[Senate Hearing 109-1061]
[From the U.S. Government Publishing Office]


                                                       S. Hrg. 109-1061
 
                OVERSIGHT OF SAFETEA-LU IMPLEMENTATION: 
                   THE CURRENT STATE OF PROGRESS AND 
                             FUTURE OUTLOOK 

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

                                HEARING

                               before the

                            SUBCOMMITTEE ON
                       HOUSING AND TRANSPORTATION

                                 of the

                              COMMITTEE ON
                   BANKING,HOUSING,AND URBAN AFFAIRS
                          UNITED STATES SENATE

                       ONE HUNDRED NINTH CONGRESS

                             SECOND SESSION

                                   ON

                OVERSIGHT OF SAFETEA-LU IMPLEMENTATION:
            THE CURRENT STATE OF PROGRESS AND FUTURE OUTLOOK

                               __________

                         TUESDAY, JUNE 27, 2006

                               __________

  Printed for the use of the Committee on Banking, Housing, and Urban 
                                Affairs


      Available at: http: //www.access.gpo.gov /congress /senate/
                            senate05sh.html

                               ----------
                         U.S. GOVERNMENT PRINTING OFFICE 

49-375 PDF                       WASHINGTON : 2009 

For sale by the Superintendent of Documents, U.S. Government Printing 
Office Internet: bookstore.gpo.gov Phone: toll free (866) 512-1800; 
DC area (202) 512-1800 Fax: (202) 512-2104 Mail: Stop IDCC, 
Washington, DC 20402-0001 













            COMMITTEE ON BANKING, HOUSING, AND URBAN AFFAIRS

                  RICHARD C. SHELBY, Alabama, Chairman

ROBERT F. BENNETT, Utah              PAUL S. SARBANES, Maryland
WAYNE ALLARD, Colorado               CHRISTOPHER J. DODD, Connecticut
MICHAEL B. ENZI, Wyoming             TIM JOHNSON, South Dakota
CHUCK HAGEL, Nebraska                JACK REED, Rhode Island
RICK SANTORUM, Pennsylvania          CHARLES E. SCHUMER, New York
JIM BUNNING, Kentucky                EVAN BAYH, Indiana
MIKE CRAPO, Idaho                    THOMAS R. CARPER, Delaware
JOHN E. SUNUNU, New Hampshire        DEBBIE STABENOW, Michigan
ELIZABETH DOLE, North Carolina       ROBERT MENENDEZ, New Jersey
MEL MARTINEZ, Florida

             Kathleen L. Casey, Staff Director and Counsel

     Steven B. Harris, Democratic Staff Director and Chief Counsel

   Joseph R. Kolinski, Chief Clerk and Computer Systems Administrator

                       George E. Whittle, Editor

                                 ______

               Subcommittee on Housing and Transportation

                    WAYNE ALLARD, Colorado, Chairman

                JACK REED, Rhode Island, Ranking Member

RICK SANTORUM, Pennsylvania          DEBBIE STABENOW, Michigan
ELIZABETH DOLE, North Carolina       ROBERT MENENDEZ, New Jersey
MICHAEL B. ENZI, Wyoming             CHRISTOPHER J. DODD, Connecticut
JOHN E. SUNUNU, New Hampshire        THOMAS R. CARPER, Delaware
ROBERT F. BENNETT, Utah              CHARLES E. SCHUMER, New York
MEL MARTINEZ, Florida
RICHARD C. SHELBY, Alabama

                  Sherry Little, Legislative Assistant

                    John East, Legislative Assistant

                    Tewana Wilkerson, Staff Director

              Stephen R. Kroll, Democratic Special Counsel

                    Sarah Kline, Democratic Counsel

                                  (ii)












                            C O N T E N T S

                              ----------                              

                         TUESDAY, JUNE 27, 2006

                                                                   Page

Opening statement of Senator Allard..............................     1

Opening statements, comments, or prepared statements of:
    Senator Reed.................................................     2
    Senator Menendez.............................................    15

                               WITNESSES

Sandra Bushue, Deputy Administrator, Federal Transit 
  Administration.................................................     3
    Prepared statement...........................................    23
Kate Siggerud, Director of Physical Infrastructure, Government 
  Accountability Office..........................................     5
    Prepared statement...........................................    28
William Millar, President, American Public Transportation 
  Association....................................................     7
    Prepared statement...........................................    60

                                 (iii)


 OVERSIGHT OF SAFETEA-LU IMPLEMENTATION: THE CURRENT STATE OF PROGRESS 
                           AND FUTURE OUTLOOK

                              ----------                              


                         TUESDAY, JUNE 27, 2006

                               U.S. Senate,
        Subcommittee on Housing and Transportation,
          Committee on Banking, Housing, and Urban Affairs,
                                                    Washington, DC.
    The Subcommittee met at 2:32 p.m., in room SD-538, Dirksen 
Senate Office Building, Senator Wayne Allard (Chairman of the 
Subcommittee) presiding.

           OPENING STATEMENT OF SENATOR WAYNE ALLARD

    Senator Allard. The Subcommittee on Housing and 
Transportation will come to order.
    On August 10, 2005, the Surface Transportation Bill, the 
Safe, Accountable, Flexible, Efficient, Transportation Equity 
Act, a Legacy for Users, called SAFETEA, was signed into law by 
President Bush. SAFETEA reauthorizes the Surface Transportation 
Programs through fiscal year 2009. For transit, the 6-year 
funding total is $52.6 billion in guaranteed funding, which is 
an increase of 46 percent over TEA-21. SAFETEA builds upon the 
successes of the previous Surface Transportation bills, ISTEA 
and TEA-21.
    While the Act generally followed the existing transit 
programs, it also made a number of changes. For example, the 
Jobs Access Reverse Commute was changed from a discretionary to 
a formula program. SAFETEA also created a number of new 
programs, such as the Small Starts and Transit in Parks 
Programs, as well as new formula factors including the growing 
States and high density formulas.
    Since reauthorization took more than 2 years, I can attest 
that these changes were given serious consideration.
    SAFETEA represents a careful balancing of priorities. Once 
the Bill was signed into law, it fell to the Federal Transit 
Administration to implement the many changes. This is a 
significant undertaking and FTA has been making good progress, 
particularly considering that FTA has been without a confirmed 
administrator for some time.
    Today's hearing will be an opportunity for the Subcommittee 
to receive an update on implementation thus far. It will also 
be an opportunity to consider the challenges and opportunities 
that FTA will face as it completes the job.
    We have an excellent lineup of witnesses that will be able 
to give us an overview of SAFETEA implementation. First, we 
will hear from Ms. Sandra Bushue, Deputy Administrator at the 
Federal Transit Administration. Ms. Bushue has shouldered a 
great deal of responsibility since she has been serving as the 
Acting Administrator.
    Next we will hear from Ms. Kate Siggerud, a Director for 
the Physical Infrastructure Team at the Government 
Accountability Office. GAO's experience with previous 
reauthorization bills will be helpful. They have also been 
studying the process by which the Act is implemented.
    Finally, we will hear testimony from Mr. William Millar, 
President of the American Public Transportation Association, 
APTA. As the voice of the transit industry, Mr. Millar can help 
us better understand the practical bottom-line realities of 
implementation.
    I would like to thank all of our witnesses for being here. 
They were very helpful as we negotiated and wrote the bill, and 
I am pleased to continue that partnership that SAFETEA has 
implemented.
    There is a significant demand for transportation dollars 
and successful implementation will help ensure that the most 
worthy projects are funded and that projects are completed on 
time and on budget.
    I will now turn to the ranking member for any statement 
that he may wish to make.
    Senator Reed.

                   STATEMENT OF SENATOR REED

    Senator Reed. Thank you very much, Mr. Chairman. And thank 
you holding this hearing on the implementation of the SAFETEA-
LU transit provisions.
    Let me welcome all of our witnesses. Again, I would like to 
thank you, as the Chairman did, not just for your presence 
today but for your help over the many months that we drafted 
this legislation.
    Public transit is essential to millions of Americans who 
use it to commute to work and to get to school, and it is a 
lifeline to many Americans who do not have an automobile.
    Across our country, transit ridership is growing and 
transit is essential not only to move people around but also to 
reduce congestion on our highways and to clean up the 
environment.
    Affordable and safe public transit is particularly 
important today when rising gas prices drain dollars out of the 
pocketbooks of working families all across this country.
    Last year's reauthorization of our Nation's surface 
transportation laws was vital to our constituents and to our 
country. It is important that we continue to move forward with 
implementation of the legislation in a manner that supports 
local communities' efforts to develop transit that meets their 
needs.
    I am particularly interested in hearing from our witnesses 
about their opinions of FTA's Very Small Starts Program and 
FTA's efforts to include land use and economic development 
factors in the evaluation of New Start and Small Start 
projects. The Very Small Starts Program was not authorized by 
Congress explicitly and I am concerned that it may not be mode 
neutral. Also, I am concerned that FTA might be ignoring 
Congressional intent to give more weight in the evaluation 
process to land use and economic development.
    One final comment that I would like to make is to express 
my disappointment that the President's budget requested $100 
million less than the amount authorized in SAFETEA-LU for 
transit projects. The Senate fought hard to ensure that there 
was an 80/20 split in funding for transportation and transit 
projects and this cut, I believe, violates the spirit.
    Also, I think it is shortsighted, given the need for 
transit in our Nation and across our country.
    I want to thank the witnesses and I look forward to your 
testimony.
    Senator Allard. Thank you, Senator Reed.
    We will now continue with Ms. Bushue and then we will go 
and call on the rest of you.
    Sandra, you are Deputy Administrator, Federal Transit 
Administration. We look forward to hearing from you. Thank you.

   STATEMENT OF SANDRA BUSHUE, DEPUTY ADMINISTRATOR, FEDERAL 
                     TRANSIT ADMINISTRATION

    Ms. Bushue. Thank you, Mr. Chairman. And thank you for the 
opportunity to testify before you today.
    As you know, SAFETEA-LU makes an unprecedented investment 
in public transportation. As noted in the June 20, 2006, Wall 
Street Journal article, public transportation is gaining riders 
and cachet, as they say.
    Since my arrival at FTA, I have made timely implementation 
of SAFETEA-LU my top priority. To meet SAFETEA-LU mandates, FTA 
prioritized 60 deliverables required by the legislation. We 
made delivery of the top 12 items a core accountability 
performance standard for the FTA senior executives.
    I am extremely pleased to report that we have either 
completed or are on target to complete all but two of them. We 
delayed delivery of the two items, New Starts and Small Starts, 
only because we made a deliberate decision to do so after 
seeing an extraordinary degree of stakeholder interest.
    In fact, FTA's approach to the requirements of SAFETEA-LU 
balances an aggressive implementation schedule with a broad-
based outreach effort that makes stakeholder input a priority.
    We have held nearly 100 sessions, including a webinar, and 
other workshops specifically focused on New Starts and Small 
Starts. We are working diligently to ensure that grantees have 
an opportunity for comment on any guidance that might create a 
binding obligation on them. This process has fostered a healthy 
dialog with the transit industry which we plan to translate 
into policies that reflect reality.
    Turning to regulatory actions, we believe we are making 
solid progress. We issued a notice of proposed rulemaking on 
Buy America on November 28, 2005, and the final rule on March 
21, 2006, covering the more routine issues in the NPRM. Since 
the comments we received indicated that the issues were more 
complex than originally thought, we plan to develop a second 
proposed rulemaking regarding the remaining items.
    FTA also began a negotiated rulemaking on Charter Bus by 
establishing a formal advisory committee. The exact timing of 
this proposed rule will depend on the committee's 
deliberations.
    Finally, we are working with Federal Highways to implement 
changes made to the Metropolitan and Statewide Planning 
Process. We issued an NPRM on June 9 and the final rule should 
be in place by spring 2007.
    Turning to FTA's new and modified programs, our aim is to 
implement SAFETEA-LU change while ensuring funding and program 
continuity. We have begun doing that for several programs. 
First, we successfully restructured our appropriations accounts 
to deal with SAFETEA-LU's program structure in time to award 
grants in fiscal year 2006.
    Second, we tackled the changes to New Starts. It appears we 
are off to a good beginning. However, since coming to FTA, I 
have had concerns about the time and cost to develop New Starts 
projects. Hence, FTA has engaged a management consulting firm 
to review the New Starts delivery process, and I hope to have 
some preliminary findings in the next 3 months.
    Third, FTA introduced the Small Starts program. With the 
level of stakeholder interest and the wide range of issues 
posed by the program, we decided to issue an advance notice of 
proposed rulemaking. The robust response to the ANPRM assisted 
us in publishing draft interim guidance that was published on 
June 9. Once the comment period closes on July 9, we will 
modify the guidance and publish it in final form later this 
summer. The draft guidance will allow grantees to assess their 
projects and submit them for possible funding during fiscal 
year 2007.
    Fourth, changes to the Job Access and Reverse Commute and 
the Elderly and Persons with Disabilities programs, and the 
introduction of the New Freedom program emphasize local 
coordination of service to populations with special needs. We 
issued interim guidance on March 15 that allowed grants to be 
made in each of these programs during fiscal year 2006. The 
final program guidance will be published later this year.
    FTA is working closely with the Department of Interior on 
the new Transit in the Park's program. Efforts by our 
interagency team allowed FTA to publish a notice of funding 
availability on March 23. The notice resulted in the submission 
of nearly 80 project proposals. The team evaluated the project 
proposals and recommended a list of projects to the Secretary 
of the Interior, who will make the final decision on the 
project selection later this summer.
    FTA is working very hard on the Grants to Indian Tribes 
program that establishes a direct Government-to-Government 
relationship between FTA and tribes. We shared some initial 
thoughts on the program and requested comments on November 30, 
2005. Since then, we have held a number of outreach sessions 
around the country. Based on the input we received, we issued a 
notice on March 22 that solicits additional comments on more 
specific program details. We plan to issue a notice of funding 
availability later this summer.
    Last, but certainly not least, is our exciting pilot 
program to assess the benefits of public-private partnerships 
for major transit investments. On March 22, we issued a notice 
requesting comments and proposals of interest for potential 
participants. The comment period closed on June 1 and we 
currently are reviewing four project proposals and the comments 
received.
    This summary of FTA activities cannot adequately convey our 
aggressive implementation of SAFETEA-LU and our broad-based 
outreach efforts. Nevertheless, it is my hope that you agree 
that FTA has made progress in our implementation of SAFETEA-LU.
    I would be happy to answer questions later.
    Thank you.
    Senator Allard. Ms. Siggerud from the Government 
Accountability Office.

       STATEMENT OF KATE SIGGERUD, DIRECTOR OF PHYSICAL 
        INFRASTRUCTURE, GOVERNMENT ACCOUNTABILITY OFFICE

    Ms. Siggerud. Thank you, Chairman Allard and Ranking Member 
Reed. I appreciate the invitation to participate in this 
hearing today on FTA's implementation of SAFETEA-LU.
    My statement will cover three issues: SAFETEA-LU's changes 
to first, the New Starts program and second, the Job Access and 
Reverse Commute program, also known as JARC, and FTA's efforts 
to implement these changes. Also, I will cover issues that may 
be important as FTA moves forward with these programs.
    My statement draws on both past reports that GAO has issued 
on New Starts and JARC, and on the preliminary results of our 
ongoing work for this Committee, as required in SAFETEA-LU.
    Turning now to the changes made to New Starts, these 
include requiring FTA to issue policy guidance, establishing 
the Small Starts program, adding economic development to the 
list of evaluation criteria for proposed projects and building 
in accountability for measuring project outcomes.
    FTA has taken steps to implement these changes, including 
policy guidance for New Starts this past January. I wanted to 
say a few words about the Small Starts program, which is one of 
SAFETEA-LU's key changes. Small Starts is intended to 
streamline the application and review process for small transit 
projects. To be eligible for Small Starts, projects must run 
along a dedicated corridor, cost less than $250 million, and 
request less than $75 million in Federal Small Starts funding.
    Earlier this year, FTA solicited public comments on its 
initial ideas for Small Starts. Members of the transit 
community did express some concern about whether the ideas 
would actually streamline the process. FTA issued interim 
guidance, as was mentioned earlier, on the Small Starts program 
just a few weeks ago, and solicited comments on this proposed 
approach.
    Under the interim guidance, Small Starts projects will be 
evaluated and rated using a slightly simplified version of the 
framework used for traditional Small Starts projects.
    In this guidance, FTA discussed a separate eligibility 
category not included in SAFETEA-LU for Very Small Starts 
projects. These would be projects that cost less than $50 
million and do not involve the construction of a fixed 
guideway. FTA is currently seeking public input on both 
programs and plans to issue its final interim guidance in 
August.
    The second issue I would like to discuss today is SAFETEA-
LU's changes to the JARC program. These include allowing 
recipients to use funds for planning activities and adding 
planning requirements. Most significantly, SAFETEA-LU made JARC 
a formula-based program rather than a discretionary program. In 
recent years most JARC funds were congressionally designated to 
specific projects. Under SAFETEA-LU, FTA will use a formula to 
distribute funds to States and urbanized areas, who will in 
turn award funds to proposed projects on a competitive basis.
    As a result, some areas will receive substantially more 
funds than under the discretionary program, while others will 
receive substantially less. It will also bring new players to 
the table as agencies that have never received JARC funds 
before will now receive grants.
    The third topic I would like to address is the issues that 
may be important as FTA moves forward with the implementation 
of SAFETEA-LU. The law itself responds to concerns we raised in 
our earlier work about transparency, communication, and 
accountability of these programs. Since 1998, we have made a 
number of recommendations in these areas.
    For example, we reported that the transparency of the New 
Starts program could be increased by obtaining public input on 
proposed policy changes before they are implemented. We have 
also reported that FTA could better measure the outcomes of the 
JARC program, an important step in holding the program 
accountable for results. For example, SAFETEA-LU requires FTA 
to publish for notice and comment any proposals that make 
significant changes to the New Starts program, which FTA did in 
January. Members of the transit community and FTA officials 
have stated that they are pleased with the review and comment 
process. FTA has also held a number of outreach sessions and 
solicited public comments to inform its development of JARC 
guidance.
    SAFETEA-LU also includes several provisions that emphasize 
the accuracy and consistency of project costs and ridership 
estimates in the New Starts process. For example, SAFETEA-LU 
requires FTA to consider the reliability of forecasting methods 
used by New Starts project sponsors and their contractors in 
estimating costs and ridership.
    With regard to JARC, SAFETEA-LU requires FTA to evaluate 
the program's effectiveness. FTA has already begun to take some 
steps to meet this evaluation requirement.
    We expect that several SAFETEA-LU provisions for New Starts 
and JARC will be a challenge for FTA to implement. The 
requirement to use the New Starts project's potential to 
stimulate economic development in evaluating it will be 
difficult because benefits from economic development have 
significant overlap with benefits from improved mobility and 
improved land use. FTA is also required to use those two 
measures as evaluation criteria.
    FTA is also studying how to implement measures of accuracy 
in forecasting ridership and costs, an issue of particular 
importance for this Committee.
    With regard to JARC, FTA will have to integrate new grant 
recipients into its established oversight process.
    In conclusion, Mr. Chairman, FTA has made progress in 
implementing SAFETEA-LU's changes to the New Starts and JARC 
programs. Both are in a state of transition as FTA works to 
implement a number of significant changes which makes it even 
more important that FTA continue its efforts with regard to 
transparency, communication, and accountability of the 
programs.
    This concludes my statement. I am happy to take questions 
when you are ready.
    Senator Allard. Thank you.
    Mr. Millar of the American Public Transportation 
Association. Thanks for being here.

            STATEMENT OF WILLIAM MILLAR, PRESIDENT,
           AMERICAN PUBLIC TRANSPORTATION ASSOCIATION

    Mr. Millar. Thank you, Mr. Chairman. It is a pleasure to be 
back in front of this Subcommittee and with you and Senator 
Reed. We appreciate the many times that you have called upon us 
and we hope that we have been of good assistance to the 
Subcommittee and its work.
    We are really pleased to be here talking about the 
implementation of SAFETEA-LU. Frankly, it is going very well 
and we are off to a very good start. As you indicated in your 
opening statement, record levels of funding for investment in 
public transit should result from SAFETEA-LU, and we are very 
pleased that we seem to be tracking the direction that this 
Subcommittee and the entire Banking Committee gave in that 
regard.
    I am also pleased to commend our friends at the Federal 
Transit Administration. As Ms. Bushue has just outlined for 
you, they were given a Herculean task of revising many 
regulations, of updating many programs, at the same time 
introducing new programs. And we believe that they are making 
very good progress on those activities.
    We are especially pleased that they have taken full 
advantage of the opportunity to contact those of us in the 
transit industry and get our input and our ideas, and I believe 
in my testimony I provided several examples where we have 
already seen that they have taken some preliminary ideas that 
they had, put them out for comment. We, in turn, have made 
suggestions and they have done their best to respond positively 
and incorporate suggestions where appropriate.
    So I think we are off, in the quick summary at the 
beginning here, we are off to a very good start and we 
appreciate the spirit with which FTA is moving on this.
    And it is a good time for that, because public transit is 
receiving attention like never before. Last year over 9.7 
billion times Americans used public transit. Transit use has 
grown by over 25 percent in the last 10 years. These are 
certainly numbers I have presented to the Committee before, but 
I think it reminds us that what this all is all about 
ultimately is serving people. And when people use something 
more, it is obvious that they are benefiting from the 
investments.
    Of course, recently, with the high gas prices that all of 
us are facing when we go to the pump, that has cost, in many 
communities, the ridership to grow even faster. One of the 
points we are trying to help the American public understand is 
they do have an alternative to high gas prices. The quickest 
thing they can do, if it is available to them, is to take 
public transit.
    So all in all, I think we are off to a good start.
    With regard to funding levels, the new programs that have 
been described, the expansion of the Rural Transit program, 
Transit in the Parks, New Freedom, the changes in JARC, seem to 
us to be going off to a good start. Some of our members have 
been concerned that because of the need to introduce new 
programs, they have not seen quite the increases in funding 
they had first thought. But we assure them that once those 
programs are in and the formulas grow in subsequent years that 
should take care of itself.
    However, we do have worries and Mr. Reed, in his opening 
statement, made an indication to this effect, that the 
Administration, in its budget proposal, did propose cutting the 
Small Starts program. We oppose that cut. We believe this 
Committee documented many times over. The need is there to 
justify it. And we are pleased that the House Appropriations 
Committee has restored the proposed cut.
    Unfortunately, they did not restore it to the Small Starts 
program. And so while the overall funding level coming out of 
the House looks consistent with what this Committee authorized, 
we would hope that the Senate Appropriations Committee would 
work to bring it in line programmatically with what this 
Committee authorized.
    Simply said, that would make sure that Small Starts gets 
the money that this Committee intended for it.
    With regard to New Starts, we particularly want to applaud 
Ms. Bushue's proposal to bring in a pair of fresh eyes to look 
at the New Starts program. This program is now more than 20 
years old. It has gone through many, many changes over the 
years. And we do think it is time to have an evaluation of the 
way the program is managed, see where there might be 
opportunities for improving the program and other things that 
may come from such an independent review.
    And we have told her that we will be very, very happy to 
cooperate with FTA and with its consultant in at review. We 
think there are many improvements that can be made. We think 
that is a perfect opportunity for that to be made.
    With regard to Small Starts, I have already described our 
disappointment at the funding levels, but hopefully Congress 
will correct that.
    We have suggested, in response to their interim guidance, 
there may be some ideas for simplifying. We want to be careful 
there is no modal bias in the regulations as they come out. And 
a long-standing policy of ours is concerned about the way land 
use and economic development get treated.
    We did our own quick survey this spring and found there 
were over 50 projects across the country that were ready to go 
that could meet Small Starts criteria. The aggregate value of 
the--the Federal share aggregate value of those projects was 
$2.3 billion. So we think this says that your Committee was 
correct in its judgment that there was a need for this type of 
program, and we are encouraging FTA to move as quickly as they 
can to implement that program provided the appropriation is 
there when we get through this cycle.
    So in summary, we are out of the gate in good form. We are 
reaching that first turn and we will see how it goes from here 
on around the track.
    I appreciate very much the opportunity to be with you. 
Thank you for your leadership and I will be happy to try to 
answer any questions that you might have.
    Senator Allard. I want to thank all of you for your 
testimony. I thought it was appropriate to have a careful 
review of the bill after it has been about 18 months, I 
believe, since we passed it just to see how it is working.
    I am curious about the Very Small Starts project. These are 
projects that have no fixed guideway and that they cost less 
than $50 million.
    I would like to know FTA's rationale for the Very Small 
Starts eligibility category within Small Starts.
    Ms. Bushue. Certainly, Mr. Chairman.
    Interestingly enough we found that, in our listening 
sessions, that this is what the industry wanted. There was a 
desire to have a Very Small Start component to allow some bus 
systems to participate in the program.
    But you are right, and again I would just like to state the 
June 9 document is draft guidance and nothing is yet etched in 
stone. This is still an evolving program. We have certainly 
received a lot of feedback from this draft guidance, much as 
Senator Reed has said. So we are definitely going back and 
taking a look at it. But that is where the Very Small Starts 
idea did originate.
    Senator Allard. If I remember during our conference 
committee, we had I think a lot of membership, Mr. Millar on 
the public transportation wanted something to reduce the rules 
and regulations. It sounds to me like this was an effort for 
you to try and address that concern.
    The question that comes up is whether you feel like you 
have the authority. You have the authority for Small Starts but 
when we are talking about the Very Small Starts program, do you 
need to have additional authority from Congress, do you 
believe, on that?
    Ms. Bushue. No, we do not believe that we need to have 
additional authority from Congress to activate the Small Starts 
program.
    Senator Allard. This is the Very Small Starts.
    Ms. Bushue. Yes, the Very Small Starts, excuse me, the Very 
Small Starts.
    However, to that point, I think what Senator Reed said was 
absolutely right. We do need to ensure that we are mode 
neutral. I do think with the Very Small Starts program, it does 
not appear that we are. I think that is a very constructive 
criticism.
    Again, these are just draft guidelines. We are going to go 
back and take another look at them. We were anxious to get it 
right at the FTA, and it seems like we got the New Starts 
guidelines right. The industry seems to be pretty happy with 
those guidelines that were put out on May 22.
    It seems like we missed the ball a bit with Small Starts. 
We are going to go back and take another look.
    Senator Allard. What type of projects did you envision in 
the Very Small Starts program?
    Ms. Bushue. For Very Small Starts, we were envisioning 
projects that would not be on a fixed guideway, probably bus 
projects, with, however, substantial investments which would 
mean they would have to show some kind of substantial 
improvement; i.e., integrating technology in some way, such as 
GPS systems. We were looking for that substantial upgrade.
    But I am not sure if we got there with the guidelines we 
put out on June 9.
    Senator Allard. I am trying to think, Very Small Starts, 
$50 million. That is not a very high figure if you are looking 
at a fixed guideway.
    Ms. Bushue. Yes, a nonfixed guideway would be for Very 
Small Starts.
    Senator Allard. But I am saying that if you have a fixed 
guideway, $50 million can be spent really quickly. These are 
nonfixed guideway projects that you have. And by necessity, I 
guess we have already--you tend to almost focus on one mode, 
and that is the busing; right?
    Ms. Bushue. Yes, and that is why I think that is where the 
Small Starts criticism is coming from, that it is not mode 
neutral. Because I think the Very Small Starts concept probably 
does show a bias for more of some kind of an intelligent bus 
system, such as BRT.
    So we are going to go back and definitely take a look and 
see how we can fix this.
    Senator Allard. Also, thinking back, I think there was a 
strong feeling within Members of Congress that they wanted to 
have more projects for buses. I think they felt like buses had 
been shortchanged in the past and felt like buses were a 
relatively inexpensive alternative to look at.
    And so I am glad that you have looked at the Very Small 
Starts program. And if we need to have new authorization 
language or something like that, we would be glad to work with 
you on that.
    What about resources in terms of people? Do you have enough 
people and everything? I would kind of open it. Your answer is 
we never have enough, I suppose.
    But do you have a reasonable number where you think you can 
do a reasonably good job with New Starts, Small Starts, and 
Very Small Starts programs?
    Ms. Bushue. Thank you, Mr. Chairman. I appreciate that 
question.
    In the President's fiscal year----
    Senator Allard. It is a softball I am going to throw you. 
Wait until my next question.
    Ms. Bushue. Payback is hard.
    In the President's fiscal year 2007 budget we did request 
14 additional FTEs and we need them.
    FTA, over the years, has had an increase in funding, an 
increase in programs, and an increase in responsibilities. And 
so this is very important--with not an increase in staff.
    So we did request 14 full-time equivalent employees. And I 
understand in the House Appropriations markup that these 
employees were included, and it is my hope that the Senate will 
include them as well. And I think with those 14 additional 
FTEs, it will be a big help in supporting the activities 
required by SAFETEA-LU.
    Senator Allard. Mr. Millar, what is your view about the 
public comments and feedback situation on the different New 
Starts and Small Starts proposals?
    I would also like to have you comment a little bit on the 
Very Small Starts concept.
    Mr. Millar. As I indicated in my testimony, overall we are 
very pleased with the way the FTA has been prompt in getting 
proposals out to the industry. They have participated in a wide 
variety of ways of distributing that, not just publishing it or 
putting on the Web site, but appearing in webinars, coming to 
our conferences, meeting with people face on face, holding 
their own listening sessions.
    So we believe they have done a very good job in the 
outreach.
    As I indicated so far, to the degree that there have been 
opportunities for them to then close off something and formally 
respond to it, generally we believe we were listened to even if 
we did not get necessarily everything we got.
    With regard to issues, if you do not mind me commenting on 
two issues that you just discussed with Ms. Bushue, I would 
like to mention both.
    One on the Very Small Starts, and not to bore the Committee 
or to get my own reading of history wrong, but prior to 
SAFETEA-LU there was below $25 million was not subject to New 
Starts regulation to the same degree.
    We always felt that was an authority that was never used as 
much as it could have been or should have been. I think we 
argued for a $50 million program, is what I believe he argued 
for at the time. We were well satisfied with the Committee's 
decision to make it $75 million.
    But we believe not only are there very small bus projects 
that could be done, certainly for less than $50 million, way 
less than $50 million, but our experience is that some of the 
New Start commuter rail projects, if they have track that is in 
good shape, and if they have the willingness of the private 
railroad to work with them, it is another example where it 
easily could come in at less than $50 million.
    Also, some of the streetcar projects, the initial links 
there we believe. So we think that the notion of having a 
simplified Very Small Starts is fine.
    But I think I would go back to what we argued before the 
Subcommittee before SAFETEA-LU, and that is that if it is $75 
million or $50 million or whatever the number is, keep the 
whole thing as simple as possible. Put your focus and emphasis 
where the big Federal dollars are. Do not worry quite as much, 
you do not want to waste a single dollar, but do not worry 
quite as much about the smaller projects. That is the place to 
experiment.
    So we would hope that the final rules, if they decide to 
include a Very Small Starts, that could be fine with us. But if 
they decide not to, we would hope that the whole $75 million 
and below really keeps with the spirit of the Committee.
    The other issue, on the size of the FTA staff, this may be 
an odd thing for an organization like mine to testify to but I 
have testified before this Committee before and we have not 
changed our minds. FTA is understaffed. So we would agree that 
additional staffing is necessary. But we obviously want that 
staff to be devoted to getting the project process moving.
    We will be sharing with this Committee and FTA and others 
the results of a study that we commissioned this year that just 
shows how long it is taking New Start projects to move from 
conception to implementation. We are not ready to share that 
information yet, but when we are I think it will be an eye 
opener.
    Senator Allard. I want to cut you short here because I want 
GAO to have a response. You did a good job in responding.
    I would like to have GAO's response, Ms. Siggerud. And give 
how you think that the Small Starts program is coming and any 
comments that you may have about that.
    And then when you were listening, talking to the various 
participants, what were some common concerns on the public 
comment that you were hearing from the various people who are 
being provided by this program?
    Ms. Siggerud. We have looked at the guidance and the 
proposed rulemaking, talked with FTA staff and with project 
sponsors about Small Starts and the Very Small Starts proposal 
that is out there.
    Some of the comments that we have heard is that the 
proposal for the Small Starts aspect in the interim guidance 
may still be perhaps not quite as streamlined as they would 
like to see. It looks rather similar to the full New Starts 
rating process. A number of the sponsors told us they would 
still like to see some progress made there.
    They view the proposal for Very Small Starts, the type of 
documentation, the type of analysis that will be required to 
apply for those projects to be appropriate and to be responsive 
to their concerns.
    With regard to the authority to develop the Very Small 
Starts concepts, in our view it is there in the legislation. We 
do have a few concerns, again on the mode neutrality and sort 
of separating it out from the other capital grant programs that 
already exist for transit.
    With regard to the issue you raised about resources, I have 
not looked specifically at whether 14 is the right number. I 
would note that the New Starts process, over time, has become 
more labor-intensive, in terms of the types of analysis that it 
asks sponsors to do. There are more demands on the New Starts 
program, especially with the creation of these two new aspects 
of it. I think looking at the people resource issue is an 
important one.
    Senator Allard. My time has expired.
    Mr. Reed.
    Senator Reed. Thank you very much, Mr. Chairman, and thank 
you all for your testimony. Ms. Bushue, thank you for 
recognizing the mode neutrality issue.
    With respect to Very Small Starts Program, is there some 
notion of how much money you are going to devote to it? Is 
there going to be a cap on this program? Or are you going to 
try to fund every project?
    Ms. Bushue. No, we are not going to try to fund every 
project. I think we would be inundated with Mr. Millar's 50 in 
the pipeline just at the front end.
    Our recommendations will be based on the project's 
credibility and how it passes our tests. They will certainly be 
evaluated and we will give them the review against the draft 
guidelines that we have already outlined.
    Senator Reed. But your allocations, and I am simplifying 
this, comes through the Small Starts or the New Starts 
allocation?
    Ms. Bushue. Small Starts has its own allocation.
    Senator Reed. And you are drawing the Very Small Starts 
from the Small Starts?
    Ms. Bushue. That is correct, sir.
    Senator Reed. Is there any breakdown, in your mind, between 
how much you will devote to Very Small Starts versus the Small 
Starts?
    Ms. Bushue. Not at this point. I know there are about 50 to 
80 projects, but I do not know the characteristics of those 
projects.
    Senator Reed. One of the concerns that GAO raised was your 
ability to review these issues based on cost effectiveness, 
support of land use and effect on local economic development. 
Do you think that is a fair point to be made?
    Ms. Bushue. Yes, I do, actually. I think another criticism, 
if I may give it, of our Small Starts guidance is that one of 
the premises of the Small Starts Program is not only to keep 
the projects small but keep the process simple. I think that is 
something we do need to go back and take a look at to make sure 
that we are properly evaluating these projects, but that we are 
also not creating something like the New Starts process that 
has become very laborious and very, very difficult for our 
grantees.
    Again, I think we need to look back and make sure that we 
simplify the best that we can.
    Senator Reed. Getting back again to the Very Small Starts 
program, effectively you have determined these are cost 
effective. I do not think you are doing a cost-effectiveness 
analysis, are you?
    Ms. Bushue. We are doing a small one. We are also trying to 
identify the project characteristics that will produce enough 
benefits by the nature of the project. We talk about benefits, 
especially ridership benefits.
    I think we will probably be looking also at the economic 
development and the land use benefits. But it is that user 
benefits that we will be emphasizing most.
    Senator Reed. Ms. Siggerud, in terms of the statutory 
authority, you claim that they have adequate statutory 
authority for the Very Small Starts program. Does that imply 
that they would have to use all of the same criteria that would 
be used for Small Starts?
    Ms. Siggerud. That is not my interpretation. I think that 
there could be sort of a variety, in terms of the size of the 
project, in terms of the types of documentation and analysis 
that would be necessary in order for FTA to review and approve 
the proposals.
    So what we see now in the interim guidance is a Small 
Starts approach that is fairly similar to the New Starts, and 
the Very Small Starts, which is actually quite different.
    But what I think I hear Deputy Administrator Bushue saying 
is they would like to get to a Small Starts proposal that is 
perhaps slightly more streamlined than is out there in the 
interim guidance. But definitely there is, in our view, the 
ability to have different proposal requirements based on the 
size of the project.
    Senator Reed. You expressed, as I suggested to the Deputy 
Administrator, concerns about their ability to do some of these 
evaluations of land use and economic impact. Can you elaborate 
on that?
    Ms. Siggerud. Yes and that does not apply only to the Small 
Starts case. This applies in general. As you know, SAFETEA-LU 
required future economic development potential to be included 
explicitly as a criterion in evaluating the project 
justification for these projects.
    Economic development and land use are very closely linked 
concepts. And all of them are what we would call in cost-
benefit language indirect benefits that flow from the 
improvement to the transportation itself, the amount of savings 
and the convenience that comes from building the project.
    In calculating the overall benefit of the project, it is 
difficult to separate these direct benefits from the 
transportation improvement from the economic development and 
land use improvements that are likely to flow from it.
    That is a difficult technical approach. There are a variety 
of different ways that FTA could go, in terms of taking a 
quantitative or a qualitative approach to that. There are also 
some thoughts they had about building in uncertainty.
    We did some work a few years ago looking at this concept of 
benefits that flow from transit projects. We think there are 
some approaches that could be used on the qualitative side, 
looking at economic development and land use, and use of 
uncertainty as well.
    So that we have a sense, when we are looking at these 
projects where the benefits look similar, that some of these 
projects are actually riskier than others in terms of the 
ability to deliver the type of economic potential that the 
project sponsors would like to see.
    Senator Reed. Ms. Bushue, you are in a similar mind, with 
respect to GAO's suggestions on the methodology and some of 
their ideas? You are prepared to accept those?
    Ms. Bushue. Yes. One of the things that it is very 
difficult to measure is the ride not taken, because of economic 
development. It is very complex and perplexing, if I may say.
    One of the things that we are thinking about doing at the 
FTA is working with Mr. Millar and his organization and 
bringing in some of their members and maybe spending half a day 
talking about that very subject and what is the best, fair, and 
consistent way to measure that component.
    Because it is very difficult and complex. And I think not 
only the FTA, but I think industry as a whole, is uncertain 
really about the best measurement method.
    Senator Reed. Mr. Millar, you have said that your members 
are very pleased with not only the legislation but the 
implementation. Are there any concerns, though, that you would 
like to express, other than the underfunding?
    Mr. Millar. Underfunding is a perennial issue, is it not?
    We are concerned that some of the very hardest rules 
understandably are going to take a while. Right now we are 
doing fine. We feel we are being listened to. We feel they are 
making sensible choices, those kind of things.
    When you get done on some of the tougher rules, to really 
figure them out, it will be interesting to see where the 
Department finally comes out.
    Senator Reed. Can you give us a quick two or three tough 
rules?
    Mr. Millar. Buy America is always a difficult issue. There 
is a negotiated rulemaking on Charter Bus that is a relatively 
new activity for FTA, I believe, and for us to participate in. 
I think we are off to a good start on that, but it is a very 
controversial area.
    The whole area of New Starts, the Small Starts and Very 
Small Starts. When we start taking a $75 million limit and 
splitting it into two, and we only have a $25 million 
difference--that is way more money than I will ever see in my 
life. But still, relative to the size of the whole program, 
there is not a lot of difference there.
    So if we have one set of rules for plus-75, another set of 
rules for 50 to 75, and another set of rules for below 50, we 
scratch our head and begin to wonder can you really make that 
fine a point?
    As Ms. Bushue has indicated, some of our members are 
concerned about some of the issues there.
    So those are examples of things that while they are going 
fine now, we may have to come back to the Committee at a later 
date and report something different. But right now we are fine.
    Senator Reed. Thank you very much.
    Thank you, Mr. Chairman.
    Senator Allard. The other two concepts--oh, I am sorry. 
Senator Menendez, I did not realize you had walked in the room.
    You are next. Go ahead.

                 STATEMENT OF SENATOR MENENDEZ

    Senator Menendez. Thank you, Mr. Chairman.
    I just have a more limited line of questioning. And I thank 
all of the panelists and I have been reviewing the testimony 
submitted to the Committee and a lot of my questions have been 
answered.
    But Ms. Bushue, back in February you were before the 
Committee, the full Committee, and I asked you a line of 
questions about the Trans-Hudson Midtown Corridor Project. I 
would like to revisit that.
    This is an incredibly important project for New York and 
New Jersey and the entire region. It is also strongly supported 
in a bipartisan way. Governor Pataki, Mayor Bloomberg, my 
colleagues in the Senate from New York, as well as Senator 
Lautenberg and I, all are working together to achieve this 
reality.
    We are reaching capacity on the current tunnel underneath 
the Hudson River. And if we do not build another one, we are 
going to be choking off the opportunity, the ability of people 
to get to where the jobs are on both sides of the river.
    It also has a very significant matter of national security 
because if something happens in the tunnel, it closes the 
entire Northeast corridor.
    I think Congress recognized that in SAFETEA-LU when it 
required the FTA to advance it to preliminary engineering 
within 90 days.
    Now it has been over 320 days since the bill was signed. 
Can you tell me where we are with this?
    Ms. Bushue. Yes, Senator Menendez. That is a worthy 
project. As you know, it is a pretty big project and very 
complex.
    SAFETEA-LU did request that FTA have it in preliminary 
engineering within 90 days, but the statutory requirements that 
FTA has to follow are still in place.
    Having said that though, FTA has worked very closely on 
Access to Regions Core (ARC) with the staff of New Jersey 
Transit (NJT).
    I believe in the middle of June we just got the last piece 
of paperwork from NJT as it relates to their financial plan. 
That is being reviewed by PMO, one of our consultants. We 
should have a report from the consultant shortly. It is my hope 
that we will be moving this project into preliminary 
engineering soon.
    Senator Menendez. Well, my understanding is that you had 
all of this already. So I will be happy to review with the 
agency that is supposed to submit that to you.
    But when you say the financial plan, is that the last step? 
Once your consultant reports to you, is that the final thing? 
Or are there more things to be done?
    Ms. Bushue. I think that will be the final thing to get 
them into preliminary engineering. And then once they get into 
that phase, there is additional work, of course, that will need 
to be done.
    Senator Menendez. Because I have been told it cleared your 
regional office. Where is your financial planning review done? 
Is it done at the regional level? Or is it done at your level?
    Ms. Bushue. It comes through the regional office and then 
they consult with the headquarters.
    Senator Menendez. So if it cleared the regional office, 
that means that it should have been done already; is that not 
correct?
    Ms. Bushue. It comes into the regional office, and again we 
send it out to our financial consultants, who review it. They 
work closely with headquarters, as well. And then a reply comes 
back, which the regional office and the headquarters review.
    Senator Menendez. How long? Do you have a sense of how long 
this is going to take?
    Ms. Bushue. I think I can say probably within 2 and 3 weeks 
we should have an answer. I am pretty confident we will be able 
to move this project into PE. The staff there at the NJT has 
been very responsive and I understand that they are very, very 
good.
    Senator Menendez. I appreciate that.
    I am concerned that if we do not do it in that timeframe 
then we will miss a window as it relates to the appropriation 
process and going through it, which means we will have obviated 
for a full year the opportunity to move it forward, which is 
certainly not the intention of the Congress. Notwithstanding 
all the other statutory authorities, Congress made it very 
clear here that it wanted to move this forward, at least for 
preliminary purposes.
    So I would really--you know, I know we are going to have 
the Administrator up for a nomination. This is incredibly 
important. And I would like to get something defined from you 
to our office with a degree of exactitude, when are we going to 
achieve this?
    Ms. Bushue. And I believe that we can pull that together 
for you, sir.
    Senator Menendez. Thank you, Mr. Chairman.
    Senator Allard. I had a couple of concepts in the SAFETEA 
legislation that passed. One is contractor performance, and the 
other one was implementing some incentives in some of the 
programs.
    On contractor performance, that was an analysis between 
cost and ridership. What steps has FTA taken to implement the 
contractor performance assessment report requirements? I notice 
you made some comments in your opening statement on that. I 
wonder if you could more fully inform us on how that is moving?
    Ms. Bushue. Certainly. Actually, in the original guidelines 
that we put out in January, we did propose that consultants who 
did the modeling of ridership have to sign a certification.
    Needless to say, that did not go over well in the industry. 
As a matter of fact, we got lots of push back only because 
these are private entities that would be certifying something 
that is relatively risky and that the assumptions that they use 
as variables are just that, assumptions.
    I think the consultants work very, very, very hard to do 
their best in determining what the ridership would be. But 
again, it is very difficult because you are making assumptions 
and dealing with the unknown. So it is very, very hard to be 
held accountable.
    Senator Allard. Is it not interesting that when they are 
making their recommendations or what not, they do not hesitate 
to make those recommendations on ridership and what not? But 
yet when you ask them to be somewhat accountable, they complain 
about it.
    Ms. Bushue. Again, they are making projections. They are 
looking into the future. It is difficult.
    But having said that, as you can understand, this is the 
private sector, and in this era that we live in of liability 
and so forth, it is something that they felt very, very 
strongly about.
    And Mr. Chairman, we heard from the industry loudly about 
that issue.
    What we have done, though, is to require the general 
manager, who is responsible for the management of the 
contracts, to certify to additional language that they believe 
that the numbers that they are providing are correct.
    And so that is how we used the language of SAFETEA-LU to 
address this issue.
    Senator Allard. So have you fully implemented this 
requirement?
    Ms. Bushue. Again, we put that in the May 22 guidelines for 
the New Starts Program. But again, the New Starts guidelines 
and the Small Starts guidelines are not yet etched in stone. We 
are still open for comments.
    Senator Allard. Do you think this is going to help projects 
to remain on time and on budget?
    Ms. Bushue. As in the New Starts guidelines that we put 
out?
    Senator Allard. Yes.
    Ms. Bushue. I hope so. Actually, at FTA we have a 
relatively good track record regarding our full-funding grant 
agreement pipeline and our projects being on time and on 
budget. I am very pleased to report before the Committee some 
empirical data that I would, if you do not mind, like to share 
with you.
    We have 24 full-funding grant agreements. Of those, only 
one of them is over budget, 21 of them are definitely on 
schedule, and only two of them are behind schedule.
    So I think the FTA has a really good track record with our 
full-funding grant agreements and construction agreements, in 
getting the projects done on time and on budget.
    However, having said that, I am also very, very sensitive 
to what is going on in the construction industry today, with 
steel prices, concrete prices, copper prices, and often 
commodity prices is what I like to call them, are certainly 
increasing. And it is something that I am very, very sensitive 
to.
    That is why I think it is very important that the FTA works 
very hard with the New Starts Program in trying to, instead of 
taking 5 to 7 years to get a full-funding grant agreement, 
compress the time to 3 to 4 years? I do not know.
    That is one of the reasons why I thought it was prudent to 
bring in a business consultant to review the New Starts process 
to see how we can be more efficient, and also even more 
effective in bringing excellent projects to our cities.
    Senator Allard. Ms. Siggerud, would you describe FTA's 
efforts to implement SAFETEA-LU's changes to the New Starts and 
JARC programs?
    Ms. Siggerud. In general, we believe that FTA has made good 
progress with regard to both of those programs. They have, for 
the most part, been on track in terms of the timing of the 
various guidance policy documents and proposed rules that they 
have put out.
    But what I think we are most pleased to see is the outreach 
to the transit community that has taken place and we believe at 
a greater level than in the TEA-21 era.
    Both the FTA staff we have spoken with who are responsible 
for the implementation and the project sponsors have told us 
that the notice and comment process has been helpful to them, 
and that FTA has, for the most part, been responsive to the 
concerns and ideas raised by the transit community.
    Senator Allard. As FTA moves ahead on their New Starts and 
also their JARC program, what kind of challenges do you see 
them facing in the future?
    Ms. Siggerud. There are a couple I would like to highlight. 
One I already talked about, and that is figuring out a way to 
be responsive to the SAFETEA-LU direction to measure and 
evaluate economic development and land use. I have already 
talked with you about what I see as the concerns and the 
challenges there.
    I do think this contractor performance issue is also a 
concern. FTA is required to report, I believe in August, for 
the first time on contractor performance. My understanding is 
that this first will largely focus on its plans for monitoring 
and how it will gather that information.
    The other is the incentive concept. As you know, SAFETEA-LU 
allowed for up to a 10 percent award essentially for those 
projects that kept costs and ridership close in line with their 
earlier estimates. FTA faces a number of challenges there, 
about when to start and stop that clock and how to handle the 
awards of those funds.
    In its solicitation and its policy guidance earlier this 
year, there were actually not a lot of comments from the 
transit community in that area.
    With regard to JARC, there will be a lot of new people at 
the table here, including a number of recipients of JARC funds 
that have never been an FTA grant recipient in the past. FTA 
has a fairly robust oversight process, but it will now need to 
bring in a number of new recipients and monitor their 
performance and their execution of this program.
    So that is a challenge that we see for JARC.
    Senator Allard. Now, I would like to go to the incentive 
part of it. When I talk about the incentives in the grants, you 
understand what I am talking about? That if they stay within 
certain parameters, then they can adjust their figures?
    Ms. Bushue. Yes.
    Senator Allard. You can make those adjustments working with 
them.
    How do you plan on using--first of all let me ask, do you 
plan on using that program?
    And, number two, if you do, what steps have you taken to 
implement that incentive program?
    Ms. Bushue. Actually, that is an excellent program and I 
certainly believe in incentives for our grantees. But we have 
not got that far, if I may say, Mr. Chairman. That is something 
that we will have to look at, and that is one thing that we 
have not really focused on as yet. But I do understand its 
importance.
    Senator Allard. Have you taken any steps at all to 
implement it or thought about it in any way?
    Ms. Bushue. No, not at all, not at this time, no sir.
    Senator Allard. I would certainly encourage you to do it 
because I think contractor incentives help them. I have had 
good results emphasizing contractor incentives on major 
projects in Colorado. I know you have been involved in some of 
those, some of them have been cleanup projects that have been 
in other agencies.
    But I think they do work and I would encourage you to look 
at them.
    Ms. Bushue. I totally agree with you. I think it is a great 
idea and I will certainly get on top of that.
    Senator Allard. The Senator from Rhode Island.
    Senator Reed. Thank you, Mr. Chairman.
    With respect to the JARC program, we are moving to a 
formula grant program this year. I know you released 
preliminary guidance in March of this year with respect to 
JARC.
    Do you anticipate difficulties as you move from a 
discretionary program to a formula program? And in particular, 
will there be some winners and losers? And what do you propose 
to do with those areas that might have received more funding in 
the other program and now receive less?
    Ms. Bushue. Yes, Senator Reed, that is a very good point. 
It is not going to be difficult for the FTA to move from what 
we call a discretionary program to a formula program. But we 
are working very, very closely with our former grantees 
because, in a sense, it is like if you put icing on the cake--
if I might use this analogy. With the discretionary program, it 
was as if you just plop the icing on the cake and people get 
the money for their program. But when you go to a formula 
approach, you are spreading that icing over the cake. So some 
programs probably will get less money.
    However, we have been working very, very closely with the 
grantee and we have a very good relationship with them. And 
because some of the programs or some of the services are of 
such high value to the community that they are already 
realizing that they are probably not going to get the funding 
that they are used to getting, they are finding funding from 
other sources. And I applaud their efforts and their 
entrepreneurship, if you will.
    But that is a concern and again, we have been working very 
closely with the grantees on that issue.
    At the same time though, there will be some winners.
    As you know, it is not only a formula program but also it 
is a competitive program because sponsors have to compete for 
funds. So those programs that probably did not get the funding 
that they had hoped for and are worthy programs, now can 
compete for, and will get the funding.
    But I do agree with you, sir, I think that is a correct 
assessment, there may be some winners and losers.
    Senator Reed. Thank you.
    Mr. Millar, SAFETEA-LU requires areas to develop 
coordinated plans for JARC, New Freedom, Section 5310 projects, 
et cetera. That raises obviously the capacity issue and how 
effective the plans will be for communities. What is your 
impression? Then I will ask Ms. Bushue.
    Mr. Millar. We certainly support the development of 
coordinated plans. We think that is very important indeed. So 
we believe that that is a good thing.
    We are concerned that in many areas it will be a new 
activity. And so of course there are undoubtedly going to be 
some startup difficulties.
    We also wonder about the willingness of parties who are not 
the recipients of funds under SAFETEA-LU to come in to that 
process. And yet, I think all of us know, in efforts to 
coordinate social service transportation, you have got to have 
a wide variety of folks willing to participate.
    We know the Committee did its best to make it a strong 
provision, and we support that provision. But those are the 
kinds of worries that we have.
    I think all of us are going to have to be patient in the 
first couple of years. I think all of us are going to be 
looking around for best practices that then we can help others 
come along in the process.
    Senator Reed. Ms. Siggerud, do you have a perspective from 
GAO, with respect to this coordination problem?
    Ms. Siggerud. Yes, we do. We actually did a fairly 
comprehensive review a few years ago, on the concept of 
coordinated transportation. We looked at the Federal level, at 
all the Federal programs that provide some sort of social 
service transportation. Then we looked at State and local 
levels as well, at the kind of coordination that was happening 
there.
    We found that when coordination happens that significant 
efficiency and improved and increased service can result.
    So we are supportive of this coordination concept and plan. 
I think that we feel that there will be good projects emerging 
from it.
    I would echo that getting the other partners, besides the 
transportation folks, to the table is important. In the 
previous iteration of JARC, for example, we found that 
coordination with the HHS and Labor programs that were serving 
some of these same constituents significantly improved the 
success of the projects.
    Senator Reed. Will you maintain an advisory or analytical 
role with respect to this coordination issue?
    Ms. Siggerud. Absolutely. I think that SAFETEA-LU requires 
us to. So we will be reporting out to this Committee and to the 
House Transportation Committee later this fall on our view just 
of implementation of the JARC program.
    We are also required to do another report before the end of 
SAFETEA-LU that does a more full evaluation of JARC. And we can 
certainly include that in our scope.
    Senator Reed. Any final comments, Ms. Bushue, with respect 
to this issue of coordination at the local level?
    Ms. Bushue. I would just like to say, just echoing what Mr. 
Millar said, that FTA very much understands how difficult it is 
sometimes with the coordinated plans. We do have a phase-in 
requirement. And for the first year we ask our grantees to make 
their best efforts. But we certainly are sensitive to the 
difficulties sometimes in getting your plan coordinated.
    Senator Reed. Thank you.
    Mr. Millar. Can I make one more comment on that?
    Senator Reed. Yes, sir.
    Mr. Millar. May I, Mr. Chairman?
    Senator Allard. Yes, Mr. Millar.
    Mr. Millar. One other concern that our members have is 
under existing law there is a process of designated recipients. 
And there is some concern that under the JARC program that 
people who have long been involved in this could, through this 
competitive process that has been described, in their 
perspective be disenfranchised in that process. And that is 
another thing we are working with FTA on, to make sure that we 
do not make too many changes in that regard.
    Senator Reed. Thank you.
    Senator Allard. Maybe you have already just answered this 
question, but what are your concerns regarding the designation 
of the recipient for JARC and the New Freedom funds in large 
urbanized areas? And do you feel that there is a potential for 
conflict of interest if transportation providers are designated 
as recipients?
    Mr. Millar. I am sorry, I did not know you were going to 
ask that question. I could have been more patient.
    Well, as I just expressed, we have been concerned that the 
designated recipient has been in Federal law probably 20 years 
now. Many agencies are very comfortable with it. They have 
procedures set up to deal with it. And we think it works well.
    So we would be very loath to see changes in that or see 
that, for the purposes of JARC, there is a new designated 
recipient. JARC is, after all, this amount of money. And yet 
for this amount of money there would be the traditional 
designated recipient.
    So we are very concerned about that.
    With regard to issues of conflict of interest that have 
been raised, the designated recipient process has worked for a 
long, long time quite successfully. This Committee and the 
Congress reauthorized that process just last year.
    So we do not think there should be a big concern about 
that. We think we have a good track record.
    Myself, I worked for many years in Pittsburgh, which had 
many different recipients. The recipients got together. We 
always worked out exactly how to handle that. I see no reason 
why the process that has worked in the past should not work in 
the future.
    Senator Allard. Thank you.
    I do not have any more questions and we do not have any 
more members.
    Once again, I would like to thank all of our witnesses for 
being here today. Your testimony touched on a number of 
important points and we had a productive question and answer 
period.
    I appreciate this opportunity to hear these perspectives as 
the Subcommittee considers how SAFETEA-LU is implemented. I 
would also encourage the Department to pursue the incentive 
program.
    Ms. Bushue. Yes, absolutely, sir.
    Senator Allard. The record will remain open for 10 days 
should members wish to submit any additional questions to the 
witnesses. Witnesses, we would appreciate your prompt response 
to the questions and would ask you to please respond to them 
within 10 days, if you would.
    Thank you, for everyone, for attending this hearing of the 
Housing and Transportation Subcommittee.
    The Subcommittee is adjourned.
    [Whereupon, at 3:38 p.m., the hearing was adjourned.]
    [Prepared statements supplied for the record follow:]
                  PREPARED STATEMENT OF SANDRA BUSHUE
          Deputy Administrator, Federal Transit Administration
                             June 27, 2006
     Thank you, Mr. Chaimlan, for the opportunity to testify today on 
the Federal Transit Administration's (FTA) implementation of the Safe, 
Accountable, Flexible, Efficient Transportation Equity Act: A Legacy 
for Users (SAFETEA-LU) enacted by Congress and signed by the President 
on August 10, 2005. The hard work of the members of this committee is 
reflected in the legislation that is good for public transportation. We 
appreciate your continued interest and strong commitment to public 
transportation as embodied in it.
    Since my arrival at the FTA in January, I have made timely 
implementation of SAFETEA-LU my top priority. I am pleased to report to 
the committee that the FTA is making substantial progress in 
implementing this important legislation.
    As you know, SAFETEA-LU authorizes a total of $45.3 billion in 
guaranteed funding for Federal transit programs over five fiscal years 
(FY) 2005-2009, an increase of 46 percent over the funding provided in 
the Transportation Equity Act for the 21st Century (TEA-21). In 
addition to historic funding levels, SAFETEA-LU added new programs such 
as New Freedom, Tribal Transit Program, and Alternative Transportation 
in the Parks and Public Lands that began in fiscal year 2006, and 
modified other programs, such as Job Access and Reverse Commute and 
Clean Fuels. SAFETEA-LU also required that FTA promulgate 17 new 
regulations, including regulations to implement FTA and Federal Highway 
Administration (FHWA) planning requirements, New Statis (including the 
Small Starts program), Buy America, Charter Bus, and a joint rulemaking 
with the Department of Homeland Secmity on transit security grants. 
This is an unprecedented amount of rulemaking for FTA. In fact, FTA was 
tasked by SAFETEA-LU with more rulemaking actions than any other 
Department of Transportation (DOT) modal administration. Besides 
regulatory changes, SAFETEA-LU also requires FTA to issue nearly 29 
other program guidance documents and 19 reports to Congress.
    Since the President signed SAFETEA-LU in August 2005, FTA has 
worked diligently with an aggressive schedule to meet the requirements 
in SAFETEA-LU and facilitate program implementation. First, I will 
outline the steps we have taken to assure an orderly implementation 
process, and to get the maximum amount of stakeholder input as 
possible. Second, I will describe the regulatory steps taken to date, 
and our plans for completing these actions. Finally, I will discuss the 
implementation of the other program changes.
Implementation Process and Outreach
    Immediately after enactment of SAFETEA-LU, FTA set out to define 
the regulatory actions that had to be taken, the new programs to be 
implemented, the reports and studies to be undertaken, and the program 
guidance documents that had to be revised. Over 60 such products were 
identified, including 17 regulations, 19 reports, and 29 program 
guidance documents. FTA then developed a prioritized listing of these 
products and a detailed timeline. FTA identified 12 of these products 
as first priority items, based on the need for action. The delivery of 
these top priority items on time is one of FTA's core accountabilities 
for evaluating the performance of our Senior Executives, and will be 
reflected in their performance appraisals and compensation. I am 
extremely pleased to say that we have already completed eight of these 
twelve first priority items. Two will not meet our original schedule, 
but we have deliberately delayed delivery of those items to better 
accommodate the high degree of interest from our stakeholders in 
providing input to the design of the program guidance being developed. 
Weare making steady progress on those not yet completed. Many of these 
first priority items involve interim steps, such as publication of 
Federal Register Notices for public comment 24 of which have been 
published by FTA to thus far.
    Indeed, a key aspect of our implementation plan has involved 
getting input from our stakeholders. We have held nearly 100 outreach 
events, ranging in size from a webinar, conducted jointly with the 
American Public Transportation Association, with nearly 1,000 
participants, to a series of five general outreach sessions conducted 
last December, at which about 700 people participated, a series of 
three outreach sessions focused on New Starts and Small Starts with 
nearly 500 participants, and two national outreach sessions focused on 
Tribal Transit with over 100 participants, to more targeted sessions at 
which small groups of 20 or 30 met to discuss specific program issues.
    Let me also stress our efforts to include the Congress in our 
outreach process. Over the last several months, we have provided 
periodic updates to the Congress on the status of our reauthorization 
implementation efforts and schedules. Let me assure you of my 
commitment to continue to provide timely information to Congress on our 
work to implement all features of this important legislation.
    Further, we have taken very seriously the changes made by SAFETEA-
LU that calls for FTA to provide notice and an opportunity for comment 
on any FTA policy or guidance document that might produce a ``binding 
obligation'' on our grantees. In implementing this provision, I am 
happy to report that FTA has developed a process that is fostering a 
healthy dialog between FTA and our stakeholders. While there may be 
additional time and steps involved because of this new notice and 
comment provision, comments received on our draft guidance and policy 
statements will allow us to assure that the. documents are more 
complete, more responsive to stakeholder needs, and more likely to take 
account of on-the-ground realities.
    Our recent experience with the New Starts Policy Guidance 
demonstrates how seriously we are taking the Notice and Comment 
process. As I will discuss in more detail later, of the nine changes in 
New Starts procedures we proposed to take effect this year, three were 
adopted as originally proposed; three were modified to incorporate 
stakeholder comments; and three were either rejected or deferred 
pending further analysis. This is a clear demonstration of FTA's 
willingness to listen to our stakeholders, make changes when necessary, 
and even go back to the drawing board if the comments we receive make 
it clear that we need to do so.
Status of Regulatory Actions
    Now I would like to quickly review for you the status of some of 
the key regulatory actions we are taking in response to direction in 
SAFETEA-LU. FTA has initiated rulemakings on Buy America and Charter 
Bus and joint rulemakings with other agencies on Security Grants, 
Metropolitan and Statewide Planning, and Section 4(f) of the DOT Act. 
In general, I believe we are making good progress on our own 
rulemakings; however, progress on the joint rulemakings has been 
comparatively slower due to the additional complication of working with 
other agencies.
Buy America
    FTA issued its Notice of Proposed Rulemaking on Buy America on 
November 28, 2005. The rulemaking covered the definition of 
microprocessor and end product and the standards for pre-award and 
post-delivery audits for small transit vehicle purchases, among other 
issues. In response, we received comments indicating that the issues 
were more complex than originally thought. As a result, we issued a 
Final Rule covering the noncontroversial aspects of the rule, such as 
the pre-award and postdelivery audits, on March 21, 2006. We now plan 
to issue another Notice of Proposed Rulemaking covering the remaining 
issues, including the definition of end product, by early fall. In 
addition, FTA plans to hold a public hearing in Washington, DC, to 
discuss the new proposal.
Charter Bus
    As you know, SAFETEA-LU requires a Negotiated Rulemaking to develop 
proposed changes to FTA's Charter Bus regulation. This involves 
establishment of a formal Advisory Committee under the Federal Advisory 
Committee Act (FACA). To do so, we published an initial Notice in the 
Federal Register on January 31, 2006, inviting comments on the proposed 
issues to be addressed and asking for nominations for membership on the 
Advisory Committee. We published a Notice responding to these comments 
and announcing the members of the Advisory Committee on April 10, 2006. 
The first meeting of the Committee was held on May 8 and 9, 2006, in 
Washington, DC. The next meeting was held on June 19 and 20, 2006, and 
the next meeting is scheduled for July 17 and 18, 2006. We expect to 
hold a series of meetings over the next several months. The exact 
timing of the Notice of Proposed Rulemaking will depend on the 
deliberations of the Committee.
Security Grants
    FTA and DHS are jointly finalizing a Notice of Proposed Rulemaking 
mandated by SAFETEA-LU that outlines requirements and characteristics 
of public transportation security grants, including funding priorities 
and eligible activities, methods for awarding these grants, and limits 
on administrative expenses. It is anticipated that DHS will administer 
these grants and DOT will provide technical assistance on development 
of the application and eligibility process. Also, as required by 
SAFETEA-LU, FTA, and the Transportation Security Administration of DHS 
completed an Annex to the Memorandum of Understanding between DOT and 
DHS on transportation security on September 8, 2005.
Metropolitan and Statewide Planning
    SAFETEA-LU made a number of changes to the metropolitan and 
statewide transportation planning and programming process. We have been 
working with FHWA, with whom FTA jointly administers these 
requirements, to implement these changes. On September 2, 2005, we 
provided joint guidance on the initial changes, and a Notice of 
Proposed Rulemaking was published on June 9, 2006. We expect to have 
the Final Rule in place by Spring 2007.
Section 4(f)
    SAFETEA-LU also made a number of changes in the requirements for 
protections of parks and historical resources, commonly known as 
Section 4(f) [of the DOT Act]. We have submitted a Notice of Proposed 
Rulemaking on these changes, to the Office of Management and Budget for 
clearance and we expect to publish this it in July 2006.
New Programs and Program Guidance
    In addition to the rulemaking required by SAFETEA-LU, FTA has been 
working to implement our new program structure, several new programs, 
and to change our program guidance to reflect the changes made in 
program requirements. Among the most important are the New Starts and 
Small Starts Program, the New Freedom Program (and related changes to 
the Job Access and Reverse Commute program, and Elderly and Persons 
with Disabilities programs), the Alternative Transportation in Parks 
and Public Lands Program, the Tribal Transit Program, and the Public 
Private Partnership Pilot Program.
New Program Structure
    One of our first tasks was to restructure our appropriations 
accounts to deal with the new program structure enacted in SAFETEA-LU. 
I am pleased to say that FTA successfully restructured its accounts in 
accordance with SAFETEA-LU in time to award grants in fiscal year 2006. 
The new accounting structure will prevent the Mass Transit Account of 
the Highway Trust Fund from running out of money in fiscal year 2007. 
The enactment of a solely trust funded account and 3 separate General 
Fund accounts should ensure the solvency of the Mass Transit Account 
well beyond the current authorization period. In fact, our estimates 
indicate that the Mass Transit Account should have a positive cash 
balance of over $6.9 billion at the end of FY 2009.
General Program Guidance
    Even before tackling the major program changes, and new programs, 
we decided that it was important to make sure that our continuing 
programs were allowed to proceed on an uninterrupted basis. Thus, on 
November 30, 2005, we issued a Federal Register Notice outlining the 
changes in all our programs, and providing initial guidance on 
implementing these changes. This allowed us to make grants in fiscal 
year 2006 to such programs as the Urbanized Formula Program, the Fixed 
Guideway Modernization Program, the Other than Urbanized (Rural) 
Formula Program, and our planning grants programs as soon as fiscal 
year 2006 funds were appropriated. Weare now proceeding with revising 
our program guidance circulars on all of these programs to accommodate 
the changes that were made by SAFETEA-LU.
New Starts and Small Starts
    SAFETEA-LU made a number of changes to the criteria for evaluating 
New Starts projects, and of course, established the new program 
category, Small Starts, for projects with a total cost of under $250 
million and a New Starts share of under $75 million. Needless to say, 
this has generated a significant amount of interest by our 
stakeholders. In addition, as we reviewed the Small Starts program as 
enacted, it became clear that there were a wide range of issues that 
needed to be addressed in some detail. Further, SAFETEA-LU specifically 
required FTA to provide notice and comment on any changes in policy or 
procedures in the New Starts program early in calendar year 2006 and at 
least every 2 years thereafter. Accordingly, on January 19, 2006, we 
issued a Notice of Proposed New Starts Policy Guidance in the Federal 
Register. And on January 30, 2006, we issued an Advance Notice of 
Proposed Rulemaking (ANPRM) on Small Starts. While we did not have to 
take the preliminary step of issuing an ANPRM on Small Starts, the wide 
range of issues that are posed by the program suggested that we take an 
opportunity to get stakeholder input before embarking on a more formal 
NPRM.
    The response to these publications suggests that this was a good 
idea. We received over 70 written comments on the draft New Starts 
Policy Guidance and over 90 comments on the Small Starts ANPRM. In 
response, on May 22, 2006, we published our final New Starts Policy 
Guidance and the fiscal year 2008 Reporting Instructions for the New 
Starts criteria for submissions for the fiscal year 2008 New Starts 
Report (submissions are due by June 30 for ridership and cost estimates 
and August 15 for financial plans). As I described earlier, we made 
several modifications to the proposals for specific changes in FTA New 
Starts Policy made in the January 19, 2006, Federal Register Notice. We 
believe that these changes will help make the process more effective in 
the short term and allow FTA to leave other major changes for later 
determination during the rulemaking process.
    I would note that since coming to FTA, I have expressed my concerns 
about how long it takes and how much it costs to develop a New Starts 
project. While we have been able to address some of these concerns in 
the New Starts Policy Guidance, I believe that we should systematically 
reassess all that FTA and our grantees must do to move a project to the 
finish line. Accordingly, we have recently engaged a management-
consulting firm to undertake a complete review of the New Starts 
project delivery process. This quick but intensive effort will be 
undertaken in parallel with our development of the New Starts Notice of 
Proposed Rulemaking.
    With respect to Small Starts, we have just published, on June 9, 
2006, draft Interim Guidance that FTA and our grantees may use to 
develop and evaluate projects beginning this year until the Final Rule 
is in place. We are aware that project sponsors are considering a large 
number of projects that may be eligible for funding under this program. 
In fact, a recent survey by the American Public Transportation 
Association identified over 75 projects in various stages of project 
development. Once we have received comments on the June 9 draft, FTA 
will modify the Interim Guidance and publish it later this summer in 
final form. This will allow grantees to assess projects and submit them 
to us for possible funding during fiscal year 2007 and inclusion in the 
fiscal year 2008 New Starts report.
    We also plan to develop a single NPRM later this year, which would 
cover both New Starts and Small Starts. Once comments are received, we 
would then be able to issue the Final Rule on both programs during 
2007. Given the large number of comments already received on these 
subjects, and the large amount of interest in these programs, we want 
to make sure that we, and our stakeholders, have sufficient time to 
think through the features that should be included in this rule. The 
Interim Guidance on Small Starts and the Policy Guidance on New Starts 
should provide us with the tools needed to assure that the New Starts 
and Small Starts programs can be effectively executed even while the 
rulemaking process is underway.
New Freedom, Job Access and Reverse Commute and Elderly Individuals and 
        Individuals With Disabilities Programs
    As you know, SAFETEA-LU established a New Freedom program for 
grants to provide improved public transit services to persons with 
disabilities, altered the Job Access and Reverse Commute (JARC) Program 
to make it a formula rather than discretionary program, and modified 
the program requirements of the Elderly Individuals and Individuals 
with Disabilities Program. Taken together, these changes now provide 
FTA with a portfolio of interrelated programs designed to address 
certain essential transportation needs. An important feature of all 
three programs is a new requirement for locally developed, coordinated 
public transit--human services transportation plans. In addition, the 
New Freedom and JARC programs require selection of subrecipients on a 
competitive basis. Finally, there are some complex eligibility. 
questions, particularly with respect to the New Freedom program which 
is targeted to provide new public transportation service and 
alternative transportation services beyond those required by the 
Americans with Disabilities Act.
    Given the challenges involved in implementing all three programs, 
and the large amount of interest in them from a wide variety of 
stakeholders, FTA has undertaken an extensive process of outreach and 
public involvement. This process began with the November 30, 2005, 
Federal Register Notice that outlined the broad parameters of these 
programs and asked for input on several key issues. These issues were a 
major topic for discussion at the outreach sessions held around the 
country in December 2005 and subsequent meetings early in 2006. The 
process culminated with a Federal Register Notice on March 15, 2006, 
that responded to the comments received on the broad issues outlined in 
the November 30, 2005, Notice, laid out interim guidance to allow the 
programs to proceed in fiscal year 2006, and provided further detailed 
topics for comment with respect to the major issues identified in the 
comments already received. FTA then held a major outreach meeting with 
over 150 participants on March 23, 2006, to discuss the issues in the 
Notice. FTA also held public conference calls and began to receive and 
review comment. While the comment period was originally set to end by 
April 21, 2006, FTA received a request for and granted an extension of 
the comment period through May 21, 2006. We are reviewing the comments 
received, and are planning to issue final program guidance later this 
year. In the meantime, the interim guidance included in the March 15, 
2006, Notice is allowing each of these programs to be implemented 
during this fiscal year. The March 15 Federal Register Notice also 
included proposed strategies for implementation of the programs 
beginning in fiscal year 2007.
Alternative Transportation in Parks and Public Lands
    SAFETEA-LU established a new discretionary program, to be 
administered in concert with the Department of the Interior, for 
alternative transportation in federally managed parks and public lands. 
FTA has been working closely with the Department of Interior and its 
National Park Service, its Fish and Wildlife Service and its Bureau of 
Land Management, and the Department of Agriculture's U.S. Forest 
Service on implementation of this program. We have established an 
inter-agency team with representatives of these organizations. This 
group has worked to develop the details of the program and a proposed 
Memorandum of Agreement between the Departments of Transportation and 
the Interior. In addition, the working group developed a Notice of 
Funding Availability that was published in the Federal Register on 
March 23, 2006. This Notice laid out the parameters of the program, and 
invited proposals for projects for fiscal year 2006 funding. Proposals 
were due on May 5, 2006. Representatives of the participating agencies 
have been reviewing the proposals and are preparing a final program of 
projects for funding. We expect to award these funds later this fiscal 
year.
Grants to Native American Tribes
    SAFETEA-LU establishes a new program for direct grants to Native 
American Tribes for public transportation within our Section 5311 
program of grants to other-than-urbanized areas (the ``Rural 
Program''). As you know, prior to passage of SAFETEA-LU, Native 
American Tribes were eligible to receive funding for transit projects, 
including projects located on reservations, but only through the 
States. This new program sets up a direct relationship between FTA and 
tribal governments. We have been working hard to implement this new 
program. In the November 30, 2005, Notice, we stated our basic 
intentions for this program and solicited comment. At the general 
outreach sessions held in five cities around the country in December 
2005, we received a good deal of comment. We also had numerous 
discussions with interested parties on this program during January and 
February of this year. Having considered these initial comments, we 
then issued a Notice proposing specific program details on March 22, 
2006. In that Notice we asked for comments on a number of disparate 
issues. We also held a series of public meetings at which tribal 
governments, and other interested parties, have discussed these 
subjects with us. The comment period on that Notice has now closed and 
we are reviewing the comments. We hope to issue a final Notice of 
Funding Availability shortly that will outline program administration 
details and request applications for funding. We expect to be able to 
announce project selections by the end of this fiscal year.
Public Private Partnership Pilot Program
    SAFETEA-LU establishes a Pilot Program to assess the benefits of 
public private partnerships for delivery and management of major 
transit investments. However, the language of the legislation is very 
broad. Accordingly, on March 22, 2006, we issued a Notice asking for 
suggestions and proposals on how FTA might design the program; posing a 
series of specific questions on the concept of public private 
partnerships and how they might relate to transit projects and FTA 
program requirements; and requesting statements of interest for 
potential participants in the program. The comment period, and period 
for initial statements of interest, closed on June 1, 2006. FTA is 
quite excited by the concept of public private partnerships, and 
believes there are significant lessons to be learned by considering how 
it might be applied to our programs. We received 19 comments providing 
useful input on the issues raised, and 4 candidate projects. Weare now 
reviewing the comments and proposals, and will determine how to respond 
shortly.
Conclusion
    Mr. Chairman, and Members of the Committee, I believe you will 
agree that FTA is making excellent progress in implementing SAFETEA-LU. 
You have my commitment that we will work hard to sustain this record of 
achievement in the coming months. I would be happy to answer any 
questions you might have.
                                 ______
                                 
                  PREPARED STATEMENT OF KATE SIGGERUD
 Director of Physical Infrastructure, Government Accountability Office
                             June 27, 2006

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

                                 ______
                                 
                  PREPARED STATEMENT OF WILLIAM MILLAR
         President, American Public Transportation Association
                             June 27, 2006
    Mr. Chairman and Members of the Subcommittee, on behalf of the 
1,600 members of the American Public Transportation Association (APTA), 
we thank you for this opportunity to testify on the implementation of 
the Safe, Accountable, Flexible, Efficient Transportation Equity Act: A 
Legacy for Users (SAFETEA-LU), which was enacted into law last summer. 
SAFETEA-LU incorporates the key principles that APTA and the transit 
industry advocated for in the reauthorization process--

    Grow the Federal transit program;

    Preserve the funding guarantees; and

    Expedite and improve program delivery.

    With Federal investment of $52.6 billion guaranteed over 6 years in 
the bill, APTA's members very much appreciate and thank this 
Subcommittee for its hard work and commitment to public transportation 
throughout the reauthorization process. The investment levels included 
in the legislation, and its new programs and policy changes, will have 
a significant impact on the mobility needs of millions of Americans, 
and we applaud this Subcommittee's hard work and leadership in making 
that happen. And we are pleased to report today that significant 
progress has been made toward successfully implementing this important 
legislation.
    In that regard, Mr. Chairman, I commend the Federal Transit 
Administration (FTA) for acting expeditiously in implementing 
rulemakings and carrying out other activities required under SAFETEA-
LU. The law calls for FTA to implement a significant number of 
programs, rulemakings, notices, and other measures, and the agency has 
made every effort to do so in a timely and open and transparent way. 
FTA has conducted workshops, participated in an APTA webinar, and been 
on panels at APTA conferences and meetings to explain SAFETEA-LU 
programs and policies. We very much appreciate FTA's efforts in this 
regard, and we look forward to continuing the good working relationship 
we now have with the agency. Looking ahead, a strong partnership 
between the public transportation industry, FTA, and Congress is more 
important than ever as we implement SAFETEA-LU. Americans took more 
than 9.7 billion transit trips in 2005. Since 1995, the use of public 
transportation has increased by 25.1 percent--more than the growth of 
highway travel (22.5 percent) over that period. The growth of transit 
ridership during the past 10 years demonstrates that Americans want 
transportation choices and will leave their cars behind when 
convenient, quality public transit service is available. As gas prices 
continue to rise, the demand for public transportation will only 
continue to grow. In short, it is clear that Americans want mobility 
options, and good public transportation is key to meeting that need.
Federal Transit Program Investment
    SAFETEA-LU authorizes and guarantees $8.975 billion for the Federal 
transit program in Fiscal Year (FY) 2007, $9.731 billion in FY 2008 and 
$10.338 billion in FY 2009. Funding in these three remaining years of 
SAFETEA-LU is of critical importance. Much of the funding growth in the 
first full year of SAFETEA-LU necessarily went to new areas of focus--
transit investment in rural communities, new investment to address the 
needs of people with disabilities beyond service required under the 
Americans with Disabilities Act (ADA), transit in National Parks and 
public lands, and other new initiatives. Full funding of the SAFETEA-LU 
program in FY 2007 and subsequent years will ensure growth for all 
transit agencies which depend on annual formula funding to support 
their services. Moreover, investment at the guaranteed level permits 
long-range planning and leveraging of funds via public-private 
partnerships and other private sector investment activities. APTA's 
members were disappointed earlier this year that the Administration 
proposed to fund transit below the level authorized and guaranteed by 
Congress for FY 2007. The Administration requested $100 million less 
than the amount authorized from the general fund for the new starts 
program, proposing only half of the funding authorized for the new 
small starts program, a program to fund smaller fixed guideway projects 
such as light rail, commuter rail, and bus rapid transit systems. We 
are pleased that the FY 2007 Transportation Appropriations bill passed 
by the House earlier this month funds transit programs at the $8.979 
billion level slightly above the SAFETEA-LU guaranteed level, but we 
are disappointed the House bill would not fund the Small Starts Program 
in FY 2007. APTA believes a viable administrative procedure to evaluate 
grant applications and make grants will be in place with sufficient 
time to distribute FY 2007 Small Starts funding. We urge the Senate as 
it considers FY 2007 transportation appropriations legislation to 
correct this problem and fund transit programs at least at the 
authorized and guaranteed levels.
Progress on Key Regulatory Issues
    Mr. Chairman, when SAFETEA-LU was enacted last August, our members 
identified four key programs that they were particularly concerned 
about--the New Starts and Small Starts Programs, Metropolitan and 
Statewide Planning, Buy America, and Charter Bus--and I will provide an 
update on the status of these programs and a few others. Complete 
copies of APTA's comments can be found on our web page--www.apta.com--
under ``SAFETEA-LU Rulemakings and Notices'' or if the Subcommittee 
would like we would be happy to submit copies to the Members.
New Starts
    As this committee knows, there is overwhelming demand for New 
Starts projects SAFETEA-LU authorized 387 such projects. New fixed 
guideway projects are an important part of meeting transit needs, but 
these major capital projects take years to develop and require a 
predictable funding commitment. SAFETEA-LU makes an important funding 
commitment to these projects, and it also directed FTA to advance 
important program changes through the rulemaking process. Mr. Chairman, 
our members have raised significant concerns about the length of time 
it takes to proceed through the New Starts process, and about some of 
the requirements the FTA imposes during that process. In that regard, I 
am pleased to report to you that FTA Deputy Administrator Sandra Bushue 
has been very responsive to our concerns and has assured us that FTA 
will be conducting an independent review of the entire New Starts 
process to make sure it is carried out in the most effective way 
possible.
    Regarding the implementation of the New Starts and Small Starts 
provisions, APTA commends FTA's outreach efforts to the transit 
industry. FTA has held extensive listening sessions and workshops 
across the country. In addition, at the request of the APTA Policy and 
Planning Steering Committee, FTA held a 2-day working session on 
several issues. From these efforts, FTA has been very responsive to the 
industry's concerns, and rulemaking products like the Guidance on New 
Starts Policies and Procedures released May 16 have benefited from this 
partnership. Let me provide some examples. The draft Guidance released 
by FTA this past January proposed that New Starts projects achieve an 
acceptable rating before a final NEPA decision. The public 
transportation industry thought this would delay projects which could 
result in cost increases. After industry input, the final policy 
guidance does not implement this requirement. Another important 
industry concern was a proposal to require contractors responsible for 
developing forecasts and related new starts data to certify that their 
forecasts have been properly developed and applied according to 
professional standards and conventions and FTA guidelines. There was 
again significant industry opposition to this provision because of the 
risk of professional liability. Moreover, accountability already 
exists, as it should, with the grant recipient. Again, following 
industry input, the final Guidance does not implement the provision. In 
regard to other New Starts implementation issues, January's draft 
Guidance proposed a cap on the size of funding in a Full-Funding Grant 
Agreement (FFGA) at the point of approval to enter final design. While 
there were mixed support and opposition to the provision, the public 
transportation industry applauds FTA's implementation provision that 
states that once approved into final design, projects are not subject 
to future changes in the New Starts Program.
Small Starts
    The new Small Starts Program, a program to fund less costly fixed 
guideway projects such as streetcar, commuter rail, and bus rapid 
transit systems, faces greater challenges with regard both to funding 
and to rulemaking implementation issues. As stated earlier, APTA's 
members were disappointed that the Administration's budget proposal for 
FY 2007 requested only $100 million of the $200 million authorized for 
the program. The effect of any underfunding the Small Starts Program 
would be felt disproportionately in future years by causing transit 
providers to fall further behind in the development of new, less 
expensive projects. As to the current status of the Small Starts 
Program, APTA's members are optimistic that Small Starts funds could be 
utilized in FY 2007 using the Proposed Interim Guidance and 
Instructions just released by FTA on June 9, and we will be making that 
case during consideration of transportation appropriations legislation 
in the Senate. An APTA survey this spring identified more than 50 
projects in various stages of development with an aggregate Federal 
share of $2.3 billion that could qualify for Small Starts funding. APTA 
believes that more work is needed to simplify the Small Starts grant 
criteria, eliminate any appearance of modal bias and insure economic 
benefits and land use criteria are given appropriate consideration 
under the Proposed Interim Guidance and Instructions when it is 
finalized. We trust these issues will also be addressed in the Notice 
of Proposed Rulemaking (NPRM) expected next year. Perhaps FTA could 
look to the streamlined process for the Very Small Starts category, 
which is contained in the Proposed Interim Guidance, and apply that 
simplified process to the entire Small Starts Program.
Other SAFETEA-LU Rulemakings and New Program Developments
    Mr. Chairman, let me turn now to some of the other key rulemakings 
and new program developments under SAFETEA-LU.
Statewide and Metropolitan Planning
    On June 9, 2006, FTA and the Federal Highway Administration (FHWA) 
issued a Notice of Proposed Rulemaking (NPRM) to implement joint 
planning regulations, and our members are already beginning to develop 
comments on that rulemaking. We appreciate that FTA and FHWA are 
holding outreach sessions on this important topic, including sessions 
at APTA workshops and conferences over the coming months.
Buy America
    The FTA issued an NPRM on Buy America on November 11, 2005, and 
issued a partial final rule on March 3, 2006, on some aspects of the 
program but has not yet issued a final rule on key elements of the Buy 
America program. We urge them to do so as soon as possible. Given the 
sensitivity and importance of this regulation, we have made a 
particular request of FTA in this matter. To guard against unintended 
consequences, and to ensure that FTA's ultimate decisions are fully 
informed by broad public comment, APTA has asked FTA to issue an 
interim final rule as the next step in this matter. Issuance of an 
interim final rule rather than a final rule provides additional 
opportunity for comments to be made and considered before the rule 
becomes final--always an important consideration regarding Buy America 
issues.
Charter Bus Negotiated Rulemaking
    Pursuant to direction in SAFETEA-LU's Conference Report, FTA has 
established an advisory committee to develop, through negotiated 
rulemaking procedures, recommendations for improving the regulation 
regarding charter bus activities FTA recipients may engage in. The 
advisory committee includes representatives of public and private 
transportation providers and other interested parties. The committee 
has held two 2-day sessions to date, and APTA is pleased to be 
represented on the committee.
Elderly Individuals and Individuals With Disabilities, Job Access and 
        Reverse Commute (JARC), New Freedom Programs and Coordinated 
        Public Transit-Human Services Transportation Plans
    Mr. Chairman, APTA submitted its comments on this matter to FTA on 
May 19, 2006, and we offer just a few comments here. The New Freedom 
program provides formula funding for new transportation services and 
public transportation alternatives beyond those required by the 
Americans with Disabilities Act (ADA) to further assist persons with 
disabilities. We look forward to participating in this important new 
program. In our comments to FTA on the program, we asked that 
preexisting services transit systems already provide beyond ADA 
requirements be eligible for funding under the New Freedom program. 
APTA believes that it would be unfair not to permit funding of any 
existing services that already exceed ADA requirements. Regarding the 
coordinated planning process, we are concerned that the proposal to 
allow State and local authorities to designate recipients other than 
the section 5307 recipient invites unnecessary bureaucracy into the 
coordinated planning process. Allowing multiple designated recipients 
could be counterproductive by adding to the number of independent 
services rather than enticing cooperation and coordination.
Alternative Transportation in Parks and Public Lands
    SAFETEA-LU established a new program to develop public 
transportation in National Parks and other federally managed public 
lands with the goal of improving mobility and reducing congestion and 
pollution. FTA, in cooperation with the Department of the Interior and 
the Department of Agriculture's Forest Service, has published a 
solicitation for proposals for projects to be funded in FY 2006. APTA 
applauds the Administration's expeditious advancement of the program, 
and we look forward to the announcement of the program's first project 
recipients expected later this summer.
Public-Private Partnership Pilot Program
    Section 3011(c) of SAFETEA-LU authorizes FTA to establish and 
implement a pilot program to demonstrate the advantages and 
disadvantages of public-private partnerships for certain new fixed 
guideway capital projects. We submitted comments to FTA on June 1 on 
this program, and are highly supportive of FTA's efforts to craft a 
strong public-private partnership program which is likely to be a model 
for many future projects. On a related note, we were pleased to submit 
comments to FTA on its joint development proposals.
Conclusion
    Public transportation plays a key role in meeting the goals of the 
Administration and Congress in providing energy independence, 
congestion relief, and transportation mobility options for Americans. 
It is important that the strong partnership among the public 
transportation industry, FTA, and Congress continues as we move to 
complete SAFETEA-LU implementation and realize the promise of this 
important legislation. At this stage in the implementation of SAFETEA-
LU we are generally pleased with the progress being made. We are 
particularly pleased with the outreach FTA has made to our members and 
its thoughtful consideration of and inclusion of the industry's ideas.
    Mr. Chairman, on behalf of APTA's member organizations, I thank you 
for this opportunity to express our views.
