that I think provides part of the answer 
for us, and I will just state this quickly.
    One of the speakers during the inaugural activities, the 
poet, talked about how it is sometimes easier to look into the 
future and to deal with the future when you do it by looking 
through the eyes of a child because then it is not as 
threatening. We recognize the fact that they have more 
tomorrows than yesterdays. So if we can position ourselves to 
look through their eyes, sometimes it becomes easier.
    I submit that these are the young people who clearly will 
have more of their days in the 21st century. They will want to 
be assured that we in our day, in the closing period of the 
20th century, have made provisions so as to lead to a system 
that can support their pursuit of happiness.
    One thing that I am going to propose--and I would like to 
have the support of this committee, the Congress, and the 
Administration--is the establishment of what I like to call a 
Garrett A. Morgan Technology and Transportation Futures Program 
where we will actually go into the communities--the schools in 
particular--of America to try to stimulate the minds of young 
people to consider transportation as a life option, as a 
professional. This industry not only represents some of the 
best-paying jobs, it is critical to our well-being as a 
democracy, to our security as a Nation, and we want to reach 
them. By doing that--and you couple that with the Eisenhower 
scholarship program that we have for college students who have 
made that choice--and you have a very powerful force at play. 
Also, going to them will allow us to learn a bit more from 
their perspective about what this future of tomorrow will 
consist of.
    I just wanted to make that point. I will say that our goal 
will be to attract 1 million students to this effort. I think 
it will prove very worthwhile to what we have discussed today.
    Senator Warner. Senator Wyden, do you have one question?
    Senator Wyden. I do, Mr. Chairman. I will be real brief.
    Mr. Secretary, could you elaborate a bit on this idea of 
high priority corridors? We are counting on having one on I-5 
in the Pacific Northwest. How many of them do you envision? Are 
there certain criteria which will be determinative? Elaborate a 
little bit on how these high priority corridors would be 
chosen.
    Secretary Slater. First of all, let me give the Congress 
and this committee credit for broaching that issue in ISTEA 
where you identified a number of national priority highways. We 
clearly will continue to focus on those. I can think of one in 
particular, I-69, which actually begins at the Blue Water 
Bridge in Port Huron, Michigan. It goes to Indianapolis, IN, as 
a constructed roadway. We have provided some resources over the 
past 4 years to do a study as to the cost benefit of continuing 
that roadway into the Lower Rio Grande Valley of the United 
States.
    But more importantly, let me say that as we move toward the 
identification of those roadways that would become a part of 
the National Highway System, a charge we were given under the 
ISTEA legislation, we took certain factors into account. For 
example, where were the natural connections with Canada to the 
north and Mexico to the south?
    We identified a number of crossings--and there aren't that 
many, about 32 on the north end and 21 or so on the southern 
end. That is where we will begin because the National Highway 
System, you will recall, represents that system of 160,000 
miles of roadway, consisting of about 4 percent of the roadways 
in the country, but carrying 45 percent of the highway traffic, 
75 percent of the truck traffic, and 80 percent of the tourist 
traffic.
    I think that is a place to begin. Also, this system, 
through its intermodal connectors that were identified and 
submitted to the Congress, deal with the connections to all the 
other modes of transportation. But clearly as we go forward and 
interface with the Congress, I think we will gain a better 
insight of where those corridors are likely to manifest 
themselves.
    Let me close my comment in this regard by saying that I 
understand clearly what Senator Moynihan was talking about a 
few minutes ago when he mentioned Buffalo and the Niagara 
region. In 1994, my second year as Administrator, I actually 
engaged in my first road tour across America. I started in 
Buffalo. In over 14 days I traveled through 14 States, 3,500 
miles, moving through much of the heart of the country and 
ending in Laredo, TX.
    The objective was to deal with those very concerns that are 
the basis of your question: Where is the natural flow of 
traffic? What will the communities in the interior and along 
the border have to deal with and grapple with as we open the 
wide door, if you will, in creating the largest trade zone in 
the world through the full implementation of NAFTA. We have a 
lot more work to do in that regard, but I think these corridors 
will manifest themselves over time.
    Senator Wyden. Thank you.
    Thank you, Mr. Chairman.
    Senator Warner. Thank you.
    Senator Smith.
    Senator Smith. Mr. Secretary, there are two comments that 
kind of caught my eye in your testimony because of the fact 
that I wear the hat of the chairman of the Superfund and 
Hazardous Waste Subcommittee. One of those statements is, 
``Efforts to revitalize brownfields must be continued and 
strengthened in ISTEA,'' and ``Transportation planning 
decisions should also take into account efforts to redevelop 
brownfields.''
    You're not proposing funding brownfield cleanup in the 
ISTEA legislation, are you?
    Secretary Slater. Not really. What we are saying there, 
Senator, is that clearly in a transportation decisionmaking 
process, those factors should be taken into account. I can tell 
you that----
    Senator Smith. How? In what way are they taken into 
account?
    Secretary Slater. Many of these brownfields are sites where 
at one time we had thriving industries. Most of them are in the 
heart of core central cities of the United States. Generally 
they are very close to critical water ports and waterways. 
Rather than just turning our backs on those sites, if we take 
them into account when we are making these very important 
transportation decisions, there may be a way for us to 
positively impact the redevelopment of those particular sites.
    Senator Smith. I don't have a problem with that. I am 
concerned about whether you are proposing funding the cleanup 
of brownfields out of the trust fund. Is that yes or no?
    Secretary Slater. No. We are talking about only to the 
degree where transportation becomes a factor as it relates to 
these areas.
    Senator Smith. Thank you.
    Senator Warner. I would simply use my minute to say that 
listening to Senator Baucus talk about the pristine, big sky 
country of Montana all the way to the smog-layered I-95 in 
northern Virginia. We have our task cut out for us. The one 
word that must prevail throughout is fairness. That is a 
challenge to the Congress and to the Administration to strike a 
note so the American people--who begrudgingly pay these taxes--
think we are treating them fairly in solving their various 
problems that our distinguished colleagues pointed out.
    I would simply say that one other thing we have to do is 
more simplification in this legislation. I am going to look at 
your bill very carefully, but there is far too much complexity 
and regulation and so forth still lingering around, in my 
judgment.
    Thank you, Mr. Secretary. It has been extraordinary and a 
very good presentation by you as well as excellent questions by 
this subcommittee.
    Thank you very much. We now proceed to the next panel.
    Secretary Slater. Thank you.
    Senator Warner. We invite to the witness table Mr. William 
D. Fay, president and CEO, American Highway Users Alliance; and 
Mr. Hank Dittmar, executive director, Surface Transportation 
Policy Project.
    The statements by both witnesses, which are in the 
possession of the subcommittee--well-prepared statements, I 
might say--will be placed into the record in their entirety. We 
ask the witnesses to proceed with the lead-off by Mr. Fay. And 
we thank those exiting the hearing room to be as quiet as 
possible.
    Mr. Fay.

   STATEMENT OF WILLIAM D. FAY, PRESIDENT AND CEO, AMERICAN 
                     HIGHWAY USERS ALLIANCE

    Mr. Fay. Mr. Chairman and members of the subcommittee--and 
Senator Inhofe if he were here--I want to note that all of this 
year's reauthorization efforts may be for naught if the 
national ambient air quality standards are changed. You may 
provide the funds for ISTEA and you may provide the 
authorization to invest them, but 800 counties in this Nation 
won't be able to build or improve their roads if those 
standards are changed.
    I appreciate the opportunity to present our views.
    Senator Warner. That is an excellent point you make and a 
question I was going to have for the Secretary, but time did 
not permit.
    Mr. Fay. It is an important issue.
    Senator Warner. It is a collision course between what we're 
driving to achieve not only in ISTEA or whatever we want to 
call this piece of legislation and the conflict with other laws 
and regulations.
    Mr. Fay. Mr. Chairman, I led the business community's 
efforts on the Clean Air Act. I worked with Senator Chafee on 
that. We didn't always agree on everything, but the foundation 
of the Clean Air Act was scientifically based national ambient 
air quality standards. I have to tell you, at that point in 
time meeting the standards is absolutely critical. That is what 
we have to do, as long as they are scientifically based. But we 
will lose confidence in the Clean Air Act as a Nation if the 
national ambient air quality standards fail to be based on 
science.
    I appreciate the opportunity to testify here today and to 
present our views on the transportation policy that will meet 
the growing needs of the 21st century.
    Highway Users is like a consumers group. Our members are 
motorists and truckers who rather willingly pay taxes in 
proportion to their driving, but who expect those taxes to be 
reinvested in safe and efficient roads and bridges. If the 
FHWA's needs report is an effective gauge, and if the chart at 
the back of my written testimony is accurate, then these 
highway consumers are being ripped off.
    The Interstate Highway System may be complete, but let us 
not forget that it was designed to meet the needs of a 1950's 
economy. Nonetheless, this Federal creation constitutes our 
Nation's safest and best roads. The NHS, which you 
overwhelmingly enacted in 1995, is the interstate highway 
system of the 21st century. Its statistics bespeak nationalism 
with 4 percent of the total miles bearing 40 percent of all 
traffic, 75 percent of commercial truck traffic, and 80 percent 
of tourist traffic. These are our most vital roads and they 
draw our Nation together, they boost our economic productivity 
and competitiveness, they create jobs, and they enhance our 
quality of life. The NHS has more than doubled the trade 
crossings, as Senator Boxer mentioned.
    So we, as the highway users, would strongly oppose those 
who would say that the Federal role should be ended, that 
somehow we should go back to before 1956 when our vision didn't 
extend beyond State boundaries.
    With that said, we also believe that the Federal program 
must readdress itself to meet national issues. We urge you to 
center this reauthorization debate around defining and then 
adequately funding those national priorities.
    Senator Warner, you mentioned that America's highways are 
in the midst of a funding crisis. The needs report documented 
roads and bridges nationwide that are crumbling from under-
investment. But our funding problems are not for a lack of 
revenue. As the chart at the back of my written statement 
shows, only 58 percent of total highway tax receipts are 
actually returned to the States for roads and bridges. The 
State-by-State breakdown shows that if all highway use taxes 
were counted, 43 States are truly donor States, and of the 
remaining 7 donee States two of them--Montana and Rhode 
Island--receive less than 1 percent more than they actually 
pay.
    It is clear that the Senate is painfully aware of this 
funding problem. Specifically, we applaud and commend three 
recent Senate-based proposals. The first is the letter that 
Senators Warner and Baucus originated and which was signed by 
nearly three-fifths of the Senate urging the Senate Budget 
Committee to increase investments from the highway account to 
$26 billion. That is the level CBO says that we can sustain 
using current highway use taxes.
    Second, Senator Byrd proposed to dedicate the regressive 
4.3 cent fuel tax to the highway account and to increase 
funding accordingly.
    Third, the ``Dear Colleague'' letter was originated by 
Senators Chafee and Bond asking that annual highway account 
investments equal annual highway tax receipts. While this 
proposal would leave the highway account with its current $12 
billion, it would guarantee that future taxes would be 
invested. That is a guarantee that we don't have today and is a 
real step in the right direction. All three proposals would 
make substantial deposits toward eliminating the dangerous 
backlog in needed road and bridge investments.
    The needs that concern us the most as the highway users are 
the human needs. Mr. Chairman, 30 percent of highway fatalities 
are caused, in part, by poor road design and conditions. In 
fact, since ISTEA was implemented, America's annual death toll 
has grown, rising in 1993, 1994, and 1995 to nearly 42,000 
highway deaths. Right after this hearing, the Roadway Safety 
Foundation, of which I am a trustee, will release a report that 
documents how road investments save lives. If I had my 
'druthers, I would want every dollar collected from highway 
users dedicated toward saving lives on our roads. You can help 
to stop this carnage by focusing both the Federal highway 
program and Federal highway use taxes toward clearly defined 
national priorities.
    We recommend a simplified program that invests 58 percent 
of highway funds into five program accounts: the National 
Highway System, bridges, safety, research and development, and 
roads on Federal lands. Like the Step 21 Program, we would 
streamline the surface transportation program, continuing the 
eligibility of CMAQ and enhancement projects, but eliminating 
ISTEA's current inflexibility of mandating them. In this way, 
State and local officials can truly establish their own 
priorities for local transportation projects without 
Washington, DC, dictating that some projects receive priority 
over others.
    As soon as the Administration's ISTEA proposal is released, 
I will submit an addendum to my testimony with our reaction. 
But if the President's fiscal year 1998 budget is any 
indication, I seriously doubt it will be favorable. Ignoring 
its own report on the investment needs of our Nation's roads 
and bridges, the President would actually cut highway 
investments amassing a whopping $48 billion surplus in the 
highway trust fund by the year 2002.
    And while cutting back on highway investments, the 
President would ask highway users to pay all of Amtrak 
subsidies. We strongly oppose this proposal and will fight it 
vigorously.
    Mr. Chairman and members of the subcommittee, I thank you 
for hearing our call to focus the program on national basics.
    Senator Warner. Thank you very much.
    Mr. Dittmar, we will hear you and then we will ask 
questions to the panel.

    STATEMENT OF HANK DITTMAR, EXECUTIVE DIRECTOR, SURFACE 
                 TRANSPORTATION POLICY PROJECT

    Mr. Dittmar. Thank you, Mr. Chairman.
    I am here today on behalf of the Surface Transportation 
Policy Project, which like the Highway Users Federation is a 
consumers group. But our consumers are drivers as well as 
environmentalists, drivers as well as senior citizens, drivers 
as well as bicyclists. We do represent those communities.
    I would like to make three points today. First, we believe 
there is a need for a continued national role in surface 
transportation investment. Second, we believe that ISTEA, as 
crafted by this committee in 1991, appropriately addresses this 
national role and balances it with the need for State and local 
officials to have greater choices in making their decisions. 
Third, we believe that some minor improvements to ISTEA can be 
made to respond to 21st century needs.
    Taking the first point, STPP believes that there is a need 
for a continuing and strong national investment in 
transportation. This national role is based on meeting five 
objectives. First, to support our national economy and the 
competitiveness of our national economy in the global economy. 
Increasingly, this has to do with ensuring that our 
metropolitan areas can compete by dealing with problems like 
metropolitan congestion and connecting our ports and airports 
with our Nation's highways at bridges and transit systems. But 
it also involves ensuring that our rural areas have access to 
the national economy.
    I would note that recent economic studies have shown that 
the rehabilitation and preservation of our highway 
infrastructure and our transit infrastructure is one of the 
best economic investments we can make. And we certainly agree 
with Mr. Fay on that point.
    The second national role really is the public safety, which 
everyone has talked about today. Making progress in reducing 
the 45,000 annual deaths through investment in surface 
transportation remains a critical reason for staying the 
course.
    The third role is environmental, scenic, and aesthetic 
quality. Transportation is environmental legislation. 
Transportation and environmental issues cross State boundaries 
and the environmental community will view ISTEA reauthorization 
as an environmental issue.
    Fourth would be access and mobility for all, opportunities 
for all of us to reach jobs and services. This is a critical 
reason for national investment.
    Finally, as a matter of practicality, we need to protect 
our enormous built investment in transportation infrastructure, 
highways, bridges, transit systems, and Amtrak.
    Second, we believe that 1991 ISTEA legislation, largely 
crafted in the Environment and Public Works Committee, 
appropriately expresses this national role. And I am not 
talking here about the formulas in ISTEA, necessarily, but 
about the program structure and the decisionmaking structure. 
My members come from all the 50 States, so we focus on the 
national aspects of the legislation. ISTEA did this in three 
ways. First, it targeted funds to areas of national interest. 
The interstate maintenance and bridge programs appropriately 
target funds to preserving our highway infrastructure.
    The safety set-aside within the surface transportation 
program clearly addresses the needs for safer highways. The 
CMAQ Program dedicated funding to ensure that the 1990 Clean 
Air Act mandate was a funded mandate and not an unfunded 
mandate. This precedent should be continued.
    The enhancement program responded to environmental issues 
and community issues by providing for funding for alternative 
modes and for making sure that the interface between 
transportation and communities was not a troubled one. And 
finally, ISTEA dedicated money to metropolitan areas and rural 
areas, ensuring that equity goes below the State line to the 
areas within the States and their need for funding.
    The second way that ISTEA really made a difference was by 
moving the Federal way from being one of overseeing the 
construction of the interstate and overseeing the engineering 
competence of our State agencies toward an oversight of a 
planning, programming, and decisionmaking process, saying to 
States and localities that the appropriate Federal role was to 
ensure the accountability of the investment of the Federal tax 
dollars through fiscal constraint and public involvement and 
ensuring local as well as State officials taking part in the 
decisions. ISTEA's planning process was an appropriate move for 
the Federal Government into the 21st century.
    Third, we think that ISTEA really balanced the national 
role in funding specific areas with the recognition that the 
ways to achieve national goals may differ from State to State 
and locality to locality. ISTEA provided broad eligibility 
within the funding categories to allow local and State 
officials to choose the projects that make the most sense. And 
it allowed broad transferability between the categories. So if 
a State received more bridge funds than it needed, it could 
transfer those funds into the National Highway System category.
    ISTEA should be retained. That is why STPP has joined with 
the U.S. Conference of Mayors, the National Association of 
Counties, the National League of Cities, the American Public 
Works Association, the American Public Transit Association, and 
the National Association of Regional Councils in the alliance 
for ISTEA renewal, arguing that we need to continue to have 
adequate funding for surface transportation, continue ISTEA's 
program structure, and keep the partnership and decisionmaking 
together.
    We believe that some improvements are possible, and they 
have been outlined in a book that we have provided separately 
to the committee, our blueprint for ISTEA reauthorization. We 
are proposing an emphasis on rehabilitation--a fix it first 
policy in the reauthorization--further progress on the 
environment, and the simplification of the transportation 
program, reducing the program categories from 14 to 6, and 
simplifying the planning process from the current 20 planning 
factors down to 6 or 7 planning factors.
    It is shifting from a one-size-fits-all philosophy. ISTEA 
unleashed a torrent of creativity at the State and local level. 
For emergency service patrols in California and New Jersey to 
remove motorists from the freeway, to clean fuel busses in 
Idaho, from scenic and historic roads serving battlefields to 
Virginia, to trails in Rhode Island and Connecticut, ISTEA is 
working. We believe this committee should keep ISTEA as it 
considers the reauthorization of the transportation program.
    Senator Chafee [assuming the chair]. Thank you very much, 
Mr. Dittmar.
    Mr. Fay, I have had the privilege of working with you, as 
you mentioned, going way back to 1991 on the Clean Air Act and 
over the years. You are a thoughtful individual as far as these 
matters go.
    You, yourself, said we are seeking a transportation policy. 
Let me present you the following problem.
    In certain corridors in the United States--and obviously I 
am not going to name them all, but in Florida, Miami to 
Orlando, or wherever it might be, Los Angeles to San Francisco 
or Los Angeles to San Diego, or New York to Boston--in certain 
of those corridors the highways are very, very clogged.
    What is the answer? You say that none of the money from the 
highway trust fund should be used for Amtrak. Yet if Amtrak in 
each of those places could contribute to substantially 
lessening the traffic on the highway so that you or Mr. Dittmar 
or whoever it might be could drive with relative ease instead 
of being caught in a clogged highway--isn't that a fair use of 
these moneys? Or is the only use for them to widen the road, 
build another lane, take some farmer's property, take some 
households, and take some businesses? Is that the only 
solution?
    Mr. Fay. Senator, the highways are the mode of 
transportation most Americans choose. In fact, if you were to 
take a look at how we commute over the past 10 years, the only 
means of commuting that has increased from 1980 to 1990 was 
driving alone. We put a lot of Federal money into carpooling 
lanes and public transportation. Both of those means of 
commuting decreased over the last 10 years.
    I am trying to say that highway users do expect that their 
highway use taxes will go to safer and more efficient roads and 
bridges.
    Senator Chafee. I don't agree with you on that. I don't 
think that when my wife goes to the gasoline station and pumps 
in the gasoline that she is saying to herself, ``I am paying a 
tax here and I want that tax to be used to improve our 
highways.'' Maybe you do, but I don't think most people do.
    Mr. Fay. The basic point is that 98 percent of the surface 
miles that we travel is over highways. The question becomes, If 
you are taking money from highway users right now and you are 
not effectively maintaining the roads and bridges--we are 
falling $20 billion short of what is needed to maintain the 
roads and bridges in the United States according the Federal 
Highway Administration report.
    I am saying right now that we are failing the American 
driver right now. And the American driver is choosing to drive 
to work, and there are different reasons for that which are 
very legitimate. We found the major reason people decided to 
drive alone to work over the last decade was the incredible 
increase in working mothers and working women on the road. They 
aren't able to use it.
    Senator Chafee. I would really like it if you could stick 
to my illustration. Let's just take Los Angeles to San Diego. 
What is the answer?
    Mr. Fay. Senator, if you were to shut the Amtrak route 
between Los Angeles and San Diego, you would not notice the 
impact on the road whatsoever. In fact, if you were to shut 
down the most used route--the route with the highest rideage is 
the Philadelphia to New York route--you would add about one car 
per lane every minute and 20 seconds. And the roads can handle 
that.
    I guess I am saying----
    Senator Chafee. I hope that when we complete this bill we 
can say to ourselves, as the Secretary said, with a child's 
eyes. What kind of a transportation system are we leaving this 
country? Not just for today and tomorrow, but in the outyears, 
have we made it better for people to go from point A to point B 
in the most efficient manner? Have we contributed? No one is 
saying that we shouldn't put money into highways. Of course we 
should. But should we do anything out of this massive fund that 
accumulates with money pouring into it.
    I am for spending what is coming into it. But to say that 
it can only be spent to widen roads it seems to me is missing 
the point.
    Mr. Fay. Senator, there are some other things I would spend 
money on. Clearly, widening roads is not the answer in all 
communities, but it can help. One of the things we have in CMAQ 
is that we are not allowed to spend any CMAQ moneys in order to 
improve single occupancy lanes. We can't use that money to 
invest in freeway interchanges in many cases. Yet those are our 
most congested parts of our country.
    Right now, I would say that what we need to do is clearly 
to invest in where the public is going. The public is going 
into their cars increasingly. I guess the question is, Is 
public policy designed to drive the public in a certain 
direction, or is public policy designed to meet what the public 
is doing? The public is driving, Senator. Whether you like it 
or I like it, it is going to happen that way. The question is 
now, Are we going to meet those needs?
    What kind of future are we handing them? We are handing 
them a very congested future if we are not making the kinds of 
investments we need.
    Senator Chafee. That is where I think you are just leading 
to more and more congestion.
    I will get back to you.
    Senator Smith.
    Senator Smith. I hate to interrupt that.
    [Laughter.]
    Senator Smith. Mr. Dittmar, let me ask you a question 
regarding some of the things that we do with the trust fund, 
such as bicycle paths, for example. I support them. I think it 
is admirable. But when you look at the issue of priority and we 
know that people are dying on the roads as a result of roads 
that are not repaired properly, or even constructed properly in 
the first place, is that justified to take dollars that are 
costing lives and use them to enhance the ability of people to 
perhaps recreationally use the surface routes in some way?
    And I say that not to be confrontational, because I support 
those. I think they are justified. But are they justified in 
terms of competition for these dollars?
    Mr. Dittmar. Let me make a couple of points with respect to 
that question.
    The first one is that about 8 percent of all trips that are 
taken are walking and bicycling trips. So to spend, as ISTEA 
did, something less than 2 percent of the funds on bicycle and 
walking facilities does not seem to me to be out of line.
    Second, about 15 percent of our fatalities are bicycle and 
pedestrian fatalities each year. Spending funds to improve 
safety for walkers and bicyclists, both by improving roads and 
providing access for them, is an important thing. We have done 
some analysis of the safety set-aside funds and we found that 
less than 1 percent of those funds were actually spent on 
bicycle and pedestrian safety.
    Senator Smith. Just a clarification, is that 15 percent of 
the 40,000 plus deaths?
    Mr. Dittmar. That's correct.
    Senator Smith. So they would be considered part of the 
totals?
    Mr. Dittmar. They are part of the traffic fatalities. 
That's right, sir.
    And we wondered about public support for this because we 
have seen the polls that say the public supports spending the 
gas tax money on the roads. So we went to the Tarrance Group 
and Lake Research and asked them to do a national poll, which 
we released today. It showed that 64 percent of the American 
people supported dedicating 1 percent of the gas tax funds for 
bicycle and pedestrian trails and a full 70 percent for the 
other kinds of enhancements, historic train facilities, and 
landscaping.
    I think bicycle and pedestrian travel can be a substitute 
for motor vehicle travel for short trips. A lot of our trips 
are very short trips within neighborhoods. If we provide safe 
facilities for people to get around, especially our kids and 
people who don't have automobiles, I think we are providing an 
option that can relieve some congestion on the roads.
    Senator Smith. I don't recall the network that put it on, I 
think it was NBC, within the last 10 days or so.
    Mr. Dittmar. Was it Dateline?
    Senator Smith. I believe it was where they showed the two-
lane roads throughout the country being the source of so many 
accidents.
    Mr. Fay, is it fair in the allocation system in these 
various categories where a lot of dollars go for the 
interstates and the National Highway System, and there is very 
little focus on improving or changing roads? Never mind whether 
they are a part of the National Highway System or not, if it is 
a two-lane road that has a propensity to cause a lot of 
accidents directly linked to that road, is it fair to continue 
to divert dollars into other accounts for the sake of some 
formula or for the sake of some allocation and neglect those 
roads?
    Mr. Fay. Senator, first of all, we are asking the 
Government to meet national objectives. Those would include the 
NHS. I think you will find--going back to the NBC show--is that 
a lot of the non-interstate NHS roads are many of those two-
lane roads that are causing a lot of those fatalities out 
there. What concerns us a great deal is that we are not 
investing in non-interstate NHS roads what we need. Those non-
interstate NHS roads are bearing interstate traffic loads but 
they don't have the benefit of interstate safety designs.
    We would like the Federal Government to focus its attention 
on the NHS, especially on the non-interstate NHS and on 
bridges. And in doing that, by dedicating 85 percent of the 
highway program to those five priorities, including safety, we 
would then try to meet those safety needs on our busiest roads.
    Senator Smith. Let me try to focus on the difference 
between highway or road design and condition. To me a condition 
is potholes, the bridges in disrepair, et cetera. But are we 
focused enough on the design of highways that are defective--
Indian trails, cow paths, or whatever--other than those such as 
the Georgetown Pike here in this area that are historic routes, 
leaving those out--do you believe we are focused enough in 
terms of design, as compared to condition, to make the changes?
    The report on NBC seemed to conclude--and I don't know 
whether it is justified or not--that if the road had a bunch of 
potholes, we would send the money in there to fix it. But if it 
is defective in its layout--too many curves, too many hills, 
you can't see the car when you come over the hill, et cetera--
it doesn't get the money. Is that your experience?
    Mr. Fay. I think that is right, Senator.
    Senator Smith. Is anybody looking at that?
    Mr. Fay. If you take a look at your State's NHS roads, non-
interstate NHS roads, and you drive those roads, you will find 
that 40 percent of those NHS roads are two-lane roads. In fact, 
later on today we will be introducing a report that 
specifically discusses the improvement you are talking about. 
It is called ``Improving Roadway Safety''.
    Senator, I always ask people to just think about driving on 
the interstate when they want to think about safety 
improvements. The interstates are our safest roads. Even though 
they have the fastest speeds, they are our safest roads. When 
you look at the design of those roads, they really do save 
lives. Wider lanes, wider shoulders, shoulders that are flat 
rather than steep to prevent rollovers, the distance in between 
the lanes, hopefully barriers to prevent you from hitting 
trees, barriers that help you from running into poles, long 
entry and exit ramps--those types of things are the kinds of 
investments we can make that will dramatically save lives in 
this country.
    That is the kind of design--if you drive down Route 7, 
Route 50--you can just look at those roads and see that in some 
cases they don't have the safety designs that the interstates 
do. But if you drive down those roads, you know they are 
bearing interstate traffic.
    Senator Smith. I would like just a yes or no answer.
    Mr. Fay. I am sorry.
    Senator Smith. I was not criticizing your response, I would 
just like a yes or no answer on this question.
    Do you believe Amtrak could survive without Federal 
assistance?
    Mr. Fay. No. I think the GAO indicated that in their study 
on that.
    Senator Smith. Do you agree?
    Mr. Dittmar. Yes.
    Senator Smith. That is not the answer I wanted.
    [Laughter.]
    Mr. Fay. If I could add something, Senator, the GAO did say 
that Amtrak could survive in certain corridors if those 
corridors were defined by use. I think one of our greater 
problems with Amtrak is the ridership.
    Mr. Dittmar. If I could add, I think that Amtrak could 
survive with a dedicated capital fund, but without continued 
operating subsidies as a national rail system.
    Senator Smith. If the interest is that high, and we are 
going to alleviate all these problems by having Amtrak running, 
then there ought to be enough interest in passengers to ride it 
and they ought to be willing to pay the price of the ticket, 
just like an airplane.
    Mr. Fay. Senator, 73 percent of the ridership of Amtrak 
earn over $40,000 a year, so they are capable of paying more 
for the Amtrak routes.
    Senator Smith. Thank you.
    Senator Warner. Thank you, Mr. Smith.
    To work with this committee is absolutely fascinating. I 
guess it is a sign that I have been here a considerable period 
of time, but I am learning things that I find surprising. When 
I first came to this committee many years ago and to the 
Senate, the idea was to finish the interstate system, do this, 
and do that. The other day we had a witness here who was just 
fascinating. He said, ``You are doing all these things, but 
you're not taking into consideration the changing lifestyle of 
America.''
    In this region for which I have primary responsibility in 
northern Virginia, 30 miles of HOV lanes on I-95, 20 miles on 
I-66, new HOVs on I-270, funded Metro, working on commuter 
rail, working on bus service even though economically it is not 
good and we are trying to expand it--all these options, yet the 
good old independent American is deciding that that car enables 
him to not only get to and from work, but also to do the 
necessary stops, in many instances, when both parents are 
working to care for the needs of the family.
    I find this fascinating. I am not sure we are getting the 
solution as to which way we go.
    Mr. Fay. Mr. Chairman, that is kind of the basis of the 
discussion I was having Senator Chafee a little earlier. The 
public is driving more. I think it comes down to the fact that 
the most difficult challenge facing us individually as 
Americans--we hear about crime and other things--is time 
management. We don't have enough time in the day to do all the 
things we need to do. We find that when we interview people who 
drive, they say that they drive simply because they can't do it 
otherwise. They can't find another way to do all the things 
they need to do during the day.
    Mr. Pazarski is quite an expert. He is the one who did the 
study that showed that over the last 10 years, despite all the 
investments we made, that the only means of commuting that 
increased over the last decade is driving alone to work.
    Senator Warner. Can we have that chart?
    Mr. Fay. Yes, I will submit this.
    Senator Warner. But you haven't given me an answer. You 
have recognized the problem in a more eloquent way than I 
stated it.
    Mr. Fay. I think the congestion mitigation is going to be 
the critical phase we are going to have to enter into. Mr. 
Chairman, I am not trying to profess that expanding roads are 
the only solution, but I will say that one of the things that 
disturbs me is that CMAQ funds cannot be used for interstate 
exchanges. We cannot really use CMAQ funds for single occupancy 
lane enhancements or expansions. That is disturbing to me.
    If Americans are driving more, we do need to meet those 
needs. I think the congestion needs do have to be met.
    Senator Warner. This region, which I described, ranks 
second in lost productivity sitting behind the wheel.
    Mr. Dittmar. Last year, we commissioned some poll work that 
asked Americans about their travel choices. Mr. Chairman, 78 
percent of them called their automobile their first choice 
today. I think that bears out what you heard from Mr. Pisarski. 
But only half of them say that is what they want. Half of 
Americans say that if other options were available to them, 
they would use them.
    Senator Warner. They are available.
    Mr. Dittmar. In some ways. Our communities are not designed 
to allow non-auto travel. They are not designed for walking and 
bicycling. Transit is only available to a minority of Americans 
for all their trips these days. So we have continued to invest 
in those things.
    And we are faced with another dilemma. I will add a problem 
to your problem, which is that we have learned, as Tony Downs 
said in his book ``Unsticking Traffic'', that building roads to 
relieve traffic congestion doesn't work. We find that the roads 
fill up with additional travel. So we are on the horns of a 
dilemma. I would submit that the way out of that dilemma is to 
begin to think about providing other options to allow people 
not to travel through telecommuting and other activities like 
that (which probably are not things we need to invest highway 
trust fund dollars in except in terms of aiding community 
planning); providing communities that are designed to allow 
walking and bicycling to take some of those trips away from 
working women, and by continuing to invest in public transit.
    The Metro system is a success in Washington, DC. You just 
have to go to some of the communities in Virginia like Ballston 
and Courthouse Square and see the success the Metro has had in 
attracting economic development and walkable transit-oriented 
communities. I would submit that we need to continue to make 
progress in that area.
    Americans are not going to say no to the car, and we don't 
think they should. But I think Americans can say yes to 
choices, if they are provided.
    Senator Warner. Thank you very much.
    Any further questions, Mr. Chairman?
    Senator Chafee. Thank you, Mr. Chairman. I have a couple 
more questions.
    First, I think we ought to get it on the record that every 
passenger railroad system in the world is subsidized. As I 
mentioned, I just came back from Germany. Whether it is there 
or Japan or wherever it is, they are subsidized.
    And Mr. Fay, I think you would agree that highways are 
subsidized?
    Mr. Fay. No, I would not agree with that.
    Senator Chafee. You wouldn't agree with that? You think 
that the highway trust fund pays for all our highways in our 
country?
    Mr. Fay. There was a study done--and I guess it is coming 
out again, updated, in the next month or so--that amassed all 
the taxes that are paid specifically by highway users, which 
includes all levels of government--fuel tax, license fees, all 
the taxes imposed directly on highway users and paid only by 
highway users. Then it amassed the number of expenditures that 
were made on roads and bridges. Those expenditures not only 
included the construction and the maintenance, but it also 
included all the administration and all the policing--adding up 
the cost of State policing on the roads.
    It concluded that in 1992 highway user receipts exceeded 
expenditures on roads by $38 billion. The study that is about 
to come out in another month is going to increase that amount 
in using 1994 figures to about $58 billion.
    So I don't accept that premise, Mr. Chairman.
    Senator Chafee. Let me just say that it is always dangerous 
to have an aid thrust a piece of paper in your hand.
    [Laughter.]
    Senator Chafee. The Federal Highway Administration was 
asked how much highway users are paying taxes compared to 
spending. In 1994, the Department stated that highway user 
taxes paid only for about $40 billion or 54 percent of total 
highway spending. The remaining $34 billion, or 46 percent of 
highway spending, comes from non-highway taxes such as property 
taxes and sales taxes.
    We can go back and forth on that. I don't really want to 
spend too much time on it, just 30 seconds.
    Mr. Dittmar. I think I can add a little light on that.
    The study Mr. Fay referred to counted sales tax from the 
sales of cars and property tax from the sales of cars as a 
highway user fee. We would say that is general government 
revenues. There is another study from the World Resources 
Institute that pegged the number considerably higher.
    In our book, we show that the amount of general revenues 
diverted to highway projects far exceeds the amount of highway 
taxes diverted to non-highway projects by about $11 billion.
    Senator Chafee. I guess Mr. Fay was concerned about the 
increased accidents on our highways. I don't know whether you 
were around when we were debating the National Transportation 
System bill. As you know, we put into the ISTEA back in 1991 
the 55-mile-per-hour speed limit, motorcyclists helmets--you 
had a provision that you lost some of your highway funds if 
States didn't pass a helmet law--and both of those were 
repealed. Indeed, we were lucky to keep the seat belt. I think 
the only reason we kept that and the drinking age of 21 
survived mostly because of Mothers Against Drunk Driving. But 
the others were blown away.
    I felt like Horatio at the bridge, except I lost. Horatio 
won, I didn't. I don't know whether those have contributed--the 
elimination of the 55-mile-per-hour speed limit--to the 
increase of deaths. I believe strongly the helmet provision has 
contributed.
    Do you have any views on that?
    Mr. Fay. Yes. It is disturbing. The highway fatalities 
increased from 1992 to 1993, 1993 to 1994, and 1994 to 1995. 
During those years, the speed limit and the helmet laws were 
intact. They had not yet been repealed by Congress. They 
weren't a factor in those increases. And what is even more 
disturbing----
    Senator Chafee. As I recall, the hammer on the 
motorcyclist's helmet law hadn't come into effect yet.
    Mr. Fay. That's correct.
    Senator Chafee. So the full effect of the law hadn't 
occurred.
    Mr. Fay. But as we looked at it, we saw increasing seat 
belt use, a dramatic increase in seat belt use. We saw safer 
cars on the road. The cars are now being built with a cage that 
protects us and so the car crumbles around the cage. We saw a 
truck safety program that dramatically reduced truck fatalities 
and truck accidents. And we saw fewer drunk drivers on the road 
as a result of MADD's work and others.
    We had all the factors that should have been driving 
fatality numbers down over those years, yet, in fact, it didn't 
happen.
    During those 3 years, we know from the FHWA that the roads 
were worsening in condition. I am not suggesting that all 
deaths on the highways result from that, but I will say that 
FHWA concluded that 30 percent of all fatalities involve the 
design or the condition of the roads. Most engineers tend to 
agree with that or accept that 30 percent figure. That is about 
14,000 deaths a year. They certainly could be helped if we 
would design our roads a little better.
    Mr. Dittmar. During those years, we also an increase in 
driving. Some experts believe that the increase in fatalities 
is related to that increase.
    Senator Chafee. But these statistics are based on 100,000 
miles--they are not just comparing numbers.
    Mr. Fay. I have a chart that indicates where that death 
toll went.
    Mr. Dittmar. If you are looking for support in attempting 
to be Horatio at the bridge or to take action on the motorcycle 
helmets and the speed limit, I would like to pledge that 
support.
    Senator Chafee. It would be awfully hard to resurrect those 
again.
    Mr. Fay. Speed is a factor in a lot of fatalities. One 
thing that is interesting, though, is that our safest roads in 
the Nation are our interstates, which bear the fastest speeds. 
That is because they are designed to accommodate those speeds.
    I have even noticed very carefully that in 1996 the 
fatalities, when the speed limits did increase nationwide, 
stayed about where they were in 1995. Speed does kill, Senator, 
but I think there are things we can do that will accommodate 
roads that will save lives instead of causing fatalities.
    Senator Chafee. Mr. Fay, I am not going to persuade you 
now, but I would hope that you would look at a transportation 
system for the country. That involves how we are going to move 
more people. Then it follows that we should not only have a 
rail system with a rail system that runs frequently so people 
will take it and ride it. That is the way we are going to be 
able to accommodate this ever-increasing number of people in 
our Nation--first, we have a growing population--without 
resorting always to widening and widening more and more roads.
    I thank you both very much. I appreciate your coming.
    That completes the hearing.
    [Whereupon, at 12:35 p.m., the subcommittee was adjourned, 
to reconvene at the call of the chair.]
    [Additional statements submitted for the record follows:]
       Prepared Statement of Hon. Rodney E. Slater, Secretary of 
                             Transportation
    Mr. Chairman, Senator Baucus, and members. It is an honor for me to 
appear before the Senate Environment and Public Works Committee--the 
committee that confirmed me as the Federal Highway Administrator, my 
first Federal position. I am especially pleased that my first 
appearance before a congressional committee as the Secretary of 
Transportation is before this committee. I am deeply honored that the 
President and you, the Senate, have seen fit to entrust me with the 
significant responsibilities that come with being the United States 
Secretary of Transportation--not the least of which is one of the major 
transportation bills to be considered this year by the Congress.
    The President has challenged all of us to help build a bridge to 
the 21st Century. While speaking metaphorically, I believe that this 
committee will agree with me when I say that transportation will have 
much to do in a real and concrete sense with the shape of the next 
Century.
    When the Intermodal Surface Transportation Efficiency Act of 1991 
(ISTEA) was enacted, it was hailed as the most significant 
restructuring of surface transportation programs since the Federal-Aid 
Highway Act of 1956. Those of you on the committee who developed this 
extraordinary legislation are to be commended, because in concept it 
was truly a landmark law.
    In the years since, we at the Department of Transportation (DOT) 
have worked tirelessly every day in every way to ensure that the noble 
objectives of ISTEA were realized in practice and implementation. The 
Administration, with the support of the Congress, has provided record 
level investment in transportation infrastructure. We have engaged in 
the most extensive outreach effort in the history of the DOT to aid our 
State and local transportation partners in implementing the new 
planning and the new shared decisionmaking process outlined in ISTEA. 
And we have engaged the private sector in ways never before realized. 
In short, we have worked to make the dream of ISTEA a reality.
    During my testimony, I will be talking about the specifics of ISTEA 
and about the specifics of reauthorization. I want to emphasize, 
however, that in preparing to meet the transportation challenges of the 
21st Century, ISTEA and its successor must be judged not simply by 
transportation measures--mileage improved, bridges rehabilitated, 
transit lines operated. Rather, ISTEA and its successor must be judged 
by how they affect the lives of our people, the health of our economy, 
and the welfare of our Nation as we enter a new century.
    I believe that transportation plays a central role in our society--
central not just to everything we do or will do, but central to the 
history that has made us what we are today. I look to history as my 
guide in showing us how transportation has pulled us together as a 
Nation, how transportation has sustained our dreams, and how 
transportation has given us the freedom to enjoy the right, as promised 
by the Declaration of Independence, to ``Life, Liberty, and the pursuit 
of Happiness.''
    The echoes of history tell us the story.
    In 1784, George Washington saw that the mountain barrier separating 
the seaboard cities of the new United States from the settlements along 
the Ohio River must be overcome or the settlements would be pulled into 
economic alliances with the British in Canada and the Spanish along the 
Mississippi River. The solution, he thought, was in the young Nation's 
clearest interests, namely: ``open a wide door, and make a smooth way 
for the produce of that Country to pass to our Markets before the trade 
may get into another channel.''
    Some years later, in 1806, President Thomas Jefferson would open 
that wide door by approving legislation to build the National Road 
linking east and west and eventually stretching almost to the 
Mississippi River. In an 1806 message to the 9th Congress, he said that 
roads and canals would knit what was even then a diverse Nation 
together in what he called a ``union of sentiment.''
    This view was reflected in the mission President Jefferson assigned 
to Captains Meriwether Lewis and William Clark. When they set out to 
explore the unknown reaches of the Louisiana Purchase, one of their 
goals was to find a navigable water route to the Pacific Ocean that 
would allow the United States to bind those uncharted territories to 
the Nation that now owned them.
    President Abraham Lincoln understood. Even while trying to hold the 
Nation together in war, he took an important step to keep it together 
in peace. In July 1862, while the Union and Confederate forces were 
locked in combat, President Lincoln signed the Pacific Railroad Act 
that made a transcontinental railroad possible. He understood its 
military value, but he also recognized the importance of transportation 
in holding a Nation together and in enhancing the lives of the people 
on both ends of the line.
    When the Federal Aid Road Act of 1916, which created the Federal-
aid highway program, reached the desk of President Woodrow Wilson, he 
said he was happy to sign it because the new law ``tends to thread the 
various parts of the country together. . . .''
    President Franklin Roosevelt, facing the worst economic catastrophe 
this Nation has ever experienced, saw transportation as an integral 
part of our recovery. He saw road building and other public works as a 
way of providing jobs to the unemployed and creating a revenue stream 
to help businesses. But he also had a vision of a national network of 
superhighways that he nurtured throughout his presidency. The earliest 
report on what became the Interstate System was prepared by the Bureau 
of Public Roads at his request.
    But in the 20th Century, perhaps no President had a clearer vision 
than President Dwight D. Eisenhower. His vision had been forged by 
practical experience. In 1919, as a Lt. Colonel, he had traveled across 
the country as an observer on the U.S. Army's first transcontinental 
convoy of military vehicles. The convoy took 62 days to get from 
Washington to San Francisco. During World War II, he had seen the 
benefits of Germany's autobahn freeway network. As President, 
therefore, he was committed to creation of a similar network for the 
United States. His 1955 message to Congress outlining his proposal 
provided an eloquent explanation of why the Interstate System was so 
important. He said:

          Our unity as a nation is sustained by free communication of 
        thought and by easy transportation of people and goods. The 
        ceaseless flow of information throughout the Republic is 
        matched by individual and commercial movement over a vast 
        system of interconnected highways crisscrossing the country and 
        joining at our national borders with friendly neighbors to the 
        north and south.

    Together, the united forces of our communication and transportation 
systems are dynamic elements in the very name we bear--United States. 
Without them, we would be a mere alliance of many separate parts.
    I take my cue from these great leaders, who recognized that the 
tools of transportation--the concrete, asphalt, and steel of today--are 
but a means to an end. And that end is the unity of our Nation--and the 
mobility and prosperity of our people.
    It is neither a coincidence nor an accident of history that in the 
19th Century, the United States became stronger and our Nation more 
united as our transportation network spread across the continent, 
connecting farmers to markets, cities to cities, and coast to coast.
    Nor is it an accident that in the 20th Century, the United States 
built the strongest economy and became the greatest power in the world 
at the same time our evolving transportation network was making our 
citizens the most mobile in the history of the world.
    Because our country's prosperity and its quality of life are linked 
inextricably to the strength and efficiency of its transportation 
system, reauthorization of ISTEA gives us an opportunity to begin to 
build that bridge to the 21st Century. The coming debate will be 
complex, frustrating, and intense, but as we build that bridge to the 
21st Century, we must never forget that our future, and that of our 
children and grandchildren, will depend on how far our transportation 
system will take us--or not take us.
                             our challenge
    As we entered the post Interstate era of the 1990's, ISTEA gave us 
the tools and flexibility to respond not only to the Nation's 
transportation needs but to many of the economic, social, safety and 
environmental challenges we faced. It recognized that Federal 
investment must do more than build roads and mass transit; it must also 
help strengthen communities, improve productivity, preserve our 
environment, and protect the safety of all Americans. Under President 
Clinton, we have made good on ISTEA's promise. Working with the 
Congress, we have increased transportation infrastructure investment to 
record levels. These investments have paid off in substantial 
improvements to the condition and performance of our highways and mass 
transit systems.
    To prepare for the future, Congress and the Department sought views 
on reauthorization over the past year, through hearings and forums all 
across the country. The clear message that emerged from these dialogs 
is that ISTEA is working and working well. The key to this success is 
that ISTEA is rooted in a strong partnership among all levels of 
government and with the private sector. These partnerships must be 
preserved and strengthened.
    New and continuing challenges lie before us in the 21st Century--
challenges to keep our economy competitive, to maintain our quality of 
life and to ensure a safe and efficient transportation system. As the 
President said in his State of the Union Address: ``we must be shapers 
of events, not observers. . . .'' ISTEA represented that kind of 
visionary approach. The reauthorization of ISTEA holds the promise of 
keeping our economy the strongest in the world by providing access to 
markets, reducing health care costs through safer transport, reviving 
and empowering poor urban and rural neighborhoods, transporting people 
from welfare to work, harnessing the powerful forces of science and 
technology, protecting our environment, and maintaining a mobile and 
ready military.
    The extensive infrastructure investment of the past two centuries 
provides a solid platform for the new foundation. Now, in addition to 
more traditional approaches, we can look to information and 
communication technologies, intelligent transportation systems, 
magnetic levitation systems, and other new or improved technologies 
that promise to transform the safety, efficiency and environmental 
soundness of travel. As the information revolution continues to change 
the way we do business, we will continue defining and expanding the 
transportation information infrastructure to get decisionmakers the 
right data at the right time and in the right format. The successor to 
ISTEA must recognize that, once again, America is at a crossroads and 
that transportation will play a key role in helping choose our future 
path.
                      resources for transportation
    One of our biggest challenges is to provide adequate resources and 
sufficient flexibility to maintain and improve our surface 
transportation system within the context of moving toward a balanced 
budget. The Administration's legislative proposal, the ``National 
Economic Crossroads Transportation Efficiency Act'' (NEXTEA), will 
authorize a total of $174 billion for surface transportation programs 
over a 6-year period. This is an 11 percent increase over ISTEA funding 
levels. Our proposal will sustain core programs such as the National 
Highway System (NHS), maintenance of the Interstate System, and 
continuation of bridge replacement and rehabilitation, as well as 
important safety, environmental, and transit programs.
    Even so, we recognize that the Federal Government alone cannot 
provide sufficient funds to meet our Nation's transportation needs. 
That is why we propose to expand the successful State Infrastructure 
Banks (SIBs) program to all States and to establish a Federal credit 
program to supplement current funds and expand opportunities for 
attracting new public and private capital transportation investment.
    Responding to the President's 1994 Executive Order on 
Infrastructure Investment, the Department launched a broad innovative 
finance initiative to stretch the Federal dollar and attract new 
sources of capital. Our Partnership for Transportation Investment, 
initiated more than 2 years ago, cut red tape, produced new financial 
tools and attracted new funding. Over 70 projects, worth more than $4 
billion, moved to completion ahead of schedule, saving both interest 
and inflation costs. As impressive as these figures are, we are 
confident we can do even more by expanding these efforts nationwide.
    We propose taking the next step by expanding the amount of seed 
money available for State Infrastructure Banks (SIBs) and by dedicating 
$100 million to a new Federal credit program. Although similar to the 
SIBs, this program will support multi-state projects of national 
significance that a single State might not be able to manage on its 
own. This new initiative will help keep us competitive in the global 
economy.
    Technology provides another strategy for getting more from our 
Federal investment dollar and maximizing system performance. In many 
cases, technology can provide needed additional capacity at less 
monetary and environmental cost than new construction. Therefore, we 
are proposing a new systems integration incentive program for 
Intelligent Transportation Systems (ITS) to assure that all technology 
systems can be integrated in order to deliver smoother service. In 
addition, we propose making ITS investments eligible under all major 
investment categories.
                 economic importance of transportation
    Our economy is rapidly changing and so must our transportation 
system. By improving access to markets worldwide through fast, flexible 
service, we will provide the foundation for American businesses to 
flourish. As the President said in the State of the Union Address, 
``America is once again the most competitive nation and the No. 1 
exporter in the world.'' Nations throughout the world are making 
massive investments in transportation infrastructure, often in an 
effort to catch up with the United States.
    To ensure our continued competitive edge in the global marketplace, 
we want to retain successful core programs, such as the NHS and the 
Surface Transportation Program (STP). They provide mobility for people 
and freight that is so critical to the economic viability in our urban 
centers, and suburban and rural areas.
    The Federal Lands Highway Program will continue to provide needed 
transportation infrastructure investments vital to Federal lands and in 
Indian country. We will continue to improve tribal involvement in 
programs serving Native Americans.
    With the success of NAFTA and GATT, we have seen a tremendous 
growth in trade. To make the most of these opportunities, we are 
proposing new programs to help improve our border crossings and major 
trade corridors--programs that will facilitate our domestic and 
international trade. In order to ensure the viability and safety of our 
intermodal transportation system and trade corridors. The Department 
recognizes the leadership role that Senator Boxer has played in 
focusing attention on the importance of these border crossing concerns. 
We also propose to provide funding to alter and remove highway and 
railroad bridges that unreasonably obstruct our water highways.
    To increase the efficiency of the NHS, we propose to broaden the 
list of eligible activities for NHS funds. Enhanced flexibility will 
enable States to make improvements that reduce congestion on the NHS, 
eliminate bottlenecks, and move people and freight more efficiently to 
their destinations.
                                 safety
    Motor vehicle crashes alone represent a terrible toll in terms of 
deaths and injuries. The cost of medical treatment for these injuries 
is estimated to be more than $14 billion a year. Our taxpayers pay more 
than one-quarter of that amount to cover Medicaid and Medicare costs. 
In addition, the attendant losses in productivity and travel time, 
place a huge burden on our economy--over $150 billion annually. 
Taxpayers also have to make up for the lost taxes resulting from 
injuries and fatalities, estimated at nearly $8 billion a year. But the 
personal costs in the tragedy to the families and survivors, with the 
destruction of their hopes and dreams, cannot be measured in dollars 
alone. We also are concerned about recreational boating safety which is 
the second largest cause of transportation related deaths. Boating 
education saves lives. We propose to extend the authority to authorize 
expenditures from the Boat Safety Account for boating safety grants to 
the States.
    The challenge before us is to improve our safety record even as we 
face steady increases in travel. To do this, we must encourage and help 
underwrite improvements on three fronts: driver behavior, vehicle 
design, and roadway safety. It is all interrelated. And, our proposal 
does just that--funding is provided to advance safety on these three 
fronts.
    Safety belt use has grown from 11 percent in 1982 to 68 percent in 
1996; alcohol involvement in fatal crashes has dropped from 57 percent 
to 41 percent over the same period. The fatality rate per hundred 
million miles driven has declined steadily.
    Despite this progress, a look at recent statistics shows that 
status quo is not good enough. Motor vehicle crashes are still the 
leading cause of premature death of America's youth. After years of 
steady decline, highway fatalities and injuries have been increasing 
since 1992: about 41,500 people died and over 3 million more were 
injured in 1996--a slight reduction from 1995. The easy gains in 
highway safety have already been made.
    And the future will bring new and difficult challenges. The number 
of teenagers--an age group with high crash and fatality rates--is 
increasing. In 1995, the last year for which we have complete data, the 
number of alcohol-related fatalities increased for the first time in 9 
years. New highway safety messages and programs will have to be created 
to target these populations and other groups that are harder to reach 
due to language or other barriers. New developments create new 
challenges--such as higher speed limits and attempts to weaken 
motorcycle helmet laws. We must strengthen all our safety efforts, 
especially our campaigns against drunk driving and for increased use of 
existing occupant protection systems. Toward that end, following 
President Clinton's initiative, the Congress last year enacted 
legislation to encourage zero tolerance for alcohol use by teenage 
drivers.
    This bill meets these challenges by adopting, within the framework 
of the State and community highway safety program, incentives that add 
new momentum to the program at the same time that State and local 
attention is focused on high priority safety needs. Key provisions of 
our highway safety proposal include increased authorizations for our 
drunk driving prevention grant program to help States enact and enforce 
tough drunk driving laws, and two new incentive programs to encourage 
States to increase safety belt use and enact and enforce tough laws to 
prevent drug impaired driving. We also are proposing a new State 
highway safety data improvement grant program. This will help States 
identify the priorities for State and local highway safety programs. 
And we are proposing a new research and education program to reduce air 
bag risks for children and small adults, while still preserving the 
benefits of air bags for all motorists.
    In all safety areas, there will be a new emphasis on performance 
based management--with a focus on results. We will provide more money 
and greater flexibility to shift that money to activities with the 
highest safety payoffs. I recognize that the demand for carrier safety 
exemptions is growing. Although it is premature to recommend any 
changes now, we are closely monitoring the safety performance of NHS 
exempt carriers and drivers. We wish to work with you on a solution.
    Roadway safety may not receive as much media attention as driver-
related factors such as drinking and driving, air bags and child safety 
seats, but it counts. Lives are saved by good, safety-conscious road 
design. That is one of the reasons our Interstate System has the best 
safety record of any roadway in the Nation. Single vehicle ``run-off-
the-road'' crashes--which account for \1/3\ of all fatal crashes--
rollover crashes, loss of control on wet or icy pavement, and crossing 
lanes into on coming traffic are all influenced by roadway design. The 
recent Dateline Report and Reader's Digest article on roadway safety 
underscore this fact. Aggressive drivers who speed are especially 
vulnerable, as are new drivers who do not know how to handle their 
vehicles. As Baby Boomers age, nighttime visibility--especially of 
signs at night and pavement markings--is growing in importance. 
Intersection design also is increasingly important as the numbers of 
aging drivers increase; left hand turns are a common accident 
configuration among elderly drivers. These are some of the roadway 
safety problems we face today. Fortunately, countermeasures exist.
    We are proposing a $500 million Infrastructure Safety Program that 
replaces and improves upon the current STP safety set-aside. These 
funds will continue to be used to eliminate highway hazards on public 
roads other than Interstates and to improve the safety of highway/rail 
grade crossings. Hazard elimination funds can be spent only on non-
Interstate public roads. That is where the money is needed. Interstates 
have a fatality rate of only 0.73, whereas two-lane local roads can 
have a fatality rate nearly five-times as high (up to 3.45 in rural 
areas). Federal hazard elimination funds can be used for these public 
roads to redesign intersections, increase visibility, improve pavement 
markings, and add guardrails. These countermeasures would help prevent 
some of the crashes, such as those described in last Friday's Dateline 
show. Grade crossings have received particular public attention since 
the tragic school bus crash at a crossing in Fox River Grove, Illinois. 
We have proposed increased flexibility in the use of these funds. For 
the first time, we will allow States, under certain circumstances, to 
use some of their highway infrastructure safety funds for behavioral 
programs.
    We also are proposing a new incentive fund--called the Integrated 
Safety Fund. It will reward a State that has an integrated safety 
planning process in place; by providing additional funds it can use for 
motor carrier safety, infrastructure improvement or driver behavior 
modification programs.
    The programs I have just described are the first part of a three-
pronged attack on our roadway safety problems. The other two parts are 
programs to close the information gap and to facilitate proactive 
partnering. It is vital to close the information gap between what we 
know are the best safety practices and what is actually being done by 
State and local communities. We are also proposing a National 
Deployment Initiative to speed up installation of signs and pavement 
markings with improved visibility and to expand technology transfer and 
training activities.
    Proactive partnering is the third piece. We intend to work closely 
with the industry, State and local governments and established safety 
groups as partners. Together we will identify the best practices and 
make the highway community aware of highway safety needs and 
opportunities.
    We have a big job facing us. Not just a big job for the Federal 
Government, but a big job for State and local governments as well. The 
size of the task facing us--to reduce the growing number of traffic 
fatalities--demands that we join in new partnerships to address this 
problem. Our safety proposal will give us the tools we need to increase 
highway safety.
    I also would like to mention two recent Presidential initiatives. 
President Clinton directed DOT to work with the Congress, the States 
and other concerned Americans and report back to him with a plan to 
increase seat belt use. This report will be delivered to the President 
and also to the Congress within the next few weeks.
    On February 15, 1997, the President announced a major new step in 
our efforts to protect American children--a universal system for 
attaching child safety seats in cars. This system will make child 
safety seats easier to install and more secure on the road. This system 
will save young lives. The DOT proposal is now out for public comment. 
If approved, the new safety system could be on the market by 1999.
           community enhancement and well being of the people
    The President has said that we must do more ``to revive and empower 
poor urban and rural neighborhoods.'' Transportation empowers our 
neighborhoods by providing access to jobs, to markets, to education and 
to health care. It also enhances a community's ability to attract 
businesses that bring employment. Both highways and transit are vital 
to maintaining our metropolitan areas as viable commercial centers as 
well as providing essential transportation service in less populated 
areas. We propose to continue our strong commitment to both. We are 
proposing even more flexibility for State and local officials to use 
funds for their highest priority projects. For transit, we propose 
consolidating programs to make it easier for transportation officials 
to select options that best improve mobility in their communities. In 
addition we propose to authorize funds for the Appalachian Development 
Highway Program which has been found to be so vital to the Appalachian 
States.
    Traffic congestion in the Nation's largest 50 cities costs 
travelers more than $40 billion annually. Delays are likely to increase 
over the next two decades as travel nationwide increases by a projected 
60 percent. These delays translate directly into growing costs to 
businesses, which ultimately are passed along to consumers, who 
sacrifice leisure time with family and friends.
    Our proposal continues and improves upon the planning provisions of 
ISTEA. ISTEA initiated a transformation in the role of planning and the 
planning process by focusing on the key linkages among modes, 
investment decisions and community impacts, transportation options and 
community needs, and transportation efficiencies and economic 
competitiveness. We have simplified, yet strengthened, both the 
metropolitan and statewide planning provisions. Language has been added 
in the statewide planning provisions to bolster the consideration of 
rural concerns in the development of both transportation plans and 
transportation improvement programs. The proposed amplified 
metropolitan and statewide planning continues requested considerations 
of the relationships between planned transportation and the economy, 
the environment, and the revitalization of communities and needs of low 
income household, disable, and elderly persons.
    One of the most important problems we face as a Nation is the 
decline of our inner cities. In our mass transportation proposal, we 
intend to reverse this trend by strengthening the influence of State 
and local decisionmakers. While we propose to replace operating 
assistance with increased capital funding for large urbanized areas 
over 200,000 in population, we have expanded the definition of capital 
projects to include maintenance, intelligent transportation systems, 
and intercity passenger facilities which will give these areas more 
control over how they spend their Federal transit money.
    We propose allowing rural and small urbanized areas under 200,000 
in population to spend their Federal transit money for any eligible 
transit purpose. The recipient can choose, for example, how much 
Federal assistance to use for operating assistance. This decision will 
be based on the recipient's own needs, rather than a programmatic 
formula.
    This Administration remains committed to mass transportation. To 
ensure that State and local governments have a predictable amount of 
Federal transit funding from year to year, we have combined the Fixed 
Guideway Modernization and Bus Discretionary Programs into the 
Urbanized Area Formula program. We have streamlined various formula 
programs by adopting simpler and more flexible program-wide definitions 
of eligible capital costs, matching ratios, and grant requirements.
    Our proposal promotes joint economic development, which would 
particularly benefit inner cities. We are proposing the creation of a 
new $100 million program to provide access to jobs and training, 
administered by the Federal Transportation Administration and 
cooperatively supported by the Federal Highway Administration. This new 
initiative will help relate the transportation contribution to welfare 
reform. We hope this program will act as a catalyst, uniting local 
governments, mass transportation providers, and social service 
providers in working toward a common goal of helping people who do not 
own cars improve their lives not only by finding a job, but by being 
able to get regularly to that job. DOT will work with other Federal 
agencies to achieve the maximum from this important initiative. In 
addition, we are proposing to reauthorize our Disadvantaged Business 
Enterprise Program, which has provided billions of dollars in Federal-
aid contracts to businesses owned by minorities and women.
                              environment
    Transportation, like all human activity, also affects the natural 
environment. Efforts to mitigate environmental impacts and improve air 
and water quality, to protect open space, wetlands and wildlife 
habitat, revitalize brownfields and urban areas and to support other 
options that reduce the need for travel, such as pedestrian-friendly 
developments, must be continued and strengthened in NEXTEA.
    The United States continues to be the world's largest producer of 
greenhouse gases--both absolutely and on a per capita basis--and 
transportation accounts for 32 percent of U.S. carbon dioxide 
emissions, the key emission from anthropogenic sources. This is of 
ongoing concern because, as vehicle miles traveled and single-occupancy 
vehicle rates continue to increase, transportation is the fastest 
growing sector for greenhouse gas emissions. The threat posed by global 
climate change must continue to be addressed through efforts to 
encourage travel in higher occupancy modes such as mass transit and 
carpools, to help reduce the growth in vehicle miles traveled. 
Transportation planning decisions should also take into account efforts 
to redevelop ``brownfields,'' particularly urban areas that have been 
abandoned or underutilized due to contamination risks.
    We have made progress. In 1990, 140 million people were living in 
areas that violated the ozone standard. Today, that number is down to 
64 million. Although that progress is commendable, we still have 
environmental challenges, not just to improve the air but to enhance 
our communities while meeting transportation needs. We also are pleased 
with successes in funding wetlands mitigation, restoration and planning 
under both the National Highway System and the Surface Transportation 
Program. Preservation of natural habitat also will be eligible in 
connection with projects funded under NHS and STP.
    ISTEA created two major and successful environmental programs, the 
Congestion Mitigation and Air Quality Improvement Program (CMAQ) and 
Transportation Enhancements Activities (TEA) funding, which increased 
State and local officials' ability to target funds to projects that 
help their communities. They responded enthusiastically to increased 
flexibility. CMAQ has proven to be one of ISTEA's most flexible 
programs. Our proposed changes to this program will make it easier for 
areas that do not meet particulate matter standards to receive CMAQ 
funds.
    Under the TEA, States have carried out projects that help 
transportation facilities fit better into communities, by preserving 
historic transportation facilities, building bicycle and pedestrian 
paths and mitigating storm water runoff. We are recommending codifying 
the requirement that these activities have a direct link to surface 
transportation.
    Under these two categories, ISTEA has stimulated hundreds of 
successful projects that prove that transportation can enhance the 
environment. For example, the Ferry Building improvement project in San 
Francisco establishes a significant public space for the city's 
residents while providing the opportunity to increase ferry ridership 
which will help alleviate automobile congestion and improve the 
region's air quality. In New York City, the CMAQ program provided the 
funds for establishing barge service to ship freight across the Hudson 
River, avoiding truck trips across the Verrazano Narrows Bridge, 
reducing congestion, and improving air quality.
    Through CMAQ, we funded an innovative truck-rail transfer facility 
in Stark County, Ohio, and projects in Portland, Oregon and Seattle, 
Washington designed to unsnarl traffic and improve rail and truck 
access to the commercial waterfront. Improved freight movement between 
New York and New Jersey ports as a result of the Red Hook Barge 
increases the marketability of that area to importers and exporters. In 
Boise, Idaho, the city is using CMAQ funds to replace 28 of its 
outdated diesel buses with a fleet of small and medium-size buses 
powered by compressed natural gas. These projects are success stories 
not only in the direct, tangible results they produced, but also 
because they brought citizens to the table to make a positive impact in 
their communities.
    Our reauthorization proposal includes Scenic Byways and the 
Recreational Trails programs, incorporating them into Title 23 and 
continuing to provide contract authority. Routes designated as All-
American Roads or National Scenic Byways will be given highest priority 
for scenic byway funding.
                        research and development
    We rarely think about how our transportation came into existence--
as if it sprang full blown into reality for our convenience. In truth, 
our transportation network is the work of several centuries of 
innovation and creativity.
    As our Nation began, we depended on natural transportation--the 
Atlantic Ocean and the rivers and streams that Nature provided to us in 
abundance. Soon, early trails allowed freight to be shipped on pack 
mules, but soon innovation overcame the packtrains in the form of the 
great Conestoga wagons and Concord stagecoaches. They, in turn, gave 
way to each new state-of-the-art in succession: the steamship, the 
canal, and then the mode that transformed the 19th century, the 
railroad.
    By the end of the century, the humble bicycle had become so popular 
that it seemed ready to revolutionize personal transportation--it 
certainly inspired the good roads movement of that era. However, its 
true revolutionary aspect was that many of the early bicycle mechanics 
became the automobile makers of the 20th century. And two bicycle 
mechanics, Orville and Wilbur Wright of Dayton, Ohio, learned from 
their work with bicycles the key innovation that allowed them to fly 
and, more important, control an airplane.
    This evolution of transportation innovations has made the United 
States the most mobile Nation in history. One thing is clear from this 
brief history. We cannot afford to stand still, whether from 
complacency or a false sense of economy.
    Research and development is the key to finding effective and 
innovative solutions to new and emerging transportation challenges. We 
recognize the need to foster cooperation in research and technology 
planning among government, academia and industry in addressing the 
nation's transportation goals. In a time of resource constraints, we 
must strive to increase the impact of our investments rather than the 
size of our budgets. By institutionalizing a planning process that 
includes other Federal entities involved in transportation research, we 
can coordinate transportation planning at all government levels, 
encourage innovation, and ensure global competitiveness. Consistent 
with the proposal to adopt a strategic approach to research planning, 
we seek to establish an Intermodal Transportation Research and 
Development Program to support long-term, higher-risk, inter-and multi-
modal research that will ensure our ability to continue the steady 
advances in transportation technology necessary to meet the demands of 
the 21st Century. Such a program will augment programs and support the 
essential research that gives us the tools to improve both the quality 
and efficiency of our transportation system.
    Our proposal includes a national Technology Deployment Initiatives 
program which will focus on the application of new and innovative 
technology that will address ``customer-driven'' technology goals. The 
Professional Capacity Building and Technology Implementation 
Partnerships proposal will support the delivery of new and innovative 
technology as well as development of knowledge and skills needed to 
apply that technology. The Long-Term Pavement Performance and Advanced 
Research element will commit a stable funding source for other long-
term research efforts.
    As we prepare to meet the challenges of the 21st Century, we must 
look ahead to prepare our existing work force and our young people for 
the growing number of high-paying transportation jobs that will be 
created as the result of our progress. Recognizing the need for a 
diverse cadre of transportation professionals who are prepared to 
design, deploy, operate and maintain the transportation systems of the 
21st Century, we propose to continue the university transportation 
centers program and encourage States to continue their transportation 
training programs.
                              streamlining
    States, MPOs, and local governments have stressed the importance of 
finding ways to streamline project delivery--to reduce the paperwork, 
speed up project delivery, and eliminate ``one-size-fits-all'' 
requirements. The STEP-21 coalition has been particularly effective in 
articulating that message, and one of the most appealing aspects of 
their legislation is its streamlining effect. They have spurred us on 
to take steps administratively, under existing law, as well as to 
include statutory changes in our proposed legislation. We propose to 
remove a limitation on project charges for construction engineering, so 
that actual costs can be reimbursed. And we propose to allow States to 
get credit toward their matching share when property owned by the State 
or local government is donated to a Federal-aid project. We recognize, 
however, that while we cut red tape and streamline transportation 
programs and projects, we must be careful not to erode workers' labor 
standards, civil rights, or employee protective arrangements.
                         apportionment factors
    In recognizing the need to replace outdated apportionment factors, 
we have proposed apportionment formulas that we believe are fair to all 
States, yet relate well to our Nation's transportation objectives--the 
safe, efficient, and environmentally sound movement of people and 
freight. The basic program formulas we propose are simple, easily 
understood, and relevant to the Federal programs they affect. They rely 
on information that is current and recognized as valid and reliable. It 
is easy to gather and can be readily updated. We recognize that sudden 
changes in formulas could be disruptive to many State programs, so we 
have proposed certain equity adjustments to ease the transition to the 
new apportionment formulas.
    In presenting these factors for your consideration, we understand 
that there will be considerable debate over formulas. We will be 
pleased to work closely with you in the development of new distribution 
formulas.
    Our legislative proposal builds on the philosophy, principles and 
strengths of ISTEA. And it proposes changes and refinements to meet the 
new challenges we face--challenges to improve safety, enhance the 
environment and foster new technologies and approaches for the demands 
of the 21st Century.
    We look to the 21st Century, and we see State and local 
transportation agencies advancing toward state-of-the-art and state-of-
the-practice in all areas, including planning, design, finance, use of 
new materials, systems management, and construction practices.
    We see the Federal Government as a coordinator, working with State 
and local transportation agencies and with the public to enhance 
transportation.
    We see increasing privatization of transportation systems and more 
private investment in public transportation facilities.
    We see growing acceptance of the need to manage existing 
transportation systems in an efficient manner by providing flexibility 
and choice to the States.
    We see the Modal Administrations within the Department of 
Transportation cooperating to help each mode of transportation do the 
work it does best--and ensuring that these modes link up into a whole 
that is greater than the sum of its parts.
    We see increased intermodal shipments pulling modes more closely 
together out of mutual interest, not government intervention.
    We see the National Highway System tying the Nation's 
transportation system into a seamless web of efficiency and safety that 
supports productivity increases and enhances competitiveness in 
international marketplaces.
    We see safety consciousness continuing to reduce the number of 
fatalities and injuries form transportation incidents. We see the 
importance of an efficient and effective intermodal transportation 
system that includes all transportation elements.
    We see transportation in the 21st Century serving the same role as 
the Civil Rights Movement of the 1950's--empowering minorities, women, 
and immigrants to achieve the freedom that is only possible with full 
mobility.
    We see roads without potholes, bridges that can bear the traffic 
crossing them, highways without congestion.
    And we see an America poised to make the 21st Century another 
American Century.
    Can we achieve this vision? In response I remind you of something 
Dr. Martin Luther King, Jr., said on March 25, 1965, when he addressed 
the throngs on the Alabama Capitol steps who had just concluded the 4-
day, 52-mile march for voting rights from Selma to Montgomery. He said:

          The road ahead is not altogether a smooth one. There are no 
        broad highways to lead us easily and inevitably to quick 
        solutions.

    For the Department of Transportation, there are no broad highways 
to easy, quick solutions. But I hope that I can help us reach not just 
for the easy and the quick, but for the solutions that will make a 
difference in the long run, for the solutions that appear, but are not 
really, just beyond our reach.
    There are significant challenges ahead. I look forward to working 
with this committee on reauthorization of these important surface 
transportation programs. Clearly, I believe, we can all agree that 
investment in our Nation's transportation infrastructure is vital to 
preserving our competitive advantage throughout the world and 
maintaining the well being of our people.
                                 ______
                                 
   Prepared Statement of William D. Fay, President and CEO, American 
                         Highway Users Alliance
    Mr. Chairman and members of the subcommittee, thank you for the 
invitation to appear before you today and the opportunity to present 
our views on the transportation programs that will best serve our 
nation's needs in the 21st Century.
    I am Bill Fay, President and CEO of the American Highway Users 
Alliance. The Highway Users represents a broad cross-section of 
businesses and individuals who depend on safe and efficient highways to 
transport their families, customers, employees, and products. We 
support a strong Federal role in transportation policy and the prudent 
investment of scarce highway use taxes in those programs that enhance 
our economic productivity, decrease safety risks, and contribute to the 
enviable quality of life Americans enjoy.
    Today, I will comply with the request of committee staff and limit 
my remarks to the big picture issues. In that context, I will discuss 
the appropriate Federal role in transportation, the proper level of 
funding for the Federal highway program, how those funds ought to be 
targeted to meet national transportation interests, and the degree of 
flexibility granted to State and local officials to set their own 
transportation priorities. I will also comment on what we know of the 
Administration's reauthorization proposal.
            federal transportation policy at the crossroads
Federal Role
    Since 1956, the Federal highway program has been largely focused on 
constructing the Dwight D. Eisenhower National System of Interstate and 
Defense Highways. Now that the Interstate System is virtually 
completed, some have questioned whether the Federal Government should 
continue to play a significant role in highway transportation policy. 
These same objections were raised 2 years ago by opponents of the 
National Highway System (NHS) legislation, and Congress answered them 
decisively with its overwhelming vote for final passage of the National 
Highway System Designation Act. With NHS designation, Congress 
recognized the Federal Government's continuing responsibility to foster 
interstate commerce and economic growth by ensuring that our most basic 
transportation infrastructure is maintained and improved.
    Without the NHS, many U.S. businesses could not compete in national 
and international marketplaces, military readiness would be put at 
grave risk because of the inability to mobilize quickly, and the 
ability of individual Americans to travel where they want, when they 
want would be severely hampered. To put it another way, a strong 
Federal role in the development and maintenance of highways and bridges 
is essential to support economic growth, to enhance individual freedom, 
and to sustain our quality of life. Few other Federal programs can 
claim such a sweeping national impact.
    But there is a lot of work ahead to make the promise of the NHS a 
reality. The nation will not only have to invest substantial financial 
resources, but invest them wisely, in order to ensure that this small 
but important network of highways becomes the engine for economic 
growth, greater personal freedom, and safer travel that we all hope it 
will be.
Funding
    Funding, then, has to be the top priority issue. Members of this 
committee understand the critical importance of increasing our 
nationwide investment in highways. This year, the issue takes on even 
greater significance as Congress works to reauthorize the Federal 
highway program. First, returning to the States more of the money 
motorists pay in highway taxes will certainly help resolve many of the 
difficult issues involved in the formula debate. Second, and of equal 
importance, without additional funding our nation cannot meet its 
documented need for increased road and bridge investments.
    We are all familiar with the U.S. Department of Transportation's 
most recent assessment of road and bridge conditions, so I will not 
rehearse the statistics again here. I will just reiterate that we are 
presently investing $20 billion per year less than is needed just to 
maintain current conditions, and a staggering $40 billion per year less 
than is needed to leave a better network of highways for the next 
generation.
    This remarkable gap between actual highway investments and the 
amount we should be spending has important implications for our 
economy, our travel safety, and our overall quality of life:
     Economy--A recent study commissioned by the Federal 
Highway Administration (FHWA) indicates that between 1950 and 1989, 
investments in non-local roads yielded production cost savings of 24 
cents for each dollar spent. Amazingly, those road investments paid for 
themselves in just over 4 years because of the economic gains they made 
possible. If we fail to maintain those roads, however, the previously 
realized gains could soon disappear.
     Safety--Highway fatalities have been of the rise over the 
past 4 years, reversing the steady improvements of the prior 4 years. 
When ISTEA took effect in 1992, 39,250 Americans died on our highways. 
Since then, fatalities have climbed to 40,150 in 1993, 40,676 in 1994, 
and 41,798 in 1995. 1996 fatalities are projected to be about the same 
as 1995. According to FHWA, substandard road designs and poor road 
conditions are a factor in nearly 30 percent of fatal crashes. Our 
failure to invest in better highways will only make travel more 
dangerous in coming years.
     Quality of Life--Under investing in highways will make it 
more difficult for working parents to get from the office, to the day 
care, to the grocery store, to home; will make vacations more time 
consuming and expensive; and will make medical care less accessible for 
many rural Americans.
    For the sake of our continued economic growth, the driving public's 
safety, and maintaining our standard of living, Congress must increase 
overall highway funding this year. That's why we applaud the recent 
efforts of members on this committee to increase the funding allowed 
for highways in this year's budget resolution.
    We particularly congratulate you, Chairman Warner, and Senator 
Baucus for taking the initiative to raise this issue among your 
colleagues. We thank you and the other members of this committee who 
signed a letter to the Budget Committee requesting that the highway 
program be funded at $26 billion in fiscal year 1998, a nearly $6 
billion increase over this year's spending level. Combined with a 
similar letter sent by Senator Moynihan and Senator D'Amato, 59 
senators have indicated clearly their support for a badly needed boost 
in highway funding. As both letters indicate, the highway account of 
the Highway Trust Fund could sustain a program funded at $26 billion 
through at least fiscal year 2002 with no additional revenues.
    I also want to take this opportunity to congratulate Senators 
Chafee and Bond on an initiative they recently announced in a Dear 
Colleague letter. They propose to create a new budget account and 
scoring procedures to ensure that annual spending from the highway 
account equals annual tax receipts deposited into the account. Although 
their proposal would not allow us to invest the $12 billion cash 
balance already existing in the account, it would guarantee that new 
tax revenue collected from highway users and deposited in the highway 
account would actually be spent on road and bridge improvements.
    Obviously, we would like to go further by spending down the cash 
balance over time. The Chafee/Bond proposal, however, is a laudatory 
step in the right direction, and we applaud their important work on 
this legislation.
    America's motorists should be able to count on their highway taxes 
being used for road improvements. Highway users today are paying 
substantially more in taxes than the Federal Government is spending on 
highway and bridge investments. In 1995, motorists paid $30.9 billion 
in Federal highway use excise taxes. 1995 is the most recent year for 
which State-by-State data is available, but total highway use taxes 
increased in 1996 and will hold steady in 1997. Although highway users 
pay around $31 billion per year, the Federal Government returns only 
$18 billion to the States for highway and bridge improvements. The 
chart I have attached to my statement provides a State-by-State 
breakdown of the difference between what motorists in each State pay in 
Federal highway taxes and the amount each State has received this year 
in total highway spending authority.
    Of course, the major reason for this disparity between what highway 
users pay and what they receive from the Federal Government is that not 
all of the taxes collected from highway users are deposited in the 
Highway Trust Fund, much less in the highway account of the trust fund. 
Taking the 4.3 cents per gallon tax that currently goes to ``deficit 
reduction''--which simply means the use of a regressive excise tax to 
fund general government programs--and depositing it in the Highway 
Trust Fund would go a long way toward keeping faith with the American 
driving public.
Focus the Federal Program
    Just as we should increase overall highway funding this year, we 
must ensure that those limited resources are wisely invested in 
programs of vital national interest. Guided by two overriding national 
goals ``improved interstate mobility and safer travel'', the Highway 
Users recommends a simplified highway program that targets Federal 
funds toward five program accounts. They are:
     The National Highway System--While the NHS constitutes 
only 4 percent of the nation's road mileage, it carries over 40 percent 
of all traffic, 75 percent of commercial truck traffic, and 80 percent 
of tourist traffic. The NHS is the 21st Century successor to the 
Interstate System and has the potential to build dramatically on the 
national contributions made by the Interstates over the past 40 years. 
To maintain these vital interstate connectors, the FHWA estimates we 
should be investing $18 billion annually and $24 billion annually if we 
want to improve their condition. Yet the current Federal highway 
program provides only $6.5 billion per year for NHS improvements.
     Bridges--Both on and off the NHS, bridges are high-cost, 
crucial links in our nationwide highway network. The FHWA reports the 
country would need to spend $5.1 billion annually to maintain current 
bridge conditions and $8.9 billion to improve them. The current Federal 
highway program budgets only $2.8 billion per year for bridge work. If 
the Administration and Congress seriously wish to build a bridge to the 
21st Century, they will have to provide more adequate funding.
     Safety--For reasons I have already discussed, we must make 
a renewed commitment to safety if we hope to curb the tide of rising 
highway deaths. The Federal Government currently invests $700 million 
annually in highway safety programs. As Americans continue to travel 
more miles than ever by highway, we must focus more attention and 
resources on safety improvements. It's a nationwide challenge requiring 
a greater financial commitment from the Federal Government.
     Research and Development (R&D)--The Federal Government 
currently invests approximately $400 million annually in R&D activities 
to develop new technologies, construction materials, and construction 
techniques that will ease congestion, make travel safer, and prolong 
the usable life of roads and bridges. By providing up-front financing, 
coordinating research activities at sites around the country, and 
transferring information and technologies among interested parties in 
the public and private sectors, FHWA programs reduce the cost and 
enhance the benefits of the nation's highway-related R&D activities.
     Roads on Federal Lands--The Federal highway program 
provides approximately $500 million per year to improve roads on 
Federal lands, such as national parks. This program is essential to 
provide public access to these areas and should be retained.
    By targeting at least 85 percent of Federal highway funds to the 
above five program accounts, The Highway Users believes Congress would 
significantly improve both safety and interstate mobility. Such a 
Federal highway program would ensure we made investments in projects of 
truly national significance.
Flexibility
    While The Highway Users seeks to target Federal highway funds on 
programs of national interest, we also advocate giving State and local 
officials the latitude to plan for their regional transportation needs 
and the flexibility to direct Federal highway dollars toward the 
programs they identify as priorities. The Surface Transportation 
Program (STP) was established in ISTEA to provide State and local 
governments that flexibility. While ISTEA is more flexible in terms of 
expanding the opportunities to use Federal highway funds on non-highway 
projects, two of the new funding accounts established in ISTEA--
transportation enhancements and the Congestion Mitigation & Air Quality 
improvement program (CMAQ)--are quite inflexible in terms of the 
discretion granted to State and local officials to set their own 
transportation priorities.
    Specifically, 10 percent of STP funds must be set-aside and used 
only for transportation enhancement activities, such as pedestrian or 
bicycle facilities, landscaping and beautification, rehabilitation and 
operation of historic buildings, or other non-highway projects. The 
CMAQ program directs highway money, $6 billion over 6 years, toward 
urban areas that do not meet Clean Air Act requirements. These funds 
generally cannot be used for highway construction, except High-
Occupancy Vehicle (HOV) lanes.
    The Highway Users recommends that Congress continue the eligibility 
of CMAQ and transportation enhancement projects under a streamlined 
Surface Transportation Program account. The streamlined STP would allow 
State and local officials to weigh all transportation needs--air 
quality, highway capacity, historic preservation, mass transit capital, 
safety, etc.--and establish priorities without the current funding 
constraints of ISTEA. By continuing the eligibility of CMAQ and 
transportation enhancement projects but eliminating the specific 
funding categories, Congress would allow those local projects to be 
funded in areas where they are truly a priority.
    In addition, we have two specific recommendations about CMAQ and 
transportation enhancement eligibility requirements. First, the CMAQ 
program to date is focused almost exclusively on air quality projects 
with very little emphasis laid on congestion mitigation. Federal 
highway funds certainly ought to be available to improve freeway 
interchanges and other traffic bottlenecks and for simple projects such 
as lane widening or shoulder improvements that can substantially 
improve traffic flow and reduce congestion. We urge you to consider 
allowing the States to more fully utilize their Federal highway funds 
for congestion mitigation projects.
    Second, the transportation enhancement eligibility requirements 
have been written and interpreted so broadly that many projects funded 
to date have no transportation elements or connection. We think these 
eligibility standards should be tightened considerably. We hope to have 
completed a report in April that will highlight the extent to which 
transportation enhancement funds have been spent on non-transportation 
projects. We will deliver the report to members of this subcommittee as 
soon as it is available.
Safety
    I want to return for a moment to a topic that should be of 
overriding concern to everyone involved in highway transportation: 
safety. As I indicated previously, highway fatalities have increased in 
recent years, and highway accidents result in millions of injuries 
annually. Those traffic crashes also drain over $150 billion per year 
from our economy, primarily by increasing medical costs and lowering 
productivity.
    The Roadway Safety Foundation (RSF), chartered by the American 
Highway Users Alliance to reduce the frequency and severity of crashes 
by improving the safety of roadways, will release a report later today 
that we hope will focus attention on roadway safety problems and 
potential solutions. The report cites four major roadway safety 
problems, including poor quality pavements and surface conditions, 
narrow lanes and shoulders, narrow bridges, and numerous roadside 
hazards.
    Those problems can be mitigated in a variety of ways--widening 
lanes and adding or widening shoulders; ensuring that bridge widths are 
commensurate with the width of approach lanes; better pavement marking, 
traffic signs, and reflective devices; creating open space adjacent to 
the roadway (clear zones) that will allow motorists to regain control 
of their vehicles. Some of these safety improvements are relatively 
simple; others are more complex. All of them cost money.
    We will provide copies of the RSF report to members of the 
subcommittee. We hope you will agree that it makes a strong case for a 
substantial increase in funds devoted to roadway safety improvements 
and programs designed to improve our knowledge of safety problems and 
effective solutions.
Administration Proposal
    Since the Administration's reauthorization proposal has not yet 
been released, I can comment only on the elements of it that are 
foretold by the President's FY-98 budget request. That makes it 
possible to be very succinct.
    The Administration proposes to cut Federal highway funds at a time 
when its own report indicates that the Nation is already investing $20 
billion less than the amount needed just to maintain current road and 
bridge conditions and performance over the next 20 years. Under the 
Administration's plan, the cash balance in the Highway Trust Fund would 
rise to $44-48 billion in just 5 years. We believe that will be 
unacceptable to most Members of Congress, to State and local elected 
officials, and particularly, to highway users who are asked to foot the 
bill for a smoke and mirrors form of deficit reduction.
    In addition, Amtrak should not be subsidized out of the Highway 
Trust Fund. We strongly oppose this proposal and believe highway users 
across the country will fight it vigorously to the extent that it is 
seriously considered on Capitol Hill.
Summary
    Again, Mr. Chairman, The Highway Users commends you and the other 
members of this subcommittee who are seeking to boost highway funding. 
Our primary recommendations for reauthorization legislation are:
     Fund the highway program at the highest level the Highway 
Trust Fund will support (currently $26 billion per year);
     Deposit the 4.3 cents per gallon fuel tax in the Highway 
Trust Fund and increase highway funding to invest the additional 
revenues in road and bridge improvements;
     Target most Federal highway funds toward the National 
Highway System, bridges, safety, research and development, and roads on 
Federal lands;
     Streamline the STP program to give State and local 
officials greater authority to set their own transportation priorities 
without the funding constraints of the current CMAQ and transportation 
enhancements programs.
    Thank you for the opportunity to present this testimony.

                                      Highway Taxes Paid vs. Funds Received
----------------------------------------------------------------------------------------------------------------
                                              Federal Highway    Federal Highway
                   State                      Use Taxes Paid *  Funds Received **    The Difference   Percentage
                                                   (1995)             (1997)                            Return
----------------------------------------------------------------------------------------------------------------
Alabama....................................       $672,065,000       $363,630,000       $308,435,000     54.11
Alaska.....................................        $67,533,000       $187,620,000     $(120,087,000)    277.82
Arizona....................................       $538,386,000       $264,525,000       $273,861,000     49.13
Arkansas...................................       $406,393,000       $284,521,000       $121,872,000     70.01
California.................................     $3,151,839,000     $1,618,984,000     $1,532,855,000     51.37
Colorado...................................       $411,451,000       $187,226,000       $224,225,000     45.50
Connecticut................................       $300,667,000       $345,243,000      $(44,576,000)    114.83
Delaware...................................        $88,056,000        $72,464,000        $15,592,000     82.29
Dist. of Col...............................        $34,798,000        $79,776,000      $(44,978,000)    229.25
Florida....................................     $1,556,936,000       $831,661,000       $725,275,000     53.42
Georgia....................................     $1,152,783,000       $600,140,000       $552,643,000     52.06
Hawaii.....................................        $82,316,000       $115,119,000      $(32,803,000)    139.85
Idaho......................................       $163,900,000       $129,520,000        $34,380,000     79.02
Illinois...................................     $1,236,879,000       $662,750,000       $574,129,000     53.58
Indiana....................................       $873,575,000       $447,415,000       $426,160,000     51.22
Iowa.......................................       $401,839,000       $205,735,000       $196,104,000     51.20
Kansas.....................................       $342,014,000       $205,214,000       $136,800,000     60.00
Kentucky...................................       $579,624,000       $300,431,000       $279,193,000     51.83
Louisiana..................................       $536,645,000       $267,672,000       $268,973,000     49.88
Maine......................................       $157,542,000       $119,769,000        $37,773,000     76.02
Maryland...................................       $511,622,000       $260,881,000       $250,741,000     50.99
Massachusetts..............................       $564,693,000       $636,712,000      $(72,019,000)    112.75
Michigan...................................     $1,098,213,000       $551,377,000       $546,836,000     50.21
Minnesota..................................       $562,630,000       $265,496,000       $297,134,000     47.19
Mississippi................................       $391,533,000       $202,448,000       $189,085,000     51.71
Missouri...................................       $798,763,000       $409,066,000       $389,697,000     51.21
Montana....................................       $139,815,000       $140,824,000       $(1,009,000)    100.72
Nebraska...................................       $260,124,000       $134,673,000       $125,451,000     51.77
Nevada.....................................       $201,871,000       $113,063,000        $88,808,000     56.01
New Hampshire..............................       $125,241,000        $85,866,000        $39,375,000     68.56
New Jersey.................................       $823,705,000       $484,311,000       $339,394,000     58.80
New Mexico.................................       $275,703,000       $156,912,000       $118,791,000     56.91
New York...................................     $1,333,990,000     $1,032,139,000       $301,851,000     77.37
North Carolina.............................       $934,122,000       $498,319,000       $435,803,000     53.35
North Dakota...............................       $110,420,000       $108,360,000         $2,060,000     98.13
Ohio.......................................     $1,296,482,000       $623,666,000       $672,816,000     48.10
Oklahoma...................................       $498,818,000       $270,888,000       $227,930,000     54.31
Oregon.....................................       $320,006,000       $205,381,000       $114,625,000     64.18
Pennsylvania...............................     $1,280,724,000       $824,980,000       $455,744,000     64.42
Rhode Island...............................        $84,742,000        $85,452,000         $(710,000)    100.84
South Carolina.............................       $538,713,000       $290,784,000       $247,929,000     53.98
South Dakota...............................       $123,165,000       $107,459,000        $15,706,000     87.25
Tennessee..................................       $749,318,000       $378,425,000       $370,893,000     50.50
Texas......................................     $2,349,527,000     $1,250,657,000     $1,098,870,000     53.23
Utah.......................................       $246,720,000       $119,544,000       $127,176,000     48.45
Vermont....................................        $85,930,000        $77,069,000         $8,861,000     89.69
Virginia...................................       $849,026,000       $451,151,000       $397,875,000     53.14
Washington.................................       $619,144,000       $318,123,000       $301,021,000     51.38
West Virginia..............................       $240,895,000       $205,442,000        $35,453,000     85.28
Wisconsin..................................       $629,491,000       $365,096,000       $264,395,000     58.00
Wyoming....................................       $136,525,000       $107,662,000        $28,863,000     78.86
                                            --------------------------------------------------------------------
    Total..................................    $30,936,912,000    $18,051,641,000    $12,885,271,000     58.35
----------------------------------------------------------------------------------------------------------------
* Estimated from State-by-State fuel consumption data (The Road Information Program) and an FHWA report on non-
  fuel highway excise taxes collected in 1995. Includes motor fuel taxes currently deposited in the General
  Fund, as well as all highway taxes deposited in the Highway Trust Fund.
** Estimated from FHWA reports on fiscal year 97 obligation limitations, minimum allocation funds, and
  congressionally designated projects.

                                 ______
                                 
        Prepared Statement of Hank Dittmar, Executive Director, 
                 Surface Transportation Policy Project
    Mr. Chairman and members of the subcommittee, thank you for the 
invitation to appear before you today to discuss the need for continued 
Federal investment in surface transportation through the 
reauthorization of the Intermodal Surface Transportation Efficiency 
Act.
    I am Hank Dittmar, Executive Director of the Surface Transportation 
Policy Project, a non-profit coalition of over two hundred 
organizations whose mission is to ensure that transportation policy and 
investments serve people and communities. Our members are national and 
local public interest groups concerned with the environment, energy 
conservation, the economy and social issues. They represent 
constituencies as diverse as the elderly, historic preservationists, 
transportation workers, taxpayer and citizen groups, communities of 
color and downtown business interests. We are united in the belief that 
balanced investment in surface transportation can strengthen the 
economy, protect the environment, help conserve energy and meet 
important social goals. I am joined today by Roy Kienitz, STPP's 
Assistant Director for Federal Affairs.
    As you know, bipartisan majorities of the House and the Senate came 
together in 1991 to produce the landmark Intermodal Surface 
Transportation Efficiency Act. To sum up our position concisely, we 
feel that the legislation enacted in 1991 was a major advance in 
national transportation policy, and that it should serve as the basis 
for the 1997 surface transportation bill. ISTEA made major changes to 
Federal transportation policy: unprecedented funding flexibility, a 
strong local role in decisionmaking, an emphasis on multi-modal 
planning and attention to environmental impacts, among others.
    We believe that ISTEA did an admirable job of balancing competing 
interests: on one hand, the obvious benefits of having more decisions 
made at the State and local level on the other, the need to articulate 
and protect a set of basic national interests. The subcommittee has 
heard and will continue to hear from interest groups wanting a bigger 
slice of the pie. The trucking industry wants Federal funds focused on 
truck routes; State transportation officials want State autonomy; donor 
States want their fair share; and on and on. If the Federal role is 
reduced to redistributing money among States, industries and interest 
groups without any reference to broad, national goals, we fear that a 
national transportation system that contributes to national 
competitiveness is endangered.
    So what is the Federal interest? Although it is tempting to define 
it in terms of specific facilities, this approach at best approximates 
what we all agree are the ultimate goals--a set of outcomes. The reason 
to have a road is not the road itself, but what it does for us. The 
time has come to acknowledge this explicitly, and base our policies on 
the outcomes we wish to achieve.
    STPP believes that there is a compelling Federal interest in 
transportation, and that it can be described by five basic goals: a 
healthy economy; access to jobs, services and opportunities for all; a 
healthy environment; public safety; and productive investment of public 
funds. The Federal transportation program should judged based on its 
ability to make progress toward these goals. We believe that ISTEA has 
measured up well in this regard, and proposed changes to it will have 
to perform equally well to gain our support.
    As I said, we see five main areas of Federal (and public) interest 
in transportation.
                         1. economic efficiency
    First of all, investment of Federal taxes in surface transportation 
should enhance the efficiency of the Nation's economy by moving people 
and goods reliably and cost-effectively. Now that we have built an 
unparalleled Interstate system, our economic challenge is to plug gaps 
in the system, make intermodal connections and ensure that the 
metropolitan economies that drive our competitiveness do not bog down 
due to deteriorated facilities and congestion. Almost 80 percent of our 
people now live in center cities and their surrounding counties, and 
increasingly the health of these large metropolitan regions--both 
cities and suburbs--defines the economic health of the Nation.
    The economic health of small towns and rural communities also 
depends on continued investment in improving the safety and ensuring 
the rehabilitation of roads and bridges in rural areas. Indeed, from an 
economic standpoint, the paramount Federal interest may be in the 
preservation and rehabilitation of the infrastructure we spent so much 
to build. Federal investment programs like those for maintenance of the 
Interstate system, rail modernization, bus replacement and bridge 
rehabilitation have proven their worth by improving the condition of 
these facilities.
    According to the U.S. Department of Transportation, there is a gap 
of almost $15 billion per year in spending for maintenance and 
rehabilitation activities, yet, as the 1995 Conditions and Performance 
report states ``. . . system preservation improvements in 1993 
accounted for 42.2 percent of [capital] spending on non-local roads.'' 
In other words, more than half of the money going into capital 
expenditures on road projects in 1993 went for new additions to the 
system--this at a time when less than 70 percent of the Interstate and 
arterial systems are in at least fair condition. Clearly there is a 
problem here, and this committee should look into making system 
preservation a higher priority.
                          2. access and choice
    As Dr. Thomas Larson, Federal Highway Administrator during the Bush 
Administration, has pointed out, the first Federal investment in 
transportation was undertaken on the basis of the general welfare 
clause of the Constitution. Clearly the investment of Federal tax 
dollars in canals, then roads and bridges, then transit systems and now 
in intelligent transportation technologies has provided Americans with 
access to jobs, housing and opportunities on an unprecedented scale. 
This promotion of the general welfare is one of the key reasons for 
Federal investment in surface transportation.
    When you ask people what kinds of transportation investments they 
see as best serving their welfare, you get some interesting results. 
Public opinion research we have commissioned shows that although over 
70 percent of people use the car as their primary means of 
transportation, half would chose other options if they were available 
and convenient. Furthermore, people identify investments in widening 
existing roads or building new ones as relatively low priorities--below 
encouraging ridesharing and investing in transit, and far below fixing 
existing roads and bridges.
    Ensuring that the benefits of our investments are available to all 
Americans, whether young or old, rich or poor, living in urban areas, 
suburbs or rural areas, able or unable to drive, has also been a reason 
for Federal investment and Federal oversight. In addition, the Federal 
Transit Act, the Civil Rights Act and the Americans with Disabilities 
Act are all meant to ensure that access, mobility and choice are 
delivered to all. Basic access and mobility means facilitating travel 
by car, transit, bicycle and foot, as well as non-travel options 
allowed by telecommuting and mixed use development.
          3. environmental stewardship and energy conservation
    Transportation investments can and should contribute to meeting our 
environmental energy and public health goals. Furthermore, the Federal 
Government must take a significant share of the responsibility for 
assuring that the environmental effects of Federal transportation 
investments are being understood and minimized.
    This is no more true than with the consequences of high levels of 
oil consumption by the U.S. transportation system. Our policies should 
also contribute to the conservation of natural, scenic and historic 
resources, a posterity we received from our parents that we are 
responsible for passing on to our children. The powerful linkage 
between transportation and air quality cannot be ignored. Half of the 
ozone pollution that hovers in the air of many of our cities--pollution 
that reduces the lung function of healthy adults, makes children, the 
elderly and sensitive populations like asthmatics short of breath, and 
costs the national economy billions of dollars in health care costs 
every year--is the result of cars and trucks.
    Make no mistake: transportation is an environmental issue, and 
transportation legislation is environmental legislation. Like it or 
not, the bill produced by this committee this year will be judged 
against environmental goals.
          4. enhancing the safety of the transportation system
    Public safety must continue to be a key reason for Federal 
involvement in transportation. Although the long term decline in the 
rate of traffic fatalities per vehicle mile traveled is well 
documented, because of the robust and continuing increase in driving 
over the last 30 years, the overall number of traffic fatalities does 
not show a similar long term decline. Good progress has clearly been 
made on traffic safety, but this is in large part due to the commitment 
of the Federal Government to the issue. The Federal commitment to 
safety should consider both users and non-users of the transportation 
system--pedestrians as well as drivers, for example--and should 
continue to examine topics like the role that road design standards 
play in encouraging greater speed. Setting goals and objectives for 
safety is important, but these objectives need to be accompanied by 
targeted funding.
                5. ensuring that our investments perform
    In spite of the rhetoric to the contrary, it is reasonable for the 
taxpayer to expect the Federal Government to monitor the expenditure of 
Federal funds and ensure that they are leading to better performance. 
Congress has both the right and the responsibility to attach 
performance standards to the expenditure of funds collected with 
Federal taxing authority.
    ISTEA balanced the need for Federal oversight with the need to 
provide State and local partners with increased authority to make 
sensible decisions at the local level. We need to continue this 
evolution by focusing Federal oversight on improved outcomes and better 
performance, not on micro-management of process, engineering or 
accounting.
        investing in the national interest--achieving our goals
    ISTEA took us in the right direction by incorporating a series of 
basic methods of meeting overall goals into the Federal transportation 
program. We believe your committee should build on ISTEA's link to 
these key principles. We identify five core methods of relating the 
Federal interest to local needs.
    First, it is appropriate for the Federal Government to target 
funding to key areas where investment should occur. The Interstate 
Maintenance program for example, has demonstrably improved the 
condition of the interstate system. Similarly, Congestion Mitigation 
and Air Quality funding provides Federal funds to comply with the 
Federal Clean Air Act mandate. It is inconceivable from either the 
standpoint of honest intergovernmental relations or sensible 
environmental policy that this program would be singled out for cuts. 
Indeed, the proposed changes to air quality standards should lead to 
increased funding for this program.
    Second, the targeting of funds should be balanced by robust 
flexibility, with a wide variety of uses for Federal funds. Such 
flexibility should be accompanied by broadened eligibility, so that 
States and localities can respond to both local and national goals in 
ways appropriate to their particular situation. This flexibility should 
be tied to a sensible planning process--one that links the selection of 
projects to a realistic idea of the amount of money available, an 
agreed-upon set of goals, and a rational evaluation of the different 
ways of pursuing the needs identified.
    Third, providing and paying for transportation requires a strong 
partnership between local, State and Federal Governments, all of which 
own or have financial responsibility for key parts of the system. The 
Federal Government must provide the basic framework for this 
partnership, at least when it comes to spending Federal funds, through 
its oversight of the process for making long-range plans and selecting 
projects. And where Federal tax funds are involved, the Federal 
Government has a responsibility to assure that the taxpaying public 
continues to have a role in the decisionmaking partnership.
    Fourth, Federal legislation should provide for balance, fairness 
and equity. ISTEA's renewal will have to balance investment in the 
national interest with the desire of individual States to maximize 
transportation funding. As States argue for specific formulas, however, 
Congress has the duty to assure another kind of balance--balance among 
modes, balance between State and local governments and balance among 
urban, suburban and rural areas. For example, USDOT studies reveal that 
while State road spending is largely paid by gas taxes, only 7 percent 
of local road spending comes from user fees.
    Finally, accountability to taxpayers should be a hallmark of 
ISTEA's renewal. Taxpayers and system users should have access to 
timely and accurate information about the condition, performance and 
management of the transportation system and should have direct and open 
access to the decisionmaking process. The best way to assure that 
transportation investments are responding to people's priorities is to 
involve them in the decisionmaking process.
Preserving and Improving ISTEA--STPP's Recommendations
    The STPP coalition has formulated 25 specific recommendations for 
ISTEA reauthorization, which fall under the five headings listed below. 
We believe that the surface transportation program should be 
reauthorized at funding levels of $28-30 billion a year over a 5 or 6 
year reauthorization period, and believe that current revenues accruing 
to the trust fund can support such a program level. Mr. Chairman, with 
your permission, I'd like to provide the committee with copies of our 
entire reauthorization proposal, entitled ``Blueprint for ISTEA 
Reauthorization.''
            I. Maintaining A National Commitment to Transportation
    Our economic health depends on a robust and efficient 
transportation system. The Federal Government should continue to fund 
transportation improvements at a high level, set the outlines of a 
national policy, and follow the principles that underlie ISTEA: funding 
flexibility, a strong local role, attention to environmental and 
community needs, a long-term focus and greater accountability.
    ISTEA's structure is sound, and should be retained.
            II. Fix It First: Maintaining What We Have
    The first priority for Federal highway money should be the 
maintenance of existing roads and bridges. To accomplish this, the two 
programs that dedicate funds directly to system preservation--the 
Bridge and Interstate Maintenance programs--should be retained. In 
addition, a national standard should be established for the condition 
of the Interstate system. No State should allow more than one-half of 
its Interstate miles to fall below ``fair'' condition. Those that do 
should be required to dedicate flexible funds to improving Interstate 
conditions. Those that do a good job maintaining Interstate highways 
should be rewarded.
    Current law requires new transit projects to include a commitment 
of funds for maintenance for the project's useful life. New Highways 
should be held to the same standard. Federal standards that prohibit 
States from asking highway contractors to guarantee the performance of 
the roads they build should be repealed.
            III. Providing Transportation Choices
    Current law's guarantees of funding for alternatives to highways--
the public transit and transportation enhancements programs--should be 
retained. In addition, intercity rail service--an area left out of 
ISTEA in 1991--should be eligible for ISTEA funding at State and local 
option and should receive dedicated funding just as highways and 
transit do. Biking and walking are real transportation options for many 
people, and Federal policy should treat them fairly.
    ISTEA II should inaugurate a new initiative to use transportation 
funding to help connect those making the transition from welfare to 
work with jobs. Poor transportation to suburban job sites is a barrier 
for urban welfare recipients, and transportation should start being 
part of the solution.
            IV. Protecting Public Safety and the Environment
    ISTEA's Congestion Mitigation and Air Quality Improvement program 
should be maintained, both for its environmental benefits and as 
funding for a Federal mandate. The Federal commitment to transportation 
safety should also be retained, with greater attention to the safety of 
non-drivers threatened by transportation-related accidents. To protect 
America's aesthetic resources, ISTEA's Scenic Byways program should be 
continued, and the Federal Highway Beautification Act should be 
strengthened.
    New initiatives should be undertaken to address the environmental 
effects of transportation in a comprehensive way, and to help 
communities integrate their land use and transportation planning 
efforts. These initiatives should include funding to cover the 
incremental cost of replacing old diesel buses with new, clean fuel 
buses, and should begin to reverse the loss of wetlands that has 
resulted from 40 years of road building and sprawl development.
V. Assuring Accountability
    ISTEA's basic guarantees of accountability--requirements for 
fiscally constrained planning, public participation, and guaranteed 
funding for metropolitan areas--should be preserved. ISTEA's list of 
planning factors for States and metropolitan areas should be simplified 
and focused on measuring performance toward agreed upon goals. 
Metropolitan Planning Organizations (MPOs) should continue to be 
involved in decisionmaking in partnership with States, and the rules 
that govern them should be adjusted to assure that they fairly 
represent the population of metropolitan areas. Small metropolitan 
areas and rural communities should be allowed a greater voice in 
decisionmaking.
                     building on istea's successes
    As a broad based and diverse coalition--ranging from State and 
local officials like myself to environmentalists and civil rights 
activists and from corporations to labor and consumer groups, STPP's 
members can't agree upon everything. When we began to sit down together 
last year to discuss the need to develop policy recommendations for 
transportation into the next century, it wasn't at all clear that we 
could agree on whether the ISTEA innovation had been a success. For the 
first time, environmentalists and others in the STPP community had 
approached Federal transportation legislation with the idea that 
transportation spending could contribute to a better environment and a 
more equitable society as it improved mobility. Always before, the 
approach had been one of finding legislative tools to mitigate the 
adverse consequences of transportation projects. ISTEA's premise was 
that with proper planning and public involvement, transportation could 
contribute to sustainability.
    By and large, the consensus that emerged was that the ISTEA premise 
was a sound one and that ISTEA was beginning to work. As we turned our 
attention to the future, then, our starting point was 1991's emphasis 
on transportation choice, fiscal restraint and State and local control. 
Our recommendations seek to build on ISTEA and to recognize new 
realities for the 21st Century--new environmental challenges, the 
challenge of moving from welfare to work, and the need to protect our 
massive Interstate investment. Our coalition's endorsement of these 
principles represents the broad support of an extremely diverse set of 
groups and we want to offer our continuing support to you throughout 
the process of developing the ISTEA reauthorization.
    Mr. Chairman, thank you again for your attention and courtesy. I am 
happy to answer any questions you or other members of the subcommittee 
may have.
                                 ______
                                 
                 The Commonwealth of Massachusetts,
                         Joint Committee on Transportation,
                            State House, Boston, February 28, 1997.
Chairman John H. Chafee,
Environment and Public Works Committee,
Washington, DC.
    Dear Chairman Chafee: It is with great pleasure that we submit this 
testimony to your committee for consideration as you deliberate the 
reauthorization of ISTEA. We regret that we were unable to present this 
testimony in person; however, as Co-Chairmen of Massachusetts' Joint 
Committee on Transportation, we are involved in a number of matters 
which require our continued presence in the State.
    The transportation community has been united in its praise of the 
innovative provisions of ISTEA. It will most certainly be a challenge 
to live up to those standards in the sequel to ISTEA. Reauthorization 
will set the tone for the future of Federal involvement in 
infrastructure funding and we would like to underscore the fact that we 
believe that a continued Federal role is imperative. It is only through 
a continued Federal presence that the country can be assured of 
maintaining its highway and rail systems that are critical to 
supporting the nation's economy and moving people and goods from state 
to state, region to region, and coast to coast.
    In New England, we understand this link between the condition of 
our infrastructure and our regional economy. This is particularly 
challenging for us as we have to contend with concentrated populations 
utilizing aging infrastructure. Consequently, we must focus our effort 
on the reconstruction, maintenance and preservation of our current 
infrastructure. Massachusetts has been particularly aggressive in 
providing funding to maintain our facilities. We have provided state 
funds to expand and modernize our mass transit system and to expand our 
commuter rail service. State and Federal funds have supported an annual 
$400 million statewide road and bridge program and the massive Central 
Artery/Tunnel Project. We realize that we don't have to elaborate on 
either of these latter project areas as you have actively followed the 
progress of both the statewide program and Artery project.
    Massachusetts is eager to be a partner with the Federal Government, 
both through Congress and the Federal Highway Administration. A bill to 
create a Metropolitan Highway System (MHS), and provide third party 
funding for the Central Artery/Tunnel Project through toll revenue 
bonds, is on track to be passed by April 1. Not only will the bill 
provide third party funding to meet operating costs and the completion 
needs of the Project, but it will also stabilize funding sources for 
the statewide program. Concurrently, we are working on a $4.5 billion 
Transportation Bond Bill which will be passed shortly after the MHS 
legislation. The bill will provide bond authorizations for the state to 
continue awarding advance construction contracts for the Artery, 
provide backing for Grant Anticipation Notes to meet the cash-flow 
needs of the Project, and fund the statewide program through Federal 
fiscal year 1999. Both of these measures have been identified by FHWA 
as crucial to maintaining the Project's schedule and budget.
    These are significant undertakings which the state has committed to 
despite the uncertainty surrounding the outcome of the ISTEA 
reauthorization. Massachusetts certainly recognizes the importance of 
finishing the Artery project on schedule and meeting our other 
infrastructure responsibilities. We hope the committee also recognizes 
Massachusetts' commitments and responsibilities and seriously considers 
our needs as you continue to deliberate the reauthorization of ISTEA.
    Thank you for considering our testimony, and please do not hesitate 
to contact us if we can be of any assistance to you or the committee. 
If you and your committee decide to organize regional hearings on the 
reauthorized ISTEA we would be honored to assist with planning for a 
New England hearing.
            Sincerely yours,
                      Joseph C. Sullivan, Chairman,
                               Committee on Transportation,
                                              State Representative.
                   Robert A. Havern, III, Chairman,
                               Committee on Transportation,
                                                     State Senator.


 REAUTHORIZATION OF THE INTERMODAL SURFACE TRANSPORATION EFFICIENCY ACT

                              ----------                              


                        THURSDAY, MARCH 6, 1997


                                       U.S. Senate,
Committee on Environment and Public Works, Subcommittee on 
                         Transportation and Infrastructure,
                                                    Washington, DC.

                TRANSPORTATION INFRASTRUCTURE FINANCING

    The subcommittee met, pursuant to notice, at 9:40 a.m. in 
room 406, Senate Dirksen Building, Hon. John W. Warner 
(chairman of the subcommittee) presiding.
    Present: Senators Warner, Smith, Baucus, Graham, and Chafee 
[ex officio].

           OPENING STATEMENT OF HON. JOHN H. CHAFEE, 
          U.S. SENATOR FROM THE STATE OF RHODE ISLAND

    Senator Chafee [assuming the chair]. The committee will 
come to order, please.
    This is a hearing of the Subcommittee on Transportation and 
Infrastructure, of which Senator Warner is the Chairman, and he 
will be along very promptly. I will start.
    We want to welcome the Honorable Rosa DeLauro. You're the 
first witness, so go to it.

 STATEMENT OF HON. ROSA L. DeLAURO, REPRESENTATIVE IN CONGRESS 
                 FROM THE STATE OF CONNECTICUT

    Ms. DeLauro. Thank you very, very much, Senator Chafee, 
Senator Baucus. I want to say thank you to you and to all the 
members of the subcommittee for inviting me to testify on the 
subject of innovative financing.
    Honestly, I'm truly very excited about the prospect of 
being able to testify on innovative financing for national 
transportation projects in the reauthorization of ISTEA. I want 
to commend the subcommittee for recognizing the importance of 
creating these kinds of public-private partnerships to be able 
to attract investments by State, local and private interests in 
our Nation's infrastructure.
    I think we all recognize that our economic future depends 
on our ability to find the creative approaches to paying for 
our Nation's infrastructure. We know that in no local, State, 
the Federal Government or even a combination of those three 
pieces can afford to provide the funding that's needed to meet 
our current and our future infrastructure needs. In fact, after 
you utilize the traditional sources of funds, and those funds 
are released, as a Nation, we face about a $30 billion to $80 
billion shortfall, enabling us to meet what our infrastructure 
needs are all about.
    At the same time, we need to increase our investments in 
our roads, mass transit, airports, ports, water and waste water 
systems, schools, other kinds of infrastructure facilities, so 
that businesses can perform at full capacity and that we can 
compete globally. This innovative financing can make it 
possible for our Nation to afford the modern infrastructure 
that it needs.
    At the same time, it had the opportunity to create hundreds 
of thousands of new jobs. Innovative financing means more 
projects will be built with less of American taxpayers' 
dollars. And in many cases, $1 of Federal investment has the 
potential to provide a return of $10 or more from other public 
or private investment sources.
    The fact is that other countries have already begun to use 
these innovative financing mechanisms in terms of solving their 
own infrastructure funding shortfalls. Already, 10 percent of 
infrastructure in Asia is privately owned. And by the year 
2000, as much as 30 percent may be financed in this way.
    In our own country, in the United States, public-private 
partnerships are still in a very early stage of development. We 
all have much work to do in trying to educate our colleagues, 
the American public, about how these kinds of partnerships can 
make better use of the limited resources that we have.
    I'd like to explain in the next couple of minutes two of my 
bills which I believe would create these kinds of lucrative 
public-private partnerships, and could be included in the ISTEA 
reauthorization. The bills are called first, the National 
Infrastructure Development Act, and second, the State 
Infrastructure Bank Expansion Act. The National Infrastructure 
Development Act, NIDA, creates a quasi-governmental corporation 
to invest in and to ensure infrastructure projects in order to 
reduce public and private investment risks. It's this issue of 
risk reduction that is the key to attracting investments in 
infrastructure from non-traditional sources.
    As projects begin to produce revenues from tolls, user 
fees, taxes and other means, the corporation would be repaid 
with interest. Eventually, it would become a self-sustaining, 
privately controlled corporate financing mechanism, much like 
the recently privatized U.S. Enrichment Corporation.
    Over time, the taxpayers' initial $3 billion investment 
into the corporation would be repaid. And with a relatively 
small Federal investment, the tools created by the NIDA would 
not only significantly improve our Nation's infrastructure, but 
in addition, create 250,000 to 500,000 new jobs.
    In the United States, there are few opportunities for 
pension funds and other private entities to invest in 
infrastructure projects. And these important funds are 
currently being invested overseas in markets such as Asia. We 
need to recapture those funds for our own infrastructure needs.
    The bill that I propose would enable public and private 
investors to invest in the building of schools, roads and 
airports here in the United States. The bill would enable 
public and private infrastructure developers to offer bonds to 
pension funds for infrastructure development in the United 
States.
    The bonds are called public benefits bonds, would be 
attractive investments for pension funds, because the bonds 
enable them to pass on the tax benefits to their pensioners. 
These bonds would be revenue neutral, and studies show that 
they are actually likely to be revenue positive. Thus, the 
legislation would enable the pension community and other 
institutional investors to invest a portion of their $4.5 
trillion in assets in infrastructure projects at home.
    The bill is a good government bill. It benefits every 
American through good jobs, creating a climate for business, 
through good infrastructure. American taxpayers benefit from 
better modes of transportation for fewer tax dollars, and 
pension investors benefit because they can look for investment 
opportunities in the United States.
    I'm pleased that the Clinton administration, through the 
Department of Transportation, has seen merit in innovative 
financing mechanisms, and I'll look forward to learning more 
about their proposals as we move on and how they propose to 
advance these new tools.
    Let me briefly mention a second piece of legislation which 
would strengthen and expand the State infrastructure banks that 
were created through the 1991 ISTEA legislation. I'm an ardent 
supporter of the State banks. They carry out much of the same 
kinds of function of the National Infrastructure Corporation. 
They do it on a much smaller scale.
    However, unlike the National Corporation, which reduces the 
risk of investing in infrastructure, the primary function of 
the SIBs is to reduce the cost of these investments. I think 
that the SIBs can be strengthened in two ways. They need to be 
able to finance projects other than highway and mass transit 
projects, such as schools and water and wastewater projects, 
airports. And they need additional capital in order to reduce 
the risks of infrastructure investments.
    I believe the SIBs have the potential to achieve many of 
the same results as a national financing corporation. For this 
reason, I introduce the State Infrastructure Bank Expansion Act 
to improve their effectiveness.
    The legislation is simply an interdepartmental study to 
determine if the SIBs can be used to finance projects outside 
the realm of transportation and to investigate sources of 
capital to make the SIBs a more efficient financing tool. The 
study would be done in consultation with an industry advisory 
panel.
    Let me conclude by saying that I urge the subcommittee to 
consider the financing tools that are created by a National 
Infrastructure Development Act, and the State Infrastructure 
Bank Expansion Act. I think the American people are ready and 
willing to take on a big challenge, and the challenges that are 
facing our country. I think they're also ready for bold ideas, 
ideas that really tackle that $30 billion to $80 billion 
shortfall, which not only makes this a stronger country, but 
also helps to provide jobs which we so desperately need.
    In particular, I want to mention my part of the country, 
which has suffered from job loss, but I think it's true 
everywhere. I think these bills are an important part of making 
that possible.
    I thank you for your time for letting me come to testify on 
this issue this morning, and would be happy to answer any 
questions that you have.
    [The prepared statement of Ms. DeLauro follows:]
Prepared Statement of Hon. Rosa L. DeLauro, Representative in Congress 
                     From the State of Connecticut
        an approach to creating jobs and building infrastructure
    Thank you Chairman Warner, Ranking Senator Baucus, and members of 
the Subcommittee on Transportation and Infrastructure for inviting me 
to testify on the subject of innovative financing for national 
transportation projects in the reauthorization of the Intermodal 
Surface Transportation Efficiency Act. I commend this subcommittee for 
recognizing the importance of creating public-private partnerships to 
attract investments by State, local and private interests in our 
Nation's infrastructure.
    America's economic future depends on our ability to find creative 
approaches to paying for our Nation's infrastructure. We know that no 
local, State or Federal Government--or even a combination of the 
three--can afford to provide the funding needed to meet all of our 
current and future infrastructure needs. In fact, after these 
traditional sources of funds are released, our Nation still faces an 
annual $30 billion to $80 billion funding shortfall to meet our 
infrastructure needs.
    At the same time, we all recognize that we must increase our 
investment in our Nation's schools, roads, mass transit, airports, 
ports, water and wastewater systems and other infrastructure 
facilities. Only then can businesses perform at full capacity and 
successfully compete in the global market.
    Innovative financing can make it possible for our Nation to afford 
the modern infrastructure it needs to be globally competitive. At the 
same time, it can create hundreds of thousands of new jobs. Innovative 
financing means more projects will be built with less of the American 
taxpayers' money. In many cases, one dollar of Federal investment has 
the potential to provide a return of $10 or more from other public or 
private investment sources.
    Other countries have already begun to use innovative financing 
mechanisms to solve their own infrastructure funding shortfalls. 
Already, 10 percent of infrastructure in Asia is privately owned. By 
the year 2000, as much as 30 percent may be financed in this way.
    In the United States, public-private partnerships are still in the 
earliest stages of development. We all have much work to do in 
educating our colleagues and the American public about how these 
partnerships can make better use of our Nation's limited resources. We 
can not afford to fall behind in building the best, most economically 
productive infrastructure possible.
    I would like to take the next few minutes to explain two of my 
bills which would create these lucrative public-private partnerships 
and could be included in the ISTEA reauthorization. These bills are 
called the ``National Infrastructure Development Act'' and the ``State 
Infrastructure Bank Expansion Act.''
    The National Infrastructure Development Act creates a quasi-
governmental corporation to invest in and insure infrastructure 
projects in order to reduce public and private investment risk. Risk 
reduction is the key to attracting investments in infrastructure from 
non-traditional sources.
    As projects begin to produce revenue through tolls, user fees, 
taxes, or other means, the corporation would be repaid with interest. 
Eventually, it would become a self-sustaining, privately controlled 
corporate financing mechanism much like the recently privatized U.S. 
Enrichment Corporation. Over time, the taxpayers' initial $3 billion 
investment into the Corporation would be repaid. With this relatively 
small Federal investment, the tools created by the National 
Infrastructure Development Act would not only significantly improve our 
Nation's infrastructure, but also create 250,000 to 500,000 new jobs.
    In the U.S., there are few opportunities for pension funds and 
other private entities to invest in infrastructure projects, and these 
important U.S. funds are currently being invested overseas in markets 
such as Asia. My bill would enable public and private investors to 
invest in the building of schools, roads and airports here at home. The 
bill would authorize public and private infrastructure developers to 
offer bonds to pension funds for infrastructure development in the U.S. 
These bonds, called Public Benefit Bonds, would be attractive 
investments for pension funds because the bonds enable them to pass on 
tax benefits to their pensioners. These bonds would be revenue neutral, 
and studies show that they are actually likely to be revenue positive. 
Thus, the legislation would enable the pension community and other 
institutional investors to invest a portion of their $4.5 trillion 
assets in infrastructure projects at home.
    The National Infrastructure Development Act is a ``good 
government'' bill that benefits every American.
     American workers benefit through good jobs. Under my bill, 
every dollar in Federal investment will result in $10 of construction. 
If we invest a billion Federal dollars it will create 250,000 to 
500,000 new jobs.
     American businesses benefit from improved infrastructure. 
Businesses depend on airports, roads, wastewater treatment facilities, 
and clean-water projects. Stronger infrastructure will aid economic 
expansion.
     American taxpayers benefit from better modes of 
transportation for fewer tax dollars, and better environmental quality.
     Pension investors benefit because they can look for 
investment opportunities in the United States instead of overseas.
    I am pleased that the Clinton Administration, through the U.S. 
Department of Transportation, has seen merit in innovative financing 
mechanisms, and I look forward to learning more about their proposals 
to advance these new tools.
    My second piece of legislation would strengthen and expand the 
State Infrastructure Banks that were created through the 1991 ISTEA 
legislation. I am an ardent supporter of these State banks, which carry 
out functions similar to the National Infrastructure Corporation, but 
on a much smaller scale. However, unlike the national corporation which 
reduces the risk of investing in infrastructure, the primary function 
of the SIBs is to reduce the cost of these investments. I believe the 
SIBs can be strengthened in two ways: they need to be able to finance 
projects other than highway and mass transit projects such as schools, 
water and wastewater projects and airports; and, they need additional 
capital in order to reduce the risk of infrastructure investments.
    I believe the SIBs have the potential to achieve many of the same 
results as a national financing corporation. For this reason, I 
introduced the State Infrastructure Bank Expansion Act to improve the 
effectiveness of the SIBs. This legislation is simply an inter-
departmental study to determine if the SIBs can be used to finance 
projects outside the realm of transportation, and to investigate 
sources of capital to make the SIBs a more efficient financing tool. 
The study would be done in consultation with an industry advisory 
panel.
    I urge this subcommittee to consider the financing tools created by 
the National Infrastructure Development Act and the State 
Infrastructure Bank Expansion Act. The American people are ready, 
willing and able to tackle the big challenges facing our country. I 
believe these bills are an important part of making that possible.
    Thank you again for inviting me here to testify before you this 
morning.

    Senator Chafee. Well, thank you very much, Representative 
DeLauro. You're from New Haven, aren't you?
    Ms. DeLauro. Yes. Born and raised in New Haven, CT.
    Senator Chafee. And that's your district now?
    Ms. DeLauro. Yes, it's the Third Congressional District of 
Connecticut, 18 towns, Senator.
    Senator Chafee. When you talk about the country faces a $30 
billion to $80 billion funding shortfall to meet our 
infrastructure needs, that's not solely, that would include 
things like airports, and would it include schools?
    Ms. DeLauro. Yes, I think in terms of traditional, what 
we're able to do in terms of the public dollars is, we just 
don't have the public dollars to do everything we need, like 
the deep water ports, airports, other kinds of projects like 
that.
    Senator Chafee. OK, well, I think you've found a very 
receptive ear in this committee. I'm sorry Senator Moynihan 
isn't here, but he's been very active in this area. And he and 
I and Senator Warner introduced, and Senator Bond, and we 
weren't able to approach everyone, but we've introduced some 
financing legislation likewise. And we look forward to look at 
your legislation.
    Have you testified in the House on this?
    Ms. DeLauro. Yes, I have. I did in the last session of the 
Congress. The State Infrastructure Bank Expansion is a new 
piece. But the National Infrastructure Development Act I think 
was the 103d Congress I introduced the legislation.
    First, I applaud your legislation. And Senator Moynihan has 
introduced the National Infrastructure Development Act, this 
piece of legislation, on the Senate side.
    Senator Chafee. Oh, he has.
    Ms. DeLauro. It's been here for a while.
    Senator Chafee. Is it the same?
    Ms. DeLauro. That's why I think this is a good moment to 
try to move with some of these things.
    Senator Chafee. Well, I think you have struck on a good 
moment.
    Now, to have this function, you've got to have a source of 
revenue. I presume that you support tolls.
    Ms. DeLauro. Well, I think if we're going to look at how we 
can repay, I talk about the National Infrastructure Corporation 
as the way we could do this is with tolls, user fees, whether 
it is taxes, in order to be able to repay the loans and to 
recapitalize the account so we can keep it moving and 
ultimately try to pay back the $3 billion in an initial capital 
outlay.
    Senator Chafee. Senator Baucus.

  OPENING STATEMENT OF HON. MAX BAUCUS, U.S. SENATOR FROM THE 
                        STATE OF MONTANA

    Senator Baucus. Thank you, Chairman.
    Congresswoman, I really appreciate what you're doing. This 
is very helpful.
    Ms. DeLauro. Thank you.
    Senator Baucus. We have to be more innovative. I want to 
followup a little bit on the financing. What do you think the 
financing sources should be?
    Ms. DeLauro. Let me just say this. I think that this always 
gets down to that, which is the critical thing, and we need to 
look very hard at how this was done, and it's not easy. I think 
we have to try to take a look at whether or not you've got the 
gas tax, which is a potential source. I know that there is, 
that that deals truly with just transportation projects at the 
moment. And whether or not there's any possibilities there to 
do any expansion of types of work with that.
    There's also potentially the possibility of looking at 
environmental infrastructure, telecommunications 
infrastructure, other areas where a portion of those kinds of 
funds could be utilized and moved into a direction which 
ultimately increases the opportunity to build, to do what we 
need to try to do, and to create those new jobs. It's not easy, 
but I think we have to put our minds to figuring out how this 
gets done, because unless we do that--this is bold. This is not 
something that is without a challenge for us to come and figure 
out. I think we've got good minds, both here and in the 
industry to try to figure out how we can put the financing 
mechanism together to do this.
    Senator Baucus. Yes, it would have to be thought through 
very carefully.
    Ms. DeLauro. I agree.
    Senator Baucus. For example, there are States who can't 
raise revenue with tolls, Western States, there just is not 
enough traffic. It's an impossibility. In addition, I know 
Connecticut has a high State gasoline tax. But part of 
Connecticut uses its State gasoline tax for non-transportation 
purposes. And it's very dangerous, I think, to break the link 
between gasoline taxes and transportation, and the gasoline tax 
is paid for non-highway or very directly highway-related 
purposes.
    Ms. DeLauro. I understand the sensitivity of that, Senator, 
I truly do. Again, I think that we need to be careful, we also 
need to think about how we do that. And you know, it could be 
said, I talk about $1 billion a year over a 3-year period, we 
also have to take a look at what we want to try to do as a 
country in order to be able to have our dollars being invested 
here rather than overseas in someone else's infrastructure.
    Senator Baucus. Don't get me wrong, you've got a great idea 
here. You've got a kernel of something that I think has great 
potential. We just have to think it through so we follow 
through on the potential. Thank you very much.
    Ms. DeLauro. Thank you.
    Senator Chafee. Just a quick question. Connecticut had 
tolls on its turnpike and then took those off. I never quite 
understood why they did that. Now, I remember that horrible 
accident that took place just outside of New Haven, I guess it 
was in West Haven, was it?
    Ms. DeLauro. Yes.
    Senator Chafee. Was that the reason they took them off, 
safety?
    Ms. DeLauro. I'm trying to think of the number that there 
were at the time in terms of toll stations. I think that 
accident----
    Senator Chafee. I remember it well.
    Ms. DeLauro. Yes, I know. Me too.
    Senator Chafee. I think there were four.
    Ms. DeLauro. Exactly, I went through them many times 
myself, Senator. I think the accident was one of the major 
causes and reasons for taking them down.
    Senator Chafee. It always seemed to me such a splendid 
source of revenue for a State. In any event, thank you very 
much, and we will clearly look at your legislation. Is yours, 
is Senator Moynihan's the same as yours?
    Ms. DeLauro. Yes, I believe so, Senator.
    Senator Chafee. OK, fine.
    Ms. DeLauro. Yes, he introduced the same legislation on the 
Senate side.
    Senator Chafee. Good, fine. Well, thank you very much for 
coming here. We appreciate it. And you have given us impetus. I 
have a statement for the record from Senator Reid.
    [The prepared statement of Senator Reid follows:]

  Prepared Statement of Hon. Harry Reid, U.S. Senator from the State 
                               of Nevada

    Mr. Chairman, As I have said at each of our first two 
hearings, transportation represents a truly national concern. 
All of us have a stake in ensuring that America's 
transportation policies are coherent and efficient.
    This session of Congress will likely include extensive 
consideration of not only how we finance our national 
infrastructure but also what our transportation policies should 
aim for as we head into the 21st century.
    With the completion of the interstate highway system, it is 
vital that we turn our attention to designing multi-modal 
transportation policies that will allow us to not only maintain 
the excellent infrastructure we have, but also to move forward 
to meet the demands of the new century.
    In many ways, the transportation issues of the future will 
be vastly more difficult than the ones of yesterday. We live in 
an increasingly diverse Nation, one that is no longer able to 
be solely dependent upon the automobile. Even in a State as 
vast as Nevada, a bridge State where we desperately need more 
roads, we are also seriously looking at the role monorails and 
MagLev can play in our future transportation infrastructure. 
These solutions will require all of the innovative and creative 
thinking we can muster at the Federal, State, regional, and 
local levels.
    That is why today's hearing is so important. Today's 
witnesses are all coming forward with ideas and progress 
reports on innovative programs and concepts for the next 
generation of transportation projects.
    I am intrigued by the innovative financing proposals that 
will help us to maximize the value of our investment in 
transportation and encourage increased private sector 
investment in infrastructure. While it is perhaps too early to 
get an accurate picture of how the State Infrastructure Bank 
pilot program is working, I am looking forward to an update on 
this innovation.
    I am delighted to see that the Federal experiment in 
Intelligent Transportation Systems seems to be having a 
positive impact on urban congestion and commuting times. Other 
programs to reduce drunken driving fatalities and to encourage 
the use of longer-lasting highway surfaces also seem to be 
working and providing tangible benefits to the American public 
and the economy.
    All of this is good news. We no longer live in an era of 
limitless budgets, even for something as vital to our future 
competitiveness as transportation. We must be smart and 
strategic in how we move forward.
    Don't get me wrong: more money is certainly part of the 
solution. While I fully support maximizing the impact of all 
the dollars we invest in our Nation's infrastructure and 
transportation systems--in fact I view it as an obligation of 
the public trust we are sent here to uphold--I also support 
maximizing the dollars we have available to maximize.
    Although the Administration has not yet provided their 
NEXTEA proposal to the Congress, I join with my colleagues on 
both sides of the aisle in saying that the dollar amounts being 
put forth by the Administration are simply not adequate. The 
fuels taxes paid into the highway trust fund each year will 
support significantly higher spending on transportation and 
that is what we should be doing with the money.
    As you know, I introduced legislation last month to take 
the Highway Trust Fund off-budget to ensure that the American 
taxpayers are getting what they pay for when the gas tax is 
collected. This is another aspect of the public trust that I 
take very seriously. The tax was paid into the trust fund for 
transportation projects and that is what it should be used for 
every year and that is all it should be used for.
    Our Nation's infrastructure represents the lifeline that 
fuels our economy. When we neglect to adequately provide for 
the health of this lifeline all of us suffer. Whether its 
unsafe and degraded roads or pollution caused from over 
congestion, all of us are affected. The price is not only the 
inconvenience of traversing a dilapidated infrastructure. 
Indeed, the real price is the increased costs all of us pay for 
goods and services because of the burdens placed on a steady 
flow of the stream of commerce. It's similar to cholesterol 
buildup in the arteries--eventually there is a steep price to 
pay.
    Thank you, Mr. Chairman.

    Senator Chafee. The next panel is the Honorable Mortimer 
Downey, the Deputy Secretary of the Department of 
Transportation. Accompanying him will be Ms. Jane Garvey, 
Deputy Federal Highway Administrator; and Ms. Christine 
Johnson, Director of the Joint Program Office, Intelligent 
Transportation System. So if you'll come to the table, we'll 
proceed right along.
    We want to welcome you here.

STATEMENT OF HON. MORTIMER DOWNEY, DEPUTY SECRETARY, DEPARTMENT 
 OF TRANSPORTATION; ACCOMPANIED BY JANE GARVEY, DEPUTY FEDERAL 
 HIGHWAY ADMINISTRATOR AND CHRISTINE JOHNSON, DIRECTOR, JOINT 
       PROGRAM OFFICE, INTELLIGENT TRANSPORTATION SYSTEMS

    Mr. Downey. Good morning, Mr. Chairman, Senator Baucus.
    On behalf of Secretary Slater, I thank you for the 
opportunity to discuss how ISTEA has contributed to innovation 
in transportation. And with your permission, I have a longer 
statement that I'd like to submit for the record and just 
highlight it.
    Senator Chafee. That will be fine.
    Mr. Downey. Before I begin, I'd like to introduce two 
innovators from the Department who accompany me this morning. 
Jane Garvey, who is currently our Acting Federal Highway 
Administrator, and Dr. Christine Johnson, who directs our ITS 
Joint Program Office.
    When Congress passed ISTEA, it responded to the challenges 
facing our transportation system: rapid increases in travel, 
aging infrastructure, and a need for greater efficiency and 
better connections between the modes. Under ISTEA, we've worked 
with the Congress to increase our investment to record levels 
to help meet these challenges. And we see the results in 
systems that are performing better and in new projects 
underway.
    But we recognize, just as Congresswoman DeLauro mentioned, 
that Federal funding alone cannot meet all our needs, nor will 
construction always be the right solution. That's why ISTEA 
also promoted innovation, new technologies, new ways of 
financing projects, and new ways of doing business. ISTEA 
initiated or furthered strategies to enhance transportation 
performance in an era of limited resources. Innovative 
contracting that helps to cut construction costs and enhance 
quality, new materials such as high performance concrete or 
Superpave asphalt, and energy-efficient, low pollution transit 
buses. My written statement outlines a number of these 
strategies, and I'd be happy to answer questions about them.
    This kind of innovation in materials and methods can 
improve operating efficiency, cut costs and increase the useful 
life of transportation facilities and equipment. And we'll see 
the benefit of such approaches well into the next century. They 
are a means of closing the gap between our needs and our 
available resources by making those resources stretch further.
    However, ISTEA's biggest impact may come from two other 
initiatives it's helped to launch: innovative financing and 
intelligent transportation systems. Together, they are crucial 
to meeting travel demands by expanding the existing system's 
capacity and making it more efficient.
    Innovative financing expands capacity by cutting red tape 
to move projects along faster and leveraging Federal funding 
with private and non-traditional public sector resources. 
Experimental provisions within ISTEA enabled concepts like 
making loans to projects with potential revenue streams and 
encouraging transit agencies to experiment with turnkey 
developments and other means of generating capital.
    Two years ago, at the Department, we announced the 
Partnership for Transportation Investment, which used ISTEA's 
provisions for such strategies as toll credits for State 
matching funds and Federal reimbursement of bond financing 
costs. During its test period, the partnership advanced 74 
projects in 31 States that had a construction value of more 
than $4.5 billion, and that included more than $1 billion that 
added new capital directly attributable to the partnership 
program.
    Many of these projects are advancing to construction an 
average of 2 years ahead of schedule. And the Congress, through 
the NHS bill that advanced through this committee, made many of 
these experimental strategies permanent, and they are now a 
regular part of how we do business.
    Congress also created State Infrastructure Banks to 
leverage private and other non-Federal investment with Federal 
seed capital, and has now provided $150 million of new money to 
launch them. My written statement identifies a number of 
projects now underway with State Infrastructure Bank support.
    With other authority provided in ISTEA and elsewhere, we 
worked to provide standby lines of credit for toll roads in 
southern California, and a direct loan to the Alameda Corridor 
project. And in the future, we want to expand the State 
Infrastructure Bank program and create a Federal credit program 
to support projects of national significance. We also want to 
explore with you the opportunities included in such proposed 
legislation as your Highway Infrastructure Privatization Act, 
Senator Chafee, and the National Infrastructure Development 
Corporation Act, as sponsored by Congresswoman DeLauro.
    Our second major innovation, intelligent transportation 
systems, or ITS, uses advanced information and communications 
technologies to cut congestion, to improve safety, and to 
enhance the efficiency of transit and commercial vehicle 
operations. These systems can be as simple as synchronized 
traffic signals or ramp metering, or potentially as complex as 
an automated highway. Such ITS applications can reduce by at 
least 35 percent the cost of providing the new capacity that 
we'll need over the next decade.
    And under ISTEA's authority, we're working with State and 
local governments and the private sector on a program of 
research, architecture, and standards creation and technology 
transfer to accelerate the development and deployment of ITS. 
We already see successes such as on the Oklahoma Turnpike, 
where electronic toll collection has cut costs by 90 percent. 
In Los Angeles, where automated----
    Senator Chafee. Wait, wait. I lost you on that. Could you 
repeat that one, please?
    Mr. Downey. Yes. The Oklahoma Turnpike, where they have put 
in automated toll collection, they not only speed travel by 
having non-stop collection of tolls, but have cut their toll 
collection costs by 90 percent.
    Senator Chafee. Thank you.
    Mr. Downey. In Los Angeles, automated traffic controls have 
already improved travel times by 13 percent. And in 
Minneapolis, reduced congestion brought about by their freeway 
management system has improved freeway speeds by 35 percent.
    We're building on such early successes through Operation 
Timesaver, which is aiding State and local governments in 
creating a national ITS infrastructure with the goal of cutting 
urban travel times by 15 percent over the next decade. In the 
longer term, we're exploring a truly automated highway system, 
which would have shorter range benefits in terms of safer 
operations on existing roads if we can deploy some of its 
technology to the existing fleet. We will meet Congress' 
mandate to demonstrate the feasibility of such a system through 
a test on San Diego's I-15 this August.
    In all of our programs, we must build on the 
accomplishments of the last 6 years. And the way to do that is 
to reauthorize the many programs which work, refine those 
programs which have not yet fully realized their promise, and 
create new initiatives which apply what we have learned from 
ISTEA. We will submit our reauthorization proposal very 
shortly. And we look forward to working with the Congress to 
make it a reality.
    Senator Chafee and Senator Baucus, this concludes my 
statement, and I'd be happy to answer your questions.
    Senator Chafee. Ms. Garvey, do you have a statement?
    Ms. Garvey. No, I don't, Senator.
    Senator Chafee. How about you, Ms. Johnson?
    Ms. Johnson. No.
    Senator Chafee. Mr. Downey, what is the position of the 
Administration on tolls? As I understand it, on interstates, 
and I'm referring solely to the interstates now, maybe I'm in 
your territory, Ms. Garvey, on interstates, those highways that 
had tolls, the Pennsylvania Turnpike, maybe the Maine Turnpike, 
before they were incorporated into the interstate, can keep the 
tolls. But is there a provision in the law, you cannot 
institute tolls? And if so, are you here to change that?
    Mr. Downey. There are provisions in current law that 
restrict the enactment of tolls. But we would propose in our 
legislation that that be relaxed, if that's a means of 
financing new transportation improvements.
    Senator Chafee. Now, if that occurred, would the State be 
in any way required to refund the 90 percent it received, or is 
that not touched?
    Mr. Downey. We would not propose that that be a 
requirement.
    Senator Chafee. You would not propose that. I've been 
around the country a great deal, and I must say, I haven't seen 
any of this intelligent toll collection. I saw it in Germany, 
where we flashed through a toll booth at 75-miles an hour. I 
was not driving.
    How do yours work that you have? Who can touch on it? Ms. 
Johnson, is this your bailiwick?
    Ms. Johnson. Actually, I think if you go a little further 
west and south, you could go to the Tappanzee Bridge, where 
ordinarily a lane could handle 350 to 400 vehicles per hour, 
they're now handling 1,000 vehicles an hour with the easy pass.
    Senator Chafee. I'm not sure if we go South to get to the 
Tappanzee Bridge.
    Mr. Downey. If you're in Rhode Island, you go South.
    [Laughter.]
    Senator Chafee. Thank you for straightening me out.
    [Laughter.]
    Senator Chafee. Does that apply to all future directions we 
get here, pretending we're in Rhode Island?
    Ms. Johnson. To remember just what the lateral----
    Senator Chafee. All right, just go to it. And the Tappanzee 
Bridge, which indeed I do go over fairly often, there is one of 
these. How is it based? Is it based on your credit card?
    Ms. Johnson. No. Basically there is a tag that is mounted 
in a particular position on the windshield. It reads an 
identifying number and deducts from an amount that you have 
stored.
    Senator Chafee. Previously paid.
    Ms. Johnson. That's correct.
    Senator Chafee. So you pay $20 or something and then you 
work that off as you go across it, a $1 or $2 a trip or 
whatever it is?
    Ms. Johnson. That's right. Now, there are other means of 
doing it. And that's being experimented with across the 
country. But in general, the debit approach is favored by the 
authorities, because frankly, they are earning some revenue off 
of the money, the stored value.
    Senator Chafee. The company that developed it?
    Ms. Johnson. Yes.
    Senator Chafee. Are there other systems that involved 
credit cards? For example, that obviously can only be used by 
some regular commuter who's made the investment.
    Ms. Johnson. That is correct.
    Senator Chafee. Is there any system possible whereby on 
your MasterCharge, you'd get something to put in your 
windshield and then you could go across them all? I don't know, 
I'm just asking.
    Ms. Johnson. In Europe, they are experimenting with what we 
call the third generation automatic toll collection system, 
which in essence would put a, it would look like a holder, but 
it's more than that. It's a transmitter, on your windshield, 
and you then can insert your credit card and in essence, incur 
a charge on your credit card for the toll.
    I am not aware that it is being used in the United States 
for toll collection yet, but we certainly are aware of it, and 
are planning for that in our standards.
    Mr. Downey. We're also seeing the toll agencies in 
particular regions settling on a single method of collection, 
so if you had an account, it would be good at a number of 
different locations.
    Senator Graham. Mr. Chairman, if I could just comment.
    Senator Chafee. I was going to suggest that, I had Senator 
Graham's credit card, and that would let me go all over the 
country, would it?
    [Laughter.]
    Senator Graham. I was recently in Dallas, and I was told 
that there, there is a proposal which is either in place or 
soon will be, using the same debit system for parking lots as 
well as for tolls, so that a person would be able to have 
multiple payments made through that same debit system.
    Ms. Johnson. Yes, we're experimenting with that in a couple 
of places in the United States, also up in Minnesota. But that 
is the intent. And you can carry that further to both concepts, 
debit or credit, to mass transit. The idea is to develop a 
single payment form for anything that you want to do in 
transportation, and we assume this will ultimately go into just 
the outright credit industry.
    Senator Chafee. Ms. Johnson, as I understand it, when we 
did ISTEA in 1991, we set up this program, intelligent 
transportation systems program, and since then, I understand 
$1.3 billion has been spent. What have we gotten out of that?
    Ms. Johnson. Quite a bit. First of all, I would note the 
fact that about half of that has been in earmarked projects, 
and about half has been spent at the discretion of the 
department. In that----
    Senator Chafee. Give me an example of an earmarked project.
    Ms. Johnson. One that immediately comes to mind is on Long 
Island for a university; Another is one that we have learned 
quite a bit from in the Twin Cities with their Guidestar 
program. We also have had competitive bid operational tests 
where we had a clear research set of priorities that we were 
trying to understand.
    But to get to your question of what have we learned, we 
started out with a series of good ideas for technology 
application. They ranged from toll taking to route selection in 
your car. We have conducted some 83 operational tests across 
the country, and have gained from that a knowledge of what 
works technologically, and of the issues that we face 
institutionally.
    We went from that to developing a national architecture, 
which is a breakthrough on a worldwide basis, that is now being 
copied. And we have launched from that architecture a series of 
standards. We will ultimately be dealing with more than 100 
standards which both the industry and the public sector will 
use.
    Also from the architecture, we were able to connect these 
feasible technologies into three systems. First, essentially a 
metropolitan system which you might think of as an air traffic 
control system, only for the surface, to perform the same 
functions in squeezing far more out of our existing transit and 
road and street system than we currently are.
    The second, for the regulatory aspects of commercial 
vehicles, again to streamline the oversight operation using 
fewer people in State government so it reduces costs, and make 
travel faster for the commercial vehicle. And the third, a 
series of seven applications or groups of applications in rural 
areas. This includes weather sensing technology tied to 
automatic vehicle location, using the global positioning 
system, to for example, deploy snow plows.
    Or in your State, it also includes being able to set up 
information kiosks or outlets at hotels outside of Yellowstone 
to tell people the park is full. These are alternatives for 
you.
    So we have brought it from kind of neat ideas to a point 
where we believe this is now ready for deployment across the 
United States. And that was the nature of the Secretary's 
national goal.
    Senator Chafee. My time is up, thank you. I've got another 
question, one of the questions I am going to ask you is dealing 
with--well, I won't get into it. Go ahead, Senator Baucus.
    Senator Baucus. Thank you, Mr. Chairman.
    Mr. Downey, I am pleased to hear you so supportive of this 
program, particularly the State Infrastructure Banks, the SIBs 
and so forth. I say that because this was my proposal. I 
proposed this in 1993, just exactly what you're doing. And I 
must say, it met strong resistance back then from OMB, from the 
Department of Transportation, from other agencies, saying it 
couldn't be done, wouldn't work, States couldn't do it. Well, 
I'm very happy to hear that you're enthusiastically in support 
of the program.
    Having said that, though, I do note that some States are 
not rushing in as quickly as some might expect. And I would 
like to ask you, why then we should earmark so many more 
dollars for this, which as we know, comes off the top of the 
highway funding formula. It's off the top. So every State gets 
less automatically, proportionately. Why are States a little 
bit slow in using this? And more importantly, why should we 
wait for greater demand before we earmark the dollars?
    Mr. Downey. We believe the progress to date on the 
infrastructure banks has really been faster than expected from 
the original enactment in 1995. We took a few months to select 
the States and then a couple of months to reach agreement. The 
States really began early in 1997 putting their loan programs 
together. And we expect by the end of the current fiscal year 
just in the 10 pilot States, to have $900 million of projects 
underway, and as much as $1.3 billion by the end of 1998, just 
in those 10 pilot States.
    Senator Baucus. Isn't it true that only one State, Ohio----
    Mr. Downey. Only one State has made a loan, yes.
    Senator Baucus. Why only one State?
    Mr. Downey. It's like buying a house. You don't close on a 
mortgage, really, until the project is fully ready to go. But 
you need to have the assurance the financing is in place to get 
construction and planning started. So there is a lot of 
planning going on, and there's a lot of project development. We 
really expect in the next several months many of these loans to 
actually go forward. But the projects themselves are moving 
through the design and development stage.
    Senator Baucus. But why not wait until there's more demand?
    Mr. Downey. We take some lesson from the GAO report, for 
example. GAO went out and asked States why they weren't 
participating in the program. And one of the findings GAO made 
was that many States are unable to reprogram dollars within 
their existing Federal aid. The 10 pilot States have, in fact, 
identified $350 million of Federal aid for the SIBs. Other 
States felt without new money they could not make use of this 
authority. We see the leverage potential of the SIBs as really 
a way to close the overall infrastructure funding gap.
    Senator Baucus. But you say the States are unable. Why are 
they unable? Do they have constitutional restrictions?
    Mr. Downey. We have now 28 applications beyond the 10 pilot 
States, so most States have found a legal or constitutional way 
to do it. It's more an issue of programming the Federal aid 
funds they have available, and the choices they may be locked 
into with projects that are underway.
    Senator Baucus. Just curious, do you know how many States 
do have State constitutional restrictions?
    Mr. Downey. I don't know.
    Senator Baucus. Rough guess?
    Mr. Downey. I do not know. But we could provide that for 
the record.
    [The information referred to follows:]

         Two States have indicated that their constitutions restrict 
        the establishment of a State Infrastructure Bank (SIB): 
        Louisiana and West Virginia. However, Louisiana has submitted 
        an application to DOT to participate in the SIB program, with 
        the expectation that its State Legislature will vote later this 
        year to amend its constitution to permit SIBs.

    Senator Baucus. And other than the potential constitutional 
restrictions, do you know of any other sort of endemic 
impediments?
    Mr. Downey. No. Again, with 38 States now ready to go 
forward with SIBs, it's clear that there are no broad-based 
reasons that cause them not to develop the concept.
    Senator Baucus. What about the need for more intermodal 
flexibility. As I understand it, the State must have either a 
highway account or a transit account, and can't use this 
innovative financing for--there's not a lot of flexibility, 
they can't use it for intermodal purposes. Shouldn't there be 
as much flexibility with the SIBs as there is under ISTEA?
    Mr. Downey. We believe there basically is as much 
flexibility for the SIBs. Within the highway account, and 
correct me if I'm wrong, any project that is eligible as a 
highway project could be financed. And many intermodal projects 
are indeed being considered as SIB projects.
    Ms. Garvey. Yes, and our legislation, Senator, will call 
for a slight expansion to make it even easier. We have found 
under the innovative financing initiative that the Deputy 
referred to earlier that we've really been able to advance very 
important intermodal projects. In fact, I think some of the 
most exciting projects that we've seen in the last 3 years have 
been intermodal in nature.
    So we'll look for a slight expansion with our legislation, 
which I hope will make it a little bit easier for those 
projects.
    Senator Baucus. If I might, just one more question, Mr. 
Chairman. It seems to be disproportionate emphasis on urban as 
opposed to rural transportation. And I'm talking about 
innovative financing now, the ITS technology.
    Sixty percent of highway fatalities are in rural areas, 60 
percent of highway fatalities are in rural areas. And one of 
the main reasons is, it takes longer to get from the accident 
to the hospital. That's one of the main reasons. We all saw on 
television the woman in South Dakota, she was saved, she had a 
cellular phone in her car. And they were able with directional 
finding and all that kind of thing, whatever it was, to find 
her.
    Why aren't we dedicating more, a higher percentage of funds 
here to rural needs? Two percent go to rural innovative, 
intelligent technology system needs. Why only 2 percent?
    Mr. Downey. We see some real opportunities here. And in 
fact, we want to deploy more funds in this area. The 
application that you mentioned is one that is just a natural 
for both urban and rural areas. This is, to automatically 
identify when a car has had an accident; send out that signal 
that says come and help, and give the precise location. It 
could be a substantial lifesaver.
    Senator Baucus. What are you giving us here today to push 
for--and not only to push for--to result with a fair allocation 
of these technology dollars?
    Ms. Johnson. You're dealing with two issues here. No. 1, as 
we begin the program, the metropolitan technologies were 
somewhat more ripe. We have gone through a period of testing 
some of the rural applications and feel far more confident in 
them now. And No. 2, last year in our budget, we asked for a 
major increase in the rural, both operational tests and 
deployment support. We were not fully successful in that. We 
have asked again in this budget for a major increase in both 
rural operational testing and deployment support. Because they 
are now ripe, we feel very confident in going forward with 
them.
    Senator Baucus. I just want you to keep an eye on this. I'm 
very serious about this.
    Ms. Johnson. Oh, absolutely.
    Senator Baucus. Because in lots of ways, we just get short 
shrift, frankly. And again, 60 percent of highway fatalities 
are in rural areas. All you have to do is remember that. Just 
remember that one statistic alone when you dedicate your 
resources.
    Thank you.
    Senator Chafee. Thank you. Senator Graham.
    Senator Graham. Thank you, Mr. Chairman.
    I'd like to ask some questions to Mr. Downey about the 
proposal for the transportation infrastructure credit program. 
Could you, and if you already went into some detail in this in 
your opening statement, I apologize. And I'll defer until 
later. But if not, I'd like to get----
    Mr. Downey. I did not go into a lot of detail.
    Senator Graham. Could you cover these questions: what is 
the objective of the program, what are the standards by which 
you will evaluate the success of the program, and what's the 
basic architecture of the program?
    Mr. Downey. The basic architecture, as we see it, is 
twofold----
    Senator Graham. Could you answer those in that sequence, 
objective, standards, architecture?
    Mr. Downey. The objectives of both the State Infrastructure 
Bank program and the National Credit Program are to enhance our 
ability to finance projects that might otherwise be manageable 
under existing Federal or State financing programs.
    Senator Graham. What's the principal inhibition that you 
are attempting to deal with?
    Mr. Downey. The principal inhibition is inability to 
generate sufficient sums of capital at the early stages of 
investment project to construct it on a timely basis.
    Senator Graham. So this is essentially a construction 
financing idea?
    Mr. Downey. Essentially project development, major 
construction opportunities.
    Senator Graham. So it's not intended to be a permanent 
financing?
    Mr. Downey. No. It's really to get a project constructed, 
help it through its early years, work with the sponsors where 
toll revenues, fare revenues or tax revenues can be deployed to 
it as means of paying off that financing.
    But the nature of most of the Federal and many of the State 
programs is such, their revenue streams, while solid, are 
insufficient in any given year to undertake major construction 
projects. Our criteria and goals in the State Infrastructure 
Bank Program, are primarily, that there is a good organization 
and capitalization at a State level. We leave the selection of 
projects largely to the States.
    In the national program, we would look at the projects 
themselves.
    Senator Graham. Would you see one of the standards that the 
relative proportion of lanes of highway which were financed 
through a user pay system as opposed to the traditional 
financing through a motor fuels tax system would increase?
    Mr. Downey. If we're looking at the national program and 
making selection of projects among States and competitors, 
certainly level of effort and means to assure that what we do 
will augment other effort, would be a key criterion. Obviously, 
the success prediction of a project would be an important one, 
too. We would ask: is this a project that indeed shows promise 
of being able to meet its costs, if the investment is made?
    Senator Graham. At the recommended funding level, which I 
understand is $100 million, how much of a percentage shift do 
you think you could make between traditional financed and this 
form of encouraging user financed systems?
    Mr. Downey. At the national level, with $100 million, this 
will show the possibility. It certainly will not finance every 
good project we think that's out there. But we believe if we 
use the $100 million carefully and in some creative ways, we 
can get very substantial leverage. Our experience, for example, 
with the Alameda Corridor Rail and Highway Project in Los 
Angeles showed we only had to come in for one layer of 
financing that assured the project. A lot of the basic 
financing was doable.
    But the project itself couldn't be done until all the 
pieces were in place. So that one piece secured a lot more 
financing that we ourselves were providing.
    Senator Graham. Now, I understood the Alameda Corridor 
Project was a permanent financing.
    Mr. Downey. It is permanent financing. Our loan is a 
permanent loan, but the intent was to get the project through 
its construction stage, to see that it was constructed.
    Senator Graham. But isn't the Federal commitment on the 
Alameda Corridor--it is a permanent period of financing?
    Mr. Downey. It is a permanent loan, yes, it is.
    Senator Graham. But are you, you're not suggesting that 
this $100 million be used for Alameda Corridor type projects?
    Mr. Downey. We are open to a variety of different projects, 
again, just to see that we get the most potential 
infrastructure benefit out of $100 million a year.
    Senator Graham. I think it's a very fundamental question as 
to whether you're talking about a financing plan to cover the 
initial development and construction period, or whether you're 
talking about a permanent financing, for instance, as in the 
case of Alameda Corridor, a credit enhancement system for the 
life of the project, or at least the life of the initial 
permanent financing of the project. Are you suggesting----
    Mr. Downey. Both.
    Senator Graham. Both of this.
    Mr. Downey. Right.
    Senator Graham. Now, could you talk about the architecture 
of the program?
    Mr. Downey. We're still working on the details of the 
program.
    Senator Graham. When do you think we'll have the 
architecture?
    Mr. Downey. We hope that when we submit our legislation, 
which should be very soon, we'll have that. But we're still in 
a lot of discussions about the specifics.
    Senator Chafee. Thank you, Senator.
    Senator Smith.
    Senator Smith. Thank you very much, Mr. Chairman.
    Good morning, Mr. Downey. I want to ask you about some of 
the unconventional materials. The State transportation 
officials are somewhat reluctant to use what we call 
unconventional materials, recycled products, etc., because they 
don't believe there's an adequate framework there to evaluate 
and demonstrate the application of these materials.
    Do you find that generally to be the case?
    Mr. Downey. We find that there are concerns, both with 
unconventional materials or with conventional materials such as 
standard asphalt or standard concrete being formulated in a new 
way. There are always concerns about being the pioneer.
    What we would propose in our legislation is some support 
for the risk taker who wants to involve themselves in such a 
project but wants to reduce their risk if in fact the results 
are not what's called for. So we would provide additional 
dollars to take out some of those risks in the use of new 
materials.
    Senator Smith. Elaborate a little bit more, or you can, Ms. 
Garvey, on the risk takers. For example, what about university 
based consortiums?
    Ms. Garvey. You'll see in our bill a commitment to 
continuing those kinds of funding activities. I think one of 
the roles that the Federal Highway Administration and the 
Federal Government can perform effectively in the area of new 
materials is to provide technical assistance. So in the area of 
new kinds of high performance concrete, or in the area of 
Superpave, we have five, for example, in the area of Superpave, 
we have five regional centers where we provide real technical 
assistance to the States, working very, very closely with them 
so that they are encouraged to use the new materials.
    We're doing the same kind of thing with high performance 
concrete. We've got some experiments going in Texas that we're 
watching very closely. And the lessons that we're learning 
we're getting out to other States as well.
    In the area of advanced composites where we're using fiber 
composites for bridges, that's being tested in San Diego. And 
again, we're able to look at those experiments, see where it 
works and get that information out.
    So I think we can provide the kind of technical assistance 
to States that gives a level of comfort so that people are more 
encouraged to use those kinds of materials.
    Senator Smith. On the subject of State infrastructure 
banks, the Federal money that is being granted to the States is 
seed money set up in these banks. I assume that that's going to 
continue to be subject to the Davis-Bacon requirements, is that 
correct?
    Mr. Downey. We believe that the initial contribution will 
be subject to Davis-Bacon, and we're looking at how additional 
projects would also be covered.
    Senator Smith. If we want to look at something called 
innovative financing, wouldn't it be appropriate to look at the 
repaid or recycled funds that go back into the States as being 
not subject to Davis-Bacon?
    Mr. Downey. I think one of the issues there is, where did 
the initiative come from, isn't there still a degree of Federal 
support and a degree of Federal interest and Federal activity 
in each of the projects.
    Senator Smith. Do you agree or disagree that Davis-Bacon 
costs more money?
    Mr. Downey. I don't think a case had been made fully one 
way or the other. Some projects arguably have cost more. Others 
with the efficiency of the construction techniques of unionized 
contractors I think have done a better job. It's also true that 
in many States, such as the one I come from, State law would 
prevail if there was not a Federal law.
    Senator Smith. Mr. Chairman, I yield at that point.
    Senator Chafee. Thank you. You'll get another shot here in 
a few minutes.
    What I'd like to do now is limit the questions to 3 minutes 
apiece, because we have two other panels that are coming up.
    I must say, Mr. Downey and Ms. Johnson, this may not be an 
entirely fair viewpoint on my part, because clearly I haven't 
been all over the country. But I frankly don't see that much 
has come of this innovative effort that we launched way back in 
1991. And again, I want to give credit to Senator Moynihan, who 
was very deeply involved with that. If maybe all these things 
have taken place, I know there's a reference to San Diego, and 
I was out there last summer, and if I had known it, I would 
have gone to take a look at it.
    But I just, I'm a bit disappointed, put it that way. Now, 
we're going to have a representative from GAO who's going to 
comment on all of this. And from what I see, and I'm open to 
being corrected on this, that nothing much has changed in the 
way highways are constructed, because there's a safe way to 
construct highways, that's the way they've always done in the 
past, so don't innovate, because something might go wrong. If 
I'm a Governor or Secretary of Transportation in some State, 
I'll go with the tried and true way.
    So I think the efforts at experimentation have been 
minimal. When we passed ISTEA, we had a crumb rubber provision 
in there. That was repealed, I think we repealed it when we did 
the National Highway System bill a couple of years ago. That 
was all under the pressure from the contractors, don't try 
anything different, this is going to have to have separate 
batches of asphalt to do this.
    Let me just ask you, for example, do we have any, is there 
any system set up anywhere where there are higher tolls for the 
more heavily traveled hours that's been talked about? Has that 
been done anywhere, Ms. Johnson?
    Mr. Johnson. I think you're referring to congestion 
pricing. As far as I know, we have not. I think you first have 
got to get the infrastructure in, which is the electronic 
tolling, before we're ever going to be able to make a lot of 
headway in that area.
    Mr. Downey. We have seen the I think quite successful 
project in southern California on State route 91, which, in 
fact, is pricing the roadway, with the speed lanes that are in 
the center----
    Senator Chafee. Is this in San Diego?
    Mr. Downey. Yes.
    Senator Chafee. Well, I'll go take a look. I'm going out 
there during the recess.
    Mr. Downey. They are variably pricing the roadway 
throughout the course of the day at a level of price that 
always assures those who pay the toll that they will have a 
free-flowing trip, and they'll watch the people who are in 
congestion in the other lanes.
    Senator Chafee. Does it work?
    Mr. Downey. It is working, yes.
    Senator Chafee. Well, there's an idea. What we tried to do, 
after all, it wasn't yesterday that we passed ISTEA, it was 
1991. And what we tried to do is to encourage use of, better 
use of all our transportation systems instead of just building 
bigger and wider roads all the time.
    My time's up. Senator Baucus.
    Senator Baucus. Thank you, Mr. Chairman.
    I just have a question about this Federal line of credit 
that you're proposing here. Essentially what's the reason for 
it? Why can't SIBs be designed to take up the proposed need 
with a Federal line of credit? I mean, after all, we're talking 
about, I've forgotten the total amounts here, $600 million over 
6 years, is that right, for the Federal proposed line of credit 
and $900 million for the SIBs? That's 9.5 right off the top. 
Again, it's off the tope of the highway program.
    So what's the big deal here? Why do we need a Federal line 
of credit?
    Ms. Garvey. Senator, we've actually talked about that a lot 
in the Department, distinguishing between the State 
infrastructure banks and the Federal credit program. 
Essentially, and I think some of the work at GAO supports this. 
Some of the work GAO has done has shown that the State 
infrastructure banks are wonderful tools for those projects 
that are State-based or in some cases even multi-State based. 
But it's still relatively small; they have a more limited 
portfolio. Their financing capabilities are somewhat limited, 
although still effective for those type of projects.
    But there still remains a cluster of projects that really 
have a national----
    Senator Baucus. What are they, what are projects of 
national significance?
    Ms. Garvey. I think something like the Alameda Corridor 
that was referred to earlier. There's also a rail project that 
I've heard a great deal about in Florida. NAFTA corridors might 
fall into that category.
    Senator Baucus. What are the criteria for eligible 
projects?
    Ms. Garvey. We're developing some of the criteria now, 
but----
    Senator Baucus. Just off the top of your head, what are you 
thinking about it?
    Ms. Garvey. Just off the top of my head, it would be size, 
projects that are very large in size, projects that often have 
benefits outside of a State boundary. Some of the economic 
benefits derived from Alameda, for example, they were more 
beneficial to Michigan and Illinois and other States than they 
were----
    Senator Baucus. Just take the Alameda, there are other 
sources of revenue for that. In California the county or 
whatever can issue bonds. There are all kinds of sources of 
revenue. Why do we need an additional Federal line of credit?
    Ms. Garvey. Well, I think, again, Senator, I don't think 
it's an overwhelming number, but I think there are still those 
projects that have national significance that can be financed 
better through a Federal program.
    Senator Baucus. I hear words, don't hear a lot of reasons, 
frankly. I don't think this gets down to the persuasive----
    Ms. Garvey. It may help, and I'd be happy to supply this, a 
list of projects that we think might be good candidates.
    Senator Baucus. But again, you haven't persuaded me why 
this source is needed, or stating the question differently, why 
there are not sufficient other resources to deal with these 
projects. If it's so risky, why should the Federal Government 
be financing them?
    Ms. Garvey. I think many of them are not as risky, there's 
some risk involved, but not as risky as some might think. For 
example, you do have to go to the market for the Federal credit 
program. You would have to have a market test. So in addition 
to the environmental tests that people go through, and in 
addition to the planning requirements, there's also the market 
test as well.
    Senator Baucus. Why not redesign the SIBs? Why not allow 
them to do a lot of this?
    Ms. Garvey. I think, Senator, at some point in time----
    Senator Baucus. Combined with other traditional financing 
sources?
    Ms. Garvey. I think, Senator, at some point in time, SIBs 
may be able to handle some of these large projects. But right 
now, and in the foreseeable future, they are really not mature 
enough to be able to handle projects of this magnitude.
    Senator Baucus. You may persuade me later, but I just urge 
you to keep working on it.
    Ms. Garvey. We'll keep working on it, Senator.
    Senator Baucus. Thank you.
    Senator Chafee. Senator Graham.
    Senator Graham. Mr. Chairman, to do back to your question 
about innovation, I think one of the key issues that we need to 
be probing as we go through this reauthorization is, what will 
be the standards by which the various policies within this 
legislation, whatever final form it takes, will be evaluated? 
Because I think if you had asked the question in 1991, by what 
standard will we judge whether we have in fact accomplished a 
sufficient amount of innovation through the initiatives of 
ISTEA, we would then today be in a position to compare results 
against previously agreed upon criteria. But in the absence of 
those criteria, we're just sort of left to this nebulous 
discussion.
    In that light, let me ask a question of Mr. Downey. I'm 
quoting from an article of January 12 this year by Neil Pierce 
on transportation policy, in which he quotes you, Mr. Downey, 
as stating that ``True conservatives are those who believe 
ISTEA was a historic step and should perfected, not junked.'' 
And then he precedes that a statement of concern, he, Mr. 
Pierce, that some of the alternatives to ISTEA, such as step 
21, would undo many of the ISTEA features that promote 
transportation innovation.
    Without attributing that last sentence to you, but what are 
the innovative provisions of ISTEA that you think most deserve 
protection from being junked, and why?
    Mr. Downey. I think some of the things that can be done 
well at the national level, especially research and technology, 
introduction of new ideas, new methods, and new materials. We 
have always found in the Federal Highway program and the other 
Federal transportation programs that States seek out the 
partnership of the Federal Government to undertake those.
    We also find that to be true in some of the investment 
programs and activities like the transportation enhancements 
that were permitted under ISTEA. We also believe they need some 
continued Federal role is needed to assure that the broad range 
of transportation choices is being made available in the 
planning process, and that the planning process and the project 
development process is an open one that really allows 
participation by lots of levels of government and private 
individuals.
    So we think there's been a means of carrying out projects 
and an attention to new concepts like Intelligent 
Transportation Systems, and the use of new methods and 
materials, that benefit from a national program.
    Senator Graham. You talked about innovations in materials, 
innovations in transportation choices. I would assume that 
means issues like promoting intermodalism.
    Mr. Downey. Intermodalism, flexibility and other features 
that we believe have been positive outcomes of ISTEA.
    Senator Graham. Could you give us some further detail as to 
what you think are the most important innovative ideas in ISTEA 
that should be protected or enhanced in this reauthorization? 
And maybe some innovative ideas in ISTEA that have not 
fulfilled their promise that might be either terminated or 
substantially altered?
    Mr. Downey. Senator, when we submit our legislation, which 
again should be shortly, it will----
    Senator Graham. But I wonder if you could give us sort of a 
sidebar, that within this legislation there is inherent the 
recommendation that the following six innovations from ISTEA 
succeeded, should be maintained and enhanced, the following 
three did not accomplish their objectives, and therefore are 
not worthy of the resources allocation, or the degree of 
constraint on State and local governments which are inherent in 
them, and therefore should be either terminated or modified, so 
that we can get the benefit of your analysis of 6 years of 
experience under ISTEA in the area of innovation as we look for 
the next 6 years.
    Mr. Downey. We'd be glad to provide that when we submit our 
legislation.
    Senator Graham. OK.
    Senator Chafee. Just one quick question. Mr. Downey, on 
page 8 of your testimony, you say the intelligent 
transportation system program has ``been used to reduce the 
environmental impact of growing travel demands.'' Could you 
give me a little illustration of what you're talking about 
there?
    Mr. Downey. Yes. It's our view that a good, well 
functioning ITS system in a metropolitan area will assure 
smooth traffic flow, eliminate backups, or eliminate problems 
like lanes being taken out of service by an accident which 
creates a backup. And any time you get serious backups and 
congestion, you get much greater degree of air pollution than 
is necessary.
    Senator Chafee. Plus, I suppose if you can move them 
through the tolls faster and have them staggered due to 
congestion mitigation in some fashion, you then don't have to 
build a new road and take more land.
    Mr. Downey. That's correct. We certainly see the 
opportunity with the ITS technology to provide for increased 
travel without having to add anywhere near as many lanes of 
roadway as we've had to do in the past.
    Senator Chafee. Do you have any questions, Senator Baucus?
    Senator Baucus. Just very briefly. I noticed in GAO's 
report, these GAO reports, that Michigan does not have 
constitutional authority to lend money to the private sector, 
and that GAO does say that there are many States, I won't say 
many, some States, have expressed the difficulty they have 
because of constitutional impediments or other legal 
impediments in the States. My question is, the degree to which, 
in your working with those States that have, think they have 
impediments, to try to find some way to skin this cat.
    Mr. Downey. I think it should be possible to find that. The 
SIB program is in some ways modeled on comparable institutions 
that were set up in the Clean Water program. It's my 
understanding that every State has found a way to do it in that 
context.
    Ms. Garvey. One of the ways that I think we have been 
helpful is to provide to States model legislation that's worked 
in other areas. So we've got five examples of model 
legislation. So those States that are trying to deal with that 
have something to look to.
    I think there are other institutional issues. You raised a 
question earlier about whether there are other problems that 
States are having. Sometimes it's just the new relationships 
that they need to establish with their financing on.
    Senator Baucus. That's my next question, the age old 
question, top down or bottom up, probably some combination is 
what works, that is, States may not quite know what's 
available. On the other hand, we don't want to tell them what 
to do. We want to help them do what they need. So what are you 
doing to try to address that, how much are you really listening 
to States and how much are you telling them what's available, 
just so that we can do a better job here?
    Mr. Downey. The Federal transportation program has 
typically been a State-based program. We have very good 
relationships with the State transportation departments through 
the Federal Highway Administration and our other activities. 
One of the things we have had to do in recent years is build 
new relationships with other levels of government that didn't 
exist before and with the private sector----
    Senator Baucus. Give me an example of how you're doing 
that, not just words, specifics, examples.
    Mr. Downey. In the ITS case, for example, we identified and 
funded what we're calling four model deployments in 
metropolitan areas, Seattle, Phoenix, San Antonio, and the New 
York-New Jersey-Connecticut area. In each case, what's being 
put in place are new institutions in those metropolitan areas 
and relationships with the private sector to see that the 
information on how a transportation system is working is being 
collected and disseminated by the motorists.
    Senator Baucus. What are you doing in Montana?
    Mr. Downey. We have three projects underway on ITS in 
Montana.
    Senator Baucus. Good, thank you.
    Senator Chafee. Just happened to have them handy.
    [Laughter.]
    Senator Baucus. That's good, thank you.
    Senator Chafee. Senator Graham.
    Senator Graham. No further questions, thanks.

           OPENING STATEMENT OF HON. JOHN W. WARNER, 
         U.S. SENATOR FROM THE COMMONWEALTH OF VIRGINIA

    Senator Warner [assuming the chair]. Thank you very much, 
Mr. Chairman. I apologize to my colleagues for my absence 
earlier. But I've got another hearing this afternoon which is 
of some significance and I'm preparing for it, the Woodrow 
Wilson Bridge. I'm determined to get this project moving as 
quickly as we possibly can. And I'm not committed to any 
particular design or concept. I'm trying to remain as objective 
as I possibly can, with a series of steps which I intend to 
take.
    But No. 1 is in the ISTEA, we asked you for a report. And 
it's not here yet. Can you tell us a little bit about where it 
is, and how are you coming along?
    Mr. Downey. I will ask Jane Garvey to speak to that.
    Ms. Garvey. Thank you very much. Good morning, Mr. 
Chairman.
    We have a draft report completed.
    Senator Warner. You have a what? You have a draft?
    Ms. Garvey. We have a draft, except for one very critical 
element, and that is a negotiated agreement among the three 
States and the Federal Government. And we know that as part of 
the report, you had asked us, or Congress had asked us, for a 
negotiated agreement. I must say, we've had some difficulty, 
although we're still obviously discussing this with the States. 
But they are taking a very strong position that they see the 
Federal share, that it should be 100 percent.
    So we have the other parts of the report, that is, the 
preferred alternative and some of the very fine work that's 
been done by the committee in place. But we're still working on 
the negotiated agreement.
    I do want to stress, though, that no time is being lost, 
that is, the design is still moving forward, and the 
environmental work is still moving forward. And I know that's 
very critical to you, Sir.
    Senator Warner. What's the timeframe in getting that 
missing part? In other words, I was thinking we could at least 
begin to take into consideration certain decisions or 
recommendations that you've made,k recognizing that there is 
still a very essential part missing. I just want to get this 
work going.
    Ms. Garvey. Sure, I understand.
    Senator Warner. I mean, not hammer and saws. But still, to 
finalize this.
    Ms. Garvey. Sure. And we have talked to the States about 
submitting to Congress a report that really reflects just the 
State of play, that is, here's where we've got agreement, 
here's where we've got some common ground and here are still 
some outstanding issues.
    Senator Warner. And where are you on that?
    Ms. Garvey. We could certainly----
    Mr. Downey. Mr. Chairman, if you believe that would be a 
good way to move forward, we'd be prepared to do that quite 
soon. If we have to follow the literal requirements of the 
statute that we have agreement before we submit a report, that 
might not be----
    Senator Warner. Let's not make a decision now, we'll go 
ahead and get what you can give us.
    Mr. Downey. Right. We'd be happy to do that.
    Senator Warner. Because I want to begin to focus some 
attention on, for example, the HOV concept. It's most unlikely 
that you'll see HOV integrated into the Beltway as such. And 
I'm not committed yet to think that we ought to go through--
it's quite a bit of expense with HOV, isn't it?
    Mr. Downey. It would be a significant portion of the 
project's cost, yes.
    Senator Warner. And I'm hearing some rumors to the effect 
that there are a lot of interchanges out here in the two 
States, the State that I probably represent, and the State of 
Maryland. Do you think that the costs of those interchanges 
should be a part of the bridge, overall cost?
    Mr. Downey. My understanding is, certainly the estimates 
that are being used today include the costs of those 
interchanges. They are essential in some form and fashion to 
make the bridge work. But how they would be paid for as an 
overall project should be part of the negotiation for how we 
move forward. And we're, as I said, anxious to move forward.
    Senator Warner. That's the question I was anxious to get 
out. So let's not delay this. Let's go to the next panel.
    Thank you very much.
    Mr. Downey. Thank you, Mr. Chairman.
    Senator Warner. Ms. Scheinberg, we welcome you. Would you 
kindly introduce your colleagues. Also, I will place my 
statement in the record at this point.
    [The prepared statement of Senator Warner follows:]
     Prepared Statement of Hon. John Warner, U.S. Senator from the 
                        Commonwealth of Virginia
    Today the subcommittee welcomes Deputy Secretary Downey and our 
other witnesses to receive testimony on Intelligent Transportation 
System technologies, innovative financing methods, including State 
Infrastructure Banks and the Department's research activities.
    Each of these programs is important to fostering a national 
transportation system.
    Each has received significant financial support from the Highway 
Trust Fund, combining for over $3.5 billion under ISTEA.
    And, each will be important as we work to continue a national 
program that responds to growing needs with limited resources.
    Intelligent Transportation Systems have received in excess of $1.3 
billion under ISTEA. These investments have been critical to improving 
the safety of our highways and to relieving congestion on our most 
heavily traveled roads.
    We must be sure, however, that our investment in new transportation 
technologies can be readily integrated by our State partners into the 
existing transportation infrastructure. I welcome the comments of our 
witnesses today as we seek solutions to improving the deployment of 
these technologies.
    Innovative financing methods also hold great promise for maximizing 
the use of limited transportation dollars and for stimulating 
investments from the private sector.
    I was pleased that the National Highway System took further steps 
to promote innovative financing through the establishment of a pilot 
State Infrastructure Bank program, credit enhancements and incentives 
for advanced construction.
    I view these financing mechanisms as additional tools for use by 
our State partners. We should proceed with caution, however, on 
providing direct funding for SIBs or a new Federal Credit program until 
we have adequate information that all States will effectively use these 
tools.
    The Administration's early description of their reauthorization 
proposal indicates that there may be specific funding to expand State 
Infrastructure Banks and to establish a new Federal Credit program.
    Over the new reauthorization period, these funds could total $2 
billion--a significant amount of Trust Fund dollars that are not 
distributed to States and local governments under a formula program.
    Before we take this step, we must be sure that all States can 
benefit from these programs.
    Certainly, more urban States with severe congestion problems can 
identify projects that will produce revenues to make these projects 
attractive to the private sector, SIBs, or for the new Federal Credit 
program.
    I have some reservations, however, that our rural States with 
important transportation needs, do not have similar projects that can 
generate the revenues necessary for these types of projects.
    At this time, however, I welcome the views of our witnesses today 
and hope that ITS technologies, our research efforts and new financing 
approaches will have applications for all regions of our Nation.

    STATEMENT OF PHYLLIS F. SCHEINBERG, ASSOCIATE DIRECTOR, 
     TRANSPORTATION AND TELECOMMUNICATIONS ISSUES, GENERAL 
 ACCOUNTING OFFICE; ACCOMPANIED BY JOSEPH CHRISTOFF, ASSISTANT 
         DIRECTOR, AND YVONNE PUFAHL, SENIOR EVALUATOR

    Ms. Scheinberg. Thank you, Mr. Chairman and members of the 
subcommittee. I'd like to introduce my colleagues, Joseph 
Christoff and Yvonne Pufahl. We appreciate the opportunity to 
testify this morning on how innovation in Federal surface 
transportation research, intelligent transportation systems, 
State infrastructure banks and design-build contracting have 
the potential for improving the performance of the Nation's 
surface transportation system.
    This is vital, because transportation figures prominently 
in the Nation's economy. Breakthroughs in research and 
stretching funds through innovative financing can complement 
the traditional reliance on motor fuel taxes and potentially 
help to fill the infrastructure needs gap.
    In September 1996, we reported on DOT's role in surface 
transportation research, and the benefit to users and the 
economy flowing from this research. These benefits include 
crash protection devices, programs to reduce alcohol related 
deaths, and longer lasting highway surfaces that reduce 
maintenance costs. We confirmed what ISTEA stressed, that DOT 
has a critical leadership role to play by funding research, 
establishing priorities for allocating funds, and acting as a 
focal point for technology transfer.
    However, within the Department, research agenda are focused 
on improving individual modes of transportation. This modal 
focus makes it difficult for DOT to accommodate the need for 
research that cuts across modes. Also, DOT does not have a 
strong department level focal point to oversee its research, 
nor does it have a strategic plan that presents an integrated 
framework for research across the surface modes.
    Last week, we issued a report on DOT's intelligent 
transportation system program. During ISTEA, ITS has received 
about $1.3 billion in Federal funds to enhance the safety and 
efficiency of surface transportation through the advanced use 
of computer and telecommunications technology.
    However, DOT's vision of widespread deployment of ITS 
systems has not been realized for several reasons. First, it 
has taken time to develop the national architecture and 
technical standards that are necessary to define the components 
of an ITS system and how they work together. The architecture 
was completed last July and the standards will not be completed 
until the year 2001.
    Second, States and urban areas have insufficient knowledge 
of ITS. And finally, limited data on the cost effectiveness of 
ITS and competing priorities for limited transportation dollars 
will constrain ITS deployment.
    Before DOT can aggressively pursue widespread deployment of 
integrated ITS, it needs to first assess the current obstacles 
facing the program and help State and local officials overcome 
these obstacles.
    Turning to innovation in finance, we reported in October 
that State Infrastructure Banks, or SIBs, offer the promise of 
helping to close the gap between transportation needs and 
available resources by potentially expanding a fixed amount of 
Federal capital, often by attracting private investment. A SIB 
would operate much like a bank and could use Federal funds to 
get its financing started. The financing offered could range 
from loans to various credit options, such as loan guarantees 
and lines of credit.
    Since financing could be tailored to fit individual project 
needs, projects could be completed more quickly, some projects 
could be built that would otherwise be delayed or infeasible, 
and private investment in transportation could be increased. 
Furthermore, repaid SIB loans can be recycled, and as a source 
of funds for future transportation projects.
    DOT approved 10 States to participate in a pilot program, 
and 28 additional States have applied for SIB participation. 
Despite this heightened interest, barriers remain to 
establishing and effectively using SIBs. For example, one 
barrier is the small number of projects that can generate 
revenue and thus repay loans that are made by the SIBs. The SIB 
program is new, and thus too early to assess how effectively 
SIBs will help to meet transportation needs.
    The last point I want to discuss concerns the use of 
design-build contracting. This approach differs from the 
traditional design-bid-build method, since it combines rather 
than separates responsibility for the design and construction 
phases of a highway project. Proponents of design-build note 
that this approach can speed up project completion, provide for 
better accountability for cost and quality, and reduce 
administrative and planning expenses, because fewer contracts 
would be needed.
    FHWA is currently evaluating design-build contracting. But 
its authority to implement design-build is limited. Also, while 
17 States have laws that prevent its use, State interest in the 
design-build approach is rising. According to FHWA, as of 
January 1997, 13 States have initiated about 50 design-build 
projects under the Agency's special program. FHWA still 
consider this approach experimental and an overall assessment 
remains limited by the small number of design-build projects 
that have been completed.
    Mr. Chairman, this concludes my statement. We'd be happy to 
answer any questions.
    Senator Warner. Thank you very much.
    You've identified in your testimony that ISTEA provided 
$3.5 billion for surface transportation research, of which $1.3 
billion has been dedicated to ITS technology. Did your analysis 
examine any issues relating to competition for these fund?
    Ms. Scheinberg. For the $3.5 billion?
    Senator Warner. Yes.
    Ms. Scheinberg. About three quarters of that money, 75 
percent of the Surface transportation research, was conducted 
by the Federal Highway Administration. And the second----
    Senator Warner. Competition? The question is, let me go 
over it again, you identified in your testimony, ISTEA provided 
$3.5 billion for surface transportation research, of which $1.3 
billion was dedicated to ITS. Did your analysis examine any 
issues relating to competition for these funds?
    Mr. Christoff. One of the questions--we did not look 
specifically at the question--for example, $1.3 billion for 
ITS, was that too much, was that too little? One thing I think 
we found when we looked at just the overall research program 
for the Department, is that the questions of is there too much 
in highways or too little in transit or too little in the 
Federal Railroad Administration, it's a difficult decision for 
us to make. Certainly is difficult for the Department, because 
No. 1, they don't have a focal point to try to bring everything 
together, and they don't have this strategic plan that would 
answer that kind of question.
    Senator Warner. Let me try again. Of the allocation of the 
$1.3 billion, did you look at competing, in other words, if the 
contracts were competed for the ITS?
    Mr. Christoff. No.
    Senator Warner. All right. Could you go back and do that?
    Mr. Christoff. Certainly.
    Senator Warner. I think that would be helpful for us to 
determine the overall sum and if that's adequate or inadequate, 
that given, factoring in competition.
    Ms. Scheinberg. OK.
    Senator Warner. Later we'll hear from ITS America proposing 
that States be required to use 5 percent of their Federal aid 
apportionments on ITS technologies. In your view, with the lack 
of acceptance by the States for ITS, would this be a productive 
way to see more deployment of ITS technologies?
    Mr. Christoff. I think some of the challenges that we cited 
in our report address the question of how far do you push 
deployment and if you impose anything on the States for 
deployment. The biggest challenge right now is that many States 
don't even know what is an integrated ITS system. They 
certainly don't understand the 8,000-page architecture that was 
issued last July. And they have to wait for many of these 
technical standards to be completed before they can make some 
wise investment decisions, do we invest in ITS, do we fill 
potholes.
    Senator Warner. Thank you very much.
    Senator Baucus.
    Senator Baucus. Thank you very much, Mr. Chairman.
    Why don't States understand?
    Ms. Scheinberg. This is a brand new program to the States. 
As we mentioned, the architecture was just completed last July. 
The standards have not yet been developed and will not be 
completed for 5 years. This is, most of what's gone on so far 
has been research and some operational testing.
    There's a lack of data on cost effectiveness. It's not 
known what are the cost-benefit analysis of integrated ITS 
systems. And so States have been reluctant to spend money on 
ITS.
    Senator Baucus. But why is there a lack of data? Why is 
there a lack of cost-benefit analysis? Is the Department just 
perhaps not focusing enough on that part of it, or what?
    Mr. Christoff. Senator, that's in fact step two, according 
to our understanding of what the Department wants to 
accomplish. They recognize some of these impediments, and next 
year are requesting more focus on first training their own 
field staff within FHWA and FTA to better understand ITS 
technologies, since they're in the forefront, working with 
States, and also to try to train States to change a mind set to 
go from a civil engineering type approach to dealing with 
transportation problems to this telecommunications information 
management system approach, which is different.
    Senator Baucus. And you think the Department recognizes 
that?
    Mr. Christoff. There have been programs to address this 
issue of education and explaining what integration means in ITS 
systems.
    Senator Baucus. Because we all have a certain mind set, 
somewhat, depending upon our background and education, lawyers 
have their mind set, engineers have their mind set, 
psychologists theirs, public relations people theirs. No one is 
right. Just obviously, we need to develop these new 
technologies. It's equally obvious to me that more emphasis has 
to be spent on the communication side of it, so that States and 
other localities and the private sector is more involved in the 
development.
    What's your view of this new Federal line of credit? Is 
that needed?
    Ms. Scheinberg. Because the Department's proposal has not 
been announced, we have not been privy to any of the details. 
But in our work on looking at State infrastructure banks, we 
did not identify a need for a Federal line of credit.
    Ms. Pufahl. I think it's an interesting idea, though. When 
you asked earlier, you said you were not convinced that one was 
really needed. Potentially, it could be used for regional 
projects, and States that were not benefiting from State 
infrastructure banks could potentially benefit from the Federal 
credit programs.
    Senator Baucus. Is the problem with ITS, first you say the 
ITS program has not been as focused as perhaps it should be. Is 
part of the problem too many congressional earmarks? You said 
50 percent of ITS projects are congressional earmarks. And that 
seems to be, it undermines confidence in the program.
    Mr. Christoff. We heard that not just from the ITS joint 
program office, but I think from many researchers within the 
other modes, within FHWA, within FRA, that in some respects, 
the congressional earmarks do limit their discretion to try to 
come up with what's the best strategic approach.
    Senator Baucus. Because they're probably not always the 
best.
    Mr. Christoff. You know, it's interesting, oftentimes 
they've labeled congressional earmarks friendly and unfriendly. 
And many of those are ones that fit well into their own 
approach, and others are ones that they feel compelled to do.
    Senator Baucus. What percent do they feel compelled to do?
    Mr. Christoff. Dr. Johnson once said to us it was about a 
60-40 split, with 60 percent friendly, 40 percent unfriendly.
    Senator Baucus. Thank you.
    Senator Chafee [assuming the chair]. Ms. Scheinberg, you 
indicated, first of all, you indicated that several States 
don't permit the design-build. I guess that's on page 8 of your 
testimony. Oh, no, on page 9. Survey identified 17 States that 
did not permit the use of combined design construction 
contracts. How is it, I suppose that's the small road designers 
that don't have a construction firm or the small contractors 
that will do a bridge or do a certain portion of it, but can't 
do the whole job, and don't have a design capability. They're 
afraid the Bechtels will get in there and squeeze them out.
    Is that why it comes about?
    Ms. Scheinberg. The traditional approach to constructing 
projects is that they are awarded according to sealed bid, and 
the lowest bidder gets the award. And that is incorporated into 
many of the States' laws, thus this is the way construction 
contracts are often awarded, to the lowest bidder.
    Because of that, it is not compatible with the design-build 
concept, where you negotiate the total project contract and 
that you talk about the design and it does not just go to the 
lowest bidder. The cost is only one component of the design-
build contract.
    Senator Chafee. In your testimony, you identified some of 
the impediments that prevent the benefits of these innovative 
programs being achieved. Should we make any changes in Federal 
law that you can suggest during the course of this 
reauthorization to remove some of the barriers? For example, 
for the best use of the ITS? Or the innovative financing, the 
State infrastructure banks?
    Ms. Scheinberg. Senator, the barriers that we identified in 
ITS, we believe very strongly need to be addressed before 
widespread deployment of ITS takes place. What needs to be done 
at the Federal level is providing training, as we mentioned 
earlier. Most State and local officials don't really understand 
how to integrate their separate ITS technologies.
    Senator Chafee. They all go off to these AASHTO meetings or 
whatever it is, this just can't be a secret. You know, and by 
the way, what I can't seem to get people to realize is we 
passed this law in 1991. It wasn't yesterday, it wasn't last 
year. And I, as I've mentioned previously to Ms. Johnson, I'm 
disappointed that more hasn't taken place. And I mean, are 
there State laws that in some way inhibit the use of toll 
booths that permit the cars to flash through or to have 
staggered hours to reduce traffic congestion?
    Ms. Scheinberg. We're not aware of State laws that prohibit 
the use of ITS components. But again, the standards for ITS 
have not been developed and are not planning to be completed 
until the year 2001. So there's a lot of work that's still 
going on on the basic ITS structure.
    Senator Chafee. I don't understand. What do you mean, 
standards have to be developed? Some standards, it's going to 
take until 2001?
    Ms. Scheinberg. These are the technical standards, the 
technical specifications that describe how the components talk 
to each other, communicate with each other and share data among 
the components. In order for the ITS to be truly effective you 
need to have an integrated system where the different 
components share the information and you can use information 
from one----
    Senator Chafee. So you do it nationally?
    Ms. Scheinberg. No, this would be metropolitan area, 
usually.
    Senator Baucus. Mr. Chairman, I just want to interject, the 
private sector does this so much more quickly. And I'm thinking 
of computer systems, network systems, with new technological 
advances which date one as opposed to some other, but they find 
a way very quickly. As the Chairman said, it just seems like 
it's an awfully long period of time that, in this project, to 
develop systems and share data.
    Senator Chafee. I think we put a man on the moon in a 
shorter period of time than that.
    [Laughter.]
    Mr. Christoff. Mr. Chairman, these standards are important, 
and it's a good reason why we need to get them out quickly. A 
State and locality doesn't want to buy something and then later 
on, find it's not going to fit with the architecture, it's not 
going to be compatible.
    Senator Chafee. Explain it in simple language, whereas, 
let's say in my State, we're trying to locate I-195. And let's 
say to pay for it, we're going to have some toll booths. And 
under the legislation that's coming up, that would be 
permissible.
    Now, what should they worry about and not do anything until 
2001 about intelligent transportation? Do you mean the type of 
credit card that's permitted to go through that booth?
    Mr. Christoff. Sure, if you want to travel the coast, and 
you're encountering electronic toll collections, you want that 
smart card that you have in your windshield to be able to work 
regardless of what State that you're in. And hopefully, your 
State will have developed and purchased electronic toll 
collection that meets the standard and fits into the 
architecture.
    Senator Chafee. So therefore, nothing can be done until 
2001?
    Mr. Christoff. No. No, States are developing electronic 
toll collections. It's interesting, electronic toll collection 
predates the ITS program. It's not a new innovation. It has 
been used and States have been using it. And for some States, 
they might have to face the question possibly of just 
retrofitting what they have put in place to meet the 
architecture and the standards.
    Senator Chafee. Senator Graham.
    Senator Graham. Thank you, Mr. Chairman.
    I'd like to ask questions in two areas. The first is 
sparked by the front page of Monday, March 3 U.S. Today, the 
lead story is Bridges of the 21st Century. And if you could 
excuse a little pride in parochialism, I'd like to read the 
paragraph. It says, Florida's Sunshine Skyway Bridge combining 
technology and beauty, is an example of the bridges of the 
future. I happen to have had something to do with that bridge. 
And the reality is that the Federal Government was more an 
inhibitor rather than a facilitator of building that bridge, 
including the requirement that there be a design of a bridge in 
steel over Tampa Bay before we could build a bridge in 
concrete, which everybody knew was the material of choice. But 
the Federal requirement was that we had to do it both ways.
    I think there's a basic assumption in articles like the one 
I quoted earlier from Neil Pierce that all innovation comes 
from Washington, and that unless Washington is a motivator, 
that we'll be stuck in the 19th century. The fact is, that is 
contrary to what this bridge illustrates, and I think thousands 
of other examples.
    So I guess my question is not what the Federal Government 
is doing to promote innovation, but what is the Federal 
Government doing to get out of the way of other peoples' desire 
to be innovative. Could you cover those issues, and do you have 
some recommendations of what we should do to clean out Federal 
inhibitions to State and local inhibitions?
    Ms. Scheinberg. Senator, I want to just commend Florida for 
being innovators, and you're absolutely correct in taking pride 
in those innovations. One of the things that the Federal 
Government can do is disseminate information and share the 
information across States. Because rather than having each 
State recreate and having to go through the learning curve on 
its own, one of the roles that the Federal Government can play 
is to share those success stories and to share that 
information.
    Senator Graham. Some would share the shock and surprise of 
Senator Chafee, that is not being done now?
    Ms. Scheinberg. Not to the extent we think it should be 
done.
    Senator Graham. I thought one of the reasons we had this 
big Federal Highway Department was to do that, disseminate the 
best practice. I thought it was supposed to be the land grant 
college of transportation, researching, developing and 
disseminating the best practices. That's not happening?
    Ms. Scheinberg. It happens to some extent, but not as much 
as it could be. And we think it could happen much more.
    Senator Graham. Do you have some recommendations of what we 
could do to get the Department into that land grant college 
mentality?
    Ms. Scheinberg. In our various reports, we have made 
recommendations that have encouraged DOT and its modes to go 
out and disseminate information. Almost every time we look at 
an individual program, it seems that the States do not know 
what's going on elsewhere.
    Senator Graham. Well, I'd be interested, and I have not had 
an opportunity to see your report, maybe it's already captured, 
in two lists, first, those things that the Federal Government 
currently is doing which are inhibiting State and local 
innovation, and second, those things the Federal Government is 
not doing which could encourage and promote innovation.
    Ms. Scheinberg. Absolutely.
    Senator Graham. The second area that I wanted to ask, if I 
have the time, Mr. Chairman, is, we talked about this at an 
earlier hearing. And again, it's in this same Neil Pierce 
column, how far behind we're getting in meeting our 
transportation needs. In the Pierce column of January 12, the 
former Secretary of Transportation, Federico Pena, is quoted as 
saying that the annual investment shortfall of the United 
States is at least $17 billion to maintain highways and $7 
billion in mass transit.
    There is not a number given for the areas of congestion 
avoidance. But I would assume that's a substantial number as 
well. So in those two categories of maintenance and mass 
transit, we are $24 billion a year of disinvestment, that is 
failing to spend the amount necessary to keep pace.
    How much of that $24 billion, and let's specifically focus 
on the $17 billion in highway maintenance do you think could be 
met by these innovative techniques? Is there a way to shrink 
the disinvestment pace through innovation as well as the old-
fashioned way, which is to put more resources behind solving 
the problem?
    Ms. Scheinberg. Right. We definitely think that innovative 
financing techniques hold promise to shrink needs.
    Senator Graham. I would think that innovative financing 
would lead to congestion problems. Do you think they can also 
be used to meet the maintenance problem?
    Ms. Scheinberg. Probably not.
    Ms. Pufahl. Well, actually, I think that the figures that 
you refer to, which comes from the needs report, is based on, 
when they talk about maintaining, it's maintaining the 
condition and the performance of the roads. Sometimes a 
project, such as an overlay and adding another lane, could 
potentially accommodate both needs, and it could be an 
innovative project supported through a SIB.
    Senator Graham. I'd like to see an analysis, and I think 
that you are probably in the best position to do this, of what 
would be required to maintain a steady state in terms of 
maintenance of our existing system and the level of congestion 
as it currently exists. It's not going to get any better, but 
it's not going to get worse And then how much of that need can 
be met through the traditional methods of finance that we have? 
And then what is the potential contribution in maintenance and 
in congestion avoidance that could be met by innovations, 
either spending our current money better, smarter, or in some 
new ways of financing, which primarily are going to mean that 
we're going to be adding an additional source of revenue by 
people paying tolls?
    That's not a cost avoidance, it's a shift of cost from 
paying it at the pump in gasoline taxes and paying it at the 
toll booth when you drive your car through. But has anybody 
done that sort of macro analysis of what it would take to keep 
the system from degrading further through innovation, 
alternative financing mechanisms, or other ideas?
    Ms. Scheinberg. No.
    Senator Graham. If not, would you be willing to assume that 
challenge?
    Ms. Scheinberg. The problem is that there's not much 
information now on the potential impact of innovative financing 
techniques because they have not been used in transportation to 
the extent that you can really make good predictions.
    Senator Graham. Well, I don't understand that. My State, 
which is the fourth largest State in the country, one-third of 
all the lane miles that we have built in recent years have been 
toll-financed. That's not an insignificant amount of 
construction in a very big State. You mean that we don't have 
enough laboratory from big States like Florida and California, 
which have used tolls extensively to extrapolate as to what 
their potential might be on a national basis?
    Ms. Pufahl. I think it would probably vary on a State and 
regional basis. And you know, as far as assessing what is 
needed to maintain our transportation infrastructure, it would 
be a very difficult task. One of the things that we noted in 
one of our reports is, if $1 in maintenance is not made when 
it's needed, then 2 years from now, it's going to cost $4.
    Senator Graham. Frankly, I was one of the handful of people 
who voted against ISTEA in 1991. The principal reason I voted 
against it was because, we were making the clear, unvarnished 
statement to America that we were going to have a worse 
transportation system at the end of ISTEA than at the beginning 
of ISTEA. And by God, we delivered on that commitment.
    And I don't want to pass another extension of ISTEA with 
the same understanding that we're going to have a worse 
transportation system in the year 2003 than we have today. It 
seems to me that in order to avoid that, we need to have a 
clear understanding of what it's going to take to at least keep 
the system from continuing on its decline, and then what 
combination of traditional revenue sources, our chairman has 
recommended an expansion of those traditional sources by 
legislation that he and Senator Bond have introduced. The 
chairman of the subcommittee has recommended even a greater 
amount of traditional resources.
    But even those two enhancements are still going to fall 
many billions of dollars short of what it will take to keep the 
system from degrading. So then we need to look, how do we add 
some new revenues through tolls and other forms of user fees, 
and how can we reduced the cost of maintaining the current 
system by being more innovative and smarter.
    I think we need to have that kind of strategic plan as a 
beginning point, looking at reauthorization of ISTEA or we're 
going to have to stand up before the American people in the 
next few months and say, again, we're absolutely certain you're 
going to have a worse transportation system 6 years from now 
than you've got today. I don't want to have to deliver that 
message.
    So again, could GAO help us in doing that sort of strategic 
analysis?
    Ms. Scheinberg. Yes, Sir.
    Senator Graham. Thank you.
    Senator Chafee. Thank you.
    Ms. Scheinberg, I think it's very interesting in your 
statement here where you talk about design-build and some of 
the reasons that it hasn't caught on. And construction service 
is being awarded to the lowest bidder after dosing is complete. 
It's very interesting what you have to say there. You say 
design-build contracting, while becoming increasingly common in 
the private sector for facilities such as industrial plants and 
refineries, does not yet have an established track record in 
transportation in the United States. However, the experience is 
now being gained through the 50 projects under the Highway 
Administration's special project, along with the Federal 
Transit, and so forth.
    So there is a record being build. It seems to me that 
dosing-build has a lot of potential, and I would hope that we'd 
see more of it in the future.
    Any other questions?
    Senator Baucus. Just briefly, Mr. Chairman. We heard the 
Department testify somewhat in response to your report. What 
have you heard that gives you more comfort, and what did you 
hear that still gives you concern?
    Ms. Scheinberg. From the Department?
    Senator Baucus. From the Department's answers that somewhat 
touched on points you made in your report.
    Ms. Scheinberg. Right. One of the points the Department did 
make is that SIBs need seed money. When we went out and talked 
to people about setting up SIBs, the people who were applying 
originally for the pilot program that was set up by the NHS 
bill, and the States not applying, one of the messages we got 
from the States is that there was no new money attached to the 
pilot program, and that's why more States weren't coming 
forward.
    When the Congress appropriated $150 million in the 1997 
Appropriations Act, 28 additional States applied for SIBS. So 
that is something that we heard a year or so ago, and now there 
is a fruition that the States are coming forward.
    Senator Baucus. Again, what did you hear that gave you 
comfort, what did you hear that gave you concern? Or is 
everything just hunky-dory now?
    Mr. Christoff. Well, it's not hunky-dory. But let's talk 
about ITS. I think you're going to be making a critical 
decision about ITS in the next ISTEA as to whether we're going 
to begin paying for deployment. And clearly, if you look at the 
Department's fiscal year 1998 budget, it has $100 million in it 
for deployment activities, and we're sort of at a critical 
edge. We're moving away from the research and testing phases of 
the ITS program, and DOT wants to move into deployment.
    I think what we've found is that there still are a lot of 
important questions to address about the ITS program before we 
start paying for deployment. States and localities need to have 
more information about whether ITS is going to be a good 
investment when they have so many other priorities that they 
confront on a daily basis. Maybe we have to address those kinds 
of concerns and get the technical standards out quickly before 
we start paying for widespread deployment.
    Senator Baucus. Mr. Chairman, I just want to thank the GAO. 
You all are referenced, as you know, a lot by the press. And 
it's always been positive, it's always been sort of a standard, 
of a watchdog of what's going on, which puts an even greater 
burden on you. I want to first thank you for all that you've 
done, and second, encourage you to keep your high integrity, 
because it's so important.
    Ms. Scheinberg. Thank you very much, Senator Baucus.
    Senator Baucus. Thank you.
    Senator Chafee. On that high note, thank you all very much 
for coming.
    And we'll move to the last panel, Mr. Gerald Pfeffer, Mr. 
Dan Flanagan, Mr. James Costantino, and Mr. Robert Skinner.
    And we'll start with you, Mr. Pfeffer, if you'll lead right 
off as soon as people have taken their seats. Mr. Pfeffer is a 
senior vice president of National Infrastructure Company, and I 
think you do a lot of this intelligent highway system stuff, 
don't you? Go ahead.

 STATEMENT OF GERALD S. PFEFFER, SENIOR VICE PRESIDENT, UNITED 
                     INFRASTRUCTURE COMPANY

    Mr. Pfeffer. Thank you, Senator Chafee, and good morning, 
members of the Senate Subcommittee on Transportation and 
Infrastructure.
    My name is Gerald Pfeffer. I'm head of surface 
transportation at United Infrastructure Company, a partnership 
of Bechtel and Kiewit. We develop and finance toll roads, 
airports and water facilities. With your permission, I have 
submitted written testimony and I would like to keep my remarks 
brief.
    I'd like to make three key points. First, private investors 
stand ready to rapidly deliver innovative, popular solutions to 
our Nation's surface transportation problems. Second, our 
experience shows that American motorists will pay market prices 
to avoid congestion. And third, Federal leadership is needed to 
achieve the maximum benefits.
    Since 1990, our parent companies have arranged over $11 
billion worth of financing. Billions more are available for the 
right opportunities. In ISTEA, Congress took the first steps to 
encourage private highway financing, but only a handful of 
projects have been realized. Additional policy changes are 
needed to maximize the opportunity.
    To illustrate this approach, I'd like to describe a project 
that really shows what can be done given the right backing. 
Information on this and other projects is included in my 
testimony. You may see this particular brochure.
    Senator Chafee. I have several brochures. What's that one 
labeled?
    Mr. Pfeffer. It's part of a package with a black cover, 
Senator. We hold a franchise to finance, build and operate the 
91 Express Lanes in Orange County, CA. We opened this project 
to service a year ago. We've added four lanes in the median of 
State Route 91, the Riverside freeway, for a 10-mile stretch 
from Anaheim to the Riverside County Line. That's one of the 
most congested in the country.
    The $126 million project is the world's first fully 
automated toll road and America's first test of congestion 
pricing. There's not a dollar of Federal or State money in this 
project. In fact, we'll spend about $120 million for 
maintenance and police services that would otherwise have been 
paid by the taxpayers.
    We depend on technologies that literally did not exist a 
few years ago. Here are a few of our innovations. The 91 
Express Lanes is a toll road without toll booths. Using 
electronic transponders like this, we deduct tolls from our 
customers' accounts, non-stop, at 65 miles an hour. That 
eliminates some of the safety concerns that were expressed 
earlier. In response to your earlier question, Senator Chafee, 
the 91 is the first toll road in the United States to vary 
tolls with demand. Off peak, we charge as little as 50 cents. 
During peak hours, our toll rates go up to $2.75 for the 10-
mile stretch.
    And Senator Graham, you referred to a recent cover story in 
U.S.A. Today. Just above the bridge story is an article 
labeled, ``Commuters Pay to Hit Fast Lanes.'' And they're 
talking about this project.
    We're the only toll road in the world that offers a 
guarantee. We even have a frequent drivers program. Later this 
year, we're planning to start using our transponders on a test 
basis in a drive-through restaurant.
    To provide quality service, we monitor operations from our 
own privately funded state-of-the-art traffic management 
center. And we respond to incidents with our own private fleet 
of tow trucks.
    We use the design-build method you're asking about. That 
absolutely saved us time and money and it improved the quality 
of our project. As an example of how we saved time and money, 
we built a $2 million temporary bridge in order to reconstruct 
a busy interchange while continuing to carry 250,000 cars a 
day. That shaved 13 months of the State's construction 
schedule.
    What do our customers, your constituents, think? Before we 
opened our new lanes, the freeway was stop and go 6 hours a 
day. Our customers now report time savings of 20 minutes each 
way. Even those who stay on the outer free lanes benefit, since 
traffic is flowing better than it has in years.
    We've distributed more than 80,000 of these transponders, 
and are adding over 100 customers a day. When asked what we 
could do to improve the 91 Express Lanes, our customers' most 
frequent response is, ``Make it longer!''
    We've shown that private funds and innovative technologies 
can help reduce gridlock. Americans will accept new methods of 
financing and operating our highway system. But to make more of 
these projects a reality, we need additional enabling 
legislation. We urge you to include the following provisions in 
the reauthorization bill. We applaud your bill, Senator Chafee, 
S. 275, a pilot program to test the use of tax-exempt debt on 
privately financed transportation projects. That would have 
saved us $3 million a year in financing the 91 project, savings 
that we could have passed through in lower tolls to our 
customers.
    The Transportation Credit Program could help to improve the 
attractiveness of projects to Wall Street and further lower the 
debt cost by getting better rates. We strongly support the 
concept of tolling new and reconstructed segments of the 
interstate system. They're not going to get fixed any other 
way.
    We need to standardize the laws and procedures under which 
we develop these projects and under which they are approved.
    My written testimony includes several other additional 
recommendations.
    As head of a company that invested millions to reduce 
gridlock in one of America's busiest freeways, I can say 
without hesitation that public-private partnerships offer a 
win-win-win opportunity. They're good for the public sector, 
they're good for private investors, and most of all, they're 
good for our Nation's motorists. By encouraging the States to 
pursue these partnerships, Congress can trigger billions of 
private investment.
    Mr. Chairman, thank you for allowing us to share our views 
with you. I'd be happy to answer any questions.
    Senator Chafee. Thank you very much. And we'll have the 
questions when each has testified.
    Mr. Dan Flanagan and I had the privilege of going together 
to see the magnetic levitation train outside of Bremen. It was 
a very unusual trip, and I enjoyed being with you. Go to it, 
Mr. Flanagan.

 STATEMENT OF DANIEL V. FLANAGAN, JR., CHAIRMAN, COMMISSION TO 
         PROMOTE INVESTMENT IN AMERICA'S INFRASTRUCTURE

    Mr. Flanagan. Thank you, Senator.
    Indeed, for those in the audience, that is being financed, 
the Hamburg-Berlin line for mag-lev, on a public-private 
partnership basis. And I think that reflects the general 
interest in that concept as we go forward.
    I'm here today as chairman of the Infrastructure Investment 
Commission, which was a provision of the 1991 ISTEA 
legislation. Listening to the comments earlier, I feel like our 
report is part of that linkage and we report to you today on 
how to make ISTEA work better. I'm also mindful of when our 
report was issued in 1993 that the Construction Writers 
Association awarded us their annual award for the innovative 
finance thinking that we had brought forward at that time. 
Essentially, it's the credit enhancement issues that we're 
talking about today.
    I'm also pleased to see legislation introduced in the House 
and the Senate that mirrors our recommendations, and I'm very 
excited about what I understand will be in the Department of 
Transportation's ISTEA proposals, having to do with Federal 
infrastructure credit programs to promote public-private 
partnerships.
    There's a lot of good ideas out there in the private 
sector, including research/technology, etc. But the essential 
issue, as we looked at the situation, was this. Private capital 
is very anxious to invest in American infrastructure, as it is 
doing today abroad in other countries. Unfortunately, it is 
difficult here in the USA in terms of market entry. The risks, 
inherent in what has traditionally been a public monopoly, are 
indeed something that has to be recognized. And a risk 
mitigation strategy has to be brought forward. And that 
requires the sponsorship from the Federal Government. I believe 
that the private sector will eventually enter these markets. 
But at the beginning, there has to be Federal leadership.
    I would like to read, from our report, as to what we would 
recommend.
    No. 1, and of course, this is what is entailed in Rosa 
DeLauro's legislation that she commented on earlier. A National 
Infrastructure Corporation would be authorized to promote 
infrastructure investment by evaluating and offering several 
forms of financial assistance and technical advice to 
infrastructure projects with self-supporting revenue potential 
through State revolving funds.
    The SIBs, as it were, have evolved as those revolving 
funds. And they would be the clients of the NIC. This would be 
a wholesale, sophisticated strategy. And the Infrastructure 
Insurance Corp., as a NIC sub, would provide a mix of direct 
insurance and reinsurance to issuers of senior debt on 
infrastructure projects that existing bond insurers and other 
credit enhancers cannot or will not ensure.
    This is new territory, preconstruction finance. There is 
construction finance available readily, and I've had Lloyds of 
London and others come up to me and say, we do what you're 
talking about, and when you get into it, you find that what 
they're talking about is construction risk, i.e., weather 
delay, etc., not preconstruction where you're into forecasting 
ridership, revenue streams, etc.
    Insured debt of projects eligible for tax-exempt financing 
would as well, become similarly attractive to the municipal 
market. Insured debt of taxable rate projects would become 
similarly attractive to pension funds and other fixed income 
investors. We have over $4 trillion in pension fund assets 
today. They do not invest in American infrastructure, but they 
can if we start giving them products. And that's what they told 
us in our hearings.
    The Corporation would charge premiums and operate on a 
self-supporting basis. As Congresswoman DeLauro mentioned this 
morning, eventually there's a payback mechanism. And this 
entity is self-sustaining. Within the insurance corporation 
would exist a finance division to lend directly to priority 
projects that have credit-worthy revenue projections but lack 
historical operating results, or to those that may not be able 
to demonstrate sufficient credit strength immediately. Such 
financial assistance would be available on a basis subordinate 
to other lenders in a manner similar to that authorized by 
Congress in the Intermodal Surface Transportation Act of 1991, 
but not yet utilized by the States.
    Subordinate debt would be recycled within a few years as 
projects are constructed to achieve operating stability and can 
be refinanced. Loan repayments would allow the corporation to 
function as a revolving loan fund.
    I should mention, there's a lot of confusion about 
leverage. Revolving funds traditionally recycle public dollars. 
And you get a leverage factor of about two to three times. And 
that's good. But what we're talking about here is using public 
dollars, Federal funds, for credit enhancement so that private 
capital will come into these projects. That's new.
    And there you're talking about real leverage, because it's 
the private capital coming in of 10 times and up to 18 times as 
we grow the system. And this is what's done all over the world, 
frankly.
    A development insurance service would provide insurance 
subject to appropriate retention of risk by the project sponsor 
to cover the initial development phase of projects where 
permitting, financing feasibility and regulatory approvals 
prove to be specific risks. The corporation would work to 
provide services to public and private project sponsors as 
domestic versions of the Overseas Private Investment 
Corporation.
    We're ensuring American investment overseas. We need to 
start ensuring it in our own country.
    The National Infrastructure Corporation will seek to become 
self-sustaining by charging fees for its services and by 
receiving project loan repayments. Among the other mechanisms 
the Corporation would consider are loan guarantees and 
assistance to infrastructure revolving funds, the SIBs. The 
Corporation's funding activities could be leveraged further as 
it issues its own debt obligations to investors. In other 
words, securitization.
    At some point, you can start bundling projects and issuing 
new securities based on a taxable yield equivalent. Pension 
funds testified they will buy those securities, and in these 
tranches of investments would be these kinds of projects. This 
is being done every day in REITs, etc. It has not been done, 
though, in our traditional norms of infrastructure.
    The Infrastructure Insurance Corporation recommended by the 
commission would offer institutional investors the opportunity 
to participate as equity investors. They would invest in this 
insurance company along with the Government. You don't want the 
Government to be the total owner of this, because you cannot 
credit enhance as a Government entity in its entirety. But the 
Government would be a 49 percent, whatever the right figure is, 
and I am confident that other pension fund investors would 
invest in that same entity to provide insurance services, 
because they are looking for alternative investment 
opportunities in the United States.
    And this is something they're interested in, to see more 
product out there that they can look at. As the insurance 
company enhance senior debt up to the highest investment grade, 
institutional investors would find it easier to participate 
directly in projects financed by purchasing long-term taxable 
rate debt instruments.
    The commission's attempt to identify a new infrastructure 
security would be attractive to both project borrowers and 
pension investors, as new options for both taxable and tax-
exempt rate securities. Pension funds clearly indicated the 
desire to have an option to invest in a new infrastructure 
security paying competitive rates of return, as I mentioned.
    The commission recognized that project sponsors who are 
eligible for tax-exempt financing generally will seek funding 
in the municipal market rather than the taxable bond market, 
precluding any meaningful participation by pension funds and 
other institutional investors. However, there are many projects 
which for legal or market reasons will seek taxable debt 
financing.
    Aside from investing in individual project loans, 
guaranteed through the corporation's bond insurance program, 
institutional investors will have an opportunity at a later 
stage to invest in taxable debt securities; and those could be 
issued through the SIBs.
    It would be to me a good way to do it, with the NIC playing 
the role of the credit enhancer that says to the market, we 
have looked at the SIBs portfolio of infrastructure 
investments, that tranche. We know it's there, we know it's 
paying on its obligations, and we are prepared to put our 
credit rating, which we have earned in the marketplace, forward 
as an imprimatur on that particular tranche of investments.
    Senator Chafee. Mr. Flanagan, could you wind up?
    Mr. Flanagan. I'm sorry, Senator.
    So conceivably, you would have State of Florida 
infrastructure bonds paying 8 percent that would be bought by 
institutional investors around the country.
    Senator this will provide a number of advantages: leverage, 
quality of investment, new technology in terms of R&D, risk 
transfer, which I think is very important, and will address the 
issues of the rural and urban concerns. In other words, the 
grant programs, the grant moneys, can focus on those areas 
where these projects can pay their own way.
    I would also like to say, just as a personal note, I have 
been involved in five different major deregulations in this 
country, ranging from electricity to telecommunications. And it 
strikes me that what we're talking about here in infrastructure 
is very similar. We need to have market entry. We need to 
deregulate infrastructure in many ways.
    Thank you, Mr. Chairman.
    Senator Chafee. Thank you, Mr. Flanagan.
    And now, Mr. Costantino.

 STATEMENT OF JAMES COSTANTINO, PRESIDENT AND CEO, ITS AMERICA

    Mr. Costantino. Thank you, Mr. Chairman, for the 
opportunity to speak before you today.
    ITS technologies are poised for national deployment. But 
this effort requires the continued leadership of this Congress 
and the Federal Administration to ensure that deployment occurs 
in a truly integrated, inter-operable and intermodal manner 
across the United States. According to a recent study by the 
Texas Transportation Institute, Americans lose 2 billion hours 
a year in traffic congestion, at a cost to the economy of $51 
billion annually in lost productivity. In 10 years, traffic 
will increase by 30 to 50 percent, while highway mileage will 
increase only slightly.
    ITS technologies offer the ability to meet this growing 
traffic demand while improving safety, efficiency and cost. In 
this morning's testimony, there was some question about where 
these benefits are and what they are, and DOT will provide this 
committee with a handout of selected ITS projects and ITS 
benefits.
    We don't suggest that ITS is a replacement for continued 
investment in new or reconstruction in highways, bridges and 
transit systems. But ITS will certainly make them work better, 
more efficiently and more economically. Many ITS technologies 
are coming into use today, although we may not always think of 
them as ITS. In fact, in 1995 alone, over $1 billion was spent 
by States with regular Federal aid highway funds for several 
components of ITS infrastructure. And I have a map here also 
provided by the Federal Government, which shows these States 
and where these projects are located.
    Senator Chafee. Could you give us an example of a typical 
investment might be?
    Mr. Costantino. It might be a toll road, it might be a 
traffic management system, like we have in Maryland and like we 
have in Virginia, like we have in Minneapolis. It might be any 
kind of an information system where travelers are provided 
information through signage on highways in real time. It might 
be any number of the ITS technologies.
    In its role as a utilized Federal advisory committee to 
DOT, ITS America has promulgated a national goal for deployment 
of ITS technologies. The goal states: ``To complete deployment 
of basic ITS services for consumers of passengers and freight, 
transportation, across the Nation by 2005.'' To date, over 30 
national organizations, many with differing perspectives and 
policies on transportation, along with over 200 other public 
and private organizations, have endorsed this national goal. 
It's an ambitious goal, but it is achievable if there is a 
national deployment effort as part of ISTEA's successor bill.
    In conjunction with the Department of Transportation, ITS 
America recently conducted a study on the future market and 
economic impact of achieving the national goal. In the next 20 
years, it is expected that the overall national market for ITS 
products and services will total more than $430 billion. 
Approximately $90 billion of that is for public infrastructure. 
The remainder would be coming from the private sector. Early 
public investment, however, from the public sector, is 
essential.
    The study also concluded that overall benefit to cost 
ratios are on the order of eight to one, for every public 
dollar invested, $8 would be returned. Achieving the national 
goal will also generate almost 600,000 jobs.
    The experience of the Federal Aviation Administration and 
the aviation industry in years back points out that training in 
new technologies and systems early on will enhance and speed up 
the deployment of new technologies. We are just beginning to do 
for surface transportation what we did so well for air travel.
    ITS America has developed a set of nine ISTEA 
reauthorization principles, included in my submitted statement. 
We believe ISTEA's successor bill should support the national 
goal for ITS deployment by creating a soft set-aside of 5 
percent of each State's Federal Trust Fund apportionment for 
deployment of ITS. To opt out or modify this requirement would 
require only a formal or public action by a State or local 
official.
    The only condition for the funding, if used for ITS 
deployment, would be compliance with national standards for 
inter-operability. We have no interest in imposing additional 
onerous mandates on State and local governments. But we do 
believe that a strong Federal role is essential if we are to 
achieve the standardized, integrated and orderly deployment of 
ITS that we seek.
    The national ITS initiative is now ready to move to the 
deployment stage, and we ask that the ISTEA follow-on act 
include ITS in it. I would be pleased to answer any questions 
you may have.
    Senator Chafee. Well, thank you very much, Doctor.
    Now, Mr. Robert Skinner.

   STATEMENT OF ROBERT E. SKINNER, JR., EXECUTIVE DIRECTOR, 
  TRANSPORTATION RESEARCH BOARD, NATIONAL ACADEMY OF SCIENCES

    Mr. Skinner. Good morning, Mr. Chairman, members of the 
subcommittee.
    My name is Robert Skinner, and I am the executive director 
of the Transportation Research Board. TRB is an independent, 
nonprofit organization that is part of the National Research 
Council, which in turn is the operating arm of the National 
Academies of Sciences Engineering.
    Senator Chafee. Where does your funding come from, Mr. 
Skinner, for your organization?
    Mr. Skinner. It comes from a variety of sources, but about 
half of the total funding of the Transportation Research Board 
is State funds, about 40 percent Federal, and the remainder is 
from other sources, including private.
    Senator Chafee. So the States would contribute and belong 
to your organization, have dues or whatever?
    Mr. Skinner. That's correct. States have voluntarily 
supported our core support activities for 50 years.
    Senator Chafee. Thank you.
    Mr. Skinner. Our mission, in brief, is to promote 
innovation and progress in transportation through research. 
Innovation requires much more than just good research. But good 
research is often a prerequisite for innovation in 
transportation, as it is in other fields.
    My comments today will focus on highway research 
initiatives. I will also make some brief remarks about barriers 
to innovation and innovative finance. The written testimony 
that I have provided includes comments on transit and rail 
research in which we are also engaged.
    In 1992, TRB convened a special expert committee to provide 
an independent, ongoing assessment of the research and 
technology program of the Federal Highway Administration, as 
well as other highway research initiatives. In 1994, the 
committee published an overall appraisal of highway industry 
research. By industry, they meant the Government agencies that 
construct and maintain and administer America's public highways 
as well as the private companies that provide services, 
materials, and equipment used by these agencies.
    I'd like to highlight several committee findings and 
recommendations, beginning with how highway research is 
organized. The U.S. highway industry is highly decentralized. 
Nearly 40,000 public agencies administer portions of the 
highway system with the assistance of tens of thousands of 
private companies. Our highway research and technology programs 
are also fairly decentralized. FHWA sponsors in-house and 
contract research. Most States have research programs and pool 
research funds for a national cooperative research program. 
Many universities carry out highway research programs. And 
private sector trade groups and large companies sponsor and 
conduct research. Although complex, these decentralized 
research programs have served us well because they allow 
potential users of research results to participate at many 
different levels and encourage close links between users and 
researchers.
    Now, let me turn to the research topic areas and 
priorities. Our committee closely examined research-related 
spending in fiscal year 1993. Based on its analysis, the 
committee urged that the research program be less conservative 
and more comprehensive. It recommended more support for high 
risk, but potentially high payoff, research that seeks 
breakthroughs in highway technology. It recommended more 
research that takes a long-term view of the highway 
transportation system and its interaction with other modes, 
land use, the environment, and the national economy.
    Altogether, the committee estimated that less than 6 
percent of the research and technology expenditures for 1993 in 
the major public-sector research programs were directed toward 
these areas. This figure has probably increased since then, as 
ITS-related research has increased. Nevertheless, the 1993 
figures are indicative of a problem, or missed opportunity, 
that goes beyond any one topic area of highway research.
    The committee also looked at the overall level of 
investment in highway research and technology. Budgets for the 
major public sector research programs have increased 
significantly since the early 1980's. But when expressed as a 
fraction of all industry expenditures, total research in 
technology spending was on the order of 0.3 percent in 1993, 
well below the investment levels of even so-called low-tech 
private sector industries.
    Recently, the committee turned its attention to highway 
research related to air quality. Specifically, research aimed 
at helping State and local agencies evaluate the impact of 
transportation actions on urban air quality goals. In a report 
released in January, the committee concluded that the 
prediction models and data bases mandated for determining 
compliance with air quality goals are inadequate and lack 
credibility among State and local transportation officials. To 
address these inadequacies, it called for a research program 
that would be cooperatively undertaken by the Department of 
Transportation and the Environmental Protection Agency.
    The transportation field faces special challenges in moving 
good ideas from the lab to practice--challenges that stem from 
decentralization, but also the lack of market incentives, which 
drive innovation in other sectors.
    Recently, another TRB committee looked specifically at 
barriers, such as procurement practices that slow the pace of 
innovation in the highway industry. The traditional low-bid 
approach to procuring highway goods and services with highly 
prescriptive specifications, gives the private sector few 
incentives to innovate. Last fall, this committee released a 
report calling for a concerted public-private effort to 
accelerate innovation and explore new approaches, such as 
design-build, warranties, life cycle costing, and construct-
ability reviews. Some efforts are already under way, but more 
experimentation with these approaches is needed.
    In the area of innovative finance, TRB has organized a wide 
array of activities addressing various aspects of this topic. 
To conclude my remarks, I will mention just one. In 1994, a 
special TRB committee completed a detailed study of one form of 
innovative finance, peak period or congestion pricing on 
highways. In brief, the committee concluded that congestion 
pricing is technically feasible and would produce a net benefit 
to society. It acknowledged, however, that the lack of public 
and political support is a significant barrier to 
implementation and recommended an incremental approach with 
small-scale experiments that might build public support over 
time. The committee specifically recommended that the Congress 
extend the congestion pricing pilot program of ISTEA when the 
legislation is reauthorized.
    I thank you very much for this opportunity to appear and 
look forward to your questions.
    Senator Chafee. Thank you very much, Mr. Skinner.
    I want to say that, from what I've gotten out of this 
testimony today is, overall discouragement. I think that for a 
variety of reasons, I suppose Mr. Skinner summed it up best 
when he said because of lack of market incentives, there's not 
much effort to do anything creative or experimental. I think 
what the Federal Government's done is minuscule. And indeed, 
when you see the total--what's the total interstate mileage in 
the United States? Who knows? It's 43,000 miles. And I suspect 
that on that 43,000 miles, there are precious few miles that 
have anything like you've got on the cover of your program 
here, your brochure, Mr. Pfeffer.
    So I don't know what it is. Now, let me ask you this, Mr. 
Pfeffer. The folks here from the Federal Government were 
testifying that they need until 2001 to set the standards. 
Where does that leave you with your, you've got your 91 Express 
Lanes. You went ahead. What were you meant to do, wait until 
2001?
    Mr. Pfeffer. We made the business decision to go ahead and 
deploy technology which complies with the California statewide 
standards. That State decided not to wait for Federal 
standards, but went ahead and developed its own. Because there 
are a lot of toll facilities in California, even though the 
State is often thought of as the land of the freeway. Many 
California bridges, for example, are toll-financed.
    And because there was some legislative foresight in that 
State, they said, let's go ahead, take advantage of the 
technology that's becoming available. When the Federal 
standards become available, we can retrofit. And we consider 
that to be a reasonable business expense.
    In fact, this technology becomes obsolete every 3 or 4 
years, with the passage of time, with new techniques. And so 
it's a business cost to us.
    Senator Chafee. With your transponder, can you go someplace 
else?
    Mr. Pfeffer. Yes, Sir. Our tags are already accepted on 
other publicly funded toll roads in California. They'll soon be 
accepted on the toll bridges in California. And other States 
have adopted the California standard.
    Senator Chafee. I'm sure that out there in my State or 
whatever State it might be that once you talk design-build, all 
kinds of hackles go up, because I presume that the local 
company that's been doing the designing of our highways would 
not qualify, because they don't have a build capacity.
    Second, you're running against the low bidder concept, 
which you know is pretty well established in every highway, in 
all State purchases. Because at least, you give some assurance 
that somebody isn't giving a bribe to somebody to get somebody 
in the State to get the deal to the State purchasing agent.
    How do you overcome that resistance?
    Mr. Pfeffer. Well, I think the market is working very well, 
Senator, in that regard. What we're finding is that in fact 
design-build creates lots of opportunities for small and medium 
size firms as well as the giants you mentioned. A lot of States 
are adopting design-build. For example, right now the State of 
Utah has got a design-build procurement underway for the 
reconstruction of Interstate 15 through Salt Lake City. They're 
trying to do that before the Winter Olympics in 2002. And they 
recognize that the traditional methods just would not get the 
project done in time.
    But they've made very clear, they expect to see local 
content, they expect to see local firms get a part of that 
work. And the large firms that are leading those consortia have 
pledged substantial amounts of the work will go to local firms. 
There is a bid involved in that, a price has been put on the 
table, and the State of Utah is evaluating the various prices 
and comparing them to their procurement requirements.
    Senator Chafee. Explain how that works. Take in the State 
of Utah for this highway they're going to build. First, they've 
got to get specs out that people can bid on. Then your 
consortium of Bechtel and Kiewit, you know, you're not small 
potatoes. It's two of the biggest construction companies in the 
United States.
    So you will submit a bid, will you, on that Utah proposal? 
Will somebody else submit a bid?
    Mr. Pfeffer. Yes, Sir.
    Senator Chafee. And then what? So it's a low bidder 
proposition or is it negotiations with the State?
    Mr. Pfeffer. The process that Utah has adopted involves 
submitting a bid in response to a set of very detailed 
specifications for the project. But they recognize, they 
brought the project along to about 25 or 30 percent of the 
level of design that you would want to have in order to 
complete construction.
    That last 70 percent is mostly filling out the details, 
what we can do more effectively by having the design firm and 
the construction firm work together, instead of in the 
adversarial roles that historically they've been in. What that 
results in is higher quality, and it also ensures that what 
gets built is built in a timely manner. Because we don't have 
to wait for the final set of plans in order to start the rough 
grading, movement of dirt, and other coarse activities.
    Now, the process can be tailored to a specific State's 
procurement requirements, so that they do have assurance of 
competitive pricing and full transparency, that this isn't 
something that's going on behind closed doors.
    Senator Chafee. Well, it seems to me, my time's up but I'll 
just ask one more question, it seems to me that--how do you 
come out with your innovativeness? Say you're going to use 
concrete instead of steel. And this is the best way to do it, 
but would the specs say you have to use steel?
    Mr. Pfeffer. Some States have recognized----
    Senator Chafee. And if that's all done, how is that any 
different from just coming out with a regular highway bid which 
is, in my State and I'm sure Senator Graham, when he was 
Governor, it's the same, you come up with the specs and you go 
out to bid, and you come back with the low bidder and he gets 
the job.
    Mr. Pfeffer. What that misses is the opportunity for true 
collaboration between the design and the construction people. 
It misses the opportunity for the contractor to say, ``Well, 
yes, we could build it that way, but did you think about 
changing this method?''
    The Sunshine Skyway is a good example of a bridge that had 
a traditional procurement process been adopted, we probably 
wouldn't have that beautiful structure that's there today in 
Tampa Bay. What that State said was, give us some alternates, 
in addition to what we think is the right way to design it, 
we're open to an alternative from the contractor. And the 
contractor went out and hired a designer who helped him come up 
with what ultimately turned out to be a lower cost and better 
looking structure that they were able to complete sooner.
    Senator Chafee. My time's up.
    Senator Graham.
    Senator Graham. Mr. Chairman, I want to commend you for 
this hearing today. This has been one of the most interesting 
couple of hours on a very important subject that I have spent 
recently. And I particularly think that the four gentlemen who 
are before us have given us many good ideas.
    Mr. Skinner, I'd like to ask a question that goes back to 
some comments that were made by the previous panel to the 
effect that there was an inadequate dissemination of new ideas 
among the State, and therefore, States were slow to pick up on 
the best practices. I found that to be a rather stunning 
commentary. What's your assessment of the degree to which the 
States are in a position to understand, have tested information 
and then apply that to current highway projects?
    Mr. Skinner. Let me first acknowledge, this is a bit of a 
self-appraisal. When my organization was established in 1920, 
it was specifically to provide means for States to exchange 
information, technical information, about highway design 
practices for the new motorized traffic era.
    So I think that in fact the commitment of the States is 
there to participate in research and technology and share 
information. There is a substantial barrier. You almost can 
never do enough to disseminate information among States, and 
between the Federal Government and the States.
    The problem is, not only is our transportation system 
disaggregated and we have 50 States, but the State 
transportation agencies themselves are disaggregated with 
thousands of employees distributed to districts and localities 
throughout their States. So there is an enormous training, 
technology transfer problem. I think that the States recognize 
this. They do indeed have committees concerned with technology 
issues through their own association, AASHTO. They sponsor a 
cooperative research program in which they pool their money, 
and they select the projects. The research program is actually 
administered by my organization. We put together panels that 
take their topics, and then turn them into requests for 
proposals so that there's a competitive selection. Our panels 
select the contractor and then oversee the work.
    So I don't disagree that there's a substantial 
dissemination problem. But I do think that the States are aware 
of that problem.
    Senator Graham. One of the things that we've seen in other 
aspects of the economy which have or are undergoing 
deregulation, such as the trucking industry, the airline 
industry, and now the utility industry, is the cultural change. 
If your management has been oriented toward submitting your 
costs and having then a price structure developed by regulatory 
agency which is cost plus some profit, that's a different 
mentality than having to go out to the marketplace and having 
to figure out what the customers want, how you and produce the 
product at a price they're willing to pay and be successful.
    What is the state of culture in transportation, and what 
from the experience of these other industries could folks in 
our position as we look at this new Federal legislation, do to 
help in the transition from a traditional regulated culture to 
a more competitive deregulated innovative culture?
    Mr. Flanagan. Senator, if I could take a shot at that. 
During the course of our hearings on the Infrastructure 
Commission, I personally was also engaged in the electricity 
deregulation issue. What was interesting to me is, when we 
looked for testimony in terms of the Infrastructure Commission, 
we were seeking project finance expertise. We wanted American 
firms to come in and talk to us about project finance, how do 
you put a deal together.
    We could not find American firms in 1992 that were engaged 
in the project finance sector. We had to bring in European 
banks to explain it to us.
    Today, it's fascinating to me that with the passage of the 
Energy Policy Act and the creation of the independent power 
industry we now have a burgeoning project finance industry in 
the United States supporting the IPP's activities overseas and 
here in the United States, and entrepreneurial activity is 
spurring research, development, etc., in the private sector, 
and bringing on new energy plants, which I think is analogous 
to what we're talking about here.
    We do have a project finance industry now. What we need, as 
with cogeneration, are incentives on the Federal side. It's 
this risk mitigation issue, credit enhancement, development 
risk insurance, so that these developers stay in there, can 
insure their risk, to come into this market and to start 
exploring what their opportunities are, and to bring their own 
entrepreneurial instincts to it. It's to grow the pie. The 
credit toll card activities were spurred by private sector 
involvement. And now the DOTs around the country are taking 
that on and using that.
    So competition is a good thing between the traditional and 
the newcomers. So I think we really should face up to it, we 
are talking about a deregulation strategy for infrastructure. 
We need to provide credit enhancements for private capital to 
come in, market entry. Just as you have the ITTs or the MCIs 
and the Sprints, we now want the U.S. infrastructure 
corporations.
    Senator Chafee. Mr. Pfeffer, I've listened to Mr. Flanagan, 
and I'm not sure I could repeat exactly what he said through it 
all, but I get the drift, I get the pitch, I think, which is 
basically to have a public-private corporation that would have 
risk insurance. Is that about it, it's an insurance company?
    Mr. Pfeffer. Yes, Sir.
    Senator Chafee. Yet you've gone ahead, your company has 
gone ahead without that. What do you think of what Mr. Flanagan 
is saying?
    Mr. Pfeffer. Well, we support the concepts that were 
included in Mr. Flanagan's commission's original report, and 
the concepts that we believe the Administration will include in 
their draft legislation, to recognize that the process of 
developing a project is one of the riskiest of all. It is 
ironic that, in fact, I can buy development risk insurance from 
an arm of the U.S. Government to develop a toll road in Borneo, 
but not in California.
    We face the same risks, we're required to go through 
exactly the same procurement processes regulatory processes 
such as environmental approval, that a public agency is. And 
all too often what happens is a decision is made not to proceed 
with a project.
    What the insurance program that's been proposed would 
acknowledge is that not every project that starts down the road 
to development gets to a financial closing, and it acknowledges 
that some share of the responsibility for that ``no build'' 
decision rests on the public side, because it's a public policy 
decision. And the program would compensate people who put their 
money at risk at some fraction of their investment, say 25 or 
50 cents on the dollar. And we would buy insurance, in turn, 
that would be paid by the successful projects, to recognize 
that there is still a high mortality rate in this fledgling 
industry.
    Senator Chafee. Take, when you built this 91 out there, 
here's my concern. In my State, let's say they went to your 
company to build this new section of I-195 that they want to 
relocate. And yet I have in my State small contractors who 
normally would be bidding on a bridge, for example, one bridge 
of the project. And yet in you come with Bechtel and Kiewit. 
What would happen to my small--and they're not tiny, they're 
not two-bit operators, but they're not Bechtels either. What 
would happen to them?
    Mr. Pfeffer. There are some fine contractors in your State, 
Senator. And what we see happening across the country is that 
we try to associate with the best in each State. Because we 
don't bring in hordes of equipment or employees from other 
locations. A large part of our work is subcontracted out to 
local contractors. And we get a good price from them, because 
they like working with us. They know that we pay well, that we 
pay on time, and that we manage our projects as efficiently as 
we can.
    But ultimately we wind up with them as partners or as 
subcontractors. And there's plenty of potential work there, 
plenty of capability there in the industry. What's missing is 
the money to make these projects work. Today it takes the large 
contractors like us to advance the costs of developing these 
projects.
    Senator Chafee. Well, I want to thank everybody on the 
panel very much, Mr. Skinner and Dr. Costantino, Mr. Flanagan 
and Mr. Pfeffer. Although we didn't ask questions of everybody, 
we've got your statements here, and it was extremely 
interesting. I just hope we do, your ideas are adopted across 
the country and that things happen. As I say, I've been 
discouraged that more hasn't happened.
    But I don't think it's, the thing I don't understand is the 
suggestion that we need Federal money to get these things 
going. It would seem to me that on their face, they're 
worthwhile doing. Because if you can get everybody to move 
through the tolls faster, if you can have congestion mitigation 
setups, then everybody wins. The county or the State doesn't 
have to build a big new highway, they don't have all the 
motorists complaining all the time.
    What about that, Doctor?
    Mr. Costantino. If you recall, I said that in practically 
every projection that's been made of what this program would be 
worth over the next 20 years, the number $400 billion, $450 
billion keeps coming up. Eighty percent of that is from the 
private sector. We are promoting for this program, unlike the 
Interstate Highway Program, public-private partnerships to do 
that work.
    The Federal Government doesn't have enough money to provide 
all of the funding for the program, but does through innovative 
financing techniques that these gentlemen have referred to. And 
through the opportunity to pull the public and private sectors 
together, that is the person who has the need for 
infrastructure or whatever it might be, and the private sector 
people who have money and the investment community is one of 
the roles that I feel ITS America has taken on for itself.
    We have to remember, however, that we're dealing with a 
large, very large technology program, and the United States has 
only been in that program for the last 6 years. I believe, in 
looking at what's been done, that enormous progress has been 
made in that kind of a program. The Europeans and the Japanese 
are 20 years ahead of us, and we're playing catchup in many 
areas.
    Senator Chafee. It seems to me that it isn't all built 
around tolls, either. If you have, I had submitted with Senator 
Warner and others legislation that would permit the private 
outfits to issue tax-free bonds. Then if you get that, plus 
this design-build concept, which, you know, you don't have to 
be a Phi Beta Kappa to understand that. It seems to me you 
could build your roads, get the job done for less money. Am I 
missing something here?
    Mr. Pfeffer. You are absolutely right, Sir. But there are 
some other legal impediments that we need help with. For 
example, I literally could not apply the 91 Express Lanes 
concept today to an interstate highway. It's illegal. We cannot 
use toll financing, even if we're trying to reconstruct a 
segment of interstate highway or build a new portion of the 
interstate system, because today that's prohibited under 
Federal law.
    Senator Chafee. Except you heard they're going to come up 
with legislation to permit that.
    Mr. Pfeffer. And we strongly support that.
    Senator Chafee. What else?
    Mr. Pfeffer. At the State level, the States need to adopt 
their own enabling legislation to make this work. Because we've 
built up, over the past 100 years, since the reform movement, 
all sorts of checks and balances to keep the public sector and 
the private sector from working together as partners. And as we 
get closer and closer to realizing that we don't have all the 
money that we used to have to pay for these things, we're going 
to have to break those barriers down.
    And ISTEA reauthorization gives us a unique opportunity to 
send a signal to the 50 State houses that Congress recognizes 
that the interstate highway era is behind us, that the era that 
this ISTEA will cover is an era of partnerships, and that laws 
need to be adopted at the State level to mirror the ones at the 
Federal level to encourage partnership structures.
    Senator Chafee. OK. Thank you all very much for coming. It 
was a very good panel.
    That concludes the hearing.
    [Whereupon, at 12:20 p.m., the committee was adjourned, to 
reconvene at the call of the chair.]
    [Additional statements submitted for the record follow:]
    Prepared Statement of Hon. Mortimer L. Downey, Deputy Secretary 
                           of Transportation
                              introduction
    Good morning, Mr. Chairman, Senator Baucus, and members of the 
committee. On behalf of Secretary Slater, I thank you for the 
opportunity to discuss innovation in transportation. When Congress 
passed the Intermodal Surface Transportation Efficiency Act (ISTEA) in 
1991, it recognized that our transportation system faced daunting 
challenges: rapidly increasing travel, an aging and deteriorating 
infrastructure, environmental and air quality problems caused by the 
transportation system, and the need for greater efficiency and better 
connections between transportation modes.
    ISTEA increased infrastructure investment to record levels to help 
meet these challenges, and the results are visible in new and expanded 
highways, transit systems, and intermodal facilities. However, Congress 
recognized that Federal finding alone could not meet all of our needs, 
nor would construction always be the right solution. Consequently, 
ISTEA also promoted innovation: new technologies, new ways of financing 
projects, and new ways of doing business.
    ISTEA is now in its sixth and final year, and as we prepare to 
reauthorize its programs we are reviewing how its initiatives have 
fared. The consensus opinion, as discerned from more than one hundred 
outreach sessions, focus group discussions, and other meetings with our 
constituents, is clear: ISTEA is working well, and needs only modest 
refinements, not major reforms.
    No aspect of ISTEA received greater approval from our constituents 
than its promotion of innovative approaches to transportation. 
Consequently, our reauthorization proposal will build on the foundation 
laid by ISTEA to sustain our existing commitment to innovation by 
establishing new infrastructure funding initiatives and technology 
deployment programs.
    My testimony on how ISTEA's programs have worked reviews several 
areas where innovation has flourished: transportation project finance; 
new approaches to contracting; advanced materials and project methods; 
intelligent transportation systems; and other research and development 
activities.
    I understand that safety will be the subject of an upcoming hearing 
to be held by this committee and that the Department will have the 
opportunity at that time to present testimony on how ISTEA has fostered 
innovation in transportation safety.
    We will also be addressing environmental issues at a future 
hearing, but I would like to briefly note our progress in addressing 
environmental concerns. ISTEA created two innovative and successful 
environmental programs, the Congestion Mitigation and Air Quality 
Improvement Program (CMAQ) and Transportation Enhancements Activities 
(TEA) funding, which increased State and local officials' ability to 
target funds to projects that help their communities. CMAQ has proven 
to be one of ISTEA's most flexible programs, and our proposed changes 
to this program would make it easier for areas that do not meet 
particulate matter standards to receive CMAQ funds. Under the TEA, 
States have carried out projects that help transportation facilities 
fit better into communities, by preserving historic transportation 
facilities, building bicycle and pedestrian paths, and mitigating storm 
water runoff. In our reauthorization proposal, we are recommending 
codifying the requirement that these activities have a direct link to 
surface transportation. Under these two programs, ISTEA has stimulated 
hundreds of successful projects that prove that transportation can 
enhance the environment.
                           innovative finance
    Transportation providers face a difficult challenge today: the gap 
between needed infrastructure investment and available resources is 
significant and growing. In response, we have been actively encouraging 
the development of innovative ways to attract new sources of capital to 
infrastructure investment and to eliminate inefficiencies in program 
delivery that add to costs. Innovative financing is an umbrella term 
used to describe these objectives, and it encompasses a wide range of 
strategies targeted at cutting red tape to move projects ahead faster 
and at leveraging Federal funding with private and nontraditional 
public sector resources.
    These strategies grew out of both ISTEA and President Clinton's 
Executive Order 12893, ``Principles for Federal Infrastructure 
Investments,'' which instructed Federal agencies to promote innovation, 
encourage private sector participation in infrastructure investment and 
management, and use Federal funds more efficiently.
The Partnership for Transportation Investment
    Experimental provisions within ISTEA led to the development of 
innovative solutions for project finance shortcomings including the 
extension of loans to fund projects with potential revenue streams and 
the development of the turnkey approach to transit project delivery 
which focuses on advancing new technology and lowering the cost of 
constructing new transit systems.
    Two years ago, we announced the Partnership for Transportation 
Investment, a pilot program which built upon ISTEA's provisions 
regarding these strategies and others, such as toll credits for State 
matching funds and the Federal reimbursement of bond financing costs.
    To date, the Partnership has included over 70 projects in more than 
30 States with a total construction value of over $4.5 billion, 
including more than a billion dollars in new capital directly 
attributable to this program. Many of these projects are advancing to 
construction on an average of 2 years ahead of schedule.
    For example, the State Highway 190 Turnpike project in Texas, 
delayed for three decades by inadequate funding, is underway because 
Federal funds have reduced the State's borrowing costs and strengthened 
its access to the capital markets. This $700 million project, which 
will help to link four freeways and the Dallas North Tollway, used $135 
million in State-loaned Federal funds to support highly rated, revenue-
backed bonds. This support will reduce loan and bond repayment costs 
(resulting in lower tolls for drivers) and will allow this project to 
be completed 11 years earlier than through conventional financing.
    The Massachusetts Bay Transportation Authority was granted advance 
construction authority to issue bonds to rebuild its heavy rail 
maintenance facility. This $236 million project was undertaken 30 
months earlier as a result, with immediate construction savings of over 
$50 million. In addition, each repair and overhaul undertaken after 
1996 will take up to one-third less time to complete.
    The Turnkey procurement process is being successfully implemented. 
For example, in New Jersey, on the Hudson-Bergen project, bids had to 
include a grant anticipation note to cover the shortfall between the 
construction cash-flows and grant receipts. The Turnkey manager for the 
project will provide a letter of credit for up to $200 million over a 
3-year period which will be backed by the U.S. Department of 
Transportation and the New Jersey Transportation Trust Fund.
    With an innovative financing grant, the Mississippi department of 
transportation leveraged an additional $1.5 million in economic 
development funds and local debt with which it is building two regional 
transportation centers to serve eight rural counties. These 
transportation centers will provide 20 percent more transit service 
with no increase in operating costs.
    In Missouri, as a result of the Partnership for Transportation 
Investment, the department of transportation and an entrepreneur joined 
forces to install fiber-optic cable within the highway right-of-way. 
This cable will be used for private telecommunications services, but 
also will serve, at no cost to the State, as the backbone of a 
statewide intelligent transportation system.
    Also through the Partnership for Transportation Investment program, 
the State of Ohio, the City of Cincinnati, and Norfolk Southern formed 
a partnership to carry out the construction of 3.5 miles of new track 
and the improvement of four rail bridges. The project, two-thirds of 
which was funded by Norfolk Southern, has alleviated congestion on rail 
lines and at grade crossings within a 60-mile radius of Cincinnati. As 
a result, this project has helped the region to reduce pollution and 
meet its air quality goals.
    In Stark County, Ohio, the State-supported construction of a $35.2 
million intermodal facility enables the transfer of freight between 
trucks and rail cars. A State loan of Federal-aid funds to the private 
developer who built the interchange made its construction feasible, and 
fees paid by facility users will repay the loan. The project has 
already attracted $24 million in private funds, and over the next 
decade could produce $500 million in new investment and 5,000 new jobs.
    A rail project, involving the City of Fort Collins, the State of 
Colorado, Burlington Northern Santa Fe, and Union Pacific, is 
consolidating and relocating track to eliminate 16 grade crossings 
throughout the city. In addition, new signals are being installed at 
several other crossings. These actions will enhance air quality, 
highway traffic flow, and rail-highway safety.
    In addition, the Chicago and Soo Line Railroad are jointly funding 
a $35.1 million project to improve access into and out of a major rail 
facility in Chicago with the railroad funding all but $2.1 million of 
the cost. The benefits of this project are estimated as a $2.6 million 
savings in reduced waiting time at rail-highway grade crossings in 
addition to the benefit of reduced pollution. Public safety will also 
be enhanced by the reduced exposure to trains at crossings, and 
additional capacity for Chicago commuter rail service will result from 
this project as well.
    In the National Highway System Designation Act of 1995 (NHS Act), 
Congress made permanent many of the experimental strategies used in 
these and other projects, and they are now a regular part of how we do 
business.
State Infrastructure Banks
    We are continuing to develop initiatives aimed at enabling States 
to leverage Federal dollars. Notable among these are State 
infrastructure banks (SIBs), which evolved from ISTEA's provision 
allowing States to loan part of their Federal grant funds to 
transportation projects. SIBs use Federal seed capital to leverage 
private and other non-Federal public investment through loans and 
credit enhancement assistance.
    Congress authorized a pilot program when it passed the NHS Act and 
provided $150 million in the fiscal year 1997 Department of 
Transportation appropriations act to fund SIBs in States participating 
in the program. Currently, SIBs have been approved for 10 States: 
Arizona, California, Florida, Missouri, Ohio, Oklahoma, Oregon, South 
Carolina, Texas, and Virginia.
    Ohio's bank is the most advanced, having already loaned Butler 
County $20 million to support a $100 million bond issue. Florida, 
Missouri, Oklahoma, and Oregon are expected to make loans by October 
1997. The following list of other projects to be supported by SIBs in 
the coming year illustrate the flexibility they afford to States 
seeking to tailor aid to the needs of specific projects.
    In Oregon, a SIB loan combined with commercial bank financing will 
reduce interest debt on vanpool leases in the Portland area and thereby 
save users 26 percent. This project will encourage ridesharing, with 
consequent decreases in congestion and air pollution.
    Missouri's Springfield Transportation Corporation will use a 
sequenced, two-loan strategy to speed up significantly a $33 million 
road construction project and to reduce interest costs. The first loan 
will enable pre-construction work to begin without waiting for the full 
Federal share of funds to be accumulated. The second loan, with below-
market interest rates, will finance the project's construction bonds, 
saving area residents several million dollars in interest costs.
    In addition, Missouri's SIB will use a Missouri department of 
transportation grant to capitalize its transit SIB account. The initial 
capitalization of $1 million will support a loan for the purchase of 
light rail vehicles for St. Louis' transit system.
    The SR 80 Interchange in Palm Beach County, Florida, will use an 
interest-free SIB loan to finance interest costs during construction 
and the first 5 years of operation, a period in which anticipated 
revenues from this toll project would otherwise be insufficient to pay 
its costs. After this time, revenues should be adequate to pay the 
construction debt, and the project will be able to sustain itself.
    These are examples of projects now in development. Our 
reauthorization proposal expands the number of participants in the 
State infrastructure bank program and provides additional Federal seed 
funding to help them get started.
Credit-Based Strategies
    SIBs are not the only financial strategies we have been exploring. 
We have worked to provide contingent loans for toll roads in Orange 
County, California and a direct loan to California's Alameda Corridor.
    These types of projects are of national significance because of 
this region's role as a global gateway, but might not have been 
feasible without the credit assistance provided by the Federal 
Government.
    In our reauthorization proposal, we would create a $100 million per 
year Federal credit program to target assistance to critical projects 
of national significance, including trade corridors, intermodal 
facilities, bi-State connectors, and international border crossings.
    This program would offer a cost-effective mechanism for financing 
important national infrastructure projects and would encourage more 
private and other nonFederal investment.
                         innovative contracting
    In examining ways to improve project delivery, we have actively 
encouraged the development of innovative contracting practices by 
working with State transportation departments to test practices that 
promise to reduce project life-cycle costs while maintaining quality 
and contractor profitability. Among the techniques which have been 
evaluated are design-build procurements, cost-plus-time bidding, and 
lane rentals.
Design-Build Procurements
    The design-build process gives the contractor maximum flexibility 
in the selection of design and construction methods. Under the design-
build approach, the contracting agency merely identifies a project's 
desired results and establishes minimum criteria for its design. 
Prospective bidders then develop proposals that optimize their work 
force, equipment, and scheduling to cut costs and enable innovation.
    Another significant benefit is the potential time savings resulting 
from design and construction being awarded under a single procurement 
which allows construction to begin before the design details are final. 
These contracts also reduce the State transportation staff required for 
projects, an important factor in an era of down-sizing.
    Fourteen States are carrying out experimental design-build 
projects: Alaska, Arizona, California, Colorado, Florida, Maine, 
Michigan, Minnesota, New Jersey, North Carolina, Ohio, Pennsylvania, 
South Carolina, and Utah.
    These projects range from pavement rehabilitation to bridge 
replacement to the construction of ferry boat facilities. For example, 
Utah is currently preparing to launch a $1.4 billion design-build 
project which will save 3 years in the expansion of I-15, a project 
undertaken to prepare for the 2002 Olympics.
    The benefits of design-built have been demonstrated in Florida 
where, in the 1980's, the State department of transportation 
administered a State-funded design-build project which was comprised of 
13 projects with a total contract value of $40 million. The results of 
this program indicated that the total completion time for design-built 
projects was up to 40 percent less than the time required to complete 
conventional design-bid-build projects.
Cost-Plus-Time Bidding
    Cost-plus-time bidding formally links the completion of 
construction projects with the cost of delays to system users. Cost-
plus-time bids reflect not only the estimated cost of construction but 
also the time required to complete the project. Contract awards are 
based upon both factors, which requires bidders to minimize 
construction-related delays.
    This strategy was used effectively in the reconstruction of the 
California freeways after the 1994 Northridge earthquake. Road user 
costs were reduced by approximately $47.7 million, and the total 
contract time for all 10 projects was lessened by 450 days.
    In addition, the New York State Department of Transportation 
(NYSDOT) let 24 cost-plus-time bidding projects between February 1994 
and August 1995. At the time of NYSDOT's 1995 interim report, nine 
projects had been completed, and the State estimated that the total 
cost savings for these nine projects was between $3 and $4 million.
    Twenty-seven States and the District of Columbia have tested cost-
plus-time bidding, and have reported good results: contract times have 
been reduced, costs have been acceptable, and quality has been 
maintained. It is now an accepted way of improving operations for 
Federal projects and is no longer considered to be experimental.
Lane Rentals
    Like cost-plus-time bidding, the goal of lane rentals is to 
encourage construction contractors to minimize impacts on system users. 
Under this approach, rental fees based upon the estimated cost of 
delays or inconvenience to users are included in construction 
contracts, and the contractor is assessed for the time that operations 
occupy the roadway and cause delays.
    Six States have experimented with lane rentals with varying degrees 
of success. Indiana, for example, experienced great success with an I-
70 pavement rehabilitation project that utilized the lane rental 
concept along with other innovative contracting concepts. As a result 
of the lane rental specifications, the contractor scheduled his work to 
minimize public inconvenience and completed the work 50 days ahead of 
schedule with a reduction in lane closures by more than one third.
    Like cost-plus-time bidding, lane rental is now an accepted way of 
doing business.
                  innovations in methods and materials
    Maintaining and upgrading pavement and bridges is crucially 
important, and we have worked through programs authorized by ISTEA to 
encourage the development and use of advanced building materials.
SUPERPAVE
    SUPERPAVE (Superior Performing Asphalt Pavements) consists of three 
related elements designed to increase the life of pavement: a 
performance-based asphalt binder specification, volumetric mix design 
and analysis using a gyratory compactor, and mix analysis tests and a 
performance prediction system-that reflects such environmental factors 
as weather. Taking these factors into account can lead to a significant 
increase in pavement life, and we have encouraged State agencies to 
obtain the training and equipment needed to take advantage of this 
innovation.
High-Performance Concrete
    We are working with State and local governments, universities, and 
industry to develop high-performance concrete, an innovation which 
offers significantly increased design life and durability. Use of high 
performance concrete will result in substantial first cost savings 
because bridges can be built with longer spans, fewer girders or beams, 
and longer life cycles. It already has been used to build a bridge in 
the Houston area, and a dozen other States have decided to begin using 
it in their bridge construction. Eight States also are experimenting 
with this concrete for pavement.
High-Performance Steel
    We are also sponsoring research in high-performance steel to 
improve the steel used in bridge construction. High-performance steel 
is tougher and more easily welded than steels previously available. Its 
improved weldability enhances the efficiency and reliability of the 
fabrication process, and its increased durability reduces the need to 
maintain or paint the structure it is used to construct.
High-Performance Composite Materials
    We have sponsored studies of the use of fiber-reinforced polymer 
composites to repair damaged bridges and to strengthen existing bridges 
against earthquakes. For instance, a broken concrete bridge beam 
repaired using composite material epoxied to its exterior was actually 
50 percent stronger than when new. Such methods can reduce repair and 
strengthening costs to just one-fourth to one-third of the cost of 
conventional methods. Since these materials are much lighter than 
traditional structural materials, foundations can be smaller, 
transportation costs are lower, and materials handling is easier during 
construction.
                   intelligent transportation systems
    ISTEA established the Intelligent Transportation Systems (ITS) 
program to further the development of advanced information and 
communications technologies across all of the modes to cut congestion, 
improve safety, enhance intermodalism, and reduce the environmental 
impact of growing travel demands. During the past 5 years, our 
activities through this program have laid the foundation for an 
information and communications infrastructure designed to facilitate 
management of the multiple transportation systems as one system for 
greater customer service.
    These ITS applications can reduce, by about 35 percent, the cost of 
the new infrastructure capacity we will need over the next decade, much 
as improvements in air traffic control have enabled us to handle more 
planes without adding new airports. For example, an ITS application 
enabling electronic clearance for trucks has been estimated to reduce 
the operating costs of weigh stations by up to $160,000 annually per 
State. In addition, through ITS deployments, government transit costs 
may be reduced by an estimated $3 to $7 billion over the next decade.
    ITS applications also have the potential, through radar-based 
collision-avoidance systems, to improve safety. Crash avoidance systems 
are expected to reduce accidents by 17 percent, saving thousands of 
lives and an estimated $26 billion per year in direct and indirect 
costs to our communities. In addition, through the application of 
global positioning satellite systems, ITS applications can help to 
track freight throughout the shipping process, improving the efficiency 
of ``just-in-time'' deliveries.
    Under the authority provided by ISTEA, we are working with State 
and local governments and the private sector on a program of research, 
architecture and standards creation, and technology transfer and 
training to accelerate the development and deployment of ITS 
technologies.
    These efforts have produced a national ITS architecture and five 
cooperative relationships with technical standards developing 
organizations. These efforts will ensure that ITS programs will be 
nationally compatible and interoperable by helping to break down the 
modal and institutional barriers which otherwise could hinder ITS 
development. They will encourage integrated deployment by public 
agencies and foster investment by entrepreneurs otherwise unwilling to 
make commitments without stable markets.
    We have already seen successes, such as those in Minneapolis, where 
reduced congestion has improved freeway speeds by 35 percent and where 
lives are being saved because emergency response times have been 
reduced by 20 minutes. In California, ITS has lessened traffic 
congestion significantly through the Automated Traffic Surveillance and 
Control (ATSAC) system which controls traffic on streets feeding into a 
highly congested portion of the Santa Monica freeway to balance traffic 
demands between the freeway and parallel arterial streets. The reported 
benefits of this ITS application have been impressive, including a 13 
percent reduction in travel time, a 35 percent reduction in vehicle 
stops, a 14 percent increase in average speed, a 20 percent decrease in 
intersection delay, a 12.5 percent decrease in fuel consumption, and a 
10 percent decrease in harmful emissions.
    Other successful applications of ITS technology include the 
electronic payment of transit fares which has saved New Jersey, for 
example, an estimated $2.7 million in labor costs. In Lexington, 
Kentucky, coordinated computerized traffic signals have reduced ``stop 
and go'' traffic delay by 40 percent and reduced accidents by 31 
percent between 1985 and 1994. The use of ITS technology by Maryland 
has enabled a Montgomery County cable station to show traffic 
conditions of major highways in 180,000 homes and consequently reduce 
congestion by steering commuters and others away from the more crowded 
routes. In Oklahoma, electronic toll collection has resulted in savings 
of more than 90 percent per lane, annually, and through Kansas City's 
transit management system implementation, transit officials have 
reduced operating costs by $400,000, have avoided $1.5 million in new 
bus purchases, and have cut the response time to emergencies from 4 
minutes to 1 minute. In addition, Seattle's implementation of ramp 
metering has kept traffic moving and cut accident rates by more than 60 
percent, despite an increase in traffic levels.
    We are building on such early successes through Operation 
Timesaver, which is aiding State and local governments in creating a 
national ITS infrastructure to cut urban travel times by 15 percent 
over the next decade. We have taken the first steps with model 
deployments of integrated travel management systems in four 
metropolitan areas, and of commercial vehicle intelligent systems in 
eight States.
    In addition, we have actively encouraged the development and 
implementation of ITS applications for rural transportation systems. 
Research and development activities currently underway include 
evaluation and identification of advanced traveler information systems, 
development of motor vehicle safety warning systems utilizing, for 
example, in-vehicle emergency notification systems to alert a network 
of responders, and development of comprehensive traveler information 
systems, incorporating road, transit, weather, and value-added 
information for an entire geographic region.
    In the longer term, we are exploring the concept of a truly 
automated highway system. This activity will greatly enhance 
transportation safety in the future, and will also, in the meantime, 
engender innovations increasing the safety of operations on our 
existing roads and vehicles. I would also like to report that we will 
meet Congress's mandate to demonstrate the feasibility of such a system 
through a test on San Diego's I-15 this August. Another innovation 
under development is a fully integrated, intelligent vehicle designed 
to deliver the right information to the driver at the right time.
    To build upon these ground-breaking developments, our 
reauthorization bill includes incentives to assist metropolitan areas 
in integrating their ITS infrastructure, as well as major training, 
standards, and technical assistance programs to support State and local 
officials in the deployment of ITS for metropolitan as well as rural 
and commercial uses.
    This proposal also would establish a program to continue research 
and to support deployment activities such as standards development, 
training, and technology transfer. This research component also would 
support automated highway system research and the continued development 
of in-vehicle collision avoidance capabilities associated with 
integrated intelligent vehicles.
                    other transportation innovations
    We are working to improve train operations through the application 
of the Global Positioning Satellite System, digital data radios, and 
onboard supervisory computers. Not only will these technologies improve 
safety, they also will enhance freight productivity today and enable 
the implementation of safe high-speed passenger and freight operations.
    Our Advanced Public Transportation Systems program uses ITS 
technologies to improve transit efficiency and customer service. It 
supports such applications as automatic vehicle locators, onboard and 
wayside passenger information links, electronic fare collection, and 
automated dispatch systems for demand-response services. For example, 
through this program, the first technical standard for vehicular data 
communications in ITS applications was developed. This standard will 
make it possible for many different hardware designers and data 
providers to develop and deploy in-vehicle information and automated 
vehicle tracking systems that can function together to provide driver 
and passenger information, as well as vehicle and fleet management 
data.
    Advanced train controls are being developed to enhance the safety 
of passengers, engineers, and maintenance crew in rapid rail systems. 
As transit ridership increases, the transit system must install more 
rail sets and run these sets more closely together. To counteract the 
resulting risks, sophisticated signaling and control systems have been 
developed. Such systems can identify obstructions on the right-of-way 
which are imperceptible to the engineer and can signal a malfunction in 
a train's subsystems when the train is still in motion. In addition, 
they can bring a train to a safe, controlled stop in the event that the 
engineer becomes incapacitated.
    The Advanced Technology Transit Bus (ATTB), also known as the 
Stealth Bus because of the space age composites and methods use to 
build it, is currently being tested. With an expected useful life of 25 
years, the ATTB is expected to reduce maintenance costs per mile by 50 
percent. It will be one-third lighter than existing buses, thus 
reducing wear on road surfaces, and with its hybrid electric engine, it 
will cut emissions by over 60 percent.
                               conclusion
    The innovations made possible by ISTEA are improving operating 
efficiency, cutting operating costs, and increasing the useful life of 
transportation facilities and equipment. We will see their benefits 
well into the next century.
    We now must build on the accomplishments of the last 6 years by 
reauthorizing the many programs which work, refining those programs 
which have not yet fully realized their promise, and creating new 
initiatives which apply what we have learned from implementing ISTEA. 
We will submit our reauthorization proposal very shortly, and we look 
forward to working with Congress to make it a reality.
    Mr. Chairman, that concludes my statement, but I would be happy to 
answer any questions.
                                 ______
                                 
              ITS America ISTEA Reauthorization Task Force
                    ISTEA Reauthorization Principles
    These principles regarding Intelligent Transportation Systems in 
national surface transportation reauthorization legislation were 
prepared by the ITS America ISTEA Reauthorization Task Force and were 
approved on January 16, 1997 by the ITS America Board of Directors and 
forwarded to the U.S. Department of Transportation as utilized Federal 
Advisory Committee formal program advice.
    1. ISTEA II should support the National Surface Transportation Goal 
for ITS, which is to complete deployment of basic ITS services for 
consumers of passenger and freight transportation across the Nation by 
2005. This goal should be supported by providing that an amount 
equivalent to at least 5 percent of total surface transportation 
outlays be invested in ITS applications unless the appropriate 
officials (non-Federal) formally waive or modify the goal for their 
area.
    2. ISTEA II should continue to support an aggressive Research and 
Technology program. This program should emphasize system integration of 
ITS vehicle and infrastructure technologies for all modes.
    3. The Intelligent Transportation Systems Program should be 
structured in such a manner as to maximize long term predictability and 
stability.
    4. To create maximum flexibility, ISTEA II should clarify and 
expand the eligible uses of program category funds to allow for 
training, operations and maintenance of ITS technology, in addition to 
ITS capital expenditures.
    5. ISTEA II should require regular reports to Congress on the 
status of deployment toward achieving the National Goal. The report 
should address specific progress as well as performance and 
effectiveness.
    6. ISTEA II should encourage the use of innovative financing 
techniques, especially public/private partnerships, in the deployment 
of ITS, including construction, operations and maintenance.
    7. Federal funding should be reserved for those ITS purposes which 
are not being carried out by private investment.
    8. ISTEA II should eliminate barriers to ITS deployment by 
encouraging the use of innovative and flexible methods for procurement.
    9. ISTEA II should continue a targeted Federal role, in partnership 
with the private sector, in the rapid development of consensus-based 
ITS standards, stimulation of ITS markets, and essential research and 
development. To ensure interoperability, Federal funding should only be 
eligible for ITS systems with components that are consistent with the 
adopted model architecture and, where they exist, conform to adopted 
standards.
                                 ______
                                 
             Intelligent Transportation Society of America,
                                                  January 31, 1997.
Hon. Rodney Slater, Secretary-Designee,
U.S. Department of Transportation,
Washington, DC.
    Dear Mr. Secretary Designee: In ITS America's capacity as a 
utilized Federal Advisory Committee, I am transmitting advice or behalf 
of the Board of Directors regarding the Intelligent Transportation 
Systems Program within the reauthorization of the Intermodal Surface 
Transportation Efficiency Act (ISTEA) of 1991.
    In January 1996, the ITS America Board of Directors created an 
ISTEA Reauthorization Task Force, chaired by former Congressman and 
Board Member Norm Mineta, to develop a set of Reauthorization 
Principles as ITS America policy. The Task Force was comprised of both 
private and public sector representatives from the ITS community. From 
the Department of Transportation, representatives from FHWA's ITS Joint 
Program Office assisted greatly with our efforts.
    At the end of last year, the Task Force finalized a set of ISTEA 
Reauthorization Principles, which were unanimously adopted by the Board 
on January 16, 1997 with instructions that the Principles be forwarded 
to the Department of Transportation as utilized Federal Advisory 
Committee formal policy advice. Accordingly, a copy of the ISTEA 
Reauthorization Principles are attached for your and the Department's 
consideration. In addition, ITS America assisted the ITS Joint Program 
Office in outreach efforts to the transportation community last year on 
the ITS program in ISTEA reauthorization. These Principles reflect the 
work of the Task Force as well as input from these cooperative outreach 
activities.
    In particular, I would like to draw your attention to Principle #1. 
This principle seeks that a five (5) percent ``soft'' set-aside of 
total Federal surface transportation funding be invested in ITS 
applications during the reauthorization period. This is not a mandate 
as the appropriate officials--State or local--would be given the 
authority to waive or modify the 5 percent provision. The goal of 
Principle #1 is not to require spending of Federal funds on ITS 
applications, but to create a mechanism whereby ITS is fully considered 
as one of several options available for addressing regional and local 
transportation problems. The remaining eight (8) Principles seek to 
continue and build upon the successes already achieved in ITS for the 
reauthorization period.
    We would like to thank the ITS Joint Program Office for its support 
and assistance. We are particularly grateful to Board Member Norm 
Mineta for his leadership of the Task Force.
    We would appreciate the opportunity very soon for a brief meeting 
to discuss the Principles and other reauthorization issues with you and 
your staff.
            Sincerely,
                              James Costantino, Ph.D., P.E.
                                                   President & CEO.
                                 ______
                                 
 Responses of Deputy Secretary Mortimer Downey to Additional Questions 
                           from Senator Reid
    Question 1. Although you did not appear before the subcommittee 
specifically to discuss the Administration's NEXTEA proposal, please 
provide the Administration's position on the use of the line-item veto 
on multi-year capital projects and contract authority. For the sake of 
this answer, please assume that the constitutionality of the line item 
veto will be upheld.
    Response. This question should be directed to the Office of 
Management and Budget. We have not been advised of a position on this 
issue.
    Question 2. The General Accounting Office provided the committee 
with a variety of criticisms of the Department's handling of both 
strategic planning and your perceived inability to adequately fulfill 
your role as an information clearing house. Please inform the committee 
what steps (if any) you are taking to improve these two vitally 
important functions.
    Response. The Department has a major effort underway that will 
result in delivery of an updated strategic plan to the Congress before 
September 30, 1997, as required by the Government Performance and 
Results Act (GPRA). Our commitment to improving the way the Federal 
Government works will be reflected in the updated plan, which will 
encompass all the operating administrations within the Department and 
become the policy architecture for transportation decisionmaking now 
and for the next several years.
    On April 24, Secretary Slater convened a strategic planning retreat 
to discuss issues related to the Department's 1997 Strategic Plan. The 
Secretary opened the retreat, which was attended by over 70 political 
appointees and senior career civil servants, with a historical 
perspective, first looking back at strategic plans produced under the 
leadership of his predecessors and then by challenging the retreat 
participants to think about the future, about transportation in the 
21st Century.
    The Secretary discussed the Department's long tradition of 
strategic planning referring to Secretary Coleman's National 
Transportation Trends and Choices to the Year 2000 and Secretary 
Skinner's Moving America. He discussed the present, referencing the 
GPRA's requirements that cabinet departments and independent agencies 
develop results oriented strategic plans. He emphasized his hope that 
the strategic plan, to be developed by retreat participants, would be a 
living document that all 100,000 men and women of the Department of 
Transportation will use every day.
    The Secretary challenged participants to sharpen the focus on the 
goals he committed to after he took the oath of office that safety will 
be the No. 1 priority of the Department; that we will invest in our 
infrastructure to ensure that America's transportation system meets the 
needs and desires of the American people in the 21st Century; and, that 
we will use a common sense approach to running the Department so that 
it works better and costs less.
    In addition, Secretary Slater has sent letters to the Chairmen and 
Ranking Members of all Congressional committees communicating his 
commitment to call upon the Congress to work with the Department to 
build the safest, most efficient transportation network possible. In 
his letters, Secretary Slater offered to brief Members of Congress on 
the progress we have made and on our timetable for this strategic 
planning effort that will help us ensure that the Department meets the 
transportation needs of Americans today and in the 21st century. We 
expect to have a draft strategic plan ready for Congressional 
consultation shortly.
    According to the General Accounting Office, the agency has never 
issued a report focusing on the Department's handling of strategic 
planning under the Government Performance and Results Act (GPRA). As a 
result, the Department is unable to address specifically the criticisms 
referenced in the question.
    However, the GAO has issued reports where elements of strategic 
planning were incorporated into larger reviews of specific USDOT 
programs and/or modal administrations. Most recent is the General 
Accounting Office's September 1996 report on Surface Transportation 
Research Funding, Federal Role, and Emerging Issues. A primary finding 
focuses on the absence of strategic planning and attention given the 
Department's surface transportation research and development program.
    The Administration's NEXTEA proposal directs the Secretary to 
establish a strategic planning process for research and technology 
which considers the need to (1) coordinate transportation planning at 
all government levels; (2) ensure compatibility of standards-setting 
with concept of seamless transportation; (3) encourage innovation; (4) 
facilitate partnerships; (5) identify core research to meet long-term 
needs; (6) ensure the Nation's global competitiveness; and (7) measure 
impact of investments on system performance. By institutionalizing the 
R&D strategic planning process, the Secretary will have a corporate 
mechanism for determining national transportation R&T priorities, 
coordinating Federal transportation R&T activities and measuring the 
impact of such R&T investments on the performance of the national 
transportation system. NEXTEA will provide the Secretary with greater 
flexibility in structuring a research and development oversight process 
which should also prove useful to State and local governments in 
developing and carrying out their own R&T initiatives.
    Finally, the Department has undertaken several initiatives which 
develop our role as a clearing house of transportation information. 
Better coordination among the operating administrations and better 
communication with our customers are helping us improve the quality, 
comprehensiveness, and availability of the Department's data.
    The Federal Highway Administration, the Federal Transit 
Administration, the Maritime Administration, the Federal Aviation 
Administration, and the Office of Intermodalism have developed and 
disseminated to transportation planners and other policymakers numerous 
publications containing information about the development of, and 
barriers to, efficient intermodal facilities. In particular compendia 
of freight and passenger facilities financed with Federal aid have been 
developed. An update of the passenger compendium is being finalized. 
All of this information has been shared with the Bureau of 
Transportation Statistics (BTS) and has been made generally available 
in print and electronic formats including on the Internet.
    BTS has worked with other modes to publish compilations of data 
from throughout the Department. Electronic formats and user-friendly 
interfaces increase customer satisfaction and broaden our audience. In 
addition, BTS publishes a directory of transportation data sources and 
a directory of transportation contacts by subject matter.
    The Bureau's award-winning National Transportation Library 
facilitates the exchange of information among the transportation 
community. An electronic repository of information, primarily from 
State DOTs and MPOs, the NTL helps Federal, State, and local agencies 
share materials more effectively.
    The Department has already begun to look at other ways to meet the 
increasing demand for transportation information. A Transportation 
Research Board (TRB) conference held in March is helping USDOT to 
better define data needs at the State and local level, and how the 
Federal Government can help meet those needs. The conference was 
sponsored by FHWA, FTA, and BTS, along with the American Association of 
State Highway Transportation Officials (AASHTO) and the Association of 
Metropolitan Planning Organizations (AMPO).
    BTS serves as the lead agency for the transportation layer under 
the National Spatial Data Infrastructure (NSDI), as identified by the 
President in E.O. 12906. In this role, BTS maintains the official 
clearinghouse, readily available on its Web site, for disseminating and 
exchanging transportation spatial data. BTS also worked with other 
National statistical agencies to create FEDSTATS.GOV, a one stop shop 
for official statistics from throughout the Federal Government.
    The Office of Intermodalism and BTS, working with the OST Offices 
and DOT Administrations, have begun a coordinated effort to improve the 
information provided on the Department's websites and electronic data 
bases. The first step in this process debuted May 19. The improved 
websites are more customer oriented and better connect numerous DOT 
resources and data bases. Most users will be able to locate the 
information they are seeking with two to three clicks.
    Question 3. Please provide more details on the rail project in the 
City of Fort Collins and the assistance provided under the Partnership 
for Transportation Investment program. Are there any aspects of the 
Fort Collins project that could be readily adapted to other cities that 
have increasing rail traffic?
    Response. The Ft. Collins track consolidation project is a private/
public partnership between the Colorado Department of Transportation, 
the City of Fort Collins, the Union Pacific Railroad Company, the 
Burlington Northern Railroad Company, the Federal Highway 
Administration, and the Federal Railroad Administration to consolidate/
relocate track, eliminate 16 grade crossings, and put new signals at 
several other crossings. The project is designed to enhance air 
quality, traffic flow and safety. It is projected to cost about $4 
million. Local, State, Federal and private funds were contributed. The 
Federal share is about $0.7 million. The two railroads will contribute 
a total of over $1 million, and the State and city will contribute a 
total of about $1 million. The first phase of the project has been 
completed. The second phase is under construction, and the funding for 
the third and final phase is being negotiated. To date, four at-grade-
crossings have been eliminated.
    The Fort Collins project is a very good example of cooperation 
among various levels of government and the private sector. Federal and 
State agencies, and the City government worked together toward a common 
goal. This project demonstrates that our partnerships with government 
at all levels and the private sector are critical in achieving 
transportation solutions that benefit our communities and our economy. 
It demonstrates that better traffic flow, more efficient freight 
movement and better air quality go hand in hand. The spirit of 
cooperation in the search for beneficial transportation solutions 
exhibited by participants should be emulated in other areas of the 
country which face multifaceted transportation problems.
    Question 4. In response to a question from a member of the 
committee, you stated that the Administration is planning to loosen the 
prohibition on tolls on the Interstate Highway System. How do you 
respond to the argument that most Americans feel they have bought, paid 
for, and continue to maintain the Interstate system through fuel taxes? 
Do you anticipate that Interstate crossings of State lines will 
immediately turn into opportunities to charge tolls (most likely in 
both directions)?
    Response. The provision that would allow tolling on Interstate 
highways is a response to requests by State and local government 
officials in many parts of the country. In our conversations on 
reauthorization of the surface transportation bill, we heard many 
requests to remove Federal restrictions that impede the ability of 
these governments to use toll finance to supplement their highway 
financing programs. Removing Federal restrictions that prevent the use 
of tolls for financing improvements to Interstate roadways will provide 
State and local authorities with a greater flexibility in meeting the 
demands being placed on their highway financing programs. This is the 
same flexibility already available under current law to the rest of the 
approximately one million miles of Federal-aid highways as well as on 
Interstate System bridges and tunnels.
    To date, the Federal investment in the Interstate system has been 
financed with revenues generated by Federal user charges, primarily the 
Federal motor fuel taxes. Federal user charge revenues will continue to 
be devoted to the preservation of the Interstate system and the 
Department has proposed a substantial increase in funding for 
Interstate Maintenance as part of our NEXTEA proposal. In many 
congested urban areas with needs for road rehabilitation and capacity 
expansion, the costs of making needed improvements can be quite high, 
often higher than what can be financed by existing highway user 
charges. The proposal we are making will allow State and local 
governments to supplement existing resources by using tolls to meet 
part of these critical investment needs. Decisions on how to finance 
needed local investments will be made, not by the Federal Government, 
but by State and local decisionmakers in the context of State and local 
political and financial realities. We believe this is consistent with 
the user pays principle of highway finance, and is a necessary addition 
to the Nation's highway finance toolbox in an era of constrained 
budgets and growing investment needs.
    We would like to make it very clear that the Federal Government is 
not mandating, or even advocating, the use of tolls on the Interstate 
system. This provision is simply providing State and local governments 
with an additional tool that can be used to increase the amount of 
investment that they can make in providing new, improved and safer 
transportation systems. Provisions remaining in the law limit tolls to 
either new facilities or facilities that undergo reconstruction or 
replacement. That is, a capital improvement in the facility would 
precede toll collection on any existing portion of the Interstate 
system. Toll revenues must be used to pay debt service, financing 
costs, operation and maintenance of the facility being improved. Any 
revenues above this amount must be used for projects that are eligible 
under Title 23.
    We do not anticipate tolls for crossing State lines to be a 
problem. As already mentioned, tolls would only be allowed after a 
capital improvement to the facility, and in the context of State and 
local political and financial realities. We, therefore, do not expect 
the use of tolls on the Interstate to be widespread. Further, if 
needed, we believe that the interstate commerce clause would protect 
against arbitrary or discriminatory tolls.
                                 ______
                                 
  Responses of Deputy Secretary Mortimer to Additional Questions from 
                             Senator Boxer
    Question 1. California was designated as a pilot State for the 
State Infrastructure Bank project about 9 months ago. In addition, the 
Appropriations Committee provided $150 million in Federal ``seed 
money'' for the loans and other credit assistance that these banks can 
provide. There are 10 eligible projects identified in the State which 
would help relieve congestion in the Bay Area, the Los Angeles-Orange 
counties area and the border.
    (1) Where is the hold up in concluding the cooperative agreement 
with California? (2) When will we know how much California will receive 
from the Federal funding?
    Response. (1) California is currently working with the Wall Street 
rating agencies on issues that will affect the final cooperative 
agreement. (2) An announcement on the SIB applications is imminent and 
distribution of the $150 million will be made in the next few weeks. 
Under the terms of the Appropriations Act, these funds would not be 
made available before April 1.
    Question 2. Another benefit of the ISTEA legislation is that it 
served as a launching pad for CALSTART and other consortia involved in 
promoting alternative transportation technologies. I know you are aware 
of the benefits provided by CALSTART and the other seven regional 
consortia nationwide in spurring progress in clean fuel vehicles and 
intelligent transportation systems.
    Can I expect to see language pertaining to this program and its 
reauthorization in your proposed legislation?
    Response. CALSTART is a consortium of advanced technology public 
and private companies and organizations that was one of four consortia 
awarded grants under ISTEA's research program for Advanced 
Transportation Systems and Electric Vehicles (sections 6071 and 6073 of 
ISTEA). They have been highly instrumental in advancing the current 
State of transportation technology, especially in the area of electric 
vehicles.
    While we have not proposed to specifically authorize funds in our 
NEXTEA proposal for the CALSTART consortium, or any of the other 
consortia, we have proposed, in section 6003, to initiate a long-term, 
high-risk research program that would encompass the efforts being 
undertaken by the CALSTART consortium.
    Also, in section 3015 of NEXTEA, we have proposed to establish a 
competitive joint partnership program, in which the Federal Transit 
Administration (FTA) could enter into grants, contracts, cooperative 
agreements, and other agreements with consortia to promote the early 
deployment of innovation in mass transportation technology, services, 
management, or operational practices. Under section 3015 a consortium 
is defined as ``one or more public or private organizations located in 
the United States which provide mass transportation service to the 
public and one or more businesses, including small- and medium-sized 
businesses, incorporated in a State, offering goods and services or 
willing to offer goods and services to mass transportation operators. 
It may include as additional members public or private research 
organizations located in the United States, or State or local 
governmental entities.''
    In addition, FTA is working closely with the Defense Advanced 
Research Projects Agency (DARPA) to integrate current hybrid vehicle 
projects funded by DARPA and FTA, such as DARPA's regional Electric and 
Hybrid Vehicle Technology Consortia (of which CALSTART is a member), 
and several other hybrid vehicle projects, including the FTA Advanced 
Technology Transit Bus (ATTB) being developed by Northrop/Grumman under 
contract to the Los Angeles County Metropolitan Transportation 
Authority. DOT has been an active participant in many of the DARPA-
funded technologies and believes that the technologies have direct 
application to many of the DOT initiatives to deploy advanced 
alternative-fueled vehicle technologies. We would expect CALSTART to be 
highly competitive in all of these programs based on the work they have 
already accomplished.
    Question 3. The San Diego Association of Governments is working 
with a consortium representing seven major design and entertainment 
industry companies on an innovative, high-tech transportation 
information system for the San Diego-Tijuana area. The project would 
fit basic traveler information at electronic kiosks with video images 
of artists from the entertainment industry relaying this traveler 
information as well as important tourist and public event messages.
    Do you believe that the entertainment industry is particularly 
well-suited to become partners with government agencies on these kinds 
of traveler information services at airports, train stations and other 
community centers? If so, how do we foster those kind of partnerships?
    Response. The ITS Joint Program office has been in contact with the 
San Diego Association of Governments about their proposal to 
demonstrate a partnership with the entertainment industry to deliver 
transportation and other critical information at transportation centers 
in the area. The proposal has a great deal of merit. We have seen a 
number of successful pairings of very different industries in 
developing kiosks. The proposed Deployment Incentive Program in NEXTEA 
allows for competitive selection of qualified projects that meet 
specified criteria. Recognizing the need to encourage partnerships such 
as this, one of the criteria includes demonstration of a good faith 
effort to involve the private sector. Given that this partnership is 
already in place for this project, we expect that several elements of 
this project could be eligible for funding under this program.
                                 ______
                                 
   Prepared Statement of Phyllis F. Schienberg, Associate Director, 
 Transportation Issues, Resources, Community, and Economic Development 
                                Division
    Mr. Chairman and members of the subcommittee: We appreciate the 
opportunity to testify on how innovation in Federal research, financing 
and contracting methods has the potential for improving the performance 
of the Nation's surface transportation system. Our testimony is based 
on three reports that we have recently completed for this committee's 
deliberations on the reauthorization of the Intermodal Surface 
Transportation Efficiency Act (ISTEA), as well as ongoing work for the 
committee.\1\ In summary, we reported the following:
---------------------------------------------------------------------------
     Surface Transportation: Research Funding, Federal Role, and 
Emerging Issues (GAO/RCED-96-233, Sept. 6, 1996), Urban Transportation: 
Challenges to Widespread Deployment of ITS Technologies (GAO/RCED-97-
74, Feb. 27, 1997), State Infrastructure Banks: A Mechanism to Expand 
Federal Transportation Financing (GAO/RCED-97-9, Oct. 31, 1996).
---------------------------------------------------------------------------
     Investments in surface transportation research have 
provided benefits to users and the economy. These benefits include 
crash protection devices, such as seat belts and car seats for infants 
and children; programs to reduce alcohol-related deaths; and longer-
lasting highway surfaces that reduce maintenance costs. The Department 
of Transportation (DOT) has a critical role to play by funding 
research, establishing an overall research mission with objectives for 
accomplishment and priorities for allocating funds, and acting as a 
focal point for technology transfer. However, DOT's organizational 
structure and lack of both a strategic plan and a departmental focal 
point may limit its impact on research. Until these issues are 
addressed, the Department may not be able to respond to ISTEA's call 
for an integrated framework for surface transportation research.
     Established by ISTEA, DOT's Intelligent Transportation 
System (ITS) Program has received $1.3 billion to advance the use of 
computer and telecommunications technology that will enhance the safety 
and efficiency of surface transportation. Although the program 
envisioned widespread deployment of integrated multimodal ITS systems, 
this vision has not been realized for several reasons. First, the ITS 
national architecture was not completed until July 1996 and ITS 
technical standards will not be completed until 2001. The ITS 
architecture and technical standards, which define ITS elements and how 
they will work together, are prerequisites to a large scale, integrated 
deployment of ITS systems. In addition, the lack of knowledge of ITS 
technologies and systems integration among State and local officials, 
insufficient data documenting the cost effectiveness of ITS in solving 
transportation problems and competing priorities for limited 
transportation dollars will further constrain widespread ITS 
deployment. Before DOT can aggressively pursue widespread deployment of 
integrated ITS, it must help State and local officials overcome these 
obstacles.
     State Infrastructure Banks (SIBs) offer the promise of 
helping to close the gap between transportation needs and available 
resources by sustaining and potentially expanding a fixed sum of 
Federal capital, often by attracting private investment. Specifically, 
these banks provide States increased flexibility to offer many types of 
financial assistance, such as loans or letters of credit, tailored to 
fit a project's specific needs. Benefits include expediting project 
completion, recycling loan repayments to future projects, and obtaining 
financial support from the private sector and local communities. 
However, some State officials and industry experts that we talked with 
remain skeptical that SIBs will produce the expected benefits. Reasons 
for their skepticism include concern that there are (1) an insufficient 
number of projects with a potential revenue stream needed to repay the 
loans and (2) impediments under State law. Only time will tell. This 
program is new; only one State has begun a project under its SIB since 
the initial pilot States were selected for SIB participation in April 
1996. Therefore, it is too early to assess how effectively SIBs will 
help to meet transportation needs.
    Our ongoing work has found that:
     the Federal Highway Administration (FHWA) is testing and 
evaluating the use of an innovative design-build contracting method for 
highway construction. This method differs from traditional contracting 
practice in that it combines, rather than separates responsibility for 
the design and construction phases of a highway project. Proponents of 
design-build see several advantages to the approach, including better 
accountability for costs and quality, less time spent coordinating 
designer and builder activities, firmer knowledge of project costs, and 
reduced burden in administering contracts. However, FHWA's authority to 
implement design-build is limited and 17 States have laws which, in 
effect, prevent the use of design-build. Finally, while design-build 
may result in the faster completion of projects, it may also require an 
accelerated revenue stream to pay for construction.
        dot's leadership role in surface transportation research
    ISTEA expressed the need for a new direction in surface 
transportation research, finding that despite an annual Federal 
expenditure of more than $10 billion on surface transportation and its 
infrastructure, the Federal Government lacked a clear vision of the 
role of federally funded surface transportation research and an 
integrated framework for the fragmented surface transportation research 
programs dispersed throughout the Government. The act recognized the 
Federal Government as a critical sponsor and coordinator of new 
technologies that would provide safer, more convenient, and more 
affordable future transportation systems.
    Our September 1996 report on surface transportation research 
confirmed what ISTEA stressed--DOT must play a critical role in surface 
transportation research. DOT's role as the leader in surface 
transportation research stems from the Department's national 
perspective, which transcends the interests and limitations of 
nonFederal stakeholders. For example, the States generally focus on 
applied research to solve specific problems; industry funds research to 
develop new or expanded markets; and universities train future 
transportation specialists and conduct research that reflects the 
interests of their funders.
    While the Department has established councils and committees to 
coordinate its research, the lack of a departmental focal point and an 
inadequate strategic plan may limit its leadership role. First, surface 
transportation research within the Department is focused on improving 
individual modes of transportation rather than on creating an 
integrated framework for surface transportation research. This modal 
structure makes it difficult for DOT to develop a surface 
transportation system mission; accommodate the need for types of 
research--such as intermodal and systems assessment research--that do 
not have a modal focus; and identify and coordinate research that cuts 
across modes.
    Second, DOT does not have a Department-level focal point to oversee 
its research, such as an Assistant Secretary for Research and 
Development. Instead an Associate Administrator of the Research and 
Special Projects Administration (RSPA) coordinates the Department's 
surface research programs. Although RSPA was established to foster 
cross-cutting research, it does not have the funding resources or the 
internal clout to function effectively as a strategic planner for 
surface transportation research. RSPA acts in an advisory capacity and 
has no control over the modal agencies' budgets or policies.
    Finally, the Department does not have an integrated framework for 
surface transportation research. The three research plans that the 
Department has submitted to the Congress since 1993 are useful 
inventories of the five modal agencies' research activities. However, 
the plans cannot be used, as ISTEA directed, to make surface 
transportation research more strategic, integrated, and focused. Until 
all these issues are addressed, the Department may not be able to 
respond to ISTEA's call for an integrated framework for surface 
transportation research and assume a leadership role in surface 
research.
its program holds potential for innovation if deployment obstacles can 
                              be resolved
    ISTEA also reflected congressional concerns about the adequacy of 
the funding for advanced transportation systems, suggesting that too 
little funding would increase the Nation's dependence on foreign 
technologies and equipment. The act therefore increased the funding for 
many existing and new research programs, especially for the ITS 
program. Since 1992, the ITS program has received through contract 
authority and the annual appropriations process about $1.3 billion. 
This amount represents about 36 percent of the $3.5 billion the Federal 
Government provided for surface research programs from 1992 to 1997.
    Our February 1997 report examined the progress made in deploying 
ITS technologies and ways in which the Federal Government could 
facilitate further deployment. On the first issue, a 1995 DOT-funded 
study found that 7 of 10 larger urban areas were using some ITS 
technologies to help solve their transportation problems. An example of 
an area that has widely deployed ITS technologies is Minneapolis. The 
Minneapolis ITS program, part of the State's ``Guidestar'' program, 
first began operational tests in 1991. Since that time, about $64 
million in public and private funds have been invested in Guidestar 
projects. With these funds, Minneapolis upgraded its traffic management 
center so that it could better monitor traffic flow and roadway 
conditions and installed ramp meters to control the flow of traffic 
entering the expressways. These improvements have helped increase 
average highway speeds during rush hour by 35 percent.
    Although urban areas are deploying individual ITS components, we 
found that States and localities are not integrating the various ITS 
components so that they work together and thereby maximize the overall 
efficiency of the entire transportation system. For example, 
transportation officials in the Washington, DC., area said that local 
jurisdictions have installed electronic toll collection, traveler 
information, and highway surveillance systems without integrating the 
components into a multimodal system. This lack of systems integration 
is due in part to the fact that ITS is a relatively new program that is 
still evolving and has yet to fully implement some fundamental program 
components such as the national architecture and technical standards. 
The national architecture, which identifies the components and 
functions of an ITS system, was completed in July 1996. In addition, a 
5 year effort to develop technical standards--which specify how system 
components will communicate--is planned for completion in 2001.
    We also found that the lack of widespread deployment of integrated 
ITS systems results from insufficient knowledge of ITS systems among 
State and local transportation agencies; limited data on the costs and 
benefits of ITS; and inadequate funding in light of other 
transportation investment priorities. The funding issue is particularly 
important since DOT has changed the program's short-term focus to 
include a greater emphasis on deploying ITS technologies rather than 
simply conducting research and operational tests. The Federal 
Government's future commitment to a deployment program would have to 
balance the need to continue progress made under the program with 
Federal budgetary constraints. Urban transportation officials in the 
Nation's 10 largest cities we interviewed had mixed views on an 
appropriate Federal role for funding ITS deployment. Officials in 6 of 
10 urban areas supported a large Federal commitment of $1 billion each 
year. Typically, these officials contended that future ITS deployments 
would be limited without specific funding for this approach. For 
example, a New York transportation planner said that without large-
scale funding, ITS investment would have to compete for scarce dollars 
with higher-priority road and bridge rehabilitation projects. Under 
such a scenario, plans for deploying ITS would be delayed. These 
officials also favored new Federal funding rather than a set-aside of 
existing Federal-aid highway dollars.
    In contrast, officials from four other urban areas opposed a large-
scale Federal aid program because they do not want additional Federal 
funding categories. Some of these officials also said that such a 
program could drive unnecessary ITS investments, as decisionmakers 
chased ITS capital money, even though another solution might have been 
more cost-effective. One official noted that a large Federal program 
would be very premature since the benefits of many ITS applications 
have yet to be proven despite the claims of ITS proponents. In the 
absence of a large Federal program, officials from 5 of the 10 urban 
areas supported a smaller-scale Federal seed program. They said that 
such a program could be used to fund experimental ITS applications, 
promote better working relationships among key agencies, or support 
information systems for travellers.
    Deliberations on the future funding for the ITS program should 
include an assessment of the current obstacles facing the program. 
First, the system architecture is relatively new, and State and local 
officials have limited knowledge of its importance. Second, it will 
take time for State and local transportation officials to understand 
the architecture and supplement their traditional approach to solving 
transportation problems through civil engineering strategies with the 
information management and telecommunications focus envisioned by an 
integrated ITS approach. In addition, widespread integrated deployment 
cannot occur without the technical standards that DOT proposes to 
complete over the next 5 years.
        innovative financing through state infrastructure banks
    Until recently, States have generally not been able to tailor 
Federal highway funding to a form other than a grant. The National 
Highway System Designation Act of 1995 established a number of 
innovative financing mechanisms, including the authorization of a SIB 
Pilot Program for up to 10 States or multistate applicants--8 States 
were selected in April 1996 and 2 were selected in June 1996. Under 
this program, States can use up to 10 percent of most of their fiscal 
years 1996 and 1997 Federal highway funds to establish their SIBs. This 
program was expanded by DOT's fiscal year 1997 appropriations act that 
removed the 10-State limit and provided $150 million in new funds.
    A SIB serves essentially as an umbrella under which a variety of 
innovative finance techniques can be implemented. Much like a bank, a 
SIB would need equity capital to get started, and equity capital could 
be provided at least in part through Federal highway funds. Once 
capitalized, the SIB could offer a range of loans and credit options, 
such as loan guarantees and lines of credit. For example, through a 
revolving fund, States could lend money to public or private sponsors 
of transportation projects. Project-based revenues, such as tolls, or 
general revenues, such as dedicated taxes, could be used to repay loans 
with interest, and the repayments would replenish the fund so that new 
loans could be supported. Thus projects with potential revenue streams 
will be needed to make a SIB viable.
    Expected assistance for some of the projects in the initial 10 
States selected for the pilot program include loans ranging from 
$60,000 to $30 million, credit enhancement to support bonds and a line 
of credit. In some cases, large projects that are already underway may 
be helped through SIB financial assistance. Examples of projects States 
are considering for financial assistance include:
     A $713 million project in Orange County, California, that 
includes construction of a 24-mile tollway. SIB assistance in the form 
of a $25 million line of credit may be used for this project to replace 
an existing contingency fund. If accessed, the plan is that the line of 
credit would be repaid through excess toll revenues.
     A $240 million project in Orlando, Florida, will involve 
construction of a 6 mile-segment to complete a 56-mile beltway. A SIB 
project loan in the amount of $20 million is being considered, and loan 
repayment would come from a mix of project and systemwide toll receipts 
and State transportation funds.
     In Myrtle Beach, South Carolina, a SIB loan is being 
considered to help with the construction of a $15 million new bridge to 
Fantasy Harbor. The source for repayment of the loan would be proceeds 
from an admission tax at the Fantasy Harbor entertainment complex.
    These examples represent but a few of the projects being considered 
for SIB assistance by the initial 10 SIB pilot States.
    SIB financial assistance is intended to complement, not replace, 
traditional transportation grant programs and provide States increased 
flexibility to offer many types of financial assistance. As a result, 
projects could be completed more quickly, some projects could be built 
that would otherwise be delayed or infeasible if conventional Federal 
grants were used, and private investment in transportation could be 
increased. Furthermore, a longer-term anticipated benefit is that 
repaid SIB loans can be ``recycled'' as a source of funds for future 
transportation projects. If States choose to leverage SIB funds, DOT 
has estimated that $2 billion in Federal capital provided through SIBs 
could be expected to attract an additional $4 billion for 
transportation investments.
    For some States, barriers to establishing and effectively using a 
SIB still remain. One example is the low number of projects that could 
generate revenue and thus repay loans made by SIBs. Six of the States 
that we surveyed told us that an insufficient number of projects with a 
potential revenue stream would diminish the prospects that their State 
would participate in the SIB pilot program. Ten of 11 States that we 
talked with about this issue said they were considering tolls as a 
revenue source. However, State officials also told us that they 
expected tolls would generate considerable negative reaction from 
political officials and the general public.
    Some States expressed uncertainty regarding their legal or 
constitutional authority to establish a SIB in their State or use some 
financing options that would involve the private sector. Michigan, for 
instance, said that it does not currently have the constitutional 
authority to lend money to the private sector.
    Since $150 million was appropriated for fiscal year 1997 and the 10 
State restriction was lifted, DOT has received applications from 28 
additional States. DOT has not yet selected additional States for the 
program. In addition, DOT has not yet developed criteria or a mechanism 
for determining how the funds will be distributed to selected States.
    The SIB program has been slow to startup. Only one State--Ohio--has 
actually begun a toll road project under its SIB since April 1996 when 
the first States were selected for the program. The program will need 
time to develop and mature.
          innovative practices using design-build contracting
    Innovation can also occur through different methods to design and 
construct transportation projects. Of particular note is FHWA's special 
project to test and evaluate the use of design-build contracting 
methods under the Agency's authority to conduct research. The project 
is an outgrowth of a 1987 Transportation Research Board task force 
report that identified innovative contracting practices such as design-
build. The design-build method differs from the traditional design-bid-
build method since it combines, rather than separates responsibility 
for the design and construction phase of a highway project.
    Proponents of design-build have identified several benefits. First, 
the highway agency can hold one contractor, rather than two or more, 
accountable for the quality and costs of the project. This compares to 
the traditional approach where problems with the project resulted in 
disputes between the design and construction firms. Second, by working 
together from the beginning, the designer and builder would have a 
firmer understanding of the project costs and could thereby reduce 
costs by incorporating value engineering savings\2\ into the design. 
Finally, design-build proponents state the approach will reduce 
administrative burden and expenses because fewer contracts would be 
needed.
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    \2\ Value engineering is the formal technique by which contractors 
or independent teams identify methods for constructing projects more 
economically.
---------------------------------------------------------------------------
    State interest in the design-build contracting approach is rising. 
According to FHWA, as of January 1997, 13 States have initiated at 
least 50 design-build projects under the Agency's special program. The 
size of State projects varies considerably, from bridge projects 
costing a few million dollars to the $1.4 billion reconstruction of I-
15 in Utah. While States are becoming more receptive to design-build 
contracting, FHWA still considers the approach experimental, and an 
overall assessment of the broad benefits, costs, and applicability of 
design-build remains limited by the small number of completed projects.
    One difficulty in implementing design-build lies in State laws 
limiting its use. A 1996 Design-Build Institute of America survey of 
State procurement laws documents this problem. The survey identified 17 
States that did not permit the use of combined design and construction 
contracts. In addition, a 1995 Study by the Building Futures Council 
noted that some States indirectly preclude design-build by requiring 
separation of design and construction services--construction services 
being awarded to the lowest bidder only after the design is complete.
    In addition, similar requirements applicable to State highway 
construction contracts under the Federal-aid highway program limit 
FHWA's authority to allow design-build contracts outside those that are 
part of its special project. However, an official within FHWA's Office 
of Engineering suggested that continuing the current special project 
may be appropriate because no consensus exists within the highway 
construction industry on the desirability of the design-build approach.
    A final consideration that may limit the use of design-build 
contracting is project financing. When design-build is applied to 
expensive, large infrastructure projects, financing can be more complex 
because the projects are constructed faster than under conventional 
contracting practices. Faster construction means that funds will be 
required faster, which may pose difficulties if the project's revenue 
stream does not keep pace. For example, in our review of a large 
design-build transit project, the extension of the Bay Area Rapid 
Transit (BART) system to the San Francisco International Airport, we 
found that BART required a borrowing program to cover cash shortfalls 
during construction. With design-build, BART may save construction 
costs but will incur additional financing costs.
    Design-build contracting, while becoming increasingly common in the 
private sector for facilities such as industrial plants and refineries, 
does not yet have an established track record in transportation in the 
United States. However, the experiences now being gained through the 50 
projects under FHWA's special project, along with four Federal Transit 
Administration funded demonstration programs, may provide sufficient 
evidence of the efficacy of design-build. Early experience suggests 
that in instances when time is at a premium, and project revenue 
sources quickly cover construction costs, design-build may provide a 
good fit with project requirements. One area where these opportunities 
may exist is FHWA's Emergency Relief Program, which places emphasis on 
the quick reconstruction of damaged facilities.
    Mr. Chairman, this concludes our prepared statement on the 
potential benefits and challenges of four examples of innovation in 
surface transportation research, finance and contracting. We will be 
happy to respond to any questions you might have.
                                 ______
                                 
     Urban Transportation--Challenges to Widespread Deployment of 
                   Intelligent Transportation Systems
    Established by the Intermodal Surface Transportation Efficiency Act 
(ISTEA) in 1991, the Department of Transportation's Intelligent 
Transportation Systems (ITS) program has received Federal funding of 
81.3 billion to advance the use of computer and telecommunications 
technologies to enhance the safety and efficiency of surface 
transportation. The wide array of ITS technologies includes automated 
toll collection systems that eliminate the need for vehicles to stop at 
toll plazas; real-time information on traffic conditions and transit 
schedules for travelers; and automated traffic management systems that 
can adjust traffic signal systems to respond to real-time traffic 
conditions.
    Concerned about the prospects for deploying integrated ITS in urban 
areas, you asked us to (1) report on how the Department has changed the 
focus of the ITS program since the Congress passed ISTEA; (2) examine 
progress in deploying integrated ITS and the key factors affecting 
deployment, including the status of the ITS national architecture (the 
framework which identifies the components of an integrated ITS) and 
technical standards; and (3) identify ways in which the Federal 
Government can facilitate the deployment of ITS. To respond to these 
objectives, we focused on the deployment of the metropolitan ITS 
infrastructure; we did not examine the development or deployment of 
other ITS elements, such as commercial vehicle operations and the 
automated highway system. We interviewed transportation officials in 10 
urban areas that are among the Nation's largest and most congested--and 
therefore likely to have the greatest need for ITS--and reviewed the 
existing studies on the ITS program. (A more detailed description of 
our scope and methodology is in app. I.)
                            results in brief
    The Department of Transportation's long-term goal for the 
Intelligent Transportation Systems program--the deployment of 
integrated intelligent transportation systems--has not changed since 
the Congress passed the Intermodal Surface Transportation Efficiency 
Act. However, the Department has recently changed the program's short-
term focus to include a greater emphasis on deploying intelligent 
transportation system technologies rather than simply conducting 
research and operational tests. Its new focus emphasizes the 
deployments of integrated intelligent transportation technologies in 
selected urban areas, outreach and training to overcome the barriers to 
deployment, and a continuing research program to develop long-term 
intelligent transportation applications, such as the automated highway 
system.
    Although the program envisioned the widespread deployment of 
integrated, multimodal intelligent transportation systems, this vision 
has not been realized. In part, the limited deployment of intelligent 
transportation systems is the result of the natural evolution of the 
program. For example, the program's national architecture and technical 
standards, which define the elements of the intelligent transportation 
systems and how they will work together, are prerequisite to a large-
scale, integrated deployment of the systems. However, the national 
architecture for the systems was not completed until July 1996, and a 
5-year effort to develop standards is planned for completion in 2001. 
In addition, the widespread deployment of the intelligent 
transportation systems faces several significant obstacles. These 
include a lack of technical knowledge and expertise among the State and 
local officials who will deploy the systems; a lack of quantitative 
data proving the systems' cost-effectiveness in solving transportation 
problems; and a lack of funds, in the light of other transportation 
priorities.
    The Federal Government can take programmatic and financial actions 
to promote the deployment of intelligent transportation systems. The 
programmatic actions include providing technical assistance and 
training to State and local officials, disseminating information on the 
costs and benefits of intelligent transportation efforts, and 
completing the development of the technical standards in a timely 
manner. While officials from all 10 urban areas we contacted stated 
that intelligent transportation systems are a potentially useful tool 
in solving transportation problems. there was a wide variety of 
opinions on the appropriate Federal role for funding the systems' 
deployment. Six urban areas stated that a large-scale Federal 
deployment program would be necessary to achieve widespread deployment. 
In contrast, the remaining four opposed a large-scale program because 
it would limit local flexibility and would encourage the deployment of 
intelligent transportation systems where other, possibly more cost-
effective efforts could be undertaken. Officials from 5 of the 10 urban 
areas also stated that a smaller-scale Federal seed program could also 
be effective in fostering deployment. Finally, officials from 9 of the 
10 areas stated that Federal financial assistance is needed to maintain 
deployed intelligent transportation technologies.
                               background
    During fiscal years 1991 through 1997, the Congress provided the 
Intelligent Transportation Systems (ITS) program with about $1.3 
billion\1\ for research and development, operational testing of the ITS 
technologies, and various activities to support deployment. The 
research and development efforts have explored new technologies and 
applications, while the operational tests have been the bridge between 
basic research and development and deployment. The activities to 
support deployment have included the development of an ITS architecture 
and a series of early deployment plans. All of the program's efforts 
are building on the important goal of developing a fully integrated ITS 
environment.
---------------------------------------------------------------------------
    \1\ Appendix II contains a figure showing the level of funding for 
the ITS program from fiscal years 1991 to 1997.
---------------------------------------------------------------------------
    In an integrated ITS, all of the components of the ITS are linked, 
so as to produce greater benefits than would a fragmented deployment of 
the systems. For example, transit agencies use automatic vehicle 
location technology to manage bus fleets, and city departments of 
transportation can use advanced traffic signal control systems to 
optimally manage traffic. If these systems are linked, the speed and 
location data on transit buses can be used to monitor the traffic flow 
on arterial streets, which are typically not monitored, and traffic 
signals can be adjusted to enable transit vehicles to stay on schedule. 
Furthermore, if these systems are linked to a traveler information 
system, travelers can access both transit and traffic information from 
a single source and use this information to decide when and how to 
travel.
     the department has refocused the its program to emphasize the 
                 deployment of technologies and systems
    ISTEA required the Department of Transportation (DOT) to prepare a 
strategic plan that would specify the goals and objectives of the ITS 
program. In December 1992, DOT issued its plan, which stated that the 
long-term goal of using ITS technologies was to develop an integrated 
intermodal surface transportation system that would be safer, make more 
efficient use of the existing infrastructure, and enhance users' 
choices of travel modes. The plan assumed that building more highways 
was not the solution to congestion in urban areas and that the 
implementation of ITS technologies could reduce congestion and 
accidents, improve transit service, conserve energy, and minimize 
environmental impacts.
    To meet its long-term goal, DOT initially outlined the four major 
components of the ITS program: research and development, operational 
tests of promising technologies, automated highway system technologies, 
and deployment support. DOT anticipated that these four program 
components would serve as the basic foundation for developing short-
term ITS technologies, identifying long-term advanced systems, and 
providing the basis for the future deployment of ITS technologies. 
Following its initial program direction, DOT funded over 300 projects 
and identified several promising ITS technologies. DOT initially 
anticipated that the Federal Government would play a major role in 
identifying and developing these technologies, but individual users and 
private-sector manufacturers would pay for a substantial portion of the 
ITS deployment costs; no special Federal funding program would be 
needed for the routine deployment of ITS. State and local implementers 
were expected to deploy ITS using existing Federal program funds.
    However, as part of its ISTEA reauthorization proposal, DOTiS 
refocusing the program to place a greater emphasis on ITS deployment. 
According to DOT officials, the new ITS program will retain a research 
and development element and continue the long-term goal of an automated 
highway system but will refocus short-term efforts to include an 
emphasis on deploying ITS technologies and inteBrated ITS systems. In 
addition, the program will emphasize outreach and training to help the 
States and local governments overcome the obstacles to widespread 
deployment. DOT'S earlier approach envisioned that most deployment 
efforts would not be funded by the Federal Government. DOT now believes 
that widespread deployment will not occur unless Federal funding 
assistance is provided. As a result, DOT proposes to expand Federal 
financial assistance by providing funding incentives of $100 million 
annually to help the State and local governments fund the cost of 
deploying and integrating the ITS technologies. DOT intends that these 
incentives will help to promote integrated urban ITS as well as systems 
for improving the regulation of commercial vehicles.
significant obstacles limit the widespread deployment of integrated its
    While data on the status of ITS deployment is not conclusive, most 
deployments have occurred in larger urban areas. However, even the 
Limit the Widespread larger areas are not deploying the kind of 
integrated systems envisioned in ISTEA. This is due, in part, to the 
fact that ITS is a relatively new research Integrated ITS program that 
is still evolving and has yet to fully implement some fundamental 
program components, such as the national architecture and technical 
standards. In addition, significant obstacles are precluding the more 
widespread deployment of ITS. These include a lack of technical 
expertise and knowledge about ITS among those who will actually deploy 
the systems; a lack of cost-benefit data about ITS; and a lack of 
funding dedicated to ITS, in the light of other priorities for 
transportation investments.
ITS Deployment Has Been Concentrated in Large Urban Areas but Has Not 
        Occurred in an Integrated Manner
    Studies of the status of ITS deployment show that deployment has 
been concentrated in larger urban areas--those with populations of over 
1 million. According to a 1995 study by Public Technology Incorporated 
(PTI),\2\ 70 percent--7 of 10--larger urban areas were using ITS 
technologies to help solve their transportation problems. In contrast, 
the study reported that 43 percent of the urban areas with populations 
between 100,000 and 1 million were using ITS and that 14 percent of the 
urban areas with populations of less than 100,000 were using ITS. In 
another study, the Oak Ridge National Laboratory (Oak Ridge) conducted 
a survey of the Nation's 75 largest urban areas and found that most 
larger urban areas had deployed ITS technologies but that deployment 
was less common in smaller urban areas.\3\
---------------------------------------------------------------------------
    \2\ PTI is the nonprofit technology organization of the National 
League of Cities, the National Association of Counties, and the 
International City/County Management Association. In 1995, PTI 
conducted a nationwide survey of over 2,000 large and small local 
governments to identify ITS issues. PTI received over 400 responses 
from a wide cross section of small and large units of local 
governments.
    \3\ The summary data on the survey conducted by the Oak Ridge 
National Laboratory, as presented by the U.S. Department of 
Transportation, Joint Program Office for Intelligent Transportation 
Systems, appear in A Report to Congress: The National Intelligent 
Transportation Systems Program (draft, Jan. 1997).
---------------------------------------------------------------------------
    Data on which specific ITS technologies have been deployed are 
inconclusive. For example, according to the PTI study, the only ITS 
technology that a large number of urban areas had deployed was traffic 
signal control systems--systems designed to manage traffic flow by 
coordinating in real-time the timing patterns of traffic signals. The 
study reported that 60 percent of the larger urban areas had deployed 
such systems. In contrast, the Oak Ridge study showed that larger urban 
areas have planned or implemented a wide array of ITS technologies, 
including traffic signal control systems, freeway operation centers, 
incident management technologies, electronic toll collection, and 
transit technologies. In addition, our interviews with transportation 
planning officials in 10 of the Nation's larger urban areas and a 1996 
study of 7 urban areas by the Volpe National Transportation Systems 
Center\4\ found that freeway management systems, incident management 
systems, and traffic signal control were the most widely deployed. The 
Volpe study also found that multimodal traveler information and 
electronic fare payment systems were the least deployed.
---------------------------------------------------------------------------
    \4\ Intelligent Transportation Systems: Assessment of ITS 
Deployment, U.S. Department of Transportation. Research and Special 
Programs Administration-Volpe National Transportation Systems Center 
(July 1996)
---------------------------------------------------------------------------
    An example of an area that has widely deployed ITS technologies is 
Minneapolis. The Minneapolis ITS program, part of the Minnesota 
Department of Transportation's ``Guidestar'' program, first began 
operational tests in 1991. Since that time, about $50 million in public 
funding and $13.5 million in private resources has been invested in 
Guidestar projects. With these funds, Minneapolis has upgraded its 
traffic management center to better monitor traffic flow and roadway 
conditions and has installed ramp meters at numerous on-ramps of the 
major expressways. These meters control the flow of traffic entering 
the expressways and, according to DOT, have helped increase highway 
speeds during rush hour by 35 percent. Other projects in the Guidestar 
program include the use of ``smart tape'' that will notify those 
motorists who stray onto the shoulders of highways, the electronic 
enforcement of traffic laws, improved oversight of commercial vehicle 
(truck) regulations, and systems architecture to help integrate all ITS 
components.
    Despite these deployment efforts, existing ITS studies and the 
transportation officials we interviewed indicated that urban areas have 
not integrated the individual ITS technologies. According to the Oak 
Ridge study, very few areas are designing and implementing ITS in an 
integrated manner. The Oak Ridge study found no examples of a fully 
integrated ITS. In addition, the Volpe study found that transportation 
agencies were implementing ITS to improve the efficiency of their 
agencies but were not integrating these technologies with other 
transportation agencies. For example, the study said that transit 
agencies have usually functioned independently of highway agencies and 
are developing stand-alone systems. Several of the transportation 
planners we interviewed also noted that the deployment of ITS 
technologies had occurred in a non-integrated manner in their areas. 
For example, transportation officials in the Washington, D.C., area 
stated that local jurisdictions had implemented electronic toll 
collection, traveler information, and highway surveillance systems 
without integrating the components into a multimodal system.
Working Knowledge of the ITS Architecture and the Issuance of Technical 
        Standards Are Needed
    According to DOT and several transportation officials we contacted, 
widespread and integrated ITS deployment is dependent on the existence 
of a national ITS architecture and technical standards. However, the 
ITS architecture was not completed until July 1996, and DOT has just 
begun an extensive outreach and training effort to ensure that 
transportation officials around the Nation have an adequate 
understanding and working knowledge of the architecture. Furthermore, a 
5-year effort to develop technical standards began in January 1996. 
Several transportation officials stated that an effective outreach 
effort for the architecture and the timely completion of the standards 
are critical to ensure that the maximum benefits are obtained from the 
extensive ITS deployments that some urban areas plan for future years.
    The ITS architecture identifies the basic components of an 
integrated ITS, the functions such components perform, and how such 
components ``interface'' or share information with each other (see App. 
III). A commonly used metaphor in describing the architecture is a home 
stereo system. The stereo industry has determined the overall 
architecture that is, the functions that will be performed by the 
speakers, amplifier, radio receiver, compact disc player, etc.--as well 
as how these systems will interact to produce a desired sound. Within 
these constraints, the manufacturers may produce a wide array of 
product types, and an individual may design a stereo system suiting 
his/her own needs and budget.
    Technical standards are an outgrowth of the system architecture--
they specify, in detail, how the components will communicate to one 
another. For example, the architecture states that electronic toll 
collection will include a roadside reader that can read an in-vehicle 
electronic toll tag. The architecture does not specifically State how 
this linkage will be made. Instead, the standards prescribe the form 
and content of messages between the reader, the toll tag, and the toll 
facility. DOT and ITS America\5\ have been supporting the development 
of standards throughout the architecture development effort and in 
January 1996, contracted with five organizations to begin a 5-year 
effort to develop standards. While the standards development effort is 
scheduled for completion in 2001, some high-priority sets of standards 
are scheduled for completion within a year.
---------------------------------------------------------------------------
    \5\ ITS America is a consortium of private firms, public agencies, 
academic institutions, and related associations that plan, promote, and 
coordinate the development and deployment of ITS technologies in the 
United States.
---------------------------------------------------------------------------
    Adhering to the technical standards is important because the 
purchasers of ITS equipment do not want to be locked into proprietary 
systems that cannot be integrated with those of other manufacturers and 
for which replacement equipment or service may not be available if the 
vendor goes out of business. For example, in the 1970's the Chicago 
Department of Transportation contracted for a custom-designed traffic 
signal control system. Subsequently, the vendor went out of business, 
and the city had to scrap the system and purchase a completely new 
system.
    Effective outreach and training for the architecture and standards 
and the timely completion of technical standards are critical in the 
light of the extensive plans for future ITS deployments. Officials from 
most of the large urban areas we contacted consider ITS a key component 
of their future transportation systems and plan to devote more 
resources to ITS in upcoming years. The transportation planners we 
contacted stated that they plan to implement more ITS projects in the 
future. For example, the New York City area's short- and long-term ITS 
deployment plans include over $450 million in ITS projects. In 
addition, DOT has awarded over $26 million in early deployment planning 
grants to 75 urban areas to determine their short- and long-term ITS 
deployment needs.
Limited Technical Knowledge, Cost-Benefit Data, and Funding Constrain 
        Deployment
    Our discussions with transportation planning officials in 10 urban 
areas and our review of several existing studies indicate that the lack 
of (1) knowledge about ITS applications at the State and local level; 
(2) data on the costs and benefits of ITS technologies; and (3) funding 
for ITS, in the light of other transportation investment priorities, 
are the key obstacles to the widespread deployment of ITS technologies.
            Transporation Officials See Need for ITS Technical 
                    Knowledge
    In our discussions of the potential for ITS deployment with 
transportation planning officials in 10 large urban areas, the 
officials consistently expressed concerns about the lack of knowledge 
about ITS at the State and local level. According to these officials, 
most transportation engineers do not possess the technical skills 
needed to operate and maintain advanced ITS computer and 
telecommunication technologies. Similarly, the deputy executive 
director of the Institute of Transportation Engineers said that 
although the Institute was involved in developing the national 
architecture and the members of the Institute attended numerous 
training and outreach sessions, most members do not have the systems 
integration background needed to develop a clear understanding of what 
the architecture is, how it works, and how it benefits the ITS 
applications. He said that most State and local implementers of ITS 
will have to rely on system integration consultants to ensure that 
their systems are compatible with the national architecture. This view 
was also expressed by the executive director of the American 
Association of State Highway and Transportation Officials at an ITS 
conference. He said that the States and urban areas have a shortage of 
technically trained persons to deal with ITS because transportation 
agencies are primarily staffed with civil engineers, not electrical 
engineers or system integrators, and new skills are needed.
    The issue of technical knowledge was also identified as an obstacle 
to deployment in several studies we reviewed. According to DOT's 1997 
report on nontechnical barriers to ITS deployment,\6\ the staffing and 
educational needs of transportation agencies is one of the most 
pressing issues confronting the ITS program. The report concludes that 
the successful deployment of ITS depends on retraining the existing 
employees and hiring individuals who possess new skills. Similarly, 
PTI's survey of urban areas found that a lack of staffing and employee 
training was an obstacle to deployment: 56.6 percent of respondents 
cited staffing and training as a problem. PTI also held a series of 
focus groups with local officials in 1995 and found that elected 
officials do not talk about ITS deployment as a priority and that few 
see any political benefits in spending more time and money on ITS. The 
1996 Volpe Center report identified both the lack of training and 
education among the staff required to work on ITS projects and a lack 
of awareness about ITS among politicians and agency managers as 
barriers to successful ITS deployment.
---------------------------------------------------------------------------
    \6\ A Report to Congress: Nontechnical Constraints and Barriers to 
the Implementation of Intelligent Transportation Systems, U.S. 
Department of Transportation, Joint Program Office for Intelligent 
Transportation Systems (draft, Jan. 1997).
---------------------------------------------------------------------------
            Transportation Officials See Need for Cost-Benefit Data
    Our discussions with transportation planning officials also 
revealed that the lack of quantitative data on the costs and benefits 
of deploying ITS is also seen as a deterrent to deployment. According 
to one official, there are no adequate economic models that local 
transportation planners can use to determine the costs and benefits of 
ITS, thereby making it difficult to justify expenditures on ITS-related 
projects. Several officials told us that quantitative data proving that 
ITS could reduce traffic congestion or make transit more reliable would 
enable them to secure funding for ITS projects.
    The lack of cost-benefit information was also seen as an obstacle 
in some existing studies. Over 43 percent of the respondents to the PTI 
survey indicated that the lack of cost-benefit data and the lack of 
proven applications were obstacles to deploying ITS. In addition, the 
1996 study by the Volpe Center concluded that relatively few formal 
cost-benefit analyses of ITS had been conducted. The report further 
stated that transportation officials needed to conduct more analyses of 
the benefits of ITS deployments and that such data are needed to 
justify spending funds on ITS.
            Transportation Officials See Need for ITS Funding
    Our interviews with transportation planning officials and review of 
studies indicate that the competition for limited financial resources 
between ITS and traditional transportation projects will limit the 
deployment of ITS. For example, officials from the Philadelphia urban 
area stated that they have plans representing over $100 million in ITS 
projects, but because of the pressing needs of their existing 
transportation infrastructure, it was doubtful whether they would 
implement many of their planned ITS projects. The officials were 
particularly concerned that the need to repair the deteriorating roads 
and bridges in their area would leave little funding for ITS projects. 
In addition, all of the officials we interviewed from the 10 urban 
areas stated that because Federal law precludes the use of Federal 
funds to maintain ITS technologies, it will be difficult for some areas 
to deploy ITS. These officials were concerned that transportation 
planners in some areas would not want to make large capital investments 
in ITS technologies that could not subsequently be maintained.
    Eighty percent of the PTI survey's respondents cited insufficient 
funding as an obstacle to deploying ITS. PTI concluded that the 
majority of local jurisdictions believed that the funding levels for 
ITS need to increase in order to successfully deploy ITS. In addition, 
the Volpe Center's report concluded that, due to funding limitations, 
transit agencies will spend little to deploy ITS technologies unless 
such funds are earmarked for ITS deployment and that transit 
administrators feel that pursuing ITS projects will force other budget 
items to be dropped or reduced. The Volpe report stated that these 
factors would reduce the viability of ITS projects for transit. 
Finally, a 1997 DOT draft report\7\ concluded that the competition for 
limited financial resources between ITS and traditional transportation 
projects will limit ITS deployment.
---------------------------------------------------------------------------
    \7\ A Report to Congress: The National Intelligent Transportation 
Systems Program, U.S. Department of Transportation, Joint Program 
Office for Intelligent Transportation Systems (draft, Jan. 1997).
---------------------------------------------------------------------------
            federal actions to foster the deployment of its
    The Federal Government can take a number of actions to address the 
major barriers to ITS deployment that we identified. DOT can take, and 
in some cases has taken, a number of measures to address the 
programmatic barriers. These include continuing and expanding training 
and outreach programs, effectively disseminating information about 
success stories and the costs and benefits of ITS deployments, and 
completing the development of the ITS technical standards. 
Congressional action would be required to address the financial 
barriers. Among urban transportation planners. we found a wide range of 
opinions on the desirability of expanded Federal deployment assistance 
and on how such assistance could best be structured. However, all 
officials we contacted said that the flexibility to use Federal-aid 
funds for maintaining ITS efforts was desirable.
Programmatic actions to Address Deployment Obstacles
    Our review of the existing studies and our discussions with 
transportation planning officials in 10 of the nation's larger urban 
areas identified a number of recommendations on how DOT can assist 
State and local implementers to overcome the key programmatic obstacles 
to deployment. First, to address the issue of training and outreach 
needs, the 1996 Volpe Center Study proposed that DOT provide education 
to State and local transportation staff and develop an information 
transfer program whereby DOT would provide contacts to State and local 
officials for answering ITS questions. During our interviews, most 
officials stated that providing training and outreach was an important 
role for the Federal Government. In addition, providing training and 
technical assistance in deploying, operating, maintaining, and 
conforming ITS technologies to the national architecture and standards 
was frequently cited as one of the most important actions the Federal 
Government could take to foster deployment.
    DOT has taken some actions to address the programmatic obstacles. 
Through a 2-year cooperative agreement with PTI, DOT has implemented an 
outreach and training program for local agencies. Under the agreement, 
PTI/DOT have created a network of local government elected officials to 
help share information between DOT and local officials. DOT has also 
developed an ITS 5-year capacity-building strategic plan for DOT staff, 
State highway agency staff, metropolitan planning organization staff, 
and other local government staff. The goal is to expand the knowledge 
of ITS among Federal, State, and local transportation officials and to 
create a cadre of highly trained ITS professionals who are able to 
plan, design, implement, operate, and maintain ITS technologies.
    To disseminate information on the benefits of ITS DOT is developing 
benefits reports, in which it presents data based on the experience 
gained in field operational tests and other deployed systems. In a 
September 1996 report,\8\ DOT provided the results on the benefits of 
ITS technologies, including time savings, crash reductions, and 
customer satisfaction. For example, the report indicates that the use 
of advanced traffic management systems on an Interstate highway in 
Minneapolis has reduced vehicle crashes by 27 percent. Second, DOT has 
implemented the Model Deployment Initiative. The initiative is designed 
to ``showcase'' sites that will demonstrate the costs and benefits of 
an integrated ITS system. DOT has selected four metropolitan areas as 
model sites--New York City, San Antonio, Phoenix, and Seattle and--
expects these projects to be operational during 1997. However, the 
results from these model sites will not be available until late 1998 or 
early 1999.
---------------------------------------------------------------------------
    \8\ Review of ITS Benefits: Emerging Successes, U.S. Department of 
Transportation, Federal Highway Administration (Sept. 1996).
---------------------------------------------------------------------------
    Finally, the lack of technical standards is seen as an impediment 
to the widespread deployment of ITS. During our interviews, several 
transportation planners said that DOT needs to ensure that the efforts 
to develop the standards are completed in a timely manner. DOT has 
awarded contracts to five standards development organizations to 
complete the 44 highest-priority sets of standards over the next 5 
years.
Mixed Views on Large-Scale Federal Financial Assistance for ITS
    The transportation planning officials we contacted had mixed views 
on the need for dedicated Federal funding for ITS deployment. Officials 
from 6 of the 10 urban areas supported a large dedicated program of $1 
billion or more per year, stating that, in the light of other 
priorities, additional ITS deployments would not otherwise occur. 
Officials of the four other urban areas opposed such a program because 
dedicated ITS funds would be too prescriptive and might result in poor 
investment decisions. In the absence of a large program, officials from 
5 of the 10 areas we contacted supported a smaller seed program. 
Officials from 9 of the 10 areas supported the concept of using ITS 
funds to maintain ITS technologies.
    As shown in table 1, the officials we contacted were divided on the 
need for a large-scale Federal aid program dedicated to deploying ITS. 
Typically, the supporters contended that future ITS deployments would 
be limited without specific funding for this approach. For example, a 
New York transportation planner stated that without large-scale 
funding, ITS investment would have to compete for scarce dollars with 
higher-priority road and bridge rehabilitation projects. The official 
believed that, under such a scenario, plans for deploying ITS would be 
delayed. Another official likened ITS to the Interstate system, noting 
that without dedicated funding, the Interstate system would never have 
been built.
                                 ______
                                 

Table 1.--Transportation Planners' Views on Federal Financial Assistance
------------------------------------------------------------------------
                Type of program                   Support       Oppose
------------------------------------------------------------------------
Large Federal program.........................            6            4
  Set-aside of existing program...............            0  ...........
  New funds...................................            6  ...........
  Grant program...............................            3  ...........
  Formula program.............................            1  ...........
  Mixed grant/formula.........................            2  ...........
Smaller seed program..........................            5            5
------------------------------------------------------------------------
Source: GAO's analysis of interview data.

    The six supporters of large-scale ITS funding all expressed a 
preference for newly authorized ITS money, as opposed to a set-aside of 
existing Surface Transportation Program or National Highway System 
funds. As one official noted, transportation officials would not 
support taking money away from existing programs and distributing it to 
ITS because there are too many other pressing needs.
    Three of the six large-program supporters favored a grant approach, 
under which only applicants with a specific ITS proposal would receive 
funds. They stated that this approach would ensure that the funds went 
only to areas with a definite need and would encourage ITS innovations. 
The advocate of the formula approach, which would distribute ITS funds 
to all States on the basis of specific factors, such as total urbanized 
population, supported the formula approach because it would be to the 
advantage of his very populous urban area The supporters of the mixed 
approach said that all areas should get some ITS funds but that larger 
amounts should be available for areas with well-developed plans for 
larger ITS initiatives.
    Four of the 10 officials we interviewed opposed a large-scale 
Federal-aid program. All of these officials generally opposed the 
establishment of additional Federal funding categories. One official 
noted that transportation planners generally identify a problem and 
then identify and assess potential solutions on the basis of the 
projected costs and benefits. Other officials noted that these resource 
allocation decisions are best made at the local level, not at the 
Federal level, and that to prescribe ITS would reduce State and local 
flexibility. One official noted that earmarking large funds for ITS 
could lead to calls for large-scale Federal assistance for intermodal 
projects, trucking projects, and so on. Some officials also said that 
such a program could drive unnecessary ITS investment, as 
decisionmakers chased us capital money, even though another solution 
might have been more cost effective. Finally, officials from one area 
noted that such a program was very premature, stating that despite the 
exaggerated claims made by ITS proponents, the benefits of many ITS 
applications have yet to be decisively proven.
    In the absence of a large-scale program, the representatives from 
five urban areas supported a smaller grant program of about 8100 
million annually nationwide that could be used to fund experimental ITS 
applications, promote better working relationships among the agencies 
and jurisdictions deploying ITS in a single urban area, or support 
information systems for travelers. The opponents of the smaller program 
felt that this level of funding would be too small to be of much 
assistance.
                               conclusion
    The reauthorization of ISTEA in 1997 represents an important 
milestone for reassessing the direction of DOT's ITS program. After 7 
years and $1.3 billion in Federal funds for an ITS program emphasizing 
research and testing ITS technologies, DOT is proposing a more 
aggressive Federal role that focuses on deploying ITS systems, 
particularly in large urban areas. However, before DOT can aggressively 
pursue ISTEA'S goal of the widespread deployment of integrated ITS, it 
must overcome the obstacles cited in this report. First, the system 
architecture is relatively new, and State and local transportation 
officials have limited knowledge of its importance. Second, it will 
take time for State and local transportation agencies to supplement 
their traditional approach to solving transportation problems through 
civil engineering strategies with the information management and 
telecommunications focus envisioned by an integrated ITS approach. In 
addition, time will be needed to assess the results of DOT's model 
deployment program--a program designed to document the benefits of an 
integrated ITS deployment program located in four urban areas. Programs 
that focus on training for State and local officials on the system 
architecture and on more information on the benefits and costs of ITS 
applications are necessary prerequisites to the acceptance of ITS as an 
important tool for addressing transportation problems. Finally, 
widespread integrated deployment cannot occur without the technical 
standards that DOT proposes to complete over the next 5 years. These 
standards are needed so that State and local governments do not 
purchase ITS technologies, such as electronic toll collection 
facilities, that are incompatible with the system architecture and 
other ITS applications.
                            agency comments
    We provided a draft of this report to DOT for review and comment 
and met with the director of the ITS Joint Program Office and her staff 
to obtain the Department's comments. In general, they said that the 
report accurately portrayed the challenges that the ITS program faces 
in fostering the widespread deployment of integrated ITS systems. In 
particular, they said that the report accurately highlighted the nature 
and importance of the ITS architecture and standards. They reemphasized 
the fact that while ITS investments are being made, the urban areas 
deploying ITS need to consider the integration of the various 
technologies even in advance of the completed standards. The officials 
said that urban areas should plan to integrate their systems as early 
as possible rather than waiting until they have deployed individual ITS 
technologies. The officials also noted that we should reemphasize that 
our report focused only on metropolitan ITS infrastructure and did not 
review other areas of ITS--such as commercial vehicle technologies and 
the development of the automated highway system. We revised the 
beginning of the report to note that we focused on metropolitan ITS 
infrastructure only. Finally, the officials provided several specific 
editorial comments, which we have incorporated where appropriate. The 
officials made no comments on our overall conclusions.
    We performed our review from October 1996 through February 1997 in 
accordance with generally accepted government auditing standards.
    We are sending copies of this report to the Secretary of 
Transportation; the Administrator of the Federal Highway 
Administration; the Administrator of the Federal Transit 
Administration; cognizant congressional committees; and other 
interested parties. Copies will be available upon request.
                                 ______
                                 
                               Appendix I
                         scope and methodology
    To determine how the Department of Transportation (DOT) has changed 
the focus of the Intelligent Transportation Systems (ITS) program since 
the passage of the Intermodal Surface Transportation Efficiency Act 
(ISTEA). We first determined the original focus of the program. We did 
this by examining DOT's ITS strategic plan and other documents. We also 
interviewed transportation officials at the Federal, State, and local 
level, as well as ITS experts in industry and academia. To determine 
any changes to the program's focus, we interviewed ITS program 
management and reviewed their draft proposal for reauthorizing the 
program.
    To examine progress in deploying integrated ITS and the key factors 
affecting the deployment, we reviewed recent survey results and 
research work prepared for DOT, conducted by Public Transportation 
Technology Inc. (PTI), the Volpe National Transportation Systems 
Center, and the Oak Ridge National Laboratory. On the basis of our 
review of these documents, we used a standards series of questions to 
conduct in-depth interviews with transportation planning officials in 
10 of the nation's largest and most congested urban areas who are, 
because of their areas' size and congestion, likely to be familiar with 
ITS technologies.\9\ We discussed whether (1) these areas had deployed 
ITS technologies, (2) which specific technologies they had used an why, 
and (3) what if any plans they had for future ITS deployment.
---------------------------------------------------------------------------
    \9\ These areas included Detroit, Houston, Los Angeles, Miami, 
Minneapolis, New York, Philadelphia, San Francisco, Seattle, and 
Washington, DC.
---------------------------------------------------------------------------
    To identify ways in which the Federal Government can facilitate the 
deployment of ITS, we used a standard series of questions to guide the 
discussions with the officials of the selected urban areas. The 
discussions covered the types of financial and nonfinancial incentives 
that would be most effective in spurring deployment. We discussed the 
general pros and cons of Federal financial assistance, as well as how a 
financial assistance program might be structured, including whether the 
program should be a large program of $1 billion or more annually or a 
smaller seed program of about $100 million. We also used the results of 
the PTI and Volpe studies, in concert with our interviews, to identify 
nonfinancial incentives the Federal Government could take.
                              Appendix II
         the its program's funding levels, fiscal years 1991-97
    Figure II.1 shows the levels of funding for the ITS program. The 
total funding for the program, which includes projects in three modal 
administrations--the Federal Highway Administration, the Federal 
Transit Administration, and the National Highway Traffic Safety 
Administration--has increased from $22 million in 1991 to $233 million 
in 1997. The total funding for the 7-year period (fiscal years 1991-97) 
was $1.3 billion. This funding includes $645 million in contract 
authority granted for the program under the Intermodal Surface 
Transportation Efficiency Act (ISTEA) and $624 million provided through 
the appropriations process.

    Figure II.1: Funding for the Intelligent Transportation Systems 
Program, Fiscal Years 1991-97 


    Note: For fiscal years 1992-97, ITS funding includes both the 
contract authority granted under ISTEA and the funds provided through 
the appropriations process. In fiscal year 1991, funds were provided 
through the appropriations process. Fiscal year 1995 reflects a 
rescission, and fiscal year 1996 reflects the reduction associated with 
ISTEA section 1003.
                              Appendix III
                    overview of the its architecture


    The National ITS architecture provides overall guidance to ensure 
system, product, and service compatibility/interoperability without 
limiting the design options of a stakeholder. The architecture provides 
a common structure for the design of intelligent transportation 
systems. It is not a system design nor is it a system concept. What it 
does define is the framework around which multiple design approaches 
can be developed each one specifically tailored to meet a user's 
individual needs. The architecture defines the functions that must be 
performed to implement a given user service, the physical entities or 
subsystems where the functions reside, the interfaces/information flows 
between the physical subsystems, and the communication requirements for 
the information flows. Figure III.1 outlines the physical architecture 
that defines the physical components of an integrated ITS system.
    The physical architecture defines four systems that encompass 19 
subsystems:
    Center subsystems deal with those functions normally assigned to 
public/private administrative, management, or planning agencies. For 
example, the traffic management subsystem processes traffic data and 
provides basic traffic and incident management services through the 
roadside and other subsystems.
    Roadside subsystems include functions that require convenient 
access to a roadside location for the deployment of sensors, signals, 
programmable signs, or other interfaces with travelers and vehicles of 
all types. For example, a toll collection subsystem interacts with 
vehicle toll tags to collect tolls and identify violators.
    Vehicle subsystems are installed in a vehicle. For example, 
commercial vehicle subsystems store safety data, identification 
numbers, and other regulatory information to expedite commercial 
vehicle clearance by interacting with roadside commercial vehicle check 
points.
    Traveler subsystems are designed to be accessible to the traveling 
public to help them make optimal travel choices. For example, a 
traveler at a shopping center can access an information kiosk to 
determine which bus to take and the time of the next scheduled 
departure. Alternatively, a commuter can access information on freeway 
traffic conditions via a home personal computer. These systems derive 
information from traffic, transit, and other management centers.
    The architecture also identifies a basic communications 
infrastructure by which these subsystems can share information. It is 
this communication between subsystems that results in a truly 
integrated ITS system.
   Response of Phyllis F. Scheinberg to an Additional Question from 
                             Senator Warner
    Question. You've testified in your testimony that ISTEA provided 
$3.5 billion for surface transportation research, of which $1.3 billion 
has been dedicated to ITS technology. Did your analysis examine any 
issues relating to competition for these funds?
    Response. ITS projects are selected in various ways. The Department 
of Transportation's Inspector General reported in 1995 that FHWA, 
NHTSA, and FTA typically conducted an annual solicitation for new ITS 
projects, and subjected the proposed projects to their own, agency-
specific selection criteria. For example, FHWA uses a three-level 
screening process to select research and development projects, and a 
four-level screening process to select operational test projects. The 
IG noted that NHTSA and FTA had less formal procedures for selecting 
projects. In general, the report found that FHWA followed its 
procedures for selecting projects (the report did not comment on NHTSA 
or FTA), but there was no central oversight of the three agencies' 
selection processes. As a result, the report found the potential for 
duplication of program efforts, and limited assurance that sufficient 
attention would be paid to intermodal projects.
    DOT's Joint Program Office used a competitive process to develop 
the national ITS architecture and select cities for its model 
deployment program. DOT received four detailed proposals for developing 
the national ITS architecture, and after reviewing the proposals, 
selected two architecture development teams. On the model deployment 
initiative, DOT solicited proposals from around the country, and 
received 23 applications. Based on selection criteria, the JPO selected 
four model deployment cities--New York, San Antonio, Phoenix, and 
Seattle.
    ITS projects are also selected by the Congress through earmarks. 
Over the past 6 years, congressional earmarks have comprised, on 
average, about 38 percent of ITS funding. The level of congressional 
earmarks varied from 75 percent in fiscal year 1993 to 20 percent in 
fiscal year 1996. DOT officials stated that congressional directives 
hamper their ability to direct their programs and match funds with 
critical needs.
                                 ______
                                 
     Response of Phyllis F. Scheinberg to Additional Question from 
                             Senator Chafee
    Question. In your statement, you said that officials from the 
Federal Highway Administration's Office of Engineering suggested that 
there was not consensus on the desirability of the design-build 
approach. However, your testimony also cites the numerous benefits of 
design-build. It seems like we have identified a good idea. Why do we 
need to wait an additional 5 years, as the FHWA Office of Engineering 
seems to suggest? What is the basis for the apparent lack of consensus?
    Response. The benefits that we cited in our statement are those 
that advocates of design-build expect to receive from using this form 
of contracting. FHWA is currently trying to determine whether highway 
agencies can actually realize these benefits through its special 
experimental project. In terms of the lack of consensus on the 
desirability of design-build, there are various reasons why the highway 
construction industry has been cautious about using it. First, 
professional design firms fear that as subcontractors to the builder, 
they will be caught between the quality demands of the owner and the 
competitive (cost) demands of the contractor. Design firms are also 
concerned about bearing the cost of developing preliminary designs and 
then losing the contract through competition. Second, trade 
associations have expressed concern that small contractors may not be 
able to compete with large firms because small firms cannot easily bear 
the burden of design costs and warranties. Finally, contractors are 
concerned that if longer term warranties are part of design-build 
projects, their bonding capacity would be tied up and the unknown 
environmental, geological, operational, and political risks associated 
with the design-build contract could be transferred to them through a 
warranty.
                                 ______
                                 
    Responses of Phyllis F. Scheinberg to Additional Questions from 
                              Senator Reid
    Question 1. Daniel V. Flanagan, Jr., the Chairman of the Commission 
to Promote Investment in America's Infrastructure, a Commission 
sponsored by the Congress under ISTEA, has recommended that the United 
States establish a National Infrastructure Corporation. The goal of 
such a corporation is to use Federal dollars as seed money to leverage 
vastly increased private sector investment, such as pension funds, in 
transportation projects that have a likelihood of turning a profit. In 
your examination of the smaller-scale State Infrastructure Bank pilot 
program, did you come away with the impression that there are a lot of 
financially viable projects out there waiting this sort of seed money?
    Response. In our October 1996 report, we reported that the absence 
of new Federal money to capitalize a State infrastructure bank was a 
factor that definitely diminished the prospects that about half of the 
States that we surveyed would participate in the pilot program. 
However, DOT's appropriation for fiscal year 1997 provided seed money, 
and 28 additional States have now applied for participation in State 
infrastructure banks.
    Nonetheless, some States we surveyed expressed aversion to debt 
financing and concern about whether there are enough revenue-generating 
projects to sustain a State infrastructure bank.
    Question 2. Mr. Constantino of ITS America testified about his 
organization's ideas for ITS under this year's transportation bill. He 
is going to suggest that ITS be treated as a ``soft set-aside.'' 
Basically, a State that does not want to participate, would be given 
the option to opt-out, with several conditions. Do you think this would 
placate those States that you surveyed that are concerned about a 
Federal dictate diluting the overall pool of money available to them? 
What else can DOT do to make this program more appealing to the States?
    Regarding the first question, our work suggests that a soft-set 
aside may not placate those State that oppose a large Federal program 
for ITS deployment. About half of the States we spoke to opposed a 
large Federal ITS deployment program, even if the funds to pay for this 
program were new funds. Typically, these State officials noted that 
such a program could drive unnecessary ITS investments, while more cost 
effective alternatives were available. State officials believed that 
States and localities need maximum flexibility to address their unique 
transportation problems. In fact, states currently have the flexibility 
to use their existing Federal aid highway funds to pay for both the 
capital and operating costs of ITS projects.
    On the second question, we believe that DOT should emphasize 
training and education of transportation officials at the State and 
local level. Deploying and maintaining ITS technologies require skills 
that current transportation professionals, trained as civil engineers, 
often do not have. Further, DOT needs to expand its efforts to 
disseminate information on the costs and benefits of ITS. Our research 
revealed that some transportation officials are quite skeptical of ITS 
solutions to transportation problems, viewing ITS in part as being 
driven by the computer, telecommunications, and consulting industries. 
More objective analysis demonstrating the benefits of ITS is needed.
                                 ______
                                 
     Prepared Statement of Gerald Pfeffer, Senior Vice President, 
                     United Infrastructure Company
                              introduction
    Good morning, Mr. Chairman and members of the Senate Subcommittee 
on Transportation and Infrastructure. My name is Gerald Pfeffer. I'm a 
senior vice president with United Infrastructure Company, a partnership 
of the Bechtel Group and Peter Kiewit Sons', two of the most respected 
names in the construction industry. With me this morning is Ms. Edith 
Page, a transportation expert in Bechtel's Washington office.
    We develop, finance and operate toll roads, airport and water 
facilities projects in partnership with public agencies. We appreciate 
the opportunity to brief you on three innovative highway projects and 
to suggest some ways that the Congress could help stimulate private 
investment in our Nation's transportation facilities. I'd like to make 
four key points:
     Our transportation funding problems are increasing.
     Private investors stand ready to rapidly implement 
innovative and popular solutions.
     American motorists will pay market prices to avoid 
congestion.
     Federal leadership is needed for the public to realize the 
maximum benefits.
                          the situation today
    First, let me characterize today's situation:
    While our growing population is driving more miles than ever, 
they're driving the most fuel-efficient cars in history. That means 
more wear and tear on our highways, but lower gas tax revenues. And the 
tax revolt shows no sign of ebbing. The bottom line: Many States can't 
afford to maintain their existing highways, much less build new ones.
    There is a solution. There's a large pool of private capital 
available, and investors are always on the lookout for projects that 
offer adequate returns on investment. In the last 7 years, our parent 
companies have arranged over $11 billion worth of financing. Billions 
more are available, for the right opportunities.
    However, unless we act now, much of this capital will be directed 
to projects overseas. It's estimated that Asian countries alone need a 
billion dollars a week to upgrade their infrastructure. Many Nations 
rely on private financing to modernize and make their economies more 
productive. Ironically, much of this money comes from U.S. 
institutions. Every billion we invest creates an estimated 20,000 jobs. 
Isn't it time we look for ways to keep this capital in the United 
States?
    In the Intermodal Surface Transportation Efficiency Act of 1991, 
Congress took the first steps to encourage private financing. It's a 
solid foundation to build upon, but only a handful of projects have 
been realized. To maximize the potential of public-private 
partnerships, some additional innovative policy changes are needed. 
I'll describe these changes in a few minutes.
                              case studies
    But first, let me share with you three projects that show what can 
be done, given the right backing: the 91 Express Lanes in Orange 
County, California, the I-15 Congestion Pricing Demonstration in San 
Diego, California, and the Tacoma Narrows Bridge in Pierce County, 
Washington. Additional information on these projects is included in 
your packet.
91 Express Lanes, Orange County, California
    Our affiliate, California Private Transportation Company, holds a 
franchise awarded by the California Department of Transportation to 
develop, finance, construct and operate the 91 Express Lanes--the 
world's first fully automated toll road, the first toll road to be 
financed in more than 50 years, and our country's first example of 
congestion pricing.
    This is one of four privately financed transportation projects 
authorized by the California Legislature in 1989, and the only one 
completed to date.
    This $126 million project added four lanes in the median of the 
existing Riverside (91) Freeway, over a 10-mile stretch from Anaheim in 
Orange County to the Riverside County line. We did it without a dollar 
of Federal or State money. In fact, we're going to pay the State an 
additional $120 million over 35 years for maintenance and police 
services that would otherwise have been paid by California taxpayers.
    We depend on technologies that literally did not exist when the 
102d Congress began to draft ISTEA a few years ago. Today, the project 
stands as perhaps the best example in the U.S. of the kind of 
innovation that private investors, in partnership with Federal, State 
and local agencies, can accomplish. Here are a few of the new ideas 
we've implemented:
     The 91 Express Lanes is a toll road without toll booths. 
Using windshield-mounted gadgets called ``transponders,'' we deduct 
user fees electronically from our customers' prepaid accounts as they 
cruise along at 65-miles-per-hour.
     While variable-pricing has long been used by phone 
companies, airlines, hotels and other capital intensive services, 91 
was the first toll road in the United States to vary tolls depending on 
the time of day, direction of traffic and day of the week. Off peak, we 
charge as little as 50 cents. During peak hours, the toll steps up to 
$2.75 for the 10-mile stretch. Variable tolls would not be possible 
without advanced technology.
     Our transponders comply with California standards. Through 
a reciprocal agreement, our customers can use their transponders on the 
Foothill and San Joaquin Hills Transportation Corridors and vice versa. 
They'll soon be accepted on toll facilities throughout the State.
     91 is the only toll road in the world that offers a 
guarantee. If at any time you're unhappy with our service, return your 
transponder and we'll refund your deposit and your last five tolls.
     To provide quality service, we monitor hundreds of sensors 
and dozens of TV cameras from our own state-of-the-art traffic 
management center. If there's an incident, we respond with our own 
fleet of tow trucks.
     We even have our own affinity program. Frequent drivers 
can join the 91 Express Club. Members pay $15 per month and save 50 
cents on each trip.
     The project was constructed using the design/build method. 
That saved money and improved quality. It also led to some real time 
savings. For example, we built a $2 million temporary bridge so a key 
interchange could continue to carry 250,000 cars a day while we rebuilt 
its primary structures. We more than paid for the bridge with the 
interest we saved by slicing 13 months off the State's original 
schedule.
    Most of our customers are thrilled with the 91 Express Lanes. Some 
indicators of their satisfaction:
     Before we opened our new lanes, the freeway was stop and 
go for 6 hours each workday, and the trip often took 45 to 60 minutes. 
Today, our customers report time savings of 20 minutes during peak 
hours. Even those who choose to stay on the adjacent free lanes 
benefit, since Caltrans reports that traffic on those lanes is flowing 
better than it has in years.
     Since we opened about a year ago, we've distributed more 
than 80,000 transponders, and we're adding over a hundred customers a 
day. Several homebuilders in Riverside County have begun offering 
prepaid transponders to new home buyers.
     To make sure we're serving our customers' needs, we do a 
lot of market research. We recently asked our customers what we could 
do to improve the 91 Express Lanes. Their most frequent request? ``Make 
it longer!''
I-15 Congestion Pricing Demonstration, San Diego, CA
    The Interstate 15 ExpressPass program is the Nation's first 
federally funded test of congestion pricing. The 3-year project is 
located on an eight-mile stretch of reversible high occupancy vehicle 
lanes in San Diego. United Infrastructure Company serves as the 
operations subcontractor for the San Diego Association of Governments.
    I-15 ExpressPass currently allows a limited number of solo drivers 
to use the HOV lanes for a monthly fee. We started on December 2 with 
500 permits at $50 a month, and sold out on day one. We were recently 
authorized to expand to 700 permits at $70 per month, and there are 
about 500 names on our waiting list. We expect to issue up to 900 
permits next month.
    An electronic system like the one we use on the 91 Express Lanes 
will be installed later this year. At that point, we expect to begin 
testing additional concepts, including dynamic pricing.
Tacoma Narrows Bridge, Pierce County, Washington
    The Tacoma Narrows Bridge, located on State Route 16 in Pierce 
County, Washington, is the primary link between the Seattle-Tacoma 
metro area and the scenic Olympic Peninsula.
    The first bridge at this site was destroyed by aerodynamic problems 
soon after it opened in 1940. The existing four-lane, 2,800 foot, 
suspension bridge was completed in 1950.
    Recent growth has led to increased traffic on the bridge. 
Congestion lasts for 3 to 4 hours each day, costing motorists over 
500,000 hours of lost time every year. Over 80,000 vehicles use the 
bridge each day. That's expected to grow to 108,000 vehicles by 2010.
    In 1993, legislation was adopted authorizing the Washington State 
Department of Transportation (WSDOT) to enter into partnerships for the 
private financing of transportation facilities. A year later, WSDOT 
selected our company over two competitors to negotiate a franchise for 
improvements in the SR 16 corridor.
    During 1995, in an effort to stop two other toll roads that had 
become controversial, the legislature adopted a number of changes in 
the program. Last year, the legislature authorized WSDOT to contract 
with our firm for technical, financial and environmental studies for 
the SR 16 corridor. Like a State Infrastructure Bank, the legislature 
anticipated that public funds advanced for these studies would be 
reimbursed from the proceeds of the project's financing.
    We're halfway through a Federal Major Investment Study, and our 
team has identified a number of innovative approaches for solving 
congestion. These include a new bridge, double-decklng the existing 
bridge, a transportation demand management approach using peak hour 
pricing and moveable barriers, and a transit-intensive alternative. 
We're very proud of our extensive public involvement program, which 
includes a storefront information center and an Internet home page.
    We're pleased to be able to continue to work with WSDOT on this 
important project.
                       key legislative provisions
    In our experience, the combination of private funds and innovative 
technologies can help reduce gridlock. Americans will accept new 
methods of financing and operating our highway system. But to make more 
of these projects a reality, we need additional enabling legislation. 
Because of the historic Federal-State partnership in transportation, 
the States are unlikely to embrace this concept without Federal 
encouragement. We urge Congress to include the following provisions in 
the ISTEA reauthorization bill:
    1. S. 275, which would establish a pilot program to test the use of 
tax-exempt debt in conjunction with privately financed transportation 
projects.
    2. A Transportation Infrastructure Credit Program, which could 
provide development risk insurance, revenue risk insurance, 
subordinated debt and related support measures.
    3. Authority for toll financing of new and reconstructed segments 
of the Interstate System.
    4. Standardized State and local laws and regulations governing the 
development and operation of projects financed through public-private 
partnerships. Incentives could include:
         Increased flexibility in the timing and use of Federal 
        cash-flows,
         Expanded access to Federal credit enhancement 
        mechanisms, and
         LAdditional authority and funds to expand the State 
        Infrastructure Bank program.
    5. Federal, State, regional and local project approval procedures 
that provide the flexibility needed for innovative funding methods.
    6. Clarification of the environmental permits associated with 
partnership projects. For example, lenders and rating agencies are 
concerned that there are no time limits on challenges to Federal 
environmental decisions. We also recommend that provisions for toll 
operation be included in all applicable environmental impact studies.
    In addition to these significant policy changes, we support the 
adoption of national standards for automatic vehicle identification 
systems, as well as expanded research and demonstrations of congestion 
pricing, automatic vehicle occupancy verification, automatic license 
plate recognition, and improved regional traffic modeling. To avoid 
charges of ``double taxation,'' we recommend that States be allowed to 
rebate Federal taxes paid on fuels consumed on toll roads.
                               conclusion
    As head of a company that invested millions to reduce gridlock on 
one of America's busiest freeways, I can say without hesitation that 
public-private partnerships offer a win-win-win opportunity.
         They're good for the public sector,
         They're good for private investors, and
         Most of all, they're good for our Nation's motorists.
    The creativity, technology and private capital are available for 
the right projects. What's needed is additional enabling legislation to 
clearly signal the Federal Government's commitment to innovative 
public-private partnerships. By encouraging the States to pursue these 
partnerships, Congress can trigger billions of dollars of private 
investment and help solve some of America's most intractable transport 
problems, long before public funds could become available.
    Thank you for allowing us to share our views with you. We'd be 
happy to arrange briefings or tours for any Senators or staff members 
interested in learning more about our projects.
    I'd be happy to answer any questions.
    
    
      Responses of Gerald S. Pfeffer to Additional Questions from 
                             Senator Chafee
    Question 1. Your testimony makes the point that American motorists 
are willing to pay market prices to avoid congestion. A special TRB 
committee cited in Mr. Skinner's testimony, on the other hand, found a 
lack of public and political support for congestion pricing. Can you 
clarify this apparent discrepancy?
    Response. Mr. Skinner was referring to Curbing Gridlock, a 1994 
report by the Transportation Research Board that cited the 91 Express 
Lanes as America's first demonstration of congestion pricing. The 
apparent discrepancy between the studies summarized in that report and 
our own experience may be due to the different approaches used in 
theoretical versus commercial market research.
    Most of the fine studies on the concept of congestion pricing have 
focused on policy issues, such as institutional arrangements, uses of 
funds or social equity. Few studies have looked at where, when and how 
congestion pricing could really be made to work.
    Most of our research has focused on the day-to-day needs of our 
potential and existing customers. Before investing $126 million in the 
91 Express Lanes, we conducted some of the most extensive market 
research in the history of the surface transportation industry. Over 3 
years, several thousand people participated in focus groups, surveys 
and interviews.
    Just as Mr. Skinner reported, when first presented with the concept 
of congestion pricing, most of those surveyed had negative reactions. 
At the time (1991-1993), few people in Southern California knew much 
about electronic toll collection, and most respondents envisioned the 
congestion and delays associated with traditional toll plazas. Others 
simply could not believe that traditional funding sources were 
insufficient.
    The more people learned about the project and its non-stop toll 
system, the more they came to like the idea. When presented with a 
choice between ``toll road or no road,'' they became even more 
supportive. As FHWA's own study has confirmed, motorist attitudes and 
approval ratings became even more positive once the new lanes went into 
operation and people could see how the project really worked.
    Question 2. Is the public's attitude to pricing a function of how 
severe the congestion is in a given region or locality?
    Response. Anecdotal evidence would suggest that congestion is 
relative. Visit almost any urban or suburban area in the country and 
you'll hear horror stories about congestion. That's probably because 
Americans tend to be pretty impatient people, and most of us place a 
fairly high value on our time . . . especially our recreational and 
family time.
    Americans are also smart consumers, and they always look for value 
for their money. The 91 Express Lanes experience demonstrates that 
significant numbers of motorists will pay for time savings and improved 
service, as long as they feel they're getting a fair deal.
    We think people may be more willing to consider alternatives like 
time-of-day road pricing in congested areas, but we don't have enough 
real-world experience to know for sure. Aside from commuters in the 91 
corridor, most Americans are totally unfamiliar with the concept.
    Congestion pricing is not a panacea for all of our transportation 
ills. It is simply one of many tools that should be made available to 
meet our Nation's widely varying infrastructure needs. If congestion 
pricing is going to become an accepted tool for solving problems in 
critical corridors, we've got to spread the word about the early 
demonstration projects. We've also got to encourage experiments in 
other parts of the country.
    For these reasons, we strongly support an expansion of the 
congestion pricing pilot program. This will allow more regions to see 
first-hand the benefits of road pricing, and allow tests of a variety 
of operational and technical approaches in a wider variety of corridors 
and climates.
    Question 3. The Highway Infrastructure Privatization Act, S. 275, 
which I sponsored with several members of this committee, calls for 
establishing a pilot program to allow public/private partnerships to 
have access to tax-exempt financing for 15 projects, or a total bond 
value of $25 billion. How many projects do you estimate would like to 
participate in this type of program over the next 10 years or so?
    While we have not conducted a detailed study of the entire country, 
we estimate that each State has at least five major surface 
transportation projects on hold, waiting for funding. If we use a 
conservative estimate of $100 million in capital costs for each of 
these projects, there is an immediate need to finance some $25 billion 
worth of projects. Over the next 10 years, that number could triple, as 
aging facilities wear out and growth continues. Because many projects 
in the $100-250 million range could benefit from tax-exempt financing, 
we respectfully suggest that the 15 project restriction be 
reconsidered, so that this authority can be applied to as many 
worthwhile projects as possible.
                                 ______
                                 
  Responses of Gerald S. Pfeffer to Additional Questions from Senator 
                                  Reid
    Question 1. Are your investors currently seeing a return on their 
investment on the 91 Express Lanes project? If so, what sort of return 
are they seeing? If not, when do you project they will see one?
    Response. As expected, we have not yet begun to receive a return on 
our investment. From the beginning, we viewed this project as a long-
term investment with returns that will be paid out over many years. For 
this first-of-its-kind project, we assumed a substantial ``ramp-up'' 
period. We worked closely with our lenders to tailor our debt schedule 
to our revenue and cost forecasts. We also set aside a combination of 
funded reserves and contingent equity to ensure that we could meet our 
financial obligations in the early years.
    We broke even on an operating basis in our third month of 
operation. This means we began to cover our operating costs much 
earlier than most startup businesses. Despite the lingering effects of 
California's recession, traffic continues to grow in the State Route 91 
corridor, and hundreds of additional transponders are ordered each 
week. At current rates of traffic growth, our forecasts indicate that 
we should achieve break-even on a net basis (e.g., including debt 
service) 1998. We expect to be able to begin paying our investors a 
return on investment in 1999. While we might have preferred higher 
traffic volumes, we are pleased with where we are on this watershed 
project and confident of our ability to achieve a reasonable return on 
our investment over the 35 year operating period allowed by our 
franchise agreement.
    Question 2. How many other projects of this type can you envision 
being able to put together?
    Answer. Before we decided to propose the 91 project, we evaluated 
over 75 potential toll-financed projects in the State of California. 
The 91 project was unique. It offered a striking combination of high 
traffic levels, readily available right-of-way, straight-forward 
construction, environmental permits in progress, and limited alternate 
routes.
    Before submitting our two winning proposals in the Washington State 
Department of Transportation's public-private partnerships program, we 
identified more than a dozen projects, despite that State's relatively 
low population level.
    There is a spectrum of projects in the infrastructure finance 
market. At one end of the spectrum, a handful of projects like the 91 
Express Lanes appear to lend themselves to 100 percent private 
financing. At the other end, many projects (especially less-traveled 
routes in rural areas) can only be financed by the public sector. Every 
project falls somewhere along that spectrum.
    Nationwide, we have observed a tendency for States to allocate 
Federal and State funds to smaller projects, leaving the larger 
``lumpy'' projects unfunded. While we have not conducted a detailed 
study of the entire country, we estimate that each State has at least 
five major transportation projects on hold, waiting for funding. If we 
use a conservative estimate of $100 million in capital costs for each 
of these projects, we're talking about $25 billion worth of needed 
improvements.
    Many of these potential projects are located on the Interstate 
Highway System, and are therefore ineligible for toll financing under 
current law. In fact, we would not have been allowed to build the 91 
Express Lanes on an Interstate Highway right-of-way.
    If we are to stimulate the maximum levels of public and private 
investment in our Nation's transportation infrastructure, we must 
develop an array of financing models tailored to fit each project along 
the spectrum. And we must remove the regulatory and legal obstacles 
that discourage or prevent private investment in these needed 
facilities.
                                 ______
                                 
Prepared Statement of Daniel V. Flanagan, Jr., Chairman, Commission to 
             Promote Investment in America's Infrastructure
    Mr. Chairman, members of the subcommittee, it is an honor to have 
been invited to testify before you today as the Chairman of the 
Infrastructure Investment Commission created by Congress in the 
Intermodal Surface Transportation Efficiency Act (ISTEA) of 1991, and 
also as the Construction Writers Association of America's 1993 award 
recipient for the ``Innovative recommendations of the Commission.'' Our 
report stimulated the public-private partnership concept and I am 
delighted to be here recognizing your interest in innovative financing 
techniques for infrastructure.
    I note that the House held similar hearings in 1996 and covered 
many of the issues that our Commission had looked at as well, 
particularly the matters surrounding the decline in infrastructure 
spending in this country. Our conclusions were as follows:
    1. There is a wide gap in the level of current public 
infrastructure finance and projected needs. Capital-intensive, long-
term projects with histories of Federal and State grant financing--
particularly environmental projects--face immediate financial 
shortfalls.
    [In the aggregate, Federal spending devoted to infrastructure 
investment as a percentage of gross national product has declined 
steadily for a quarter of a century.]
    2. Current infrastructure finance programs--government grant 
programs, the tax-exempt bond market, government tax programs--can be 
strengthened and made more effective.
    3. The relative complexity, tax status and other factors currently 
make infrastructure investment unattractive to certain institutional 
investors, including pension funds.
    4. New financial structures and Federal leadership will be vital in 
any new, sustainable effort to fund the nation's infrastructure needs.
    5. New communities of interest among various levels of government 
and the private sector are necessary to raise the priority of meeting 
the infrastructure challenge and to facilitate the flow of new sources 
of capital into infrastructure development.
          * * * * * * *
    Our Commission held seven public hearings in the Fall of 1992 with 
46 witnesses from various financial institutions, development firms, 
pension funds, project sponsors, and public officials. Our report was 
submitted to the President and Congress on February 23, 1993. We have 
briefed the leadership of Congress and the Chairmen and Ranking Members 
of the appropriate committees. We are excited that our recommendations 
will be considered in-depth during the course of the review of the 
ISTEA legislation this year.
          * * * * * * *
    Public sector spending on infrastructure in America amounts to more 
than $140 billion annually. Projections of the shortfall range from 
another $40 to $80 billion annually to meet critical infrastructure 
needs. The U.S. Environmental Protection Agency alone projects the need 
for $200 billion in new finance over the next decade to bring 
communities into compliance with existing Federal mandates for clean 
water and clean air.
    Traditional sources of infrastructure finance--government grant 
programs, tax-exempt bonds and private capital--all face serious 
impediments in filling the gap. Grants do not leverage enough project 
activity and the Commission found little indication that general tax 
increases of a magnitude sufficient to meet forecasted infrastructure 
development needs are likely to be forthcoming from Federal, State and 
local sources.
    Current provisions of the tax code discourage private capital flows 
into infrastructure development. State and local governments seeking to 
expand issuance of tax-exempt bonds for new infrastructure are hampered 
by Federal laws, difficulties in finding new revenue sources, obtaining 
satisfactory credit ratings and limited enhancement alternatives. 
Project developers face procedural impediments ranging from extended 
permitting periods to a tight construction lending market.
    Current infrastructure finance programs can be strengthened and 
made more effective. But as Federal moneys for grant programs become 
increasingly inadequate, States and localities will require self-
renewing sources of finance built on access to large pools of capital, 
such as the six trillion dollars offered by institutional investors, 
including pension funds. For many projects, however, particularly 
projects with the potential to be self sustaining, but which fall into 
lower credit categories in the early years, access to these large pools 
of capital will require application of new financing techniques.
    The Commission to Promote Investment in America's Infrastructure 
has three major recommendations to develop new financing options to 
facilitate access of these projects to large pools of capital:
    (1) Establish a new, federally chartered financing entity, a 
national infrastructure corporation.
    (2) Crate new investment options for institutional investors, 
including securities issued or guaranteed by the corporation.
    (3) More consistent, uniform Federal policy treatment for private 
investment in infrastructure development.
    These three recommendations are outlined more fully in Addendum A.
          * * * * * * *
    The new national infrastructure corporation would offer credit 
enhancement through a guarantor subsidiary, subordinate loans and other 
financial assistance through a lender subsidiary and development phase 
assistance through insurance-type arrangements. The Commission 
estimates that each new one billion dollars of Federal capital in the 
corporation has the immediate potential to prompt $10 billion in 
infrastructure project activity.
          * * * * * * *
    In the second phase, when the Corporation has established an 
operating history and begins issuing infrastructure securities to 
pension fund and other investors, each one billion dollars of Federal 
infrastructure money would have the potential to leverage $18 billion 
or more in new infrastructure project activity. If Congress devotes one 
billion dollars annually to this vehicle for 5 years, the Federal 
Government would build a self-renewing source of finance with the 
potential to leverage up to $100 billion of infrastructure projects.
    These estimates build on the recommendations adopted by the 
Commission after reviewing a decade of studies on infrastructure needs 
and hearing testimony in public hearings in 1992. The alternate 
financing mechanisms that emerge will supplement existing grant and 
tax-exempt bond finance programs and attract the tens of billions of 
new dollars annually needed to finance the future infrastructure of 
America. While the actual leverage ratios will vary according to 
assumptions on minimum capital criteria and other factors, the 
Commission found a clear possibility to leverage Federal dollars in a 
self-sustaining program.
    As the 6 trillion dollars in assets held by institutional investors 
continue to grow. the Commission found that investors will seek 
additional investment options. New investment opportunities in 
infrastructure projects, where pension funds now do not invest, can 
further diversify the investments that currently make up their 
portfolios.
          * * * * * * *
    It was pointed out that, the United States was the only Nation in 
the world to provide for a municipal bond/tax exempt approach--with a 
Federal tax subsidy--for infrastructure. Through this historical 
devotion to grant programs and municipal bond finance--which moves 
exclusively through the political process--we have inadvertently 
prevented the private sector from playing a role. What is that role? It 
is taking risk, it is introducing new technology, and it is providing 
alternative innovative financing. Most importantly, there is private 
capital available with a willingness to invest in suitable 
infrastructure product if available.
    Our over arching goal is to ``grow the pie''. This is not an 
either/or but rather an additional outlet on the financing artery of 
infrastructure. One of the reasons that American pension funds can 
invest in products overseas in China and elsewhere is that there is a 
global tradition of project finance. What we need in this country 
today, is that same product deriving from that same discipline. Since 
we have never taken the time to design an infrastructure product for 
this vast resource of capital, it has looked for its investment 
opportunities elsewhere.
    American institutional investors want to invest in their own 
nation's infrastructure; but they are limited in that option because we 
have not, to date, responded to that interest. Colorado's public 
employee retirement system testified as to their trustees desire to 
have 20 percent of their assets invested in Colorado--but they were 
only at 7 percent and had exhausted what intra-state infrastructure 
opportunities existed. They heartily endorsed our recommendations as a 
way to increase the supply of infrastructure investment opportunities 
in Colorado. The same story occurs in every State in America. That is 
my underlying message here today.
          * * * * * * *
    The issue is not on the pension fund side, it is on the product 
side. What is needed in terms of the Federal and State government 
activity is to address the availability of development risk insurance 
and user fee (project revenue) re-insurance as a credit enhancement 
through the National Infrastructure Corporation to get the product to 
the marketplace prior to actual construction. The financial 
institutions will do their own due diligence and will make the 
investments accordingly stimulating over time the creation of a new, 
liquid market in security instruments that are also attractive to 
pension fund investors. These would be at non tax-exempt yields 
sufficient to attract such investment since pension funds are already 
tax-exempt and will not purchase municipal bonds. We provide risk 
insurance for American investment abroad through the Overseas Private 
Investment Corporation, and now through the Export-Import Bank, it is 
time to do the same in our own country.
    While transportation might be the leading edge for our proposals--
they do incorporate other infrastructure usages and legislation should 
not be generically exclusive but rather focus on the marketplace and 
new ideas that can evolve throughout the infrastructure finance 
spectrum.
          * * * * * * *
    During the course of our hearings, I was struck by the fact that 
one witness, Bill Chew from Standard and Poor--a nationally recognized 
expert on bond ratings made the comment that what we were doing 
reminded him of PURPA, which stands for the 1978 Public Utilities 
Regulatory Policy Act. The Act spawned the independent power/
cogeneration industry at a time when virtually all power plants were 
``built'' by utilities. The perception was that no one else could do 
it. Today we find that the bulk of our power plants will be built and 
owned by independents injecting new technology and private capital. It 
is an interesting analogy and one I am personally familiar with having 
led the 1992 Energy Policy Act reform effort.
    Private capital has the attribute of encouraging entrepreneurs, now 
strangers to our nation's regulated infrastructure. While the best at 
infrastructure systems management, the United States is falling behind 
in infrastructure technology according to recent studies. There has 
been this discussion of public/private partnerships which emanate from 
our report. Real benefits will come from a marketplace approach that 
will provide intrinsic competition to the existing infrastructure 
networks and, in the long run, elevate infrastructure finance to a 
higher standard of fiscal integrity, i.e., you will not be able to 
finance the project with private/public investment if the deal doesn't 
make sense.
    Our recommendations have no real opposition. We have put together 
suggestions that have been very well received. Additionally, there is 
nothing--but lack of market experience--that precludes the private 
sector from pooling their resources and developing similar tools to 
these recommended here for the Federal Government. The private sector 
can eventually follow suit and form private development risk insurance 
companies, credit enhancement facilities, etc. And they will, 
supplementing the Federal effort which could then be privatized. The 
Federal Government, as a result, should take the initiative here in the 
context of leveraging the Federal dollar. A modest stipend for this 
activity on the Federal side will multiply to a significant extent what 
the Federal dollar can do through the State Infrastructure Banks 
(SIBs). In truth, you can more readily address the needs of the inner 
city and rural America by bringing on this additional capacity of user 
fee application. You do grow the pie.
    Years ago, I had the pleasure of knowing Mr. Ray Lapin, a fellow 
San Franciscan, who had been the head of Federal National Mortgage 
Association (FNMA) in the Johnson Administration and while there, 
established the GNMA program. At the time I had just returned from 
Naval service in Vietnam and was a young investment consultant working 
with pension funds around the country. Ray and I were talking about 
this activity back in our own home town; and he noted that GNMA's would 
be the perfect investment opportunity for pension funds. Mind you this 
was in 1971. No one knew what a GNMA was in those days and of course 
the rest is history. I have explained many times, that what Ray lapin 
had in mind with GNMA for housing--we must find something similar for 
infrastructure.
    There are numerous public-private partnership possibilities across 
the land, e.g., rebuilding bridges, that can stand the test of a time-
certain user fee and/or enjoy a funding scheme allocated over a 30-year 
depreciation period based on ``sale/lease''/techniques. The point, as 
always, is that we must do more. We cannot afford, as a nation, to 
freeze out the vast resources contained in America's institutionally 
managed accounts, particularly the pension funds. The Infrastructure 
Investment Commission was created with this challenge in mind.
          * * * * * * *
                               ADDENDUM A
  recommendation 1.--create a national infrastructure corporation to 
    leverage federal dollars and boost investment in infrastructure 
projects with a capacity to become self-sustaining through user fees or 
                           dedicated revenues
    1.1--A national infrastructure corporation, in partnership with 
State infrastructure revolving funds and other local private sources of 
capital, would be able to implement national infrastructure priorities, 
leverage more dollars with Federal funds and employ innovative 
financing techniques to get priority projects underway.
    A national infrastructure corporation will provide new leadership 
and supplementary approaches for the multiple departments, agencies and 
authorities involved in infrastructure finance. This federally 
chartered enterprise will provide a focal point for infrastructure that 
is essential to a timely, effective national policy response to the 
infrastructure financing challenge.
    The corporation would be authorized to promote infrastructure 
investment by evaluating and offering several forms of financial 
assistance and technical advice to infrastructure projects with self-
supporting revenue potential.
    An infrastructure insurance company, established initially as a 
subsidiary of the corporation, would provide a mix of direct insurance 
and reinsurance to issuers of senior debt on infrastructure projects 
that existing bond insurers and other credit enhancers cannot or will 
not insure. Insured debt of projects eligible for tax-exempt financing 
would become more attractive to the municipal market. Insured debt of 
taxable-rate projects would become more attractive to pension funds and 
other fixed-income investors. The company would charge premiums and 
operate on a self-supporting basis, similar to the successful College 
Construction Loan Insurance Association (Connie Lee).
    An infrastructure finance division of the corporation would use 
funds borrowed by or appropriated to lend directly to priority projects 
that have credit-worthy revenue projections, but lack historical 
operating results or to those that may not be able to demonstrate 
sufficient credit strength immediately. Such financial assistance would 
be available on a basis subordinated to other lenders in a manner 
similar to that authorized by Congress in the Intermodal Surface 
Transportation Efficiency Act of 1991 (ISTEA), but not yet utilized by 
the States. There are a significant number of startup projects seeking 
financing that lack only subordinated debt to get underway.
    Subordinated debt would be recycled within a few years as projects 
are constructed, achieve operating stability and can be refinanced. 
Loan repayments would allow the corporation to function as a revolving 
loan fund.
    A development insurance service would provide insurance, subject to 
appropriate retention of risk by the project sponsor, to cover the 
initial development phase of projects, where permitting, financial 
feasibility and regulatory approvals pose specific risks. The 
corporation would work to provide services to public and private 
project sponsors as domestic version of the Overseas Private Investment 
Corporation (OPIC).
    The national infrastructure corporation will seek to become self-
sustaining by charging fees for its services and by receiving project 
loan repayments. Among the other mechanisms the corporation would 
consider are loan guarantees and assistance to infrastructure revolving 
funds and national projects where financing is scarce.
    The corporation's funding activities could be leveraged further as 
it issues its own debt obligations to investors. This program would 
benefit from a limited line of credit to the U.S. Treasury, similar to 
other federally chartered enterprises, to expedite the entry of new 
investors in the near term.
recommendation 2.--create a new range of investment options to attract 
  institutional investors, including pension funds, as new sources of 
                        infrastructure capital.
    2.1--The national infrastructure corporation will offer 
institutional investors the opportunity to take equity in the 
infrastructure insurance company and to invest in the senior debt in 
taxable projects insured by the company.
    Institutional investors are valuable not only as potential sources 
of capital, but as potential new players in infrastructure finance that 
can bring the discipline of investment risk and return evaluations to 
infrastructure decisionmaking.
    The infrastructure insurance company recommended by the Commission 
would offer institutional investments the opportunity to participate as 
equity investors, along with other public or private investors, in an 
insurance business that would be maintained at the highest standards, 
with prudent credit criteria, and supported by necessary management 
expertise and financial performance to maintain a Triple-A rating.
    As the insurance company evaluated and insured project senior debt 
up to the highest investment grade, institutional investors would find 
it easier to participate directly in project finance by purchasing 
long-term, taxable rate debt instruments with established credit, 
liquidity and rates of return.
    2.2--The corporation will broaden the market in investment grade 
infrastructure securities to attract institutional investors, including 
four trillion dollars in pension fund assets, and to provide liquidity 
for project lenders.
    The Commission's attempt to identify a new infrastructure security 
which would be attractive to both project borrowers and pension 
investors led it to consider new options for both taxable and tax-
exempt rate securities. Pension funds clearly indicated the desire to 
have an option to invest in a new infrastructure security paying a 
competitive, taxable, market rate of return.
    The Commission recognizes that project sponsors who are eligible 
for tax-exempt financing generally will seek funding in the municipal 
market, rather than the taxable bond market, thereby precluding any 
meaningful participation by pension funds and certain other 
institutional investors. However, there are many projects which for 
legal or market reasons will still seek taxable debt financing.
    Aside from investing in individual project loans guaranteed through 
the corporation's bond insurance program, institutional investors will 
have an opportunity at a later stage to invest in taxable debt 
securities issued directly by the corporation. the corporation would 
use the proceeds to acquire project-specific debt, including that 
insured by the infrastructure insurance company.
    Some securities would be general obligations when guaranteed by the 
corporation, while others could be pass-through securities. Such 
obligations of the corporation would be of Federal agency caliber if 
the corporation had access to a limited line of credit of the U.S. 
Treasury. The Commission does not foresee a need for a full faith and 
credit guarantee from the U.S. Government.
    Purchases of these securities would be on a purely voluntary basis 
in accordance with the fiduciary duties set forth in the Federal ERISA 
statute for private plans and comparable State and local laws of State 
and local government plans. Experts indicate that there are no 
restrictions against such investments in infrastructure securities.
    2.3--A security whose tax-free benefits flow through to fund 
beneficiaries at the time of distribution from retirement plans could 
attract investments from defined contribution pension programs, 401(k) 
plans and individual retirement accounts.
    The Commission recommends that Congress consider amending Federal 
tax laws to allow part or all of the investment earnings attributable 
to infrastructure securities to be distributed tax-free to pension plan 
participants upon retirement. Such a tax-free pass-through from a fund 
to its participants would produce a competitive after-tax market rate 
of return for the retirement fund participants, yet allow a project to 
obtain funding at levels commensurate with municipal bonds.
    The security could be even more attractive if it were structured as 
a deferred annuity, thereby satisfying both early project cash-flow 
requirements and the typical payout profiles on pension benefits. It is 
noteworthy that this sort of investment security would be particularly 
appropriate for defined contribution and 401(k) plans, which are the 
fastest growing sector of retirement assets.
 recommendation 3.--strengthen existing infrastructure financing tools 
   and programs by making federal incentives more consistent and by 
 providing uniform treatment for investment in infrastructure projects.
    3.1--Reviewing and modifying Federal restrictions on the use of 
tax-exempt bonds for infrastructure projects could stimulate additional 
infrastructure bond finance activity.
    Tax-exempt bonds are used by more than 16,000 issuing authorities 
as primary tools for financing infrastructure projects, often supported 
by tolls, user charges and other dedicated funds. But the ability to 
utilize tax-exempt debt is circumscribed if the private sector is 
involved in developing or operating new facilities.
    The Congress has reviewed many of these contradictory restrictions 
in recent months. Among the specific steps considered favorably by 
Congress in H.R. 4210 and H.R. 11 in 1992, but not signed into law, 
were provisions to increase the annual issuance limit for bank-
qualified tax-exempt bonds and the expand use of private-activity 
redevelopment bonds in areas designated as enterprise zones.
    The Commission encourages further Congressional review and 
modification of Federal restrictions on the use of tax-exempt bonds for 
infrastructure projects to broaden the development options for these 
projects and to promote efficient allocation of Federal tax 
expenditures.
    To stimulate investment in new transportation and environmental 
projects, the Commission encourages consideration of a new class of 
tax-exempt debt, a public benefit bond, in instances where the benefits 
to the general public are substantial, notwithstanding private sector 
participation. This would have the effect of applying the definition of 
facilities exempt from volume cap restrictions evenly across all 
environmental and transportation projects.
    Among the additional steps recommended to the Commission are 
modifying arbitrage rebate rules where proceeds return to support 
infrastructure projects, returning the private involvement threshold to 
25 percent and changing the definition of a qualified small bond issuer 
for bank investment purposes to one which issues under $25 million per 
year.
    While a full-scale study of the fiscal impact of these 
recommendations is beyond the scope of the Commission, the consensus of 
the Commissioners is that new economic activity and the attendant 
potential increase in Federal tax revenues over the long-term may prove 
cost-effective from a Federal budgetary viewpoint, notwithstanding any 
temporary costs in the near-term of actual or foregone revenues. 
Changes of this kind also may contribute to greater policy consistency 
and serve to renew cooperative effort among various levels of 
government in infrastructure finance.
    3.2--Reviewing and making incentives for taxable infrastructure 
investment more consistent, particularly depreciation rules, would 
prompt additional capital flows into infrastructure projects.
    Even with some changes to the private activity restrictions on 
issuance of tax-exempt bonds, the Commission concluded that a 
significant portion of America's infrastructure is likely to be 
financed in the future on a taxable-rate basis. The defined depreciable 
life of assets, therefore, should be short enough to encourage 
investments in these assets and not penalize infrastructure projects 
which have government participation. The concept of a shorter ``useful 
life'' may attract new investment where emerging technologies hold 
promise for future infrastructure efficiencies.
                               ADDENDUM B
  national highway system designation act of 1995--innovative finance 
                               provisions
    A number of the innovative financing provisions have become 
available to States as part of the regular Federal-aid program. These 
changes in Federal-aid financing are the result of the Innovative 
Finance provisions of The National Highway System Designation Act of 
1995 (Public Law 104-59).
State Infrastructure Bank (SIB) Pilot Program
    Through the SIB Pilot Program, up to 10 States may test the use of 
SIBs as a means of increasing and improving both public and private 
investment in transportation. Pilot SIBs will be able to provide loans, 
enhance credit, serve as capital reserves, subsidize interest rates, 
ensure letters of credit, finance purchase and lease agreements for 
transit projects, provide bond or other debt financing security, and 
provide other forms of assistance that leverage funds.
Advance Construction
    The U.S. Department of Transportation can approve an application 
for advance construction for reimbursement after the final year of an 
authorization period provided the project is on the State's 
transportation improvement program (STIP). This change also provides 
greater flexibility to States to engage in advance construction using 
their anticipated apportionments.
Bonds and Other Debt Instruments Eligible for Reimbursement as 
        Construction Expenses
    States can be reimbursed with Federal-aid funds for bond principal, 
interest costs, issuance costs, and insurance on Title 23 projects. To 
date, Federal-aid funds have been limited to bond retirement costs on 
certain categories of projects, and interest costs were only eligible 
on some interstate projects.
Federal Share on Toll Projects
    This provision sets the Federal share for toll projects on 
highways, tunnels, and bridges at a maximum of 80 percent of eligible 
costs. Up until now, the Federal share for toll projects has varied 
from 50 percent to 80 percent, based on activity and system 
designation.
ISTEA Section 1012 Loans
    States can loan Federal-aid funds to tool and non-toll projects 
with dedicated revenue streams. A loan can be made for any phase of a 
project including engineering and right-of-way work. A loan is not 
required to be subordinated to any other debt financing. Interest rates 
on loans may be at or below market rates. Loan repayments can be used 
for various credit enhancements.
Matching Credit for Materials or Services Donated to federally Assisted 
        Projects
    This provision allows private funds, material, or assets to be 
donated to a specific Federal-aid project and permits the State to 
apply the value to the State's matching share. To date, States could 
only receive credit for State and local funds or for donations of 
private property incorporated into a Federal project.
                               ADDENDUM C
        national infrastructure development act of 1994--summary
     As expressed in Executive Order 12893 of January 26, 1994, 
a well functioning, expanded infrastructure is vital to sustained 
growth in the Nation's economy.
     Current and foreseeable demands for infrastructure 
expansion and replacement exceed available Federal, State and local 
funding resources by wide margins and prompt serious concerns about the 
Nation's long-term economic development and competitiveness.
     Sources of private capital, including the more than $4.5 
trillion in assets held by institutional investors such as pension 
funds, have expressed a growing interest in public-private 
infrastructure investment opportunities that provide competitive rates 
of return.
     A self-supporting national level entity is critical to 
developing new uniform financing mechanisms that promote increased 
public-private partnership investments and expand the resources 
available to address unmet infrastructure needs. These new financing 
mechanisms would maximize effective leverage of Federal funds--
resulting in at least $10 billion of new infrastructure projects for 
every $1 billion invested.
     Such a national entity would also help provide significant 
and sustained job growth in critical sectors of the Nation's economy.
                the national infrastructure corporation
    The Act establishes the National Infrastructure Corporation (NIC), 
and a subsidiary to be called the National Infrastructure Insurance 
Corporation, as government corporations. NIC would bring national 
leadership and vision to the effort to find new funding mechanisms to 
increase private participation in infrastructure facilities and make 
maximum use of a available Federal resources.
NIC's Mission
    1. Make senior and subordinated loans and equity investments that 
would assist States and private entities develop revenue-based 
infrastructure projects. NIC could assist projects by lending funds to 
State revolving funds or directly to projects.
    2. Provide financial insurance, through its Insurance Corporation 
subsidiary, on taxable and tax-exempt debt, particularly for smaller or 
startup projects which have difficulty obtaining conventional credit 
enhancement.
    3. Provide development risk insurance for critical pre-construction 
and other development phase costs.
    4. Facilitate pension fund infrastructure investments through the 
issuance of investment grade infrastructure securities. The Act also 
creates an opportunity, over time, through a transition plan, for these 
funds to purchase a controlling interest in NIC from the Federal 
Government.
    5. Guard the public interest by the use of strict project selection 
criteria and by application of Davis-Bacon Act wage provisions to NIC 
assisted projects. the Act also makes clear that State and local 
authority to approve and regulate an infrastructure project is not 
superseded by NIC assistance.
NIC Funding
    NIC would receive startup capitalization through the sale of common 
stock to the U.S. treasury, authorized at a realistic $1 billion per 
year for 3 years. Thereafter, NIC would be self supporting, and the Act 
specifically prohibits any additional Federal investment. The Act also 
States that NIC's obligations do not carry a Federal guarantee.
    The projected additional revenue to the U.S. Treasury generated by 
the Public Benefit Bond is anticipated to offset the amount of the 
Federal investment in NIC. The legislation also provides for a 
transition plan under which the Federal Government's investment in NIC 
would be repaid.
                          public benefit bonds
    Public and private pension plans would be permitted to purchase 
Public Benefit Bonds issued to finance infrastructure facilities. the 
interest income would be distributed tax-free to the plan member at 
retirement, passing the tax benefits through to plan beneficiaries. 
These bonds would be of particular interest to defined contribution 
plans which could offer their participants new competitive investment 
opportunities tied to infrastructure development.
    Public Benefit Bonds would significantly broaden the market for 
infrastructure bonds, and would have a projected revenue-positive 
budgetary impact, based upon Department of Treasury budget-scoring 
methodology.
                                 ______
                                 
 Responses of Daniel V. Flanagan to Additional Questions from Senator 
                                  Reid
    Question 1. Roads in much of this country have come to be treated 
as more of a pure public good, almost an entitlement. Additionally, 
many of the toll projects that come to my mind are, at best, self-
sufficient, not money-makers. Do you really see a huge potential market 
for the sort of profit-making ventures you have described? How long do 
you expect it might take for this concept to catch on?
    Response. Let me explain our thinking at the Infrastructure 
Investment Commission in making our recommendations in 1993. With the 
decline in government sponsored infrastructure spending across the 
country, it is imperative that we begin ancillary strategies as soon as 
possible. Our original focus emanates from the 1991 Act itself and we 
now have 6 years behind us emphasizing the absence of any credit 
enhancement strategies to encourage project finance and private 
institutional investment in our Nation's infrastructure. One cannot 
underestimate the potential of private investment once these credit 
enhancement facilities are in place, not just with toll roads but other 
modalities, as well. For example, look at the enormous infrastructure 
investment by U.S. pension funds overseas--particularly in independent 
power projects--since the passage of the 1992 Energy Policy Act which, 
in essence, created the independent power concept. I happen to have 
been very involved in that activity and am well versed with the trends 
that have begun since that time. I think this gives us a good benchmark 
as to how fast similar infrastructure type investment can be expected 
here in the United States in a variety of modalities including 
transportation. This is a very important point, incidently, in that we 
expect credit enhancement strategies to be available to a variety of 
modalities including waste water treatment facilities, educational 
infrastructure, et. al. The sooner we get on with these types of 
programs where we would leverage a modest amount of public moneys to 
encourage private capital to gain market entry, the sooner we will be 
able to tally up the successes in this regard.
    I would also point out that the Maglev technology that would be 
brought forward here in the United States would be very suitable for 
so-called public/private partnerships and that such credit enhancement 
strategies would facilitate this type of infrastructure development 
particularly in certain areas of the country such as California-Nevada. 
Right now, it is difficult for the entrepreneur to move forward in what 
has been a traditional public monopoly, i.e., the infrastructure 
sector; but I have given speeches all over the country and feel 
confident that we would see significant activity if Congress were to 
devote a significant amount of credit enhancement support in the 
preconstruction development phase of such projects.
    Question 2. Obviously, the National Infrastructure Corporation 
concept shares some common characteristics with the Senate 
Infrastructure Banks that are currently being set up. Do you have any 
thoughts on what you have seen of SIB's so far. Any surprises? Anything 
that gives you pause about the NIC proposal?
    Response. As to the State infrastructure banks and the NIC 
proposal, we had recommended in our 1993 report that State ``revolving 
funds'' that would serve as the clients for the National Infrastructure 
Corporation concept. In other words we would have one Federal credit 
enhancement mechanism providing both development risk and the 
reinsurance of future project revenue streams (credit enhancement) and 
those services would be provided through the State revolving funds. 
Since that time, Congress in the debate on the National Highway System, 
elected to move ahead on a provisional basis with the State 
Infrastructure Bank concept. Obviously the SIBs have been in place only 
for a very brief period of time and have, in fact, had little direct 
funding. Therefore, one cannot expect very much from the SIBs to date, 
but I am optimistic that they can play the role that we had envisioned 
for State revolving funds utilizing the support services from NIC in a 
very effective manner.








   Prepared Statement of James Constantino, President and CEO of ITS 
                                America
    Good morning. I would like to thank you, Mr. Chairman, and members 
of the subcommittee for the invitation to speak before you today. I am 
James Costantino, president and CEO of ITS America.
    I am here today to speak to you about the many successes of the 
Federal Intelligent Transportation Systems program, or ``ITS'', that 
was initiated by the Intermodal Surface Transportation Efficiency Act, 
or ``ISTEA,'' in 1991. I would also like to note that the Federal ITS 
program is at a critical juncture. ITS is poised for national 
deployment, but this effort requires the continued leadership of this 
Congress in ISTEA's successor act (``Reauthorization Act'') to ensure 
that deployment occurs in a truly integrated, interoperable and 
intermodal fashion across the United States.
    ITS America, or the Intelligent Transportation Society of America, 
was incorporated in August 1990 and began operations in March 1991 at 
the behest of the Congress. It was intended to be, and is, a public/
private coordinating organization in partnership with the U.S. 
Department of Transportation to guide the research, development and 
deployment activities associated with ITS. Our over 1,000 member 
organizations include private corporations, over 30 State departments 
of transportation, local government units, academia and other 
associations. ITS America is also a utilized Federal Advisory Committee 
to the U.S. Department of Transportation on ITS matters.
    According to a recent study by the Texas Transportation Institute, 
Americans lose 2 billion hours a year in traffic congestion at a cost 
to the economy of $51 billion annually. This same study predicted that 
in 10 years, traffic will increase by 30 to 50 percent while overall 
highway mileage will increase only slightly. Based on these numbers, it 
is clear that transportation is becoming a problem where it once 
provided solutions.
                            the need for its
    This dramatic increase in highway travel cannot be handled solely 
by continuing to build and expand highway facilities because of the 
great cost and land use issues. ITS uses communications, computer and 
information technology to make better, safer, and more efficient use of 
our physical surface transportation system. ITS technologies include 
electronic toll facilities where you can zip through a toll booth at 
highway speed and have your toll electronically billed rather than 
stopping to pay. They include computerized control of traffic signals 
where traffic flow can be speeded up as conditions warrant.
    They include ``real time'' information on traffic conditions to 
inform travelers ahead of time which routes are congested and which are 
not. They include in-vehicle navigation and route guidance systems to 
direct you to your destination in an unfamiliar area. They include 
collision warning systems now in use on many school buses and other 
vehicles to let drivers know when they are too close to other vehicles 
or objects. And they include ``Mayday'' systems that pinpoint the 
location of your vehicle in order to bring help when you are stranded.
    The general benefits of ITS include fewer accidents on our streets 
and highways, more efficient traffic flow, fewer traffic jams, faster 
freight deliveries, better travel information, and quick emergency 
responses, to name a few.
    ITS is not a replacement for continued investment in new or 
reconstruction in highways, bridges and transit systems. ITS enables 
the builders and operators of highways and transit systems to realize 
more bang for their buck. As Federal funding for transportation becomes 
tighter, maximizing the benefits of each dollar spent becomes all the 
more crucial.
    There is a direct analogy with the history of the aviation industry 
and what is happening in surface transportation today. On June 30, 
1956, the day after President Eisenhower signed the Interstate Highway 
Construction bill, two airliners collided over the Grand Canyon, 
killing all on board in both planes. As a result, the aviation industry 
immediately went high-tech, bringing in the latest in radar, 
communications, and traffic control systems to make air travel safer. 
But while air travel went high-tech, highways stayed low-tech, still 
using the same roadbuilding principles the Romans did in building the 
Appian Way 2000 years ago.
    Although only one new airport, in Denver, has been built in a 
generation, we land two to three times as many planes as we did in the 
1960's and 70's on our existing airport and airway infrastructure. We 
are just beginning to do for surface transportation what we did so well 
for air travel. ITS holds the promise of making possible quantum 
advances in the performance of the surface transportation system.
                                 istea
    The 1991 Transportation Appropriations Act called for an 
organization to coordinate and accelerate ITS activities in the United 
States. The United States Department of Transportation charted ITS 
America as a Federal Advisory Committee on ITS matters. In December 
1991 Congress passed the landmark ISTEA legislation, which included a 
subtitle titled the Intelligent Vehicle Highway Systems Act of 1991 
that established the Federal ITS program and funded it at roughly $660 
million over the 6 years of ISTEA. The Intelligent Vehicle Highway Act 
also advised the Secretary of Transportation to seek assistance and 
input from Federal Advisory Committees, such as ITS America, for 
purposes of supporting the Federal ITS program. This partnership 
arrangement has worked well.
    ISTEA funded research, development and testing of new technology 
applied to surface transportation. During the 6 years of ISTEA, the 
U.S. Department of Transportation has spent approximately $1 billion in 
the Federal ITS program. According to the U.S. Department of 
Transportation, the majority of the $1 billion was spent on basic and 
applied research of existing and emerging technologies (30 percent) and 
conducting operational tests and establishing priority corridors for 
ITS technologies (57 percent). Many of these ITS systems have now 
proven themselves and, where deployed, have delivered significant 
public benefits. These are real benefits that are resulting now, even 
though a full scale, national deployment effort is not yet underway.
                      real benefits happening now
    For the individual traveler, some of the benefits include a greater 
awareness of travel options and increased safety and personal security 
with greater convenience and reduced stress. On a broader level, 
benefits include enhanced system reliability and efficiency, increased 
safety, added productivity and competitiveness and the development of 
new markets and new industries.
    According to the U.S. Department of Transportation, it has been 
shown that freeway management systems can reduce accidents by 17 
percent, while permitting the system to handle 8 to 22 percent more 
traffic at greater speeds. Synchronization and real time system wide 
adaptation of traffic signals have the capability to decrease travel 
times by 14 percent, reduce delay by 37 percent and increase speeds by 
22 percent. Incident management programs have reduced incident-related 
congestion and delays by 50 to 60 percent.
    Examples of these systems include a 24-Hour Traffic Operations 
Center that has been operating in Northern Virginia since 1994 and a 
statewide Emergency Operations Center to coordinate the response to 
major accidents and weather emergencies. The New York City metropolitan 
area has been selected as a Model Deployment Initiative site. This will 
be a showcase of ITS technologies providing real-time traffic 
information through local government agencies as well as through 
independent service providers.
    Electronic toll collection is another technology that has delivered 
clear benefits, both in terms of reducing operating costs and time 
saved by drivers. In New Jersey, electronic toll systems have saved 
approximately $2.7 million to date through reduced labor costs. 
Similarly, in Oklahoma, the turnpike electronic toll collection has 
resulted in reducing annual cost per lane from $176,000 to $16,000--a 
savings of over 90 percent. Regarding throughput on electronic toll 
lanes: increases of 200 to 300 percent compared with traditional 
attended lanes have resulted. As for public acceptance, the E-Z Pass 
program has signed up hundreds of thousands of users in New York, New 
Jersey, Pennsylvania and Delaware.
                           expected benefits
    It is still early in the development and deployment of rural ITS 
technologies, but clear benefits are expected. Rural ITS technologies 
would include such systems as traveler mayday systems, hazard and 
weather emergency warning systems, tourism and travel information 
services, and commercial vehicle operations. ``Mayday'' systems will 
dramatically reduce the time it takes for emergency personnel to reach 
accidents. The benefit is key as every minute saved by emergency crews 
getting to an accident scene lessens the seriousness of the injuries 
and ultimately, the likelihood of death. In-vehicle navigation systems, 
already deployed in many rental car fleets and commercial vehicle 
fleets, are expected to have a significant impact in rural areas.
    Other examples of rural deployment include roadway weather 
information systems that are helping to manage snow clearing operations 
in a number of States. A Storm Warning System is being tested in Idaho 
to provide accurate and reliable visibility and weather data on I-84, a 
highway subject to reduced visibility from blowing snow and dust. 
California and Nevada have already deployed a traveler information 
system along the I-80/US50 corridor between San Francisco and Lake 
Tahoe/Reno. Using satellites, land line and cellular telephones and 
wireless FM subcarriers, real-time information is given to travelers 
via telephones, in-vehicle navigation systems and interactive kiosks.
    ITS technologies are clearly applicable to Commercial Vehicle 
Operations, in both urban and rural environments. Systems such as 
electronic clearance, automated roadside safety inspections and on-
board safety monitoring will provide major benefits for public agencies 
as well as trucking operators. Automated roadside safety inspections 
are predicted to save a State between $156,000-$781,000 in costs of 
avoided accidents. On-board safety systems, along with electronic 
clearance and automated roadside safety inspections, could reduce 
fatalities by 14-32 percent.
    Currently, Interstate 75, which runs from Miami to Detroit and on 
to Ontario, Canada, is being used to test many of the ITS applications 
for Commercial Vehicle Operations. Upon entering the freeway, a truck 
will stop at the first weigh station. Information about that truck will 
then be stored in its truck-mounted transponder. The information is 
also forwarded onto the next weigh station for automatic compliance and 
clearance from that weigh station. This test is demonstrating reduced 
waiting times for inspection and clearance, resulting in reduced costs 
and improved efficiencies for both the trucking industry and State 
governments.
    In addition, there are similar coalitions of Western States, 
including Wyoming, Idaho, Nevada and Montana, using ITS applications 
for Commercial Vehicle Operations to create an eventual borderless and 
paperless trucking system.
                    national goal for its deployment
    These are but a few of the many examples of successful ITS 
deployment. Many have come from successful operational tests. 
Unfortunately, in the absence of a national deployment effort, 
deployment to date has occurred in a fragmented fashion. If the prime 
goals of ISTEA--namely intermodalism and efficiency--are to be 
realized, then ITS technologies need to be deployed in a systematic and 
interoperable manner across the nation. To this end, ITS America has 
promulgated a National Goal for ITS, which reads:

          To complete deployment of basic ITS services for consumers of 
        passenger and freight transportation across the Nation by 2005.

    Currently, there are three basic areas of ITS that are ready for 
deployment: (1) services related to travel information and 
transportation management; (2) services related to intermodal freight, 
including Commercial Vehicle Operations; and (3) in-vehicle and 
personal information products in the consumer and commercial 
marketplace. The U.S. Department of Transportation has established 
compatible deployment goals by 2005 for metropolitan ITS 
infrastructure, a commercial vehicle information systems and networks 
(CVISN), and rural ITS.
    In order to achieve the ITS deployment goal, the public and private 
sectors must work in partnership. The public sector will lead in the 
deployment of core intelligent transportation infrastructure to meet 
essential public needs, in partnership with the private sector in the 
right situation. For its part, the private sector will lead in the 
development and bringing to market of reliable and affordable 
Intelligent Transportation Systems. What is crucial to this equation is 
that all Intelligent Transportation Systems that are developed and 
deployed must be integrated, interoperable and intermodal.
    Integration of ITS systems must be initiated now before wide-scale 
deployment occurs. Without it, disjointed pockets of deployment will 
result that will be a barrier to the seamless flow of information 
across jurisdictions, regions and States. In 5 or 10 years, the cost of 
retrofitting these systems to achieve integration will be prohibitive.
    The National Goal has been widely supported by a broad spectrum of 
organizations, who frequently have differing perspectives, including 
over 30 national associations and nearly 200 other public and private 
organizations. These organizations include the American Automobile 
Association, American Trucking Associations, Association of American 
Railroads, American Association of State Highway and Transportation 
Officials, Surface Transportation Policy Project, United States 
Conference of Mayors, National League of Cities and the National 
Conference of State Legislatures, to name but a few. (A list of the 
major organizations and associations supporting the National Goal is 
attached.) The support of the National Goal is indeed broad based, 
cutting across the spectrum of transportation policies and 
perspectives.
              its national investment and market analysis
    As ITS America was developing the national goal in cooperation with 
the U.S. Department of Transportation, and as DOT developed congruent 
Federal goals, the need for a thorough analysis of the costs, benefits, 
market growth, and economic impact of achieving the goal became 
evident. ITS America and the U.S. Department of Transportation jointly 
sponsored a study which has been conducted by Apogee Research and 
Wilbur Smith Associates to address these issues.
    The overall market for the basic ITS metropolitan infrastructure 
and associated products and services in the consumer and commercial 
marketplace for the next 20 years is $437 billion dollars. Of that 
amount approximately $90 billion is for the public infrastructure and 
$347 billion are for products and services in the market place. Early 
public investment, however, will leverage much of the private market 
activity. An overall benefit-to-cost ratio for all metropolitan areas 
is 5.7 dollars of benefit for every public dollar invested. The 
benefit-to-cost ratio for 75 of the largest metro areas is 8.8 to 1. 
Safety-related benefits--accident cost savings represent 44 percent of 
the benefits. Time savings account for 41 percent. The economic impact 
of achieving the national goal will see a ripple multiplier effect on 
the economy of 240 to 300 billion dollars triggered by 93 billion in 
direct public investment. 590,000 jobs will be created.
    The public cost of achieving the national goal in metropolitan 
areas over the next 10 years will be $48 billion dollars. Cost, benefit 
and market analysis for commercial vehicle operations infrastructure 
and rural applications will be completed this summer.
    These benefits and projected economic activity are predicated on 
public policies that result in achieving the national goal. 
Reauthorization legislation will define Federal leadership and drive 
public investment in ITS which will be critical if the goal is to be 
reached.
                       reauthorization principles
    In its role as a utilized Federal Advisory Committee to the U.S. 
Department of Transportation, ITS America has prepared and submitted as 
formal program advice a set of ISTEA reauthorization principles. (A 
copy of the submitted document is included with this written 
testimony.)
    The first principle states that:

         1. The Reauthorization Act should support the National Surface 
        Transportation Goal for ITS, which is to complete deployment of 
        basic ITS services for consumers of passenger and freight 
        transportation across the Nation by 2005. This goal should be 
        supported by providing that an amount equivalent to at least 5 
        percent of total surface transportation outlays be invested in 
        ITS applications unless the appropriate officials (non-Federal) 
        formally waive or modify the goal for their area.

    This is what we refer to as a ``soft set-aside.'' This is not a 
proposal to impose additional onerous mandates on State and local 
governments with regard to their use of surface transportation trust 
fund money. In this case, Congress would indicate that an amount 
equivalent to at least 5 percent of each State's Federal trust fund 
apportionment should be used for deployment of ITS. However to ``opt 
out'' of, or modify, this requirement, all that the State and local 
authorities with responsibility for use of Federal surface 
transportation funding would need to do is to take a formal and public 
action stating that either the jurisdiction has chosen not to support 
the national goal or that different sources or levels of funding will 
be used to achieve it. The only condition on the funding, if used for 
ITS deployment, would be compliance with national standards for 
interoperability.
    Funding incentives to initiate national deployment of ITS are 
essential for this reauthorization bill. Without such an incentive for 
the next several years, a coordinated and coherent national deployment 
will not occur. However, it is clear that most of the Federal funding 
will, in the long run, come from mainstream funding categories.
    The second, third, fourth and fifth principles state:

         2. The Reauthorization Act should continue to support an 
        aggressive Research and Technology program. This program should 
        emphasize system integration of ITS vehicle and infrastructure 
        technologies for all modes.
         3. The Intelligent Transportation Systems Program should be 
        structured in such a manner as to maximize long term 
        predictability and stability.
         4. To create maximum flexibility, the Reauthorization Act 
        should clarify and expand the eligible uses of program category 
        funds to allow for training, operations and maintenance of ITS 
        technology, in addition to ITS capital expenditures.
         5. The Reauthorization Act should require regular reports to 
        Congress on the status of deployment toward achieving the 
        National Goal. The report should address specific progress as 
        well as performance and effectiveness.

    The sixth principle states:

         6. The Reauthorization Act should encourage the use of 
        innovative financing techniques, especially public/private 
        partnerships, in the deployment of ITS, including construction, 
        operations and maintenance.

    In an environment of limited of Federal resources, effective use of 
private capital and initiative become more critical. We applaud the 
actions of Congress in the original ISTEA and the National Highway 
System acts for enabling experimentation and implementation of 
innovative financing techniques for transportation infrastructure, 
including the establishment of State Infrastructure Banks. Moreover, 
public/private partnerships allow private initiative to be used to 
undertake activities that traditionally been viewed as solely public 
sector responsibilities.
    The seventh principle states:

         7. Federal funding should be reserved for those ITS purposes 
        which are not being carried out by private investment.

    The eighth principle states:

         8. The Reauthorization Act should eliminate barriers to ITS 
        deployment by encouraging the use of innovative and flexible 
        methods for procurement.

    The ITS community quickly learned that the traditional linear and 
segmented process for procuring capital transportation projects cannot 
be effectively applied to information technology and system deployment. 
There are successful models for ITS procurement, but, to date, their 
application remains the exception and not the rule. Federal law, 
regulation and practice should enable and encourage public agencies to 
use these differing procurement tools to design, build, and operate ITS 
systems.
    The ninth principle states:

         9. The Reauthorization Act should continue a targeted Federal 
        role, in partnership with the private sector, in the rapid 
        development of consensus-based ITS standards, stimulation of 
        ITS markets, and essential research and development. To ensure 
        interoperability, Federal funding should only be eligible for 
        ITS systems with components that are consistent with the 
        adopted model architecture and, where they exist, conform to 
        adopted standards.

    The importance of the development of standards to assure 
interoperability and to sustain a national market place cannot be over 
emphasized. Consumers, including individuals, public agencies, and 
companies further down the chain of product development have the 
biggest stake in the competitive market enabled by standards. The 
Federal Government is now playing a critical role, in collaboration 
with the traditional standards developing organizations and the ITS 
America public/private partnership, in coordinating, accelerating and 
maximizing the development process for key interoperable standards. 
This role should be continued and strengthened.
                               conclusion
    In conclusion, the national ITS initiative is ready to move to the 
deployment stage, building upon the successes to date fostered by 
ISTEA. A national deployment effort is essential if we are to achieve 
the vision of seamless, intermodal and interoperable systems that use 
state-of-the-act technology to gain the maximum in safety and 
efficiency from our surface transportation systems.
    National deployment must shift away from the isolated, stand-alone 
systems that have proven the concept and demonstrated that the 
technology works. National deployment requires an incentive program 
that provides leadership and focus without mandates and hard set-
asides. Deployment incentives, along with fostering standards for 
interoperability, broadening Federal eligibility criteria for ITS, 
facilitating private investment, eliminating procurement barriers, 
providing a stable funding source and supporting continued research are 
the key elements of what should comprise the ITS component of 
reauthorization.
Responses of James Costantino to Additional Questions from Senator Reid
    Question 1. Please provide more information to the committee on the 
traveler information system along the I-80/U.S. 50 corridor between San 
Francisco and Lake Tahoe/Reno.
    In order to provide the most complete and up-to-date information on 
this project, I contacted the California Department of Transportation 
(CalTrans), which, along with the Nevada Department of Transportation 
(NDOT), is one of the leading public agencies for this project. It is 
called the TransCal InterRegional Traveler--Information System 
(TransCal) and runs between San Francisco and Reno. CalTrans sent me a 
packet of materials that describe the project along with photographs of 
the information kiosks and other hardware being developed. I have 
included these materials with this letter.
    In brief, the TransCal project will be an integrated interregional 
traveler information system between San Francisco, Sacramento, Lake 
Tahoe and Reno. The project will provide real-time information on 
roadway conditions, incidents, traffic, weather, alternative 
transportation options and traveler services such as yellow pages and 
tourist information. TransCal will employ a satellite-based emergency 
notification system to provide emergency assistance to travelers. In 
addition, a frequent passenger program will be initiated using 
``smart'' cards and incentive programs to encourage greater use of 
public transit. Real-time information will be made available through 
stationary kiosks, a Traveler Advisory Telephone system, in-vehicle 
devices and personal digital assistants. TransCal will also be able to 
interface with other existing traveler information systems, such as the 
San Francisco Bay Area's Traveler The Information System, called 
TravInfo. A 12-month operational field test of the project began this 
month. For more information on TransCal, I direct your attention to the 
enclosed materials.
    Question 2. Do you share the view that DOT's design specifications 
for ITS are significantly behind? If so, why? If not, why not?
    Response. I assume that this question is based on the conclusion of 
the GAO report, ``Urban Transportation: Challenges to Widespread 
Deployment of Intelligent Transportation Systems,'' that ITS standards 
development (or ``design specifications'' as your question states) is 
occurring at an unacceptably slow pace; therefore, ITS deployment 
should be delayed until these standards are in-place. I believe that 
this conclusion is not wholly accurate. It is true that ITS standards 
are not expected to be finalized before 2001 or 2002. This does not 
mean, however, that either the standards-setting process is 
``significantly behind'' or that deployment should be halted until that 
time.
    In fact, just the opposite has occurred. Through the Federal 
Highway Administration's ITS Joint Program Office, $16 million in 
Federal funding was made available in 1996 to support the standards-
setting process over a 5-year period. This funding has served to bring 
the necessary stakeholders to the table--DOT, private industry, 
traditional standards developing organizations (such as the American 
Association of State Highway & Transportation Officials, the American 
Society of Testing and Materials and the Society of Automotive 
Engineers) and the user community--and to create a new sense of urgency 
within the process. It is not the case that any one of these 
stakeholders could develop these standards on its own. Each has its own 
specialized interests that must be coordinated with other stakeholders. 
Conversely, by bringing the stakeholders together, DOT has maximized 
the strength of each. Private industry brings technical expertise and 
market knowledge. Standards-developing organizations bring experience 
and knowledge of the consensus-based process of establishing standards. 
The user community brings urgency--they want products and services now. 
Also, these stakeholders are participating as volunteers. The DOT 
funding is needed to focus the energy, time and strengths of the other 
stakeholders.
    Already, this effort has borne fruit. One of the priority standards 
identified by DOT concerns Dedicated Short Range Communications (DSRC) 
for automatic toll collection and commercial vehicle operations. It is 
expected that the first critical standards for DSRC will be finalized 
by the end of this year. The project manager has stated that ``we have 
accomplished more in 4 months than would take 4 years in a routine 
process.'' This is possible because the Federal Government provided 
money and leadership after 5 years of discussions resulted in no 
tangible progress. Contrary to the conclusion of the GAO, this example 
illustrates that the standards-setting process is on course and moving 
forward with all deliberate speed.
    Moreover, it is not the case that deployment of ITS technologies 
should wait until all ITS standards are established in 2001 or 2002. 
Many priority standards will be in place before that time, and, most 
importantly, deployment will occur, and is occurring now, although ITS 
standards are not yet finalized. Gerald Pfeffer of United Technologies 
testified as much at the same hearing. When deployed, the automatic 
toll collection and congestion-pricing project along SR91 in Southern 
California used the then-current standards for DSRC with the 
realization that the system would have to be retrofitted to the soon-
to-be developed national standard. Similarly, the TransCal project 
described in Question #1 is not waiting on ITS standards before being 
deployed. Deployment should be in conformity with the completed ITS 
National Architecture, which identified what standards were needed, and 
the then-existing standards. As more standards come on line, 
retrofitting of the systems will occur. This is an expected cost of 
doing business, as Mr. Pfeffer testified. Waiting on these standards is 
simply short-sighted because it denies the reality of what is happening 
on the ground throughout the United States. With DOT involvement, it is 
expected that the standards-setting process can now get ahead of the 
parade to deployment that is underway.
    Question 3. Upon their completion next summer, please provide the 
cost, benefit, and market analysis for commercial vehicle operations 
infrastructure and rural applications described in your testimony.
    Response. I will be sure to provide this information as soon as it 
is available.
                                 ______
                                 
      Responses of James Costantino to Additional Questions from 
                             Senator Chafee
    Question 1. You have testified that the public and private sectors 
must work as a partnership in the ITS deployment effort. What exactly 
are the appropriate roles for the public and private sectors?
    Response. There are two areas in which the public and private 
sectors must work as partners for ITS deployment. First, in the era of 
dwindling government resources at all levels to capitalize fully new 
transportation projects, whether they be construction, reconstruction 
or ITS deployment, it will be necessary to pursue alternative methods 
of finance. The private sector brings expertise and experience with 
such alternative methods as debt financing through, for example, the 
sale of public bonds or an extension of credit. For projects where a 
return on investment can be predicted with confidence, the public and 
private sectors can structure a relationship where they both assume the 
risk and share the benefits. It is not the case that only toll projects 
can provide the required revenue to attract private investment. For 
example, the private sector has started to show success with 
repackaging real-time traffic information collected by public agencies 
for dissemination to the public. Support from the Federal Government in 
the form of Federal credit insurance, as suggested by Daniel Flanagan 
at the March 6 hearing, or raising the ceiling on private investment 
for tax-exempt municipal bonds from 10 to 25 percent for public 
infrastructure projects, as proposed in the Highway Infrastructure 
Privatization Act, are but two of the examples of where the Federal 
Government can make transportation projects more attractive to private 
investment as partners to share the risks and benefits.
    Second, the private sector will build on the initial investment by 
Federal, State and local governments in ITS deployment. A comparison 
here to the development of the Internet is an effective analogy. 
Initially, the Internet was created as a secure means for the 
Department of Defense (DOD) to communicate with itself and its research 
institutions. DOD then constructed a supporting infrastructure. At no 
point was it thought that private industry would build on this public 
infrastructure to create the exploding market we have today, and all of 
which occurred at no additional cost to the taxpayer.
    We believe that a similar situation exists today with ITS 
deployment. The Federal Government is the only entity that can provide 
the leadership and funding incentives to create a national ITS 
infrastructure. Once this infrastructure is in place, the private 
sector will have the foundation upon which to feed the consumer market 
for ITS services and products. As I described in my oral and written 
testimony, ITS America and DOT conducted an ITS National Market and 
Investment study to determine, in part, whether the Internet analogy 
was valid. The study's results confirmed this belief.
    The study concluded that the overall market for basic ITS 
metropolitan infrastructure and associated products and services in the 
consumer and commercial markets over the next 20 years is approximately 
$437 billion. Of that amount, approximately $93 billion--from Federal, 
State and local sources--would be for the public infrastructure. The 
remaining $347 billion would be for ITS products and services in the 
marketplace. As was the case with the Internet, the early public 
investment in the infrastructure will provide the critical foundation 
for a private market to develop.
    In sum, the public and private sectors can work as partners both in 
financing the development of a national ITS infrastructure and, as a 
result, developing a market for ITS products and services.
    Question 2. Your testimony asserts that it is critical that ITS 
deployment occur in an integrated, interoperable, and intermodal 
fashion. You also mention that the deployment of ITS technology has 
begun, albeit in a fragmented manner. What impact will this 
fragmentation have on the prospects for effective deployment?
    Response. In my testimony, I described several example of ITS 
technologies that have been deployed across the United States. On the 
upside, these systems are producing tangible benefits. Unfortunately, 
these examples also illustrate that deployment is not occurring in a 
systematic fashion from community to community. Certain cities and 
regions, such as Houston, Minneapolis, and the New York City region, 
are leaders in deploying ITS. Other cities and regions, however, are 
either just beginning to examine the possibilities of ITS or are 
unaware that these technologies exist. ITS America's concern, which is 
shared by DOT, is that without a national coordinated deployment 
effort, the fragmentation we see today will persist such that the goals 
of integration, interoperability and intermodalism will not be 
achieved.
    If deployment continues in a fragmented manner, there will surely 
come a time when an attempt will be made to integrate the many 
``islands'' of deployment. What will be found is that the cost, and 
bureaucratic resistance, to retrofit the many stand-alone systems to be 
compatible with each other will be prohibitive. In other words, once 
deployment is done wrongly--that is, not integrated, interoperable nor 
intermodal--States and localities will be less likely to go back and 
fix these problems later. The goal of a national deployment effort 
based on funding incentives would be to ensure that these States and 
localities deploy ITS correctly from the outset. Already, the Federal 
seed money for the four Model Deployment Initiative sites in New York 
City, Phoenix, San Antonio and Seattle is used for projects that will 
be nationally integrated.
    On a practical level, if deployment continues in a fragmented 
fashion, the driving public, for example, will be unable to use a 
single transponder that can be read by every electronic toll collection 
system in the country. Rather than creating a seamless and paperless 
commercial freight inspection and safety system from State to State, 
truck drivers will still have to be weighed and inspected by each State 
along a single route, such as along the I-75 corridor I identified in 
my testimony. This fragmented deployment will prevent the ultimate 
efficiencies in time, reduced cost and ease that ITS can deliver from 
being achieved.
    Question 3. Your ISTEA reauthorization proposal encourages, rather 
than mandates states to invest 5 percent of their total surface 
transportation outlays in ITS applications. You have referred to it as 
a ``soft set-aside.'' I applaud your effort not to incorporate an 
unfunded mandate in your proposal. Have you done any research to 
determine how successful the ``soft set-aside'' approach will be? How 
many States do you expect to participate in this initiative?
    Response. ITS America has not done any research on how our ``soft 
set-aside'' approach will be embraced by the States. But based on our 
knowledge of the number of States that are involved with ITS, and those 
that are not, we believe that this ``soft set-aside'' proposal will be 
embraced by at least the 10 to 15 States that are have already invested 
in ITS. In 1995 alone, the States invested over $1 billion of Federal-
aid funds in ITS. This ``lead'' group of States has already determined 
that ITS provides solutions to problems they face. These States would 
probably use ITS regardless of the presence of Federal money, but the 
``soft set-aside'' will act to spur them forward with greater speed and 
enthusiasm.
    We also believe that there is a ``middle'' group of States, 
approximately 20 to 25 in number, that are beginning to consider and 
deploy ITS. For this group, the ``soft set-aside'' could act as a 
critical incentive. Although our proposal is not calling for a 
mandatory program category, the ``soft set-aside'' would force States 
to consider ITS as an option for their transportation needs. It is 
hoped that if ITS is ``on the plate'' of State and local officials, it 
will be viewed more seriously and, hopefully, embraced as a solution.
    Finally, there is a last group of States, 10 to 15 in number, that 
have yet to consider ITS and will probably not do so unless NEXTEA 
creates a separate program category. We do not expect that our ``soft 
set-aside'' proposal alone will be enough to convince this group that 
ITS will benefit them. We do, however, hope to be surprised.
    Question 4. As you know, I am very interested in safety issues. You 
mentioned that the Freeway Management Systems will reduce accidents by 
17 percent. Can you expand on your assertion? What areas of safety will 
see benefit?
    Response. The figure of 17 percent reduction in accident rates is a 
composite average calculated by DOT from the experience of several 
freeway management systems in place throughout the country. Some 
systems have resulted in a greater reduction, others less. Nonetheless, 
the clear answer is that freeway management systems do reduce accident 
rates.
    Freeway management systems are premised on the conclusion that the 
significant portion of accidents, which are mostly fender-benders and 
minor personal injuries, occur in urban areas under congested 
conditions. Therefore, by reducing the amount and severity of 
congestion, there will be resulting reduction in accidents. Experience 
on the ground has proven this conclusion.
    For example, in July 1995 San Antonio, Texas, one of the four Model 
Deployment Initiative sites, opened its TransGuide freeway management 
system. The Operations Control Center and 26 miles of the proposed 191-
mile system are now operational. The TransGuide System encompasses a 
complete digital communications network consisting of changeable 
message signs, ramp meters, lane control signals, loop detectors, and 
surveillance cameras. Since going operational, the TransGuide freeway 
management system has seen a reduction in accident rates of 15 percent. 
Future reductions are predicted at 21 percent. For freeways not covered 
by TransGuide, the total number of accidents rose by 7.8 percent with 
an overall increased rate of 4.3 percent.
    A significant element of the TransGuide system, and other freeway 
management systems, is the improvement of incident management. The goal 
is to improve incident management by detecting and verifying the nature 
and severity of incidents more quickly and also lessening response and 
clearing times. San Antonio's TransGuide system has been able to meet 
this goal. For example, average response time to accidents improved 
once TransGuide became operational. For minor accidents, the rate 
improved 19 percent; for major accidents a 21 percent improvement was 
achieved. Because emergency teams are able to reach accidents more 
quickly, the severity of injuries and likelihood of death are also 
lessened.
    It should also be recognized that freeway management systems result 
in time-saved benefits, increased throughput, less impact on the 
environment and improved customer satisfaction. All of which translates 
into cost savings for both the private and commercial driver. Other 
freeway management systems in Houston, Seattle, Montgomery County, 
Maryland, and Minneapolis/St. Paul have had similar experiences. In 
short, freeway management systems have proven they work.
                                 ______
                                 
   Prepared Statement of Robert E. Skinner, Jr., Executive Director, 
       Transportation Research Board National Academy of Sciences
    Good morning, Mr. Chairman and members of the subcommittee. My name 
is Robert Skinner. I am the executive director of the Transportation 
Research Board. The Transportation Research Board has been involved in 
transportation research for the past 76 years since its creation in 
1920 as the Advisory Board on Highway Research. TRB is an independent, 
nonprofit organization that is part of the National Research Council, 
which is the operating arm of the National Academies of Sciences and 
Engineering. TRB's mission, in brief, is to promote innovation and 
progress in transportation through research. TRB fulfills this mission 
by maintaining over 180 standing technical committees covering all 
modes of transportation, hosting an Annual Meeting that attracts about 
7,500 transportation professionals, publishing reports and collections 
of peer-reviewed technical articles, administering two contract 
research programs, and undertaking special studies at the request of 
Congress and executive branch agencies.
    Innovation clearly requires more than just good research; but good 
research is often a prerequisite for innovation in transportation, as 
it is in other fields. My comments today will focus on highway research 
initiatives, and I will also make some brief comments about barriers to 
innovation and innovative finance. In addition, I have included 
comments on transit and rail research in which TRB is also engaged.
    I will begin with highway research, and in doing so I will draw 
upon the work of a special TRB expert committee, the Research and 
Technology Coordinating Committee (RTCC), which was convened in 1992 to 
provide an independent, ongoing assessment of the research and 
technology program of the Federal Highway Administration (FHWA) as well 
as other highway research activities. Its members include high-level 
administrators and researchers from the highway field as well as some 
technology experts from other fields. The current committee roster is 
attached.
    In 1994 the committee published an overall appraisal of highway 
industry research in TRB Special Report 244, Highway Research: Current 
Programs and Future Directions. By `industry' the committee meant the 
government agencies that construct, maintain, and administer America's 
public highways, as well as the private companies that provide 
services, materials, and equipment used by these agencies.
    Let me highlight several committee findings and recommendations 
about highway research, and begin with how highway research is 
organized.
    As you know, the highway industry is highly decentralized in our 
country--nearly 40,000 public agencies administer portions of the 
highway system, and tens of thousands of private companies provide 
products and services to State and local agencies. Our highway research 
and technology programs are also fairly decentralized. The Federal 
Highway Administration sponsors in-house and contract research; most 
States have research programs; many universities carry out highway 
research programs; and private-sector trade groups and large companies 
sponsor and conduct research.
    Of these, the Federal Highway Administration's research program is 
the largest, the most comprehensive, and the best positioned to pursue 
long-term research initiatives. State DOT research programs constitute 
the other major public-sector component and are largely financed 
through the State Planning and Research (SP&R) program, authorized by 
the Intermodal Surface Transportation Efficiency Act of 1991 (ISTEA). 
The State programs place considerable emphasis on diagnostic, 
consultative, and testing activities--work that strictly speaking is 
not research but is a necessary component of the innovation process. 
But the SP&R program, like its predecessor, the Highway Planning and 
Research (HP&R) program, is also the mechanism that States have used 
for ``pooled fund'' research ranging from ad hoc projects supported by 
a few States to the National Cooperative Highway Research Program 
(NCHRP), which the 50 States, the District of Columbia, and Puerto Rico 
have collectively overseen for 35 years.
    Decentralized research programs allow the potential users of 
research results to participate at many different levels. Because the 
industry is so highly fragmented, a more centralized program would 
probably make it even more difficult to establish productive links 
between researchers and the users of research products. So, while the 
overall highway research program in the United States is complicated 
and difficult to understand at first, it provides a solid foundation 
for highway innovation.
    Now let me turn to research topic areas--do we have the right 
priorities? Our committee spent a great deal of time trying to 
understand and classify research and technology activities, and it 
closely examined highway research-related spending in fiscal year 1993. 
In a nutshell, based on its analysis, the committee urged that the 
research program be less conservative and more comprehensive. It 
recommended more support for high-risk, but potentially high-payoff, 
research that seeks breakthroughs in highway technology. It recommended 
more research that takes a long-term view of the highway transportation 
system and its interaction with other modes, land use, the environment, 
and the national economy, as well as more research on improvements in 
intermodal transportation that involve highways.
    Altogether, the committee estimated that less than 6 percent of the 
research and technology expenditures for 1993 in the major public-
sector programs (FHWA, SP&R, and NCHRP) were directed toward these 
areas. This figure has probably increased since then as ITS-related 
research has increased; certainly a portion of ITS research is aiming 
for breakthrough technologies to improve safety and increase highway 
capacity. Nevertheless, the 1993 figures are indicative of a problem, 
or perhaps missed opportunity, that goes beyond any one topic area of 
highway research.
    At the same time, the committee recognized the importance of 
incremental, short-term research that seeks improvements in highway 
performance, safety, and cost through evolutionary changes to current 
materials, designs, and construction and operational practices.
    The committee also looked at the overall level of investment in 
highway research and technology. Budgets for the major public-sector 
research programs, when adjusted for inflation, increased by a factor 
of about 2.5 between 1982 and 1993. Nonetheless, when expressed as a 
fraction of all industry expenditures, total research and technology 
spending was probably on the order of 0.3 percent in 1993, well below 
the investment levels of ``low-tech'' private-sector industries. Given 
the magnitude of the challenges ahead and the opportunities available, 
the committee concluded that increased highway research funding would 
be a wise investment.
    More recently, the Research and Technology Coordinating Committee 
turned its attention to highway research related to air quality--
specifically, research aimed at helping State and local agencies 
evaluate the impact of transportation actions on urban air quality 
goals set forth by the Clean Air Act Amendments of 1990 (CAAA) and 
ISTEA. In a report released in January, the committee concluded that 
the prediction models and data bases mandated for determining 
compliance with air quality goals are inadequate and lack credibility 
among State and local transportation officials. It identified targeted 
research studies, which would address these inadequacies, and called 
for a research program in this area that would be cooperatively managed 
and supported by the U.S. Department of Transportation and the 
Environmental Protection Agency.
    In addition to the work of this committee, other special TRB 
committees provide continuing advice to the Federal Highway 
Administration concerning specific areas of research and innovation. 
One such committee provides advice about the implementation of research 
products developed by the now complete Strategic Highway Research 
Program (SHRP), and another periodically reviews the SHRP-initiated 
long-term pavement performance (LTPP) studies.
    The transportation field faces special challenges in moving good 
ideas from the lab to practice--challenges that stem from the 
decentralized nature of the industry and the lack of market incentives, 
which help drive innovation in other sectors. Recently, another TRB 
committee looked specifically at problems, such as procurement 
practices, that slow the pace of innovation in the highway industry.
    The traditional low-bid approach to procuring highway goods and 
services, with highly prescriptive specifications, gives the private 
sector few incentives to innovate. But a new era of highway renovation 
has begun that offers significant opportunities to apply new 
technologies and practices--an era when innovation will be critical to 
providing more highway infrastructure with fewer public dollars. Last 
fall, this committee released a report calling for a concerted public-
private effort to bring more innovation into maintaining and rebuilding 
the nation's highways. This will require application of a wide range of 
innovative approaches, such as design-build, warranties, life-cycle 
costing, and constructability reviews, to name a few. Some efforts are 
already under way, but more experimentation with these approaches is 
needed. Equally important, we must begin to educate industry leaders, 
from both the public and private sectors, more aggressively about the 
opportunities offered by these approaches. As a small step in this 
direction, the committee recommended formation of a ``strategic forum 
for innovation in highway infrastructure,'' to bring together visionary 
leaders from both industry sectors.
    In the area of innovative finance, TRB has organized a wide array 
of activities addressing different aspects of this topic, including a 
Conference on Innovative Finance for Transportation, to take place on 
April 23-25 in Dallas. The conference will showcase innovative 
financing techniques currently being used for highway and transit 
projects and will identify research and information transfer needs in 
this area.
    In 1994, a special TRB committee completed a detailed study of one 
form of innovative finance, peak-period or congestion pricing on 
highways (TRB Special Report 242, Curbing Gridlock: Peak-Period Fees To 
Relieve Traffic Congestion). In brief, the committee concluded that 
congestion pricing is technically feasible and would produce a net 
benefit to society. It acknowledged, however, that the lack of public 
and political support is a significant barrier to implementation and 
recommended an incremental approach with small-scale experiments that 
might build public support over time. To support this, the committee 
specifically recommended that Congress extend the congestion pricing 
pilot program of ISTEA when the legislation is reauthorized.
    Now let me make some comments about public transit research. In 
1987, a special TRB committee completed a strategic review of public 
transit research (TRB Special Report 213, Research for Public Transit: 
New Directions), which called for a new operator-oriented, problem-
solving research program. Transit agencies were to play the dominant 
role in managing and implementing the research program, and the 
committee proposed that the program be funded through mandatory set-
asides from Federal grants. In 1991, ISTEA authorized a new Transit 
Cooperative Research Program (TCRP), which closely followed this model. 
It provided for an independent governing board and specified that the 
program be administered by the National Academy of Sciences, which has 
fulfilled this assignment through the Transportation Research Board.
    The Transit Cooperative Research Program will complete its fifth 
year in August 1997, and during that time 194 research studies have 
been authorized and 84 have been completed. Research products are now 
finding their way into practice. For example, Santa Clara County 
officials cite a TCRP report as the basis for their decision to adopt 
low-floor light rail vehicles and provide accessibility for riders with 
disabilities without costly ramps and platforms. More than 800 
transportation professionals have served on the panels that guide TCRP 
research projects, helping to ensure that the applied research remains 
faithful to industry needs, and providing critical linkages for 
implementation. From my personal vantage point, I believe that TCRP is 
having a positive impact and fulfilling the mission originally 
envisioned by the special TRB committee in 1987.
    My statement has focused on highway and public transit research, 
but TRB has also been involved in rail research and provided guidance 
to the Federal Railroad Administration (FRA) in this regard. For 
example, at the request of Congress, a special TRB committee is 
conducting periodic reviews of the high-speed ground transportation 
technology demonstration program, which was authorized by ISTEA. It is 
assessing individual program elements and how well they are integrated, 
program management, and the prospects for deployment of the 
technologies being investigated.
    My comments today have highlighted research initiatives that are 
specific to individual modes of transportation. This type of research 
is and always will be important, but there is also a need for more 
research that cuts across modes. I mentioned earlier that TRB's 
Research and Technology Coordinating Committee, in its overall 
appraisal of highway industry research, recommended more research that 
takes a long-term view of the nation's highway transportation system 
and its interaction with other modes, land use, the environment, and 
the economy, as well as more research on improvements in intermodal 
transportation involving highways. In recent years, TRB's activity in 
these areas has steadily increased, with projects ranging from a 
national conference on setting a framework for intermodal 
transportation research to a study on the U.S. transportation system 
viewed in the context of the quest for ``sustainability.'' Given the 
rapid pace of change in all aspects of our world, I expect that the 
need to address these types of issues will continue to grow.
    Thank you for the opportunity to provide these comments this 
morning. I know that the subcommittee has previously heard testimony 
about the important role our transportation system plays in the 
economic vitality of our country. To be sure, a willingness by both the 
public and private sectors to invest in that system has been critical 
to this success. But innovation, often based on research, has also been 
critical, and will be ever more so as our financial resources are 
constrained.
   Responses of Robert E. Skinner, Jr. to Additional Questions from 
                              Senator Reid
    Question 1. According to your testimony, less than 6 percent of the 
Nation's highway research funds are directed to long-term initiatives 
such as intermodalism, land use, the environment, and the national 
economy. Where are the remaining 94 percent of the highway research and 
technology expenditures directed?
    Response. In its 1994 report cited in my testimony, our Research 
and Technology Coordinating Committee analyzed total expenditures in 
fiscal year 1993 for the three major public-sector highway research and 
technology programs (FHWA, SP&R, and NCHRP), broken down into the 
following categories (for description of these categories, see Highway 
Research: Current Programs and Future Directions):


------------------------------------------------------------------------
                                               Expenditures
                   Category                    [millions of   Percentage
                                                 dollars]
------------------------------------------------------------------------
Incremental Improvements.....................          $158           58
Breakthrough Research........................            11            4
U.S. Transportation System Issues............           1.2           <1
Policy Analysis & Regulatory Compliance......            19            7
Intermodal Transportation....................           1.7           <1
Tech Transfer/Field Applications.............            27            9
Education & Training.........................            29           10
Technical Support & Testing..................            29           10
                                              --------------------------
    Total....................................          $276  ...........
------------------------------------------------------------------------

    Question 2. How can national transportation policy ensure that a 
larger share of research expenditures are directed to long-term 
initiatives such as the environment, the economy, land use, and the 
interaction of highways with other modes?
    Response. The Research and Technology Coordinating Committee 
identified a need for this type of research but did not consider the 
question of what type of mechanism would be most appropriate to ensure 
its accomplishment. Clearly, there are a variety of legislative or 
administrative actions that might be considered as a means of requiring 
a reallocation of research priorities. Speaking personally, however, 
what is probably more important than the specific mechanism chosen is a 
willingness among those responsible for funding research to accept the 
``failures'' and lack of short-term products that are inevitable in any 
high-risk, long-term research program.
    Question 3. A TRB report released in January concluded that ``the 
models and data bases mandated for determining compliance with air 
quality goals are inadequate and lack credibility among State and local 
transportation officials.'' It also called for a cooperative EPA-
Department of Transportation research program to look further into this 
area. I understand that there is a model called the Transportation 
Analysis and Simulation System, better known as TRANSIMS, that is 
developing new, integrated transportation and air quality forecasting 
procedures necessary to satisfy ISTEA and the Clean Air Act. How do you 
think the TRANSIMS model can improve transportation planning?
    Response. The report released in January and an earlier report--
Expanding Metropolitan Highways: Implications for Air Quality and 
Energy Use (Special Report 245)--identified a number of deficiencies in 
the data needed and the models available to forecast the effects of 
transportation investments on vehicle emissions, travel demand, and 
land use.
    The TRANSIMS model is being developed at the Los Alamos National 
Laboratory under the auspices of the Travel Model Improvement Program, 
which is jointly funded by the U.S. Department of Transportation and 
the Environmental Protection Agency. TRANSIMS is a multimodal regional 
microsimulation model that is intended to provide detailed estimates of 
household trips and travel and vehicle movements in a metropolitan 
area, which can then be linked with emissions, airshed, and energy use 
models. The model will provide highly detailed data on travel and 
traffic movements in a metropolitan area that should be helpful in 
analyzing travel impacts on the environment and energy use.
    This model may prove to be a powerful analytical tool to aid 
transportation planning. However, like any model, its full potential 
will only be realized when used in conjunction with accurate input data 
and with other reliable models that link travel characteristics to 
specific impacts on the environment or land use. For example, a 
separate modal emissions model must be developed and linked to the 
travel component of the TRANSIMS model to produce reliable estimates of 
the effects of specific travel characteristics on vehicle emissions and 
pollutant concentration levels. Moreover, my understanding is that the 
data requirements to support model use in the field are quite 
extensive. Thus, the TRANSIMS model may help correct several of the 
deficiencies reported in our studies, but its full potential for 
transportation planning is not likely to be realized without other 
improvements in data and modeling.
    Question 4. A special TRB Committee found a lack of public and 
political support for congestion pricing. Mr. Pfeffer's testimony, on 
the other hand, made the point that American motorists will pay market 
prices to avoid congestion. Can you clarify this apparent discrepancy? 
Is the public's attitude to pricing a function of how severe the 
congestion is in a given region or locality?
    Response. By all reports, the public reception is favorable to the 
congestion pricing being applied on the State Route 91 project in 
southern California. This project, which has come on line since TRB's 
report on congestion pricing was completed, is the first application of 
congestion pricing in the United States, and it may help pave the way 
for more projects in different settings. The project does, however, 
have some unique features--such as private ownership and operation, 
extreme congestion in the corridor, and the availability of adjacent 
``free'' lanes--that may not be readily reproduced elsewhere.
    In Curbing Gridlock: Peak-Period Fees to Relieve Traffic 
Congestion, a special TRB study committee concluded that congestion 
pricing, applied in a variety of settings, has great promise as a 
demand management tool and would be a net benefit to society, but also 
acknowledged that the political feasibility of this approach is not 
certain. The committee lists several reasons for this uncertainty, 
among them whether the public is prepared to pay for what it now 
perceives as a ``free'' service; the potentially complicated politics 
regarding how the substantial hinds raised through congestion pricing 
would be allocated (both within transportation and between 
transportation and other public services); and how the potentially 
negative impacts on some individuals and groups would be ameliorated.
    In recognition of both the potential benefit and the uncertainty, 
the committee recommended experimentation with this policy and careful 
evaluation. The committee observed (page 8 of the report), ``The risks 
associated with congestion pricing and the nature of policy development 
in a pluralistic society imply that this policy will only progress in 
small steps. Given that congestion pricing represents a substantial 
change from current operation of the road system, such small steps are 
appropriate. If individual projects succeed, they will help convince 
policymakers and the public of the benefits of congestion pricing. This 
process will take time, however; thus it may be many more years before 
congestion pricing would be applied throughout a metropolitan area in 
this country.''
    The Route 91 project is one step toward congestion pricing, and it 
provides a unique opportunity to learn from and expand upon this 
approach.
    Question 5. Looking at the entire highway sector, do you think we 
are doing an adequate job of getting innovation incorporated into our 
infrastructure?
    Response. We are making progress, but as I noted in my statement 
there are special challenges that confront the transportation field in 
getting innovative approaches into practice--challenges that stem from 
the decentralized nature of the industry and the lack of market 
incentives, which help drive innovation in other sectors. The TRB 
Strategic Highway Research Program Committee is assisting FHWA in 
finding effective ways to encourage and aid the implementation of 
innovative products that have emerged from SHRP research. TRB's 
Committee for the Study of Approaches for Increasing Private-Sector 
Involvement in the Highway Innovation Process looked specifically at 
problems, such as procurement practices, that slow the pace of 
innovation in the highway industry. In its 1996 report, that committee 
called for a public-private effort to bring more innovation into 
maintaining and rebuilding U.S. highways, through application of a wide 
range of approaches such as design-build, warranties, life-cycle 
costing, and constructability reviews. Some State agencies are already 
experimenting with these and other innovative approaches; more 
experimentation is needed, as well as a more aggressive effort to 
educate industry leaders from the public and private sectors about the 
opportunities offered by these approaches.
    Question 6. Where do we need to focus our attention to accelerate 
innovation? For instance, should we focus on basic research, training 
for State and local officials, large-scale testing of new materials, or 
some other area?
    Response. As I noted in my testimony, the Research and Technology 
Coordinating Committee examined the overall level of investment in 
highway research and technology and found that spending for research in 
the highway industry has been well below the investment levels of even 
``low-tech'' private-sector industries. The committee concluded that 
additional spending would be worthwhile, quite possibly in all of the 
areas mentioned in the question. Recognizing, however, that resources 
are limited, the committee targeted some specific areas that are 
currently receiving a disproportionately small share of funding. The 
committee recommended a less conservative, more comprehensive research 
program, including more support for high-risk, potentially high-payoff 
research aimed at breakthroughs in highway technology. It also 
recommended more research that takes a long-term view of the highway 
transportation system and its interaction with other modes, land use, 
the environment, and the economy, as well as more research on 
improvements in intermodal transportation that involve highways.
    Question 7. Do you think that having the private sector play a 
greater role in the design, construction, and operation of the Nation's 
transportation infrastructure might lead to greater innovation?
    Response. Underlying the types of approaches I've alluded to in my 
response to question #5 above is the belief that an enhanced private-
sector role could lead to greater innovation in the design, 
construction, and operation of the Nation's transportation 
infrastructure. Although much of that infrastructure is publicly owned, 
many opportunities are emerging for increased private-sector 
involvement and public-private partnerships in designing, building, and 
operating U.S. transportation facilities. Providing incentives to 
innovate and to encourage and reward efficiency is key.


REAUTHORIZATION OF THE INTERMODAL SURFACE TRANSPORTATION EFFICIENCY ACT

                              ----------                              


                        THURSDAY, MARCH 13, 1997

                                       U.S. Senate,
Committee on Environment and Public Works, Subcommittee on 
                         Transportation and Infrastructure,
                                                    Washington, DC.
    The subcommittee met, pursuant to notice, at 9:30 a.m. in 
room 406, Senate Dirksen Building, Hon. John W. Warner 
(chairman of the subcommittee) presiding.

                  PROGRAM ELIGIBILITY AND FLEXIBILITY

    Present: Senators Warner, Smith, Bond, Baucus, Moynihan, 
Reid, Graham, Boxer, and Chafee [ex officio].
    Also present: Senators Lautenberg and Wyden.

OPENING STATEMENT OF HON. JOHN W. WARNER, U.S. SENATOR FROM THE 
                    COMMONWEALTH OF VIRGINIA

    Senator Warner. The subcommittee will come to order.
    We will now hear from our distinguished colleagues. First, 
the distinguished Senator from Delaware, Senator Roth, then the 
Senator from New York, Senator Moynihan, followed by Senator 
Biden, then Senator Jeffords.
    [The prepared statement of Senator Warner follows:]
   Prepared Statement of Hon. John W. Warner, U.S. Senator from the 
                        Commonwealth of Virginia
    I want to welcome my colleagues, Secretary Huerta, and our other 
witnesses to the subcommittee today as we continue our examination of 
issues important to the reauthorization of the Intermodal Surface 
Transportation Efficiency Act.
    The purpose of today's hearing is to discuss ISTEA's program 
eligibility, funding flexibility and proposals to expand or limit this 
flexibility.
    Let me clarify that we are looking at two very distinct issues 
today.
    First, we will examine the flexibility permitted under ISTEA. This 
flexibility allows our State and local transportation partners to use 
Highway Trust Fund dollars to meet their own highway and transit 
priorities.
    Second, we will discuss the Administration's proposal to expand the 
eligible uses of moneys from the Highway Trust Fund.
    The current ISTEA program allows States to transfer funds among 
various program categories--shifting funds among the National Highway 
System, Bridge, or Surface Transportation programs. Also, ISTEA allows 
States to spend their STP or CMAQ funds on transit projects and other 
intermodal projects aimed at moving people and goods more efficiently.
    I believe giving our transportation partners this flexibility to 
meet their individual needs has been highly successful. It has been one 
of the strongest cornerstones of ISTEA and a principle that is 
continued in the reauthorization bill I am sponsoring--STEP 21.
    On the matter of using Highway Trust Fund dollars to fund other 
transportation purposes that do not contribute to Fund, I have serious 
reservations.
    The Administration's proposal to fund all of Amtrak's operating and 
capital expenses from the Highway Trust Fund rather than the General 
Fund is a major departure from current law.
    This subcommittee has repeatedly heard testimony from the Federal 
Highway Administration and other witnesses during our hearings that we 
should be spending $50 billion more than our current investments just 
to maintain the conditions and performance of our surface 
transportation system.
    We know the significant challenge before us to increase funding to 
meet our existing transportation demands.
    Because of this challenge, I question the wisdom of using limited 
dollars to fund Amtrak, freight rail activities and other purposes not 
central to our national transportation system.

    Senator Roth.

        OPENING STATEMENT OF HON. WILLIAM V. ROTH, JR.,
            U.S. SENATOR FROM THE STATE OF DELAWARE

    Senator Roth. Thank you very much, Senator Warner and 
Senator Chafee. I want to express my appreciation for starting 
the hearing early because we also have a hearing at 9:30 and 
our first witness, Mr. Volcker, has to leave early. So it is 
very helpful.
    I particularly appreciate the opportunity to testify before 
your subcommittee on what is an extremely important issue for 
me--the survival of our national passenger rail system. Amtrak 
is a vital part--I cannot emphasize too much--is a vital part 
of America's transportation network in both rural and urban 
areas. Due to increasing highway congestion and air quality 
requirements in urban areas, and the need for more 
transportation options in rural areas, reliance on rail 
passenger service will most certainly increase.
    Given these facts, the question I believe is not whether 
the Nation needs to support rail passenger service, but how.
    Our national passenger rail system is facing very serious 
financial challenges. If something is not done to put Amtrak on 
a solid basis so it can repair its track, improve its rolling 
stock, and speed its service, we will have more congestion, 
crumbling highways, dirtier air, and wasted energy. What this 
Nation needs is not only good highways but a good passenger 
rail service.
    To meet this objective, Congress must make a significant 
investment in Amtrak's capital infrastructure.
    Mr. Chairman, there are several ways Congress can do this. 
First, we can give States the flexibility to use their Federal 
transportation dollars, such as their CMAQ and STP dollars, for 
Amtrak service. Last year I offered an amendment on the 
National Highway System bill that would allow States to use 
their Federal transportation dollars on Amtrak if they choose 
to do so.
    This language overwhelmingly passed the Senate but was 
dropped in conference with the House. At the request of States 
who have lost Amtrak service, this language was later included 
in the fiscal year 1997 Department of Transportation funding 
bill.
    I am very pleased that Senator Moynihan's ISTEA 
reauthorization bill includes my flexibility language allowing 
States to use their STP and CMAQ dollars for Amtrak. I am also 
pleased that the Administration adopted my language as part of 
their ISTEA proposal.
    I urge this committee that whatever bill is reported to the 
full committee to include this important eligibility for 
passenger rail service.
    Second, and the most important in my mind, is giving Amtrak 
a secure and reliable source of capital funding. Today, Senator 
Moynihan and I will be introducing legislation that would 
transfer one half cent of the 4.3 cents-per-gallon motor fuels 
tax now being deposited into the general fund to a new trust 
fund for Amtrak.
    The fund, totally $3.8 billion, would allow Amtrak to make 
the capital improvements necessary to provide for a modern, 
efficient, and financially viable passenger rail system. The 
one half cent would revert back to the general fund after 5 
years.
    This legislation would provide Amtrak with a reliable 
capital funding source, no different than what highways and 
other modes of transportation currently receive. It would allow 
Amtrak to do long-term planning, to enhance the corporation's 
ability to raise funds in the private market, to make the 
necessary repairs to its tracks, and improvements to its 
equipment.
    Creating a trust for Amtrak is absolutely essential if we 
are to have a financially sound national passenger rail system.
    In closing, I would like to remind my colleagues of the 
importance of keeping a national passenger rail system. If we 
are to fulfill our ISTEA mandate ``to develop a national 
intermodal transportation system that is economically efficient 
and environmentally sound,'' then we must deploy a 
comprehensive transportation network that includes a 
financially stable passenger rail system as an integral 
component.
    As chairman of the Senate Finance Committee, with 
jurisdiction over the gas tax rates for ISTEA, I am eager to 
work with your committee to ensure that Amtrak's financial 
status is reversed.
    It is my view that capital--I want to emphasize--it is my 
view that capital funding for Amtrak must be part of any 
sensible ISTEA bill. I am pleased that the Administration 
heeded my call for a capital trust fund for Amtrak and included 
a plan to do so in their ISTEA bill.
    My committee can put the funding mechanism for Amtrak in 
place, but it will require all of us--Environment and Public 
Works, Commerce, Finance--working together to make Amtrak 
sound. I am hopeful that we can make significant strides toward 
this goal in the 1997 ISTEA reauthorization bill.
    Mr. Chairman, I look forward to working with your 
subcommittee on this most important issue.
    Senator Warner. Senator, just before you leave, may I 
comment, speaking for myself. You started not whether, but how 
to finance.
    Senator Roth. And I agree with that.
    Senator Warner. Except that I would say not whether, but 
why should we change from the current method of financing 
Amtrak? That's No. 1.
    Second, some committee has got to step up to the fact that 
Amtrak now, current management, is burdened with statutory 
requirements, like a 6-year pay to a laid-off, dismissed 
worker. That's a platinum parachute unlike anything elsewhere 
in America. The inability of Amtrak to contract out is another. 
In other words, when the Amtrak legislation was put together, 
there was far too much influence by the unions and that 
influence now is crippling the ability of Amtrak to become 
financially viable no matter how much money we give to them.
    Senator Moynihan.

      OPENING STATEMENT OF HON. DANIEL PATRICK MOYNIHAN, 
            U.S. SENATOR FROM THE STATE OF NEW YORK

    Senator Moynihan. Mr. Chairman, I'd just wholly endorse 
what my chairman has said to you. I would make the point that 
the 4.3 cents gasoline tax which the Finance Committee levied 
in 1993 extends to diesel fuel used by railroads as well as to 
gasoline used by automobiles. There is a case in equity as 
regards the origins of the revenue stream.
    Just one other point. The whole purpose of ISTEA, as 
Senator Chafee would agree, was to restore a balance to a 
Federal transportation policy that had been almost wholly 
directed to highway travel since 1956. In that setting, 
railroads declined precipitously. But railroad freight has come 
back to an extraordinary degree, and passenger rail need not be 
far behind if this committee can act in concert with our 
committee. I hope that would be the case. I thank you, Senator.
    Senator Warner. Senator Biden, and then the chairman of our 
committee. Mr. Chairman, do you wish to say a few words first?

           OPENING STATEMENT OF HON. JOHN H. CHAFEE, 
          U.S. SENATOR FROM THE STATE OF RHODE ISLAND

    Senator Chafee. I would just say this, if I might, Mr. 
Chairman, I support the approach that Senator Roth has taken. I 
do want to make it, very clear that I am not for the 4.3 
cents--let's start from there--I feel very strongly that should 
go into the general fund. Now if from that should be deducted 
the 5 cents, I would be agreeable to that, but I wouldn't want 
the balance of the money to go into the Highway Trust Fund. I 
believe, very strongly we need that money for deficit 
reduction. That's the way it's been. So I start with that.
    Senator Warner. So you would be preserving the sanctity of 
the Highway Trust Fund as moneys needed for the specific 
purposes for which that fund was created?
    Senator Chafee. No. No. Wait a minute.
    Senator Warner. All right. Go ahead, Mr. Chairman.
    Senator Chafee. I don't want to take too long on this. As 
you know, 4.3 cents goes into the general fund.
    Senator Warner. I'm very aware of that. It goes into the 
general treasury.
    Senator Chafee. There have been efforts underway to have 
that go entirely into the Highway Trust Fund. I am not for 
that. And so I wouldn't want the approach that Senator Roth is 
suggesting that we're giving up on the balance of that going 
into the general fund, because that's----
    Senator Warner. But you would agree on the half cent?
    Senator Chafee. On the half cent, yes, I would agree on 
that.
    Senator Roth. So we're in agreement on that?
    Senator Chafee. We're in agreement on that.
    Senator Reid. Mr. Chairman, before the two finance members 
leave, with all due respect to my dear friend the chairman of 
this subcommittee, I strongly disagree that the problem with 
Amtrak is the unions. Even the testimony that you're going to 
hear today from the people at Amtrak don't say that.
    Senator Chafee. Let me just say another thing, if I might, 
Mr. Chairman. I want to reiterate the point that Senator 
Moynihan made, that this is a transportation bill that we're 
dealing with with the ISTEA--that's what the letter ``T'' is in 
the ISTEA, and I would hope we would very much keep that in 
mind--and rail transportation is a very, very important part of 
the general transportation system of the United States. Thank 
you.
    [The prepared statement of Senator Chafee follows:]
Prepared Statement of Hon. John H. Chafee, U.S. Senator from the State 
                            of Rhode Island
    Thank you, Mr. Chairman. I would like to welcome all of the 
witnesses who will appear before us today.
    The purpose of this morning's hearing is to receive testimony on 
the eligibility of programs and flexibility in the Intermodal Surface 
Transportation Efficiency Act. ISTEA was a landmark law that afforded 
the states unprecedented flexibility in spending their Federal 
transportation dollars.
    One of the important considerations to keep in mind as we develop a 
committee recommendation for the reauthorization is the diversity and 
uniqueness of the country and all of its transportation needs. All of 
us must resist the temptation to set a national transportation policy 
based solely on our own region's particular demands. The demands of the 
Northeast are different from those of the South; the demands of the 
South are different from those of the West. And so on.
    We need to be cognizant of the population growth that has taken 
place in the South and Southwest and the strains that such growth has 
put on areas within that region. Many of the Western states, by 
contrast, with their low population density and the great distances 
involved in travel, rely on highways as the major mode of 
transportation. We also need to acknowledge the uniqueness of the 
Northeast United States; its older infrastructure and acute congestion 
make it more dependent on non-highway modes such as transit and Amtrak. 
Attempts to pass a new bill by forming alliances along regional lines 
will fail unless the bill recognizes the needs of all regions.
    Another consideration that cannot be overlooked is the primary 
purpose of ISTEA, that is, the efficient movement of people and goods. 
ISTEA recognized that transportation is but one part of a complex web 
of competing and often conflicting demands. By unleashing the 
efficiency and environmental benefits of all modes of transportation, 
highways, rail and transit, the ISTEA reauthorization can meet these 
demands and deliver a better quality of life for all.
    Today's hearing is important because it will examine how the 
eligibility of ISTEA programs can address the Nation's diverse 
transportation needs. A number of today's witnesses will recommend 
expanding the eligibility of highway trust fund moneys to accommodate 
alternative modes, such as Amtrak and freight rail. Others will argue 
that the spending categories under ISTEA should be more constrained.
    I am sensitive to American taxpayers' receiving a fair shake for 
the contributions they make to the Highway Trust Fund. Along those 
lines, I co-sponsored a bill with Senators Bond, Cochran, Nickles, 
Gregg and Smith, to strengthen the link between taxes going into the 
trust fund and expenditures from the trust fund. However, let me repeat 
my fervent belief that gasoline taxes should not drive transportation 
policy.
    Rather, national transportation policy must focus on needs, which 
brings us back to the focus of today's hearing. Maintaining and 
building upon the broad eligibilities provided in ISTEA is essential to 
creating the most efficient transportation system possible.
    I am hopeful that the ISTEA reauthorization will build upon the 
strong record of its predecessor. Admittedly, the transition from old 
policies and practices to those embodied in ISTEA has not always been 
easy, and more work needs to be done. However, we should not let these 
bumps in the road cause us to retreat from the progress we have made.

    Senator Warner. Thank you, Mr. Chairman.
    Senator Biden, thank you for your patience.

        OPENING STATEMENT OF HON. JOSEPH R. BIDEN, JR., 
            U.S. SENATOR FROM THE STATE OF DELAWARE

    Senator Biden. Thank you very much. I'll be necessarily 
brief. I would like to make approximately four points. No. 1, 
let me compliment you for allowing us to take a shot at this, 
and also Senator Moynihan and Senator Chafee for what I think 
went largely unnoticed by the public in this bill called ISTEA 
when it first came around the bend, that for the first time we 
acted intelligently about transportation in America, you acted 
intelligently about transportation in America.
    Basically, what I understand ISTEA to be about is 
flexibility. We've got former Governors sitting here, I've 
heard constantly about how States need flexibility. The 
transportation needs of Delaware are not the transportation 
needs of the Commonwealth of Virginia or the State of Missouri, 
New Jersey, or anywhere else. We cannot afford, Senator 
Lautenberg and I, to have nine more lanes of I-95 running up 
and down through our States. My State is small enough as it is.
    Literally, I'm not joking about this, when we have these 
debates on the Senate floor--to my Western friends, who some 
help and some don't, just like Eastern friends sometimes help 
and sometimes don't help on water projects--I think we've got 
to keep in mind here the need for the flexibility in 
transportation relates to what I thought federalism was about, 
that we make up for the weaknesses of each other's territories. 
We subsidize your water in the West; you subsidize our 
transportation in the East. That's part of the deal. It's 
called federalism. So, No. 1, flexibility.
    No. 2, explicitly exempted from the flexibility of ISTEA, 
and I'm not just going to speak about the dedicated tax for 
Amtrak which I proposed 7 years ago, is flexibility within this 
legislation. These guys sitting behind me will tell you that 
there's flexibility. You can decide, for example, in Montana to 
put a bus line through from one small town to another with your 
highway money. But I can't in Delaware allow my Governor to use 
that money for rail.
    We've got all kinds of rail in my State. Why can't we have 
the flexibility to use our rural Highway Trust Funds, for 
example, for rail instead of busses if we want to do it? I'll 
tell you why. Cement and concrete, that's why. You want to talk 
about the ``bad guys'' in this deal, it's cement and concrete, 
that's the ``bad guys'' in this deal.
    Another point I'd like to make, Mr. Chairman, and I love 
you, you're one of the great guys in this place, but you're 
dead wrong in my humble opinion about the unions. Let's 
remember how this happened. There was a thing called the Penn-
Central Railroad. We came along and decided to break this thing 
up. What you burden these guys with is the deal on Penn-
Central. You're making them pay out the pensions that were 
negotiated by the Federal Government. We made a deal. Maybe 
they made a wrong deal before all of us got here, I've been 
here 24 years, this deal was made before I got here, but it's 
not Amtrak's fault and it's not the union's fault now. That's 
No. 2. They pay now effectively out of their operating funds 
stuff that they could be using money for for other things. They 
are the ones picking up the responsibility the Federal 
Government flipped onto them.
    The third point I would make is, again, flexibility. I have 
got my Amtrak coffee cup here, I ride it everyday, I admit I 
have a vested interest. I don't own any stock but if Amtrak 
shuts down, I'm moving to Washington.
    [Laughter.]
    Senator Biden. That's the thing that gets me here. But all 
kidding aside, Mr. Chairman, the other thing no one realizes, 
you do and others here do but nobody else does, about 70 
percent of all those steel wheels that touch those tracks are 
not Amtrak trains. What does Amtrak do? When we cut this deal 
to set up Amtrak years ago we made another bad deal. We said, 
I'll tell you what, the incidental cost of MARK, and the 
incidental cost of SEPTA, and the incidental cost of Conrail, 
and the incidental costs of maintaining the rail, or the only 
ones assigned to these other tracks, these guys have to pay all 
the maintenance. I don't know, is it 70 percent, 50, 60, 80 
percent, a majority of the wheels on that track are not 
Metroliners or Amfleet cars. They're not passenger rail. We 
should give the Governors the flexibility and Amtrak the 
flexibility to charge them the going rate.
    The third point I would make, Mr. Chairman, is with regard 
to the unions. I heard this song constantly about contracting 
out. Guess what? We're contracting in. Guess what? Because my 
union guys do a better job than anybody on the outside does. 
We're contracting in. The States are coming to us and saying 
the guys in Wilmington, DE, build better engines than anybody 
else in the Nation, cheaper, better. And they do. So we're 
contracting in. We're saving money.
    This isn't the union guys' fault. My God, they've been 
ripped, rapped, and raped over the last 10 years in the deals 
that have been made with them, last 20 years. And by the way, 
you do away with all the union rules, do away with them all, 
you still aren't going to solve Amtrak's problem. Amtrak's 
problem is you're making them try to do something nobody else 
in the world has ever done.
    I come back here, and I'll end with this, Mr. Chairman, but 
it frustrates the devil out of me, I come back here and I'll 
hear people say, especially new members the first time they 
travel, they'll say, you know, I was in Germany and I was on a 
train that was amazing, that train was incredible, or I was in 
Japan and I was on that bullet train. Why can't we--the reason 
why we don't do it is we don't subsidize it like they do. We 
don't subsidize it. There's not a passenger rail service in the 
world that strictly on their operating cost makes it. Not one. 
So what is this fantasy that we keep saying that over here 
we're going to make sure they do that.
    So we found a way out for you all. The way out for you all 
is real simple--allow us flexibility, allow the Governors 
flexibility. If they want to use all their highway moneys to 
build highways, fine. But if little old Delaware, as opposed to 
big old Montana, if we want to make sure that we're going to be 
able to do something with rail, we should be able to do it.
    With regard to flexibility, set up a dedicated fund. Half a 
cent gives these guys $600 million a year. That $600 million a 
year takes care of all the capital costs that they have in the 
entire system. Now I ask, what's the total gas tax? Is it 
$0.19, $0.20?
    Senator Warner. It's $0.183.
    Senator Biden. OK, $0.183. Give us a break. A half a cent? 
Everybody sounds like Yasser Arafat around here when we talk--
it's the camel's nose under the tent, if we yield on this, we 
yield on everything.
    My message to the concrete guys is lay off, will you? Just 
lay off. Give us a half a cent, a simple half a cent. I'm 
willing--which will drive everybody else crazy--I'm willing, I 
say to Frank Lautenberg who has been the leader in this thing 
for me, the guy I look to, I say, real simple, you want to make 
sure we write in for the next 20 years we can't ask for more, 
I'll write it in. But don't give me this nose under the tent 
stuff. The sanctity--the sanctity of the Highway Trust Fund, 
heck. We've already breached the sanctity of the Highway Trust 
Fund. It's a thing called ISTEA. Why the hell are my trains not 
as good as your busses?
    I get frustrated, as you can see, Mr. Chairman, but I'm so 
tired of this debate--not you, Mr. Chairman, and not this 
committee. But every single year we go to the floor, every 
single year we cut Amtrak, every single year we try to zero it, 
every single year we make this fight, every single year we're 
back here, every single year we look for magicians like this 
guy to put it back together. He's done a hell of a job. You 
know why the unions don't like him, you all don't like him, 
nobody likes him?
    [Laughter.]
    Senator Biden. Because he's gone out there and done things 
that no one else has done. I say give the guy a break. Give him 
a shot. Give him a half cent. Why is this such a big deal? And 
so you concrete guys out in the audience, cool it. Asphalt 
guys, cool it. Let us have our half cent. I'm finished.
    [The prepared statement of Senator Biden follows:]
Prepared Statement of Hon. Joseph R. Biden, Jr., U.S. Senator from the 
                           State of Delaware
    Thank you Mr. Chairman, for the opportunity to be here today.
    I don't envy you the tough job you are taking on here--
reauthorizing the landmark ISTEA legislation. This is an important 
opportunity to carry forward and perfect the historic innovations in 
that landmark bill.
    I am here today because I am convinced that one of the ways we can 
build and improve on the original ISTEA is to improve the way it treats 
passenger rail as part of our country's transportation system.
    The original ISTEA legislation was revolutionary in the way it 
improved the coordination among the many different modes of 
transportation our country depends on. It recognized that our national 
highway system--the envy of the rest of the world, and the greatest 
public works project of all time--was not the only way to move people 
and products.
    The original ISTEA was remarkable for its emphasis on balance, on 
the use of the full range of transportation modes--each at it's most 
appropriate scale and most appropriate function. To build on the 
accomplishments of that legislation, we should recognize our country's 
continuing need for a viable national passenger rail system.
    A few statistics will help to make this point.
    Despite being the orphan child in our nation's transportation 
funding, Amtrak carries 55 million passengers a year, connecting 68 of 
the 75 biggest cities in the country. And, to remind some of my 
colleagues from more rural states, fully 40 percent of its annual 
passengers ride Amtrak to and from rural locations and our nation's 
cities.
    Along the northeast corridor, Amtrak carries more passengers 
between New York and Washington, DC. than all the airlines combined. 
That's the equivalent of 7,500 fully loaded 757's or 10,000 DC-9's. 
Without Amtrak, there would be an additional 27,000 cars on the highway 
between New York and Boston every day. Between New York and 
Philadelphia, there would be an additional 18,000 cars a day.
    I don't have to elaborate for this committee what that would mean 
in terms of construction and maintenance of more highway lanes, time 
lost in congestion, additional airport construction costs and delays, 
health costs from air pollution--all costs that we do not have to pay 
now because Amtrak is filling that gap.
    And Amtrak is performing these tasks under the most restrictive 
financial conditions. Both the administration and the Congress now 
assume in their budgets that Amtrak will receive no further Federal 
operating assistance after the year 2002. I am not convinced that this 
is the best course, but it is the one we are now committed to.
    To move toward that goal, Amtrak has laid off 3,500 workers, and 
cut 15 percent of its service. In just the last 2 years, these moves 
have saved $364 million a year. I don't need to add that these moves, 
while they are real accomplishments, also threaten to reduce the 
availability and efficiency of Amtrak service.
    There are real limits on how much further the system can go.
    Under these circumstances, it is essential that Amtrak be 
provided--in the ISTEA legislation that you are considering here 
today--with the means to reach that goal.
    I am here today, along with my other colleagues, to urge you to 
include two provisions in the next ISTEA--authorization for a dedicated 
capital fund, and flexibility for states to use Federal transportation 
funds for intercity passenger rail, if they choose.
    I am a cosponsor of the proposal made by the distinguished Chairman 
and ranking member of the Finance committee to use a half-cent of the 
existing Federal fuels tax to create a capital fund for Amtrak. This 
proposal would not cost the treasury a dime--it comes from an existing 
revenue source. It could mean a total of $3.8 billion for Amtrak over 
the next 5 years, the years in which it must move to operating self-
sufficiency.
    A capital fund would allow Amtrak to upgrade facilities, purchase 
new equipment, and engage in the prudent long-term financing that other 
businesses can use. This would not only improve Amtrak's finances--it 
will help them attract the riders, to sell the tickets, that will 
permit them to become self-sufficient--to meet the goals that we have 
set for them.
    Fully funded, the high-speed rail program for the northeast 
corridor will generate the income Amtrak needs to maintain and even 
expand its national passenger rail system. That will be a prudent 
investment, with substantial returns for our country's transportation 
system.
    Virtually every other advanced industrial economy around the world 
is making this kind of investment. They are providing their citizens 
with not just another important option--transportation option--they are 
creating passenger rail equipment industries, industries that take 
advantage of the latest developments in materials and other 
technologies to build the new high-speed rail systems.
    We could have those industries--and those jobs, and the new 
products and processes they will spin off--if we make the same kind of 
sensible investment in passenger rail by establishing a capital fund.
    The other provision that I urge you to adopt as part of the 
reauthorization of ISTEA that you are considering is state flexibility 
to support passenger rail. I think we all know that passenger rail is 
uniquely and unfairly disadvantaged when it comes to the flexibility 
that was built into the original ISTEA legislation. That flexibility 
was central to the common-sense, local-option approach that made that 
first legislation such a success.
    Right now, snowmobile trails, hike-and-bike paths, HOV lanes, 
transportation research, and lots of other components of our country's 
complex transportation system are eligible for Federal matching funds 
if states elect to use them for those purposes. This is a great idea, 
and an appropriate application of the principles of financial 
flexibility and local control.
    The problem is that passenger rail is the only application that is 
currently left off that long list of eligible uses for various kinds of 
Federal transportation funds. That is an unfortunate accident of 
history--and one that should be corrected this time around.
    During the last session of Congress, I offered an amendment to 
correct that inequity with my colleague from Delaware, the 
distinguished Chairman of the Finance Committee. We got the support of 
64 senators, but the amendment was dropped in conference with the 
House.
    I am asking today that you include that kind of flexibility in the 
ISTEA reauthorization you are now considering. That would certainly be 
in keeping with one of the most important principles that we have heard 
a lot about in Congress lately--devolution of responsibility and 
choices to the levels of government that are closer to the people.
    Now, I think there are real limits to that idea--I think there are 
areas where national standards and national responsibilities are 
essential--but this is one area where it makes a lot of sense.
    This kind of state flexibility is consistent with the principles 
embodied in the original legislation, and consistent with the 
principles of local control and responsibility.
    In conclusion, Amtrak is an important, even indispensable part of 
our country's transportation system. And we here in Washington have 
decided to put it on a path to self-sufficiency in the next 5 years--
quite literally, we have given it a ``drop dead'' date, if it does not 
find a way to become self-sufficient.
    As Mr. Downs will tell you this morning, Amtrak has done its part. 
Job cuts, route reductions, and other sacrifices have cut its operating 
losses. Lots of states, including my own, have felt the impact of those 
cuts.
    Now it is time for us to do our part, to provide Amtrak with the 
capital funds, and the support of those states that choose to support 
passenger rail.
    Thank you for allowing me to participate here this morning.

    Senator Warner. Let me just make a comment. Senator, I'll 
make you a deal. Ready?
    Senator Biden. I'm ready.
    Senator Warner. We don't take it off the top, but we allow 
you flexibility if you'll allow the management of Amtrak 
flexibility through the bargaining process to get rid of these 
6-year platinum parachutes and do through the bargaining 
process a reasonable contracting out.
    Senator Biden. I'm willing to sit down and find out what 
you specifically mean by that, Mr. Chairman. The general 
principle, I have no objection as long as there is genuine 
collective bargaining. Understand, there is another little 
piece here. We have a little thing where we say to the Amtrak 
unions, we say, by the way, if you all don't like what it is, 
you can't strike. You can't shut down because the President can 
tell you you're open. So I'm willing to open that whole thing 
up if we're going to do it in good faith. I'm willing to do it 
but I would like to know the detail of what you mean, Mr. 
Chairman. I'm not being facetious when I say that.
    Senator Warner. I understand.
    Senator Biden. If I know the detail. If you're saying what 
I think you're saying, I'm willing to go ahead and sit down and 
do that with you. But, again, really guys, we're talking about 
a half a cent to keep alive a system.
    Senator Warner. We got that point.
    [Laughter.]
    Senator Warner. Let's let your colleague, Senator Jeffords 
have a word or two.
    Senator Reid. Mr. Chairman, I have to leave, but if I could 
just make one comment. It is obvious that Joe had to stay here 
last night, so I think we should do everything we can to get 
that Amtrak fixed so he doesn't stay here more nights.
    [Laughter.]
    Senator Biden. I have no response.
    Senator Warner. Now, Senator Jeffords. By the way, Joe, do 
take a look at the policy analysis which says ``Amtrak is by 
far the most highly subsidized form of inner-city 
transportation. The average taxpayer's subsidy per Amtrak rider 
is $100.''
    Senator Biden. Mr. Chairman, I'm happy to look at that if 
you'll look at the one I can show you that we subsidize an 
airline ticket more than we do an Amtrak ticket. If you're 
willing to treat it the same way, I've got no problem. I'm just 
saying in for a dime, in for a dollar, let's treat it the same 
way.
    Senator Warner. OK. I used 10 seconds, you used 10 seconds.
    Now, Senator Jeffords.

         OPENING STATEMENT OF HON. JAMES M. JEFFORDS, 
             U.S. SENATOR FROM THE STATE OF VERMONT

    Senator Jeffords. With some trepidation, I don't know how 
to proceed after that performance.
    [Laughter.]
    Senator Jeffords. I would like to go to an entirely 
different approach. This is the soft sell of success in my 
little State in Vermont. Vermont has an incredible railroad 
tradition. At one time, we were the busiest railroad center in 
the country. In fact, at one point we had more railroads than 
any other State, almost 30 railroads in our State. Billings, 
MT, is named for a Vermonter because he built the railroads in 
Montana. Just keep that in mind because we're having a little 
bit of a renaissance in Vermont.
    Two years ago, Amtrak announced the elimination of a 
passenger rail service to Vermont. Today, Vermont has two of 
the Nation's most successful passenger trains in the Nation--
the Ethan Allen Express and the Vermonter. We have plans for 
more. During the past last few years, Amtrak undertook an 
ambitious plan to turn around the troubled system. Under 
pressure from Congress, Amtrak moved to become free of Federal 
operating support. This involved eliminating rail lines that 
were losing money. When Amtrak called for the elimination of 
our train, Vermont leapt into action. Working with Amtrak, 
Vermont shortened the route, changed the schedule, and put in 
place a train that is now popular with travellers throughout 
Vermont, New England, and the Nation.
    More recently, Vermont identified a large market for rail 
service. Last December, the Ethan Allen Express began running 
from New York City to Rutland, VT. Now millions of skiers, 
bikers, and travelers from the city are just a pleasant 5 hours 
train ride from Vermont's beautiful lakes and mountains.
    Passenger rail is working for Vermont and we want it to 
grow. To maintain our success, two things must happen. First, 
Amtrak must be given the tools to modernize. This will require 
the one-half cent of gas tax imposed on motor fuels be put into 
an Amtrak trust fund. Second, States must be granted the 
flexibility to use Highway Trust Fund moneys to maintain 
passenger rail. For our two trains, Vermont pays a share of the 
operating costs. Other States do the same. These States need 
this flexibility to ensure that passenger rail service is 
continued. Finally, this flexibility should be extended to 
include local rail projects. This will allow States to improve 
and expand short freight rail lines.
    Successful commerce in our Nation depends upon strong short 
line railroads. Vermont is deeply concerned about the huge 
increase in truck traffic, the threat of triple trailers and 
all. We want to do what I think the Nation will be doing, and 
that is to turn more and more traffic over to the rails. So I 
am dedicated, and Vermont is dedicated to make the rail service 
work in Vermont, and we hope that you will go along with our 
request. Thank you, Mr. Chairman.
    [The prepared statement of Senator Jeffords follows:]
  Prepared Statement of Hon. James M. Jeffords, U.S. Senator from the 
                            State of Vermont
    Mr. Chairman, 2 years ago Amtrak announced the elimination of 
passenger rail service to Vermont. Today, Vermont has two of the 
nation's most successful passenger trains in the nation--the Ethan 
Allen Express and the Vermonter. And we have plans for more.
    During the last few years, Amtrak undertook an ambitious plan to 
turnaround the troubled system. Under pressure from Congress, Amtrak 
moved to become free of Federal operating support. This involved 
eliminating rail lines that were losing money.
    When Amtrak called for the elimination of our train, Vermont leapt 
to action. Working with Amtrak, Vermont shortened the route, changed 
the schedule and put in place a train that is popular with travelers 
throughout Vermont, New England and the Nation.
    More recently, Vermont identified a large market for rail travel. 
Last December, the Ethan Allen Express began running from New York City 
to Rutland Vermont. Now, millions of skiers, bikers and travelers from 
the city are just a pleasant 5 hour train ride from Vermont's beautiful 
lakes and mountains. Passenger rail is working for Vermont and we want 
it to grow.
    To maintain our success, two things must happen. First, Amtrak must 
be given the tools to modernize. This will require one half cent of the 
gas tax imposed on motor fuels into an Amtrak Trust Fund.
    Second, states must be granted the flexibility to use highway trust 
fund moneys to maintain passenger rail. For our two trains, Vermont 
pays a share of the operating costs. Other states do the same. These 
states need this flexibility to ensure that passenger rail service is 
continued.
    Finally, this flexibility should be extended to include local rail 
projects. This will allow states to improve and expand short freight 
rail lines. Successful commerce in our region depends on strong 
shortline railroads.
    Mr. Chairman, thank you for this opportunity to testify.

    Senator Warner. Thank you very much, Senator Jeffords.
    I would like to indicate to my colleagues that Senator 
McCain desired to be here this morning, he was precluded from 
doing so but he will submit a statement for the record.
    [The prepared statement of Senator McCain follows:]
     Prepared Statement of Hon. John McCain, U.S. Senator from the 
                            State of Arizona
    Mr. Chairman, thank you for the opportunity to testify this morning 
on ISTEA reauthorization. I recognize the challenges facing this 
committee and I want to begin by commending your leadership in steering 
away from the demonstration project frenzy taking place in the House. 
The Senate is on record opposing demonstration projects and I am 
committed to working with this committee in holding strong our 
position.
    As you consider program eligibility, you will hear from members 
advocating that Amtrak should be entitled to funding from Highway Trust 
Fund. I strongly oppose their proposal. I encourage you to carefully 
consider Amtrak's legislative history, as well as its current financial 
condition.
    Amtrak was created in 1971 in order to relieve the freight railroad 
industry from the economic burden of providing ongoing passenger 
service. With capital acquired from participating railroads and the 
Federal Government providing $40 million in direct grants and another 
$100 million in loan guarantees, the corporation was to become self-
sustaining within 2 years.
    By 1972, Amtrak was already losing $152 million and requested 
Congress for additional funding. Congress responded as it has for 26 
years, giving Amtrak more Federal money. Congress authorized another 
$225 million plus another $100 million in loan guarantees. You know the 
rest of the story.
    Since 1971, Amtrak has received $19 billion in Federal funding to 
help cover its operating, capital, and labor protective costs. I 
recognize Amtrak has strived to reduce its operating costs and increase 
its revenues. Frankly, many of Amtrak's financial challenges are due to 
statutory constraints that Congress has not lifted. But the fact 
remains: the Amtrak ``two-year experiment'' was unsuccessful 20 years 
ago, it's unsuccessful today, and it will be unsuccessful in the 
future.
    Even if Congress approves statutory reforms and a dedicated funding 
source, Amtrak's viability remains uncertain. That is why the Commerce 
Committee's Amtrak authorization bill during the last Congress included 
a sunset trigger provision to kick in if the reforms and funding 
authorized in the committee-passed bill were not effective in 
preserving Amtrak's future.
    This afternoon, the Commerce Committee's Subcommittee on Surface 
Transportation and Merchant Marine will hold a hearing to analyze 
Amtrak's financial condition. We will hear Amtrak is in dire financial 
straits--on the brink of bankruptcy. Amtrak is $1 BILLION in debt and 
that debt level is projected by GAO to double to $2 billion in the next 
2 years.
    If it can become a recipient of highway trust fund money, however, 
Amtrak wants us to think its troubles will be over. But the fact is its 
financial challenges would continue. Let there be no illusions. Once in 
the door, Amtrak would remain a recipient of highway funds for years to 
come. Amtrak already projects negative cash balances during the next 3 
years even with an injection of highway trust fund moneys. If an Amtrak 
trust fund is approved, highway investment will suffer. It would be bad 
public policy.
    Amtrak continually tells Congress it is working to be free from 
Federal operating support, but that Congress needs to give them still 
more money for now. And Amtrak's story has not changed in 26 years, 
except in the 1980's, Amtrak wanted a whole penny of the gas tax, not 
just one-half.
    Even though I think it is high time to end subsidies, the political 
realities are that Amtrak will likely continue to receive Federal 
funding. But if the collective congressional wisdom concludes it is 
sound policy to continue pouring money into a passenger rail system 
that serves only about 500 locations across the Nation, why rob the 
trust fund? The $19 billion given to Amtrak so far has come from the 
General Treasury.
    Why, I ask, should highway dollars pay to subsidize Amtrak? They 
don't even pay into the fund. Already highway infrastructure needs 
outweigh public investment capabilities. Even if the budget permitted 
spending down all of the money in the Fund, a significant funding 
shortfall would remain.
    Let me also point out that many states, like Arizona, are donor 
states. Why should gas tax dollars paid in by donor states already 
subsidizing highway projects in donee states, now be used to pay for 
Amtrak service that is not even available to most communities? And, why 
should citizens across the country have a portion of their gas taxes 
diverted away from critical transportation projects to the Northeast 
Corridor system that essentially subsidizes high income travelers?
    According to the American Highway Users Alliance, 86.7 percent of 
travel is by car; 9.4 percent by air, 3.6 percent by mass transit and 
school buses; and 0.3 percent by Amtrak. Instead of turning on a new 
spigot for Amtrak which serves less than 1 percent of the traveling 
public, maybe a better alternative would be to expand funding 
flexibility. If passenger rail service is a transportation priority, 
let States use their Federal funds to help support passenger rail 
service.

    Senator Warner. Now it is the intention of the chair to 
defer to the members of this committee for such statements as 
they may wish to make. We will start with the chairman and then 
the ranking member.
    Senator Chafee. I have no statement, Mr. Chairman, except 
to say that I am very, very supportive of the efforts made to 
ensure the continuance and the viability of rail passenger 
service in the United States. I think the point that Senator 
Biden made that every rail passenger system in the world is 
subsidized, so we shouldn't be surprised when they are seeking 
this what I think to be a rather modest subsidy. Thank you.
    Senator Warner. Thank you.
    Senator Baucus.

             OPENING STATEMENT OF HON. MAX BAUCUS, 
             U.S. SENATOR FROM THE STATE OF MONTANA

    Senator Baucus. Mr. Chairman, I regret that I was not here 
to hear Senator Biden expound.
    Senator Warner. He was at his best.
    Senator Baucus. As he almost always is. As I understand the 
conversation, Mr. Chairman, it somewhat revolved around how 
much to take-out of the 4.3 cents, if at all, for Amtrak.
    My view, quite strongly, is that 4.3 cents, because it is 
paid for by motorists, whether in gasoline or diesel or 
whatnot, should be used for transportation purposes. That's 
what it's for. I think a half cent for Amtrak does make sense, 
but I also think the balance of 3.8 cents for ISTEA makes 
sense. I didn't say 3.8 cents for highways; I said 3.8 cents 
for ISTEA.
    Under ISTEA, if that 3.8 cents were to go to the highway 
account, that can be used for a whole variety of purposes in 
addition to highway construction; for example, carpool lanes, 
vanpool programs, bike paths, pedestrian walkways, wetland 
mitigation, historic preservation of transportation facilities 
in addition to highway construction. There is immense 
flexibility under that program. That's why I think it makes 
sense to divert that 3.8 cents to ISTEA because that's what 
it's for.
    The Appropriations Committee--we have members of this 
committee who are on Appropriations Committee--can decide how 
much of that authorization to actually obligate. That's the 
role of the Appropriations Committee in the Congress generally. 
But I just think it does make sense to use that where it's 
supposed to be used and am reminding Senators that there is 
tremendous flexibility under that to use that 3.8 cents.
    Senator Warner. Senator, you raise, as usual, very valid 
points.
    Senator Warner. Senator Bond.

        OPENING STATEMENT OF HON. CHRISTOPHER S. BOND, 
            U.S. SENATOR FROM THE STATE OF MISSOURI

    Senator Bond. Thank you very much, Mr. Chairman. I was 
going to make a very brief opening statement, but I feel a 
responsive diatribe coming on because I felt there were certain 
things that perhaps we need to get out on the table to open up 
the debate.
    First, let me speak about Amtrak. As Governor of Missouri, 
I started subsidizing, and we subsidized Amtrak out of State 
general operating funds because we believed that there ought to 
be alternative and rail transportation for passengers. We have 
been thanked by cutbacks in Amtrak so that the service is no 
longer feasible for many people. We also had Amtrak trains that 
would take a 6-hour run across the State and, due to antiquated 
work rules, they had to stop two-thirds of the way across the 
State and put on a brand new crew and pay both crews full day 
service. What the chairman has said about opening up Amtrak and 
allowing the flexibility to make efficiencies in the operation 
of it make a tremendous amount of sense.
    But I am here today to register a very strong objection to 
what I understand is the Administration's proposal to add 
Amtrak as another one of the eligible items to be paid out of 
the Highway Trust Fund. We're not talking about flexibility 
here. As far as I'm concerned, and I believe it is the 
chairman's point, if the Governor of Delaware wishes to use the 
funds for rail transportation because the needs of Delaware are 
for rail transportation, so long as they meet their commitments 
to the National Highway System, and some of the northeastern 
States have very deficient bridges--and I believe my colleague 
from New Jersey shares a ranking in his State with my State of 
having some of the worst bridges in the Nation--we need to have 
that National Highway System. We have mandated that everybody 
be part of a national system.
    But to take money off of the top, as I understand the 
Administration has proposed, from the Highway Trust Fund to 
fund Amtrak I think is an outrage. My constituents and 
motorists all over the country are getting hit twice. First, 
they're hit in the pocketbook when they pay the Federal gas tax 
at the pump. Second, in my State, because of the bad conditions 
of over-used roads, they are paying additional costs in the 
operation of their cars.
    I haven't heard anyone disagree that we have tremendous 
infrastructure needs in this country. Missouri's roads and 
bridges, according to a national report, have the seventh from 
the highest percentage of structurally deficient or 
functionally obsolete bridges in this country. As I said, I 
believe that New Jersey is right up there with us. We have a 
tremendous unfunded need.
    According to the Department of Transportation, 25 percent 
of the Nation's interstate bridges are classified as deficient 
or in poor condition, and that doesn't include 28 percent-plus 
the number of deficient bridges in our arterial systems. 
According to an Associated Press article last June, more than 
one-third of our Nation's major roads are in immediate need of 
repair. In Missouri, more than half of our major roads are in 
poor or fair condition.
    We all know that the condition of our Nation's roads and 
bridges play an important factor in highway safety. I deeply 
regret the comments that have just been made that implied that 
the only people who are interested in safety are the concrete 
and asphalt boys. I think that is an outrage, Mr. Chairman, and 
I hope to have an opportunity to address that and perhaps 
clarify that with our friend who made those statements.
    Today, at the House Transportation and Infrastructure 
Committee hearing, the Winkler family from Moberly, MO, will be 
testifying regarding the need to finish the expansion of 
Highway 63, a national highway system road that should be four-
lanes. You see, Mr. and Mrs. Winkler lost their son, Tracy, on 
October 25 last year when an out-of-State car pulled out to 
pass on a two-lane road and struck his pickup head-on. I wish 
the Dickinson family could be here to talk about the loss of 
their father and husband just about 10 days ago on Highway 36 
when he was hit head-on on a two-lane road that is part of the 
national highway system and should be four-laned. Maybe Mr. 
Roland, from Festus, Missouri, could be here to talk about the 
loss of his wife, Evelyn, on Highway 21 just about a week ago 
on a two-lane road when she was hit head-on.
    Mr. Chairman, when we're talking about safety and 
transportation, we have a tremendous need that is recognized by 
a broad cross-section of people in our Nation. I think it is 
truly unfortunate that we have had an attempt to frame this in 
the context of people who build roads being the only ones who 
want to see good roads. I think that we have tremendous 
transportation needs. We're always willing to work with all 
forms of transportation. My record shows that I was willing to 
commit funds for Amtrak. But I can tell you that the needs for 
deficient bridges, unsafe two-lane highways that are supposed 
to be part of the National Highway System cannot afford to have 
a raid on the transportation funds in the Highway Trust Fund to 
cut back on the spending.
    I would note that the Administration proposal would have us 
hold back significant outlays, outlaying at only about $18 
billion, for the improvement of our transportation systems. 
We're going in the wrong direction, Mr. Chairman. I hope to 
work with you. I like the direction you outlined. We have to 
take care of the transportation needs of our country and do so 
in a responsible manner.
    [The prepared statement of Senator Bond follows:]
   Prepared Statement of Christopher S. Bond, U.S. Senator from the 
                           State of Missouri
    Mr. Chairman, I do not want to take much of the committee's time 
with an opening statement, but I do want to express my serious concerns 
(reservations) with all the discussions centered around increasing the 
amount of eligible items paid for with Highway Trust Fund dollars.
    Mr. Chairman, my constituents and motorists all over the country 
are getting hit in their wallets at least TWICE for our highway 
infrastructure! First at the pump when they pay the Federal gas tax 
that was implemented with the promise that the revenue raised would be 
used for highway and bridge construction and maintenance. Second, when 
they pay in extra vehicle operating costs to drive on roads in need of 
repair--in my state of Missouri this averages to be $128 per motorist.
    I haven't heard anyone disagree that we have tremendous 
infrastructure needs in this country. A report released on February 5 
of this year on the state of Missouri's roads and bridges stated that 
Missouri has the seventh highest percentage of structurally deficient 
or functionally obsolete bridges in the country. Federal Highways has 
my state of Missouri tied for 6th from the bottom, with my colleague 
Senator Lautenberg's state of New Jersey sharing this horrible 
distinction.
    According to the Department of Transportation, 25 percent of the 
nation's interstate bridges are classified as deficient or in poor 
condition, and this doesn't include the 28 percent plus number of 
deficient bridges on our arterial systems. In addition, according to an 
Associated Press article last June, more than a third of our nation's 
major roads are in immediate need of repair. In Missouri, more than 
half of our major roads are in poor or fair condition and in need of 
improvements.
    Mr. Chairman, we also know that the condition of our nation's roads 
and bridges play a factor in highway safety.
    Each day 114 Americans die on our nation's highways. This is 
equivalent to a major airline crash every single day. Several of these 
fatalities are directly related to poor highway infrastructure. Today 
during the House Transportation and Infrastructure hearing, the Winkler 
family from Moberly, Missouri will be testifying regarding the need to 
finish the expansion of Highway 63, a National Highway System road, to 
a four-lane highway. Mr. and Mrs. Winkler lost their son Tracy on 
October 25 when an out-of-state car pulled out to pass on the two-lane 
road and struck his pickup head on. Tracy's wife and three young 
children, as well as the rest of his family and friends are pushing for 
the highway investments needed in the State of Missouri, specifically 
Highway 63.
    Mr. Chairman, I have yet to see the actual language for the 
Administration's NEXTEA proposal, but I have heard several comments 
about expanding the eligible items for funding out of the Highway Trust 
Fund. I will state now that I cannot and will not support diverting 
more highway trust fund dollars for Amtrak and other non-contributing 
trust fund items.
    How can we STEAL money from the highway trust fund for items that 
especially do not contribute, when we are not even close to meeting the 
highway and bridge needs this country is facing?

    Senator Warner. I thank the Senator.
    I'm going to allow each Senator to make opening remarks. 
Bear in mind, the chairman has submitted his opening statement 
for the record.
    Senator at your invitation, this subcommittee will be 
holding a hearing in your State on March 26, the emphasis of 
that hearing being the continuation of the concept of 
intermodalism as we move to the next piece of legislation.
    Senator Bond. I'm very grateful to you, Mr. Chairman, and 
to the chairman of the full committee. We will have an 
opportunity to hear some of these concerns in addition to the 
great importance we have on the intermodal aspect of the 
transportation system. Some exciting things, and I'm anxious to 
see you.
    Senator Warner. Thank you. I think at this time, on behalf 
of the distinguished chairman of the committee and the ranking 
member here, I should announce that on March 22 we will have 
hearings in Idaho, on the 28th of March in Las Vegas, and April 
7 in New York City. Again, this clearly reflects the leadership 
of the distinguished chairman, Mr. Chafee, and the ranking 
member, Mr. Baucus, and myself in trying to go out and listen 
in America to their perspective of how this legislation should 
be shaped.
    Senator Lautenberg.

  OPENING STATEMENT OF HON. FRANK R. LAUTENBERG, U.S. SENATOR 
                  FROM THE STATE OF NEW JERSEY

    Senator Lautenberg. Thanks very much, Mr. Chairman. I 
appreciate the opportunity to be participating in this 
subcommittee review of ISTEA, Amtrak, and this relatively 
tranquil kind of debate that we've had.
    One thing that I learned from the discussion this morning, 
from proponents of the half cent for Amtrak and opponents, is 
that it engenders some significant feeling and emotion. That's 
the way it ought to be. Because transportation in our society 
is starved on all fronts, whether it's highways, whether it's 
rail, the aviation system certainly is not keeping up with the 
demand that we foresee. Yet we fail to step up to the plate, as 
they say, and really try to do something about it. I think 
since this discussion was primarily focused on the half-cent 
for Amtrak, I would ask, Mr. Chairman, in the interest of 
trying to expedite things a little bit, that my full statement 
be in the record. I want to make some comments additionally 
however.
    I would just point out in response to the Senator from 
Missouri's comments, there is something like 95,000 deficient 
or obsolete bridges across our country. We have them, they have 
them, everybody has got them. But when we talk about Amtrak, I 
think that we fail to recognize the contribution that Amtrak 
makes to the transportation well-being of our society. First of 
all, it is the most self-sufficient intercity passenger rail 
system in the world, directly responsible for reducing 
congestion on our roads, resulting in improved mobility, 
highway safety, air quality in our skies. The subsidies we 
provide Amtrak are far less than what taxpayers put into 
building bridges, highway lane miles, fund airport 
improvements, all to accommodate tremendous growth in need.
    A few weeks ago, a panelist before the committee said that 
if Amtrak was abolished, there would be no measurable effects 
on the roads for the Northeast corridor, particularly from 
Philadelphia to New York City. It was a directly incorrect 
statement. The route goes primarily through my State of New 
Jersey and I've got to respond to that. Based on Amtrak 
ridership figures for that route, it is estimated that Amtrak 
takes 18,000 cars off the road every week day. The cost of 
constructing one additional highway lane for that route is 
estimated to be between $80 and $100 million per mile. Look at 
it another way. If the Washington to New York Amtrak route were 
eliminated, we would need 7,500 fully booked 757s in already 
congested air space to accommodate these passengers. These 
costs would dwarf anything that we give to Amtrak.
    Amtrak is a key element in our National Transportation 
System. And even with that it is in dire of economic straights 
because of the steady decline in annual funding. Last 
September, I watched while Congress chose to allocate fewer 
dollars for Amtrak and then watched and listened as members 
objected when routes were cut. You can't have it both ways. We 
must provide Amtrak with a stable funding source so that it can 
glide its way to self-sufficiency. Senator Roth's bill that 
would allocate a half-cent for Amtrak for 5 years is a sound 
approach, the one that I support. That will help us give Amtrak 
the tools that it needs to build its way into full self-
sufficiency. I look forward to working with all of you toward 
this end.
    I would say one other thing. I listened very carefully as 
Senator Bond called off names of people who lost someone in 
traffic accidents in Missouri. I would like to send out an 
appeal to members of this committee and those who are 
listening, every year we lose over 17,000 people to alcohol 
related traffic accidents--17,000 a year. We compete in the 
very negative sense with the number of murders in our society 
by handguns, knives, et cetera, that's 21,000. But 17,000 
people a year are lost to alcohol-related accidents. If we want 
to save lives, that is one significant way to do it. I have a 
bill in. I would plead for support here. We want to get the 
blood alcohol content down to .08. That's when driving is 
impaired. If we could do that, Mr. Chairman, we would not only 
go a long way toward making America a happier place, but we 
would also go a long way toward taking care of our 
transportation needs.
    I thank you for the opportunity.
    [The prepared statement of Senator Lautenberg follows:]
  Prepared Statement of Hon. Frank Lautenberg, U.S. Senator from the 
                          State of New Jersey
    Thank you, Mr. Chairman. I appreciate your allowing me to 
participate in this subcommittee hearing.
    I'm glad that the subcommittee is holding this hearing on 
flexibility and eligibility in ISTEA. Because to me, that's what sound 
transportation policy is all about. ISTEA empowers states, communities, 
and local interests to have a real say in where their transportation 
dollars are allocated.
    By giving them the flexibility to spend money on an expanded set of 
options, ISTEA allows each state, each region to tailor transportation 
spending decisions to fit their unique needs, while under the guidance 
of a national transportation framework.
    If states and localities lose this flexibility, transportation 
decisions will revert back to satisfying special interests, rather than 
the public interest.
    In my state of New Jersey, we have seen how ISTEA'S planning and 
flexibility provisions have benefited our communities and improved our 
quality of life.
    While New Jersey is the most densely populated state in the Nation, 
it also has vast open spaces and is trying to cope with suburban 
sprawl. It is a corridor state that must contend with extensive use of 
its interstates and more recently, with truck traffic and congestion on 
smaller roads that were not designed to bear the load. We have found 
that one size does not fit all.
    In many parts of the state, we simply cannot build our way out of 
congestion. ISTEA's eligibility and flexibility provisions help us to 
cope with the ever expanding growth, both of our communities and with 
interstate and intrastate commerce.
    We cannot turn the clock back on ISTEA's farsighted provisions. 
Instead, we must build upon them to provide even more flexibility and 
eligibility transportation modes. We must ensure that all our options 
are maximized and balanced. We're not quite there.
    I'm talking about Amtrak. We have a national transportation system 
with national goals and needs. No mode should have priority status. It 
is unconscionable that our national passenger rail system continues to 
be the forgotten step-child.
    Unlike highways or transit, which are the annual beneficiaries of 
billions of dollars in infrastructure investment, Amtrak must year in, 
year out, justify its existence for a fraction of the subsidies that go 
to other transportation modes.
    This is not a new issue: we must remember that flexibility for 
Amtrak has passed this committee and the Senate in 1991; and again the 
Senate in an Appropriations bill. Six years later, we're fighting an 
old fight.
    The United States has the most self-sufficient intercity passenger 
rail system in the world. Amtrak is directly responsible for reducing 
congestion on our roads--resulting in improved mobility, highway safe 
and air quality and in our skies.
    The subsidies we provide to Amtrak are less than what the taxpayers 
would have to pay to build more highway lane miles, or fund airport 
improvements or air traffic control--all to accommodate the tremendous 
increase in traffic.
    A few weeks ago, a panelist before this committee said that if 
Amtrak is abolished, there would be no measurable effect on the roads 
for the northeast corridor, particularly from Philadelphia to New York 
City. Because that route goes almost entirely through my state of New 
Jersey, I would like to respond.
    Based on Amtrak ridership figures for that route, it is estimated 
that Amtrak takes 18,000 cars off the road every week day. The cost of 
constructing one additional highway lane for that route is an estimated 
$80-$100 million per mile.
    Or, to look at it another way, if the Washington to New York route 
were eliminated, we would need 7,500 fully booked 757's in already 
congested airspace to accommodate those passengers. And, those costs 
would dwarf any subsidies to Amtrak.
    Amtrak is a key element in our national transportation system. Even 
still, Amtrak is in dire economic straits because of the steady decline 
in annual funding. Last September, I watched while Congress chose to 
allocate fewer dollars for Amtrak, and then watched as members objected 
when routes were cut. We cannot have it both ways.
    We must provide Amtrak with a stable funding source so that it can 
glide its way to self sufficiency. Sen. Roth's bill to allocate one-
half cent to Amtrak for 5 years is a sound approach, and one that I 
support. We must give Amtrak the tools to reach its goals, out from 
under the annual political flood lights. I look forward to working with 
all of you toward this end.
    Thank you, Mr. Chairman.

    Senator Warner. Senator, I want to say you've been a 
pioneer on the problems of alcohol and transportation. The 
Senate recognizes you for that.
    Now I turn to our good friend, the former Governor of 
Florida and valued member of this committee, co-author of Step 
21, and hope we can have a fairly brief statement, Senator 
Graham.
    [Laughter.]

  OPENING STATEMENT OF HON. BOB GRAHAM, U.S. SENATOR FROM THE 
                        STATE OF FLORIDA

    Senator Graham. Thank you, Mr. Chairman. I'll try to make 
this brief.
    I think the fundamental point which we failed to grasp in 
1991, and which I hope we will not repeat in 1997, is the fact 
that we are substantially under-investing in virtually every 
area of our Nation's infrastructure. The new Secretary of 
Transportation has indicated that our disinvestment in the 
Highway System alone is in the range of $20 billion a year to 
keep the system at its current state of repair, its current 
state of congestion.
    I believe that what this committee ought to do is to step 
back and look at this issue not from the microscope of 
individual needs, but from the telescope of the broad national 
needs. I would add to the list of needs one that is outside of 
the jurisdiction of this committee, and that is the tremendous 
need that we have in education. All over America, school 
buildings are crumbling around students. Students are packed 
into over-crowded schools because school districts have been 
unable to keep pace with student growth.
    I personally think that we ought to look at the 4.3 cents 
as a beginning of an expanded Federal-State partnership to meet 
a variety of our Nation's important capital needs, and that we 
should look at it from three perspectives. No. 1, what 
additional traditional resources are going to be needed to meet 
the needs; No. 2, how can we use Federal resources as a magnet 
to attract non-traditional resources to meet these needs, such 
as the excellent panel that we had last week on innovative 
financing mechanisms; and No. 3, how can we use the experience 
of the recent past to see which innovations will make us use 
our money more efficiently. I would suggest that if we could 
concentrate on those three questions to meet the strategic 
issue of a more adequate response to our Nation's 
infrastructure requirements across a variety of areas--of which 
highways, public transit, Amtrak, and education are four 
primary areas--that we would be fulfilling the trust that the 
public has placed in us as their representatives.
    Senator Warner. I thank the Senator.
    We'll alternate. Senator Smith and then Senator Boxer. I 
hope we can then hear the Secretary.
    Senator Smith. I have no statement.
    Senator Warner. I thank you very much, Senator.
    Senator Boxer.

OPENING STATEMENT OF HON. BARBARA BOXER, U.S. SENATOR FROM THE 
                      STATE OF CALIFORNIA

    Senator Boxer. Mr. Chairman, I just want to make a couple 
of comments on Amtrak to my friends in the Northeast.
    I very much want to see us have a steady funding stream. 
But in a recent report by the California Transportation 
Commission, I just hope that my friends will hear this because 
it is a problem, while California has 11 percent of the 
Nation's population, it has received $6.4 million in Federal 
funding for improvements to our Southwest corridor--Sacramento, 
Bay area, Fresno, L.A., San Diego. The San Diego to Los Angeles 
segment has had ridership second only to the Northeast 
corridor, which has received $4 billion. That's according to 
our California analysis from the CTC, the California 
Transportation Commission. I am such an advocate of 
alternatives to the car because, as we look into the future, I 
think that is the way to go. But we do need to do something 
about the fairness here.
    Mr. Chairman, very briefly, I serve on the Budget 
Committee, and I agree with Senator Graham that we're not 
making enough of an investment in this whole area of our 
Nation's infrastructure. I want you to know that I feel this is 
a bipartisan sense that I'm getting on this committee and from 
my colleagues and that I do intend to push very hard in the 
Budget Committee for a greater funding level.
    Senator Warner. Senator, that's the best news we've gotten 
today.
    Senator Boxer. I don't know if I'll be successful, but I'm 
going to try.
    In talking to my local elected officials, that's where I 
started off, in county government, they like ISTEA. Our 
Governor doesn't like it; our local electees love it, 
Republicans and Democrats. And I'm going to fight to continue 
it. I think it gives the flexibility.
    Senator Chafee. What did you say? You're going to fight to 
continue ISTEA?
    Senator Boxer. Yes.
    Senator Chafee. Generally? The broad scope?
    Senator Boxer. Yes, the broad idea of giving this type of 
flexibility, the CMAQ program, the border infrastructure 
program which, for the first time, is in the Administration's 
proposal, and work with you on many other areas of concern. But 
I do think that in my State we need to get a better share for 
our rail, and we also do like the flexibility that ISTEA 
provides. I will work with my colleagues as we move this 
forward.
    [The prepared statement of Senator Reid follows:]
     Prepared Statement of Hon. Harry Reid, U.S. Senator from the 
                            State of Nevada
    Mr. Chairman, As I have said many times during my years on this 
committee, transportation represents a truly national concern. All of 
us have a stake in ensuring that America's transportation policies are 
coherent, efficient, and meet the present and future needs of the 
American people.
    This session of Congress will likely include extensive 
consideration of not only how we finance our national infrastructure 
but also what our transportation policies should aim for as we head 
into the 21st century.
    With the completion of the interstate highway system, it is vital 
that we turn our attention to designing multi-modal transportation 
policies that will allow us to not only maintain the excellent 
infrastructure we have, but also to move forward to meet the demands of 
the new century.
    In many ways, the transportation issues of the future will be 
vastly more difficult than the ones of yesterday. We live in an 
increasingly diverse nation, one that is no longer able to be solely 
dependent upon the automobile. Even in a state as vast as Nevada, a 
bridge state where we desperately need more roads, we are also 
seriously looking at the role monorails and MagLev can play in our 
future transportation infrastructure. These solutions will require all 
of the innovative and creative thinking we can muster at the Federal, 
state, regional, and local levels.
    Today's hearing is important. Now that the Administration has 
unveiled its NEXTEA proposal, the members of this committee are that 
much closer to making the vital determinations of how much flexibility 
to provide for the next 6 years; that much closer to deciding what 
activities are eligible for funding under the Federal program.
    Although I disagree strongly with the Administration over the level 
of funding they are proposing, I agree with the approach that we should 
be building on the successes of ISTEA (and the handful of failures) 
rather than marching off in a completely new direction.
    We no longer live in an era of limitless budgets, even for 
something as vital to our future competitiveness as transportation. We 
must be smart and strategic in how we move forward. This program is, 
appropriately enough, a Federal program. All of us will be judged on 
its success or failure. We must not lose sight of the notion that 
program eligibility and the ultimate level of flexibility in 
implementation are the most critical elements of this package (aside 
from the money, of course).
    Don't get me wrong: more money is certainly part of the solution. 
While I fully support maximizing the impact of all the dollars we 
invest in our nation's infrastructure and transportation systems--in 
fact I view it as an obligation of the public trust we are sent here to 
uphold--I also support maximizing the dollars we have available to 
maximize.
    I join with my colleagues on both sides of the aisle in saying that 
the dollar amounts being put forth by the Administration are simply not 
adequate. The fuels taxes paid into the highway trust fund each year 
will support significantly higher spending on transportation and that 
is what we should be doing with the money.
    As you know, I introduced legislation last month to take the 
Highway Trust Fund off-budget to ensure that the American taxpayers are 
getting what they pay for when the gas tax is collected. This is 
another aspect of the public trust that I take very seriously. The tax 
was paid into the trust fund for transportation projects and that it 
what it should be used for every year and that is all it should be used 
for.
    Our nation's infrastructure represents the lifeline that fuels our 
economy. When we neglect to adequately provide for the health of this 
lifeline all of us suffer. Whether its unsafe and degraded roads or 
pollution caused from over congestion, all of us are affected. The 
price is not only the inconvenience of traversing a dilapidated 
infrastructure. Indeed, the real price is the increased costs all of us 
pay for goods and services because of the burdens placed on a steady 
flow of the stream of commerce. It's similar to cholesterol buildup in 
the arteries--eventually there is a steep price to pay.
    Thank you, Mr. Chairman.

    Senator Warner. I thank our colleague.
    The committee will now have the pleasure of hearing from 
the Associate Deputy Secretary, Department of Transportation, 
the Honorable Michael Huerta. Nice to have you, and thank you 
for your patience. You got the message.
    Mr. Huerta. Thank you. I did.
    Senator Warner. We thank your Secretary. We are fortunate 
in this committee to have such a distinguished American to work 
with in the capacity of the Secretary of Transportation. Thank 
you, Mr. Huerta. Please proceed.
    Now that volume before you is somewhat awesome. For those 
of you who can't see it, it is nearly six inches high. That 
does not reflect your statement, does it?
    [Laughter.]
    Mr. Huerta. Absolutely not, Mr. Chairman.
    Senator Warner. And if I agree to admit not that but some 
comparable statement to the record in its entirety, you will 
summarize the very important points that are before the 
committee today?
    Mr. Huerta. That is my intention, Mr. Chairman. I will be 
very brief in my introductory remarks.

 STATEMENT OF HON. MICHAEL HUERTA, ASSOCIATE DEPUTY SECRETARY, 
                  DEPARTMENT OF TRANSPORTATION

    Mr. Huerta. Mr. Chairman, Senator Baucus, Chairman Chafee, 
and members. Two weeks ago, Secretary of Transportation Rodney 
Slater appeared before this committee to describe the 
Administration's vision for legislation to extend the Nation's 
Surface Transportation Program into the next century. At that 
time, he pledged that the Department's proposal would be 
released shortly.
    Last week our Deputy Secretary Mort Downey described for 
the committee many of the innovations in our current 
authorization ISTEA, and he also assured you that the release 
of our proposed bill was eminent.
    So today it is my privilege to tell you that our promise 
has been kept. Yesterday morning, President Clinton, Vice 
President Gore, and Secretary Slater unveiled a 6-year, $175 
billion National Economic Crossroads Transportation Efficiency 
Act, or NEXTEA, to continue building and operating an 
efficient, safe, and environmentally sound surface 
transportation system to carry this Nation into the 21st 
century.
    Under this new proposal, Federal investment will reach 
historic highs. NEXTEA increases surface transportation funding 
by $17 billion, or 11 percent over the $157 billion authorized 
by ISTEA. It increases safety programs by 25 percent, and Clean 
Air programs by 30 percent. So it's a strong commitment to 
transportation but, at the same time, it's much more.
    The $175 billion we propose to invest will support almost 1 
million jobs across the country in the next 6 years as we build 
our roads and transit systems. These investments will make it 
possible to help all Americans whether they live in urban, 
rural, or suburban America.
    But, clearly, there are special people that we must help, 
those that are trying to get off welfare and onto jobs. As 
Secretary Slater has said, ``Transportation provides the `to' 
in welfare-to-work.'' Our $600 million access to jobs program 
will make a difference.
    There's another special feature of our proposal, one that 
addresses education. As we meet the President's national goals 
that every 8-year-old can read, every 12-year-old can log on to 
the Internet, and every 18-year-old can go to college, we will 
go into the schools to ensure that we have the transportation 
professionals of the 21st century. If students take the 
responsibility when they're in high school, we can provide the 
opportunity to go further with a special scholarship.
    We've developed our NEXTEA proposal by going around the 
country asking people what was good and what was bad about the 
current program under ISTEA. In 1991, the Senate laid out the 
conceptual framework for ISTEA, and, Senators, you should be 
proud of what we heard from your constituents across the 
Nation. I am not exaggerating when I say that the overriding 
comments that we received at our outreach meetings can be 
summed up in two words--ISTEA works. It adapted the Federal 
Surface Transportation Program to better meet the needs of 
State and local decisionmakers and their reviews were clear, 
constructive, and consistent. As one State official in the 
Midwest said, ``Tune it, don't toss it.''
    That attitude characterizes our approach to NEXTEA. Those 
aspects of ISTEA described as ground breaking and revolutionary 
have been retained. NEXTEA continues critical funding programs 
that have enhanced transportation decisionmaking and allowed 
State and local officials to spend Federal dollars on an 
expanded set of transportation solutions.
    And about the distribution of those Federal dollars, in 
NEXTEA we have tried to be fair to all States. Forty-nine 
States would receive more dollars than they did under ISTEA. 
The formulas used to appropriate funds have been updated and 
will incorporate new information throughout the life of the 
authorization.
    Let me also say, on behalf of the Secretary and the Deputy 
Secretary and the entire Department, that we look forward to 
working with Congress as you review both our proposal as well 
as those offered by others committed to their own visions of 
America's transportation future. Your job is to balance the 
demands of a large and diverse Nation. We believe that NEXTEA 
is a thoughtful, well-considered attempt to do just that.
    The poles that define the transportation debate--urban 
States and rural States, truckers and railroads, highways and 
transit--are not the distinctions that define Democrats and 
Republicans. We think NEXTEA provides the foundation to build 
consensus in both the traditional bipartisan sense and among 
the multiple interests that will be prominent throughout your 
deliberations this year.
    I was invited to speak before this committee to discuss the 
Department's experience with the expanded flexibility and 
eligibility provided by ISTEA. These features signaled a sharp 
departure from the previous surface transportation legislation 
and they are the heart of what makes ISTEA work. NEXTEA would 
expand the types of eligible uses under the National Highway 
System and the Surface Transportation Program to include 
publicly owned rail facilities such as intercity passenger rail 
capital projects, including Amtrak, passenger rail and 
intermodal freight terminals that connect to the National 
Highway System, rail safety infrastructure improvements, 
intercity passenger rail infrastructure, and freight rail 
infrastructure.
    NEXTEA would extend eligibility for transit and STP funds 
to both publicly owned and privately owned intercity bus 
facilities, including terminals and vehicles.
    Based on the strong positive response to the pilot phase of 
our State Infrastructure Banks program, NEXTEA would make it a 
permanent program to offer this innovative financing tool to 
all the States.
    In recognition that the operational improvements achievable 
through intelligent transportation systems can improve capacity 
and safety of existing infrastructure, NEXTEA would make 
explicit the authority of the States and local entities to use 
NHS, STP, and transit funds for ITS operations and maintenance 
as well as ITS capital projects.
    NEXTEA would provide an infrastructure safety program that 
replaces and improves upon the current STP set-aside. To the 
extent that a State reduces its grade crossing crashes, highway 
and rail funds could be spent on highway hazard elimination. 
Further, if a State has an integrated safety planning process, 
it may transfer its hazard elimination funds into behavioral 
programs identified under section 402 and the motor carrier 
safety programs.
    We would propose to consolidate the transit programs to 
make it easier for local officials to select options that best 
improve mobility in their communities.
    Mr. Chairman, that concludes my remarks. And, again, I feel 
privileged to be here to discuss our reauthorization proposal. 
I would be happy to answer any questions you or the committee 
might have.
    Senator Warner. You heard this morning I think a very good 
dissertation by strong representation of the Northeast corridor 
Senators. It seems to me the proposal centers on taking the 4.3 
and dedicating some percentage of that to a dedicated fund, and 
let's call it the Amtrak trust fund or rail transportation 
trust fund, because I'm sure there are some short-line rails 
that likewise are going to have to be addressed. How does that 
proposal sound to you?
    Mr. Huerta. The Administration has not proposed dedicating 
one-half cent to Amtrak. We have proposed and are requesting 
$767 million to be funded from the Highway Trust Fund for 
Amtrak, of which $423 million would be for capital, which is 
not equal to the half cent, and $344 million for operating.
    We are committed to a long-term vision of Amtrak as an 
important component of the Nation's intermodal transportation 
system. We share the belief that Amtrak needs to have a 
reliable source of capital investment over the next several 
years to address the previous lack of investment if we're to 
preserve our national system and to permit Amtrak to achieve 
its potential.
    We recognize that we need to strike a proper balance 
between what the needs are versus the needs in other modes of 
transportation, and how we achieve all of this in a context of 
the bipartisan commitment to a balanced budget. The Department 
is committed to working with you and the Congress, with Amtrak 
management and labor, with State Governments and other 
interested parties in the coming year to develop an affordable 
long-range plan that eliminates Amtrak's dependence on the 
Federal subsidy.
    Senator Warner. OK. I think your answer is very well 
programmed. Let me try something differently then. I'm speaking 
for myself, I feel very strongly that we do need to strengthen 
the ability of Amtrak to provide transportation but do it in 
today's real world, not the old days of the railroad barons and 
their corresponding union barons. Do you know of anything 
comparable in America of a 6-year guarantee full salary for an 
employee that is terminated, that is now the question facing 
Amtrak?
    Mr. Huerta. I don't.
    Senator Warner. Nor do I. Would you like to research that 
and supplement your response for the record if you can find 
anything in America's transportation system?
    Mr. Huerta. I'd be happy to do that.
    [The information to be supplied follows:]

    Labor protection arrangements have been a standard feature 
of the railroad industry for over 60 years. The jointly agreed-
upon Washington Jobs Agreement of 1936 established a precedent 
of protecting employees displaced by mergers (one year's 
severance pay, or a guarantee of 60 percent of prior income for 
5 years, plus other protections). Congress has reaffirmed the 
importance of, and has mandated labor protection in the 
Emergency Railroad Transportation Act of 1933, the 
Transportation Act of 1940 (mandated labor protection in 
mergers), the Urban Mass Transportation Act of 1964 (mandating 
labor protection for mass transit employees adversely affected 
by Federal funding), the High Speed Ground Transportation Act 
(1965), the Rail Passenger Service Act of 1970 (creating 
Amtrak), the Regional Rail Reorganization Act of 1973, the 
Railroad Revitalization and Regulatory Reform Act of 1976, the 
Milwaukee Railroad Restructuring Act (1979), the Rock Island 
Transition and Employee Assistance Act (1980), the Staggers 
Rail Act of 1980, the Northeast Rail Service Act of 1981, and 
the ICC Termination Act of 1995.
    Amtrak's enabling legislation, 49 U.S.C.Sec. 24706(c), 
required that labor and management negotiate a labor protection 
agreement, and that the agreement be certified by the Secretary 
of Labor. The protective conditions which the Secretary 
certified are referred to as the ``C-1'' and ``C-2'' 
conditions. C-1 covers employees of the freight railroads who 
did not transfer to Amtrak and who are adversely affected--
whether by losing their jobs or having to take lower paying 
jobs--by a discontinuance of Amtrak intercity passenger 
service; C-2 covers adversely affected Amtrak employees. These 
protective conditions provide for a guarantee of income 
protection, escalated by future wage increases, for up to 6 
years (or for a period equal to the employee's length of 
service, if less than 6 years), optional separation allowances, 
moving expense reimbursement, and certain rights regarding 
training and rehiring.
    Amtrak's experience with labor protection payments 
following route discontinuances indicates that actual payouts 
have been approximately 40 percent of potential liability. This 
occurred because some employees were reemployed on other Amtrak 
jobs and others selected a one-time buyout in lieu of multi-
year protection.
    Amtrak's labor protection terms are comparable to the 
protection imposed on freight railroads as a condition of the 
Surface Transportation Board's approval of a line abandonment, 
known as Oregon Shortline Conditions. Freight railroad 
employees are also protected from the adverse effects of a 
coordination by two or more railroads of facilities, 
operations, or services (``mergers''). The merger related 
protective conditions are known as New York Dock Conditions.
    Under New York Dock, railroad workers of the larger 
carriers (Class I and II) whose pay is adversely affected by a 
merger, get 1 year of salary protection for each year of 
service, up to a maximum of 6 years, plus other customary 
benefits. Incomes are indexed for general wage increases. In 
the case of line acquisitions by a Class II railroad (carriers 
with annual revenues of $20.5 million or more) and merger 
transactions involving a Class II railroad and one or more 
Class III railroads, the protection imposed is 1 year of 
severance pay which cannot exceed the employee's railroad 
earnings during the preceding 12-month period, reduced by the 
employee's railroad earnings with the acquiring carrier during 
the following 12-month period. In the case of transactions 
involving only Class III railroads, no labor protection 
conditions are imposed.

    Senator Warner. I appreciate that. Do you think that's a 
reasonable area in which Congress to work its will and to give 
Amtrak the ability at the bargaining table to rework some of 
those old archaic union parachutes?
    Mr. Huerta. I think the Administration is certainly 
committed to working with the committee on the whole Amtrak 
question.
    Senator Warner. Well, I think that's sufficient probing by 
myself.
    Do either of you gentlemen want to lead off, Mr. Chairman? 
Max?
    Senator Chafee. It seems to me that the point that has to 
be stressed, Mr. Secretary, is that the population of the 
country now is, what, 234 million, something like that, 260 
million, that the population 20 years from now is going to be 
substantially more than that. The number of automobiles in the 
country now are X, and the number of automobiles, if everything 
goes along, no change, no greater alternative means of 
transportation is readily provided, that the number of 
automobiles is going to be X plus some very large percentage. 
Thus, it seems to me if we're sitting here in this committee in 
this Congress and trying to plan for the future, we need to 
think about not just tomorrow and the day after that, but 2020, 
2030, 2050--there's nothing wrong with that, what's that, 53 
years from now; after all, the war was over 53 years ago and 
that doesn't seem such a long time ago.
    Therefore, I feel very strongly that we've got to think in 
the terms of transportation as not just wider and wider and 
wider highways, but how are we going to move people back and 
forth from where they want to go to from where they are now and 
back. That's what has got to be in the forefront of our mind. I 
think it is going to require bold thinking. So I do encourage 
the Administration to take that long view. Absent that, 
everything that we believe in in this committee, such as 
preservation of the environment, for example, is going to be 
harmed by continual expansion of roads wider and wider and 
wider all the time, and the congestion that comes with it, the 
pollution that comes from the emissions of the exhausts. So I 
would ask your Department to use every bit of thinking about 
the future that you can muster. Thank you, Mr. Chairman.
    Senator Warner. Thank you, Mr. Chairman.
    Our distinguished ranking member.
    Senator Baucus. Thank you, Mr. Chairman.
    I don't think there's a lot of disagreement here, frankly. 
It's just a matter of how they solve it. To state the obvious, 
the country is very diverse. The Northeast is very dense, the 
West not densely populated. In our part of the country, it is 
not so much a matter of adding more lanes, although that's true 
in some very congested parts, it's basically making sure that 
there are paved roads and the roads are maintained. We don't 
have the alternative of Amtrak except for in the Northern 
corridor.
    I just am curious why you didn't recommend paying for 
Amtrak or at least providing more funds for Amtrak by use of 
the additional half-cent out of the 4.3 cents instead of taking 
Amtrak funds off the top of the Highway Trust Fund. The people 
who now pay into the trust fund, it's highway users, and if 
those dollars then, with your proposal, go to pay Amtrak, non-
highway users, a lot of folks who pay those gasoline taxes will 
say that's not fair. So why isn't a better solution to take--
though it's not exactly on point, it is still diluted--that 
half cent from the 4.3 cents to pay for Amtrak?
    Mr. Huerta. We were trying to achieve a balance.
    Senator Baucus. Also, I say that in part because the 
Administration's budget recommendations nets out to a $500 
million reduction in actual highway spending compared with the 
current programs. And this will make it even worse.
    Mr. Huerta. What we're trying to do is achieve a balance 
between the modes of transportation, picking up on the point 
that was raised by Chafee that we need to look at 
transportation as an integrated system, and a balance between 
Federal, State, and local interests and responsibilities here. 
And so while we have not proposed funding Amtrak at the 
proposed half-cent level, we have proposed----
    Senator Baucus. But my question is, why not with the half-
cent?
    Mr. Huerta. We think we pick it up in the additional 
flexibility given to States.
    Senator Baucus. But that's money taken off the top of the 
Highway Trust Fund which means fewer dollars being allocated.
    Mr. Huerta. There are fewer dollars being allocated, but 
each State overall is getting more in dollars under NEXTEA than 
they would get under ISTEA.
    Senator Baucus. But the highway portion will receive even 
less for actual highway spending, less than they currently 
receive.
    Mr. Huerta. Sure. We recognize that there are a lot of 
competing interests here. But we have to address all of this in 
the context of trying to achieve what we're all trying to 
achieve in the form of a balanced budget. There are a lot of 
competing interests out there. We want to work with you to 
develop whatever is going to be the most appropriate formula.
    Senator Baucus. I can't understand why the Administration 
doesn't get behind the need, and we're all talking about it 
here, of more infrastructure spending in our country. We are 
woefully inadequate. You all know that. Even the DOT's needs 
assessment has us way behind even on just pure highway 
construction let alone Amtrak. As I recall, it is about $50 
billion needs in this country that are not going to begin to be 
fulfilled with your proposal, nowhere close to it.
    So why not take that 4.3 cents and dedicate it to the Trust 
Fund, half a cent goes to Amtrak, the remaining 3.8 cents to 
the highway account where there is a lot of flexibility. That 
would then send the signal that we're going to spend more on 
infrastructure, we're going to meet our infrastructure needs in 
this country, and let the appropriations committees and the 
Congress work its will as to how much of that we're actually 
going to spend in this year. At least we'll be going in the 
direction of infrastructure. It will force us to go in that 
direction. Otherwise, we're consuming off the top rather than 
investing.
    Look at other countries, some of their rail systems, some 
of their highway systems are very advanced. We Americans want 
to be No. 1; we want to have the best, I think, I assume you 
want America to be No. 1.
    Mr. Huerta. Absolutely.
    Senator Baucus. Why not just take that 4.3 and spend it 
along the lines I've suggested?
    Mr. Huerta. We have proposed a substantial increase we 
believe.
    Senator Baucus. It's a net reduction in highways.
    Mr. Huerta. But an 11 percent increase overall, recognizing 
the systemic----
    Senator Baucus. I'm talking about highways right now.
    Mr. Huerta. Recognizing that Montana would have the 
flexibility to invest funds as it sees fit within its own 
State.
    Senator Baucus. But fewer dollars.
    Mr. Huerta. Montana would actually receive more in absolute 
dollars overall.
    Senator Baucus. I'm talking about fewer highway dollars. I 
don't want to make a case only for Montana, I'm talking about 
the Nation right now. The Nation will receive $500 million 
fewer highway dollars, not talking about ISTEA, highway 
dollars.
    Mr. Huerta. It's also important though to look at the 
Administration's record. We have had 4 years of record levels 
of investment in highways and in transportation. So we're 
building on that success. We are proposing higher authorization 
levels. What we're trying to achieve here is all of this in the 
context of balancing the budget.
    Senator Chafee. May I just point out briefly that forget 
the 4.3 cents, or balance of 3.8 cents if you want, going into 
the Highway Trust Fund. That currently goes to reduce the 
deficit, it goes to the general fund. But the moneys that are 
currently coming into the Highway Trust Fund are not going out. 
In other words, we are not appropriating for spending the total 
annual income into the fund. So rather than reducing the moneys 
that come in for deficit reduction, at least spend the money 
that's currently coming in, and that's the Bond-Chafee proposal 
which we'd be glad to have you join.
    Senator Warner. How about your joining the Baucus-Warner 
letter which now has 59 signatures calling for exactly what our 
distinguished chairman just enunciated. Thank you.
    Senator Chafee. It's worthy of examination.
    Senator Warner. Excuse me, Max.
    Senator Baucus. That's fine. Thank you, Mr. Chairman, 
you've made the point. Thank you.
    Senator Warner. Mr. Smith.
    Senator Smith. Thank you, Mr. Chairman. Mr. Huerta, how 
many States do you anticipate will impose tolls under your 
program?
    Mr. Huerta. I think it's important to point out that the 
Administration's proposal would offer States the flexibility to 
impose tolls if that works in a financial context. We are not 
mandating or suggesting that tolls are the answer.
    Senator Smith. Do you have any indication how many will do 
it?
    Mr. Huerta. I actually think that it would probably be 
pretty few in the early years. But nonetheless, in the spirit 
of flexibility which is associated with ISTEA, we want to 
ensure that States have it in their toolbox and it is an option 
for those States that want to move forward on it.
    Senator Smith. But let me just pick up on the discussion 
between my three colleagues here a moment ago regarding the 
fact that the trust fund money that has been raised now is not 
being expended. So what is the justification for suggesting 
that tolls should be placed on these highways? We're not 
spending the money that we now have in the fund to do what we 
need to do for roads and bridges, et cetera, and now you're 
suggesting that we impose tolls and double tax people who are 
using the roads.
    Mr. Huerta. I would observe that tolls are not merely a 
financing mechanism, although that is an important benefit 
associated with them, but some might choose to use tolls as 
congestion management devices, as is being tried, for example, 
in California with the variable toll on State road 91. And so 
there is more than one reason that you might want to look at 
imposing tolls.
    Senator Smith. Did you ever ride down an Interstate on a 
holiday and things go along real smoothly until you get within 
4 or 5 miles of a toll booth and then it all backs up, doesn't 
it?
    Mr. Huerta. Well, actually some do now. And that's through 
applications of technology. That is exactly some of the things 
that are being tried, for example, on SR 91 so you don't stop 
at all.
    Senator Smith. The sticker on the bumper, computer?
    Mr. Huerta. Transponder on the windshield.
    Senator Smith. It just seems to me that the answer that 
you're suggesting is extracting more money from the driving 
public in a more sinister way. We pay it at the pump as 
drivers, the taxes, and now we're going to pay it at the toll 
booth. And whatever the use of the money is, whether it's 
tangentially related or directly related to the issue at hand, 
that is, making better roads and bridges, the point is we're 
not spending what we're collecting for the purpose we're 
collecting it for and, therefore, I don't understand the 
justification. To me, it is just not an answer.
    Mr. Huerta. The point also needs to be made that we are all 
committed to achieving a balanced budget. We recognize that we 
need to make some difficult tradeoffs and choices between 
competing Federal needs. Our suggestion we believe represents a 
reasonable compromise and an honest middle ground that tries to 
achieve both of those objectives.
    Senator Smith. When you responded to Senator Baucus 
regarding the dollar amount going up for Montana and I guess 49 
States, that's the authorization though, isn't it, that's not 
the appropriation.
    Mr. Huerta. That is correct.
    Senator Smith. No further questions, Mr. Chairman.
    Senator Warner. Thank you very much.
    Senator Boxer?
    Senator Boxer. Yes, Mr. Chairman. This is very interesting 
to me because I've long looked at the land and water 
conservation trust fund in the same way that you're looking at 
highways, and that is that fund is supposed to be used for park 
purposes and it is being used for deficit reduction. The fact 
of the matter is, I don't approve of it either. I think we 
ought to be more honest about the way we budget around this 
place. The trust funds that are set up for a particular purpose 
ought to be used for that purpose.
    Having said that, you got to get to the next step, which is 
if you can't function this way, where are we going to make the 
cuts and where are we going to increase the revenues. So I 
think it is a much broader conversation that applies to a 
number of trust funds across the board where they are not 
expending--and it isn't just this Administration, I might add--
it's the Congress and prior Administrations that just do not 
look at these trust funds in a sacred way. So I think that 
whole issue--and there are going to be votes to take a lot of 
these trust funds off budget. I think it is going to be 
interesting to see how that all shapes up when we are having 
the vote on those issues.
    Mr. Huerta, I also feel that we need to have more of a 
priority around here. One of the areas that I support, and I 
support most of these, given the size of my State which is now 
33 million people and growing, and we're looking out in the not 
too distant future to 60 million people, so when we talk about 
these issues, how do we really save our magnificent State? How 
do we really continue to be able to lead in trade and move 
goods and move people? So it is very key.
    Last year, I supported an amendment to the transportation 
appropriations bill to fund the loan guarantee program, section 
511, which is a Federal railroad administration loan guarantee 
program. Unfortunately, that amendment, though it passed the 
Senate, was done away with in the conference. What is your view 
of the section 511 program?
    Mr. Huerta. We are proposing in NEXTEA broader eligibility 
for use of funding certain rail freight improvements that would 
certainly benefit your home State and mine of California and 
many other States around the country. We believe that rail 
access for connectors between major intermodal facilities and 
the major infrastructure of the country is extremely important 
for reasons that it helps alleviate congestion on highways and 
it also ensures that our Nation's gateway--our seaports, our 
airports, our major intermodal terminals--have what is needed 
in order to ensure that things don't get bottled up on the land 
side.
    We recognize that this is a difficult question, has always 
been a difficult question. But rail freight, we believe that if 
we look at publicly owned facilities and expand eligibility on 
the part of the various programs, primarily STP, to use funds 
for that purpose, that goes a long way toward addressing the 
problem that you're referring to.
    Senator Boxer. Well, so you support the section 511 loan 
guarantee program?
    Mr. Huerta. I would have to go and review section 511 
specifically, and I can provide you an answer for the record on 
that.
    [The information to be supplied follows:]

    The Department believes that the combination of rail 
freight assistance programs proposed in NEXTEA obviates the 
need to revive the Section 511 loan guarantee program.
    Section 511 was established in Title V of the Railroad 
Revitalization and Regulatory Reform Act of 1976. The aim of 
the Title V programs was to help keep Class I major railroads 
out of bankruptcy, and thus avoid a repeat of the Penn Central 
Railroad collapse that led to the Federal Government's creation 
of Conrail. To this end, these programs worked well. section 
505 made $580 million in loans available to 24 recipients, and 
Section 511 guaranteed $253 million in loans to eight 
recipients. Of course, deregulation is the primary reason why 
Class I railroads are so healthy today, and it is unlikely they 
would need either the Section 505 or 511 programs.
    The Class II regional and Class III short line railroads 
have also grown their business effectively.
    In 1993, these railroads identified about $400 million in 
infrastructure needs for which they believed they could not get 
financing through traditional means. The Department has 
responded in several ways.
    First, the Department's innovative financing initiative has 
included 12 rail-related projects, with many more in the 
pipeline. Then, in 1995, Congress approved the National Highway 
System (NHS), which made highway connectors between the NHS and 
intermodal terminals eligible for NHS funding. Now, the 
Department's NEXTEA proposal offers a menu of opportunities for 
rail freight projects.
    NEXTEA, for the first time, would include publicly owned 
rail projects as eligible uses of Highway Trust Funds. At least 
74 railroads now operate on publicly owned facilities. State 
Infrastructure Banks allow a State the option to invest in rail 
freight projects, and NEXTEA's Credit Enhancement Program would 
provide an opportunity for large public rail projects to lower 
their costs of borrowing.
    Of course, the CMAQ program, which through ISTEA funds 
alternative transportation projects in air quality non-
attainment areas, has supported many rail projects. In 
California, CMAQ offers an opportunity to supported many rail 
projects. In California, CMAQ offers an opportunity to support 
the resumption of service on the San Diego & Arizona Eastern 
Railway, for which Section 511 funds were sought last year.

    Senator Boxer. OK. Now just getting to your issue about 
publicly versus privately owned facilities, I want to ask you 
about the Port of Oakland, and this is my last question, Mr. 
Chairman. The Port of Oakland is the fourth largest container 
port in the United States. It has plans to build a major 
terminal for off-loading containers from ships to rail and 
trucks, it's this intermodal idea. The terminal would be used 
by three railroads that are privately owned. The Port has used 
$2.5 million of ISTEA funds for studies and will use another $7 
million this fall from the Surface Transportation Program 
account. However, the Port is not allowed to use highway funds 
for rail projects that are privately owned.
    It was my understanding that the Administration had an 
earlier draft of a plan that would have allowed privately owned 
facilities to be eligible for highway funding if the facility 
served competitive carriers, was under public control, and 
produced public benefit. Now you're saying the eligibility will 
be limited to publicly owned facilities. Why did the 
Administration back off the earlier proposal?
    Mr. Huerta. We found it difficult in looking at public 
versus private facilities to find a way to address public 
benefits. But turning to the Oakland example, I do believe that 
there is a way to achieve the objectives of what is being 
talked about in Oakland. My understanding of the project is 
that it is sponsored by the Port of Oakland and the underlying 
property ownership would actually rest with the Port of 
Oakland, a public entity.
    Therefore, my understanding of the facility is that it 
would be publicly owned, as would many port and airport 
connectors all around the country. And so in that circumstance, 
California and the Metropolitan Transportation Commission could 
choose to dedicate funds toward a facility such as the joint 
intermodal terminal.
    Senator Boxer. Thank you. I appreciate that. Thank you, Mr. 
Chairman.
    Senator Warner. Thank you very much, Senator.
    I think we've completed the shoot-out between the 
legislative branch and the executive branch. Thank you.
    Senator Warner. Now we will go to the real world, the 
users. So let's ask this very distinguished and broad panel to 
assemble. We start with Mr. Tom Downs, chairman, chief 
executive officer of Amtrak; Mr. Leslie White, chairperson, 
American Public Transit Association; Karen Phillips, senior 
vice president, Association of American Railroad; Mr. William 
Loftus, American Short-Line Railroad Association; Mr. Thomas 
Donohue, president, American Trucking Association.
    Given that Mr. Downs and Amtrak have been the subject of a 
good deal of discussion this morning, I think there's unanimity 
among the Senators to let him be the wrap-up hitter and thereby 
hopefully benefit from the erudite wisdom that will spill forth 
here momentarily from this distinguished panel of witnesses.
    We will ask our witnesses to limit their comments to 
hopefully less than 5 minutes. Our distinguished chairman, Mr. 
Chafee, and the distinguished ranking member, Mr. Baucus, had 
to depart for the Intelligence Committee this morning, and 
other colleagues are here there and everywhere. But I intend to 
stay right here unless I have a vote in the Labor Committee, in 
which case I'll recess for a few minutes to go cast that vote. 
We'll take a very thorough opportunity here to hear from your 
views. All statements will be placed in the record in their 
entirety.
    So with that, Mr. White, would you be kind enough to lead 
off?

STATEMENT OF LESLIE WHITE, CHAIRPERSON, AMERICAN PUBLIC TRANSIT 
       ASSOCIATION, ON BEHALF OF THE CLARK COUNTY PUBLIC 
             TRANSPORTATION BENEFIT AREA AUTHORITY

    Mr. White. Thank you, Mr. Chair, and members of the 
committee. I am Les White, the chair of the American Public 
Transit Association, and also the executive director of CTRAN, 
the transit authority in Clark County, WA, which is the 
northern neighbor of Portland, OR, for those of you that are 
not familiar with the Northwest. I would like to submit a full 
statement and the American Public Transit Association's 
proposal for reauthorization for ISTEA to the committee for the 
record and simply summarize a few comments this morning, being 
cognizant of the committee's time.
    Mr. Chair and members of the committee, ATPA appreciates 
the opportunity to present our recommendations for the 
reauthorization of ISTEA, and we would like to commend you and 
the members of the committee for the strong leadership role 
which you played in the initiation of ISTEA back in 1991.
    Our reauthorization proposal would maintain the ISTEA and 
transit program structures, it would expand opportunities for 
flexible funding in both highways and transit, and it would 
support ISTEA's planning provisions as well as transit research 
and development. We seek increased funding for investment in 
transit and in transportation purposes generally. Our proposal 
would fund the annual transit and highway core programs at 
$6.25 billion for transit, and $25.4 billion for highways. 
Additionally, we would supplement that with a recommendation of 
$3.6 billion annually for an increased Surface Transportation 
Program.
    Our proposal is based on the premise that ISTEA works, and 
that the continuation of a strong Federal role in setting 
Surface Transportation policy is needed to ensure a healthy 
economic future for the Nation.
    We cannot support proposals which have emerged to place 
total responsibility for transportation programs exclusively on 
the States. While we are not opposed to efforts to modify the 
highway funding formulas to achieve equity, we believe that a 
fair distribution of highway funds can be accomplished within 
the current ISTEA structure.
    We support the level playing field provisions between 
highway and transit investments that were established under 
ISTEA, including the four to one funding ratio. Transit is 
critical to meeting our national goals. And one of the more 
important functions it serves at this point in time is 
providing access to jobs and education, very critical in 
achieving the goals of welfare reforms.
    Specific recommendations in our proposal include 
maintaining and expanding the flexible funding program. We 
believe that the flexible funding provisions under the 
Congestion Mitigation and Air Quality program and the Surface 
Transportation Program, CMAQ and STP, have been successful and 
should be retained.
    We support the metropolitan area suballocations, the equal 
80 percent Federal matching shares for highway and transit 
projects, and the use of local soft match for certain selected 
transit projects. The flexible program allows communities to 
fund those transportation solutions that best support their 
goals for economic development, community revitalization, and 
other priorities. It truly is the forum where the nexus between 
land-use planning and transportation investments takes place.
    Nearly 60 percent of the $3 billion in ``flexed'' funds 
that have gone to transit in the current ISTEA came from the 
Congestion Mitigation and Air Quality program. The American 
Public Transit Association supports adjustments to the CMAQ 
program that would keep areas which have achieved attainment 
status whole so that they could maintain those attainment 
levels during the course of the next ISTEA.
    We are not able to support the changes to CMAQ envisioned 
in the current STEP-21 reauthorization plan, as it would fold 
the CMAQ program into the STP program and eliminate specific 
incentives in areas that have severe or moderately severe air 
quality problems.
    We support higher authorization levels for the Surface 
Transportation Program using resources from both the Highway 
account and the Mass Transit account of the Highway Trust Fund. 
After the transit core program has been funded, we propose that 
additional MTA funds would go into a new STP transit program, 
that that would be flexible for highway uses, and that for 
every $1 dollar of MTA funding going into the STP transit 
program, an additional $2 in Highway account funds would go 
into an STP highway program. This expanded STP program would be 
able to be used for either highways or transit at the 
discretion of State and local officials.
    We strongly support adding resources to the Transportation 
Investment program under the next ISTEA. To do that, we support 
taking the 4.3 cents per gallon which currently goes to deficit 
reduction and placing it in the Highway Trust Fund. We support 
allocating one-half cent of the 4.3 cents per gallon in gas tax 
revenue for a new intercity passenger rail account and the 
residual revenue being split 80 percent to the Highway Trust 
account and 20 percent to the Mass Transit account.
    We also support applying the Byrd solvency rule to the Mass 
Transit account, as it is currently applied to the Highway 
account in the Trust Fund.
    In addition, to ensure that Governors and State DOTs have 
the broadest flexibility to meet transportation needs, we 
recommend that States be authorized to use the State's share of 
STP funds for intercity passenger rail investments.
    Our proposal retains the transit program because it has 
been successful and it does a good job of meeting a larger 
number of basic needs. The transit program fills critical gaps 
in the national transportation network. It helps to create 
transportation choices that allow existing infrastructure to 
move people and goods more efficiently and to reduce 
congestion.
    We propose to expand the definition of allowable capital 
expenditures to include maintenance of capital assets, 
preservation and maintenance, if you will, to help cover the 
cost of compliance with Federal mandates. This change would 
make the Mass Transit program much more like the Highway 
program, as highway funds can now be used for maintenance and 
preservation purposes.
    We support the ISTEA planning provisions, including the 
current authority for MPOs. Additionally, we support the public 
participation requirements, the transit and research 
development efforts, and the establishment of a unified 
appropriation and outlay rate for transit funds.
    We ask that you keep the Federal Highway Administration 
section 130 Highway Rail Grade Crossing Safety Program----
    Senator Warner. Mr. White, our light is now functioning. 
We're at the extremity of your time, if you don't mind.
    Mr. White. That's fine. Thank you, Mr. Chairman.
    Senator Warner. Mr. Smith, since the two of us have the con 
here, I feel that now and then I'd like to interject a quick 
question, and you feel free to do so.
    We had fascinating testimony, Mr. White, the other day on 
what is called ``the Work Trip Chain,'' where the lifestyle of 
the American family, and particularly those where both husband 
and wife are working, just requires intermediate family stops 
to and from the workplace and so forth, and they're drifting 
away significantly from transit. Have you got any concept as to 
how we can make transit more appealing to get them back?
    Mr. White. Mr. Chairman, that is a concern the transit 
authorities across the Nation have. We propose that more mixed-
use development in conjunction with transit investments begins 
to get at that problem. In my own community, we are finding 
that our park and ride facilities, once augmented with day care 
facilities, with grocery facilities, with auto maintenance 
facilities as a part of those developments which eliminate the 
need for auto-dependent intermediary stops, that in fact a one-
stop shopping approach has made a major impact on people's 
travel habits. By being able to come to a park and ride 
facility where communities can split----
    Senator Warner. That would take some time and big bucks in 
the private sector to reorient all that. But maybe that is a 
direction which we'll have to go.
    Mr. White. Senator, if you will, the private sector in our 
community has been enthusiastic and anxious to enter into 
partnerships with our transit authority to make those kind of 
developments happen. So it in truth is happening.
    Senator Warner. It takes land values which enable the 
economics of those places to exist.
    Mr. White. That's true.
    Senator Warner. Now, Mr. Loftus.

STATEMENT OF WILLIAM E. LOFTUS, PRESIDENT, AMERICAN SHORT LINE 
                            RAILROAD

    Mr. Loftus. Thank you, Mr. Chairman. I would like to 
address the issues of eligibility and flexibility as they 
relate to small railroads.
    Our association represents more than 400 short line and 
regional railroads around the country in legislative and 
regulatory matters. Short line and regional railroads are an 
important and growing component of the railroad industry. 
Today, they operate and maintain over 45,000 miles of track, 27 
percent of the American railroad industry's total route 
mileage. These small railroads serve every State in the Nation 
and thousands of small shippers and small communities. We 
essentially are the pick up and delivery segment of the 
railroad industry, the feeder lines.
    In connection with ISTEA reauthorization, we and a sister 
organization, the Regional Railroads of America, are seeking to 
clarify eligibility provisions of ISTEA so that projects 
involving small freight railroads can be eligible to be 
selected by State and local decisionmakers. Our request for 
eligibility for small or local railroad projects under ISTEA 
should be viewed in terms of what is happening to the rail 
network in each State. The restructuring of the Nation's rail 
system is still underway. Recent mergers of the giant rail 
systems in the West and the forthcoming merger of the giant 
rail systems in the East present a significant challenge to 
each State and each region within a State.
    The States and shippers have to deal with the reality that 
trunk line rail service is shrinking to about a 100,000-mile 
rail network, when it had been 250,000 miles a few years ago. 
The short line and regional railroad system is the vital 
linkage in each State and rural areas within the State that 
must depend upon those railroads for connectivity to the 
national rail network in order to maintain their economic base 
and their economic future. There is a vital small railroad 
network in every State that must be preserved and enhanced and 
allowed to grow. It is a valuable, irreplaceable transportation 
asset.
    That is the fundamental reason I am here today to seek the 
committee's support for permitting States and local communities 
the ability to direct some of their ISTEA funds to rail 
projects, which will not only help preserve the rail network 
but will continue to generate economic growth in non-urban 
areas.
    Small railroad eligibility for ISTEA funding should not be 
viewed as an unwarranted incursion into STP funds. ISTEA is not 
exclusively a highway program today. Congress has recognized 
that a multi-modal approach is most appropriate, and there is 
eligibility for funding for intermodal connectors, private bus 
companies, commuter transit, biking/hiking trails, and, yes, 
some freight railroad projects. State infrastructure banks 
provide a system for funding flexible alternatives. All these 
various non-highway categories eligible for funds under ISTEA 
share a common feature--all can benefit the highway system and 
highway users, either by enabling a smoother transportation 
flow, or by offering an alternative to get some users off the 
highway system. Small railroad freight projects fit this mold 
perfectly.
    We recognize that the matter of private sector railroads 
receiving public funds is of some concern. However, there are 
established ways of providing such assistance within Federal 
guidelines and will full protection of the public investment. 
These types of small railroad projects should be eligible for 
funding from SIBs, including pay-back requirements, and other 
innovative financing mechanisms which may be in ISTEA 
reauthorization.
    In order to be chosen for funding, small railroad projects 
would need to clear the hurdle of a strict public benefit test. 
Any short line or regional rail freight project would have to 
be found by the State or local decisionmakers to be better, 
more cost-effective use of transportation dollars than other 
transportation projects with which they are compared. The local 
decision may, indeed, select the highway project, but at least 
the local decisionmakers would not arbitrarily be restricted 
from considering investing in its rail network.
    We are not seeking entitlements, we're not seeking set-
asides for small railroads. Our proposal would, in essence, put 
small railroads at the table to argue, along with advocates of 
every other type of eligible transportation project, for 
consideration as the MPO or statewide planners weigh the best 
use of their Federal transportation dollars.
    Over the past two decades, Local Rail Freight Assistance 
funding from the Federal Government provided more than $200 
million in grants to short line and regional railroads for 
rehabilitation of track and bridge structures. However, since 
1996, Congress has chosen not to reauthorize or provide funding 
for the LRFA program, apparently finding it hard to justify the 
time and effort required in the annual appropriation process 
and periodic reauthorization process for such a relatively 
small Federal program. However, this should not preclude the 
States from being able to do what Congress has been doing since 
1976, and that is exactly what our ISTEA reauthorization 
proposal would do.
    On other issues, the short line and regional railroads 
joined the Association of American Railroads in support of 
funding for highway-railway grade crossing warning devices, 
section 130 funds, including both continued earmarking of those 
funds for their critical safety purpose, and an increase in the 
amount; also, maintaining the status quo with regard to truck 
sizes and weights; and availability of funding for intermodal 
connectors.
    In summary, I urge you to clarify eligibility of projects 
involving small railroads for funding as part of ISTEA 
reauthorization. To do so represents good, multi-modal public 
policy, and will allow State and local decisionmakers to make 
the transportation investment decisions they find best suited 
to their needs. Thank you, Mr. Chairman.
    Senator Warner. Thank you, Mr. Loftus. I put myself in the 
category of a railroad buff. I've always been fascinated with 
the ability of communities to go back and finance a short 
system for various purposes in my State. A very courageous 
group now is looking at it partially from the standpoint of 
freight, but more from the standpoint of tourism and I'm trying 
to give them a little helping hand.
    Mr. Loftus. The Buckingham Branch.
    Senator Warner. Yes, you got it. Thank you.
    Now, Ms. Phillips. It is so nice to have you with us. If I 
might observe, somehow through the years I've known a number of 
the senior executives in your distinguished association and 
they've been persons of incredible competence. So I'm delighted 
to have you associated with that group and join us here today.

    STATEMENT OF KAREN B. PHILLIPS, SENIOR VICE PRESIDENT, 
               ASSOCIATION OF AMERICAN RAILROADS

    Ms. Phillips. Thank you very much. Mr. Chairman and Senator 
Smith, my name is Karen Phillips. I appreciate your invitation 
to appear before this subcommittee to present the views of the 
Association of American Railroads on reauthorization of ISTEA.
    I would like to discuss four issues of concern to the 
railroad industry. The first of these is safety at highway-rail 
grade crossings. The successful partnership between Government 
and the railroads has resulted in a reduction in annual public 
grade crossing accidents of over 65 percent since the early 
1970's. This success has been accomplished primarily as a 
result of the engineering improvements carried out under the 
Federal section 130 program and the driver education/public 
information and traffic law enforcement efforts of the 
Operation Lifesaver Program. AAR is proposing four initiatives 
which we believe will result in a significant improvement in 
highway-rail grade crossing safety.
    First, is that the Federal Government should continue and 
increase funding for the section 130 grade crossing improvement 
program. Without funding dedicated or earmarked for this 
important program, crossing projects rarely compete 
successfully with more traditional highway needs. This problem 
was the primary reason, in fact, that a separate grade crossing 
improvement program was established. However, many States 
continue to assign an extremely low priority to crossing 
improvement projects. That is why it is essential that 
earmarked funding for the section 130 program should be 
continued and increased.
    Second, the Federal Government should establish a national 
mandate and a uniform process for closing unnecessary public 
grade crossings. Highway and rail safety officials have long 
advocated the closure of a large proportion of the public 
highway-rail grade crossings in the United States. The 
railroads support the establishment by Congress of a Federal 
crossing closing program implemented through a uniform 
nationwide process.
    Third, the Federal Government should finance a multi-year 
national grade crossing safety education and public awareness 
program to be conducted by Operation Lifesaver, Inc. Government 
should take responsibility for a major, multi-year public 
awareness campaign designed to illustrate the life or death 
consequences of motorists' behavior at grade crossings. This 
expanded national Operation Lifesaver campaign must garner the 
same national universal recognition and acceptance that Mothers 
Against Drunk Driving, MADD, for example, enjoys for its attack 
on drunk driving.
    And fourth, the Federal Government should create a national 
grade crossing warning device problem alert system. Railroads 
occasionally have problems receiving timely notification when 
warning device problems occur. The railroad industry supports 
the creation of a publicly funded, nationwide grade crossing 
warning device problem alert system operated by appropriate 
State agencies. The Federal Government should evaluate the 
feasibility of the Texas 1-800 system which has operated since 
1982 and other possible nationwide alert systems, and adopt and 
implement an effective system.
    These four grade crossing safety initiatives will 
significantly enhance safety at highway-rail grade crossings, 
and I urge this committee to include these recommendations in 
its ISTEA reauthorization legislation.
    The second issue I would like to discuss is that of 
intermodal connector highways. The importance of 
interconnectivity of our transportation modes and systems was 
underscored by the National Commission on Intermodal 
Transportation when it found that: ``Barriers to safe and 
efficient movement of freight occur at connections between 
modes. For example, inadequate roadway access to freight 
terminals is a barrier to the intermodal freight system.''
    On May 24, 1996, then-Transportation Secretary Pena sent to 
the Congress a recommended list of highway connectors to major 
intermodal freight and passenger terminals. Without first-rate 
connections, trains, trucks, barges, and planes are condemned 
to operate separately and inefficiently. Government and 
America's private transportation companies can provide the 
finest transportation systems and services in the world, but a 
completely efficient intermodal transportation system can never 
be realized without quality connections.
    The third issue is the transportation planning process. 
ISTEA attempted to establish a new approach to transportation 
throughout the country by striving to break out of traditional, 
but limiting, perspectives. Private railroads are working 
closer than ever, and more successfully, with States and MPOs 
to develop effective transportation plans and programs. It has 
been an evolutionary process, but all the parties in this 
process are working, learning, and improving, and the 
transportation in this country is winning as a result.
    My last issue is that of truck sizes and weights. AAR 
supports the status quo on truck size and weight limits. Of 
particular concern are any efforts that might be made to thaw 
the freeze on the expanded use of longer combination vehicles 
which are outside the scope of any legislative truck size and 
weight agreement that might be reached between the railroads 
and the trucking industry.
    Advocates of increased LCV use are now proposing a State 
option regime in place of the current Federal LCV freeze. We 
have great concerns about this, and especially about the upward 
ratcheting of truck size and weight limits that could occur; 
this, in fact, was the precise reason for the 1991 LCV freeze. 
The railroad industry hopes that Congress will continue to 
oppose larger and heavier trucks in ISTEA reauthorization 
legislation.
    In conclusion, ISTEA is working because all of us are truly 
working together. AAR is convinced that America must continue 
the progressive agenda established by the Intermodal Surface 
Transportation Efficiency Act. Thank you, Mr. Chairman, for 
inviting me to testify before your subcommittee today. I would 
be happy to answer any questions you might have.
    Senator Warner. Thank you very much, Ms. Phillips. An 
important contribution.
    Now, Mr. Donohue.

 STATEMENT OF THOMAS J. DONOHUE, PRESIDENT AND CHIEF EXECUTIVE 
         OFFICER, AMERICAN TRUCKING ASSOCIATIONS, INC.

    Mr. Donohue. Thank you, sir. I'm Tom Donohue, president and 
CEO of the American Trucking Associations. As you might 
imagine, I'm a truck buff.
    Senator Warner. That's fine. Let me just tell you that when 
I go down to visit industries in my State, and I like to tell 
this little story, there's a blue jeans plant in Luray, VA, one 
of the most beautiful parts of our State, and it is surviving, 
doing well on turn-around time, and you know what that is. In 
that one-world market, they can turnaround with your trucks and 
beat their competitors in the Far East, beat them hands down, 
if we give you the roads to deliver the goods.
    Mr. Donohue. Thank you, sir. I'm pleased to be here to 
represent the 9 million people that work in our industry and 
that contribute 43 percent of the funds that go into the 
National Highway System and to our trust funds, a total of 50 
percent of the funds that go into State and Federal road funds 
of all types.
    I'm particularly pleased to be here as the only person on 
this panel representing an industry that pays into the Highway 
Trust Fund. Each of my colleagues on this panel is here trying 
to get some money out of it. And we encourage some of that. In 
the efforts we made in President Bush's intermodal group, we 
made a commitment to spend Highway Trust Funds, and you 
confirmed that, on connectors. We have, and continue to put 
money in transit where it has made sense. And we are probably 
even willing to do some very limited amount of funding for 
Amtrak on a capital basis.
    Beyond that, I begin to feel like the banker who is looking 
over the transom at Willie Sutton wondering what he's doing 
there. Obviously, he's there to rob the bank. I listened to Ms. 
Phillips' extended list of the money she would like to have, 
and the short line railroads, and I know Mr. Downs has one 
view, but the Administration wants to fund the whole Amtrak 
thing. I think if that's the case, then we ought to look at 
these railroads that have billions of dollars of surpluses and 
8, 9, and 10 percent profit margins, maybe we need another 
trust fund. All of these folks could then come and petition 
both trust funds. But I think after a while you have to stop 
and say why is Willie Sutton here and what is he after? I'm 
here to say that we need to put the money in the roads or we're 
going to have a very serious problem.
    Let me say, Mr. Chairman, that the trucking industry 
believes that the current level of funding for roads, bridges, 
and highway safety is inadequate. The Administration's bill 
won't make it any better; they'll make it worse. The failure by 
this committee and by our industry to address these critical 
infrastructure needs is going to cost this Nation jobs, 
mobility, international competitiveness, as you were 
discussing, and, most important, innocent lives.
    The trucking industry applauds this committee's leadership, 
and I'm glad Senator Chafee just came back in, his major effort 
to assure that we get an adequate amount of highway funding in 
relation to what we put into the system. But, like many of you, 
the trucking industry is very skeptical about the 
Administration's reauthorization proposal. They call it NEXTEA. 
Their proposed spending limits will be as much as $11 billion 
less than could be supported by the current user fees that 
we're paying in. At the same time, they are increasing 
diversions to non-highway, non-safety related programs. You 
might imagine, Mr. Chairman, we object vigorously to the idea 
of putting tolls on roads that we've already paid for that we 
will then have to pay rent on. We would like to call the 
Administration's proposal in this regard ``NEXTOLL NEXTEA.''
    We propose a $34 billion annual program which can be 
achieved without raising taxes, but, instead, by dedicating all 
the Highway Trust Fund money and bringing the 4.3 cents back 
into the fund. And then the folks here that are petitioning on 
the matters we can agree on would also have an opportunity to 
get their programs paid for. ATA's approach to this would be to 
have a core highway program and then to take those 40-odds and 
ends grants and put them in a block grant so the States could 
get their business done in an orderly way.
    Let me focus just for a minute on safety. Approximately 
42,000 Americans die every year on our roads and highways. 
That's a national disgrace. Truckers take very, very little 
comfort in the fact that in 88 percent of those accidents we're 
nowhere near them. and in the 12 percent that are left, 70-plus 
percent of those the State police will tell you we had nothing 
to do with. This is a responsibility we all must step up to. 
And a great deal can be done. I'm very pleased that our fatal 
accident rates continue to go down as the miles we drive 
continue to go up. In 1995, we had the best accident ratio in 
the history of the trucking industry, while car accident rates 
and fatality rates began to go up. We need to work on this 
highway bill in a way that improves roads. If you don't fix the 
potholes, if you don't widen the lanes, if you don't fix the on 
and off ramps, we're going to continue to have fatalities and 
accidents that we don't need.
    And, of course, going back to your example down in 
Virginia, 77 percent of the communities across this country are 
served exclusively by truck. There are no railroads there. 
Trains and cargo planes, they go somewhere else. Many of you 
have worked hard to attract business to your States and 
communities. You can't have it both ways. If you want business, 
if you want economic growth, if you want jobs, you're going to 
have trucks.
    Let me say, sir, that between now and the year 2004, we're 
going to increase the miles we drive in trucks by almost 30 
percent. We're going to put 14 percent more heavy trucks on the 
roads, and we're only going to be able to keep it at that 
number if the railroads can double their movement of intermodal 
freight. Remember, we employ 9 million people and 5 million 
trucks in 500,000 companies. They have 230,000 people in a very 
limited facility. We need to focus on that. We look forward to 
working with you in that regard.
    Let me conclude, sir, by saying whether we live in 
America's largest cities or our smallest towns, the investments 
we make in these roads are essential to every State, whether 
they be a donor or a donee. If you can't get through Nevada to 
California, you can't deal in the Southern part of the 
California economic system. We need to find a way, and so we 
suggest a core program and a block grant to give the States 
flexibility that they want.
    Finally, let me say, we're very willing to share the 
largess that our members worked so hard to put into this fund, 
but we want to do so sensibly. If some of our colleagues and 
competitors have such big appetites, perhaps they should 
contribute to the meal fund. Thank you very much, sir.
    Senator Warner. I thank you very much. Indulge me in just a 
little personal thing. I travel a great deal in my State, as do 
all Senators, and do it at odd hours. Late at night when I want 
to get a bite, I try and find a truck stop. Two reasons: first, 
the food is pretty quality, and second, the conversation is 
excellent. They don't know who I am and you don't have to ask 
many questions and they'll unload.
    [Laughter.]
    Mr. Donohue. Senator, truckers are not always right and 
they're not always wrong, but they're always sure.
    [Laughter.]
    Senator Warner. I think they're a hard working lot, I 
guarantee you.
    Senator Chafee. Sometimes in error, but never in doubt.
    Mr. Donohue. That's exactly right.
    Senator Warner. Are you ready, Mr. Downs?
    Mr. Downs. Yes, sir, Mr. Chairman.
    Senator Warner. We welcome your presence here today. Of 
course, both John Chafee and I knew your predecessor. We had 
the greatest respect for him, an able man. A very distinguished 
American who did much to put Amtrak back to serving the 
American public.

   STATEMENT OF TOM M. DOWNS, CHAIRMAN, PRESIDENT AND CHIEF 
    EXECUTIVE OFFICER, AMTRAK, NATIONAL RAILROAD PASSENGER 
                          CORPORATION

    Mr. Downs. We all miss him.
    In respect for the committee's need for brevity, I am going 
to ask that my formal statement be entered into the record and 
I will cut immediately to the chase to allow you enough time to 
grill me.
    Senator Warner. Without objection, your statement will 
appear in the record in its entirety.
    Mr. Downs. We would like to request of the committee that 
two issues be addressed in NEXTEA. First, is the creation of an 
account that would create a trust fund account for Amtrak 
intercity rail passenger service for capital. We have entered 
into a compact with the Administration and with the Congress 
that we will be subsidy-free by 2002. We have never wavered 
from that. That is enrolled in House and Senate budget 
committee resolutions. It is something that we have agreed to a 
glide path to reach self-sufficiency in 2002.
    We said we needed two things in addition to our own 
restructuring of the corporation and our own re-engineering of 
our service. The first was a reauthorization bill. It has been 
talked about here. The House, after a lot of controversy, a lot 
of struggle, passed a bipartisan bill 406-4 that dealt with a 
lot of those restructuring issues. I understand, because of a 
lack of time, this body of the Congress could not deal with it. 
I understand that it is expected to be dealt with again in this 
session of the Congress. We, of course, support that.
    The other thing that we said we needed was a regular fund 
of capital to make up for the years of underfunding of the 
corporation's capital. We said it would take 5 years of that, 
and we understand that this bill being proposed by Senator Roth 
and Senator Moynihan is 5 years and out; in other words, the 
fund reverts.
    The options are: fund it at that level, or continue the 
operating funding at current level, which would be about 13 to 
15 percent more than that fund would create over its life, or 
unwind the corporation, because we're getting dangerously close 
to unravelling financially. We've been to the private 
marketplace, we've borrowed money for our equipment. In effect, 
most of our rolling stock belongs to banks, and foreign banks 
at that, because of the need to provide capital to replace 
aging locomotives and passenger cars. That unwind, according to 
the scoring provided by CBO, is about $5 billion, because of a 
variety of issues around debt and labor contracts. If that's 
the case, this fund, this half-cent is still cheaper than the 
bankruptcy of the corporation.
    So, of the two options, if you're a deficit hawk, and I 
understand, Senator Chafee, you are in this process, it is 
still cheaper to fund this capital fund to self-sufficiency for 
Amtrak by 2002 than it is to continue the operating subsidy or 
to unwind the corporation. We're still dead serious about 
meeting this operating subsidy-free target in 2002. We 
understand the congressional direction on it, we understand the 
Administration's direction on it, and we're not asking for any 
mercy in that process. We are saying we have a compact, we've 
tried to deliver, we need the other two pieces of it in order 
to make this work, and we think we can.
    The second is funding flexibility. We got to a lack of 
choice at the State level because of a committee jurisdiction 
issue in the House. When Mr. Dingell was chair of his 
committee, he insisted on clear lines of jurisdiction. We were 
part of that committee's jurisdiction. House Public Works 
Committee at that time said we're drawing the line, too. So 
there is no eligibility for any funding in highways or transit 
for Amtrak; therefore, it is illegal for a State to make a 
choice about using any of its transportation fund for Amtrak.
    This is a dilemma I face in calling a number of Governors 
to tell them that they are about to lose their service. In 
particular, one comment that I had from the Governor of Wyoming 
on the notice that he was losing his service on the Pioneer in 
Southern Wyoming, he said, ``I hate that and I'm sorry. Our 
Constitution says that we cannot use State gasoline taxes for 
anything other than highway purposes or to match Federal 
funds.'' He said, ``I don't have that choice. I hate to see you 
go away, but I guess that's the answer since I cannot choose to 
make that choice for ourselves.'' He said, ``That is painful 
for us because airfares in Southern Wyoming to Denver are often 
$500 round trip just to Denver, and that's on a small commuter 
plane. This is the only other choice we have. If we had it, 
we'd probably make it, but we don't.'' I've heard that from a 
number of Governors.
    We had an actual vote on this in the Senate. Two-thirds of 
the Senate voted to create a Governors' and States' choice 
around funding for Amtrak, and it passed by two-thirds of the 
Senate. I never took that as a vote about Amtrak; I took that 
as a vote to give Governors and States the funding flexibility 
that they think they need to make State choices about the type 
of transportation system they want.
    Ultimately, we want to stay away from issues like 
allocation formulas for equity and fairness and who pays and 
who doesn't in this process because we're a relatively minor 
player in this process. We've asked for a fund that holds us 
accountable for relieving the Federal Government of the 
majority of the burden of providing intercity passenger rail 
and in a way that will have the least amount of subsidy for 
passenger rail of any country practically in the world. And 
we've asked for choice for States to be able to make those 
decisions themselves around transportation funds.
    That concludes my remarks, Mr. Chairman.
    Senator Warner. Did you have sufficient time? Did you lose 
any point that you wanted to make?
    Mr. Downs. Oh, I could go on forever, but----
    Senator Warner. No, no.
    Mr. Downs. I better cut it short.
    Senator Warner. Senator Chafee has said, I guess he can 
best express himself, what is it, there's no place in Heaven 
for those who cannot control their opening statements? What is 
that?
    [Laughter.]
    Senator Chafee. I said there's a special place in Hell for 
those----
    [Laughter.]
    Senator Warner. We'll stop right there.
    I listened earlier to my good friends and distinguished 
colleagues talking about how they go to France and marvel at 
the trains, to Germany and marvel at the trains. Indeed, I took 
a trip into the NATO area, where I have other responsibilities, 
and I always try and use the trains. I'm fascinated with them. 
But in fairness, those trains are running through some of the 
most congested, heavily populated regions on the globe. At each 
station, there's an abundance of passengers who exit and get on 
the train.
    This brings me to the realistic needs that you have. And 
I'm not trying to just beat up on labor, but there are some 
lines that you would close down tomorrow if you weren't 
automatically burdened with that 6 year, as I termed it, 
platinum parachute. Am I correct about that?
    Mr. Downs. Well, it has never kept us from closing the 
lines. As you're probably aware, last year we said we were 
going to close five lines--the Pioneer, the Desert Wind, the 
Texas Eagle, Lakeshore Limited, and Gulf Service. We said we 
were going to do that because we had to and we were going to 
absorb those costs into the system. In the big continuing 
resolution, the Congress said, well, no, we want you to think 
about that a little longer, and extended that decision for 
another 6 months. They gave us in that continuing resolution 
$22.5 million to continue those lines for another 6 months. We 
told the Congress at that time that it would probably cost us 
$40 million to do that. So we've now lost another $13 million 
on that decision.
    It has never stopped us from making those decisions. We're 
going to go ahead, absent any other State participation, on the 
10th of May and eliminate those lines. So we go ahead and do it 
anyway, that's because we have no choice. Our operating subsidy 
has declined from $395 million when I got to the company 3 
years ago to $200 million now. We have no choice. It is a clear 
direction from the Congress, we just need to continue the 
process to the levels that we're supported by appropriations.
    Senator Warner. I can only speak for myself, but I will 
support you. We're privileged to have Amtrak in my State and 
maybe we will be confronted some day. I like to ride the Amtrak 
trains, but I get on and the cars are empty. Anyway, you know 
that far better than I.
    Talk to me about your need to get other relief. You've 
talked about the dedicated capital fund. I think that's a 
concept that Senator Baucus and I will be working on here 
pretty soon. Let's talk about the contracting out.
    Mr. Downs. Those labor provisions are enrolled in Federal 
law.
    Senator Warner. I understand that.
    Mr. Downs. They are not in contract with labor and 
management. We have said that we think that it is not a 
defensible structure to have Federal law dictate labor and 
management's relationships. It doesn't happen in many other 
industries except under the aegis of, say, the Rail Labor Act.
    Senator Warner. By necessity, they were probably written in 
at the time of the financial troubles of the major Eastern 
rails, Penn Central and others. Would that be correct?
    Mr. Downs. Those were written in at the beginning of our 
corporation as an incentive for employees to come from the 
bankrupt railroads into Amtrak. The assumption was that this 
railroad would die within 3 or 4 years of its creation.
    Senator Warner. If you didn't have that skilled labor 
force.
    Mr. Downs. And we had to have the skilled labor force, and 
we still do.
    Senator Warner. So that provision met its need at a 
critical time?
    Mr. Downs. Yes.
    Senator Warner. And is it your professional judgment as the 
top manager you don't need it anymore?
    Mr. Downs. We have said consistently that we need to be 
able to negotiate these issues.
    Senator Warner. At the bargaining table.
    Mr. Downs. At the bargaining table, the way----
    Senator Warner. As do other major American----
    Mr. Downs. The way any other major railroad or private 
company would.
    Senator Warner. And what about this 6 year parachute that I 
keep referring to. Is there anything comparable you know----
    Mr. Downs. Well, the New York dock and----
    Senator Warner [continuing]. Other than Disney World and 
Disneyland where there's a nice parachute.
    Ms. Phillips. The freight railroads are subject to the same 
6 year labor protection as well.
    Senator Warner. Well, is it about time we got rid of that?
    Ms. Phillips. Sounds good to me.
    Mr. Downs. We've not said that we want it eliminated. We 
want to be able to negotiate it. We don't want Federal law to 
intervene in those relationships between labor and management. 
That was, in effect, in the House bill that passed 406-4 and 
came to this body.
    Mr. Donohue. Mr. Chairman, we could arrange for some of 
these workers to become truck drivers. We could hire about 
300,000 of them right now at an average salary of close to 
$40,000 if we could find them.
    Senator Warner. Well, here we go. I'll come back for 
further questions.
    Senator Chafee.
    Senator Chafee. Thank you, Mr. Chairman.
    Mr. Downs, see if I understand what you're here for. No. 1, 
you would like the .5 cent which would be for capital, correct?
    Mr. Downs. Yes, sir.
    Senator Chafee. There's no limit on that? That wouldn't end 
in 2002?
    Mr. Downs. It's 5 years.
    Senator Chafee. OK. That's 5 years. But you are not making 
any commitment to us now that you would believe that would 
carry you and that in 2002 you wouldn't need any more? Are you 
suggesting that?
    Mr. Downs. Senator Roth's bill reverts that fund to the 
general fund at the end of the 5 years. That's been what I have 
been told was the intent of that bill. It is clear in the 
language of that bill that that fund is withdrawn at the end of 
the 5 years.
    Senator Chafee. All right. Now let me continue. 
Furthermore, you would like the flexibility in ISTEA to allow 
the Governors to use some of the annual moneys that are sent to 
the States, what percentage they wish, for rail passenger 
service, Amtrak subsidy?
    Mr. Downs. Yes, sir.
    Senator Chafee. OK. Now the third thing, as I understand 
it, is you currently are receiving $300 million in an annual 
operating subsidy from appropriations. Is that right?
    Mr. Downs. The President's budget for this coming fiscal 
year is for $202 million worth of operating subsidy, and $142 
million for excess railroad retirement payments which go to the 
railroad retirement fund.
    Senator Chafee. Now, what are you telling us is that in the 
year 2002, if you receive all these things I'm talking about, 
the three points, in the year 2002, you indicate that you no 
longer will need an operating subsidy?
    Mr. Downs. Yes, sir.
    Senator Chafee. That's not the $0.05?
    Mr. Downs. It is not.
    Senator Chafee. OK. Now that's a bold commitment on your 
part, isn't it? As we've had testimony before, and I guess from 
our own knowledge and experience, there's not a rail passenger 
system in the world that isn't not only subsidized, but 
probably heavily subsidized. Yet, you're saying that you won't 
need that operating subsidy. I presume you would like the 
capital fund continued. But you said you're content for it to 
expire in 2002.
    Mr. Downs. If we have to live with a term that says at the 
end of the 5 years we need to be capital independent as well, 
we will do our best to do that. I'm not as clear about our 
ability to say that because of the capital needs within the 
corporation over the long-haul. But I am clear about becoming 
the first passenger railroad in the world to become operating 
subsidy-free.
    Senator Chafee. I think that's a bold commitment on your 
part. It seems to me, and nobody knows this better than you, 
but the same thing comes up with bus transportation, if you cut 
back the service, then obviously you get fewer riders, and you 
get fewer riders on your feed lines, and the whole thing goes 
downhill. I'm sorry that you had to cutoff those five lines you 
mentioned. Well, you wanted to cut them, and I presume you did 
it because of lack of ridership, and you're continuing them 
now. But the time you committed yourself to continue must be 
close to expiring, isn't it?
    Mr. Downs. The decision by the States has to be made by 
Saturday in order for us to not cancel the routes on the 10th 
of May.
    Senator Chafee. I'd say that's very close.
    [Laughter.]
    Mr. Downs. That's very close.
    Senator Chafee. All right. Mr. Downs, I want to thank you 
for all the cooperation you've given me in the peculiar 
problems we've had in our State in connection with railroad-
owned land. That project, that Province Place that you've given 
us waivers on is indeed going forward. We're having a ground-
breaking on March 24. If you're not invited, you ought to be. 
It's no secret that Amtrak service in our State, which 
includes, obviously, the Northeast corridor, is extremely 
important.
    I have no further questions, Mr. Chairman.
    Senator Warner. Thank you very much, Mr. Chairman.
    Mr. Smith.
    Senator Smith. Thank you, Mr. Chairman.
    Mr. Donohue, you indicated that the trucking industry pays 
about 43 percent of the trust fund. What's that in dollars, $10 
billion?
    Mr. Donohue. A little more than that. We're doing much 
better, let me say, in collecting the money that's supposed to 
go into the trust fund because of some excellent improvements 
that were made here. And when you add up the trucks that run 
gas, the trucks that run diesel, other highway activities, it 
gets up just a little bit over $10 billion.
    Senator Smith. How much do you estimate it would cost your 
industry if these tolls were to be imposed?
    Mr. Donohue. If you let the Governors and the legislatures 
of the States decide, as was suggested by Mr. Huerta today, 
whether or not they want to put tolls on a road that has trucks 
and cars running up and down them, with all the financial 
problems they face, and the ones they're going to face as this 
Congress sends things back to them to do, you'll have tolls on 
roads all over this country and it will make it look like the 
Garden State Parkway. I'd like to say that we are vigorous 
supporters of a national connected, continuity-based system of 
roads around this country. But a toll system that tries to pay 
again and again for a set of roads that we've already paid for 
and pay to maintain would raise serious doubts in our industry 
about our continued support for a national system.
    Senator Smith. What percentage of the Nation's freight is 
transported by truck, do you know?
    Mr. Donohue. A dollar value, it is 78 percent. The rails 
haul some very, very heavy commodities--grain, coal, steel, and 
cars in their initial movement from the manufacturing plants. 
But the rest of the things, unless they're going as intermodal 
freight that we gave to the railroads, they're all going by 
truck.
    I think it is important to understand, if you just look at 
the two industries, one employs 230,000 people, one employs 9 
million people, one has $350-some billion in business, the 
other has $30-some billion in business. There is a great mystic 
that people say, oh, we should put it all on the rail. Well, if 
they don't go to 77 percent of the communities, and every time 
they have a merger they take up more rail track, if you said 
today let's stop the trucks and put it on the rail, the rails 
would be the first people to say, please, God, don't.
    This is a cooperative, integrated system where the rails 
play a very important role. But the Nation's freight runs on 
truck. That's how it goes. If I could do one thing to let the 
American people understand what we do, I would have plastic or 
glass sides on all the trucks in this country for a month so 
people could see what's going up and down the roads instead of 
just seeing the trucks. They would understand, it takes four--
count them--four tractor trailers to fill the average 
supermarket every night. We lose sight of the fact that all of 
the tank trucks that come into our community to fill up the gas 
stations every night. If it doesn't go by truck, it just 
doesn't get there. That's the bottom line.
    Senator Smith. Mr. Downs, I think we've played this already 
pretty well here, but in the interest of fairness and not 
trying to be confrontational or hostile about it, I'm trying to 
keep an open mind on this, we do have an aviation trust fund 
that's paid for with a ticket tax, we have a highway trust fund 
that's paid for by gasoline taxes, we have harbor maintenance 
and inland waterway trust fund paid for by users, we even have 
a social security trust fund and a Medicare trust fund that's 
paid for by those who pay into that. Why shouldn't Amtrak. or 
the railroads in general, pay into the trust fund as well?
    Mr. Loftus. First, Tom is right, Amtrak does not pay into 
the Highway Trust Fund. We pay $0.055 worth of diesel tax on 
locomotive fuel that goes to the treasury for deficit 
reduction. We're not part of a non-contributor problem. The 
railroads are the same way. The deal was struck though that the 
railroads would not pay a diesel tax that went to the Highway 
Trust Fund for some of the same reasons about equity. We do 
pay, we are a payer, we pay it every day we pull a locomotive 
up to the pump. So, in part, the answer is, we already pay, but 
we pay to deficit reduction, not to the trust fund.
    The second is that I spent a number of years as the 
associate administrator of the Federal Highway Administration. 
It always struck me that the modes of transportation within the 
DOT were on different floors, they had different funding, and 
different constituencies, and what the American public wanted 
from all of us was a national transportation system that moved 
people and goods safely and let us compete internationally. The 
American public doesn't think modes or trust funds, they think 
when they get in their car, have I got the best way to go to 
work or the best and safest way to get home. That often has us 
pitted against each other. I've never believed in that process. 
I think we all have to stay focused on what the national 
interest is at the national level about transportation. I agree 
with Tom, it has never been to have the modes run against each 
other, or freight against trucking, or transit against 
highways; it is that they work together. We think we're a 
partner in that. We'll never be a dominant partner, but we 
think we are a partner.
    Senator Smith. One final question, Mr. Chairman. Mr. White, 
you say you support giving States the flexibility on whether or 
not they want to spend highway dollars on Amtrak. How do you 
feel about the Administration's proposal to fully fund Amtrak 
out of the trust fund?
    Mr. White. Our proposal suggests that a half cent fund 
established for intercity passenger rail is the proper thing to 
do, but only in the context of reassigning the 4.3 cents that 
currently goes to deficit reduction over into the Highway Trust 
Fund. Currently, every mode, and I think you've heard that from 
the panel today, is underfunded substantially. On the transit 
side alone, the Department of Transportation estimates that we 
need a capital infusion of money of approximately $13 billion a 
year. Currently, the Congress is infusing approximately $4 
billion. So we're substantially short. That type of shortfall 
is in every single mode.
    Only if we begin to invest in all of the modes where they 
work together as a system will we be able to effectively 
improve mobility. To rob one mode to fund another in the 
context of current funding is not something that we can be 
supportive of.
    Senator Smith. Is that the way you view the Amtrak 
proposal?
    Mr. White. From the Administration or from ourselves?
    Senator Smith. From the Administration.
    Mr. White. From the Administration, that's correct.
    Senator Smith. Thank you, Mr. Chairman.
    Senator Warner. Thank you, Mr. Smith. Mr. Smith, I want to 
associate myself with your thought that some clearly 
identifiable tax from the rail systems into whatever fund we 
eventually create I think is a good concept. It is a good 
selling device. I'm exploring that now and we'll see what 
happens.
    I'm sure you lay awake at night looking at these, do you 
not, Mr. Downs?
    Mr. Downs. I'm old enough that my eyes are not what they 
used to be, so I can't----
    Senator Warner. The distinguished and very credible Cato 
Institute report which says you are the most highly subsidized, 
and the other is our GAO report. But both of them say that no 
matter how courageous you are in the proposals that you put 
before us today, they are still going to fall short and you're 
not going to be able to make your goals. Just give us a word or 
two now and then supplement the record with such rebuttal 
material as you would like on each of these reports for the 
benefit of the committee who will be studying these reports 
very carefully.
    Mr. Downs. Thank you, Senator. I was requested by the then-
chair of the Senate Commerce Committee to pursue the subsidy 
numbers between the modes by rider and by citizen of the United 
States. It was performed by the Congressional Research Service, 
and I would submit that response to you from CRS. It shows, in 
effect, that, if you take subsidy, Amtrak has about a less than 
$10 a passenger subsidy. And if you take it on a per capita 
basis, the average American pays about $0.80 a year for 
Amtrak's role in the United States.
    I have always been leery about--I know there's an old 
saying about figures lie and liars figure. Arguing about modal 
subsidy gets into a divisive battle. It's like the President's 
request that Amtrak be funded out of the existing Highway Trust 
Fund. I like to spend time on the water, I'm a sailor, and it's 
a little bit like if you're overboard and you're drowning and 
somebody throws you an electrical wire and they say don't 
worry, it's not electrified, and the choice is grabbing it and 
getting electrocuted, which I feel a little bit like being in 
the box with my good friend, Tom Donohue, about Amtrak coming 
out of existing resources in the Highway Trust Fund, including 
railroad retirement, which Tom said he loved----
    Mr. Donohue. We've got retirement problems. If you want to 
start funding pension problems, I'd like to talk to you about 
MEPA.
    Mr. Downs. But the issue is the Administration's 
recommendation is to create a fund, in other words, to have us 
be within the fund; the limitation is that there are no 
resources to fund that. I've said publicly I think that is a 
bad choice, because it intentionally almost pits us against 
very powerful forces not only in highways and trucking but also 
in transit. It leaves us with a very difficult Hobson's 
Choice--do you agree with the fund concept but disagree with 
the lack of funding, and I have publicly said that's our 
position. I'm appreciative of the President's request for a 
funding trust fund, but not of the lack of funds going into it.
    Senator Warner. Thank you.
    Mr. Donohue. Mr. Chairman, could I just----
    Senator Warner. I'm sorry, I need to leave.
    Chairman Chafee, I am badly needed in Labor Committee for 
my votes. Would you be kind enough to continue this?
    Senator Chafee. Sure.
    Senator Warner. And I noticed Ms. Phillips indicated she 
wished to make a response to one of Senator Smith's points. And 
if the chairman would kindly ask those two questions on behalf 
of the Senator from Virginia. Thank you very much.
    Senator Chafee [assuming the chair]. Let's do this, you had 
a comment, Mr. Donohue, on Mr. Downs' last statement.
    Mr. Donohue. A positive one. I want to say that I think 
that what Tom is doing is a herculean job. I think you laid it 
out very clearly. There are benefits in terms of congestion and 
there are benefits in terms of citizen service to this 
passenger system. That is the reason that we would accommodate 
ourselves on the capital portion of this thing for a limited 
period of time. It's maybe not the best of arguments, but it is 
one we can rationalize and deal with. We are impressed with 
what he has tried to do.
    Our concern is when we then get into the questions of 
pensions and operating funds and these short line railroads and 
every other matter. So we look forward to working with the 
Senator and with his colleagues to work this out, but we do 
have a lot of respect for what Tom Downs is trying to do.
    Senator Chafee. OK. Meaning the passenger transportation?
    Mr. Donohue. Yes.
    Senator Chafee. OK. Ms. Phillips.
    Ms. Phillips. I just wanted to add on to Senator Smith's 
question about railroads paying into trust funds. I just want 
to make sure to clarify the fundamental difference in some of 
the points here. The Highway Trust Fund is used to finance 
highways, the infrastructure that the trucking industry uses. 
With respect to the freight railroads, the freight railroads 
pay for their own infrastructure to the tune of approximately 
$7 billion per year. One of the reasons there is no railroad 
trust fund is that we fund these expenses privately. These are 
business decisions made by the privately operated freight 
railroads. For that reason, we feel very strongly that the 
freight railroads should not be paying into any sort of 
railroad trust fund.
    With your permission, I would like to submit for the record 
a presentation made by the chairman of the board of directors 
of the AAR to Chairman Archer's Transportation Tax Task Force a 
couple of weeks ago on the railroad trust fund issue.
    Senator Chafee. Senator Smith, do you want to comment on 
that?
    Senator Smith. No, go ahead. Good point.
    Senator Chafee. See if I understand this. You currently pay 
into the general fund of the United States a 5-point-
something----
    Ms. Phillips. It's $0.055 a gallon.
    Senator Chafee. Per gallon of diesel fuel. Do you pay into 
that, too, Mr. Downs?
    Mr. Downs. We do, Senator.
    Senator Chafee. Amtrak does. So all the publicly held 
railroads or the private railroads, if you want to call them 
that, Union Pacific and so forth. And you get no appropriation 
back, nothing back?
    Ms. Phillips. That is correct. From those payments, that is 
correct.
    Senator Chafee. And so it is being discussed that that be 
a--what's the problem you're pointing out here? I think you'd 
say to yourself, gee, we'd like to get some of that back.
    Ms. Phillips. Ideally, we would like to see the 5.55 cent 
fuel tax repealed, especially if you start talking about 
getting rid of deficit reduction taxes for all the other modes 
of transportation that are now paying for deficit reduction. 
However, we recognize that there are budgetary concerns that 
must be addressed. The $0.055 a gallon paid by Amtrak and the 
large and small freights is somewhere over $200 million a year. 
So we recognize the budgetary consequences.
    What we are concerned about, however, is any thought that 
might be given to creating a railroad trust fund, using the 
money that's going into deficit reduction from all the 
different modes barges, aviation, highway users and the 
railroads as well. We would just argue that the nature of 
private railroading is such that we're already paying for our 
infrastructure. We should not be made to pay again for 
infrastructure maintenance or improvements or anything like 
that.
    Senator Chafee. I'm not sure I understand you. You are 
saying you don't violently object with going into the general 
fund to reduce the deficit.
    Ms. Phillips. We're not thrilled about that either.
    Senator Chafee. I know you're not thrilled about it, but 
you----
    Ms. Phillips. We're good citizens, however.
    Senator Chafee. You're good citizens. OK.
    Ms. Phillips. Let the record show.
    Senator Chafee. Let the record show we concede that. But 
you don't want it earmarked for--I'm missing a beat in here--
you don't want it earmarked for a railroad improvement trust 
fund?
    Ms. Phillips. We're not thrilled about paying for deficit 
reduction, and we are especially concerned about the fact that 
right now as current law exists we pay more into deficit 
reduction than any other mode. That is an inequity that, no 
matter what else happens here, we believe strongly needs to be 
resolved.
    What we're saying, however, is while we're good citizens 
but we're not happy about paying deficit reduction, we will 
continue to do so if that's what everybody else has to do. If 
what is being discussed, however, is moving everyone else's 
deficit reduction taxes out of deficit reduction----
    Senator Chafee. Namely, the 4.3 cents or 3.8 cents, 
whatever is left.
    Ms. Phillips. Precisely, whatever is left out of deficit 
reduction payments, if that's going to go into the Highway 
Trust Fund or the barge or aviation trust funds. We're saying 
don't create a railroad trust fund, we just should not be 
paying anything at all at that point. It would be inequitable 
for the railroads to pay deficit reduction when no one else is 
doing so, but it would be also terribly inequitable to make us 
pay into a trust fund from which we would really not receive 
any benefits. We already pay for our own infrastructure and 
maintain it.
    Senator Chafee. I can understand that.
    There are a couple of questions that were left here from 
Senator Warner. Mr. Loftus, Senator Warner had a question of 
you. Your testimony supports an expansion of eligibility of 
highway funds for all short line and regional railroad systems, 
both public and private. My understanding, i.e., Senator 
Warner's, is that the Administration's bill only expands 
eligibility to use the National Highway System and the STP 
funds for publicly owned rail facilities. What's your view of 
this proposal, and how many publicly owned short line regional 
railroads are there?
    Mr. Loftus. The number of railroads, first of all, is about 
550 railroads, 9 of which are Class I, very large railroads, 
and the other 541 would be very small railroads. Of that, I 
would estimate about 10 percent would be publicly owned 
railroads. All the port railroads are generally publicly owned. 
Railroads have been purchased by industrial authorities to----
    Senator Chafee. I must say this term ``publicly owned'' is 
confusing. When you say publicly owned, you mean governmentally 
owned or they're traded with the public on the Big Board or 
something?
    Mr. Loftus. Government-owned.
    Senator Chafee. When you use the publicly owned, you mean 
government-owned?
    Mr. Loftus. Government-owned, yes. Port authorities, 
industrial development authorities. Senator Warner has one on 
the Eastern Shore owned by a transportation district. About 10 
percent I think of the railroads would fit in that category. 
The others are privately held, small entrepreneurs, and 
essentially ones that bought the properties as the large 
railroads slimmed down to a core system and we essentially 
built a substantial 45,000 mile feeder line system.
    Senator Chafee. We've got some in our State, a relatively 
small one, Providence----
    Mr. Loftus. A very important one in New England.
    Senator Chafee. To you, Mr. Donohue, and Mr. Loftus. How do 
we ensure that establishing a new Federal subsidy for local 
freight rail will not distort decisions made by private 
companies and introduce inefficiencies into the marketplace? 
That's assuming that a Federal subsidy for local rail is 
established.
    Mr. Loftus. Let me try to answer. The issue that we're 
raising is one of essentially eligibility. Small railroad 
projects have been funded in a fairly erratic or inconsistent 
way under ISTEA I. CMAQ funds, some enhancement funds, and some 
innovative uses of STP funds have come into these projects.
    Our point is that with a small rail network in every State, 
the State should have the ability to decide whether or not that 
is truly a public interest-public benefit type of facility and 
it would have to meet a fairly strong public benefit test. It 
would have to meet a test that investing in that small railroad 
project, and these are relatively very small dollars, would 
have to provide a larger public benefit than perhaps putting it 
into a highway project. An example would be maintaining a 
railroad line at a level that would maintain high volume grain 
coming out of it versus perhaps putting it into rebuilding 
secondary road bridges in a grain area. The decision may indeed 
be to do the highway project. But right now, the State or the 
local communities would not have the ability to make those 
decisions.
    So it is really not a question of expanding a subsidy, it's 
a question of opening up eligibility and whether or not it 
would be beneficial. Also, all of these projects would be, 
obviously, on a cost-sharing basis and not fully a direct 
subsidy from whatever source.
    Senator Chafee. Mr. Donohue.
    Mr. Donohue. Mr. Chairman, I believe there is a fundamental 
difference between helping a United States major passenger 
railroad on its capital and beginning a process of subsidizing 
short line railroads. You heard Ms. Phillips' presentation 
where the first part of her presentation was a whole series of 
suggestions that involve railroads using highway funds. I think 
there are three things to note here. Everyone of those projects 
that you get involved in reduces the number of dollars 
available to the Highway Trust Fund.
    Second, while I understand that the railroad folks are 
paying into the deficit reduction fund, you should keep in mind 
that the other trust funds, such as FAA and highways and so on, 
pay for their whole operation over in the Department of 
Transportation. It doesn't come out of general funds. But the 
Federal Railroad Administration comes out of general funds. So 
it's just about a wash.
    What we're really sitting here talking about is how these 
other modes, very important to our country, can get their 
fingers on money that is in the Highway Trust Fund paid by 
highway users. We need to be very careful because this 
Government is full of things that were started off as a few 
dollars and have turned into some of the major nightmares that 
you and your colleagues face. I say let's really think about 
this very carefully.
    The third point I want to make, and this goes back to 
transit, to Mr. Downs and others, we are all better served, we 
will all resolve our problems in a more thoughtful way if we 
make the available fund as big as possible. I think your 
proposal of money in, money out, and then a thoughtful look at 
the 4.3 cents, and the 4.3 cents the railroads are paying as 
well, they pay another penny, gets looked at, and we move it 
where it belongs.
    Highway users, highway consumers have a trust that was 
established a long time ago. And although the diversion has 
been going on, the Administration's bill you will find, takes 
lots of money away from highways and puts it in lots of places 
we haven't figured out yet. So I encourage your very careful 
review of that, and we look forward to working with you and 
your colleagues on it. But a little bit of skepticism might be 
helpful this time around.
    Senator Chafee. Mr. Donohue, I'm going to ask that you be 
given a chart here, I'll give it to everybody at the table so 
you can follow it, which is made up from information we 
received from the Federal Highway Administration. What this 
does is the red line shows the diesel taxes paid by trucks as 
they go up in weight, and the bottom line on the graph is 
weight in 1000 pounds. The vertical line is cents-per-mile. So 
the cost to the trucker by weight is the red line, and the 
damage to payments and bridges is the blue line.
    As you know, as the weight goes up, the damage increases, 
but the cost to that particular truck percentage-wise 
decreases. I bring this up because you were rather forceful in 
stating you were opposed to tolls.
    Mr. Donohue. Yes, sir. Excuse me, tolls on existing Federal 
roads that have been paid for. There are places for tolls, and 
we would encourage----
    Senator Chafee. Sure. OK. But these would be tolls on 
federally paid for highways. In my State, we have to 
reconstruct I-195, it's collapsing and so the local 
authorities, the State is looking at moving it. The cost of 
doing that is way beyond the amounts that the State receives 
from the Federal Government for highway construction. So the 
question is how to pay for it.
    The fact is that tolls are a user fee. It seems to me, as I 
look at this chart, that we've got a situation where the larger 
heavier trucks are not paying their fair share for the damage 
they do. Somehow that strikes me as unfair. We've got all kinds 
of testimony that the infrastructure of the country is falling 
apart and no one knows more about the relationship between 
weight and destruction or damage to payments than you do 
probably. What's your answer to this? Why should we tolerate 
this?
    Mr. Donohue. First of all, I think this is a very good 
question and I thank you. May I ask a question, who produced 
this chart?
    Senator Chafee. This chart came from the Federal Highway 
Administration. It was produced by my staff based on the 
Federal Highway Administration's figures.
    Mr. Donohue. Fine. Let me respond then, if I might. First 
of all, if you were to go down and draw a line at 80,000 pounds 
and draw that straight up through your chart, everything on the 
left of that represents almost all of the heavy trucks in this 
country operating at 80,000 pounds.
    Second, you would know, if your staff has carefully looked 
at this, that what really is important on the highway is not 
the total weight of the truck, but the weight on the axles. So 
that, for example, if in Rhode Island you allowed a permit to 
have things coming out of your ports that were a little over-
weight, over 80,000 pounds, what generally would happen is it 
would have extra axles so that there would not be incremental 
damage to the road, because what really damages the road is not 
the weight of the truck but the weight on the axles. We, for 
the most part, unless we have a very special thing maybe where 
we're moving a generator or something, don't let the axle 
weight get over the allowed limit.
    Finally, let me say, Senator, that all of these special 
exception trucks that are over 80,000 in most instances pay 
permits, fees, additional money to run at the higher weight.
    Senator Chafee. To whom? To the Federal Government?
    Mr. Donohue. To the States. You could then, your staff, 
being very astute as it is, could then say, wait a minute, what 
about the triple trailers that weigh more, none of which, by 
the way, run in your State. The answer would be that the axle 
weights are actually lower than on some of the 80,000 pound 
trucks, they run on very specific and identified roads, and 
they run primarily out in the West where they have highways 
prepared to accept them. So I would say about this chart, we 
have some additional information, and would welcome working 
with your staff.
    What I would say is, if you would draw the line straight up 
to where the axis is, 90-some-odd percent of all the heavy 
trucks in the country are to the left. The ones to the right, 
generally you will find that their axle weights are within the 
34,000 pounds tandem limitation. And if they are heavier than 
that because of the need of the community--they have a port, 
for example, or they may be taking containers to the 
railroads--they pay a permit to do that.
    I would be very happy, Senator, to submit some additional 
information in very brief form that would help you look at this 
chart and get more value out of it, and then we could discuss 
how it should happen.
    I would add, finally, that there have been two or three 
cost allocation studies done in recent years in some of our 
States that said that trucks continue, and, in fact, are doing 
more, in paying their fair share on the highways. So we look 
forward to submitting some additional material, and I thank you 
for raising the subject.
    Senator Chafee. Thank you, Mr. Donohue.
    Let me just stress to everybody that I don't believe there 
is a necessity to reach out for the 4.3 cents that is currently 
going into the general fund for deficit reduction, or 3.8 if a 
half a cent goes to Amtrak, to reach out and include that in 
the Highway Trust Fund. Currently, there is about $24 billion 
coming into that fund and $22 billion going out. So that the 
first order of business is, it seems to me, to make efforts to 
get out what goes in, not increase what goes in because, as I 
say, we're not even currently taking out what goes in. I think 
that's important because if you included the 3.8 cents going in 
and then took that, that would really make a very substantial 
increase in the annual expenditures or outgo from the trust 
fund.
    So it seems to me, first, let's concentrate on the 
immediate problem that's before us. If new money is required, 
then, OK, let's take out what we're putting in and not effect 
the moneys that go into deficit reduction.
    Mr. Donohue. Senator, I said we applaud very much your 
thinking on this. I would encourage your staff to look at not 
only what the Administration proposes, but also what they're 
trying to do in the appropriations. For example, last year, 
Congress appropriated $20 billion. The Administration is 
showing $23 billion, but they're going to ask in the 
appropriations for less than $20 billion. So that's why your 
suggestion gets very simple and very to the point--what comes 
in goes out. That is an excellent start and I applaud you.
    Senator Chafee. Now that differs from some presentations 
which, forget the 4.3 cents or the 3.8 cents, forget that, some 
are saying what goes in, take out, plus reducing the balance 
that's in there, take out the interest that is occurring on the 
balance. Mine doesn't do that.
    OK. Fine. I would like to leave the thought, and I think 
Mr. Donohue has touched on this, and certainly Mr. Downs has, 
that the country is growing in population. If we let passenger 
rail collapse, as Mr. Downs said is thoroughly possible absent 
action by the Federal Government, it would be, to me, a very, 
very sad thing for the Nation as we look to the future. But 
you've all got my speech memorized on that, so I won't repeat 
it.
    Thank you all very much. I want to thank every one of you 
for coming. We appreciate it. Thank you.
    [Whereupon, at 12:20 p.m., the subcommittee adjourned, to 
reconvene at the call of the chair.]
                              ----------                              

Prepared Statement of Michael P. Huerta, Associate Deputy Secretary of 
 Transportation, Director, Office of Intermodalism, U.S. Department of 
                             Transportation
    During the course of these hearings, many people will no doubt 
describe the Intermodal Surface Transportation Efficiency Act of 1991 
(ISTEA) as ``groundbreaking'' and ``revolutionary'' in its approach to 
addressing national transportation issues in an era when such singular 
goals as the creation of the Interstate Highway System have been 
accomplished. It is my distinct pleasure to appear before you to 
discuss those innovative aspects of ISTEA that drive this shift in 
Federal transportation policy. Thank you, Mr. Chairman, Senator Baucus, 
and members of the committee, for inviting me to assess the Department 
of Transportation's experience with the enhanced flexibility and 
eligibility provisions of ISTEA: in essence, the freedom given to State 
and local officials to spend Federal dollars on an expanded set of 
transportation solutions.
    In my testimony today, I will describe several ISTEA funded 
projects that demonstrate this multi-modal approach to addressing 
transportation challenges. Many States and regions have gratefully 
embraced ISTEA's improved flexibility and eligibility opportunities. 
Just as significantly, however, many others have not, and this one fact 
demonstrates the essential wisdom of the policy embodied in ISTEA. 
Faced with different challenges--and given different options--States 
have selected different paths to reach their goals. Within the context 
of our national goals of safety, mobility, economic development, 
environmental stewardship and community enhancement, ISTEA gives State 
and local decisionmakers a bigger and better ``tool box'' with which to 
work. Based on this experience, the Administration's proposal for 
ISTEA's successor--the National Economic Crossroads Transportation 
Efficiency Act, or NEXTEA--continues those critical programs that have 
enhanced local decisionmaking. Because these past 6 years have also 
taught us the importance of being flexible in our delivery of these 
Federal programs, we also propose certain refinements that I will 
describe shortly.
    Let me first describe some of the specific impacts of ISTEA's 
enhanced flexibility and eligibility provisions.
                      transportation and planning
    One of the hallmarks of ISTEA is that it establishes a clear 
linkage between planning and transportation decisionmaking. Notably, it 
accomplishes this linkage through both explicit and implicit means.
    It is well known that ISTEA's statutory language gives metropolitan 
planning organizations (MPOs) greater say over how Federal funds are 
spent in their region, and requires both State and metropolitan 
planners to seek the participation of less traditional constituencies 
such as freight providers and environmental advocates. ISTEA also 
recognizes that good planning requires hard choices based on available 
resources, and therefore requires that transportation plans reflect 
fiscal reality.
    ISTEA's statutory planning language, however, as admirable as it 
is, would have been significantly less influential were it not for the 
complementary flexibility of several of its major funding programs. In 
truth, flexibility has done more to empower transportation planning 
than any specific instructions regarding the planning process. To a 
much greater extent than previous surface transportation legislation, 
ISTEA allows State and metropolitan areas to spend their apportioned 
Federal funds based on thorough planning rather than restrictive 
program categories. Specifically, almost 60 percent of the funds 
authorized by ISTEA have been available, at the initiative of State and 
local officials, for almost any type of surface transportation project.
                        flexible fund transfers
    Probably the most noted result of this flexibility is the 
approximately $3 billion administratively transferred (``flexed'') 
during the first 5 years of ISTEA from the Federal Highway 
Administration to its DOT partner, the Federal Transit Administration 
(FTA), for delivery to FTA's State and local grantees.
    Such transfers occurred in 45 different States. Across the country, 
State and local officials chose to spend ``highway program'' funds to 
purchase buses and rail cars, build park-and-ride lots and bus transfer 
facilities, renovate rail stations and railroad track, and pay for rail 
signal systems and paratransit vehicles to implement the Americans with 
Disabilities Act (ADA). Eighty-five percent of these funds originated 
from two flexible programs introduced by ISTEA: the Surface 
Transportation Program (STP) and the Congestion Mitigation and Air 
Quality (CMAQ) program.
    But the fact that most States have flexed funds among programs 
fails to tell the entire story. As I noted above, the use of this 
option varies widely among States. In fact, just two--New York and 
California--account for nearly half of all such spending. At the other 
end, the combined transfers in 27 States and territories amount to less 
than 3 percent of the national total!
    This disparity demonstrates what we all understand to be true: that 
the most suitable solutions for a dense urban area may be irrelevant to 
an expansive and largely rural State. So it's hardly a surprise to see 
many such States represented by this committee--Montana, Idaho, Nevada, 
Oklahoma, Wyoming and New Hampshire--among those that have transferred 
the least amount of flexible program funds.
    All of which forcefully demonstrates the point previously made: 
ISTEA's flexible programs are adaptable to local needs. Flexibility 
means more than highway funds paying for transit improvements, or vice 
versa. Whether you choose, e.g., to buy extra buses or to improve a 
highway, you are taking advantage of the flexibility inherent to these 
programs. Flexibility provides different means to an end, and that 
makes it a valuable tool.
                          expanded eligibility
    Another dimension of ISTEA's flexibility, beyond the shifting of 
funds between administrations of the DOT, is its expansion of eligible 
uses for Federal dollars based on good intermodal planning. Without any 
administrative financial transfers, the STP and CMAQ programs in fact 
support many projects that directly benefit multiple transportation 
modes.
    For instance, last month saw the opening of a unique alternative to 
traffic congestion in the US-1 corridor in Miami, Florida. The eight-
mile South Dade Busway, built exclusively for Miami's Metrobuses as a 
rubber-tire extension of the existing rail system, connects outlying 
suburbs to the city's rapid transit network. The Florida Department of 
Transportation, in coordination with both FHWA and FTA, conceived and 
built the $25 million construction project using Federal funds 
administered solely by FHWA: $19 million from CMAQ and $1.2 million 
from STP.
    In Albany, New York, the State spent funds from FHWA's National 
Highway System (NHS) program to build park-and-ride lots in the heavily 
congested I-87 ``Northway'' corridor to link to the FTA funded buses of 
the region's transit operator, the Capital Transit District Authority.
    Through the Intelligent Transportation Systems (ITS) program, ISTEA 
also recognizes that improving operations can be more cost-effective 
than building new infrastructure, and thus is an eligible use of STP 
and CMAQ funds otherwise designated for capital projects. ITS 
technology provides an alternative to physical expansion, increases the 
efficiency of existing facilities and enhances their safety. The use of 
ITS as a standard tool to coordinate highway and transit infrastructure 
and operations will help blur the distinction between modally based 
programs in favor of an orientation toward the perspective of the 
individual traveler.
    As noted above, ISTEA's expansion of eligible uses for Federal 
funds goes hand in glove with its insistence that a wider array of 
parties become involved in planning State and regional transportation 
systems. One group that had rarely been part of the public 
decisionmaking process was the freight transportation industry. Today, 
advisory councils of private sector freight operators are providing 
essential input into comprehensive public plans. Although in some 
instances this involvement has yet to produce tangible projects, CMAQ 
and STP funds have supported many freight improvements that previously 
would not have been eligible for Federal money.
    For example, the CMAQ program will fund half of a $15.3 million 
project to improve intermodal access to the Barbour's Cut Container 
Terminal at the Port of Houston. By creating a dedicated corridor for 
rail and truck movements between existing roads and a new on-terminal 
rail facility, the project will eliminate current congestion at a rail 
bridge and reduce truck trips between Barbour's Cut and existing 
offsite rail facilities. CMAQ's emphasis on improving mobility in order 
to mitigate air quality problems made Federal participation much easier 
than under more traditional program categories.
    In California, more than $1 million of STP funds will help improve 
local streets to ease truck access to the Port of Stockton. In addition 
to demonstrating local recognition of the important economic 
contribution of freight transportation, this project exemplifies how 
ISTEA has extended eligibility to vital street networks that, because 
of their classification as local roads, were not part of the 
hierarchical Federal Aid system that existed before 1991.
    Transportation planning decisions also have the flexibility to 
consider efforts to redevelop ``brownfields,'' particularly urban areas 
that have been abandoned or underutilized due to environmental 
concerns. ISTEA has played an important role in brownfields successes 
in Portland, Oregon and Lawrence, Massachusetts, where Federal funds 
have supported transportation-related brownfields projects.
                  financial flexibility and innovation
    As you have often heard, the challenge of meeting increased 
infrastructure needs in an era of budget discipline means that public 
agencies must do business in a new way. A single strategy of grant 
reimbursement will no longer meet our Nation's transportation needs. 
Last week, Deputy Secretary Mort Downey described to the committee our 
incentives for States to take full advantage of ISTEA financing 
opportunities. These efforts respond to President Clinton's January 
1994 Executive Order on infrastructure which encourages innovation, 
private sector participation, and more efficient use of Federal funds.
    The centerpiece of our effort, the Partnership for Transportation 
Investment, has cut red tape to speed construction projects and 
developed new strategies to leverage private investment. The 74 
projects in this pilot program started an average of 2 years early and 
attracted $1.2 billion in investment beyond that available through 
conventional financing. Building on these successes, the National 
Highway System Designation Act of 1995 (NHS Act) made many of these 
strategies a regular part of how we do business.
    For example, one common sense strategy is to allow private money to 
substitute for public funds in providing the local match for federally 
funded projects. This-will be the case in New Hampshire, where the 
State will increase the clearance over the Gorham Railroad Bridge for 
double-stack container freight trains. This clearance restriction is 
the last remaining U.S. impediment to double-stack trains between Maine 
and Chicago. The $200,000 fix will alleviate congestion on the 1-95 
corridor in the Northeast and improve operational safety. Eighty 
percent of the funds, $160,000, will come from ISTEA program funds. The 
privately owned St. Lawrence and Atlantic Railroad will pay the 
remaining $40,000.
    Mr. Downey also described another initiative, the State 
Infrastructure Bank (SIB) program, which uses Federal seed money to 
leverage private and nonFederal public funds in 10 pilot States. I'm 
pleased to note that five of these 10 States are represented on this 
committee: California, Florida, Missouri, Oklahoma and Virginia.
            nextea's eligibility and flexibility refinements
    The innovations provided by ISTEA have changed the way Federal 
dollars are spent for State and local needs. The truth is, however, 
that a lot of sweat equity was needed to make the projects noted above 
successful examples of flexible planning and implementation. Because 
these efforts broke new ground, they represented a higher degree of 
difficulty compared to the delivery of the familiar pre-ISTEA programs. 
DOT officials in every part of the country had to revise eligibility 
interpretations, invent new administrative procedures, and help 
coordinate the participation of transportation groups whose previous 
activities had rarely intersected. As a result of 5 years of hard work, 
we're in position to extend ISTEA's landmark philosophy of flexible 
transportation solutions through our reauthorization proposal: NEXTEA.
    Of course, as often happens after working with new programs, we do 
believe that certain refinements would help us better achieve the goals 
of ISTEA. Based on our experience of the past 5 years, and after 
intensive discussions with our customers and among our own program 
staff, we propose that NEXTEA embrace the following eligibility and 
flexibility changes:
    Publicly owned rail facilities. NEXTEA would expand the types of 
eligible uses under the National Highway System and Surface 
Transportation Programs to include publicly owned rail facilities. 
Delineated uses would be:
     intercity passenger rail capital projects, including 
Amtrak (NHS),
     passenger rail and intermodal freight terminals that 
connect to the NHS (NHS),
     rail safety infrastructure improvements (STP),
     intercity passenger rail infrastructure and vehicles 
(STP), and
     freight rail infrastructure (STP).
    Intercity bus facilities. NEXTEA would extend eligibility for 
transit and STP funds to both publicly owned and privately owned 
intercity bus facilities, including terminals and vehicles.
    State Infrastructure Banks (SIBs). Based on the strong positive 
response to the pilot phase of the SIB program, NEXTEA would establish 
a permanent SIB program to offer this innovative financing tool to all 
States.
    Intelligent Transportation Systems (ITS). In recognition that the 
operational improvements achievable through ITS can improve the 
capacity and safety of existing infrastructure, NEXTEA would make 
explicit the authority of States and local entities to use NHS, STP and 
Section 5307 transit funds for ITS operations and maintenance, as well 
as ITS capital projects.
    Infrastructure Safety Program. NEXTEA would provide an 
Infrastructure Safety Program that replaces and improves upon the 
current STP safety set-aside. These funds would be designated in 
separate accounts to eliminate highway hazards and improve the safety 
of rail/highway grade crossings. To the extent that a State reduces its 
grade crossing crashes, however, the rail/highway funds could be spent 
on highway hazard elimination. Further, if a State has an integrated 
safety planning process, it may flex its hazard elimination funds into 
behavioral programs identified under the Section 402 and motor carrier 
safety programs.
    Transit Formula Programs. NEXTEA would consolidate transit programs 
to make it easier for local officials to select options that best 
improve mobility in their communities. Our proposal would combine the 
Fixed Guideway Modernization and Bus Discretionary Programs into FTA's 
Section 5307 urbanized area program. This would make these funds 
available for any eligible transit purpose, including planning, bus and 
rail car purchases, facility repair and construction, preventive 
maintenance, and, in areas under 200,000 population, operating 
expenses. NEXTEA would also streamline various formula programs by 
adopting simpler and more flexible definitions of eligible capital 
costs, matching ratios and grant requirements.
                       conditional fund transfers
    NEXTEA doesn't only propose to expand existing limits. Two 
important exceptions are described below.
    Interstate Maintenance (IM) Program. The IM Program provides 
funding to preserve the Interstate System, which is critical to the 
nationwide movement of people and goods. NEXTEA would continue to allow 
States to transfer any IM funds not required for Interstate pavement 
and bridges to the NHS and STP programs. However, all transfers would 
be conditioned upon DOT's acceptance of a State's certification that 
its Interstate System is adequately maintained. ISTEA allows a State to 
transfer the first 20 percent of its IM funds without conditions.
    Highway Bridge Replacement and Rehabilitation Program (HBRRP). This 
program provides funds to replace or rehabilitate deficient highway 
bridges and to undertake preventive measures to prolong the life of 
existing highway bridges. NEXTEA would continue to allow States to 
transfer up to half of their HBRRP funds to the NHS and STP programs. 
However, unlike ISTEA, in which transfers are unconditional, transfers 
would be allowed only if a State's bridges on the National Highway 
System meet certain standards of condition. Since the HBRRP formula is 
based upon the condition of the bridges in the State, we believe the 
priority should be to fix those bridges.
                         the multi-modal future
    It is a truth universally acknowledged--to borrow a phrase from 
Jane Austen--that we live in an era where Federal, State and local 
governments face fiscal and physical limits. When it comes to 
transportation, each industry mode can demonstrate needs far in excess 
of public resources. And when it comes to preserving mobility, our 
understanding of transportation's impacts on neighborhoods and the 
natural environment has made insufficient the traditional approach of 
simply adding infrastructure.
    These restraints intensify the urgent need to get the best return 
on Federal transportation investments. This, in turn, requires 
integrated planning and coordinated operations to exploit the synergy 
that comes when each improvement is built and operated as part of a 
system. Despite the rhetoric that often attends presentations such as 
mine, the reality of a ``seamless intermodal national transportation 
system'' lies well in the future. Nevertheless, if we resolve today to 
continue our hard work to reach this ideal, we will no doubt achieve 
many worthy accomplishments. As part of this effort, we must enable 
local transportation decisionmakers to leverage their fiscal and 
physical resources through flexible and intelligent use.
    I think one of the best examples of this approach can be found in 
Houston, Texas. During the past several years, Houston has implemented 
a comprehensive transportation mobility program that covers a region of 
600 square miles. Elements of the program include freeway improvements, 
High Occupancy Vehicle (HOV) lanes dedicated to transit and carpools, 
clean fuel buses, transit stations, park-and-ride lots, a state-of-the-
art ITS traffic signal system, and a regional travel information 
network. Since this program began, transit ridership has increased 
significantly, as have average highway speeds--a unique combination 
among major metropolitan areas. Money spent on the program has included 
a local sales tax designated for transit, State and Federal highway 
funds, and Federal transit funds previously set aside for a rail 
system.
    Houston's experience--intermodal regional planning, sophisticated 
information and operations technology, multi-modal improvements in 
critical transportation 
corridors--demonstrates features that will become more commonplace as 
we seek optimal transportation solutions. In this case, local 
decisionmakers made choices, and even reversed earlier decisions, 
without regard to the supposed restrictions attached to their available 
funds. To replicate this success elsewhere will require continued 
commitment to a flexible Federal surface transportation program.
                               conclusion
    ISTEA gave us the tools to respond to the Nation's transportation 
needs in the post-Interstate construction era. Our proposal for NEXTEA 
extends this effort, and it has been my privilege to describe the 
flexibility and eligibility tools that remain essential for success. As 
Secretary Slater and Deputy Secretary Downey have said in their earlier 
hearings, the Department looks forward to working with Congress to make 
it a reality. Mr. Chairman, this concludes my statement, and I would be 
happy to answer any questions.
                                 ______
                                 
      Responses of Michael Huerta to Questions from Senator Chafee
    Question 1. The Administration's NEXTEA expands the eligibility of 
ISTEA's programs to better accommodate all modes of transportation and 
meet the nation's diverse transportation needs. Regrettably, some 
interests criticize increased flexibility as a ``diversion'' of highway 
trust funds from ``highway purposes.'' Is there any way to reconcile 
the ``diversion'' argument with flexibility, which is one of the key 
principles of ISTEA?
    Response. If ``diversion'' is viewed as any use of motor fuel taxes 
for purposes other than the construction, maintenance and operation of 
highways and highway vehicles, the arguments can never be reconciled. 
However, we do not believe that the flexibility of the surface 
transportation programs is a ``diversion'' of funding. Congress in its 
last several reauthorization bills--and most significantly in ISTEA--
has explicitly recognized that all Americans benefit from a balanced, 
multimodal transportation system and, further, that state and local 
decisionmakers should be afforded the flexibility to shape a multi-
modal transportation system to serve, as efficiently as possible, their 
unique transportation, economic, environmental and social needs--
regardless of mode.
    Congress, of course, has previously crossed the so-called 
``diversion'' line in order to meet other competing public goals. For 
example, starting in 1982, it dedicated a portion of the motor fuel tax 
toward transit capital projects. In ISTEA, Congress explicitly linked 
Federal transportation assistance to national clean air goals via a 
program (CMAQ) that, not only provides mobility benefits, but funds 
improvements to reduce congestion and mitigate air pollution related to 
transportation. NEXTEA continues and strengthens the commitment to 
local decisionmaking and flexibility reflected in these earlier laws.
    Question 2. I commend the Administration's NEXTEA proposal for 
providing greater program eligibility and funding flexibility for 
States and localities in meeting their transportation needs. In your 
opinion, what aspect of increased flexibility and eligibility in the 
NEXTEA proposal is the most substantial departure from current law?
    Response. Extending eligibility to certain intercity bus and 
passenger, including Amtrak capital projects, and publicly owned 
freight rail facilities may be seen as the most significant departure 
from current law. In truth, however, NEXTEA expands only incrementally 
on the approach embodied in ISTEA, which truly revolutionized Federal 
transportation spending. The major new programs established by ISTEA 
OHS, STP and CMAQ--remain central elements of our proposal for 
reauthorization. The enhanced eligibility of NEXTEA builds on the 
flexible programs in ISTEA. For example, using CMAQ funds, Chicago and 
the Soo Line Railroad are jointly funding a $35.1 million project to 
improve access into and out of a major rail facility in Chicago; the 
railroad will fund all but $2.1 million of the cost. The Chicago MPO 
calculated that the public benefit from the project was more than $2.6 
million in reduced waiting time at rail-highway grade crossings and 
reduced pollution--benefits to highway users who pay into the trust 
fund. The project will have additional public safety benefits from 
reducing exposure to trains at crossings, as well as additional 
capacity for Chicago commuter rail service. Other examples of projects 
that could only be funded under CMAQ are the Auburn, Maine intermodal 
project that takes 14,000 long haul trucks off the highway a year and 
the Cincinnati third track project that reduces congestion and air 
pollution in the Cincinnati area.
    The expansion of eligibility proposed under NEXTEA will allow 
additional projects to be funded without limiting such projects to non-
attainment areas (i.e. under CMAQ eligibility criteria) and, on the 
passenger side, without limiting funding to commuter projects in areas 
where intercity projects offer attractive opportunities.
    Question 3. As you know, representatives from the American Short 
Line Railroad Association and Association of American Railroads are 
here and will testify shortly. The Administration's proposal, NEXTEA, 
extended Surface Transportation Program funding eligibility to publicly 
owned freight rail infrastructure. It did not extend funding 
eligibility to private freight rail. Why is it appropriate not to do 
so?
    Response. The Administration did consider extending eligibility to 
private freight rail, provided that the improvements demonstrated 
public benefit. Constructing an acceptable test of public benefit, 
however, promised to be problematic and controversial. Our targeted 
approach relies upon the fact of public ownership as a simple and 
undisputed demonstration of public benefit without raising issues of 
subsidies to private freight railroads. Further, it would assure that 
federally funded initiatives would be available to multiple private 
sector users.
    Question 4. Your testimony indicates that ISTEA played an important 
role in some brownfield success stories. Can you provide me with an 
example of a success story? How does NEXTEA address brownfields?
    Response. One example of a success story is the Lawrence Gateway 
Project in Lawrence, Massachusetts. This brownfields redevelopment 
project called for the cleanup of the most visible brownfield in 
Lawrence--The Oxford Paper Plant--located at the gateway to the 
historic, industrial part of town. Following almost a decade of 
frustration and lack of funding, in 1994 officials launched an 
initiative to redevelop the Oxford site by linking the project with a 
nearby bridge replacement and traffic interchange project, thus 
enabling the city to draw on Massachusetts Highway Department funds. 
Working closely with citizens and the business community, Lawrence 
officials developed a new plan to revitalize the city by restoring the 
historic entrance into the city.
    Under this plan, a historic bridge will be converted into a 
pedestrian crossing, and a new arched bridge will be built to handle 
automotive traffic. In spring 1998, officials expect to begin building 
the new road and bridge that will form the backbone of the Lawrence 
Gateway Project.
    Total projects costs are expected to be over $8 million. Over half 
of this funding was secured through the Massachusetts Highway 
Department, which dedicated 
$4.5 million for demolition and remediation at the Oxford site, as well 
as construction of the new canal Street bridge and a traffic 
interchange. FHWA contributed 80 percent of this money, the state 
provided the remaining 20 percent. DOT also provided $500,000 in ISTEA 
enhancement funds. ISTEA Enhancement money cannot be used for any 
demolition or construction activities; instead, it will fund Gateway 
corridor studies for establishment of a historic, scenic parkway.
    According to city officials, the Lawrence Gateway Project has 
triggered a domino effect of revitalization in Lawrence's historic 
industrial district. Encouraged by redevelopment at the Oxford Paper 
site, public and private investors already have committed over $160 
million for improvement in the surroundings area.
    NEXTEA addresses brownfields by continuing the emphasis on strong 
planning and funding flexibility necessary to support successful 
transportation-related brownfields redevelopment. NEXTEA continued 
existing authorities which allow States and MPOs to fund brownfields 
cleanup as part of transportation infrastructure development efforts. 
At the same time, although not specifically required by NEXTEA, DOT is 
continuing other efforts to support brownfields redevelopment, 
including: (1) working with transportation and economic development 
agencies and industries to consider the redevelopment of brownfields 
for transportation-related uses; (2) encouraging consideration of 
transportation access in redevelopment planning: and, (3) identifying 
policies that discourage transportation-related brownfields 
redevelopment.
    Question 5. Your testimony clearly indicates that NEXTEA would 
expand funding flexibility and program eligibility. Why then is it 
appropriate to maintain two separate State Infrastructure Bank accounts 
(one to fund highway projects and one to fund transit capital projects) 
when NEXTEA expands eligible projects funded out of the highway account 
to all Title 23 projects, including transit capital projects?
    Response. By maintaining separate transit and highway accounts 
within State Infrastructure Banks (SIBs) we are seeking to balance the 
distinction Congress has established between highway and transit 
funding accounts with the goal of enabling flexibility.
    The separate accounting for SIBs mirrors the separate accounting 
within the Highway Trust Fund. The NEXTEA proposal would keep the SIB 
program structure consistent with its original establishment in Section 
350 of the National Highway System Designation Act of 1995. To date, 
DOT has not heard from the initial pilot States that the separate 
accounts have posed a significant obstacle. In fact, of the ten 
original pilot States, four States are actively planning to establish 
both transit and highway accounts.
    Question 6. Can you expand on NEXTEA's welfare to work initiative? 
What does it involve and what are the goals of the program?
    Response. Welfare reform has profound implications for our public 
and human service transportation systems. People cannot work if they 
cannot get to work. Providing transportation for the economically 
disadvantaged is among the most difficult transportation problems to 
solve. Nationally less than 6 percent of the AFDC recipients own cars.
    Studies are showing that we face major challenges in meeting the 
transportation needs of welfare recipients. There is a spatial mismatch 
between where people on welfare live and where most entry level jobs 
are. Today's high growth job markets are outside the central cities--
two-thirds of all new jobs are in the suburbs. Transit does not always 
serve these markets well.
    For example, a recent Cleveland Study of five inner city 
neighborhoods showed that less than 45 percent of the entry level jobs 
could be reached with less than an 80 minute transit ride. In Boston, a 
recent study showed that two-thirds of the entry level jobs in high 
growth areas are not reachable with less than a 2-hour transit ride. In 
addition, transit timetables generally serve the traditional 9-5 
commute, not the shift schedules that entry level jobs demand. In rural 
areas, particularly in the deep South, transportation problems may even 
be worse than those in the inner-city, because few services are 
available.
    Furthermore, over 90 percent of the welfare recipients are single 
parents. Day care and shopping needs complicate the commutes of working 
parents. A recent Washington Post article recounted the transportation 
difficulties of one DC. resident. Her commute, which involved dropping 
her daughter off at day care, took 2 hours and involved 6 bus 
transfers--and her trip was not even to the suburbs but took place 
entirely within DC.
    To address these problems, DOT has proposed a 6-year, $600 million 
competitive grant program to support flexible, innovative 
transportation alternatives to get welfare recipients to jobs and 
training. Collaboration is a key element of this program--to make sure 
that the services meet the real needs. Providing the transportation 
needed to transition individuals from welfare to work is a shared 
responsibility. The transportation strategies must be closely 
coordinated with other human services assistance provided to states and 
localities working to meet the special needs of the welfare population. 
Transportation/human resource financial partnerships, fostered by the 
50/50 match requirement, will enhance this coordination.
                                 ______
                                 
Prepared Statement of Leslie White, American Public Transit Association
    The American Public Transit Association (APTA) appreciates the 
opportunity to testify on the subject of Intermodal Surface 
Transportation Efficiency Act (ISTEA) funding flexibility and program 
eligibility. Mr. Chairman, at the outset we want to commend you and the 
subcommittee for the strong leadership role you played in securing 
passage of ISTEA in 1991.
                                overview
    APTA believes that continuation of a strong Federal role is needed 
to provide an efficient, balanced transportation system for all 
Americans. Toward this end, APTA has adopted a comprehensive ISTEA 
reauthorization working proposal, which has been submitted for the 
record, that would preserve the ISTEA and transit program structures, 
expand opportunities for flexible funding--both highway to transit and 
transit to highway--and support ISTEA's planning provisions and transit 
research and development.
    The APTA proposal is based on the premise that additional 
investment in the nation's surface transportation network is needed to 
provide a solid foundation for economic growth. It would fund the 
annual transit and highway core programs at $6.25 billion and $25.4 
billion respectively, and also authorize some $3.6 billion annually for 
an increased Surface Transportation Program. These funding levels can 
be supported with existing trust fund revenues, balances, and interest, 
and with revenues from the 4.3 cents Federal fuels tax that now goes to 
deficit reduction. It assumes that commitments from the Mass Transit 
Account (MTA) would be subject to the same spending limitations that 
are applied to the Highway Account.
    Mr. Chairman, we oppose efforts to repeal Federal gas taxes that 
support investment in the nation's transportation infrastructure, or to 
eliminate the existing Federal partnership with state and local 
governments. On the other hand, we are not opposed to efforts to modify 
the highway funding formula, but we believe that a fair distribution of 
highway funds can be accomplished within the current ISTEA program 
structure. We also strongly support the ``level playing field'' 
provisions between highway and transit investments established under 
ISTEA, including the roughly four to one funding ratio. Without these 
provisions modal balance--an important ISTEA hallmark--will be 
jeopardized.
                 apta's istea reauthorization proposal
    ISTEA established a sensible program to carry out post-interstate 
Federal highway and transit policy, which should be retained in the 
next authorization act. It recognized that Federal interests are best 
served by a balanced transportation system. ISTEA achieves balance by 
allowing Federal, state, and local resources to be used a range of 
transportation alternatives and it allows state and local authorities 
to choose the alternative that best meets their particular objectives. 
ISTEA's flexible funding and intermodal emphasis allow transportation 
policy to address national and local needs while recognizing that 
transportation is linked to other factors that effect each community's 
economy and quality of life. In short, ISTEA works, and its 
reauthorization is critically important in the face of significant 
surface transportation infrastructure needs.
Maintain ISTEA's Flexible Funding Provisions
    ISTEA's flexible funding provisions under the Congestion Mitigation 
and Air Quality Improvement program (CMAQ) and Surface Transportation 
Program (STP) have been successful and should be maintained. APTA 
supports metropolitan suballocations, the equal 80 percent Federal 
matching shares for highway and transit projects, and the use of local 
``soft match'' for transit projects.
    The flexible funding provisions allow communities to identify those 
transportation solutions that best support or otherwise affect their 
goals for economic development, community revitalization, and other 
priorities. They have also created new incentives to manage Federal 
resources more efficiently and strengthened the partnership among 
Federal, state, and local governments. Flexible funding transfers to 
transit have risen from $304 million in fiscal year 1992 to $780 in 
million fiscal year 1996. This is a clear indication that ISTEA's 
flexible funding provisions have been successful and that transit is a 
priority at the state and local level.
The CMAQ Program
    Nearly 55 percent of the $3 billion in surface transportation funds 
``flexed'' to transit in the first 5 years of ISTEA have come from the 
CMAQ program. CMAQ recognizes the connection between transportation 
improvements and air quality. The ability to fund innovative projects 
that improve the overall transportation system's effectiveness is one 
of CMAQ's most significant contributions to a balanced transportation 
system. CMAQ funds have been used to purchase alternative fuel buses, 
expand parking at rapid transit stations, and to construct intermodal 
facilities that connect local bus service with intercity bus, train, 
and airline service.
    APTA's proposal supports adjustments to the CMAQ program that would 
keep ``maintenance areas'' eligible for CMAQ funding, because these 
areas remain subject to EPA requirements and should have access to 
Federal funds that can help them to keep their air clean.
    Our proposal does not support the changes to CMAQ envisioned in the 
``STEP-21'' reauthorization plan, which would fold the CMAQ program 
into a streamlined Surface Transportation Program. While our proposal 
to use CMAQ funds in maintenance areas would have the effect of 
distributing CMAQ funds more broadly, we do not feel that CMAQ program 
goals should or need to be diluted to address the allocation of funding 
among the states. Although the STEP-21 proposal would make CMAQ 
purposes eligible under the new STP, there is no guarantee that any of 
these funds would be used to advance national goals relating to 
congestion mitigation or improved air quality. By enacting the STEP-21 
proposal, the commitment to funding Clean Air Act mandates could be 
reduced greatly.
Expand Opportunities for Flexible Funding
    APTA supports an increase in the authorized funding level for the 
Surface Transportation Program using resources from the Highway Trust 
Funds's Highway Account (HA) and Mass Transit Account (MTA). After the 
transit core program has been funded at our recommended level of $6.25 
billion in fiscal year 1998, additional MTA funds would go to a new 
STP-transit program. For each $1.00 of MTA funds that go to the STP-
transit program, an additional $2.00 in Highway Account funds would go 
to the STP-highway program. Funding for each program would be 
apportioned in the same manner as the existing STP program, and would 
include metropolitan area suballocations, and would be subject to the 
same planning standards.
4.3 Cents/Gallon Revenue
    Additional resources for the expanded STP program would be provided 
by depositing revenue from the 4.3 cents per gallon ``deficit 
reduction'' motor fuels tax into the Highway Trust Fund and by applying 
the Byrd rule solvency test to the Mass Transit Account of the Highway 
Trust Fund. APTA's proposal would allocate one-half-cent of the 4.3 
cents per gallon gas tax revenue for a new intercity passenger rail 
account and the revenue from 20 percent of the remaining 3.8 cents to 
the Mass Transit Account.
Intercity Passenger Rail Capital Investments
    In addition, to ensure that Governors and state DOTs have the 
broadest flexibility to meet transportation needs, APTA recommends 
that, under the current program, states be authorized to use the state 
share of flexible funds for intercity passenger rail investments.
Preserve the Federal Transit Program Structure
    The Federal transit program is an essential element of the Federal 
surface transportation program. It supports transit services that fill 
critical gaps in a comprehensive national transportation system. It 
helps to create transportation choices that allow the existing 
infrastructure to move people and goods more efficiently and reduce 
ever more costly congestion. A recent study by the Federal Transit 
Administration (FTA) indicates that transit saves at least $15 billion 
per year in traffic congestion costs. Transit also carries millions of 
Americans to jobs each day and is vital to the success of welfare 
reform.
    In this regard, the existing transit program structure should be 
retained because it has been successful. It does a good job of meeting 
a large number of basic needs. The major capital investment programs 
for new start, fixed guideway modernization, and bus/bus facilities; 
the urban, rural, and elderly/disabled formula programs; and the 
planning, research, and administrative functions, all support essential 
needs and encourage innovative projects and management practices in 
various regions of the country.
Expanded Definition of Capital Expenditures
    Within the transit program we also propose to expand the definition 
of allowable capital expenditures to include the maintenance of capital 
assets and to help cover the costs of Federal mandates; these changes 
would allow elimination of operating assistance in areas of 200,000 or 
more in population. This change would help to create a more level 
playing field between the highway and transit programs, since highway 
funds can now be spent on maintenance.
Public Highway/Rail Grade Crossing Safety Improvements
    In addition, the Federal Highway Administration's Section 130 
Highway/Rail Grade Crossing Safety Program should be maintained to 
protect the motoring public who use highways that cross over commuter, 
light and freight rail tracks throughout the United States.
Support ISTEA's Planning Provisions
    ISTEA's planning provisions are fundamentally sound, including 
current authority for Metropolitan Planning Organizations, public 
participation requirements, transportation and land use linkages, and 
multi-modal corridor analysis through the Major Investment Study (MIS) 
criteria. APTA recommends changes to ensure that the planning process 
fully accounts for often-ignored benefits of transit investments and to 
provide sufficient resources so that planning does not become another 
``unfunded mandate.''
                     the administration's proposal
    We applaud provisions in the President's fiscal year 1998 budget 
proposal that retain a strong Federal role in the nation's surface 
transportation network. We are pleased that the proposal generally 
maintains the transit program structure created under ISTEA, and that 
it proposes greater flexibility in the way transit systems can use 
Federal funds. This sets the stage for a renewed, reaffirmed ISTEA 
later this year.
    However, the proposed funding for both transit and highway 
investment falls short of meeting the growing needs of America's 
transit riders and highway users. A bright economic future requires a 
world-class, intermodal transportation system. The efficient movement 
of people and goods by bus, rail, truck, and automobile is critical to 
our economy.
    The funding recommended in the proposal for surface transportation 
programs does not meet the Administration's own estimates of the 
investment required just to maintain our transit and highway 
infrastructure. The U.S. Department of Transportation (DOT) has 
estimated that nearly $13 billion should be invested in capital 
projects each year, just to maintain existing transit services and 
provide modest improvement to meet a variety of needs. The current 
Federal investment of $4 billion per year is simply not enough. That is 
why we support the use of gas tax revenues, including the 4.3 cents per 
gallon gas tax that now goes to non-transportation purposes, for 
investment in transportation.
                               conclusion
    Mr. Chairman, APTA strongly supports a continued Federal role in 
transportation and continuation of ISTEA and its flexible funding 
provisions. A greater investment in surface transportation must me 
made. Building on ISTEA's innovations and emphasis on intermodalism, we 
can improve the nation's transportation system and ready our economy 
for global competition in the next century.
                                 ______
                                 
       Responses of Leslie White to Questions from Senator Chafee
    Question 1. Your testimony recognizes the importance of the 
Congestion Mitigation and Air Quality Improvement (CMAQ) program in 
helping nonattainment and ``maintenance'' areas improve their air 
quality. Many Critics of the CMAQ program claim it has done little to 
clean the air. What is your answer to such criticism? Are there any 
reforms that we could make to the program to strengthen its air quality 
component?
    Response. The CMAQ program has prevented air quality degradation 
and congestion growth that would have otherwise occurred without the 
CMAQ program. Critics of this program often claim that the air quality 
problem in our cities has been solved by technology and that they can 
fix congestion by building more highways. Both of these assertions are 
wrong.
    According to the Environmental Protection Agency, on-road vehicles 
are a primary source of several air pollutants. In 1995 on-road 
vehicles accounted for 64 percent of carbon monoxide emissions, 35 
percent of nitrogen oxide emissions, and 27 percent of volatile organic 
compound emissions. In the past 2 years nitrogen oxide emissions from 
on-road vehicles have increased 1.2 percent, carbon monoxide emissions 
have decreased 2.6 percent, and volatile organic compound emissions 
have been stable. These changes may reflect a difficulty of using 
technological improvements to overcome continuing increases in vehicle 
miles of travel.
    An effective strategy for controlling vehicle emissions must 
address both emissions from individual vehicles and the number of 
vehicles on the road. Transit service can help control the growth of 
vehicle miles of travel.
    New 1995 Federal Highway Administration (FHWA) data show vehicle 
miles of travel continue to increase. Vehicle miles of travel increased 
2.8 percent from 1994 to 1995, vehicle miles per vehicle by 1.0 
percent, and motor fuel consumption by 1.7 percent. The increase in 
motor fuel consumption is also a negative factor in the emission of 
green house gases. Emissions by vehicles of carbon dioxide, a 
significant contributor to green house gases, increases nearly in 
proportion to motor fuel consumption.
    The FHWA data also show continuing increases in congestion. Average 
daily vehicles per lane mile on urban interstates increased another 2.3 
percent from 1994 to 1995 with a total increase of 31 percent over the 
past 11 years. Many researchers recognize that it is not possible to 
build enough roads to build our way out of congestion. New roads induce 
as much or more traffic amount of traffic they are expected to take off 
other roads. New roads make locations further apart closer in time so 
that some people chose to drive farther and cause the dispersal of 
destinations so that others must drive farther.
    Transit helps control emissions and congestion through efficiency 
and through reductions in vehicle travel. A transit vehicles carries 
many more people than an automobile. Buses reduce the number of 
vehicles on a road and rail vehicles take travelers totally off the 
road. Both buses and rail vehicles, when operated with efficient 
passenger loads, reduce emissions. Transit travelers on average travel 
shorter distances on vehicles than drivers, further improving the 
ability to transit to help reduce emissions and congestion. If transit 
commuters were to drive instead, at least $220 billion more would need 
to be spent on new roads and parking facilities, calculated at 1993 
prices.
    CMAQ funds are often used as an inducement to demonstrate the 
feasibility of emission reduction technology such as heavy duty 
alternative fueled vehicles or innovative traffic management 
procedures. These programs offer models for what can be done. The CMAQ 
program also ensures that national emission reduction and congestion 
management goals are considered when transportation investment 
decisions are made at the state and local levels. In APTA's view that 
the CMAQ program should remain a significant part of the surface 
transportation program.
    Finally, APTA believes that the CMAQ program can be improved by the 
inclusion of ``maintenance areas'' in future funding distributions. 
Urbanized areas should not be penalized for achieving attainment 
status. Continued effort is often needed to maintain maintenance status 
as these areas continue to grow.
    Question 2. The Administration's NEXTEA proposal would consolidate 
transit programs by combining the ``Bus Discretionary'' and the 
``Fixed-Guideway Modernization'' programs into a single program, making 
the funds available for any eligible transit purpose. What is APTA's 
position on NEXTEA's streamlining of the transit formula program?
    Response. APTA does not support the provision of the NEXTEA 
proposal that would consolidate the transit formula, bus discretionary, 
and fixed-guideway modernization programs. The proposed consolidation 
will not streamline the program but rather will significantly 
redistribute funds among communities and transit modes compared to 
ISTEA.
    This is shown on Table 1, which is a comparison of the percentages 
of all funding groups in the consolidated formula as authorized in 
ISTEA for fiscal year 1997 and in NEXTEA for fiscal year 1998, fiscal 
year 1999, and fiscal year 2000. (The ISTEA distribution for fiscal 
year 1997 is similar to the proportions for the last 5 years of ISTEA 
while the proportions for NEXTEA change during the first 3 years of the 
authorization period.) We also note, moreover, that while the formula 
consolidation proposal is characterized as streamlining the transit 
program, in fact it does not reduce the number of formulas which are 
used to distribute the funds.

                                 Table 1: Percent of Funds by Recipient Category
                     [Includes all ISTEA Programs Consolidated into NEXTEA Formula Program]
----------------------------------------------------------------------------------------------------------------
                                                                     ISTEA      NEXTEA      NEXTEA      NEXTEA
                                                                 -----------------------------------------------
                            Category                                FY 1997     FY 1998     FY 1999     FY 2000
                                                                      (in         (in         (in         (in
                                                                   percent)    percent)    percent)    percent)
----------------------------------------------------------------------------------------------------------------
Urbanized Area Fixed Guideway...................................     39.42       42.96       45.66       46.56
Urbanized Area Bus..............................................     54.42       51.54       48.84       47.94
Rural...........................................................      4.49        3.75        3.75        3.75
Elderly and Disabled Persons....................................      1.67        1.75        1.75        1.75
----------------------------------------------------------------------------------------------------------------

    Between fiscal year 1997 and fiscal year 2000, the percentage of 
authorized funds for urbanized area rail would increase from 39.42 
percent to 46.56 percent; for urbanized area bus would drop from 54.42 
percent to 47.94 percent; for rural areas would drop from 4.49 percent 
to 3.75 percent; and for elderly and disabled person programs would 
increase from 1.67 percent to 1.75 percent. The decline of urbanized 
area bus funding results primarily from the elimination of the bus 
capital program and the distribution of those funds to the entire 
urbanized area formula, both rail and bus. The continued decline in the 
urbanized area bus percentage in the second and third years of NEXTEA 
results from increased funding for fixed-guideway modernization while 
the total formula program amount remains constant. The decline in rural 
funding results from the transfer of 5.5 percent of the bus capital 
program designated for rural areas to the urbanized area formula 
program.
    Bus operators in medium size and smaller urbanized areas may be 
particularly disadvantaged by the consolidation proposal. These areas 
are often dependent on bus capital grants to obtain sufficient funds 
for a facility investment or to replace a significant part of the bus 
fleet at one time. They are unable to accumulate adequate funds for 
these investments from their formula amounts (in part because Federal 
funds cannot be banked for a long time period). With a reduced 
percentage of total funding directed to these properties, major 
investments would become even more difficult.
    Question 3. In my opinion, mass transit is essential for three 
reasons: it protects the environment, it promotes efficient mobility by 
reducing congestion, and it provides greater accessibility for all to 
transportation. Does APTA recommend any legislative reforms in the 
ISTEA reauthorization that would yield even greater benefits for 
efficiency, accessibility, and the environment?
    Response. APTA believes that ISTEA increases the efficiency of our 
surface transportation system, increases accessibility for all 
Americans, including the disabled, and improves protection for the 
economic and social as well as the natural environments.
    We believe an important way to maintain the benefits of ISTEA is to 
reauthorize the basic ISTEA structure so that it will have an adequate 
time to fully realize its potential. We believe it is especially 
important to retain a distinct transit program, flexible funding 
provisions, and a distinct CMAQ program.
    It is also essential that the new authorization bill fund these 
programs at adequate levels. The U.S. DOT estimated that transit 
capital funding shortfall below needed funds was over $6 billion 
annually, which should assure the Congress that any increase in transit 
funding will be used for necessary investments.
    APTA does, however, recommend some improvements that would make 
ISTEA more efficient and more effective. These improvements are 
described in detail in APTA's reauthorization proposal, which has been 
provided to your office. If you or your staff have any questions 
concerning the implementation of the recommendations, APTA's staff are 
available to provide any assistance you require. I would like, however, 
to point out some of the recommendations that would provide great 
benefits:
     Expand the definition of allowable capital expenditures 
for the transit program to include maintenance. An assistance program 
restricted solely to capital investments without any funding for 
maintenance will eventually result in over capitalization and a loss in 
value of the capital funding. If the Congress chooses to reduce or 
eliminate operating funding for larger urbanized area, it is essential 
that capital funding include maintenance as an eligible use to maximize 
the return from the total investment. Adopting this provision would be 
another step toward putting the transit and highway programs on a level 
playing field since highway funds can now be used for maintenance 
purposes.
     Allow use of transit formula funds for both capital and 
operating expenditures in small urbanized areas in the same flexible 
manner as funds are now made available to rural areas. Small urban 
areas face similar constraints and needs as rural areas. Experience has 
shown that the flexibility of the rural program has been successful in 
directing investment to meet the greatest local needs.
     Provide for a unified appropriation. If the transit 
program had a single appropriation like the Federal-Aid Highways 
program, the transit program could be scored for first-year outlays at 
a single rate. This would show that the transit program has had 
relatively lower first-year outlays than the highway program and reduce 
the need to vary levels of the individual transit programs in 
appropriations to meet outlay caps. Since the portion of funds directed 
to each transit program would still be identified in authorizing 
legislation, the Congress will still be able to identify appropriation 
levels for specific programs if investment needs made such 
specification desirable.
     Equalize the values of tax free benefits available to 
commuters for parking or transit. Under current law a commuter is 
penalized for taking transit. While a commuter who drives can receive 
up to $165 per month tax free parking, a transit commuter can only 
receive $65 of transit benefits before being taxed. This action would 
be another step toward leveling the playing field.
     Ensure that the transportation planning process fully 
accounts for the transit benefits noted in your question by making 
necessary changes in the planning process.
     Change the Mass Transit Account solvency test to the Byrd 
Test so that transit can use as much anticipated revenue as highways 
are currently allowed to use.
     Use the 4.3 cents of the motor fuel tax currently directed 
to deficit reduction purposes for surface transportation. From this 
amount provide funds for intercity passenger railroads as well as 
transit and highways. The funding shortfalls for transit and highways 
are well documented as is the need for increased revenues to reduce 
those shortfalls. Intercity passenger rail also has documented needs. 
If the intercity passenger rail needs are not met, the funding needs 
for highways will grow to accommodate travelers forced from rail travel 
to highway travel.




Prepared Statement of William E. Loftus, President, The American Short 
                       Line Railroad Association
    Senator Warner, and members of the subcommittee, I am William E. 
Loftus, President of the American Short Line Railroad Association 
(ASLRA). I appreciate the opportunity to appear before you today to 
testify concerning a subject of critical importance to this Nation's 
transportation network--program eligibility under the new legislation 
which will replace ISTEA.
    ASLRA is a non-profit trade association which represents the 
interests of its more than 400 short line and regional railroad members 
in legislative and regulatory matters. Short line and regional 
railroads are an important and growing component of the railroad 
industry. Today, they operate and maintain over 45,000 miles of track 
(27 percent of the American railroad industry's total route mileage); 
and employ approximately 24,000 persons (11 percent of the rail 
industry total). These small railroads serve every state in the Nation 
and thousands of small shippers and small communities.
    In connection with ISTEA reauthorization, ASLRA is working together 
with another organization, Regional Railroads of America (RRA), toward 
our common goal of clarifying eligibility provisions of ISTEA so that 
projects involving small freight railroads can be eligible to be 
selected by state and local decisionmakers to receive ISTEA funds under 
certain circumstances. By ``small freight railroads,'' I refer to Class 
II and Class III railroads as defined by the Surface Transportation 
Board, more commonly referred to as regional and short line railroads. 
It is only projects involving these carriers, i.e., Class II and Class 
III railroads, that our proposal addresses.
    Our request for eligibility for small or local railroad projects 
under ISTEA, should be viewed in terms of what is happening to the rail 
network in each state. The restructuring of the nation's rail system is 
still underway. Recent mergers of the giant rail systems in the West 
and the forthcoming merger of the giant rail systems in the East 
present a significant challenge to each state and each region within a 
state. They have to deal with the reality that trunk line rail service 
is shrinking to about a 100,000 mile rail network, when it had been 
250,000 miles a few years ago. At the same time the growth of the short 
line and regional railroad system is the vital linkage that each state. 
Regions within the state must depend upon small railroads for 
connectivity to the national rail network in order to maintain their 
economic base and economic future.
    In 1970, the state of Georgia had 90 miles of short line railroad 
service. Today it has 1,200 miles. The entire New England region has 
only one Class I railroad line, Conrail's Albany to Boston mainline; 
the rest of the region is served by short line and regional railroads. 
The same statistics are repeated in Alabama and Mississippi, 
Pennsylvania and Ohio, Indiana and Illinois, Oregon and California--
anywhere you look. There is a vital, small railroad network in every 
state that must be preserved, enhanced and allowed to grow. It is a 
valuable, irreplaceable transportation asset.
    I feel very strongly, that without direct financial assistance, the 
railroad feeder line system in the states will not be able to fully 
serve the needs of the state and its regions. That is the fundamental 
reason I am here today to seek the committee's support for permitting 
states and local communities the ability to direct some of their ISTEA 
funds to rail projects, which will not only help preserve the rail 
network but will continue to generate economic growth in non-urban 
areas.
    Under the current ISTEA provisions, more than $180 million has been 
spent on the Rails to Trails program. We have no quarrel with the 
conversion of abandoned railroad rights-of-way to hiking trails and 
such, but we are concerned that the nation's priorities are out of 
sync. If no ISTEA funds can be spent by a state or community to 
preserve and enhance its local railroad network in order to prevent 
rail line abandonments, but $180 million, and more, is available for 
trails after the community loses a rail line, I question those 
priorities.
    The joint ASLRA/RRA effort is particularly focused on clarification 
of eligibility in regard to Surface Transportation Program (STP) funds. 
Small railroad projects are already eligible to receive funds under the 
limited CMAQ and Enhancements Programs, and under the Section 130 
Program for funding highway-rail grade crossing warning devices which 
is set aside from STP. Under the ASLRA/RRA proposal, eligibility of 
freight projects involving small railroads to receive funds under CMAQ, 
Enhancements, Section 130, and STP as a whole should be clarified.
    Small railroad eligibility for ISTEA funding should not be viewed 
as an unwarranted incursion into STP funds. ISTEA is not exclusively a 
highway program today. Congress has recognized that a multi-modal 
approach is most appropriate, and there is eligibility for funding for 
intermodal connectors and private bus companies and commuter transit 
and biking/hiking trails and, yes, some freight railroad projects. 
State infrastructure banks (SIB's) provide a system for funding 
flexible alternatives. All these various non-highway categories 
eligible for funds under ISTEA share a common feature: all can benefit 
the highway system and highway users, either by enabling a smoother 
transportation flow, or by offering an alternative to get some users 
off the highway system. Small railroad freight projects fit this mold 
perfectly.
    Small freight railroad projects have a positive benefit to the 
efficient functioning of an overall multi-modal transportation system, 
and can represent a more efficient use of Federal transportation funds 
in some cases. Indeed, these projects can have demonstrable highway 
benefits by relieving highway congestion, reducing wear and tear, 
avoiding expenditures for upgrading highways and bridges, and reducing 
air pollution and fuel consumption.
    We recognize that the matter of private sector railroads receiving 
public funds is of concern to some. However, there are established ways 
of providing such assistance within Federal guidelines and with full 
protection of the public investment. These types of small railroad 
projects should be eligible for funding from SIB's 
including pay-back requirements, and other innovative financing 
mechanisms which may be in ISTEA reauthorization.
    In order to be chosen for funding, small railroad projects would 
need to clear the hurdle of a strict public benefit test: any short 
line or regional rail freight project would have to be found by the 
state or local decisionmakers to be a better, more cost-effective use 
of transportation dollars than other transportation projects with which 
they are compared. The local decision may indeed favor the highway 
project, but at least the local decisionmakers would not arbitrarily be 
restricted from considering investing in its rail network. The option 
to allow consideration of railroad freight projects as part of an 
overall, multi-modal state or local transportation plan represents good 
government policy. Based on my contacts with many state and 
Metropolitan Planning Organization (MPO) officials, they want this 
flexibility.
    We are not seeking entitlements or set-asides for small railroads. 
Our proposal would, in essence, put small railroads at the table to 
argue, along with advocates of every other type of eligible 
transportation project, for consideration as the MPO or statewide 
planners weigh the best use of their Federal transportation dollars to 
meet their community or regional transportation needs and plans. From 
across the country, we are aware of examples in which local or 
statewide planners would like to have the ability to fund a short line 
railroad project today, because it makes the most sense to them and 
represents the most efficient use of transportation dollars.
    Attached to my testimony is a copy of the statement given last 
summer at a U.S. Department of Transportation field hearing in 
Huntington, West Virginia by Mr. Leo Howard, Chairman of the West 
Virginia State Rail Authority. In his prepared statement, Mr. Howard 
explains the critical role that Federal LRFA funds played in the 
startup of the South Branch Valley Railroad in 1978. In response to a 
question from then-Federal Highway Administrator Rodney E. Slater, who 
chaired the Huntington hearing, about why Federal transportation 
dollars should go to a rail project, Mr. Howard explained that a 
perfect example was to be found in a 132-mile CSXT line slated to be 
abandoned between Tygart and Bergoo, West Virginia. An investment of 
under $5 million to save this rail line would allow the State Highway 
Department to avoid expenditure of between $25 and $40 million that 
would be required to upgrade secondary roads and bridges to handle the 
large tonnages of coal and lumber traffic they will be required to 
carry if the railroad goes away.
    On Virginia's Eastern Shore, the Accomac Northampton Transportation 
District Commission owns and operates the Eastern Shore Railroad. It 
links the Eastern Shore of Delaware, Maryland and Virginia with the 
Norfolk Southern and CSXT's national systems by operating a freight car 
barge across Hampton Roads and 70 miles of mainline. The Eastern Shore 
Railroad requires an investment of $250,000 to upgrade 38 miles of its 
mainline trackage to 25 mph in order to attract more customers and 
operate more efficiently. Those funds could come from ISTEA, under our 
proposal, if the Transportation District had the ability to decide to 
use Federal ISTEA funds for track rehabilitation work.
    Another example of the need for states to have more flexibility can 
be seen in Maine and New Hampshire, where a major port development 
project is dependent upon upgrading rail access--as an alternative to 
highway access--so that overall investment costs can be justified and 
the economic benefits obtained. The states are in the best position to 
decide whether to invest in upgrading the rail line or investing in 
highway access facilities.
    A few freight railroad projects already have benefited from 
innovative funding in states which managed to ``stretch the envelope'' 
in terms of eligibility under the current ISTEA. Based on a report 
prepared by the U.S. Department of Transportation's Federal Railroad 
Administration in September, 1996, these include:
     Up to $5 million per year of STP funds set aside for high-
speed rail crossing improvements.
     $2.5 million from STP funds for a new intermodal bridge to 
bring rail services directly into the Port of Seattle (total project 
cost $300 million).
     Ventura County, California's Transportation Commission is 
purchasing two partially abandoned rail corridors, one existing rail 
corridor, 40 miles of rail track and contiguous land to expand rail 
freight service. Projected funding includes $4.2 million in STP grants, 
$3.5 million in STP enhancement funds, and $1.0 million local matching 
funds.
     Santa Teresa, New Mexico, proposed new intermodal terminal 
will apply advanced technology to speed truck and rail freight between 
New Mexico and Mexico. A blending of STP, state, and private railroad 
funds has been used for planning and research.
     Ft. Collins, Colorado, track consolidation project. This 
$2.75 million public-private partnership used a combination of local, 
state and STP funds as well as private funds from affected railroads.
     Hiawatha line improvements, Illinois and Wisconsin. STP 
and interstate maintenance funds are being used for Amtrak's Hiawatha 
line connecting Chicago and Milwaukee.
    When passed by the Congress and signed into law by President Bush 
in December 1991, ISTEA refocused this Nation's transportation policy, 
moving away from the emphasis on building the interstate highway system 
which had dominated U.S. transportation policy since the 1950's, to a 
focus on enhancing that system's performance and productivity. In 
addition, ISTEA moved transportation policy into the era of multi-modal 
planning and investment.
    Small railroads preserve and maintain rail infrastructure that 
might otherwise have been lost to abandonment. They are the vital link 
connecting communities and regions to the national rail system, aiding 
in creation and preservation of jobs, and economic development efforts. 
Railroads are a fuel-efficient and environmentally friendly way to move 
freight, and contribute to reducing, postponing or avoiding gridlock on 
roads and highways.
    Over the past two decades, Local Rail Freight Assistance (LRFA) 
funding from the Federal Government provided more than $200 million in 
grants to short line and regional railroads for rehabilitation of track 
and bridge structures. In most instances, the assistance was provided 
in the early stages of a railroad's startup operation, soon after 
acquisition from a major Class I railroad. This is the critical time 
when the new owner/operator has to deal quickly and effectively with 
the problem of deferred track and bridge maintenance, acquisition of 
locomotive power, rebuilding a traffic base that had lost customers to 
other modes--all while meeting the debt service on commercial loans 
used to acquire the line. Attached to my testimony is a copy of the 
statement given last summer at a U.S. Department of Transportation 
field hearing in Missoula, Montana by Ms. Carla Allen, General Manager 
of Central Montana Rail, Inc. Ms. Allen underscored the critical role 
Federal funding played at startup of this 87-mile grain line.
    However, since 1996, Congress has chosen not to reauthorize or 
provide funding for the LRFA program, apparently finding it hard to 
justify the time and effort required in the annual appropriation 
process and periodic reauthorization process for such a relatively 
small Federal program. However, this should not preclude the states 
from being able to do what Congress had been doing since 1976, and that 
is exactly what our ISTEA reauthorization proposal would do. Support 
for our proposal in both Houses of Congress is growing. Copies of 
bipartisan letters of support in the House and Senate are attached.
    The restructuring of the American rail system into a core network 
and feeder line system has had enormous economic benefits for every 
section of the country in the form of continued rail service, often 
with an increase in both the number of shippers and the amount of 
traffic coming back to the railroads. The restructuring process is 
continuing in all regions of the country. The Staggers Act and the 
policies of the Surface Transportation Board (formerly the Interstate 
Commerce Commission) have been the foundation of these benefits. The 
need for some one-time infrastructure investment support for startup 
operators who face an uphill struggle to deal with long-deferred 
maintenance issues will only continue to grow in coming years as more 
lines are spun off.
    It is critically important that state and local decisionmakers, who 
will be faced with tough choices and many tradeoffs as they make 
transportation policy and investment decisions, have all transportation 
options available. Funding choices should allow sufficient flexibility 
to preserve and enhance short line and regional railroad freight 
facilities if the local planners decide that is the best use of their 
transportation funds.
                              other issues
    The short line and regional railroads fully support the priorities 
of the railroad industry as a whole. As explained in more detail in 
testimony presented today by Karen B. Phillips, Senior Vice President 
of the Association of American Railroads, these include:
     funding for highway/rail grade crossing warning devices 
(Section 130 funds), including both continued earmarking of these funds 
for their critical safety purpose, and an increase in amount,
     maintaining the status quo with regard to truck sizes and 
weights, and
     availability of funding for intermodal connectors.
The Section 130 Program
    The Highway Safety Act of 1973 created and funded a national 
highway safety program, now called the Section 130 program, which has 
enhanced safety at highway-rail grade crossings by providing for 
necessary engineering and warning device improvements. In fiscal year 
1996, approximately $150 million was apportioned to the states for this 
program. Since the 1973 Act was passed, a total of $3.2 billion has 
been distributed.
    The Section 130 program has had a significant and positive impact 
on the number of accidents, fatalities and injuries occurring at 
highway/railway grade crossings. As a direct result of Federal funding 
for grade crossing improvements, annual crossing accident and fatality 
rates have been reduced by over 50 percent. The Federal Highway 
Administration has estimated that the Section 130 program has prevented 
over 8,000 fatalities and 36,000 injuries since 1974, with an overall 
benefit/cost ratio of approximately 2.7.
    To remain fully effective, I believe that the earmarked annual 
Federal Highway Administration funding for the Section 130 program 
should not be lumped in with other categorical grants to be given to 
the states on a lump sum basis. I fear that some grade crossing funds 
could be diverted to other highway safety issues.
    The level should be increased to at least $185 million to maintain 
overall safety performance, and to provide some important relief for 
small railroads. Currently the funds are limited to the installation of 
new devices. I believe that a portion of the funds should be directed 
to upgrading and replacing existing devices, particularly when damaged 
in accidents and from storm activity. Railroads now fund all 
maintenance costs at grade crossings, including the repaving of 
crossing surfaces. I seek your support to correct these inequities. I 
can assure you that the cost of annual maintenance of public grade 
crossing warning systems and crossing surfaces is a heavy and unfair 
burden on small railroads.
    In addition to Section 130 funding, other important Federal 
initiatives critical to improving grade crossing safety include 
standards for closure and elimination of redundant crossings, 
separation of crossings where feasible, and a vigorous public 
information campaign under the leadership of Operation Lifesaver, Inc. 
to increase awareness of drivers and to prevent trespassing.
    In summary, I urge you to clarify eligibility of projects involving 
small freight railroads for funding as part of ISTEA reauthorization. 
To do so represents good, multi-modal public policy, and will allow 
state and local decisionmakers to make the transportation investment 
decisions they find best suited to their needs. Projects involving 
small freight railroads can, in some cases, demonstrate sufficient 
highway benefits to meet the test of being the best use of 
transportation funds. Public/private partnerships should be encouraged. 
I look forward to working with you as you draft the legislation.
    Suggested legislative language to clarify small railroad 
eligibility is attached.
                                 ______
                                 
Prepared Statement of Thomas J. Donohue, President and Chief Executive 
           Officer, The American Trucking Associations, Inc.
                            i. introduction
    Chairman Warner, Senator Baucus, members of the committee, thank 
you for the opportunity to express the trucking industry's priorities 
regarding reauthorization of the Federal highway program.
ATA Represents the Trucking Industry
    The American Trucking Associations, Inc. (ATA) is the national 
trade association of the trucking industry. ATA's membership includes 
nearly 4,200 carriers, affiliated associations in every state, and 13 
specialized national associations. Together, ATA represents every type 
and class of motor carrier in the country. We are a federation of over 
36,000 member companies and represent an industry that employs over 
nine million people, providing one out of every 14 civilian jobs. We 
are a highly diverse industry, but we can all agree that a good system 
of roads is crucial both to our bottom line and to the safety of all 
drivers, including millions of truck drivers who deliver to all 
Americans their food, clothing, finished products, raw materials, and 
every other item imaginable. Actions that affect the trucking 
industry's ability to perform these services have significant 
consequences for the ability of every American to do their job well and 
to enjoy a high quality of life.
Current Spending Levels Cannot Support a Safe and Efficient Highway 
        System
    The trucking industry contributes over $10 billion each year to the 
Federal Highway Trust Fund, about 43 percent of total receipts. As an 
investor, we expect a return on our investment. The user fees that we 
contribute to the trust fund should be invested in a manner that makes 
our highways both safer and more efficient.
    Investing all revenues collected is especially important given the 
tremendous pressures our highways and bridges will face in the future, 
when economic growth will spur tremendous increases in the demand for 
freight transportation. In 1994 the revenue for trucking was $362 
billion and is projected to reach $437 billion in 2004. By this same 
date, the total volume of freight carried by truck will reach 6.5 
billion tons, 19 percent more than in 1994. Both the total number of 
miles driven and the total volume of ton-miles will grow 29 percent. 
More than half a million more trucks will be needed to meet these 
increased demands. This assumes that we will be successful in 
increasing intermodal business substantially to $12.9 billion--150 
percent of today's levels. The safety and efficiency of the freight 
industry will depend in no small measure on the actions of this 
committee and the 105th Congress.
              ii. current funding levels are insufficient
    I would like to thank the committee for the leadership it has given 
to restore integrity to the Highway Trust Fund. Both the Highway Trust 
Fund Integrity Act and efforts by 59 Senators to increase annual 
spending to $26 billion are laudable. Your commitment to significantly 
raise transportation spending sends a clear message that this country 
and this Congress can no longer make the inadequate investments that 
are failing to meet the critical needs of our nation's highway 
infrastructure. We also support efforts to move the 4.3 cents fuel tax 
now directed to deficit reduction to the Trust Fund. According to the 
Congressional Budget Office, this could help support an annual highway 
program of $34 billion.
Current Spending will not Sustain Highway Infrastructure
    The trucking industry is prepared for the tremendous challenges 
posed by ever increasing demands for more efficient freight service. 
However, if under-investment in our highways continues, it will be 
impossible for the industry to meet these challenges. The resulting 
productivity losses will take a severe human toll as stiff competition 
from abroad wipes out existing jobs and reduces the ability of our 
economy to create new jobs for a rapidly expanding population. To 
simply maintain conditions and performance on the National Highway 
System (NHS), an annual Federal investment of $15.6 billion is needed. 
Despite the fact that the 160,000-mile NHS carries 40 percent of all 
traffic and 75 percent of truck traffic, the Federal Government 
dedicates just $9 billion to these most important highways, 58 percent 
of the investment necessary just to maintain the status quo. 


    This dismal level of spending has contributed to the current 
situation now faced by users of the system. The NHS has been allowed to 
deteriorate to the point where nearly half of urban Interstate miles 
are congested during peak periods. Forty percent of travel on urban NHS 
routes takes place under such congested conditions that even a minor 
incident can cause severe traffic flow disruptions and extensive 
queuing.\1\ Congestion on urban Interstates increased from about 55 
percent of peak hour travel in 1983 to approximately 70 percent in 
1989, remaining relatively constant since then.\2\ Travel delays in the 
nation's 50 largest urban areas as a result of increased congestion 
costs society an estimated $43 billion every year.\3\ Congestion 
increases the risk of accidents and interferes with our ability to 
serve our customers' ``just-in-time'' delivery needs.
---------------------------------------------------------------------------
    \1\ FHWA 1995 Conditions and Performance Report, pp. 105-109.
    \2\ The Bottom Line: Transportation Investment Needs 1998-2002. 
American Association of State Highway and Transportation Officials, 
1996, p. 11.
    \3\ Ibid.
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Highway Investment Saves Lives
    Adequate highway funding allows states to make roadway improvements 
that increase safety. Improved roadway characteristics such as 12-foot 
lanes and ample shoulders, gentler curves, and improved median and 
median barriers, can significantly reduce the number and severity of 
accidents.\4\ One 1995 study estimated that full funding for the NHS 
over a 10-year period would prevent 720 fatal crashes, 55,000 personal 
injury crashes, and 120,000 property damage crashes on the NHS 
alone.\5\ The report estimated average annual societal savings of $800 
million as a result of the accident prevention. Additional funding for 
other roads would increase these savings even more.
---------------------------------------------------------------------------
    \4\ McGeen, H.W., W.E. Hughes, K. Daily, Effective of Highway 
Standards on Safety, Final Report to National Cooperative Research 
Program, Project 17-9, Bellomo-McGee, Inc., Dec. 1994.
    \5\ Safety Effects Resulting from Approval of the National Highway 
System. AAA Foundation for Traffic Safety. Bellomo-McGee, Inc., July 
1995.
---------------------------------------------------------------------------
    It is important to keep in mind that 43 percent of the NHS includes 
two-lane roads. These roads often have no median separation to prevent 
head-on collisions. Although lanes, shoulders and clear zones can 
provide motorists with the critical space to recover if they lose 
control of their vehicles, these features are inadequate or nonexistent 
on many NHS routes. These two-lane roads may have very tight curves 
with few warning signs and poor visibility to alert motorists before it 
is too late to adjust. FHWA crash statistics confirm the danger posed 
by the hazardous conditions on these narrow roads. While the Interstate 
System has the lowest fatality rate per 100 million vehicle miles 
traveled (VMT), 0.74, NHS routes not on the Interstate have a death 
rate of 1.48, twice that of Interstates.\6\ Other Federal aid highways 
not on the NHS take an even higher toll, with a fatality rate of 1.81 
per million VMT.
---------------------------------------------------------------------------
    \6\ FHWA, Highway Statistics, 1994.
---------------------------------------------------------------------------
    We cannot afford to become complacent. In 1995, 41,798 people died 
on our nation's highways. The vast majority of these fatal crashes 
involved cars, motorcycles, and pickup trucks. This is equivalent to a 
Valujet crash every single day! Safety must be given the highest 
priority, and the Federal commitment must be demonstrated through 
adequate funding and strong leadership.
Highway Investments are the Key to Economic Development and Employment 
        Growth
    According to a Federal Highway Administration (FHWA) report, 
investment in the nation's highways stimulates tremendous job 
growth.\7\ The report states that for each $1 billion in highway 
investment, 42,100 full-time jobs are created and supported.
---------------------------------------------------------------------------
    \7\ Federal Highway Administration. Highway Infrastructure and Job 
Generation: A Look at the Positive Employment Impacts of Highway 
investment, 1996.
---------------------------------------------------------------------------
    United States productivity improvements are the key to global 
competitiveness, rising standards of living, and economic growth. 
Investing in the NHS results in significant, nationwide improvements in 
productivity.\8\ In fact, every dollar invested in the NHS results in a 
24-cent reduction in overall production costs for U.S. manufacturing. 
These productivity improvements let U.S. industry sell more goods and 
services at lower prices both at home and abroad. More people can be 
employed at higher wages. Since salary increases are firmly tied to the 
increase in the amount of goods and services each worker produces, 
living standards are improved. In addition, these real wage increases 
result in elevated tax revenues.
---------------------------------------------------------------------------
    \8\ Nadiri, M. Ishad and Theofanis Memuneous. Highway Capital and 
Productivity Growth, June 1996.
---------------------------------------------------------------------------
    Through new innovations such as just-in-time (JIT) delivery, the 
trucking industry has played a vital role in improving U.S. 
productivity. This would have been difficult, if not impossible, to 
achieve without an efficient network of good roads that connects 
markets, centers of industry, and multi-modal transportation 
facilities. A 1994 study of five diverse U.S. companies demonstrates 
the importance of transportation to American businesses' daily 
operations.\9\ For instance, a reliable system of roads allows Saturn 
Corporation, which has its manufacturing and assembly plant in Spring 
Hill, TN, to utilize a just-in-time strategy. Saturn's JIT approach to 
its inventory control system, combined with the company's advanced 
communications system and a safe, well-functioning highway network, has 
allowed the company to reduce order cycle times and inventory costs by 
holding down in-plant inventory to an average of 2 days' stock.
---------------------------------------------------------------------------
    \9\ Apogee Research, Inc. The Economic Importance of the National 
Highway System, Feb. 1994.
---------------------------------------------------------------------------
A Minimum of $34 Billion Annually Can and Should be Available for 
        Investment
    If all funds coming into the Highway Trust Fund are spent in a 
timely manner, a $26 billion program could be sustained. A slow 
drawdown of the existing balances in the trust fund would increase 
revenues by approximately $2 billion annually, allowing a $28 billion 
program. Ensuring that all highway user fees are dedicated to 
transportation improvements, including the 4.3 cents now deposited in 
the General Fund, would make a $34 billion annual program possible. 
This level of investment would stop the deterioration of our highways 
and bridges, allowing our nation's economy to move forward, renewing 
our commitment to safer, more efficient, and less congested highways, 
and improving our quality of life. Another important benefit of a 
higher funding level is that it would diminish the contentious and 
divisive debate over funding formulas. We all support a better surface 
transportation system, and this issue is a barrier to achieving our 
common goals.
    Given the tremendous economic and social benefits of highway 
investment, it is illogical to fail to spend the highway user fees 
collected to correct the many deficiencies of our highways and bridges. 
Although the fees paid into the Highway Trust Fund are sufficient to 
improve conditions and performance on the National Highway System and 
related roads, not enough of the funds are being spent to even maintain 
the status quo. The status quo itself is unacceptable.
    By the end of the 1997 fiscal year, the unspent balances in the 
Highway Trust Fund will exceed $22 billion. Extending the 
Administration's budget proposal for fiscal year 1998, that figure 
could reach nearly $50 billion in just five more years. For many years 
the trucking industry has been a steadfast supporter of the user fee 
system. Support for that system and the Federal program will erode if 
the balances in the Trust Fund continue to rise or if user fees are not 
invested in highways in a timely manner. We urge the committee to 
continue to heighten efforts to restore trust in the Highway Trust 
Fund, ensuring that the maximum amount is available for investment.
            iii. ata's proposal for highway reauthorization
    ATA's proposal is a comprehensive plan which ensures that the 
national interest in a safe and efficient system of highways is 
preserved. We propose an annual $34 billion total funding level, which 
includes $25 billion for a Core Highway Program and $9 billion for a 
highly flexible State Block Grant Program (See appendix). We propose to 
invest highway user fees in a targeted set of programs which serve 
important national needs. Our proposal creates a flexible state Block 
Grant and ensures that the Trust Fund balances are spent down.
    The Core Highway Program would include the NHS, a Bridge Program, a 
Federal Lands Program, a national highway safety program, and a 
Research & Technology Activity program. Investment in these areas 
ensures the preservation and improvement of a seamless national highway 
network that benefits all Americans. Funding distribution, therefore, 
would be based on national need, rather than on contributions to the 
Trust Fund.
    ATA's proposed Block Grant Program gives states and localities the 
flexibility to select and fund highway and transit capital projects, as 
well as congestion mitigation and air quality projects. This 
flexibility allows them to address their unique needs in a manner best 
suited to their circumstances. Funds now available for suballocation 
would continue in the same proportion. Funds in the block grant would 
be distributed to states in exactly the same proportion as the dollars 
are collected from the states, so that there would not be any donors or 
donees.
    iv. the administration's proposal is inadequate and unacceptable
    During Secretary Slater's most recent appearance before this 
committee, he declared that ISTEA's successor must be judged by how it 
affects ``the lives of our people, the health of our economy, and the 
welfare of our Nation . . .'' I am sorry to say that the 
Administration's proposal for reauthorization, which is called NEXTEA, 
will fall far short of meeting these laudatory criteria.
    The Administration's fiscal year 1998 $22.7 billion allocation to 
the Highway Account falls over $3 billion short of where it could be 
under current revenue circumstances and is $11 billion short of where 
it would be if the Administration made changes that restored the 
honesty and integrity of the user fee system. In addition, any 
potential for reducing highway infrastructure deterioration is 
obliterated by programmatic changes that further dilute highway 
investment. Instead of targeting limited funds where they can most 
effectively address national highway needs, NEXTEA diverts an 
additional 25 percent of user fees to programs, such as the Congestion 
Mitigation and Air Quality Program (CMAQ) and Transportation 
Enhancements Program (TEP), that will not reduce highway fatalities.
    NEXTEA also includes funding for passenger and freight rail 
facilities and operations. ATA opposes funding Amtrak out of the 
Highway Account because Amtrak expenditures do not measurably help 
reduce highway fatalities. Moreover, Federal decisions to allocate 
funds to Amtrak create a new class of donors and donees--with most of 
the states being losers.
    Some short line railroads are proposing to fund private rail 
freight projects out of the highway account. The trucking industry has 
to pay for our vehicles, terminals and operating costs out of our 
pockets. Our competitors should not have their private costs paid out 
of the highway account. This is especially true since truckers 
typically earn two cents on the revenue dollar while railroads often 
earn 15 cents or more. If the railroads want public funding, they also 
should pay a reasonable fuels tax and create a railroad account. Each 
one cent would raise around $30 million dollars. We do not believe that 
these proposals have the support of the major railroads.
    Finally, the administration has proposed turning its back on 40 
years of history by allowing tolls on the Interstate Highway System. 
Charging highway users to rent what we have already bought is a 
travesty. We are already paying more in highway taxes than we get back. 
Moreover, putting tolls on free Interstate Highways will force cars to 
slow from freeway speed, adding to safety, congestion, air pollution, 
and noise problems. ATA urges the committee to adamantly oppose any 
effort to impose tolls on Interstates for which we have already paid.
         v. other reforms will increase safety and productivity
    Several other important issues are likely to be subject for 
discussion during reauthorization, and I will touch on them briefly. 
The freight planning process which ISTEA set in motion needs to be 
improved. Many Metropolitan Planning Organizations have not fully 
addressed the essential freight planning needs that are important to 
freight mobility both in their own communities and as a link in the 
national supply chain. Current hours of service regulations, many of 
which have been on the books since the 1930's, are too inflexible and 
outdated. While we are not sure at this point whether a legislative or 
regulatory approach is preferable, a new option should be developed 
that improves highway safety, as well as industry productivity and 
efficiency. Truck drivers suffered inequitably from the cutback in the 
meal deduction, and this should be corrected. Finally, states should be 
given more flexibility to determine the most appropriate regulations 
governing the size and weight of trucks on highways within their 
jurisdiction.
                             vi. conclusion
    A few weeks ago, Deputy Transportation Secretary Mort Downey told 
this committee that, given current investment levels and travel growth 
projections, 9,500 more people will die on our nation's highways in 
2005 than in 1996. In the face of such a grim statistic, the 
Administration offers a proposal that would decrease funding for 
investment in highways and increase diversion of highway user fee 
revenues to non-highway purposes, further straining the highway 
system's ability to safely transport people and goods. This, despite 
the fact that sufficient revenue is readily available. ATA's proposal 
makes targeted, nationally significant investments which would both 
improve highway safety and spur economic growth. It also gives states 
and localities unprecedented resources and flexibility to address their 
unique surface transportation needs in the most creative and effective 
manner possible.
    I look forward to working with the members of this committee as you 
strive to meet the many challenges ahead. I hope ATA's proposal can 
serve as a basis for discussion during reauthorization of the highway 
program. Thank you.


                      American Trucking Associations, Inc.,
                                     Alexandria, VA, April 8, 1997.
Hon. John Chafee, Chairman,
Committee on Environment and Public Works,
U.S. Senate, Washington, DC.
    Dear Mr. Chairman: Thank you for the opportunity to testify before 
your committee on March 13 on the need to improve the safety of our 
nation's highway system by increasing highway investment. At the 
hearing, you provided me with a copy of a chart labeled 
``Infrastructure Costs vs. Taxes'' and I asked me to react to it. I 
responded at the hearing, but, because the chart had never been 
presented before, I asked to provide additional comments for the 
record. My comments are as follows:
    We understand that the data in your chart is derived from the work 
of the Federal Highway Administration (FHWA) on its new highway cost 
allocation study and applies only to five axle tractor semi-trailers. 
Because this study has not been released, we would like the opportunity 
to expand our comments after it is made public.
    There are several key points that I'd like to make with respect to 
the chart and some of the conclusions drawn from it.
     First, taking the chart at face value, it shows that 
trucks weighing less than 75,000 pounds are paying more than enough 
taxes to cover even the most costly estimate. According to FHWA, the 
actual operating weight for this type of truck is less than 75,000 
pounds 81 percent of the time. Your chart leads to the conclusion that 
the vast majority of tractor semi-trailers are entitled to a tax 
reduction.
     Second, the amount of wear and tear on a highway is 
related to the actual weight of the vehicle and the number of axles on 
which it operates. Unfortunately, your chart is based on the registered 
weight of the trucks, rather than the actual weight. Trucks are 
registered at the maximum weight they can safely carry, but rarely 
operate at the weight because the trailer is filled with cargo before 
the weight limit is reached. Moreover, many trucks, such as those 
carrying fuel and automobiles return empty. The chart treats these 
vehicles the same as those that operate nearly all of the time at their 
registered weight. To be fair to these operations, such vehicles would 
be entitled to an even greater tax reduction.
     Third, the expense side of the chart includes costs that 
have nothing to do with the variation in truck weight. According to 
FHWA, the numbers on which the cost line is based include all Federal 
infrastructure costs including metropolitan planning, parkways (on 
which trucks do not run), billboard removal costs, and bikepaths. This 
fact suggests a further reduction in tax demand based on your chart.
     Finally, the chart does not include all of the taxes paid 
\1\ by carriers. For instance, it does not include the 4.3 cents per 
gallon fuel tax that is paid by trucks into the General Fund. It also 
does not include billions of dollars paid by this type of truck to 
states in the forms of fuel taxes, registration fees, permit fees, and 
other highway taxes.
---------------------------------------------------------------------------
    \1\ The chart is also mislabeled. It describes that the red line 
represents ``diesel taxes paid per mile.'' According to FHWA, the 
numbers represent all Federal taxes paid into the Highway Account of 
the Highway Trust fund, including the heavy vehicle use tax.
---------------------------------------------------------------------------
    To summarize, according to your chart, most trucks are paying more 
than their fair share because they operate at weights less than 75,000 
pounds. Moreover, the chart overstates the costs created by a 
particular weight truck, because it uses registered weight rather than 
the actual weight which is typically thousands of pounds lighter. 
Finally, the assumptions in the chart are not a fair way to compare 
taxes with pavement damage since it fails to include all of the taxes 
and other fees paid by trucks and includes costs that have nothing to 
do with pavement damage.
    The bottom line is this: the typical interstate tractor-semitrailer 
combination currently pays $22,579 annually in Federal, state and local 
taxes, and another $15,307 in government-imposed regulatory compliance 
costs--and the truck doesn't start turning an after-tax profit for its 
owners until December 26. Senator Chafee, trucking not only carries 
most of America's freight, we carry more than our fair share of the 
burden when it comes to paying for the nation's infrastructure.
    Thank you for the opportunity to respond more fully to your 
question. We would be pleased to discuss these issues with your staff 
so that we can get a common understanding of these very technical 
issues.
            Sincerely,
                                         Thomas J. Donohue.
     Response of Thomas J. Donohue to Questions from Senator Chafee
    Question. Your testimony emphasizes the need for the committee to 
focus on highway safety as we think about the ISTEA reauthorization. It 
is obvious that we need to make greater efforts to reduce the horrible 
amount of injuries and fatalities on our nation's highways. Your 
position is supported by members of this committee, and by others who 
have testified before us, including Secretary Slater, who cited safety 
as his ``North Star'' which will guide him in reauthorization. Given 
this consensus on the need to improve highway safety, it seems to me 
that we should significantly increase our spending on highway safety 
programs in the ISTEA reauthorization. Do you agree? Would you support 
a much larger safety program or emphasis in the ISTEA?
    Response. I agree wholeheartedly that we should significantly 
increase spending on highway safety programs in the ISTEA 
reauthorization. I support a larger safety program in ISTEA and special 
emphasis on safety issues. Increased investment in highway 
infrastructure will improve safety and reduce the 42,000 fatalities 
that occur annually on the nation's highways. We also need to have 
targeted safety programs to improve safety procedures.
    Over the past decade, the trucking industry's support for safety 
measures has contributed to a 39 percent reduction in the fatal 
accident rate for crashes involving trucks. However, in over 30 percent 
of highway fatalities--11,000 lives every year--inadequate roadways are 
cited as a factor in the fatality. The Federal Highway Administration 
reports a backlog of more than $300 billion in the funding needed for 
road repairs. A significant increase in the size of the highway 
infrastructure program would address root causes of these fatalities. 
Taxes already being collected from highway users would support an 
increase from the current $20 billion annual program to a $34 billion 
annual program.
    A range of safety efforts that extend beyond infrastructure 
concerns, and which focus on both drivers and vehicles, should also be 
pursued. For instance, since only 12 percent of fatal accidents involve 
trucks, we have launched an education campaign to teach all drivers 
techniques to drive more safely. We hope to work in partnership with 
the U.S. Department of Transportation to expand these efforts. To 
address driver fatigue, more funding should be available for additional 
highway rest areas. We believe that it is time to reexamine the 10-
year-old commercial driver license program and find ways to improve the 
program's ability to identify safe drivers and weed out bad drivers. To 
take overweight and unsafe trucks off the road, more funds should be 
available to states for truck inspection facilities and portable 
scales.
    I look forward to working with you and the committee to promote 
initiatives that will make our roads safer for all. As we head into the 
new century, safety must become a key factor behind any decision 
regarding the investment of highway user fees.




  Prepared Statement of Thomas M. Downs, President and CEO, National 
                Railroad Passenger Corporation (AMTRAK)
    Mr. Chair and members of the subcommittee: Thank you for the 
opportunity to appear before this subcommittee to discuss Amtrak's top 
priority for 1997: Inclusion of a dedicated source of capital funding, 
as well as program eligibility, for intercity passenger rail in the 
upcoming reauthorization of the Intermodal Surface Transportation 
Efficiency Act of 1991 (ISTEA). Our top priority is the creation of a 
trust fund for intercity passenger rail, which will require cooperation 
among the committees of jurisdiction, and second, eligibility for 
intercity passenger rail under the various programs, which clearly 
comes under the jurisdiction of this committee.
    ISTEA was truly visionary legislation. It was the first step down 
the path toward a balanced transportation system. It was the first law 
that sought to put movement at the forefront, and not the different 
interests that comprise our methods of movement. At many state DOT's, 
``Intermodal'' needed to be defined and added to the vocabulary.
    But ISTEA brought us only part way down the path. In order to reach 
our ultimate destination--a truly balanced transportation system--we 
must eliminate modal bias. A significant step in the right direction 
would be to discontinue the bias against intercity passenger rail that 
is inherent in ISTEA. That is consistent with what has historically 
been the position of this committee, and the Senate as a whole, and it 
is my hope that this year, with the jurisdictional problems in the 
House resolved, the Senate's position will prevail.
    For those who were not here, in 1991 the Senate-passed version of 
ISTEA included passenger rail as an eligible entity in all state-
administered programs, but when the conference on the bill began we 
were left in no-man's land between the insurmountable boundaries of 
jurisdiction in the House. And it was there that eligibility for 
intercity passenger rail died--on a jurisdictional impasse, not due to 
any substantive objection. Now, after it being codified that way for 6 
years, we need to remind people it was never a policy decision to 
exclude rail--we fell victim to clearly drawn lines of committee 
jurisdiction. Now, with jurisdiction over all surface transportation 
programs, including Amtrak, consolidated in the House Transportation 
and Infrastructure Committee, the obstacle has been removed, and this 
indefensible modal bias should be eliminated.
    Everyone on this subcommittee knows that public policy on 
transportation modes is incredibly skewed--and that goes well beyond 
the gross inconsistencies in funding levels for the different modes. 
Current Federal funding policies distort state and local 
decisionmaking. The Federal Government offers generous matches to a 
state if they are making highway, transit or aviation investments, but 
offers little or no funds to match state investment in rail passenger 
service. The result is states and localities are discouraged from 
investing in rail even when it's the best system for the area. 
Elimination of modal bias and the desire for a balanced, truly 
responsive intermodal transportation system demands that this change. 
And ``NEXTEA'' is the most appropriate vehicle for that change.
    As you know, highway trust fund moneys can be spent on mass 
transit, bus acquisition, light rail, bike paths, pedestrian walkways, 
technology research, planning, snowmobile trails, intermodal freight 
facilities, driver education programs, hiking trails, and much more. I 
am not here to discourage these types of investments, but I would like 
to point out the absolute inconsistency on prohibiting expenditures on 
intercity passenger rail. If a state chooses to spend a portion of 
their Federal transportation allocation on Amtrak, they should clearly 
be allowed to do so.
    Including passenger rail as an eligible use of Congestion 
Mitigation and Air Quality (CMAQ), Surface Transportation (STP), 
National Highway System (NHS) and eligible transit program funds would 
eliminate this bias. States would be able to leverage a 75 or 80 
percent match on their investment, and thus would be financially free 
to choose the best transportation solution based on transportation 
efficiency, not skewed economic incentives.
    The legislative discrimination against passenger rail should be 
terminated with the enactment of NEXTEA. Inclusion of passenger rail as 
an eligible use of NEXTEA funds would require no new spending, would 
not change any Federal transportation allocation formulas, and would 
not mandate that a state spend one penny on rail service. What it would 
do is provide states with the flexibility to buy the transportation 
service that best meets their needs.
    In 1995 when Amtrak announced a major route and service 
restructuring, Governors from across the country made personal appeals 
to then Secretary Pena asking that ISTEA funds be approved for 
expenditure on intercity rail service. Except in the most narrow case, 
where the Secretary found the grounds for making an exception, Federal 
law prohibited it. Instead, these Governors were forced to seek and 
spend state general revenues--dollars that are much harder to come by, 
that are wrestled from State Legislatures, and that provide no leverage 
of Federal funds--to support Amtrak service. Despite that, many of the 
states worked with us, and came up with the funding to preserve some 
form of the service proposed for termination. We currently have 13 
states partnering with us for services, so it's clear that states want 
to have these partnerships. It is clear that the American people want a 
national passenger rail system--the challenge for this Congress is how 
best to support it and ensure its healthy existence. Allowing states 
the right to spend a portion of their Federal transportation allocation 
on Amtrak, if they so choose, is one critical response to this 
challenge.
    The Senate approved legislation to provide this flexibility and 
eligibility in 1991, and again, by a nearly 2-1 bipartisan vote, during 
consideration of the National Highway System Designation Act (NHSDA) in 
1995. Sixty-four Senators in the last Congress, supported by many of 
the nation's Governors, voted in favor of this. I am pleased to see 
that Senator Moynihan's ISTEA reauthorization, cosponsored by Senators 
Lautenberg, Lieberman and others on this committee, includes this 
eligibility for Amtrak. I urge this committee to ensure that whatever 
bill is reported to the full Senate for consideration include this very 
important eligibility for intercity passenger rail. Simply, it is a 
states' rights issue. If a state decides that Amtrak best meets their 
transportation needs, that state should be able to leverage the same 
amount of Federal dollars for rail service that it can for a new 
highway, a new bridge, a transit improvement or a bike path.
    That is what Amtrak is seeking. Parity. Parity doesn't require an 
indictment of our highway system, or our transit systems, or our 
aviation system. As a former highway administrator, the head of a 
bridge and tunnel authority, a transit agency and a state DOT, I have 
never argued the merit of one mode over the other. Each serves a 
different need and a different population. They should be woven 
together to supplement and enhance each other.
    The other issue that must be addressed in NEXTEA is the inclusion 
of a dedicated funding source for Amtrak. Amtrak has explained why we 
need it, GAO has agreed the National Commission on Intermodal 
Transportation has called for its creation, and leadership on both 
sides of the Hill have agreed. I'm not going to sit here in front of 
you and ``cry wolf,'' but I know our national rail system cannot 
survive intact through yet another year of inadequate funding, and I 
can assure you that Amtrak will have to break its commitment to achieve 
independence from Federal operating support if we are not given an 
adequate, reliable dedicated source of capital funding. As we have 
always said, operational self-sufficiency is absolutely dependent on 
adequate capital investment in the system.
    For some reason Amtrak, the only major mode of transportation which 
does not have a dedicated source of funding, is held to a higher 
standard than any other mode, all of which are dependent on the Federal 
Government for support and none of whom are called upon to defend 
themselves in terms of ``profitability.'' We are also held to a higher 
standard than any other passenger rail system in the world, all of 
which rely on some level of Federal support. Amtrak covers more of its 
operating costs--an estimated 84 percent--than any other passenger 
railroad in the world, and serves more than 93 percent of the 
continental United States, while receiving less than 3 percent of all 
Federal transportation spending.
    Although we were not witnesses, providing flexibility and a 
dedicated source of funding for Amtrak has been discussed in previous 
hearings before this subcommittee, and I must address some of the 
issues that have already been raised. One issue discussed, when the 
Highway Users Federation and the Surface Transportation Policy Project 
were testifying, was the number of riders on different modes. To 
provide some context, if Amtrak were an airline carrier, we would be 
the third largest in the United States. We carry almost half of the 
combined air-rail market between Washington, DC and New York, and when 
intermediate cities (such as Baltimore and Philadelphia) are included, 
Amtrak's share of the air-rail market rises to 70 percent. Loss of 
Amtrak service in this corridor would not only put a huge financial 
burden on the affected states, it would require another 7,500 fully 
booked 757's to carry our passengers every year, or hundreds of 
thousands of cars added to already congested highways. If Amtrak 
disappeared tomorrow, there would be an additional 27,000 cars on the 
highway between Boston and New York every day. To address the 
particular Northeast city pair discussed by Mr. Fay and Senator Chafee 
at an earlier hearing, between New York and Philadelphia Amtrak service 
removes 18,000 cars from the highways every weekday.
    That number--18,000 cars a day--does not include the thousands of 
commuter rail passengers, and their parked cars, that are carried on 
Amtrak's Northeast Corridor by commuter agencies such as New Jersey 
Transit (NJT) and the Southeastern Pennsylvania Transit Authority 
(SEPTA) every day. These commuter agencies could not operate if Amtrak 
did not maintain the track, bridges, signals and electric traction 
system on the Corridor. Above and beyond Amtrak's enumerated ridership, 
another 220 million commuter passengers ride on Amtrak's Corridor 
between Boston and Washington, DC every year. You can measure Amtrak's 
impact not only in the number of cars removed from the road, but also 
in terms of avoided costs--as reported in the Journal of Commerce last 
May, Amtrak's presence eliminates the need for 20 additional highway 
lanes in New York City, and ten new tunnels under the Hudson.
    Finally, it also must be noted that Amtrak carries all these 
passengers even as the terms of relative investment by mode become more 
and more disparate. In real terms, spending for highways approached $20 
billion last year while capital investment for Amtrak was less than 
$450 million. In relative terms, between fiscal year 1980 and fiscal 
year 1994, transportation outlays for highways increased 73 percent, 
aviation increased 170 percent, and transportation outlays for rail 
went down by 62 percent. In terms of growth, between 1982 and 1992 
highway spending grew by 5 percent, aviation by 10 percent, while rail 
decreased by 9 percent. The overall funding amounts as well as the 
relative levels of investment should make one wonder how Amtrak has 
managed to maintain a fairly constant level of ridership, not why it 
hasn't increased its share. Amtrak has been accused of not serving 
enough of the traveling population, but that must be weighed against 
the price of not serving those travelers. It isn't just a matter of 
slightly more clogged roads or additional pollution. For some people it 
is the only way ``to get there from here.''
    It's not just the urban corridors that depend on our service. Some 
22 million of our 55 million passengers depend on Amtrak for travel 
between urban centers and rural locations some of which have no 
alternative modes of transportation. Some of the most persuasive 
appeals for flexibility for Amtrak and some of the strongest advocates 
for a dedicated trust fund have been elected officials from those 
states who are facing the elimination of Essential Air Service (EAS) or 
the disappearance of local bus service, and truly face the elimination 
of all other modes.
    I have also been advised that opponents have made claims in front 
of this committee about the sanctity of the highway trust fund. I 
believe that the highway trust fund was legitimately expanded long 
before ISTEA and the funding of bike paths, pedestrian walkways, and 
``enhancements'' was allowed. Fifteen years ago, when mass transit 
fought for a piece of the revered Highway Trust Fund, it met fierce 
opposition from a powerful highway lobby--who claimed the Highway Trust 
Fund would become insolvent and the Nations' roadways would all 
collapse, all within a few years. As everyone here knows, that is not 
the case. So when we hear these accusations against any usurping of the 
gasoline tax by Amtrak, realize they are not new, they are not 
accurate, and they are not convincing.
    As the Chairman of this committee has said, there is no law--no 
covenant with the people--that says excise fuel taxes need to be spent 
on highways, nor for that matter, transportation. States use revenues 
collected from the gasoline tax for non-highway uses, and it goes 
unquestioned. Texas spends 25 percent of what it collects on the 
state's education system, while for states represented on this 
committee, the uses range from environmental protection in Florida and 
Arkansas to support for the Fish and Game Department in New Hampshire, 
to aiding the critically important ports and transit systems in 
Virginia, and maintaining snowmobile trails in Wyoming. Oklahoma 
already spends a portion of the gas tax on transit and railroad needs. 
Like the states, Congress should spend the revenues raised by the 
excise fuel tax on those programs it feels are deserving. I think 
passenger rail should be one of those programs.
    Finally, I am not aware of any transportation system that supports 
itself sadly through user fees. According to the US DOT, in fiscal year 
1994 nearly $6 billion more was spent on highways than was collected in 
user fees. In fiscal year 1995 nearly $8 billion more was spent on 
highways than was collected in user fees. That amount represents 
significantly more than Amtrak is requesting in funding over the entire 
6-year life of NEXTEA. It's not just highways--transit is exempt from 
the gas tax and received approximately $3 billion in gasoline revenues 
last year. No mode is self-financed. One parting thought. Like so many 
worthwhile things that have been done to little applause, ISTEA has 
faced criticism. You have invited witnesses here to discuss the good 
and the bad, to criticize and commend, and they may disagree by mode, 
or by state, or by region. Despite that, I believe your highest 
priority must be defending the ground already gained with that landmark 
bill and to build on it.
    If we are to continue the vision of ISTEA and maximize our 
transportation resources in NEXTEA, we must move past the counting up 
and comparing of costs of each mode. A truly balanced transportation 
system is like an effective education system. All of society benefits 
from its existence, those who use it directly and those whose lives are 
eased or enriched by its existence. That is what NEXTEA should embody, 
promote and protect, and we at Amtrak believe intercity passenger rail 
should be a part of it.
                                 ______
                                 
 Prepared Statement of Karen Borlaug Phillips, Senior Vice President, 
                   Association of American Railroads
                              introduction
    Mr. Chairman and members of the subcommittee, my name is Karen 
Phillips. I am Senior Vice President of the Association of American 
Railroads (AAR).\1\ I appreciate your invitation to appear before this 
subcommittee and present AAR's views on the reauthorization of the 
Intermodal Surface Transportation Assistance Act (ISTEA).
---------------------------------------------------------------------------
    \1\ AAR is a trade association whose members account for 75 percent 
of total rail line-haul mileage, produce 93 percent of total rail 
freight revenues, and employ 91 percent of the freight railway work 
force.
---------------------------------------------------------------------------
    As you begin your work on ISTEA reauthorization with these 
hearings, I would like to discuss four particular issues of significant 
concern to the railroad industry. The first of these issues is one of 
overriding interest to all of us--transportation safety, and in this 
instance safety at highway-rail grade crossings. The second issue 
involves an essential element in any serious effort to continue to 
improve the movement of freight in this country and in the global 
marketplace--intermodalism, and specifically the important connections 
between different transportation modes. Third, I would like to address 
the roles of States and MPOs in effective transportation planning, and, 
finally, I will briefly discuss the important issue of Federal truck 
size and weight standards.
                      highway-rail grade crossings
    There has been an extremely successful partnership among Federal 
and state governments, the railroad industry, and other transportation 
safety interests for many years. This partnership has resulted in a 
reduction in annual public grade crossing accidents of over 65 percent 
since the early 1970's. This success has been accomplished primarily as 
a result of engineering improvements carried out under the Federal 
Section 130 Program, and the driver education/public information and 
traffic law enforcement efforts of the Operation Lifesaver Program. In 
fact, the Federal Highway Administration estimates that the Section 130 
Program and Operation Lifesaver efforts have prevented over 8,500 
fatalities and 38,900 serious injuries since 1974.
    Despite the impressive safety improvement, the record of 3,697 
accidents and 432 fatalities at public grade crossings in 1996 is 
unacceptable. More must be done to eliminate these tragic accidents, 
and the partnership among the involved interests must be strengthened. 
AAR is proposing four initiatives which it believes will result in a 
significant improvement in highway-rail grade crossing safety:
1. The Federal Government should continue and increase funding for the 
        Section 130 Grade Crossing Improvement Program.
    The historic Highway Safety Act of 1973 created and funded a 
national highway safety program specifically dedicated to enhanced 
safety at highway-rail crossings by providing for needed engineering 
and warning device improvements (Section 130 Program). In fiscal year 
1997, approximately $150 million in highway user revenues was 
apportioned to the states to carry out this important program. As 
mentioned earlier, as a direct result of the earmarked Federal funding 
for highway-rail crossing improvements, the annual crossing accident 
rate has been reduced by over 65 percent. This substantial reduction in 
accidents has occurred despite significant increases in both highway 
and rail traffic.
    Without funding dedicated or earmarked for the Section 130 Program, 
crossing projects rarely compete successfully with more traditional 
highway needs, such as highway capacity improvements and highway 
maintenance. In fact, this problem was the primary reason a separate 
crossing improvement program was established in 1973. Despite the 
proven success of the Section 130 Program, however, many states 
continue to assign an extremely low priority to crossing improvement 
projects. Through the end of 1996, over $227 million of Section 130 
Program funds remained unspent by the states, and approximately $230 
million had been transferred to other Federal-aid highway program 
categories.
    Earmarked funding for the Section 130 Program should be continued, 
and the annual funding level should be increased to at least $185 
million. The ``Rail-Highway Crossing Study'' completed by the U.S. 
Department of Transportation in 1989 found that:
    ``For warning systems, an estimated annual investment of $185 
million in improvements is necessary to maintain current overall safety 
performance. . . . An initiative to cost effectively reduce current 
accident levels would require another $30 million annually.''
    Additionally, in order to increase state priority for Section 130 
Program projects and assure crossing improvement spending, the 
authority to transfer Section 130 Program funds to other Federal-aid 
highway program categories should be restricted and obligation 
authority should be specifically reserved for the Section 130 Program.
2. The Federal Government should establish a national mandate and a 
        uniform process for closing unnecessary public grade crossings.
    Highway and rail safety officials have long advocated the closure 
of a large proportion of the public highway-rail grade crossings in the 
United States. Many grade crossings are redundant, serve no significant 
transportation mobility or access purpose, and continue to constitute a 
rail and highway safety hazard.
    However, closing grade crossings is often not an objective 
transportation safety decision because the issue causes local 
emotional/political confrontations. The railroads support the 
establishment by Congress of a Federal crossing closing program 
implemented through a uniform nationwide process. Such a process should 
require state transportation agencies to identify and evaluate 
candidate crossings for closure, utilizing uniform criteria established 
by the U.S. Secretary of Transportation, and to develop and implement a 
statewide crossing closing plan. Active participation in this National 
Grade Crossing Closure Program should be required of all states. DOT 
should also develop guidelines which states would be required to follow 
in deciding whether to permit the opening or creation of any new grade 
crossings.
3. The Federal Government should finance a multi-year national grade 
        crossing safety education and public awareness campaign to be 
        conducted by Operation Lifesaver, Inc.
    Since motorists frequently are unaware of the grave dangers of 
their behavior, government should take responsibility for a major, 
multi-year public awareness campaign designed to illustrate the life-
or-death consequences of motorists' behavior at grade crossings. ISTEA 
authorized $300,000 annually for the National Operation Lifesaver 
Program to increase public awareness of the grade crossing safety 
problem. Additional funds to support Operation Lifesaver are generally 
included in annual Federal Railroad Administration appropriations. 
However, a substantially increased commitment of resources is required 
to ensure the broadest understanding of the inherent danger of highway-
rail grade crossings and the critical responsibility of motorists and 
the public to exercise appropriate care.
    This expanded national Operation Lifesaver campaign must garner the 
same universal recognition and acceptance that Mothers Against Drunk 
Driving (MADD), for example, enjoys for its attack on drunk driving. 
The need to ``Look, Listen . . . and Live'' at grade crossings must be 
as familiar to the general public as ``Friends Don't Let Friends Drive 
Drunk''.
    As an example of a possible component of such a national campaign, 
Operation Lifesaver--joined by FRA and various state agencies--is 
sponsoring a national campaign called ``Highway or Dieways.'' AAR is 
giving significant support to this campaign. This is a very graphic and 
hard-hitting public service advertising campaign promoting highway-rail 
grade crossing safety. The campaign consists of television and radio 
spots, print advertising, and billboards. The strategy is to introduce 
the campaign in every state through Operation Lifesaver state 
coordinators. Begun in 1996, it has been introduced in five states, 
Texas, Georgia, South Carolina, Alabama, and Missouri, and has received 
significant media interest. The campaign will also begin next month in 
Ohio and California.
4. The Federal Government should create a national grade crossing 
        warning device problem alert system.
    Despite regular and thorough grade crossing warning device testing, 
inspection, and maintenance conducted by railroad personnel, the 
industry has occasionally experienced problems in receiving timely and 
accurate notification when warning device problems occur. To address 
this problem, in 1982, the Texas legislature created the Texas 1-800 
Number Rail-Highway Crossing Notification Program. Texas has installed 
signs at public crossings encouraging the public to call the 1-800 
telephone number in the event of a crossing warning device problem. The 
calls are received by the Texas State Police, which in turn alert the 
appropriate railroad personnel.
    The railroad experience with the Texas 1-800 System has been 
generally positive. Although occasional ``crank'' calls are received 
and the public's perception of a warning device problem may be 
inaccurate, the system continues to provide valuable and timely 
information concerning warning device problems to appropriate railroad 
maintenance personnel.
    The railroad industry supports the creation of a publicly funded, 
nationwide grade crossing warning device problem alert system operated 
by appropriate state agencies. The Federal Government should evaluate 
the feasibility of a variety of possible nationwide alert systems, and 
adopt and implement an effective system.
    These four grade crossing safety initiatives will significantly 
enhance safety at highway-rail grade crossings and strengthen the 
essential partnership between the railroad industry and government. I 
urge this committee to include these recommendations in ISTEA 
reauthorization legislation.
                         intermodal connectors
    I would now like to discuss briefly the second issue of concern to 
the railroad industry--intermodalism and intermodal connector highways.
    In ISTEA, Congress declared that:
    It is the policy of the United States to develop a National 
Intermodal Transportation System . . . The National Intermodal 
Transportation System shall consist of all forms of transportation in a 
unified, interconnected manner . . .
    In an effort to achieve that important objective, the Congress 
established the National Highway System, and determined that:
    The purpose of the National Highway System is to provide an 
interconnected system of principal arterial routes which will serve 
major population centers, international border crossings, ports, 
airports, public transportation facilities, and other intermodal 
transportation facilities . . .
    The importance of the interconnectivity of our transportation modes 
and systems was subsequently underscored by the National Commission on 
Intermodal Transportation when it found that:
    Barriers to safe and efficient movement of freight occur at 
connections between modes . . . For example, inadequate roadway access 
to freight terminals is a barrier to the intermodal freight system and 
a major contributor to urban congestion. The lack of adequate 
connectors between the interstate highway system and the Nation's port, 
rail, airport, and truck terminals results in urban congestion, air 
pollution, negative impacts on adjacent neighborhoods, and delivery 
delays for shippers.
    On May 24, 1996, then-Transportation Secretary Pena sent to the 
Congress a recommended list of highway connectors to major intermodal 
freight and passenger terminals. In his letter of transmittal, 
Secretary Pena observed:
    The Congress, in creating the NHS, recognized that the Nation's 
transportation infrastructure must be viewed as a single system with 
each mode complementing the others. With the NHS and its connections to 
major intermodal terminals as the united force, our national 
transportation network will sustain economic growth, increase our 
competitiveness in the international marketplace of the 21st century, 
and enhance the personal mobility of every American.
    Representing our major freight railroads, I can assure you that 
these observations and findings concerning intermodal highway 
connectors are absolutely correct. These essential highways are the 
glue that holds much of this country's intermodal transportation system 
together. Without first rate connections, trains, trucks, barges, and 
planes are condemned to operate separately and inefficiently. 
Government and America's private transportation companies can provide 
the finest transportation systems and services in the world--and that 
is occurring--but a completely efficient intermodal transportation 
system can never be realized without quality connections.
    During ISTEA reauthorization these important intermodal connectors 
are to be considered for inclusion on the National Highway System 
(NHS). AAR enthusiastically supports improvement of intermodal 
connectors and urges their addition to the NHS.
                        transportation planning
    ISTEA attempted to establish a new approach to transportation 
throughout the country, by striving to break out of traditional, but 
limiting, perspectives. Transportation after ISTEA would no longer 
suffer from historic compartmentalization. The interests and concerns 
of both public and private providers of transportation facilities and 
services would be considered jointly and cooperatively. Passenger and 
freight transportation needs would both receive adequate attention and 
an appropriate allocation of resources. State, local, and metropolitan 
transportation interests would each have an appropriate and important 
role in planning and resource allocation. These goals of ISTEA have not 
yet been achieved, but that should in no way tarnish the vision or 
diminish our efforts.
    Private railroads are working closer than ever, and more 
successfully, with states and MPOs to develop effective transportation 
plans and programs. It has been an evolutionary process, primarily 
because all participants have had a great deal to learn about each 
other and about just how to integrate our respective interests and 
needs into a truly comprehensive transportation planning process. But 
the learning and improving is happening, and transportation in this 
country is winning as a result.
                         truck size and weight
    AAR supports the status quo on truck size and weight limits. Of 
particular concern are any efforts which may be made to thaw or 
otherwise modify the freeze on the expanded use of longer combination 
vehicles (LCVs)\2\ that was included in ISTEA which are outside the 
scope of any legislative truck size and weight agreement that may be 
reached between the railroad and trucking industries.
---------------------------------------------------------------------------
    \2\ Longer combination vehicles, or LCVs, include three main truck 
types: triple 28 foot trailer combinations or triples; twin 48, or 53, 
tractor trailer combinations, also known as long or turnpike doubles; 
and Rocky Mountain Doubles, combinations with one long and one short 
trailer. The 1991 ISTEA defines LCVs as combinations with two or more 
trailers operating at weights above 80,000 pounds.
---------------------------------------------------------------------------
    The railroad industry has, of course, a vital stake in truck size 
and weight policy. Larger, heavier trucks--especially LCVs--would cause 
serious traffic and revenue losses to the U.S. railroad industry. This 
is obviously a grave concern for the railroad industry. This vital 
interest extends not just to the rail companies themselves, but also to 
the 213,000 rail employees, rail shippers, and the railroad supply 
industry. Additionally, there is strong evidence that heavy trucks pay 
user charges far less than the costs they impose on our highways and 
our society. This underpayment enables them to reduce rates and divert 
traffic from railroads. In the absence of full cost recovery, the 
further diversion from rail that will result from expanded use of LCVs 
is likely to mean a significant net economic loss not only to 
railroads, but also to society.
    The public strongly supports Federal truck weight standards. Sixty-
eight percent of Americans endorse a Federal weight freeze on trucks, 
according to a April, 1995, nationwide poll conducted by The Tarrance 
Group. Further, by exercising control over the nation's infrastructure 
through continuation of current truck size and weight standards and the 
LCV freeze, Congress can prevent highway infrastructure damage and 
congestion, increased highway safety problems, and exacerbated harm to 
the environment.
    Advocates of increased LCV use are now proposing a ``State Option'' 
regime in place of the current Federal LCV freeze. Under ``State 
Option'', States without LCVs would come under intense pressure to 
allow bigger trucks as they spread to neighboring jurisdictions. 
Stopping this ``upward ratchetting'' of truck size and weight limits 
was the reason for the 1991 LCV freeze. Ending the current freeze 
through such a ``State Option'' approach would mean a rapid spread of 
LCVs throughout the United States.
    The truck size and weight status quo--including the LCV freeze--is 
also threatened by the negotiations on standardizing truck size and 
weight limits which are being held with our NAFTA partners, Canada and 
Mexico. Last summer, 57 members of the Senate and 232 House members 
signed a letter to then-DOT Secretary Pena, urging him not to allow the 
NAFTA negotiations to be a vehicle for truck size and weight increases 
in the United States. AAR commends those members who signed the letter 
to the Secretary and the railroad industry hopes that Congress will 
continue to oppose larger and heavier trucks not just in NAFTA 
negotiations, but also in the ISTEA reauthorization.
    In conclusion, ISTEA is working, because all parties are truly 
working together. AAR is convinced that America must continue the 
progressive agenda established by the Intermodal Surface Transportation 
Efficiency Act into the 21st Century.
    Thank you for inviting me here today to present our views on ISTEA 
reauthorization. I would be pleased to answer any questions you may 
have.
                                 ______
                                 
American Public Transit Association, Recommendations on Reauthorization 
        of the Intermodal Surface Transportation Efficiency Act
                     statement of national purpose
    To enhance mobility in the 21st Century, the nation's 
transportation system must provide a solid foundation for economic 
growth by moving people and goods, not just vehicles, and by serving as 
an efficient, comprehensive, integrated network. Toward this end, the 
U.S. transit industry is ready to build on its outstanding record of 
customer service, innovative public-private cooperation, and a wide 
range of contributions to American life. Federal support for transit 
investments is a fundamental part of a balanced national transportation 
program that will strengthen our economic productivity and global 
competitiveness, improve the quality of life in our nation's 
communities, and provide all Americans with access to the broad range 
of affordable transportation services they need to lead fulfilling, 
productive lives.
    From our very beginnings as a nation, Congress has determined that 
a national role in transportation is important to ``ensure domestic 
tranquility, provide for the common defense, promote the general 
welfare . . .'' This national role has been manifested in assistance 
for coastal and seaborne shipping; the Post Office's transportation 
needs; canal, turnpike, and railroad construction; aviation; and a 
Federal highway aid program that culminated in the 1954 authorization 
of the Interstate and Defense Highway system. The following decade saw 
the development of Federal transit programs as Congress recognized that 
transit was essential to achieve Federal objectives.
    By 1991, the Intermodal Surface Transportation Efficiency Act 
(ISTEA) reformed Federal policy to meet the mobility challenge of the 
post-interstate era by integrating surface transportation planning, 
programs, and services. ISTEA recognizes that our economic health and 
the quality of life in our communities depend on more efficient use of 
infrastructure and careful planning in regions and states.
    ISTEA also addresses the complications posed by our past 
insensitivity to the environmental and social impacts of massive urban 
freeway construction, which has stiffened public resistance to 
transportation improvements. We need more effective strategies to blend 
transportation infrastructure into the social and neighborhood fabric 
of our cities and suburbs, addressing human needs and impacts as well 
as physical and engineering questions.
    Over the past 30 years, the U.S. transit industry and its riders 
have prevented:
     the emission of 1.6 million tons of hydrocarbons, 10 
million tons of carbon monoxide, and 275,000 tons of nitrogen oxides 
into our air;
     the importation of 20 billion gallons of gasoline; and
     the construction and maintenance of 20,000 lane-miles of 
freeways and arterial roads and five million parking spaces to meet 
rush-hour demands, saving at least $220 billion (as much as all Federal 
highway spending for the last 14 years).
    Today, transit saves at least $15 billion per year in congestion 
costs and provides a lifeline for people in thousands of metropolitan 
and rural communities. The Federal Government relies on transit to 
protect the environment; conserve energy; provide accessible 
transportation for people with disabilities, the elderly, and other 
transit-dependent riders; and ease the burden on crowded roads.
    By standing firm on ISTEA's reforms and allowing the Federal-state-
local transportation partnership to flourish, the Federal Government 
can ensure that transit will function even more effectively as a 
thriving part of a balanced national transportation system. As the 
economic losses caused by congestion grow in suburban as well as 
central cities, transit will become an even more important alternative 
to congestion. Continued Federal support for balanced transportation 
will enable every community to improve its transit senice and increase 
the range of affordable, convenient transportation options, and 
revitalize our central cities, maintain the health of our suburbs, and 
weave our smaller towns and rural America more closely into the fabric 
of our national life.
    Therefore, the American Public Transit Association (APTA) holds 
that it is the policy of the United States to create an environment 
that provides expanded opportunities for business, industry, 
households, and individuals to grow and prosper. Among the most 
important of these are the opportunities to:
     Enhance the economic security of individuals and 
businesses;
     Assure personal safety and security;
     Improve the quality of our neighborhoods and regional 
environments; and
     Enhance the effectiveness of public services.
    Public transit links people to these new opportunities. The mission 
of public transportation is to foster personal mobility, economic 
opportunity, and an improved quality of life through partnerships, 
communication, and technology. Investments in transit are needed to 
enhance the economic health and the quality of life in central cities, 
suburbs, small towns, and rural areas. These transit investments will 
improve the quality of all citizens' lives and avert a future of 
congestion, economic stagnation, environmental degradation, and 
increasingly severe constraints on mobility for all people including 
those with no access to personal vehicles.
    So that public transit can carry out this mission, we recommend the 
following proposals for the reauthorization of Federal surface 
transportation programs.
                       principal recommendations
    I. Maintain ISTEA'S provisions for flexible funding and a level 
playing field between transit and highway investments, with expanded 
opportunities for flexible funding.
    II. Maintain the existing transit program structure.
    III. Expand the definition of allowable capital expenditures to 
include maintenance and mandate relief.
    IV. Support transit in small urbanized areas and rural areas.
    V. Provide for a unified appropriation of transit funds.
    VI. Increase the Federal transit program's efficiency.
    VII. Modify the congestion mitigation and air quality program.
    VIII. Maintain and strengthen the planning requirements.
    IX. Apply the highway solvency test instead of the more stringent 
mass transit solvency test to the mass transit account.
    X. Recapture the ``deficit reduction'' 4.3 cents/gallon gasoline 
tax for the Highway Trust Fund, depositing the revenue from 0.5 cents 
in a new intercity passenger rail account and 20 percent of the revenue 
from the remaining 3.8 cents in the mass transit account.
    XI. Continue to support the transit cooperative research program 
(TCRP), university transportation centers, and ISTEA institutes; and 
create a new technology development and demonstration program.
    XII. Allow states to use the state shares of flexible funding 
programs for intercity passenger rail investments and maintain the 
section 130 program to provide safety improvements for public highway/
rail grade crossings.
                       summary of recommendations
I. Maintain ISTEA'S provisions for flexible funding and a level playing 
        field between transit and highway investments, with expanded 
        opportunities for flexible funding.
    ISTEA's innovative flexible funding and level playing field 
provisions have been successful and should be retained. Among these 
important programs and principles are:
     The Surface Transportation Program (STP) and the 
Congestion Mitigation and Air Quality (CMAQ) program, with metropolitan 
suballocations;
     Equal, 80 percent Federal shares for highway and transit 
projects; and
     The use of local ``soft match'' for transit projects.
    Additional flexible funding should be authorized by expanding the 
Surface Transportation Program using revenue from the Highway Trust 
Fund's Highway Account and Mass Transit Account. For every $1 in Mass 
Transit Account revenue that would go to a new STP-Transit Program, an 
additional $2 in Highway Account revenue would go to an STP-Highway 
Program. The STP-Transit Program would be part of the Federal Transit 
Program, but would be apportioned in the same way as the STP program, 
including metropolitan area suballocations, and its funds could be used 
for the same purposes as STP program funds.
II. Maintain the existing transit program structure
    The existing transit program structure should be retained because 
it works well. The discretionary new start, rail modernization, and bus 
components; urbanized area, non-urban, and elderly/disabled components, 
and planning, research, and FTA administrative functions, all provide 
funds for a range of specific needs and encourage innovative new start 
projects in all regions of the country.
    The next authorization act should provide funding for a core 
transit program before additional flexible funding is provided through 
the STP-Transit Program as proposed in our Recommendation. Even the 
maximum amount of Federal revenue that is likely to be available during 
the next authorization period is insufficient to fund the appropriate 
Federal share of the nation's transit investment needs. The following 
recommended funding levels for the core and new flexible programs are 
based on the revenue that is available from the Mass Transit Account.
    Funding for the core transit program should be authorized at $6.25 
billion in Fiscal Year 1998 and should be adjusted for inflation in 
later years. Since transit capital needs alone are $15 billion per 
year, this proposal does not meet clearly identified transit funding 
needs. Instead, it sets funding at levels that can be supported with 
existing gasoline tax revenues and MTA balances, along with additional 
revenue from our proposal to return to the transportation trust funds 
the revenue from the 4.3 cents per gallon Federal gasoline tax that now 
goes to deficit reduction.
    Transit funds should be divided among individual programs as 
authorized by ISTEA, retaining to ratio of $1.36 in formula funds for 
each $1.00 in discretionary funds; the 40:40:20 ratio for the New 
Start, Fixed Guideway Modernization, and Bus discretionary components 
of the Major Capital Investment Program; the 80 percent Federal share 
for transit projects and the 90 percent Federal share for Clean Air Act 
and Americans with Disabilities Act (ADA) costs; and Federal authority 
for the use of ``soft match'' resources such as toll revenues for the 
local share of project funds. Funding should continue to flow to 
Designated Recipients.
III. Expand the definition of allowable capital expenditures to include 
        maintenance and mandate relief
    Despite ISTEA's overall record of success, annual appropriations 
measures have significantly reduce'' urbanized area (UZA) transit 
operating assistance, causing serious problems for transit agencies. To 
ameliorate the problems caused by this operating assistance shortfall, 
APTA proposes to expand the transit program's definition of allowable 
capital expenditures. For small UZAs, we propose to eliminate the 
distinction between capital and operating assistance as is now the case 
for non-urban areas, so that transit operators in these areas could use 
all of their funds for capital or operating purposes as currently 
defined. This proposal would not affect the program structure or the 
distribution of funds. No transit agency would receive a lower share of 
funds. If Congress retains operating assistance for large UZAs, we 
further propose that transit operators in these UZAs be able to trade 
in $1 of operating assistance for $2 of capital.
IV. Support transit in small urbanized areas and rural areas
    To provide adequate support for transit in smaller urbanized areas 
(UZAs) and in rural areas, APTA supports the existing ISTEA formulas 
for smaller UZA and non-urban funding, as well as a provision to allow 
all these funds to be used for operating assistance as defined under 
current law, as is currently permitted for rural areas, and minimum 
regulatory requirements for these areas.
V. Provide for a unified appropriation of transit finds
    To create more stability and predictability in annual transit 
funding levels, APTA proposes that transit funds be appropriated in a 
unified amount as is done for the Federal-Aid Highway Program. Any 
shortfall of appropriations below authorized levels would be 
proportioned equally among all transit programs. This procedure would 
result in a uniform first-year outlay rate for the total transit 
program in the same way that a uniform first-year outlay rate is 
calculated for the Federal-Aid Highway Program.
    This proposal would:
     Seek as a worthy goal equality in first year outlay rates 
for transit and highways, which is currently a 17 percent first-year 
outlay rate; and
     Establish a level playing field between the highway and 
transit programs as they are treated in the budget and appropriations 
processes.
    The next authorization act can fulfill these goals by applying the 
principle of a level playing field between transit and highway 
investments to the budget and appropriations process.
VI. Increase the Federal transit program's efficiency
    Building on Congressional and U.S. DOT initiatives, APTA proposes 
several administrative and regulatory changes to make the Federal 
transit program more cost-effective. We propose to:
    (1) Increase capital flexibility by eliminating the associated 
capital maintenance item threshold and expanding capital maintenance 
eligibility to be consistent with FHWA programs;
    (2) Provide flexibility under the drug and alcohol testing program, 
for example, when a recipient must comply with FHWA and FTA rules;
    (3) Apply Federal procurement requirements only to capital funds;
    (4) Allow proceeds from sale of transit assets--including real 
property--to remain with grantee if used for transit purposes;
    (5) Permit transit operators to coordinate or combine Federal and 
state reviews to avoid duplication of efforts;
    (6) Reassert that ETA Circulars do not carry the weight of 
regulations;
    (7) Establish a direct link between non-rush hour half-fare 
requirements for senior citizens and the provision of Federal operating 
assistance;
    (8) Modify the parking tax benefit to narrow the difference between 
the $65 per month tax-free transit benefit ant the S165 per month tax-
free parking benefit. Require that Federal employees pay market prices 
for workplace parking. Create a Federal income tax deduction for trait 
commuter expenses;
    (9) Establish a procedure to give transit agencies credit for their 
contributions to attainment under the Clean Air Act;
    (10) Allow transit operators to provide charter bus service with 
fewer restrictions;
    (11) Extend the current exemption for public transit buses that 
exceed Interstate System axle weight standards, consistent with an 
FHWA/FTA study on this subject;
    (12) Ensure that compliance with the Americans with Disabilities 
Act:
     Establishes a method that accommodates financial burden on 
transit systems;
     Provides discretion to local officials;
     Defines compliance that is certified by FTA;
     Strengthens the coordination process at the Federal level 
to ensure transit access to all Federal funding for transportation 
services;
    (13) Reform section 13(c) legislatively with respect to its 
applicability, to ensure that it complies with the Administrative 
Procedure Act (APA) and is subject to a time limit, and to cover 
substantive issues.
VII. Modify the congestion mitigation and air quality program
    Steady annual increases in flexible funding transfers to transit 
prove that ISTEA's flexible funding provisions respond to the needs of 
states and metropolitan regions. APTA favors adjustments to the CMAQ 
program so it will continue to provide resources for areas that come 
into attainment, but continue to face serious congestion problems and 
potential long-term air quality deterioration. The Federal Government 
should not penalize states and regions for achieving air quality goals.
VIII. Maintain and strengthen the planning requirements
    ISTEA's planning provisions are fundamentally sound, including 
current authority for Metropolitan Planning Organizations, public 
participation requirements, transportation and land use linkages, and 
multimodal corridor analysis through the Major Investment Study (MIS) 
criteria. APTA recommends changes to ensure that the planning process 
fully accounts for often-ignored benefits of transit investments and to 
provide sufficient resources so that planning does not become another 
``unfunded Federal mandate.''
IX. Apply the highway solvency test instead of the more stringent mass 
        transit solvency test to the mass transit account
    Spending from the Mass Transit Account of the Highway Trust Fund 
should be required to comply with the Byrd Test instead of the more 
restrictive Rostenkowski Test. This change will create a more level 
playing field between highways and transit since the Byrd Test applies 
to the Highway Account.
X. Recapture the ``deficit reduction'' 4.3 cents/gallon gasoline tax 
        for the highway trust fund, depositing the revenue from 0.5 
        cents in a new intercity passenger rail account and 20 percent 
        of the revenue from the remaining 3.8 cents in the mass transit 
        account
    We join other transportation industry organizations in calling for 
a return of the deficit reduction gas tax to the Highway Trust Fund. 
The revenue from a half-cent of this tax should be deposited in a new 
Intercity Passenger Rail Account. In keeping with the precedent set by 
President Reagan and reaffirmed by Presidents Bush and Clinton, the 
Mass Transit Account should receive 20 percent of the revenue from the 
remaining 3.8 cents, with the balance reserved for the Highway Account.
XI. Continue to support the transit cooperative research program 
        (TCRP), university transportation centers, and ISTEA 
        institutes; and create a new technology development and 
        demonstration program
    ISTEA has enabled the nation's transit agencies to improve 
productivity and serve their customers more effectively. ISTEA 
established the Transit Cooperative Research Program (TCRP), the first 
national research program to give the transit community a direct role 
in addressing critical challenges. Like its highway counterpart, TCRP 
makes a significant contribution to the national interest that deserves 
continued support. The university transportation centers (UTCs) and the 
university institutes established by ISTEA (ISTEA Institutes) also 
conduct important research, education, and training programs. The next 
authorization should retain these programs and provide them with no 
less than their current percentage of transit program funding. We also 
recommend the creation of a Technology Development and Demonstration 
Program as a partnership of the Federal Government, transit agencies, 
and the private sector. This Program would support the implementation 
of new transit technologies and practices, including those identified 
through TCRP.
XII. Allow states to use the state shares of flexible funding programs 
        for intercity passenger rail investments and maintain the 
        section 130 program to provide safety improvements for public 
        highway/rail grade crossings
    Since it is important to ensure that Governors and state DOTs have 
control over the use of flexible fiends, we recommend that states be 
authorized to use the state share of flexible funding programs for 
intercity passenger rail investments. The use of funds for intercity 
passenger rail purposes is acceptable, however, only if there is an 
increase in the total amount of flexible funding. Therefore, this 
proposal is conditioned on the adoption of APTA's proposal to make 
available a higher total level of flexible funding with Highway and 
Mass Transit Account and ``deficit reduction'' gas tax resources.
    APTA also supports the Federal Highway Administration's Section 130 
Highway/Rail Grade Crossing Safety Program, which has successfully 
improved safety by funding state efforts to reduce accidents at 
highway/rail grade crossings.
                        detailed recommendations
I. Maintain ISTEA'S provisions for flexible funding and a level playing 
        field between transit and highway investments, with expanded 
        opportunities for flexible funding
    Proposal: Retain the Title I program structure of formula and 
discretionary programs and expand the Surface Transportation Program 
using revenue from the Highway Account and the Mass Transit Account.
    Background: ISTEA's innovative flexible funding and level playing 
field provisions have been successful and should be retained. Among the 
most important programs and principles are the Surface Transportation 
Program (STP) and the Congestion Mitigation and Air Quality (CMAQ) 
program, including the metropolitan suballocations; the equal, 80 
percent Federal shares of highway and transit projects; and the use of 
local ``soft match'' for transit projects. ISTEA has strengthened the 
partnership among Federal, state, and local governments, created new 
incentives to manage Federal resources more efficiently, and gone far 
to reduce Federal policy biases against transit investments.
    Flexible funding transfers to transit have risen from $304 million 
in fiscal year 1992 to $780 million in fiscal year 1996, for a total of 
nearly $3 billion in the first 5 years of ISTEA. This steady increase 
is one indication that transit is a priority at the state and local 
level, and that ISTEA's flexible funding Provisions have been 
successful.
    APTA supports an increase in the authorized funding level for the 
Surface Transportation Program using resources from the Highway Trust 
Fund's Highway Account (HA) and Mass Transit Account (MTA). After the 
transit core program has been funded at our recommended level of $6.25 
billion in fiscal year 1998, additional MTA funds would go to a new 
STP-transit program. For each $1.00 of MTA funds that go to the STP-
transit program, an additional $2.00 in Highway Account funds would go 
to the STP-highway program. For fiscal year 1999 and future years, the 
transit core program, STP-transit program, STP-highway program, and 
highway core program funding levels would be adjusted for inflation.
    Although funding for the STP-transit and STP-highway programs would 
be authorized in different titles of the U.S. Code, each program would 
be apportioned in the same manner as the existing Surface 
Transportation Program and would include metropolitan area 
suballocations like the existing program. Funds from each program could 
be used for the same purposes allowed under the existing program; 
proposed changes in the definition of eligible projects would apply to 
each of the programs in an identical manner. STP-transit funds could be 
flexibly used for highway projects selected by states or MPOs, just as 
STP-highway funds could be flexibly used for transit projects.
    APTA estimates that the new STP-transit program could be.authorized 
at $1.2 billion in fiscal year 1998. Under the 1-to-2 ratio, additional 
STP-highway funding would be $2.4 billion in fiscal year 1998. [See 
attached Table, Reauthorization Proposal Funding Levels.]
    For fiscal year 1998, transit core funding and transit-flexible 
funding would total $7.45 billion, and this amount would increase with 
inflation. Total transit funding over 5 years (FY 1998-2002) would be 
$39.5 billion. To provide this funding level, we propose that the Mass 
Transit Account receive the revenue from a share of the 4.3 cents/
gallon Federal motor fuels tax that now goes to deficit reduction, that 
the Byrd rule solvency test apply to all Highway Trust Fund Accounts, 
and that existing balances in the Mass Transit Account be fully 
committed.
    Action: Amend subtitle III of Title 49 to create a Surface 
Transportation Program-transit program with funding from the Mass 
Transit Account; for each $1.00 of funds Authorized for this program, 
increase the authorized funding for the Title 23 Surface Transportation 
Program by an additional $2.00 from the Highway Account.
II. Maintain the existing transit program structure
    Proposal: Retain the current Federal transit program structure of 
formula and major capital investment (discretionary) programs.
    Background: Federal surface transportation programs provide 
essential funding for infrastructure investments that promote economic 
development, increased productivity, and individual opportunity. The 
Federal Transit Program is a vital component of this program: It 
supports transit systems that fill critical gaps in the comprehensive 
national transportation network, and it creates more transportation 
choices so that our infrastructure can move people and goods more 
efficiently and provide an alternative to ever more costly congestion.
    To meet these critical economic and social needs, the existing 
Federal transit program structure should be retained, including a Major 
Capital Investment (Discretionary) Program with New Start, Fixed 
Guideway Modernization, and Bus/Bus Facility Components; a Formula 
Program with Urbanized Area, Non-Urban, and Elderly/Disabled 
Components; and the Research and Development Program. The Federal 
program should be administered by a transit agency or advocate whose 
status within DOT is equal to its modal counterparts. Funding should be 
$6.25 billion in fiscal year 1998 and should be adjusted for inflation 
in later years.
    A categorical program:
     Provides a base level of predictable, stable fuming that 
is important to all transit operators including those in medium-sized 
and smaller metropolitan areas and rural areas;
     Retains a focus on the needs of transit-dependent 
individuals and the high quality service that must be provided to 
attract and keep new customers, both of which might be ignored or 
undervalued in the allocation of block grant funds;
     Allows transit agencies to participate in local and 
regional planning as full partners with their own assets to contribute, 
rather than putting them in the position of supplicants with few 
resources of their own;
     Within DOT, ensures that transit needs will receive 
appropriate attention and consideration.
            Transit Program Funding
    The next authorization act should provide funding for a core 
transit program before additional flexible funding is provided through 
the STP-Transit Program as proposed in our Recommendation. Even the 
maximum amount of Federal revenue that is likely to be available during 
the next authorization period is insufficient to fund the appropriate 
Federal share of the nation's transit investment needs.
    We recommend that funding for the transit core program be set at 
$6.25 billion in fiscal year 1998 and adjusted for inflation in later 
years for a 5-year total of $33.1 billion in fiscal year 1998-2002. As 
discussed above, additional Mass Transit Account authorizations above 
the amount for the transit core program would go to the new STP-transit 
program. When these transit-flexible funds are included, transit 
funding would total $39.5 billion during fiscal year 1998-2002. The 
$39.5 billion funding level can be achieved if the Mass Transit Account 
receives the revenue from a share of the 4.3 cents/gallon Federal motor 
fuels tax that now goes to deficit reduction, the Byrd rule solvency 
test applies to all Highway Trust Fund Accounts, and existing balances 
in the Mass Transit Account are committed. We also support the highest 
possible authorization level of General Fund support for the Federal 
transit program, although we recognize that in recent years, General 
Fund support for transit has declined steadily in relative and absolute 
terms.
            Equitable Funding Within the Transit Program
    The formula program is an essential component of the Federal 
transit program and should continue to receive an equitable share of 
Federal transit funding. The current equity formulas, derived from the 
funding levels authorized in ISTEA, should be retained:
     There should be $1.36 in urbanized area and rural Formula 
funding for every $1 in Major Capital Investment (Discretionary) 
funding.
     The Major Capital Investment Program should continue to be 
divided on a 40:40:20 basis among the New Start, Fixed Guideway 
Modernization, and Bus/Bus Facility programs, respectively.
     Within the Formula program, we support the division of 
funds authorized in ISTEA. Thus the Section 18 Non-urban program should 
receive 5.5 percent of the total funding provided for the Section 9 and 
18 programs.
            Major Capital Investment Program
    APTA supports all the existing Major Capital Investment programs, 
but is neutral on the process that Congress uses to earmark funds for 
individual New Start and Bus/Bus Facility projects. These discretionary 
programs provide a strong incentive for innovative, customer-responsive 
transit investments.
    The New Start program creates incentives for metropolitan areas to 
develop and implement innovative transit alternatives in high density 
corridors. This program promotes greater choices for commuters who 
would otherwise have fewer alternatives to congestion and rush hour 
travel. It is essential not to limit the New Start program to existing 
projects or otherwise inhibit the efforts of more metropolitan areas to 
incorporate innovative rail and busway options into their long-range 
planning processes. The planning requirements for transit New Starts 
should, under the MIS regulations, be comparable to those for highway 
developments. The next authorization act should provide for equity in 
planning applications for all modes.
    The Fixed Guideway Modernization program helps maintain and extend 
the useful life of major capital investments in many of our largest 
metropolitan areas. It has enabled the historic rail cities to maintain 
infrastructure which, in many cases, had suffered many years of neglect 
or disinvestment by private owners Any proposal to change the formula 
for distribution of fixed guideway modernization funds should be the 
product of a consensus among the fixed guideway cities.
    The Bus/Bus Facilities program meets major facility and equipment 
purchase needs that cannot be accommodated through the formula program. 
Further consideration should be given to changes in the Section 3 Bus/
Bus Facility program that would provide minimum allocations to states 
or regions over the life of the reauthorization.
    Action: Affirm support for the current law version of the Federal 
Transit Act, except as noted elsewhere in this proposal.
III. Expand the definition of allowable capital expenditures to include 
        maintenance and mandate relief
    Proposal: Expand the transit program's definition of allowable 
capital expenditures and eliminate the distinction between capital and 
operating assistance for small UZAs as is now the case for non-urban 
areas.
    Background: For transit operators, ISTEA's most serious shortcoming 
has been the failure to achieve full funding of the urbanized area 
operating assistance cap. Operating assistance shortfalls have 
undermined ISTEA's goal of providing stable, predictable transit 
funding to allow elective long-term planning and the provision of cost-
effective, affordable service. Congress and the Administration have 
undertaken several initiatives to ameliorate the problems caused by the 
decline in operating assistance, including measures to reduce unneeded 
regulations and to expand the definition of allowable capital 
expenditures.
    Looking to the Federal-Aid Highway Program as a model for 
additional reform in this area, APTA proposes to incorporate features 
of that program into the transit program Instead of an operating cap 
that limits spending on certain categories of expenditures, the transit 
program could have a uniform definition of allowable expenditures that 
includes the use of Mass Transit Account and General Revenue funds for 
maintenance expenditures, the costs of Federal mandates, planning, and 
research. This change would build on steps taken in the Fiscal Year 
1996 Transportation Appropriations Act, which expanded the definition 
of allowable capital expenditures.
    This proposal would not affect the program structure or the 
distribution of funds. No transit agency would receive a lower share of 
funds. The proposal would:
     Eliminate the ``operating limit'' formula apportionment;
     Expand the use of UZA formula funds for maintenance, 
mandates, etc.; and
     Eliminate the restrictions on the use of funds for UZAs 
with fewer than 200,000 people and rural areas, as is now the case for 
rural areas.
    Action: Amend subtitle IN to expand the definition of allowable 
capital expenditures.
            Alternative Capital-Operating Trade-In Proposal
    Proposal: Establish a Capital-Operating Trade-In Program.
    Background: In the event that Congress maintains the operating 
assistance provisions of current law for large UZAs, APTA recommends 
the establishment of a program that would allow transit operators to 
trade operating assistance dollars for capital dollars. Under this 
proposal, an amount from $400 million to $800 million would be a take-
down off the top of the transit appropriation. Transit operators in 
UZAs with more than 200,000 people that choose to trade in their 
operating limit would receive an additional $1 of capital for each $1 
of operating funds they used for capital purposes. In eject, they would 
trade in $1 of operating assistance for $2 of capital. All funds in the 
takedown pool that are not used to match traded-in operating funds 
would revert to the urbanized area formula program for reapportionment.
    Action: Amend subtitle III to establish a capital-operating trade-
in program.
IV. Support transit in small urbanized areas and rural areas
    Proposal: Support transit agencies in small urbanized areas and in 
rural areas by allowing them to use all Federal funds for operating or 
capital purposes without restrictions, and eliminating burdensome 
reporting requirements.
    Background: Transit operators provide essential basic mobility for 
millions of people in the nation's small urbanized areas and non-urban 
areas. ISTEA affirmed the importance of Federal support for these 
programs by expanding the existing formula programs that assist them; 
transit operators in these areas also receive discretionary funds, 
chiefly through the bus/bus facility program.
    For transit-dependent residents of these communities, including 
many elderly and low-income working people and people with 
disabilities, transit service is a critical lifeline to jobs, stores, 
schools, churches, and health care. The next authorization act must 
protect the programs that give these Americans access to affordable 
transit service.
    Given the shortfalls in operating assistance during the ISTEA era, 
the transit industry recommends that small urban and non-urban transit 
agencies be allowed to use all formula funds for operating assistance 
needs as defined in current law. We also recommend that these transit 
agencies be exempted from burdensome regulatory requirements.
    The current relationship between Section 9 and 18 should be 
maintained: The Section 18 non-urban program should receive 5.5 percent 
of the total funding provided to Sections 9 and 18. All of these funds 
should be available for operating as well as capital needs. The 18(i) 
set-aside for intercity bus service should be eliminated. The next 
authorization act should include a provision requiring that section 18 
funds should first be made available to section 18 public entity 
recipients before such funds may be made available to other entities 
that are not necessarily open to the public.
    Action: Amend relevant sections of the law.
V. Provide for a unified appropriation of transit funds
    Proposal: Have the transit program appropriated as a single amount 
with programs funded proportionately to authorized levels.
    Background: The ability to plan long-term investments in transit 
has been restricted by uncertainty in transit appropriations. 
Variations in outlay rates among transit programs have resulted in 
uneven reductions of program levels when appropriations have fallen 
below authorized levels. The operating limit for urbanized area formula 
funds has been significantly reduced as have research funds. The ratio 
of formula to Major Capital Investment funding also changes from year 
to year.
    APTA proposes that transit funds be appropriated in a uniform 
amount as is done for the Federal-Aid Highway Program. Any shortfall of 
appropriations below authorized levels would be proportioned equally 
among all transit programs. This procedure would result in a uniform 
first-year outlay rate for the total transit program in the same way 
that a uniform first-year outlay rate is known for the Federal-Aid 
Highway Program. APTA proposes that the portion of expenditures from 
formula funds allowed for maintenance and mandate relief be consistent 
for all recipients and sufficiently high that the first-year outlay 
rates for the entire transit program and the entire Federal-Aid Highway 
Program be equal. This would eliminate the need to appropriate transit 
and highways at different portions of their authorized levels to 
achieve first-year outlay savings.
    This proposal would:
     Seek as a worthy goal equality in first-year outlay rates 
for transit and highways, which, currently a 17 percent first-year 
outlay rate; and
     Establish a level playing field between the highway and 
transit programs as they are treated in the budget and appropriations 
processes.
    The next authorization act can fulfill these goals by applying the 
principle of a level playing field between transit and highway 
investments to the budget and appropriations process. Improved economic 
productivity and individual access to opportunity both require a 
Federal transit program that allows transit operators to meet 
customers' needs in a businesslike way with a minimum of bureaucratic 
restrictions.
    Action: Amend subtitle III to establish a unified transit 
appropriation as described above.
VI. Increase the Federal transit program's efficiency
    Because they increase transit operating costs, Federal mandates 
limit transit agencies' ability to provide their customers with 
efficient, affordable service. The total annual cost of Federal 
mandates is greater than the level of operating assistance authorized 
by ISTEA, and far in excess of the actual operating aid levels 
appropriated during the ISTEA era. Federal policymakers must weigh the 
need for transit service as well as their desire to achieve the 
laudable goals of Federal mandates. To reduce the conflict among these 
varying needs, Federal policy should increase the resources available 
to transit agencies and reduce the regulatory burden on these agencies.
    We propose the following regulatory efficiencies for inclusion in 
the next authorization act:

    Proposal 1: Eliminate associated capital maintenance item 
threshold. Expand capital maintenance eligibility to be consistent with 
FAWN programs.
    Background: Congress has cut Federal operating assistance 
significantly. One concern is that transit systems as a result may be 
forced to cut back on routine and ongoing maintenance, which could 
result in a more rapid depreciation of federally funded assets. A 
response to this concern would be to permit the capitalization of 
maintenance costs, which already is the case under programs 
administered by the FHWA and, to a lesser extent, the FTA. The fiscal 
year 1996 DOT appropriations act, for example, made certain bus 
overhaul costs eligible for capital funding. This proposal could be 
implemented piecemeal--by modifying existing provisions of law--or by a 
wholesale change in the definition of ``capital'' under Federal transit 
laws.
    Action: For piecemeal approach, at 49 USC 5307(a)(1) delete``. . . 
each costing at least .5 percent . . . [through end of sentence].'' For 
broader approach, amend statutory definition of capital at 49 USC 
5302(a)(1).

    Proposal 2: Provide flexibility under drug and alcohol testing 
program.
    Background: APTA supports Federal drug and alcohol testing of 
safety workers, including operators of transit vehicles. Nonetheless, 
the application of the rules sometimes is duplicative, burdensome, and 
costly. Where the underlying program goals are unaffected, APTA urges 
greater flexibility in DOT's administration of the program. For 
example, if an entity is subject both to FTA's and FlIWA's programs, 
which have different requirements, the entity should be permitted to 
comply only with the program that affects its operations more. In 
addition, under the existing DOT regulations, transit systems may have 
their random drug and alcohol testing rates lowered only on the basis 
of industry-wide data. Random testing is costly; if a transit system 
can show from its own data that positive drug and alcohol rates are 
low, it should be able to apply to FTA for lowered random testing rates 
on an individual basis, and not be held to a more difficult industry-
wide standard.
    Action: Amend FTA law, not Omnibus Transportation Employee Testing 
Act.

    Proposal 3: Apply Federal procurement requirements only to capital 
funds.
    Background: Under current FTA policy, Federal procurement 
requirements apply to all federally funded projects, including those 
funded with operating assistance. Because operating assistance is 
``fungible'' and cannot be limited to a particular project in the way 
that capital funds can, this FTA policy essentially means that Federal 
procurement rules apply to all of a grantee's procurements, even those 
funded solely from state and local sources. There is no indication that 
Federal procurement requirements were meant to apply so broadly. 
Accordingly, APTA recommends that Federal transit laws be amended to 
limit Federal procurement requirements to the use of Federal capital 
funds, thereby permitting projects not using Federal capital funds to 
be subject to relevant state and local requirements.
    Action: Add new provision at 49 USC 5302.

    Proposal 4: Proceeds from sale of transit assets--including real 
property--should remain with grantee if used for transit purposes.
    Background: Under current Federal transit law, if a grantee chooses 
to sell federally funded assets, the Federal share of the proceeds 
generally must be returned to the Federal Government. This acts as a 
barrier to good business practices, and tends to discourage a grantee 
from making decisions based on local conditions and circumstances. 
ISTEA added a new provision permitting a grantee to transfer Federal 
assets to another public body if the assets no longer are needed, and 
APTA recommend that the provision be amended to permit a grantee also 
to sell federally funded assets and to keep the proceeds so long as 
they are used for transit purposes.
    Action: Amend 49 USC 5334(g) to permit such dispositions.

    Proposal 5: Permit transit operators to coordinate/combine Federal/
state reviews to avoid duplication of efforts.
    Background: Recipients of Federal transit funds are subject to 
comprehensive Federal triennial reviews. Increasingly, such systems are 
subject to state and local reviews as well. To reduce duplicative costs 
and encourage comprehensive and coordinated reviews, to the extent 
practical Federal reviews should be administered in concert with 
related state or local reviews.
    Action: Amend triennial review section of law at 49 USC 5307(i)(2).

    Proposal 6: Reassert that FTA Circulars do not carry the weight of 
regulations.
    Background: In contrast to FTA regulations that are issued in draft 
form and subject to comment and revision, FTA circulars are frequently 
issued without the benefit of the same public review. Unfortunately, 
however, circulars often carry the same weight and penalties as 
regulations.
    Action: Include statutory or, more likely, report language that 
instructs the FTA to limit circulars for the purpose of providing 
guidance.

    Proposal 7: Establish a direct link between non-rush hour half-fare 
requirements for senior citizens and the provision of Federal operating 
assistance.
    Background: Under section 5307(d)(1)(D)--formerly section 5m--of 
the Federal Transit Act, approval of formula program grants by the 
Secretary are contingent on half fares being provided to the elderly 
and handicapped during non-peak hours of operation. While many transit 
systems may prefer to maintain this benefit, the elimination of this 
provision would give others the discretion to structure fares in a 
manner more appropriate to their demographics and financial condition. 
A redefinition of this provision would make the implications of 
operating assistance cuts more apparent to Congress and would provide 
discretion to local authorities.
    Action: amend 49 USC 5307(d)(1)(D) to tie this requirement 
specifically to operating assistance grants.

    Proposal 8: Modify the parking tax benefit to narrow the difference 
between the $65 per month tax-free transit benefit and the $165 per 
month tax-free parking benefit. Require that Federal employees pay the 
market rates for workplace parking. Provide a Federal income tax 
deduction for public transit commuting expenses.
    Background: Employers can subsidize employee work trips through 
tax-free fringe benefits. Persons commuting in personal vehicles can 
receive free parking and transit users can receive transit passes. The 
value of these two benefits is not, however, equal. The parking benefit 
is tax free up to $165 per month whereas the transit pass benefit is 
tax free only up to $65 per month. Transit users are limited to 39 
percent of the benefit available to private vehicle drivers simply 
because they choose to use transit. In addition to encouraging private 
vehicle commuting and discouraging transit commuting, the tax-free 
parking benefit costs the Federal Government $17 billion annually in 
lost tax revenues.
    In recent years, Congress has made significant progress in 
redressing this imbalance. APTA recommends further reforms to equalize 
the tax-exempt fringe benefit for transit riders and private vehicle 
commuters, and supports certain revisions to the tax code to eliminate 
barriers that deter employers from offering the benefit. APTA 
recommends that employees of the Federal Government be subject to 
market rates for parking costs.
    We further recommend that individuals (both itemizers and 
nonitemizers) should be allowed an income tax deduction in the amount 
of their public transit expenses commuting to and from their places of 
employment. For example, if the cost of a monthly transit pass is $100, 
a commuter could deduct $1,200 from his/her taxable income. A 28 
percent taxpayer would save approximately $336 from his/her Federal 
income tax annually. To control the overall cost to the Treasury, an 
annual ceiling could be imposed, perhaps as high as $1,500.00 per 
taxpayer.
    Action (1): Amend the Tax Code to provide equal monthly tax-free 
benefits for employee parking and employee transit expenses; make 
certain revisions to IRC Section 132(f)(4) to make the benefit more 
attractive to employers; and to allow individuals to claim as a Federal 
tax deduction the cost of commuting to and from work on public transit 
This tax deduction would be available to all taxpayers across the 
economic spectrum--both itemizers and nonitemizers.
    (2) Require Federal agencies to charge employees market rates for 
workplace parking.

    Proposal 9: Establish a procedure to give transit agencies credit 
for their contributions to attainment under the Clean Air Act.
    Background: Transit is one of the most environmentally beneficial 
forms of urban transportation. Transit riders use less energy and cause 
smaller quantities of emission than private vehicle drivers. Transit 
vehicles use less right-of-way than roads and encourage land use 
patterns that use fewer resources and cause less stress for the natural 
environment.
    With the recent relaxation of Employee Commute Option and 
Inspection and Maintenance requirements, some of the mandatory tools 
available to local officials to achieve their clean air standards have 
been reduced. The goals, however, remain in place without any more 
definitive means of achieving them. Transit investment and enhancement 
should be available as a measure by which local officials can receive 
enhanced credit for achieving their clean air attainment goals.
    Action: Amend Clean Air Act.

    Proposal 10: Allow transit operators to provide charter bus 
services with fewer restrictions.
    Background: ISTEA established a charter bus demonstration program 
pursuant to which transit systems could meet the needs of government 
civic, charitable, and other community activities which otherwise would 
not be served in a cost effective and efficient manner. The 
demonstration program went well, and APTA recommends that its 
principles be embodied in permanent law. Alternatively, APTA recommends 
that the remaining charter bus program be administered in accordance 
with the more flexible and less costly regulations that were in place 
before 1983.
    Action: Make provisions of demonstration program permanent law; 
incorporate key provisions of pre-1983 regulations into law.

    Proposal 11: Extend the current exemption for public transit buses 
that exceed Interstate System axle weight standards, consistent with an 
FHWA/FTA study on this subject.
    Background: Current law provides an exemption from Interstate 
System axle weight standards for transit buses until the date that 
ISTEA is reauthorized. An FHWA/FTA study has found that only a portion 
of such transit bus traffic is overweight, and that use of interstate 
highways is vital to some transit agencies. The study further notes 
that, due to cost and scheduling problems, it is not feasible to 
operate different types of buses on and off the interstate system. 
Accordingly, the study recommends that public transit buses be allowed 
to operate on the interstate system at a grandfathered weight until 
2003.
    Action: Amend the law to extend the exemption until 2003.

    Proposal 12: Ensure that compliance with the Americans with 
Disabilities Act:
     Establishes a method that accommodates financial burden on 
transit systems;
     Provides discretion to local officials;
     Defines compliance that is certified by ETA;
     Strengthens the coordination process at the Federal lend 
to ensure transit access to social service funding.
    Background: Preliminary estimates indicate that total ADA costs to 
transit operators will exceed $1.4 billion annually, including some 
$1.1 billion in paratransit costs (of which at least $980 million is 
for operation or contract operation of paratransit service). The final 
implementation of paratransit plans is likely to increase costs even 
more. Therefore, every effort should be made to control future cost 
increases. Because the goal of meeting 100 percent of demand is 
unrealistic, APTA recommends a number of regulatory reforms that would 
help contain costs. They include:
     The establishment of a flexible interpretation of 
compliance that would provide local officials with some discretion in 
balancing paratransit requirements with mainline needs.
     Statutory language stipulating that agencies that receive 
funding from any Federal source for non-emergency transportation 
service shall participate in the design and delivery of paratransit 
services, and in the cooperative transportation planning process, as 
identified in ISTEA.
     Provisions to broaden flexibility of Federal 
transportation funds to authorize eligibility for paratransit operating 
and capital costs necessary to comply with the complementary 
paratransit service requirements of the ADA
    Action: Add a new ``ADA Enhancement Program `` with these 
provisions at 49 USC 5310(h).

    Proposal 13: Reform section 13(c) legislatively with respect to its 
applicability, to ensure that it complies with the Administrative 
Procedure Act (APA) and is subject to a time limit, and to cover 
substantive issues.
    Background: In 1964, Congress responded to the collapse of many 
private mass transit systems with the Urban Mass Transportation Act 
(UMTA) of 1964, which provided Federal assistance to public transit 
systems. In drafting the UMTA, Congress included Section 13(c) in 
response to the concerns of organized labor that the status and 
bargaining rights of private sector employees would be undermined by 
the conversion from private to public mass transit systems.
    Section 13(c) has long outlived its original intent of protecting 
private sector employees as they were absorbed into public transit 
systems. Accordingly, APTA recommends that Section 13(c) be reformed 
legislatively in the three areas of applicability, process and 
substance.
    Action: Amend section 13(c) to reflect the following positions:
            A. Applicability
    (i) 13(c) should not apply to grants for operating assistance, 
routine rolling stock replacements, or other projects with no adverse 
impact on workers or that are required to carry out another Federal 
mandate.
    (ii) Protective arrangements should expire within a fixed time 
(e.g. 3 years for capital assistance).
            B. Process
    (i) The process for making 13(c) certifications should be reformed 
to comply with the Administrative Procedure Act (APA) and be subject to 
a time limit (e.g., 60 days) after which grant funds may be awarded by 
the Department of Transportation (DOT) without a Department of Labor 
(DOL) certification.
    (ii) The specific reforms that would be achieved by applying the 
APA include:
           Require legal basis for DOL decisions to be stated
           No ex parte contacts
           Precedential value of decisions established
           APE judicial review available, both before or after 
        grant funds accepted
           Burden of proof on claimant
    (iii) Consideration should be given to administering section 13(c) 
in DOT rather than DOL.
            C. Substantive Issues
    (i) Reform efforts should make clear that:
           A wide range of impasse resolution measures may be 
        agreed upon by the parties and should be based on state law. 
        These may include the right to strike, fact finding, mediation, 
        and interest arbitration provided both parties are in 
        agreement. Interest arbitration is not to be imposed 
        unilaterally.
           Section 13(c) does not provide carry over employment 
        rights from contractor to contractor.
           Section 13(c) does not infringe on basic management 
        rights to contract out, use part time employees, plan routes 
        and service, etc.
           The 6-year severance provisions should be 
        eliminated.
           Contingent liability arising from issues such as 
        service area workers included under 13(c) protections should be 
        ended
VII. Modify the congestion mitigation and air quality program
    Proposal: Modify the Congestion Mitigation and Air Quality (CMAQ) 
program to provide for the weighted apportionment of CMAQ funds in 
states that had carbon monoxide or ozone non-attainment areas on 
January 1992, and that have since come into compliance with Mean Air 
Act standards. Such areas would be considered ``clean air maintenance'' 
areas and apportionment would be calculated using the weighting factors 
in current law.
    Background: CMAQ funds under ISTEA are distributed on a basis where 
the population in non-attainment areas, as it Dates to all such areas, 
is multiplied by a factor of 1.0 to 1.4 (depending on the severity of 
the air quality problem). Notwithstanding such factors, each state 
receives at least \1/2\ of 1 percent of the total. States without non-
attainment areas for carbon monoxide or ozone within their borders can 
use funds for projects eligible for assistance under the Surface 
Transportation Program. ISTEA was, however, amended under the National 
Highway System Designation Act (P.L. 104-59) so that no state receives 
less CMAQ funds in fiscal year 1996 or fiscal year 1997 than it 
received in fiscal year 1995.
    Support for the CMAQ program is likely to increase if funds are 
distributed to more states for congestion mitigation and improvement or 
maintenance of air quality. As more areas come into compliance with air 
quality standards current law would reduce the number of areas 
receiving such funds, which are one of the best sources of flexible 
funding for transit. Project eligibility standards should be retained, 
however, and in particular, the prohibition on the use of CMAQ funds 
for projects that result in the construction of new capacity available 
to single occupancy vehicles (except in off-peak hours) should be 
retained.
    Action: Amend 23 USC 149(b) to ensure distribution of CMAQ funds to 
``clean air maintenance'' areas.
VIII. Maintain and strengthen the planning requirements
    Introduction: ISTEA's planning provisions triggered a more 
inclusive, comprehensive, intermodal, flexible, locally responsive, and 
transit-friendly approach to transportation planning. ISTEA provides 
communities with a planning process to help make difficult choices and 
justify them in the short and long terms. APTA strongly supports a 
continued Federal role in transportation planning. APTA endorses 
ISTEA's planning provisions, and in some cases recommends measures to 
strengthen them.
    This endorsement is based in large part on the results of APTA's 
Survey on the Planning Provisions of ISTEA. In May 1995, under the 
leadership of the APTA Policy and Planning Committee, a survey was sent 
to members of the Policy and Planning and Legislative Committees in 
order to obtain their views on ISTEA's planning provisions. The 
enclosed survey results overwhelmingly support most provisions and 
recognize the need for improvement in a few others.
    APTA endorses ISTEA's regulatory framework for process, criteria, 
elements to consider, level of detail, participants, funding 
assumptions, and update schedules as appropriate. The regulatory 
framework provides minimum protections for the non-traditional players 
in the transportation planning and programming process.
    The transportation planning process should be guided by broad goals 
that include: (a) reduced vehicle miles traveled (Vow), (b) increased 
average vehicle occupancy, and (c) coordinated land use and 
transportation plans.
            A. Metropolitan Planning Organizations (MPOs)
    Proposal: Strengthen Metropolitan Planning Organizations and 
Transit Relationships
    Background: The economic health of metropolitan regions is an 
essential component of our nation's economic health. Making 
metropolitan regions more economically productive depends on an 
effective intermodal transportation system that moves people and goods 
more efficiently into and throughout each region. APTA believes that 
Metropolitan Planning Organizations (MPOs) are best suited to be the 
power brokers of transportation decisionmaking in metropolitan areas 
and that their prominent role must be strengthened. Eighty-one (81) 
percent of members surveyed endorsed providing more power to MPOs; 86 
percent supported the current MPO role in long range planning, and 88 
percent endorsed the MPO's role in Transportation Improvement Program 
development. One issue is the need for disclosure by states of the 
obligation amounts since passage of ISTEA for each urbanized area by 
funding category, including transit and highway programs.
    Current law allows MPO board members representing 75 percent of an 
area's population to approve redesignation. APTA proposes that the next 
reauthorization bill require all MPOs to reconfirm their composition if 
they have not done so since the passage of ISTEA The reconfirmation 
process should be preceded. by widespread, proactive public 
involvement, culminating in formal public hearings. Further, in 
addition to membership, the process should address issues such as 
equitable representation, transit representation, meeting frequency, 
chair rotation procedures, the ability of members other than the chair 
to convene meetings, the composition and operational procedures of key 
committees, and the independence of MPOs housed in modal agencies. 
Finally, APTA believes the 75 percent trigger for redesignation is 
overly restrictive, and recommends that it be changed to 51 percent 
plus the central city. Ninety (90) percent of the survey results 
support transit representation on MPO boards and 89 percent support 
central city representation on MPO boards.
    APTA supports the Transportation Management Area (TMA) concept; 86 
percent of our survey respondents endorsed the power of local 
transportation decisionmaking to TMAs.
    Action: (1) Reduce the redesignation threshold from 75 percent to 
51 percent of the population so that MPO board members representing 51 
percent of an area's population plus the central city can trigger 
redesignation.
    (2) Require local affirmation of each MPO's composition and 
institutional, structural, and procedural arrangements under the new 
redesignation ground rules to publicly reaffirm the MPO's 
decisionmaking process for plans, programs, and the use of public 
funds. This should be accomplished with proactive public involvement 
MPOs that have experienced redesignation since ISTEA's enactment would 
be exempt.
    (3) Require states to make public the obligation amounts since 
passage of ISTEA for each urbanized area by funding category, including 
transit and highway programs.
    (4) Provide adequate MPO funding; at a minimum, this would be 
equivalent to current ISTEA levels
            B. Public Involvement
    Proposal: Maintain inclusive decisionmaking in the planning 
provisions.
    Background.--The importance of participatory planning in developing 
transportation plans, programs, projects, and policies cannot be 
overemphasized. Effective transportation planning does not take place 
without meaningful public involvement programs tailored to the 
particular local circumstances. Benefits of public input include 
improved planning, facilitated decisionmaking, enhanced legitimacy, and 
increased implementation prospects. Ninety-five (95) percent of the 
survey results endorsed continued public involvement in the 
transportation planning process.
    Action: Retain all existing public involvement legislation, and 
implement final adoption of the ``Interim Policy on Public 
Involvement'' and the corresponding ``Questions and Answers. ``
            C. Major Investment Studies (MIS)
    Proposal: Support the continued use of Major Investment Studies as 
a process to make sound investment choices to solve problems and/or 
achieve objectives in selected corridors.
    Background: Major Investment Studies (MIS) are a way of leveling 
the playing field in making major investment decisions because they 
subject highway and transit projects to the same level of review. 
Eighty-one (81) percent of the survey results support the major 
investment study process for seeking transportation solutions in 
problem corridors. APTA strongly supports the continued use of MIS to 
make sound choices in transportation investments.
    Action: (1) Add language that explicitly recognizes the MIS. 
Require the long range transportation plan to identify major corridor 
investments only after conducting multi-modal investment studies, 
undertaken in a cooperative manner, that consider a reasonable range of 
alternatives against investment criteria
    (2) Repeal the transit-only investment criteria found in Section 49 
USC 5309(m)(3) (formerly 3(j)) and replace them with multi-modal 
criteria
            D. Consideration/Consolidation of Planning Factors
    Proposal: Consolidate existing factors, where possible, while 
maintaining the spirit and flexibility of ISTEA; add one new factor.
    Background: ISTEA included factors to be considered in metropolitan 
planning with the intent of stimulating comprehensive thinking. While 
the factors have sometimes been dealt with in perfunctory ways, APTA 
supports the underlying premise of the 16 factors and recommends the 
following provisions to broaden their scope. Seventy-eight (78) percent 
of the survey results support the consideration of the planning factors 
in the planning process.
    The legislation should recommend that DOT issue guidance explaining 
the flexibility of the factors. The factors are benchmarks for 
consideration. For example, if an MPO feels that a criterion does not 
apply, it can meet the requirement simply by explaining why.
    Action: (1) Require an additional factor, the consideration of 
central city issues.
    (2) Include statutory or report language recommending that DOT 
issue guidance explaining the flexibility of the concept. The factors 
are benchmarks for consideration.
            E. Fiscally Constrained Plans
    Proposal: Retain fiscally constrained plans.
    Background: ISTEA's ``financial constraint'' requirements are 
necessary to protect the integrity of the state and MPO planning 
processes. They also force decisionmakers to set a more realistic set 
of priorities in a collaborative, participatory setting. In addition, 
financial constraints can also help areas to get more resources. When 
state and local officials fully realize the shortfall between available 
funding and transportation needs, they more readily work to support 
additional funding sources. Seventy-eight percent of survey results 
support fiscally constrained programs and financial assessment for the 
long range plan. However, many comments suggested a two-tiered approach 
that includes a less constrained, more visionary long range plan.
    By programming to the authorized level, not an uncommon tactic in 
most plans, the plan provides a minimum cushion of over-programming to 
meet unexpected delays that hamper project implementation. In addition, 
the 3-year nature of the Transportation Improvement Plan (TIP) provides 
another mechanism for identifying projects that can be advanced without 
creating the need for a special set of ``contingency'' projects, which 
then have questionable status.
    Action: Retain the provision for fiscally constrained metropolitan 
and statewide plans.
            F. Land Use/Transit Linkage
    Proposal: Encourage and promote the coordination of land use and 
transportation planning.
    Background: Although the Federal Government does not require land 
use planning, it has recognized that transit-supportive land use 
patterns and associated policies are the cornerstone success for major 
transit investments. Therefore, Congress and the Administration must 
continue to give special consideration to projects with transit-
supportive land use patterns and/or legally binding policies and must 
encourage and promote the coordination of land use and transportation 
planning.
    Action: (1) Continue to emphasize transit-supportive land use 
planning for major capital investments.--Compatible and transit-
supportive land use must continue to be a major criterion for capital 
investments. The use of public transit investments to enhance, 
stimulate, facilitate, reorient, and/or organize adjacent land 
development or redevelopment strategies needs to be recognized and 
supported Areas that adopt and implement enforceable transit-supportive 
policies in land use, infrastructure, and related areas should be given 
priority.
    (2) Provide greater flexibility in the use of ISTEA funds for 
transit-supportive and development activities.--Major Capital 
Investment (Discretionary) funds provide flexibility for using funds 
for non-vehicle-related activities that are functionally and 
operationally related to a transit project. This allows for pedestrian 
access, mixed uses in transit facilities, etc., and the creative use of 
funding to encourage more transit-supportive land uses. Explicit 
language is needed in the reauthorization bill that extends the 
flexibility afforded to Major Capital Investment Program 3 funds to 
projects using Formula, STP, and CMAQ funding.
    (3) Modify cost-effectiveness analyses to recognize infrastructure 
savings achieved with compact transit-supportive land uses.--There are 
potential savings of local infrastructure costs associated with compact 
development which should be included in the analyses.
    (4) Authorize Federal funds to improve modeling to identify 
benefits of transit-supportive land use.--Current trip models are 
weighted by automobile trips and travel times. These models currently 
do not adequately consider the beneficial impact of short trips, 
transit usage, or pedestrian access. Funding should be provided to 
improve modeling capability to include better quantitative methods, 
including sensitivity to specific design details. Needed are model 
refinements and data to test options such as a direct connection to 
transit, pedestrian amenities, bicycle facilities, etc.
    (5) Continue and increase FTA's Livable Communities initiative 
grant programs as part of the next authorization act, and integrate 
these programs with other governmental programs and private sector 
activities. The FTA's Livable Communities initiative has sought 
opportunities to place transit services and projects in the context of 
the community-its relationship to the needs of the residents and 
businesses, its reinforcement of the unifying aspects of transit 
services to community identity, and its commerce. Emphasis is placed on 
the comprehensive plan of the community, public involvement, 
coordinated community development strategies, intergovernmental and 
private partnerships, and the synergy of the project.
    Funding and flexibility for Livable Communities needs to be 
increased under reauthorization.--Local communities, transit providers, 
and businesses need to see more success in collaborative, cooperative, 
and coordinated partnerships to enhance and reinforce transit services' 
impact on community vitality.
    (6) Include a policy statement regarding transit's role in 
improving the quality of life.--Transit provides jobs; access to jobs; 
mobility for all segments of the population; and needed transportation 
to school, medical treatment, services, recreation, shopping, etc. It 
also provides capability to respond to community disasters and 
emergencies and a transportation choice to citizens who choose not to 
use or do not have access to personal vehicles. Communities dealing 
with air and noise pollution rely on public transit as part of the 
solution. Transit encourages urban forms that offer variety in density 
and land use that are often defining of a community. Transit supports 
pedestrian flows and access which creates the street environment that 
makes cities livable and inviting. Transit also provides essential 
transportation to rural communities. Therefore, transit's role in 
improving the quality of life in our communizes needs to be recognized.
    (7) Authorize at least three demonstration projects of integrated 
land use and transit policies.--The transit/land use connection is more 
theory than practice in much of the United States where it has been 
tried, the implementation of new, legally binding transit supportive 
plans and policies in conjunction with major transit investments has 
been a way to achieve local land use objectives and help guarantee the 
transit project's success. More local success stories--such as examples 
of corridor--wide station community planning, land banking for joint 
development, or transit supportive development incentives-are needed to 
advance the state-of-the-art and provide practical examples from which 
to learn.
    (8) Require MPOs to collaborate with other agencies to conduct a 
broad-based visioning process for transportation and land use if they 
have not already done so.--Experience has demonstrated that such 
processes best provide a framework for subsequent transportation 
planning, and can develop a cadre of interested citizen and government 
officials who will be actively involved in subsequent phases of project 
development. Many communities have successfully used a visioning 
process to define quality-of-life issues for their communities. Their 
aspirations for healthy commerce and communities have led to a 
reconsideration of land use and development policies, and greater 
emphasis on ensuring the development of a balanced transportation 
network.
    As part of the visioning process, MPOs should explicitly recognize 
the importance of revitalizing the nation's central cities and creating 
new employment, housing mobility, and economic opportunities in these 
areas. MPOs should be encouraged to incorporate the goal of 
revitalizing our center cities and the inner rings of older suburbs 
into their regional transportation, land use, and development plans. 
All participants in the MPO process should cooperate toward this end, 
recognizing that the economic health and quality-of-life in the suburbs 
and central city are inextricably linked.
    (9) Extend the regional and statewide planning structure developed 
under ISTEA to other Federal programs, e.g., HUD's new block grants, 
HHS service grants, etc. All should be linked to a regional structure 
for metropolitan planning so that housing, business development, and 
service delivery can be regionally designed and delivered as part of 
regional growth strategies Incentives should be provided for regional 
cooperation.
    (10) Assure reasonable representation of agencies with control over 
land use on decision/policy bodies for MISs and MPOs Without the active 
involvement of land use agencies in MISs and MPOs, the transportation 
land use connection envisioned in ISTEA is an impossibility.
            G. Federal Certification Reviews
    Proposal: Continue Federal oversight in the planning process to 
ensure consideration and consultation between state and regional 
stakeholders.
    Background: APTA believes that the FHWA/FTA certification process 
can provide much-needed oversight to ensure that all the players are 
adhering to the principles of ISTEA (or any subsequent authorization 
bill). In our membership survey, 85 percent supported Federal 
certification and 79 percent favored sanctions for non-compliance with 
ISTEA planning mandates.
    ISTEA changed the way we do business. Some oversight must be 
expected to ensure that the new principles are being followed. Over 
time, perhaps the need for Federal oversight will diminish.
    Action: Maintain Federal certification of the metropolitan and 
statewide planning processes.
            H. State Planning
    Proposal: Continue statewide planning and programming process under 
ISTEA.
    Background: APTA supports state planning as generally defined in 
ISTEA. Seventy-four (74) percent of survey results support the 
development of a state plan as required under ISTEA. In addition, 79 
percent of survey results support a statewide transportation 
improvement program. However, there is some confusion at state DOTs 
when an MPO TIP is amended, particularly when the amendment involves a 
transit project. All ISTEA partners would benefit from a consistent, 
clearly defined TIP amendment process.
    Action: (1) Require MPO review and approval of a metropolitan 
area's portion of the state long-range plan.
    (2) Require a legislative provision that defines the TIP amendment 
process.
IX. Apply the highway solvency test instead of the more stringent 
        transit solvency test to the mass transit account
    Proposal: Apply the Byrd Test Instead of the Rostenkowski Test to 
the Mass Transit Account.
    Background: Under current Federal tax law, the solvency of both 
accounts of the Highway Trust Fund is protected by automatic spending 
restrictions. The Byrd Amendment of the Federal-Aid-Highway Act of 1956 
applies to the Highway Account and specifies that the trust fund must 
maintain a sufficient balance to make all reimbursements. The Byrd test 
permits commitments to equal revenue for the year being appropriated 
plus two additional year's anticipated revenue. Spending from the Mass 
Transit account is limited by a stricter standard, known as the 
Rostenkowski Test. It is similar to the Byrd test but requires that 
transit be able to pay its authorizations with the cash balance plus 1 
year's anticipated cash revenue. APTA recommends that the MTA be 
subject to the Byrd test instead of the Rostenkowski test. This change 
would allow the authorization of an additional $2.8 billion from the 
MTA and provide the same rule for highways and transit.
    Action: Amend USC 269503 (e4).
X. Recapture the ``deficit reduction'' 4.3 cents/gallon gasoline tax 
        for the highway trust fund, depositing the revenue from 0.5 
        cents in a new intercity passenger rail account and 20 percent 
        of the revenue from the remaining 3.8 cents in the mass transit 
        account.
    Proposal: Amend the Tax Code to provide that revenue from the 4.3 
cents per gallon ``deficit reduction'' Federal motor funs excise tax be 
deposited in the Highway Trust Fund. The revenue from a half-cent of 
this tax should be deposited in a new Intercity Passenger Rail Account 
subject to the same budget rules as the Mass Transit and Highway 
Accounts. In keeping with the precedent set by President Reagan and 
reaffirmed by Presidents Bush and Clinton, the Mass Transit Account 
should receive 20 percent of the revenue from the remaining 3.8 cents, 
with the balance resented for the Highway Account.
    Background: The Surface Transportation Assistance Act of 1982 
created the Mass Transit Account within the Highway Trust Fund and 
provided that this Account would receive 20 percent of the revenue from 
a five-cent per gallon increase in the Federal fuels excise tax. In 
1990, the Mass Transit Account received the revenues from an additional 
one-half cent per gallon of the Federal fuels excise tax. The Omnibus 
Budget Reconciliation Act of 1990 (OBRA) increased the gasoline tax by 
5.0 cents per gallon. Of this total, the revenue from 2.5 cents per 
gallon was earmarked for deficit reduction and the revenue from 2.5 
cents per gallon was deposited in the Highway Trust Fund with 20 
percent going to the Mass Transit Account. President Clinton's economic 
package, the Omnibus Budget Reconciliation Act of 1993, included the 
4.3 cents per gallon deficit reduction tax and provided that OBRA's 
deficit reduction 2.5 cents would be turned over to the Highway Trust 
Fund on October 1, 1995, with 20 percent of that amount deposited in 
the Mass Transit Account.
    Recent studies, including APTA's definitive evaluation of transit 
funding needs, confirm that transit and other surface transportation 
funding needs are far greater than the amount of funding available 
under current law. Transit capital funding requirements are $15 billion 
per year.
    Over a 10-year period, capital needs include:
     $38 billion for new vehicles, including 67,800 buses and 
51,400 vans;
     $25 billion for new bus facilities including parking lots 
for bus passengers;
     $13 billion to modernize bus facilities and equipment;
     $23 billion to modernize and rehabilitate existing fixed 
guideway rail and bus routes, stations, and maintenance facilities;
     $46 billion for additional fixed guideway services that 
respond to new customer demands; and
     $5 billion to rehabilitate more than 14,900 buses, rail 
cars, and other vehicles to extend their useful lives.
    Additional revenue is needed to support the maintenance of existing 
transit facilities and services, transit operators' compliance with 
Federal mandates and requirements, and investments in new transit 
facilities and services that respond to unmet demands. Adequate Federal 
support for the transit program under a self-sufficient, wholly 
dedicated source helps to facilitate predictable planning and 
investment by individual transit operators and local governments. 
Moreover, the Federal transit program has been funded to an increasing 
degree from the Highway Trust Fund's Mass Transit Account, the source 
of 81 percent of transit funds in fiscal year 1997, up from 68 percent 
in fiscal year 1996 and 62 percent in fiscal year 1995. Transit funding 
needs greatly exceed the available resources in the Mass Transit 
Account.
    Action: Amend tax code to provide that the revenue from 4.3 cents 
per gallon of the Federal fuels excise tax now used for deficit 
reduction be deposited in the Highway Trust Fund. The revenue from a 
half-cent of this total should be deposited in a new Intercity 
Passenger Rail Account subject to the same budget rules as the Mass 
Transit and Highway Accounts the Mass Transit Account should receive 20 
percent of the revenue from the remaining 3.8 cents (the revenue from 
.76 cents per gallon), with the balance (the revenue from 3.04 cents) 
deposited in the Highway Account
XI. Continue to support the transit cooperative research program 
        (TCRP), university transportation centers, and ISTEA institutes 
        and create a new technology development and demonstration 
        program
    Proposal: Retain the Transit Cooperative Research Program 
established in ISTEA, continue to support University Transportation 
Centers and ISTEA Institutes, and authorize a new technology 
development and demonstration program.
    Background: Through its support of research programs, ISTEA has 
enabled the nation's transit agencies to improve productivity and serve 
their customers more effectively. ISTEA established the Transit 
Cooperative Research Program (TCRP), the first national research 
program to give the transit community a direct role in addressing 
critical operating challenges. Like its highway counterpart, TCRP makes 
a significant contribution to the national interest that deserves 
continued support. The university transportation centers (UTCs) and the 
university institutes established by ISTEA (ISTEA Institutes) also 
conduct important research, education, and training programs. The next 
authorization should retain these programs and provide them with no 
less than their current percentage of transit program funding. We also 
recommend the creation of a Technology Development and Demonstration 
Program as a partnership of the Federal Government, transit agencies, 
and the private sector. This Program would support the implementation 
of new transit technologies and practices, including those identified 
through TCRP.
            1. Transit Cooperative Research Program
    The Transit Cooperative Research Program (TCRP), administered by 
the Transportation Research Board (TRB) of the National Research 
Council (NRC), is a cooperative research program authorized by ISTEA 
and created by an agreement among the Federal Transit Administration, 
the Transit Development Corporation (TDC), and the NRC. The program 
addresses research needs as identified by transit operating agencies, 
planners, designers, and others in operations, hardware, physical 
infrastructure, economics, human resources, and other contemporary 
issues selected by the TDC Board of Directors/TCRP Oversight and 
Project Selection (TOPS) Committee, which plans the program. 
Reauthorization of this highly successful program is imperative. TCRP 
is the first national research program in which the transit community 
has had a direct role in addressing the many operating challenges 
common to the transit industry. The program has been operating since 
August 1992 and is producing results of significant value to the 
transit industry
    TCRP Reports have addressed a number of critical issues, including 
rural transit planning and service delivery assessment, access to 
transit for people with disabilities, and a wide range of operational, 
scheduling, maintenance, and other issues. There is no other source for 
these studies; they cannot be carried out at the local levy. Moreover, 
they enhance transit service providers' ability to help achieve a wide 
range of Federal objectives including those outlined in ISTEA: 
``Significant transit improvements are necessary to achieve national 
goals for improved air quality, energy conservation, international 
competitiveness, and mobility for elderly persons, persons with 
disabilities, and economically disadvantaged persons in urban and rural 
areas of the country.'' Like its highway counterpart, the TCRP's 
contribution to the national interest is significant and worthy of 
continued support. APTA recommends that TCRP should receive no less 
than its current percentage of transit program funding in the next 
authorization act.
            2. University Transportation Centers and Research 
                    Institutes
    Ten University Transportation Centers (UTCs) were established by 
Federal legislation in 1987. ISTEA added four more Centers and seven 
university research, education, and training institutes (ISTEA Centers 
and Institutes) with non-redundant topical assignments. The UTCs and 
ISTEA Centers and Institutes develop areas of expertise and perform 
research, education, and training programs that are designed to advance 
the state-of-the-art; interest, recruit, and train students; and 
provide continuing education for professionals in the field. They are 
among the only places for fundamental research in transportation in an 
environment designed to deliver products useful to practitioners. These 
programs build a base for future transportation systems and identify 
transportation as a discipline on the frontier of technology. They 
attract, and prepare for careers in the transportation industry, the 
best and the brightest students interested in careers in management, 
technology, engineering, and science. Federal dollars are matched by 
nonFederal funds to leverage the investment in this program.
            3. Technology Development and Demonstration Program
    Investments in new technology development and the demonstration of 
new services and methods ensure maximum utilization of capital 
investments, safer operation, and lower operating costs. Such 
investments benefit transit agencies and the riding public alike. 
Neither the private sector nor the public sector can be expected to 
make these technological or service demonstration investments alone. 
Consequently, a portion of Federal transit program funds should be set 
aside for a technology and service innovation program that works in 
partnership with private and public sector investments. A creative and 
reliable funding source should be identified which will allow multi-
year commitments for projects initiated under this program.
    Action: (1) Ensure the retention of funding and appropriate 
authorizing language for the TCRP, the UTCs, and the ISTEA Institutes; 
and (2) Establish a Transit Technology Development and Demonstration 
Program.
XII. Allow states to use the state shares of flexible funding programs 
        for intercity passenger rail investments and maintain the 
        section 130 program to provide safety improvements for public 
        highway/rail grade crossings
    Proposal: Amend the definition of allowable expenditures under the 
Surface Transportation Program (non-suballocated funds) to include 
intercity passenger rail capital purposes, and maintain the Federal 
Highway Administration's Section 130 Program.
    Background: Intercity Passenger Rail Capital Investments. Since it 
is important to ensure that Governors and state DOTs have control over 
the use of flexible funds, we recommend that states be authorized to 
use their share of flexible funding programs for intercity passenger 
rail investments. Aside from this change, we propose to retain the 
current definition of eligible expenditures under the Surface 
Transportation Program, which includes ``capital costs for transit 
projects eligible for assistance under the Federal Transit Act''. The 
use of funds for intercity passenger rail purposes is acceptable only 
if there is an increase in the total amount of flexible funding. 
Therefore, this proposal is conditioned on the adoption of APTA's 
proposal to make available a higher total level of flexible funding by 
using funds from the Mass Transit Account and ``deficit reduction'' gas 
tax resources.
    Section 130 Program to provide safety improvements for Public 
Highway/Rail Grade Crossings. The Federal Highway Administration's 
Section 130 Highway/Rail Grade Crossing Safety Program should be 
maintained to protect the motoring public who use highways that cross 
over commuter, light, and freight rail tracks throughout the United 
States. The Section 130 Program provides Federal funds for state 
efforts to reduce the incidence of accidents,-injuries, and fatalities 
at public highway/rail grade crossings. Under the Section 130 Program, 
fatalities at highway/rail grade crossings have been reduced from 1,500 
in 1972 to 615 in 1994. The Federal Highway Administration estimates 
that the Section 130 Program has saved over 9,000 lives and helped 
prevent nearly 40,000 injuries.
    Action: (1) Amend 1 Title 23, Section 133 of the U.S. Code to 
authorize grants for intercity passenger rail services
    (2) Maintain the Federal Highway Administration's Section 130 
program.


Prepared Statement of Jerry Davis, Chairman of the Board of Directors, 
                   Association of American Railroads
                              introduction
     Good morning. My name is Jerry Davis, and I am here as 
Chairman of the Board of Directors of the Association of American 
Railroads, representing the large freight rail carriers. First of all, 
I would like to thank the Task Force for the opportunity to appear 
before you today to share our views on rail excise taxes and related 
issues. I have been in the rail industry for more than 40 years in a 
variety of positions with Union Pacific Railroad, CSX and Southern 
Pacific. With me today is Mary McAuliffe, also with Union Pacific, 
Karen Phillips and Paul Oakley with the AAR, Dan Westerbeck, with the 
Burlington Northern Santa Fe, and Jim Hixon, with Norfolk Southern. As 
an introduction to our presentation, I would like to show you a brief 
video to give you a flavor of how the freight rail industry operates, 
builds and maintains its infrastructure.
    (Video)
    As you can see from the video, building and maintaining rail 
infrastructure is a complex, labor-intensive operation, now requiring a 
capital investment of more than $7 billion annually. Our ``interstate'' 
system is comprised of more than 212,000 miles of track, essentially 
built and maintained with private capital, not derived from a 
government trust fund. Our primary business is the transportation of 
freight and bulk commodities--more than 1.55 billion tons per year.
    For the remainder of my presentation I will refer to the notebook 
which you have each been provided. Tab #3 contains the slides to which 
I will refer from time to time. The other sections of the notebook 
represent materials which provide further elucidation on the issues 
being discussed here today. Slide #1 of Tab #3 sets out the three 
recommendations which are the focus of this presentation.
    (1) The 1.25 cents-per-gallon deficit reduction fuel tax paid 
exclusively by the railroad industry is discriminatory and should be 
repealed;
    (2) While the railroad industry is dedicated to the goal of deficit 
reduction, it is fundamentally unfair to single out one industry--
transportation--from other segments of the economy to pay for deficit 
reduction. As long as the fuel tax is viewed as an appropriate vehicle 
for deficit reduction, however, the burden of achieving such deficit 
reduction should be shared equally among competing modes of 
transportation so as not to distort market choices; and
    (3) The railroad industry is different from other modes of 
transportation in that we build, maintain, and own our infrastructure 
and, accordingly, the creation of a Federal Railroad Trust fund is 
unwarranted.
               background of deficit reduction fuel taxes
    Now, let me give you some brief background on where we are today 
with respect to deficit reduction fuel taxes, and how we got here. 
Please refer to slide #2, which is a condensed history of the deficit 
reduction transportation taxes. I have also included more detail on the 
history elsewhere in your notebooks.
     The 1990 Reconciliation Act extended fuel taxes beyond 
their traditional role as transportation user fees by introducing a 2.5 
cents-per-gallon Federal deficit reduction tax on railroad and highway 
fuels. In fact, to the best of our knowledge, with the exception of the 
Leaking Underground Storage Tank (LUST) fuel tax, this was the first 
time railroads had ever been required to pay a Federal fuel tax.
     The 1993 Reconciliation Act imposed an additional 4.3 
cents-per-gallon deficit reduction tax on all transportation modes 
(commercial aviation was exempted until October 1, 1995). As you can 
see from the second line of slide #2, this resulted in a deficit 
reduction tax of 6.8 cents-per-gallon for railroads and trucks, 4.3 
cents-per-gallon for barges, and a suspended 4.3 cents-per-gallon for 
airlines.
     On October 1, 1995, the entire 2.5 cents-per-gallon 
deficit reduction fuel tax paid by highway users was redirected into 
the Highway Trust Fund to pay for highway infrastructure needs. At that 
time, the railroad 2.5 cents-per-gallon fuel tax was reduced to 1.25 
cents-per-gallon, but railroads were left as the only payers of the 
original 1990 deficit reduction fuel tax. Consequently, today highway 
users, inland waterway users, and commercial aviation pay 4.3 cents-
per-gallon into the Treasury's General Fund, while the railroads alone 
pay 5.55 cents-per-gallon for deficit reduction.
                  inequitable transportation taxation
     As depicted in slide #3, the current structure of deficit 
fuel taxes is obviously inequitable. There is absolutely no policy 
justification for railroads to pay deficit reduction fuel taxes at a 
rate of 1.25 cents-per-gallon greater than motor carriers and barges 
with whom we vigorously compete. Allowing this inequity to continue 
only perpetuates tilting the marketplace in favor of the trucking and 
inland waterway industries.
     Some would argue that there is no inequity because motor 
carriers continue to pay the full original 2.5 cents-per-gallon imposed 
by the 1990 Reconciliation Act. Such a contention ignores the essential 
fact that the revenue from the 2.5 cents-per-gallon tax paid by motor 
carriers now goes into the Highway Trust Fund and is used to pay for 
improvements and maintenance of highway infrastructure. This portion of 
the highway fuel tax is now a true user fee investment in highways.
     By contrast, the railroad industry operates over its own 
privately funded and maintained rights-of-way. Slide #4 illustrates the 
enormous, increasing cost of building, maintaining, and upgrading a 
safe and efficient railroad right-of-way. In 1995, for instance, 
freight railroads spent more than $7 billion maintaining and improving 
their infrastructure. As shown on slide #5, if we translate this 
investment to a cost per gallon basis in order to compare modal 
expenditures on their respective rights-of-way, this is equivalent to 
$1.98 per gallon of fuel consumed by railway locomotives--an amount 
which is four to ten times the equivalent per gallon tax paid by 
competing modes.
     This $1.98 is directly comparable to the Federal user fees 
shown on slide #4 that are paid by other modes to help finance their 
public rights-of-way. These fees are not directly at issue here. 
However, what is critical and absolutely fundamental, is the 
realization that when deficit reduction taxes of other modes are 
converted to infrastructure user fees, these fees become synonymous 
with the $1.98 railroads are already paying for infrastructure. In 
other words, the transfer of other modes' deficit fuel taxes into 
infrastructure trust funds is the equivalent of those other modes 
paying themselves for infrastructure improvements and maintenance. 
Under these circumstances, the railroads would alone be left to pay for 
deficit reduction.
     It should be noted, as the trucking industry pays for its 
infrastructure via fuel excise taxes, their payments are immediately 
expensed in the year paid and deducted for tax purposes. As railroads 
directly invest in their infrastructure using their own funds, their 
investment must be depreciated, spreading the tax deduction over a 
period of years. Additionally, U.S. DOT research shows that even the 
fuel taxes paid into the Highway Trust Fund by truckers, with whom the 
railroads directly compete, do not cover the full highway cost which 
they cause.
     While the current deficit reduction fuel tax situation is 
clearly inequitable, it is likely to get much worse without relief for 
the railroads. During 1996 there was an intense effort by Senator 
Robert Byrd to redirect the remaining 4.3 cents-per-gallon paid by 
highway users, including truckers, into the Highway Trust Fund. Already 
in the 105th Congress there is legislation (H.R. 255) introduced by 
Representatives Petri and Rahall to accomplish the same objective. 
Placing the 4.3 cents highway user tax into the Highway Trust Fund 
would exacerbate an already inequitable situation, adding to the 
railroad industry's competitive disadvantage. In essence, the railroads 
would continue to contribute to deficit reduction, while the truckers 
would contribute to their own infrastructure.
     As long as the transportation fuel tax is viewed as an 
appropriate vehicle for deficit reduction, public policy should be 
neutral regarding competition among modes of transportation, with all 
competing modes required to make equal contributions. Tax burden equity 
should serve as an overriding principle in the structure of the tax 
system, otherwise it will artificially affect the structure and 
efficiency of the transportation system.
            solutions to deficit reduction fuel tax inequity
     Solution 1--Tax equity requires that the 1.25 cents/gallon 
deficit reduction fuel tax differential currently paid by railroads 
above that paid by competing truckers should be repealed. Further, as 
illustrated on slide #6, should the 4.3 cents/gallon tax paid by 
truckers be placed into the Highway Trust Fund, the railroad industry 
urges the repeal of the entire 5.55 cents/gallon tax paid by railroads, 
thereby equalizing the deficit reduction payments for the railroad and 
trucking industries. Similarly, as indicated on slide #7, should the 
1.25 cents/gallon tax be repealed and the truckers' 4.3 cents/gallon 
tax be converted to a Highway Trust Fund user fee in the future, the 
railroads' 4.3 cents/gallon deficit reduction tax should likewise be 
repealed.
     Solution 2--The railroad industry recognizes the need to 
compensate for the budgetary consequences of repealing the 1.25 cents/
gallon differential. The railroads are of the opinion that sufficient 
new revenue or budget savings can be identified to offset losses due to 
the repeal of inequitable deficit reduction taxes, especially 
concerning the $50 million annual revenues generated by the current 
1.25 cents/gallon tax differential. However, if that is not possible, 
equity demands that all transportation modes, including railroads, 
truckers, barges, and airlines, share equally in any deficit reduction 
tax so as not to distort market choices. To that end, in order to 
offset the revenue lost by elimination of the discriminatory 1.25 
cents/gallon tax on the railroad industry, a tax of only 0.03 cents/
gallon should be imposed on fuel used by the same transportations 
modes, including railroads, subject to the 1993 deficit reduction tax. 
Such a small additional tax would raise sufficient to offset the repeal 
of the 1.25 cents/gallon railroad fuel tax. Should the 4.3 cents/gallon 
fuel tax paid by truckers also be placed in the Highway Trust Fund, 
identifying an appropriate budget offset would be more difficult. Once 
again, though, if finding such an offset were to prove to be 
impossible, simple equity would require that all transportation modes 
equally share the burden of paying for deficit reduction.
                   support for an equitable solution
     The railroads are not alone in calling for a fair and 
equitable solution to the current deficit reduction fuel tax problem. 
The U.S. Chamber of Commerce and the American Road and Transportation 
Builders Association (ARTBA) have adopted policies in support of the 
railroads' position on this issue.
     The Chamber of Commerce said in 1994 that taxes and user 
fees that are currently collected from transportation users should be 
used for transportation infrastructure improvements and should be 
directed to the appropriate trust fund, or repealed.
     ARTBA in 1996 supported the repeal of railroad excise 
taxes used for Federal deficit reduction, should competing modes not 
similarly be required to pay such excise taxes for deficit reduction 
purposes.
                     railroad trust fund proposals
     Various proposals have been made to solve the fuel tax 
inequity problem by creating a Federal Railroad Trust Fund in which to 
place the railroad deficit fuel taxes in order to finance a variety of 
railroad needs. Rather than solving the problem, such proposals would 
compound the inequity by instituting an inappropriate cross subsidy.
     The deficit reduction fuel tax on railroads generated over 
$1 billion since it began, and approximately $250 million in 1995--a 
substantial drain on the funds available for infrastructure investment, 
and an amount sufficient to purchase 179 new locomotives each year. Of 
that 1995 amount, $227 million came from large Class I railroads. 
Clearly, the great preponderance of these funds have and will continue 
to come from a few very large railroads. As a notable example, Union 
Pacific Railroad is the No. 1 private consumer of diesel fuel in the 
United States (well over 1 billion gallons/year).
     While large freight railroads would contribute the bulk of 
the tax revenues, the possible uses of such a Railroad Trust Fund would 
be for purposes which are the primary responsibility of interests other 
than those large freight railroads. As an example, proposals have been 
made to use such a Railroad Trust Fund to finance shortline/regional 
railroad improvements, intercity or commuter passenger rail needs, or 
highway-rail crossing traffic control devices. In such a scenario, the 
beneficiaries of the Trust Fund, while having contributed little or 
nothing to the Fund, would profit from a cross-subsidy from the large 
freight railroads. It is not appropriate to expect the large railroads 
to provide additional funding support for passenger rail, shortlines, 
or highway-rail traffic control devices, the latter of which has 
legitimately been the responsibility of highway users for 25 years. 
Neither do the large railroads care to finance their own infrastructure 
needs through such a Trust Fund by inefficiently sending funds to 
Washington, DC, simply to be returned to the private sector railroads, 
minus bureaucratic administrative and overhead costs, and subject to 
political manipulation and government regulatory red tape.
     There are particularly sharp distinctions between the 
interests of freight and passenger railroads. While freight railroads 
support a U.S. passenger rail system, we believe it would be totally 
inequitable to require us to subsidize an industry that we ourselves 
found it necessary to exit 25 years ago. I have included slides #8 and 
#9 so there will be no confusion between profitable, private sector 
freight railroads and Amtrak. With all of its stock owned by the 
Federal Government, Amtrak is the nation's only intercity rail 
passenger provider, serving 45 states with over 300 trains per day. It 
also is a major provider of rail commuter operations, under contracts 
with states and cities.
    Amtrak receives between $500 million and $1 billion annually in 
operating and infrastructure assistance from the General Fund of the 
U.S. Treasury. Slide #10 shows the approximately 24,000 mile route 
structure over which Amtrak operates. Aside from roughly 600 miles 
mostly between Washington, DC and Boston, the trackage is owned by the 
individual freight railroads. The operating rights fees paid by Amtrak 
to the freight railroads do not cover the costs incurred by the freight 
railroad industry to accommodate Amtrak.
    In fact, my railroad has just completed a study of the level of 
subsidy it is forced to provide Amtrak. Excluding the less direct, but 
nonetheless real, economic costs of delays to freight trains and other 
congestion impacts, the Union Pacific Railroad alone is effectively 
providing an operating subsidy to Amtrak of $56 million every year.
                                summary
     In conclusion, slides #11 and #12 depict the substantial 
role of the freight railroads to our nation's transportation system.
    With harmful economic regulation reduced, the railroads' true 
advantages in cost, environmental impact, highway congestion, safety, 
and fuel efficiency have rightfully become important criteria in modal 
choice. Artificial cost barriers to the use of freight transportation, 
in terms of inequitable deficit reduction taxes, can only disadvantage 
rail in the competitive marketplace and distort consumer choice.
     Thus, the final page of your slide packet, slide #13, 
summarizes the freight railroad industry's position on deficit 
reduction fuel taxes.
    (1) The 1.25 cents/gallon tax should be repealed because it is:
    Discriminatory against railroads, since no other mode of 
transportation pays it.
    Economically unsound, because it artificially diverts traffic that 
would otherwise travel by rail.
    Inconsistent with national policy, because it violates the goals of 
economy, impartiality, energy efficiency, and environmental 
friendliness.
    (2) With regard to the 4.3 cents/gallon tax, the railroads:
          Request repeal of the 4.3 cents/gallon tax if the 
        corresponding tax of other modes is directed into trust funds 
        which finance the building and maintenance of those mode's 
        infrastructure.
    (3) Finally, we oppose large freight railroad participation in a 
Federal Railroad Trust Fund.
                                 ______
                                 
       Vincent B. Mancini, Attorneys and Counselors at Law,
                                         Media, PA, March 10, 1997.

Hon. John H. Chafee, Chairman,
Committee on Environmental and Public Works,
United States Senate,
Washington, DC, 20510.

RE: Reauthorization of Funding for the Intermodal Surface 
Transportation Efficiency Act (ISTEA)--Opposition to Funding for 
``Rails to Trails'' Projects

    Dear Senator(s): Please accept this letter on behalf of the many 
concerned American citizens who oppose the use of their tax dollars to 
fund so called ``rails to trails'' projects under the Intermodal 
Surface Transportation Efficiency Act of 1991 (ISTEA). The idea of 
converting abandoned railway lines to pedestrian and bicycle trails may 
have superficial appeal at first glance. However, a careful review of 
the facts will demonstrate that such ``rails to trails'' projects are 
unnecessary luxuries which our country can ill-afford if a balanced 
Federal budget is to be achieved by the year 2002. Bicycle and 
pedestrian activities may be pleasant forms of recreation, but the 
current and future Federal funds available for surface transportation 
purposes should be used for exactly such purposes, i.e. for 
transportation, not recreation. Surely it is beyond dispute that the 
money would be better spent maintaining, expanding, and improving our 
nation's highways, bridges, and mass transit systems, which are capable 
of transporting far more people and goods than are bicycle and 
pedestrian walkways principally used by joggers and cycling enthusiasts 
for recreation.
    Consider the actual costs of a ``typical'' bicycle/pedestrian trail 
conversion. For example, land for the project must be acquired. If the 
state or other relevant governmental authority does not own title to 
the land, it must acquire it through eminent domain proceedings. Once 
this land has been acquired by the government (at the taxpayer's 
expense), it is unavailable for productive use by the private sector. 
Furthermore, such land is removed from the property tax base of the 
local economy, further placing a burden upon the average taxpayer.
    While the foregoing would be true of any traditional transportation 
project (e.g., an interstate highway), the burdens involved in such a 
traditional project would be more than offset by the benefits to a much 
broader community than might benefit by a rails to trails project, 
i.e., many, many people would be able to make productive use of that 
highway, which could be used for commercial and business uses as well 
as individual needs. In stark contrast, the inherent limitations of 
local bicycle and pedestrian uses dictates that only a relative few 
would be able to make use of these facilities.
    Moreover, the inherent limitations of bicycle and pedestrian trails 
also include, inter alla, the following shortcomings:
     locating bicycle/pedestrian ``railways adjacent to 
residential neighborhoods infringes upon the privacy rights and may be 
detrimental to the security of the neighborhood residents (see e.g. the 
enclosed excerpt from the Seattle Times);
     bicycle/pedestrian trails do not allow for the transport 
of meaningful quantities of goods in furtherance of interstate 
commerce;
     given the user's exposure to the elements, the potential 
use of bicycle/pedestrian trails is severely limited in adverse weather 
conditions (particularly when compared to other means of 
transportation);
     the difficulties in workers commuting to major urban 
centers from outlying suburbs and the return commute home to the 
suburbs on a daily basis given the distances involved and the nature of 
the typical work schedule (often involving additional travel far away 
from the office) limit the utility of bicycle and pedestrian trails as 
a means of transportation;
     the cumulative effect of having workers start the cold 
engines of their cars in the morning followed by a drive to a bike/
pedestrian center, (perhaps circling for parking or otherwise having 
the engine idling at the center), to be followed by another engine cold 
start at the end of the day and a return drive home further increasing 
emissions is at odds with the goals of improving the air quality 
reducing congestion, the ostensible goals of the Congestion Mitigation 
Air Quality (CMAQ) subcomponent of ISTEA;
     trails limited to bicycle and pedestrian access place 
additional burdens on local municipalities in terms of public safety 
(i.e. access by police, fire, ambulance, and other emergency services);
     the rights and concerns of reversionary interest owners 
and abutting landowners are often neglected or ignored in the trail 
development process (see enclosed May 2, 1996, letter from Mr. Henry 
Ingram of the Pennsylvania Landowner's Association (PLA) regarding his 
resignation from the Program Committee for the Governor of 
Pennsylvania's Conference on Greenways and Trails, which is attached 
herein with Mr. Ingram's permission).
    Perhaps most importantly, the funding of ISTEA projects in practice 
appears to have no oversight on a day to day basis other than a 
``rubber stamp'' approval by administrative agencies without regard as 
to whether or not the particular project satisfies the criteria 
specified in the ISTEA statute and the regulations promulgated 
thereunder. If more than a ``rubber stamp'' approval were to take 
place, many ISTEA projects would not survive for their failure to 
conform to the requirements specified by law, i.e., that such projects 
be for transportation purposes rather than for recreational uses. The 
average citizen attempting to learn about the eligibility and funding 
process for an ISTEA project and participate therein must navigate the 
treacherous shoals of an administrative Bermuda Triangle--a daunting 
task indeed! Moreover, in attempting to seek accountability for public 
funds spent pursuant to ISTEA or otherwise obtain a remedy to this 
inequity, the resources of the average taxpayer are dwarfed in 
comparison to those possessed by the bureaucrats for whom an accounting 
is sought. In sum, it is respectfully requested that the Senate and/or 
the Congress as a whole undertake a review and investigation of the 
funding and eligibility of ``transportation enhancements'' under ISTEA 
(both in history and in practice) to determine whether or not such 
projects are developed within the statutory criteria set forth by ISTEA 
or otherwise serve our Nation's transportation needs.
    For all the foregoing reasons, the reauthorization of the ISTEA 
statute for 1997 and beyond, if it is to take place at all, should be 
subject to the deletion of funds for bicycle and pedestrian trail 
projects as transportation ``enhancements'' under CMAQ or any other 
provision of ISTEA or its successor statute. By terminating this 
funding, scarce Federal transportation dollars can be better allocated 
to the maintenance and improvement of the Nation's highways, bridges, 
and mass transit systems which serve the transportation needs of a 
broad base of citizens rather than a select few recreational users of 
bicycle/pedestrian trails.
    Should the Honorable members of this committee or of the Senate as 
a whole request further information or public comment regarding this 
issue in the course of their deliberation of ISTEA's reauthorization, 
both I and several of my clients have experience with the proposed 
development of a rails to trails project funded by ISTEA. We have 
sought answers from the appropriate transportation officials to the 
concerns listed above (as well as many other concerns related to the 
proposal) and our questions have fallen on deaf ears. In any event, 
both I and my clients would be pleased to respond to your inquiries 
regarding our experience with ISTEA at your earliest convenience.
    In the course of the Senate's deliberations regarding the 
reauthorization of ISTEA, please keep in mind that the decisions made 
by this Honorable body will have a major impact upon the future of 
surface transportation in the United States and the everyday lives of 
taxpayers. Given the importance of spending tax dollars wisely and 
reducing the Federal budget deficit while continuing to maintain and 
improve our nation's transportation systems, it is our earnest hope and 
our respectful request that the eligibility, funding mechanisms, and 
oversight of ISTEA projects be subjected to a rigorous cost-benefit 
analysis and the strictest of scrutiny by your committee, the Senate, 
and the Congress as a whole.
            I remain,
            Very truly yours,
                                                Vincent B. Mancini.
                               __________
  Prepared Statement of Joan Bray, Chair, Midwest Intercity Passenger 
                        High Speed Rail Compact
    The mission of the seven-state High Speed Rail Compact is to 
explore the potential for high-speed ground transportation in the 
Midwest and Great Lakes Region and promote a cooperative, coordinated 
approach for related planning and development. As part of this goal, 
the Compact has adopted a Regional Rail Passenger Development Program 
encompassing the member states of Missouri. Illinois, Michigan. 
Indiana, Ohio. Pennsylvania and New York. The Compact strongly supports 
Federal legislation that contributes to implementing this program--
ultimately, high speed ground transportation throughout the region. The 
Compact recognizes that for its goal to be realized, all levels of 
government--Federal, state and local--must first commit programs and 
resources to re-establishing a reliable and efficient network of 
passenger rail service.
    The Compact region is home to approximately one-third of the 
nation's population, manufacturing employment and wholesale trade. The 
nation's first, third, fourth, and fifth largest urbanized areas are 
situated in the region. It also has four of the nation's top five 
manufacturing employment states and four of the top seven wholesale 
trade states. Amtrak rail passenger service is a vital link serving the 
Compact region's population and employment centers. The Federal 
Railroad Administration (FRA) is, in many cases, a funding partner in 
the development of the intercity rail passenger system.
    The High Speed Rail Compact wholeheartedly endorses the following 
legislative measures, being considered at this time, that impact 
intercity rail passenger service:
     Establishing a dedicated capital funding source for 
intercity rail passenger service (Amtrak);
     Broadening eligibility criteria for the use of fuel taxes 
to include passenger rail;
     Continuing to focus on safety by funding the elimination 
of highway-railroad grade crossing hazards; and
     Continuing to fund the development of rail technology, 
including that specifically for high speed rail.
    We support incorporating these provisions in the reauthorization of 
the Intermodal Surface Transportation Efficiency Act ( ISTEA).
    About $750 million a year could be dedicated to intercity rail 
passenger service by dedicating one-half cent of the 4.3-cent fuel tax 
currently used for deficit reduction. Currently, passenger rail is the 
only mode of public transportation without a dedicated funding source. 
The funding could be used to improve passenger rail trackage, signaling 
systems and stations, and to acquire new locomotives and coaches.
    This investment in the future of rail could result in tremendous 
economic opportunities in the Midwest. In the long term, high speed 
rail networks would bring jobs, people and businesses to our cities. 
According to the U.S. Department of Transportation's Federal Railroad 
Administration report, ``High-Speed Ground Transportation for 
America,'' the Chicago Hub Network, which links the Chicago, Detroit, 
Milwaukee and St. Louis corridors, has the highest benefit/cost ratio 
of any of the proposed regional corridors. The report says that for 
every dollar invested, about $2.50 in benefits would be realized. One 
particular economic benefit to the region is apparent. Much of the 
nation's steel is produced in the Midwest, and steel would be a vital 
resource in the expansion of rail development.
    Investment in passenger rail also would be less expensive for 
taxpayers. Upgrading existing railroad infrastructure is far less 
expensive than expanding and maintaining highways, bridges and 
airports. New rights-of-way would not be needed, thereby reducing the 
impact on smaller communities that new automobile and airplane 
infrastructure causes. The involvement of Federal, state and local 
governments in passenger rail would also encourage private investment 
in the system.
    Establishing a dedicated funding source for passenger rail and 
making Federal transportation funding to the states more flexible would 
create more equitable conditions for all surface transportation modes. 
It would also enable individual states to make transportation decisions 
that are the most appropriate to meet that state's needs. Consequently, 
this would help develop a seamless intermodal transportation system 
that would be safer and more efficient. For example, integrating Amtrak 
rail passenger service with the National Highway System would have many 
benefits, such as reductions in highway congestion and in automobile 
emissions that pollute the environment.
    Continuing to fund technology development and eliminating highway-
railroad grade crossing hazards are necessary to further enhance rail's 
safety advantage and to make high speed rail a reality. Among the 
initiatives affected would be positive train control, arrester nets, 
and new and refined equipment technologies such as improved turbine-
powered locomotives, tilt-body coaches and diesel multiple units.
    In summary, investment in passenger rail would result in multiple 
benefits to the people, the economy, urban development, the environment 
and the rail industry. It also would bring advancements in technology 
and rail transportation together in a way that has not been fully 
developed in this country. The members of the Compact urge you to 
support legislation that moves high speed rail closer to implementation 
and to join our effort toward building a future for our constituents 
that gives them reasonable transportation choices. All of these 
measures would enable the Compact states, Amtrak and the FRA to take 
major steps toward the development of the Compact's regional rail 
passenger system.


REAUTHORIZATION OF THE INTERMODAL SURFACE TRANSPORTATION EFFICIENCY ACT

                              ----------                              


                       WEDNESDAY, MARCH 19, 1997


                                       U.S. Senate,
Committee on Environment and Public Works, Subcommittee on 
                         Transportation and Infrastructure,
                                                    Washington, DC.
    The subcommittee met, pursuant to notice, at 9:35 a.m., in 
room 406, Senate Dirksen Building, Hon. John W. Warner 
(chairman of the committee) presiding.

            ENVIRONMENTAL PROGRAMS AND METROPOLITAN PLANNING

    Present: Senators Warner, Baucus, Boxer, Graham, Inhofe, 
Reid, Thomas, and Chafee [ex officio].

           OPENING STATEMENT OF HON. JOHN H. CHAFEE, 
          U.S. SENATOR FROM THE STATE OF RHODE ISLAND

    Also present: Senator Allard.
    Senator Chafee [assuming the chair]. We are going to get 
started here. Senator Warner is unavoidably delayed for a few 
minutes and will be right along.
    I want to welcome all the witnesses.
    When enacted in 1991, certainly ISTEA radically altered the 
focus of transportation policy. It recognized the integral role 
and enormous impact of surface transportation on the 
environment in which we live, work, and play. And for the first 
time, transportation decisions became part of a larger planning 
process that considered how transportation touches every part 
of our lives.
    I must say, for those of us who were present in 1991 at 
that ISTEA legislation, I don't think even we realized how 
significant a piece of legislation it was and what a departure 
from the traditional legislation dealing with highways as 
opposed to transportation that had taken place in the past.
    I am delighted the Administration has chosen to continue 
the important legacy of ISTEA. Yesterday, Senator Moynihan and 
I had the pleasure of introducing the Administration's bill in 
the Senate. I am particularly pleased the Administration has 
chosen to increase funding for some of the key environmental 
programs through the original ISTEA such as congestion 
mitigation and air quality, so called CMAQ, the improvement 
program in transportation enhancement activities.
    The bill isn't perfect, but it will serve as a sound 
foundation for bipartisan legislation to address the Nation's 
surface transportation needs.
    As much as transportation benefits society through the 
efficient movement of people and goods, it is not without its 
costs. One of the major unintended consequences of mobility is 
its negative impact on the Nation's air, water, and land. It is 
appropriate, I believe, that we tap the highway trust fund to 
offset some of these formidable costs.
    The single largest source of flexible funds in ISTEA has 
been the CMAQ program, which provides funds for States to 
improve air quality in areas that do not meet the Clean Air Act 
standards. ISTEA also established several programs to help 
preserve environmental and scenic resources, such as the scenic 
byways program and the transportation enhancements program.
    In addition to creating flexible programs to offset some of 
the costs of transportation to the environment, ISTEA created a 
sound planning process that is a very important part of all 
this. The State-wide metropolitan planning provisions of ISTEA 
have yielded high returns by bringing all interests to the 
table and increasing the public input into the decisionmaking 
process.
    As you know, it is not a simple task to resolve often 
competing and conflicting demands. ISTEA provides States and 
localities with a set of tools to cope with the growing demands 
on our transportation system and the corresponding strain on 
the environment. We must preserve and build upon these tools as 
we move forward on reauthorization.
    [The prepared statement of Senator Chafee follows:]
Prepared Statement of Hon. John H. Chafee, U.S. Senator from the State 
                            of Rhode Island
    Thank you, Mr. Chairman. I would like to welcome all of the 
witnesses that we will hear from this morning.
    The purpose of today's hearing is to receive testimony on 
environmental programs and Statewide and metropolitan planning under 
the Intermodal Surface Transportation Efficiency Act. When it was 
enacted in 1991, ISTEA radically altered the focus of transportation 
policy. It recognized the integral role and enormous impact of surface 
transportation on the environments in which we live, work, and play. 
And for the first time, transportation decisions became part of a 
larger planning process that considers how transportation touches every 
corner of our lives.
    I am delighted that the Administration has chosen to continue the 
important legacy of ISTEA. The NEXTEA proposal builds upon the strong 
record of its predecessor. I am particularly pleased that the 
Administration has chosen to increase funding for some of the key 
environmental programs of the original ISTEA such as the Congestion 
Mitigation and Air Quality improvement program and Transportation 
Enhancements activities. Yesterday, Senator Moynihan and I introduced 
NEXTEA. While the bill is not perfect, it will serve as a sound 
foundation for bi-partisan legislation to address the Nation's surface 
transportation needs.
    Speaking of needs, we have heard a great deal of attention toward 
infrastructure needs alone. You are undoubtedly familiar with the 
arguments for more money to build and repair roads and bridges to 
preserve the Nation's economic future. As much as transportation 
benefits society through the efficient mobility of people and goods, 
however, it is not without its costs. We cannot afford to ignore all of 
the consequences, good and bad, of our transportation system.
    One of the major unintended consequences of mobility is its 
negative impact on the Nation's air, water and land. The costs of air 
pollution that can be attributed to cars and trucks range from 30 
billion to 200 billion dollars per year. Passenger cars alone account 
for almost 30 percent of the Nation's total oil consumption. Highway 
construction and other transportation activities often pollute the 
Nation's surface waters and groundwater. Vehicles and other 
infrastructure are also major sources of solid waste. It is therefore 
only appropriate that we tap the Highway Trust Fund to offset some of 
these formidable costs.
    ISTEA provided States and localities with a set of tools to cope 
with the growing demands on our transportation system and the 
corresponding strain on our environment. The single largest source of 
flexible funds has been the Congestion Mitigation and Air Quality 
improvement program. The CMAQ program provides more than six billion 
dollars nationwide over 6 years, to improve air quality in areas that 
do not meet Clean Air Act standards. These are the so-called ``non-
attainment areas.'' The entire State of Rhode Island is a non-
attainment areas, so our share of this money, about five million 
dollars per year, can be spent anywhere in the State for projects that 
improve air quality. Examples could include bicycle and pedestrian 
facilities, or capital improvements to our transit systems.
    ISTEA also established several programs to help preserve scenic 
resources. One tool is the National Scenic Byways Program, which 
provides 80 million dollars in grants to States over the 6-year 
duration of the law. Its purpose is to maintain the scenic, historic, 
recreational, cultural, and archaeological characteristics of scenic 
byway corridors, while accommodating tourists. So far, the States have 
designated 34,000 miles of American roads as scenic byways. It is a 
small but significant program.
    Another tool to help preserve our environmental and scenic 
resources is a provision that requires each State to spend 10 percent 
of its Surface Transportation Program or STP funds on transportation 
enhancements. The enhancements program is designed to make the roads 
that go through our communities blend with and preserve our natural, 
social, and cultural environment. Some of the early Interstate 
construction provides a clear example of the destructive power a 
freeway can have on a community and its surrounding environment. To 
redress some of the damage highways have done in the past, enhancements 
money can be used for a variety of things, including the acquisition of 
scenic easements, historic preservation, bike paths, removing 
billboards, and mitigating stormwater runoff.
    In addition to creating flexible programs to offset some of the 
costs of transportation to the environment, ISTEA created a sound 
planning process. It strengthened the notion of partnership among State 
and local governments and all affected interests by elevating the role 
of the metropolitan planning organization in the planning process.
    The Statewide and metropolitan planning provisions of ISTEA have 
yielded high returns by bringing all interests to the table and 
increasing the public's input into the decisionmaking process. As you 
know, it is not a simple task to resolve these competing and often 
conflicting demands.
    Finding the right solutions to address all of our needs requires 
strategic and comprehensive approaches to transportation policy. Tunnel 
vision is downright risky as we move toward reauthorization. We must 
therefore ensure that our transportation system is maintained according 
to high national standards and that all of its elements are integrated 
into a coherent whole.
    That is why today's hearing is so important. Initiatives 
established in ISTEA, such as the CMAQ program, transportation 
enhancements and the planning process, must be preserved to build the 
best transportation system for all Americans.

    Senator Chafee. On our witness list, we welcome again Ms. 
Jane Garvey, acting administrator of the Federal Highway 
Administration, and Mr. David Gardiner, assistant administrator 
for policy, planning, and evaluation of EPA.
    Why don't you proceed and I won't restrict each of you to 
the 5 minutes, but if you could try to stay in that general 
area, it would be helpful.
    Ms. Garvey, welcome. Go to it.

STATEMENT OF JANE GARVEY, ACTING ADMINISTRATOR, FEDERAL HIGHWAY 
                         ADMINISTRATION

    Ms. Garvey. Thank you very much, Mr. Chairman.
    I thank you for the opportunity to testify on behalf of 
NEXTEA, President Clinton's $175 billion proposal for 
reauthorization of Federal highway, transit, and highway safety 
programs.
    Mr. Chairman, I would like to say at the outset, on behalf 
of Secretary Slater and the Administration, how very grateful 
we are to both you and Senator Moynihan for your show of 
support yesterday. We know very much the significance of that 
action and we certainly celebrate that sort of support and 
enthusiasm, if you will. Thank you very much. We appreciate 
that.
    This morning I would like to review some of NEXTEA's 
highlights in the area of planning and the environment. I also 
have a more detailed statement that I would like to submit for 
the record, with your permission.
    NEXTEA, Mr. Chairman, as you indicated, is the President's 
proposal to succeed ISTEA, the landmark 1991 law that 
transformed transportation decisionmaking. ISTEA moved us from 
a single mode perspective, reflecting instead a broader 
problem-solving orientation that has given States and local 
decisionmakers greater leeway and more flexibility to address 
their own individual needs. At its most fundamental level, 
ISTEA recognized the interconnection between transportation and 
the environment, and it gives us the tools to prove that a 
sound transportation system and a healthy environment need not 
be mutually exclusive.
    Because of ISTEA, we have initiatives which improve the 
quality of life in our community, such as transportation 
enhancement, recreation trails, and scenic byways. Because of 
ISTEA, we have CMAQ, the congestion mitigation and air quality 
improvement program, which helps communities reduce congestion 
on their streets while improving the quality of air. And 
because of ISTEA, we have a planning process that focuses on 
inclusiveness and public involvement on realistic financial 
planning, on multimodalism, and on links across policy concerns 
such as air quality.
    ISTEA's history has been a series of success stories. The 
consensus we have heard from our partners, the chorus we have 
heard from our stakeholders around the country, has been to 
tune it, not to toss it. NEXTEA follows that advice. It 
continues the many programs which work, refines those which 
have not yet fully realized their promise, and creates new 
initiatives which apply what we have learned. The planning and 
environmental provisions of our reauthorization proposal seek 
to build on the successes of an ISTEA and make strategic 
revisions oriented toward reducing the burdens on our partners 
and enhancing their flexibility.
    I would like to take just a minute to mention a few of the 
recommendations included in our proposal.
    In the area of planning, for example, we have proposed to 
streamline the 23 State-wide and 16 metropolitan planning 
factors into seven broad goals that States and localities can 
use to guide their planning. We are also emphasizing system 
operations and management so that planning considers a complete 
range of transportation options, including intelligent 
transportation systems. And we are expanding planning 
inclusiveness by ensuring that the concerns of freight shippers 
are heard.
    Planning can achieve results only if funding is available 
to carry out its recommendations. That is why NEXTEA's 
authorization levels include an 11 percent increase over 
current funding levels. Part of the increase is in programs 
focused on improving the environment such as CMAQ and 
transportation enhancements.
    CMAQ has been the most flexible and innovative of our 
programs, targeting funding to where it produces results, 
whether it is high-speed ferry service in Rhode Island, an 
intermodal freight transfer facility in New York, or bicycle 
and pedestrian paths in Montana. Through administrative 
changes, we have streamlined the CMAQ program over the past 
couple of years.
    We want to build on that success, so we are recommending 
the following changes: to increase CMAQ funding by 30 percent 
to $1.3 billion annually; to make areas with unhealthy levels 
of particulate matter eligible for CMAQ funding; and to make 
eligible for funding those areas designated as non-attainment 
under the proposed new air quality standards.
    CMAQ is the largest of our environmental programs. We are 
also sustaining our commitment to recreational trails, to 
scenic byways, and to bicycle and pedestrian facilities. We are 
proposing a 30 percent increase in our transportation 
enhancements program in order to fund those types of projects 
which are low in cost but high in the value they return to our 
communities. Transportation enhancements have become an 
important part of our commitment to communities through a 
variety of activities from the renovation of historic rail 
depots to rehabilitation of stone arch bridges to recreational 
trails.
    While retaining the programs, we have also put in place a 
number of streamlining measures. For example, we are allowing 
States to use their own procurement procedures. We have 
streamlined the rules for environmental clearance and reduced 
the Federal oversight requirements.
    Thanks to Congress, the NHS also included other 
streamlining measures, such as those allowing States to use 
donated funds or materials as their non-Federal match and 
providing advance payment options, as well as streamlined 
provisions for environmental documentation. All of those 
provisions are continued in NEXTEA.
    Let me close by saying that we believe our proposal is 
faithful to what we heard from our constituents: sustain and 
retain ISTEA's principles, streamline its requirements, and 
increase its flexibility in funding levels. We have listened, 
we have learned, and we have produced a proposal which can take 
America's transportation system well into the 21st century.
    Mr. Chairman, we look forward to working with this 
committee and with Congress to make it a reality.
    Thank you very much.
    Senator Chafee. Thank you very much, Ms. Garvey.
    Several have come in and the chairman has arrived. While he 
is getting organized, Senator Baucus, do you have anything?
    Traditionally, as you know, the last panel all too often 
get short-shrift as time races by. It would be my hope that we 
could move right along today and give full attention to the 
last panel.
    Senator Reid. Is that a suggestion that we don't say 
anything?
    [Laughter.]
    Senator Chafee. Well, you can take it as a suggestion. I 
tossed it out there.
    Senator Baucus.

  OPENING STATEMENT OF HON. MAX BAUCUS, U.S. SENATOR FROM THE 
                        STATE OF MONTANA

    Senator Baucus. Mr. Chairman, there is not a lot to say 
here. We want to hear the witnesses.
    There are some benefits and there are some problems with 
the CMAQ and other programs. I just hope that the witnesses are 
candid and up-front, not just giving each one side only, but 
also suggesting some solutions and compromises, hearing both 
the benefits as well as the problems of all these programs.
    Senator Chafee. Senator Thomas.

 OPENING STATEMENT OF HON. CRAIG THOMAS, U.S. SENATOR FROM THE 
                        STATE OF WYOMING

    Senator Thomas. Thank you, Mr. Chairman.
    I will submit a statement, but I too want to--I guess when 
you come from a State like mine I think we need to know a 
little more about what you're talking about with the CMAQ 
program. You talked about recreational trails rather 
enthusiastically, but it is my understanding that you are 
spending down substantially over what it was before. I think 
you might ought to talk a little more about that.
    We have been having some real problems from Cody to 
Yellowstone in trying to get a road built because of all the 
conflicting problems and the environmental problems with the 
agencies there, a road that clearly needs to be rebuilt. There 
will be much more traffic and yet it is stalled. In fact, the 
State has withdrawn their support because of the difficulty. I 
am interested in what you suggest we do about that if we really 
want to do something with the roads.
    Thank you.
    I will submit a statement, Sir.
    [The prepared statement of Senator Thomas follows:]
    Prepared Statement of Hon. Craig Thomas, U.S. Senator from the 
                            State of Wyoming
    Mr. Chairman, thank you for holding this hearing today. I think it 
is important that we examine the environmental programs and the State 
and local planning provisions of ISTEA. Some of these programs have 
been successful and should be continued; however, some should be 
changed or dropped entirely.
    I am deeply concerned about the environmental planning process and 
its effect on safety. For example, the design work on the Cody to 
Yellowstone Highway (U.S. 14/16/20) started in 1987, but the 
preliminary design on two-thirds of the project is still not complete. 
The design work is on hold until the Wyoming Department of 
Transportation and various Federal agencies can resolve certain 
differences on recreation and fish an wildlife mitigation issues. These 
delays have exacerbated problems with a road that is unsafe and in dire 
need of improvement. In fact, accident rates on segments of this 
highway continue to far exceed the Wyoming average by as much as 225 
percent. In addition, tourist traffic to Yellowstone National Park over 
this road will increase by more than 50 percent over the next 20 years. 
In the reauthorization of ISTEA, we must find a way to get the Federal 
Highway Administration, the environmental community, the States and all 
other interested parties involved in the process so that we can shorten 
the time and lessen the design costs of important projects like this 
one.
    Another safety issue that involves the planning process is the 
current prohibition on using safety set-aside money on the Interstate 
system. In Wyoming, one of the most useful safety features on our 
system is the addition of ``rumble strips'' on the shoulders of our 
Interstate highways. They are particularly effective on rural 
Interstate highways. The use of safety set aside money for this type of 
work would be ideal. Although the Administration claims that safety is 
its top priority, it's NEXTEA proposal does nothing to address this 
issue. However, the bill Senators Baucus, Kempthorne and I are about to 
introduce, the Surface Transportation Authorization and Regulatory 
Streamlining Act (STARS 2000) will make this important change to ensure 
safer highways in rural America.
    An environmental issue I am interested in examining today is the 
Congestion Mitigation and Air Quality (CMAQ) program. I hope the 
Administration will do a better job of explaining the effects of the 
proposed National Ambient Air Quality Standards (NAAQS) on CMAQ. I am 
troubled by this proposal that will take more and more money from the 
Surface Transportation Program (STP) that otherwise would help address 
some of Wyoming's roads needs in order to pay for air quality problems 
in other parts of the country.
    Two other ``environmental'' programs that should be looked at are 
the enhancements and the recreational trails programs. While we will 
hear from some strong advocates of enhancements today, I believe we 
should allow states and localities to make the decisions about these 
projects, not the Federal Government. At the very least, the program 
should be maintained at its current level, not increased as the 
Administration proposes. We need to take a hard look at our priorities. 
For example, 44 percent of Wyoming's roads are in fair to poor 
condition and Yellowstone National Park faces $250 million in road 
needs while receiving less than $10 million annually. That is where my 
focus during the reauthorization of ISTEA will be.
    Recreational trails, however, is an entirely different program. I 
agree with my colleague Senator Kempthorne, who has done great work on 
this issue. The program operates on a ``user pays'' system. It is the 
only one of these programs that is financed by user fees--from taxes on 
fuel purchased for use on recreational trails and in outdoor recreation 
equipment, which are paid into the national recreation trails trust 
fund established by ISTEA. The U.S. Department of Transportation 
estimates that this user fee brings in somewhere between $65 and $120 
million annually. Yet the Administration has proposed to spend $7 
million per year on this program. I find this proposal for recreational 
trails to be completely inadequate. STARS 2000 addresses this important 
issue and I encourage the Administration to reconsider its position.
    Finally, Congress and the Administration need to think about 
reducing Federal regulation of State and local governments. We took a 
big step forward a year and a half ago under the National Highway 
System Designation Act, but more work remains to be done. We need to 
simplify prescriptive interpretations of Federal regulations by several 
Federal agencies. We should also consider initiatives that review and 
reduce many obsolete and unnecessary regulations on State and local 
governments. This will ensure that American taxpayers will get more for 
their fuel tax dollars.
    Again, Mr. Chairman, thank you for holding this hearing. I am 
hopeful these concerns will be addressed today.

    Senator Chafee. Of course there will be a chance for 
questions as soon as we hear from Mr. Gardiner.
    Mr. Gardiner.

  STATEMENT OF DAVID M. GARDINER, ASSISTANT ADMINISTRATOR FOR 
  POLICY, PLANNING, AND EVALUATION, ENVIRONMENTAL PROTECTION 
                             AGENCY

    Mr. Gardiner. Thank you, Mr. Chairman.
    I am happy to be here on behalf of the Environmental 
Protection Agency to support the Administration's proposal on 
NEXTEA.
    As you pointed out in your opening remarks, our 
transportation network enables us to maximize our economic 
potential, provides us with unprecedented amounts of personal 
freedom, and gives us both a figurative and a literal path for 
the things we want in life. However, it also exacts a price on 
the environment. These problems manifest themselves in many 
forms, including local air pollution, such as smog and 
particulate matter, water pollution, habitat fragmentation, and 
contributions to climate change. Environmental costs are real 
and they impact the economy.
    The enactment of ISTEA in 1991 marked a watershed in 
national transportation policy as it linked transportation and 
environmental policy in ways that had never been thought of 
before. That linkage should be improved and strengthened as 
Congress reauthorizes ISTEA.
    In no area, it is more important to consider the conflict 
and the linkage between transportation and the environment in 
our effort to provide clean and healthy air for every American 
to breathe. The technology mandated by the Clean Air Act, and 
its subsequent provisions, has been remarkably successful. New 
cars today are much cleaner than they were in 1970. Generally 
speaking, tile pipe emissions standards applied to new cars 
today allow only about 5 percent of the typical emissions of 
cars prior to 1970.
    Despite this progress, the history of transportation-
related air quality in the United States over the past 25 years 
is not a story of unqualified success. For one thing, the 
emission reductions derived from end-of-pipe control 
technologies on cars and trucks have been undermined by steady 
and ongoing increases in the number of vehicle miles traveled.
    If you look at this chart, you will see the trend over the 
course of time. You can see that the trend of vehicle miles 
traveled continues to go up. In 1970, Americans drove their 
vehicles about 1.1 trillion miles. By the end of 1995, vehicle 
miles traveled had more than doubled to over 2.4 trillion 
miles.
    Senator Chafee. Mr. Gardiner, I think the charts are in 
your testimony, right?
    Mr. Gardiner. That is correct. They are also attached to my 
testimony that was submitted to the committee.




    Senator Chafee. Either my eyes are going on me, or these 
are the most illegible charts.
    [Laughter.]
    Senator Chafee. I am for bolder charts.
    [Laughter.]
    Senator Chafee. In any event, we have it here. Your point 
is the dramatic increase of vehicle miles traveled.
    Mr. Gardiner. That is correct.
    Senator Chafee. You show in your chart here. Is this in 
trillions?
    Mr. Gardiner. The chart is in millions of miles, but what I 
spoke of, it adds up to trillions.
    Senator Chafee. So it is very dramatic, certainly 
percentage-wise, in every way.
    Mr. Gardiner. That is correct. And the increases have been 
especially rapid in America's cities and surrounding suburbs 
where typical patterns of economic development have caused 
millions of commuters to drive more miles between their homes, 
their jobs, and the typical activities of their daily lives.
    This steady increase in vehicle miles traveled nationwide--
about 3.3 percent per year for the past decade--has had several 
adverse effects on the quality of American life. First, it is 
slowing the air quality benefits we expect to gain from end-of-
pipe controls and improved fuel technologies. After a quarter 
of a century of technology improvements, 74 million Americans 
still live in the 106 counties that do not meet national health 
standards for ozone or smog. Almost 30 million Americans still 
live in the 41 counties that do not meet national health 
standards for particulate matter.
    Between now and 2010, more widespread use of better 
catalyst and cleaner fuels will not reduce vehicle-related 
emissions much further. In fact, over time you will see that 
they begin to rise. If you look at the next chart, if you 
follow the curve, you see that as a result of the passage of 
the Clean Air Act in 1990, which mandated new controls on 
automobiles and on fuels, emissions go down to about 2005. But 
after 2005, this steady increase in vehicle miles traveled 
erodes the gains we make between now and 2005 or so. You can 
see that the trend in air quality emissions goes up after 2005. 
That is largely due to this increase in vehicle miles traveled.
    Obviously, one of the major creations of ISTEA in 1991 was 
the creation of both the congestion mitigation and air quality 
funds and the enhancements program. These were excellent 
examples of the wholly appropriate emphasis on both innovation 
and its connection to the environment.
    In CMAQ I would point out that for the first time we have a 
federally funded transportation program that is targeted 
explicitly at air quality and the Federal mandate that we have 
to deliver clean air for every American. In effect, CMAQ funds 
the mandate we require under the Clean Air Act, or at least a 
portion of it. The CMAQ and enhancements programs have made 
funding available for projects and activities that never before 
would have been eligible for Federal-aid highway or for 
transit.
    I think the results speak for themselves. Let me just give 
you a few examples of some of the improved transportation 
options and improvements in the environment we have seen as a 
result of the CMAQ and enhancements programs.
    In Boise, ID, as a part of an effort to encourage 
alternative transportation, the city has replaced 28 of its old 
diesel buses with a fleet of smaller buses fueled by compressed 
natural gas. Besides the fact that these new buses are more 
efficient and user friendly than their predecessors, they 
eliminate particulate emissions and cut carbon monoxide 
emissions by 90 percent.
    In order to fight a serious ozone pollution problem in St. 
Louis, the public can now purchase cards that enable them to 
ride the regional light rail or bus system for free on days 
with high ozone or smog levels. In 1996, the first year of the 
program, over 8,500 of these cards were used. Private companies 
and retail stores have begun to offer their own incentives to 
use these cards. Thousands of people in the area now have even 
more reason to leave their cars at home during high pollution 
days.
    Agencies in New York and New Jersey have come up with an 
innovative way of reducing traffic on the Gowanus Expressway 
and the Verrazano Narrows Bridge. Because highway construction 
over the next several years is expected to reduce available 
lanes by up to half, a new water freight service has been set 
up across the Hudson River. As freight moves by water instead 
of truck, air pollution and congestion will both be reduced. 
This new barge service is expected to eliminate about 50,000 
truck trips per year across the Verrazano Narrows Bridge.
    Finally, in San Jose, CA, a state-of-the-art child care 
facility has been constructed at one of the areas major 
transportation hubs. Parents can now drop off their kids, park 
their cars in the free commuter parking lot, and use one of the 
hundreds of trains and buses that stop nearby. A study 
estimates that this day care center and the resulting 
facilities could reduce area vehicle miles traveled by more 
than 700,000 trips per year, with consequent reductions in 
vehicle emissions.
    The diversity of these local programs is truly striking. 
Clean-fuel buses, free transit passes, new intermodal freight 
facilities, day care centers, pedestrian and bicycle paths, 
traffic flow control projects--all these and more are now in 
use in American communities because ISTEA thought about old 
problems in a new way.
    Our communities have a bigger voice in designing 
transportation systems to meet their unique needs. Now, they 
now have more options. The diversity of projects funded through 
CMAQ and the enhancements programs is itself one of the primary 
benefits of ISTEA because out of this rich profusion of ideas 
will emerge the set of linked transportation and environmental 
policies that will sustain us in the 21st century.
    I have heard some of ISTEA's projects criticized because 
their environmental benefits are difficult to quantify or 
because they have not helped a local community attain national 
air quality standards. As we evaluate these projects, it is 
important to remember that compared to the history of national 
transportation policy, a relatively small amount of money has 
been spent on these projects over a relatively short amount of 
time.
    We should not criticize these programs because we expect 
too much of them too soon. We are trying to shift the momentum 
of 50 years of transportation policy, and that is not going to 
happen over night. We have to keep at it. It is going to take a 
while for these ideas to catch on and show measurable results, 
but we are undoubtedly moving in the right direction.
    We also have to remember that cleaner air and a healthier 
environment are not the only benefits derived from CMAQ and 
enhancements projects. Some of the projects help to reduce 
congestion on local streets. Others made local transportation 
systems more flexible or more efficient in giving local 
communities more transportation options. The varied benefits 
derived from most of these projects argue eloquently for the 
success of ISTEA and for its continuation in the future.
    EPA stands squarely behind ISTEA and we stand squarely 
behind NEXTEA, particularly the increase in funding for CMAQ. 
Like President Clinton, we believe that NEXTEA is one of the 
most important pieces of environmental legislation that 
Congress will consider over the next 2 years.
    We see great cause for hope in the hop-shuttle service in 
Boulder, CO, where clean-burning propane-fueled buses are 
carrying an average of 4,300 passengers a day, more than twice 
the number originally expected. In Glendale, CA, the public-
private partnership is rewarding employees for leaving their 
cars at home and heading to work in car pools, van pools, 
bicycles, mass transit, and on their own 2 feet. We see a less 
congested and cleaner future in the 45-mile long Pinellas Trail 
linking St. Petersburg with Tarpon Springs, FL, and in the 235-
mile long Katy Trail that traverses nine counties and joins 35 
towns in Missouri.
    Let's keep the successes for the environment and for public 
health and for communities going by reauthorizing the CMAQ and 
enhancements programs with increases in funding as proposed by 
the Administration.
    Thank you very much, Mr. Chairman.

           OPENING STATEMENT OF HON. JOHN W. WARNER, 
         U.S. SENATOR FROM THE COMMONWEALTH OF VIRGINIA

    Senator Warner [assuming the chair]. Thank you, Mr. 
Gardiner.
    [The prepared statement of Senator Warner follows:]

     Prepared Statement of Hon. John Warner, U.S. Senator from the 
                        Commonwealth of Virginia

    I want to welcome Acting Administrator Garvey and EPA 
Assistant Administrator Gardiner, and our other witnesses today 
to discuss ISTEA's environmental and planning programs.
    The particular focus this morning will be on the Congestion 
Mitigation and Air Quality program--known as CMAQ.
    First established in ISTEA, CMAQ had sound goals of 
promoting more transportation choices for consumers. It 
properly gave States and local governments the flexibility to 
fund their highest transportation needs.
    To those who believe that legislation I have introduced--
STEP-21--would terminate the CMAQ program, let me set the 
record straight.
    STEP-21 continues the flexibility for State and local 
governments to continue to select their own transportation 
choices, including transit, commuter rail and highways.
    Transportation projects in non-attainment will continue to 
recognize their impacts on air quality because of the 
conformity requirements of the Clean Air Act.
    The Clean Air Act guides the types of projects selected in 
non-attainment areas and ensures that transportation plans work 
together with a State's air quality plans.
    The result will be that the States will continue to invest 
in transit alternatives, HOV lanes, and other opportunities to 
reduce automobile trips and improve air quality.
    STEP-21 does not change this important relationship.
    As important, STEP-21 continues the statewide and 
metropolitan planning requirements. It preserves the 
metropolitan planning organization structure and the allocation 
of funds so that local governments in urban areas can determine 
their own transportation priorities. I welcome the views of our 
witnesses today and look forward to a thoughtful discussion of 
these important issues.

    Senator Warner. We will now proceed to have questions and I 
will lead off with one to you, Mr. Gardiner.
    On the question of congestion--I experienced it this 
morning first-hand--CMAQ restricts the State's and MPO's choice 
of options that may provide much-needed congestion relief. As 
all transportation plans in non-attainment areas must conform 
to a State's air quality plans, shouldn't we permit CMAQ funds 
to be used for any project that is included in a conforming 
transportation improvement plan?
    Mr. Gardiner. I think, again, Mr. Chairman, we have to go 
back to the purposes for which the congestion management and 
air quality fund was created in the first place, and that is to 
deal with the very serious air quality problems that we have 
across the country and to make an attempt to pursue innovative 
strategies, as I was elucidating in my testimony, that local 
communities can dream up that can help them attain their air 
quality objectives by trying innovative transportation 
policies.
    I think the record of CMAQ speaks for itself, that in fact 
the communities have been marvelously innovative and that that 
move us in the right direction.
    I think it is going to be very important, if we are going 
to maintain our momentum toward achieving clean air in 
communities across the country, that we continue to try to have 
this sort of contribution that the CMAQ projects can make both 
in the short-term and the long-term toward enhanced air quality 
for communities across the country.
    Senator Warner. Let me ask it this way.
    Transportation plans that are consistent with air quality 
plans should use CMAQ funds. Is that a yes or a no?
    Mr. Gardiner. Transportation plans that meet the conformity 
test that use funds from other areas then may go forward. There 
was a test that was established in the Clean Air Act in 1990. 
That so-called conformity test says that items that are in a 
transportation improvement plan must conform with the area's 
clean air plans. That is a very important test that has been 
established. I think it is an essential element of the 
integration the Congress was seeking in both the Clean Air Act 
amendments of 1990 and the creation of ISTEA in 1991. That is 
the way we get a consistency between our objectives for clean 
air and our objectives for transportation.
    Senator Warner. Is it a yes or a no?
    Mr. Gardiner. The CMAQ funding can be used for projects 
which are in an air quality plan, yes.
    Senator Warner. Do you want to comment at all, Ms. Garvey, 
or let that one slide by?
    Ms. Garvey. I think I will.
    [Laughter.]
    Senator Warner. Let's talk a little about the 9 years to 
take a project from the design phase to construction.
    Many have indicated that the new requirement to conduct a 
major investment study duplicates the purpose of the 
environmental impact statement, which requires that all 
alternatives, including alternative modes of transportation, be 
analyzed.
    What is the Federal Highway Administration doing to ensure 
that the MIS does not duplicate the EIS and does not recreate 
the regional planning process for each project?
    Ms. Garvey. Let me try to answer that question in two ways, 
Mr. Chairman.
    First of all, we are conducting a pilot program now with a 
number of States to really demonstrate how an MIS can be used 
in coordination with and merging into the NEPA process, because 
that is a very fair question and one that has been raised by 
our State coalition at the beginning of the MIS process. We are 
conducting with our colleagues at FTA a pilot project which I 
think is going to give us some very good examples.
    We have also suggested to States that they can approach an 
MIS in two ways, either on its own or as part of the planning 
process. But I think we are going to learn a great deal from 
the pilot programs on how we can merge the two.
    Senator Warner. I am going to digress for a few seconds.
    Mr. Chairman, I understand that prior to the arrival of 
myself and Mr. Baucus you made a statement this morning 
regarding the intention of yourself and Mr. Moynihan to 
introduce the Administration's bill.
    I think Mr. Baucus and I and the members of the 
subcommittee would like to have an opportunity to talk with you 
about which bill will serve as the initial markup document.
    Senator Chafee. Certainly. I have introduced the bill with 
my staff. But that doesn't mean that that is the only bill I 
will put in. There are a variety of bills.
    The answer to your question is yes.
    [Laughter.]
    Senator Warner. I thank the chair.
    [Laughter.]
    Senator Warner. Would you like to ask any questions?
    Senator Chafee. Yes.
    Mr. Gardiner, I think it is important that we get across 
once again the point you are making, as I understand it. What 
you are saying is that we have built these highways all across 
the country--and we are continuing to do so and widening them 
and so forth. As a result of that, the vehicle miles traveled 
has increased dramatically, as you showed in the first chart up 
there. And the effect of that is to denigrate the air quality 
in many communities across the country.
    Am I correct in the point you are making?
    Mr. Gardiner. In essence, yes. I think what we find is that 
the growth in vehicle miles traveled is undermining the 
technological improvements that we can make. The technological 
improvements in the other chart actually show a real benefit. 
But over time, as we continue to increase vehicle miles 
traveled, that will erode the air quality gains we get from 
technology.
    Senator Chafee. So therefore, it is legitimate to use 
highway trust fund moneys to do something about this?
    Mr. Gardiner. We certainly believe so. Certainly under the 
Clean Air Act we are asking communities across the country to 
design plans to achieve air quality. They are wrestling with 
the challenges they are facing as VMT in their communities 
grows substantially. It has been our thought that the CMAQ 
funding has been the primary place where communities have been 
able to go to use innovative funding to seek, in essence, 
alternatives to single occupancy vehicle travel. They have been 
able to fund these innovative projects that look at 
transportation alternatives within their community.
    Senator Chafee. Well, I agree with you. I agreed with that 
philosophy in 1991 and I agree with it now.
    Ms. Garvey, one of the arguments we are constantly going to 
hear is regarding the enhancements--that's a nice thing, but if 
the States want it let them do it themselves and don't have a 
designated sum set aside for the enhancements. Leave this big 
thrust toward options or flexibility and let the States do what 
they want with that. If they want to put more or less in, that 
is their business.
    What is your answer to that?
    Ms. Garvey. That issue came up a great deal during our 
discussions both within the Administration and also when we 
conducted the outreach and forums in the last year. But we also 
heard from proponents of transportation enhancements that it 
was a fairly new program, that it was really just getting 
started, and that there was strong support for staying the 
course one more time. Perhaps in NEXTEA III or ISTEA III, 
moving much more toward eligible activities may be the right 
approach.
    But for now, the proponents felt very strongly--and we 
agreed--that having a separate program was important. It is 
still a small amount of money. It is extraordinarily popular 
with communities, with cities and small towns across this 
country. So we opted for a set-aside in this reauthorization.
    Senator Chafee. I agree with you, too.
    I wish those who do the enhancement programs in the States 
would make every effort they could to invite Senators to come 
and cut the ribbon.
    [Laughter.]
    Ms. Garvey. We will make that suggestion. I think it is a 
good one.
    Senator Chafee. I think it would be a good one, myself.
    [Laughter.]
    Senator Chafee. I thank the chair.
    Senator Warner. Mr. Baucus.
    Senator Baucus. Thank you, Mr. Chairman.
    I would like to ask both of you to respond to this 
question.
    The chairman makes a good point that more people drive. 
That's true. And there are more highway lanes added with 
highway construction. But the point is that a lot of those 
lanes are added not for the sake of just adding lanes but 
because people are driving more. They just are. That helps 
alleviate congestion and reduce air pollution because car 
engines burn more cleanly when they are not stopped at 
intersections and so forth.
    Do we really get a big bang for our buck in spending money 
on CMAQ? I ask that because I think GAO has raised the question 
that we are not getting a lot of benefit from all this. It 
sounds good, but the fact of the matter is that we are not 
getting many benefits. One could ask the question, Why not take 
that same $1.3 billion--or whatever it is you are suggesting--
and put that into research for batteries so that we get more 
efficient automobiles? Why not put more into oxygenated fuels 
or something like that so that we do get a greater bang for our 
buck if our goal is cleaner air, which it obviously is?
    Here is your opportunity to respond to that question. It is 
a fair question and one that reminds us that it sounds nice and 
good, but when you really look at it, we don't really get that 
many benefits. There is probably a better way to get clean air 
benefits than putting all this money into feel-good stuff.
    Ms. Garvey. I will start. Thank you, Senator.
    Let me try to answer your question in a couple of ways. I 
think there still are some benefits for a number of localities. 
It is a way to get into conformity. So there are some benefits 
to it.
    I think what has been the most encouraging when you look at 
the CMAQ program is that it is a good mix of projects. When we 
started CMAQ, there were a lot of just traffic flow 
improvements. But I have to say that that got communities into 
conformity. So they did use it well and effectively.
    If you look at it now, you can almost divide it into three 
categories. There is about 46 percent that goes into transit. I 
think your point, Senator, is that in the area of transit there 
is a great deal to reduce congestion. The air quality benefits 
may not be as great as some of the others. But States and 
localities are also putting money into traffic flow 
improvements. That is about 30 percent and that does get some 
immediate gains for them.
    Then finally, I think there is a real interesting mix, as 
David Gardiner has suggested, on newer approaches such as 
transportation control measures, demand management and so 
forth.
    Senator Baucus. Why not spend that money on more research 
for efficient batteries and so forth? You are just describing 
to me how the money has been spent. I asked a different 
question.
    What about other uses of that same dollar that might be 
more efficient and might more efficiently reach our goal?
    Ms. Garvey. I think we can do both.
    Senator Baucus. We can't do both. There is only a limited 
number of dollars.
    Ms. Garvey. Yes, there is a limited number of dollars.
    Senator Baucus. So we have to decide what our priorities 
are, given the limited number of dollars we have.
    Ms. Garvey. I guess I would say that with the research 
money we have, we are undertaking a number of those 
initiatives, looking at ways that we can get cleaner fuel, get 
better vehicles working with----
    Senator Baucus. What about the rural areas? Rural areas 
can't use these programs, such as transit systems and light 
rail. They are unavailable. Traffic synchronization doesn't 
mean anything. It can a little, but the benefits aren't very 
much. So what about the rural areas that are non-attainment, 
small communities?
    Ms. Garvey. Smaller communities----
    Senator Baucus. They can't use CMAQ dollars nearly as 
efficiently as big cities can.
    Mr. Gardiner. But they can still use the funding to help 
them get toward attainment of the air quality standards, which 
was the purpose of CMAQ in the first place. Again, the CMAQ 
funding is immensely flexible and very innovative funding of a 
wide variety of projects. I think the notion has been to allow 
communities--whether they be rural or any other kind--to use 
their own innovative capacities. I think we are seeing that 
across the country. Communities are being very innovative in 
coming up with new strategies.
    For rural areas that are in attainment, they can flex the 
money into----
    Senator Baucus. How much of the benefits in cleaner air are 
attributable to stationary source and mobile source provisions 
in the Clean Air Act?
    On the other hand, how much is attributable to programs 
like CMAQ?
    Mr. Gardiner. It varies from pollutant to pollutant. Carbon 
monoxide would be a pollutant that was very heavily dependent 
on the transportation sector. Sixty-four percent of carbon 
monoxide emissions, according to EPA's most recent trends 
report would come from the mobile source sector.
    Senator Baucus. But how much Clean Air Act as opposed to 
CMAQ?
    Mr. Gardiner. I think the way to think about that is by 
looking at the chart that we had up there before. Again, I 
think you see that the requirements in the Clean Air Act--which 
are in essence technology requirements that are both 
requirements on the technology on the automobile as well as 
requirements for at least certain communities around the 
country for cleaner fuels, for other kinds of technology 
programs--that they yield a very substantial benefit that in 
fact they make a real dent in clean air. But what you see over 
time is that the increase in vehicle miles traveled will erode 
those benefits and it will turn up.
    Senator Baucus. That is not responsive to my question.
    Mr. Gardiner. I don't know the fraction. I can happily see 
whether we have an answer.
    Senator Baucus. And the reason that is going up is because 
people are traveling more. Americans have more cars and they 
are driving more, too. It is not just because of a 
deterioration--it is because people are driving more.
    Mr. Gardiner. That is correct. And there are many factors 
that are causing that to occur. All I think we are saying is 
that in essence, just as you would not invest all of your 
finances in one particular stock, you want some diversity in 
your portfolio of approaches in the transportation area in 
dealing with air quality problems.
    Senator Baucus. But you don't want to go into a stock that 
is not going to pay dividends, either.
    Mr. Gardiner. That is correct. Certainly my impression has 
been that in looking at the CMAQ projects that have been done 
already--I have provided examples where I think there are real 
world benefits.
    Senator Baucus. I am trying to give you an opportunity in 
some respect to come up with some good evidence here. Frankly, 
I hear a lot of words, but I don't hear a lot of data or a lot 
of hard evidence.
    Thank you, Mr. Chairman.
    Senator Warner. Mr. Thomas.
    Senator Thomas. Thank you, Mr. Chairman.
    EPA is seeking to implement some more stringent standards 
on smog and particles. What do you think that will cost and 
what impact does that have on what you are seeking to do?
    Mr. Gardiner. There are two questions there. First, what is 
the impact on cost?
    As I think you know, Senator, accompanying the standards we 
are setting is a complete analysis of both the cost and the 
benefits of those standards. That analysis is under revision 
now and will be available.
    Senator Thomas. We haven't seen that, I don't believe.
    Mr. Gardiner. There is a draft version that has come out 
along with the draft standards. That has been available for 
public comment. The public comment period has just closed. But 
we have also been revising the analysis. The final analysis, 
which is responsive to the public comments as well as the 
standards, will be available later this year when the standards 
are proposed.
    In terms of the----
    Senator Thomas. Does it increase the cost or not?
    Mr. Gardiner. The analysis shows that standards will 
actually have net benefits, that the cost will be exceeded by 
the benefits.
    Senator Thomas. Does it increase the cost?
    Mr. Gardiner. It will increase the cost and will even more 
substantially increase the benefits.
    The second point you asked about was how this related to 
the reauthorization of this law. The Administration is 
proposing to make it clear that any new areas that might come 
into non-attainment would be eligible for the CMAQ funding. So 
that if the standards would cause an area in your own State to 
come into non-attainment, they would be eligible for the funds 
that they could then use to make a contribution from the 
transportation standpoint.
    Senator Thomas. Ms. Garvey, there is something that I 
should know, but does the CMAQ fund come off the top before the 
State formula division?
    Ms. Garvey. Yes, in the sense that the CMAQ program is 
authorized separate from other programs.
    Senator Thomas. So in a State like mine or Montana, where 
there is relatively less activity here, we get less money than 
we would otherwise?
    Ms. Garvey. And it would be built into the rest of the 
program, into for example, the STP.
    Senator Thomas. So we would get less money than we would 
otherwise?
    Ms. Garvey. Not necessarily, you would get less money in 
CMAQ, but it would be counted by increases in the STP program 
and into other programs that would go to your State.
    Senator Thomas. Not if you take it off the top, would it?
    Ms. Garvey. Staff is reminding me that because of the hold-
harmless that is the case. But we can get you some more detail 
and perhaps do the breakout for your State, if that would be 
helpful.
    Senator Thomas. I understand what you are saying.
    Mr. Gardiner, you have cited that rail and mass transit--
there isn't much mass transit between Shoshone and Greybull, 
Wyoming. So my point is that these are all substantially 
different kinds of circumstances. It does appear that you have 
a one-size-fits-all proposition here for congestion and all 
those things when they are quite different.
    Mr. Gardiner. That is correct. I actually think that the 
current law is structured to be flexible enough to accommodate 
different circumstances. Under the CMAQ funding, all States get 
some money under CMAQ. States which have no non-attainment 
areas--if Wyoming has no non-attainment areas, then Wyoming can 
take the money that they get from CMAQ and move it to 
traditional highway projects and other kinds of things.
    Senator Thomas. But let me remind you again that the money 
has been taken off the top.
    Let me ask you a little more about safety.
    You indicate flexibility and yet in Wyoming one of the most 
useful futures is the rumble strips on the sides of our 
interstates. They are particularly effective. But why do you 
insist on not allowing safety set-aside money to be used on the 
interstate?
    Ms. Garvey. I am going to have to get back to you with more 
specifics on that, but I am assuming it is because we are using 
the interstate maintenance program that is set up and that that 
would be an eligible activity under the interstate maintenance 
program.
    Senator Thomas. This is the kind of flexibility that our 
State highway department would like to have.
    Ms. Garvey. Right, but I believe that it is eligible under 
the interstate maintenance.
    Why is it not eligible under the separate set-aside for 
safety?
    Senator Thomas. Yes, for safety.
    Ms. Garvey. Let me take a look at that, Senator, and get 
back to you.
    Senator Warner. These are non-attainment areas, two 
Virginia counties. One has 6,000 people and one has 19,000. I 
know both of them. The largest city in either county is 350 
people. They are both non-attainment. What can they do with the 
money? Put up a stop light?
    I don't think there is an answer to that question except to 
change the law.
    Mr. Gardiner. I would be happy, Senator, to take a look at 
the situation in those two counties and to see what is already 
happening in those two counties and what might some of the 
things be to use that funding. I will get back to you on that.
    Senator Reid. Mr. Chairman, I think this morning's session 
has indicated the wisdom of when this committee was formed and 
it being Environment and Public Works because they really go 
hand in hand. I think sometimes people ask why it is 
Environment and Public Works. The hearing today indicates 
clearly why it is important that we keep our eye on the prize. 
Whenever we do public works projects, we have to keep the 
environment in mind.
    I would ask our first witness, Ms. Garvey, in following up 
on what was stated by Senator Thomas in his brief opening 
statement, when we did the conference on this bill 5 years ago, 
one of the last things we did was come up with the program for 
trails. Some will remember Senator Symms was leaving and this 
was something he had worked hard on and we wanted to make sure 
that was in the bill. And it is in the bill. I think it has 
been one of the most popular aspects of the program, even 
though just a small amount of money has been spent.
    You have spent a lot of your testimony today, in effect, 
boasting about the program. But if you look at the bill we get 
from the President, it cuts this program back significantly. 
Why?
    Ms. Garvey. We had two goals for the recreational trails 
program as we were developing the bill. One was to provide 
contract authority so that there was a consistent stream of 
funding, which is something that we heard loud and clear in our 
outreach sessions. The second was to provide some additional 
flexibility so that the Federal dollars from other programs 
could be used as a match for the non-Federal share, which was 
another issue we heard.
    When we looked at the tough choices we were making at the 
end, recreational trails came out with a lower number in part 
because the transportation enhancements program is another 
opportunity for projects like that. But I know it is an issue 
Congress is going to look at. I understand the question.
    Senator Reid. It is very popular, doesn't take much money, 
and it really adds some light to the bill.
    Senator Baucus mentioned that one of the things he thinks 
we should look at rather than paving more roads is research 
with Federal agencies through better batteries, as an example. 
This has been an ongoing project and we have spent very little 
money on this.
    Also Senator Harkin and I and others have been very 
concerned about why we haven't done more with hydrogen fuel. 
The technology is there, we just need some direction from some 
of the Federal agencies--for example, with some of the Federal 
fleets--to use hydrogen fuel there. Magnetic levitation is 
something that Senator Moynihan, the former chairman of this 
committee, has talked a lot about, as have I.
    In answer to Senator Baucus' question--I really didn't get 
one--could you tell us why we don't do more. Why is there not 
more coordination with Federal agencies in some of these 
programs?
    Ms. Garvey. Actually, you are going to see in 1998 and 
beyond much more of an emphasis in this area and much more 
coordination. We are in the midst of a cooperative agreement 
with the Department of Energy as well as with EPA to really 
look at the issues of alternate fuels, to do it in a 
cooperative way, and to combine our research dollars so that we 
can get a better bang for the buck. The area of alternate fuels 
is one we are going to be focusing on. There are some elements 
of cleaner vehicles where we have a partnership with the auto 
industry.
    Our research budget in 1998 and beyond will focus on those 
areas. That is something that our colleagues in the Department 
of Energy have raised with us as well. We will do this in a 
cooperative manner.
    Senator Reid. There will be witnesses later on today that 
will testify. Their testimony bears on your testimony here--
both Mr. Gardiner and Ms. Garvey--and that is why it takes so 
long to get things done at the permit level. There will be 
examples of project delays that will be given today by the 
American Consulting Engineers Council, some of the examples 
taken from testimony of Senator Boxer in January of last year.
    We hear this all the time. The examples they give are 5, 6, 
and 7 years from the beginning of a project until the Federal 
Government will give the approval. Most of the time is taken by 
the Federal Government.
    You or Mr. Gardiner may not have the responses to the 
testimony given by the American Consulting Engineers, but I 
would ask that you inform the committee in writing as to what 
we can do to speed up the permitting process.
    Ms. Garvey. Senator, if I could just respond very briefly 
on that.
    Senator Warner. Let's take a minute on that. That issue is 
central to everything we are doing.
    Ms. Garvey. It is a very important issue. I have not yet 
seen the testimony, but I am certainly familiar with the issue.
    We have in the last 9 months been engaged in a discussion 
again with our colleagues at the Federal level as well as with 
some of our State partners to look at that issue, how we can 
make the process work better. We have a report that was just 
completed with some very specific recommendations, which I 
would be very happy to share with members of this committee.
    Let me just mention two or three very quick 
recommendations.
    Very often we bring our environmental colleagues into the 
process very late in the game. Frankly, they raise issues that 
are very important, but we brought them in too late. So sitting 
down early in the process with all the affected agencies is one 
recommendation that comes through loud and clear in the study.
    Second, there is a need to do simultaneous reviews rather 
than sequential reviews, which often add months if not years to 
the process.
    Third, we need to let one agency really be the lead as 
opposed to a kind of confusion as to who really is taking the 
lead and who is acting as the point agency, if you will.
    But there are a number of other recommendations, including 
delegating some of these responsibilities out to the field 
rather than bringing everything into Washington where it often 
gets----
    Senator Reid. Who made these recommendations?
    Ms. Garvey. We have had a cooperative process with our 
sister agencies as well as some of the States.
    Senator Reid. Is that in writing?
    Ms. Garvey. Yes.
    Senator Reid. I think that is something we should take a 
real close look at.
    Mr. Chairman, the reason this is so important--not only the 
delay in time, but it winds up costing so much more money. Most 
of these projects are done by the State's bonding authority. By 
the time they get around to actually being able to do it, these 
projects have gone up and they don't have the money to do them 
anymore. They have to cut back the projects, redesign, and so 
forth.
    Senator Warner. The bottom line is that it is a failure in 
the Government to serve the people.
    Thank you. And thank you for your comments about the 
history of this committee. You are absolutely right. This is a 
hearing that shows the importance of the two.
    Senator Inhofe.

          OPENING STATEMENT OF HON. JAMES M. INHOFE, 
            U.S. SENATOR FROM THE STATE OF OKLAHOMA

    Senator Inhofe. Thank you, Mr. Chairman.
    I have a rather lengthy opening statement that I would 
submit for the record.
    Senator Warner. Without objection, your prepared statement 
will appear in the record.
    [The prepared statement of Senator Inhofe follows:]
    Prepared Statement of Hon. James Inhofe, U.S. Senator from the 
                           State of Oklahoma
    Thank you, Mr. Chairman for holding this hearing on the 
environmental programs, namely CMAQ, under ISTEA and NEXTEA. I look 
forward to hearing from the Administration as well as the states, 
organizations and interest groups that will be directly affected by 
these new proposals.
    I have heard different opinions about the CMAQ program. It appears 
that some State and local governments find it useful to finance 
projects that help them to reach nonattainment status for ozone and 
carbon dioxide under the Clean Air Act. However, I understand that 
there are certain strict requirements that these competing projects 
must meet to be eligible for CMAQ set-asides. This calls into question 
its effectiveness of assisting the projects that most need it as well 
as the need for there to be a set-aside at all. Personally, I have 
trouble with mandatory set-asides since they can sometimes stifle 
flexibility and the most efficient usage of funds. This not to say 
however, that we should eliminate the CMAQ program altogether. It 
should just be less restrictive and more flexible.
    As Chairman of the Clean Air Subcommittee under EPW I have been 
keeping a close eye on how the Administration plans to handle the 
possibility of EPA's proposed ambient air quality standards for ozone 
and particulate matter with relation to the transportation industry and 
the NEXTEA. I have a couple of concerns so bear with me. Under current 
law, ozone nonattainment areas are classified in terms of severity by 
rating them on a scale of marginal to extreme and then assigned a 
weighted formula for the distribution of CMAQ dollars. The new air 
standards proposed by EPA eliminate the marginal-extreme weighting 
system for ozone, thus skewing the initial equality of areas already in 
nonattainment compared to areas that will come into nonattainment 
should the new regulations be promulgated. I feel this needs to be 
clarified.
    Another concern is with the small rural counties that will find 
themselves in noncompliance under a PM2.5 standard. CMAQ 
funds are distributed mainly to urban areas, however even under EPA's 
conservative estimates there will be a multitude of rural areas that 
will all of a sudden find themselves in nonattainment. This concerns me 
because it is these small counties that do not have the need for HOV 
lanes and transit that urban areas have so they will have a more 
difficult time having projects that qualify for CMAQ dollars.
    Under the new NAAQS proposal, hundreds of more counties will be 
thrown into nonattainment stretching the CMAQ funds even tighter, while 
the Administration proposes a ``hold-harmless'' provision, the use of 
that provision will take money directly from the STP fund. Even with 
the $300 million dollars the Administration proposes adding to CMAQ, I 
think they will have to rob the STP funds to a far greater extent than 
they are admitting. The proposed NAAQS standards are an unfunded 
mandate and I am concerned that under a court challenge that the EPA 
and the affected counties will expect the funding for these costly 
mandates to come from the CMAQ fund which will in turn exhaust the STP 
funds.
    In short, environmental programs are meant to play a role in our 
transportation system of today. My hometown of Tulsa has made enormous 
strides toward cleaner air and remained in compliance with air quality 
standards. However, CMAQ has been unfair in the past, cities which have 
bordered on nonattainment have not qualified for sufficient funding 
levels to enact measures which keep them in attainment. Tulsa already 
receives fewer CMAQ dollars than other cities, although they have had 
to spend enormous time and resources maintaining their current 
attainment status. If the goal posts move with the promulgation of 
these new EPA regs Tulsa will have even more competition for CMAQ 
money.
    We need to be cautious about mandatory set-asides and where the 
money is actually going. I look forward to hearing from the witnesses.

  OPENING STATEMENT OF HON. HARRY REID, U.S. SENATOR FROM THE 
                        STATE OF NEVADA

    Senator Reid. If my friend would yield, I would ask 
unanimous consent that my opening statement be made a part of 
the record.
    Senator Warner. Without objection, your prepared statement 
will appear in the record.
    [The prepared statement of Senator Reid follows:]
     Prepared Statement of Hon. Harry Reid, U.S. Senator from the 
                            State of Nevada
    Mr. Chairman, For many years and in each of our recent hearings in 
this subcommittee, I have repeated my belief that transportation 
represents a truly national concern. We all have a stake in a national 
transportation system that is second to none, one that meets the 
present and future needs of the American people.
    Moving people and goods quickly and efficiently throughout the 
Nation is one of the most important things we can do to keep our 
economy strong over the long haul. Far too much time and productivity 
is lost waiting in traffic.
    However, our transportation system does not operate in a vacuum. 
Transportation is one of the biggest contributors to environmental 
problems in this country. Half or more of the emissions of nitrogen 
oxides and carbon monoxide in the U.S. come from cars and trucks. In my 
home State of Nevada, we are making good progress in overcoming these 
problems despite the dramatic growth in our urban areas over the last 
decade.
    However, a national transportation system that does not address 
environmental issues is one that would not be living up to the 
expectations of the American people. If we are serious about wanting to 
clean up the environment, we need to be serious in our transportation 
program about providing some resources to the states to assist them in 
implementing a program that is consists of both sound infrastructure 
and is environmentally sound.
    Therefore, I have not only been supportive of the Congestion 
Mitigation and Air Quality Improvement Program and the Transportation 
Enhancements Program, but also other programs such as the Intelligent 
Transportation Systems program that also has a positive impact on the 
environment.
    These and many other ISTEA ``experiments'' work together to make 
the core highway and transit programs work better, smarter, and 
cleaner.
    The people of Nevada have taken advantage of CMAQ and enhancement 
money under ISTEA to fund a variety of very popular projects. Las Vegas 
has improved interchanges, built a pedestrian overpass at one of the 
city's busiest intersections, and partially funded a cutting-edge 
regional traffic signal system. We still have a lot of traffic problems 
in Las Vegas, but without the Las Vegas Area Computer Traffic Signal 
System, they would be immeasurably worse.
    In Reno we have been able to purchase $5 million worth of newer, 
cleaner buses and to expand and improve our paratransit system. 
Elsewhere in the State we have been able to rehabilitate rails stations 
and have beautified several highway corridors.
    Senator Chafee is conducting a field hearing with my assistance in 
Las Vegas on March 28. I would like to invite all of you out to Nevada 
to see first hand how we are trying to build a 21st century 
transportation infrastructure for the Nevada of the 21st century. 
Witness after witness will describe how communities in Nevada and 
elsewhere are merging the traditional highway and transit programs with 
advanced, environmentally sound, concepts and technology to build the 
intermodal system all of us on this committee are dedicated to.
    Yes, Senator Chafee, we will even have a witness discussing Maglev.
    A word of caution. I have stated that these programs are widely 
popular in Nevada, as I suspect they are in many communities across the 
nation. Unlike many Federal projects, these are small and discrete and 
have a visible, positive day-to-day impact on people and the 
communities where they live. They are appealing and popular for good 
reasons.
    However, they are popular in the same way cable TV is popular. 
Cable TV is a nice addition to a home as long as you aren't paying for 
it with money you should be using for the electric bill. It is very 
hard to justify an expansion of these programs, however successful or 
well-intentioned they are, when the overall funding of the 
Administration's bill falls far short of meeting the critical 
transportation needs of most states.
    I will not dwell on this point. My State department of 
transportation will be delighted to continue developing projects to 
enhance Nevada's transportation system with CMAQ and the Transportation 
Enhancement dollars if the overall funding is acceptable. Rails to 
Trails is terrific, but I do not want it to become someone's only 
option for getting to work because the rest of the system is so vastly 
under funded.
    The fuel taxes paid into the highway trust fund each year will 
support significantly higher spending on transportation and that is 
what we should be doing with the money.
    As you know, I introduced legislation last month to take the 
Highway Trust Fund off-budget to ensure that the American taxpayers are 
getting what they pay for when the gas tax is collected. This is simply 
a matter of living up to the public trust.
    Perhaps, Ms. Garvey, you will today become the first Administration 
witness to come right out and say that more money is at least part of 
the answer.
    Thank you, Mr. Chairman.

    Senator Inhofe. Mr. Gardiner, I am the chairman of the 
Clean Air Subcommittee. On February 12, we had Administrator 
Browner in and talked for some time about the effect of the 
proposed changes. I want to elaborate a little bit on what 
Senator Thomas was talking about.
    She testified that the proposed changes for ozone would 
have the effect of increasing the population of people living 
in non-attainment areas up to somewhere between 74 million and 
122 million people, or about a 65 percent increase.
    Do you agree with that estimate?
    Mr. Gardiner. I think that is correct, yes.
    Senator Inhofe. Subsequent to that, we have gone back and 
felt that that estimate was very conservative, but I wouldn't 
ask you to elaborate on that. I think it is going to be closer 
to 100 percent.
    Ms. Garvey, the amount of CMAQ funding is increased over 
the 1991 authorization by about 30 percent?
    Ms. Garvey. Yes, that is correct, Senator.
    Senator Inhofe. And I understand there is a hold-harmless, 
which will ensure that we would be guaranteed the same amount 
as we were under the authorization of 1991. Is that correct?
    Ms. Garvey. If you are referring to if an area moves into 
non-attainment because of a new standard, that is correct, 
Senator.
    Senator Inhofe. Then I would have to ask the question. You 
are talking about 30 percent versus my 100 percent increase or 
the Administrator's 66 percent. Isn't that going to come from 
the surface transportation system? Where else will it come 
from?
    Ms. Garvey. It would, Senator. It would come off the top of 
the Surface Transportation program, yes.
    Senator Inhofe. Which is primarily roads, such as you find 
in Oklahoma, Wyoming, Nevada, and Montana. Is there any other 
place it could come from?
    Ms. Garvey. Other than the core program, no, it could not.
    Senator Inhofe. That is really substantial. I don't think 
we have talked about that quite enough, Mr. Chairman, because 
we have had two hearings here and we had a field hearing in 
Oklahoma where 11 States were represented. Everyone came in 
with their own estimates. This is a great concern out in the 
States that have what used to be referred to as secondary road 
systems.
    Back to your chart up here, Mr. Gardiner, are those years 
that are the black dots? In other words, you have 1990, then 
these dots that come down finally to 2000.
    Mr. Gardiner. That is correct.
    Senator Inhofe. So we are right now at about half-way down. 
That is based on the current standards. Nitrogen oxide is a 
precursor to ozone.
    Mr. Gardiner. That is correct, but the standards that we 
are about to set for particulate matter and for ozone are for 
ambient. It tells the public that this is the level that is 
safe to breathe. These standards refer to the actual emissions 
standards that we would apply to automobiles.
    Senator Inhofe. Emission standards based on the current 
standards?
    Mr. Gardiner. Yes, under the 1990 amendments to the Clean 
Air Act.
    Senator Inhofe. Not under the proposed changes?
    Mr. Gardiner. Well, I want to be clear that the proposed 
changes will not affect, for example, how clean a car is that 
the automobile manufacturers have to produce. There are two 
different kinds of standards that we set. We set a standard, 
which is the one under consideration today that is for ambient 
air quality, which is--basically the question posed when 
setting an ambient air quality standard is, How clean should 
the air that we breathe be?
    We also set emissions standards. Emissions standards tell 
an automobile company how clean the emissions that come out of 
a car should be, or how clean the emissions from a factory or a 
power plant should be. Those would be emissions standards.
    To get these kinds of calculations, these show the 
combination of emissions standards for automobiles required 
under the Clean Air Act. In certain parts of the country we 
have now clean air regulations for reformulated gasoline. That 
is in effect an emissions standard. This shows that when you 
add all those things up, and you calculate in also how much 
people will drive and other factors like that, what we expect 
to see from the overall on-road vehicles, the vehicles that 
will actually be on the roads.
    Senator Inhofe. You would say, then, that this chart 
demonstrates a successful program, wouldn't you?
    Mr. Gardiner. In the short-term, it demonstrates that 
technology will have a substantial positive effect for cleaning 
up the air. In the long-term, when you look at it about 2005, 
it shows that the amount of vehicle miles traveled--how much we 
are driving--we are increasing the amount we are driving so 
much that emissions from the vehicles on the road will begin to 
increase in the year 2005 according to these projections. The 
basic message of this chart is that you cannot rely simply on 
technology--or at least the technology that we currently 
require automobile companies and others to produce--to continue 
to produce clean air.
    Senator Inhofe. You are going to have to explain--and you 
won't be able to do it in this meeting--to me that curve as it 
starts to curve back up. To me, it has been a successful 
program. What we have contended is that what we are doing right 
now is working. What we are doing right now is cleaning up the 
air, not confining it just to this chart.
    Mr. Gardiner. I understand.
    Senator Inhofe. Quite frankly, I think we are doing enough.
    Thank you, Mr. Chairman.
    Senator Warner. Thank you.
    Our distinguished cosponsor of Step 21, the distinguished 
former Governor of Florida, Senator Graham.

  OPENING STATEMENT OF HON. BOB GRAHAM, U.S. SENATOR FROM THE 
                        STATE OF FLORIDA

    Senator Graham. You gave me a lousy introduction.
    [Laughter.]
    Senator Graham. Thank you, Mr. Chairman, and thank you for 
your kind remarks.
    I'm going to start by restating what I think is a truth and 
then some observations on that as the context for the question.
    The truth is that America's surface transportation system 
has degraded over the last 6 years since the passage of ISTEA, 
and there is every expectation that it will continue to 
degrade. The fundamental reason for that is that whereas 
according to the estimates of the former secretary of DOT, Mr. 
Pena, we should be investing about $50 billion a year in order 
to maintain the system at its current state, we have been 
investing about 60 percent of that. We are paying the price for 
that year after year disinvestment in our transportation 
system. That is the truth.
    The observation is that there are three basic ways to deal 
with that problem. First, is to provide more funds through the 
traditional methods we have used to finance transportation. 
Second, is to restructure the Federal funds in such a way that 
they will serve as a magnet to encourage non-traditional funds 
into transportation. Third, is to use the funds that we have 
available from whatever source more efficiently than we have in 
the past or some combination of those three techniques.
    Having said that, I would like to ask Mr. Gardiner: What 
are the standards that you look to to determine whether our 
surface transportation congestion is becoming more serious, 
being ameliorated, or in a steady state?
    Mr. Gardiner. I think from our standpoint--it is possible 
that Ms. Garvey may have a better answer specifically on 
congestion--we at the Environmental Protection Agency are 
simply interested in whether we are making progress toward 
meeting the goal of air quality standards around the country. 
Is a community moving in that direction? So under the Clean Air 
Act communities are developing clean air plans. The purpose of 
the CMAQ funding is to try to provide some funding for some of 
the efforts that local communities may make to do 
transportation alternatives. Similarly, in the remainder of 
funds we have a test to make sure that the transportation plan 
and the clean air plan conform with each other, that they in 
effect mesh.
    Senator Graham. What are the Department's standards for 
congestion?
    Ms. Garvey. Speaking as a former State DOT official, we 
often would look at levels of service and grade levels of 
service, obviously wanting to move toward level of Service A.
    From the Department's perspective, our thrust has really 
been to try to give States as many tools as we can to deal with 
the congestion.
    Senator Graham. I am interested in performance standards. 
Using those standards that you referred to that have an 
alphabetical listing, what is the result of applying those 
standards to the surface transportation in 1991 and 1997? Are 
more States in the higher alphabeticals?
    Ms. Garvey. Congestion is worse. I think your point earlier 
is well taken.
    I will say that there is some hope, though, in the last 
conditions and performance report. We are seeing that States 
are, in many cases, much more strategic in where they are 
putting their dollars. I think there is hope in that.
    When you look at the pavement conditions, those are 
stabilizing. In some cases, it is getting a little better. But 
the number of choke points, the number areas where congestion 
is a real problem, is not decreasing.
    Senator Graham. Could you quantify that? How many States 
are in a lower alphabetical position today than they were in 
1991?
    Ms. Garvey. I would like to submit that for the record, 
Senator, if I could, to be more specific and to be accurate.
    Senator Graham. Then applying the consequences of NEXTEA, 
what would be your projection as to where we were 6 years from 
today? Will we continue to degrade or will we see some 
stabilization?
    Ms. Garvey. I certainly hope that we will see more than 
stabilization. I think if we provide the kind of alternatives 
you have pointed out--we have to be smarter, we have to figure 
out alternative ways to fund infrastructure projects. Our 
emphasis on operation and maintenance I think is a very key 
component. Often--again as a former State official, we approach 
solutions through figuring out how much money we can devote to 
capital investment. But I think we are learning more and more 
that it has to be operations and maintenance as well.
    I hope it will be better.
    Senator Graham. What within NEXTEA are the initiatives that 
give you the most hope that we will be spending our money 
smarter as it relates to ameliorating traffic congestion?
    Ms. Garvey. I think not having funding decisions so modal 
driven and allowing States and localities the flexibility to 
choose among alternatives is one way. I think the emphasis on 
the planning process that brings in----
    Senator Graham. On that point, in what ways is NEXTEA 
different than ISTEA in terms of that range of choice?
    Ms. Garvey. For example, the STP program increases what is 
eligible. It includes, for example, Amtrak capital. It includes 
publicly sponsored freight rail. So again, if a State says that 
they want to put their dollars into freight rail because they 
think that is going to help our national highway system by 
getting some movement of goods onto rail, that is a good 
alternative for them.
    Senator Graham. I would like to get a followup. First, 
looking back, what has been the effect of our ISTEA program in 
terms of traffic congestion? What are the numerical or 
alphabetical measurements of that change?
    Second, looking forward, what are the alterations in NEXTEA 
that in which we are going to invest our confidence that they 
are going to improve the system over the next 6 years? And some 
quantification of how much we are looking to that particular 
tactic to contribute to the reduction of traffic congestion.
    Ms. Garvey. We will do that, Senator. But in summation, I 
do think increased funding levels, increased eligibility, and 
increased financing strategies--multiple strategies--are three 
areas that will give States more tools to reduce congestion.
    Senator Warner. Thank you, Senator, very much. I am quite 
anxious to proceed to the next panel because the Senate will 
have two back-to-back votes beginning at 11:30. But that should 
leave adequate time to hear from a very important series of 
witnesses.
    Before you depart, Ms. Garvey, let me say--and I think I 
speak for most on this committee--we wish you luck. You may be 
returning in the near future. I think it would be smooth 
sailing, and I hereby announce my vote yea.
    Ms. Garvey. Thank you very much, Mr. Chairman. I appreciate 
that.
    Senator Warner. Good luck. Go for it.
    [Laughter.]
    Ms. Garvey. Mr. Chairman, may I just say that I always 
report back to the Secretary. If you don't mind, I will report 
that last comment back.
    [Laughter.]
    Senator Warner. You bet. Thank you.
    Senator Warner. We will now have the next panel.
    We will hear from Mr. Thomas Walker, executive director, 
Wisconsin Road Builders Association, on behalf of the American 
Road and Transportation Builders Association; Mr. Hal Hiemstra, 
vice president of national policy, Rails to Trails; Ms. Meg 
Maguire, president, Scenic America; Mr. Hank Dittmar, executive 
director, Surface Transportation Policy Project; and Mr. Leon 
S. Kenison, commissioner, Department of Transportation, State 
of New Hampshire.
    We will have Mr. Walker to lead off.

STATEMENT OF THOMAS WALKER, EXECUTIVE DIRECTOR, WISCONSIN ROAD 
   BUILDERS ASSOCIATION, ON BEHALF OF THE AMERICAN ROAD AND 
              TRANSPORTATION BUILDERS ASSOCIATION

    Mr. Walker. Thank you very much, Mr. Chairman.
    I am very pleased to be here with you this morning. My name 
is Tom Walker. I am the executive director of the Wisconsin 
Road Builders Association, an affiliated chapter of the 
American Road and Transportation Builders Association.
    Senator Warner. I am going to interrupt to say that we will 
have to ask each witness to limit their remarks to 5 minutes. 
All statements will be placed in the record in their entirety.
    Thank you.
    Mr. Walker. Prior to joining the Wisconsin Road Builders 
last summer, I was employed for almost 10 years in the 
Wisconsin Department of Transportation where I played a major 
role in developing Wisconsin's Clean Air Act compliance 
strategy, oversaw the development of Wisconsin's first 
multimodal transportation plan, and also served as the 
administrator of the division of planning.
    I would like to begin by strongly endorsing ISTEA's 
emphasis on State and metropolitan planning. By improving the 
planning process as you did in 1991, I think we can have a much 
more intelligent discussion today about what works and what 
doesn't work in terms of transportation options. As a result of 
my own experience, I would like to share with the committee 
some of the things that I learned and use those to help 
substantiate some of the proposals to improve the planning 
process and how the linkage between the environment and 
transportation should work.
    The first point I would like to emphasize is how limited 
the real potential is for meaningful modal shift from highway 
use to alternatives to highways. In my written statement, I 
explain how the variety of rail and transit proposals and plans 
in Wisconsin barely reduce forecasted auto travel growth. While 
very important for improved mobility and travel choice, they 
cannot substitute for feasible highway improvements.
    You recall from the chart that EPA brought before you this 
morning the nice slope of highway travel growth they projected. 
I would suspect that if you took all the State-wide plans 
produced under ISTEA and all the MPO plans, and we successfully 
implemented them over the next 20 years, and we were able to 
actually get all the forecasted rail and transit ridership that 
those plans assume--which is a pretty optimistic statement--
that the slope of that chart in terms of forecasted auto travel 
will not move substantially.
    The challenge, as Senator Graham said earlier: What are we 
going to do to solve congestion? Yes, you need a multi-faceted 
approach, but absolutely you cannot do it without improvements 
to highway capacity.
    Is Wisconsin unique? At the department, we looked at MPO 
plans around the country, especially those containing major 
commitments to transit system development. Even in metropolitan 
areas like Portland and San Diego, for example, where plans 
call for a very ambitious doubling of transit trips within the 
plan horizon, modal shift will in fact be minimal. For each new 
forecasted transit trip, those plans recognize that there will 
be 10 to 15 new automobile trips during the same planning 
period. In short, the highway-transit tradeoff assumed in much 
of ISTEA is probably not there in most cases.
    Investments in alternatives to highways are important. They 
should continue. We encourage the committee to include them in 
NEXTEA. But they cannot substitute or come at the expense of 
continued investment in highways.
    For these reasons, we strongly recommend the removal from 
any Federal planning requirements of bias against highway 
capacity projects. States and MPOs should have the full 
flexibility to plan for highway mobility solutions and transit 
mobility solutions. Whatever works, they should have the 
flexibility to choose.
    We have several specific suggestions. First, the MPO 
financial feasibility requirement should be repealed. Limiting 
plans to current revenues precludes good planning. MPOs should 
be free to develop multimodal plans that require expanded 
investment levels. Then use the benefits in the plan to 
persuade all levels of government to respond with appropriate 
resources. I don't know of any elected official in my State of 
Wisconsin who is prepared to vote for increased fees or taxes 
for highways or transit without having in place first a plan 
that says how in fact those dollars should be invested.
    If the committee believes that some limit is appropriate, 
then we suggest that a requirement for State and MPO 
endorsement of the plan's financial element should suffice. If 
these public agencies are willing to endorse the revenues, why 
should Federal rules prevent them from taking that leadership 
role?
    I also would like to suggest that the committee take a hard 
look at restructuring the urban planning process to be a joint 
partnership between the State and the MPO. Without question, in 
every metropolitan area in this country there needs to be a 
partnership with the State representing the interregional 
mobility needs and the commercial mobility needs with the MPO 
focusing on the urban mobility needs of a region. Putting those 
together and requiring both the Governor on behalf of the State 
and the MPO on behalf of the urbanized area to endorse those 
plans seems to be a positive step forward.
    When Congress passed the Clean Air Act amendments in 1990, 
it included requirements for TCM evaluation and inclusion in 
SIPs. ISTEA funded those TCMs with the CMAQ program. The basic 
assumption we have heard over and over this morning was that 
reduction in auto usage would be a critical element in air 
quality attainment and maintenance.
    In my written testimony, I recount our experiences in 
Wisconsin. These indicate that CMAQ investments do not 
contribute significantly to air quality attainment. In the last 
6 years, technological changes produced a reduction of almost 
90 tons of VOCs daily, despite VMT growth in southeastern 
Wisconsin. CMAQ projects contributed one-twentieth of one ton. 
That is .005 of the total.
    All research and experience I have seen seems to prove that 
travel growth is not and will not overwhelm the technological 
potential for improved automobiles and improved fuels. The 
chart that EPA brought before you this morning, Mr. Chairman, 
showed an upturn in NOX emissions. That is based on existing 
law. You have in this country a proposal for a 49-State car as 
an alternative cleaner car of the future. If the committee 
believes strongly that the mobile sector needs to do more than 
it is doing, we would certainly encourage a mandate for the 
earliest possible production and sale of that vehicle because 
that will change that curve. It will move out yet further a 
point in which an uptake occurs.
    The cleaner cars get, the smaller the impact of any future 
potential uptake is. My guess is that--based upon what I know 
and what I have learned--in most non-attainment areas we can 
move that uptake based on existing technology out probably to 
2015, 2020, and beyond. That chart was a chart covering the 
Nation as a whole. Clearly many non-attainment areas are doing 
better than that. In my area in southeastern Wisconsin, we 
believe that the emissions of VOCs, for example, by 2015 will 
be down to 20 tons per day or less, compared to 160 tons in 
1990, if we can get the 49-State car implemented.
    Obviously, the State of Wisconsin cannot control that.
    Thank you very much, Mr. Chairman.

 STATEMENT OF HAL HIEMSTRA, VICE PRESIDENT OF NATIONAL POLICY, 
                        RAILS TO TRAILS

    Mr. Hiemstra. Good morning, Mr. Chairman and members of the 
committee.
    My name is Hal Hiemstra. I am the vice president of 
national policy at the Rails to Trails Conservancy. I also 
serve on the steering committee for the Surface Transportation 
Policy Project and the ``Bikes Belong'' campaign, and co-chair 
STPP's transportation Enhancements Committee. Thank you for the 
opportunity to address you this morning on issues relating to 
the reauthorization of the transportation enhancements program 
of ISTEA.
    Since passage of ISTEA, the Rails to Trails Conservancy has 
maintained an ongoing dialog with the State departments of 
transportation and project sponsors about spending and 
implementation issues associated to the enhancements program. 
We track enhancement money programmed, money matched, money 
obligated, and money reimbursed. We also track projects funded 
and project spending by enhancements category.
    Today, since I have 5 minutes, I have five main points that 
I would like to share with members of this committee.
    First, transportation is about more than roads. True, we 
all need and benefit from highway infrastructure, however, 
bicyclists and pedestrians needs safe on-and off-road routes, 
sidewalks, and convenient access to transit stations and other 
intermodal transfer points as well. Investments in these types 
of facilities are exactly what the American people want. A new 
poll released in late February by the ``Bikes Belong'' 
campaign, a coalition of bicycle advocacy and industry groups, 
has found that a majority of Americans support the use of a 
portion of gas tax revenue for funding transportation 
enhancements.
    The bipartisan poll conducted by the Lake Research 
Insurance Group, found that 64 percent of those polled favored 
using gas tax revenues for alternative transportation projects 
such as funding bike lanes, bike trails, and sidewalks. The 
response increase to 70 percent when respondents were asked 
whether they also favored using enhancements funds for related 
transportation purposes, including the renovation of historic 
transportation facilities, scenic road enhancements, and 
similar projects. And a whopping 79 percent of the respondents 
supported using gas tax dollars to build safe places for 
children to walk and bicycle.
    According to the spokesperson for the Terrance Group, the 
same polling organization that Ronald Reagan used, the poll 
data shows that ``the continued Federal support for alternative 
transportation projects is among the few topics upon which 
Americans can agree.''
    My second point is that the transportation enhancements 
program helps to stabilize and rebuild community infrastructure 
by improving the quality of life in communities lucky enough to 
have received enhancement funding since the program began, and 
by simulating local economic development, both of which are 
goals associated with any type of transportation project.
    The enhancements program also responds to local priorities. 
Since enhancements projects tend to be small projects--the 
average project is approximately $289,000--local community 
leaders have been able to play an important role in helping to 
define and design transportation enhancements projects. Because 
the program responds to local priorities, the transportation 
enhancements program, perhaps more than any other program 
created in ISTEA, builds new public support for transportation 
funding.
    In addition to recruiting new supporters of transportation 
spending, the enhancements program is already bringing 
additional investment into the transportation sector by 
leveraging more than the required 20 percent local match. 
Nationally, the average local match for transportation 
enhancements projects is 27 percent, and some States--such as 
Virginia--have a local match that exceeds 50 percent.
    My third point is that the enhancements program has and 
continues to be successfully implemented all across the 
country. As of February, 7,321 enhancements projects have been 
programmed for funding. But numbers and statistics are sterile.
    What has the transportation enhancements really 
accomplished?
    Children in Jackson Hole, WY now have a series of trails 
that converge upon their middle school, allowing them safe 
routes to bicycle, walk, or ski to school, enabling their moms 
and dads to leave the car at home for at least two trips a day.
    Mr. Chairman, 1,000 Minnesotans a day now commute to work 
in Minneapolis on the Cedar Lake Park bikeway, which shares the 
corridor with the Burlington Northern mainline carrying coal 
from Montana to Chicago. By allowing this many people to arrive 
in Minneapolis through bicycling, walking, or in-line skating, 
the need for another parking lot was eliminated, preserving 
valuable green space in the central city.
    In Great Falls, Montana, enhancement funds are being used 
to help build the 5.5-mile long River's Edge trail which will 
provide new off-road transportation choices for students and 
residents of adjacent neighborhoods and communities along the 
Missouri River.
    And a project I am sure you are familiar with, Senator 
Warner, is the renovation of the Danville, VA depot.
    Senator Warner. You might well close on that one. You have 
strong support from the three of us here. I thought you might 
want to stop while you were ahead.
    [Laughter.]
    Mr. Hiemstra. I will take that as a wonderful hint.
    Senator Warner. Great. We will put it in the record. Really 
it is a marvelous thing for the country. I know it is a 
diversion of funds, but sometimes those things are necessary.
    Mr. Hiemstra. Thank you very much, Mr. Chairman.

      STATEMENT OF MEG MAGUIRE, PRESIDENT, SCENIC AMERICA

    Ms. Maguire. Thank you very much, Mr. Chairman.
    I am Meg Maguire, president of Scenic America. Our mission 
is to preserve and enhance the scenic character of America's 
communities and countryside. We have seven affiliates. We are 
one of the founding members of the STPP coalition and we are 
very pleased to be here today.
    ISTEA presents a great opportunity to continue a program 
that works. I can tell you that our constituents feel very 
different about transportation now that we have had ISTEA for 6 
years. They have been able to come to the table and gain from 
that, makes a difference in their communities.
    We all agree that the transportation enhancements program 
has had great benefits. I will only second the feelings about 
that and call your attention to this report which we prepared 
last year which highlights 25 of the most outstanding of the 
transportation enhancements projects.
    Let me focus on another program that works very well, and 
that is the national scenic byways program. This program was a 
bit slow getting off the ground, but now it is really taking 
root in the States. The exciting thing for Scenic America is 
that we are working on the ground in four States with private 
funds. Foundations are putting money into the scenic byways 
programs to get programs started in their States because they 
see this as a great conservation opportunity.
    We are working in Ohio, Pennsylvania, we just started 
working in Virginia. Our most interesting partnership at this 
point is with the State of Georgia. We have a formal 
partnership with the Georgia DOT, the Georgia Trust for 
Historic Preservation, and Scenic America to a State-wide 
program of scenic byways. Mr. Chairman, 20 communities have 
expressed great interest in scenic byways and there are many 
more. We are working through the whole rural development 
infrastructure in Georgia to help train people about what 
scenic byways can do and to get this program off the ground.
    As you know, the first set of national scenic byways were 
designated this year. This is a great program, so we urge that 
you continue it.
    ISTEA is also a great opportunity to fix something that 
doesn't work. Mr. Chairman and members of the committee, the 
Highway Beautification Act is broken and the people need your 
help to fix this Act. The time to fix it is now. Scenic 
America, over the last 2 years, has been conducting quite a bit 
of research. What do we know about billboards?
    We have done a study which will be released in the next few 
weeks, a survey of 46 States that have billboards. We are 
trying to find out what the States are doing to control 
billboards, to implement the Highway Beautification Act. We 
have found that billboards are proliferating rapidly. When the 
Highway Beautification Act was enacted in 1965, there were only 
330,000 billboards estimated nationwide. Today there are 
500,000 on Federal-aid primary and interstate highways alone.
    We know that billboards are going up rapidly in unzoned 
rural areas. Often sham businesses are going up, and then that 
becomes the commercial activity around which the billboards 
then go up. I have a March 9 clipping from the St. Louis Post 
Dispatch that details this in the State of Missouri. We know 
that this is a problem with sham businesses in Florida, 
Georgia, Missouri, and many other States.
    The States are also losing money. We know that it is 
costing them between $6 million and $10 million per year just 
to administer this program.
    They are not collecting any road user taxes, tolls, or fees 
from the billboard industry. This is the only industry that is 
not paying its fair share to use the American roads. If you 
turn a billboard away from the road it has absolutely no value 
at all. It doesn't clothe, feed, house, or educate anyone. Its 
entire value is derived from the road. Right now, it is paying 
nothing.
    We know that people in this country who have been 
professionally surveyed know that enough is enough. We find 
great dissatisfaction in Missouri, Florida, Rhode Island, and 
New Hampshire where the recent surveys have been conducted.
    We don't have any good safety information. Here is an 
industry that spends a great deal of creativity and ingenuity 
in billboard messaging and we really don't have any good safety 
information.
    We ask that you fix the Highway Beautification Act and 
propose these five measures: put real controls on the number of 
billboards on our Nation's highways; protect rural States from 
billboard blight; protect America's roadside trees--we know a 
lot of trees are going down.
    Senator Warner. Let's close on that one.
    Are you familiar with what happened in the Virginia General 
Assembly this year?
    Ms. Maguire. Sir, we were very pleased to work with the 
garden clubs and others.
    Senator Warner. For those who don't know about it, a bill 
was passed to cut down trees, and all of a sudden your 
organization went to work and got it pretty well reversed, 
didn't you?
    Ms. Maguire. Yes, we did.
    Senator Warner. There is power.
    Ms. Maguire. Yes, there is power.

    STATEMENT OF HANK DITTMAR, EXECUTIVE DIRECTOR, SURFACE 
                 TRANSPORTATION POLICY PROJECT

    Mr. Dittmar. Thank you, Mr. Chairman, for your kind 
invitation to join you today. I am Hank Dittmar, the executive 
director of the Surface Transportation Policy Project, a 
national coalition. Among our members are the Environmental 
Defense Fund, Friends of the Earth, the Sierra Club, the 
National Resources Defense Council, and the National Wildlife 
Federation.
    Today I want to focus on transportation and the 
environment, particularly on the congestion mitigation and air 
quality program. The reauthorization of the ISTEA legislation 
may well be the most important environmental legislation to be 
passed by the Congress in 1997. Federal investment in 
transportation is as critical to environmental quality and 
quality of life as it is to economic competitiveness. We have 
learned that American people want a clean environment and a 
good transportation system. ISTEA began the process of bringing 
those goals together. We believe the committee should build on 
that solid foundation in 1997 by preserving and enhancing 
ISTEA's environmental provisions, particularly the congestion 
mitigation and air quality program.
    I want to make two over-arching points and then leave you 
with a few recommendations. First, transportation investment 
affects environmental quality in many ways. Second, we need new 
alternatives to relieve traffic congestion.
    Federal transportation investment affects environmental 
quality in a number of ways. The most documented may be the 
Nation's air pollution problems: cars and trucks to emit 65 
percent of carbon monoxide emissions, 47 percent of nitrogen 
oxide emissions. Evidence increasingly points to small 
particulates in exhaust, particularly diesel exhaust, as a 
prime cause of respiratory problems in children.
    With respect to energy usage, almost two-thirds of the oil 
we use goes into cars and trucks. A decade ago, most of that 
oil was produced domestically. From 1980 to 1995, the amount of 
our Nation's oil we imported grew from 27 percent to over 50 
percent. Other environmental implications of the transportation 
program include global climate change, water quality loss due 
to run-off, the loss of farmland and open space, and impacts to 
biodiversity.
    For the environmental community, ISTEA has brought us to 
the table as partners. It has shown us it is possible to invest 
in transportation projects which actually improve the 
environment. So we have been happy, Mr. Chairman, to support 
your call to the Budget Committee for increased spending in 
transportation programs because we believe that if the funding 
is provided for ISTEA programs we can help mobility and the 
environment.
    This leads to my second main point, which is that we simply 
are learning that we can't solely build our way out of 
congestion by adding new road capacity. An increasing body of 
evidence has demonstrated that it is not possible to build our 
way out of congestion by adding new roads and widening roads. 
Anthony Downs of the Brookings Institute concluded in his book 
``Stuck in Traffic'' that ``building new roads or expanding 
existing ones does not reduce the intensity of peak hour 
congestion to any extent, particularly in rapidly growing areas 
because commuters quickly shift their routes, timing, and mode 
of travel.''
    Congestion in our metropolitan areas is not only annoying 
to those trapped in traffic jams, it represents a huge drain on 
our economy. The Texas Transportation Institute estimates 
economic losses due to congestion at $48 billion annually.
    ISTEA in 1991 sought to address air quality and congestion 
by creating the CMAQ program to provide alternative ways of 
investing in transportation. Dedicating only about one-
twentieth of our resources in 1997, the law has provided 
funding for alternatives to highway construction in a number of 
areas.
    I would like to make four basic recommendations with 
respect to the CMAQ program, which we believe should be 
continued in the reauthorization.
    First, we believe that the air quality benefits of CMAQ 
have been improving over time, that investment of these funds 
over time by the States has improved as the States have begun 
to do more rigorous air quality analyses and as they have begun 
to invest in a wider variety of projects. For instance, we have 
seen over the course of ISTEA about $275 million in CMAQ funds 
being programmed or obligated for alternative fuel projects, 
either clean transit projects or clean fleet applications.
    Clean transit is particularly promising as it provides a 
mobility solution, an air quality contribution, and helps to 
create a market for American clean technologies all at the same 
time. We don't believe the CMAQ program should be extended to 
include road-widening projects that can be funded under 
virtually every other ISTEA category and should not be 
permissible under the CMAQ program.
    Second, we believe the CMAQ program should address long-
term benefits as well as short-term benefits.
    Third, we believe that additional funding is needed for new 
areas coming into conflict with the standards in the future.
    Fourth, we believe that administrative simplification of 
the CMAQ program is needed. Many smaller projects could be 
certified as meeting the requirements of title 23 without 
Federal review or oversight in advance. This action would 
advance the air quality and mobility goals of the program.
    Mr. Chairman, I would like to introduce into the record a 
statement prepared by the Environmental Defense Fund and a 
letter by the Energy and Environmental Studies Institute, which 
has over 65 signatories in support of the CMAQ program. I have 
already provided it to the clerk.
    If there is time in questions, I would like to talk about 
ways that we might be able to streamline the delivery of 
transportation projects in the future. I was very interested in 
questions members of the committee had asked.
    Thank you.
    Senator Chafee [reassuming the chair]. Thank you.
    You have a blueprint for ISTEA reauthorization with the 
recommendations?
    Mr. Dittmar. Yes, Sir.
    Senator Chafee. Have you presented that to us?
    Mr. Dittmar. We have mailed it to you. I would be happy to 
provide additional copies. I have some at this time.
    Senator Chafee. As long as we have copies of that. I would 
like to see that.
    That was very interesting testimony, on everybody's behalf.
    We have one more witness, Mr. Kenison from the Department 
of Transportation in the State of New Hampshire.

   STATEMENT OF LEON S. KENISON, COMMISSIONER, DEPARTMENT OF 
             TRANSPORTATION, STATE OF NEW HAMPSHIRE

    Mr. Kenison. Thank you, Mr. Chairman.
    I am Leon Kenison, the commissioner of the New Hampshire 
Department of Transportation. I certainly appreciate the 
invitation of Senator Smith, Chairman Warner, and Senator 
Baucus to appear before you today to express our thoughts about 
the reauthorization of ISTEA, specifically in the area of 
environmental programs and planning.
    Speaking on behalf of the State of New Hampshire, we 
believe ISTEA has worked as an effective successor to the 
interstate era, and successfully served the entire Nation. New 
Hampshire joins with several other States in supporting 
reaffirmation of ISTEA without significant changes. We believe 
the original aims of ISTEA are still the right way to go, 
placing more responsibility on State and local governments, 
providing greater flexibility, recognizing that transportation 
needs vary from State to State and within a State, improving 
regional transportation efforts, and giving equal consideration 
to all modes of transportation.
    New Hampshire supports the maintaining of a strong Federal 
role in transportation, including funding for Federal clean air 
mandates through CMAQ. We support the need for long-term 
consistent Federal capital investment in transportation. That 
continued investment is needed to maintain and encourage 
economic growth.
    While the objective of this hearing is to gather comment on 
the environmental programs and planning aspects of ISTEA, we 
feel it important to note that the goals of the National 
Environmental Protection Act, NEPA, was to achieve a balance 
between the impacts and mitigation of a project. But a 
fractured regulatory permit system sometimes requires an agency 
to unbalance or block actions that may greatly benefit the 
welfare of affected citizens.
    We suggest stronger emphasis be placed on the need to 
achieve balanced resolutions by those Federal agencies assuming 
an advisory and regulatory role in the NEPA decisionmaking 
process.
    I also have some suggestions for improving the 
transportation planning provisions of ISTEA.
    By making optional many of the mandates, the States could 
conform to the spirit of ISTEA while tailoring a process that 
better meets the needs of the individual State's citizens. For 
example, eliminating the mandate for management systems has 
allowed different States to devise systems appropriate to 
support their decisionmaking. From the MPO side, the 
requirements for a 20-year project-specific, financially 
constrained plan should be changed. A 20-year plan should be 
more realistically based on goals and strategies to establish a 
direction for planning activities. Such a plan obviously cannot 
be financially constrained in the strict sense now required.
    For the States and MPOs, the public process should be 
simplified. Instead of encouraging public involvement, we have 
driven people away with the number of meetings we hold. When 
compounded with the meetings we need for TIP and STIP 
amendments, we suppress public involvement.
    We support the continuation of the transportation 
enhancement concept. However, we suggest that reauthorization 
enable States an option to process small projects--perhaps 
those under a certain threshold of, say, $50,000--as grants, 
avoiding the disproportionate preparation and overhead costs 
current procedures create.
    New Hampshire continues to support the environmental and 
planning goals of ISTEA, but we have identified problems 
associated with the process as it now exists. The idea of 
widespread public involvement in transportation planning is 
commendable.
    Unfortunately, the process has become cumbersome and 
confusing to our citizens and legislators. Rules and 
interpretations have gotten us off track, stifling both public 
interest and participation. The results in many cases has been 
to drive away the very people who want to participate. Good 
intentions have been met with skepticism and a lack of support. 
An already complex area of environmental regulation is now more 
so. The existing approach has proven costly both in funds and 
in time when it comes to transportation projects. In some 
cases, it has added years to the development of projects and 
increased costs considerably. Ironically, in many cases it has 
caused more serious environmental impacts than were avoided.
    In New Hampshire, I believe that ISTEA has worked. We 
support the key notions of ISTEA: partnering between the State 
and local entities; intermodal planning; and public 
participation in the planning, design, and construction of 
transportation projects. We support a continuation of at least 
existing funding levels in ISTEA and oppose efforts to 
dramatically adjust the formula for allocating funds to the 
State.
    Thank you again for allowing me to share my thoughts 
regarding reauthorization with you. Our agency would love to 
work with the staff in addressing the new law and certainly 
will welcome any questions.
    Senator Chafee. Thank you very much, Mr. Kenison. Something 
has gone wrong when the very purposes encouraging public 
involvement works atypically to that, as you have pointed out. 
I don't quite understand it, but our folks will be talking with 
you on why that has occurred.
    Mr. Hiemstra, I just want to say--and this would apply to 
you, Ms. Maguire--that although the programs that you feel are 
successful, and I am very supportive of, are wonderful and have 
significant support. On the receiving end, we don't get as much 
support--it doesn't come to us from those beneficiaries as 
occurs from those who are quite vociferous in opposing any non-
highway spending from the funds. In other words, you folks 
aren't very loud. If you want to stir up your troops, it would 
be worthwhile.
    Do you have any comment on that briefly, Ms. Maguire?
    Ms. Maguire. Our people are very desperate and they are 
very busy working on these programs. I am sorry to say that 
sometimes we don't say thank you enough and recognize from 
whence these programs came.
    Senator Chafee. I am not seeking a thank you, although I am 
always glad to get one and rarely do.
    [Laughter.]
    Senator Chafee. I think apparently you were very vigorous 
in Virginia. But it seems to me that if you are supportive of 
these programs, I would let my Senator and Representative know.
    The same goes for you. No one is arguing from Rails to 
Trails. It is a great idea and many, many people in my State 
are enjoying it tremendously. However, I am not sure they would 
take the trouble to let me know or the other members of the 
delegation.
    Mr. Hiemstra. If I might say, Senator Chafee, your point is 
very well taken. In fact, individuals from around the country 
that have been involved in transportation enhancements projects 
are working with members of the committee and other Members of 
Congress throughout this spring to try to organize 
opportunities for those members to actually go out to projects 
that have been funded with enhancements funds and to see 
projects on the ground.
    Senator Chafee. I think that is very important because we 
are clearly hearing from those who are opposed to the whole 
idea.
    Senator Baucus.
    Senator Baucus. Thank you, Mr. Chairman.
    I want to thank all of you here because I think all these 
programs are good. They are worthwhile.
    I particularly appreciate you, Mr. Hiemstra. I used this 
morning rails to trails. I jogged on the trail that used to be 
the old railroad along the canal. It is now asphalt. Every time 
I jog there, I keep thinking that it used to be a railroad.
    Mr. Chairman, as one who uses it, I benefit from it and I 
want to thank you very much for supporting it.
    [Laughter.]
    Senator Chafee. I want to sign you up. That is good news.
    [Laughter.]
    Senator Baucus. I would like to turn a little bit to the 
CMAQ. I support CMAQ. I think it is important. But various 
people have asked legitimate questions about the efficiency of 
CMAQ and how much it really does what it is supposed to do. For 
example, Mr. Walker asked a lot of pretty good questions. 
Basically, if the relative air quality benefits of behavior 
change strategies are minimal, should there be conformity 
requirements? Should conformity requirements only apply to 
urban areas? Does conformity make sense?
    What is your answer to those questions?
    Mr. Dittmar. In fact, the conformity process, by and of 
itself, is not a tool for making the air better. It is really a 
check to make sure that the projects that we are proposing in 
our transportation plans are not contributing to making the air 
worse and that, in fact, we are on target.
    The conformity requirement in ISTEA really asks that plans 
and programs need to respond to the schedule for attainment--in 
other words, that they do not move you from the schedule for 
attainment of the national air standards--and second that the 
funding is being used to implement the control measures that 
the State has committed to the EPA that it will build.
    I think that is an absolutely essential part of the process 
because it ensures that as we invest some $20 billion a year in 
highway projects and $4 billion or $5 billion in transit 
projects in this country that those projects are being done in 
a way that is consonant with the environmental program.
    Senator Baucus. Why conformity for rural areas that really 
can't do much? They can't enact the transit provisions. It is 
very, very hard.
    Mr. Dittmar. In most rural areas, the non-attainment status 
is due to pollutants coming from some metropolitan area. So the 
CMAQ projects in the metropolitan areas often are the ones that 
are going to help lead to the attainment.
    Senator Baucus. So why conformity for the rural, if that is 
true?
    Mr. Dittmar. Generally, the non-attainment area includes 
both rural and non-rural areas.
    Senator Baucus. There is a lot of space between communities 
and towns in Montana. It is not the case, really.
    Mr. Dittmar. Conformity in rural areas really then just has 
to do with making sure that the State transportation 
improvement program, which fits those areas, is following 
through on their requirements in the State implementation plan. 
It doesn't involve an air quality modeling by a rural county. 
It involves an assurance at the State level that it works.
    Senator Baucus. Mr. Walker, do you have a response to all 
this?
    Mr. Walker. Thank you, Senator.
    We had a project in Wisconsin that I think might make a 
very good point about rural non-conformity. It crossed an area 
in moderate non-attainment status, a county that had about 
15,000 in population, a very rural dairy type of county. The 
corner of the county that the State highway improvement project 
crossed was proposed to bypass a village. Because the length of 
the trip increased as you bypassed it instead of going straight 
through, there was obviously an increase in emissions if there 
was the same number of vehicles because they drove just a 
little bit longer.
    We had a devil of a time getting that project through a 
conformity test because the project was air quality positive. 
It was air quality positive, but has zero impact whatever on 
the air quality in that county because--as Mr. Dittmar said 
earlier--all the emissions that were causing the air quality 
status were coming from some place else.
    Senator Baucus. Right.
    Mr. Dittmar. I don't want to get into ping pong here, but 
there is a project underway at EPA with the Federal Highway 
Administration to look at the conformity requirements and try 
to find ways to make them less burdensome. That might be 
something that Mr. Gardiner can help you with.
    Senator Baucus. Thank you, Mr. Chairman.
    Senator Chafee. I want to thank everybody on the panel very 
much. We appreciate your coming here. That is splendid. You 
have been very helpful to us.
    Senator Chafee. Now the final panel is Mr. Lawrence Dahms 
from the Metropolitan Transportation Commissioners, Mr. Michael 
Cook from Douglas County, CO, Mr. Vidal also from Colorado, and 
Mr. Timothy Stowe.
    Senator Allard is here. Senator, it is my understanding 
that you will be introducing to us two of your home State 
constituents.
    Senator Allard. Thank you, Mr. Chairman.
    I appreciate you allowing me the opportunity to introduce a 
couple of people we have here from Colorado and to welcome to 
Washington, DC. It is a pleasure for me to introduce two of my 
constituents before your subcommittee, Commissioner Michael 
Cooke and Mr. Bill Vidal. Both have visited with my office 
about the importance of transportation at both the State level 
and the local level.
    Mr. Vidal is the commissioner of the Colorado Department of 
Transportation. In this position, he is responsible for not 
only working with the State Legislature, but also with 
Colorado's congressional delegation, certainly a very donning 
task for anyone. Mr. Vidal understands the need for maintaining 
our current infrastructure while also recognizing that 
technological advances will mean that we may have to rethink 
some of the current structure we operate our transportation 
programs under. I think the committee will benefit from his 
views.
    Also we have Michael Cooke on today's panel. Commissioner 
Cooke is a county commissioner from Douglas County, which is 
just south of Denver. Douglas County is one of the fastest 
growing counties in Colorado, if not the Nation. Ms. Cooke will 
testify with respect to metropolitan planning organizations and 
her view that they are not operating efficiently. Her testimony 
will provide this subcommittee with a thoughtful look at how 
the planning process is working, particularly in areas like 
where she lives.
    Once again, Mr. Chairman, thank you for fitting in these 
two good Coloradans in today's panel.
    Senator Chafee. Thank you very much, Senator. We look 
forward to their testimonies.
    Mr. Dahms, the executive director of the Metropolitan 
Transportation Commission, will be our first witness. We are 
delighted to hear from you.
    Your whole statement will go in the record, but we would 
like to keep each of these statements to 5 minutes, if we 
could.

      STATEMENT OF LAWRENCE D. DAHMS, EXECUTIVE DIRECTOR, 
             METROPOLITAN TRANSPORTATION COMMISSION

    Mr. Dahms. Thank you, Mr. Chairman.
    I am Lawrence Dahms, the executive director of MTC, the MPO 
for the San Francisco Bay Area. The San Francisco Bay Area is 
diverse, a microcosm in many ways of the diversity of the 
Nation. We are urban, suburban, and rural. To serve our 
population of 6.5 million people, there are 26 transit 
operators, new and old highways, and world-class bridges in 
serious need of repair.
    Let me preface my comments by telling you that we support 
reauthorization that preserves ISTEA's basic program structure. 
We urge your committee to build on the foundation so 
effectively established by ISTEA.
    One of the great strengths of ISTEA is its flexibility to 
respond to the needs of each region. Over the past 6 years, we 
have financed over 500 projects with the $500 million in 
flexible funds that have come to our region.
    Though the projects financed by ISTEA are important, I 
would like to focus today on one aspect of ISTEA that gets 
little notice, though it has great value.
    Who would believe that such phrases as ``A State shall 
coordinate,'' ``The metropolitan planning organization in 
cooperation with the State and affected transit operators shall 
develop,'' and ``All projects shall be selected by the 
metropolitan planning organization in consultation with the 
State'' could produce powerful results in the implementation of 
ISTEA. ``To coordinate,'' and ``to cooperate,'' and ``to 
consult'' all are ordinary terms that should be expected to 
characterize the civilized relationships of States and local 
governments. When combined with the delegation and flexible 
funding choices also embodied in ISTEA, however, these words 
did indeed produce perhaps unexpected results.
    This over-arching thrust of ISTEA to encourage productive 
partnering by many who may not have worked well before came 
just in time. For it recognized that in today's pluralistic 
society, the State acting on its own is sometimes unable to 
deliver the projects or programs as it did just a decade or so 
ago. With the help of local officials, however, brought 
together in the form of metropolitan planning organizations, 
challenging but important programs can still be advanced.
    To illustrate, consider just how the State of California 
Department of Transportation, CALTRANS, and sometimes the 
California Highway Patrol have partnered with my organization 
in productive enterprises. I will cite a few examples.
    MTC manages the freeway call box program placed on CALTRANS 
right of way with phones answered by CHP dispatchers. There are 
3,000 phones and 600 calls answered a day.
    MTC manages the freeway service patrol, which clears up 
incidents on CALTRANS freeways with the cooperation and 
assistance of CHP. There are 50 tow trucks patroling 218 miles 
of freeway. An average of 370 incidents are responded to within 
an average of 8 minutes every working day.
    MTC manages the traveler info program providing real-time 
information to any of the Bay Area's 3 million commuters who 
can dial 817-1717 at any time of the day. The control center is 
located in the CALTRANS District 4 office immediately adjacent 
to its traffic operations system center. MTC's contractor, 
Metro Traffic Control, enters 300 to 600 incidents per day in 
the auto call system, which in turn handles approximately 2,000 
calls per day.
    MTC has been instrumental as well in financing and 
administrating the vital contracts required to implement the 
CALTRANS traffic operations system that I have just referred 
to.
    MTC was required to intervene at two critical points in the 
design of the last Bay Area interstate link, I-80 heading 
northeast from the San Francisco Bay Bridge. Thanks to our 
assistance, this $300 million construction project is now well 
advanced. When it is completed, it will offer one of the most 
effective exclusive bus and car pool services in the country.
    In the most recent example, MTC has been asked to recommend 
the best design for the new east span of the San Francisco Bay 
Oakland Bridge. The State has determined that it is more 
prudent to construct a new span than retrofit the existing 
bridge to withstand the next major earthquake. While the State 
Legislature and Governor are still debating just how to finance 
the approximate $2.5 billion cost, our process for design 
selection is moving ahead in full cooperation with CALTRANS and 
yet another State agency, the Bay Conservation and Development 
Commission.
    As little as 10 years ago, such partnering with the State 
was unheard of. Now it is essential, welcomed, and productive.
    I go on in the testimony to refer to some coordinating 
projects as well with our transit operators and with the 109 
local governments. One in particular, I should note, is that 
the regional rail agreement was brokered by MTC in 1988 and it 
has two-thirds State and local funding. A large down payment of 
$568 million of the Federal share was authorized in ISTEA and 
an additional authorization is needed in the next bill.
    While not all of these initiatives are solely the result of 
ISTEA prodding, it has been a significant catalyst. The common 
thread running through all the projects cited has been the 
multi-agency cooperation essential. MTC took the lead in 
forming the Bay Area partnership with 30 leading transportation 
agencies in January 1992, immediately after ISTEA was signed by 
President Bush. We have made the task of nurturing the 
partnership our No. 1 priority ever since. And it is working.
    We like ISTEA because of its several provisions that 
encourage--even require--such commitment. That is why we join 
even Jane in her testimony this morning in urging you to tune 
and not toss ISTEA, a phrase I believe former Federal Highway 
Administrator Tom Larson first coined.
    Senator Chafee. I think we have to wind up. I see your 
final paragraph there about coming up with helpful and 
constructive suggestions.
    That is certainly a good plug for ISTEA and we appreciate 
that, Mr. Dahms.
    Mr. Dahms. Thank you, Mr. Chairman.
    Senator Chafee. Next we will hear from Ms. Cooke from 
Colorado. We welcome you.
    Is Pueblo in your area?
    Ms. Cooke. It is south of the Douglas County area.
    Senator Chafee. It is not in Douglas County?
    Ms. Cooke. It is not.
    Senator Chafee. Fine. Proceed, please, Ms. Cooke.

     STATEMENT OF M. MICHAEL COOKE, CHAIR, BOARD OF COUNTY 
               COMMISSIONERS, DOUGLAS COUNTY, CO

    Ms. Cooke. Thank you very much, Mr. Chairman. I am Michael 
Cooke, a commissioner on the Douglas County board of 
Commissioners in Colorado. I am here to testify before the 
committee today on the need for metropolitan planning 
organization system reform.
    While ISTEA has provided certain benefits nationwide, some 
of the provisions have tended to paint all jurisdictions with 
one brush, which has in many ways been difficult for some local 
governments, particularly linkage communities like Douglas 
County.
    Douglas County is the fastest growing county in the State 
of Colorado. According to the latest census, it has also been 
the fastest county in the United States for the first half of 
this decade and continues to be so today. Our highways are 
impacted not only by the growth in Douglas County, but by the 
growth in the Denver metropolitan area and the Colorado Springs 
metropolitan area which Douglas County links.
    There is no doubt that transportation planning is an 
important element of any transportation program and that MPOs 
established to facilitate that planning have helped to 
coordinate planning in a regional context. ISTEA gave MPOs a 
much more extensive role, including the actual approval of 
transportation projects. That authority has caused some 
problems with the local makeup of the MPO.
    While ISTEA intended to give more flexibility to local 
elected officials, it failed to give local governments the 
ability to choose whether they wanted to be a part of this 
federally imposed effort or not. Federal regulations require 
that in order to redesignate an MPO, a jurisdiction must 
accomplish the following: first, obtain the approval of the 
Governor of the State; second, obtain the approval of local 
officials representing 75 percent of the population of the 
entire metro region; and third, obtain the approval of local 
officials in the central city within the metropolitan planning 
area.
    We believe that the national trend is to send more 
decisionmaking responsibility back to the local government 
level and that the MPO process is in great need of reform. To 
be more specific, the population for the entire region at this 
time is approximately 2.1 million persons. This is based on 
DRCOG's 1996 estimate.
    Douglas County's population represents about 5.27 percent 
of that total. However, the total amount of funding Douglas 
County has received for county-sponsored projects over the life 
of ISTEA is approximately $250,000, compared to nearly $20 
million in county requests that have been denied. Mr. Chairman, 
we have included in our written testimony the more specific 
examples of those projects and our attempts to work within the 
MPO system.
    We are here today to ask for your consideration on the 
following changes in the reauthorization of ISTEA.
    We would first ask that you lower the barrier for 
jurisdiction withdrawal and redesignation from an MPO to the 
approval of local officials representing 50 percent of the 
population in the entire metropolitan area. Problems in 
suburban communities are certainly different from those in our 
central cities. If the MPO is not meeting the needs of those 
communities, then they should be allowed to withdraw and 
redesignate or join an adjacent MPO.
    We would also ask that--assuming that is achieved--there is 
no justification for the official of the central city to have 
veto power. We would request that the central city veto 
authority be eliminated. Organizations held together in this 
way are really not as effective as those where the players have 
an equal voice.
    Third, if a jurisdiction should satisfy the criteria I have 
outlined, it is again required by Federal law that they 
cooperate, consult, and coordinate with other MPOs in the 
metropolitan planning area. We would recommend that the 
language be modified to read only that the new MPO consult with 
other entities.
    These proposed changes will help make the MPO process more 
responsive to local government transportation needs and will 
ensure that jurisdictions will be able to determine their 
transportation priorities and meet their needs equitably. 
Congressman Joel Hefley has introduced H.R. 477, a bill we call 
the Local Transportation Decisionmaking Empowerment Act, which 
incorporates many of the items I just outlined, and which is 
supported by a number of jurisdictions in the Denver region.
    Finally, Mr. Chairman, I am pleased to see that the 
Administration is moving in the direction I have outlined in 
their version of ISTEA sent to Congress last week. There are 
two specific provisions in their proposal that are similar to 
ours. The first is decreasing the threshold for MPO designation 
to 51 percent from 75 percent. The second is to require 
coordination instead of cooperate, coordinate, and consult 
between MPOs.
    Mr. Chairman, we believe this shows the strength of our 
cause. We hope you will strongly consider all the provisions in 
H.R. 477 for inclusion into your version of ISTEA. And we would 
like to submit for your record letters of support from all the 
counties surrounding the City of Denver, the Denver metro area 
counties who are part of the transportation planning region, as 
well as Colorado Counties, Incorporated, and a number of 
cities.
    Thank you for the opportunity to testify, Mr. Chairman and 
members of the subcommittee.
    Senator Chafee. Thank you. That was very constructive. As 
you point out, the Administration's bill does take some of your 
suggestions and arrives at the same conclusion you do. I don't 
know whether they do it in all of them, but let me check. You 
have been very helpful.
    Mr. Vidal, also of Colorado, the Department of 
Transportation, we are glad you are here.

STATEMENT OF GUILLERMO VIDAL, EXECUTIVE DIRECTOR, DEPARTMENT OF 
               TRANSPORTATION, STATE OF COLORADO

    Mr. Vidal. Thank you, Mr. Chairman. It is certainly an 
honor and a privilege to be here to address you today on these 
concerns.
    As stated, my name is Guillermo Vidal and I am the 
executive director of the Colorado Department of 
Transportation. I am here to report on the great success 
Colorado has had in implementing ISTEA. And I want to emphasize 
that although I am certainly respectful of the comments made by 
Commissioner Cooke regarding the fine-tuning of the MPO 
process, the general principles of ISTEA have worked very well 
for us.
    I should tell you that I am a Cuban immigrant and I came to 
this country many years ago. When I came here, my idea of the 
American west was what was presented by Clint Eastwood and John 
Wayne. I do think that perhaps many of the people who have 
never been to the West think of us in that way and were perhaps 
surprised when Governor Romer signed Colorado on to the ISTEA 
WORKS coalition and really talked about the emphasis for a 
balanced multimodal transportation system.
    Some of the reaction we have received is one of surprise 
with people that felt that a multimodal transportation decision 
in Colorado was whether or not to use our four-wheel drive. I 
think that is something that we want to dispel today.
    This is really why ISTEA has been so great for us, because 
it has allowed the people of Colorado to come together out of 
our concern for the environment and the growth in our State 
that may hamper our quality of life. It has allowed us to form 
together a great vision for our State. I have been with our 
department for 20 years and never in the history of my career 
has anything affected us as much as ISTEA.
    I should also tell you at the same time ISTEA was 
implemented we were also converted into a department of 
transportation. So, we had to implement ISTEA and go from a 
department of highways to a department of transportation at the 
same time. I know that at that time we all thought it would be 
the end of civilization as we knew it. But, in fact, ISTEA has 
really helped us out.
    We were able to develop a multimodal transportation plan 
with strong partnership development with our MPOs and other 
planning regions around the State. We were able to develop a 
specific 20-year vision for our State. By specific, I mean that 
we identified over 3,000 projects that we felt needed to be 
built over the next 20 years.
    Never in our history have we had such a vision that has 
been so specific. I have to tell you that it is that vision 
that has become the very foundation of many of the things that 
we are trying to accomplish in transportation, whether raising 
revenues or prioritizing projects. Unfortunately, our needs 
have far surpassed our revenues. But at least on a State basis 
we are united in what we think our priorities are and what it 
is we think we need.
    These planning relationships are very important. It was a 
grassroots effort. All regions of the State were represented. 
We had consistent planning information and process throughout. 
And we were able to set regional priorities as well as 
establish State-wide priorities. More importantly, we were able 
to develop a multimodal plan.
    As a result of our work, Colorado finds itself trying to 
establish a transportation direction that focuses more on the 
movement of people and goods and information rather than the 
emphasis alone on the movement of cars. That is why we would 
like to see ISTEA reauthorized but with the following emphasis 
areas.
    We would like to see more flexibility given to the States 
to move money between categories. We are committed to the 
program, but we need the flexibility to make sure that we can 
invest the dollars in the best transportation system that is 
available for any corridor.
    We would like to streamline the Enhancement program to a 
State-administered grant program to allow the most effective 
use of the funds.
    We would like to retain the MIS process. The reason for 
that is we feel that we need a tool by which we can consider 
all modes of transportation.
    We would like to streamline the Federal approval process 
and we would like to consolidate the 23 planning factors that 
are now a little bit unmanageable in setting up the State-wide 
plan.
    We would also like to continue the use of the innovative 
financing tools to enhance the possibilities of increasing the 
funds that we have.
    I would like to conclude my remarks and once again state 
that ISTEA has worked for Colorado and we feel it should 
continue with the minor modifications I addressed. I appreciate 
the opportunity to come before you today. I thank you very 
much.
    Senator Warner [reassuming the chair]. Thank you very much.
    And last but not least, Mr. Stowe of Virginia.

  STATEMENT OF TIMOTHY S. STOWE, VICE PRESIDENT, ANDERSON AND 
  ASSOCIATES, INCORPORATED; ON BEHALF OF AMERICAN CONSULTING 
                       ENGINEERS COUNCIL

    Mr. Stowe. Thank you, Mr. Chairman.
    For the record, my name is Tim Stowe. I am employed by 
Anderson and Associates, a consulting engineering firm in 
Blacksburg, VA. Today I speak to you on behalf of the American 
Consulting Engineers Council, ACEC, which represents about 
5,000 engineering firms across the country employing about 
200,000 people.
    Last year, Senator Warner, you issued a request that we 
look for ways to accelerate projects. We accepted that request 
and I am proud to report to you here this morning the findings 
we have come up with. Over the last 18 months we have had 
meetings across the country. We have met with our membership, 
looked for ways to identify the problems and what is causing 
delays in these projects, and developed solutions to overcome 
these problems.
    We found through our membership that it has taken on 
average about 10 years from the time a project is conceived 
until the traveling public can use the project to get from one 
location to another. We feel that this time can be cut by about 
30 percent.
    In order to identify some of the items that we found delay 
projects, we started at the very beginning of the planning 
process with the scoping meetings for environmental documents 
where all the agencies may not be represented. They might not 
even show up for the scoping meeting until 6 months later when 
they call and say that they are interested in the project and 
want to sit down and go over it. We then have to back up and 
start over again.
    The potential delays continue all the way to the opposite 
end of the spectrum, when we try to obtain permits to actually 
go out and accomplish the construction after the environmental 
document has been approved. We have submitted with our 
testimony some of the examples that were cited earlier this 
morning where these types of delays have occurred and some of 
the tremendous costs that have been associated with those 
delays, paid for by the American taxpayers.
    In order to overcome those types of delays, we have 
proposed in the planning and environmental arena three things. 
The first is the establishment of an interagency environmental 
unit in each State. These environmental units would be funded 
by transportation revenues and housed near the Federal and 
State DOT offices. Their sole purpose of existence would be to 
coordinate and provide a single issuance of an approval for an 
environmental document or a disapproval if it does not comply 
with the current NEPA laws or other environmental laws. We also 
feel that an incentive should be added for this agency to 
accomplish its work on time, on budget, and according to 
standards and laws that already exist.
    Through a series of cooperative agreements between the 
State and Federal environmental agencies, the unit would be 
empowered to administer, review, and approve or disapprove 
environmental documents. Specific situations may require that 
the unit would directly contact the source agency to resolve a 
particular issue. Acting as a surrogate staff of the Agency, 
the environmental unit manager would know the detailed local 
situation, who to contact in a Federal agency, and be able to 
expeditiously provide followup on any activities that may be 
required.
    We believe this management realignment alone could save a 
significant amount of the time required in environmental 
document preparation and approval.
    Senator Warner. Mr. Stowe, we have a situation in which 
Senator Chafee and I have about 6 minutes in which to vote. 
Either one or both of us are going to return, at which time you 
can complete your testimony, which is very important. And the 
panel will entertain such questions as members put forward.
    We will take a short recess for the purpose of voting. I 
hasten to point out that we have two votes, which means at the 
completion of this one, we remain for a second vote.
    [Recess.]
    Senator Chafee [reassuming the chair]. Mr. Stowe, you were 
going through your testimony. Why don't you pick up from where 
you were.
    Mr. Stowe. As we went through and reviewed with our 
membership some of the problems we have encountered with the 
planning process and the environmental process that created 
delays in projects, we identified three key areas in which we 
felt improvements could be made.
    The first would be an establishment of an interagency 
environmental unit in each State. As I mentioned, the role we 
envision for this unit is they would be a single point of 
approval for environmental documents or disapproval, as well as 
their role in coordinating all the Federal, State, and local 
environmental agencies.
    Our proposal is not intended to change the goals set forth 
in NEPA or other related environmental laws. And we 
wholeheartedly support a strong environment. Our goal is to 
address the process issues, which end up adding substantial 
time and cost to transportation projects.
    The second recommendation we are making in the planning 
process is an enhanced public involvement process. We currently 
have a stop and go system where a block of work is accomplished 
and we stop and invite the public in to look at a project. We 
get their comments, incorporate them or address their comments, 
then we do another block of work and the process goes on and 
on. We are advocating a more continuous flow of public 
involvement in the project process with a very strong public 
involvement component early on in the project when the cost to 
make changes is low and in some cases seek out public 
involvement from groups that may have a special interest in a 
particular project. We feel the internet can be used to help 
accomplish this and the information we receive in this process 
will better enable our planners and our engineers to plan their 
projects.
    The third point we are suggesting is that there be an 
establishment of centralized digital mapping products with the 
U.S. Geological Survey. The quadrangle maps are a very good 
example of a mapping product that is used by our environmental 
scientists, our engineers, and our planners all across the 
country to help in the process of planning transportation 
projects. The USGS has these in paper form, but to have these 
in a digital form would be a great enhancement, especially if 
there were available on the internet and would allow us to 
expedite the development of projects rather than duplicate 
mapping products on various projects.
    The national digital orthophotography program is currently 
in place with the USGS and we certainly encourage and support 
that program and ask that it be completed rapidly.
    Senator Chafee. What is an orthophoto? That sounds like a 
medical term.
    Mr. Stowe. Sir, that is a vertical image of an area that 
shows up on a computer screen. It is basically a photograph 
that has the same qualities as a map. You can measure off of 
it, distortions have been removed from the camera, from the 
terrain, and it has the same properties as a map.
    Senator Chafee. Let's wind up here.
    Mr. Stowe. There are other examples in our paper that we 
have provided with the testimony on where we see time can be 
saved in the design phase, in the right of way phase, and in 
the construction phase of projects. Those have been submitted 
for the record.
    The American Consulting Engineers Council stands ready to 
help this committee in any way that we can with the 
reauthorization of ISTEA. I thank you for allowing me to 
testify this morning.
    Senator Chafee. Thank you very much for that testimony.
    Mr. Kenison, during the vote I saw Senator Smith who said 
that he had spoken with you. He was very sorry that he couldn't 
be here. We all have these dual hearings going on at the same 
time. He is in the Armed Services Committee, but he asked me to 
convey his best wishes to you. I think he had an opportunity to 
speak with you.
    We have statements from Senators Smith and Boxer that I 
will put in the record now.
    [The prepared statements of Senators Smith of New Hampshire 
and Boxer follow:]
 Prepared Statement of Hon. Bob Smith, U.S. Senator from the State of 
                             New Hampshire
    Thank you, Mr. Chairman. First, I want to welcome Mr. Leon Kenison, 
Commissioner of the New Hampshire Department of Transportation, to our 
committee today. And, second, I want to express my appreciation to the 
chairman and ranking member for inviting Mr. Kenison to testify at my 
request.
    Mr. Kenison was appointed commissioner last year, after having 
served as assistant commissioner for 5 years. He is also one of the few 
people in his position who has an engineering background and has a 
total of 33 years of experience in the New Hampshire DOT--something 
that elicited strong praise from highway user groups, as well as the 
engineering, design and construction communities.
    During this reauthorization process, I think it is extremely 
important that we hear from our State government partners, particularly 
the individuals like Commissioner Kenison who are directly involved in 
implementing the Federal program. I want to hear about the successes as 
well as the failures and problem areas so we can better determine where 
improvements or refinements are needed.
    Thank you, Mr. Chairman, and I look forward to hearing from our 
witnesses.

                                 ______
                                 
    Prepared Statement of Hon. Barbara Boxer, U.S. Senator From the 
                          State of California
    Thank you, Mr. Chairman.
    I just have a few remarks about one of the subjects of today's 
hearing, the environment.
    I do not believe that I am exaggerating when I suggest that when 
you look back on the environmental progress of the 20th Century, 
passage of ISTEA (the Intermodal Surface Transportation Efficiency Act) 
is a red letter date. ISTEA completed the historic link in our laws 
between transportation and the environment. ISTEA established that 
transportation capacity projects must meet air quality standards.
    We cannot proceed with the reauthorization of our transportation 
programs without this linkage. We cannot look at the condition and 
performance of our highways, bridges and transit systems without 
looking at the condition of the environment. Before ISTEA, 
transportation was blind to its environmental consequences. We cannot 
put those blinders back on and then look at our children and say we did 
right by you.
    This is the problem: 65 percent of carbon monoxide emissions and 47 
percent of nitrogen oxide emissions come from cars and trucks. Carbon 
monoxide is repeatedly linked to increased hospital admissions for 
congestive heart failure. Nitrogen oxide, which helps form smog, is 
linked to respiratory illness, which has particular adverse effects on 
our children and elderly. Recent research suggests that fine 
particulate matter may be the worst pollutant of all and can cause a 
variety of harmful health effects.
    Even though vehicle emissions are cleaner now than a few years ago, 
the Environmental Protection Agency is predicting that continued growth 
in the use of vehicles will wipe out any gains from cleaner fuel 
vehicles by the year 2005.
    More than 43 million people in the United States live in areas that 
fail to meet EPA's air quality standards for carbon monoxide. We have 
13 million people in non-attainment areas for nitrogen oxide. And, in 
my State of California, nearly 26 million people live in a non-
attainment area for one or more pollutants, out of a State of nearly 33 
million people!
    This is the tool we need: the Congestion Mitigation and Air Quality 
(CMAQ) program. This $6 billion program under ISTEA has given our local 
governments the funding needed to try and meet the air quality 
standards. To enact the next transportation bill without CMAQ would 
leave our cities and counties with an unfunded Federal mandate, under 
the Clean Air Act, to clean up their air.
    Our local governments have used CMAQ in a variety of ways based on 
their own situations. Some fund mass transit, or traffic management 
improvements, or disabled vehicle assistance, or purchasing clean fuel 
vehicle fleets. We need to provide more technical assistance to local 
governments so they will purchase and operate clean fuel fleets.
    We also need to make provision for areas that improve air quality 
from non-attainment to maintenance status. I want to thank this 
committee for its support of my provision in the National Highway 
System Designation Act, which preserved CMAQ funding for these areas 
with improving air quality but still needing assistance. That 
``freeze'' on CMAQ funding for such areas saved $55 million for the San 
Francisco Bay Area, and kept a major transit project serving the 
Silicon Valley on track. In the next ISTEA, we need to provide a 
permanent fix that would allow continued CMAQ funding to air quality 
maintenance areas but at a lower level of funding. I am pleased the 
Administration plan closely tracks the program offered by the San 
Francisco Metropolitan Transportation Commission in this regard.
    Now, we face the prospect of revised air standards that could 
nearly triple the number of non-attainment areas in the country. The 
next ISTEA must provide the additional CMAQ funding needed to cover 
these new areas without reducing funds for current non-attainment 
areas.
    I will close with a couple of comments on another innovative 
program that has helped spur alternative transportation. That's the 
transportation enhancements program. This program sets aside 10 percent 
of the Surface Transportation Program for bike trails, scenic byways 
and historic preservation, among other uses. My State has been very 
aggressive in using this funding for projects to enhance its 
communities. The State and local communities choose how to spend these 
funds. About a third of California's projects involve bicycle or 
pedestrian paths. The extensive bike trail networks in the State serve 
not just recreation but in many cases become non-polluting, commuter 
lanes.
    I am pleased to see the Administration's support for continuing 
this program.
    I look forward to the testimony today. We have a real challenge to 
maintain this important link between transportation and the environment 
into the next century.

    Senator Chafee. Mr. Stowe, let me ask you about a 
suggestion that came up previously when we were talking about 
innovative methods of financing and building our highways. One 
of them was what they call a design-build. What do you think 
about that?
    As I understood the design-build, it would be that you go 
to some big outfit--let's say Bechtel--and you would say to 
them, ``You design and you build this road for us.'' Obviously, 
you get into the so-called lowest bid problems. In our State we 
have legislation that it must go to the lowest bidder, so how 
do you do that?
    But set that aside. It seemed to me that the idea of 
design-build had a lot of appeal to it. But then I began 
thinking that the American Consulting Engineers might not be 
too excited about that as far as approval goes.
    What is your thought?
    Mr. Stowe. Senator Chafee, we have addressed that in our 
paper and we have gone on record as supporting a two-step 
approach to design-build. Design-build is not for every 
project, but it is appropriate for some. We have advocated that 
an engineer be selected using a qualifications-based selection 
process early on and develop preliminary 30 percent designs 
that will establish the project concepts and that will allow a 
format for innovative thinking and for economical thinking 
early on in establishing the project concept, rather than 
having the whole thing awarded to a firm based on the lowest 
price where innovation would not be encouraged and the only 
thing being encouraged would be to make money.
    We also think that the design-build process is very 
expensive. It is very expensive to put together proposals and 
to submit proposals for these projects, which are usually large 
projects. Frequently, that will exclude smaller firms and maybe 
the most qualified firms for the project because of the large 
capital investment that is required on the front end of those 
projects.
    Senator Chafee. You mean that because whoever is bidding 
has to come up with the design of the whole thing? That is the 
big expense?
    Mr. Stowe. Yes, Sir, that is correct.
    Senator Chafee. It seemed to me to have a lot of appeal 
because--and I may be wrong in this, so I will ask you. As I 
have sat here in this committee and we have dealt with waste 
treatment plants, highways, and whatever else there might be, I 
always worry whether we are as innovative as we might be. Let's 
say that I am a Governor or a mayor and we are going to build a 
waste treatment plant. ``Don't go with something innovative, 
because it might not work out. Pick the safe way, which is 
clearly not innovative.''
    Yet this design-build concept seemed to me that the 
designers and the builders would work together so that it 
wouldn't be some designer over here prescribing a certain type 
of support or road surface or whatever it might be when that 
might not be the most efficient, most original, or most 
innovative.
    What about that? In other words, how much coordination 
between the designers and the builders is there under the 
existing system?
    Mr. Stowe. Under the existing system, there is very little. 
Under the design-build system what frequently happens is that 
the contractor is in the lead role. The engineer is working for 
the contractor. So even in that scenario he may not be afforded 
the freedom to be innovative. The contractor may have some 
specific equipment in place that would make it to his benefit 
to use a particular method that is already established rather 
than to develop something totally new for the sake of 
innovation. That is where the real benefit of the separation is 
where the engineers have the freedom to be innovative and to 
work on new ideas that can benefit the traveling public.
    Senator Chafee. Mr. Dahms, your MTC is frequently cited as 
an exemplary organization. I suppose a suggestion that you 
wouldn't reject. Why has your situation worked out so well, 
outside of having outstanding leadership?
    [Laughter.]
    Senator Chafee. Give me a couple of the major challenges 
you have confronted over the past 6 years. Have you been there 
6 years?
    Mr. Dahms. I have been there 19 years, a long time.
    Senator Chafee. Did you have a metropolitan----
    Mr. Dahms. One of the advantages we had, Senator Chafee, 
was that we were well positioned when ISTEA passed. We were 
created by the State Legislature in 1970 and we had the 
requirement, in effect, to work with our partners and had a lot 
of practice working with our partners. So when ISTEA came 
along, we had had enough experience that we were well 
positioned to take advantage of it. ISTEA did give us a lot of 
flexibility that we didn't have before, which in a sense 
presented some new challenges. Prior to that we would deal with 
the transit people over here and the highway people over there. 
The challenge of ISTEA was to bring them all together.
    But because we had had a lot of experience with them in our 
19 years before ISTEA, we had built up some trusting 
relationships that helped.
    Senator Chafee. When you mentioned that you were going to 
build another Oakland bridge--that is pretty big stuff.
    Mr. Dahms. We are not going to build it. CALTRANS is going 
to build it. But what has happened is that----
    Senator Chafee. But didn't you say that you were going to 
design it?
    Mr. Dahms. Not even that. My testimony maybe overstates the 
case.
    The State will design it and the State will build it. The 
State has said that it is inappropriate to try to retrofit the 
east span of the bridge, that it would be better to build a new 
span as opposed to retrofitting the old one.
    Once that question is raised, then the question arises: 
What is the scope going to be? What is it going to look like? 
So the Governor said to our legislative delegation that there 
was a basic bridge design that he would be willing to support, 
but if we want to add something for ascetics, for example, we 
must pay for it. The Governor is willing to support a box 
girder bridge, yet some people in the community would like to 
have a cable stay bridge, which may cost an extra $200 million. 
The basic design doesn't have bike lanes on it, and some people 
may want bike lanes. So essentially the Governor is saying that 
the State will support the basic bridge, but if the region 
wants something more than that, then the region should be 
willing to pay for it. Thus the region needs to decide how much 
bridge it wants.
    That is the kind of question that was posed to us.
    Senator Chafee. Why do you have to build a new bridge? Your 
principal bridge going across the entrance there--how long has 
that been there?
    Mr. Dahms. It was completed in 1937. The bridge could be 
retrofitted. It is not to say that it couldn't. But it would 
cost almost as much to retrofit it as to build a new bridge.
    Senator Chafee. Why does it have to be retrofitted?
    Mr. Dahms. It is not capable of withstanding the kind of 
earthquake forces we expect. This is the span that had one deck 
fall in our 1989 quake. That was repaired, but we have--on our 
highway structures--spent about $2 billion in California 
retrofitting maybe 1,500 bridges. But these transbay bridges 
pose a much greater challenge and a much greater cost.
    Senator Chafee. Ms. Cooke, you were very flattering to the 
ISTEA, and then you had your specific suggestions. I thought 
they were good suggestions and we will certainly bear those in 
mind. But my overall impression from these four witnesses is 
that ISTEA is doing all right.
    Would you say that, Ms. Cooke? I know I have your 
suggestions here.
    By the way, if you are the fastest growing county in the 
United States--faster than Dade County, obviously, if you are 
the fastest growing county--you have a lot of problems.
    Ms. Cooke. A lot of challenges, Mr. Chairman.
    Senator Chafee. A lot of opportunities.
    Ms. Cooke. Opportunities as well.
    Senator Chafee. These suggestions you gave us are good 
ones.
    We thank you all very much very, very much for coming. We 
appreciate it.
    That completes the hearing.
    [Whereupon, at 1:40 p.m., the committee was adjourned to 
reconvene at the call of the chair.]
    [Additional statements submitted for the record follow:]

  Prepared Statement of Jane F. Garvey, Acting Administrator, Federal 
                         Highway Administration
     Environmental and Transportation Planning Provisions in NEXTEA
                            i. introduction
    Mr. Chairman, Senator Baucus, and members of the committee, thank 
you for the opportunity to discuss the Administration's proposals for 
reauthorization of the Intermodal Surface Transportation Efficiency Act 
of 1991 (ISTEA) in the areas of planning and the environment. My 
message is straightforward. ISTEA was a success that we would like to 
build on, improve, and fine tune. Congress and the Administration have 
many successes to their credit as a result of ISTEA. We seek to stay 
the course with ISTEA as a foundation for the proposal announced by the 
President, Vice President, and Secretary Slater last week, the National 
Economic Crossroads Transportation Efficiency Act of 1997 (NEXTEA).
    ISTEA has transformed transportation decisionmaking and investment 
decisions to better serve our transportation needs in the next century. 
Key among these were funding flexibility and financial planning, 
enhanced public involvement, and multi-modal decisionmaking, and 
crosscutting issues, such as air quality and transportation. In the 
years since the bill was enacted, the transportation community has 
debated how much has changed as a result of ISTEA, which ISTEA programs 
have been a success, and what needs more work. To sort out the rhetoric 
from the reality, the Department undertook a broad outreach effort and 
smaller focus group meetings across the country.
    The central theme from our outreach, which almost all respondents 
echoed, was: ``Stay the course of ISTEA.'' ``Tune it, don't toss it!'' 
Consistent with the Administration's effort to reinvent and enhance 
governmental performance, we are seeking to respond to our customers. 
The planning and environmental provisions of our reauthorization 
proposal reflect this customer perspective. ISTEA is about better 
choices, based on more accurate information, made by key officials 
better informed of public concerns. It has moved us from a single mode 
perspective, reflecting instead a comprehensive, problem solving 
orientation that has given State and local decisionmakers greater 
leeway and more effective tools to address significant and growing 
transportation needs. In our NEXTEA proposal, we have sought to build 
on the successes of ISTEA and make strategic revisions to reduce the 
burden on our partners and enhance their flexibility.
    We do believe that some fine tuning is necessary to better address 
the needs of our customers and partners in the transportation arena.
                              ii. planning
    Planning is the heart and soul of the transformation in 
transportation decisionmaking made by ISTEA. Under our NEXTEA proposal, 
ISTEA's key planning provisions would be continued with minor 
modifications. ISTEA firmly established the transportation planning 
process as the primary mechanism for transportation decisionmaking.
    Because of ISTEA, transportation planning is a more meaningful 
activity based on realistic financial capability--not merely an 
unconstrained wish list. In particular, the requirement that Statewide 
and metropolitan transportation improvement programs and metropolitan 
plans be fiscally constrained is generally acknowledged as one of the 
most important, though difficult, of ISTEA's provisions. It has made 
financial planning a critical part of the analyses supporting prudent 
transportation decisionmaking and strategic investments. For instance, 
Washington State, in cooperation with its transportation partners, has 
built a financial estimating process that is providing MPOs with more 
reliable and accurate information for developing transportation plans. 
The Puget Sound Regional Council has developed a comprehensive system 
to estimate transportation costs faced by the region, which undoubtably 
aided their recent successful transit initiative.
    Because of ISTEA, transportation planning is more inclusive, 
bringing to the table traditional transportation representatives, rural 
interests, freight carriers, environmentalists, and many others. 
Examples of increased public involvement as a result of ISTEA are 
numerous. There are notable successes across the country, ranging from 
the adoption of citizen advisory committees in Cleveland, Ohio, to 
effective use of open house strategies in Kansas and Missouri. St. 
Louis officials, recognizing the critical need to address the mobility 
needs of its urban poor, has built an aggressive, joint jobs/
transportation effort that has effectively involved this traditionally 
under-represented group in transportation decisionmaking.
    Because of ISTEA, MPOs have become stronger and more effective. In 
my home town of Boston, we have witnessed the replacement of a decades-
old decisionmaking structure with a new, more inclusive policy board 
that reflects the broader interests of local governments. This same MPO 
restructuring has occurred in other areas as well, including 
Wilmington, Delaware, and Seattle, Washington. The Metropolitan 
Transportation Commission in the San Francisco area has forged a new 
partnership with local business and government leaders to foster 
intermodalism with its Bay Area Partnerships program, and many other 
metropolitan areas are building on this example by instituting their 
own locally tailored models to promote cooperative decisionmaking.
    As these examples illustrate, ISTEA's planning provisions have 
worked well. These efforts, and the comments we received at our 
outreach sessions, underscore the need to continue the best of ISTEA. 
We believe there are some areas where ISTEA can be strengthened. Our 
NEXTEA planning proposal would do just that.
     In order to streamline the planning process, we propose to 
transform the 23 Statewide and 16 metropolitan planning factors into 7 
broad goals that States and metropolitan areas can use as appropriate 
to develop their own transportation objectives.
     To more fully consider a complete range of transportation 
options, including Intelligent Transportation Systems, and to support 
States' efforts to better manage our current transportation systems, 
our proposal emphasizes system management and operation in the 
development of transportation plans and programs.
     To strengthen the intermodal nature of transportation 
planning, our proposal adds freight shippers to the list of 
stakeholders afforded an opportunity to comment on transportation plans 
and programs.
     To enhance the options available to State and local 
policymakers for designating and redesignating MPOs, our proposal would 
reduce the population threshold factor.
     To further reinforce the importance of financial planning 
to cooperative transportation decisionmaking, our proposal includes a 
requirement for MPOs, States, and transit agencies to cooperate in the 
development of financial estimates that support plan and program 
development--bringing all partners together to address the critical 
topic of project financing.
                      iii. environmental programs
    Under NEXTEA, the basic program structure of our environmental 
programs remains unchanged from ISTEA, and we propose to increase 
funding levels for major environmental programs--the Congestion 
Mitigation and Air Quality Improvement Program (CMAQ) and 
transportation enhancements. The changes we propose would enhance State 
and local decisionmakers' ability to consider the environmental impacts 
of their transportation investment decisions.
A. Congestion Mitigation and Air Quality Improvement Program
    The CMAQ program has proven to be ISTEA's most flexible program, 
representing more than half of all flexible funds used for transit 
purposes ($1.7 billion of $3.0 billion). Other non-highway projects 
that assist areas in improving air quality are receiving an increasing 
share of CMAQ funds, as well. Through 1996, over $500 million in CMAQ 
funds were used to establish or expand rideshare services, promote 
demand management, and support bicycle and pedestrian travel through 
better routes, sidewalks, and improved security features such as 
bicycle racks and lockers. The CMAQ program has funded projects ranging 
from San Francisco's Incident Management Program, to the intermodal 
freight facilities in Portland, Oregon, and Auburn, Maine, to New 
York's Red Hook Barge intermodal project, to Glendale, California's, 
awardwinning parking management program, which helps employers reduce 
emissions by encouraging their employees to consider options to driving 
alone each day. As these projects demonstrate, CMAQ has brought new 
players to the table, including bicycle and pedestrian enthusiasts, 
intermodal freight interests, and demand management professionals, and 
has strengthened coordination between State and Federal transportation 
and air quality agencies.
    CMAQ flexibility has allowed States to fund new efforts which go 
beyond traditional highway and transit infrastructure. Such innovation 
has been the hallmark of the CMAQ program. CMAQ supports vehicle 
emission inspection and maintenance programs. Over $290 million in CMAQ 
funding has been used on alternative fuel conversions and refueling 
facilities and to purchase clean fueled buses and electric vehicles. 
CMAQ has also funded public education and outreach campaigns like 
Phoenix's Clean Air Campaign.
    The congestion relief benefits of the CMAQ program have also been 
substantial. Houston's TranStar traffic management and control system 
uses cutting edge technology to manage over 300 miles of freeway and 
over 100 miles of high occupancy vehicle lanes. CMAQ has also funded 
many other congestion mitigation projects, including HOV lanes in Los 
Angeles, shared-ride services in Virginia and New Hampshire, and 
bicycle and pedestrian facilities in Montana. The benefits of promoting 
alternative travel options as envisioned by the Congress in ISTEA have 
clearly been realized through the CMAQ program.
    In 1994, the Department, in cooperation with the Environmental 
Protection Agency (EPA), conducted a review of the first 3 years of 
CMAQ program activities to determine ways for us to administratively 
streamline this program. The review provided an opportunity for us to 
hear directly from the public. We held 70 meetings in 10 States, 
meeting with MPOs, State and local government representatives, State 
departments of transportation and air quality agencies, and public and 
private interest groups. Our program review revealed several specific 
challenges facing a few States in the obligation and programming of 
CMAQ funds. We issued revised guidance on the CMAQ program to address 
these challenges, providing for more extensive public outreach and 
education efforts, and encouraging funding of experimental projects and 
incentive programs promoting the use of transit, ridesharing, and other 
alternatives to the single-occupant vehicle. Most recently, we have 
initiated a new interagency effort with the EPA to reduce the oversight 
and coordination requirements of the CMAQ program at the Federal level. 
In all nine of our Federal regions, we now have memoranda of agreement 
to streamline the project review process, providing for only minimal 
necessary oversight and ensuring more timely Federal review.
    Under NEXTEA, we will build on this success. As envisioned under 
ISTEA, the CMAQ program demonstrates that flexibility is a better 
approach to the funding of transportation projects and programs and 
that transportation can contribute to improved air quality. Now, some 
5\1/2\ years later, the CMAQ program is no longer an experiment. The 
program's flexibility and innovation have been key to its success, and 
the Department proposes an increase in the CMAQ program funding 
authorization from $1.029 billion annually to $1.3 billion, an increase 
of 30 percent. We also propose to expand CMAQ funding eligibility to:
     Maintenance areas: We are proposing to provide funds on 
the basis of a State's maintenance, as well as nonattainment area, 
populations.
     PM areas: The original CMAQ provisions were silent on the 
use of funds in nonattainment areas for particulate matter (PM). The 
apportionment formula has been modified and eligibility made explicit 
to include PM areas.
     New nonattainment areas designated under the revised air 
quality standards: With EPA's proposal to revise the national ambient 
air quality standards, the Department recognizes the need to extend 
funding to any areas newly designated under the new standards. 
Therefore, we propose that CMAQ funds be available to these areas afier 
a State has submitted its implementation plan addressing the new 
standards to EPA.
    Another hallmark of the CMAQ program and flexible funding has been 
the equal treatment of eligible projects. Our reauthorization proposal 
for CMAQ would build on this.
     Operating Assistance: We propose to delete the specific 
provisions covering operating assistance on traffic management and 
control projects to provide the same 3-year period of funding 
eligibility for all projects requesting operating assistance. Our 
proposed amendment would put traffic management and control projects on 
a level playing field with transit and other projects receiving 
operating assistance under the CMAQ program.
     TCM Funding Flexibility: ISTEA excludes from CMAQ funding 
two transportation control measures listed in the Clean Air Act--
extreme cold starts and vehicle scrappage. Under the DOT proposal, 
programs to reduce extreme cold starts, where the majority of emissions 
are generated, would be eligible for CMAQ funds. Scrappage or ``buy 
back'' programs for high polluting vehicles would also be eligible. 
Rather than requiring States to use CMAQ funds for these two 
transportation control measures, our proposal simply gives States the 
added flexibility to fund them if they choose to.
B. Transportation Enhancements
    States and localities have used transportation enhancement funds 
for projects in thousands of communities nationwide. As a result, today 
we look far more closely at the needs and concerns of localities, and 
the ways that transportation can, in fact, help make them better 
communities. We recognize that communities know best how to serve their 
own needs and must be actively involved in deciding how and where we 
invest Federal transportation funds. We are moving away from a focus on 
just getting people and goods from one place to another and toward an 
emphasis as well on the impacts of transportation projects on the 
communities they traverse.
    In keeping with the goal of the ISTEA legislation to develop a more 
balanced transportation system, the Department has supported projects 
that enhance the use and safety of bicycling and walking as 
transportation, the development of recreational trails, and the 
recognition of scenic byways. In very visible and measurable ways, 
these typically modest and creative transportation investments 
dramatically improve the quality of peoples' lives.
    ISTEA transportation enhancements therefore have become an 
important part of our commitment to the redevelopment and sustainment 
of communities through a variety of transportation related activities, 
from the renovation of historic rail depots, such as the Lafayette 
Depot in Lafayette, Indiana, (which became the centerpiece for a 
magnificent plaza serving as an economic catalyst and community focus 
area) to the rehabilitation of the historic Stone Arch Bridge in 
Minneapolis and funding for the Schuylkill River Park and Trail in 
Philadelphia.
    After consulting with our partners on how we could maximize program 
delivery, we have put in place streamlined procedures that will allow 
States to use their own, less stringent contracting and procurement 
procedures to advance enhancements projects, and we have streamlined 
the rules for environmental clearance (section 4(f) impacts), property 
acquisition (voluntary transactions) and Federal oversight 
requirements. In addition, through the initiatives Congress included in 
the National Highway System Designation Act of 1995, we have adopted 
streamlining measures to allow States to use the value of donated 
funds, materials, and services as their non-Federal project match, we 
have provided advance payment options for cash-pressed localities, and 
we have set up streamlined procedures for environmental documentation 
and Federal review.
    While bicycle and pedestrian projects can be funded under all of 
the major ISTEA funding programs, transportation enhancements funds 
have accounted for 75 percent of funding for pedestrian and bicycle 
projects. Our NEXTEA proposal continues the broad bicycle and 
pedestrian funding eligibility of ISTEA.
    The public support for and success of these enhancement projects, 
along with thousands of others, convinced the Department to retain the 
current transportation enhancement provisions of ISTEA in our 
reauthorization proposal, including a provision to require all 
enhancements activities to be directly linked to transportation. Under 
our proposal, enhancements funding would increase by over 30 percent.
C. National Scenic Byways Program
    The Department, responding to ISTEA, launched the National Scenic 
Byways Program to recognize roads that are outstanding examples of 
scenic, historic, recreational, cultural, archeological, and natural 
qualities by designating them as National Scenic Byways or All-American 
Roads. The first national program designations were made by former 
Secretary Pena in September 1996. States and local communities have 
made significant accomplishments under this program. We have awarded 
over $74 million in grants to 37 States for over 550 projects. These 
funds serve as seed money for States and localities in their effort to 
help conserve the unique character of these scenic routes.
    Our proposed legislation reauthorizes this program, with a number 
of changes designed to increase program flexibility. For example, our 
proposal would allow Federal land management agencies to provide the 
non-Federal share of project costs for scenic byways projects on 
Federal or Indian lands.
D. Recreational Trails Program
    The Recreational Trails Program established under ISTEA provides 
States an opportunity to construct new recreational trails, restore and 
maintain existing trails, and construct trail-side and trail-head 
facilities for both motorized and nonmotorized uses. With minimal 
Federal oversight, States select projects that meet the needs of their 
trail users.
    The Recreational Trails Program has built significant new 
connections within communities, enhanced the environment, and provided 
youth training and employment. For example:
     In Richmond, Virginia, the Gilles Creek Park Foundation 
provided a trail between a housing area and a local park.
     In Rhode Island, the Appalachian Mountain Club, the 
Audubon Society, and the Nature Conservancy each used Recreational 
Trails funds to repair pedestrian trails designed to protect 
environmentally sensitive areas.
     In Colorado, a local youth ranch reconstructed a trail in 
the Rio Grande National Forest, providing work training experience for 
juvenile offenders. That trail is used by off-road vehicle users, 
mountain bicyclists, equestrians, and hikers for access to scenic 
public lands and for hunting and fishing opportunities.
     Connecticut has used all of its fiscal year 1993 trails 
funds, and most of its fiscal years 1996 and 1997 trails funds, to 
develop the Airline North State Park Trail. The Connecticut National 
Guard, with the support of the Governor, helped build the trail as part 
of a joint public improvement/military training exercise. The trail 
connects Putnam, Willimantic, and Manchester, with future connections 
planned to Hartford and to Providence, Rhode Island.
    Our proposed reauthorization legislation would continue the 
Recreational Trails Program within the Department and would provide a 
consistent and reliable funding source (with contract authority). Our 
proposal maintains the current 50 percent Federal share, but would 
increase flexibility by allowing Federal agency project sponsors to 
provide a portion of the non-Federal match. Several program mandates 
would be deleted to provide greater State flexibility.
                             iv. conclusion
    In conclusion, the Administration's proposal is faithful to ISTEA 
and the message we heard in our outreach efforts: stay the course on 
the principles of ISTEA. We have, however, proposed refinements to 
reduce unproductive requirements, such as reshaping the planning 
factors, while at the same time giving State and local decisionmakers 
more flexibility and tools to make transportation decisions.
    Recognizing that transportation can effectively support other 
public initiatives and improve their related effects in the community, 
we have sought to reinforce the linkage to other policy areas, such as 
economic development and brownfields. We hope to continue our role as a 
partner that provides leadership, resources, and tools to help make the 
kinds of decisions that will serve our transportation needs well into 
the next century.
    Thank you for this opportunity to testify today. I would be pleased 
to answer any questions you may have.
                                 ______
                                 
 Responses of Deputy Administrator Jane Garvey to Additional Questions 
                          from Senator Chafee
    Question 1. Critics of the Congestion Mitigation and Air Quality 
Improvement (CMAQ) program claim that it has done very little to clean 
the air.
    Do you think the CMAQ program should be judged solely by the air 
quality benefits? What is your answer to such criticism?
    Response. Some CMAQ projects yield considerable emissions 
reductions (such as the more than 1,000 KG, or 1 ton, per day 
reductions from inspection and maintenance programs). Taken as a whole, 
CMAQ projects implemented in 1997 will eliminate 52,000 tons of 
volatile organic compounds (VOCs) and 62,000 tons of nitrogen oxides, 
key components of smog, as well as 336,000 tons of carbon monoxide, 
annually, according to an Administration analysis.
    CMAQ-funded projects also serve another important goal: helping 
nonattainment areas demonstrate conformity with State implementation 
plans for air quality (SIPs). The CMAQ program has also been helpful in 
multiple instances to ensure State funding for transportation control 
measures contained in their air quality implementation plans. CMAQ-
funded projects can provide significant air quality improvements to 
help nonattainment and maintenance areas meet rate of progress and 
maintenance requirements. State and local officials have made clear the 
importance of the Federal Government participating in the effort to 
achieve cleaner air since the Federal Government places specific air 
quality requirements on State and local governments.
    In addition, the benefits of CMAQ-funded projects should not be 
evaluated solely in terms of air quality improvements; they have other 
benefits. Transportation projects are often designed to meet multiple 
objectives, and this is true of CMAQ projects as well. In addition to 
air quality improvements, these projects have served such other 
purposes as congestion relief, economic development, and improving 
overall quality of life. These other factors have been important 
considerations for metropolitan planning organizations (MPOs) when 
using CMAQ funds.
    The CMAQ program, even at the $6 billion authorized under ISTEA, is 
small when considered in relation to funding for the entire surface 
transportation network, which is valued in the trillions of dollars. 
Projects funded under this or any other small program--only 4 percent 
of the Federal-aid highway program will only make incremental 
improvements to such a vast network, whether focused on air quality, 
congestion relief, or other national goals and objectives. The CMAQ 
program has also produced benefits directly related to many of the 
other goals of ISTEA. Examples include:
     Funding Flexibility: The CMAQ program has been ISTEA's 
most flexible program, accounting for 55 percent ($1.3 billion) of all 
funds flexed to transit, despite its relatively low authorization 
levels. Another 500 million dollars of CMAQ funds have gone toward new 
shared ride services, bicycle and pedestrian projects, and demand 
management.
     MPO Empowerment: Empowering MPOs has been a primary goal 
of ISTEA. Again, the CMAQ program has been a leader in this area 
because CMAQ funds must be spent in nonattainment areas, making them 
local funds for which metropolitan areas exercise responsibility.
     Increased participation in Planning: CMAQ has improved 
communication between transportation and air quality agencies at the 
State and local levels and has opened the door for many new 
participants in the transportation planning process.
    Question 2. Under NEXTEA, the CMAQ program would address areas 
newly designated in nonattainment for ozone and PM2.5, if 
the EPA's proposed new air quality standards are adopted. Have you done 
an analysis on the additional funding level required to ensure that the 
CMAQ program can adequately fund these new areas in ozone and 
PM2.5 nonattainment?
    Response. We attempted to analyze the impact on CMAQ apportionments 
(including new nonattainment areas resulting from the proposed new air 
quality standards). This analysis was completely dependent on the 
populations of these new areas, and since we did not have reliable 
estimates as to the areas that would be designated under these new 
standards (particularly for PM2.5), or what their 
populations would be, the results of this analysis were preliminary. 
The analysis showed a small impact causing redistribution of CMAQ 
apportionments among 28 states, half of which would receive additional 
STP funding to maintain their funds for CMAQ projects at comparable 
levels. However, since the form of the new air quality standards as 
promulgated is different than the proposal, this analysis would need to 
be updated.
    The impact of the new air quality standards on CMAQ apportionments 
would be felt in later years of NEXTEA at the earliest. The 
implementation plan published with the new standards states that EPA 
expects to designate ozone nonattainment areas under the new 8-hour 
standard in the year 2000. Some nonattainment areas would not submit an 
ozone SIP until 2003. The new areas would be eligible for CMAQ once 
they have submitted a SIP. Because new PM2.5 nonattainment 
areas are not expected to be designated until at least 2002, it is 
likely that designations will not be made until after the next surface 
transportation reauthorization period.
    Question 3. NEXTEA continues to call for states to produce 
financially constrained transportation plans. Why is it appropriate to 
have transportation plans that are financially constrained?
    It is good transportation planning practice to address financial 
reality in plans and programs. ``Wish list'' planning undermines the 
ability of the public and State and local officials to make well-
informed decisions on how to best allocate available resources for 
competing transportation projects. Financially constrained planning 
results in realistic plans that can be effectively and fully 
implemented. Financial constraint also empowers MPOs by allowing them 
to set local priorities for projects.
    NEXTEA continues the ISTEA requirements for financially constrained 
metropolitan transportation plans (20-year plans), financially 
constrained metropolitan transportation improvement programs (TIPs), 
and for projects to be included in statewide transportation improvement 
programs (STIPs) only if funds are available for such projects. Both 
TIPs and STIPs are 3-year listings of projects expected to be 
implemented by a given metropolitan area or state. There is not a 
requirement for financially constrained statewide plans.
    The air quality conformity regulations call for financially 
constrained plans in metropolitan nonattainment and maintenance areas, 
and NEXTEA does not change these air quality requirements. For the sake 
of consistency between statewide and metropolitan planning, the Federal 
Highway Administration and the Federal Transit Administration require 
all metropolitan plans, TIPs and STIPs to be financially constrained, 
regardless of the air quality of the areas included in these plans and 
programs. In addition, by regulation, statewide plans (which may be 
policy plans) are required to be financially constrained. It would be 
difficult to financially constrain a policy plan. But project-specific 
plans such as metropolitan plans can be more easily constrained because 
cost estimates can be prepared to the individual projects and those 
costs compared to available funds.
                                 ______
                                 
                         U.S. Department of Transportation,
                                    Washington, DC, April 25, 1997.
Hon. Craig Thomas,
U.S. Senate,
Washington, DC.
    Dear Senator Thomas: During the March 19 hearing of the Committee 
on Environment and Public Works on reauthorization of the Intermodal 
Surface Transportation Efficiency Act of 1991 (ISTEA), I was pleased to 
testify regarding the Administration's proposed National Economic 
Crossroads Transportation Efficiency Act of 1997 (NEXTEA). At that 
hearing, you asked why a State could not use its safety set-aside funds 
from its Surface Transportation Program (STP) apportionment to install 
rumble strips on Interstate highways.
    Under current law (23 U.S.C. Sec. Sec. 130, 133, and 152), the 
State transportation departments can use their STP safety set-aside 
funds for highway safety projects on any public road other than 
Interstates. This is because a key aim of the STP safety set-aside is 
to target funds to roads where safety needs are the greatest, namely 
railroad-highway crossings and high hazard locations off the Interstate 
System. Other Federal-aid highway funds are available to the States for 
Interstate projects, including the installation of rumble strips on 
Interstate routes. For example, States can install rumble strips on 
Interstates using their apportionments for the National Highway System 
(NHS), the Interstate Maintenance (IM) program, and the STP (other than 
the set-asides for safety and transportation enhancement activities). 
These amounts are significantly larger than the STP funds set aside for 
safety. Wyoming, for instance, has received, on average, $3,669,000 in 
safety-set aside funds for each of the 6 years of ISTEA and has 
received an average of $25,777,000 in NHS, $31,885,000 in IM and 
$40,796,000 in STP apportionments for each of these same years.
    The Administration's NEXTEA proposal would authorize a separate 
infrastructure safety program rather than continuing to fund important 
safety projects as an STP set-aside. We also propose to increase the 
authorization for this program above ISTEA levels and increase funding 
flexibility. However, in terms of funding eligibility, we believe the 
current safety program's focus on those roads with the highest fatality 
and fatal accident rates and nearly 77 percent of vehicle-miles 
traveled, i.e., the non-Interstates, is sound. We propose, therefore, 
to continue the same funding eligibility for hazard elimination 
projects and to expand grade crossing eligibility to include all public 
grade crossings and certain private crossings where sufficient public 
benefit has been identified. Under our proposal, States would still be 
able to fund rumble strips on Interstate routes from their National 
Highway System, Interstate Maintenance Program, and STP apportionments.
    Thank you for the opportunity to respond to your question in 
writing. I look forward to continuing to work with you and the other 
members of the Senate Environment and Public Works Committee to build 
on the accomplishments of ISTEA in the reauthorization of our surface 
transportation programs.
            Sincerely yours,
                                            Jane F. Garvey,
                                              Acting Administrator.
                                 ______
                                 
                         U.S. Department of Transportation,
                                    Washington, DC, April 25, 1997.
Hon. Bob Graham,
U.S. Senate,
Washington, DC.
    Dear Senator Graham: At the March 19 hearing of the Subcommittee on 
Transportation and Infrastructure of the Committee on Environment and 
Public Works, you asked a very thoughtful and valid question about 
present and future congestion on our Nation's highways.
    Following the hearing, I asked FHWA staff to research how different 
States' congestion levels compare and what changes are expected in the 
future. They also looked closely at how congestion in Florida and its 
cities compares to other States and cities.
    Enclosed is the resulting analysis, which I found enlightening. We 
will also send it directly to the subcommittee for inclusion in the 
hearing record. I hope it is responsive to your interest. If you need 
additional information, I would be pleased to provide it.
            Sincerely yours,
                                            Jane F. Garvey,
                                              Acting Administrator.
                                 ______
                                 
           Florida Highway Travel Demand--Current and Future
     Since 1989, nationwide we have added only 43,000 new lane-
miles of nonlocal roads to meet our added highway demand requirements, 
a total increase of 1.6 percent. Over that same period, highway demand 
increased by 17 percent. Our increase in demand was over 10 times as 
great as our increase in capacity over that time period.
     As a result of this differential growth in demand vs. 
supply, the density of travel, that is, the average daily traffic lane, 
has increased on all highway systems. On the urban Interstate System, 
the most densely traveled of all our highways, densities increased from 
12,000 vehicles per lane in 1989 to 13,100 vehicles per lane in 1995, 
about a 9.2 percent increase. [Figure 1]
     Congestion delay cost Americans at least $1 billion 
annually in each of our largest urban areas.
                     florida congestion indicators
     FHWA publishes State estimates of peak-period traffic 
congestion and measures of travel density and congestion for all 
urbanized areas as part of the annual Highway Statistics.
     Tables 1 and 2 provide the 1995 volume/service flow for 
the major urban and rural highways by State. A value of >0.95 indicates 
severe peak-period congestion. Values of 0.80-0.95 indicate congested 
conditions.
    Table 3 includes a column ``AADT/lane'' (average annual daily 
travel per lane), a measure of the density of daily highway usage. 
Florida ranks 11th among all States in urban AADT/lane and 3rd among 
all States in rural AADT/lane.
    Table 4 shows selected demographic, system, and geographic 
parameters for all urbanized areas above 100,000 population, arrayed in 
descending order by population. Of these 260 urbanized areas, Florida 
contains 18. Nationwide, of the 63 largest urbanized areas of greater 
than 500,000 population, 5 are in Florida. Of these 5 urbanized areas, 
2 have AADT/freeway lane greater than the average of the top 63 
urbanized areas.
                         future highway demand
     Estimates of future congestion by State and urbanized area 
are a function of future travel demand; changes in land use and other 
local policies and initiatives that might impact travel demand; future 
capital and operating investment; application of ITS traffic management 
strategies; price of fuel; and related variables that will combine to 
influence rates of travel increase.
     Table 5 shows current (1995) and future (2015) daily 
vehicle miles of travel (DVMT) by State, with a percent growth rate. 
Among all of the States, Florida ranks 32nd in expected DVMT growth 
through 2015, with an increase of 48.5 percent, compared to a national 
average of 53.4 percent.
     Table 6 shows similar information for each of the Nation's 
urbanized areas of greater than 100,000 population, along with percent 
annual rates of change in highway travel demand. Nationally, the 
expected annual rate of travel growth for all urbanized areas, 1995-
2015, is 2.0 percent.
    Among Florida's 18 urbanized areas of greater than 100,000 
population in 1995, 11 are expected to experience travel demand in 
excess of the national average through 2015 and two, Fort Myers-Cape 
Coral and Melbourne-Palm Bay, are expected to significantly exceed the 
national average, at 3.2 percent and 2.4 percent annually, 
respectively. Values for Tallahassee, Lakeland, Fort Pierce, 
Gainesville, Fort Walton Beach, Panama City, and Naples are not shown 
separately, since they are reported as grouped data, and can not be 
disaggregated. For purposes of comparison, the collective travel growth 
rate for these areas is expected to be 2.2 percent annually.
    Impacts of Congestion/Mitigation Strategies:
     As congestion increases, both recurring (daily congestion 
points) and non-recurring delay (vehicle breakdowns, accidents, etc.) 
increase. Although the increase in recurring delay has a large impact 
on additional traveltime and vehicle operating costs, the increase in 
non-recurring, delay has a more structural impact on U.S. firms' 
ability to compete because of additional pressures on costs of 
manufacturing, warehousing, and logistics.
     Many of the MPOs are developing aggressive strategies to 
help curb the growth of urban highway and the congestion associated 
with it. These strategies include the deployment of Intelligent 
Transportation Systems (ITS), providing timely information to travelers 
on alternate routes with less congestion, the use of higher levels of 
transit service, better coordination with land use planning and zoning 
decisions to reduce the reliance on single occupant vehicles, parking 
cash out programs, offering commuters a choice of parking support or 
vouchers for transit or other means of commuting, congestion pricing, 
and other innovative strategies that work well in combination. The MPOs 
in our larger metropolitan areas are programming large investments in 
transit over the next several years, in anticipation of transit growth 
in highly congested areas.
    Progress will come through these, and other, public and private 
efforts (1) to offer greater options to travelers; (2) to provide 
better and more timely information to travelers; (3) to monitor 
changing conditions on our major NHS urban routes and help States and 
local decisionmakers design more effective strategies for dealing with 
congestion on these routes of greatest national and regional 
significance. Congestion can only be successfully addressed by a 
combination of demand reduction and supply enhancement, either through 
more efficient use of our existing system, or targeted efforts to add 
additional capacity.
    Our NEXTEA reauthorization proposal addresses all of these 
elements.
                               __________
   Prepared Statement of David Gardiner, Assistant Administrator for 
 Policy, Planning and Evaluation, U.S. Environmental Protection Agency
                            i. introduction
    Good morning, Chairman Warner and members of the committee. I am 
David Gardiner, Assistant Administrator of Policy, Planning and 
Evaluation at the U.S. Environmental Protection Agency (EPA). I am 
pleased to be here today with Acting Administrator Jane Garvey of the 
Federal Highway Administration to offer EPA's perspective on the 
National Economic Crossroads Transportation Efficiency Act (NEXTEA).
    Transportation gives form and function to our great country; it is 
an inherent factor in nearly every aspect of life. Our transportation 
network enables us to maximize our economic potential, provides us with 
unprecedented amounts of personal freedom, and gives us both a 
figurative and literal path to the things we want in life.
    It also exacts a price upon the environment. These problems 
manifest themselves in many forms, including: local air pollution (such 
as smog and particulate matter), water pollution, habitat 
fragmentation, and contributions to climate change. Environmental costs 
are real, and they impact the economy.
    NEXTEA is important to the EPA because sound transportation policy 
is sound environmental policy. Last week, the President echoed this 
sentiment when he said, ``Make no mistake about it, [NEXTEA] is one of 
the most important pieces of environmental legislation that will be 
considered by the Congress in the next 2 years. And I think it should 
be thought of in that way.''
    The EPA strongly supports this statement and the position set forth 
in the Administration's bill, because it will help us fulfill our 
mission of providing clean air, and clean water, and protecting public 
health. In 1991, the Intermodal Surface Transportation Efficiency Act 
(ISTEA) recognized that the transportation sector can be used to 
improve public health, improve the quality of our environment, improve 
the economy, and improve the quality of life of our citizens. The 
continuation of the Congestion Mitigation and Air Quality Improvement 
and Transportation Enhancements Programs are important steps to 
ensuring that this happens.
    Sound transportation policy is also sound economic and community 
policy. How and where we lay out our transportation network can have 
great impacts on whether downtowns and neighborhood communities 
prosper, whether we can safely walk across the street, or whether those 
without automobiles can shop, get to their place of work or to 
educational opportunities. EPA supports the Administration's philosophy 
of ``local solutions to local problems''. The public involvement 
requirement in ISTEA is one of the things that makes it so successful. 
It empowers the citizen to have an impact, and it needs to stay in the 
legislation.
    ISTEA is good policy; NEXTEA preserves it. Today, I would like to 
talk with you about how transportation affects the environment, and 
then discuss how the Congestion Mitigation and Air Quality Improvement 
and Enhancements programs have helped improve environmental quality. I 
also will discuss why the flexibility and public participation 
opportunities created by ISTEA are so important for helping communities 
and EPA achieve their environmental goals.
               2. environmental impacts of transportation
    In 1991, ISTEA acknowledged the explicit Federal role in addressing 
the environmental impacts of transportation. I present these impacts in 
four categories: air quality, water and habitat quality, climate 
change, and solid waste.
a. Air Quality
    Nationally, air quality has improved substantially, 
contemporaneously with strong economic growth, population growth, and 
increased vehicle miles traveled (VMT). EPA analysis shows that mobile 
source emissions, which contribute significantly to overall emissions, 
dropped substantially between 1986 and 1995:
     CO emissions declined 21 percent during that time period;
     NOX emissions fell 2 percent;
     ozone precursors (hydrocarbons) fell 9 percent; and,
     PM10 emissions declined by 17 percent
    These national long-term air quality improvements translate to 
cleaner air on the local level. When the Clean Air Act was amended in 
1990, there were 140 million citizens living in 98 ozone non-attainment 
areas. Progress in ozone mitigation led to the redesignation of 29 of 
those areas. Of the remaining 69 non-attainment areas, 40 had met the 
first qualification for redesignation; they had not had a violation of 
the standard for over 3 years. Nearly one third of the affected 
citizens now live in areas that meet the ozone standard. 
PM10 non-attainment areas have decreased only slightly, from 
83 to 81. However, 35 PM10 non-attainment areas have been 
meeting the standard and have not yet been redesignated. In 1990, there 
were 42 CO nonattainment areas; in 1995, 34 were meeting the NAAQS for 
CO.
    Americans continue to increase their travel activity, and this has 
important implications for air quality. In 1970, the Nation logged an 
estimated 1.1 trillion VMT. By the end of 1995, the VMT total had more 
than doubled to just over 2.4 trillion miles annually. Between 1983 and 
1993, motorists increased their VMT more than 39 percent.
    In addition to the national increase, it is evident that vehicle 
travel in some areas of the Nation has out paced others, with some 
seeing a doubling of VMT in 10 years or less. Generally, there has been 
a substantial and growing divergence between urban and rural VMT 
growth. This urban-rural gap has continued to widen over the last 20 
years, largely because of continued metropolitan development 
incorporating both the expansion of urban boundaries and the rapid 
growth in suburb-to-suburb commuting. For the period described above--
1983 to 1993--urban VMT increased nearly 49 percent, while 
corresponding rural VMT growth was less than 27 percent.
    To date, ISTEA and the Clean Air Act has helped states and 
localities across the country make great strides in mitigating mobile 
source pollution. These reductions have been achieved by reducing 
emissions at the tailpipe through technological advances, cleaner 
fuels, and better inspection/maintenance facilities. But the critical 
question remains will environmental control technology be able to keep 
pace with increasing VMT. Based on current Clean Air Act requirements 
EPA models show that:

          CO emissions from on-road vehicles are predicted to decline 
        from 48,874 thousand short tons in 1996 to 44,525 thousand 
        short tons in 2002. By 2010, CO emissions are predicted to 
        increase to 46,749 thousand short tons. NOX 
        emissions from on-road vehicles are predicted to decline from 
        7,041 thousand short tons in 1996 to 6,281 thousand short tons 
        by 2005. By 2010, NOX emissions are expected to 
        increase to 6,495 thousand short tons. Volatile Organic 
        Compound (VOC) emissions from on-road vehicles are predicted to 
        decline from 5,147 thousand short tons in 1996 to 4,578 
        thousand short tons in 2005. By 2010, VOC emissions are 
        expected to increase to 4,726 thousand short tons.

    Technological improvements in vehicle technology and fuels have 
kept emission trends on a downward path for the past 25 years, and may 
continue to do so in the future. The Clean Air Act requires EPA to 
evaluate whether additional technology based programs will be necessary 
and feasible such as National Low Emission Vehicle program, and tighter 
Tier II emission standards. Methods for improving vehicle durability 
and maintenance requirements are also being evaluated. Strategies to 
reduce VMT would also help preserve our air quality improvements, and 
protect public health and the environment.
b. Water and Habitat Quality
    Transportation also has great impacts upon our soils and lands, 
upon our water and wetlands, and upon our flora and fauna. Water 
quality is generally affected by transportation in three ways: run-off 
from new construction and existing highways, air deposition, and 
wetland loss.
            Runoff
    Runoff pollution is that associated with rainwater or melting snow 
that washes off highway pavements and bridge decks and other impervious 
surfaces. As it flows over these surfaces, the water picks up dust and 
dirt, rubber and metal deposits from tire and engine wear, oil and 
grease that has dripped onto the pavement, pesticides and fertilizers, 
antifreeze, and debris. These contaminants as well as those associated 
with highway construction and maintenance are washed from highways and 
bridges and carried into our lakes, rivers, streams, and oceans.
    In the snowbelt, road salts can be a major pollutant in both urban 
and rural areas Melting snow runoff containing deicing salts can 
produce high sodium and chloride concentrations in ponds, lakes, and 
bays causing fish kills and changes to water chemistry. Road salts can 
also contribute to damage roadside vegetation to cause erosion. Erosion 
produces sedimentation which can choke aquatic organisms in receiving 
waters.
            Air Deposition
    The transportation sector generates NOX, which reacts in 
the atmosphere to become an acid, thus contributing to acidic 
deposition. EPA's Chesapeake Bay Program reports that acidic deposition 
from transportation accounts for approximately 9 percent of all 
nitrogen in the Bay. Nitrogen (and other pollutants) directly affect 
the vitality of the Bay.
            Wetlands
    Prior improvements to the nation's transportation infrastructure 
have contributed to the loss and degradation of wetlands and other 
habitats. Wetlands mitigation provisions within ISTEA have provided the 
resources and flexibility needed to offset wetlands losses resulting 
from transportation projects. For example, ISTEA has provided support 
for wetlands mitigation banking activities throughout the country. 
Mitigation banking increases the ecological benefits of wetlands 
compensatory mitigation efforts, while also facilitating the permitting 
of highway projects. Ensuring that ISTEA continues to provide the 
resources and flexibility needed to offset unavoidable impacts to 
wetlands will help us to achieve the Administration's interim goal of 
no overall net loss of the nation's remaining wetlands and the long-
term goal of increasing the quality and quantity of the nation's 
wetlands resource base.
c. Climate Change
    Transportation accounted for nearly one-third of all anthropogenic 
greenhouse gas emissions from the U.S. in 1990 and the transportation 
sector is expected to have the fastest growth in greenhouse gas 
emissions of any part of the U.S. economy during this decade. This 
growth is the result of two trends; the average fuel economy of the new 
personal vehicle fleet has decreased since 1988, and the number of 
miles driven by Americans continues to rise. The drop in fuel economy 
is largely a result of a shift toward larger vehicles, such as sport 
utility vehicles, that have lower gas mileage than cars. While some 
vehicle models may be getting better mileage over time, as a nation we 
are buying more of the less efficient models. The causes of the 
increase in number of miles driven are more complicated and include 
population shifts to urban fringes.
    Global Climate Change has emerged as an important environmental 
concern. An international consortium of scientists has recently 
concluded that human-induced climate change has begun. The 1996 report 
of the Intergovernmental Panel on Global Climate Change expressed a 
scientific consensus that man-made ``greenhouse gases''--including 
carbon dioxide, chlorofluorocarbons, and methane--are building up in 
the Earth's atmosphere, and that the temperature of the atmosphere is 
increasing as a result. This rise in temperature is referred to as 
global climate change, global warming, or the greenhouse effect. 
Although the predicted increase in average global temperature may not 
seem like much--an increase between 1.8 and 6.3 degrees Fahrenheit is 
predicted--scientists believe that it will be enough to cause sea 
levels to rise, although the precise timing of when this might happen 
is unclear. Changes in temperature and rainfall in particular regions 
are more difficult to predict and the impact on different ecosystems 
remains uncertain. Nevertheless, agriculture, aquaculture, and plants 
and animals will have to adapt or move as the climates and habitats 
that support them change.
                 3. nextea and environmental protection
a. Congestion Mitigation Air Quality Improvement Program
    Air quality control under ISTEA and the Clean Air Act have been an 
environmental success story. Pollution from vehicles has been 
substantially reduced. Many areas, however, still face substantial 
challenges, and will continue to need the type of flexible support 
provided by CMAQ. Funding under the CMAQ program, unlike many other 
Federal-aid highway programs, is not limited to traditional highway 
uses, and the program has funded many innovative projects such as I/M 
programs aimed at reducing emissions and other programs focusing on 
vehicles and fuels. One of CMAQ's successes has been to open up the 
transportation planning process to allow projects to compete on their 
air-quality merits, an important ISTEA goal. The program also has been 
successful at empowering Metropolitan Planning Organizations (MPOs) and 
furthering the ISTEA goal of allowing local decisionmakers to select 
projects. Finally, the CMAQ program has invited new players into the 
planning process.
    Funding Under NEXTEA, new air quality nonattainment areas, 
resulting from the proposed PM and ozone NAAQS, would be eligible for 
money from the Congestion Mitigation and Air Quality Program upon 
submission of a SIP to EPA. The President's fiscal year 1998 budget 
would increases CMAQ funding to $1.3 billion per year from $1.0 billion 
in fiscal year 1997. Additional money will be transferred to CMAQ from 
the Surface Transportation Program when new nonattainment areas become 
eligible for CMAQ money, as necessary, to ensure no state will lose 
CMAQ funds.
    Transit improvement projects have been the recipient of the largest 
share of CMAQ funding since the start of the program, accounting for 
approximately 47 percent of all obligations between 1992 and 1995. As 
of October 1995, more than $1.7 billion had been transferred for 
transit-related air quality improvement projects. Highway traffic flow 
improvement projects, specifically identified as Traffic Control 
Measures (TCMs) in the CAA if they reduce emissions, have accounted for 
31 percent of CMAQ resources. Transit and highway traffic flow 
improvements together continue to receive about 75 percent of available 
CMAQ funding. On a lesser scale, funding for pedestrian/bicycle, 
shared-ride, and other less traditional TCM-type projects generally 
ranges between 10 and 15 percent of CMAQ funding obligations.
            Traffic Control Measures
    Most of the emissions reductions achieved to date have been through 
the CM's long-term focus on reducing tailpipe and evaporative 
emissions, and clean fuels program. As increasingly stricter tailpipe 
standards have been put in place, automakers have responded by 
producing lower emission vehicles that can meet the standard. If VMT 
growth outpaces existing tailpipe controls, CMAQ can provide 
communities the flexibility to rely more on TCMs to help reduce VMT.
    Although TCMs may not yield, in the short run, as large an air 
quality benefit as some of the more effective mobile source strategies, 
there are ample other reasons to fund them. Most notably, congestion 
continues to strangle many metropolitan areas and without TCMs to 
increase the supply of transportation alternatives and demand 
management strategies like pricing, these areas have few ways to 
address their growing congestion mitigation needs. Hence, programs like 
CMAQ are needed for a variety of reasons. The CMAQ program has been 
instrumental in furthering the empowerment of MPOs, a key goal of 
ISTEA. It also has invited local citizens and officials into the 
transportation planning process.
    The effectiveness of TCMs is directly linked to the low-density 
development pattern prevalent throughout the United States, which 
virtually necessitates automobile ownership and use. TCMs that increase 
the supply of transportation alternatives must address the 
geographically diverse origins and destinations that low-density 
development fosters. A focus that has gained some acceptance within the 
transportation and air quality communities, is to increase the 
accessibility of alternative to automobiles such as transit, bicycling, 
or walking.
            CMAQ Success Stories
    The CMAQ program already has funded hundreds of innovative 
projects. These are examples of quality planning efforts that are 
environmentally friendly and contribute to the social and economic 
needs of the community. As I have said before, good environmental 
policy is good economic policy. Since economic development is of 
tantamount importance to most cities, I must point out some of the many 
cases where these programs have been successfully used.
    Glendale Parking Management--In a public-private partnership with 
the Glendale Transportation Management Associates, Glendale, 
California, two private companies have implemented a 3-year 
demonstration program to reduce the number of employees driving to work 
alone. The companies reward employees who choose alternatives to 
driving alone--carpools, vanpools, walking, bicycling, and transit. The 
program combines a graduated parking charge for all employees with 
incentives such as prizes, awards, and-one of the most valued 
incentives-the Guaranteed Ride Home Program. As evidence of its 
success, this project earned the Federal Highway's 1995 Environmental 
Excellence Award in the CMAQ Program category.
    Freeway Service Patrol--The Freeway Service Patrol, managed by the 
Metropolitan Transportation Commission (MTC), the FSP alleviates long 
delays caused by disabled vehicles that account for 50 percent of the 
traffic congestion in the San Francisco metropolitan area. A fleet of 
52 FSP trucks patrols more than 200 miles of the Bay Area's most 
congested freeways, clearing over 9,000 incidents every month. Aided by 
the latest communications technology, the FSP truck drivers rescue 
stranded motorists. By alleviating start-and-stop travel and vehicle 
idling due to traffic jams, the FSP also has decreased overall fuel 
consumption and helped reduce harmful air pollution from motor 
vehicles.
b. Enhancements Program
    The Enhancements Program provides funding for activities that 
increase transportation options. Enhancements are designed to boost 
local economies, promote and increase multi-modal and overall non-
motorized travel, and protect the environment. Enhancements funds may 
be used for ten different kinds of projects. They are: bicycle and 
pedestrian facilities; acquisition of scenic or historic sights; 
archaeological planning and research; scenic or historic highway 
programs, landscaping and scenic beautification; historic preservation; 
preservation of abandoned railway corridors; control and removal of 
outdoor advertising; mitigation of water pollution due to highway 
runoff; and rehabilitation and operation of historic transportation 
facilities. Nation-wide, $2.4 billion was made available over the 6 
year life of ISTEA (1992-1997) for the Enhancements Program.
    Transportation Enhancements funding fills a vital role in 
mitigating the impacts of transportation and protecting the 
environment. Transportation is a significant source of air and water 
pollution, wetlands loss, habitat destruction and loss of open space. 
Historically, transportation planning focused more on the automobile, 
with less regard for alternative modes or the impacts on the community. 
The Enhancements Programs provides balance to those circumstances where 
wide roads and highways have cutoff communities from their neighbors, 
increased traffic noise, and discouraged bicycle and pedestrian travel.
    Enhancements funding has provided states and communities with the 
opportunity to fix the problems that are caused by traditional 
transportation projects. State and local transportation officials say 
that many enhancements-like projects would never have been undertaken 
without the enhancements program. Projects such as rails-to-trails, 
greenways, and bicycle/pedestrian paths support non-motorized 
transportation, provide increased mobility, provide recreational 
opportunities, increase economic development, clean the air, reduce 
non-point source water pollution, and encourage multi-modal 
transportation. Landscaping and historic preservation projects are 
popular on the local level. They provide tangible benefits which 
enhance livability and provide a sense of community. Historic sites 
often increase tourism and can act to strengthen the local economy.
            The Enhancement Program Expands Transportation Alternatives 
                    and Promotes Economic Development
    The Katy Trail--This 235-mile Missouri trail traverses nine 
counties and adjoins 35 towns ranging in population from 60 to 60,000. 
These communities initially were opposed to the trail, fearing an 
increase in vandalism from the users of the trail. Instead, 
restaurants, bed-and-breakfasts, wineries, bicycle rental shops, 
antique dealers, and campgrounds all opened to meet visitor needs. A 
user survey on the trail's western half showed that trail visitors 
generated an estimated $3 million in local revenue.
    Accommodating Pedestrians--Naples, FL, installed a network of 
sidewalks to make it quicker and safer to walk downtown. The city has a 
street system which did not originally include sidewalks. ISTEA 
Enhancement funds will pay for the design and construction of walking 
paths to link neighborhoods with recreation and the town center.
    Enhanced Suburban Transit--The Minnesota Valley Transit 
Administration recently constructed a suburban transit hub designed to 
meet the varied demands of suburban commuters. The transit hub offers 
convenient access to high occupancy vehicle (HOV) lanes on regional 
highways and features retail and office space, a day care facility, 
senior housing, expanded parking, and a movie theater.
            The Enhancement Program Reduces Highway Runoff
    Highway runoff mitigation is one of the ten categories of 
activities specifically eligible to receive Transportation Enhancement 
funds. Since 1992, nearly 100 runoff projects with a combined cost of 
more than $20 million have been funded by the Enhancements Program. In 
order to qualify as an enhancement, each of these projects must address 
issues which are beyond the scope of customary construction mitigation 
efforts, i.e., required runoff control measures cannot be funded by the 
Enhancements Program.
    Cucumber Creek, Oklahoma, Pollution Mitigation--Mitigation efforts 
recently were completed in southeastern Oklahoma to correct the harmful 
effects of runoff from State Highway 259. Water quality in Cucumber 
Creek, which is located near the highway right-of-way, was degrading 
due to runoff from the roadway. This contamination threatened the 
viability of several rare species of plants and animals.
    In order to remedy the runoff problems and preserve the integrity 
of Cucumber Creek, the state of Oklahoma used approximately $65,000 in 
enhancement funds to regrade the land between the highway and stream 
and expand the Cucumber Creek Preserve by 400 acres. Because runoff is 
directed to less fragile areas, further pollution of habitat will be 
reduced. The regrading of the highway right-of-way also will prevent 
further erosion of the land on the sides of the roadway.
                           3. parking cashout
    NEXTEA includes important policy initiatives to reduce the threat 
of climate change. One of these, the change in the tax treatment of 
commuter benefits, clearly demonstrates that there are opportunities to 
align the sometimes competing objectives of environmental protection 
and transportation mobility. Free parking at work is today offered to 
90 percent of the American work force. In part, this is because the 
Internal Revenue Code prevents employers from offering their employees 
a choice between tax-exempt parking, other tax-exempt commute benefits, 
or taxable cash. NEXTEA changes that. Employees who do not need or want 
their free parking spaces and would prefer to commute by some other 
means than driving, but accept them because they are often the only 
commute benefit offered, will be able to convert their parking spaces 
to taxable cash at no cost to their employer. Employers will cease to 
pay for parking their employees no longer use. Fewer automobile 
commuters means better air quality, fewer greenhouse gas emissions to 
the atmosphere, and less traffic congestion. This is smart policy that 
is good for transportation mobility and for the environment.
                         4. public involvement
    The Clean Air Act requires the evaluation of environmental concerns 
in transportation planning. NEXTEA continues to provide states with the 
tools to implement this requirement. In the past, citizens and local 
officials did not always have enough say in local transportation 
planning. ISTEA puts the citizens and local officials in the planning 
process. With the flexibility of ISTEA funding, the ``community 
vision'' can become the community reality.
    ISTEA has provided the funds and the flexibility to more easily 
make transportation networks efficient and environmentally sound. 
ISTEA, by requiring public input on transportation planning, supports 
local citizens and officials make their own choices and have the funds 
to realize their community visions. Some states have created 
decentralized processes in which the state share some aspects of its 
traditional control helping to empower MPOs and local governments. This 
empowerment comes in the form of programming control over the spending 
of Federal funds in the MPO's planning area.
    I'd like to mention a few examples of these decisions to show that 
increased public participation can result in good planning and better 
environmental outcomes.
    Albany's New Visions--Through the ``New Visions'' initiative, the 
Albany, NY, MPO has started calculating and using the costs of traffic 
jams, environmental factors, and larger economic impacts in 
transportation projects. This comprehensive account is almost 
unprecedented, and includes costs and benefits not traditionally 
included in the transportation planning process.
    Florida--Florida's state DOT has developed a close working 
relationship with MPOs, air quality agencies, and the public by 
involving these parties in making decisions about a variety of 
transportation investments. Florida's approach is partially 
attributable to the state's decentralized DOT structure. District 
offices of the state DOT work closely with local governments and MPOs, 
providing a good mix of local, state, and public input in the project 
selection process.
    Bottom-up Planning--California and Washington state have created 
well-defined ``bottom-up'' approaches to the selection of ISTEA's 
enhancement funds. Selection criteria are set by the state and MPOs, 
and corresponding agencies in non-urbanized areas evaluate proposed 
projects in their jurisdiction and send a prioritized list to the 
state. Although in both states, primary decisionmaking authority 
remains at the state level, the states have largely honored the 
recommendations by the MPOs.
                             5. flexibility
    Transportation funding before ISTEA was generally more rigid 
allowing less flexibility and creativity for finding alternatives to 
transportation problems. ISTEA and NEXTEA differ in major ways from 
transportation policy of the past. Flexibility allows for the 
implementation of local solutions to local problems as determined by 
local citizens and officials. Flexible funding encourages creative 
solutions that promote sustainable transportation, clean air, economic 
development, and meet the mobility needs of local citizens. Funds 
previously earmarked solely for highway projects now can be used by 
state and local officials to pursue multiple options for making their 
transportation systems more effective and sustainable.
    The following are a few examples of how state and local governments 
have taken advantage of flexible funding to support economically and 
environmentally sensible projects.
    Bridge Preservation--In Vermont, most bridges were built after a 
1927 flood, and they are now reaching the end of their useful life. 
Rather than replacing them all with a standard new bridge, the state 
has used ISTEA's new flexibility and funding provisions to rehabilitate 
or replace historic bridges on a case-by-case basis. Flexible funding 
permits investments that save money.
    Train Station Revitalization--In Greensburg, PA, ISTEA Enhancements 
funds are being used to renovate a historic train station on Amtrak's 
Chicago-to-New York route. The redevelopment will help revitalize 
downtown Greensburg, and Amtrak predicts tripling ridership.
ISTEA Flexibility Encourages Innovation for Addressing Freight 
        Emissions
    Flexibility in ISTEA also allows us to grapple with emerging 
problems, such as emissions from freight transportation, in cheaper and 
smarter ways. Freight transportation moves the nation's commodities to 
U.S. markets, uses roughly a fifth of U.S. transportation energy, and 
produces roughly 30 percent of the mobile source sector's air emissions 
of NOX, according to EPA estimates. The corresponding 
percentages for particulate matter specifically from freight are not 
available, but are known to be even larger ISTEA began to emphasize the 
importance of freight transportation.
    EPA recognizes and supports the steps already taken by the freight 
industry to promote and achieve industry productivity and environmental 
benefits:

           Partnerships between truck and rail companies are on 
        the rise, as many trucking companies are finding it more 
        profitable to facilitate long hauls rather than make the entire 
        trip themselves;
           Truck-rail transfer stations have sprung up across 
        the country, with truck companies serving the shipper and 
        receiver and railroads providing long-distance movement to and 
        from the transfer points; and,
           Warehouse siting strategies and freight distribution 
        technology are decreasing fuel use and, therefore, costs.

    Several successful examples of intermodal freight transfer projects 
merit particular attention. The City of Auburn, Maine, has used ISTEA 
CMAQ dollars to develop a state-of-the-art project that includes track 
improvements, new parking and container storage, and a weighing and 
freight control operations center. Auburn, an air quality nonattainment 
area, has the long-term goal of becoming a multi-modal transportation 
center. The new facility reduces long-haul truck traffic on area 
highways, decreasing vehicle emissions both in the Auburn area and 
along regional highway routes.
    Auburn's project, which is referred to as the ``Intermodal Freight 
Transfer Facility,'' has provided an economic boost to the area. With 
the conversion of freight from long-haul trucking to rail, a multitude 
of short-haul trucking companies have moved to Auburn to serve short 
trips from rail facilities to other destinations. The increase in 
economic activity has led to added competition for local warehouse 
space. Auburn has also attracted producers of goods that require 
incoming raw and bulk goods and the outgoing freight capacity of the 
facility. A number of transportation-related businesses and thus jobs 
have grown along Auburn's main freight corridor. On-going plans for the 
Facility are to provide multi-user access and grant access to the 
terminal to other railroads.
    New York State, New York City, and the Port Authorities of New York 
and New Jersey are using an innovative water freight service across the 
Hudson River to relieve congestion on area bridges and roads, reduce 
air pollution, and provide a more economic mode of transportation. With 
the Red Hook Barge, officials in the New York area have turned a 
potential congestion problem into a sustainable way to move goods.
    EPA and DOT have made great strides in developing tools to aid 
local planners in integrating freight infrastructure and management 
practices with emissions control policy. Strategies for dealing with 
freight-related system enhancements and modal emissions rates include 
tradeoffs among such measures as changing terminal access or capacity, 
improved scheduling, and incentives for more rapid introduction of new 
technology or of alternative fueled vehicles, to name but a few. As 
these planning tools are disseminated through the funding of pilot 
projects and conducting of workshops in communities across the U.S., 
efficient and environmentally effective freight strategy options have 
been (and will be) implemented. The funding provided by CMAQ eases the 
transition to such implementation. Continued progress would be stymied 
without the CMAQ program.
ISTEA Flexibility Encourages Innovation for Addressing Border State 
        Freight Transportation Issue
    The issues that have arisen with freight border traffic between the 
United States and Mexico is of concern to EPA. NAFTA requires the 
harmonization of standards for truck, bus, and rail operations, and for 
the transportation of hazardous materials among Canada, the United 
States, and Mexico. Progress has been made, but EPA wishes to emphasize 
the environmental stake the United States has in resolving issues to 
ensure that there is no degradation of air or water quality and that 
land use, waste disposal, and other considerations are carefully taken 
into account.
    Coordination of cargo transfers between Mexico and the United 
States to minimize cases where freight carriers making return trips 
empty of cargo, encouraging use of those border crossing points that 
are currently underutilized, and increasing hours of operation at 
border bridges are examples of measures that reduce congestion and 
lower peak emissions levels. Other measures that reduce congestion 
through construction of new infrastructure, such as expansion of 
facilities adjacent to border stations, connecting the Rio Grande 
Valley to the Interstate Highway System, and construction of limited 
access roads from Mexican factories to intermodal facilities in the 
United States should be viewed as opportunities to take transportation, 
energy, and environmental concerns into account.
ISTEA Flexibility Encourages Innovation for Addressing Brownfields
    Brownfields are abandoned, idled, or under-used industrial and 
commercial properties where expansion or economic redevelopment is 
complicated by the threat of environmental contamination. While the 
full extent of the brownfields problem is unknown, the United States 
General Accounting Office estimates that approximately 450,000 
brownfields sites exist in this country, affecting virtually every 
community in the nation. The Administration's Brownfields Initiative is 
directed toward empowering states, local governments, communities, and 
others to work together to assess, clean up, and sustainable redevelop 
these sites.
    Transportation issues are critical to the sustainable redevelopment 
of brownfields. As DOT has testified in previous hearings before this 
committee, transportation empowers our neighborhoods by providing 
access to jobs, markets, education, and health care. Both highways and 
transit are vital to maintaining our metropolitan areas as viable 
commercial centers, especially for brownfields areas where we are 
trying to restore hope and vitality to blighted neighborhoods.
    Environmental cleanup linked to transportation projects allows the 
reuse of urban land with existing infrastructure and provides the 
access to transportation that is vital to successful community 
revitalization. EPA and the U.S. Department of Transportation are 
working together to coordinate brownfields projects with transportation 
policy. The importance of these efforts are reinforced by the 
recommendations of the President's Council on Sustainable Development 
that stress the links between transportation, the environment, and 
sustainable development.
    Brownfields redevelopment benefits the national transportation 
system. Brownfields projects take advantage of existing infrastructure 
and can reduce project costs. Further, redevelopment of brownfields may 
reduce pressure on suburban transportation infrastructure. Finally, 
locating development on brownfields may reduce the need for new 
transportation infrastructure needed to service greenfield 
developments.
    There are added environmental benefits from Brownfields 
redevelopment and infill, especially when they are located in central 
cities. These areas are generally more accessible via transit and non-
motorized modes of transportation. Those who choose to drive to work at 
these locations generally will have shorter trips than when the same 
jobs are located at the urban fringe. Infill development, as opposed to 
new development on greenfield sites, can reduce total growth in VMT, 
reduce congestion, improve air quality, and reduce carbon emissions.
    The benefits of linking brownfields redevelopment with 
transportation are demonstrated by transportation projects in cities 
such as Portland, Oregon, and Lawrence, Massachusetts. In Portland, 
Oregon, ISTEA funds were used to build a road through a brownfields 
area, connecting a port facility with an interstate highway. The 
transportation project was a primary factor in opening this blighted 
area to restoration and reuse. The Lawrence Gateway Project used ISTEA 
funds to revitalize the city by restoring its historic Canal Street 
bridge entrance and adding a new traffic interchange. Although the 
transportation costs were only $5 million, over $167 million has been 
leveraged in public and private funds to give the former mill capital 
of the United States a brighter future. Examples like these demonstrate 
the flexibility that would be continued under NEXTEA.
                            closing remarks
    The best way to sop pollution is to find alternatives to the 
activity creating it. In the case of mobile source air pollution, 
reducing fuel consumption and VMT is an important way to achieve 
results. EPA favors the continuation of the CMAQ and Enhancements 
programs, because they enable state and local governments to take 
diverse approaches to reducing air pollution, while also cleaning the 
water, preserving habitats, increasing system safety, improving the 
quality of life for their citizens, and encouraging local economic 
develop.
    If judged solely on its ability to clean the air and enhance 
mobility, ISTEA is a success. When factoring in everything that ISTEA 
does for the environment, it is one of the most innovative and 
effective funding bills that has ever been passed. The CMAQ and 
Enhancements Programs permit multiple responsibilities to be met with 
one law. That is good policy. That is why they should be maintained.
    ISTEA has planted the seeds of progress. NEXTEA has the potential 
to make those seeds bloom. EPA believes that the way to do this is to 
support programs that stress sustainability, environmental protection, 
economic development, and community involvement. The structure of ISTEA 
encourages planners and the ``person on the street'' to have vision, 
and provide them the tools to do something about it. The CMAQ and 
Enhancement programs are two of these tools.
    Mr. Chairman and other members of the committee, thank you for your 
time this morning.
                                 ______
                                 
      Responses of David M. Gardiner to Additional Questions from 
                             Senator Chafee
    Question 1. Your testimony\1\ cites two trends, the decrease in the 
fuel economy of the passenger cars on our Nation's roads and the 
continuing increase in vehicle miles traveled, as the primary culprits 
of an alarming increase in greenhouse gas emissions in the U.S. And the 
steady rise in vehicle miles traveled is likely to contribute 
significantly to additional air pollution in the future. Under a 
transportation funding formula driven by gas tax contributions as has 
been proposed in the Administration's bill, States are discouraged from 
trying lower VMT rates and to increase fuel economy.
---------------------------------------------------------------------------
    \1\ Testimony was presented to the Subcommittee on Transportation 
and Infrastructure on March 19, 1997.
---------------------------------------------------------------------------
    If the solution to improving air quality and reducing greenhouse 
gas emissions is encouraging better fuel economy and reducing vehicle 
miles traveled, doesn't the distribution formula proposed by the 
Administration that rewards gasoline use because it rewards 
contributions to the Highway Trust Fund, work against these goals? Was 
your agency consulted about the funding formula in the Administration's 
bill?
    Response. The Department of Transportation (DOT) included Highway 
Trust Fund (HTF) contributions in their formulas as a proxy for highway 
use and need. It is true that allocation formulas, based primarily on 
HTF contributions, could theoretically provide a disincentive to 
improve air quality and reduce greenhouse gas emissions.
    The DOT recognized this potential problem in developing its NEXTEA 
proposal, and EPA supported the inclusion of several provisions to 
mitigate against potential disincentives. Most importantly, the 
Administration's NEXTEA proposal increases the authorization for the 
Congestion Mitigation and Air Quality Improvement (CMAQ) and 
Transportation Enhancement programs, which are specifically designed to 
mitigate the transportation-related impacts on air quality and the 
environment. The DOT also continues an emphasis on ISTEA apportionments 
to States when determining current year NEXTEA apportionments. The 
DOT's approach may help reduce the effects of the new formulas by 
factoring into the equity adjustments the States' previous ISTEA 
apportionments, which weighed HTF contributions less heavily.
    The structure of the NEXTEA equity adjustments, we believe, 
provides better protection against disincentives than many of the 
proposals we have reviewed, especially those that would allocate HTF 
funds based entirely on State contributions or reduce CMAQ or 
Enhancements funding. Those bills may create a much stronger 
disincentive for States to improve air quality and reduce greenhouse 
gas emissions.
    Question 2. Some critics of the CMAQ program claim that the program 
has done little to improve the Nation's air quality. How do you respond 
to this criticism? What additional recommendations do you have for 
ensuring that CMAQ funds are spent on projects and programs that reduce 
air pollution for mobile sources?
    Response. In response to your question, and a similar question from 
Senator Baucus, asked during the March 19, 1997 ISTEA reauthorization 
hearing before the Transportation and Infrastructure Subcommittee, EPA 
initiated an assessment of the pollution emission reductions from the 
CMAQ program. EPA analyzed the impact of the CMAQ program in reducing 
air pollutant emissions of volatile organic compounds (VOC), carbon 
monoxide (CO), and oxides of nitrogen (NOX) under ISTEA and 
in the Administration's NEXTEA reauthorization proposal. Data used in 
this analysis came from estimates of emission benefits and funding 
obligations reported by the States to the Federal Highway 
Administration (FHWA) and published in FHWA's CMAQ Program Annual 
Report for fiscal year 1994. A complete copy of the assessment is 
enclosed. The key conclusions from the assessment are outlined below.

          The CMAQ program under ISTEA, is projected to reduce VOC 
        emissions by 52,135 tons per year, CO emissions by 336,349 tons 
        per year, and NOX by 62,406 tons per year. Under 
        NEXTEA, annual CMAQ emission reductions could grow 
        substantially to 165,151 tons per year of VOC, 856,166 tons of 
        CO, and 275,837 tons of NOX.
          Under NEXTEA, the projected emission reductions from CMAQ 
        could have a significant effect on improving urban air quality. 
        For example, by 2005, CAA requirements for on-road vehicles 
        will have reduced VOC emissions by approximately 888,000 tons 
        per year, while CMAQ is projected to reduce VOC emissions by 
        104,200 to 165,151 tons per year. While NEXTEA ends in 2003, 
        emission reductions are estimated to 2005 since this is when 
        projects funded in 2003 are expected to produce results.
          The CMAQ program may help keep emission trends moving 
        downward even though VMT increases are projected--around the 
        turn of the century--to reverse the downward emissions trends 
        realized through vehicle emission controls, cleaner fuels, and 
        existing ISTEA programs. Figure 2, in the enclosed report, 
        illustrates EPA's different estimates of emission trends from 
        on-road vehicles with and without CMAQ.
          By 2005, CMAQ VOC emission reductions could equal 10 to 16 
        percent of total on-road vehicle emission reductions for the 
        period 1995 to 2005 (Figure 3). For NOX and CO, CMAQ 
        would contribute 11 to 23 percent, and 8 to 10 percent, 
        respectively of total emission reductions.
                 metropolitan cmaq emission reductions
    EPA has also undertaken a study of the role CMAQ can play in 
helping individual metropolitan areas improve air quality and attain 
compliance with CAA requirements. The initial results from this study 
show the important contribution made by CMAQ funded traffic control 
measures: In the three serious ozone nonattainment areas in Texas 
(Houston-Galveston-Brazonia, Beaumont-Port Arthur, and El Paso), CMAQ 
VOC emission reductions from fiscal year 1995 projects equal 6 tons per 
day, or 15 percent of the 40 tons per day required by the State 
Implementation Plans (SIPs) for these areas. For California's six 
nonattainment areas, fiscal year 1995 CMAQ projects reduce VOC 
emissions by 13 tons per day, or 19 percent of the 69.5 tons per day 
required by the SIPs for these areas.
    EPA has undertaken an effort to incorporate the emission reductions 
achieved in voluntary emission reduction programs, such as CMAQ funded 
TCMs, into the State Implementation Plan (SIP) process. We are just now 
beginning to fully understand the potential benefits of CMAQ projects, 
and therefore our ability to accurately predict and give credit for the 
emission reductions is in very early stages. Some reports are already 
available so that local governments can begin acting now. We have given 
grants to the California Air Resources Board and to the Washington-
Baltimore Council of Governments in order to apply scientific methods 
to the quantification of emission reductions. These more rigorous 
studies will take place over the next year and will help us develop our 
policy principles and methodologies for estimating emission reductions 
so that States can apply them to their programs and claim credit in 
their SIPs.
    EPA is also working with States Ad MPOs in an effort to streamline 
the process for incorporating traffic control measures, like those 
funded by CMAQ, into their SIPS. For example, Portland, Oregon and 
Boston, Massachusetts have included TCM substitution mechanisms in 
their SIPs, with the assistance of EPA Regional Offices. EPA will be 
releasing guidance by the end of 1997 that will assist States and 
cities in developing mechanisms to substitute TCMs in approved SIPs.
                 emission reductions from cmaq projects
    Individual CMAQ-funded programs also are estimated to have air 
quality benefits including reductions in volatile organic compounds 
(VOCs), oxides of nitrogen (NOX), carbon monoxide (CO), and 
particulate matter PM10). The following table summarzies 
CMAQ's air quality benefits for fiscal year 1994.

         Estimated Air Quality Benefits of CMAQ-funded Projects
------------------------------------------------------------------------
                                  Number of projects   Maximum impact of
            Pollutant               affecting given     any one project
                                       pollutant           (kg/day)
------------------------------------------------------------------------
VOC.............................  659...............  86,182
CO..............................  374...............  36,986
NOX.............................  453...............  6,132
PM10............................  64................  1,059
------------------------------------------------------------------------

    It is important to note that CMAQ project expenditures range from a 
few thousand dollars (for programs like installation of bicycle 
lockers) to millions of dollars (e.g., for rail transit improvements). 
Modest impacts per project do not represent low effectiveness. Instead, 
they represent allocation of funds to many small projects rather than a 
few expensive projects. Such allocations may be an efficient use of 
resources, especially if CMAQ funding is used to leverage funding from 
other sources. The high estimates of some projects suggest that there 
is potential for CMAQ funding to have significant impacts on a per-
project basis.
    A recent analysis of air quality benefits by the Federal Highway 
Administration (FHWA) showed that estimated emissions benefits of CMAQ 
projects vary little by project type.\2\ This finding suggests that no 
single type of project is most effective in all cases. Enhanced 
inspection and maintenance programs, however, did show the greatest 
emissions benefits of all projects in recent years. Air quality 
benefits attributed to specific CMAQ projects are discussed below. The 
CMAQ project categories shown here are those used by FHWA in their 
analysis, and at least one example per category is provided below:
---------------------------------------------------------------------------
    \2\ Federal Highway Administration, CMAQ Program Report for fiscal 
year 1994. December 17, 1995. P. 10.
---------------------------------------------------------------------------
               enhanced inspection and maintenance (i&m)
    I&M programs reduce emissions by detecting and repairing vehicles 
that are serious emissions violators. It is estimated that of the cars 
on the road today, a disproportionately low percentage are responsible 
for 50-60 percent of the fleet's emissions. CMAQ funds have been used 
to update quality assurance software, construct diagnostic facilities 
that utilize a treadmill test rather than stationary test, purchase 
equipment, and develop mechanic training curricula. I&M programs have 
reported some of the largest air quality benefits of all CMAQ projects, 
including the following:

          Enhanced implementation of an inspection and maintenance 
        (I&M) program, including development of an upgraded computer 
        system, by the New Jersey Division of Motor Vehicles was 
        estimated to reduce VOC emissions by 86,182 kg/day. This was 
        the highest estimated emissions reduction of any CMAQ program 
        in fiscal year 1993 and 1994.
          The Indiana Department of Environmental Management used CMAQ 
        funds to aid implementation of enhanced I&M in four counties 
        classified as ozone non-attainment areas. They estimated that 
        enhanced I&M would reduce VOC emissions by 7,518 kg/day, CO 
        emissions by 8,890 kg/day, and NOX emissions by 
        4,800 kg/day.
          In Delaware, enhanced I&M facilities in Wilmington and New 
        Castle County were estimated to reduce VOC emissions by 1,978 
        kg/day, and an enhanced facility in Dover, Delaware was 
        estimated to reduce VOC emissions by 1,288 kg/day.
                          transit improvements
    Transit improvements can enhance air quality by encouraging people 
to reduce vehicle travel. In addition to service expansion, another 
effective type of program has been the replacement of old transit buses 
with more modern, less polluting vehicles. In a number of cases, 
alternative fuels, such as methanol, compressed natural gas, liquefied 
natural gas, or electric vehicles have been used. For example:

          Boise, ID used $3.8 million in CMAQ funds to replace 28 of 
        its outdated diesel buses with a fleet of small- and medium-
        sized buses powered by compressed natural gas (CNG). The new 
        buses produce 9 percent less CO, resulting in a reduction of 84 
        kg/day, and reduce PM10 by 10 kg/day.

                       traffic flow improvements
    Traffic flow improvements, such as signal coordination and retiming 
and incident management, can reduce congestion. These projects can be 
particularly effective at ameliorating CO ``hot spots,'' locations with 
high levels of CO, which are often caused by vehicles idlings at 
congested bottlenecks. For example:

          Major traffic signal system improvements and retiming in the 
        Denver, CO region were estimated to reduce emissions of VOCs by 
        500 kg/day and CO by 5,500 kg/day.

                          shared ride services
    Shared ride services include vanpool or carpool programs, parking 
areas for people using these services, and programs to match drivers 
and riders. An example of a successful program is:

          In Nashville, TN, the ``Ride Instead of Drive, It's Easy'' 
        (RIDE) program, makes it easy for solo drivers to join a 
        carpool or vanpool. CMAQ funds were used for RIDE's outreach 
        activities as well as to supplement the van fleet for the HOV 
        corridor. The program was estimated to eliminate 102 kg/day of 
        VOC emissions in 1994.

                    pedestrian and bicycle programs
    Pedestrian and bicycle programs include the creation of trails and 
bicycle storage facilities, improved pedestrian walkways, and 
promotional activities designed to encourage these forms of 
transportation:

          In Cleveland, OH, the Greater Cleveland Regional Transit 
        Authority (RTA) built an elevated, climate-controlled walkway 
        connecting Tower City Center, Cleveland's main transit station, 
        to the new Gateway Sports and Entertainment Complex. By 
        shielding fans from inclement weather and street traffic, the 
        walkway encourages use of public transportation, while 
        decreasing roadway congestion. The project was estimated to 
        reduce emissions of VOCs by 12 kg/day, CO by 74 kg/day, and 
        NOX by 18 kg/day.

                           project selection
    Your question also asks for our recommendations on how to help 
ensure that CMAQ funds are spent on projects and programs that reduce 
air pollution from mobile sources. There are three important changes 
proposed under NEXTEA that will help with this goal: First, NEXTEA 
would allow nonattainment areas under the newly proposed NAAQS to be 
eligible for CMAQ funds. Second, NEXTEA would amend the CMAQ provisions 
to encourage the selection of projects that produce long-term 
sustainable air quality benefits, as well as short-term air quality 
benefits. The proposed language is:

          SEC. 1020 (b)(4) In selecting eligible projects for 
        advancement, both the short-term effectiveness and the long 
        term sustainability of air quality benefits should be 
        considered, and priority must be given to implementing those 
        projects and programs that are included in an approved State 
        implementation or maintenance plan as a transportation control 
        measure that will have air quality benefits.

    Finally, NEXTEA would reduce the Federal cost-share for 
signalization and carpooling projects from 100 percent to 80 percent, 
making them compete on an equal basis with other CMAQ projects.
                                 ______
                                 
 The Emission Reduction Potential of the Congestion Mitigation and Air 
                           Quality Program\1\
---------------------------------------------------------------------------
    \1\ For additional information concerning this report, please 
contact Ken Adler, U.S. EPA, 260-6925, or Camille Mittelholtz, U.S. 
DOT, 366-4861.
---------------------------------------------------------------------------
                                overview
    The Congestion Mitigation and Air Quality Improvement Program 
(CMAQ) provides funds to states for projects designed to help attain 
and maintain the national ambient air quality standards (NAAQS) set 
under the Clean Air Act (CAA). CMAQ was created in 1991 by the 
Intermodal Surface Transportation Efficiency Act (ISTEA), and Congress 
is now considering reauthorization of ISTEA. This report analyzes the 
impact of the CMAQ program in reducing air pollutant emissions of 
volatile organic compounds (VOC), carbon monoxide (CO), and oxides of 
nitrogen (NOX) under ISTEA and in the Administration's 
NEXTEA reauthorization proposal. Data used in this analysis came from 
estimates of emission benefits and funding obligations reported by the 
states to the Federal Highway Administration (FHWA) and published in 
FHWA's CMAQ Program Annual Report for fiscal year 1994.\2\
---------------------------------------------------------------------------
    \2\ Federal Highway Administration. ``The Congestion Mitigation and 
Air Quality Improvement Program: A Summary of Third Year Activities (FY 
1994).'' December 1995. (As of the date of this analysis, the fiscal 
year 1995 report had not been released.)
---------------------------------------------------------------------------
                            key conclusions
     The CMAQ program, under ISTEA, is projected to reduce VOC 
emissions by 52,135 tons per year, CO emissions by 336,349 tons per 
year, and NOX by 62,406 tons per year (Table 1 and Figures 
la-c)\3\ Under NEXTEA, annual CMAQ emission reductions could grow 
substantially to 165,151 tons per year of VOC, 856,166 tons of CO, and 
275,837 tons of NOX. These estimates represent the 
cumulative reductions from CMAQ projects funded through 1997 and 2003. 
Projects funded after 1997 are assumed to achieve improved 
effectiveness compared to projects funded prior to 1997.
---------------------------------------------------------------------------
    \3\ These estimates are slightly higher than the estimates released 
by EPA and DOT on May 7, 1997 because of a correction in the amount of 
funds available for CMAQ.
---------------------------------------------------------------------------
     Under NEXTEA, the projected emission reductions from CMAQ 
could have a significant affect on improving urban air quality. For 
example, by 2005, CAA requirements for on-road vehicles will have 
reduced VOC emissions by approximately 888,000\4\ tons per year, while 
CMAQ is projected to reduce VOC emissions by 104,200 to 165,151 tons 
per year, While NEXTEA ends in 2003, emission reductions are estimated 
to 2005 since this is when projects funded in 2003 are expected to 
produce results.
---------------------------------------------------------------------------
    \4\ U.S. EPA, National Air Pollution Emission Trends. EPA-454/R-95-
0111. October 1995. These emission estimates reflect existing and 
projected regulatory requirements as of 1994.
---------------------------------------------------------------------------
     While increasing VMT threatens to reverse air quality 
gains made through ISTEA programs and through cleaner cars and cleaner 
fuels, Figure 2 suggests that CMAQ may help keep emission trends moving 
downward. Figure 2 illustrates EPA's different estimates of emission 
trends from on-road vehicles with and without CMAQ.
     By 2005, CMAQ VOC emission reductions could equal 10 to 16 
percent of total on-road vehicle emission reductions for the period 
1995 to 2005 (Figure 3). For NOX and CO, CMAQ would 
contribute 11 to 23 percent, and 8 to 10 percent, respectively of total 
emission reductions.
     Estimates of emission benefits CMAQ program are sensitive 
to assumptions about the effectiveness of individual projects. There is 
a large range in the estimated effectiveness of CMAQ projects funded in 
fiscal year 1994. The balance of this report address these issues, and 
provide information to place the data in the proper context.
              estimated potential emissions effect of cmaq
    The report presents potential tons of pollutants reduced through 
the CMAQ program when it reaches its potential effectiveness. FHWA 
analysis shows that obligation rates have risen rapidly since the 
inception of the program. As states become more familiar with the CMAQ 
program and institutionalize procedures to select projects, the 
effectiveness of projects is expected to increase. This analysis 
assumes steady State conditions under which the program has ramped-up 
to potential effectiveness. To coincide with the ISTEA legislative 
cycle, the years 1997 and 2003 was selected for analysis, and CMAQ 
spending was assumed to be equal to the annual obligation levels for 
CMAQ. Emission estimates for ISTEA and NEXTEA, however, are reported 
for 1999 and 2005, respectively, because projects are assumed to take 2 
years to reach their full effect. Emission estimates were derived by 
dividing deflated CMAQ expenditures by a range of effectiveness 
estimates for each project type. A more detailed description of our 
approach is provided in the Methodology section.
    Lower and upper bound estimates are presented in the analysis for 
the 2000 to 2005 year estimates. The lower bound estimate assumes that 
the typical project funded will be as effective as the median or 50th 
percentile project in 1994. For the upper bound estimate we assume that 
project effectiveness increases moderately, beginning in 1998, as 
states and metropolitan areas learn more about the administration and 
impact of CMAQ projects. For the upper bound we assume that the typical 
project will be as effective as the 60th percentile project in 1994. 
(The 60-percentile project is more effective than 60 percent of 
projects, on a dollar per ton basis, and less effective than 40 
percent.) Corresponding to the large range in effectiveness estimates, 
there is a large range in the estimated national emissions effect.
                              methodology
    This analysis involved estimating the potential effectiveness, by 
project type, of all CMAQ projects in fiscal year 1994 where CMAQ 
emission reductions and expenditures were reported by states. These 
effectiveness estimates were then used to develop a range of estimates 
for potential national emissions reductions associated with the CMAQ 
program to be expected in 1999 (ISTEA), and 2005 (NEXTEA).
    The methodology for this analysis is detailed below:
    1. Project effectiveness was calculated for each project and 
pollutant by dividing fiscal year 1994 CMAQ project expenditures by 
estimated tons of each pollutant reduced per year. Since The CMAQ data 
base presented emissions reductions in kilograms per day, daily 
reductions were multiplied by 240 days per year to calculate annual 
reductions, assuming most projects affect workweek travel. This 
assumption is conservative, i.e., tends to underestimate emissions 
reductions since many projects--such as enhanced inspection and 
maintenance (I&M) programs and traffic flow improvements--affect travel 
every day of the year.
    2. The projects were then grouped into the six project categories 
according to classifications under the CMAQ Program guidance: traffic 
flow improvements, transit, shared ride, demand management, bicycle and 
pedestrian, and I&M and other.
    3. For each project category, projects were then ranked by 
effectiveness in order from highest to lowest for each pollutant. 
Projects were ranked in separate analyses for each pollutant. Projects 
with no reported emissions reductions (including those with emissions 
increases) were excluded from these rankings.\5\ The projects at the 
50th and 60th-percentile were selected. The project at the 50-
percentile is the median project--half of all projects were less cost-
effective and half were more cost-effective. The 60-percentile project 
is more cost effective than 60 percent of projects, and less cost-
effective than 40 percent.
---------------------------------------------------------------------------
    \5\ It would be incorrect to assume no emissions reductions occur 
for projects that report no omissions benefits. For example, these 
projects may have been located in areas that were in attainment for the 
non-reported pollutant. Projects that resulted in increased emissions 
were dropped from the analysis since negative cost-effectiveness values 
are not meaningful in this context.
---------------------------------------------------------------------------
    4. The average life of the projects was based on a methodology 
developed by California's Department of Transportation and the 
California Air Resources Board for estimating emissions effects of CMAQ 
projects. The average for the range was used in this analysis:
     Traffic flow improvements--12.5 years (average of 5-20 
years)
     Transit--12 years (average of 5-12 years)\6\
---------------------------------------------------------------------------
    \6\ The mid-range estimate for transit projects appears low, given 
that many rail projects can last 25 to 35 years, so the upper bound 
estimate was chosen for transit.
---------------------------------------------------------------------------
     Shared ride--14 years (average of 8-20 years)
     Demand management--12.5 years (average of 5-20 years)
     Bicycle and Pedestrian--20 years
     I/M and Other--5 years (not estimated in the California 
methodology)
    5. Total year 1997 and 2003 Federal CMAQ expenditures were 
calculated for each category of spending. According to the President's 
reauthorization proposal for ISTEA, $1.3 billion would be authorized 
and $1.047 billion would be obligated annually for CMAQ for fiscal year 
1998-2003. The table below provides annual obligation rates. For the 
analysis, those dollar values were converted into 1994 dollars\7\ since 
the cost effectiveness estimates represent omissions reductions per 
1994 dollar spent:
---------------------------------------------------------------------------
    \7\ A GDP price deflator was used to convert the current-dollar 
CMAQ obligations for each year into constant 1994 dollars. The 1992-
1995 GDP deflators were calculated from Economic Report to the 
President, 1996. The 1996-2003 GDP deflators were calculated from GDP 
price index growth rate projections reported in CBO's The Economic and 
Budget Outlook: Fiscal Years 1998-2007 (January 1997, Table 1-1).

                                     CMAQ Obligations (millions of dollars)
----------------------------------------------------------------------------------------------------------------
                                      FY
FY 1992- FY 1993- FY 1994- FY 1995-  1996-  FY 1997-  FY 1998-  FY 1999-  FY 2000-  FY 2001-  FY 1002-  FY 2003-
 Actual   Actual   Actual   Actual  Actual  Estimate  Estimate  Estimate  Estimate  Estimate  Estimate  Estimate
----------------------------------------------------------------------------------------------------------------
    340      601      815      950     939      878      1047      1047      1047      1047      1047      1047
----------------------------------------------------------------------------------------------------------------

    6. The proportion of spending for each project type was assumed to 
be the same as in 1994:
      Traffic flow improvements--34.1 percent
      Transit--40.4 percent
      Shared ride--4.3 percent
      Demand management--4.6 percent
      Bicycle and Pedestrian--2.1 percent
      I&M and Other--5.5 percent
    7. Annual CMAQ expenditures for each category of projects were 
divided by various effectiveness estimates (computed in steps 3 and 4), 
in dollars per ton, to estimate a range for the tons of pollutants 
reduced nationally.
                                caveats
    While this analysis provides an order-of-magnitude approximation of 
potential emissions benefits from CMAQ funding, it is important to note 
a few significant caveats for this analysis:
Accuracy of reported emissions estimates is uncertain.
    Emissions estimates associated with CMAQ-spending are reported by 
individual states. Since Federal guidance imposes no uniform approach, 
each State performs air quality analyses using its own methods, and 
quality control and quality assurance mechanisms. Analyses may use 
different underlying assumptions, emissions estimation methodologies, 
and types of data. FHWA has noted that occasionally numbers were 
reported that appeared unreasonable and required extensive followup. In 
some cases, it was not possible to obtain better information, and these 
figures were deleted by FHWA from their data base. It is not clear to 
what extent, if at all, the states have taken into account the 
secondary effects of projects. For example, it is possible that traffic 
flow improvements that reduce travel times, and mass transit projects 
that reduce congestion levels could lead to induced travel that would 
reduce emissions effectiveness. It is also possible that an 
interconnected bicycle path system could be much more effective than 
the sum of the individual bicycle paths.
    This analysis deals with uncertainties in estimating CMAQ effects 
by performing statistical analysis using the entire data base of 
projects, rather than pre-selecting an individual project or case study 
for analysis, which may or may not be representative of most projects. 
This analysis also uses a range of estimates in order to deal with the 
uncertainty in individual estimates.
No emissions estimates are reported for a number of projects.
    About 77 percent of all CMAQ projects reported quantified emissions 
reductions. Many of these projects reported emissions reductions for 
fewer than all four pollutants (VOC was the pollutant reported most 
often). Projects with no reported data for individual pollutants were 
dropped from the ranking of projects when selecting the 50- and 60-
percentile projects within each category. Dropping these projects may 
have eliminated some projects with small impacts and lowered the 
effectiveness of the 50- and 60-percentile projects. However, it would 
not be appropriate to assume that no emissions reductions occur for 
projects that do not report emissions benefits. These projects may have 
been located in areas that were in attainment for the non-reported 
pollutant. Non-attainment areas would be expected to target funding to 
projects that help them reach attainment status.
    Nine (9) percent of CMAQ funds were spent by states that did not 
have any non-attainment areas. This analysis uses the conservative 
assumption that CMAQ spending in states without any non-attainment 
areas does not result in emissions reductions. This assumption tends to 
underestimate CMAQ's effectiveness. Since states are expected to target 
CMAQ funds toward projects that help them meet attainment, emissions 
reductions would be proportionally larger in non-attainnent and 
maintenance areas.
Timing of emission reductions
    There is significant variation in the nature of benefits of CMAQ-
projects. In particular, some projects may have multiple-year impacts, 
e.g., replacement of old transit buses with cleaner ones, development 
of bicycle facilities, and improvement of signalization, while others 
have one-time effects, e.g., operating costs for park-and-ride lots or 
vanpooling service. For some projects, it may take many years to reach 
full benefits while for others the effect may occur immediately. For 
analytic purposes we assumed that projects would need 2 years to reach 
effectiveness. The data base of CMAQ projects does not provide 
information on the duration of benefits or peak year for benefits. This 
analysis projects emissions estimates under steady-state conditions in 
which the CMAQ-program has 10 years to reach potential effectiveness.
    FHWA guidance suggests that emission reductions for each project be 
estimated for the year when the implemented project is expected to 
realize its maximum benefits. Some projects may require multiple years 
in order to reach full impact, in which case there will be some interim 
years in which the emissions impact of spending is less than in 
subsequent years. For example, CMAQ funding has been used to help 
establish Transportation Management Organizations, which may not yield 
reported impacts for a number of years. In addition, 1994 projects that 
continue to produce benefits in 2005 may be on-average less effective 
than the 50- or 60-percentile projects. As a result, the total 
emissions benefits estimated using the assumption of multiple year 
impacts may overstate the total benefits that would occur in 1 year.
    Assuming only 1-year effects for each project, rather than 
multiple-year effects, underestimates the total emissions reductions in 
2005 since many projects from prior years will continue to have an 
emissions effect in 2005 (for example a park and ride lot funded in 
1998 will produce benefits in 2005). To estimate cumulative/steady 
State emission reductions in 2005, this analysis sums emission 
reductions from all potential projects initiated between 1992 ant 2003.
    It is also important to note that some projects reported in the 
fiscal year 1994 DOT Annual CMAQ Report do not report the total CMAQ 
funds needed for the projects. This can occur when a project is funded 
over a 2- or 3-year period. If a large number of projects were funded 
over a multi-year period it would lead to an over-estimate of the 
emission reductions from CMAQ projects. To assess the magnitude of this 
problem we reviewed 3 years of CMAQ project data from Pennsylvania and 
California. While 9 percent of the Pennsylvania projects were multi-
year projects, they only accounted for 2.7 percent of the emission 
reductions. California's multi-year projects only accounted for 2.5 
percent of the state's emission reductions. To adjust for multi-year 
projects, we reduced total emission estimates by 2.5 percent.
                 effectiveness of cmaq projects in 2005
    Predicting future effectiveness associated with transportation 
control measures (TCMs) in general is not certain. On the one hand, the 
effectiveness of a particular type of project may decrease in the 
future since each vehicle mile of travel (VMT) reduced will result in 
fewer grams of pollution reduced (since the average vehicle on the road 
will be cleaner, due to stricter emission regulations, and emit less 
pollution per mile traveled). On the other hand, each dollar spent may 
affect more vehicle miles since projected increases in travel and 
congestion nationwide may mean that a particular project, such as 
rideshare services, reduces more VMT. This analysis estimated the 
potential of the CMAQ program in 2005 using the effectiveness of the 
50- and 60-percentile of projects in fiscal year 1994. Our upper bound 
assumption, supported by our analysis of the California and 
Pennsylvania data (see table below), is that as the program continues, 
States will become more effective at targeting CMAQ funding, and so 
projects are likely to have higher than the median 1994 cost 
effectiveness in future years.

                                          Change in Cost Effectiveness
----------------------------------------------------------------------------------------------------------------
                                            5-year signal+hwy project life      10-year signal+hwy project life
                                         -----------------------------------------------------------------------
                                                1993              1996              1993              1996
----------------------------------------------------------------------------------------------------------------
VOC:
  California............................          $15,630            $9,121           $11,301            $7,437
  Pennsylvania..........................           72,734            28,181            44,076            19,848
NOX:
  California............................           20,192            11,756            16,813            10,008
  Pennsylvania..........................           99,084            27,588            93,706            24,667
----------------------------------------------------------------------------------------------------------------

    This analysis is also conservative in that it assumes spending will 
continue to be apportioned among the six categories of CMAQ projects in 
the same manner as in 1994. That is, this analysis does not assume that 
funding shifts to the more effective categories of projects, only to 
more effective projects within each category. The assumptions used on 
this issue tend to underestimate potential effectiveness.
Costs measured in this analysis only account for Federal expenditures 
        on CMAQ.
    For most CMAQ-funded projects, Federal CMAQ-funds are only a 
portion of total project costs. For our analysis the CMAQ portion of 
the project costs was used as an intermediate step to analyzing the 
potential effectiveness of CMAQ funding in the future. We were not 
attempting to assess the relative cost-effectiveness of different types 
of project. As a result, the effectiveness estimates should not be 
confused with cost-effectiveness estimates that include total costs. 
The analysis presented here assumes that the CMAQ program leverages 
other funds that would not have otherwise been spent on these projects. 
That is, if CMAQ-spending were reduced, the states would not spend 
money on these projects. CMAQ projects often have substantial State and 
other funding sources. For example, $1.9 million in CMAQ funds 
contributed to total project costs of $6.4 million for a Freeway 
Service Patrol (to clear highway incidents) in San Francisco. CMAQ 
contributed $7.3 million out of $13.7 million in total project costs to 
build an elevated pedestrian walkway connecting Tower City Center 
transit station to the Gateway Sports and Entertainment Complex in 
Cleveland. In some cases, CMAQ funds have been used to pay for most or 
all of project costs. For example, CMAQ provided $1.7 million out of 
$2.2 million for a transit operating assistance project in Ventura 
County, CA.\8\ Some TCMs love financial costs for the private sector as 
well.
---------------------------------------------------------------------------
    \8\ U.S. Department of Transportation. CMAQ, Innovation in 
Transporation & Air Quality: Twelve Exemplary Projections (FHWA-PD-
016).
---------------------------------------------------------------------------
Projects have different levels of effectiveness at reducing various 
        pollutants.
    This analysis estimated potential effectiveness based on individual 
analyses of the 50- and 60-percentile projects for each pollutant. In 
reality, a project that is near the top in effectiveness for one 
pollutant may be average or near the bottom in effectiveness for 
another pollutant, measured in terms of CMAQ expenditures per ton of 
emission reduction. Metropolitan areas would be expected to target 
funding priority to projects that help them meet attainment status. As 
a result, regions may select projects that most effectively reduce 
pollutants of their concern. However, at the national level, it may not 
be possible to achieve the full potential of CMAQ reported for all 
pollutants. Targeting projects that are highly effective in reducing 
one pollutant often results in less effectiveness at targeting the 
others. For example, 33 CMAQ-funded projects that reduce VOC and CO 
were expected to result in increased emissions of NOX. This 
is true for a number of traffic flow improvement projects, since 
increasing travel speeds often reduces VOC and CO, but increases 
NOX emissions. These findings stress the importance of 
examining CMAQ from a regional perspective--since regions can target 
funding to help implement their transportation/air quality plans--
rather than solely from a national emissions inventory perspective.








Prepared Statement of Thomas Walker, Executive Director, Wisconsin Road 
  Builders Association, on behalf of American Road and Transportation 
                          Builders Association
                              introduction
    I am pleased to be here with you this morning. My name is Thomas 
Walker. I am Executive Director of the Wisconsin Road Builders 
Association, a state affiliated chapter of the American Road and 
Transportation Builders Association.
    The American Road and Transportation Builders Association (ARTBA) 
represents 4,000 member organizations in the nation's transportation 
construction industry, including construction contractors, professional 
engineering firms, heavy equipment manufacturers, and materials 
suppliers. Our member companies employ more than 500,000 people in the 
transportation construction industry in the United States.
    Prior to joining WRBA last May, I was employed for almost 10 years 
in the Wisconsin Department of Transportation. For much of that time, I 
served as Executive Assistant to the Secretary, with responsibility for 
Departmental policy development and planning. In that capacity, I 
played a major role in developing Wisconsin's Clean Air Act compliance 
strategy, and oversaw the development of Wisconsin's first multimodal 
transportation plan, in response to ISTEA. I also served as the 
Administrator of the Division of Planning. I am currently a member of 
the Wisconsin Department of Natural Resources' Clean Air Task Force and 
the TRB Committee on Statewide Multimodal Planning.
    Without question, the reauthorization of the Intermodal Surface 
Transportation Efficiency Act (ISTEA) is the single most important 
legislative issue this year for the transportation construction 
industry. The content of the new ISTEA will determine the future not 
only of our industry, but shape the nation's mobility and help 
determine the competitiveness and productivity of our national, state, 
and regional economies.
    Within ISTEA, planning and environmental issues will be a major 
determiner of investment policy. We applaud the committee's interest in 
taking a close look at both the policy and process issues involved.
                   value of state and local planning
    First, let me strongly endorse ISTEA's emphasis on state and 
metropolitan planning. By improving the planning process, we can find 
better solutions to the mobility challenges we as a nation face.
    I would like to share with the committee a few key conclusions I 
reached in my work at Wisconsin DOT and use them to help amplify key 
ARTBA recommendations.
                    limits to modal shift documented
    The first point I would like to emphasize is how limited is the 
potential for modal shift from highways to passenger rail, urban 
transit, and other alternatives to driving.
    Wisconsin's statewide multimodal passenger plan includes ambitious 
new intercity bus service as well as both conventional and high-speed 
rail passenger service. If implemented, these would clearly improve 
mobility and travel choice. But they will barely impact forecasted auto 
travel. Without these rail and transit improvements, intercity auto 
trips are forecasted to grow 22 percent. With them, auto trips will 
still grow 21.2 percent.
    The corridor with the highest potential for high speed rail, 
between Milwaukee and Chicago, has been recently studied in depth. 
Currently, it is served by 6 daily round trip Amtrak trains, traveling 
at conventional speeds. One alternative studied included 14 round trips 
daily, offering virtual hourly service at high speed, cutting travel 
time by 50 percent. As a result, rail passenger ridership in the 
corridor would grow by 400 percent. However, that is still a very small 
percent of corridor travel. Motor vehicle travel on the adjacent 1-94 
corridor would still grow by 56 percent, just slightly less than the 59 
percent growth forecasted if there were no improvement at all in rail 
passenger service. And additional highway capacity in this critical 
corridor would still be required.
    The conclusion we reached is that improvements in rail and transit 
service are important. They improve access, and add choice. But they 
cannot substitute for feasible highway improvements, because they 
produce remarkably small modal shifts. Highway travel growth in a 
single year will usually more than outpace the modal shift forecasted 
for the entire 20-year planning period.
    The Southeastern Wisconsin Regional Planning Commission is the MPO 
for 7 southeastern Wisconsin counties, six of which comprise a severe 
ozone non-attainment area. Its updated 2010 plan, completed in 1994, 
called for a 70 percent increase in transit miles of service, 
comprising a 40 percent increase in transit service hours. This major 
investment will primarily improve job access, but is nevertheless 
forecasted to generate only 14 percent more transit trips and have 
virtually no impact on regional modal split. Consequently, the MPO plan 
also includes significant new investments in highway capacity, needed 
to avoid gridlock and keep the region economically competitive.
    Is Wisconsin unique? Hardly! At the Department, we looked at MPO 
plans around the country, especially those containing major commitments 
to transit system development. Even in metro areas like Portland and 
San Diego, whose plans call for a very ambitious doubling of transit 
trips, modal shifts will be minimal. For each new transit trip, there 
will still be more than 10 new auto trips.
    In short, the highway-transit tradeoff assumed in much of ISTEA is 
simply not there in most cases. Investments in alternatives to highways 
are important, but cannot substitute for or come at the expense of 
continued highway investment.
    For these reasons, ARTBA strongly encourages the removal from 
Federal planning requirements any bias against highway capacity 
projects. States and MPO's should have the full flexibility to plan for 
mobility solutions that work regardless of mode.
    We also encourage the repeal of the MPO financial feasibility 
requirement. Limiting plans to current revenues precludes good 
planning. MPO's should be free to develop multimodal plans that require 
expanded investment levels, and then use those plans to persuade all 
levels of government to respond with appropriate resources. If the 
committee believes some limit is appropriate, then we suggest that a 
requirement for state and MPO endorsement of the plan's financial 
element should suffice. If these public agencies are willing to endorse 
new revenues, should Federal rules prevent them from taking that 
leadership role?
    We also encourage the elimination of the Major Investment Study 
requirement in most cases. If an MPO determines through its 
comprehensive planning process that a highway or transit capacity 
solution is needed, and that selection is endorsed by both the state 
and transit operator, that should suffice. ISTEA planning rules place 
far too many hurdles in the way of highway capacity projects, through 
seemingly endless alternative analysis, wasting both time and financial 
resources.
                     transportation and air quality
    Let me now turn to air quality issues.
    When Congress passed the Clean Air Act Amendments of 1990, it 
included the requirement to evaluate and include Transportation Control 
Measures, or TCM's, in State Implementation Plans. ISTEA funded TCM's 
by creating the CMAQ program.
    The basic assumption was that reduction in auto usage would be a 
critical element in air quality attainment and maintenance.
    Since 1991, we have learned a great deal more about ozone 
formation, the effectiveness of various ways to reduce ozone precursors 
from the mobile sector, and the real potential to reduce vehicle travel 
growth.
    I would like to recount our experience in Wisconsin. Our base 1990 
VOC inventory included 160 tons of VOC's on hot summer days. Due to the 
combination of new tailpipe standards, Stage II vapor controls, 
enhanced inspection and maintenance and reformulated fuel, we have 
reduced mobile sector VOC's from 160 tons daily to about 66 tons today, 
with projections of a continuing decline to about 30 tons in 2007, 
despite VMT growth. That 81 percent reduction is due almost 100 percent 
to technology, not a modal shift.
    Last year, the MPO and state Departments of Transportation and 
Natural Resources evaluated the full range of Transportation Demand 
Management strategies and concluded that full implementation of the 
regional transit plan and other strategies, would produce a year 2007 
benefit of only 0.3 additional tons, beyond that which technology would 
otherwise produce.
    By comparison, the year 2007 benefit of the 49-state car proposed 
by U.S. auto manufacturers would reduce mobile sector VOC's by another 
10 tons daily, and VOC's would continue to decline through at least 
2020.
    What then, should we conclude?
    First, how significant is the transportation conformity requirement 
to achieving ambient air quality standards attainment? If the potential 
for significant modal shift through transportation program choices is 
minimal and if the relative air quality benefits of behavior change 
strategies is minimal, should the requirement be continued at all? 
Should it be narrowed to apply only to very large urban areas, where 
there is some modal shift potential? Does rural conformity make any 
sense? How about in small metro areas?
                         should cmaq continue?
    Is the underlying premise for a CMAQ set-aside still valid? Will 
CMAQ investments contribute significantly to air quality attainment? In 
southeastern Wisconsin, our MPO has calculated that, of the 94 tons 
reduction in mobile sector VOC's, CMAQ funded projects contributed 
about 100-200 pounds (not tons!), or about one one-hundredth of 1 
percent, per year, and at a very high cost per ton of VOC reduction. 
Might not the public be better served by redirecting CMAQ funding into 
highway and transit projects in all states, not just those with non-
attainment areas? Should CMAQ be funded from the Highway Account at 
all?
    If Congress believes that additional mobile sector emissions 
reductions are appropriate, then ARTBA is recommending that Congress 
mandate the production of the 49-state car, precisely because it would 
be extremely effective in reducing emissions that dwarf the air quality 
benefits of CMAQ.
                    repeal highway funding sanctions
    When the Clean Air Act Amendments of 1990 were passed, Congress 
included two types sanctions, stationary source offset requirements and 
withholding of highway funds, to compel states to comply with the Act's 
requirements. Highway funding sanctions are not only needed to reduce 
atmospheric pollutants from mobile sources, they are counter 
productive.
    Loss of highway funding, ironically, can delay highway projects 
that improve traffic flow and reduce emissions. Thus, application of 
highway funding sanctions can exacerbate air pollution problems that 
the sanctions are intended to help solve.
    Highway funding sanctions can be imposed for conditions over which 
non-Federal authorities have no control, such as ozone transport from 
other jurisdictions. And they can be imposed for Title V violations 
that have nothing to do with transportation.
    We hope that Congress will reconsider this onerous provision, 
especially in light of the Environmental Protection Agency's recent 
proposals to tighten the nation's air quality standards for ozone and 
particulate matter. Depending on the standard ultimately chosen by EPA 
in its final rule, the number of new nonattainment areas could double 
or triple. In fact, we believe that at least 800 counties across the 
Nation will be placed in nonattainment status for at least one of 
requirements proposed. And this estimate probably is low since many 
rural and smaller urban areas currently do not have ozone or PM 
monitors. Many of these presently unmonitored areas are likely to show 
violations of the new standards once monitoring begins. In addition to 
these new areas, existing nonattainment areas would find themselves 
facing even more difficult goals.
    The fact of the matter is that the mobile sector has contributed 
most of the reductions in ozone precursor over the last decade. On a 
national scale, emissions from highway vehicles of carbon monoxide, 
VOCs and nitrogen oxides during the period 1986-1995 decreased 20 
percent, 31.2 percent and 2.2 percent, respectively, despite a 32 
percent increase in highway vehicle miles traveled during that period. 
Adoption of the 49-state car and its tightened tailpipe standards will 
assure that these trends continue, and at a cost far lower than any 
combination of TCM's.
    Air pollutant reductions such as these have resulted in a 
concomitant increase in the quality of our air across the nation. The 
number of poor air quality days in the nation's 20 largest urban areas, 
for example, decreased by 60.7 percent from 1986 to 1995. Reductions in 
highway vehicle emissions during that timeframe accounted for 86 
percent of the overall reduction in carbon monoxide and for all of the 
reduction in VOC concentrations.
    Thus, empirical evidence indicates that mobile sources have made 
and continue to make remarkable progress. Our nation does not need the 
disruptions of highway funding sanctions and the obstacles of 
transportation conformity to make progress on clean air.
                  single occupancy vehicle limitations
    We recommend that Congress remove the requirement that projects 
which increase capacity for single-occupant vehicles in ozone and CO 
nonattainment areas be part of an approved congestion management plan. 
This requirement creates administrative burdens, increases cost and 
wastes time for no benefit. An MPO should have the flexibility to 
decide if and where highway capacity is needed, on its own authority, 
and include those improvements in its adopted plan.
                      revised mpo planning process
    Traditionally, and very appropriately, the MPO's primary focus has 
been on comprehensive urban mobility within the metro region. The state 
DOT's primary focus has been on intercity and inter-regional 
transportation through and between metro areas, including a major focus 
on commercial freight movement.
    In each metro area, it is clearly in the national interest to 
encourage the close coordination of both objectives.
    The metropolitan transportation plan must coordinate both 
objectives.
    To assure this, I am suggesting that the committee consider re-
defining the metropolitan planning process as a joint state-MPO 
process. The final adopted plan should require the endorsement of both 
entities.
    In ISTEA, Congress appropriately required the approval of the 
Governor for MPO TIP's, to assure that both objectives are balanced in 
the project programming process. Since programs must derive from plans, 
ARTBA urges that the Governor's approval also be required for MPO plans 
as well, since these will shape the long-term program in each metro 
area.
                   intelligent transportation systems
    To help curb air pollution resulting from traffic congestion, ARTBA 
favors highway-related solutions like construction of additional 
capacity to the highway system where appropriate, development of 
Intelligent Transportation Systems (ITS), and implementation of traffic 
management solutions like ramp metering, increased real time signage, 
improved emergency road service, and better coordination of traffic 
signals.
            obstacles to timely project completion concerns
    There also are several other environmental and planning issues 
about which we have concerns. While they presently are not issues 
directly on point for ISTEA reauthorization, let me just mention a 
couple of them, because the ISTEA reauthorization process may provide 
us with opportunities to address them.
    We find it unacceptable that it frequently takes 7 years or, in may 
cases much longer, to bring badly needed transportation projects on 
line. The environmental assessment process embodied in the National 
Environmental Policy Act needs to be improved. Federal agencies with 
standing need to be required to participate in the NEPA process within 
reasonable timeframes and there needs to be a point for final 
resolution authority among competing public interests. The process also 
needs to be made more definitive, so that only legitimate issues are 
considered, rather than allowing the process to be used as a tool for 
stopping needed public projects by endless investigation and process-
oriented litigation.
    Let me relate a situation that occurred recently in Wisconsin that 
dramatically illustrates these points. In June 1995, the Federal 
Highway Administration issued a Record of Decision on a major new 
interstate bridge over the St. Croix River, which links Wisconsin and 
Minnesota. That ROD was based on more than 10 years of formal EIS 
investigation. Overall, the project was studied for 30 years.
    Without warning, just several weeks before bids were to be 
advertised, the National Park Service decided that necessary permits 
should be denied because the new bridge would have unacceptable scenic 
impacts on the value of the river. Until then, the NPS had numerous 
opportunities to raise objections within the EIS process and to be a 
part of evaluating solutions, but instead chose to remain silent until 
the eleventh hour.
    At this point, the project cannot proceed, despite the fact that 
the existing bridge is an aging two-lane drawbridge that carries 17,000 
vehicles daily. With forecast demand rising to 40,000 vehicles daily by 
the year 2017, the failure of the NPS to participate constructively in 
the environmental assessment process is unconscionable. Yet the current 
provisions of NEPA allow such situations to occur.
    Other Environmental Planning Statutes. Similar problems exist with 
the Endangered Species Act, the Clean Water Act, Section 7 of the Wild 
and Scenic Rivers Act, and several other environmental planning 
statutes. There are many reasonable modifications to these statutes 
that could be suggested to improve environmental planning processes. 
For example, the Endangered Species Act should require consideration of 
economic values in listing decisions, critical habitat designations and 
development of recovery plans, and it should require landowner 
compensation for diminished land values due to listing decisions. The 
Clean Water Act should clarify in law the definition of wetlands and 
require recognition of wetland functional values in delineation 
determinations and calculations of mitigation requirements. It should 
limit the timeframes available to the Corps of Engineers to process 404 
permit applications and eliminate EPA's 404(c) veto authority over the 
Corps. And it should require landowner compensation for diminished land 
values due to Section 404.
    Because this hearing is focused on the environmental aspects of 
ISTEA, I will not go into further depth regarding these matters. 
However, in light of the inability of Congress to address such issues 
in reauthorization of these other major environmental statutes, I 
believe the committee should consider addressing such issues during the 
ISTEA reauthorization process.
                               conclusion
    While I only have time to cover some of the changes we think need 
to be made in the ISTEA reauthorization process, I think you can see 
that this is a vitally important and very active area for us. Thank you 
for inviting me here today. I will be happy to respond to any questions 
you might have.
                                 ______
                                 
 Response of Thomas Walker to Additional Questions from Senator Chafee
    Question 1. NEXTEA continues the requirement that transportation 
plans be financially constrained. You testified that this requirement 
precludes good planning. How does the financial constraint requirement 
adversely affect good planning?
    Response. By virtually all accounts, the United States is severely 
underfunding its highway and transit systems. Continuing the current 
level of investment will predictably result in continued system 
deterioration and continued negative impacts on mobility and choice.
    Therefore, any plan constrained to current funding will inevitably 
fail to meet current and emerging needs.
    It may be quite useful and revealing for MPO's to document the 
damaging consequences of inadequate investment in highways and transit, 
to show the necessity of increased resources.
    Good planning, however, should document a coordinated highway/
transit strategy that adequately serves forecasted travel. This will 
require increased funding. If Federal law continues to constrain plans 
to available funding, then Federal law is virtually dictating that the 
nation's metropolitan transportation systems should continue to 
deteriorate.
    Good professional planning should inform Federal, state, and local 
political decisionmakers on the best mix of investments to handle 
emerging travel trends, based on land use and development plans. That 
information is critical to responsible decisionmaking at all levels of 
government.
    Good planning can and will then reveal the financial investment 
level required to meet those emerging needs. By comparing that to 
current funding levels, then decisionmakers can readily decide whether 
to provide the necessary additional funds, or accept the negative 
consequences to mobility and choice.
    Without a change in Federal law, it will be virtually impossible 
for MPO planners to include major investments in their plans, that 
require new funding. This restriction will be particularly onerous for 
transit, since many metro areas are dependent on unpredictable 
discretionary Federal capital grants for system development. These 
funding levels are not in their existing revenue inventories.
    Question 2. Your testimony states that several environmental and 
planning issues present obstacles to timely project completion. What 
issue poses the most significant barrier and how could it be modified 
without adversely affecting the environment?
    Response. I believe that the most significant barrier to timely 
project completion is the conflicts and delays that have stymied the 
original intent of the NEPA process.
    Without a doubt, NEPA is sound public policy. It is extremely 
important for decisionmakers to understand the impacts of proposed 
projects before deciding to proceed, and if so, to use that information 
to shape the scope of the final project, so that it avoids or minimizes 
undesirable environmental impacts.
    However, the evolution of subsequent legislation in other areas, 
court decisions, and general practice and Federal rulemaking have 
resulted in an extremely costly, time-consuming process that is used 
time and again by project opponents to interminably delay or block 
projects, no matter how much mitigation or avoidance is included.
    Attached is a ``not-so-simple'' schematic of that process as it has 
evolved, published by the Transportation Development Association of 
Wisconsin. Very frankly, it is used by many Wisconsin legislators to 
point to as an example of overly invasive Federal law. Here are some 
suggestions for reform:
    Clarify That NEPA Requires Disclosure, Not Outcomes. Too often, 
extensive, costly litigation occurs to prevent outcomes undesired by 
individuals or groups. Congress should clarify that NEPA does not 
prohibit a decision for a project to proceed, as long as adequate 
evaluation of the impacts occurs and appropriate tradeoffs to protect 
the environment are incorporated, and balanced with mobility goals.
    Clarify strengthen the role of U.S. DOT. Federal law should give to 
U.S. DOT the final responsibility for project approval in all cases, 
after appropriate consultation with other agencies. Federal law should 
clarify that U.S. DOT's role is to advocate for mobility, just as other 
agencies have explicit missions. Independent project vetoes 
subsequently enacted and held by EPA, the Corps of Engineers, the 
National Park Service, etc. should be repealed, and replaced with a 
single mandate for a collaborative, consultative process. Federal 
agencies should be required to identify their issues early in the 
process. This should ensure that all issues are examined simultaneously 
and appropriate tradeoffs that serve the public interest are chosen.
    Eliminate Opportunity for Agencies to ``Blackmail'' FHWA/FTA. The 
most critical problem today is that even with early involvement, 
``single-focus'' agencies are often unwilling to compromise, allowing 
them to hold up or veto the project, or insist on extreme mitigation 
often unrelated to the project purpose, to ``buy'' approval. In these 
cases, project costs soar, through interminable studies and/or 
excessive mitigation. As long as multiple agencies have approval 
rights, the problem will not be solved.
    One-stop Shopping. FHWA/FTA can and should be able to issue all 
Federal permits and a final record of decision, in effect creating a 
``one-stop shopping'' mechanism for project approval.
    State Certification Should Be Sufficient. Currently, there is far 
too much oversight/approval by multiple Federal agencies. Federal 
agencies are usually in no position to second-guess the project-level 
detailed decisions made by State agencies, under State laws and 
processes. It should be adequate to require State DOT's to certify that 
they are complying with Congressional mandates, with periodic process 
reviews by U.S. DOT.
    Eliminate Redundant Requirements. A good example is Section 4f 
(Parklands). This prohibition was enacted prior to NEPA. The NEPA 
process should suffice to require a thorough examination of alternative 
locations.
    Require Agencies to Develop Their Own Resource Inventories. A major 
problem is that far too often, resource agencies insist on a project 
paying to inventory and assess potentially impacted resources. This 
takes a great deal of time and funding. If these inventories are 
critical, Congress should provide funding and mandate their creation. 
Lack of inventories should not delay project approval.
    Limit Secondary Land Use Impact Analyses. Increasingly, projects 
are being delayed by a requirement to assess (and mitigate/prevent) 
secondary land use impacts. First, Federal law should not be used to 
usurp State and local land use decisionmaking. And second, the 
methodology to assess secondary land use impacts is both highly 
controversial and very immature. In short, the science to do this kind 
of analysis is weak and inexact, yet critical projects are being 
delayed by a Federal process that is being used to pre-empt State and 
local land use decisionmaking. Predicting the secondary land use 
impacts of projects is not possible, and even if it were, should a 
State be prevented from deciding to proceed?
    Develop a ``Streamlined'' Model EIS. Increasingly, EIS's have 
become virtually encyclopedias, so long that practically no one ever 
reads them. Is this useful? Cost-effective?
    Congress should require FHWA/FTA to develop a more streamlined 
model EIS, that can customarily be completed in less than a year, and 
at a cost not to exceed, say, 2 percent of projected project costs.
    Courts should be required to consider both time and cost in 
evaluating requests for additional analysis.
    Question 3. On page three of your testimony, you refer to a bias 
against highway projects. Could you please elaborate what you mean?
    Response. My point is that ISTEA seems to set up hurdle after 
hurdle that highway capacity projects must get over, before they can 
proceed. The same kind of barriers do not seem to be present for other 
modes.
    Some examples include:
     Requiring that highway capacity projects in non-attainment 
areas can only proceed if part of an approved congestion management 
plan. All that should be required is that the project be included in a 
conforming plan and TIP. A good MPO plan will include all appropriate 
highway, transit, and demand management tools needed to handle 
forecasted congestion. The requirement is redundant.
     The MIS requirement for all urban capacity projects over a 
mile in length is patently absurd. The opportunity for modal tradeoffs 
occurs only in major corridors. This is simply a mechanism that wastes 
time and money.
     Rural conformity for highway capacity projects is a very 
cumbersome, senseless requirement. In virtually all cases, there is no 
transit alternative. The VMT projected will occur, with or without the 
project. The only impacts are marginal changes in speed or distance, 
none of which are likely to impact ambient air quality, given that 
violations are usually caused by transport.
    Increasingly, due to these kinds of delays, the public sector is 
failing to keep up with market forces and the pace of economic change. 
In short, State and local agencies are no longer able to be proactive 
and timely in providing needed facilities.
    As America deals with the productivity challenges posed by a global 
economy and accepts the increased penetration of ``just-in-time'' 
shipping to do that, the consequences of delay to projects that are 
needed to meet the demands of reliability and predictability could be 
devastating.
    Highways are a big part of the economic development equation; 
making highway improvements happen, including capacity projects, is a 
goal Congress should expedite, not burden with regulatory hoops.
    Question 4. Page five of your testimony questions whether the CMAQ 
program should even be funded by the highway account. According to EPA, 
highways account for 62 percent of the Carbon Monoxide emissions, 32 
percent of NOX emissions, and 27 percent of VOC emissions. 
Why is it not appropriate that the Highway Trust Fund pay for a trust 
fund that tries to mitigate these impacts?
    Response. As I indicated in my testimony, all research I have seen 
to date shows that TCM's are very expensive tools to reduce auto-
related emissions.
    The issue is whether emission reduction benefits of CMAQ projects 
are cost-justified, from an air quality perspective. Yes, they do 
reduce emissions, but a what cost per ton? And how do CMAQ projects 
compare to alternative ways to reduce mobile-sector emissions, also in 
terms of cost per ton?
    CMAQ seems to be the most expensive, least effective way to reduce 
mobile sector emissions. Mandating the 49-state car, improving the 
emissions content of reformulated fuels, developing electronic 
catalytic converters, and implementing other technology solutions have 
been repeatedly shown to be more effective, and far less costly than 
strategies that try to change travel behavior. That's why Congress 
repealed the ECO mandate.
    I am convinced that current and emerging technology can and will 
ensure the continuing decline of mobile sector emissions through at 
least 2010, and in most urban areas, 2020. Forecasted VMT growth is 
projected to slow significantly by then.
    If CMAQ effectively reduced highway emissions, then highway funding 
might make sense. The problem is that CMAQ does not. Fortunately, other 
strategies do.
    Given this conclusion, it seems clear to me that competing highway 
priorities, where the benefits are clear, should take precedence for 
limited highway funding over CMAQ.
    Question 5. Your testimony questions the success of the CMAQ 
program, because you claim it is not a cost effective way to reduce 
emissions. This appears to be an unfair comparison because it judges 
the success of the entire program based only on one of the benefits. 
CMAQ program benefits are not limited solely to emissions reductions. 
Would it also be fair to judge a new highway solely by safety benefits, 
excluding all other safety benefits? Your response is appreciated.
    Response. This is an excellent question!
    Certainly, like other highway and transit programs, CMAQ has 
multiple benefits, most of which outweigh its air quality impacts.
    The problem is that CMAQ is a set-aside, strictly allocated only to 
current and prior non-attainment areas, and using a formula based on 
the severity of that area's non-attainment status.
    CMAQ redistributes funds from 35 states, to 15 states, based SOLELY 
on the assumption that meeting air quality goals justifies this 
transfer. Obviously, this assumption is not warranted by the facts.
    I believe that CMAQ has funded a number of worthwhile projects, 
primarily transit, but for other than air quality reasons.
    The key policy question is whether those benefits should be denied 
to a community because it complies with air quality standards, and 
provided to another community, in the same state, because it violates 
those standards. The test MUST be whether CMAQ as a set-aside is 
justified on the basis of air quality, and nothing else. Highway 
funding goes to all states and to all communities.
    In Wisconsin, the largest city, Milwaukee, receives CMAQ funding 
because it violates the NAAQS. Our second largest city, Madison, does 
not. Would not both communities benefit equally from the innovative 
program ideas developed under CMAQ?
    As an alternative to a CMAQ set-aside, it seems quite logical for 
Congress to repeal CMAQ in its entirety, enhance both STP and transit 
funding equitably to all states, and expand the flexible use of those 
programs to projects currently eligible for CMAQ funding, at the 
discretion of states and local governments.
                                 ______
                                 
Prepared Statement of Hal Hiemstra, Vice President for National Policy, 
                      Rails-to-Trails Conservancy
    Good morning. Mr. Chairman and members of the committee, my name is 
Hal Hiemstra. I am the Vice President for National Policy at the Rails-
to-Trails Conservancy, a national non-profit trails, bicycling and 
transportation reform organization with approximately 100,000 members 
and supporters. I also serve on Steering Committees for the Surface 
Transportation Policy Project and Bikes Belong! Campaign, and co-chair 
STPP's Transportation Enhancements Committee which includes among many 
others representatives of the National Trust for Historic Preservation, 
Scenic America, League of American Bicyclists, American Planning 
Association, and the American Institute of Architects. I want to thank 
you for the opportunity to address you this morning on issues relating 
to the reauthorization of the Transportation Enhancement provisions 
(TEP) of ISTEA.
    Since the passage of ISTEA, Rails-to-Trails Conservancy (RTC) has 
maintained an ongoing dialog with State Departments of Transportation 
and projects sponsors about spending and implementation issues 
associated with the TEP. We track Enhancement money programmed, money 
matched, money obligated and money reimbursed. We also track projects 
funded and project spending by Transportation Enhancements Activity 
(TEA) category. Twice a year, RTC complies the spending information 
into a comprehensive Enhancements funding report which details 
programmed as well as obligated and reimbursed funds by TEA category, 
and also documents the amount of local matching funds spent on 
transportation enhancement projects.
    While I could speak at length about the successes nationally of the 
Transportation Enhancements Program, in the interest of time, today I 
want to share five main points with members of the committee.
    (1) First, transportation is about more than roads. True, we all 
need and benefit from highway infrastructure, however bicyclists and 
pedestrians need safe on and off-road routes, sidewalks and convenient 
access to transit stations and other intermodal transfer points as 
well.
    An important eligible funding category of the TEP which speaks 
directly to the broader goals of ISTEA is the renovation of historic 
transportation facilities. Renovated transportation facilities have the 
potential to become focal points for new transit riders, increased 
Amtrak users and related commercial development.
    Clearly, local community leaders want transportation-related 
projects that help to offset the strains that are sometimes imposed by 
highway infrastructure development. The Intermodal Surface 
Transportation Efficiency Act calls for public investment in a variety 
of transportation modes and types of transportation facilities. The 
Transportation Enhancements Program is helping to meet these broader 
transportation goals by directing just 1.7 percent of ISTEA's funds to 
projects which are helping to build diverse transportation 
infrastructure. (see Appendix A)
    Investments in these types of facilities are what the American 
people want.
    A new poll released in late February by the Bikes Belong! Campaign, 
a coalition of bicycle advocacy and industry groups, has found that a 
majority of Americans support the use of a portion of gas tax revenue 
for funding transportation enhancements. The bipartisan poll, conducted 
by Lake Research and the Terrance Group, found 64 percent of those 
polled favored using gas tax revenues for alternative transportation 
projects such as funding bike lanes, bike trails and sidewalks. The 
response increased to 70 percent when respondents were asked whether 
they also favored using Enhancement funds for related transportation 
purposes including renovation of historic train depots, scenic road 
enhancements and similar projects. And, a whopping 79 percent of the 
respondents supported using gas tax dollars to build safe places for 
children to walk and bicycle. According to a spokesperson for the 
Terrance Group, the poll data shows ``that continued Federal support 
for alternative transportation projects is among the few topics upon 
which most Americans can agree.
    (2) Second, the Transportation Enhancements Program helps to 
stabilize and rebuild community infrastructure by improving the quality 
of life in communities lucky enough to have received enhancement 
funding since 1991, and stimulating local economic development--both of 
which are goals associated with any type of transportation project. 
And, unlike many other types of transportation projects, Transportation 
Enhancement projects are actually very popular.
    The Enhancements Program also responds to local priorities. Since 
enhancement projects tend to be small projects (the average Federal 
share is $289,000), local community leaders have been able to play an 
important role in helping to define and design transportation 
enhancement projects. Because the program responds to local priorities, 
the Transportation Enhancement Program--perhaps more than any other new 
program created by ISTEA--builds new public support for transportation 
funding. In fact, the TEP has attracted more new players than any other 
program or provision of ISTEA. While enhancement opponents may see this 
phenomenon as a bothersome consequence of the program, these same 
individuals and groups are often the first to complain that there are 
not enough dollars for needed transportation investments. But, any 
increase in transportation spending is hard to imagine without broad--
and growing--public support.
    In addition to recruiting new supporters of transportation 
spending, the Enhancement Program is already bringing additional 
investments into the transportation sector by leveraging more than the 
required 20 percent local match. Nationally, the average local match 
for Transportation Enhancement projects is 27 percent--that's a 7 
percent overmatch. Typically, the sources of funding for the overmatch 
come from non-traditional transportation partners including local 
governments, private foundations, or state agencies other than the DOT. 
This type of local hyper-investment speaks volumes about the level of 
commitment these communities and the local elected officials making 
tough spending decisions have for the Transportation Enhancements 
Program.
    (3) Third, the TEP has and continues to be successfully implemented 
all across the country. Nationally, as of February this year, 
approximately 7,321 Enhancement Projects had been programmed for 
funding. Funds committed to these projects total some 80.6 percent of 
available money. For a variety of reasons TEP obligation rates are 53 
percent and reimbursement rates fall to a disappointing 26 percent. 
Later in this testimony I will offer suggestions on ways to streamline 
the TEP in an effort to improve these obligation and reimbursement 
rates.
    The attached pie chart (Appendix B) illustrates that just over 52 
percent of funded projects are either bicycle/pedestrian or trail 
projects, and another 16.7 percent are for projects which rehabilitate 
historic (and often in use) transportation facilities.
    But numbers and statistics are sterile. What has the Transportation 
Enhancements Program really accomplished?
     Children in Jackson Hole, Wyoming now have a series of 
trails that converge upon their middle school allowing them safe routes 
to bicycle, walk or ski to school, and enabling their moms or dads to 
leave the car at home for at least two trips a day.
     One thousand Minnesotans a day now commute to work in 
Minneapolis on the Cedar Lake Park Bikeway which shares the corridor 
with a Burlington Northern mainline carrying coal from Montana to 
Chicago. By allowing this many people to arrive in Minneapolis through 
bicycling, walking or in-line skating, the need for another parking lot 
was eliminated preserving valuable greenspace in the central city.
     In heavily congested downtown business district of 
Indianapolis, Indiana enhancement funds were used for major 
infrastructure reconstruction involving curbs, sidewalks, streets, and 
landscaping. Without compromising traffic flow or the historic 
integrity of this National Road corridor, a ``pedestrian friendly'' 
downtown has been created for the more than 100,000 pedestrians 
visiting downtown hotels, restaurants, office buildings and retail 
shops on a daily basis.
     In Great Falls, Montana enhancement funds are helping to 
build the 5\1/2\-mile long Rivers Edge Trail which will provide new 
off-road transportation choices for students and residents of adjacent 
neighborhoods and communities along the Missouri River.
     The renovated rail depot in Danville, Virginia not only 
provides an inviting Amtrak station for today's passengers, but it has 
also anchored a deteriorating neighborhood and gives promise of 
restoring the city's downtown life.
     And, in San Francisco, enhancement funds are helping to 
redesign and construct the central passenger concourse of the National 
Landmark Ferry Building. By improving the intermodal connection between 
water and land based transportation options for commuters using the 
long-neglected Ferry Building, initial daily passenger numbers are 
projected to increase from 8,500 to 12,500.
    But, the Transportation Enhancements approach has just begun to tap 
community needs for the kind of projects it funds. In fact, for every 
project programmed, nationally literally thousands of other eligible 
enhancements projects remain unfunded.
    The Transportation Enhancement Program has not, however, glided 
effortlessly to its successes. Despite early reactions of bewilderment 
and denial by many of the 50 states, thanks to the efforts of FHwA 
staff, dedicated state DOT officials and enthusiastic private sector 
stakeholders, by mid-1993 every state had a TEP program up and running. 
To clarify a variety of implementation issues including concerns about 
project linkages to the transportation system, FHwA has issues or 
referenced 16 Enhancement guidance documents since 1991. (Appendix C) 
And, this committee enacted several implementation streamlining 
amendments in last year's NHS bill.
    Despite these clarifying and streamlining steps however, the 
Transportation Enhancement Program has and continues to come under 
criticism as being too burdensome or for funding some projects which 
have less than obvious transportation linkages. When considering these 
criticisms, it is important to understand that (1) states were given 
tremendous latitude over the ways in which they could design their 
enhancements programs and their project selection process; (2) it is 
the state DOT or Transportation Commission which makes the final 
decision about which projects get funded; (3) it is important to 
separate the individual project from the overall TEP program; and (4) 
under current law, states are free to withhold obligation authority 
(OA) from TEP projects when OA levels are below state apportionments 
and many states do so using the Enhancements Program disproportionately 
to make up budgetary shortfalls. If complaints are being lodged about 
particular projects, the problem, if any, rests with the state designed 
project selection process, and does not reflect any structural problem 
with the Transportation Enhancements Provision.
    (4) Changes which could be made to strengthen and continue 
streamlining the TEP. These recommendations are offered as the product 
of the STPP Transportation Enhancements Committee and have the 
endorsement of this broad coalition of partners. (See Appendix D for a 
more detailed outline.)
    1. Make Enhancements a non-reimbursement program (i.e. a grant 
program at the request of the states);
    2. Continue the innovative financing and soft match provisions 
enacted in the NHS legislation;
    3. Explicitly allow TE program funds to be spent on overhead and 
staffing charges;
    4. Require proportionate use of obligation authority;
    5. Encourage the creation of State TEP Advisory Committees made up 
of TEA stakeholders;
    6. Allow sole-source contracting with non-traditional partners in 
certain situations; and
    7. Add a clear statement of policy about this important program.

    If these changes were adopted as part of ISTEA II, effective 
implementation of the Transportation Enhancement Program would be 
accelerated, obligation rates would increase significantly, and issues 
of reimbursement could become moot in states choosing to take advantage 
of the advance payments option.
    (5) Fifth, and finally, we want to urge the committee in the 
strongest possible terms, to reauthorize ISTEA's Transportation 
Enhancement program as a dedicated program with assured levels of 
funding. It is certainly my hope, and the desire of groups like Rails-
to-Trails Conservancy and the Surface Transportation Policy Project 
that eventually we will not need a separate set-aside for the 
Transportation Enhancements Program. However, experience with the state 
DOTs across the country leaves us with little illusions about the 
program's future if it becomes simply ``eligible'' or is made 
``flexible.'' In most cases, the program would be gone within a year, 3 
years at most.
    We are not alone in this surmise. At last summer's National 
Transportation Enhancements Conference sponsored by FHwA, AASHT0, the 
mid-Atlantic State DOT's, and various STPP partners, participants from 
42 states signaled by a vote of 300 to 11 that their state DOT's led by 
those traditionally focused on building roads and highways would 
abolish enhancements if given the chance. The conference audience was 
comprised of approximately one-third local project sponsors, one-third 
private citizens, and one-third mid-level state and Federal DOT 
officials.
    A GA0 report on the status of Transportation Enhancements released 
in July 1996 further confirmed the urgency of maintaining dedicated 
funding for the program. All of the State transportation officials 
interviewed in the report acknowledged that the set-aside would have to 
be retained to ensure that enhancement projects would be implemented.
    One final comment on the various ISTEA II bills now being 
considered by this committee. We are pleased that most of the bills 
include a dedicated Transportation Enhancement Program. While funding 
levels and program structure vary among the proposals (with the 
Administration's proposal significantly strengthening the TEP by 
providing a 29 percent increase in funding) enhancement supporters are 
gratified to see that many members of this committee recognize that 6 
years of ISTEA has not been enough time for institutional 
transportation thinking to embrace an Enhancements philosophy. Clearly, 
Federal leadership is still needed and we support you in your efforts 
to provide it.
    Thank you. I look forward to working with the committee to identify 
ways to make this already strong program even better.






                               appendix d
    Proposed Changes to the Transportation Enhancements program in 
ISTEA II:
    1. Making enhancements a non-reimbursement program. We propose 
requiring DOT to advance funds to the states on a quarterly basis for 
this program so long as the state commits to following all relevant 
Federal requirements, and agrees to an end-of year audit if USDOT feels 
one is necessary. This would make the program less of a burden for 
state DOTs to run, and would reduce the delays experienced by project 
sponsors trying to get their projects through the pipeline.
    2. Continuing innovative financing and soft match provisions. 
Guidance issued by FHwA in 1995 to test innovative finance techniques 
has really helped the enhancements program. It has made the process of 
determining what expenditures can count as non-Federal match much more 
flexible, and this has allowed projects to move forward with less red 
tape. We propose that this authority be continued.
    3. Increasing allowable overhead charges. Long-standing FHwA rules 
determine which costs state DOTs can charge against Federal funds. In 
general, any work or overhead that can directly be attributed to a 
federally funded project or a Federal funding program can be reimbursed 
on an 80/20 basis. However, as far as we can tell these requirements 
have been interpreted differently in different states. Because 
enhancement projects tend to be small (average size $300,000) overhead 
costs make up a larger share of total funding than in other programs. 
Making it clear that states can charge these costs to the enhancements 
program (including up to 100 percent of the cost of employees who run 
the program consistent with the soft-match provisions described in 2 
above,) would make it possible for states to allocate the staff 
resources necessary to get projects through the pipeline. This would be 
particularly helpful in states where state gas taxes can only be spent 
on road projects. This has been interpreted to mean that state funds 
cannot pay even the non-Federal share of flu salary of the people to 
run the program.
    4. Requiring proportionate use of obligation authority. For the 
first 5 years of ISTEA, (FY92-96), enhancements funds were obligated at 
a 63 percent rate. This is in contrast to an average rate of obligation 
for all programs of 92 percent. Some (but by no means all) of this gap 
is due to delay in getting the program going in the first few years. To 
make matters worse, it looks as if the gap between authorized funding 
and obligation limitations may grow to several billion per year or more 
in the next few years. In this environment, it seems certain that many 
states would allocate this shortfall disproportionately to enhancements 
or other programs they have less than full enthusiasm for, like safety, 
CMAQ, IM and even Bridge. The obligation rate for enhancements could 
fall to near zero in such an environment. We are recommending that 
obligation authority be tied more closely to apportionments for all 
programs, but this is particularly necessary for enhancements. We 
propose that states be asked to maintain equal obligation rates over a 
3-year average.
    5. State advisory committees. Our review of the implementation of 
the enhancements program shows that, in most cases, the states with the 
best run, most popular and most effective programs are those that 
established broad-based advisory committees to help the state run the 
program. Although there are states without such committees that have 
good programs (i.e. Michigan) and states with them that have mediocre 
program (i.e. Ohio), in general the pattern holds true. We recommend 
that Congress ask those states that have not yet established such 
committees to do so.
    6. Allowing sole-source contracting with non-profits in certain 
situations. The enhancements programs has brought new players into the 
process of suggesting projects for funding, but Federal contracting 
requirements make their formal participation difficult. We propose that 
in specific circumstances, non-profit community organizations that have 
played a unique role in suggesting a project for enhancement funding be 
eligible for sole-source contracts to advise the state on design, 
community participation or other aspects of the project for which they 
have unique status.
    7. Adding a statement of policy. To give the program a greater 
feeling of legitimacy and sense of purpose without actually making it a 
full-fledge program, it might be useful to enact a clear goal 
statement.
                                 ______
                                 
      Prepared Statement of Meg Maguire, President, Scenic America
    Thank you, Mr. Chairman and members of the committee, for the 
opportunity to present Scenic America's views on the reauthorization of 
the Intermodal Surface Transportation Efficiency Act of 1991 (ISTEA). 
As a founding member of the Surface Transportation Policy Project, 
Scenic America speaks today on behalf of a broad coalition of 
environmental, preservation, community, and other organizations.
    Scenic America's mission is to preserve and enhance the scenic 
character of America's communities and countryside. Since our founding 
in 1982, Scenic America has worked to establish scenic conservation as 
an integral part of the transportation decisionmaking process. With a 
committed national membership and affiliates in seven states, Scenic 
America is empowering communities to identify, preserve, and enhance 
their distinctive character and appearance.
    We believe that while growth is inevitable, ugliness is not. An 
enlightened Federal policy toward transportation--which we trust ISTEA 
II will continue--is fundamental to any vision for conserving scenic 
beauty.
    ISTEA created a new approach, making transportation the servant, 
rather than the master, of our communities. ISTEA brought new players 
to the table and offered citizens a meaningful role in planning 
interconnected transportation that helps communities work well.
    ISTEA has also done much to conserve and enhance America's scenic 
heritage. Its innovative programs have helped to make hundreds of 
American communities more attractive and more livable. But there is 
still more to be done. Today I want to talk briefly about two programs 
in ISTEA that have succeeded even beyond their advocates' hopes--and an 
old program, the Highway Beautification Act, that, after more than 30 
years has proven to be a dreadful failure badly in need of reform.
                          the success of istea
    Scenic America supports the continuation of ISTEA's overall 
structure. Mr. Chairman, it is imperative that ISTEA's many positive 
programs be extended--and that ordinary Americans continue to have the 
chance to participate in transportation planning.
    I would like to highlight especially ISTEA's transportation 
enhancements program and the National Scenic Byways Program--innovative 
measures that are making a big difference in America's communities.
    I know that you have heard from many groups in favor of retaining a 
designated share of funding for transportation enhancements. We 
believe--and the evidence demonstrates--that this program has had 
significant transportation, economic, environmental, and community 
livability benefits. From rail-trail conversions to scenic byway 
conservation to preserving historic railroad stations, the 
transportation enhancements funds have done much to provide Americans 
with new transportation options, to protect scenic and environmental 
resources, and to improve the ways in which our roads and other 
transportation facilities serve communities.
    Last June, as part of the National Transportation Enhancements 
Conference, Scenic America compiled a book on 25 of America's best 
enhancement projects. We were overwhelmed by the more than 85 
exceptional projects nominated--projects that have made cities, towns 
and rural areas more livable, more attractive, and more prosperous.
    The National Scenic Byways Program, another ISTEA innovation, is 
the first ever Federal effort to identify, preserve, and promote 
America's most scenic roads. A careful balance between locally based, 
locally driven conservation and economic development is at the heart of 
this program.
    The scenic byways program is funded at just $80 million over the 6-
year life of ISTEA but yields far greater benefits. It provides 
citizens with a new tool to identify what is special in their 
communities and to take steps to preserve and profit from their 
distinctive character. The program recognizes some of America's most 
outstanding scenic roads, such as the Pacific Coast Highway. But it 
also recognizes roads with critical historic, cultural, and 
environmental qualities. For example, the Selma to Montgomery March 
Byway in Alabama commemorates the fabled civil rights march. And the 
Seaway Trail combines scenic vistas with the history of much of upstate 
New York.
    Scenic America has worked actively with local and state groups to 
help make the byways program a success. For example, we are in a 
creative, privately funded partnership with the Georgia Department of 
Transportation and the Georgia Trust for Historic Preservation to 
establish a conservation-minded scenic byway program in that state. The 
program's advisory committee includes more than 40 state and local 
organizations, ranging from the Garden Clubs to the Southeast Travel 
and Tourism Society. More than 20 local groups have come forward 
seeking byway designation for roads they cherish.
    Scenic America has also worked closely with state and local 
organizations in many other states, including Ohio and Pennsylvania. In 
both states--and in the many states that have received funds through 
the National Scenic Byways Program--local activists have found the 
scenic byways program to be a powerful tool that brings community 
stakeholders, who are often on opposite sides of debate, together to 
develop a common vision for their community and to take steps to attain 
that vision. Demand for funding is high. Last year, states applied for 
three times more money than was available.
    Several times in recent years, the billboard lobby has urged 
Congress to change the existing program and to allow new billboards to 
be constructed on designated scenic byways. As the Senate has wisely 
recognized, the provision which bans new billboards on designated 
scenic roads is a small but significant, common-sense measure to keep 
our byways scenic. It is widely supported and it is working.
    The 20 new National Scenic Byways and All American Roads are a 
valuable addition to the roster of national programs that identify our 
nation's rich scenic, historic, and environmental heritage. These roads 
will prove to be popular with tourists, foreign and domestic alike.
    These two great success programs should continue in the 
reauthorized ISTEA.
                 fixing the highway beautification act
    But on another issue that has a critical impact on our communities 
and countryside--billboards--we have been notably unsuccessful. Mr. 
Chairman, the Highway Beautification Act, meant to control billboards, 
is completely broken and must be reformed. America the Beautiful is 
disappearing bit by bit, day by day. And one of the biggest reasons is 
uncontrolled billboard proliferation. We can afford no further delay in 
putting the beauty back in the Beautification Act.
    Currently, under the Beautification Act, an estimated 500,000 
billboards line our Federal aid Interstate and primary highways. Five 
to 15,000 new ones go up each year--proliferation that could continue 
almost endlessly. Tens of thousands of trees on public land are 
clearcut to improve billboard visibility. And the states are losing 
millions of dollars administering the program.
    We can quite literally see the problems with the Highway 
Beautification Act. Our roadsides have been called ``tubes of the 
hideous,'' ``interminable wastelands,'' and ``like television, violent 
and tawdry.'' And a big culprit in the degradation of our scenic 
heritage is the Highway Beautification Act.
    Americans intuitively know that, as a nation, we can have the 
growth and economic development we need without degrading the scenic 
resources we treasure. The places we cherish--where we'd most like to 
live, work, and visit--are also those places that have been very 
intentional about protecting their distinctive scenic character. It's 
no coincidence that Alaska, Hawaii, Maine, and Vermont are all renowned 
for their scenic splendor, and all four are billboard-free.
    With each passing day, advancing technology provides new methods of 
communicating. Low-tech methods such as logo signs and tourist-oriented 
directional signs transmit vital traveler information without the 
visual pollution of billboards. Now, high tech tools like the Internet, 
in-car information systems, and emerging ITS technology will enable 
advertisers and consumers to communicate directly, cheaply, and 
efficiently, while preserving scenic vistas.
    What do Americans think about billboards? Professional surveys 
conducted since 1990 make clear that Americans believe that enough is 
enough. For example:
     Sixty-three percent of Missouri residents favor a 
constitutional amendment to cap the number of billboards;
     Ninety percent of Florida residents believe that no new 
billboards should be built in their state;
     By a 2-1 margin, Rhode Islanders favored banning new 
billboards;
     By a three to one margin, New Hampshire residents opposed 
billboard advertising, and by a 2-1 margin favored outlawing billboards 
on state highways completely;
     In Houston, TX, 79 percent support the city's current law 
banning billboards; and
     Americans overwhelmingly oppose tree cutting for billboard 
visibility: 80-11 percent in New Hampshire, 75-25 percent in Florida, 
80-17 percent in Missouri.
    In addition, more than 200 communities annually fight to control 
billboards because they know that preserving and enhancing their unique 
character boosts their local economy and improve their quality of life.
    Yet in spite of all the activism and concern, too often the message 
is not heard. The billboard lobby has, in fact, nearly perfected the 
art of fighting meaningful regulation. Listen to just two voices:
     A comment in the Mobile (AL) Register: ``I managed for a 
large billboard company for 31 years . . . They are the poorest of 
corporate citizens. They have a massive local, state, and Federal 
lobby.''
     From the U.S. General Accounting Office:'' . . . states 
have expressed a feeling that, even if they were to pursue a strict 
policy in sign acquisition and control, FHWA would provide little 
support against a strong industry.''
    Even the regulators, it appears, can't be counted on to implement 
this program.
    What can we do to fix the Highway Beautification Act? We ask 
Congress to do five things:
    First put real controls on the number of billboards. Perhaps the 
biggest problem with the HBA is that it provides the illusion that 
billboards are controlled without actually controlling them. The HBA 
standards allow 106 billboard structures per mile on urban primary 
highways, 35 per mile on rural primary highways, and 21 per mile on 
rural Interstates--with no national maximum number of billboards.
    This unlimited billboard proliferation is not beautification.
    A 1996 Scenic America study of the 46 states that permit 
billboards, which we will release in early April, demonstrates that in 
most states the number of billboards is either rising or stable, and 
that nationally the number of billboards is rising by a minimum of 
5,000 per year. An earlier study by the Congressional Research Service 
estimates the number at 15,000 per year.
    In 1965, there were fewer than 330,000 standard billboards in all 
of America (The New Republic, April 23, 1966). Today, there are 
500,000--50 percent more--just on the roads controlled by the HBA. And 
the number is still going up. Let's put a lid on billboard 
proliferation.
    Second, protect rural areas from billboard blight. Under the 
Highway Beautification Act, thousands of billboards are already in 
rural areas; and more go up each year. In fact, since just a single 
business in an unzoned rural area means that new billboards can go up, 
billboard operators in Missouri, Montana, and elsewhere actually build 
sham businesses like unattended storage facilities just to get 
billboard permits.
    Recently, the St. Louis Post-Dispatch found that the construction 
of sham businesses by billboard operators is common. What's more, while 
the billboard lobby publicly decries this abuse of the law, it has 
actively and vigorously opposed any and all attempts to make the 
state's law work.
    In our survey, we found that over 85 percent of the states allow 
new billboards to be constructed in unzoned rural areas under this 
loophole--with tens of thousands of billboards already in place.
    Third, protect America's roadside trees. Under the Highway 
Beautification Act, tens of thousands of roadside trees on public land 
are clearcut each year to improve the visibility of billboards. The 
billboard industry calls this ``vegetation management.'' But, as the 
Rochester Democrat and Chronicle noted, ``Having advertisers `manage' 
our vegetation seems a bit like having the fox guard the henhouse . . . 
Not a good idea.''
    Despite the obvious conflict with the public interest, trees are 
destroyed under the HBA in more than 1,500 locations in over 20 states 
each year. Industry lobbyists have sought more permissive tree cutting 
regulations in New York, New Hampshire, Virginia, Kentucky, and Georgia 
in just the last 18 months.
    Scenic conservation advocates have held the line in those states, 
but the fact is that ordinary citizens have a hard time being heard 
over the din of an organized, professionally run interest group like 
the billboard lobby.
    Fourth, make billboard operators pay their fair share to use 
America's highways. Billboards are fundamentally users of our roads--
turn a billboard around facing away from the road, and it's worthless. 
Yet, unlike other Americans, billboard operators pay no road user 
taxes, tolls, or fees for the privilege. What's more, the permit fees 
the states do charge fail even to approach covering state costs of 
controlling billboards. In our study, we found the states are running a 
$6-10 million deficit each year in this program.
    The cost of that deficit goes beyond simple dollars and cents. 
Without adequate funding, many states lack staff to administer the 
program. And without staff, control becomes lax. It is well known that 
without adequate funding many state DOTs pay only lip service to 
billboard control, resulting in spotty and ineffective enforcement of 
the HBA. As the General Accounting Office has noted, many states turn a 
blind eye even to known violations because the program has no teeth, 
and no one really cracks down on violators.
    And twice in recent months, state DOT officials have told me that 
their states allow known illegal billboards to remain in place rather 
than incur the wrath of billboard operators.
    Fifth, allow local communities to opt out of participation in the 
Highway Beautification Act. It is abundantly clear that the controls of 
the HBA are little more than a sham, standards that are little better 
than no standards at all.
    We encourage the Congress to allow communities to decide not to 
participate in the Highway Beautification Act--to opt out, in effect. 
This would allow incorporated municipalities to determine for 
themselves what course of action they would take on billboard control. 
Strict or lax, it would allow local leaders to make the decisions for 
local communities. But it would also allow communities to remain under 
the HBA, if they so choose.
    Some communities might pursue a course stricter than the HBA, for 
example, amortizing nonconforming billboards. Others might allow more 
billboards than permissible under the HBA. But in either case, local 
leaders would make local decisions.
    Sixth, ensure that policymakers and citizens have adequate 
information about the billboard issue. We learned in our survey that 
existing information is often fragmentary and hard to obtain. As a 
result, making good decisions about the HBA is inordinately difficult.
    We call for two types of information to be made available: first, 
the Federal Highway Administration should develop and distribute a 
comprehensive annual billboard inventory. This inventory should include 
the full numbers of legal, illegal, and nonconforming billboards on 
Federal-aid highways. Such an inventory could draw a much clearer 
picture of the failures and successes of the Highway Beautification 
Act. Second, we urge the Department of Transportation to undertake a 
study of the effects of billboards and other roadside distracters on 
traffic safety. The majority of reputable studies on this topic have 
found that roadside blight distracts drivers and compromises traffic 
safety. But no such study has been undertaken in this country in nearly 
20 years. Clearly, with new technologies available, it is time to 
develop conclusive information about this important issue.
    Mr. Chairman, it is clear that the Highway Beautification Act does 
little to beautify our nation's highways. The industry points out that 
under the Beautification Act the states may enact more restrictive 
controls, and this is true. But, quite frankly, a Highway 
Beautification Act that allows virtually unlimited billboard blight and 
whose only redeeming quality is that it allows the states to enact real 
billboard control is not a Highway Beautification Act worth keeping.
    We believe that there remains a strong national interest in 
protecting natural beauty and our communities from billboard blight. We 
therefore support an effective Highway Beautification Act.
    Senator James Jeffords has introduced S. 401, the Scenic Highway 
Protection Act, to close many of the loopholes in the HBA and once 
again make beauty the cornerstone of the Beautification Act.
    His bill is fair yet effective, and we urge you to include its 
major provisions in ISTEA. It would place a cap on the number of 
billboards on our Federal aid highway system, protect unzoned areas 
from new billboard blight, end tree cutting for billboard visibility, 
and place a gross revenue tax on billboards so that billboard 
operators, like the rest of us, will pay their fair share to use our 
national highway system.
    America's beauty is one of its greatest assets. Thomas Jefferson 
wanted communities to be designed to foster maximum beauty in our daily 
lives. Our incomparable scenic beauty--urban and rural alike--has 
inspired artists, authors, and composers; it has shaped our values and 
our heritage. But beauty, like other precious resources, is fragile. 
Everyday beauty is no longer an everyday pleasure. More and more, 
scenic beauty is primarily for the privileged--a value we find only if 
we travel to distant places.
    Mr. Chairman, the Congress has a great opportunity in ISTEA II to 
make a profound difference in the appearance of this country. 
Maintaining funds for enhancements, protecting scenic roads, and 
enacting real billboard controls will be significant steps toward 
conserving the Beautiful America we cherish. Thank you.
                               __________
    Prepared Statement of Hank Dittmar, Executive Director, Surface 
                     Transportation Policy Project
    Mr. Chairman and members of the committee, thank you for the 
invitation to join you today to discuss transportation and 
environmental issues, particularly the Congestion Mitigation and Air 
Quality funding program. I am Hank Dittmar and I am Executive Director 
of the Surface Transportation Policy Project, a non-profit coalition of 
over two hundred national and local groups whose mission is to ensure 
that transportation policy and investments support the economy, the 
environment and people and communities. Among the environmental groups 
represented on our Steering Committee are the Environmental Defense 
Fund, Friends of the Earth, the Natural Resources Defense Council, the 
National Wildlife Federation and the Sierra Club. Two other coalition 
members are testifying today to discuss scenic and enhancement 
programs--Meg McGuire of Scenic America and Hal Hiemstra of Rails to 
Trails Conservancy.
    The reauthorization of the Intermodal Surface Transportation 
Efficiency Act (ISTEA) may well be the most important piece of 
environmental legislation to be passed by the Congress in 1997. Federal 
investment in transportation is as critical to environmental quality 
and quality of life as it is to economic competitiveness--and the 
American people want all three goals to be met. The ISTEA legislation 
crafted by this committee on a bipartisan basis in 1991 sought to meet 
the challenge of improving mobility and accessibility while protecting 
and improving the environment. The committee should build upon that 
solid foundation in 1997 by preserving and enhancing ISTEA's 
environmental provisions, especially the successful Congestion 
Mitigation and Air Quality program.
                   transportation and the environment
    Federal transportation investment affects environmental quality in 
many ways. The contribution of the transportation system to our 
nation's air pollution problem may be the most well documented of these 
environmental impacts. Although the country has made considerable 
progress through the Clean Air Act in decreasing the amount of 
pollution automobiles emit per mile, the continuing growth in driving 
is threatening to wipe out these gains. Cars and trucks emit 65 percent 
of carbon monoxide emissions and 47 percent of nitrogen oxide 
emissions. A study of 500,000 adults in 15 cities found that residents 
of regions with the most polluted air were 15 to 17 percent more likely 
to die prematurely than residents of cities with cleaner air. And 
evidence increasing points to small particulates in exhaust, 
particularly diesel exhaust, as a prime cause of children's respiratory 
problems.
    With respect to energy usage, almost two-thirds of the oils we use 
goes into cars and trucks. A decade ago, most of this oil was produced 
domestically. From 1980 to 1995, the amount of our nation's oil we 
imported rose from 27 percent to over 50 percent. Americans consume 
five times as much fuel as the average Japanese citizen and three times 
as much as the average European. Our consumption of foreign oil is the 
single largest component of our trade deficit.
    Other environmental implications of the transportation program 
include global climate change--a problem drawing increasing 
international attention. In 1994, fully a third of all carbon dioxide 
emissions in the United States came from our transportation system. 
Road construction has direct environmental impacts as well--on water 
quality due to runoff, on the loss of farmland and open space, habitat 
and biodiversity. Truly Federal transportation policy is a critical 
component of national environmental policy. In creating a performance 
based planning process that incorporated environmental concerns and in 
dedicating funding to transportation environmental programs, ISTEA 
began the dual process of protecting the environment and improving 
mobility and environmental quality. This reflected a change in 
perspective and a recognition that citizens wanted both a good 
transportation system and a clean environment. ISTEA sought to fulfill 
both goals.
                we can't build our way out of congestion
    The 1991 law recognized another fact--that an increasing body of 
evidence demonstrated that it was not possible to build our way out of 
congestion by adding new roads or widening roads. As Anthony Downs of 
the Brookings Institution concluded in his book Stuck in Traffic, ``. . 
. building new roads or expanding existing ones does not reduce the 
intensity of peak hour congestion to any extent, particularly in 
rapidly growing areas, because commuters will quickly shift their 
routes, timing and mode of travel.'' A recent national study in Great 
Britain supported Mr. Downs' conclusion. New evidence from researchers 
at the University of California concludes that adding road capacity may 
in fact induce new trips on the entire road network, finding that for 
each 1 percent increase in road mileage, there is a .9 percent increase 
in travel on the entire network. These studies are disturbing, as 
congestion in our metropolitan areas is not only annoying to those 
trapped in traffic jams, it represents a huge drain on our economy. The 
Texas Transportation Institute estimates economic losses due to 
congestion at $48 billion annually.
    If road construction is prescribed neither for improving air 
quality or reducing congestion, then it becomes imperative for the 
Nation to invest in alternative solutions. 1991's ISTEA law sought to 
do just that--by allowing the flexible use of highway funds and by 
dedicating $1 billion per year into a new program, the Congestion 
Mitigation and Air Quality program (CMAQ). This program was designed to 
provide resources to states and localities who were working to meet the 
challenges of the 1990 Clean Air Act, thus funding a Federal mandate. 
The funding could be used to implement programs and projects which 
helped bring non-attainment areas into compliance with Federal air 
standards. Such programs included transit, alternative fuel programs, 
demand management and ridesharing programs, traffic management, 
Intelligent Transportation System activities and other transportation 
control measures under the Clean Air Act. The Congestion Mitigation and 
Air Quality program has succeeded in helping our nonattainment areas 
meet clean air challenges and it should be preserved and strengthened 
in this year's reauthorization.
                      air quality benefits of cmaq
    Early on in the program's implementation, we at STPP were critical 
of the progress of some states in funding CMAQ programs and concerned 
that many of the projects would have minimal or even negative effects 
on air quality. Many of these problems have been addressed as states 
have learned to work with the new program and as the Federal Highway 
Administration has refined its program guidance. In fiscal year 1995, 
for example, about 90 percent of CMAQ funds were obligated by the 
states, compared to 42 percent in fiscal year 1992. Similarly, the 
number of projects subjected to an analysis of their air quality 
benefits has increased dramatically since the inception of the program, 
according to a joint FTA/FHWA program review published in December 
1996.
    CMAQ funds have been invested in a wide variety of beneficial 
projects which provide air quality benefits while providing 
alternatives to added capacity on the road network. Over 40 percent of 
CMAQ funds have gone to transit projects. According to the Department 
of Energy's Clean Cities program, over $275 million of CMAQ funds has 
been programmed or obligated for alternative fuel projects, either 
clean transit projects or clean fleet applications. The clean transit 
investments are particularly promising, as they provide a mobility 
solution, an air quality contribution, and help to create a market for 
clean technologies all at the same time. In Boise, Idaho, for example, 
the city 22 new clean buses equipped with bicycle racks. Other funded 
projects include bicycle and pedestrian facilities, ridesharing and 
reverse commute programs, and projects to encourage pedestrian oriented 
development around transit facilities.
    We remain concerned that an inordinate amount of funding has gone 
into traffic flow improvements. Although these activities are clearly 
eligible as Transportation Control Measures under the Clean Air Act, 
signal timing projects offer at best a short term air quality 
enhancement. Evidence increasingly indicates that traffic flow 
improvements may even worsen air quality at higher speeds. With so much 
of air pollution coming from the starting of the car, projects which 
seek to relieve congestion by smoothing traffic rather that by 
replacing trips tend to be less effective than many had hoped. STPP is 
also concerned that some projects which actually worsen air quality 
have been approved by states. In North Carolina, for example, it 
appears that $23 million of CMAQ funds was used to build an outer loop 
highway in the Charlotte area, clearly an ineligible activity. Road 
widening projects can be funded under virtually every other ISTEA 
category. They should not be permissible under the CMAQ program.
                      assuring long term benefits
    Even as too much CMAQ funding in the early years was focused on 
short term improvements that may in the long run lead to worsened air 
quality, it appears that the focus on demonstrating short-term benefits 
may bias evaluation against projects which have longer term benefits. 
Transit projects which make higher density and mixed use development 
economically feasible do not score well when analyzed over a three or 5 
year timeframe. Studies do indicate, however, that vehicle miles of 
travel decrease by 25 to 30 percent when residential density is 
doubled--a finding with dramatic potential for improving air quality. A 
reauthorized CMAQ program should clearly state that programs and 
projects should balance both short and long term objectives.
                additional funding needed for new areas
    Reauthorization of the CMAQ program should also recognize that 
areas which have done a good job cleaning their air continue to have a 
need for CMAQ funding. Areas which have been redesignated from non-
attainment status to maintenance status continue to have an obligation 
to stay in attainment, and this will require continued CMAQ resources. 
Maintenance areas should continue to be eligible for CMAQ funding and 
they should be included in allocation formulas and factors at a lower 
level than non-attainment areas. CMAQ funds should also be extended to 
areas which may be affected by the new air quality standards proposed 
by the Administration. Newly reclassified non-attainment areas--both 
for ozone and particulates--should be eligible for funds and existing 
areas should continue to receive existing funding levels. Thus CMAQ 
funding should be increased, both now and at the time when the new 
standards come into effect. STPP supports the Administration's 
recommendation for an increase in CMAQ funding to $1.3 billion per 
year.
                administrative simplification is needed
    A final suggestion for improvement in the program relates to 
program administration. It is our observation that many promising air 
quality strategies are not being pursued in nob-attainment areas 
because the task of getting approval for either nontraditional projects 
or small projects is so daunting. CMAQ funding is thus focused upon 
large capital projects with small air quality benefits or on traffic 
flow improvements with at best short term gains. As a result, CMAQ 
funds are concentrated into projects which transportation agencies have 
traditionally funded, resulting in the criticism that the program has 
small air quality benefits. The joint FWHA/FTA program review of the 
CMAQ program recommended that legislative relief was needed to ensure 
that these transportation control measures not be subjected to the same 
Federal requirements as large capital projects receive (design review, 
contracting oversight, etc.). Congress should permit smaller, non 
construction projects to be certified by the state as meeting 
requirements of Title 23 without Federal review or oversight in 
advance.
    The Congestion Mitigation and Air Quality program has proven its 
worth. It is highly flexible, popular among those who have used it in 
non-attainment areas, and provides funds to localities to implement a 
Federal mandate. The program should be continued, its funding increased 
and various provisions enhanced and streamlined. Many other aspects of 
ISTEA also benefit the environment--the focus on improved decision 
processes and enhanced local control, the emphasis on consideration of 
social and environmental issues and the dedication of resources to 
rehabilitating the existing system and funding alternatives to the 
single occupant vehicle.
    ISTEA recognized that it is possible to have a healthy 
transportation system and a healthy environment. In hopes that we can 
continue to make progress toward that goal, the STPP coalition has 
released A Blueprint for ISTEA Reauthorization, which includes 25 
recommendations for keeping what's good in ISTEA and improving it. 
We've also documented 110 ISTEA success stories in our book Five Years 
of Progress. Both of these documents have been provided to you by mail, 
but we have additional copies today.
    Again, thank you for the opportunity to join you today. I would be 
happy to answer any questions that you might have.
                                 ______
                                 
         Prepared Statement of Leon S. Kenison, New Hampshire 
                      Transportation Commissioner
    Good morning, Mr. Chairman and members of the Senate Transportation 
and Infrastructure Subcommittee.
    I am Leon Kenison, Commissioner of the New Hampshire Department of 
Transportation.
    I appreciate the invitation by Senator Smith, Chairman Warner and 
Senator Baucus to appear before you today to express my thoughts on the 
very important issue of reauthorizing the Intermodal Surface 
Transportation Efficiency Act (ISTEA) . . . specifically in the areas 
of environmental programs and planning.
    Speaking on behalf of the State of New Hampshire . . . we believe 
that ISTEA has worked as an effective successor to the Interstate Era . 
. . and successfully has served the entire nation. New Hampshire joins 
with several other States in supporting reaffirmation of ISTEA without 
significant changes.
    We believe that the original aims of ISTEA are still the right way 
to go. . . . placing more responsibility on State and local governments 
. . . providing greater flexibility . . . recognizing that 
transportation needs vary from State to State and within a State. . . . 
improving regional planning efforts . . . and giving equal 
consideration to all modes of transportation.
    New Hampshire supports the maintaining of a strong Federal role in 
transportation . . . including funding for Federal clean air mandates 
through the Congestion Mitigation Air Quality Program (CMAQ).
    We support the need for long-term, consistent Federal capital 
investment in transportation, that continued investment is needed to 
maintain and encourage economic growth.
    While the objective of this hearing is to gather comment on the 
environmental programs and planning aspects of ISTEA . . . we feel it 
is important to note the goal of the National Environmental Policy Act 
(NEPA) was to achieve a balance between the impacts and mitigation of a 
project. But a fractured regulatory permit system sometimes requires an 
agency to unbalance or block actions that may greatly benefit the 
welfare of affected citizens.
    We suggest stronger emphasis be placed on the need to achieve 
balanced resolutions by those Federal agencies assuming an advisory and 
regulatory role in the NEPA decisionmaking process. Some suggestions 
for improving the transportation planning provisions of ISTEA. . . .
    By making optional many of the mandates . . . the States could 
conform to the spirit of ISTEA while tailoring a process that better 
meets the needs of the individual state's citizens. For example . . . 
eliminating the mandate for management systems has allowed different 
States to devise systems appropriate to support their decisionmaking. 
For the Metropolitan Planning Organizations (MPOs) . . . the 
requirements for a 20-year project-specific, financially constrained 
plan should be changed. A 20-year plan should be more realistically 
based on goals and strategies to establish a direction for planning 
activities. Such a plan obviously cannot be financially constrained in 
the strict sense now required.
    For the States and MPOs . . . the public process should be 
simplified. Instead of encouraging public involvement . . . we have 
driven people away with the number of meetings we hold. When compounded 
with the meetings we need for TIP and STIP amendments . . . we suppress 
public involvement.
    We support continuance of the transportation enhancement concept. 
We suggest, however, that reauthorization enable States an option to 
process small projects (e.g. under a value of $50,000) as grants . . . 
thereby avoiding the disproportionate preparation and overhead costs 
current procedures create.
    New Hampshire continues to support the environmental and planning 
goals of ISTEA . . . but we have identified problems associated with 
the process as it now exits.
    The idea of widespread public involvement in transportation 
planning is commendable. Unfortunately the process has become 
cumbersome and often confusing to citizens.
    Rules and interpretations have gotten us off track . . . stifling 
both public interest and participation. The result, in many cases, has 
been to drive away the very people who wanted to participate. Good 
intentions have been met with skepticism and a lack of support.
    An already complex arena of environmental regulation is now more 
so. The existing approach has proven costly both in funds and in time 
when it comes to transportation projects.
    In some cases . . . it has added years to the development of 
projects and increased costs considerably. Ironically, in many cases it 
has caused more serious environmental impacts than were avoided.
    On the issue of funding ISTEA . . . the need to maintain at least 
the current funding level is great. There are currently more than 95-
thousand bridges classified as deficient in the United States.
    New Hampshire is not a stranger to harsh weather conditions . . . 
and despite our best efforts, more than 600 State and municipal bridges 
are designated as ``Red List'' bridges, meaning that due to known 
deficiencies they have to be inspected twice a year.
    Americans are traveling almost twice as much as they did in 1973 . 
. . and the number of vehicles on the nation's roads has increased by 
more than 50 percent. That jump, along with a working population in New 
Hampshire that often commutes long distances, has put increasing 
pressure on our highway system . . . and emphasized the need to 
maintain it at higher levels of standards to ensure safe and efficient 
mobility.
    Motorists are traveling more but paying relatively less for fuel 
and fuel taxes. In 1979, Federal/State motor fuel taxes accounted for 
6.7 percent of the cost of owning and operating a vehicle. By 1993, the 
fuel tax share of motor vehicle costs was 4.4 percent--a 60 percent 
drop over 15 years.
    Although highway investments increased substantially in the last 
decade . . . the investment must continue increasing to keep up with 
our needs. Any delays in preserving highway investments or in meeting 
the needs brought on by traffic growth could quickly reverse the 
repairs and the gains achieved over the past few years.
    When adjusted for inflation, U.S. highway investments per mile of 
travel have dropped 40 percent since 1973. When adjusted for inflation, 
U.S. capital highway investments are up just 10 percent since 1973.
    The future of American jobs and economic development depends on 
increased transportation funding. Current funding levels are inadequate 
for the nation's transportation needs . . . yet a portion of user taxes 
(4.3 cents) is still going to non-transportation purposes.
    New Hampshire supports a return of the 4.3 cents per gallon fuel 
tax . . . currently diverted to the general fund for deficit reduction 
. . . to the highway trust fund. Those funds should be distributed for 
their intended purposes. . . . to maintain and improve the condition 
and safety of the nation's highway, bridge, and transit system.
    To enable the full investment of the highway user taxes without 
being detrimental to the laudable efforts of general fund reduction . . 
. . we suggest either removal of the trust fund from the general budget 
category . . . or pursuit of the revenue constrained fund . . . as 
proposed by Senators Chafee and Bond and co-sponsored by Senator Smith.
    Using highway user revenue to mask other spending unnecessarily 
limits infrastructure investment and associated economic opportunity . 
. . and breaks the trust placed in the trust fund concept by the paying 
public.
    Failure to adequately fund the transportation system could cripple 
the nation's mobility and economy.
    Surveys have shown that highway accessibility is the No. 1 
selection factor considered by businesses when deciding where to 
locate.
    Again, New Hampshire believes ISTEA has worked. We support the key 
notions of ISTEA . . . partnering between State and local entities . . 
. intermodal planning . . . and public participation in the planning, 
design, and construction of transportation projects.
    We support a continuation of at least the existing funding levels 
in ISTEA . . . and oppose efforts to dramatically adjust the formula 
for allocating funds to the states.
    Thank you again for allowing me to share my thoughts regarding the 
reauthorization of ISTEA with you.
    My agency would welcome the opportunity to work with your staff to 
address any of these issues.
    I welcome any questions you may have.
                                 ______
                                 
 Responses of Leon Kenison to Additional Questions from Senator Chafee
    Question 1. Your testimony indicates that the requirement for a 
financially constrained 20 years transportation plan should be changed. 
How would changing this requirement help New Hampshire?
    Response. A 20-year transportation plan should be focused on 
identifying transportation deficiencies and transportation strategies 
to provide solutions to those problems. The current ISTEA Metropolitan 
Planning regulations for developing a 20-year transportation plan have 
very detailed requirements for estimating the amounts and sources of 
revenue available and forecasting programs for a 20-year period. 
Metropolitan Planning Organizations (MPOs) have been asked to 
concentrate on future economic conditions rather than establishing 
goals and strategies for this transportation future timeframe.
    New Hampshire STIP/TIP development process, as well as the State's 
Ten-Year Transportation Improvement Plan process, currently provide 
detailed financial constraints and realistic project expectations over 
a 10-year horizon. The removal of the requirement for the 20-year 
financially constrained plan, would offer New Hampshire's MPOs the 
flexibility to better consider the direction of transportation, rather 
than directing their energies to costing out the details. In their Plan 
development, cost should be a factor but not the overriding issue.
    Question 2. In your testimony you propose that Transportation 
Enhancement projects under $50,000 be administered as grants. Can you 
expound on this idea and indicate the benefits that would result?
    Response. The Transportation Enhancement Program has been very 
successful in New Hampshire. Local community and regional planning 
agencies have worked well with our State's Transportation Enhancement 
Advisory Committee to propose, deliberate, and select a wide variety of 
projects throughout our State.
    The major problem of this process is, unfortunately, in the 
details. Despite the low dollar cost of these projects they are each 
treated as any other Federal aid project. As projects, they must be 
designed, estimated, reviewed, tracked, managed, advertised for bids, 
and the construction supervised. This process results in an 
administration burden out of scale with the type of projects selected.
    By regarding all Transportation Enhancement Projects under $50,000 
as grant projects the situation charges. Grant recipients will provide 
many project services and administration with appropriate oversight by 
the Department of Transportation. The Department of Transportation will 
supply guidelines and support rather than assuming full 
responsibilities for these lower cost projects. By issuing grants to 
the successful sponsors, control as well as responsibility, will return 
to the local level which should result in increased ownership of the 
proposal, as well as the product.
    Projects costing more than $50,000 would continue to be developed 
and managed, as before, by the Department of Transportation. The scopes 
and costs of these projects make this protocol more appropriate.
    Question 3. ``Page two of your testimony states that widespread 
public involvement in transportation planning, while commendable, is 
cumbersome and confusing to citizens. How can this problem be 
alleviated?''
    Response. New Hampshire fully supports public participation in the 
planing, design, and construction of transportation projects. This 
tracks well with the intent of ISTEA to provide a process which engages 
the public in the planning process, increases understanding, and 
results in informal decisionmaking. If the current process supported 
this vision, all would be well.
    However, those who chose to participate were faced with discussions 
which centered less on the major issues, but rather dealt with the 
details of overlapping jurisdictions, and requirements based on: 
planning agency boundaries, MPO boundaries, urban/rural boundaries, air 
quality attainment classification boundaries, highway classifications, 
and funding category eligibility as they attempted to reach consensus 
on their Transportation Improvement Plan.
    They were then informed that their TIP had to fit seamlessly with 
those of other MPO's, meet statewide financial constraints, and be 
contained identically by project description, funding category, and 
project phase within the State Transportation Improvement Program 
(STIP). Each step in the development of the TIP and STIP was supported 
by a technical committee review, public committee review, public 
hearing, and official acceptance.
    A change in project timing, scope, cost, or funding category, could 
require an Amendment to the TIP or STIP which requires the same review 
and approval process, as the original adoption. Of the original public 
who chose to participate in the process, some made it as far as the 
first two TIP/STIP amendments. Most left when the Amendment process 
began to overlap (but not to be entwined with) the biennial TIP/STIP 
update. The public described the process as ``cumbersome and 
confusing''.
    The solution to the problem is flexibility. By eliminating the 
requirement for TIPs and STIPs to be identical, the process would be 
streamlined with less need for repetitive amendments. By removing the 
multitude of dedicated funding categories, financial constraint would 
be more easily understood and accomplished. In order for transportation 
decisions to be as inclusive as possible, the process must be 
understandable and public friendly. Flexibility would help accomplish 
this.
                                 ______
                                 
      Prepared Statement of Lawrence D. Dahms Executive Director, 
  Metropolitan Transportation Commission (MTC) San Francisco Bay Area
    Good Morning, Chairman Warner, Senator Baucus, Senator Boxer and 
members of the committee. I am Lawrence Dahms, executive director of 
the Metropolitan Transportation Commission (MTC), the metropolitan 
planning organization for the nine-county San Francisco Bay Area. I 
appreciate the opportunity to review our experience and views on 
reauthorization of the Intermodal Surface Transportation Efficiency 
Act, or ISTEA.
    The nine-county San Francisco Bay Area is a diverse region, a 
microcosm in many ways of the diversity of this nation. We are urban, 
suburban and rural. We have intermodal facilities, a population of 6\1/
2\ million people, clean air challenges and an active disability 
community that continues to seek implementation of the ADA. We have 26 
transit operators, new and old highways and world-class bridges in 
serious need of repair. Recognizing that the Federal Government has an 
interest in keeping one of the strongest economies in the Nation 
moving, how can one Federal law address this range of challenges? ISTEA 
has been about as close as you can get.
    Let me preface my comments by telling you that MTC supports a 
reauthorization that preserves ISTEA's basic program structure. MTC's 
resolution guiding our reauthorization advocacy is attached. Many local 
jurisdictions and partners in our region including business and 
environmental groups have adopted similar resolutions. We urge your 
committee to build on the foundation so effectively established by 
ISTEA.
    One of the great strengths of ISTEA is its flexibility to respond 
to the needs of each region. Through the flexibility of ISTEA's Surface 
Transportation Program (STIP), the Congestion Mitigation and Air 
Quality Improvement Program (CMAQ) and the Transportation Enhancements 
Program, MTC has been able to put together a program of projects that 
is reflective of the region's needs. Over the past 6 years, working 
with our local and regional partners, we have programmed over 500 
projects with the $500 million in flexible funds that have come to our 
region--everything from a joint intermodal terminal at the Port of 
Oakland and BART rail car rehabilitations to expansion of MTC's popular 
freeway service patrol tow trucks and various highway and local street 
improvements throughout the region.
    Though the projects financed by ISTEA are important, I'd like to 
focus today on one aspect of ISTEA that gets little notice through it 
has great value.
    Who would believe that such phrases as:

    ``A State shall coordinate. . .''
    ``The metropolitan planning organization in cooperation with the 
    State and affected transit operators shall develop. . .''
    `All projects . . . shall be selected by the metropolitan planning 
    organization in consultation with the State. . .''

could produce powerful results in the implementation of ISTEA? To 
coordinate, to cooperate, to consult--all are ordinary terms that 
should be expected to characterize the civilized relationships of 
States and local governments. When combined with the delegation and 
flexible funding choices also embodied in ISTEA, however, these words 
did indeed produce perhaps unexpected results.
    This overarching thrust of ISTEA, to encourage productive 
partnering by many who may not have worked well together before, came 
just in time. For it recognized that in today's pluralistic society the 
State acting on its own is unable to deliver some projects or programs 
as it could just a decade or two ago. With the help of local officials, 
however, brought together in the form of metropolitan planning 
organizations (MPOs), challenging but important programs can still be 
advanced. To illustrate, consider just how the State of California 
Department of Transportation (Caltrans) and sometimes the California 
Highway Patrol (CHP) have partnered with the Metropolitan 
Transportation Commission (MTC) in productive enterprises.
     MTC manages the freeway call box program, placed on 
Caltrans' right-of-way, with the phones answered by CHP dispatchers. 
There are 3,000 phones and 600 calls answered per day.
     MTC manages the freeway service patrol (FSP), which clears 
up incidents on Caltrans' freeways, with the cooperation and assistance 
of the CHP. There are 50 tow trucks patrolling 218 miles of freeway. An 
average of 370 incidents are responded to within an average of eight 
(8) minutes every work day.
     MTC manages the TravInfo program, providing real-time 
traffic information to any of the Bay Area's three (3) million 
commuters who can dial 817-1717 at anytime of the day. The TravInfo 
control center is located in the Caltrans District 4 office, 
immediately adjacent to its Traffic Operations System center. MTC's 
contractor--Metro Traffic Control--enters 300 to 600 incidents per day 
into its auto call system, which in turn handles approximately 2,000 
calls per day.
     MTC has been instrumental in financing and in 
administering vital contracts required to implement the Caltrans 
Traffic Operations System referred to above.
     MTC was required to intervene at two critical points in 
the design of the last Bay Area Interstate link--1-80 heading north 
east from the San Francisco-Oakland Bay Bridge. Thanks to MTC's 
assistance, this $300 million construction project is now well 
advanced. When complete, it will offer one of the most effective 
exclusive bus and carpool services in the country.
     In the most recent example, MTC has been asked to 
recommend the best design for the new east span of the San Francisco-
Oakland Bay Bridge. The State has determined that it is more prudent to 
construct a new span than retrofit the existing bridge to withstand the 
next major earthquake. While the State Legislature and Governor are 
still debating just how to share the approximate $2 to $2.5 billion 
cost of the full Transbay earthquake retrofit package, MTC's process 
for design selection is moving ahead in full cooperation with Caltrans 
and another State agency--the Bay Conservation and Development 
Commission (BCDC).
    As little as 10 years ago such partnering with the State was 
unheard of. Now it is essential, welcomed, and productive.
    Vital coordination and cooperation extends to our Bay Area transit 
operators as well. It was MTC that brokered the regional rail agreement 
in 1988. The $3.7 billion program is \2/3\ funded by State and local 
revenues. A large down payment of $568.5 million of the Federal share 
was authorized in ISTEA. An additional authorization is needed in the 
next bill. While the Santa Clara Valley Transportation Authority 
(SCVTA) and the Bay Area Rapid Transit District (BART) have the lead 
responsibility for delivering the two rail extensions vying for Federal 
funds, it is MTC that has had the challenge of sustaining the broad 
State and regional commitment that has now endured for 9 years.
    In another transit agency collaboration, MTC and ten (10) of the 
regions 26 transit operators are developing TransLink, a regional 
transit pass that will provide access to any of their systems. Here 
again, MTC has the lead in designing and delivering the system.
    Flexible ISTEA funding has been vital to MTC's partnership with the 
100 cities and nine counties in the region. For example, $65 million 
has been invested in upgrading and synchronizing the signals at 2,700 
major intersections in the region. A small part of this investment paid 
for the four traffic engineer consulting firms MTC has retained to 
assist our smaller cities in implementing this program. MTC's parallel 
program, the pavement management system (PMS), is the tool used to 
optimize maintenance expenditures by \2/3\ of our 109 local 
governments. In a unique partnership, we have joined with the State of 
Oregon's Association of Counties, making our PMS system available to 
them in return for a computer program upgrade they were able to do for 
us.
    While not all of these initiatives are solely the result of ISTEA 
prodding, it has been a significant catalyst. The common thread running 
through all of the projects cited above has been the multi-agency 
cooperation that is essential. MTC took the lead in forming the Bay 
Area Partnership of the 30 leading transportation agencies in January 
1992, immediately after ISTEA was signed by President Bush. We have 
made the task of nurturing that partnership our No. 1 priority ever 
since. And, it is working.
    We like ISTEA because of its several provisions that encourage, 
even require, such commitment. That is why we are here urging you to 
tune--not toss--ISTEA, a phrase I believe former FHWA Administrator Tom 
Larson first coined.
    Last year, House Transportation and Infrastructure Committee 
Chairman Bud Shuster visited the San Francisco Bay Area and challenged 
us to offer suggestions regarding how to strengthen metropolitan 
planning organizations in their partnerships with the 50 States and 
others across the country to assure Federal transportation investments 
produce the desired results. A copy of our response is attached for 
your consideration as you evaluate ways to improve the planning 
process.
    I will be happy to answer your questions and to elaborate on any of 
my examples.
                                 ______
                                 
                    Metropolitan Transportation Commission,
                                                   January 7, 1997.
Hon. Bud Shuster, Chairman,
Transportation and Infrastructure Committee,
U.S. House of Representatives,
Washington, DC.
    Dear Chairman Shuster: We remember well your hard-working tour of 
the San Francisco Bay Area and its major transportation facilities last 
June. We were pleased to demonstrate, among other things, the central 
role the Metropolitan Transportation Commission (MTC) plays in 
coordinating the activities of the region's transportation partners. 
This prompted you to ask for suggestions regarding how to strengthen 
metropolitan planning organizations (MPOs) in their partnership with 
the 50 states and others across the country to assure Federal 
transportation investments produce the desired results.
    First, however, there must be sufficient Federal revenues to 
invest. We thank you for beginning to build the foundation for the 
budget debate in 1996 when you secured a strong vote by the House in 
support of directing trust fund revenues to transportation investments. 
We understand that your leadership will be tested again as the budget 
battle continues in 1997, and that you must be able to win that battle. 
If not, some of our suggestions regarding program structure will become 
insignificant. Thus, we will work with the California Congressional 
delegation to support you ill those efforts.
    Presuming a significant revenue package, how can MPOs be encouraged 
to live up to their responsibilities? The key probably lies in most 
states discovering, as I believe California already has, that strong 
MPOs can work to their advantage. A strong MPO will organize local 
input, and in so doing, provide a positive context within which 
essential state and regional transportation decisions can be made and 
carried out. An MPO is not relevant, however, without authority. ISTEA 
defined shared state/MPO relationships that can be improved upon, first 
in allocating program revenues, and second in defining planning 
objectives. In the following paragraphs we offer three suggested 
changes designed to encourage MPOs to hold up their end of the bargain 
in these critical partnerships with the states.
    1. Require Equitable Allocation of ISTEA Program Revenues. Each 
state should be given the authority and responsibility to adopt, in 
cooperation with its MPOs, a formula for the distribution of all 
transportation revenues to each MPO area.
    Current ISTEA law requires that the Governor and MPO jointly 
approve the Transportation Improvement Program (TIP). By establishing a 
formula distribution, a budget would be established thus making these 
joint decisions more relevant and equitable. A county minimum provision 
that has been a part of California law for almost two decades 
demonstrates that this is a workable approach. (The California 
Transportation Commission (CTC) is responsible for assuring that over 
the course of each 4-year period at least 70 percent of State Highway 
Funds are distributed to each county based on population and lane 
miles.)
    2. Focus on Transportation Systems. We urge reinforcement of the 
current ISTEA planning provisions that require State and MPOs to 
``identify transportation facilities . . . that should function as an 
integrated (metropolitan/state) transportation system, giving emphasis 
to those facilities that serve important national and regional 
transportation functions.'' During the interstate-era there was a 
system focus that pulled the Nation together in support of a national 
transportation program. Now the loss of system focus risks relegating 
the Federal role as simply a tax collector. Returning revenues to their 
sources becomes the loudest objective, whereas delivering on the 
Federal interest in effective transportation systems gets lost in the 
noise.
    Section 103 (b)(1) of Title 23 defines the purpose of the national 
highway system. However, Section 133 establishing the surface 
transportation program lacks a purpose statement. A parallel statement 
defining the purpose of metropolitan transportation systems and their 
integration with the national highway system should send a strong 
message to states and MPOs alike.
    We suggest the following legislative language: The purpose of the 
surface transportation program is to provide a flexible funding source 
for operating, improving and integrating the metropolitan 
transportation system identified pursuant to subsection (g) of Section 
134, the state transportation system identified pursuant to subsection 
(a) of Section 135, and the National Highway System designated pursuant 
to subsection (b) of Section 103.
    3. Make a direct connection of the Federal interest to planning 
guidelines. The 16 planning factors required of MPOs and 21 factors 
required of states in current ISTEA are admirable, but of limited 
usefulness. The number of factors is so large that they tend to be used 
as passive checklists rather than as the driving criteria to be used in 
deciding how best to invest. We propose legislative language that links 
planning to a more limited set of clearly defined Federal interests. 
Legislative language we would suggest as a replacement for the planning 
factors is attached.
    Further, the state and MPO planning activities should reinforce one 
another. As it now stands, ISTEA requires each MPO to prepare and 
update long-range plans and each state to do so as well, essentially 
covering the metropolitan area twice. The MPO plan should cover its 
geography. The State plan should insure the interregional linkages 
between metropolitan areas. As partners, each should assist the other 
wherever relevant. As a practical matter, this duplication has not 
occurred in California because the MPO plan is project specific and the 
State plan is limited to policy and strategy statements. But, an 
opportunity has been lost. States and MPOs would be encouraged to take 
their partnership more seriously if required to anticipate in their 
plans essential interregional linkages.
    To conclude, under Tom Larson's leadership, the Federal Highway 
Administration helped Caltrans and MTC establish a working Bay Area 
Partnership. It is our mechanism to make sure the full range of 
interested agencies have a voice in transportation decisions. Perhaps 
ISTEA II can encourage the replication of our partnership model in 
other parts of the country.
    The ideas above are sure to have detractors, partly because many 
states appear not to recognize that strong MPOs can work to their 
advantage. Paradoxically, some large city mayors and transit operators 
believe their MPO's to be dominated by state, suburban or rural 
interests. These mayors and transit operators may even ask Congress to 
mandate their representation on MPO boards. Yet, there is little 
evidence that they have attempted to remedy the problems at home. The 
MPO governance question brings to mind Churchill's quip about democracy 
being the worst form of government except for all the rest!
    Thank you again for the time you and your staff have given to our 
transportation projects. Again, we will work in support of your efforts 
to increase transportation revenues in order to deliver a healthy ISTEA 
II, and look forward to working with you and your committee in that 
interest.
            Sincerely,
                                         Lawrence D. Dahms,
                                                Executive Director.
                                 ______
                                 
Attachment: Language Proposed to Replace the Existing Title 23, Section 
      134(f) and 135(c) Discussion of ``Factors to be Considered''
                    performance-based considerations
    In developing transportation plans and programs pursuant to this 
section, each state and each metropolitan planning organization shall 
incorporate performance-based consideration of the direct and indirect 
effects of transportation actions, including effects in the following 
identified areas of national interest. It is expected that 
considerations appropriate to the state level and those appropriate at 
the metropolitan level will differ, but will complement each other. The 
identified areas of national interest are:
     National Transportation Linkages--It is in the national 
interest to ensure that safe, adequate and effective transportation 
linkages be provided within metropolitan areas; between metropolitan 
areas surrounding rural areas; between various metropolitan areas 
within the same state; between states; and around international 
destinations as part of a multimodal national transportation system.
     Strong Economics and Strong Communities--It is in the 
national interest that states and metropolitan transportation systems 
support healthy regional economies to serve as the economic building 
blocks of the nation, and that the development and transportation 
activity supported by such economies be consistent with state, regional 
and community land use and development plans. It is also in the 
national interest that state and metropolitan transportation systems 
support safe access to jobs, housing, education, recreation and other 
important social and economic activities and that state and 
metropolitan transportation systems contribute to addressing the unique 
economic and community needs of central cities, other older urban 
areas, suburban areas and rural communities.
     Environmental Quality--It is in the national interest that 
state and metropolitan transportation systems help achieve national 
environmental objects and maintain and improve overall environmental 
quality.
     Resource Management--It is in the national interest that 
state and metropolitan transportation systems make effective and 
efficient use of resources through preservation of existing facilities 
and promotion of modes of transportation and forms of development that 
are fiscally sound and efficient in the use of natural resources when 
considered over the life of the investment.
                                 ______
                                 
     Re: Reauthorization of the Intermodal Surface Transportation 
                             Efficiency Act
      metropolitan transportation commission--resolution no. 2954
    Whereas, the Intermodal Surface Transportation Efficiency Act 
expires September 30, 1997 and the 105th Congress must reauthorize 
Federal surface transportation programs and;
    Whereas, ISTEA made major progress in moving decisionmaking closer 
to people affected by transportation spending with almost $500 million 
in flexible ISTEA funds allocated to 500 projects throughout the Bay 
Area and;
    Whereas, ISTEA marked a shift from the end of the Interstate era to 
a new era emphasizing highway and transit system preservation, 
increasing the efficiency of existing networks, and improved intermodal 
integration, now therefore, be it
    Resolved, that the Metropolitan Transportation Commission endorses 
the following principles to guide the reauthorization of ISTEA.
    1. Support a continued Federal role in transportation and oppose 
efforts to repeal or reduce the Federal gas tax;
    2. Support ISTEA's basic program structure, such as the Surface 
Transportation Program, the Congestion Mitigation and Air Quality 
Improvement Program and the Transportation Enhancements Program, and 
oppose block grants or revenue sharing;
    3. Focus Federal-aid funding on integrating and managing the 
various public and private elements of the transportation system;
    4. Maximize Federal investment by dedicating transportation taxes 
for transportation purposes and encouraging greater private sector 
investment;
    5. Fully fund implementation of the Americans with Disabilities Act 
with additional Federal resources that protect existing transportation 
funds; and, be it further
    Resolved, that the Executive Director shall forward a copy of this 
resolution to our representatives in Congress and the United States 
Secretary of Transportation.
                                 ______
                                 
             Metropolitan Transportation Commission
                                          James P. Spering,
                                                             Chair.

    This resolution was entered into by the Metropolitan Transportation 
Commission at a regular meeting of the Commission held in Oakland, 
California on February 26, 1997.
                                 ______
                                 
         Prepared Statement of M. Michael Cooke, Commissioner, 
                           Douglas County, CO
    Mr. Chairman, my name is Michael Cooke, and I am a Commissioner on 
the Douglas County Board of Commissioners in Colorado. I am here to 
testify today before your subcommittee on the need for reform of the 
Metropolitan Planning Organizations (MPO's) whose duties and 
responsibilities were enhanced significantly with the passage of ISTEA. 
The Federal transportation funding process has fundamentally changed 
under ISTEA, which has provided certain benefits nationwide. However, 
the provisions of ISTEA have tended to treat all jurisdictions in the 
same manner; this system has not been advantageous for some local 
governments, particularly linkage communities like Douglas County. 
Although the intent of returning more power over the purse and 
decisionmaking on transportation priorities to local areas was 
admirable, its practical impact in areas such as Douglas County has in 
many ways created an unfair system for the citizens of Douglas County 
and, at the same time, has created a system that is difficult to modify 
or escape.
                      background on douglas county
    Douglas County, Colorado, is the fastest growing county in the 
State of Colorado and in the United States. As of January, 1997, the 
County's population is 123,000 persons. The latest census figures 
indicate that the County has been the fastest growing county in the 
United States for the first half of this decade and remains so today.
    Douglas County's population has doubled since 1990, putting 
significant pressure on public services, from the need for more schools 
to expanding the transportation infrastructure to keep up with 
increased traffic. This growth particularly impacts us because 
approximately 72 percent of our total population resides in the 
unincorporated areas of the County and depend upon the County 
government for the provision of essential services. While the majority 
of the population lives in the northern tier of the County, rapid 
growth has been experienced all along the Interstate 25 corridor, 
linking Denver and Colorado Springs.
    Our situation in Douglas County is not unique. We have an expanding 
population, and with that expansion comes a need to accommodate growth 
with the necessary public infrastructure, including adequate highway 
and transit capacity. We would contend that the MPO decisionmaking 
process for the approval of transportation funding is inadequate; it is 
subject to extensive bureaucratic inertia that protects the status quo 
and has created a system protected by Federal mandates.
    Before I go any further, let me say for the record that Douglas 
County has not come before your subcommittee today without doing 
everything within its power to work cooperatively within the system and 
with our MPO, the Denver Regional Council of Governments (DRCOG). We 
will document the extensive number of times that we have tried to 
pursue project funding or project enhancements and have run into real 
or perceived roadblocks. The reason we are here today is because the 
current system makes real local decisionmaking illusory and the 
prospect for improving the system locally all but impossible without 
some sort of Federal assistance.
                the need for mpo reform: national issues
    There is no doubt that transportation planning is an essential 
element of any transportation program. MPO's were established to 
facilitate that planning and to help coordinate planning in a regional 
context, but in most cases the role of the MPO was strictly advisory 
and generally voluntary. However, in ISTEA MPO's theoretically took on 
a much more extensive role, including the actual approval of specific 
Federal transportation funding projects and in some cases taking that 
direct authority away from local governmental entities who are 
responsible for providing services to citizens.
    With the authority to approve specific transportation projects and 
to set priorities for overall transportation projects in a particular 
region have come problems with the local makeup of the MPO and whether 
one area dominates the other. This issue is at the very root of the 
problems that have been experienced in Douglas County and which I will 
describe in greater detail later in my testimony.
    ISTEA gave allegedly more ``flexibility'' and ``greater local 
decisionmaking'' to local elected officials, but it failed to give 
local governments the ability to choose whether they wanted to be part 
of this federally imposed effort or not. Federal regulations require 
that in order to redesignate an MPO in a metropolitan area a 
jurisdiction must accomplish the following:
    1. Obtain the approval of the Governor of the state;
    2. Obtain the approval of local officials representing 75 percent 
of the population in the entire metropolitan planning area; and
    3. Obtain the approval of the local officials in the central city 
within the metropolitan planning area.\1\
---------------------------------------------------------------------------
    \1\ 23 CFR Sec. 450.306(g)
---------------------------------------------------------------------------
    Even if a jurisdiction were able to accomplish all of those Federal 
requirements, the law goes on to say that if there is a redesignation 
of an MPO, this new MPO would still be required to cooperate, consult 
and coordinate with the State and other MPO's in the metropolitan 
planning area.\2\
---------------------------------------------------------------------------
    \2\ 23 U.S.C. See 134(d)(l) and (c); 23 CFR Sec. 450.312(e)
---------------------------------------------------------------------------
    Therefore, if a local government believes that the MPO and its 
decisionmaking process is unfair and wants to have more control over 
its own future, the Federal Government makes it virtually impossible 
for the local government to make its own decisions. We believe that the 
national trend is to send more decisionmaking and responsibility for 
the allocation and management of resources back to the local government 
level. The MPO Federal mandate tends to inhibit local decisionmaking 
and has resulted in a heavy handed bureaucracy that is in many ways 
worse than the process was before ISTEA. We believe the MPO process is 
in great need of reform.
                  douglas county's case for mpo reform
    The Federal planning process has become extremely complicated and 
archaic, resulting in local transportation decisions being dictated by 
the planning bureaucracy. Federal regulations governing this process 
have become so burdensome that no one outside the planning 
professionals understands them, and the local elected decisionmakers 
simply do not have the time to read all the regulations that are now on 
the books. Further, every time Douglas County staff meets with DRCOG 
staff, we seem to get different and contradictory information about how 
the transportation funding process works.
    When MPO's served in an advisory role such a situation was 
tolerable. However, now that MPO's, in some cases, have taken on the 
role of allocating scarce Federal transportation resources, the 
bureaucracy has become problematic. In the case of Douglas County and 
in its capacity as a fast growing, transitional community, the 
decisions of the local MPO could have disastrous short and long-term 
effects.
    To the point, the population for the entire DRCOG region is 
approximately 2.1 million persons, based on DRCOG's 1996 estimate. 
Douglas County is about 5.27 percent of that total. However, projects 
in Douglas County have received only .35 percent of DRCOG 
transportation funding in the fiscal year 1993-1995 Transportation 
Improvement Program (TIP) cycle, only 1.2 percent of the fiscal year 
1995-1997 TIP funding cycle and only .4 percent of the fiscal year 
1997-1999 TIP funding cycle. In fact, the total amount of funding 
Douglas County has received for county-sponsored projects over the life 
of ISTEA is $250,000, compared with approximately $20 million in County 
requests that have been denied. This funding inequity and the 
unlikelihood of any real potential for change under the current MPO 
structure are the main reasons why we are here today.
    The reasons for such funding inequities are complex. However, one 
clear factor that inhibits areas like Douglas County from obtaining a 
fair share of the funding is that there are no provisions in the 
funding process which address growth. Highways in Douglas County are 
impacted not only by the County's increased population, but also by the 
growth rate of the entire Denver and Colorado Springs areas, based on 
our linkage position between these two regions. This growth has 
significant effects on roadway safety and capacity, as well as air 
quality. However, the current funding process tends to favor core city 
projects, with extremely high costs and minimal improvements to roadway 
safety or air quality improvements, to the detriment of high-growth 
communities. The result is that the metropolitan region's 
infrastructure is not able to keep pace with growth, and impacted 
communities like Douglas County are not able to meet the transportation 
needs of their residents, nor the needs of the region. Trends indicate 
that future growth will continue to take place in suburban areas, and 
current and future needs in these communities must be addressed in the 
Federal transportation funding process.
    For the record, we would like to document for the subcommittee the 
major issues that have arisen between the County and the MPO since the 
enactment of ISTEA that we hope will show the County's frustration with 
the current system:
     During the preparation of the first DRCOG TIP under ISTEA 
in 1993, Douglas County applied for funding to complete a four lane 
section of Lincoln Avenue, the County's most heavily traveled road. The 
engineering was totally funded by Douglas County, and the project was 
in the final design phase. Nearly all of the right-of-way had been 
obtained, and the County had the local match identified. DRCOG denied 
funding for the project, declaring the project a ``capacity 
enhancement.'' The reality is that the project simply would have 
widened a 2.5 mile, two lane section of road that was already four 
lanes on either end--a project designed to improve the safety of the 
roadway;
     Also in 1993, the County applied for funding for a bicycle 
project that was originally planned to add a shoulder to 22 miles of 
Highway 105 under the County's jurisdiction. This project was intended 
to mitigate a significant safety issue by separating automobile traffic 
from bicycle traffic. The cost of the proposed safety project was $5 
million. DRCOG unilaterally and drastically modified the scope of the 
project and narrowed the project to a 2-3 mile section of a roadway 
that was under the State's jurisdiction, not the County's. We were 
requested to pay a local funding match on a section of roadway we did 
not own. Therefore, the project that was dictated to the County by the 
MPO did not meet our stated needs and was rejected by the County;
     DRCOG was not initially supportive and, in fact, was often 
an obstacle in Douglas County's efforts to have additional mileage on 
Highway 85 added to the proposed National Highway System in 1995. 
Douglas County approached DRCOG in July 1995 and was told that adding 
mileage to Colorado's request ``was not possible'', and, in fact, if 
such mileage were added it would mean deletion of other routes in 
Colorado. Obviously this was simply not factual.
    Despite DRCOG staff reservations and with the much needed support 
of Congressman Joel Hefley, the DRCOG Board on September 20, 1995 gave 
direction to the staff to send a letter to the Federal Highway 
Administration (FHWA) in support of the project. However, it was then 
determined by DRCOG staff that DRCOG's Transportation Committee must 
ratify the request. Ultimately, 10 weeks after the County made the 
request, a formal letter was sent by DRCOG on September 27, 1995 to the 
FHWA, only 2 days before the decisive action was taken on the NHS bill 
in the U.S. House of Representatives. Despite DRCOG's actions, the FHWA 
approved the new NHS with the Highway 85 section added;
     As further evidence of DRCOG's opposition to equitable 
highway funding, especially regarding the Highway 85 project in Douglas 
County, the County attempted to apply for NHS funds for a dangerous 
intersection at Titan Road and Highway 85. The County was not allowed 
to apply for funding due to the fact that DRCOG had set a deadline for 
applying for NHS funds of January 5, 1996. This application deadline 
was less than 20 days after the FHWA had allocated funds to the State 
and a little over 35 days since the NHS had been enacted into law. 
While we understand the need for deadlines, we consider this timeframe 
to have been unreasonable;
     On another safety-related issue, in early 1996 the 
Colorado Department of Transportation (CDOT) submitted a request to 
DRCOG for $30 million to widen northbound and southbound I-25 from 
Lincoln Avenue to Castle Pines Parkway, in an area that has experienced 
a high level of fatalities and injuries from truck related accidents, 
including an 82-car pileup on February 6 of this year. DRCOG attempted 
to reallocate the construction funding requested to another project 
outside of Douglas County, without the knowledge of CDOT, and 
recommended instead that $300,000 be allocated for the roadway to be 
studied in 1999. When this action by DRCOG was discovered, CDOT and the 
County protested the action and requested that funding for the project 
be restored.
    I am pleased to say that $7.5 million was placed back into the 
budget for that much-needed highway improvement, but it is still only 
25 percent of what is needed. Since Douglas County has made attempts to 
strive for MPO reform and has begun to work closely with CDOT on this 
project, DRCOG appears to have become more responsive to the safety 
needs on this Section of I-25. However, DRCOG has also made it clear 
that no funding from the MPO will be available for a proposed truck 
safety lane to meet immediate safety needs.
    These are specific examples, including the denial of over $20 
million in project requests, of how we have tried to work through the 
system and cooperate with DRCOG. At nearly every turn, our efforts are 
frustrated, and we have reluctantly reached the conclusion that the 
system is not a democratic decisionmaking process and that change 
within DRCOG is nearly impossible.
    The size and complexity of DRCOG also hampers our efforts to 
proceed with necessary infrastructure projects. DRCOG is made up of 39 
municipalities and 8 counties, with the City and County of Denver, our 
central city, having a seat on the board for each category. This 
structure makes it particularly difficult for county governments 
because of the control of the municipalities. It is extremely 
problematic for Douglas County due to the percentage of our population 
which resides in unincorporated areas of the County.
    While DRCOG maintains that local government elected officials make 
transportation decisions and that DRCOG is responsive to local 
government needs, Douglas County and other jurisdictions have not had 
such positive experiences with the MPO process. In fact, as noted 
above, DRCOG staff has hindered Douglas County's ability to obtain 
support for transportation priorities. Further, municipalities, which 
represent over 80 percent of the local governments in the MPO, have a 
stronger voice than suburban counties, like Douglas, in regional 
planning efforts.
    This inequity is even more extreme regarding the role of the 
central city, Denver; because it is a city and county, Denver receives 
two votes on the DRCOG Board. DRCOG's weighted voting system, which has 
never been invoked, provides even more power to the central city. 
Douglas County is not alone in its frustration; other jurisdictions 
have also expressed concerns with the current MPO process and have 
indicated support for the legislative reform that we are advocating 
today.
    State departments of transportation provide a consistency that MPOs 
cannot, as MPO's vary from region to region and State to State. In 
Colorado, MPOs do not design, engineer or construct projects. Why then, 
should they be responsible for the selection of those projects? As an 
elected official, I am accountable to the citizens I represent. As an 
organization, DRCOG is not. It is clear that DRCOG is a federally 
mandated and protected local decisionmaker that is staff driven. We do 
not believe that was the intent of ISTEA, and for that reason we 
believe national reform is needed.
                recommendations for national mpo reform
    For the reasons specified above, we would ask this subcommittee to 
consider the following reforms for MPO's in the reauthorization of 
ISTEA:
    1. Lower the unreasonable barrier for a jurisdiction's withdrawal 
and redesignation from an MPO to the approval of local officials 
representing 50 percent of the population in the entire metropolitan 
area outside of the central city. Problems in suburban communities are 
drastically different from the central cities, and if their colleagues 
agree that further involvement with that MPO is not meeting the needs 
of those communities, they should be allowed to withdraw, be 
redesignated, or join an adjacent MPO;
    2. Assuming that the above criteria are achieved, there is no 
justification for the official of the central city having a veto power 
over that decision. If this is allowed to continue, why are other local 
officials surrounding the central city not given the same veto power 
over a proposal by the central city? This central city veto authority 
should be eliminated;
    3. If a jurisdiction seeking to determine its own transportation 
planning future should satisfy the above criteria, it is again 
required, by Federal law, ``to cooperate, consult and coordinate with 
the State and other MPO's in the metropolitan planning area.'' In our 
judgment, this would completely negate whatever effort there would be 
to make one's own decisions. We would recommend that this language be 
modified to read only that the new MPO ``consult'' with the other 
entities; and
    4. Because State departments of transportation have the knowledge, 
experience, and expertise to assure project selection based on sound 
data and engineering analysis, the authority for project selection 
should be returned to those entities. MPOs should have an expanded role 
in research and development that focuses on problems and technology 
transfer and that answers back to State and local governments 
responsible for solving problems.
    5. As long as the Federal Government is going to be involved in the 
planning process and assuming that the intent is truly to foster 
greater local decisionmaking, there should be a requirement that an MPO 
must have a process in place for equitable, agreed upon local 
decisionmaking and that the process should be utilized. If it can be 
shown that a democratic locally accepted voting process is not being 
utilized, such an inequitable voting process would be a basis for the 
MPO's Federal certification not to be renewed.
    Again, these proposed changes will help make the MPO process more 
responsive to local government transportation needs, as we believe is 
the intent of ISTEA. We are proposing these changes today not as an 
attempt to circumvent the current process, but to ensure that all 
jurisdictions will be able to determine transportation priorities and 
meet local needs equitably. Congressman Joel Hefley has introduced H.R. 
477, a bill we call the ``Local Transportation Decision-making 
Empowerment Act,'' which incorporates many of the items we just 
mentioned.
    Finally, Mr. Chairman, I am pleased to see that the Administration 
is moving in the proper direction on these issues. The Administration's 
version of ISTEA, that was sent to the Congress last week, includes the 
following recommendations:
    (1) Decreasing the threshold for MPO redesignation to 51 percent 
from 75 percent;
    (2) Having local officials acting through the MPO and the Secretary 
determine whether redesignation is possible instead of having the 
authority rest solely with the Governor; and
    (3) Require ``coordination'' instead of ``cooperate, coordinate and 
consult'' between two MPO's.
    Overall, Mr. Chairman this is a positive direction, and we believe 
this shows the strength of our cause. Washington simply cannot dictate 
local decisionmaking any longer, and we hope you will strongly consider 
all the provisions in H.R. 477 for inclusion into your version of 
ISTEA.
    Mr. Chairman, thank you for this opportunity to present our views 
and I would be glad to try to answer any questions that you may have.
                                 ______
                                 
                                            Douglas County,
                                   Castle Rock, CO, March 17, 1997.
Hon. A. Wayne Allard,
U.S. Senate,
Washington, DC.
    Dear Senator Allard: Thank you for inviting Douglas County to 
appear before the Senate Committee on Environment and Public Works, 
Subcommittee on Transportation and Infrastructure, regarding our 
transportation concerns.
    As you know, Douglas County is anxious to pursue reform for the 
Metropolitan Planning Organization (MPO) system as a part of the 
reauthorization of ISTEA. We have attempted and will continue to 
attempt to work cooperatively with local jurisdictions to meet our 
transportation needs. However, to date we have had minimal success. We 
are now looking forward to pursuing Congressman Joel Hefley's 
legislation, H.R. 477, to help us meet the growing needs of our 
community.
    This bill would allow more local government flexibility in the area 
of MPO's by allowing local jurisdictions to withdraw, redesignate, or 
join an adjacent MPO which might better meet the needs of the local 
jurisdiction. We are requesting your support for the provisions of H.R. 
477, and further request that you consider introducing similar 
legislation in the U.S. Senate.
    Attached please find letters of support from Colorado Counties, 
Inc., as well as from counties and cities within the DRCOG region. 
Thank you for your consideration of this critical issue.
            Sincerely,
                                          M. Michael Cooke,
                                                      Commissioner.
                                 ______
                                 
                                   Colorado Counties, Inc.,
                                     Denver, CO, February 26, 1997.
Hon. A. Wayne Allard,
U.S. Senate,
Washington, DC.
    Dear Senator Allard: Colorado Counties, Inc. (CCI) is a nonprofit, 
statewide organization of Colorado's county commissioners. We have a 
vital interest in all Federal and State transportation policies. CCI's 
focus is to ensure that the local government perspective is represented 
on Federal transportation policy and related issues.
    CCI endorses the provisions of H.R. 477, ``To amend titles 23 and 
49, United States Code, relating to metropolitan planning'', sponsored 
by Congressman Joel Hefley. H.R. 477 amends Federal law regarding 
criteria for designating metropolitan planning organizations (MPO's) 
for urbanized areas under the highway and mass transit programs. CCI 
strongly believes this legislation will give local governments the 
flexibility to establish and join MPO's that best fit their needs at 
the local level.
    Congressman Hefley's bill amends sections 134(b) and 134(e) of 
title 23 and sections 5303(c) and 5303(e) of title 49, United States 
Code, concerning the designation of MPO's under highway and transit 
programs. The proposed amendments would accomplish the following:
     Allow a jurisdiction to withdraw from an MPO with the 
approval of local officials representing 50 percent of the population 
in the entire metropolitan area. Under existing law, jurisdictions must 
receive approval from 75 percent of the population in the entire 
metropolitan area This provision will grant governments the ability to 
withdraw from currently required MPO's and join other organizations 
that may provide a better fit, based on the local governments' needs.
     Eliminate the current provision that the central city must 
approve of a jurisdiction's withdrawal from an MPO. This revision, 
therefore, eliminates the central city's ability to block the 
withdrawal of a local jurisdiction from an MPO.
     Enhance local government flexibility by requiring that a 
withdrawn jurisdiction and existing MPO's only consult with neighboring 
MPO's in transportation planning. This revision maintains that the 
State should provide oversight in areas with multiple MPO's. Therefore, 
local jurisdictions, while consulting with other MPO's and the state, 
would have the authority and autonomy to develop plans and programs 
that meet local needs.
    CCI encourages support of this legislation, which grants 
flexibility to local governments in the designation of metropolitan 
planning organizations. The benefits achieved by MPO's will be enhanced 
and furthered with the passage of H.R. 477, which removes obstacles and 
limits imposed in current Federal law.
    CCI respectfully requests your support for H.R. 477. Thank you for 
your consideration of this important issue.
            Sincerely,
                                     Cynthia Erker,
                        County Commissioner, Morgan County,
                      Chair, CCI Transportation Steering Committee.

                                  M. Michael Cooke,
                       County Commissioner, Douglas County,
                 Vice Chair, CCI Transportation Steering Committee.
                                 ______
                                 
                                  Arapahoe County Colorado,
                                     Littleton, CO, March 18, 1997.
Hon. A. Wayne Allard,
U.S. Senate,
Washington, DC.
    Dear Senator Allard: On behalf of the Arapahoe County Board of 
County Commissioners, I am writing to express Arapahoe County's support 
for metropolitan planning organization (MPO) reform. Specifically, our 
County supports H.R. 477, introduced by Congressman Hefley.
    This legislation would provide local governments the flexibility to 
determine and meet their transportation needs, as we believe is the 
intent of ISTEA. H.R. 477 would accomplish the following:
     Allow a jurisdiction to withdraw from an MPO with the 
approval of local officials representing 50 percent of the population 
in the entire metropolitan area. Under existing law, jurisdictions must 
receive approval from 75 percent of the population in the entire 
metropolitan area;
     Eliminate the central city's ability to block the 
withdrawal of a jurisdiction;
     Require that the withdrawn jurisdiction and existing MPO's 
only consult with neighboring MPO's in transportation planning issues;
     Make it the responsibility of the state to provide 
oversight in the areas with multiple MPO's.
    Such legislation would allow more local government flexibility in 
the area of MPO's by allowing local jurisdictions to withdraw, 
redesignate, or join an adjacent MPO, while maintaining the need for 
intergovernmental cooperation. Therefore, we respectfully request that 
you support H.R. 477 and consider introducing similar legislation in 
the U.S. Senate. Thank you for your consideration of this important 
matter.
            Sincerely,
                                                Polly Page,
                           Chairman, Board of County Commissioners.
                                 ______
                                 
               Adams County, Board of County Commissioners,
                                      Brighton, CO, March 17, 1997.
Hon. A. Wayne Allard,
U.S. Senate,
Washington, DC.
    Dear Senator Allard: On behalf of the Adams County Board of 
Commissioners, I am writing to express Adams County's support for 
metropolitan planning organization (MPO) reform. Specifically, we 
support H.R. 477, introduced by Congressman Hefley.
    This legislation would provide local governments the flexibility to 
determine and meet their transportation needs, as we believe is the 
intent of ISTEA. H.R. 477 would accomplish the following:
     Allow a jurisdiction to withdraw from an MPO with the 
approval of local officials representing 50 percent of the population 
in the entire metropolitan area. Under existing law, jurisdictions must 
receive approval from 75 percent of the population in the entire 
metropolitan area. Under existing law, jurisdictions must receive 
approval from 75 percent of the population in the entire metropolitan 
area;
     Eliminate the central city's ability to block the 
withdrawal of a jurisdiction;
     Require that the withdrawn jurisdiction and existing MPO's 
only consult with neighboring MPO's in transportation planning issues;
     Make it the responsibility of the state, to provide 
oversight in the areas with multiple MPO's.
    Such legislation would allow more local government flexibility in 
the area of MPO's by allowing local jurisdictions to withdraw, 
redesignate, or join an adjacent MPO, while maintaining the need for 
Intergovernmental cooperation. Therefore, we respectfully request that 
you support H.R. 477 and consider introducing similar legislation in 
the U.S. Senate. Thank you for your consideration of this important 
issue.
            Sincerely,
                                           Martin J. Flaum,
                           Chairman, Board of County Commissioners.
                                 ______
                                 
             Boulder County, Board of County Commissioners,
                                       Boulder, CO, March 14, 1997.
Hon. Wayne Allard,
U.S. Senate,
Washington, DC.
    Dear Senator Allard: We are writing to indicate our support of H.R. 
477, concerning Metropolitan Planning Organizations under the Federal 
Highway Program, sponsored by Congressman Joel Hefley; and to ask for 
your assistance with this legislation in the U.S. Senate.
    Congressman Hefley introduced this legislation on behalf of Douglas 
County and other local jurisdictions who need more flexibility in their 
own regional planning for the use of limited Federal transportation 
resources. Boulder County, like Douglas County on the fringes of the 
Denver Metropolitan Area, needs this additional flexibility.
    We, too, are one of the fastest growing counties in Colorado and 
the country. Our population is now over 260,000, and has two distinct 
employment centers of over 50,000--the City of Boulder and the City of 
Longmont. We, therefore, qualify as a separate metropolitan statistical 
area (SMSA) under Federal census guidelines. We have important regional 
relationships among the 11 incorporated municipalities in the county 
and a county regional organization, the Boulder County Consortium of 
Cities, which recently has formed a Regional Transportation Task Force 
to coordinate among the cities and towns and the county to plan for and 
address our many transportation needs. Additionally, we have strong 
regional relationships with Northeastern Colorado, and receive most of 
our Colorado Department of Transportation planning and funding through 
Engineering Region Four, located in Greeley.
    There is widespread acceptance of the fact within Boulder County 
that Federal and State transportation resources will never meet our 
current and future transportation needs. We believe it is likely that 
many areas in the United States, like Boulder and Douglas Counties, 
need additional flexibility in planning and allocation of Federal 
transportation dollars within this environment of scarce resources. We 
strongly support Congressman Hefley's bill as a way of addressing this 
issue.
    Additionally, we feel that any separately identified metropolitan 
area (SMSA) within the country should have the ability to withdraw from 
a combined metropolitan statistical area, without the need for any 
authorizing vote from that combined area. We plan to request that 
Congressman David Skaggs, representing our Congressional District, seek 
an amendment regarding this issue; and would hope to have your 
assistance with this, as well.
    Thank you in advance for your support and your assistance on this 
legislation.
            Sincerely,
                                               Ron Stewart,
                               Chair, Boulder County Commissioners.

                                            Paul D. Danish,
                                       Boulder County Commissioner.

                                               Jana Mendez,
                          Vice Chair, Boulder County Commissioners.
                                 ______
                                 
           Jefferson County, Board of County Commissioners,
                                        Golden, CO, March 17, 1997.
Hon. A. Wayne Allard,
U.S. Senate,
Washington, DC.
    Dear Senator Allard: We are writing to express Jefferson County's 
support for metropolitan planning organization (MPO) reform. 
Specifically, we support H.R. 477, introduced by Congressman Hefley.
    This legislation would provide local governments the flexibility to 
determine and meet their transportation needs, as we believe is the 
intent of ISTEA. H.R. 477 would accomplish the following:
     Allow a jurisdiction to withdraw from an MPO with the 
approval of local officials representing 50 percent of the population 
in the entire metropolitan area. Under existing law, jurisdictions must 
receive approval from 75 percent of the population in the entire 
metropolitan area.
     Eliminate the central city's ability to block the 
withdrawal of a jurisdiction.
     Require that the withdrawn jurisdiction and existing MPO's 
only consult with neighboring MPO's in transportation planning issues.
     Make it the responsibility of the State to provide 
oversight in the areas with multiple MPO's.
    Such legislation would allow more local government flexibility in 
the area of MPO's by allowing local jurisdictions to withdraw, 
redesignate, or join an adjacent MPO, while maintaining the need for 
intergovernmental cooperation. Therefore, we respectfully request that 
you support H.R. 477 and consider introducing similar legislation in 
the U.S. Senate. Thank you for your consideration of this important 
matter.
            Sincerely,
                                             John P. Stone,
                           Chairman, Board of County Commissioners.

                                         Michelle Lawrence,
                                     Board of County Commissioners.

                                      Patricia B. Holloway,
                                     Board of County Commissioners.
                                 ______
                                 
                                            City of Aurora,
                                        Aurora, CO, March 14, 1997.
Hon. A. Wayne Allard,
U.S. Senate,
Washington, DC.
    Dear Senator Allard: I am writing to express my support for 
metropolitan planning organization (MPO) reform. Specifically, I 
support H.R. 477, introduced by Congressman Hefley.
    This legislation would provide local governments the flexibility to 
determine and meet their transportation needs, as I believe is the 
intent of ISTEA. H.R. 477 would accomplish the following:
     Allow a jurisdiction to withdraw from an MPO with the 
approval of local officials representing 50 percent of the population 
in the entire metropolitan area. Under existing law, jurisdictions must 
receive approval from 75 percent of the population in the entire 
metropolitan area;
     Eliminate the central city's ability to block the 
withdrawal of a jurisdiction;
     Require that the withdrawn jurisdiction and existing MPO's 
only consult with neighboring MPO's in transportation planning issues;
     Make it the responsibility of the State to provide 
oversight in the areas with multiple MPO's.
    Such legislation would allow more local government flexibility in 
the area of MPO's by allowing local jurisdictions to withdraw, 
redesignate, or join an adjacent MPO, while maintaining the need for 
intergovernmental cooperation. Therefore, I respectfully request that 
you support H.R. 477 and consider introducing similar legislation in 
the U.S. Senate. Thank you for your consideration of this important 
matter.
            Sincerely
                                             Paul E. Tauer,
                                                             Mayor.
                                 ______
                                 
                                       Town of Castle Rock,
                                   Castle Rock, CO, March 17, 1997.
Hon. A. Wayne Allard,
U.S. Senate,
Washington, DC.
    Dear Senator Allard: On behalf of the Castle Rock Town Council, I 
am writing to express support for changes in the nature of Metropolitan 
Planning Organizations (MPO).
    We support some of the intent of H.R. 477 introduced by Congressman 
Heffley, but feel that one must consider the economic and geographic 
realities of each area. While the current focus is on transportation 
issues, other related issues such as air and water quality must be 
recognized as well in any move to create realigned MPO's.
    We believe that the ability of the central city to block the 
withdrawal of a jurisdiction in the current law should be changed. In 
our metropolitan area, it is likely that Denver represents a smaller 
proportion of population than either Jefferson or Arapahoe counties. I 
suspect this is true in many areas of the country. An organization held 
together by force is not likely to be as effective as one created by 
equals working together.
    We appreciate your consideration of these potential changes to 
improve the effectiveness of MPO's.
            Sincerely,
                                           Donald K. Jones,
                                        Mayor, Town of Castle Rock.
                                 ______
                                 
                                         City of Lone Tree,
                                                    March 14, 1997.
Hon. A. Wayne Allard,
U.S. Senate,
Washington, DC.
    Dear Senator Allard: On behalf of the Council, I am writing to 
express the support of the City of Lone Tree for Metropolitan Planning 
Organization (MPO) reform. Specifically, we support H.R. 477, 
introduced by Congressman Hefley.
    This legislation would provide local governments the flexibility to 
determine and meet their transportation needs, as we believe is the 
intent of ISTEA. H.R. 477 would accomplish the following:
     Allow a jurisdiction to withdraw from an MPO with the 
approval of local officials representing 50 percent of the population 
in the entire metropolitan area instead of 75 percent as required by 
existing law;
     Eliminate the central city's ability to block the 
withdrawal of a jurisdiction;
     Require that the withdrawn jurisdiction and existing MPO's 
only consult with neighboring MPO's in transportation planning issues;
     Make it the responsibility of the State to provide 
oversight in the areas with multiple MPO's.
    Such legislation would allow more local government flexibility in 
the area of MPO's by allowing local jurisdictions to withdraw, 
redesignate, or join an adjacent MPO, while maintaining the need for 
intergovernmental cooperation. Therefore, we respectfully request that 
you support H.R. 477 and consider introducing similar legislation in 
the U.S. Senate.
    Thank you for your consideration of this important matter.
            Sincerely,
                                           John R. O'Boyle,
                                                             Mayor.
                                 ______
                                 
                                            Town of Parker,
                                        Parker, CO, March 17, 1997.
Hon. A. Wayne Allard,
U.S. Senate,
Washington, DC.
    Dear Senator Allard: On behalf of the Council, I am writing to 
express the Town of Parker's support for metropolitan planning 
organization (MPO) reform. Specifically, we support H.R. 477, 
introduced by Congressman Hefley.
    This legislation would provide local governments the flexibility to 
determine and meet their transportation needs, as we believe is the 
intent of ISTEA. H.R. 477 would accomplish the following:
     Allow a jurisdiction to withdraw from an MPO with the 
approval of local officials representing 50 percent of the population 
in the entire metropolitan area. Under existing law, jurisdictions must 
receive approval from 75 percent of the population in the entire 
metropolitan area;
     Eliminate the central city's ability to block the 
withdrawal of a jurisdiction;
     Require that the withdrawn jurisdiction end existing MPO's 
only consult with neighboring MPO's in transportation planning issues;
     Make it the responsibility of the State to provide 
oversight in the areas with multiple MPO's.
    Such legislation would allow more local government flexibility in 
the area of MPO's by allowing local jurisdictions to withdraw, 
redesignate, or join an adjacent MPO, while maintaining the need for 
intergovernmental cooperation. Therefore, we respectively request that 
you support H.R. 477 and consider introducing similar legislation in 
the U.S. Senate. Thank you for your consideration of this important 
matter.
            Sinerely,
                                              Gary Lasater,
                                                             Mayor.
                                 ______
                                 
                    Denver Regional Council of Governments,
                                        Denver, CO, April 10, 1997.
Hon. John H. Chafee, Chairman,
Committee on Environment and Public Works,
Washington, DC.
    Dear Chairman Chafee: We have reviewed Commissioner Michael Cooke's 
March 19, 1997 testimony on behalf of Douglas County before the 
committee on Environment and Public Works regarding metropolitan 
planning organization (MPO) reform. We respectfully request this letter 
and the attachment be made part of the committee hearing record.
    While the county is entitled to take its own position on such 
issues, we are concerned with its portrayal of the MPO transportation 
planning process before the subcommittee. We are particularly concerned 
with the examples of the county's frustration with the current MPO 
system. The presentation is incomplete and in some cases is factually 
incorrect. Attached you will find a detailed discussion and response to 
each of the county's examples of issues with the MPO. While there is 
always room for improvement, the MPO decisionmaking process in our 
region basically works well and represents a coordinated, regional 
approach to determining transportation investments in the metropolitan 
area as intended under the Intermodal Surface Transportation Efficiency 
Act (ISTEA).
    As the Metropolitan Planning Organization (MPO) for the Denver 
region, the Denver Regional Council of Governments (DRCOG) has the 
prime responsibility for developing the long-range Regional 
Transportation Plan (RTP) and its short-range priorities through the 
Transportation Improvement Program (TIP). It is important to note that 
the MPO, as structured at DRCOG, brings together the key partners in 
transportation planning, ensures that the region's transportation plans 
and projects are compatible with local land use decisions, and 
addresses air quality issues as prescribed in ISTEA. The process 
includes policy representatives from the Colorado Department of 
Transportation (CDOT), the Regional Transportation District (RTD), and 
the DRCOG Board of Directors--local elected officials.
    With all due respect, we simply do not agree with Douglas County's 
view of the MPO process in our region. Rather than being a process that 
``makes real local decisionmaking illusory,'' the MPO process in the 
Denver region is driven by the projects identified by local 
governments, the Colorado Department of Transportation and the Regional 
Transportation District. Moreover, it is local governments represented 
by elected officials on the DRCOG Board of Directors, that make the 
decisions on the criteria for project evaluation and on the projects to 
be included in the TIP.
    Douglas County's testimony states that under ISTEA, the MPO role 
has shifted from advisory to ``actual approval of specific Federal 
transportation funding projects . . . taking that direct authority away 
from local governmental entities.'' In fact, lSTEA marked a new era in 
transportation planning--one that emphasized local discretion and 
control of investment decisions. Prior to ISTEA, transportation project 
decisions were made solely by the states. The significance of the MPO 
role is in providing a cooperative forum for local government 
interests, in partnership with state and other interests, to determine 
and to act on the transportation needs of the region. The MPO must 
consider these needs within a fiscally constrained context. Thus, only 
the projects with the highest priority which collectively meet air 
quality standards, are considered in the TIP.
    Commissioner Cooke states that the MPO process ``tends to inhibit 
local decisionmaking and has resulted in a heavy-handed bureaucracy 
that is in many ways worse than the process was before ISTEA.'' On the 
contrary, the significance of ISTEA is that for the first time local 
elected officials, acting through their metropolitan organizations, 
were given the responsibility and authority, cooperatively with the 
states, to set priorities for use of Federal transportation funds. 
Pursuant to this responsibility and authority, DRCOG has established 
plans and programs which respond to Federal statutory and regulatory 
requirements and ensure a fair and equitable distribution of Federal 
transportation funds throughout the region.
    As with any process which allocates limited resources, there will 
always be winners and losers; however, during the ISTEA authorization 
period, the distribution of dollars through DRCOG's process has been 
responsive to Federal requirements, has given all eligible local 
governments an equal opportunity and has been fair and equitable. We 
have diligently sought to maintain a level playing field for all of our 
member cities and counties.
    The starting point for DRCOG's project priority determinations is 
in fact local decisionmaking. Our process begins with an open 
solicitation of projects. Only the projects received through this 
solicitation are prioritized and considered for inclusion in the TIP. 
In response to this solicitation for the 1997-2002 TIP, Douglas County 
did not submit any projects for consideration. During solicitation for 
the 1995-2000 TIP, the county only submitted two enhancement project 
proposals--both for trails. For the 1993-1995 TIP, the county also only 
submitted two projects. Both of these were selected and included in the 
TIP. See the attachment for a discussion of these projects--Lincoln 
Avenue and Highway 105. Without project submittals to evaluate, DRCOG 
has no basis for including Douglas County projects in the TIP.
    With respect to the issue of equity, I would respectfully point out 
that for the 1992-97 ISTEA authorization period, DRCOG allocated 4.4 
percent of the funds over which it has primary authority to projects 
located in Douglas County. Those funds within the Colorado Department 
of Transportation's purview amounted to 2.3 percent of the regional 
total for an overall share of 2.6 percent. The county's average 
population share of the region between 1992-96 was 4.5 percent.
    Douglas County raises an issue regarding the size and complexity of 
DRCOG as hampering their efforts to proceed with infrastructure 
projects. The focus of their concern is the relationship between the 
municipalities and the counties within the DRCOG structure as well as 
the perceived role of the City and County of Denver. If Douglas County 
and other jurisdictions have concerns regarding their role and 
participation within the DRCOG structure, that is an issue that must be 
addressed locally, not by Congress. DRCOG is a voluntary association of 
cities and counties which is organized and operates by the consent of 
its member governments. To date, Douglas County has not raised these 
concerns directly within the organization. Let me assure you that as 
Chairman of the Board of Directors, if Douglas County or any other 
member has concerns about DRCOG's structure, we are prepared to address 
those concerns among the membership. To do this we would urge the 
county to work with its colleagues at DRCOG to address such issues 
locally rather than continuing to pursue national legislation.
    Appropriately, MPOs nationally have been given significant 
responsibilities to ensure that ISTEA works as Congress intended. They 
have performed very well, including throughout the Denver metropolitan 
area. Diminishing the MPO's role and breaking-up the metropolitan areas 
that they serve will not enhance the operation or perspective sought by 
ISTEA.
            Sincerely,
                                     Margaret W. Carpenter,
                                                          Chairman.
                                 ______
                                 
                               Attachment
 response to issues identified in douglas county testimony before the 
 u.s. senate committee on environment and public works--march 19, 1997
Lincoln Avenue--Page 3 of testimony
    The statement is made that DRCOG denied funding for the Lincoln 
Avenue project because we identified it as a ``capacity enhancement'' 
project. While Lincoln Avenue was a capacity enhancement project, it 
was not denied funding for that reason. In 1993, Lincoln Avenue existed 
as primarily a two-lane road from 1-25 on the west to Parker Road/SH-83 
on the east, with short sections of four lane in the vicinity of 1-25 
and just west of Jordan Road. As mostly a two-lane roadway, it provided 
two-lane capacity. By adding the additional two lanes, the capacity 
would indeed be increased to that of a continuous four-lane highway. It 
should be noted that this roadway parallels, at approximately one mile 
distance, the E-470 tollway, which is a freeway providing two lanes in 
each direction. With both the four lanes on E-470 and the two lanes on 
Lincoln Avenue, the near term capacity needs of the corridor were not 
an issue. The project was originally selected for Federal funding in 
the 1993-98 Transportation Improvement Program (TIP). However, in order 
to find conformity between the TIP and the State Implementation Plan 
(SIP) for Air Quality pursuant to section 176(c) of the Clean Air Act 
as amended, it was necessary to constrain the TIP time period to 1993-
95 such that the transportation improvements which actually would be 
constructed within that timeframe could show attainment of the SIP 
requirements in 1995. Consequently, capacity adding projects which 
could not show that they had completed all environmental clearances, 
such that they could be constructed by 1995, had to be excluded from 
the 1993-95 TIP. As Lincoln Avenue had not completed required 
environmental clearances necessary for the use of Federal funds, it was 
unable to be constructed within that time period. Thus, in order for 
DRCOG, as the Metropolitan Planning Organization (MPO), to respond to 
Federal law and regulation--both transportation and environmental--the 
Lincoln Avenue project ultimately could not be included in the 1993-95 
TIP. The project could have been included in the next TIP; however, the 
county proceeded to complete the project using its own funds.
SH-105--Page 3 of testimony
    It is stated that ``in 1993, the County applied for funding for a 
bicycle project that was originally planned to add a shoulder to 22 
miles of Highway 105 under the County's jurisdiction.'' It is then 
alleged that ``DRCOG unilaterally and drastically modified the scope of 
the project and narrowed the project to a 2-3 mile section of roadway 
under the State's jurisdiction, not the County's.'' And, as a result, 
the county rejected the project. This is simply not the case. The 1993-
95 TIP allocated $445,000 for this project as requested by Douglas 
County. The project boundaries as selected by the county were from the 
El Paso County line to Red Rock Drive. This length contains a long 
segment of county road and a short segment of state highway. The 
project description, as identified on page 29 of the adopted TIP, is 
exactly as stated in the Douglas County application. Subsequent to the 
project's inclusion in the TIP, the Colorado Department of 
Transportation (CDOT) indicated that per Federal regulation shoulders 
could not be added to the road to accommodate bicyclists unless the 
entire roadway was reconstructed to Federal standards. The $445,000 
requested by Douglas County was clearly insufficient to fund 
construction to Federal standards for 22 miles of roadway. In an 
attempt to salvage the project, DRCOG did photolog it and, using this 
video, discussed the project with CDOT Region 1 staff and Douglas 
County staff in the summer of 1993. Discussed were ways to modify the 
project scope and reduce the project length to the most critical 
sections to fit within available funding. On September 28, 1993 a field 
inspection was conducted regarding Douglas County's proposed shortened 
improvement from Sedalia to Wolfensberger Road with state, county and 
DRCOG staff attending. At the meeting, CDOT Region 1, indicated that 
the construction requested would cost about $2 million due to roadway 
drop offs, vertical curves and a substandard bridge. Douglas County 
agreed to pursue an option involving adding four-foot shoulders on 
either side of the road including planned bridge improvements. They 
would pursue a roadway standard variance with the Federal Highway 
Administration (FHWA). As the state was not prepared to provide the 
matching funds, the degree to which the county would financially 
participate was a key determinate as to the project proceeding. The 
project was deleted from the 1993-95 TIP at the request of Douglas 
County, the county stated that the local match was unavailable.
SH-85--Page 3 and 4 of testimony
    It is alleged that DRCOG was ``often an obstacle in Douglas 
County's efforts to have additional mileage on Highway 85 added to the 
proposed National Highway System in 1995.'' It is true that DRCOG's 
first reaction was that it was ``not possible'' to add to the NHS 
mileage. Until Congress later saw fit to change the situation, it had 
established a specific mileage limitation on the NHS. FHWA rules 
implementing the Congressional action had set specific NHS roadway 
mileage quotas by state for roadways, both rural and urban. However, 
the principal reason that SH-85 was not considered for NHS mileage was 
that it had not been functionally classified as a principal arterial 
roadway. Only roads officially classified by CDOT as urban or rural 
principal arterials or freeways were eligible for classification as NHS 
routes. Within rural areas, the state evaluated principal arterial 
roadways for NHS designation on the basis of interstate connections, 
connections between major urban areas, cross-state connections, and 
vehicle miles of travel within a very limited federally prescribed 
amount of available rural principal arterial mileage. With the 
exception of a two mile segment of SH-85 in Castle Rock, SH-85 south of 
C-470 and SH-86 were classified as minor rural arterials and, 
consequently, could not be evaluated under FHWA criteria for NHS 
designation. Within these constraints, DRCOG's role was to simply 
provide advice to CDOT. The state concurred and did not include SH-85. 
As a result, SH-85 was not considered for NHS designation. Once 
Congress opened the door for additional mileage through the political 
process, irrespective of designation criteria, DRCOG did support the 
addition of the SH-85 mileage to the system. Our concern has always 
been that open and objective criteria be used to select roadways in the 
region for whatever reason to assure fair and equitable treatment to 
all of DRCOG's member jurisdictions and to avoid inappropriate 
political pressure within the Board.
    Further, it is alleged that DRCOG is opposed to equitable highway 
funding as it thwarted the county's attempt to apply for NHS funds for 
a dangerous intersection on Titan Road near SH-85 as the ``application 
deadline [for submittal of projects for the 1997-2002 TIP] was less 
than 20 days after the FHWA had allocated funds to the State and a 
little over 35 days since the NHS had been enacted into law.'' The fact 
that the NHS had just been enacted into law has nothing to do with 
applying for funding to address a dangerous intersection on this 
roadway. Indeed, the 1993-95 TIP contained a project to ``address 
operational improvements'' along the entire stretch of SH-85 from C-470 
to Castle Rock, which includes this intersection. Further, as is clear 
in Federal law, Congressional adoption of the NHS did not make any more 
funds available than had previously been allocated to the states for 
the NHS. While the recent NHS designation may have made this section of 
SH-85 eligible for NHS funds, this project, had it been submitted on 
time, would have had to compete with other major projects from 
throughout the region for extremely limited funds. Apparently, the 
state did not see the SH-85/Titan Road project as of high priority. 
CDOT Region 1, which is the responsible agency for this portion of SH-
85, did not submit an application for funding the SH-85/Titan Road 
project. Instead, the SH-85 project it did submit was for a 
demonstration project that would allow the state to implement 
strategies to maintain improvement options until such time as 
additional construction funding is available. Clearly, the application 
deadline for TIP project submittals had nothing to do with submitting 
this project as improvements on SH-85 it could have been funded with 
other funds besides NHS dollars. While the time available between NHS 
adoption and TIP application deadline was short, the data to be 
submitted in the project application is not overwhelming, especially if 
the project is of such high priority. It should be noted that the DRCOG 
Board of Directors turned down late submittals of other projects with 
compelling arguments for consideration because they believed that in 
order to assure equitable funding opportunities, all applicants needed 
to abide by the rules so that the TIP process was as fair as possible.
    The timeliness of the submittal of the project, however, would not 
appear to be the issue at hand. In April 1994, CDOT completed an 
environmental assessment (EA) of SH-85 from C-470 to Castle Rock. This 
EA was adopted by the Federal Highway Administration in June 1994. The 
EA states that while widening of the intersection with Titan Road will 
be included in the SH-85 widening project, ``the expansion of Titan 
Road to a four-lane and the railroad grade separation will be Douglas 
County's responsibility'' (p. 15). Only SH-85 is on the National 
Highway System and DRCOG's 2015 Interim Regional Transportation Plan. 
Titan Road is not. Consequently, this portion of the project would 
appear not to be eligible for use of Federal funds even if it had been 
submitted on time.
I-25--Page 4 of testimony
    It is alleged that DRCOG attempted to stand in the way of a 
widening of I-25 by reallocating the construction funding requested to 
another project outside of Douglas County without the knowledge of 
CDOT, and recommended, instead, that $300,000 be allocated for the 
roadway to be studied in 1999. Again, here are the facts. The original 
project application submitted to DRCOG by CDOT Region 1 called for 
$300,000 to be allocated in year 3 (FY 1999) to conduct a major 
investment study and the necessary environmental assessment, as 
required by Federal law and regulation. Such studies identify what 
needs to be done, how much it will cost, and how to address 
environmental impacts. The application also showed $30 million for 
design, right-of-way, and construction at some ``future'' date. In the 
first draft of the 1997-2002 TIP, staff included only the $300,000 in 
FY99 as it was uncertain as to what ``future'' meant, and since CDOT 
had no idea of exact costs until the studies were completed. On the 
basis of this draft, subsequent discussions were held with CDOT Region 
1. The state then modified its submittal to show $7.5 million in the 
second 3 years of the program (FY 2000 through fiscal year 2002), but 
the remainder of the dollars ($22.5 million) were to be needed sometime 
beyond 2002. Because the state still needs to complete the necessary 
studies, it is still uncertain as to whether the $30 million is an 
appropriate estimate for needed construction. It assumes that the $7.5 
million can at least be used for upgrading substandard interchanges in 
this area. We believe it is indeed prudent of an MPO to ask questions 
with respect to large expenditures of dollars when the application is 
not well defined and when funding for the region is constrained. Most 
emphatically, the $30 million of design, right-of-way and construction 
proposed by the state was not reallocated to any other roadway in the 
region. DRCOG's long-range plan calls for widening of I-25 in Douglas 
County and we are supportive of this project. DRCOG has been working 
with the state and the adjacent MPO to expedite necessary studies to 
more accurately define the south I-25 corridor needs and costs and, 
hopefully, to expedite necessary improvements.
                                 ______
                                 
Prepared Statement of Guillermo V. Vidal, Executive Director, Colorado 
                      Department of Transportation
    Chairman Warner, Senator Baucus, members of the committee, thank 
you very much for the opportunity to speak before you today. My name is 
Guillermo V. Vidal and I am Executive Director of the Colorado 
Department of Transportation (CDOT). It is with great respect that I 
come before you today to talk about Colorado's success in implementing 
the policy direction set forth in the Intermodal Surface Transportation 
Efficiency Act (ISTEA) of 1991.
    I have been with CDOT for over 20 years. In that time, I can tell 
you that the adoption of ISTEA has had the most significant influence 
on the operation of my organization. I should also note that in 1991, 
my organization was converted by our state legislature from a 
Department of Highways to a Department of Transportation. This new CDOT 
legislation also embraced the long range, multi-modal planning process 
put forth in ISTEA. Our transportation success in Colorado is evidence 
that ISTEA works!
    Although, when we first began we thought implementing ISTEA was 
going to be the end of civilization as we knew it, I am proud to be 
here today to advocate that ISTEA works and only minor modifications to 
the Act are necessary. As you may already be aware, Colorado Governor 
Roy Romer is part of the ISTEA WORKS coalition initiated by the 
Northeastern states. However, he has not endorsed any particular piece 
of legislation. It may seem unusual that a Rocky Mountain state would 
have any transportation commonality with the northeastern states, but 
in fact, we believe that the principles put forth by that group of 
states best meets Colorado's policy objectives in the reauthorization 
of ISTEA. For your convenience, I have attached a copy of Colorado's 
ISTEA Reauthorization Principles and the ISTEA WORKS Reauthorization 
Principles.
    Colorado's ISTEA Reauthorization Principles are a representation of 
input from various interests in Colorado ranging from our modal, 
environmental, business and local planning partners. Because of the 
rapid growth in our state and our concern for the impact this growth 
will have on our environment and quality of life, all of these 
interests were anxious to work together. Our ability to develop a 
statement representing such broad interests is largely due to the 
communications and relationships built through the development of our 
20-Year Statewide Transportation Plan.
    I am personally very proud of Colorado's Statewide Plan. It took us 
5 years and a great deal of work for the plan to be developed, but it 
was well worth the pain. Colorado's Statewide Plan is multi-modal, 
policy-oriented and project specific. It is the reason why today our 
state legislature has the confidence to invest state general fund 
surplus revenues in transportation to meet our ever increasing 
transportation needs ($830M over 5 Years with 20 percent allocated to 
our MIS corridors). It is also one of the reasons why our business 
community in Colorado is pursuing a tax initiative this November to 
further meet our mobility needs and address our funding shortfall. 
Colorado's 20-Year Priority Plan totals $27.3 billion. With anticipated 
revenues of $19 billion, our funding shortfall is approximately $8 
billion. But you didn't ask me here to talk about money.
                colorado's statewide transportation plan
    Although our success in developing a statewide plan may not be 
unique, our experience was. I'm a strong believer in consensus 
building. I believe in bringing people to the table, talking about our 
needs and working together to determine the best transportation 
solutions for Colorado. And then, working together to get those 
solutions funded and built. As I stated before, in 1991 our state 
legislature embraced the policy direction established by ISTEA and 
further created a State Transportation Advisory Committee and 15 
transportation planning regions. Together with CDOT, this group of 
representatives partnered to create our statewide plan. Colorado's 
Statewide Planning Process included the following:
     Grassroots based process--broad public participation
     15 Transportation Planning Regions (TPRs) made up of local 
elected officials, planners, environmental, economic development 
interests and modal representatives
     Consistent planning process and planning information 
provided to each TPR
     Flexible to account for regional diversity
     Regional ``Preferred Plans'' and ``Constrained Plans''
     Regional Plan priorities developed through criteria-based 
consensus process
     Statewide Plan created to reflect regional needs and 
regional priorities
     Statewide Plan strived to balance quality of life issues 
regarding mobility, environment, and economic development
     Statewide Plan incorporated State Significant System 
project priorities
    The Plan that resulted from this process has two components: policy 
and projects. The Policy Plan includes policy direction, issues of 
statewide significance, and our transportation investment strategy. The 
Project Plan includes over 3,000 projects from regional transportation 
plans and establishes priorities among the projects
    Public participation, fiscal constraint, modal integration, joint 
decisionmaking, major investment studies, conformity and enhancements 
are all part of what makes our plan successful. It is not to say 
however, that the process is perfect.
    We in Colorado would like to see the following modifications made 
to ISTEA:
     More flexibility given to the states to move money between 
categories. We are committed to the program but need flexibility to 
invest the dollars in the project areas prioritized through the 
planning process (i.e., ITS eligibility, funding available to all modal 
applications, etc.).
     Streamline the Enhancement Program to a state administered 
grant program to allow for the most effective use of the funds and not 
dilute the programs objectives with administrative costs and Title 23 
requirements.
     Retain the MIS process with a more defined relationship 
with NEPA. We see the MIS process as a great tool in helping us 
determine what the best transportation modal investment should be in 
Colorado. We are committed to this process and encourage your support 
for its continuation. Colorado has gone further and established 
Corridor Investment Studies to address selected corridors outside the 
metropolitan areas.
     Streamline the Federal approval process to allow for 
program approvals on an annual or semi-annual basis rather than 
project-by-project.
     Consolidate the 23 planning factors to a more manageable 
number as proposed by the Administration.
     Continue the use of Innovative Financing tools that allow 
the states to creatively pursue mechanisms to leverage existing revenue 
streams.
    I would like to conclude my remarks by once again stating that 
ISTEA WORKS for Colorado. I admire your leadership in addressing the 
nations transportation challenges and I hope the experiences I have 
shared with you today help you better understand the impact this 
legislation has on our state and our communities. I appreciate the 
opportunity to come before you today. I can answer any questions that 
you may have for me.
                                 ______
                                 
               Colorado ISTEA Reauthorization Principles
    1. The policy direction initiated by the Intermodal Surface 
Transportation Efficiency Act (ISTEA) should continue with minor 
modification.
    Colorado supports continued evolution of the policy concepts 
initiated in ISTEA specifically in the areas of public participation, 
partnership, state and local decisionmaking, environmental/air quality 
sensitivity and multi-modal long range planning. Colorado recognizes 
the value of increased coordination and cooperation with all levels of 
government and the private sector and the benefit each provides to the 
overall transportation system.
     Colorado is committed to continuing a strong public 
participation process as part of our statewide planning process.
     Colorado advocates joint decisionmaking with our Federal/
state/regional and local partners.
     Colorado has demonstrated commitment to the policy 
direction initiated by ISTEA and believes, based on individual state 
priorities, that it should be a determination of the state as to what 
programs modified and continued.
    2. Greater flexibility of Federal funding is essential to implement 
state and locally determined transportation solutions.
    Colorado should have the authority to invest in any mode of 
transportation or technology deemed appropriate to accomplishing 
access, environmental/air quality and mobility goals and objectives. 
Colorado supports the concept of making Federal transportation funds 
more flexible for state and locally determined investment.
     Definition of Flexible Funds--Funds utilized to design, 
construct and preserve any transportation mode (as defined in 43-1-
102(6), C.R.S. for highways, rail, transit, aviation, etc.) as 
determined through the statewide transportation planning process to 
most appropriately meet the transportation needs to move people, goods 
and information in the state.
     Colorado has invested heavily in developing our long-range 
multi-modal planning process. We are committed to continued investment 
in this approach in order to reach our goal of a sustaining a viable 
transportation system while maintaining quality of life for our 
citizens. This objective is attainable if Federal programs are 
simplified by allowing program funding to be flexible and project 
selection to be driven by locally identified needs.
     Colorado is committed to the continued use of major 
investment studies (MIS) as one means of determining the best modal 
solution within congested corridors.
     Colorado supports the continuation of the current programs 
under ISTEA. However, due to the varying conditions and problems from 
state-to-state and mode-to-mode, greater flexibility is needed between 
and within programs. Therefore, Colorado is opposed to any additional 
Federal categorical requirements, setasides and suballocations that 
inhibit the flexibility of the state and MPO's to adequately invest 
funds. Colorado also supports the current fully flexible suballocation 
to the Transportation Management Areas (TMA's).
     Colorado supports the reduction in take downs and any 
other mechanisms used to decrease the total funding available to be 
distributed back to the states.
    3. Eliminate mandates, sanctions, and restrictions.
    Great strides were made through NHS to eliminate many onerous 
mandates that held no relationship to state's priorities or needs. 
Colorado supports the continued elimination of mandates and sanctions 
that limit the powers of the state to implement individual states needs 
Congress should either eliminate mandates and restrictions that show 
little cost effectiveness or fully fund remaining mandates that impact 
the funding of other transportation programs.
     All remaining unfunded mandates should be eliminated. 
Specifically the DUI zero-tolerance penalty, and the safety and 
congestion management system mandates.
     Federal programs should be geared more toward incentives 
for increased participation rather than sanctions.
     Federal restrictions, such as the ability to toll the 
interstate and privatize rest areas on Federal aid facilities, should 
be left to the discretion of the states.
     Simplify and reduce Federal regulations that often limit 
state flexibility and constrain already limited Federal dollars.
    4. Reduce Federal DOT oversight and reporting requirements.
    ISTEA emphasized an increase in efficiency of both programs and the 
administration of funds. Colorado believes a streamlining of the 
Federal administration of programs could significantly improve the 
overall efficiency and effective use of very limited Federal dollars. 
Whereever possible, Congress should provide for increased self-
certification by the states and delegate current Federal regulatory 
oversight to the state and local agencies.
     Federal reporting requirements often require excessive 
staff resources that exceed the perceived Federal benefit. 
Relationships between Federal reporting and state compliance should be 
further clarified and simplified where possible.
     States should be allowed to certify compliance with 
Federal guidelines/objectives in order to simplify the process.
     Through ISTEA, Colorado has developed successful 
partnerships among players and brought about a unified transportation 
agenda. As such, Colorado favors a unified transportation budget and a 
surface transportation administration to support our continued success.
    5. Colorado advocates: Full funding of the Federal transportation 
program; returning the 4.3 cents gas tax from the general fund; 
spending down the Highway Trust Fund; and taking the trust funds off 
budget.
                                 ______
                                 
                              ISTEA Works
                    istea reauthorization principles
    1. Maintain the course set by ISTEA. It represented a revolutionary 
change from past transportation legislation and was the result of a 
truly bipartisan effort that recognized how interdependent the state's 
economies are and, thus, designed sound programs that benefit the 
Nation as a whole. The 40-year Interstate Highway construction era was 
shifted to a new era of highway and transit system preservation, 
increasing efficiency of existing networks, and improved intermodal 
integration to support efficiency and a sound economy.
    2. Reauthorize ISTEA with simplification and refinement but without 
significant changes. While improvements can be made, its fundamental 
structure is sound and should be preserved. States, regional and local 
governments have invested heavily in making ISTEA work. This Investment 
should not be wasted.
    3. Authorize the maximum level of Federal investment possible, over 
the next 5 years, in our nations multi-modal transportation systems. 
All sources of revenue that currently fund transportation should be 
maintained and maximized. Recognize the crucial link between 
investments in transportation and our ability, as a nation, to compete 
globally. The return on these investments is unparalleled in 
government.
    4. Allocate funds to states primarily based on needs. Adjustments 
to reflect system usage, system extent, level of effort, each state's 
overall balance of Federal payments, and historic distribution patterns 
should also be considered. In addition, discretionary funding programs 
should be continued in order to meet extraordinary and emergency needs.
    5. Retain the Federal Government's role as a key transportation 
partner to help fund highway, bridge and transit projects and to assure 
that a national focus remains on mobility, connectivity, uniformity, 
integrity, safety and research. Our nations's transportation programs 
should also continue to support related national goals such as improved 
air quality, economic competitiveness, and improved quality of life.
    6. Preserve and strengthen the partnerships among Federal, state 
and local governments and between the public and private sectors which 
were formed to implement ISTEA. Shared responsibility for national 
transportation interests, encouraging public participation in the 
planning process, building national coalitions, and the promotion of 
environmentally friendly intermodal transportation projects must be 
provided for. The current program for metropolitan areas with more than 
200,000 population and the state role in the metropolitan planning 
process should also be retained.
    7. Reauthorize ISTEA to continue current programs and refrain from 
creating any new funding categories or set-a-sides. Due to the varying 
conditions and problems from state-to-state and mode-to-mode, it should 
also allow greater flexibility between programs and eligibility within 
programs.
    8. Minimize prescriptive Federal regulations to allow for a more 
efficient and effective transportation program and eliminate Federal/
state duplication. Reauthorized ISTEA should continue to reduce time 
consuming Federal reviews, onerous mandates and sanctions. and allow 
self-certification at the state level.
    9. Permit state and local jurisdictions to apply innovative 
financing solutions to address the growing transportation financing 
gap. States should be allowed to utilize their unobligated balances to 
guarantee bonds, enhance credit and capitalize state infrastructure 
banks.
    10. Continue to support research. development and deployment of 
ways to improve quality and efficiency. This should include new 
technology such as ITS, as well as new materials, designs and 
practices.
                                 ______
                                 
                              Department of Transportation,
                                          Denver, CO, May 28, 1997.
Senator John H. Chafee,
Committee on Environment and Public Works,
Washington, DC.
    Dear Senator: This letter is in response to questions in your March 
28, 1997 letter.
    The planning process in Colorado is patterned after and supports 
the intent we believe is embodied in ISTEA. Many of the ``requirements 
and mandates'' included in the Federal planning regulations were 
utilized in Colorado as opportunities and challenges to find a better 
way to establish agreement, and build partnerships in transportation. 
We viewed the programs and elements of the Federal planning process as 
flexible and not prescriptive, to be molded by Colorado into something 
that would fit our needs and be supportive of coalition building.
    Many of the initiatives undertaken and successfully carried out in 
Colorado would not have been possible without the guidance and 
direction afforded by ISTEA. Building upon those ideas, CDOT crafted a 
process that was successful and meaningful to the State of Colorado. We 
and our partners are already planning for and looking forward to the 
update cycle beginning in July, 1998, because we are eager to build off 
of the progress and support generated by this effort.
    You asked that I describe my experiences with respect to planning 
over the last 6 years that transformed my fears of ISTEA into a ringing 
endorsement. Below are a few of the key features of our process that 
enabled us to achieve success, establish credibility, and build 
partnerships for transportation in the state.
     The Colorado Department of Transportation began the 
planning process required by ISTEA and state law by directly and 
intensively involving local governments, interest groups and the public 
in the development of our process and plan. State law created ten 
additional Transportation Planning Regions (TPR) in addition to our 
five existing Metropolitan Planning Organizations (MPO). The TPRs were 
used as the foundation for developing regional and state transportation 
needs and CDOT gained statewide commitment and buy-in to the process, 
results, and the recommendations. We gained support for our efforts by 
applying public participation and involvement to all aspects of the 
planning process and not simply following the letter of the law.
     The formation of the Statewide Transportation Advisory 
Committee (STAC), which is required under state law but was supportive 
of the partnerships and involvement encouraged by ISTEA, has been a key 
link in the chain of credibility that we have forged. This committee, 
comprised of one representative from each Transportation Planning 
Region plus one representative from each of Colorado's two Indian 
Tribes, is ongoing and is advisory to the Department on transportation 
needs and policy issues relevant to the process. This group has been 
instrumental in helping to establish credibility of the Plan.
     The 15 regional plans were integrated into a statewide 
plan that truly had consensus. When the Transportation Commission 
approved the Plan in January, 1995, there was no opposition to the 
conclusions or recommendations in fact several diverse groups supported 
the Plan before the Commission prior to approval. This shows 
unparalleled consensus and support for an inaugural effort and unique 
approach to developing a transportation plan in Colorado.
     By allowing the Transportation Planning Regions, 
(including the associated local governments, interest groups, and the 
public), to participate in the development, prioritization and 
selection projects to be included in the Plans, we built coalitions for 
improvements that had never before existed. By applying the general 
concept of regional decisionmaking, required by ISTEA in metropolitan 
areas, to the other regions of the state, we gained meaningful 
involvement and interest in the process.
     We are using the Major Investment Study (MIS) approach to 
not only develop the best solution, but also to build consensus and 
public support for transportation alternatives in controversial 
corridors. The concept of evaluating major transportation investments 
in metropolitan areas has been utilized successfully in three corridors 
in the Denver metro area. CDOT has also embraced this concept for 
identifying the best possible investment strategy in other areas of the 
state. Studies to evaluate potential major investments are underway, or 
proposed, in at least three additional corridors; I-70 west of Denver 
through the mountains, I-25 north of Denver to the Greeley/Fort Collins 
area, and I-25 south of Denver to Colorado Springs or Pueblo. This 
method of determining the best transportation solution in a complicated 
corridor has generally been endorsed in the state as a sound approach.
     Increased public involvement encouraged by ISTEA has been 
seen as an opportunity rather than a mandate. We see the requirements 
as flexible and not prescriptive, and we have tailored our approach to 
fit our needs, resulting in a process that is responsive and inclusive. 
It has been a cornerstone in achieving consensus and buy-in to 
transportation needs in Colorado. This included a comprehensive 
statewide household survey on transportation needs, advisory 
committees, local and regionally based public participation, and 
outreach to under served populations.
     Because of the consensus, broad-based support, and the 
outreach/involvement that have characterized this effort, the Plan, its 
needs, its policies, and its projects are standing the tests of time. 
It has been reviewed, scrutinized, and supported by the business 
community and other groups interested in revenue increases. It has been 
quoted and relied upon by the environmental community to support its 
call for environmental awareness and project conformity, and it has 
been audited by the Legislature to ensure reasonableness and soundness.
    In summary I would emphasize my strong support of this approach to 
planning because I have seen it accomplish wonderful things in 
Colorado; in short, it works. Certainly there have been some rough 
spots, and we still have our detractors, but we have put in place a 
grassroots, regionally based planning process that supports statewide 
policy and generates broad-based support. We intend to build on this 
philosophy and approach as we plan for the future. This is the basis 
for Colorado DOT's strong support for the continuation of ISTEA 
programs in the Reauthorization.
            Sincerely,
                                        Guillermo V. Vidal,
                                                Executive Director.
                                 ______
                                 
 Prepared Statement of Timothy Stowe, Chairman, ACEC's Transportation 
                         Subcommittee on ISTEA
    Mr. Chairman and members of the subcommittee, thank you for the 
opportunity to be with you today to testify on the reauthorization of 
the Intermodal Surface Transportation Efficiency Act. My name is Tim 
Stowe and I am Vice President for Transportation Planning and Surveying 
with the consulting engineering firm of Anderson & Associates in 
Blacksburg, VA. Today however, I represent the American Consulting 
Engineers Council (ACEC).
    ACEC is the largest trade organization of its kind, representing 
approximately 5,000 consulting engineering firms from across the 
country, employing some 200,000 people. Our members are consultants to 
public and private entities, and furnish professional services in 
planning, engineering, maintenance, and operation of our nation's 
transportation systems.
    It has been said, Mr. Chairman, that the wealth of our nation did 
not build our transportation system, but rather, our transportation 
system created the wealth of our country. Consulting engineers 
understand and appreciate this basic relationship between 
infrastructure and industry. We have been involved with planning, 
designing, constructing, maintaining, and enhancing these 
infrastructure projects. We also planned and designed the projects that 
accompanied the massive economic development triggered by the resulting 
arteries of commerce and prosperity.
    For years, our nation's transportation system has been the envy of 
leaders and businesses around the world. However, as each year passes 
in which we fail to maintain our infrastructure we are, in effect, 
withdrawing from our long-term investment and leaving a deficient 
transportation system for the next generation. In an era of scarce 
Federal resources to fund transportation projects, we simply must do 
better with the funding we have if our nation is to continue to prosper 
and grow in the 21st Century.
    Last year, ACEC was asked and accepted your challenge to look at 
how we can accelerate the delivery of transportation projects. We 
believe we can improve the delivery of transportation projects at a 
reduced costs to the taxpayer while, at the same time, enhancing public 
input, achieving the environmental goals set forth under the National 
Environmental Policy Act and other laws, and improving quality. We 
accepted this challenge Mr. Chairman and I am pleased to present to you 
and the members of this distinguished committee, ACEC's vision for 
ISTEA II.
    ACEC's report is divided into four sections: Funding for the 
Future, Partnerships for Quality, Accelerating Project Delivery, and 
Quality Through Competition. I will limit my remarks to the 
recommendations contained in the Accelerating Project Delivery section 
of the report since these proposals focus directly on environment and 
planning issues. I encourage you to read the entire document which 
contains additional recommendations and I will be pleased to answer any 
questions that you may have on the other sections of the report.
    I believe we can all agree that it is taking too long to deliver 
badly needed transportation projects to the American public. On 
average, it takes 10 years to plan, design and construct a major 
transportation project. We believe this time can be reduced by 30 
percent.
    Currently, there are delays in issuing permits after environmental 
documents have been certified. There are unnecessary, duplicative and 
burdensome regulations that impact the day-to-day work. Finally, there 
are numerous levels of government that are enmeshed in an institutional 
and organizational web where accountability is frequently unclear and 
where resources do not necessarily follow responsibilities. Mr. 
Chairman, we have included examples of these with our testimony but I 
suspect that you may have some of your own examples of projects that go 
on for years at tremendous cost to the taxpayer.
    To improve the planning component of project delivery we propose 
to:
     Establish inter-agency environmental units in each state
    In order to avoid delays associated with this bureaucratic 
quagmire, ACEC recommends that inter-agency environmental units be 
established in each state empowered to directly and expeditiously 
address environmental issues. These environmental units, that would be 
funded by transportation revenues and housed near Federal and State DOT 
offices, would focus their resources to issue a single approval. In 
addition, incentives should be provided for the State agency to 
accomplish its work on time, on budget, and according to standards.
    Through a series of cooperative interagency agreements between 
State and Federal environmental agencies, this unit would be empowered 
to administer, review and approve environmental documents. Specific 
situations may require that the unit would directly contact a source 
agency to resolve a particular issue. Acting as a surrogate staff of 
the agency, the environmental unit manager would know the detailed 
local situation, who to contact in the Federal agency, and be able to 
expeditiously coordinate followup activities. We believe this 
management realignment alone could save a significant amount of the 
time required to prepare an environmental document.
    Our proposal is not intended to change the goals set forth in the 
National Environmental Policy Act or other related environmental laws. 
We wholeheartedly support a strong environment. Our goal is to address 
the process issues which end up adding substantial time and cost to the 
transportation projects.
     Enhance Public Involvement
    The current delays encountered in the existing stop-and-start 
process associated with public involvement are further exacerbated by 
the NEPA process. Milestone documents are required to be published and 
circulated with one--or two--month review times for the public. 
Subsequently, a written response must be prepared and documented for 
each concern or for similar concerns. While this occurs, the work on 
the project is all but halted. Often the environmental documents 
provided to the public for review are voluminous and complex, and 
describe the project in technical terms not easily understood by the 
general public. As a result, the documents are read and understood by 
only a limited number of people.
    The public involvement process required by the existing regulations 
could be simplified and shortened if information were provided in 
smaller packages at more frequent intervals in an informal process. 
Smaller public meetings to focus on specific local issues would also 
enable planners to better address the well-defined needs of specific 
locations. Additionally, increased use of the Internet to disseminate 
information about a project should be encouraged. This low-cost method 
of providing information to a large number of people would benefit both 
the public and the planners by reducing or eliminating the existing 
stop-and-go process.
     Centralize Digital Mapping Products
    Good base maps are the single most critical element of 
environmental infrastructure and land use planning. The U.S. Geological 
Survey's quadrangle maps are used by civil engineers, water resource 
scientists, environmentalists, geologists, and the general public to 
answer a myriad of questions. Many other Federal and State agencies 
possess paper and digital mapping products they have developed for 
their agency's use. Maps currently available to the public provide 
value far beyond the cost to produce them. The USGS maps have been in 
use for many years and are available in paper form from the U.S. 
Government.
    ACEC supports acceleration of the National Digital Orthophoto 
Program (NDOP) to ensure completion of a nationwide inventory of high-
resolution, accurate, digital imagery to supplement and update existing 
USGS topographic maps for transportation planning. The NDOP, which is 
administered by the U.S. Geological Survey's National Mapping Division, 
is a collaborative effort between government and the private sector.
    The NDOP pools funds from several Federal agencies, and State 
governments, including some State transportation departments, and 
relies on private contractors, using the qualifications-based selection 
(QBS) process, to develop and maintain this critical layer of 
geospatial information for the Nation. Timely completion of this 
digital inventory would be a significant benefit to State and national 
efforts relative to transportation planning. By making available to 
transportation planners pre-existing standardized national digital 
mapping products developed by various government agencies, 
transportation planners can hit the ground running on a planning 
project rather than wait for months and spending thousands of dollars 
for new mapping to be developed.
    There are other examples of how time may be saved in the 
development of planning transportation projects in the report attached 
to my testimony. Taken together, we believe our recommendations can 
reduce the time it takes to deliver transportation projects by as much 
as 30 percent while at the same time, protecting the environment, 
enhancing public participation, and designing high quality roads, 
bridges and transit systems for the American people.
    These briefly stated suggestions summarize only a portion of our 
vision for the reauthorization of ISTEA. We commend this subcommittee 
for the hard work and dedication to this important task. Your efforts 
are apparent to all of us in the transportation industry. We stand 
ready to serve you, and the American people, in any capacity you deem 
necessary as you chart the course of our transportation system for the 
coming years.
    Thank you Mr. Chairman for this opportunity to testify.
                                 ______
                                 
                       Examples of Project Delays
   delays in issuing permits after environmental documents certified
    One of the primary sources of delay in the implementation of 
projects is the granting of permits by Federal environmental agencies 
after the environmental documents for a project are certified. This 
occurs even though the environmental agencies participate in the 
environmental review process. A good example is the project to extend 
the San Diego light rail from Old Town to Jack Murphy Stadium in 
Mission Valley. The environmental process began in January, 1990 and 
was completed with certification in 1992. The permits from the Corps of 
Engineers and the Wildlife Service were granted in 1995.
    It took 3 years to obtain permits from agencies who had the 
opportunity to review the relevant material beginning in 1990 and had 
to sign-off on the environmental document in 1992. The analysis, the 
agreed upon mitigation strategy, and the award of the relevant permits 
should be completed at the time the environmental documents are 
certified. It cost the San Diego Metropolitan Transit Development 
Board, the project sponsor an additional $500,000 in consultant 
services alone to negotiate for 3 years with the permitting agencies. 
(Source: January 6, 1997 testimony by Californians For Better 
Transportation to Senator Barbara Boxer)
 unnecessary and burdensome regulations that impact the day-to-day work
    Another example of troublesome regulations that delay project 
delivery times are those promulgated by the Environmental Protection 
Agency and administered by the U.S. Army Corps of Engineers. One 
current illustration of this problem is the Smith Creek Parkway in 
Wilmington, North Carolina. The construction plans were finally 
advertised for construction in August 1996 following months of 
unnecessary, and annoying delays. The final plans were ready for 
advertisement in Spring 1996.
    The Army Corps of Engineers was involved and accordant with the 
North Carolina Department of Transportation from the early stages of 
project planning. At the final hour, however, the Corps could not issue 
the necessary permits for the project. The Corps then required the 
State of North Carolina to return back to square one by examining 
alternative alignments. Following several months of bureaucratic 
posturing and senseless delays, the permits were issued and the project 
was advertised for construction. (Source: September 26, 1996 testimony 
by ACEC before the House Transportation and Infrastructure Subcommittee 
on Surface Transportation.)
                minnesota bridge blocked by park service
    On December 27, 1996, The National Park Service issued a 
determination that no Federal permits be issued for construction of the 
bridge because it ``would have direct and adverse effect on scenic and 
recreational values of the lower St. Croix National Scenic Riverway.'' 
The proposed bridge has been under study for 30 years, and more than 
$14 million has been spent on property acquisition and design. (Source: 
AASHTO Journal, January 3, 1997.)
                                 ______
                                 
  Statement of Michael A. Replogle, Federal Transportation Director, 
                       Environmental Defense Fund
    I am testifying on behalf of the Environmental Defense Fund, a 
leading, national, NY-based nonprofit organization that represents over 
300,000 members across America. EDF links science, economics, and law 
to create innovative, economically viable solutions to today's 
environmental problems. I am joined in these remarks by the Natural 
Resources Defense Council, representing another several hundred 
thousand Americans.
    ISTEA Reauthorization: A Major Environmental Issue. In announcing 
his National Economic Crossroads Transportation Efficiency Act (NEXTEA) 
proposal last week, President Clinton correctly said, ``Make no mistake 
about it, this is one of the most important environmental bills to be 
considered by this Congress.'' We would respectfully urge the members 
of the Environment and Public Works Committee to use the NEXTEA 
proposal as the framework for reauthorization of Federal transportation 
programs, for it addresses key environmental concerns----
     expanded funding for the Congestion Mitigation and Air 
Quality Improvement (CMAQ) program and Transportation Enhancements, 
with CMAQ eligibility extended to long-term maintenance of healthy air 
quality and new areas found to fail the CAA's health-based air quality 
standards. These provide the resources for local and state governments 
to meet Clean Air Act mandates for transportation and to fund important 
transportation innovations.
     continued requirements for fiscally constrained long-range 
state and metropolitan transportation planning, public involvement, and 
interagency consultation. These are vital to Clean Air Act 
implementation and cost-effective transportation investment and 
management.
     a stronger and more fairly representative role for local 
governments in statewide and metropolitan planning with adequate 
resources subject to local government decisionmaking authority through 
both CMAQ and metropolitan suballocation of the Surface Transportation 
Program (STP).
     new flexibility for states, local governments, and the 
private sector to introduce market-based incentives, such as value 
pricing on roads and other transportation facilities, High Occupancy 
Toll (HOT) express lanes, and a level playing field for employer-
provided commuter benefit programs. These voluntary strategies can 
reduce traffic congestion and air pollution equitably at a very low 
cost and can help leverage both private transportation investment and 
more efficient use of existing resources.
    Environmental Progress or Peril? Historically, more efficient and 
effective transportation has been important for economic progress, but 
has often led to the degradation of environmental quality and threats 
to public health. Far-sighted Federal legislation over the past 25 
years, however, has allowed us to dramatically expand our economy and 
travel while making environmental progress. However, if key 
environmental provisions are left out of ISTEA reauthorization, as some 
have proposed, we are likely to find ourselves as a nation slipping 
backward into a climate of environmental degradation and even sharper 
conflict over transportation policy.
     Thanks to mandates for cleaner vehicles and fuels in the 
Clean Air Act (CAA) starting in 1970 and continuing through the 1990 
CAA Amendments, we have sharply reduced the amount of pollution per 
mile of vehicle travel.
     Thanks to the 1970 National Environmental Protection Act 
(NEPA) both experts and the public have gained a better appreciation of 
the environmental consequences of many transportation projects. As a 
result, some of these projects have been redesigned or rethought to 
reduce environmental harms.
     Thanks to the intertwined transportation conformity 
provisions of the 1990 Clean Air Act Amendments and the planning 
requirements of ISTEA, many of our metropolitan areas with unhealthful 
air quality have begun to develop, evaluate, and implement regional 
transportation strategies and investments that will significantly 
reduce the long-term growth of transportation-related air pollution and 
other environmental problems, supporting more sustainable and efficient 
economic development.
     Thanks to the $1.0 billion a year CMAQ program, many local 
and state governments have had flexible resources that enabled them to 
make effective investments in pollution-reducing transportation 
strategies. These have been complemented by the Transportation 
Enhancements element of the Surface Transportation Program that has in 
the past 6 years done more to spur local improvements in pollution-free 
non-motorized transportation alternatives than any other Federal 
program.
    The Transportation-Air Pollution-Public Health Connection. Despite 
great progress in cleaning up our air over the past 25 years, careful 
scientific study has shown us that the danger posed by air pollution to 
our health is more pervasive than we had ever thought. We know now 
that, for example, exposure to fine particles can be lethal to those 
with lung disease, and that hospital emergency admissions for 
respiratory problems soar on high ozone (smog) days. These health 
effects occur at levels of air pollution currently found in many of our 
cities.
    In urban and many suburban areas, transportation plays a major role 
in the creation of air pollution. For both ozone (smog) and particulate 
matter pollution, the transportation sector, whether it be diesel 
trucks or gasoline powered vehicles, is a major source of pollution. 
Transportation is responsible for a variable, but significant portion 
of particulate matter, roughly 30 percent of nitrogen oxides, and 25-30 
percent of volatile organic compounds, both of which can be precursors 
to ozone and fine particles. To achieve clean air, we must reduce the 
amount of pollution from the transportation sector.
    Growth of vehicle use is far outpacing population and employment 
growth and poses an environmental challenge itself. While cleaner 
vehicles and fuels will help address environmental problems, these 
alone are not sufficient to solve the multiple challenges posed by 
transportation. Effective solutions require strategies to promote smart 
growth and transportation, to foster economic development that meets 
all our household and business needs but with less need to spend time 
and money traveling. There are no magic solutions. Instead, we must 
look at combining high and low technologies, market-oriented pricing 
reforms, and improved linkages between transportation and other aspens 
of community development to enhance value and choices for travelers and 
citizens.
    National Health Standards, Regional Strategies, Local Solutions. We 
need a national response to our transportation-related environmental 
problems that sets the framework. Ever since the early versions of 
Clean Air Act, Congress and the American people have recognized that 
air pollution does not respect state boundaries, and that Federal 
action is needed to clean up the air. Now, we recognize that often the 
most effective Federal action can be setting up a framework, and then 
allowing localities to decide how best to implement the law. That is 
exactly what CMAQ does. Congress has a set of deadlines for Clean Air 
Act compliance that should require a set aside to ensure those 
deadlines are met. It is a daunting effort for many states to meet the 
requirements of the Clean Air Act. The CMAQ program is one way to help 
make the deadlines achievable.
    CMAQ Is the Funding for Clean Air Act Mandates. If CMAQ is 
curtailed or eliminated, it potentially adds transportation-related 
clean air requirements to the list of unfunded Federal mandates. CMAQ 
is the key funding for transportation related clean air mandates. While 
CMAQ sets up the national framework, it allows for local control and 
local solutions to air pollution problems. The CMAQ program allows for 
a fair amount of latitude in implementation, not mandating any specific 
set of programs. It offers opportunity for development of local 
solutions that make sense from an air quality and community 
perspective.
    Targeting Resources to Regions with Air Quality Challenges. 
Although all states are guaranteed a share of CMAQ funds, the program 
has been designed principally to benefit nonattainment areas, with 
funds allocated on a population-weighted basis and with a larger weight 
given to more severely polluted areas. The Surface Transportation 
Program of ISTEA, on the other hand, has been set up to fund projects 
anywhere, mostly at the state's discretion. CMAQ and the Enhancements 
program help fund small, non-traditional projects that are new, 
innovative, and effective. Against large traditional highway and 
transit projects, these face tough competition in the inertia-driven 
bureaucratic process.
    The need for providing this type of direction is illustrated by the 
bridge repair program. Before ISTEA, many of our nation's bridges were 
in disrepair and were not successfully competing against other highway 
projects for dollars to pay for repairs. It was not until the bridge 
maintenance program in ISTEA dedicated money to the bridges did 
substantial repair work begin on the bridges. Nonattainment areas 
already are burdened with air pollution; CMAQ makes sure that some 
resources are available solely to address this problem, alleviating 
some of the competition with more well-established traditional 
transportation priorities that have spurred growth in travel and 
related air pollution.
    CMAQ's Flexibility to Meet Local Opportunities. In establishing 
CMAQ in the 1991 ISTEA law, Congress recognized the need to dedicate a 
source of funds to help the many areas of the country that have not 
attained the National Ambient Air Quality Standards (NAAQS) reduce 
their transportation-related air pollution through innovative 
investment, system management, public outreach, and planning 
activities. CMAQ funds can be spent on a very wide variety of 
initiatives to help implement transportation control measures (TCMs) 
and programs designed to attain the NAAQS for carbon monoxide, ozone, 
and in some cases, small particle matter. CMAQ is designed to cut 
across traditional boundaries, encompassing projects and programs 
dealing with highways, transit, and non-traditional areas, such as 
vehicle emission and inspection and maintenance. CMAQ is not to be used 
for actions that will increase air pollution problems or delay 
attaining the NAAQS, such as expanding single-occupant vehicle highway 
capacity. CMAQ can be used to improve the quality of information and 
analysis systems to forecast travel behavior and environmental 
consequences of transportation plans and programs.
    CMAQ Successes. Across the nation, CMAQ funds have been invested in 
a wide variety of projects that have improved air quality. Boise, 
Idaho, spent CMAQ dollars to replace some of its old diesel buses with 
new, cleaner buses powered by compressed natural gas and equipped with 
bicycle racks to allow users greater travel choice. CMAQ has been used 
to encourage pedestrian and transit oriented development, to improve 
conditions for walking and bicycling, to encourage ridesharing and 
reverse commute programs, and to improve access to public 
transportation. In San Francisco, the Freeway Service Patrol used CMAQ 
money to buy tow trucks to clear incidents and help stranded motorists, 
thus reducing congestion and delay. More than 40 percent of CMAQ 
spending has gone to support transit initiatives, with over $275 
million devoted to clean transit projects or clean fleets applications. 
Some communities used CMAQ funds to update their land use ordinances 
and urban design requirements to expand transportation options and 
choices and reduce traffic and pollution problems. Yet others have used 
CMAQ to fund planning, public education, and public involvement efforts 
to improve decisionmaking, cost-effectiveness of investments, and to 
build community consensus on transportation solutions.
    CMAQ Eligibility Issues. Some states have devoted a large share of 
CMAQ funding to traffic flow improvements. While these are eligible 
under the terms of the Clean Air Act and CMAQ program, they generally 
produce at best short term reductions in air pollution. These traffic 
flow improvements often reduce short-term VOC emissions while boosting 
NOX emissions in both the short and long-run. Such projects 
often also spur long-term growth in pollution-creating traffic and 
encourage greater sprawl development. Traffic signalization 
improvements in isolation often produce only short-term benefits, but 
when linked to public transportation priority treatment strategies and 
attention to pedestrian and bicyclists needs, these can produce long-
term positive environmental benefits. Add-a-lane High Occupancy Vehicle 
(HOV) lane projects, on the other hand, rarely produce sustainable 
pollution reductions because of their effect in spurring sprawl and new 
travel demand and the NOX emissions associated with higher 
speed traffic. Add-a-lane HOT projects can produce large positive or 
negative pollution effects depending on the nature of alternative 
travel options offered, potential for converting adjacent lanes to 
express HOT, and other factors. These uncertainties make it important 
for large CMAQ projects to be subject to continued evaluation for their 
effects on travel behavior and emissions.
    In North Carolina, a major outer loop highway in the Charlotte area 
was built using CMAQ funds, although this was clearly an ineligible 
activity. In many other states, major conventional highway widening 
projects were converted to part-time High Occupancy Vehicle (HOV) lane 
projects that were then made eligible for CMAQ funding under ISTEA. 
Road expansion activities can be funded under every other major 
category of ISTEA. The use of CMAQ funds for road expansions of any 
sort should not be eligible, since such projects do not contribute to 
long-term reduction in pollution problems, but generally exacerbate 
such problems.
    Congress should direct that programs and projects funded under CMAQ 
should focus not just on short term emission reductions, but should 
emphasize likely longer term effects on air quality and the growth of 
travel demand. Innovative projects that show reasonable promise of 
sustainable longer-term emission reductions through managing travel 
demand growth should be given priority access to CMAQ funds.
    Administrative Simplification of CMAQ. Congress should permit 
smaller, non-construction projects to be certified by the state as 
meeting requirements of Title 23 without advance Federal review, 
providing administrative simplification. Some of the most effective 
uses of CMAQ funds are to provide small incentive grants to local 
governments for innovative actions. Small grants can help spur 
voluntary revision of obsolete and cumbersome street, site design, and 
zoning standards to bring these into better accord with contemporary 
community values, for example using visual preference surveys and 
similar techniques. These approaches can enhance transportation 
choices, reduce automobile dependence, and foster healthier communities 
while reducing pollution.
    Additional CMAQ Funding Needed for New Areas. CMAQ should be 
extended to maintenance areas, with a population-based weight lower 
than that of non-attainment areas. Areas subject to the new National 
Ambient Air Quality Standards (NAAQS) should become eligible for CMAQ 
funds. CMAQ funding should be increased both now and at the time when 
the new NAAQS come into effect so that communities have adequate 
resources to address these problems.
    Some argue that gasoline taxes should only be used for roads, yet 
road users benefit from reduced congestion brought about by support for 
public transportation and other alternatives and programs that reduce 
air pollution from transportation. CMAQ uses Federal gasoline taxes to 
pay for transportation costs related to highway use. Federal gasoline 
taxes are properly considered user fees for highway construction and 
maintenance, because motor vehicles use highways. Vehicle use also 
results in important transportation related air pollution and 
congestion costs and CMAQ programs seek to address these.
    Vital Importance of Promoting Market-Based Pricing Reform. NEXTEA 
proposes to remove Federal restrictions that bar states from 
experimenting with effective and successful market-based strategies, 
such as High Occupancy Toll (HOT) express lanes that are cutting 
traffic congestion and winning popular approval in southern California 
on I-15 and State Road 91. It would offer a pilot program for value 
pricing to encourage the more efficient use of roads with time-of-day 
pricing for those willing to pay extra for better rush-hour service, 
permitting the flexible use of revenues for transportation purposes. 
Section 7003 would provide a long-overdue correction to Federal law 
that would allow market-incentives to operate more freely in workplace 
commuting. The proposed change in NEXTEA would level the playing field 
for voluntary employer commuting benefit programs that now impose 
unfair tax consequences on those who choose to provide equal commuter 
benefits regardless of how an employee chooses to get to work. We 
believe all of these market-based strategies are potentially very 
beneficial for the environment and for sound transportation system 
management. They offer extremely high benefits relative to costs and 
offer greater flexibility and choice to businesses and travelers. We 
urge you to include NEXTEA's Section 1032 and 7003 language in your 
reauthorization bills.
    Need for Improved Transportation Data and Decision-Support Systems. 
To meet Clean Air Act mandates, states and regions must evaluate the 
environmental consequences of transportation plans and programs and 
their alternatives. This requires information and management systems to 
monitor and evaluate transportation system and environmental 
performance. While major advances have been made in recent years in 
computer and information science, remote sensing, and other fields to 
support travel forecasting and traffic monitoring, many states and 
regions lag in adopting such systems.
    The NEXTEA proposal for the Bureau of Transportation Statistics 
merits support. Development of an intermodal transportation data base 
is vital to national transportation, environmental, and public welfare 
interests. The Research and Development (R&D) grants program in Section 
6002(g) is important to environmental progress and performance. 
However, the proposed Sec. 6002(l)(1) limit of $0.5 million a year in 
these R&D grants is too low and should be increased to $5 million to 
spur more rapid innovation in this important area. Many regional 
agencies continue to use obsolete methods that often poorly estimate 
travel behavior and emission effects of project and plan alternatives, 
although newer methods are available. This results in flawed 
decisionmaking for transportation and emissions planning. At least half 
these 6002(g) R&D funds should be dedicated to incentive grants for 
metropolitan planning organizations, state DOTs, and local governments 
to work with universities and non-profit organizations to accelerate 
the upgrading of transportation and emissions analysis tools to meet 
the standard of best available practice.
    Conclusion. How we manage our transportation resources is critical 
to determining whether our future will be a more polluted one or not. 
Proposed surface transportation legislation will be judged by whether 
it offers more or less resources for environmental protection, whether 
it rolls back current requirements that tie transportation decisions to 
environmental consequences, and whether it offers prospects for greater 
use of innovative tools, like time-of-day congestion pricing.
    Thank you for the opportunity to provide our views on these 
matters. I would be happy to answer any questions that you might have.
                                 ______
                                 
                                                    March 19, 1997.
    Dear Senator: The undersigned organizations strongly support 
dedicated and increased funding for the reauthorization of the 
Congestion Mitigation and Air Quality Improvement (CMAQ) program as 
part of the next surface transportation act.
    CMAQ is an excellent example of the innovation and flexibility 
built into the Intermodal Surface Transportation Efficiency Act of 1991 
(ISTEA) to address the billions of dollars of costs associated with 
polluted air and traffic congestion. CMAQ directs funds mainly toward 
projects in Clean Air Act ``non-attainment'' areas for ozone, carbon 
monoxide and particulate matter, with a guarantee of funding to all 
states regardless of non-attainment status.
    CMAQ is the Federal transportation program that most clearly serves 
the national goals of clean air, reduced congestion, intermodalism and 
energy efficiency. ISTEA's Declaration of Policy underscores the 
importance of the CMAQ program:

          It is the policy of the United States to develop a National 
        Intermodal Transportation system that is economically efficient 
        and environmentally sound . . . will move people and goods in 
        an energy efficient manner . . . shall consist of all forms of 
        transportation in a unified, interconnected manner . . . to 
        reduce energy consumption and air pollution.

    Dedicated and separate funding for CMAQ will continue to be 
necessary. The CMAQ program is still new enough that it has not yet 
established equal standing with traditional highway programs. State and 
local government processes for project selection are fully 
institutionalized for traditional highway projects, but not for CMAQ 
projects. Dedicated funding will help ensure that CMAQ projects have an 
opportunity to be selected from a level playing field. In addition, 
CMAQ serves national goals such as reducing imported oil, greenhouse 
gases, and air pollution that crosses state lines. Since CMAQ uses 
Federal funds, these funds should be dedicated to serving these 
national goals while simultaneously serving state and local air 
pollution and congestion mitigation goals.
    During the last 5 years CMAQ has proven its value in many ways:
    CMAQ reduces unhealthy air pollution from transportation, and 
therefore, has helped state and local officials meet public health 
standards established in the Clean Air Act Amendments of 1990 (CAAA) 
which continues to enjoy broad popular support. Indeed, CMAQ prevents 
the CAAA from becoming a so-called ``unfunded mandate.'' CMAQ addresses 
this issue in a non-regulatory manner by providing Federal funds to 
reduce air pollution from transportation. The transportation sector 
produces nearly one-third of all air pollution.
    CMAQ is the most innovative ISTEA program. More new and creative 
projects have been funded through CMAQ than any other ISTEA program. 
Such projects include transit, bicycle and pedestrian, ridesharing, 
demand management, and the acquisition of clean natural gas and 
electric buses. And CMAQ has helped keep the ``I'' in ISTEA by funding 
innovative intermodal projects.
    CMAQ is the most flexible ISTEA program. Over the past 5 years of 
ISTEA, state and local governments have transferred or ``flexed'' more 
CMAQ funds than any other ISTEA program funds. This unparalleled 
flexibility accommodates and responds to state and local priorities. 
While lawmakers anticipated that the Surface Transportation Program 
would be the most flexible, thereby fulfilling ISTEA's new flexible 
approach, it is the CMAQ program that has best served this objective.
    The CMAQ program should receive dedicated funding above the 
currently authorized level in ISTEA in recognition of the proposed 
tighter Federal air quality standards and in recognition of the new 
evidence of the harmful effects of air pollution. More regions will 
likely be classified as non-attainment areas under the final U.S. 
Environmental Protection Agency (EPA) rule for ozone and particulate 
matter. CMAQ also is essential for states and regions to maintain their 
``attainment'' status. Meanwhile transportation will continue to be a 
primary and growing source of both ozone and particulate matter air 
pollution.
    Given the amount of transportation money spent on highways every 
year--$20 billion in Federal money, and more than $88 billion in public 
sector funds altogether--$1 billion per year dedicated to CMAQ is 
insufficient. In fact, analysis illustrates that this amount of funding 
is inadequate to address state, local and national air quality needs. 
Studies funded by the Federal Highway Administration identify costs 
from transportation-related particulate matter alone to be anywhere 
from $16-$266 billion per year. By contrast, EPA research shows that 
for every $1 spent on reducing air pollution, there has been a public 
health and environmental benefit of $45. Even so, the vast majority of 
Federal transportation funds is dedicated to traditional highway 
programs.
    We strongly urge your support for the continuation of the 
innovative CMAQ program with additional dedicated funding. We look 
forward to discussing this program with you in the coming months.
            Sincerely,

American Council for an Energy-Efficient Economy, Washington, DC
American Planning Association, Washington, DC
American Public Transit Association, Washington, DC
American Lung Association, Washington, DC
American Lung Association of Metropolitan Chicago, Chicago, IL
Amos W. Butler Audubon Society, Indianapolis, IN
Association for Commuter Transportation, Washington, DC
Bicycle Federation of America, Washington, DC
Business & Professional People for the Public Interest, Chicago, IL
California Natural Gas Vehicle Coalition, Sacramento, CA
Center for Neighborhood Technology, Chicago, IL
Chesapeake Bay Foundation, Washington, DC
Chicagoland Bicycle Federation, Chicago, IL
Citizens League for Environmental Action & Recovery, Manville, RI
Clean Air Network, Washington, DC
Coalition of Washington Communities, Seattle, WA
Connecticut Natural Gas Corporation, Hartford, CT
Consolidated Natural Gas Co., Pittsburgh, PA
Conservation Law Foundation, Boston, MA
Earth Day Coalition, Cleveland, OH
East Ohio Gas, Cleveland, OH
Environmental Defense Center, Santa Barbara, CA
Environmental and Energy Study Institute, Washington, DC
Environmental Law and Policy Center, Chicago, IL
Environmental Defense Fund, Washington, DC
Environmental Working Group, Washington, DC
Enveco of Texas Inc., Austin, TX
Fleet Fuels Inc., Greenwich, CT
Gas Guzzler Campaign, Washington, DC
Friends of the Earth, Washington, DC
Illinois Natural Gas Vehicle Coalition, Naperville, IL
Inland Northwest ALT-TRANS, Spokane, WA
League of American Bicyclists, Washington, DC
Lone Star Chapter of the Sierra Club, Austin, TX
Maryland Chapter of the Sierra Club, Rockville, MD
National Parks and Conservation Association, Washington, DC
Natural Resources Council of Maine, ME
Natural Resources Defense Council, New York, NY
Natural Resources Defense Council, Washington, DC
Natural Gas Vehicle Coalition, Arlington, VA
New Jersey Environmental Lobby, Trenton, NJ
Northeast Alternative Vehicle Consortium, Boston, MA
Northern Illinois Gas, Naperville, IL
NYC Environmental Justice Alliance, New York, NY
Oregon Environmental Council, Portland, OR
Peoples Gas Light and Coke Company, Chicago, IL
Peoples Natural Gas, Pittsburgh, PA
Pierce Transit, Tacoma, WA
Public Citizen, Washington, DC
Rails-to-Trails Conservancy, Washington, DC
San Diego County Bicycle Coalition, San Diego, CA
Sierra Club Ohio, Columbus, OH
Sierra Club--Virginia Chapter, VA
Sierra Club, San Francisco, CA
Southern Consortium for Advanced Transportation, Inc., GA
Surface Transportation Policy Project, Washington, DC
The Izaak Walton League, Gaithersburg, MD
The U.S. Council of Mayors, Washington, DC
Union of Concerned Scientists, Berkely, CA
Union of Concerned Scientists, Washington, DC
Urban Ecology, Inc., Oakland, CA
Virginia Natural Gas, Norfolk, VA
      
                                 ______
                                 
                                       The Civil War Trust,
                                      Arlington, VA, April 2, 1997.
Hon. John W. Warner, Chairman,
Subcommittee on Transportation and Infrastructure,
Committee on Environment and Public Works,
Washington, DC.
    Dear Senator Warner: On behalf of The Civil War Trust, I am pleased 
to provide for the subcommittee hearing record, testimony supporting 
retention of the transportation enhancement provisions of the 
Intermodal Surface Transportation Efficiency Act of 1991 currently 
before the Congress for reauthorization. These remarks demonstrate the 
positive impact that the enhancement provisions have had in the arena 
of Civil War heritage preservation and urge that they be retained in 
the reauthorizing legislation.
    If we may provide additional information please do not hesitate to 
call on us. Thank you for your consideration of these views.
            Sincerely,
                                      Edgar M. Andrews III,
                                                         President.
                                 ______
                                 
  Statement of the Edward M. Andrews III, on Behalf of the Civil War 
                                 Trust
    I am pleased to provide testimony on behalf of The Civil War Trust 
relative to the reauthorization of the Intermodal Surface 
Transportation Efficiency Act of 1991. Specifically, I will demonstrate 
the positive impacts that the transportation enhancement provisions of 
that Act have had in the arena of Civil War heritage preservation and 
encourage retention of these important provisions.
    The Civil War Trust is a 501(c)(3) non-profit organization of 
28,000 members nationwide, that is dedicated to the preservation and 
protection of historic Civil War sites. Preservation of these 
irreplaceable sites enables us to teach to future generations, the 
lessons of this defining period in American history at the places where 
events actually occurred.
    The Intermodal Surface Transportation Efficiency Act became law in 
1991. With its passage, Congress recognized that road construction and 
highway improvements have the potential to damage the historic 
resources, environment and, in many ways, the quality of life in 
communities where construction is undertaken. To partially offset such 
damage, and to give communities a voice in planning for the expenditure 
of transportation dollars, Congress wisely mandated that each state set 
aside 10 percent of its Surface Transportation Funds for transportation 
enhancement activities. These set-asides amount to less than 2 percent 
of total funds authorized under the Act. Since enactment, $1.3 billion 
has been provided by ISTEA for historic preservation, scenic easements, 
bike trails and a variety of cultural improvements.
    Since 1991, ISTEA transportation enhancement funds have been the 
single greatest resource devoted to preservation of historic Civil War 
sites. In 12 states, $23.6 million in enhancement funding has been 
matched by $20.1 million raised by communities and organizations like 
the Trust to fund preservation activities. The resulting $43.7 million 
has been committed to meet critical preservation needs at a time when 
Federal funding for such important efforts has been limited.
    Maryland pioneered the practice of committing ISTEA enhancement 
funds to Civil War battlefield preservation. The state used $7.8 
million of enhancement funds to acquire land and easements at Civil War 
sites. In the process, Maryland acquired 3,000 acres at Antietam, 25 
acres at South Mountain and 20 acres at Monocacy, either in fee or in 
the form of scenic easements. This foresight ensures that development 
radiating from Washington, DC along crowded transportation corridors 
will not envelop these historic places. Maryland's example is important 
not only because it saved vast acreage around the state's principal 
Civil War sites, but also because numerous other states used Maryland 
as an example and followed suit.
    Virginia has committed $6.2 million of enhancement funds for a 
broad range of programs designed to preserve its extensive network of 
historic Civil War resources, encourage heritage tourism and stimulate 
interpretation and education about this critical time in the state's 
experience. Programs have been funded for land and easement 
acquisition, upgrade and replacement of highway historical markers, 
construction of pedestrian wayside exhibits, and development of driving 
trails and pull-offs along the routes followed by competing armies 
during the War. These innovative programs were developed through the 
cooperative efforts of many individuals, organizations and communities 
who are now reaping benefits from increased tourism and rekindled pride 
in community resources.
    There are similarly innovative programs underway in Alabama, 
Arkansas, the District of Columbia, Kansas, Kentucky, Mississippi, New 
Mexico, Oklahoma, Tennessee and West Virginia. Creation of hiking and 
biking trail networks to connect Civil War sites, improvements to roads 
that access historic places, construction of visitors centers, 
archaeological research at sites and along transportation corridors and 
restoration of decaying historic structures are examples of enhancement 
programs that have been funded through ISTEA in these states.
    These examples show clearly that the availability of enhancement 
funding has mitigated the impact of transportation development on 
communities, the natural environment and historic venues near its path. 
It has fostered partnerships among communities, organizations, citizens 
and government agencies, and it has re-kindled interest in the 
preservation and interpretation of historic sites. It has greatly 
stimulated heritage tourism which has had a positive and powerful 
impact on the physical and economic well-being of many localities.
    These demonstrated positive results have been accomplished at a 
relatively small cost. The Civil War Trust, its members and community 
preservation partners, therefore consider it vital that mandatory 
transportation enhancement set-asides be retained in the legislation to 
reauthorize ISTEA.
  

                                
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