[House Hearing, 108 Congress]
[From the U.S. Government Printing Office]



                      DEPARTMENT OF TRANSPORTATION
                 BUDGET PRIORITIES FOR FISCAL YEAR 2004

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

                                HEARING

                               before the

                        COMMITTEE ON THE BUDGET
                        HOUSE OF REPRESENTATIVES

                      ONE HUNDRED EIGHTH CONGRESS

                             FIRST SESSION

                               __________

           HEARING HELD IN WASHINGTON, DC, FEBRUARY 12, 2003

                               __________

                            Serial No. 108-3

                               __________

           Printed for the use of the Committee on the Budget


  Available on the Internet: http://www.access.gpo.gov/congress/house/
                              house04.html


                                 ______

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                        COMMITTEE ON THE BUDGET

                       JIM NUSSLE, Iowa, Chairman
CHRISTOPHER SHAYS, Connecticut,      JOHN M. SPRATT, Jr., South 
  Vice Chairman                          Carolina,
GIL GUTKNECHT, Minnesota               Ranking Minority Member
MAC THORNBERRY, Texas                JAMES P. MORAN, Virginia
JIM RYUN, Kansas                     DARLENE HOOLEY, Oregon
PAT TOOMEY, Pennsylvania             TAMMY BALDWIN, Wisconsin
DOC HASTINGS, Washington             DENNIS MOORE, Kansas
ROB PORTMAN, Ohio                    JOHN LEWIS, Georgia
EDWARD SCHROCK, Virginia             RICHARD E. NEAL, Massachusetts
HENRY E. BROWN, Jr., South Carolina  ROSA DeLAURO, Connecticut
ANDER CRENSHAW, Florida              CHET EDWARDS, Texas
ADAM PUTNAM, Florida                 ROBERT C. SCOTT, Virginia
ROGER WICKER, Mississippi            HAROLD FORD, Tennessee
KENNY HULSHOF, Missouri              LOIS CAPPS, California
THOMAS G. TANCREDO, Colorado         MIKE THOMPSON, California
DAVID VITTER, Louisiana              BRIAN BAIRD, Washington
JO BONNER, Alabama                   JIM COOPER, Tennessee
TRENT FRANKS, Arizona                KENDRICK B. MEEK, Florida
SCOTT GARRETT, New Jersey            RAHM EMMANUEL, Illinois
GRESHAM BARRETT, South Carolina      ARTUR DAVIS, Alabama
THADDEUS McCOTTER, Michigan          DENISE L. MAJETTE, Georgia
MARIO DIAZ-BALART, Florida
JEB HENSARLING, Texas
[Vacant]

                           Professional Staff

                       Rich Meade, Chief of Staff
       Thomas S. Kahn, Minority Staff Director and Chief Counsel


                            C O N T E N T S

                                                                   Page
Hearing held in Washington, DC, February 12, 2003................     1
Statement of:
    Hon. Michael P. Jackson, Deputy Secretary, U.S. Department of 
      Transportation.............................................     9
    Hon. Nick J. Rahall, II, a Representative in Congress from 
      the State of West Virginia.................................    41
Prepared statement and additional submissions of:
    Questions submitted for the record by Hon. Denise L. Majette, 
      a Representative in Congress from the State of Georgia.....     4
    Deputy Secretary Jackson:
        Prepared statement.......................................    12
        Response to Mr. Spratt's question regarding Federal aid 
          for highway projects...................................    18
        Response to Mr. Wicker's question regarding the Federal 
          Highway Administration.................................    27
        Response to Mr. Cooper's question regarding the 
          Transportation Equity Act for the 21st Century.........    29
        Response to Mr. Baird's question regarding ship disposal.    33
        Response to Mr. Scott's question regarding the James 
          River Ghost Fleet......................................    37
        Response to Mr. Meek's question regarding Minority 
          Business Outreach......................................    39
    Prepared statement of Mr. Rahall.............................    43

 
                      DEPARTMENT OF TRANSPORTATION
                 BUDGET PRIORITIES FOR FISCAL YEAR 2004

                              ----------                              


                      WEDNESDAY, FEBRUARY 12, 2003

                          House of Representatives,
                                   Committee on the Budget,
                                                    Washington, DC.
    The committee met, pursuant to call, at 10 a.m. in room 
210, Cannon House Office Building, Hon. Jim Nussle (chairman of 
the committee) presiding.
    Members present: Representatives Nussle, Gutknecht, Spratt, 
Brown, Portman, Thompson, Putnam, Wicker, Diaz-Balart, 
Hastings, Scott, Neal, Garrett, Baldwin, Cooper, Baird, Vitter, 
and Shays.
    Chairman Nussle. Good morning.
    This is the House Budget Committee full committee hearing 
on the Department of Transportation Budget Priorities for 
Fiscal Year 2004.
    Today I am pleased to welcome the Honorable Michael P. 
Jackson, Deputy Secretary of Transportation. Mr. Secretary, we 
look forward to hearing your testimony today on the Department 
of Transportation's budget for the coming fiscal year.
    We also extend our best wishes to a former colleague, the 
current Secretary of Transportation, and we hope he gets well 
soon, feeling better, and back at it. We thought Congress was a 
pain in the neck but a pain in the back, that is something you 
cannot recover from quickly. He has our best wishes and if you 
would let him know we are thinking about him today, we would 
appreciate it.
    This year will be a very busy year for the Transportation 
Department and for that matter, a very busy year for my 
colleagues and myself here in Congress as we deal with 
transportation issues, as the Transportation and Infrastructure 
Committee grapples with a number of very important, vexing 
issues for our country.
    The administration's proposed budget request for the next 
fiscal year will provide the foundation for the new 
authorization cycle for many of the essential transportation 
programs. In the coming months, Congress will consider 
reauthorization of many of the surface transportation programs 
under what is called TEA-21 and their programs under AIR-21 and 
passenger programs under Amtrak. Mr. Secretary, there is no 
question that we have our work cut out for us as we work 
through these.
    As we prepare this year's budget, it is going to be 
important that we balance the essential needs of our Nation, 
especially those in the area of transportation and homeland 
security with our commitment to ensure that we keep the growth 
of discretionary spending in particular in line, in this 
instance.
    With the terrorist attacks still fresh in our minds and the 
possibility of a war on the horizon, we remember the critical 
role of the Transportation Department and its many components, 
the role you have played in these past several months. The 
attacks of September 11, 2001, made it crystal clear that our 
Nation's transportation system is on the front line in this 
global war on terrorism. While two major Department of 
Transportation operating administrations, the Coast Guard and 
the Transportation Security Administration, are moving from DOT 
to the new Department of Homeland Security, so much of what 
this department does on a daily basis helps to insure safety 
and security for our way of life.
    The administration's fiscal year 2004 proposal for the 
Department of Transportation calls for $54.3 billion in budget 
resources and $53.6 billion in outlays, a $2.9 billion or 5.7-
percent increase from the previous year's level. The 
administration bases its request on the need to ``create a 
safer, simpler and smarter transportation system for all 
Americans.''
    To accomplish this, the Department is focusing on five 
performance goals: improved safety, increased mobility in the 
support of the Nation's economy, protect human and natural 
environment, and achieve organizational excellence while at the 
same time supporting homeland and national security issues. 
This hearing will examine how the President's budget request 
would accomplish these aims as well as other priority 
objectives of the Department of Transportation programs.
    About two-thirds of the funding provided here is for ground 
transportation programs. These include the Federal Highway 
Program, mass transit operating, and capital assistance. Under 
ground transportation are rail transportation through the 
National Rail Passenger Corporation. We all know this to be 
Amtrak and high speed rail and rail safety programs.
    Additional components of this function are air 
transportation, including the Federal Aviation Administration, 
Airport Improvement Program, the Facilities and Equipment 
Program, and the operation of air traffic control systems.
    Water transportation is also considered through the Coast 
Guard and Maritime Administration as well as other 
transportation support activities.
    We want to thank you for coming today. We need to work 
through a number of very important issues. These will not be 
settled today but we need to begin work as we look not only to 
2004 but beyond.
    There is no question we saw the vulnerability of 
transportation itself as well as the vulnerability of our 
economy to transportation and transportation concerns manifest 
itself over the last 2 years. This has to be one of our top 
priorities as we look forward to the future.
    I thank you for coming today. We look forward to your 
testimony.
    I would like to turn to Mr. Spratt for any comments he 
would like to make before we begin the hearing.
    Mr. Spratt. Mr. Chairman, thank you very much.
    Secretary Jackson, welcome. You are doing something not all 
Cabinet Secretaries are willing to do. We appreciate you coming 
before our committee, particularly this year because this year 
is an important year for transportation.
    I am sorry to hear about Norm Mineta's situation. I was the 
victim of an old back injury myself. I know how he must feel 
and I hope you will convey to him my best wishes for a speedy 
recovery and tell him to take it easy.
    Shortly, Congressman Rahall, the second most senior 
Democrat on the Transportation Committee, will appear before us 
to give us his perspective on the administration's request.
    This is, as I said, an important year for transportation. 
This year, Congress will take up the reauthorization of the 
Federal programs that support highways, transit, aviation, and 
rail. The President's proposals are the baseline or starting 
point so I am interested in hearing, as we all are, the 
administration's ideas for improving and bolstering these 
programs.
    At first glance, your 2004 budget for the Department of 
Transportation appears to be modest. The administration is 
claiming about a 6-percent increase over its request of last 
year. However, last year's request included a large cut to 
Federal aid for highways due to the incoming revenues of the 
Highway Trust Fund and I would venture to say that Congress is 
all but certain to reject that and increase the amount for 
education.
    The House reported an appropriations bill of $26.7 billion 
and passed it. The Senate, however, appropriated $31.8 billion 
for transportation. I am not quite sure where the Omnibus Bill 
stands at this point but it is my understanding that the 
highway amount will be increased. I hope it will be increased 
close to the Senate amount. If that is true, your request for 
this year, $29.3 billion, is about $2.5-billion less than the 
likely level of the Omnibus Appropriations Bill for the 
Department of Transportation.
    We think that is a mistake for several reasons. All of us 
come from States where there are large, unmet agendas for 
public works, highways in particular. Furthermore, we are in a 
slump even though the economic data indicate that we are coming 
out of a recession, you cannot feel it. This is a jobless 
recovery and we may actually be dipping back into a negative 
growth situation. Under those circumstances, it makes sense 
when there is a backlog of unfinished public works programs, 
highway programs, that not only can stimulate the economy but 
also can provide a return on investment in future years, that 
this is a time when we want to spend more rather than less on 
highways.
    I know to some extent that is tied to our formulation of 
how you use the Highway Trust Fund, but nevertheless, those are 
manmade laws and we could rewrite those laws. As we propose in 
our economic stimulus proposal, we want to put at least $5-
billion more into highways right now in 2003, put it to work so 
that we could stimulate the economy and clear at least a small 
part of the backlog that every State has for transportation 
projects.
    I would also like to hear from you this morning the 
administration's justification for freezing transit funding in 
what is likely to be the 2003 funding level. Investments in 
transit combat congestion, would help all of us and combat 
urban sprawl. Transit systems across the country in major urban 
areas are going to need to make major security improvements in 
light of the threat to our homeland.
    Use of transit has been increasing steadily over the last 
few years, so I think it is fair to ask you to consider whether 
or not it is wise to flatline investments in transit systems 
around the country.
    The chairman has mentioned Amtrak. Amtrak is in dire fiscal 
straits and we would like to know what the administration 
proposes to do to deal with Amtrak's solvency.
    Finally, we want to hear about the Department of 
Transportation's role in homeland security. The Coast Guard and 
the Transportation Security Administration are now part of the 
new Homeland Security Department. We are interested in knowing 
if DOT has any remaining role in homeland security and if so, 
what will it be under the President's budget.
    Thank you again for coming. We look forward to your 
testimony.
    Chairman Nussle. All members will be given at this point in 
time, with unanimous consent, a chance to put into the record 
an opening statement.
    [The information referred to follows:]

    Questions Submitted for the Record by Hon. Denise L. Majette, a 
          Representative in Congress From the State of Georgia

                 FUNDING FOR TRAINING HAZMAT RESPONDERS

    Question--I note that the administration has maintained the level 
of funding for emergency preparedness grants at the same level as last 
year--$14 million--because of the authority authorized to the 
Department. As you know, these grants provide much needed funding for 
local hazardous materials responders, and I believe these grants are 
important, especially at a time when many State and local officials 
assert that their budgets and specifically their security budgets are 
strained. In my district, I have several major highways and rail lines 
along which HAZMAT materials travel.
    I also understand that as a result of a lawsuit, the user fees that 
fund this program have been reduced. Do you believe that the Department 
still has a role in training HAZMAT responders? [IF YES,] What does 
Congress need to do to provide DOT with the authority to increase the 
funding level for this program?
    And, are there other areas that my local officials can look for 
funding for training in the event of a HAZMAT emergency?
    Response--Under provisions of the Hazardous Materials 
Transportation Law of 1994, the Research and Special Programs 
Administration (RSPA) is authorized to fund Hazardous Materials 
Emergency Preparedness (HMEP) Planning Grants at amounts not to exceed 
$5 million, and Training Grants not to exceed $7.8 million. In 
addition, in our appropriations, Congress has imposed an obligation 
limitation of $14.3 million, which funds the planning and training 
grants, a special grant to non-profit organizations that funds training 
for HAZMAT trainers in dealing with HAZMAT incidents, training 
curriculum development, technical assistance and program management. 
All funds are generated by a registration fee imposed on shippers and 
carriers of certain HAZMAT.
    In the first six years, the registration program was generating 
substantially less than the $14.3 million in user fees Congress 
intended to be collected for funding the grants program. Thus, in 2000, 
RSPA expanded the scope of the companies required to register, and 
introduced a two-tier fee structure. As a result, the registration 
program was generating over $20 million. Annually, over the past 
several years, this surplus accumulated. To offset this surplus, RSPA 
lowered the fees so that the surplus will be drawn down over a few 
years.
    DOT has a continuing role in assisting the training of HAZMAT 
responders. Over the past decade, over 1.1 million HAZMAT responders 
have received training partially funded by the HMEP Grant program. 
Funding has also been distributed to about 1,700 local emergency 
planning committees.
    Other Federal Grant programs also provide funding for training to 
first responders. The Federal Emergency Management Agency (FEMA) in 
particular provides sizeable amounts of grant funds to emergency 
response organizations. FEMA's Fire Administration has distributed 
funding in excess of $100 million per year since 2000, and is expected 
to distribute over $330 million in fiscal year 2003, to be used by the 
Nation's firefighters to increase the effectiveness of firefighting 
operations, improve fire fighter health and safety programs, purchase 
new fire apparatus, enhance EMS programs, and support Fire Prevention 
and Safety Programs.
    FEMA also established an Emergency Management Performance Grant 
(EMPG) program targeted at anti-terrorism activities, to provide States 
the flexibility to allocate funds according to risk and to address the 
most urgent State and local needs in disaster mitigation, preparedness, 
response, and recovery, and to provide delivery of specialized, multi-
agency anti-terrorism preparedness training. This program is a 
consolidation of several previously independent grant programs. 
Training is provided through each of the 50 States. The training is 
targeted at first responders, those who might come into contact with 
and be forced to manage the consequences of terrorist acts. Funding in 
fiscal year 2003 is estimated at $117,946,000.
    However, the HMEP Grants program is the only such program that 
specifically addresses training for first responders in responding to 
hazardous materials incidents during transportation. The program also 
offers a significant degree of flexibility to grantees for planning and 
training purposes.

               BALANCING FREIGHT EFFICIENCY AND SECURITY

    Question--Given the increased security concerns with respect to our 
country's freight transportation system, as well as the importance of 
efficiently moving goods to our economy, can you please elaborate on 
some of the mechanisms by which the Department intends to reconcile 
these two concerns and deal with freight efficiency and security in the 
budget?
    Response--Immediately following the tragic events of 9/11, 
Secretary Mineta recognized the need to safeguard our Nation's 
transportation system and sustain the movement of people and goods. To 
address the challenge of ensuring mobility while enhancing security, 
the Secretary convened a National Infrastructure Security Committee 
(NISC) that included senior managers from the Department of 
Transportation's modal administrations and our Office of Intelligence 
and Security, representatives from other Federal agencies responsible 
for trade and commerce (e.g., U.S. Customs, Department of Commerce, 
etc.), and private sector transportation providers. The NISC is working 
with industry to incorporate deterrents to cargo tampering and criminal 
activity into freight transportation business practices without 
compromising customer service. In its review of the transportation 
environment, the NISC has been able to identify areas where existing 
Federal programs and regulations are adequately addressing security 
issues and areas where improvements can be made without impeding the 
flow of commerce through redundant requirements or onerous enforcement 
activities.
    The Department's proposal for TEA-21 reauthorization will place a 
high priority on the efficient and secure movement of commercial 
freight. The Secretary will be seeking to increase funding flexibility 
for State and local authorities to make effective freight program 
investments, enhance innovative financing tools to leverage freight 
transportation investments, and expand the capacity and improve the 
efficiency of freight transportation networks.
         technology to improve freight transportation security
    Question--Given your background in the private sector as well as 
your service in the Department, do you think there is a need for 
federally funded increased logistics and information technology to help 
improve the overall efficiency and security of our intermodal freight 
transportation systems?
    Response--The Department believes that increased Congressional 
support for existing logistics and technology research and development 
programs would improve the efficiency and security of our intermodal 
freight transportation system. For example, our work in freight-related 
operational tests and infrastructure development under the Intelligent 
Transportation System program is expediting the movement of commercial 
vehicles using advanced technologies that confirm the location and 
contents of cargo shipments, and assure the operational compliance and 
safety status of commercial vehicles and their drivers under the 
Commercial Vehicle Inspection Systems and Networks (CVISN) program. 
These technologies provide information to enhance the logistics 
capabilities of transportation service providers and facilitate the 
inspection and clearance of commercial vehicles and their cargo by law 
enforcement agencies.
    Many of these technologies are newly developed and their successful 
application in the transportation environment requires further testing 
and refinement. Improvements to freight logistics and security are 
derived not from technologies or devices alone, but from their 
integration into business practices and government programs. The 
Department is working with its private sector partners and other 
government agencies to validate the transportation system benefits of 
our freight-related research and development activities.

                      BUS AND BUS FACILITY FUNDING

    Question--The administration has proposed to eliminate the transit 
Bus and Bus Facilities funding category. Does this mean that the 
administration thinks that all major bus capital projects can be funded 
with regular formula funds?
    Response--While we have proposed to eliminate Bus and Bus 
Facilities as a separate program beginning in fiscal year fiscal year 
2004, the funding has been incorporated into the urbanized formula 
program, the nonurbanized formula program, and the New Starts program 
in the President's fiscal year 2004 budget request. Each urbanized area 
and State will receive a share of the bus capital funds as part of 
their annual apportionment. When the funding is included in the formula 
programs, transit operators and State departments of transportation 
will be able to anticipate and plan systematically for routine bus 
replacements, fleet expansion, and facilities over a period of several 
years, rather than relying on sporadic earmarks. We also believe the 
predictability of the funding stream will allow transit operators to 
better plan for major bus capital projects over the short and long 
term. In addition, funding and eligibility under the New Starts program 
will be expanded to include major non-fixed guideway corridor 
improvements such as Bus Rapid Transit projects.

                          INTERMODAL TERMINALS

    Question--Atlanta has been working on a centralized multimodal 
facility, which would combine all modes of passenger public 
transportation in one convenient hub. Such a facility helps reduce 
congestion by making intercity and local public transportation a more 
attractive alternative to the private auto. Does the DOT budget and 
related TEA-3 proposal contain any provisions that would lead to the 
development of more of these intermodal terminals?
    Response--To provide seamless transportation for the traveling 
public, there is a critical need for the Nation's surface public 
transportation modes to link to each other and to airports at 
intermodal facilities. Few intermodal passenger terminals in the 
country bring together all the surface public transportation modes: 
motorcoach, intercity rail, urban mass transportation and rural local 
transit. Further, current surface transportation programs fail to 
address the importance of intercity bus service to our Nation's 
transportation infrastructure. Intercity buses serve over 4,200 U.S. 
communities in regular service and virtually every community in the 
United States through regular route, charter, or tour service. 
Intercity bus service connects sparsely populated rural routes to 
larger corridors.
    For these reasons, we believe that it is in the economic interest 
of the United States to improve the efficiency of public surface 
transportation modes by ensuring their connection with and access to 
intermodal passenger terminals, thereby streamlining the transfer of 
passengers among modes, enhancing travel options, and increasing 
passenger transportation operating efficiencies.
    To that end, we are proposing that Title 49, U.S.C., Chapter 55, 
Intermodal Transportation, be amended to include a new subchapter III, 
Intermodal Passenger Facilities. The purpose of this subchapter would 
be to accelerate intermodal integration among North America's passenger 
transportation modes by assuring intercity public transportation access 
to intermodal passenger facilities; encouraging the development of an 
integrated system of public transportation information and providing 
intercity bus intermodal facility grants.

                              BUS SECURITY

    Question--Many of my constituents rely on bus service, both 
intercity and local, for reliable, affordable public transportation. 
The security of those systems is very important. What is DOT doing to 
support the efforts of intercity bus and transit bus operators to make 
the bus systems more secure?
    Response--Since September 11, the Federal Transit Administration 
(FTA) has undertaken a series of major steps to help prepare the 
transit industry to counter terrorist threats. FTA has provided direct 
assistance to transit agencies through on-site readiness assessments, 
technical assistance teams, regional forums for emergency responders, 
grants for drills, training, and accelerating technology and research 
projects. Throughout this process, FTA has been learning, sharing, and 
applying all that we can to enhance transit security. We have learned 
from the terrorism experiences in London, Paris, Tokyo, and Israel. We 
have formed working relationships with the intelligence community, and 
have applied their expertise and knowledge to the transit industry. And 
we gained a tremendous amount of information about the readiness and 
needs of the transit industry from the aggressive five-point initiative 
we initiated immediately after September 11. Under this initiative thus 
far, FTA has:
    1. Completed 37 threat and vulnerability assessments: Multi-
disciplinary teams including experts in anti-terrorism, security, and 
transit operations assessed the readiness of the largest and highest 
risk transit agencies. Based on these assessments, FTA has provided 
specific feedback to individual agencies on how to improve their 
security systems and reduce vulnerabilities, as well as information on 
``best practices'' to all transit agencies.
    2. Deployed technical assistance teams: Emergency response planning 
and technical assistance teams are being deployed to the top 50-60 
transit agencies to help them to implement the major components of a 
systematic security program including current security and emergency 
response plans, training assessments, security awareness materials for 
transit employees and customers, etc.
    3. Awarded grants for drills by emergency responders and transit: 
Grants of up to $50,000 were awarded to 83 transit agencies to conduct 
tabletop and full scale drills with regional emergency responders to 
test and improve their security and emergency response plans.
    4. Accelerated technology deployment: FTA accelerated the 
deployment and testing of the PROTECT system for chemical detection in 
the Washington, D.C. and Boston subway systems. In addition, research 
funds were refocused to conduct 11 short-term, quick payoff research 
projects identified by the transit industry.
    5. Facilitated training and regional collaboration: A new 2-hour 
security awareness course for front line employees and supervisors is 
being delivered nationwide. This winter, FTA will complete 17 regional 
forums to promote regional collaboration and coordination among fire, 
police, and medical emergency responders and transit. To date, nearly 
1,300 individuals, including representatives of 125 transit agencies 
and their community partners, have participated in these 2-day forums 
held in 10 locations across the country.
    Although the transit industry has made great strides to strengthen 
security and emergency preparedness, there is much more to do. It is 
critical that security be integrated throughout every aspect of transit 
programs, operations, and infrastructure.
    The most important steps to focus on right now are employee 
training, public awareness, and emergency response planning. Our 
current efforts in this regard include the following:
    Training. As part of the Model Bus Safety and Security Program, FTA 
is preparing technical assistance and guidance documents to assist 
transit agencies in implementation of safety and security system 
program plans. The Security Guidance Document will detail baseline and 
enhanced security actions scaleable by system size and will focus on 
areas such as training employees to recognize suspicious activities, 
packages and substances and to respond to threats and incidents. 
Security is a core element of this Model Program whose goals are to 
improve transit bus safety and security through the establishment of 
transit bus safety and security practice benchmarks and to provide 
Model Program implementation technical assistance to the industry.
    Emergency Preparedness and Response. Using FTA grants of up to 
$50,000, 83 of the Nation's largest transit agencies will conduct 
tabletop and full-scale drills with regional emergency responders to 
test and improve their security and emergency response plans. One 
important condition of these grants is that the drills must include the 
participation of local and regional police, fire and emergency response 
agencies.
    Public Awareness. FTA public awareness outreach on bus security 
enhancements focuses on making the public able to recognize suspicious 
activities and packages in public portions of transit facilities, 
including bus stops, and to report these to transit officials, the 
police and to each other. Over the next several months, FTA will launch 
``Transit Watch,'' a national outreach campaign to engage transit 
agencies of all sizes in a voluntary security program to improve 
personal safety and awareness, and to develop a media campaign that 
informs the public about this government/industry partnership. We will 
be working with industry stakeholders, including transit unions, to 
develop and deliver training materials, posters, pocket cards, 
brochures and other materials, The passenger awareness component of 
this initiative is a major new focus for FTA and it will provide an 
immediate and significant improvement in transit security. ``Transit 
Watch'' will be modeled after successful programs already underway in 
many of the larger transit agencies and the national ``Neighborhood 
Watch Programs.'' This will assist in positioning transit as a good 
community neighbor, and transit vehicles and employees as ``safe 
havens'' in the event of an emergency.

                            INTERCITY BUSES

    Question--Amtrak receives a great deal of attention and has a role 
to play in the Nation's public transportation network, but many of my 
constituents rely on intercity buses for affordable, intercity 
transportation. What DOT programs exist, or are being proposed, to 
support this vital public service? What is your view of the importance 
of intercity buses to the national transportation system?
    Response--Intercity buses serve over 4,200 U.S. communities in 
regular service and virtually every community in the United States 
through regular route, charter, or tour service. Intercity bus service 
connects sparsely populated rural routes to larger corridors and plays 
an important role in our national transportation system.
    Current surface transportation programs, however, fail to 
adequately address the importance of intercity bus service to our 
Nation's transportation infrastructure. FTA currently funds intercity 
bus transportation through the 5311(f) program, whereby States are 
required to spend at least 15 percent of their 5311 Rural formula 
program money on planning, marketing, shelters, service agreements, and 
other activities having to do with rural denizens and intercity bus 
transportation. States can certify that these needs are being met and 
thereby not have to set aside any or all of that 15 percent (about one-
half the States so certify each year). In addition, the Federal Motor 
Carrier Safety Administration (FMCSA) develops, promulgates and 
enforces safety regulatory standards for intercity buses. FMCSA 
provides no specific funding for this mode of transportation.

             EXPANDING COMPETITION WITHIN AIRLINE INDUSTRY

    Question--The fiscal year 2004 budget has been billed as laying the 
groundwork for the several authorization bills that will be considered 
by Congress this year. The Federal Aviation Administration (FAA) 
reauthorization bill will be important to establish the groundwork to 
continue and expand the consumer choice and the competition we 
currently experience in the aviation industry. What steps is the 
Department taking through the budget to expand further choice and 
competition for consumers in the industry?
    Response--Issues of competition in airline service to communities 
are handled by the Office of the Secretary of Transportation rather 
than by the FAA. While the Office of the Secretary's 2004 budget 
proposes to eliminate the Small Community Air Service Development Pilot 
Project and to restructure and cut back the Essential Air Service 
program, due to government-wide budget pressures and high per-passenger 
subsidies in the EAS program, the Department recognizes that airline 
service and competition remain key issues to communities across the 
Nation. The Department will study the results of the Small Community 
pilot program grants from fiscal years 2002 and 2003, and provide $50 
million for EAS service. The budget proposes over $2 million for new 
studies on the impact of changing airline business plans on competition 
and community service, competition in international airline service, 
and the impact of regional jet aircraft on competition and service. The 
Office of the Secretary will also continue to carry out its statutory 
responsibilities in overseeing such aspects as airline alliances and 
airport competition plans, with an emphasis on encouraging competition 
and service choices for consumers.

                     AIR TRAFFIC CONTROLLER HIRING

    Question--As you know, much of the Nation's air traffic controller 
workforce was hired in the years immediately following the strike. 
Thousands of controllers hired in those years are approaching the 
mandatory retirement age, and I am concerned that the U.S. may not have 
a ready workforce to replace these experienced controllers at our 
Nation's busiest airports, like Hartsfield, and air traffic control 
facilities. I believe we should capitalize on the experience we have 
before it is lost by training recruits with current controllers. Does 
this budget provide adequate funding to recruit and train a quality air 
traffic controller workforce in the near term?
    Response--The Department is well aware of this situation, confirmed 
by studies of the General Accounting Office. The Federal Aviation 
Administration portion of the President's fiscal year 2004 budget 
requests an increase of 302 air traffic controllers, at a cost of $13 
million, to begin to prepare the FAA for the rapid increase in 
retirements that FAA expects to start experiencing around fiscal year 
2007.

    Chairman Nussle. With that, Secretary Jackson, welcome. We 
look forward to your testimony.

    STATEMENT OF HON. MICHAEL P. JACKSON, DEPUTY SECRETARY, 
                  DEPARTMENT OF TRANSPORTATION

    Mr. Jackson. Thank you, Mr. Chairman.
    Thank both of you for your comments about Secretary Mineta. 
I will be certain to convey to him today your best wishes for 
his speedy recovery. He is doing well and we expect him back in 
the office and at the desk in short order.
    On Secretary Mineta's behalf, I am pleased to share with 
you a brief overview of the 2004 budget. Mr. Chairman, you have 
given a good thumbnail sketch of it and I will try not to run 
over too much of the same territory in my oral remarks.
    As you said, we have a $54.3 billion request for the 
Department which is a 6-percent increase over the 2003 level. 
We are losing two great sets of colleagues from the Department 
this year as the Coast Guard and Transportation Security 
Administration move to the Department of Homeland Security. We 
are proud of our 35-year relationship with the Coast Guard and 
are very proud of the work that TSA has done in its first year 
of operation to stand up their agency to meet congressionally 
established goals.
    I would like to share with you some highlights from the 
2004 budget request and mention briefly some of the key 
initiatives. Then we can discuss some of these items in greater 
detail as you wish.
    As you know, current laws authorizing both surface and air 
transportation, as said here this morning, are up for 
reauthorization as is our intercity passenger rail program. 
These will be far reaching reauthorizations--in the case of 
highways and transit, a 6-year authorization; in our air 
program, a 4-year authorization is anticipated. The decisions 
we make this year will set the pace for many important 
investments in the coming years. We look forward to unveiling 
the details of our reauthorization legislation very soon and to 
working with Congress on swift passage.
    I would like to start by sharing a few principles that will 
be embedded in these reauthorization proposals and that animate 
some of our work. For surface transportation programs, we will 
include increased funding flexibility for State and local 
authorities. This is a key point of how we want to make the 
program more responsive to State and local needs. We will 
continue to encourage innovative financing tools, and efficient 
environmental review processes will be a priority. DOT will 
seek to improve efficiency for freight transportation networks, 
an area that has been too little appreciated and needs 
additional focus to help us understand how to facilitate the 
movement of freight through the Nation. We will continue to put 
a strong emphasis on public transportation by simplifying 
transit programs and fostering seamless networks and greater 
flexibility for transit programs.
    Finally, our proposals will include an emphasis on 
consolidating and expanding Federal safety programs. I would 
like to repeat that point. For DOT, 2003 will be a special year 
for focus on highway and aviation safety. Secretary Mineta has 
challenged us to bring to this year the same focus, passion and 
innovation that we used last year in creating the 
Transportation Security Administration, but to focus this 
passion and this creativity on the profoundly important goal of 
improving safety and saving lives.
    Forty-two thousand people perish annually in traffic 
accidents and almost one out of our, almost 9,000 people, could 
be saved if America would only buckle up. We think we can do 
significantly better. We know we must do significantly better. 
The President's budget will include a number of mechanisms to 
address seatbelt usage, impaired driving and overall highway 
safety measures to try to reduce this terrible toll on America.
    Regarding the highway reauthorization bill, let me begin 
with the fundamental principle. We are committed to maintaining 
the guaranteed funding that links highway spending to Highway 
Trust Fund receipts. This has been the cornerstone of the two 
previous authorizations and one which the administration 
reinforces and supports. In fact, the President's budget 
request will actually propose to obligate more for highway 
programs than we expect to collect in Highway Trust Fund 
receipts. We will try to squeeze everything we can out of the 
mechanism we have, the Highway Trust Fund, but the President's 
budget does not propose increases in highway user fees.
    For the Federal Highway Administration, the 
administration's 2004 budget request proposes that all revenue 
from gasohol taxes, 2.5 cents per gallon, be deposited directly 
into the Highway Trust Fund rather than the current approach to 
deposit gasohol receipts into the General Fund. If enacted, 
this one change would bring an additional $600 million a year 
into the Highway Trust Fund to be invested for transportation 
needs.
    In addition to spending estimated Highway Trust Fund 
receipts, our proposal unveils a brand new $1 billion 
infrastructure performance and maintenance initiative. This 
program is specifically aimed at addressing maintenance and 
short term projects that can be implemented quickly, and be 
obligated in a rapid fashion. Totalling $6-billion over the 
authorization period, this funding will target projects to 
address congestion, bottlenecks and improve pavement 
conditions. Our proposed program spends at a level that keeps 
the Highway Trust Fund balance relatively constant. The 
obligation limit for 2004 is $29.3 billion, a 6-percent 
increase above the President's amended request for 2003 and the 
level the House had marked up as we put together this budget.
    When comparing the President's 6-year surface 
transportation reauthorization proposal in total, including 
highways, highway safety, transit, and motor carrier safety to 
the 6 years of TEA-21, the President proposes an overall 
increase of some 19 percent.
    Turning to the National Highway Traffic Safety 
Administration, I return to the theme of safety. This is their 
No. 1 priority at NHTSA. The President's budget request 
includes $665 million for NHTSA to reduce fatalities, prevent 
injuries, and encourage safe driving; $447 million in NHTSA's 
2004 funding request will support grants to the States to 
enforce safety belt and child safety seat use and reduce 
impaired driving.
    At DOT, we are also working to keep highways safe through 
the work of the Federal Motor Carrier Safety Administration by 
focusing on ways to prevent fatalities and injuries resulting 
from accidents involving commercial motor vehicles. The 2004 
budget request includes $447 million to address these 
particular issues as well. A focus on safety is an integral 
part, as you see, of these core highway programs.
    Another way to improve transportation safety is by 
encouraging the use of public transit, a dependably safe and 
efficient way to get people where they need to be. The 
President's budget request includes $7.2 billion to strengthen 
and maintain our public transportation systems. The 2004 budget 
request includes $1.5 billion to fund 26 New Start projects 
that will carry 190 million riders annually when completed.
    In transit we are reducing five accounts to three. We are 
focusing more flexibility on State formula grants so that 
States can have the money to use in more flexible ways. We have 
proposed a 25-percent increase in New Start funding and a 20-
percent increase in the funds devoted to rural areas for 
transit.
    Having touched on the surface programs, I will turn briefly 
to the reauthorization of aviation programs. While we will soon 
release the policy details of our aviation reauthorization 
proposal, the President is requesting $14 billion for Federal 
Aviation Administration programs in 2004.
    Because travel demand has dipped in the post-9/11 
environment, it is important to understand that it will be 
back. We will face congestion and capacity problems. So we 
cannot take our eye off these aviation infrastructure 
investments. We want to fund them at a significant level in 
this budget. Equally important, we want to continue to focus on 
reducing aviation fatality rates and improving aviation 
security. These are component parts of what you will be seeing 
when we send our proposal up for the Airport and Airway Trust 
Fund and the FAA reauthorization.
    The President's budget request and our reauthorization 
proposal maintain current levels of aviation infrastructure 
investment and expand FAA's safety staff, including the number 
of air traffic controllers needed as FAA faces an anticipated 
bubble in retirements. Because of the long lead time to train 
air traffic controllers, we will begin in 2004 to increase the 
work force to be able to meet this anticipated retirement need.
    Overall in FAA, we are in a period of declining revenue 
into the Aviation Trust Fund. Similar to the Highway Trust 
Fund, we are trying to squeeze as much as we can from the 
Aviation Trust Fund to maximize the funding of these core 
programs that are so important to our Nation.
    Now let us turn to railroads and Amtrak first. Amtrak faces 
severe and persistent financial challenges. The administration 
has asked Congress to adopt reforms that will strengthen 
Amtrak's business operations and its financial condition, but 
Amtrak continues to request funds to maintain their current 
business structure and services in place. The Federal 
Government simply cannot afford business as usual at Amtrak and 
the significant investment increases that are required for 
business as usual.
    The President's 2004 budget request includes $900 million 
for Amtrak. This is a funding level with a message. Amtrak must 
reform; Amtrak must do better. Passenger rail is an important 
part of our Nation's transportation infrastructure. I want to 
reemphasize that. We recognize the importance of intercity 
passenger rail. We are ready to work with Congress and the 
States in upcoming reauthorization discussions to create an 
intercity passenger rail system that is driven by sound 
economics, one that fosters competition and establishes long 
term partnerships between the States and the Federal 
Government. There is not a simple solution to this set of 
complex problems. If there were, sometime over the past 30 
years somebody would have found it. It is time to work hard at 
this one to see how we can make this organization run in a more 
businesslike fashion and how to make intercity passenger rail 
viable.
    Finally, I would like to share the President's request for 
our maritime programs. The Maritime Administration supports 
essential transportation and intermodal connections for 
domestic and international trade. The President is requesting 
$219 million for MARAD. One of MARAD's continuing challenges is 
the disposal of obsolete ships. We have 130 such vessels in our 
inventory and we are requesting $11.4 million for removal of 
the highest risk vessels.
    My prepared remarks focus on only a part of the big 
picture, compressing $54 billion into just this few minutes, 
but I want to thank you for the opportunity to testify today. I 
look forward to working closely with the Congress during this 
period of reauthorization for so many of our core programs. I 
look forward to responding to any questions you may have.
    With your permission, I would ask that my prepared remarks 
be submitted as a part of the record.
    Chairman Nussle. They will be made a part of the record.
    [The prepared statement of Michael P. Jackson follows:]

   Prepared Statement of Hon. Michael P. Jackson, Deputy Secretary, 
                      Department of Transportation

    Mr. Chairman, members of the committee, thank you for the 
opportunity to appear before you today to discuss the President's 
fiscal year 2004 budget request for the Department of Transportation 
(DOT).
    At the onset let me say that Secretary Norman Mineta sends his 
regrets, as he is unable to be here today. As many of you know, he is 
recovering from back surgery. While he recovers, we are in constant 
communication and he sends his regards. He is feeling great, is in high 
spirits and is ready to be back at work in the near future.
    President Bush is requesting $54.3 billion for DOT--a 6-percent 
increase over the 2003 President's request--including over $14 billion, 
or 27 percent, targeted toward supporting Secretary Mineta's top 
priority--safety.
    2004 presents tough choices. The President must balance pressing 
domestic needs, meet our international responsibilities and protect 
against terrorist attacks at home. As the President made clear in his 
State of the Union Address, the Federal budget reflects a growth at a 
rate of about 4 percent. In this context, our proposed funding for DOT 
at a 6-percent growth is responsible, and will support important 
transportation needs.
    During the past year, we at DOT have worked to strengthen our 
important role as guardians of the Nation's transportation systems. 
Under the leadership of Secretary Mineta, the DOT Team is hard at work 
to ensure a safe and efficient Federal transportation system for all 
Americans.
    This budget request provides the foundation for a new 
reauthorization cycle in both surface and aviation programs that will 
guide the course for these important programs for the next several 
years.
    The President's budget request also reflects the first full year of 
funding for the newly established Department of Homeland Security. Two 
major DOT operating administrations--the United States Coast Guard and 
the Transportation Security Administration--are moving from DOT to the 
new Department of Homeland Security.
    DOT is proud to have provided guidance and support to the United 
States Coast Guard for more than 35 years. Whether saving the lives of 
those in distress at sea, protecting the Nation from the scourge of 
illegal narcotics, or responding to environmental catastrophes like the 
Exxon Valdez oil spill--we at DOT celebrate the Coast Guard's many 
accomplishments and we wish them ``Godspeed'' as they take on an 
expanded role in homeland security.
    We are also honored to have shepherded the Transportation Security 
Administration--TSA--from its birth through its first full year of 
operation. TSA has overcome enormous challenges to bring discipline and 
consistency in providing security to the traveling public. The 
Secretary and his entire team are extremely proud that TSA has 
successfully met its deadlines for bringing airports throughout the 
country into compliance with new security procedures.
    Although TSA has much work ahead--particularly to address non-
aviation security issues--we are confident that this new organization 
is off to a good start and headed in the right direction. We look 
forward to continuing to work closely with the Coast Guard, TSA and the 
Department of Homeland Security to ensure that the Nation has an 
efficient, safe, and secure transportation system.
    Now, I would like to emphasize some of the highlights in the DOT 
2004 budget request and key initiatives in the President's proposal.
    Current laws authorizing both surface and air transportation 
programs will expire at the end of 2003. In anticipation of this, the 
2004 budget request includes the budgetary foundation for proposed new 
legislation that will authorize these programs for the next several 
years. A few details of the administration's reauthorization proposals 
are still being refined; however, I want to share with you now several 
principles that will animate our surface and aviation transportation 
proposals.
     For the surface transportation programs, we will include 
increased funding flexibility for State and local authorities to make 
effective program investments.
     We will continue to encourage innovative financing tools 
to extend the reach of our transportation investments.
     Efficient environmental review processes will be a 
priority, and we will continue to implement the President's 
streamlining Executive Order.
     DOT will seek to improve efficiency for freight 
transportation networks--a crucial driver of our Nation's economy.
     We will continue a strong emphasis on public 
transportation by simplifying transit programs and fostering a seamless 
transportation network.
     Finally, our proposals will include an emphasis on 
consolidating and expanding Federal safety programs.
    I want to repeat that last point: for DOT, 2003 will be a year of 
special focus on highway and aviation safety. For the last 15 months, 
Secretary Mineta and his senior management team have spent a great deal 
of time focused on the security threats that face transportation. This 
was absolutely necessary. We've made great progress.
    But for this year, and going forward, Secretary Mineta has 
challenged us to focus that same passion and innovation on a simple but 
profoundly important goal: improving safety, saving lives.
    Forty-two thousand people perish annually in traffic accidents. 
Almost one out of four--over 9,000 lives--could be saved, if America 
would only buckle up. We can do significantly better; we must try. And 
the President's budget request will make a meaningful investment to 
strengthen our partnership with states and the public to improve 
safety.
    We look forward to unveiling the details of our reauthorization 
legislation very soon, and to working with the Congress on swift 
passage.
    Regarding the highway reauthorization budget, let me begin with a 
fundamental principle: we are committed to maintaining the guaranteed 
funding that links highway spending to Highway Trust Fund receipts.
    In fact, the President's budget request will propose starting the 
reauthorization by actually obligating more for highway programs than 
we expect to collect in Trust Fund receipts. We will squeeze everything 
we prudently can from the Trust Fund, but the President's budget 
request does not propose new user fees.
    For the Federal Highway Administration, the administration's 2004 
budget request proposes that all revenue from gasohol taxes be 
deposited directly in the Highway Trust Fund, rather than the current 
approach that deposits gasohol taxes to the General Fund. If enacted, 
this one change will add more than $600 million of available funding to 
the Highway Trust Fund for each year of the authorization cycle.
    In addition to spending estimated Highway Trust Fund receipts, our 
proposal also unveils a brand new $1 billion Infrastructure Performance 
and Maintenance initiative specifically aimed at addressing immediate 
highway needs and at projects that can be implemented quickly. Totaling 
$6-billion over the authorization period, this funding will target 
projects that address traffic congestion and bottlenecks, and improve 
pavement conditions.
    All up, what our proposed program does is spend at a level that 
keeps the Highway Trust Fund balance relatively constant. The 
obligation limitation for 2004 is $29.3 billion--this is a 6-percent 
increase above the President's amended request for 2003. When comparing 
the President's 6-year surface transportation reauthorization proposal 
in total--including highways, highway safety, transit, and motor 
carrier safety--to the 6 years of TEA-21, the President proposes an 
overall increase of 19 percent.
    I've already discussed highway safety. Highway fatalities claim 
more than 42,000 Americans each year and vehicle accidents cost an 
estimated $230 billion. Reducing this tragic statistic is ``priority 
one'' at the National Highway Traffic Safety Administration. The 
President's budget request includes $665 million for NHTSA to support 
its mission--to reduce fatalities, prevent injuries, and encourage safe 
driving practices. $447 million of NHTSA's 2004 funding request will 
support grants to States to enforce safety belt and child safety seat 
use and reduce impaired driving.
    At DOT we are also working to keep our highways safe through the 
work of the Federal Motor Carrier Safety Administration--by focusing on 
ways to prevent fatalities and injuries resulting from accidents 
involving commercial motor vehicles. The 2004 President's budget 
request includes $447 million to address these problems, including $174 
million dedicated to strengthening truck and bus safety standards, 
ensuring compliance with safety regulations, and supporting inspection 
programs that keep unsafe trucks off our roads.
    We will also continue to emphasize a comprehensive safety 
inspection program at the southern border so Americans can be assured 
that trucks entering the United States from Mexico meet U.S. Federal 
safety regulations. The President's request provides $223 million for 
Motor Carrier Safety Grants to States to ensure aggressive State 
enforcement of interstate commercial truck and bus regulations.
    Another way to improve transportation safety is to continue to 
encourage the use of our transit and rail systems by the millions of 
Americans who use them to get where they need to go. Public 
transportation is a dependably safe and efficient mode of 
transportation. The President's 2004 budget request includes $7.2 
billion to strengthen and maintain our public transportation systems.
    This request includes a proposed streamlined and consolidated 
program, giving States and localities additional flexibility to meet 
the mobility needs in their communities, efficiently and effectively. 
The 2004 budget request includes $1.5 billion to fund 26 ``New Starts'' 
projects that will carry over 190 million riders annually when 
completed.
    Included in the Federal Transit Administration's funding envelope 
is $145 million to support the President's New Freedom Initiative to 
reduce barriers for persons with disabilities who wish to enter the 
workforce.
    Having touched on DOT's surface transportation programs, I'll turn 
to the reauthorization of our aviation program. We will soon release 
policy details of our aviation reauthorization proposal; however, the 
President is requesting $14 billion for 2004 for Federal Aviation 
Administration programs.
    Because travel demand for air service will inevitably return to and 
exceed pre-9/11 levels, we cannot afford to reduce our commitment to 
investing in the nations air traffic control system and our airports. 
Equally important, we cannot take our eye off the safety goal: to 
reduce aviation fatality rates by 80-percent over the period 1996 to 
2007.
    To meet both safety and mobility needs, the budget proposes to 
spend a greater portion of the accumulated cash balances from the 
Airport and Airway Trust Fund. The President's budget request and our 
reauthorization proposal maintain current levels of aviation 
infrastructure investment, and expand FAA's safety staff, including the 
number of air traffic controllers needed as FAA faces anticipated 
controller retirements.
    Let's turn now to the railroads. First Amtrak. Amtrak faces severe 
and persistent financial challenges. The administration has asked 
Congress to adopt reforms that will strengthen Amtrak's business 
operations and financial condition. But Amtrak continues to request 
funds to maintain their current business structure and services. The 
Federal Government simply cannot afford business as usual at Amtrak.
    The President's 2004 budget request includes $900 million for 
Amtrak of which $229 million is for capital maintenance and $671 
million is for operations and for implementing restructuring and 
management reforms for passenger rail. This is a funding level with a 
message: Amtrak must undergo significant reform.
    Passenger rail is an important component of our Nation's 
transportation infrastructure. We stand ready to work with Congress and 
the states in the upcoming reauthorization to create an intercity 
passenger rail system that is driven by sound economics, fosters 
competition, and establishes a long-term partnership between states and 
the Federal Government to sustain an economically viable system.
    In addition to passenger rail subsidies, the President requests 
$189 million for the Federal Railroad Administration aimed at enhancing 
safety, by reducing rail-related accidents and ensuring the safe 
transport of hazardous materials throughout the rail system.
    The movement of hazardous materials is a priority focus for the 
Research and Special Programs Administration (RSPA). RSPA oversees the 
transportation of hazardous materials, including America's 2.1 million 
miles of gas and oil pipelines. The President's 2004 budget request 
provides $132 million--including $67-million specifically targeted 
toward pipeline safety initiatives.
    Finally, I want to share with you the President's request for our 
maritime programs. The Maritime Administration (MARAD) supports 
essential transportation and intermodal connections for domestic and 
international trade. The President is requesting $219 million for 
MARAD. One of MARAD's continuing challenges is the disposal of obsolete 
ships that potentially pose an environmental risk to our Nation's 
waterways. The 2004 budget request includes $11.4 million for removal 
of the highest risk ships.
    The 2004 budget request also includes funding of $14 million for 
the Saint Lawrence Seaway Development Corporation, which supports 
domestic and international trade as well.
    My prepared remarks focus on only a part of the whole picture. Yet 
each organization within DOT contributes indispensably to accomplishing 
the DOT goals I have outlined. In addition, I am proud to note that DOT 
is working hard to address the President's Management Initiatives in 
order to improve departmental efficiency and customer service.
    To conclude, President Bush's 2004 budget request makes a very 
substantial commitment to ensuring a safe and efficient Federal 
transportation system for all Americans. Thank you again for the 
opportunity to testify today. Secretary Mineta and his management team 
will work closely with Congress as you consider the 2004 budget and I 
look forward to responding to any questions you may have.

    Chairman Nussle. I would like to start with a compliment. 
The transportation security folks are doing just a fantastic 
job. There were a number of people in a bipartisan way that had 
some concerns about what was going to happen when this was 
federalized--and people may still have some of those same 
concerns, but I have to tell you, as a frequent flyer and 
traveler, it is a night-and-day difference in the job they are 
doing across the country. They are professional, thorough, and 
polite, which is not easy to do in a situation like that.
    I am sure there are some challenges that are out there and 
people have their stories they like to tell about different 
circumstances but it doesn't take much. All you have to do is 
travel to another country to see the glowing differences 
between the job they do and the difference in the amount of 
thorough security they provide compared to the past.
    Does that mean it is fail safe? No, of course not, but I 
just want to start with a compliment on the professionalism 
that they have provided. I think it is very noticeable and 
every chance I get, I thank them as I go through the airports. 
I know that is leaving the Department and going to Homeland 
Security, but the Department of Transportation deserves a lot 
of kudos for the way that was brought into existence. I hope 
you are hearing that from other entities.
    Mr. Jackson. Thank you, Mr. Chairman. We are. I have to say 
Congress really stepped up and did the thing they needed to do 
which was set a mission, set what many thought were impossible 
goals. Secretary Mineta just refused to let us do anything but 
hit those goals and targets. We have made a great start and 
there is still much to do, but I feel tremendously proud of the 
team at DOT and TSA. We threw the whole organization at this 
task over the last year and created the largest organization 
created since World War II to meet this need. I think we have 
made an outstanding start. There is more to do but it is a 
story the whole government, particularly the men and women that 
signed up to do this task for us, can feel proud about. So 
thank you for your remarks.
    Mr. Spratt. Mr. Chairman, if you will yield, I want to 
second what the chairman just said. I have had the same 
experience. We come from different parts of the country and 
there is a decided change for the better in the processing.
    I am sure improvements can still be made, security still 
needs to be strengthened but nevertheless, it is decidedly 
better than it was.
    Mr. Jackson. Thank you, Congressman. I appreciate that.
    Chairman Nussle. A couple of things. First of all, with 
regard to gasohol or ethanol, the administration is proposing 
to redirect to the highway account the 2.5 cents per gallon 
excise tax as part of a General Fund transfer. Do you want to 
comment further on that proposal?
    Mr. Jackson. Yes, sir. It is revenue that has been going to 
the General Fund that would find a natural home in the Highway 
Trust Fund. It is a way of giving us $600 million in 2004 and 
throughout the period of this reauthorization to address core 
needs. The President supports this effort and we will strongly 
encourage the Congress to adopt that as part of the 
reauthorization.
    Chairman Nussle. Does the administration anticipate any 
other proposed changes to the tax structure involving ethanol?
    Mr. Jackson. I do not have any to propose at this time, 
sir.
    Chairman Nussle. With regard to the trust fund itself, the 
administration, as I understand, is proposing to extend the 
funding approach of TEA-21 in which highway spending is linked 
to Highway Trust Fund receipts. Will the administration 
proposal still include the possibility for funding to not only 
go up but also down as part of this proposal?
    Mr. Jackson. Yes, sir. We absolutely want to preserve the 
Revenue Aligned Budget Authority that allows us to enjoy the 
benefit if there is uptake in the economy above the projected 
outlay levels. But we think it needs to be smoothed so that the 
rapid variation that we found when the economy made a downturn, 
and this past year's proposal reflected this downturn, can be 
smoothed out. We think we have some proposals that will help 
eliminate such jagged variations in the operation of RABA and 
we hope to submit them soon.
    Chairman Nussle. You mentioned in your prepared remarks 
that ``We will squeeze everything we prudently can into the 
trust fund but the President's budget request does not propose 
new user fees.'' What will the administration's position be if 
they are proposed to the administration?
    Mr. Jackson. We think we have a responsible budget that 
balances transportation needs with the very real deficit 
management problems we have to face in the country. We think it 
is a reasonable and sound proposal and we hope it will get 
careful consideration on the Hill.
    Chairman Nussle. The budget the President has submitted 
suggests that the administration supports a spend down of the 
Highway Trust Fund unexpended balance to support an equally 
modest annual increase in highway program spending. Depending 
on the scenario that comes out from the future, that might be 
very affordable. However, there are scenarios out there, one 
that we probably are all experiencing right now and that is a 
spike in gas prices as well as the possibility of a war and 
other scenarios that may make it more difficult to see 
increases in the Highway Trust Fund and therefore, may make it 
difficult to achieve the balances to therefore spend down. In 
other words, you would be betting on the come and that come may 
not actually come.
    Does the DOT have any contingencies for a decrease in 
driving and as a result, a decrease in the revenues to the 
Highway Trust Fund?
    Mr. Jackson. Part of the work of the RABA adjustment is to 
adjust the spending in the highway program around the baseline 
targets set in the authorization bill. RABA, by definition, 
includes a mechanism to impose discipline in a time of 
downturn. In this past year, the administration initially 
supported a budget for 2003 that simply took the RABA 
adjustment as Congress had written it and put it in play. We 
then supported $4.4-billion increase that brought us back up to 
the projected levels, which basically was spending down our 
trust fund balances somewhat.
    We think our proposal that is going forward strikes a 
reasonable and prudent balance in what we leave in trust fund 
balances and what we are spending. We are actually obligating 
more than we are receiving in trust fund receipts during this 
time period. We think we can do that responsibly in order to 
push the investment out the door as much as possible.
    Chairman Nussle. I guess my final question would be if the 
administration is not supporting an increase in the user fees 
or the gas taxes, if the administration is suggesting we stick 
to RABA and while there is somewhat of a spend down, it is 
modest and still maintains the fiduciary responsibility to the 
trust fund, if a consensus develops around additional spending, 
do you have any suggestions to us on how that might be 
financed?
    Mr. Jackson. I don't have any other suggestions for you at 
this point on financing options. I think that would be 
speculative and I will lean on the President's budget.
    Chairman Nussle. But you have done what you can, so it has 
to come either out of additional deficit spending or it has to 
come out of other discretionary programs would be the way I 
would read that.
    Mr. Jackson. Yes, sir, I think so.
    Chairman Nussle. Thank you.
    Mr. Spratt.
    Mr. Spratt. Thank you, Mr. Chairman and thank you, Mr. 
Jackson for your testimony.
    How much does the Highway Trust Fund have now in cash 
balances?
    Mr. Jackson. The estimated balance is about $14.9 billion 
in 2003.
    Mr. Spratt. At the end of this fiscal year, do you expect 
to have roughly that amount as carryover balances?
    Mr. Jackson. Yes, sir. For the period of the 
reauthorization, we expect to go up to about $15.1 billion in 
the first year and down to $14.6 billion by the last year, so 
if you round it to billions, it stays at $15 billion for the 
duration.
    Mr. Spratt. Why is it necessary to carry balances of that 
magnitude year-to-year over a long period of time?
    Mr. Jackson. Some of this money has already been obligated, 
and it is based on a formula that is fairly known and settled; 
we are preserving some cushion there.
    Mr. Spratt. It is not all obligated, is it? Some is 
expected to be obligated but not actually obligated on 
contract?
    Mr. Jackson. It is a cash balance reserve.
    Mr. Spratt. Unobligated or obligated?
    Mr. Jackson. It is obligated.
    Mr. Spratt. It is obligated. It is the unexpended cash 
balance on obligated funds?
    Mr. Jackson. Yes, sir. There is a pretty good formula over 
time which I would be happy to share with you about how these 
highway programs typically obligate over a seven to 9 year 
period. The bulk of the obligation outlays over the first 2 
years. We have some pretty good figures on how that has played 
out over time, and I can share that with you.
    [The information referred to follows:]

 Mr. Jackson's Response to Mr. Spratt's Question Regarding Federal Aid 
                          for Highway Projects

    The following table shows how Federal-aid highways projects 
historically outlay over a 9-year period:

                                    FEDERAL-AID HIGHWAYS PROGRAM OUTLAY RATES
----------------------------------------------------------------------------------------------------------------
   Year 1       Year 2       Year 3       Year 4       Year 5       Year 6      Year 7      Year 8      Year 9
----------------------------------------------------------------------------------------------------------------
       27%          41%          16%           5%           3%           3%          2%          2%          1%
----------------------------------------------------------------------------------------------------------------


    Mr. Spratt. So the Department feels it is necessary to have 
reserves of this magnitude to meet its obligations on contracts 
still being executed?
    Mr. Jackson. Yes, sir. The point about the balance in the 
trust fund is that this is money committed to specific projects 
and specific States and communities.
    Mr. Spratt. But not yet drawn down?
    Mr. Jackson. Yes, sir.
    Mr. Spratt. You do indicate, however, in your testimony 
that the administration intends to spend $1-billion more for 
selected congestion projects where immediate aid and relief is 
needed and you are also adding $600 million from the gasohol 
tax into the Highway Trust Fund, yet the amount of money we see 
is still pretty flat even though you are putting that 
additional $1.6 billion.
    First of all, where does the billion dollars come from if 
all the money is obligated? Where does the additional billion 
dollars come from?
    Mr. Jackson. It comes from spending down the trust fund. We 
would have otherwise had a growth in the balance. It actually 
drops a little bit but is kept relatively flat during the 
period of the new authorization.
    On the other money, it is consistent with the principle 
that gasohol user fees paid in should be used on highway-
related expenditures. So we are trying to take that from the 
General Fund, and put it into the Highway Trust Fund account so 
that we can enjoy the benefit of that additional $600 million 
annual investment, on highway-related projects.
    Mr. Spratt. At this point in time, what do you expect your 
appropriated level for 2003 to be when the Omnibus Bill comes 
out of conference to the floor?
    Mr. Jackson. I really don't know the answer to that 
question yet. It is somewhere between the House level and the 
Senate level and there is a $4-billion plus swing in that. Our 
2004 budget request is approximately $1.6-billion above the 
2003 House mark.
    Mr. Spratt. You mean your amended request?
    Mr. Jackson. Yes, sir. Above our amended request. Our $29.3 
billion request for the highway program, is still above the 
House and Senate marks.
    Mr. Spratt. Let me show you a chart and show you why 
percentage comparisons become rather precarious. As you can 
see, in 2002, the funding for Federal aid to highways was $31.8 
billion. Incidentally, do you not expect to see revenues 
recover as the economy recovers to the 2002 levels?
    Mr. Jackson. Without making a particular spending or 
revenue estimate, I do expect the economy to recover and 
additional revenue to come in, and that is where the RABA 
formula would come into play. If there is growth, then RABA 
would allow for us to enjoy the benefits of that.
    Of the $31.8 billion in 2002, actually $27.2 billion was 
so-called baseline money and the remainder above that, the $4.2 
billion, was the result of the RABA action.
    Mr. Spratt. When you look at this year's request, it is 
well below 2002 but it is also for 2004 below where 2003 is 
likely to be once the Omnibus Appropriations Bill comes to the 
floor, is it not? You indicate there was a 6-percent increase 
but if the Omnibus Bill comes out over $30 billion, which it 
appears likely to do, then next year's increase for 2004 is 
actually less than what the Congress is providing for 2003, is 
it not?
    Mr. Jackson. If the Congress approves $31.8 billion for 
2003, then the President's proposal is below that number. 
Again, that large number was really the result of the program 
we put in place to enjoy the benefits of the good times 
economically and flow it into the trust fund. So it is an 
increment that is well above the guaranteed spending levels. 
What we are trying to talk about in our budget is the 
guaranteed spending level that is appropriate for the duration 
of the 6 year reauthorization. We have embraced the idea that 
RABA should be a component of the reauthorization, albeit one 
that smooths out the rough edges of such rapid fluctuations in 
an economic downturn.
    Mr. Spratt. You know pretty well the different highway 
projects going on in 50 different States. If other States are 
like my State, there is a long backlog of highway projects, 
bridge projects, maintenance as well as new construction. Most 
State highway departments can spend the additional money fairly 
expeditiously because they have an unmet urgent backlog anyway.
    Would you agree with the $5 billion additional money was 
provided out of the General Fund of the Highway Program this 
year, the State highway departments could spend it rather 
expeditiously, with dispatch, put it into the economy and put 
it to work?
    Mr. Jackson. I believe that there is a fair amount of work 
in most State transportation plans that could be accelerated. 
We would have to work on a State-by-State basis to assess 
exactly how much that might be.
    Mr. Spratt. But most States have long backlogs, do they 
not, of projects they are addressing as and when the money 
comes available?
    Mr. Jackson. Yes, sir, most States do have a pretty good 
list they work through and it is the normal way you do 
procurement. You just make a list, you prioritize them and when 
you get the money to do it, you get to them.
    Mr. Spratt. The chairman asked you about the proposal 
Chairman Young is advancing or at least broaching and that is 
to add 2.5 cents to the gasoline tax. Are you saying you would 
oppose it or you simply haven't taken a position it yet?
    Mr. Jackson. The administration opposes any changes in the 
taxes supporting the Highway Trust Fund.
    Mr. Spratt. Thank you very much for your testimony.
    Let me say one thing. The attendance at this hearing has 
nothing to do with the interest in the subject matter. There 
are lots of other committees meeting this morning and 
organizational meetings members have to attend.
    Thank you for coming.
    Mr. Jackson. I understand. We are grateful to have a chance 
to walk through this with you.
    Chairman Nussle. Mr. Gutknecht.
    Mr. Gutknecht. Thank you, Mr. Chairman.
    First of all, let me say that I strongly believe that a 
strong economy rides on good roads, so I think this committee 
historically has recognized that fact.
    I want to touch on a couple of things. First of all, to 
follow up on something Mr. Spratt raised, do you have any idea 
how many States right now, even if we did dramatically increase 
the amount of money available at the Federal level, could even 
come up with their State match?
    Mr. Jackson. No, sir, I don't. The States are in a strapped 
financial condition as well by and large and that certainly 
plays into how they would take this money and use it 
effectively.
    Mr. Gutknecht. But is it fair to say that there would be a 
limit no matter how much money we put into the fund, there 
would be a limit in terms of how many projects could be done 
nationwide simply based on how much money they have available 
for their match?
    Mr. Jackson. Yes, sir, that certainly is a variable we need 
to consider.
    Mr. Gutknecht. You touched on this question from the 
chairman, and pardon me for being a bit parochial because I 
represent an awful lot of ethanol plants, but there is a lot of 
misunderstanding about the ethanol program. Just for the 
record, no farmers receive checks from your office for the 
production of ethanol, do they?
    Mr. Jackson. Yes, sir, that is right.
    Mr. Gutknecht. It is a blenders credit, isn't it?
    Mr. Jackson. Yes, sir.
    Mr. Gutknecht. I want to make one other point for the 
benefit of my colleagues and for the record. That is that right 
now I think unleaded gasoline retail back in Minnesota is 
bumping up against $1.70 a gallon. The embedded cost of the 
ethanol in that blended fuel is about $1.10. I guess the point 
I want to make is it is not ethanol that is driving up the 
price of gasoline. As a matter of fact, in some respects, you 
could argue it is actually holding the price of gasoline down. 
So I just want to reiterate and reconfirm what you essentially 
said to the chairman, that the administration is not going to 
take sides against our producers of ethanol out there who have 
invested a lot of money and do not receive direct checks from 
the Federal Government?
    Mr. Jackson. By forecasting that $600 million figure 
flowing into the trust fund we are assuming that there is a 
continuation of revenues into the trust fund. I wouldn't want 
you to read anything more into it than that.
    Mr. Gutknecht. We will do our part to make certain you have 
adequate resources to do your job and will work with you on a 
lot of these issues.
    Thank you.
    Mr. Jackson. Thank you, sir.
    Chairman Nussle. Mr. Thompson.
    Mr. Thompson. No.
    Chairman Nussle. Ms. Hooley.
    Ms. Hooley. Thank you for testifying before us today. I do 
want to reiterate what Mr. Spratt said that there are a lot of 
other committees going on. I know I have another committee 
going on at the same time that is having a markup.
    I come from Oregon and let me tell you a bit about what is 
happening in our State. I know this is happening across the 
Nation. It is a State where we have no fat to cut, we have to 
have a balanced budget. In some school districts, we have cut 
up to 5 weeks off the school year as we are making drastic cuts 
throughout the State. We are cutting programs where people now 
don't have medicines and that will be life threatening to them. 
That is where we start.
    We also have huge needs in transportation. We look at our 
old bridges and we need $2 billion just to repair bridges.
    One of the things I think you always have to look at and 
one of the reasons we can run a deficit is particularly more 
time or when you have an economy that is down the tubes and you 
need to do something to help stimulate the economy.
    It seems to me that we have a great opportunity in 
transportation to do everything we can to bump up those numbers 
to help stimulate the economy. As stated by others, we have an 
opportunity, those projects are on the ground, those projects 
are ready to go, those projects stimulate the economy, those 
projects also deal with safety.
    I look at what is happening in our commerce right now. We 
have to close so many bridges that it is now costing companies 
more money to move their goods because they have to go around 
those bridges. When I look on our interstates, we have a number 
of bridges that need repair, that are cracked and we are going 
to have to send those on some kind of detour which also does 
not help with our economy and help our businesses there.
    Having said that, is there any way that you see that we 
could bump up these dollars? This is a time of crisis. Our 
economy is in a crisis. Can we bump up transportation funds 
which we know help stimulate the economy and helps provide 
jobs?
    Mr. Jackson. The President's proposals on economic growth 
and stimulus take a more macro view on how to stimulate the 
economy rather than trying to make explicit expenditures in a 
given sector as an economic stimulus. This is a philosophical 
and principled approach to the problem you lay on the table 
which is how to help encourage the economy to grow out of the 
economic downturn that we are currently facing. So it is the 
administration's view that this collective package of economic 
growth items, principally tax related items, will help produce 
the type of effect that you are looking for.
    As an adjunct to that, while preserving the principle of 
spending the money on roads that comes from trust fund 
receipts, we have taken this additional step of the quick start 
program of putting $1 billion a year into projects that can be 
moved quickly and make a meaningful difference in repairing 
bridges, roads and other infrastructure that is needed. So I 
think we have a modest but responsible component of the idea, 
the concept that you are laying on the table, in the DOT budget 
but the broader economic approach is layered into the 
President's growth proposal.
    Ms. Hooley. Thank you. I understand this is not the only 
way to stimulate the economy and there are several ways to do 
that. I see this as one component and I see this as something 
we really need to take another look at in trying to get this 
budget a little further.
    Right now, our State under the current budget would take a 
$37 million cut. When you start taking cuts at a time when you 
are already in trouble and have huge safety problems, and no 
way to move commerce, it becomes a huge problem for all of us.
    I have just one other quick question. I am concerned about 
the change in the formula for mass transit projects where a lot 
of communities have been fighting for these projects, have been 
working on the projects and to go from an 80-20 or wherever it 
is now to a 50-50 is going to kill some of those projects. 
Respond to me about this.
    Mr. Jackson. It is not as gloomy a picture as you might 
think.
    Ms. Hooley. Thank you. Help me. I would like to be enthused 
about this.
    Mr. Jackson. Right now, the overall match that States and 
localities are providing for transit projects actually averages 
below 50 percent. I believe it is about 49 percent, so the 
reality of what we are seeing around the country is that State 
and local communities are able to bring a large match and 
continue to make these important projects work.
    We are seeing an explosion of demand in the Transportation 
Department for these types of projects and we have expanded the 
eligibility so that we will be able to fund other projects in 
addition to fixed rail projects, including important bus 
projects that might have been excluded from some of these 
funds. It is a balancing act among scarce resources, but we 
have given more flexibility. In addition, we propose to 
continue to allow States and localities to flex surface 
transportation funds from the highway account into transit 
projects and vice versa. This is currently done on a very 
routine basis and has put many, many projects into the realm of 
the possible. So we are making a series of approaches around 
this problem to recognize the growing need for these transit 
projects in State and local communities.
    Ms. Hooley. Thank you.
    Chairman Nussle. Mr. Hastings.
    Mr. Hastings. Thank you, Mr. Chairman.
    I want to add my voice to those who wish Secretary Mineta a 
quick recovery.
    I want to focus on a couple of areas. I represent a rural 
area and a lot of small airports. One of the things that I have 
noticed, sometimes painfully, is that explosive detection 
equipment that is now being required is located in all 
different parts of airports. For example, in my hometown, you 
walk into the door before you get to the ticket counter and 
there is the equipment. Then you go to the ticket counter and 
get your ticket and back up and it gets rather inconvenient for 
customers and personnel.
    I understand that the cost of trying to bring this all up 
to date and to put it in an efficient manner is somewhere 
around $3 to $5 billion. Yet in your request, you don't have 
any request for dollars to help these airports defray some of 
that cost. I wondered if you would comment on that.
    Mr. Jackson. Congressman Hastings, I would be happy to 
comment at the risk of poaching on Secretary Ridge's turf, but 
maybe I can at least lay out some of the particulars.
    Mr. Hastings. I was wondering if there was a connection 
there.
    Mr. Jackson. TSA is part of the Department of 
Transportation today and will be until the end of this month.
    The Department does have some money to invest in trying to 
make a more efficient flow in the use of these EDS machines. We 
had a tremendous deadline to meet which was driven not only by 
a congressional deadline but by the reality of the threat. The 
difficulty of, installing this equipment in a more tidy, neat 
and efficient fashion and still get them done by the end of the 
year was great. So in some airports, we have put them into the 
lobby in anticipation of work that will eventually put them 
behind the scenes, underground, or behind the ticket counters. 
In the TSA budget we have some significant money appropriated 
to that process for fiscal year 2003. In addition, last year we 
spent about $560 million out of the Aviation Trust Fund 
essentially on discretionary programs that we could target to 
this type of activity to bring more efficiency to operation of 
these explosive detection machines. We expect again this year 
to be able to put a comparable figure into that type of project 
to help some airports.
    It is a large project if you try to do this in the most 
neat and efficient way all through the system. We are going to 
put some money against it this year in a meaningful way and 
also we are going to fund some R&D efforts to try to help us 
get to the next generation of equipment and have a replacement. 
This is essentially 1997 technology and there is a significant 
R&D effort underway in the private sector to try to make them 
smaller, more efficient, cheaper and better machines.
    We hesitate to try to take the model of what we have in 
technology today and spread it into every airport and invest 
billions of dollars in that process. If we wait just a bit 
longer, we might have a clear vision of how to do this in a 
more effective and efficient fashion.
    So we are balancing all of those things. If you have a 
particular concern about the local airport, I would be happy to 
take that up off line with you, sir.
    Mr. Hastings. It is a bit of an inconvenience the way it is 
set up and in this particular case, that probably came because 
the airport was designed 25 years ago not anticipating any of 
the security.
    Let me switch gears. As you know the final report of the 
Commission of the Future of the United States Aerospace 
Industry calls for a rapid deployment of new and highly 
automated air traffic managerial system. Clearly this new 
system must accommodate efficiencies and safeties and so forth 
that will affect civil and military operations. I think it is 
safe to say that in order to accomplish this, there will be 
multiple agency involvement in this including DOT, FAA, NASA, 
DOD, and so forth.
    Do you expect that DOT will be taking a lead in this effort 
to fulfill what came out of this report?
    Mr. Jackson. I do expect DOT to be focused very rigorously 
and in a disciplined fashion on these sets of issues. As a 
matter of fact, our FAA administrator is in your home State 
today meeting with Boeing officials on exactly these types of 
issues and will be there for a good round of discussion about 
how we take our so-called ``ops evolution'' plan, our 10-year 
rolling method of improving, modernizing, and operating more 
effectively the Federal Aviation Administration, and look to a 
bit longer cycle and look at breakthrough technologies.
    We have a tremendously talented new FAA administrator in 
Marion Blakey. She has taken a fresh look at all of our core 
technology infrastructure investments to try to get a plan and 
vision that is affordable and squeezes the maximum amount of 
innovation we can from this great country's technology base.
    Mr. Hastings. One brief question, if I may. Getting back to 
small, rural airports, they rely heavily on the Airport 
Improvement Program. With the demands mentioned with homeland 
security, demands on them to upgrade is probably more acute 
than it has been in the past. You have pretty much flatlined 
that budget. I wondered if you would comment on that.
    Mr. Jackson. We actually have declining revenues as a 
result of the post-9/11 environment. We have spent down that 
trust fund somewhat to be able to keep us at least at the 
baseline we are right now. You have heard me say too many times 
now we think it is a reasonable balance that can sustain this 
crucial investment over the next 10 years. Twelve major runways 
are going to be delivered in the country according to the plan 
and continuing to make this type of capital investment is 
important not only for capacity but also for safety.
    Mr. Hastings. Thank you.
    Chairman Nussle. Mr. Neal.
    Mr. Neal. Thank you, Mr. Chairman.
    Mr. Secretary, you indicated the priorities for the coming 
year will be along the lines of highway and airport security. 
What about rail transportation?
    Mr. Jackson. We see the reauthorization of Amtrak and 
intercity passenger rail as a significant priority for the 
department and the administration. We need to find a common 
sense solution to the issues we have before us with passenger 
rail.
    Mr. Neal. Do you have any notions of where you are heading 
on that?
    Mr. Jackson. Last year, the Secretary laid out in a speech 
some very clear principles about how we would like to see the 
intercity passenger rail business reformed. We want to 
introduce some degree of competition and we want to make 
certain that we have more disciplined operational financial 
controls. On that note, I would complement our new president at 
Amtrak. At the Secretary's delegation, I have the privilege of 
sitting on the Amtrak board of directors, and David Gunn is 
doing a very, very capable job of bringing additional financial 
discipline to the operation.
    We want to introduce principles of competition so that we 
can allow States to have the flexibility to find a low cost 
operator. We don't want to do this in some rash and precipitous 
way and kick out Amtrak. On a pilot basis, we want to let a 
couple of places see if they can find alternatives. If we can 
work on bringing financial discipline within Amtrak, they may 
be the best competitor.
    A second area I would mention is the northeast corridor.
    Mr. Hastings. A good example.
    Mr. Jackson. We have a tremendous amount of need in the 
northeast corridor. It is a vital transportation link for the 
country and it is operating under a broken model. We are not 
able to fund it in the long term for the type of infrastructure 
investment it needs under the current business model.
    When we talked to the President about this issue, the 
President said to the Secretary, ``Remember, Norm, what my job 
was before my current one. I was a Governor.'' So we can't 
throw the States off the cliff and say you have to pay for all 
operating subsidies overnight but we do have to move to a mode 
where the States can play a partnership role as many now do in 
providing the subsidies necessary for making rail work in a 
coherent way.
    In the northeast corridor, we need a longer term plan--that 
won't happen overnight--to put it on a sound financial footing 
and to have a joint Federal and State government investment 
that makes the thing viable. We will be looking forward to 
working with the House T&I Committee to review these principles 
and move them toward legislative proposals.
    Mr. Neal. You indicated the administration was reluctant to 
micromanage portions of the economy in terms of stimulus and 
subsequently mentioned the President's experience having been 
executive of the State of Texas as well. We all came to 
Congress through a different experience. Most of the Members of 
Congress came here through the State legislatures. My 
experience was having been mayor of a pretty good sized city.
    Let me testify strongly in support of infrastructure 
spending. If you want to get people back to work quickly, if 
you want to get people spending money quickly, there still is 
no better plan, despite the notion that it is all pork, than 
highway and roadway airport security projects, which get people 
back to work immediately. It is also a good expenditure of the 
public purse with the purpose of not only stimulating the 
economy but creating greater efficiency in the infrastructure 
of the Nation.
    I don't think there should be the philosophic divide that 
has developed about that question because at one time Congress 
was a model of the national principle that infrastructure 
spending helped everybody.
    Mr. Jackson. Thank you, sir.
    Chairman Nussle. Mr. Wicker.
    Mr. Wicker. Mr. Secretary, thank you for being with us.
    I want to commend you on your budget in brief that you 
provided. There is a very nice layout and very helpful.
    Let me direct your attention to page 31 regarding the 
Federal Railroad Administration. Under safety and operations, 
railroad research and development, and next generation high 
speed rail, you mentioned in all three of those paragraphs the 
problems with grade crossings: ``reducing grade crossing 
accidents, grade cross hazard mitigation.''
    This is a problem I am particularly interested in. What we 
have seen over the last century or two, a century and a half 
perhaps, is cities that have sprung up over time and grown 
because the railroad was there and then we find that the 
railroad going through town--perhaps 10 grade crossings, 20 
grade crossings in a medium sized city--becomes not only a 
safety hazard but also a detriment to economic development. It 
has actually become the other way around, the railroad that 
created the city now threatens the downtown of the city.
    I wondered if you would give us your thoughts about that? 
It is a terribly expensive proposition for a local community or 
the railroad company for that matter to move a track outside 
and yet that is what we do with highways, we don't run a four- 
or six-lane highway through the middle of town, we move it to 
the edge of town and bypass. What can you tell me to give hope 
to communities like some I represent in that regard?
    Mr. Jackson. It is a very important and excellent set of 
observations that you make about this issue. I wish I had some 
silver bullet that said here is the solution, here is the way 
to make this go away. There is no simple solution. Rather, it 
requires the commitment of people like yourself, local leaders 
the railroad industry, and the department. We are certainly in 
that camp of people committed to just whacking away at these 
problems, finding resources and technology to address this 
problem.
    The administration's proposal will give a significant 
amount of flexibility to States to use money for grade crossing 
safety programs. We hope we will be able to work very closely 
in places where this is pinching the hardest.
    I also believe that grade crossing safety is an area where 
we can make a better financial investment in technology that 
might help us do this in a more efficient way. I had a recent 
meeting with the AAR folks and some of the railroad CEOs on 
this topic. We are committed to working with them to try to 
keep a focus on grade crossing safety.
    Mr. Wicker. Because we are time constrained today, perhaps 
you can get back to me on the record about looking at where we 
have had success stories with the Federal Government working 
with local communities. When it comes to the middle of town, 
the best safety in grade crossings is simply to eliminate the 
grade crossing and get it away from the traffic.
    [The information referred to follows:]

 Mr. Jackson's Response to Mr. Wicker's Question Regarding the Federal 
                         Highway Administration

    The Federal Highway Administration (FHWA) has worked with 
communities throughout the country to improve the safety and efficient 
operation of State and local roads in the vicinity of high-volume rail 
corridors. Nebraska offers a good example of a coordinated effort to 
deal with this problem. Many Nebraska communities developed flanking 
the railroad tracks. The growth in rail traffic has restricted and 
delayed vehicle traffic and negatively impacted the economies of these 
communities. FHWA's Division Office in Nebraska worked with the State's 
Department of Roads to develop a plan that defines the problems in 
detail and outlines a course of action involving overpasses, improved 
at-grade crossings and crossing eliminations to address the most 
pressing needs. The State-wide plan determined the need for $440 
million in recommended improvements at public grade crossings. This 
includes the addition of 83-grade separations state-wide. With each 
viaduct project costing in the range of 5 to $10 million, the State was 
able to construct one or two grade separations per year.
    To finance these projects, States and communities may want to work 
with FHWA's Division Offices to identify and access Federal innovative 
financing programs in addition to State and local funding. The 
Transportation Equity Act for the 21st Century (TEA-21) also included 
10 percent set aside of the Surface Transportation Program (STP) funds 
for safety programs including rail grade crossing safety. Almost $929 
million was allocated to States over 6 years to address grade crossing 
safety issues. National Highway System, Optional Safety funds, and STP 
funding, in addition to the set-aside, may be used for rail crossing 
improvements at the discretion of the States at up to 100 percent 
Federal share.

    Mr. Wicker. Let me briefly ask you, turning the page to 
page 32, Research and Special Programs Administration, you 
mention hydrogen fuel infrastructure and standards for hydrogen 
vehicle fuel systems. Are you the principal government agency 
in charge of the program the President mentioned in his State 
of the Union to develop quite quickly a hydrogen powered 
vehicle?
    Mr. Jackson. No, sir, that is the Energy Department's 
focus, although we will be working very closely to support the 
initiative and to do our part. As you rightfully mentioned, we 
will be most involved in the movement of this new fuel 
technology to the retail level.
    Mr. Wicker. Thank you.
    Mr. Jackson. I would like to thank you for your comments 
about the Budget in Brief book but the lady who did the real 
work is sitting next to me, our Assistant Secretary for budget 
and our CFO, Donna McLean. She deserves the kudos along with 
her team.
    Mr. Wicker. Credit where credit is due.
    Thank you very much.
    Chairman Nussle. Mr. Cooper.
    Mr. Cooper. Thank you, Mr. Secretary.
    Best wishes to Mr. Mineta for a speedy recovery.
    Mr. Jackson. Yes, sir.
    Mr. Cooper. The Railroad Infrastructure Fund, could you 
tell me how much is currently available for loans in that fund, 
the RIF fund?
    Mr. Jackson. We have approved five Railroad Rehabilitation 
and Improvement Financing loans, we have five pending and I 
don't have on the top of my head the numbers. If you will give 
me a moment, I might be able to ask one of my colleagues to 
find it for me.
    Mr. Cooper. OK. So about five loans have been made from 
that fund?
    Mr. Jackson. Yes, sir.
    Mr. Cooper. And five more are pending?
    Mr. Jackson. Yes, sir.
    Mr. Cooper. Any ballpark idea of how much money would be 
remaining in the fund for loans? It is my understanding that 
few, if any, loans have been made from this fund.
    Mr. Jackson. We had a very slow start in this program. When 
the administration took over the mechanisms for putting the 
loans out into the market were only just being developed, so 
under Secretary Mineta's guidance, we did take a focus on this 
and pushed that regulatory regime and the initial review of 
those out. I would say the Department did not do a terrifically 
good job of launching this program. I think we have very clear 
rules and precedents for working now and I think we have worked 
with OMB well to be able to figure out how to review them in a 
timely fashion.
    I would say we got off to a slow start in managing this 
program well. I think we are doing much better now. I think we 
will have adequate resources in our budget to manage the 
program going forward.
    Mr. Cooper. So you anticipate accelerating the pace of 
loans from that fund and not shutting down the fund?
    Mr. Jackson. Donna is reminding me that we are really not 
budget constrained in this arena because the applicant funds 
the credit risk premium to cover the risk of the project and if 
it is a financially sound proposal, we have the flexibility to 
do quite a bit in this area. I don't see it as a budget-related 
issue or budget constrained. I see it more as what I was saying 
up front. Did we get ourselves launched and working right? Are 
we interfacing effectively with people who are participants in 
this? I think the answer was that we are ready to go now.
    Mr. Cooper. It is a relief to find an area that is not 
budget constrained. Don't tell anybody else.
    Mr. Jackson. I wanted to have that experience to say that 
once in my life.
    Mr. Cooper. How much money remains then in the fund if it 
is not budget constrained?
    Mr. Jackson. We have direct loans for acquisition or 
improvement of railroads. To date, we have approved loans of 
about $215 million. If the loan goes bad that is when we have 
to pay off our guarantee, so right now we are in good shape.
    Mr. Cooper. But your authority to make new loans is $1 
billion, $2 billion?
    Mr. Jackson. I don't have a dollar figure. Can I get back 
to you and follow up with that?
    [The information referred to follows:]

    Mr. Jackson's Response to Mr. Cooper's Question Regarding TEA-21

    The Transportation Equity Act for the 21st Century (TEA-21) 
provides a cap of $3.5 billion for the aggregate unpaid principal 
amounts of Railroad Rehabilitation and Improvement Financing (RRIF) 
loans at any one time, of which not less than $1 billion is to be 
available solely for smaller (non-Class I) railroads. Given that the 
five loans approved to date total $215.37 million, authority to make 
new loans totals up to a little less than $3.3 billion.

    Mr. Cooper. Another question. New start funds for commuter 
rail, it is my understanding the formula has been changed to 20 
local and 80 Federal to a 50-50 match. These are New Start 
funds for commuter rail, the funding share has been switched 
from 20-80 to 50-50. Can you tell me why that was done?
    Mr. Jackson. One of the things we found was there was much 
more demand for these programs than we were able to meet. We 
have found in recent experiences that the average amount 
provided by way of a local match is about 49 percent, so our 
practice in the real world is that we have found communities 
and States able to make a higher match level work. We are 
constrained in terms of supporting a significant number of 
these applications, more than we could afford if we didn't work 
in this direction. We provided a couple of years notice about 
how we expect to gradually move to this higher match level.
    Mr. Cooper. But it could also be viewed as discriminating 
in favor of the rich communities who can come up with a local 
match and discriminating against the poor communities that have 
a tough time finding adequate revenues. What is your solution 
to that problem?
    Mr. Jackson. I think we have been very successful in 
working with communities that show a commitment to do it. It is 
not really a question of underprivileged communities or 
privileged communities being able to afford it. We have seen 
projects with cities that have financial challenges and other 
places where the financial pinches are not so acute. It has not 
been our experience so far that it is a program for the wealthy 
or the better off communities. We are very committed to working 
with the communities to make these projects work and to help 
them figure out how to do it right. We are looking for a little 
commitment on the part of the locality to help us do it.
    Mr. Cooper. My time has expired. I thank the chairman.
    Chairman Nussle. Before we proceed, I would like to 
acknowledge a former colleague from the Budget Committee who 
has returned. He is the Speaker's representative and our new 
vice chairman, Chris Shays from Connecticut. We welcome him 
back to the committee. We hope it wasn't anything you did or 
said that had a new sentence back to the Budget Committee but 
we thoroughly enjoyed working with you in the past. I think you 
had a 10-year term here, so the fact you are back with us says 
a great deal about your abilities as well as what we are going 
to be able to do this year. We welcome you back to the 
committee and look forward to working with you.
    Mr. Spratt. I second what the chairman just said. We look 
forward to working with Chris Shays.
    Chairman Nussle. Mr. Garrett.
    Mr. Garrett. Thank you, Mr. Chairman.
    Just a couple of quick questions for you. Early on in your 
remarks, you mentioned you will have as a priority for the 
Department to provide the States with additional flexibility to 
meet their local needs. As a State legislator just coming here, 
I have worked for 12 years with local county governments. I 
will go out on sites with the engineers, walk sites and ask as 
a layman, not an engineer, why are you doing this, why are you 
putting up guard rails on a back road where there is no 
inclination on either side of the road, while you are paving 
over and fixing a drainage ditch. They will say that is because 
the Federal Government tells us we have to do it that way in 
order to get the Federal dollars.
    Then I will talk to the engineer, is there a safety issue 
here? Is this the way you would do it? The local engineers 
would say no, we wouldn't do it this way. We would use that 
money on some other projects on the other side of the county 
where there is a safety problem. This all predates you, of 
course.
    What are you planning on doing to allow the counties or the 
local governments to have the flexibility they have not had in 
the past?
    Mr. Jackson. There are a couple of levels to this question. 
The first level in our flexibility is to not have so many rigid 
categories that say you have this amount of money for this type 
of project or that type of project, and make people spend in 
buckets. The idea of the first principle is flexibility in how 
to take funds and use them to meet the real needs you have 
locally. As an example, one of the things in TEA-21 we want to 
continue is the ability to flex highway funds into transit 
projects. Well over $1 billion has been flexed to do the things 
that local communities decided they needed to do the most. So 
the first level is flexibility in on how you use the available 
funds you have.
    The second level is something that drives me nutty, as I 
suspect it must have driven you to distraction in listening to 
that engineer, which is when people tell me I have to do it 
this way because that is what the rulebook says. There is a 
long safety tradition and discipline in FHWA but there is no 
lock on commonsense at the FHWA. If a local community feels 
they need a waiver from a particular rule and can show us why 
that waiver is sound and safe and sensible, then we should and 
do have processes in place to be able to accommodate that.
    Sometimes I think people get ground down by the reality of 
dealing with a large bureaucracy, so we would like to send the 
message very clearly that common sense is a valued commodity at 
DOT. If there is a particular problem, I would love to make 
sure we wind up the right person to work on it.
    Mr. Garrett. I guess from a common sense point of view, 
couldn't you simply turn that responsibility, that decision 
making process back over to the local engineer? I know these 
guys better than the Federal guys, so I will say the local guys 
I know are trained, certified and have been on the job for 20 
years and I trust them with my life as I drive around my 
district. Maybe as you say, the local guys are ground down 
because they say, that means there is just another form or 
application I have to go through in order to get this approval, 
I will just do it. Can't we just turn it right over to the 
local county guys?
    Mr. Jackson. The principle behind the Federal highway 
investment program has been that we are going to guarantee a 
minimum level of performance. It is very hard on a macro basis 
to decide whether that engineer you know as superb and so 
capable is going to be matched in another town and another 
State by someone with equal credentials. So there is a 
discipline in the program overall to force us to meet basic 
core performance standards. Within that, I hope we can have the 
flexibility to find a brilliant engineer and treat him with 
dignity and listen to their good ideas.
    Mr. Garrett. Can you speak real quick on the PMA? Explain 
to me what that is and what you are doing to address the 
problem areas that may still exist, performance management?
    Mr. Jackson. In the Department overall or in the highway 
area?
    Mr. Garrett. In the highway area.
    Mr. Jackson. In the highway area, we are trying to work on 
performance standards across a range of variables--how long 
pavement is going to last, how strong a bridge is going to be--
and drive into this equation not just design specifications, 
but performance specifications. This is really a theme of the 
President all across government, to say set a metric, measure 
it carefully, tell us whether we are hitting it or not, and 
reward people that do. In a nutshell, that is the principle and 
in the highway realm, it gets complicated but that is the 
principle.
    If it would help to have someone brief you in more detail 
about that, I would be happy to do so. If that is an interest, 
we can certainly follow up with you.
    Chairman Nussle. Mr. Baird.
    Mr. Baird. Thank you, Mr. Secretary, for being here, and 
thank you, Mr. Chairman, for hosting this hearing. I serve on 
the Transportation Committee, so I am very interested in this 
issue. I am going to kind of jump around because there are a 
couple of topics in the budget.
    First of all--and you may have addressed this so forgive 
me--throughout the President's budget proposal I do not find 
and staff has not found any explicit discussion of extending 
the highway and transit firewalls. Is that just an omission or 
is there a tacit intention from the administration to eliminate 
the highway and transit budgetary firewalls?
    Mr. Jackson. No, I said in announcing the budget at our 
initial budget roll-out, and I have it in my testimony today 
here--it is our intention to preserve the fundamental principle 
of trust fund revenue being used for trust fund purposes.
    Mr. Baird. Terrific. That, as you know, was a signature 
accomplishment of TEA-21.
    Mr. Jackson. Yes, sir. The core thing that has made our 
program work.
    Mr. Baird. On the issue of transit, do I understand 
correctly that--two things I am concerned about--that the 
transit budget is going to be flatlined and that the local 
share is going to be increased from 20 to 50 percent for New 
Starts?
    Mr. Jackson. Yes, sir. We have been gradually ramping the 
Federal match down and our appropriators set a target for us 
last year, of a maximum 60-percent Federal investment with a 
local match of 40 percent. We are working toward a 50-50 match. 
And as I said, right now we are finding that is not a problem 
overall because our average local match is slightly below the 
50 percent level.
    Mr. Baird. My concern is twofold. We had, if I remember 
correctly, the Under Secretary for Highway and Transit was in 
the committee and presented a graph I think every American 
should see. The vertical axis of the graph was demand, the 
horizontal axis was time, and there were two graphs going up, 
demand for road passenger capacity, and a nice linear increase 
also in demand for road freight capacity, and then on the 
bottom there was a nearly flat line indicating actual capacity 
increase. It seems to me the only way we are going to get there 
is by somehow making more efficient use of the roads we have 
got, building some new for sure, but we cannot build the way 
out. It just did not match up. So I am concerned if we are 
going to flatline the transit budget.
    And in the second part with the match, when the States and 
the local municipalities are hurting so badly financially, how 
do we do that?
    Mr. Jackson. Well, this is the dilemma of the entire 
transportation budget. We have to find some prudent balance and 
then we just have to work these dollars as effectively as we 
can and extract the maximum from the investment. It is not an 
unconstrained budget environment but we are providing a 19-
percent increase over the funding in TEA-21.
    We think that we work smarter and make that money go 
farther by using alternative financing tools and tools that 
allow us to use technology. For example, the investment in 
intelligent transportation infrastructure will help us reduce 
congestion in a meaningful way and make our systems more 
efficient. I have done some very excited listening out at the 
Federal Highway Administration's research facility at Turner 
Fairbanks. I was told how we can build manufactured roads, in a 
factory and bring big slabs into congested areas, reducing the 
time and the cost of construction. So I think that we are going 
to have to take all of our intellect and apply it to the 
problem.
    Mr. Baird. Let me ask one last question also on 
transportation. We have studied the problem of the MARAD ships 
that are dilapidated and needing disposal. One of the problems, 
maybe all of us as humans but I do not think the Government 
should do it, is we do not like to clean up our messes, if you 
remember that ``everything I need to know I learned in 
kindergarten'' principle. We actually have a company in my area 
that could quite readily dispose of these, create a number of 
new jobs, and do so responsibly. The tendency has been to tow 
these ships over to Third World countries and have these folks 
risk their lives and risk their environment by dumping PCBs in 
their bays, et cetera. I would like to know how closely our 
budget for this area of MARAD ship disposal matches the demands 
and the needs.
    Mr. Jackson. You have hit a personal interest of mine on 
this one.
    Mr. Baird. We will work on it.
    Mr. Jackson. I would be happy to work with you. The problem 
is that we have 130 of these vessels, some in very poor 
condition, as you know, and they are on the East Coast, the 
West Coast, and in the Gulf. We have met as recently as this 
week with the deputy of the Environmental Protection Agency, to 
work out a method to move scrappage forward domestically, 
internationally, and also to work on reefing some of these 
vessels. We need to establish criteria whereby we pay to remove 
PCBs from the vessels and then use them for much needed reefing 
work.
    So I am cautiously optimistic that the bureaucracy has been 
sufficient stimulated that we will see some significant 
breakthroughs in the very near term.
    Mr. Baird. Terrific. I would love to follow up with you on 
that.
    Mr. Jackson. OK. I would be happy to.
    [The information referred to follows:]

 Mr. Jackson's Response to Mr. Baird's Question Regarding Ship Disposal

    The Maritime Administration (MARAD) plans to make great strides in 
the Ship Disposal Program, having received $31 million--$11 million 
directly and $20 million indirectly in the fiscal year 2003 
Appropriations Acts. To ensure continuity of this year-to-year 
responsibility, the President's Budget requests $11 million in fiscal 
year 2004.
    Through its Program Research & Development Announcement (PRDA) 
proposals, the Maritime Administration has requested innovative, cost-
effective proposals from the ship disposal industry that represent best 
value to the Government. Proposals for ship disposal are evaluated for 
cost, technical, environmental, and worker safety factors.
    MARAD is also reviewing proposals for the removal and remediation 
of oils, fuels, and contaminated liquids, to minimize any potential 
environmental issues, while the ships await permanent disposal. Using 
the PRDA method, MARAD is initiating a pilot project for the removal of 
fuel from vessels in the James River Reserve Fleet. MARAD also issued 
invitations to bid for domestic dismantlement of the highest risk 
vessels in the fleet, and those contracts are expected to begin this 
spring.
    Concurrently with domestic awards and pursuing PRDA proposals, 
MARAD is working with coastal States to accomplish artificial reefing, 
and with the U.S. Navy to participate in their SINKEX program for the 
deep sinking of MARAD's obsolete vessels. Through the interagency 
efforts of Environmental Protection Agency (EPA), Navy, Coast Guard, 
National Oceanic and Atmospheric Administration (NOAA), et al., 
national best management practices for environmentally safe reefing are 
being developed and will be completed this spring.
    MARAD continues its efforts with the EPA to allow export of vessels 
for recycling, considering not only environmental, but also, human 
safety and protection factors. MARAD has been in discussion with the 
EPA and the State Department regarding the possibility of dismantling 
capacity with England, China, and Mexico.
    Finally, MARAD actively participates in the Global Action Program, 
an international program to ensure environmentally responsible and 
sustainable ship disposal through partnerships of the Basel Convention 
countries, the International Maritime Organization, and the 
International Labor Organization.

    Mr. Baird. Thank you very much, Mr. Chairman.
    Chairman Nussle. Thank you. We welcome Mr. Vitter to the 
Budget Committee, and you may inquire.
    Mr. Vitter. Thank you, Mr. Chairman. And thank you, Mr. 
Secretary, for being here. I wanted to ask you a few things 
about two precise areas of interest to me. Last year 
Congressman Harold Rogers and I wrote the DOT and included 
language in the transportation appropriations bill for fiscal 
year 2003 to urge your Inspector General to thoroughly 
investigate and audit the DOT's Disadvantaged Business 
Enterprise (DBE) program administered at three New Orleans area 
agencies--Louis Armstrong International Airport, the Orleans 
Levee Board, and the New Orleans Regional Transit Authority.
    First of all, I want to thank you and Secretary Mineta and 
the whole department for being very responsive to that, 
devoting a number of full-time personnel which have been on the 
ground doing a very thorough investigation/audit beginning at 
the airport and are soon going to go to the other two agencies. 
So I really do want to thank you for that. We are looking 
forward to their report about those agencies.
    But as they have done their work, I have met with them, we 
have had discussions as they have gone along and it has already 
highlighted, apart from the specific clear abuses at those 
agencies, it has also highlighted some national sort of policy 
concerns. I wanted to get your reaction to that.
    First of all, there clearly seems to be a national problem 
of fronts being employed by prime contractors, DBE fronts, 
clear abuse of the DBE program. In several cases, the DBEs are 
leasing all of their equipment and all of their personnel for 
the DBE part of the contract from the prime. It is a pretty 
clear front. So that is one concern.
    Secondly, in 1999, some regulations were put in regarding 
limits on a DBE's net worth. At our airport, it is clear from 
this audit, and I think other facilities, there has been very 
little, if any, attempt to phase-in that new regulation which 
is now 4 years old and which put limits on net worth. So I 
think there are all sorts of improperly certified DBEs still 
benefiting under the program that are basically owned by people 
worth too much.
    And thirdly, even under those new regulations, there is a 
pretty big loop hole in terms of net worth. Net worth limit is 
$750,000 but, as I understand it, that does not count a house 
you can own up to $1 million, or stock in your company up to $1 
million. I think there is a real concern on my part and that of 
others that that is not a meaningful net worth limit.
    So let me ask a few questions with that background. One is, 
when is the last time the department has really had a major 
examination of DBE regulations, issues like I am bringing up?
    Mr. Jackson. We are actually undergoing a regulatory review 
of each mode right now in preparation of formulating our next 
regulatory agenda. The mandate from Secretary Mineta is to look 
at all outstanding rules, significant and non-significant, and 
find out why we are not moving off the dime on ones that have 
been delayed.
    This issue has come up in the context of a regulatory 
review and assessment of our outstanding regulatory process. So 
without prejudicing that, I will just say that we are looking 
at these rules, and we are eager to try to do the right thing 
and get them out of the department in an effective way. I want 
to thank you for your focus on this issue. If we have abuses in 
this system, it undermines an important tool of commerce that 
we want to use. We want to stimulate small business growth and 
development, and abuses of it cannot be tolerated. And Ken 
Mead, I will tell you, is all over this one like a blanket, and 
committed to working the specific issues of any allegation. I 
am working very closely with him in that regard.
    Mr. Vitter. Great. I appreciate that. But just to 
underscore, I personally would like to request that you all put 
this whole area on your regulatory review agenda. Many of the 
things I am talking about are not draft or proposed regulations 
in the works. They are existing regulations which, in my 
opinion, are inadequate because they are full of loop holes. 
And again, the first and the prime victim in these cases, it 
should be underscored, is a real Disadvantaged Business 
Enterprise. The first goal should be to direct the benefit of 
this program to the people for whom it was intended and not 
multimillionaires and not primes who are using people as 
fronts.
    Mr. Jackson. I understand. Yes, sir.
    Mr. Vitter. Thank you.
    Chairman Nussle. Thank you. Mr. Hulshof.
    Mr. Hulshof. Thank you, Mr. Chairman. Mr. Secretary, 
welcome. You certainly have an ambitious undertaking with the 
multi-year highway bill. We look forward to working with you 
not only to craft something that will meet the pressing 
infrastructure needs of the country, but also to do that in a 
fiscally responsible manner. It seems that we are all zeroing 
in on our little pet issues, so I would like to do the same; 
specifically, as it relates to the diesel fuel deficit 
reduction tax.
    This was a tax, a 4.3-cent per gallon excise tax on diesel 
fuel that was imposed in 1993, as you recall. In the last 
highway bill in 1998, we actually took the diesel fuel excise 
tax on the trucking industry and rolled that into the Highway 
Trust Fund so it is used for infrastructure. However, other 
competing transportation industries, specifically, railroads 
and waterway operators, barge owners, still pay a 4.3-cent 
excise tax into the general fund.
    I have in previous Congresses, beginning in the 105th 
Congress, sponsored legislation to actually repeal the 4.3-cent 
excise tax for the railway industry and for the barge 
operators, primarily because of the competitive disadvantage in 
which they find themselves as opposed to the trucking industry. 
In fact, in the last Congress when I introduced this bill, it 
is a tax issue, of course, and being also on Ways and Means, 
there are 41 members of our committee, 27 of them co-sponsored 
our bill, including the chairman of this committee, to repeal 
the 4.3-cent deficit reduction tax. In fact, in last year's 
budget that the House passed, there was language in the 
resolution that says, and I will just quote briefly, ``the 4.3-
cent per gallon diesel fuel deficit reduction tax remains an 
issue which needs redress even though Congress has twice passed 
legislation to repeal this unfair and discriminatory tax. This 
tax is inconsistent with sound national transportation policy 
because it effectively singles out the Nation's railroads and 
inland waterway industry.''
    The only reason I mention this to you is because there is 
some discussion I think about creating some railway-highway 
crossing fund or maybe some other trust fund. Do you have a 
position as far as the 4.3-cent excise tax on the railway or 
barge industry, or not?
    Mr. Jackson. I think the answer today is no. But let me 
qualify that a little bit. In the President's budget, the 
money, which I believe is about $160 million in current revenue 
to the treasury, is included as revenue for the purpose of 
reducing the deficit. So the current budget that OMB has put 
forward does not propose to take it out.
    It is a Treasury issue, not particularly a DOT issue. But I 
have had visits from almost every railroad CEO and they have 
raised this issue. It is one that we are aware of as an issue 
to discuss. We have not made a proposal on this issue in our 
previous statements out of DOT. We are still looking at that 
issue, recognizing its affect on the deficit front. We also 
understand very clearly from the industry that relief from this 
would allow them to make the type of capital investments that 
they believe they need to improve their systems and provide the 
infrastructure necessary to support the railroad industry, in 
particular.
    Mr. Hulshof. And I appreciate that answer. I know that 
primarily the attention seems to be garnered with the railroad 
industry. I actually would like to also--and let me just in the 
interest of full disclosure as the co-chairman of the 
Mississippi River Caucus, we have no legislative fiat, but it 
is every Member, Republican and Democrat, whose district 
includes part of the Mississippi River. So this is really a 
forum for us to talk about competing interests as far as 
recreation, navigation, environmental issues. And the thing is 
that an Inland Waterway Trust Fund, there are already balances 
that are accumulating that are not being tapped. And so the 
idea to roll this into, for instance, the Inland Waterway Trust 
Fund, sufficient monies I believe are available already. The 
railway industry, yes, but also those inland waterway 
operators, too. And not to pick a fight with any of the other 
industries, but transporting grain, for instance, on a barge is 
the most environmentally friendly way of transportation. And 
when you take 800 trucks off the highways with one 15 tow and 
barge, there are some environmental implications there.
    So, again, I appreciate your answer. It is something that I 
have been focusing on in previous Congresses and we have 
generated a lot of bipartisan support. So I appreciate your 
keeping that in mind.
    Mr. Jackson. OK. I would be remiss not to acknowledge the 
barge part of this. I recently had a meeting with a very good 
collection of the barge industry, and they were quite explicit 
in their concern about this issue.
    Chairman Nussle. Thank you, and thank the gentleman for 
bringing up that issue. I am also a co-sponsor and associate 
myself with the gentleman's remarks.
    Mr. Scott.
    Mr. Scott. Thank you, Mr. Chairman. I would like to follow 
up with some of the remarks by the gentleman from Louisiana 
about minority business. The Department of Transportation has a 
full commitment to minority business enterprises, does it not?
    Mr. Jackson. Yes, it does.
    Mr. Scott. And you are not going to allow regulatory 
minutia to adversely affect that commitment, will you?
    Mr. Jackson. Sir, what I tried to make clear is that any 
abuse of this program undermines a program that has a very, 
very important role to play for helping stimulate small 
business investment in the country, and the department's 
program certainly recognizes that fact.
    Mr. Scott. Thank you. I am representative of several ports 
and you know that ports have been identified as vulnerable to 
terrorism. As I understand it, the TSA is presently in the 
Department of Transportation and will be moving when?
    Mr. Jackson. March 1, 2003.
    Mr. Scott. In the meanwhile, who is doing port security?
    Mr. Jackson. The responsibilities for our port security are 
shared among Coast Guard, MARAD, and TSA. We are working in a 
close partnership on these issues.
    Mr. Scott. Who covers port operations after all is said and 
done and shifted around?
    Mr. Jackson. Well, the Coast Guard's Captain of the Port is 
the principal point of focus for port operations, security 
issues, and safety inspections of vessels.
    Mr. Scott. Just normal operations?
    Mr. Jackson. Yes, sir.
    Mr. Scott. Not just security. OK. Now where is port 
security in the budget?
    Mr. Jackson. I think you may be asking about the grant 
program that was funded through TSA. We worked out a 
cooperative agreement between TSA and MARAD for MARAD to 
administer those grants. We had an initial grant of $92 million 
which we gave out to the ports, and we have another $105 
million that we are trying to get out to the ports now. We have 
submitted a Request for Proposal.
    Mr. Scott. What is in this budget?
    Mr. Jackson. There is no money in this budget for this. We 
have in 2003----
    Mr. Scott. Wait a minute. In the budget submission we are 
talking about----
    Mr. Jackson. Yes, sir?
    Mr. Scott. How much additional money is there for port 
security?
    Mr. Jackson. Funding is not requested for a port security 
grant program. In 2003, we hope to bring closure on an 
additional $105 million. So this split out----
    Mr. Scott. In the 2004 budget, there is no additional money 
for port security?
    Mr. Jackson. That is correct. That would be a Department of 
Homeland Security budget item.
    Mr. Scott. I am not concerned about where it is coming 
from. But there is no additional money in the budget for port 
security? You mentioned I think in your opening remarks the 
James River Ghost Fleet. Is it true that in the last 5 years we 
have spent $2.2 million cleaning up the mess that is caused by 
those boats sitting there?
    Mr. Jackson. I do not have that figure on the top of my 
head, but we have had to spend too much money in my view to 
remediate problems instead of getting the vessels scrapped.
    [The information referred to follows:]

  Mr. Jackson's Response to Mr. Scott's Question Regarding the James 
                           River Ghost Fleet

    In the past 5 years, there were oil spill clean-ups and fuel 
removals from five vessels in the James River Reserve Fleet at a cost 
of $2.8 million. The Maritime Administration (MARAD) estimated the 
costs and addressed the challenges and conditions of the obsolete 
vessels in the National Defense Reserve Fleet in their April 2001 
report to Congress. In that report, MARAD estimated the custodial costs 
of the obsolete ships as follows: $20,000 for annual maintenance, 
$200,000 for one-time fuel removal, and $900,000 for dry-docking once 
every 15 years.

    Mr. Scott. And if one of those ships actually broke apart, 
the cost could be $20 million per ship?
    Mr. Jackson. It could be high, and I would not hazard a 
guess on what it would be in a specific case.
    Mr. Scott. And the estimated cost to remove all of the 
ships from the James River is $177 million?
    Mr. Jackson. We have had various estimates on what the cost 
of the whole program is. I will just tell you, sir, I am not 
satisfied that we have a good program where you could estimate 
a unit price for the whole thing.
    Mr. Scott. And Congress ordered you to get it all done by 
2006?
    Mr. Jackson. Yes, sir.
    Mr. Scott. And we are adding more ships to the fleet than 
we are taking out of the fleet?
    Mr. Jackson. Exactly right.
    Mr. Scott. Title XI----
    Mr. Jackson. Sir, just one quick point on that, if I could.
    Mr. Scott. I want to get a Title XI question in while my 
time is still alive. I am going to ask you about Title XI, what 
happened to it. It is very important to the shipbuilding 
industry.
    Mr. Jackson. Yes, sir.
    Mr. Scott. So you can answer all of those.
    Mr. Jackson. OK. On the ship scrappage issue, it is an 
important environmental issue, it is an important business 
management issue, and it is an important management challenge 
for us. The cost of scrapping ships one by one in the way that 
we have done it recently is too high and we are working on 
multiple means of trying to do this more efficiently. We have a 
reefing program that we are working on with EPA; the Navy and 
others that we think can be a significant help here. We also 
have been working with EPA on a plan for a pilot project that 
would allow us to remediate the removable PCBs and other 
chemicals that need to be removed in order to scrap the vessel 
at a given location overseas. This will also allow domestic 
scrappage to operate more effectively. So I would say to you 
that this is a high priority issue of the department and I am 
very optimistic, frankly, that we are going to be able to break 
through the roadblocks that we have had in place.
    Mr. Scott. Title XI?
    Mr. Jackson. Title XI. We have had an IG report that is in 
the drafting stage. The budget requests for Title XI have not 
had a significant priority on new money into this program. In 
the last 10 years, we have had approximately $489 million worth 
of defaults in this program. The IG is doing an assessment of 
the program. He is making some recommendations that we are 
going to look at very closely about how to manage that 
vulnerability more effectively.
    Mr. Scott. Thank you, Mr. Chairman. I would just say the 
amount of money for removing the fleets is totally insufficient 
and we need to work on that. I appreciate your indulgence, Mr. 
Chairman.
    Chairman Nussle. Thank you. Mr. Shays.
    Mr. Shays. Secretary Jackson, greetings. I am very 
interested in the Aviation Trust Fund. The budget appendix on 
page 712 shows that the trust fund is going from about $10 
billion in fiscal year 2002 to $11 billion in fiscal year 2004. 
In this day and age with this economy and all the potential 
terrorist threats that are out there, is that a realistic 
number?
    Mr. Jackson. I think it is a prudent number. It does not 
reflect all of the investment that is being made on the 
security issue. We have money in the Transportation Security 
Administration budget for aviation security so all of that 
burden is no longer embedded in the FAA budget.
    Mr. Shays. Would you help us out, if there were a war in 
the Gulf or if there were a terrorist attack where a few planes 
were blown up, what would likely happen to that trust fund?
    Mr. Jackson. Well, I would not want to speculate too widely 
here. The trust fund has not been an insurance program for a 
catastrophic failure in the system. As you know, when we had 
the events of 9/11, Congress passed an additional $5 billion 
emergency supplemental to help address the airlines' immediate 
needs in the wake of that event and then created a $10 billion 
fund for loan guarantees. So it is not my sense that the AIP 
program is designed to manage catastrophic contingencies.
    Mr. Shays [presiding]. Thank you. I am going to finish my 
questions now so I can become acting chairman and recognize Mr. 
Meek.
    Mr. Meek. Thank you, Mr. Chairman. Mr. Secretary, how are 
you doing today?
    Mr. Jackson. Good, sir. Thank you.
    Mr. Meek. I could not help but notice--I took an 
opportunity to take a look at your budget, and I notice that on 
your minority business resource center overview--on page 38 of 
your budget, there was a decrease in the dollars from 2003 to 
2004. I really took strong point to that because I know that 
the President has made it a centerpiece of his budget to make 
tax cuts aimed at helping small businesses. Why did the 
department decrease these dollars from last year? I think you 
are budgeted for $18 million.
    Mr. Jackson. Yes, sir. If I could get back to you with a 
more detailed answer to that question, I would be grateful. I 
do not have the specifics on the program and what it covers.
    [The information referred to follows:]

   Mr. Jackson's Response to Mr. Meek's Question Regarding Minority 
                           Business Outreach

    The fiscal year 2004 funding for the Minority Business Resource 
Center (MBRC) and the Minority Business Outreach (MBO) is not 
decreasing. The fiscal year 2004 funding for MBRC and MBO is the same 
level as fiscal year 2003. For presentation purposes, the Budget in 
Brief combined the funding for MBRC, MBO, and the Office of Civil 
Rights into a single line. It is also important to note that the 
funding in the Budget in Brief is reflected in millions of dollars.
    For clarification, the following funding is in thousands of 
dollars:


----------------------------------------------------------------------------------------------------------------
                                                              Fiscal year 2003 request  Fiscal year 2004 request
----------------------------------------------------------------------------------------------------------------
Minority Business Resource Center...........................                      900                       900
Minority Business Outreach..................................                    3,000                     3,000
Office of Civil Rights......................................                    8,700                     8,569
Total MBRC, MBO, and Civil Rights...........................                   12,600                    12,469
----------------------------------------------------------------------------------------------------------------

    The funding for the Office of Civil Rights is decreasing slightly 
to reflect the shift of minority employment and recruitment programs 
from the Office of Civil Rights to the Human Resources Office in the 
Office of Administration, and the transfer of three positions and 
related costs to the Department of Homeland Security.

    Mr. Meek. One other thing as it relates to the issue of 
port security. I am from Miami-Dade County and Broward where 
the cruise ship industry is located and homeland security is 
something that we hold in very high regard, as everyone does, 
but as it relates to transportation. I know that you responded 
in the best way you could to Representative Scott, but I just 
wanted to underscore that as we look at the department, as we 
look at homeland security, my local governments are asking what 
role will the Federal Department of Transportation play as it 
relates to the security of our ports and many other ports. 
Florida has I believe almost seven main deep water ports and 
eleven in total. What are the discussions within the department 
as it relates to that role?
    Mr. Jackson. I should start by saying that Florida has so 
much to be proud of in the way that they had done port 
contingency and security planning prior to 9/11. The State had 
made an important investment and really was a leader when we 
were looking around after 9/11 to see what sort of measures you 
had already investigated and adopted. You have much to be proud 
of and every reason to be concerned about making sure that you 
deal with these issues appropriately.
    The Department of Transportation will still work with the 
TSA when it moves to the new Department of Homeland Security on 
the operation of port security grants. We will have a 
significant interest in working with the Coast Guard in the 
same way. We view our role on these issues as changed but not 
taken away. We are planning a memorandum of agreement in 
essence with TSA to define the types of tasks that we will do 
in support of the TSA security mission. They have the core 
security mission, and we need to support them with that 
mission.
    Mr. Meek. Mr. Secretary, I am fresh and new to the Congress 
and I served on a select committee in Florida as it relates to 
homeland security, and it is almost devolution of 
responsibility when we look at it. We ask the local governments 
to pull their weight, be it financial or fiscal, and their big 
question of wanting to know, you have asked us, you have given 
us these requirements and guidelines that we should follow, 
they are constantly calling me, my city commissions and the 
counties that I represent, what role financially will the 
Federal Transportation Department play. That is the million 
dollar question. A lot of cities who have to balance their 
budget, a lot of counties who have to balance their budget are 
finding great heartburn as it relates to that. I think the 
rubber really meets the road as it relates to that.
    One of my questions, Mr. Chairman--and I would just put it 
in writing to you, Mr. Secretary, because I felt that it was 
really dealing with a local issue that needed a little more--
but it was commending the department as it relates to Miami-
Dade County's metro rail extension. As you know, they passed a 
transportation sales tax to support our local match for Federal 
dollars. So we look forward to working with you and your 
department on that.
    Mr. Jackson. We look forward to working with you too. And 
welcome to the world of people coming and asking you to help 
with dollars. I feel a sense of solidarity with you on that. On 
the port security front you can tell them we put $92 million 
out on the street last year and Florida got a good chunk of 
that money. And we have $105 million that is on the way now and 
I am certain that Florida will be applying for those funds as 
well.
    Mr. Meek. Thank you, Mr. Chairman. Thank you, Secretary.
    Mr. Jackson. Thank you, sir.
    Mr. Nussle [presiding]. If there are no other questions for 
this witness, I would like to thank the Secretary for coming 
here today and testifying on the transportation budget. And as 
we started off, please return our greetings to the Secretary 
and give him our best wishes as he goes toward a full recovery. 
We look forward to working with him and you and the department 
as we tackle these very difficult issues.
    Mr. Jackson. Thank you, Mr. Chairman. I am grateful for 
your hospitality. I know the Secretary will be grateful for the 
good wishes. I will certainly tell him today that you have sent 
them with great kindness. We appreciate your hospitality and 
look forward to working with you.
    Chairman Nussle. Thank you.
    That ends the first panel for today's hearing. We will 
await the second panel. We stand in a brief recess until that 
witness makes himself available.
    [Recess.]
    Chairman Nussle. To the second panel for today's hearing, 
we have the honor of welcoming back to the committee our 
distinguished colleague and friend Nick Rahall from West 
Virginia. He is a senior member of the Transportation and 
Infrastructure Committee and someone who has been able to 
demonstrate over his career in Congress, both with his 
expertise in the area of transportation infrastructure and also 
in his leadership, the importance of this issue as we move 
forward.
    We have a number of very important challenges, as the 
gentleman is well aware, and we appreciate your coming to 
testify today. Your entire statement will be made part of the 
record at this point and you may proceed as you wish, 
summarizing your testimony or delivering it, if that is what 
you would like to do. Welcome.

   STATEMENT OF HON. NICK J. RAHALL, II, A REPRESENTATIVE IN 
            CONGRESS FROM THE STATE OF WEST VIRGINIA

    Mr. Rahall. Thank you very much, Chairman Nussle, for your 
kind comments, for the opportunity to present the 
Transportation and Infrastructure Committee's viewpoints here 
today, and for your leadership as chairman of our Budget 
Committee. Mr. Shays and Ranking Member Meek, good to be with 
you as well.
    As a senior member on the T&I Committee, I have reviewed 
the proposal for its impact on infrastructure matters. And I 
should thank also the actual ranking member, Mr. Spratt, at 
this point, I know he had to step out, but he has been very 
helpful to me and to the committee in providing information on 
these matters and other issues under the budget. But generally 
speaking, as I am sure the committee is aware, the budget 
request does propose a wholesale reduction of almost $11 
billion for programs within the T&I's jurisdiction. Simply put, 
the proposed cuts are a bad idea.
    The FHWA estimates that every $1 billion spent on 
infrastructure creates over 47,000 jobs--that is 47,000 jobs--
and $6.1 billion--$6.1 billion--of economic activity in this 
country. Therefore, the proposed cuts would lead to a loss of 
almost a half a million jobs. And when you combine that with a 
failure to capitalize on over $12 billion of opportunity, the 
picture is pretty clear, at a time when we remain stuck in a 
weak economy, the proposed cuts would be devastating.
    Mr. Chairman, quickly I want to address three specific 
areas in the budget that do affect matters falling under our 
jurisdiction. The first is the Transportation Equity Act of the 
21st Century, otherwise known as TEA-21; the second is the 
Appalachian Regional Commission, known as ARC; and the third is 
Amtrak.
    This year the T&I Committee will take the lead on 
reauthorizing TEA-21. As we do so, it is absolutely necessary 
that we maintain the budget firewalls--it is absolutely 
necessary that we maintain the budget firewalls. Also, we must 
fully fund the baseline level for the Highway Trust Fund.
    Mr. Chairman, when President Eisenhower and Congress 
established the Highway Trust Fund in 1956, as you are well 
aware, they made a promise to the American people; motorists 
would pay a gasoline user fee into the Highway Trust Fund, that 
trust fund would provide for America's infrastructure. And as a 
result, the United States now possesses the greatest 
infrastructure network in the world. To protect that Highway 
Trust Fund, to keep faith in the trust fund, we had to 
establish the budgetary firewalls in TEA-21. That was necessary 
to prevent a practice that has grown common over the years. Too 
frequently, the Highway Trust Fund fell victim to the budget 
process and the gas tax revenues were not used for their 
intended purpose. It became a game of mirrors, smoke screens, 
et cetera, in which President-after-President, regardless of 
party, tried to mask the true size of the deficit.
    Now these firewalls need to be extended as we go forward. 
Looking over the budget proposal, I notice that the 
administration proposes budget caps for the next several years. 
I would say, Mr. Chairman, that it also is appropriate that we 
extend the firewalls for the Highway Trust Fund. By doing so, 
we can maintain the fiscal discipline while keeping the promise 
that President Eisenhower and the Congress made to the American 
people. Also, the proposal cuts the baseline funding in the 
Highway Trust Fund by about $2.5 billion. This one budget cut 
alone would translate into a loss of more than 115,000 jobs. 
Instead of cutting the Highway Trust Fund, we need to use the 
2002 level as a baseline so that we can grow the program to 
meet future needs.
    Moving on to the ARC, it does provide vital infrastructure 
investments in a historically depressed area of the country. 
The budget proposal currently before us calls for massive cuts 
in a critical program that spans 13 States, including all of my 
home State of West Virginia, the only State whose borders lie 
totally within the ARC map. In the 1960s, President Johnson 
carried out a promise to help raise the Appalachian region out 
of the crushing poverty when he formed ARC. For over 30 years 
it has provided the development and jobs throughout 410 
counties across a 210,000 square mile region. Yes, it has 
worked. Although the Appalachian region is dramatically 
improved, there remains more to be done.
    What is proposed would slash the ARC budget by over 50 
percent from its fiscal year 2000 levels. Mr. Chairman, doing 
so would simply gut this program upon which so many people 
across so many States rely. So I urge you to fully fund this 
program.
    And finally, Amtrak. The administration proposes $300-
million less than what Amtrak says itself that it needs to 
continue working. I know I join with many of my colleagues from 
both sides of the aisle in both houses when I say that David 
Gunn should be commended for the fine job he is doing at 
instituting reforms. I think Mr. Gunn needs to be allowed to 
continue those efforts. And to help him do so, I would hope the 
committee would make the necessary funding of $1.2 billion 
available.
    In conclusion, Mr. Chairman, the T&I Committee has 
historically been among the largest, the most bipartisan, and 
the most diverse committee in all of Congress. The budget 
resolution will affect key issues that the T&I Committee will 
address this year and it will be crucial for our two committees 
to work together. We need to combine our efforts to craft 
legislation that allows us to reinvest in the Nation's 
infrastructure and provide good jobs, and the way to do so is 
by providing full funding rather than large wholesale cuts.
    That concludes my testimony, Mr. Chairman.
    [The prepared statement of Nick J. Rahall, II, follows:]

  Prepared Statement of Hon. Nick J. Rahall, II, a Representative in 
                Congress From the State of West Virginia

    Chairman Nussle, Ranking Member Spratt, and members of the 
committee, thank you for the opportunity to testify before you today on 
transportation issues and the President's budget.
    As a senior member of the Transportation and Infrastructure 
Committee, I have reviewed the proposal for its impact on 
infrastructure matters. In addition, I want to thank Ranking Member 
Spratt for the information he has provided on these matters and other 
issues in the budget.
    Generally speaking, the budget request proposes a wholesale 
reduction of almost $11 billion for programs within the Transportation 
and Infrastructure Committee's jurisdiction. Simply stated, the 
proposed cuts are a bad idea. The Federal Highway Administration 
estimates that every $1 billion spent on infrastructure creates over 
47,000 jobs and $6.1 billion of economic activity. Therefore, the 
proposed cuts will lead to a loss of almost a half-a-million jobs. 
Combine that with a failure to capitalize on over $12 billion of 
opportunity. At a time when we remain stuck in a weak economy, the 
impact of these cuts will be devastating.
    Further, Mr. Chairman, I want to address three specific issues in 
the budget request that affect matters falling under the Transportation 
and Infrastructure Committee's jurisdiction.
    The first is the Transportation Equity Act for the 21st Century, 
also known as ``TEA-21;'' the second is the Appalachian Regional 
Commission; and, the third is Amtrak.
    This year the Transportation and Infrastructure Committee will take 
the lead on reauthorizing TEA-21. As we do so, it is absolutely 
necessary that we maintain the budgetary firewalls. Also, we must fully 
fund the baseline level for the Highway Trust Fund.
    Mr. Chairman, when President Eisenhower and Congress established 
the Highway Trust Fund in 1956, they made a promise to the American 
people. Motorists would pay a gasoline user fee into a Trust Fund. That 
Trust Fund would provide for America's infrastructure. As a result, the 
United States now possesses the greatest infrastructure network in the 
world.
    To protect the Highway Trust Fund, we had to establish budgetary 
firewalls in TEA-21. This was necessary to prevent a practice that had 
grown common over the years. Too frequently, the Highway Trust Fund 
fell victim to the budget process, and gas tax revenues were not used 
for their intended purpose.
    Now, these firewalls need to be extended as we go forward. Looking 
over the budget proposal, I noticed that the administration proposes 
budget caps for the next several years. Mr. Chairman, I would submit 
that it is also appropriate that we extend the firewalls for the 
Highway Trust Fund. By doing so, we can maintain fiscal discipline 
while keeping the promise that President Eisenhower and Congress made 
to the American people.
    Also, the proposal cuts the baseline level of funding in the 
Highway Trust Fund by about $2.5 billion. This one budget cut alone 
would translate into a loss of more than 115,000 jobs. Instead of 
cutting the Trust Fund, we need to use the 2002 level as a baseline, so 
that we can grow the program to meet future needs.
    Moving on to the Appalachian Regional Commission, the ARC provides 
vital infrastructure investments in a historically distressed area of 
the country. But the proposal calls for massive cuts in this critical 
program that spans 13 states--including all of West Virginia, my home 
state.
    In the 1960s, President Johnson carried out a promise to help raise 
the Appalachian region out of its crushing poverty when he formed the 
Appalachian Regional Commission. For over 30 years, the ARC has 
provided for development and jobs throughout 410 counties across a 
200,000 square mile region. Although the Appalachian region is 
dramatically improved because of this effort, there remains more work 
to be done to fulfill the promise made.
    What is proposed would slash the ARC budget by over 50 percent from 
its fiscal year 2002 levels. Mr. Chairman, doing so will simply gut 
this program that so many people across so many states rely on. So, I 
urge you to fully fund this program in the Budget Resolution.
    Finally, Amtrak. The administration proposes $300-million less than 
what Amtrak says that it needs to continue operating. I know I join 
with many of my colleagues from both sides of the aisle in the House 
and the Senate when I say that David Gunn should be commended for the 
fine job he is doing at instituting reforms. I think Mr. Gunn needs to 
be allowed to continue these efforts. To help him do so, I urge the 
committee to make the necessary funding of $1.2 billion available.
    In conclusion, the Transportation and Infrastructure Committee has 
historically been among the largest, the most bipartisan, and the most 
diverse committees in all of Congress. The Budget Resolution will 
affect key issues that the Transportation and Infrastructure Committee 
will address this year, and it will be critical for our two committees 
to work together. We need to combine our efforts to craft legislation 
that allows us to reinvest in our Nation's infrastructure and provides 
good jobs. The way to do that is by providing full funding rather than 
large, wholesale cuts.

    Chairman Nussle. I appreciate the gentleman's testimony. It 
will be made a part of the record in its entirety. I want to 
thank the gentleman for his work with our committee in the 
past, both you and Chairman Young and this committee have been 
able to deal with the last couple of years in a very 
straightforward way, difficult way, knowing that there are huge 
budget implications both by what we do together as well as the 
impact on the rest of the budget.
    Just I guess two comments and I would be interested in your 
viewpoint. RABA was meant to be a firewall, as you indicated 
there was a firewall, but it seems as though, for full 
disclosure purposes, it seems to work one direction only--in 
preventing trust fund dollars from leaving the trust fund. But 
as of late at least, we have been pouring quite a bit of 
general fund revenue into the trust fund in order to hold it 
harmless and to deal with the obligations. It is my 
understanding that you are proposing that that continue as you 
present your budgetary proposal and concerns here before this 
committee today.
    Mr. Rahall. Yes, Mr. Chairman, that is our committee 
proposal that we fund it at the fiscal year 2002 level of $31 
billion and establish that $31 billion as a baseline. I know 
the administration proposal calls for amending RABA so as to 
prevent the sudden drops in revenues that we have experienced 
in recent months.
    But RABA, as you so well know, and you were deeply involved 
in those negotiations with then Chairman Shuster, was a middle 
position, if you will, between our T&I Committee, who in a 
bipartisan fashion every year, including the full House, has 
voted in a bipartisan fashion to remove the Highway Trust Funds 
from budget so that we can have those revenues go back out for 
the intended purpose of spending on infrastructure. In order to 
reach that middle ground, RABA, the firewalls were established 
to say that future revenue coming into the Highway Trust Fund 
would go back out but the main surplus itself would stay on 
line, on budget.
    So that, as you know, is the background for RABA. I firmly 
believe that we should have the 2002 levels as a baseline and 
that money should be kept sacrosanct, if you will, for spending 
on infrastructure.
    Chairman Nussle. And it has been since RABA has been put 
into place, has it not?
    Mr. Rahall. Yes.
    Chairman Nussle. I mean all of the money coming in to the 
trust fund from the gas tax, which was the intended purpose 
behind all of our concern over that being used for other 
purposes, all of that money has been used and there is nothing 
in the proposals that you have seen that suggests it will be 
redirected is there? You have not seen anything that suggests 
those trust fund dollars will be redirected anywhere else, have 
you?
    Mr. Rahall. No, I have not seen anything that would say 
they would be redirected, Mr. Chairman.
    Chairman Nussle. So the point of both the President's plan 
as well as the plan last year from the Budget Committee and the 
T&I Committee as well as the proposal that moves us forward 
does not suggest that money that is coming into the trust fund 
from gas taxes be diverted, it suggests that general fund 
revenues continue to be diverted from the general fund to the 
Highway Trust Fund in order to meet our determined obligations 
for transportation in the future.
    Mr. Rahall. Yes, Mr. Chairman, our determined obligations 
for transportation in the future. And in my opinion, that means 
we must grow that infrastructure. Obviously, the status quo is 
not acceptable. We have ever-increasing demands on that 
infrastructure, especially in today's climate with homeland 
security being the buzz word.
    Chairman Nussle. And I will be sharing my list with you if 
not today then very shortly in the future.
    Mr. Rahall. We will be glad to receive that, Mr. Chairman.
    Chairman Nussle. Having said that, the difference is that 
in 2002, in 2001, and before, we were running surpluses both in 
the trust funds as well as in the general fund. Now that we are 
running deficits, every dollar that crosses that firewall to go 
back into the trust fund from the general fund comes from 
somewhere--it comes from deficit spending, it comes from 
borrowing, or it comes from lowering a priority in another 
area. So I am not going anywhere with this except to say that 
this was an easy lift when we were running surpluses. Now that 
we are not, we all have to get familiar with the trade-offs and 
priorities that are out there, including running deficits.
    And I would just caution, as I hear more and more Democrats 
take the floor and others take the floor and blaming others for 
deficits and blaming others for downturn in the surpluses, that 
every dollar that is requested over and above where we are 
today comes from deficits, it does not just come out of thin 
air. So you and I may share a priority for highway funding, in 
fact, we may share it very directly, but every dollar that 
crosses that firewall comes from the deficit, comes from 
borrowing, comes from some other priority; it does not come 
from thin air. So we all have to know that as we are making 
these determinations and these choices during the budget 
process.
    Mr. Rahall. Mr. Chairman, I do understand the point you are 
making. And I do not wish to get into the debate about the tax 
cuts and how the deficit was created and who is to blame, et 
cetera, et cetera. My main point here is to say that the 
Highway Trust Fund is a dedicated user fee.
    Chairman Nussle. Right. And every dollar of it----
    Mr. Rahall. Every dollar that has come into that trust fund 
is paid by the American people every time they go to the gas 
pump. They have paid it with the expectation and with the faith 
that that money does not go over to the general revenues but 
rather stays in that trust fund to go back out in expenditure 
on the roads that they are getting ready to drive out on after 
they pay into that fund. So that is the trust that I would like 
to see we maintain with that Highway Trust Fund.
    Chairman Nussle. We have that. And in fact, the 
administration is actually adding dollars because of the 
gasohol and ethanol provisions that they have put into their 
budget. I guess the bottom line question is, for every dollar 
we increase this, where is it coming from? Do you have a 
suggestion of where we should take it from?
    Mr. Rahall. We have detractions from that Highway Trust 
Fund, too, as far as the hydrogen car of the future. That is 
not necessarily going to mean increased revenues to the Highway 
Trust Fund. And with the threats we have pending today, less 
people are traveling, which means less revenues into the 
Highway Trust Fund. So, there are all kinds of pressures going 
counter to income producing into that Highway Trust Fund that 
certainly is not keeping faith with spending what is in that 
trust fund.
    Chairman Nussle. Well, I look forward to any ideas and 
proposals that anyone has for the increase to highway spending. 
And as I said, I make full disclosure that I may be one of 
those that is interested in doing that. But I look forward to 
proposals from folks who want to increase the funding of where 
that funding is going to come from. And I know that is going to 
be difficult. I have heard of those suggesting tax increases or 
user fee increases. The administration I think made it pretty 
clear they are not going to support that today. There may be 
other more creative measures. But other than taking it straight 
from the bottom line and borrowing, I am not sure I am aware of 
any that are available, or dollar for dollar cuts in other 
domestic discretionary programs.
    So we here at the Budget Committee will await your good 
work in coming up with some ideas, hopefully, your's and 
Chairman Young's, on how we can accomplish that.
    Mr. Meek.
    Mr. Meek. Thank you very much, Mr. Chairman. Thank you, Mr. 
Chairman, for being here. You elaborated on Amtrak some and you 
also talked about quite a few other things. But could you 
comment on the merits of infrastructure investment as it 
relates to being an economic stimulus tool.
    Mr. Rahall. Yes, Mr. Meek. Certainly, investment in our 
infrastructure is investment in growing the economy. I have 
referred to the number of jobs that investment in 
transportation spending means for our economy. Those jobs of 
course translate into tax-paying Americans that pay more money 
into our general revenues. It is all very related. It is truly 
what I think is a trickle down theory. When you have investment 
in infrastructure it just trickles down to revenue that comes 
into our economy from many different sources, whether it is 
good paying construction jobs, or whether it is the creation of 
new businesses.
    I truly believe in the philosophy that if you build it, 
they will come. We have seen that in so many parts of our 
country. And with cutbacks in other modes of transportation, 
our surface transportation is vital to getting people and goods 
around this country and growing our economy.
    Mr. Meek. Let me just for a moment, and I agree with you on 
that point, talk a little bit about what is the issue of today 
and tomorrow and has been for some time now as it relates to 
our transportation needs and pointing toward homeland security. 
When we look at Amtrak and we look at some of the fiscal issues 
that they are facing right now, it is very important, you 
mentioned that you commend the work that is going on as it 
relates to Amtrak, and when the airlines shut down everybody 
ran to the rails, but they are not necessarily where they need 
to be right now if we want to be able to continue our economy 
and travel throughout our land here. What are some of your 
recommendations as it relates to addressing the Amtrak fiscal 
issue? And second, do you have any suggestions for Amtrak 
reform that would allow the rail service to get more stable 
footing right now?
    Mr. Rahall. Well, Mr. Meek, I think the Amtrak Reform 
Commission has come up with some recommendations, and I leave 
that to their expertise as to those reforms that are necessary 
to get Amtrak back on track, so to speak. And I do hope that 
their intention, which we have to ensure that it is, is not to 
do away with the service, especially as it exists across rural 
America today.
    There obviously are reforms that are necessary. There are 
methods I think Amtrak could better conduct itself to running a 
business, like any business operation should be run. As any 
``mom and pop'' operation across America would conduct its 
operations, that is how Amtrak I think should set its sights.
    But the bottom line is it is a service to our people. As 
you said, when there are problems with airlines people flock to 
the rail lines, and that service should be there for the 
American people, not necessarily looking at the bottom line 
when it comes time to providing a vital transportation service 
to our people in times of national emergency or even in times 
of everyday life across rural America. I have many veterans, 
for example, senior citizens, for example, handicapped 
individuals that cannot move across the rural parts of my 
district were it not for the Cardinal, the Amtrak line that 
comes through there. To cut that service out to them is not 
improving our homeland security, is not improving services that 
I think Amtrak should be providing to our people without a 
regard to the bottom line.
    Mr. Meek. Let me just say I agree once again with you as it 
relates to that. But when we look at infrastructure investment, 
we look at stimulating the economy, we look at individuals that 
are blue collar that will have an opportunity to go to work, we 
look at business as being a part of the transportation pie, 
being able to stimulate our economy. And as we work on 
infrastructure, I am from Florida--South Florida, it is going 
to help quite a few small businesses to be reachable. Also as 
it relates to rural America, I could not see a better 
investment that this country should make in being able to work 
on an infrastructure.
    I want to thank you for coming before the committee today.
    Mr. Rahall. Thank you, Mr. Meek.
    Chairman Nussle. Mr. Shays.
    Mr. Shays. Thank you. It is good to see you here, 
Congressman Rahall. I have appreciated working on a number of 
issues with you, and I appreciate your contribution to the work 
of Congress.
    I served on this committee a few years ago, and after we 
came up with a balanced budget, we broke the budget when we had 
the debate and you had arguments on both sides about making 
sure we used all the trust funds for transportation. But the 
end result was we spent more on transportation and we really 
broke the budget agreement, in my judgement. But the argument 
was that the money should be spent that is in the trust fund. 
Now that we are borrowing from the trust fund in a sense, 
excuse me, now that the trust fund is borrowing money from the 
Federal Government because it did not have enough funds to meet 
the obligations, isn't there an obligation of the trust fund to 
pay back to the general fund?
    Mr. Rahall. Well, I will not deny there is an obligation 
there. But that has to be fulfilled in terms of where we are in 
today's economy and where we are in terms of transportation 
needs. And as we make the necessary improvements, let's face 
it, we have got deficient bridges that threaten Americans' 
lives everyday across America, hundreds of deficient bridges 
that could fall in, God forbid, any day. Those are items that 
have to be addressed immediately without regard to paying back 
obligations the Highway Trust Fund may incur. So, let us take 
care of our people and our infrastructure first, and then as 
the economy improves, hopefully it will, we will look at 
repaying that obligation.
    Mr. Shays. I am doing a lot of wrestling on this issue 
because I buy into your general argument that there is 
tremendous infrastructure needs. I do not like seeing the trust 
fund being used for operational expenditures as a general rule. 
I think we have some very real capital needs. What is your 
position on increasing the gasoline tax to bring more money 
into the trust fund?
    Mr. Rahall. Well, I have been on the T&I Committee for 26 
years now, so I have seen increases in that gas tax over my 
congressional career. The current proposal I know Chairman 
Young has put it on the table, and I commend him for doing 
that. On our side, having just organized, as we speak as a 
matter of fact, organized in our committee, we have not really 
addressed this issue and adopted a position as a Democratic 
position on the T&I Committee. But again, I go back to what I 
said in my opening comments, we are very bipartisan and I would 
expect that we would work together on this.
    Mr. Shays. Right. I realize that you would not be speaking 
for your conference, but what would your personal position be 
based on your years of experience and the need to spend more on 
infrastructure? What would you be advocating?
    Mr. Rahall. Well, what I would be after is, first of all, 
some type of ironclad commitment of where that increase, if it 
were to occur, would go. Of course, I would want it to go 
toward the purpose for which it would be collected--
transportation.
    Mr. Shays. And if it did, would you advocate increasing the 
gasoline tax?
    Mr. Rahall. I would seriously consider that, yes.
    Mr. Shays. Thank you very much. I thank you, Mr. Chairman.
    Chairman Nussle. Thank you. Congressman Rahall, colleague 
and friend, we appreciate you coming to the committee today. We 
appreciate your testimony and will look forward to working with 
you and the members of the T&I Committee as we grapple with 
this very vexing challenge that we have before us.
    Mr. Rahall. Thank you, Mr. Chairman.
    Chairman Nussle. Thank you.
    With that, if there is no other business to come before the 
committee, we stand adjourned.
    [Whereupon, at 12:19 p.m., the committee was adjourned, to 
reconvene at the call of the Chair.]