[House Hearing, 110 Congress]
[From the U.S. Government Publishing Office]



 
                          THE NATIONAL SURFACE
                       TRANSPORTATION POLICY AND
                        REVENUE STUDY COMMISSION
                REPORT: ``TRANSPORTATION FOR TOMORROW''

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

                                (110-91)

                                HEARING

                               BEFORE THE

                              COMMITTEE ON
                   TRANSPORTATION AND INFRASTRUCTURE
                        HOUSE OF REPRESENTATIVES

                       ONE HUNDRED TENTH CONGRESS

                             SECOND SESSION

                               __________

                            JANUARY 17, 2008

                               __________


                       Printed for the use of the
             Committee on Transportation and Infrastructure

?

             COMMITTEE ON TRANSPORTATION AND INFRASTRUCTURE

                 JAMES L. OBERSTAR, Minnesota, Chairman

NICK J. RAHALL, II, West Virginia,   JOHN L. MICA, Florida
Vice Chair                           DON YOUNG, Alaska
PETER A. DeFAZIO, Oregon             THOMAS E. PETRI, Wisconsin
JERRY F. COSTELLO, Illinois          HOWARD COBLE, North Carolina
ELEANOR HOLMES NORTON, District of   JOHN J. DUNCAN, Jr., Tennessee
Columbia                             WAYNE T. GILCHREST, Maryland
JERROLD NADLER, New York             VERNON J. EHLERS, Michigan
CORRINE BROWN, Florida               STEVEN C. LaTOURETTE, Ohio
BOB FILNER, California               RICHARD H. BAKER, Louisiana
EDDIE BERNICE JOHNSON, Texas         FRANK A. LoBIONDO, New Jersey
GENE TAYLOR, Mississippi             JERRY MORAN, Kansas
ELIJAH E. CUMMINGS, Maryland         GARY G. MILLER, California
ELLEN O. TAUSCHER, California        ROBIN HAYES, North Carolina
LEONARD L. BOSWELL, Iowa             HENRY E. BROWN, Jr., South 
TIM HOLDEN, Pennsylvania             Carolina
BRIAN BAIRD, Washington              TIMOTHY V. JOHNSON, Illinois
RICK LARSEN, Washington              TODD RUSSELL PLATTS, Pennsylvania
MICHAEL E. CAPUANO, Massachusetts    SAM GRAVES, Missouri
TIMOTHY H. BISHOP, New York          BILL SHUSTER, Pennsylvania
MICHAEL H. MICHAUD, Maine            JOHN BOOZMAN, Arkansas
BRIAN HIGGINS, New York              SHELLEY MOORE CAPITO, West 
RUSS CARNAHAN, Missouri              Virginia
JOHN T. SALAZAR, Colorado            JIM GERLACH, Pennsylvania
GRACE F. NAPOLITANO, California      MARIO DIAZ-BALART, Florida
DANIEL LIPINSKI, Illinois            CHARLES W. DENT, Pennsylvania
DORIS O. MATSUI, California          TED POE, Texas
NICK LAMPSON, Texas                  DAVID G. REICHERT, Washington
ZACHARY T. SPACE, Ohio               CONNIE MACK, Florida
MAZIE K. HIRONO, Hawaii              JOHN R. `RANDY' KUHL, Jr., New 
BRUCE L. BRALEY, Iowa                York
JASON ALTMIRE, Pennsylvania          LYNN A WESTMORELAND, Georgia
TIMOTHY J. WALZ, Minnesota           CHARLES W. BOUSTANY, Jr., 
HEATH SHULER, North Carolina         Louisiana
MICHAEL A. ARCURI, New York          JEAN SCHMIDT, Ohio
HARRY E. MITCHELL, Arizona           CANDICE S. MILLER, Michigan
CHRISTOPHER P. CARNEY, Pennsylvania  THELMA D. DRAKE, Virginia
JOHN J. HALL, New York               MARY FALLIN, Oklahoma
STEVE KAGEN, Wisconsin               VERN BUCHANAN, Florida
STEVE COHEN, Tennessee
JERRY McNERNEY, California
LAURA A. RICHARDSON, California
VACANCY

                                  (ii)

                                CONTENTS

                                                                   Page

Summary of Subject Matter........................................    iv

                               TESTIMONY

Busalacchi, Hon. Frank, Wisconsin Department of Transportation...     8
Geddes, Commissioner Raymond R., Director of Undergraduate 
  Studies, Cornell University Department of Policy Analysis and 
  Management.....................................................     8
Heminger, Commissioner Steve, Executive Director, Metropolitan 
  Transportation Commission......................................     8
McArdle, Commissioner Frank, Senior Advisor, General Contractors 
  Association of New York........................................     8
Odland, Commissioner Steve, Chairman and CEO, Office Depot.......     8
Quinn, Commissioner Patrick, Co-Chairman, U.S. Xpress Enterprises     8
Rose, Commissioner Matthew, CEO, Burlington Northern Santa Fe....     8
Schenendorf, Vice Chair Jack, Of Counsel, Covington and Burling..     8
Skancke, Commissioner Tom, CEO, The Skancke Company..............     8
Weyrich, Commissioner Paul, Chairman and CEO, Free Congress 
  Foundation.....................................................     8

          PREPARED STATEMENTS SUBMITTED BY MEMBERS OF CONGRESS

Altmire, Hon. Jason, of Pennsylvania.............................    62
Carnahan, Hon. Russ, of Missouri.................................    63
Costello, Hon. Jerry F., of Illinois.............................    64
Mitchell, Hon. Harry E., of Arizona..............................    67
Tauscher, Hon. Ellen O., of California...........................    68

               PREPARED STATEMENTS SUBMITTED BY WITNESSES

Geddes, Commissioner Raymond R...................................    72
Rose, Commissioner Matthew.......................................    82
Schenendorf, Vice Chair Jack.....................................    99

                       SUBMISSIONS FOR THE RECORD

Geddes, Commissioner Raymond R., Director of Undergraduate 
  Studies, Cornell University Department of Policy Analysis and 
  Management:

  Responses to questions from Rep. Carney........................    76
  Responses to questions from Rep. Duncan........................    78
Mica, Hon. John, a Representative in Congress from the State of 
  Florida, chart of fuel consumption history.....................     4
Rose, Commissioner Matthew, CEO, Burlington Northern Santa Fe:

  Responses to questions from Rep. Carney........................    93
  Responses to questions from Rep. Duncan........................    95
Schenendorf, Vice Chair Jack, Of Counsel, Covington and Burling:

  Responses to questions from Rep. Carney........................   109
  Responses to questions from Rep. Duncan........................   111

                        ADDITIONS TO THE RECORD

U.S. Department of Transportation, Mary E. Peters, Secretary, 
  written statement..............................................   115
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HEARING ON THE NATIONAL SURFACE TRANSPORTATION POLICY AND REVENUE STUDY 
             COMMISSION REPORT: TRANSPORTATION FOR TOMORROW

                              ----------                              


                       Thursday, January 17, 2008

                  House of Representatives,
    Committee on Transportation and Infrastructure,
                                                    Washington, DC.
    The Committee met, pursuant to call, at 11:00 a.m., in Room 
2167, Rayburn House Office Building, the Honorable James L. 
Oberstar [Chairman of the Committee] presiding.
    Mr. Oberstar. The Committee on Transportation and 
Infrastructure will come to order.
    Over the last 115 years, there have been 4 transformational 
moments, episodes, in the history and evolution of surface 
transportation policy in America. The first was 1894 when a 
group of bicyclists gathered 150,000 signatures on a wheel and 
presented them to a Committee of Congress in the House, asking 
for a $10,000 study for a system of paved roads to take the 
newfangled horseless carriages off the bicycle trails, which 
were creating ruts and causing cyclists to have faceplants or 
headers as they called them in those days.
    Congress complied. The study was completed and led to the 
next episode which was the establishment of the Bureau of Road 
Inquiry in 1896 in the U.S. Department of Agriculture, leading 
to the creation of the Bureau of Public Roads in 1916.
    The third transformational episode was 1956, the 
establishment, enactment of the interstate highway, the 
National System of Interstate and Defense Highways and the 
Highway Trust Fund with a dedicated revenue stream to sustain 
the construction of this extraordinary facility.
    The fourth transformational moment was 1991 at the end of 
the interstate era and the beginning of the post-interstate 
period, the enactment of the Intermodal Surface Transportation 
Efficiency Act.
    This Commission's report will, in time, be seen as I see it 
now as the first transformational chapter in the transition to 
a new era of transportation policy for the 21st Century. The 
report does precisely what commissions should do: lift our 
vision above the horizon, challenge our thought processes with 
innovative ways of addressing established vexing, complex 
problems that appear to be irreconcilable.
    The report goes further. It sets forth specifics on how to 
accomplish, how to carry out their recommendations.
    It remains for us in the public policy arena in the 
Executive Branch and the Legislative Branch to summon up the 
political will to act upon this compendium of proposals in 
order to transform America's transportation portfolio into a 
vibrant, sustainable engine of economic growth underpinning and 
enhancing the greatest economy in the world.
    Thank you for your splendid work, for your intense effort 
and for this purposeful report.
    I yield to the Ranking Member, and I will announce that we 
will have statements from Mr. DeFazio subsequently and from Mr. 
Duncan. Then we will proceed to the Commission because we are 
here to hear them, not to hear one another.
    Mr. Mica. Well, I thank Chairman Oberstar for his opening 
statements and for yielding time. I have a rather lengthy 
statement that I would have included in the record.
    Mr. Oberstar. Without objection, it will be included in the 
record.
    Mr. Mica. It is unfortunate, but Secretary Peters, our 
Secretary of Transportation, will not attend or participate in 
today's hearing or provide her testimony. I don't want to get 
into the dispute on her having her own panel, which has been 
accorded to cabinet members of various administrations. But, in 
any event, I would like to ask unanimous consent to submit 
Secretary Peters' statement for the record.
    Mr. Oberstar. The Secretary's statement will be included in 
the record, without objection.
    Mr. Mica. Thank you.
    Mr. Mica. I want to also reiterate the comments of the 
Chair in thanking the Commission for their service and also for 
your vision in trying to develop a blueprint for our Nation's 
infrastructure not only in the short term but in the long term. 
I have had an opportunity to read through your recommendations, 
and I think it can serve as a template for the investment in 
our Nation's infrastructure that is so urgently needed.
    I think you have done an incredible job in assessing the 
need. You have correctly assessed the need. We are probably 
looking at a requirement for investing three to four times what 
we are investing now in our Nation's highways, rail, ports, 
airports, all of our infrastructure.
    I believe that you have provided us with some options by 
which we can expand the investment and some of those will be 
measures that Congress must consider, particularly as we head 
towards 2009 and reauthorizing our surface transportation 
programs.
    Some of the areas of agreement are indexing, better 
leveraging our existing funds through creative financing and 
bonding, and public-private partnerships. One of the things 
Congress has failed to do is establish clear Federal policy on 
public-private partnerships. This is a term that requires 
definition so that we can move forward and use public-private 
partnerships as an important element in expanding the dollars 
that we have available.
    You have also identified a need of trying to expedite the 
project delivery process. Improving this process is so 
important in saving us not only time but money, and I would 
like to see what I call a 437 day process adopted at least for 
projects that are replacement in nature such as the bridge that 
collapsed in Minnesota. A project that would otherwise take 
some 7 to 8 years and many times the cost to complete will be 
completed in 437 days. Again, I think a recommendation of your 
Commission is that we expedite the project delivery process.
    I do have some concerns with the report, of course, and 
maybe you have heard my comments when the report first came out 
and proposed a potentially 40 cent increase which would be 
about a 200 percent increase in the gas tax. I did have my 
reservations. The press asked me what I thought the chances 
were of something like that passing Congress, and I think my 
comment was that it has a snowball's chance in hell.
    I did notice that there was quite a bit of snow coming down 
and the temperature had dropped precipitously as we began the 
hearing, but I still wouldn't give it a much better chance.
    [Laughter.]
    Mr. Mica. I believe that using some of the mechanisms and 
the options that you outlined, though, that we can adjust those 
figures. I don't believe_and share the dissenting opinion_that 
just increasing the gas tax is the answer, and I don't think 
that was your solution.
    My Secretary of Transportation in Florida provided me with 
a chart that is up on the screen, that shows how dramatic fuel 
consumption has decreased, and that chart dramatically 
illustrates the challenge that we face.
    [Information follows:]
    [GRAPHIC] [TIFF OMITTED] 40625.013
    
    Mr. Mica. We have nine million vehicles now using some 
alternative fuels. Congress has passed a requirement that we 
double some of the synthetic fuels, and I think even the 
marketplace will hasten what we see here.
    So, even if we increase the gasoline tax by a dollar or 100 
percent, it is not going to resolve our problem nor sometimes 
things that need to have the right political climate nor with 
$3 plus a gallon of gas currently at the pumps will we see that 
proposal pass in Congress as some may advocate.
    I think consolidation of the 108 surface transportation 
programs is also a worthy goal that has been recommended. 
However, I would caution any elimination of mass transit as a 
separate program. I think that mass transit is one of the 
solutions, and it shouldn't be sidelined.
    For the future of our Nation I believe that we might just 
as well start now with your proposal. In the next few days and 
weeks, we will hear proposals for stimulating our economy which 
is lagging.
    I would hope and ask Mr. Oberstar and others on the 
Committee that building our Nation's infrastructure be an 
investment that we look at on a joint basis because rather than 
sending folks a check of a few hundred dollars for which they 
will go out and probably buy some more imported goods, we could 
be investing in our Nation's infrastructure, and I would hope 
that that would be a key component, that we build on some of 
the recommendations not in September 2009, but now.
    So I would propose, finally, that we take your good 
blueprint and the items we can agree on in investment in 
infrastructure and use that as part of an economic stimulus 
package.
    So, with those comments, Mr. Chairman, I am pleased to hear 
the members of the Commission and their report to us today. I 
yield back.
    Mr. Oberstar. I thank the gentleman.
    Just for a point of clarification, Secretary Peters in her 
capacity as Chair of the Commission was invited to testify with 
the Commission. But since hers is a minority report, just as 
with the Supreme Court, when the Chief Justice is not in the 
majority, he does not deliver the opinion from the bench. The 
Justice designated to write the majority opinion does so.
    So, the Secretary was invited to participate with the 
Commission or to testify separately or to testify at a separate 
hearing. She declined those options.
    As for the future of the gas tax and the Secretary's views 
thereupon in this Administration, they will be here when we 
make those decisions.
    Mr. DeFazio.
    Mr. DeFazio. Thank you, Mr. Chairman.
    I want to thank the members of the Commission for their 
work and the grist they have provided for the coming debate 
over the reauthorization of the surface transportation 
legislation in the next Congress.
    I think the most important thing for Members of this 
Committee and the Administration to know from this report is 
the extraordinary and growing gap between the needs of the 
American people, the traveling public, the American economy and 
the Nation's infrastructure.
    We only need to travel to some of our competitor nations, 
China and others, to see what massive investment is doing to 
promote their economy and their economic competitiveness. Here, 
we are investing at a rate of a third world nation, and we are 
moving toward a third world transportation system: more 
congested, less safe, in fact at times, catastrophically unsafe 
as we saw with the bridge collapse last summer.
    Now, the most controversial thing is going to be how are we 
going to pay for those investments. As the Chairman said, that 
is something to be decided at a future date or how close are we 
going to come to your numbers, but your numbers are astounding.
    We are basically, in aggregate, between the private sector 
and the public sector at all levels, investing, by what I think 
is a pretty well documented in your report, about one third of 
what we should be investing if we want to have a more 
competitive, less congested and safer future for the American 
traveling public, more fuel efficient and kinder to the 
environment.
    We are investing in aggregate, again well substantiated in 
your report, less than we need to maintain the investment of 
the Eisenhower generation in the national transportation 
infrastructure. That is astounding.
    Every day, we are losing ground. Every day, we are moving 
closer to more bridge collapses. Every day, our roads are more 
congested, and we are not even investing enough to maintain the 
existing system. That is an extraordinary condemnation of the 
current process.
    I, too, regret the Secretary isn't here today. I would have 
loved to have her come and defend the indefensible, which is 
her position that we need to phase out any Federal involvement 
and there is no Federal obligation to the national 
transportation system. She says that by saying we should freeze 
the current levels of investment by the Federal Government, and 
we will solve all the problems through rationing, otherwise 
called congestion management.
    Ration the system, price people off it, price independent 
truckers off it, price working Americans off it, and it will be 
less congested. The Lexuses will just speed their way to work. 
That is not a solution in the national interest.
    Secondly, of course, she says privatization will solve all. 
All we have to do is add on the costs of the borrowing and the 
profits instead of financing it through public entities. That 
doesn't seem to be a real rational argument to me.
    Then finally, of course, she's a big fan of tolling. This 
is unbelievably simplistic coming from the person in this 
Administration most responsible for setting a path to the 
future. But, luckily, when this Congress or the next Congress 
sets a path to the future, we will be dealing with a different 
and hopefully more enlightened Administration.
    I look forward to the testimony and discussion.
    Thank you, Mr. Chairman.
    Mr. Oberstar. I thank the gentleman.
    Mr. Duncan, Ranking Member of the Subcommittee.
    Mr. Duncan. Thank you very much, Mr. Chairman.
    First, I want to join Chairman Oberstar and Ranking Member 
Mica and Chairman DeFazio in expressing my appreciation to the 
Commission for this report.
    I think considering the quality of the membership of this 
Commission and the hard work that they put into it--20 months 
of work, 22 hearings, 300 witnesses--I think that we should pay 
more attention to this report than probably any report we have 
ever received, and I think that all the Members of the 
Committee or hopefully all the Members of the Committee will 
thoroughly review and study this report.
    The Commission has clearly recognized the importance of the 
transportation system to the Nation's economic prosperity and 
the enormous challenges we will face addressing these needs 
over the next 50 years, and I might say we are going to have to 
if we are going to keep up with our global competitors who are 
moving much, much faster in these areas at this time than we 
are.
    The report identifies opportunities to simplify and 
consolidate programs and funding categories. More flexibility 
for States and localities is a good thing.
    I do agree with Chairman DeFazio, though, that there is an 
important and legitimate Federal role in these areas. People in 
Tennessee use the highways and the infrastructure in California 
and vice versa, and it is the same for the entire Nation.
    The report makes concrete proposals to streamline the 
current planning and environmental processes for transportation 
projects. This is something that we really need to work on. 
Once again, other countries, China and Japan and India and most 
other countries that are moving forward economically, move much 
faster than the seven to ten years that it typically takes on 
major highway projects and other transportation projects.
    The report recommends that funding decisions be based on 
performance and outcome and relying more on public-private 
partnerships. These are all areas of agreement that give us 
real change and improvements in the way that the Federal 
highway, transit and safety programs are organized and managed.
    We need to also encourage, in every way possible, more 
domestic energy production because we have to bring down these 
costs for the American people or at least hold them stable and 
not have our Country and our people as vulnerable to foreign 
energy producers as they are now.
    In addition to that, the conservative foreign policy 
columnist, Georgeanne Geyer, wrote, in 2003, words that I think 
are very prophetic. She wrote that Americans will inevitably 
come to a point when they will have to choose between a 
government that provides services at home or one that seeks 
empire across the globe.
    We know, we all know that we have spent, I think some 
estimates are $750 billion or $800 billion on the wars in Iraq 
and Afghanistan, and we are still spending at staggering rates. 
But, on top of that, we are spending megabillions in many, many 
other countries, in fact, every other country around the world 
through every department and agency almost of the entire 
Federal Government.
    We have to reach a point where we have to start putting our 
own people and our own needs first once again. We need to tell 
other countries we need to have trade and tourism, and we need 
to have cultural and educational exchanges, and we need to help 
out during humanitarian crises. But we have to start.
    It is perhaps a quaint and old-fashioned notion that the 
first obligation of the American Congress should be to the 
American people, and it is certainly true in this area. We will 
fall drastically behind if we don't starting doing that in the 
very near future.
    I hope that we will enact many of the recommendations of 
this Commission as we go forward in the very near future, and I 
want to thank the Commission once again and especially Vice 
Chairman Schenendorf who served us so long and faithfully here 
on this Committee.
    Thank you very much, Mr. Chairman.
    Mr. Oberstar. I thank the gentleman for his thoughtful 
observations. He has been a very productive and considerate 
Member of this Committee for a very long time, and I appreciate 
his observations.
    You heard from us, at least some of us. Now is our turn to 
hear from you.
    Mr. Schenendorf, welcome back to the Committee in a 
different role. You are used to sitting on this side of that 
table except during markups, and now you come to us in a new 
capacity and we are delighted to have you back in familiar 
environs.
    Normally, witnesses have five minutes to present their 
views, but this is a very substantial subject matter, and so we 
give you such time as you may require to present the report and 
then to allocate time to your fellow commissioners.
    If I understood right, you chose to go in an alphabetical 
arrangement. It is up to you, whatever you wish to do with the 
panel. The time is yours.

TESTIMONY OF VICE CHAIR JACK SCHENENDORF, OF COUNSEL, COVINGTON 
 AND BURLING; COMMISSIONER STEVE HEMINGER, EXECUTIVE DIRECTOR, 
  METROPOLITAN TRANSPORTATION COMMISSION; COMMISSIONER STEVE 
  ODLAND, CHAIRMAN AND CEO, OFFICE DEPOT; THE HONORABLE FRANK 
      BUSALACCHI, WISCONSIN DEPARTMENT OF TRANSPORTATION; 
 COMMISSIONER MATTHEW ROSE, CEO, BURLINGTON NORTHERN SANTA FE; 
     COMMISSIONER FRANK MC ARDLE, SENIOR ADVISOR, GENERAL 
   CONTRACTORS ASSOCIATION OF NEW YORK; COMMISSIONER PATRICK 
   QUINN, CO-CHAIRMAN, U.S. XPRESS ENTERPRISES; COMMISSIONER 
 RAYMOND R. GEDDES, DIRECTOR OF UNDERGRADUATE STUDIES, CORNELL 
   UNIVERSITY DEPARTMENT OF POLICY ANALYSIS AND MANAGEMENT; 
      COMMISSIONER TOM SKANCKE, CEO, THE SKANCKE COMPANY; 
  COMMISSIONER PAUL WEYRICH, CHAIRMAN AND CEO, FREE CONGRESS 
                           FOUNDATION

    Mr. Schenendorf. Thank you, Mr. Chairman.
    I am Jack Schenendorf. I am Of Counsel with Covington and 
Burling, a law firm in Washington, D.C. I have had the honor of 
serving as the Vice Chair of the Commission, and it is in this 
capacity that I am testifying before you today.
    Before discussing our recommendations, on behalf of all of 
the commissioners, we would like to thank our Chair, Secretary 
Mary Peters, who did an outstanding job in guiding us through 
this effort and all the Department of Transportation staff 
assigned to the Commission especially our Executive Director, 
Susan Binder. Their professionalism, expertise and dedication 
were instrumental in our success.
    Our recommendations are the product of a bipartisan 
consensus of a diverse group of commissioners, five appointed 
by Republican officeholders, four appointed by Democratic 
officeholders, from both ends of the political spectrum and 
everywhere in between, from all regions of the Country, the CEO 
of a company that relies on transportation services, the CEO of 
a trucking company, the CEO of a rail company, a State 
transportation official and a local transportation official. 
Despite our differences, we were all able to coalesce around 
the findings and recommendations in the Commission's report.
    I should also note that three of the commissioners 
dissented: Secretary Peters, Former Deputy Secretary Cino and 
Commissioner Geddes. Once you have thoroughly studied and 
memorized the Commission report itself, I would encourage you 
to read their dissenting views that are also included in the 
report.
    My oral testimony today will focus on our key 
recommendations.
    Our first key recommendation is that to keep America 
competitive, we are recommending a significant increased 
investment in our national surface transportation system, and 
we are recommending that investment start now. We cannot afford 
to wait.
    Any effort to address the future transportation needs of 
the United States must come to grips with the sobering 
financial reality of such an undertaking. We estimate that the 
United States needs to invest at least $225 billion annually 
for the next 50 years to upgrade our existing transportation 
network to a state of good repair and to build the more 
advanced facilities we will require to remain competitive. We 
are spending less than 40 percent of that amount now.
    Our second key recommendation is that we are recommending 
that the Federal Government be a full partner with States, 
local governments and the private sector in addressing this 
looming transportation crisis. We believe that the Federal 
Government must continue to be part of the solution both in 
terms of providing leadership and in terms of providing a fair 
share of the resources.
    Our third key recommendation is really the heart of our 
recommendations. It is reform with a capital R. We are 
recommending fundamental and wide-ranging reform of the Federal 
transportation program. We do not believe that the Federal 
program should be reauthorized in its current form. Instead, we 
are calling for a new beginning.
    We are recommending that the existing 108 and some odd 
Federal transportation programs be replaced with 10 new 
programs that are performance-driven, outcome-based, generally 
modal-neutral and refocused to pursue objectives of genuine 
national interest. We are also recommending that the project 
delivery time be reduced dramatically, and we are recommending 
a BRAC-type commission to help depoliticize the process.
    We believe that a mission or sense of purpose must be 
restored to the Federal program. Since completion of the 
interstate system, the program has had no clear mission. It is 
now essentially a block grant model with little or no 
accountability for specific outcomes.
    We believe this must change. That is why we are 
recommending these 10 new performance-based programs. These 
programs would be as follows:
    First, a program designed to bring our existing highways, 
bridges and mass transit systems into a state of good repair. 
Second, a freight program designed to speed the flow of goods 
to enhance U.S. global competitiveness;
    Third, a program designed to reduce congestion in our 
largest metropolitan areas with a population of a million or 
more by some sort of performance standard like reducing 
congestion by 20 percent by 2025, something that people can 
understand and can measure.
    A program designed to improve access and mobility in 
smaller cities and rural areas; a program designed to improve 
safety by cutting fatalities by 50 percent by 2025; a program 
designed to provide high speed passenger rail service in the 
Nation's high growth corridors of three to five hundred miles 
long.
    We would also propose programs designed for environmental 
stewardship, energy security, Federal lands and research and 
development.
    These programs would give rise to a national surface 
transportation strategic plan that would guide Federal 
investment. U.S. DOT State and regional officials and other 
stakeholders would establish performance standards in the 
Federal program areas outlined above and develop detailed plans 
to achieve those standards. Detailed cost estimates would also 
be developed.
    These plans would then be assembled into a national surface 
transportation strategic plan very much of the type that 
Congressman Mica has been talking about. This Federal 
investment would be directed by the national strategic plan. 
Only projects called for in the plans would be eligible for 
Federal funding, and all levels of government would be 
accountable to the public for achieving the results promised.
    This would be a dramatic new way to run the program, but we 
believe that it would restore a sense of mission, a sense of 
mission that the American people agreed was in the national 
interest and therefore the American people would be willing to 
pay for it.
    Our fourth key recommendation involves financing and to 
close the investment gap, we are recommending a wide range of 
revenue enhancements. Mr. Chairman, there is no free lunch when 
it comes to infrastructure investment. Policy changes, though 
necessary, will not be enough in their own to produce the 
transportation system the Nation needs in the 21st Century. We 
need significant new funding as well.
    Here are our major financing recommendations: First, as a 
general matter, we strongly support the principle of user 
financing that has been at the core of the Nation's 
transportation system for half a century, and we are also 
recommending continuation of the budgetary protections for the 
Highway Trust Fund so that user fees benefit the people and 
industries that pay them.
    With respect to specific recommendations, let me start with 
the long term recommendations first. The most promising 
alternative to the motor fuel tax for the long term appears to 
be the Vehicle Miles Traveled fee, provided that substantial 
privacy and collection cost issues can be addressed. We are 
recommending that we transition to the VMT fee as quickly as 
possibly and have suggested specific steps for the next 
reauthorization bill to hasten that process.
    Like the National Academy of Sciences, we think it is going 
to take until 2025 to get there because you have to basically 
solve the problems with the system, get the whole system in 
place and then, to a certain degree, you have to turn over the 
fleet in order that all the vehicles basically have the 
equipment in them to allow for this type of system and to 
minimize the retrofit.
    Now, maybe it will be sooner than 2025. Maybe it will be 
2020, 2015. Maybe it will be 2030. But we think we need to move 
as quickly as possible in that direction.
    With respect to the interim, in other words, the period 
from 2010 until the time that this replacement fee can be put 
in place, whatever that period of time is, we are recommending 
a comprehensive set of recommendations for how to pay for the 
program.
    First, we are recommending that the Federal motor fuel tax 
be raised by 25 to 40 cents per gallon over 5 years. This 
increase would be phased in over a five year period, so it 
would be 5 to 8 cents per gallon per year, and it should be 
indexed for inflation.
    This works out in year five, if the Congress were to adopt 
this, this would mean to the average motorist 41 cents a day or 
66 cents a day or somewhere in that range for the 25 to 40 cent 
increase in the gas tax.
    Second, we are recommending other Federal user fees to 
address the funding shortfall such as a freight fee for goods 
movement projects, dedication of a portion of the existing 
customs duties and ticket taxes for passenger rail 
improvements. Tax and regulatory policy can also play an 
incentivizing role in expanding freight and intermodal 
networks.
    In addition, we are recommending that Congress remove 
certain barriers to tolling and congestion pricing under 
conditions that protect the public interest. This will give 
State and local governments that wish to make greater use of 
tolling and pricing the flexibility to do so.
    More specifically, we are recommending that Congress modify 
the current Federal prohibition against tolling on the 
interstate to allow tolling to fund new capacity on the 
interstate as well as the flexibility to price the new capacity 
to manage its performance. We also are recommending that the 
prohibition be modified to allow congestion pricing on the 
interstate in metropolitan areas with populations of greater 
than one million.
    During this interim period, we are also recommending that 
Congress encourage the use of public-private partnerships 
including concessions for highways and other transportation 
modes. Public-private partnerships can serve as a means of 
attracting additional private investment to the surface 
transportation system, provided that conditions are included to 
protect the public interest and the movement of interstate 
commerce.
    We also expect and anticipate that State and local 
governments will have to do their part in raising revenues in 
order to close this investment gap.
    Let me end by saying in this interim period, until you can 
phase in the replacement for the Federal motor fuel tax, we do 
not see any way to raise the money that is necessary without 
having the increase in the motor fuel tax be a significant part 
of the solution. Pricing is a part of the solution. Tolling is 
a part of the solution and private sector investment.
    All those things are a part of the solution, but you also 
need significant increase in the motor fuel tax unless you want 
to shift to the general fund to finance this program which we 
are not recommending.
    Let me close by saying that a failure to act would be 
devastating. The surface transportation of the United States is 
at a crossroads. The future of our Nation's well being, 
vitality and global economic leadership is at stake. We must 
take significant, decisive action now to create and sustain the 
preeminent surface transportation system in the world.
    A failure to act, that is a failure to reform the Federal 
program, refocus it on the national interest and raise 
sufficient revenue to close the investment gap would be 
devastating. The United States would be unable to compete 
effectively in the global marketplace and our quality of life 
would suffer substantially. This is not the outcome we want.
    We must find the political leadership and the political 
will to make the necessary reforms and the necessary 
investment. It will not be easy, but we cannot afford to not do 
so.
    We cannot sit back and wait for the next generation to 
address these ever increasing needs. It will be too late. The 
crisis is now, and we have a responsibility and obligation to 
create a safer, more secure and ever more productive system.
    We need to create and sustain the preeminent surface 
transportation system in the world, and we need to do it now.
    Thank you, Mr. Chairman.
    I would like to turn to the other members of the 
Commission. I will just alternate back and forth and start with 
Commissioner Heminger.
    Mr. Heminger. Thank you, Jack.
    Mr. Chairman, Mr. Mica and Members of the Committee, my 
name is Steve Heminger. I am Executive Director of the 
Metropolitan Transportation Commission which is the 
Metropolitan Planning Organization for the San Francisco Bay 
Area. I was appointed to the Commission by Speaker Pelosi.
    Since I am the first commissioner to speak, I would like to 
say I am sure on behalf of all of us that we owe a great debt 
of gratitude to our Vice Chairman who, because of our outcome, 
as you might imagine, has had to carry additional duties that 
the Vice Chairman normally may not. So we thank you, Jack, for 
your leadership.
    I would like to dwell just in my brief time, Mr. Chairman, 
on two of the new program areas that we are recommending, the 
first in metropolitan mobility.
    The Census Bureau tells us to expect 120 million more 
fellow citizens by the year 2050. From a transportation point 
of view, that kind of growth wouldn't be too tough to handle if 
it were spread all across our wide Country, but it won't be. 
Most of those new Americans will live in metropolitan areas. 
These metropolitan areas are already the economic engines of 
the Nation, and they are bound to become even more so as 
America's population continues to urbanize and cluster near 
large cities.
    In our commission work, as Jack indicated, we have focused 
on major metropolitan areas with more than one million 
residents. These 50 or so areas account for 60 percent of the 
Nation's population in GDP, but they capture an astonishing 90 
percent or more of national market share for 3 key 
transportation indicators: traffic congestion, transit 
ridership and population exposure to auto-related air 
pollution.
    In a nutshell, these major metros are where the action is. 
That is why our Commission report recommends that one of the 
ten new programs focus on restoring mobility to these dense 
urban centers. We think the Nation should set ambitious targets 
to reduce traffic congestion in these areas from today's 
levels, not just to slow the rate of increase.
    In order to do so, metropolitan officials surely will need 
more resources, but they will also need more authority as well 
to experiment with strategies like congestion pricing to help 
unclog some of our key commute and freight corridors. With the 
added resources and authority, we believe strongly should come 
accountability to meet the mobility targets that they set.
    In brief, the Commission believes that it is time to stop 
complaining about traffic congestion and do something about it.
    The second area I wanted to cover is traffic safety, and I 
regret to say that, here, our track record on highway safety in 
America is truly a national tragedy. Every year, over 40,000 
Americans die on the Nation's highways. That is equivalent to a 
9/11 every month, month after month, year after year.
    We constantly hear transportation officials claim that 
safety is job one, and the current Federal bill is even named 
SAFETEA. Yet, the death toll continues.
    With the exception of some rural roads that need to be 
upgraded, our highways themselves are pretty safe. It is the 
drivers who are dangerous. Driver behavior is where we need to 
devote much more attention than we have in the past just as 
countries very similar to ours like Great Britain and Australia 
have done so and achieved much lower fatality rates than our 
own.
    Every State should have a primary seat belt law, yet only 
half do. Every State should have a motorcycle helmet law, but 
only 20 do. Every State should have an ignition interlock law 
that prevents repeat drunk drivers from starting their car if 
they are not sober, but less than a handful do.
    Our Commission report, proposes an aggressive but 
achievable goal of cutting traffic fatalities in half by 2025. 
We can reach that goal but only if the combined might and 
muscle of our Federal, State and local government are brought 
to bear especially in the area, once those laws are passed, of 
enforcing them to make sure they are complied with.
    If we do reach that goal, Mr. Chairman, it would mean 
20,000 more Americans every year would be able to tell their 
loved ones about their drive home from work each day.
    Thank you very much.
    Mr. Oberstar. I am going to intercede for just a moment to 
observe your observations are quite right. I participated 
recently in a European Union discussion on highway safety, and 
the same issues pertain in Europe with five million people, 
fewer miles of roadway, fewer miles driven, 42,000 fatalities 
but the same concerns that you cited.
    Thank you.
    Mr. Schenendorf. Commissioner Odland.
    Mr. Odland. Thank you, Mr. Chairman.
    I am Steve Odland, the Chairman and CEO of Office Depot. I 
am pleased to be here as a business leader and a commercial 
user of the highway system and our entire surface 
transportation system.
    Office Depot is nearly a $16 billion office supply company. 
We operate in 34 countries. We have shipments to over 1,200 
stores here in North America, and we have next day delivery of 
supplies to businesses, education, government, hospitals from 
over 32 different distribution facilities in the United States.
    We do over 100,000 deliveries per day. We are third largest 
internet retailer in the world with nearly $5 billion in sales.
    As a user and a contributor to the system, I believe the 
surface transportation system is at a crossroads. The future of 
our Nation's well being, our vitality and our global economic 
leadership is at stake. We must take significant action now to 
create and sustain the preeminent surface transportation system 
in the world.
    Surface transportation is obviously important. It is 
important to defense, but it is very important to commerce. 
People move to and from their places of work. We move goods and 
services within the Country, and we move goods and services to 
the ports for export and from the ports for import.
    The United States now has incredible economic potential and 
significant transportation needs. We have said before we need 
to invest $225 billion a year for the next 50 years to upgrade 
the existing system to a state of good repair and to begin 
creating a more advanced surface transportation system to 
sustain and ensure our long term economic leadership.
    The needs of the infrastructure are clear. This is not the 
first commission to identify the needs of the system, but it is 
time for us to face the facts. Continued under-investment in 
business as usual policies and programs will have a detrimental 
effect on the United States and our ability to compete in the 
world economy as well as on the everyday lives of Americans.
    Steady economic growth and increasing and shifting 
population make a high performance transportation system more 
important than ever. To maintain the margin of the U.S. 
competitive advantage, a transportation network providing fast, 
reliable, cost effective performance is critical.
    We have some things that are working very well. First of 
all, the interstate highway system works well. The consistency 
of the system for the users and the ease of use is very 
important, and we have capacity outside of the urban areas, and 
we also have capacity inside urban areas during certain times 
of the day and week.
    But the issues are metropolitan congestion, our road 
conditions, safety, and we have a lot of congestion. By 
estimates, congestion costs our Country between 78 and 200 
billion dollars a year. So we can argue about the needs of the 
investment, but we are investing today, and it is called waste 
through congestion.
    Congestion causes us to carry more inventory and therefore 
inefficient use of capital. It causes us more variable 
operating costs. It causes lowered customer service, lowered 
efficiency and profits and less global competitiveness.
    In a just-in-time world, America needs to ensure it has the 
right capacity in the right places to compete just in time. 
That local truck that delivers goods to a neighborhood store is 
often the last move in the supply chain that spans half the 
world while the final retail price of those goods reflect 
10,000 miles of hard-gained freight transportation efficiencies 
within that chain.
    As we said, over the next 50 years, the population will 
grow by nearly 50 percent, but our GDP can triple in that 
period of time. In order to accomplish that, we need the 
capacity in the system to do it. If we don't step up and focus 
on this, we risk slipping from first place in the world to 
second or even third place as other countries pass us by.
    Maintenance and expansion of our freight system will 
require a set of policy tools and incent more private 
investment and direct public funds towards projects which 
alleviate the capacity constraints and allow for more traffic 
to flow across an efficient, sustainable intermodal freight 
network.
    Now, when it comes to funding and financing, every option 
must be used to address these problems. The gas tax is one of 
these means. In effect, it is, we believe, a user fee.
    In the system, overhead is already in place to ensure that 
100 percent of every dollar collected is available for 
investment. Contrast that to tolling authorities which can use 
up to 50 percent of their collection to cover their overhead.
    While I believe strongly in the free market and a 
capitalist system and I believe in the role of the private 
sector, the Federal Government also plays a role in funding and 
managing the surface transportation sector within a combined 
effort with the private sector. But we need to depoliticize 
this process.
    Outside of this town, people don't think in terms of 
politics. We think in terms of moving goods and moving people. 
The politics are getting in the way for Americans, and 
Americans are beginning to criticize our elected leaders and 
our private sector leaders. I think everyone from Congress 
itself to business to mainstream America is frustrated with the 
current process.
    This recommendation creates a lot of new things. NASTRAC is 
one of them. NASTRAC is recommended to help take the politics 
out of the governance of this 50 year plan and ensure the 
funding is targeted at the projects that are required for the 
entire 50 year plan and the entire U.S. system. This precedent 
for a Commission has been set in other areas and has been 
successful.
    We realize this is a bit visionary on our part, but we were 
asked to be visionary and step out of our comfort zone, and we 
hope that you consider that.
    Our transportation system has helped us to build the 
greatest economic powerhouse in history. This has allowed us to 
become the greatest superpower Nation in history. We should 
seek to build on that legacy for the next 50 years, and our 
recommendations are designed to create and sustain what we 
believe will be the preeminent surface transportation system in 
the world.
    Thank you, Mr. Chairman.
    Mr. Schenendorf. Commissioner Busalacchi.
    Mr. Busalacchi. Thank you, Jack.
    Good morning, Mr. Chairman, all Members of the Committee.
    My name is Frank Busalacchi. I am Secretary of the 
Wisconsin Department of Transportation and also the Chair of 
the States for Passenger Rail Coalition.
    As a commissioner, I have had a unique opportunity to share 
my perspective and goal for a new direction in national 
transportation policy, one that includes a Federal-State 
funding partnership for intercity passenger rail similar to the 
partnerships that exist for highways, transit and aviation.
    The Commission heard testimony from State and local 
officials and others asking for additional public investment in 
intercity passenger rail. The Commission agrees that passenger 
rail must be a part of a multi-modal solution. It can help 
alleviate highway and airway congestion, high gas prices and 
the impacts of global warming.
    We don't envision rail replacing other modes. We see rail 
providing greater mobility to help meet the needs of our 
growing and aging population.
    To assist the Commission in advising Congress, I engaged a 
passenger rail working group to provide analysis. This group 
created a 2050 map and cost estimates for passenger rail 
improvements. The map focuses city to city connections in 
corridors of 500 miles or less. The map provides one 
perspective on the future of passenger rail. It is entirely 
illustrative.
    Individual States will be responsible for their own rail 
plans and, with Congressional support, they will be empowered 
to implement them.
    Of the 10 new transportation programs recommended by the 
Commission, intercity passenger rail is the only modally 
focused program. The Federal Government will fund 80 percent of 
the program similar to other modes. Fifty years ago, a bold 
vision and strong commitment to funding the interstate highway 
system made it all possible.
    Today, both our highway and aviation systems are congested. 
It is time to invest in another mode and to provide our 
citizens a modal choice.
    I commend my colleagues on the Commission for agreeing to 
this bold new vision for passenger rail. We are united in our 
view that this Nation needs passenger rail if it is to achieve 
its vision of being the preeminent transportation system in the 
world.
    Thank you.
    Mr. Schenendorf. Thank you.
    Commissioner Rose.
    Mr. Rose. Thank you, Jack.
    Chairman Oberstar, Ranking Member Mica, it is always good 
to be here, testifying. Sometimes it is more enjoyable than 
others and this is one of those days.
    [Laughter.]
    Mr. Rose. Most of you know me as the freight rail 
individual, so I will limit my remarks to the impact of freight 
rail.
    The Commission essentially concluded that freight rail 
capacity needs to be expanded systematically over the next 50 
years and also determined that freight rail market share should 
be increased. In sum, here is what the report recommended:
    First, promoting private investment, the report recognizes 
that private investment is and always will be the primary means 
of meeting these goals. It states that rational regulatory 
policies--economic, safety, security, labor and environmental--
are fundamental to sustaining private investment. It also 
supports incenting private investment in freight rail network 
expansion.
    Second, promoting public-private partnerships, the 
Commission made freight-related programmatic recommendations 
that I predict will be hotly debated in freight stakeholder 
circles. The Commission believes that there ought to be a 
freight program to help expand and decongest freight networks 
and recommends more funding for freight programs from a variety 
of sources and broad eligibility across these programs.
    Additional funding should include gas tax revenues and also 
a portion of the customs fees, any revenues the Federal 
Government might realize from greenhouse gas regulation and a 
freight fee.
    Trade is the key driver for these increasing volumes. So I 
think that customs duties are an appropriate source of revenue 
to help fund this freight program. Diverting just 5 percent of 
the customs duties would generate almost $2 billion annually, 
and it would not displace freight between any ports of entry. 
Also, collection and administration is already established.
    The Commission was not specific about any form of the 
freight fee which Congress might authorize such as container 
fee or a waybill surcharge, but it did clearly state that it 
must not burden commerce. No local and State proliferation of 
such fees, no private sector administration requirements since 
steamship lines, trucking or rail companies will find it hard 
to pass along a fee to the ultimate customer.
    The Commission recognized that the payers of such a fee 
must realize the benefit of improved freight flows. This is a 
fundamental user fee principle. Shippers agree to pay for the 
Alameda Corridor because they can see the benefits, capacity 
and throughput as well as a benefit to the surrounding Los 
Angeles neighborhoods.
    I will, no doubt, be asked, should there be a freight trust 
fund? The rail industry has long had no trust that the funds 
would flow to project those projects to meet the goals of goods 
movements versus the political earmarking process. The 
Commission makes a variety of recommendations for creating 
transparency and accountability in directing funds to high 
priority freight projects.
    Achieving responsible governance around project funding 
will be critical to obtaining the freight community's support. 
I could not support any freight fee and related freight program 
without it.
    I would like to mention the passenger rail provisions of 
the report. I urge this Committee to commit itself to a bold 
vision of high speed passenger rail in the next transportation 
bill, a vision in which high speed passenger rail is the 
starting point rather than the end point. Incrementalism, where 
more passenger rail is added to the existing freight networks 
until it is completely full will be frustrating and potentially 
counterproductive in light of growing freight revenues.
    The Commission envisions high speed rail and was clear 
about the need to protect and expand the underlying freight 
railroad networks where joint use exists. The key principles 
where passenger rail is feasible focuses on corridor service, 
negotiating at an arm's length mitigating the present and 
future rail capacity impacts and paying for the capacity costs 
of the passenger traffic.
    In an era of rising gas prices and full recognition of 
transportation's impact on the environment, Americans need a 
real passenger rail alternative but, quite frankly, we can't do 
it on the cheap.
    Finally, for the first time, this Commission has 
demonstrated the need to integrate freight into the Nation's 
infrastructure policy.
    I look forward to any questions you might have.
    Mr. Schenendorf. Thank you, Matt.
    Commissioner McArdle.
    Mr. McArdle. Good morning. Thank you very much, Mr. 
Chairman.
    My name is Frank McArdle, the former Managing Director of 
the General Contractors Association of New York which 
represents the heavy construction industry and am now a Senior 
Advisor with that group.
    I want to begin by acknowledging my Congressman, your 
colleague, Congressman Nadler, and I want to tell you perhaps a 
little story to reflect the value of the investments that you 
make in the system.
    Some 30 years ago, when Congressman Nadler and I lived just 
a block apart, we spent many a Saturday morning at the corner 
of 94th and Broadway, talking about transportation, spending an 
hour or so almost every week on the issues.
    When we started that dialogue, the New York City subway 
system had been allowed to run down and deteriorate and wear 
out. There had been no substantive investment in maintenance or 
upgrading, and the New York City economy reflected that. 
Businesses were fleeing because they could not get people to 
their places of work in Manhattan from the homes and apartments 
in which they lived.
    But an investment program started, and the system is well 
established, well directed towards a state of good repair, and 
the economy flourishes.
    There is a very simple measure of how effective the dollars 
you provided in that effort have been. When we started our 
dialogue, you could buy a one bedroom apartment on the West 
Side where we lived for $20,000. Today, 30 years later, you 
would be paying $800,000 for that one bedroom apartment, and 
people do it every day because they want to be in a Manhattan 
that works well because of its mass transit system.
    But that system will only survive and expand, as so many 
other elements will, if you continue the kinds of investment 
programs that we recommend.
    I want to make one other point to you, and that gets to the 
issue of energy. We now rely on petroleum for 97 percent of the 
energy that runs our transportation system, 97 percent. Two 
thirds of all the petroleum we use in the United States goes 
into transportation. That is 16 percent of the world's 
production, and it is increasingly in the hands of people who 
do not like us.
    The programs we laid out for you in every aspect of 
metropolitan mobility, freight or rural and smaller cities 
programs, they will help us better focus on transportation in a 
way that will in fact reduce our dependence on foreign oil.
    In addition, we have two other proposals that I would call 
to your attention. One is a major investment program in the 
research for alternative fuels and a second recommendation that 
you act to accelerate the development of the infrastructure and 
the fleet conversions to those alternative fuels. We will not 
get to alternative fuels as quickly as we can unless the 
infrastructure is in place for the drivers to rely on, and you 
can help make that possible.
    Thank you.
    Mr. Schenendorf. Thank you.
    Commissioner Quinn.
    Mr. Quinn. Thank you, Jack.
    Good morning. Thank you for the opportunity to appear here 
today.
    My name is Pat Quinn. I am Co-Chairman and President of 
U.S. Xpress Enterprises which is a trucking company 
headquartered in Chattanooga, Tennessee. As a participant in an 
industry that basically lives on our Nation's highways, I have 
a keen perspective of how the changes that are occurring there 
are limiting the growth of our economy.
    This report properly identifies, I think, the future 
infrastructure investment needs that have to happen in our 
economy.
    Commissioner Odland, who is also a customer of ours, 
properly said that the delivery of goods depends upon just-in-
time delivery, and I can tell you that every day just-in-time 
delivery is becoming more of I will get it there when I can and 
sometimes if I can. It is due to the congestion.
    We heard the estimates of $78 billion to perhaps $200 
billion a year wasted in that, and more than 40 percent of that 
is due to bottlenecks. These bottlenecks that are occurring in 
our major cities and freight bottlenecks have to be addressed 
or Congressman DeFazio's statements are exactly right. We will 
become a third world economy from a transportation standpoint 
because the infrastructure just is not there to move goods.
    It simply means when delays in that cycle happen, it puts 
more goods on the road to meet the needs of the customers 
because there is more of it in transit. That almost is a self-
fulfilling prophecy of doom. We just add that much more 
congestion there to meet the same delivery requirements.
    And so, I think investment in the infrastructure has to 
occur, and I think that our report properly recognizes that.
    It explicitly recommends that a new freight transportation 
program should target efforts to eliminate freight bottlenecks 
and those inefficiencies that develop from them, system-wide 
improvements targeted to trucking productivity should address 
incident management, innovative off-peak freight delivery 
systems and technology and equipment improvements.
    It also recommends that the U.S. Department of 
Transportation begin the formation of a national freight 
transportation plan by establishing performance standards such 
as congestion, hours of delay, ability to support heavier and 
larger vehicles and national goals intended to meet the needs 
of private freight haulers and shippers.
    While we are encouraging the increased utilization of 
tolling and public-private partnerships and other funding 
mechanisms, as a user again with paying, obviously, the 
majority of fuel taxes by the industry that is out there, it is 
sometimes difficult to recommend that those be increased, but I 
think that there is no alternative today but to.
    That is the mechanism that exists. It is the fairest 
mechanism, and I think that it is what we have to use because 
the needs are just overwhelming. They have to be met at this 
point in time.
    Lastly, certainly Commissioner Heminger properly noted the 
safety concerns as I do too and concur in his views on that. We 
have to address safety on our Nation's highways. From our own 
company as well as the companies that we serve on the highway, 
we are all concerned about that. There are innovations and 
things that can happen out there to make our highways safer 
both for the movement of freight but for the movement of our 
families and our friends.
    Thank you very much for this opportunity.
    Mr. Schenendorf. Commissioner Geddes.
    Mr. Geddes. Thank you, Jack.
    Thank you, Chairman Oberstar, Committee Members and fellow 
Commissioners.
    My name is Rick Geddes, and I am an Associate Professor and 
Director of Undergraduate Studies in the Department of Policy 
Analysis and Management at Cornell University.
    Thank you for the opportunity to serve on this 
distinguished Commission. It has been a pleasure to serve with 
such a distinguished group of colleagues.
    I have noticed recently in some coverage of the 
Commission's report that it is focused on some of the 
respectful disagreements amongst the commissioners on some of 
the recommendations. I am quite concerned that if that focus 
continues, the importance of a number of the key 
recommendations on which this Commission is unanimous will be 
lost, and I think that would be unfortunate. I, therefore, want 
to emphasize just a few of the concepts of recommendations, 
some of which Jack covered in his opening statement, which the 
Commission unanimously supports.
    This Commission unanimously supports the need for 
substantial increase in investment in the Nation's surface 
transportation infrastructure.
    This Commission unanimously recommends that Federal 
transportation programs be simplified, consolidated and 
streamlined.
    This Commission unanimously recommends that overall project 
delivery times be drastically reduced.
    This Commission unanimously recommends that Federal 
programs be refocused on a small number of key areas where 
there is a compelling national interest.
    This Commission unanimously recommends that a performance-
driven, outcome-based approach be adopted with regard to all 
investments in transportation infrastructure.
    This Commission unanimously recommends the use of cost-
benefit analysis in the assessment of the efficacy of 
investment decisions.
    This Commission unanimously recognizes that tolling and 
pricing are important components of any solutions to the 
formidable problems facing our Nation's surface transportation 
infrastructure.
    This Commission recognizes that private investment has an 
important role to play in the funding of our Nation's surface 
transportation infrastructure.
    This Commission recognizes that all modes have an important 
contribution to make in solving our Nation's surface 
transportation infrastructure problems.
    This list is only a short list of the recommendations on 
which this Commission, after a long and arduous process, has 
found unanimity. I believe that all of these recommendations, 
if adopted, will have important beneficial effects on our 
surface transportation system, going forward, and I believe 
that this will be a lasting contribution of this Commission.
    I look forward to your questions. Thank you.
    Mr. Schenendorf. Commissioner Skancke.
    Mr. Skancke. Thank you, Jack.
    Good morning, Mr. Chairman, Ranking Member Mica and Members 
of the Committee.
    My name is Tom Skancke, and I am a transportation 
consultant in Las Vegas, Nevada. It has been an honor for me 
and a privilege to serve on this Commission for the past 22 
months with such distinguished and credible people. I cannot 
imagine 12 other individuals that could have served our great 
Nation in this capacity.
    I would also like to thank you, Mr. Chairman and Members of 
this Committee, for the additional time for us to complete our 
work. I don't believe that this job could have been done in the 
12 months that we were allowed originally.
    As my colleagues know, I have spent most of my professional 
life working in the private sector to bring to completion 
important needed transportation projects across this Nation. I 
have done so within the framework and rules and regulations and 
laws passed by Congress, and I must say that the transportation 
crisis of the Nation that we have never seen before, one that 
is likely not to change unless Congress does something very 
quickly and very swiftly.
    I would like to thank the Ranking Member for bringing 
forward this morning in his comments the project delivery 
process. That is where I would like to focus my comments today 
because I believe and we have heard across the Country that the 
project delivery process causes a lot of waste in both time and 
in money.
    As we traveled across America in our field hearings, 
listening to the American public and DOT directors across the 
Country, we learned and it was proven to us that when you add 
one Federal dollar to a transportation project, that adds a 
minimum of ten to fourteen years to a project before it 
actually gets started for construction. Now some will say that 
is about the NEPA process, and I will tell you that the 
elaborate process surrounding NEPA is a part of the problem but 
not the entire problem.
    I realize that this process is an environmental hot button 
here in Washington, D.C. and across the Country, and I will 
likely have to start my car from a remote location if I 
continue this debate on the delivery process. But when you add 
one Federal dollar to a project, it adds fourteen years to the 
delivery time.
    I am not going to discuss today what happens with you in 
the New Starts Program because that is an entirely different 
subject, but let me explain to you briefly.
    For a $1 billion project today in 2008 dollars, by the time 
that project is completed in 2022, the cost of that has cost 
the American taxpaying public an additional 3 to 4 billion 
dollars. When you add inflation, review time, product cost 
increases, public bidding processes and the like, ladies and 
gentlemen, we are spending money we just don't have and future 
money that can better be spent elsewhere.
    If I may, Mr. Chairman, if that $1 billion took only five 
years instead of fourteen years, we could not only have the 
project earlier to meet the community's needs, but we would 
have more money to authorize for more projects. We could maybe 
upgrade 200 additional $50 million interchanges. We could fix 
maybe 150 other bridges.
    We could add additional freight and passenger rail lines, 
improve our transit system and we could add capacity equal to 
hundreds of additional lane miles with new technology, lanes or 
up to date design to provide congestion relief and save money.
    The leftover money, Mr. Chairman, we could maybe provide 
for more bike lanes, pedestrian walkways and have cleaner, 
safer and healthier environment.
    The delivery and funding crisis is not coming. The delivery 
and funding crisis has arrived.
    The United States is a great Nation that has created the 
interstate highway system, brought the automobile to the 
masses, adopted the locomotive and built a cross-continental 
rail system thereby developing at the time the world's 
preeminent transportation system. Other countries envy what we 
have which is why they are now trying to emulate what we have 
done.
    To that end, Mr. Chairman and Members of the Committee, I 
encourage you to work towards making our transportation system 
not just the one to be envied by the world but one that is 
delivered in a timely manner. By doing so, we can stay ahead of 
the competition and save our American taxpayers more on their 
hard-earned money for additional transportation projects, for 
their personal quality of life.
    This report is more than just a report about an increase in 
the gas tax, and I hope we don't get lost in that fact.
    This Commission has spent 22 months of hard work. Most of 
us have traveled many, many miles on our own budgets. In fact, 
this Commission ran out of money four months ago.
    Thanks to many of us on this Commission. I would like to 
acknowledge a couple of them. This report here today, the 
executive summary was funded by Steve Heminger in San 
Francisco. Frank Busalacchi and his team at the Wisconsin DOT 
funded the intercity passenger rail working group report.
    Most of us traveled to and from Washington, D.C. for the 
past four months on our own budgets, and we did so because we 
had a job to do, and I believe that the job that we did is one 
worthy of significant consideration.
    I want to thank you all for your time and your years of 
dedication to our Nation and the people who live here.
    It is an honor for me to be here today, and I thank you for 
your time and attention. I will be happy to answer any 
questions, Mr. Chairman, from the Committee. Thank you.
    Mr. Schenendorf. Finally, to wrap things up, we have 
Commissioner Weyrich.
    Mr. Weyrich. Thank you, Mr. Chairman.
    I am Paul Weyrich, Chairman and CEO of the Free Congress 
Foundation. I served on the Amtrak Board for six years. I was 
Vice Chairman of the Amtrak Reform Council. I did 
transportation appropriations work in the Senate. In point of 
fact, I have been involved with transportation for many, many 
years.
    Half of the Country does not have any mass transit and, of 
the cities that have transit, many don't operate a system 
worthy of getting people out of their automobiles and into 
usually buses. People do not like to ride buses which is why 
the Commission recommended an increasing dependence on electric 
rail throughout the Country, particularly the cities that do 
not have it now.
    In fact, at our retreat, we kicked around the notion almost 
of an entitlement based on the size of the city with electric 
buses for smaller communities and then light rail. Frankly, 
there aren't many communities that would have heavy rail. Most 
of them already have it.
    But what we have to do is to fund a first class transit 
system to the point where people have the incentive to get out 
of their automobiles and into the transit system such as we 
have in St. Louis where over half of the people riding that 
system could drive but have chosen the transit system rather 
than driving.
    So, ladies and gentlemen, it is imperative that we offer 
people a choice. Nobody wants to put a gun to anybody's head 
and tell them they have to ride transit. Rather, we want to 
have the kind of systems in place as we have now in some of the 
newer cities that are attracting large numbers of people, 
communities where everybody said that light rail wouldn't work 
and it is working very well, but we want to have that in other 
communities to the point where people will say I want to ride 
that. I will leave my car at home because I have the right kind 
of choice.
    I think transit, after the great society, became a program 
that really was aimed at the transit-dependent and it became 
thought of as a program for the poor and the elderly and so on, 
but look at Metra in Chicago. Most of the people riding that 
commuter rail system are Republicans. Most of them are business 
people. Most of them come into Chicago with their suits and 
briefcases. It is a beautifully run system, and that is the 
kind of system that we are talking about.
    Thank you, Mr. Chairman. I know that you are deeply 
committed to the cause of transit, and I look forward to 
working with you on this project.
    Mr. Schenendorf. Thank you. That is it from us.
    Mr. Oberstar. I want to note for the record that this may 
well be a record. We have had nearly a quorum of the Full 
Committee who have sat here spellbound, I hope--at least I have 
been--for more than an hour while we listened to others instead 
of talking to each other or just talking.
    Splendid presentation, thoughtful contributions from each 
and exceptional dedication and showing of a wide variety of 
interest but all imbued with a sense of mission and of history. 
As I said at the outset, I think this will be, the Commission's 
report will be a transformational moment in the history of 
transportation and will be looked upon as the beginning of the 
21st Century transportation initiative.
    There is an old saying about how to make an omelette. 
First, you have to break some eggs.
    You have broken the eggs in that spirit, taking the mold of 
transportation as we have known it and crafted it. Many of us 
have been here for a long period of that last 50 years of 
transportation and have contributed to shaping the mold that 
you have now proposed to break. To reshape a national surface 
transportation strategic plan, a national surface 
transportation commission based on the BRAC and the postal rate 
commission.
    A stern message to the Committee, to the Congress, to the 
Administration: do not reauthorize in its current form. And a 
suggestion of what to do, instead of an admonition, a 
suggestion, 10 suggestions, specifics, more money into the 
system but subject to benefit-cost analysis, performance-based 
outcomes and 9 points on how to measure them, a project 
delivery process.
    I hope the Commission members looked at what we did in 
SAFETEA-LU on project delivery. Unfortunately, no State to my 
knowledge has yet implemented that project delivery initiative 
that then Chairman Young charged me with establishing and which 
we included in the bill in the House and passed the Senate. But 
the States, I know of no circumstance where a State has 
implemented it, but that is a good starting point and you are 
right to signal this out.
    Then Commissioner Weyrich, on the transit issue, thank you 
for tracing the history. That was a very, very incisive and 
insightful reminder of the evolution of the transit idea. We 
need to shape a new or renewed mission statement for transit, 
and I look forward to working with you to develop that.
    Mr. Skancke, this is a citizens commission, but it is 
probably the first time the citizens have funded their own 
commission to do work for the Federal Government. For that, we 
apologize on behalf of our colleagues on the other side of the 
Hill who have failed.
    I just want to say that this House, on a bipartisan basis, 
has four times passed the technical corrections bill to provide 
the authorization for the funding for the commission. We will 
find a way, I hope, to do it retroactively, and I know that Mr. 
Mica joins me in that initiative because we participated in the 
last Congress and in this Congress.
    I noted that each of the commissioners in one way or 
another said that the funding recommendations are not the 
centerpiece but a part of an overall picture. In that respect, 
I find it very disappointing that the Department of 
Transportation is, in effect, distorting the Commission with 
their various statements, trying to concentrate attention on 
proposals for an increase in the user fee or the gas tax.
    I remind those observers of the scene that in 1956 when the 
Highway Trust Fund was enacted, it was with a three cent user 
fee. A year passed, the Federal Highway Administration came 
back to the Congress. My predecessor was one of the five co-
authors of the Interstate Highway Program, John Blatnik. His 
portrait is over there in the corner.
    They said we need an additional cent. It passed the House 
on a voice vote. It is hard to get even the prayer passed on a 
voice vote these days.
    We need what you have all described and demonstrated, a 
setting aside of partisanship in favor of policy. Policy-ship 
is what we need.
    Thank you for your report.
    Now Mr. Mica.
    Mr. Mica. First of all, I am pleased to see the Commission 
recommend a national strategic infrastructure plan. I tried to 
lobby some of you individually to go that route. I have been on 
the Committee only 15 years--Mr. Oberstar, 32 years--but I 
quickly realized in assuming our side of the aisle's 
responsibility that we just do not have a strategic national 
infrastructure plan.
    People, we are competing against China, Inc. and E.U., Inc. 
It is all about infrastructure trade and business, and we don't 
have a plan.
    So, Mr. Schenendorf, I don't know if you were responsible 
for this, but the Commission, I guess, agreed unanimously we 
need that.
    I notice you put that in a commission. Then you also gave 
them some teeth which I have some questions about, and that 
would be to have the commission set the fluctuating rate for 
the tax. Is that correct and what is the thinking there?
    Mr. Schenendorf. I think initially the plan, the national 
strategic plan would be developed by State and local 
governments. It is really a bottom-up planning process, and 
that would really be done by the State and local governments 
with DOT.
    Mr. Mica. Right.
    Mr. Schenendorf. The commission would simply validate 
various parts of it.
    Mr. Mica. But then the part I question is to date that 
responsibility for setting the tax or the fee has been 
basically Congress, and you are shifting that to the 
commission.
    Mr. Schenendorf. What we are basically saying is that once 
you take this plan and you get the cost estimates, that the 
commission would then basically validate the cost estimate and 
say if you are going to be able to achieve these performance 
standards over this period of time, here is what you need to 
authorize and here is what that would translate into in user 
fee increases.
    Mr. Mica. You are not advocating the commission assume the 
responsibility for enacting it.
    Mr. Schenendorf. It would sent to the Congress for an up or 
down vote like BRAC. Frankly, that proposal came out and is an 
attempt to kind of depoliticize the issue and provide a 
mechanism whereby Congress can come to a yes or no on making 
the investment that is needed for the infrastructure.
    Mr. Mica. Okay. Well, first of all, you identified the need 
and did a great job in that. The issue and Mr. DeFazio and Mr. 
Oberstar and others have said it is all about raising the 
money. I mean we can all identify the need, but we have to 
raise the revenue to address the need.
    Now I would liked that Commissioner Skancke, he identified 
one element which is the process and how much that costs. How 
much do you think we could achieve in increased production or 
in increased project dollars by speeding up the process?
    You gave sort of an example. Again, in the scheme of what 
we need, what do you think we could do by increasing and 
reforming the process?
    Mr. Skancke. Congressman, Ranking Member Mica, we did not 
do an analysis of what we thought we could save, and we are 
happy to do so. But what we heard across the Country was the 
fact that when you add a dollar, it slows the process down.
    And so, we did not actually say how much we could save but 
if you just take an example of just one project of a billion 
dollars, you could save about three billion over that whole 
year.
    Mr. Mica. One of the things that my Administration has not 
been good in supporting is bonding and taking the revenue 
stream that we have now and leveraging that out. That is one of 
the things I think we can do other than just increasing taxes. 
Again, if we do a number of these things, we save money. We put 
projects forward by speeding up the process.
    I asked the staff and Mr. DeFazio also said that we are 
getting into a third world level of infrastructure, but the way 
we finance it is third world.
    I went with my wife to visit some of her relatives in 
Poland, and the way they financed building their house was 
every month they would buy a few more bricks. They do the 
foundation first, the plumbing and would go year after year 
because there was no financing, and that is what I think we are 
doing, third world financing.
    Bonding, to me, $500 a month, if you add $1,000 a month to 
build your house, it would probably take you all 30 years to 
build it. On an $83,000 house, 6 percent that $500 could 
finance.
    Do you see bonding also as one of the elements of getting 
us to the dollars that we need, Mr. Schenendorf?
    Mr. Schenendorf. Yes. Part of our recommendation, I mean we 
view tolling which typically is bonding projects and public-
private partnerships which often are as definitely an essential 
part of the solution, and it is a piece of the solution. I 
don't think we had any witness come before us and say that that 
was the entire solution.
    Everybody, I think, recognizes there needs to be more 
investment and, in the interim period, it is the motor fuel tax 
that can really provide that additional amount.
    Mr. Mica. Well, again, I have my concerns about how that 
diminishes. As it diminishes, it keeps us sort of at a level. 
Even if we increase 5 cents per year, in 5 years, say the 
authorization period, we increase it 25 cents. We are basically 
flat, given the information that the Secretary of 
Transportation of Florida gave me.
    My final point, I have to compliment Paul Weyrich. As a 
fellow conservative, he and I are of the same ilk. But his 
vision for years and years in trying to educate folks, not only 
in the past but today, on how cost-effective transit, mass 
transit and high speed rail systems and transit alternatives 
can be not only from a conservative fiscal standpoint but now 
for energy and for the environment. So I salute you and thank 
you for your contribution to the Commission.
    I yield back.
    Mr. Oberstar. I thank the gentleman.
    Amidst all the hand-wringing about the future of the 
Highway Trust Fund and alternative fuel vehicles, the latest 
report from DOT shows a 700 million gallon increase in fuel 
consumption in 2007 over 2006. We are not falling behind. It is 
increasing.
    I want to encourage Members to be brief, and I tried to set 
that tone myself at the outset, so that we can get comments and 
observations from all Members.
    Mr. DeFazio, the Chairman of the Subcommittee.
    Mr. DeFazio. Thank you, Mr. Chairman.
    Just quick, a little bit off the topic here but Mr. 
Busalacchi, I believe, would be interested in addressing this 
question, perhaps others.
    We are having a bit of a discussion here about what would 
constitute an effective stimulus package for the American 
economy, and many of us on this Committee believe investment in 
infrastructure would be. We are getting a little push-back from 
some of those in our leadership who believe it couldn't happen 
soon enough. Could you comment on that, Mr. Busalacchi?
    Mr. Busalacchi. Certainly. Just to give you a little 
history, the last couple of months, in the State of Wisconsin, 
I have had briefings with our Department of Revenue and 
Department of Commerce about the economy. We have kind of 
looked at it. Our own budget shop, we look at it and we see 
what is going on. Of course, everybody is a little nervous, 
Congressmen.
    I brought our people together, our staff together, our 
planners and I said, look, if there was an injection into 
transportation, is there a way that we could turn this around 
quickly? Because there is a school of thought out there, 
Congressmen, that oh, it takes too long to get these things and 
to get them up and running. That is not true.
    If that were to happen, we could turn it around very, very 
quickly, and I believe that other State Departments of 
Transportation could do likewise. These bills are jobs bills. 
It is not like you get nothing for what you are doing here. 
These create a lot of good, and I feel very strongly that we 
could do that.
    Mr. DeFazio. But this construction season, you could let 
contracts and put people to work?
    Mr. Busalacchi. Absolutely, absolutely.
    Mr. DeFazio. All right. Thank you. Thank you for that.
    Commissioner Schenendorf, in your prepared testimony, I 
thought you made an interesting comparison and that was between 
the potential impact of your recommended increase in the gas 
tax and the hot lane tolling, what the costs would be per day. 
Do you want to elaborate on that a little bit because I thought 
that was a very interesting observation and comparison?
    Mr. Schenendorf. As you know, we have recommended a blend 
of solutions, and I guess the point is that none of these 
solutions come without pain. The gas tax solution which is part 
of the solution, if it were implemented at the levels we are 
talking about, that would translate into, for the average 
motorist, 41 cents a day at the 25 cent per gallon, up to 66 
cents a day at the 40 cent per gallon range.
    Contrast that now to this project in Northern Virginia 
which is a public-private partnership, which is being funded as 
a congestion management project. They are estimating that the 
average fee per trip is five to six dollars. So, every time a 
car gets on that 14 mile segment, on average in rush hour, it 
would cost five to six dollars.
    The rate that they are charging of 10 cents a mile at the 
low end and a dollar a mile at the high end, if you get 20 
miles to the gallon, that would be an equivalent of either a $2 
gas tax or a $20 gas tax for your trip on that road.
    The only point just to make is that if you talk about 
tolling or public-private partnerships, none of these things 
are cheap. We think there is a role for public-private 
partnerships and premium services like that, but it is only a 
piece of the solution. You can't implement that everywhere to 
solve the entire problem, and that is why we have recommended a 
combination of solutions.
    Mr. DeFazio. Right. I would note, and I am going to ask for 
further comment here because I am particularly concerned about 
some of these arguments we are receiving about congestion 
pricing. I think there are some very substantial equity issues.
    There is an allegation that trucking companies could very 
easily schedule to deal with congestion pricing. Anybody who 
would say that has not been involved or is not familiar. It may 
come from academia.
    But the trucking industry would say like last week we had 
snowstorms. People were delayed in the Siskiyou summit. Say we 
impose congestion pricing in Portland as some have advocated, 
well, gee, your schedule would get kind of messed up because of 
the snowstorm and now, well, I guess you have an alternative. 
You could drive up over the mountain, through the pass, up the 
east side and then come back down and go around Portland to 
avoid congestion pricing or you can continue on your trip.
    That is just scheduling. That's interruption. But even 
normal scheduling is difficult for truck drivers in terms of 
weather. They don't determine when deliveries are ready and 
when they have to depart. To say somehow the entire economy 
would rejigger itself and the trucking industry could avoid 
high costs and congestion or we just pass those costs on in the 
products, I think is a little Pollyanna-ish.
    But I go beyond that to the issue of equity for average 
consumers. I see in the chart, in 5-38 here, it looks like 
basically the fuel tax seems to be inversely proportional in 
terms of equity according to this chart to congestion pricing. 
That is it looks like equity by income group for the fuel task 
gets a pretty high rating and equity by income group for 
congestion pricing gets an abysmal rating.
    People don't determine when they go to work. Now I don't 
quite understand the choice that people would have to make. The 
choice is you don't determine when you go to work.
    Say you live on the east side of town and you work on the 
west side. We impose congestion pricing. There is not a viable 
mass transit alternative that will get you there within a 
reasonable time. What is your choice? Sell your house? Move? 
Quit your job? Tell your boss, hey, boss, I'm coming in two 
hours later, I have to avoid that congestion pricing?
    I don't think it is going to work real well.
    Mr. Geddes, can you tell us how you are going to deal with 
these equity issues with congestion pricing?
    Mr. Geddes. Certainly, I would be happy to, Mr. 
Congressman. I think that one of the beauties of our economy 
today is its flexibility. I think we have one of the most 
flexible economies in the world, and I think that the number of 
ways in which our economy would adjust to a new system.
    Mr. DeFazio. No. I want to deal on the big. I want to deal 
with how do we come to an equitable position here?
    We are going to impose congestion pricing. Now people live 
where they live; they work where they work. Suddenly, you are 
confronted with congestion pricing. You can't choose what time 
you go to work. You go to work when congestion pricing is 
imposed. What are your alternatives as a consumer?
    If there isn't a viable mass transit option, what are your 
alternatives here? Quit your job? Sell your house? Move? Say 
sorry, kids, we are moving?
    Mr. Geddes. My brother owns a small business in Baltimore 
and, because of congestion in that area, has moved to several 
shifts. He has an early shift that starts at 7:00 and a later 
shift.
    Mr. DeFazio. But the workers didn't get to determine that, 
did they?
    Mr. Geddes. No, they didn't.
    Mr. DeFazio. He is an enlightened and somewhat flexible 
owner or manager.
    Mr. Geddes. They get to determine which shift they would 
like to work on. It is their preference.
    Mr. DeFazio. Right.
    Mr. Geddes. And I assume he could go to a third shift if he 
wanted, if people didn't want to travel during peak times.
    Mr. DeFazio. But using congestion pricing, if I may, to 
manage demand I would call rationing. Now we know rationing 
doesn't work real well because it distorts the market. As an 
economist, you have to agree that we start rationing, you are 
going to create some distortions in the market because that is 
what you are talking about here, rationing. I mean you get to 
the point.
    Let me use a concrete example, the Indiana toll road. One 
of the many prescriptions is they have to meet a certain 
congestion standard on that toll road. There is also a non-
compete agreement, 10 miles either side.
    Now the owner-investor, Macquarie, has to meet that 
congestion standard. They could meet it by, as you point out, 
making investments that have very low rates of return in new 
capacity on that road or they can meet it by jacking up the 
price and driving people off.
    Unfortunately, when you drive the people off the road to 
meet the congestion standard, they flow into the corridor, 10 
miles either side, where they have a non-compete agreement with 
the State.
    Then you have what I think economists call an external dis-
economy. That is we have now clogged up all the roads around 
that road.
    They are meeting the standard. They are getting their 
profitability, but the State now and the people have a problem 
which they can't solve because we have a non-compete agreement. 
That is one example of congestion pricing, and that is 
rationing, and it distorts and causes inadvertent effects.
    I just can't see how this is some grand solution when 
people don't have viable alternatives that are comparable.
    Mr. Geddes. Would you like me to respond?
    Mr. DeFazio. Sure.
    Mr. Geddes. I will be happy to do so.
    So, in terms of your terminology at the beginning regarding 
rationing, keep in mind that price is the way that we ration 
almost all goods in our society. That is the way we determine 
how many tomatoes people buy and how many cars people buy, 
gasoline.
    Mr. DeFazio. Sure, but we are talking here about public 
infrastructure.
    Mr. Geddes. Right.
    Mr. DeFazio. There is a difference when it is public 
infrastructure.
    Mr. Geddes. But it is inappropriate to apply, to say that 
this is somehow different, that this is rationing and when 
people decide to buy tomatoes or not to buy them because of the 
price, that that is somehow rationing.
    What we are doing is consistent with Economics 101 where 
you ration the good by the price and by the people's 
willingness to pay for it.
    Mr. DeFazio. But we are talking about public 
infrastructure, public good here. Basically, what you are 
saying is people who can afford to use the system should be 
able to use it, and people who can't afford it shouldn't be 
able to use it. You don't think this is going to cause some 
massive dislocation and inequity in this economy for workers 
and business?
    Mr. Geddes. Keep in mind. Keep in mind that with a large 
number of other goods that we consider to be public utilities 
or network industries, electricity for example, natural gas.
    Mr. DeFazio. I am glad you brought up electricity, and you 
must be an advocate of deregulation. I am one of very few 
people who opposed the energy deregulation here in Congress 
back when we authorized it in wholesale, back in the early 
nineties, and I have been opposed to the California 
deregulation and predicted it would be disastrous.
    Of course, now the studies are out. Every State that has 
deregulation, people have seen the gap grow by four cents a 
kilowatt hour from two cents a kilowatt hour.
    We had regulated rates of return and a public 
infrastructure. Now we have it deregulated. People pay a 
massive amount more. They still get electricity. The people in 
the regulated markets still get electricity.
    You think this is a net benefit? I mean the only people I 
know of who thought this was great were like Ken Lay and the 
people in Enron, and the problem was they got caught.
    Mr. Oberstar. The gentleman's time is expiring although his 
enthusiasm is not.
    [Laughter.]
    Mr. DeFazio. Thank you, Mr. Chairman. Mr. Chairman, perhaps 
Mr. Geddes and I can continue this at another venue.
    Mr. Oberstar. I think that would be appropriate.
    Mr. DeFazio. The point I am trying to make here is there 
may be limited applicability for this function, congestion 
pricing. But to say congestion pricing, tolling and freezing 
the Federal investment and relying on the private sector is 
going to solve this problem, I think is absurd.
    Thank you, Mr. Chairman.
    Mr. Oberstar. We will explore those matters in further 
hearings over which the gentleman will preside.
    Mr. Petri.
    Mr. Petri. I would observe on that last point or discussion 
that queuing or congestion is another form of rationing, and 
the question is how you want to do it. We have a lot of social 
services where we don't provide more resources, so we end up 
rationing through delay. That is one of the complaints in the 
health care area, that people worry about some changes that 
might be made.
    But, in any event, if we don't come up with the resources, 
we don't increase the capacity. If you have more time than 
money you prefer, I suppose, using time, but overall it is 
probably more efficient for society to figure out how to 
maximize the utilization of the existing infrastructure to 
increase production and people getting to work and all the 
rest.
    But, in any event, I would like to ask a question that 
reflects the concerns that Mr. Rose and Mr. Skancke both 
expressed too. You suggested a major transformation of the 
system, and you have talked about the huge need that we have 
and the consequences to our Country if we don't maintain and 
improve our infrastructure that underpins our economy and our 
standard of living.
    But there is a lot of resistance in the Country and in the 
political process because of perceived pork-barrelling, but it 
really is thought we are not getting value for money spent, 
that there is a lot of cost that is unnecessary both in 
procedures and in various requirements and delays. As a result, 
it costs two or three times as much to do something through the 
system that we have at the Federal level than to figure out 
some other way to do it because we can't reform it.
    How important is it to reform the system?
    You talked about a big increase in investment. I think 
people are willing to pay for what they get, but how are we 
going to assure them that they are going to get value for this 
increased investment? How important is reforming the system, in 
other words?
    Do the two go hand in hand or, at the end of the day, if we 
have a stalemate out here, should we just figure out some way 
to increase taxes and hope it works?
    I don't know who would like to respond.
    Mr. Schenendorf. I think a number of us may want to respond 
to this. Let me just take a quick first crack at it.
    I think that is what we thought was one of the number one 
things. First of all, you need both. We are recommending that 
you have to have both together. You have to have reform, and 
you have to have increased investment.
    I think we came to the conclusion that in order to get the 
increased investment, you really have to restore a sense of 
purpose and mission to the program.
    In the days of the interstate program, people knew what you 
were trying to accomplish. They were willing to pay to get 
that.
    Today, it is very hard to discern what the program is 
really trying to do. Consequently, you have the donor-donee 
fight. You have the Members trying to get earmarks because that 
is the way they can show back in their districts.
    We are giving you a program here where we are recommending 
a performance-based program that we think people will buy into 
this and say these are the things we need to do and here is 
what it is going to cost. Then that will help you to be able to 
politically raise the revenues to do it.
    We think, without that reform, you really won't be 
successful in trying to raise the revenues. I don't see the 
American people supporting big increases in user fees to just 
say it is the same thing and they really don't know what the 
money is being used for.
    But I do think this is a point that a number of 
commissioners felt very strongly about, and I would like to 
give anybody that wants to a chance to talk about it. Steve?
    Mr. Heminger. Thank you, Jack.
    I will give you, Congressman, one example from California 
where you may be aware that most of the counties in our State, 
where the population lives have raised sales taxes on 
themselves. Our current voting standard is by two thirds vote, 
public vote. They have done so not with a blank check. They 
have done so only because they are presented with a program of 
investment, itemized projects that will deliver improved 
performance.
    I think when you make that kind of contract with people, I 
think they are willing to invest. They are willing to put their 
money where their mouth is. We have some of the worst traffic 
congestion in America, and people are willing to pay for 
solutions to it.
    I think that kind of strategy can work nationally if we can 
develop, as Jack said, a national strategic vision for how we 
want to improve performance, reducing congestion, savings 
lives, speeding goods movement. If we can offer those promises, 
and it is risky to promise and we need to be accountable for 
the promises if we make them, but if we can, I think we have a 
different discussion with the public about whether additional 
revenue is desirable.
    Mr. Schenendorf. Anybody else?
    Mr. Rose. I don't really have a lot to add. I think it is 
all around transparency and governance of how this would work.
    We studied a number of the privatization, public-private 
partnerships around the Country. When somebody comes in and 
monetizes a piece of infrastructure and then those funds don't 
go back into the infrastructure, I think it is a real problem, 
and it has to be around transportation. Even though our society 
and where we have this infrastructure has other issues, it has 
to go back into transportation.
    I know, certainly from any time I am dealing with 
customers, when we are talking about user fees, container fees, 
anything like that, their biggest concern--and unfortunately it 
is well founded--is that the money will be siphoned off into 
other projects, not just about transportation. When we lose 
that credibility--we jointly--we lose, quite frankly, the trust 
of our shippers and their answer is no, just say no to 
everything.
    Mr. Oberstar. I thank the members. I know other 
commissioners. We are running up against votes on the House 
floor.
    I want to depart from the order to recognize the former 
Chairman of the Committee, Don Young, under whose Chairmanship 
the current law, SAFETEA-LU, was shaped and out of which 
emerged this Commission. He was detained earlier today with 
other commitments, and I want to recognize the gentleman at 
this point.
    Mr. Young. Thank you, Mr. Chairman, and again I want to 
congratulate you on having this hearing, and I want to 
congratulate the panel.
    When the Chairman and I decided to set up this Commission 
in SAFETEA-LU, we were hoping that suggestions would come out 
to solve the problem about congestion and where we are going in 
the future.
    I am one that had supported and will continue to support 
the raising of monies for our infrastructure because the 
importance to compete globally is on transportation, and we 
have not kept up. It is that simple.
    I am little frustrated when people come out with the idea 
there is a magic wand. You may as well have this pencil doing 
it. Someone is going to pay and how we pay for it has to be 
decided, and that is going to be up to the Chairman and the 
Members of this Committee and how we raise those dollars and 
what we have to do.
    I am pleased with the report. I am a little disturbed about 
some people who don't agree that the money should be raised. We 
all deal with public-private endeavors. That can play part of 
it. Tolls can play part of it. But, overall, we are going to 
have to have the public participate in upgrading this 
infrastructure that is 50 years old.
    My only one question in your debate and discussion and, by 
the way, welcome, Jack. Glad to see you back down there. Mr. 
Skancke, good to see you here and Mr. Rose. We have all these 
nice people on this panel. I will tell you that right now.
    The gentleman from California mentioned the county putting 
taxes in this proposal. Is this an interstate transportation 
proposal or does it include intra? I mean this is what I am 
interested in.
    Mr. Heminger. Congressman, what we tried to do in our 
report is identify areas for investment of genuine national 
interest, and so I would think that would predominantly be 
interstate travel, although in metropolitan areas quite a bit 
of it may be intrastate.
    We recognize that there are a lot of needs out there. They 
are all important. It is just they are all not the 
responsibility of the Federal Government. What we tried to do 
in our report is identify those areas like freight, 
metropolitan mobility and safety that really rose to the level 
of genuine national interest, so that we could refocus the 
Federal program in those areas.
    Mr. Young. The reason I ask that is because you recognize 
when Eisenhower passed the first highway bill, one of my 
arguments was it went east and west or west and east and we 
needed to develop north and south, and that is crucial.
    I do expect the communities being involved. If they know 
they are going to get their tax dollar spent right there, I 
think they are more inclined to support it on an intrasystem if 
we are going to be writing this bill with the idea of a 
national transportation system which includes rail, includes 
highways, includes new bridges, et cetera, so we can compete 
globally.
    I know it has been mentioned before, but China is building 
more highways now than we have total in the United States 
because they want to be able to compete and they want to 
connect one another, their provinces with one another, which 
made our Nation great.
    We just got behind, and people say, well, we can't afford 
it now. Boy, oh, boy. I have an old saying: You shouldn't plant 
the tree today. You should have planted it 20 years ago. You 
shouldn't wait any longer, and we shouldn't wait any longer on 
this transportation.
    Again, Mr. Chairman, I appreciate your indulgence and 
appreciate your leadership in this issue. I just hope we can 
come up with a solution to it.
    Mr. Schenendorf?
    Mr. Schenendorf. I would just add that the national freight 
program that we are recommending and the national rural access 
program that we are recommending would both provide for 
upgrading the kinds of corridors that you are talking about.
    Mr. Young. I thank you.
    Thank you, Mr. Chairman.
    Mr. Oberstar. I assure the gentleman we are going to start 
planting trees today.
    Mr. Rahall.
    Mr. Rahall. Thank you, Mr. Chairman, and I do want to 
salute you for calling this hearing and so quickly upon the 
release of this study Commission's report.
    I have been following the morning's hearing very closely 
and heard each of the testimonies and the opening statements of 
my colleagues. I heard you refer to scrambled eggs, Mr. 
Chairman, and I thought you were serving an omelet lunch, so I 
can down here immediately.
    [Laughter.]
    Mr. Rahall. I might also add that, Jack, I heard you and 
other members answer numerous questions during the press 
conference upon your release over C-SPAN Radio as my wife and I 
drove up here Tuesday afternoon along our beautiful interstate 
system. She slept rather soundly, but I enjoyed listening to 
every comment and question.
    [Laughter.]
    Mr. Rahall. I know you answered numerous questions from the 
media during that press conference on Tuesday during the 
release of this report.
    I salute each of you for the work that you have done, the 
time you have taken from work schedules and your personal lives 
to contribute to a transportation study as you have given this 
Nation. It is a very important work. It is going to be around 
with us for some time to come.
    To those who might say that Congress perhaps should 
abdicate its responsibilities and turn these tough decisions 
that are needed in the future over to an outside commission to 
make those recommendations much like many recommend in regard 
to Social Security, I would say, bad idea. Congress is not 
going to abdicate our responsibilities and certainly not under 
the very capable leadership of the Chairman of this Committee, 
Jim Oberstar.
    You have recognized the reality of our surface 
transportation needs. In your mission to develop a fair and 
just system, you have shown a firm commitment both to the 
reality that more investment is needed and the consequences if 
that investment is not used more effectively.
    I do want to commend you for recognizing that our 
transportation needs cannot be solved by public or private 
sectors alone but that a strong public-private partnership is 
needed.
    This is what we have experimented with in West Virginia. We 
have had coal companies that have mined the coal, thus 
generating much needed revenue to our State and local units of 
government and leaving in place the roadbed for future Federal 
and State transportation infrastructure investment, hopefully 
at less cost than might otherwise be needed. It is this type of 
partnership that we need to certainly develop more of in the 
future, and I commend you for recognizing that.
    I do have a concern, though, and this leads to my question, 
that perhaps the Commission has not paid enough attention to 
the very rural needs of our Country. As you know, most of this 
Nation is rural and rural America has needs that must be 
considered. As I am sure each of you are aware, it can cost us 
up to $24 million per mile in a rural part of our Country such 
as southern West Virginia to build a road versus a mile in a 
flat state.
    So I would ask you this question. You did focus most of 
your report on congestion and other issues in the more urban 
areas, but what about rural roads? What is your thinking about 
an equitable financing plan to address these parts of the 
Country where it is much more costly to build roads than flat 
States?
    Mr. Schenendorf. Thank you for raising that point, and we 
really did take rural America into account in this report. 
Maybe we didn't talk about it as much as we should have in the 
report, but we did.
    The program that would bring our Nation's infrastructure 
into a state of good repair, that would apply to all rural 
roads as well. So we would be bringing that program itself. We 
would make a major investment in rural America just to bring 
the existing system into a state of good repair.
    Our national freight program, a lot of the improvements 
that are going to be needed for freight and the corridors that 
will be upgraded will be in rural areas.
    Then we have a special program that is targeted to rural 
America and smaller cities, all of the cities outside of a 
million which has its own program. The rest of America would be 
picked up in another program for rural access and mobility in 
rural areas and smaller communities.
    Then, on top of that, also our safety program, a lot of the 
safety issues are in rural America and a lot of the 
improvements that would be made in that program would be on 
routes that are in rural America.
    So I think that when you look at the overall 
recommendations that we have, there will be plenty of targeted 
investment in rural America to make sure we preserve a national 
network and that we provide access to all of America, including 
our small communities.
    Mr. Rahall. Thank you. Thank you, Jack.
    Mr. Chairman, that concludes my questions. I appreciate it.
    Mr. Oberstar. I thank the gentleman especially for raising 
that point. I note that point four in the ten new Federal 
programs recommendation deals with connections to smaller 
cities and towns, and I think that is an appropriate 
recommendation.
    The gentleman from Ohio was very generous and forbearing, 
allowing former Chairman Young to proceed ahead of him. Thank 
you. The gentleman is recognized.
    Mr. LaTourette. It is my pleasure and thank you very much, 
Mr. Chairman. I think actually the former Chairman bumped Mr. 
Nadler, but I am happy for your gratitude.
    Mr. Schenendorf, welcome back. There are days when I wish 
you were back with the Committee. As proud as we were of 
SAFETEA-LU, I kind of felt the Administration rolled us a 
little bit on that bill, and we could have used some of your 
brass knuckle approach that you employed in TEA-21 in 
negotiating with the other body and with the Administration.
    Mr. Rose, always good to see you.
    Mr. Weyrich, you and I have never met, but actually it was 
a seminar that I attended in 1993 at the Free Congress 
Foundation that propelled me to become a candidate for 
Congress. Although I never became the conservative Mr. Mica 
wanted me to be, I appreciated the instruction that I received.
    Mr. Schenendorf, you mentioned the magic words and, Mr. 
McArdle, I am glad you mentioned Mr. Nadler because when we do 
these bills, the donor-donee State issue raises its ugly head. 
I will say on the record that New York City and New York State 
has no fiercer champion than Jerrold Nadler when it comes to 
defending the right of New York to get all the money from Ohio 
and any other State he can get it from.
    [Laughter.]
    Mr. LaTourette. But I would say, when you are talking about 
whether it is breaking the mold and making omelets or whatever 
the case may be, I think you have hit the nail on the head in 
your comment that when Dwight Eisenhower and others envisioned 
the national highway system, people knew what they were 
getting.
    People in my State ask questions sometimes, particularly in 
light of one of the items that has received a lot of the 
attention in your report is the other rather suggested increase 
in the fuel tax. People in my State do ask questions, and they 
say if you are going to ask us to pay up to 40 cents a gallon 
more, are we going to be building roads in Ohio or are we going 
to build roads for Mr. Nadler, even though he makes eloquent 
argument that he subsidizes farmers in Ohio and so forth and so 
on?
    I guess the question I have of you: Did you all talk about 
the donor-donee State difficulty in crafting these 
recommendations and could you share with us, any of the 
commissioners, sort of the thoughts that you were having?
    Mr. Schenendorf. We did talk about it. We talked about it 
extensively. I think the conclusion that we came to was that 
because of the under-investment that is going on in the Country 
and because of the lack of clear mission, that basically the 
needs are so great that every State says in the absence of a 
Federal vision, a common goal, we ought to get back as much as 
we can.
    So you have all the States trying to get back as much as 
you can, and it affects Members of Congress. You have people 
coming to you and saying all these good projects that need to 
be done, and so you use the bills to try to deal with that.
    What we are proposing here with these performance-based 
standards are programs that people would see as being in the 
national interest, and they would be able to put that above the 
just grabbing the money to get it back. Consequently, these 
programs themselves, if people will buy into them and the 
vision that is in there, will restore to the program a sense of 
purpose and mission similar to what it had in the interstate 
system, where people were willing to put the common good.
    Every State is going to benefit significantly from this 
program. Every district would benefit significantly, and it 
would benefit in a way that there would be clear goals that 
people would understand and government would be accountable.
    We think if these kinds of reforms can be made, the people 
will be willing to pay for it because they will have a sense of 
what they are getting and they will feel a part of the process. 
All of these projects that would be funded would be coming from 
the bottom up through this planning process that would result 
in a strategic plan. So, all of America would have an interest 
in ensuring that this program was adequately funded.
    Mr. LaTourette. I think that is a laudable goal. I do 
think, just to respectfully disagree, I think the pressure is 
on those of us that come from donor States and is going to 
continue to remain pretty significant.
    I thought that Chairman Young and then Ranking Member, now 
Chairman Oberstar had a great notion in SAFETEA-LU that the way 
we solve the problem isn't to punish Mr. Nadler and take money 
away from him. It would be to grow the pot, so that other 
States reach a certain level.
    If that is the goal and that is where we intend to go, I 
think it can work. But just saying we are going to continue as 
we are, I do think donor States legitimately have question.
    The last question with my last 53 seconds, because of there 
reliance on an increased fuel tax, the report also recommends 
an energy security tax credit that would have as its goal to 
reduce our use of petroleum-based fuels. The question I have is 
I heard the Chairman's observation about we are selling more 
gasoline or using more gasoline.
    Those two things together, while it is laudable to reduce 
our use of fossil fuels, if the main revenue stream is going to 
be as a result of the increased excise tax on fossil fuels, 
don't those two?
    We had a little dust-up last year on the children's health 
care bill. I happened to be one the Republicans that supported 
it, but I found it a little anomalous that we were going to 
fund it with a cigarette tax and we had to create 11 million 
new smokers in order to get the revenue stream necessary to 
fund the bill. Aren't you doing the same thing with the 
gasoline tax?
    Mr. Schenendorf. Well, I think the gasoline tax in the 
interim. We are proposing to shift over to a Vehicle Miles 
Traveled fee as soon as we can. I mean we have provisions in 
there to try to hasten that transfer, but in the interim 
period, I think we see the fuel tax as the way to raise the 
funding and raise the significant amounts that will be 
necessary.
    The replacement, part of the stream would go toward 
basically hastening replacement fuels and bringing them online. 
Of course, they could ultimately have a user fee also. I mean 
as we go forward and we see what these replacement fuels are, 
it may be that that is a possible source of revenue as well.
    So this is all going to have to play out over time, but we 
think we are trying to push the program in the right direction 
while making use, from a revenue perspective, what we have in 
front of us today.
    Mr. LaTourette. Thank you.
    Thank you, Mr. Chairman.
    Mr. Oberstar. I thank the gentleman.
    Mr. Nadler, by the way, we have 6 and a half minutes 
remaining on this vote and 365 have not voted yet. You have 
plenty of time.
    Mr. Nadler. Thank you, Mr. Chairman.
    Let me just briefly comment on the donor-donee thing and 
then get to the question I wanted to ask.
    The donor-donee thing is obviously if people realized that 
there are artificial limits on how much. For instance, New York 
has 33 percent of the person miles on mass transit, and yet 
there is an artificial limit of 15 percent in the law in how 
much mass transit aid any State could get. If you abolish that, 
you might start getting a little more fair.
    Plus, the fact that if you don't look only at 
transportation accounts, New York State has a balance of 
payments deficit with the Federal Government between 14 and 18 
billion dollars a year. The one account where we have a balance 
of payments surplus is suddenly the one that is unfair, but we 
will save that for a different day.
    I gathered from looking, from reading the report that the 
basic idea of the report--I don't want to ask a question on 
this though--is to give the money functionally and to abolish 
the block grant allocation formulas, and that is not a bad 
idea.
    But my question goes to freight rail. The report observes 
that there is a shortfall in capital funding for freight rail, 
that the railroads can't raise the money themselves 
sufficiently, that assuming the revenues increase with tonnage 
and railroads maintain their current level of effort for 
capital expansion, there will be a big shortfall.
    Options for funding, all a part of the shortfall, include 
investment tax credits, PPPs, customs duties and container fees 
depending on specific characteristics, but this does not seem 
to envision any action to supply enough funding to increase 
market share for rail as opposed to less energy efficient forms 
of transportation which, given the congestion on our highways 
and given global warming and everything else we are talking 
about, it seems we should be going to.
    So my first question: Is it envisioned that the general 
proceeds of the gasoline and other taxes that we are talking 
about could be used for freight rail on a functional analysis 
or would this be walled off? If so, how do we get sufficient 
funds to look at increasing market share for freight rail as 
the environmental and efficiency considerations would seem to 
indicate that we should do?
    First, I think Mr. Rose, then Frank McArdle.
    Mr. Rose. Congressman, that is a question we talked about a 
lot, and this freight rail study we did is really the first 
time that the Country has ever taken a look at the national 
freight railroad network. I run one of the railroads. We know 
exactly what our capacity is, what our bottlenecks, but we 
never brought these major railroads together to look at how the 
whole Country flows freight.
    Clearly, what we struggled with was how to get modal shift, 
how do we get market share shift to increase more freight rail 
in conjunction, not against the trucking industry, quite 
frankly, as a partner with them. We did not resolve that in the 
study itself, and so these numbers that we are talking about in 
terms of the size of the investment of $147 billion is really 
just to stay up with some sort of gross ton mile growth around 
2 to 2.5 percent which is what we get into is the compounding 
of that result requires that kind of capacity.
    So we did not. We were not able to address what would it 
take, what would it cost to increase another 1 percent or 2 
percent or 3 percent of market share shift.
    Mr. Nadler. Is it envisioned in the report that this 
Commission, NASTRAC or whatever it is, under the functionality 
concept could use general revenues from the system for freight 
rail if it judges it advisable in a given thing?
    Mr. Rose. Yes.
    Mr. Nadler. Thank you.
    Mr. McArdle?
    Mr. McArdle. Yes, I think it is critical to understand that 
these programs, particularly the freight program and the 
metropolitan mobility, truly intersect in the metropolitan 
areas where we need critical investments to expand capacity in 
freight rail. We need to add a port the equivalent of Seattle 
and Tacoma every year to our port capacity, but we need to add 
those connections as well, and those are most critically to be 
rail.
    Again, a discussion you and I have had over many years, as 
you know Congressman, and you actually made provision if you 
recall when you did residential development on the West Side, 
that we in fact have facilities examine in hopes of preserving 
and expanding rail's market share into Manhattan. It is 
critical that we do this and that we have bottom-up planning in 
the metropolitan areas that accommodates freight and makes the 
kind of capital investments that make freight work where the 
most difficult congestion problems are confronted today.
    Mr. Nadler. Thank you.
    Mr. Oberstar. We will recess the Committee hearing. We have 
six, possibly seven, votes on the House floor, and that could 
take the better part of an hour which would give the Commission 
members time to refresh themselves in our sumptuous environment 
in the Rayburn cafeteria, following which we will resume the 
hearing. We will send runners to notify you when that will be.
    The Committee stands in recess.
    [Recess.]
    Mr. Oberstar. The Committee will resume its sitting after 
the recess and the extended votes with apologies to our 
witnesses for their long interruption.
    Next on the list is our colleague from the State of 
Washington, Mr. Baird.
    Mr. Schenendorf. Mr. Chairman, just before we start with 
the questioning, I just needed to say that we had a couple of 
commissioners, because of travel arrangements, that had to 
leave and we have somebody who may have to leave during the 
questioning. I just wanted to let you know, all because of 
prior travel arrangements.
    Mr. Oberstar. Thank you very much. I assumed that there 
would be difficulties for some of the commissioners given the 
extended voting that just occurred. In fact, we are having a 
fallout of Members who had travel plans and, newly liberated by 
the last vote of the day, chose to report home to constituents.
    Mr. Baird.
    Mr. Baird. Thank you, Mr. Chairman.
    I thank our witnesses for your excellent testimony earlier 
today and for sticking around. We hope the remaining time will 
be worth your while. It certainly will be worth ours.
    I was just earlier this morning over in the Budget 
Committee where the big focus, of course, is on an economic 
stimulus package. The alliterative vernacular there, I think, 
is targeted, timely and temporary.
    I would prefer that it be practical, permanent and paid 
for. It strikes me that infrastructure investment is, as was 
discussed earlier, one way to do that. As opposed to a 
temporary influx of a tax cut or some other thing which will, I 
think, be rather evanescent, I would rather have us do 
something that creates jobs immediately and creates an 
infrastructure resource that will maintain the economy for some 
time to come.
    So, when you get a chance, substitute those three Ps of 
practical, permanent and paid for, for the three Ts that are so 
popular right now.
    Mr. Skancke, this is meant, as I mentioned to you 
personally a moment ago, as a friendly question really. I have 
long had a concern, as have many of us on this Committee and 
elsewhere, about the delays and expense that go with some of 
our regulatory processes, however well intentioned they are.
    You cited a figure for if there is a single dollar spent, 
you can add 10 years to the project. In just a minute, could 
you tell me the source of that and how this derives?
    I have a couple other questions, hence the one minute 
restraint.
    Mr. Skancke. Sure, Mr. Chairman, if I may. Congressman, we 
got that in testimony from the Nevada Department of 
Transportation as well as from CalTrans and just about every 
DOT across the Country. For example, in the State of Utah, they 
don't put any Federal dollars into their major projects program 
because it slows the process down 10 years.
    Mr. Baird. Has there been a breakdown, an analysis 
specifically of where the delays derive and where the expenses 
derive?
    We have a major cross-river project, and I was how looking 
at how some of the initial money was spent. A fair bit of money 
anyway had been spent to translate this EIS into multiple 
languages without necessarily any realistic understanding of 
whether or not it was people who spoke those languages were 
desperately interested in the EIS for the project.
    Are there other things that we can look at that says this 
is superfluous, it doesn't necessary help the environment or 
help the process but costs us money and costs us time? Has 
someone done that analysis?
    Mr. Skancke. We have, Congressman. It is on pages 12 and 13 
of our report in Volume 1 that outlines the process by which a 
lot of these agencies could review these at the same time. In 
fact, is it necessary to have a preliminary and a final EIS 
statement done when, in fact, most DOTs know within the first 
90 days of the environmental process pretty much what is going 
to come up in that process? So do you need to do a preliminary 
and a final?
    Agencies need to coordinate better. Give them the 
authority. Give the department the authority to coordinate with 
the Army Corps of Engineers and EPA and all the other agencies 
that are reviewing a document. It should not take two to three 
years for those agencies to review those documents.
    Mr. Baird. One of our issues has been to try to promote 
parallel processing of permits versus serial processing because 
what we find in our region is that sometimes, at the end of the 
day, the third agency who is supposed to give you the permit 
tells you to do something different than the first agency and 
you are back literally almost to or maybe worse than square 
one.
    One of the discussions earlier had to do with if we do gas 
tax or congestion pricing, that may affect residential choices. 
I respect the concern about that, but it seems to me that a 
portion of our congestion mitigation, however we do it, ought 
to actually address this decision of you may think you are 
buying a house for ``cheaper,'' 40 miles from where you work, 
but what is your time worth, what is the commute worth, et 
cetera?
    Someone once told me that one of the best ways we could 
reduce commute times was put more money into inner city schools 
because when you ask people why they live in the burbs, it is 
so they can get their kids a quality school. It would be much 
more of a win-win to invest in inner city schools, so every kid 
could get a good education, and we wouldn't have to drive to 
work so our kids could get educated somewhere else as some 
people say.
    Any thoughts or anything in this document--I haven't had 
the chance to peruse it yet--that talks about this kind of 
decision process or alternative mechanisms?
    Mr. Schenendorf. I think that our metropolitan planning, 
our metropolitan program that we have, the performance 
standard, would address it, and Steven Heminger is our expert 
on that.
    Mr. Baird. Steve?
    Mr. Heminger. Congressman, I think the idea we had with the 
metropolitan mobility program and vesting that accountability 
and responsibility in officials in those areas is that they are 
in large part the same officials who are making local land use 
decisions, and I think putting the responsibility on them, 
frankly, will marry those two subjects together a lot better 
than they are today.
    Too often, we have local land use decisions trying to match 
up with State or multi-State transportation decisions, and the 
match doesn't occur, and so our idea with that program is to 
try to place that accountability and responsibility where it 
belongs.
    Mr. Baird. As policy-makers, what it often leaves us doing 
is somebody decided we would build X new development, X miles 
away from the center of the city, and then they come to us and 
ask for the earmarks to build the transportation 10 years too 
late. You are always sort of chasing your tail, and it doesn't 
work very efficiently.
    Mr. Heminger. And Jack did talk earlier about the fact that 
we do need to go a long way to restore public confidence in the 
program. I think one of the things that really frustrates the 
public is they don't know who is it on traffic congestion, and 
it is so easy to point the finger at somebody else. It is the 
business that locates here. It is the local land use decision. 
It is the Federal Government because they won't provide the 
funding.
    We are trying to instill in all of our recommendations with 
this performance approach a level of accountability, so the 
public, once we make a promise to them, they can track our 
progress in trying to fulfill that promise.
    Mr. Baird. Mr. Chairman, could I be indulged for one last 
question?
    One last question, actually a comment, Mr. Weyrich, I very 
much appreciated your observation of the merits of investment 
in mass transit.
    I serve on the Budget Committee, as I mentioned, and one of 
the things we hear a lot in that Committee is the need to do 
dynamic scoring of tax cuts. I think we also ought to do 
dynamic scoring of infrastructure investment.
    Here is a case I think you illustrated well where 
investment--and someone else on the Committee also was talking 
about, this gentleman--that investment in infrastructure 
spurred vast increase in value and economic development. I 
would just open that briefly for comment.
    Mr. Weyrich. The street car line in Portland, only 4.5 
miles, has spurred $3.5 billion in economic development.
    But you talk about a stimulus package. For example, Salt 
Lake City is ready to go on two more light rail lines. They 
have done the preliminary engineering, and you could give the 
money tomorrow and they would hire people and start 
construction.
    Mr. Baird. That would be practical, permanent and paid for.
    Mr. Weyrich. I dare say that this is true of other systems 
because many of them have another branch that they want to 
build. I mean the minute Charlotte opened their system, right 
away there was talk about, well, we want one here and we want 
one there. So I strongly urge you to examine that.
    Mr. Baird. I appreciate the comment.
    Mr. McArdle?
    Mr. McArdle. If I might.
    Mr. Oberstar. Just one moment on that before you proceed 
and I will certainly recognize you but following up on Mr. 
Baird's question to Mr. Weyrich. The Federal Transit 
Administration has established a cost effectiveness index for 
rating transit projects. How do you calculate into the cost 
effectiveness index the investment consequence of a decision to 
build that commuter or light rail project?
    You cited the billions of dollars investment in Washington, 
D.C.. Over $30 billion of investment has taken place along the 
metro stops created for Metro.
    In Dallas, Texas, on the Dallas Area Rapid Transit West, 
the 20 mile line generated $1.2 billion in private sector 
investment. Before they put a shovel in the ground on DART 
East, on that 20 mile segment, $120 million of private sector 
investment was announced a couple years ago when I was there at 
that moment.
    All those are investments in the community. They generate 
economic activity. Why can't they be calculated into the cost 
effectiveness index?
    Mr. Weyrich. Well, they ought to be and they are not. The 
Department does not recognize any of the potential of any of 
these lines. Even a mere street car line can generate all kinds 
of economic activity, but they won't allow us to calculate that 
in as to the advisability of building it or not.
    Mr. Oberstar. I would suspect that Mr. Rose, in deciding 
whether to add a second line or a third line on freight 
movement, would look at the benefits to be derived from that 
investment.
    Mr. Rose. We have. I mean that is exactly how we do 
projects, but again it is a little easier for us because we are 
able to control our own destiny around those investments.
    Mr. Oberstar. Thank you. I appreciate the opportunity to 
interrupt. Please proceed, Mr. McArdle.
    Mr. McArdle. Congressman, I think you can look as well to 
what has happened on the New Jersey Gold Coast to see the 
advantage of light rail investment. I think New Jersey Transit 
itself has been extraordinarily surprised by the amount of net 
investment that has occurred there along the coast opposite 
Manhattan where people have, in fact, used the light rail to 
site not only offices but in fact residential developments and 
the like, all of which contribute net to the community.
    But I did want to make one point. You have picked up on the 
question of investment now, and I would urge you to go back and 
look at the accelerated public works programs which I am sure 
the Chairman remembers and others do.
    Mr. Oberstar. Oh, yes.
    Mr. McArdle. I was on the New York City side of that 
equation and was pushing and managing those programs for the 
City of New York in the middle seventies. We learned a lot 
about how to make those things work quickly, and it took a lot 
of effort, as it always does, to make those programs work.
    So, as you are going forward to consider that as an 
economic stimulus, I would urge perhaps to invite back those of 
us with less and less hair to tell you of what worked for us 
because we really did have to reinvest in the city to get 
programs out quickly to make things work, and they were a lot 
of small projects, nothing big, lots of small projects. It was 
very successful. Lots of infrastructure is really where it paid 
off.
    Mr. Baird. It is an outstanding example. Insofar as public 
tax expenditures are fungible relative to direct investment, it 
is all money we don't have, but we are spending.
    I would hope our leadership and the bipartisans and the 
Administration would say if we are going to put $100 billion 
into a stimulus, I would rather see us give a guy a job and a 
way to work than just a temporary tax cut. That would be my 
bias.
    Thank you, Mr. Chairman, for your indulgence and thanks to 
the witnesses.
    Mr. Oberstar. Mr. Petri.
    Mr. Petri. I appreciate the tremendous effort you have all 
put in. You know it is appreciated when you have the turnout 
the Chairman spoke of earlier and a standing room only audience 
at this hearing and a second hearing room filled with overflow 
crowd. It is being recorded, and it will be broadcast, I 
suspect, repeatedly on C-SPAN and other channels.
    It is something that is the beginning. It is a final 
product of your deliberations, but this is something that is 
hopefully a building block for us to actually turn around and 
come up with a more modern and appropriate way of investing in 
our Nation's infrastructure going forward.
    We don't need to sell anyone on this Committee, and I 
suspect very few in the Country, on the fact that at the end of 
the day we have to fix the roof of our house. We have to fix 
the infrastructure of our Country, and we have to expand it to 
account for changing technology and changing demands in our 
society if we want to succeed.
    The bottom line to me is that we pay one way or another. We 
pay through waste and missed opportunity and inefficiencies, or 
we pay, invest and benefit from a more efficient system and a 
higher standard of living, higher quality jobs, and a more 
pleasant lifestyle.
    So this is very important stuff, and I do hope that this is 
not the end of the road for you and your commitment to it. I 
hope that you will be willing as commissioners to spend some 
time, helping to explain your work to editorial boards around 
the Country, to public talk shows and other fora that are 
appropriate and that you will participate as we try to figure 
out how to develop some momentum for probably, maybe a piece or 
two in this Congress.
    But we reauthorize this program in the next Congress, and 
we will have a new Administration one way or another. Each 
Administration takes the successes and it has to build on areas 
that have been neglected. This is an area, as a Country, where 
we have been marking time and we have been neglecting our 
obligations. We have to figure out how to change that, and you 
are part of the solution to that problem. So thank you very 
much.
    Mr. Oberstar. I thank the gentleman. Very thoughtful, I 
couldn't have said it better myself.
    Mr. Larsen.
    Mr. Larsen. Thank you, Mr. Chairman.
    Mr. Chairman, I hope that you first noticed, at least on 
this side of the aisle, all the northwest Members came back to 
the hearing, and I hope that is taken into account as we move 
forward.
    [Laughter.]
    Mr. Larsen. The Washington and Oregon delegations are well 
represented at this second part of the hearing. We will remind 
you if you forget.
    Mr. Schenendorf. It is a lack of travel luck.
    Mr. Larsen. Yes, it has to do with lack of flights out of 
D.C. more than anything.
    Mr. Schenendorf. Their planes don't leave until 6:30.
    Mr. Larsen. Where is Eleanor Holmes Norton?
    [Laughter.]
    Mr. Larsen. The first thing I wanted to note and perhaps 
for Mr. Schenendorf, Washington State has the largest ferry 
system in the Country measured by vehicles and by passengers. 
It is certainly not a tourist attraction. It is a major part of 
our transportation system, and I noted it is considered part of 
the highway system. Former Senator Magnuson was able to make 
that happen.
    I note a lack of conversation about that ferry system or 
San Francisco's or New Jersey, New York or North Carolina and 
some of the other folks, Alaska as well. How does that fit into 
your thoughts?
    Mr. Schenendorf. I think that we would view that as 
basically being eligible the way it is under the current 
program. We weren't charged with looking at water 
transportation, so there isn't much in the report on that.
    But, again, when you get back to the performance-based 
standards, if you are looking at that metropolitan area and you 
are saying how do we reduce congestion by 20 percent by the 
year 2025, it is going to make the local jurisdiction look at 
all of the alternatives. Highway construction, mass transit, it 
is also going to be land use. It is going to be ferries. It is 
going to non-motorized ways of moving around, bike paths and 
the like, because they are going to have to put together a 
program that shows how they are going to get to a 20 percent 
reduction in the face of the growth that is coming.
    So we would envision ferry service as being an integral 
part of that and basically, because it is eligible in today's 
programs, that type of thing would continue.
    Mr. Larsen. It is currently eligible for ferry capital 
construction and terminal construction, and the States are 
largely left with the operating costs, and those are largely 
passed on through rates to the folks who use them as well. So I 
just was curious.
    Any other comments from anybody on that issue?
    Mr. Heminger. Mr. Larsen, if I could, I certainly won't 
pass up an opportunity to say something nice about ferry boats 
because they are very important to our system in the San 
Francisco Bay Area.
    I think it is fair to say that one of the unsettling things 
about our report is that generally we did try to strive for 
mode neutrality. The intercity passenger rail program is the 
exception.
    In the current program, you can find them really easy. 
There is a ferry program. There is a bus program. There is a 
New Starts program.
    It is unsettling when you can't find them right there in 
name, but as Jack indicated the notion with a performance-based 
approach and a benefit-cost analysis is the cream will rise to 
the top. I am very confident that in our large metropolitan 
areas, public transit investments, rail, bus, ferry will rise 
the top and those will feature prominently in these 
metropolitan mobility plans.
    Mr. McArdle. I think, equally, you are going to find new 
areas looking at ferries because the road and the ability to 
build roads is so constrained. I know that Jacksonville, 
Florida is aggressively looking at ferries as an option on the 
Indian River and other places because they see that as a key. 
They clearly, as they do their bottom-up planning, are going to 
incorporate that in their capital investment program.
    Mr. Larsen. Okay. Mr. Rose, you sort of had the freight 
mobility section of the testimony. Two questions, I suppose, if 
you could touch on your comments in your testimony about the 
tax incentive for capital investment on rail and with regards 
to the second issue, the freight fee idea, whether or not you 
all contemplated a national freight fee so you didn't go State 
by State.
    How did you propose and maybe build a wall around those 
dollars so it goes into freight mobility?
    Did you envision it going only into freight mobility and 
did you envision it going only into rail or did it include 
waterside port investment? Did it look at grade crossings for 
truck traffic?
    How did you envision the freight mobility dollars being 
used that could be generated?
    Mr. Rose. Sure, yes. The answer to the first question in 
terms of the size of the capital investment: Congressman Baird 
had to leave, but when we think about stimulus, what he was 
talking about, we roughly estimate that every billion dollars 
of rail construction results in about 20,000 jobs.
    So we are very interested in finding ways. We have, for 
quite awhile, been discussing an investment tax credit, a 
stimulus that would simply provide a 25 percent investment tax 
credit to pull forward investments that might otherwise be used 
later.
    As far as freight fees, first, we believe that global trade 
has really changed our transportation infrastructure and our 
transportation requirements. Certainly, you understand that 
with what you see in your area, and we are a big part of that.
    When you look at the railroad growth over the last 10 
years, containerism has been the number one driver, and we 
expect that to continue as we continue to trade globally and 
not just imports of goods from China specifically but now 
exports as well. And so, we know that this global trade is 
causing new distribution patterns, new traffic patterns.
    When we think about a freight fee, it is not just for rail. 
It is also for highway. It is for intermodal connectors, 
getting in and out of the ports.
    We didn't get into specifics, exactly how it would be 
spent, but again getting back to transparency, governance, 
accountability, other things that are so important.
    Quite frankly, the easiest thing to do, I know it is not 
easy but would be to take a percent of the customs fee which is 
variable with growth in international trade. As I said earlier, 
a 5 percent customs fee would equate to about $2 billion a 
year. That would be a good first start.
    We have also talked about a freight fee on top of that. The 
issue for customers is going to be, again, accountability, how 
those agreements, how those funds are going to be spent. I 
think if we can prove to our customers that they really are 
spent on rail and highway infrastructure to facilitate the 
goods movement, then they will be at least more accommodating 
to that.
    The problem is there is a lot of history out there where 
freight fees go to pay for different things and not 
transportation-related. So we have a credibility issue that we 
will have to work through. But some sort of formula could be 
granted on an origination area and a destination area because 
the destination area also gets impacted, and we believe that 
all that could be worked out.
    Mr. Larsen. If I may, Mr. Chairman, in Washington State and 
this could also be in other States--I am just obviously more 
aware of my own--we have a Freight Mobility Strategic 
Investment Board. FMSIB, it is called. Its sole purpose is to 
consider the allocation of State dollars to freight mobility 
projects.
    That is how, in Washington State, we direct available 
dollars directly to local jurisdictions, whether they are port 
or city or county, those jurisdictions, for direct investment 
into projects defined as freight mobility. Then there is an 
accountability because it is through this particular board. 
Other States may do that as well.
    I am just curious if, again, there is any envisioning about 
the organizational structure, the flow of dollars like we run 
dollars through our MPOs and RTPOs, thinking about running 
freight dollars, identified Federal freight dollars through 
things like a FMSIB.
    Mr. Rose. Yes, we have a couple models, a couple examples 
of big projects. The Alameda Corridor is the best example. 
Again, it was made up of people from the ports as well as 
railroad people, very strict governance, very tight operating 
control. We had another one, Chicago CREATE, where we brought 
together the passenger agency, the commuter agency, the State 
DOT, the Feds, the railroads, the Metra.
    Again, it is all about the governance and to make sure that 
the projects that are going to be developed really are very 
specifically related to decongestion and removing these choke 
points that we have on the system. So that is what our vision 
would be to be able to move a process like this forward.
    Mr. Larsen. Yes. Thanks a lot.
    Thank you, Mr. Chairman.
    Mr. Oberstar. I would like to now dig a little deeper into 
some aspects of your recommendations.
    The first is the national strategic plan. Your describe how 
it will be stepped: Performance standards, detailed plans to 
achieve the standard, cost estimates developed, plans assembled 
into a national surface transportation strategic plan, and then 
only projects called for in the plan would be eligible for 
Federal funding, quoting from your report.
    How do you propose to achieve that? What are your specific 
steps going forward or are you describing a broad concept and 
leaving it to the imagination of the Legislative Branch to fill 
in?
    In responding, let me describe for you the setback we had 
in this concept. In the fashioning of the current law, SAFETEA-
LU, as I traveled around the Country, I saw congestion choke 
points. Mr. Shuster and I did that in the preparation as you 
recall very well, Mr. Schenendorf, for TEA-21.
    It occurred to me some years later after TEA-21 that we 
needed a major capital investment in those choke points, maybe 
six or seven or them. St. Louis comes to mind. Chicago CREATE 
comes to mind. New York City comes to mind. The Alameda 
Corridor region came to mind immediately. The Alaska right of 
way into Seattle came to mind, not excluding others but at 
least a half a dozen of these that would require in the range 
of a billion to two billion dollars, something that really 
rises to the level of a national economic impact.
    We crafted a proposal with $17 billion committed to that 
concept. Then because of the Administration's intransigence on 
the total dollar amount, we scaled that number back. The whole 
package was scaled back.
    It was an auction in reverse. We went from 375 to 350, then 
325, then 300. Anybody go for 275? The auctioneer was going in 
the wrong direction. So we scaled that back. Eventually, in 
conference with the Senate, we wound up with $3 billion.
    I said to our colleagues on the other side of the divide--
those are the most difficult 200 meters in America to bridge--
can we agree on a half dozen projects to make these 
investments?
    Oh, no, said the other said. Oh, no. We are the United 
States Senate. We know how to make these investments.
    So they chopped it up into little pieces and frittered a 
grand opportunity to make a major impact on America.
    Now your idea has the advantage of taking it out of that 
milieu, putting it into some autonomous proposition, an auto de 
fe, as it is called in theater, operating by itself. How do you 
propose to do that and avoid the catastrophe that, frankly, we 
had in SAFETEA-LU?
    Mr. Schenendorf. I think the way that we envision this 
happening and let me, just as a practical matter, maybe 
describe the state of good repair program as an example of how 
it would work to prevent the kind of thing that you were 
talking about. I think that we would model it very much in the 
way that the old interstate program was done.
    Basically, what it would start as would be the Federal 
government and the States and local governments and 
stakeholders would develop the standards for state of good 
repair, so that when we talk about that, what exactly would 
that be. A lot of States have already done that to try to say 
here are the level of road conditions and bridge conditions 
that would have to be in order to be in a state of good repair.
    Once you had those standards and they had been agreed to, 
then the States would go out and they would inventory their 
infrastructure against those standards. They would come back 
and say here are all the projects that we have to do in this 
State in order to bring our highway systems and our transit 
systems into a state of good repair and here is what that is 
going to cost.
    In addition to identifying them, they would do cost 
estimates the way the interstate program had for each State in 
figuring out how much it was going to cost to complete the 
interstate system in that State. So there would be a cost 
estimate associated with the project to bring it into a state 
of good repair.
    Then the Federal funding that would be providing for that 
program, you would have an overall cost estimate because you 
would have all 50 States added up just the way the cost 
estimate for the interstate was added up. Then you would have a 
sense of the total cost.
    You would have a number of years over which you were going 
to try to bring the system into the state of good repair, and 
that would give you an idea of how much money each year you 
needed to provide for the program.
    Then when you provided it for the program and each State 
got their portion of the money, the only projects that they 
could spend that money on were the projects that were 
identified in the plan as being what was necessary to bring it 
into a state of good repair.
    Mr. Oberstar. That is a good answer as far as it goes. Does 
this approach envision scrapping the STIP, the State 
Transportation Investment Plan, the 20 year plan each State 
does and substituting therefore this broader plan?
    Secondly, you say incorporating transit into that. Does 
that also mean that we would do away with the, roughly, 18.5 
split for transit?
    When the bill left our Committee, we had a goal of 20 
percent for transit over the 5 years of the bill. In 
negotiations with the other body, that was scaled back. Would 
you eliminate that split altogether?
    Mr. Schenendorf. These plans, I talked about the plan for 
one program, but you would have plans for each of the programs, 
and then they would be knitted together into this national 
strategic plan. That would substitute for the current planning 
process because this would have all the projects in it just the 
way the interstate cost estimate had all those projects in it, 
and it would replace the existing programs that guaranteed a 
certain amount to any particular mode and would basically be 
needs-based. I mean it would be cost to complete, and all of 
the costs that are associated with bringing transit into a 
state of good repair would be in there as well as the highway 
system.
    It was our assessment that when you looked at all these 
performance-based programs, that there would be a huge increase 
for transit, a huge increase for intercity passenger rail as 
well as highway, that we would be basically funding the 
transportation solutions and that all the modes would do very, 
very well.
    Mr. Oberstar. All right. So you would include in this plan 
the 162,000 miles, roughly, of our NHS. Anything that is within 
the NHS would be subject to the national strategic plan?
    Mr. Schenendorf. Right.
    Mr. Oberstar. In Wisconsin, let's say, Commissioner 
Busalacchi is not here, but say Highway 53 in Wisconsin, if it 
were scheduled for four lanes from Superior to Eau Claire, to 
be upgraded. Well, it is already four lanes. Say six, if they 
were going to upgrade it to six lanes, if that was in the plan, 
then that would be it?
    Mr. Schenendorf. That would be funded on a cost to complete 
basis, whatever is in the plan to meet the performance.
    Mr. Oberstar. But if the Milwaukee interchange were not 
included in the upgrade, they wouldn't be able to do it?
    Mr. Schenendorf. If it were not included, they wouldn't be 
able to do it.
    Mr. Oberstar. In the strategic plan.
    Mr. Schenendorf. But the plan is based off the standards, 
so all of the needed transportation investments should show up 
in the plan.
    Mr. Oberstar. How do you update the plan to accommodate 
changing demands of traffic?
    Mr. Schenendorf. I think it is envisioned that the plan 
would be updated whether it is every two years or every five 
years.
    Mr. Oberstar. As we did previously with the interstate cost 
estimate every two years.
    Mr. Schenendorf. Exactly, every two, whatever you decided, 
there would have to be a periodic review and updating of the 
plan, and that would bring in new projects and it would change 
the cost estimates or existing ones.
    Mr. Oberstar. Excellent. I don't want to pursue this 
further, but I have other similar or other aspects of it, of 
your proposal. We will go back to those.
    Mr. LaTourette.
    Mr. LaTourette. Thank you, Mr. Chairman.
    This has been a long day for the witnesses, and I don't 
want to keep them a long time. But I think as I walked in you 
were talking about the projects of national and regional 
significance that were originally proposed for SAFETEA-LU, and 
I thought that that was terrible result that we wound up. 
Rather than having billion dollar projects that could really 
make a difference to the future of travel in the Country, we 
wound up with things that are chopped up and may now never get 
built. They put $100 million here, $50 million there rather 
than the billions of dollars that could have resulted.
    I know that a number of us in Ohio were trying to get a 
$1.2 billion to reshape something effectively known as Dead 
Man's Curve, and it is called Dead Man's Curve for a reason, 
but that is not going to happen in my lifetime now as a result 
of decisions in the Senate. So I want to echo your remarks.
    I forgot in my last remarks to thank all of you for your 
service, and I really appreciate the work that you have done.
    Two, I am glad Mr. Nadler is not here, so I didn't lose any 
money in Ohio while I was out doing something.
    But, three, there is one item of concern. We have used. 
When this Committee put in State infrastructure banks, when 
this Committee put in the design-build approach and other 
things, we have had some successes with attracting private 
capital.
    For instance, the most famous example in Ohio is we have a 
large company in Columbus called the Limited. The Limited 
wanted an interchange off of Interstate 71, and they were 
required to pay for it because they were primarily benefitting 
from it. And so, I am encouraged that the report seems to 
encourage public-private partnerships.
    What raises concerns, and I just need you to correct me if 
I am wrong, is that you appear to recommend that new 
regulations would replace the otherwise specifically negotiated 
agreements that State could make relative to the attraction of 
private capital and that we would have a national regulatory 
scheme of public-private partnerships as opposed to Ohio 
negotiating their deal, Wisconsin and Minnesota negotiating 
their deal. In my mind at least, it would seem that these new 
regulations could limit a State's ability to attract private 
investment.
    If you could just share with us your thinking as to why you 
went that way in your recommendations.
    Mr. Schenendorf. Sure. First of all, with respect to 
public-private partnerships, what we are focusing on is where 
there are really current prohibitions against these kinds of 
things which is on the existing interstate system. States and 
local governments that enter into public-private partnerships 
on new roads that are State roads or roads that don't have 
Federal money in them, not on the interstate system, that is up 
to the States. They can decide whatever they want to do.
    The question is on the interstate system right now, 
tolling, these kinds of agreements, congestion pricing, they 
are prohibited. They can't do any of them. States can't do any 
of them today.
    So the question is if you relax that prohibition and you 
say okay, here, we are going to allow this to occur, would 
there be some conditions that you would place on these 
agreements in a general sense in order to protect the public 
interest because this is the interstate system and it is 
something that the Federal Treasury has paid for?
    The same way in aviation, we prohibited taxes on passengers 
flying. We then allowed the PFC to be put in place, but that 
has conditions on it. There is only so much you can put in. It 
is a certain amount of money that has to be used for certain 
purposes. It can't be diverted off the airport. That is the 
kind of thing that we have here.
    I think these are common sense requirements that we are 
proposing, and so I do not believe that it is excessive 
regulation or that it is trying to regulate something where the 
States can already do something because the States today can't 
put any of these public-private partnerships on the interstate 
system.
    Mr. LaTourette. Thank you very much.
    Thank you, Mr. Chairman.
    Mr. Oberstar. Back to Mr. DeFazio.
    Mr. DeFazio. Thank you, Mr. Chairman.
    I was talking to staff. I was trying to remember the number 
for maintenance and repair on an annual basis, the portion. 
What do you think? Is that a 110 to 140 range? Was that it?
    Mr. Heminger. Congressman, I believe the figure we quote, 
we have an investment gap of about $140 billion. The total need 
is about 225 per year, all levels of government, and roughly 
half of that, we estimate is rehabilitation.
    Mr. DeFazio. So about 110, roughly.
    Mr. Heminger. Correct.
    Mr. DeFazio. Okay. So here is the question that I would 
have put to Mr. Geddes if he was here. Who in the private 
sector is going to want to invest in rehabilitation of the 
existing system?
    Mr. Heminger. Congressman, I have tried to address that 
question in other public fora, and I scratch my head and don't 
know any investment banker that thinks they can make money on 
that. That is why I think it is important that we talk about 
the finance questions not in the abstract but very practically.
    In my view, I think in our view, where private capital will 
be most attracted is in new capacity in high growth areas and, 
frankly, the more the merrier. If we can attract as much of 
that as possible under conditions that protect the public 
interest, we think that is great.
    They are generally not going to be interested in 
rehabilitation. They are not going to be interested in a lot of 
projects in areas that aren't growing as quickly, where the 
dividends won't be as high. So I think we have to acknowledge 
that there are limits to that strategy just as there are limits 
to any financing strategy, and one of the huge limits is on 
this question of repairing our existing infrastructure.
    Mr. DeFazio. There are even new capacity issues. I was 
going to use a specific example. We have something, a need 
identified by the State DOT in Oregon, something called the 
Newberg-Dundee Bypass outside Portland, a rapidly growing area. 
Basically, we have the old State highway there. It is a real 
problem.
    My State went out and actually had Macquarie come in, paid 
Macquarie to come in and do analysis. Macquarie said, yes, we 
can do it. We can build it, but if we build it, you must toll 
the existing infrastructure to drive people onto our facility 
so we can make money. That was kind of the end of the 
conversation.
    I think there are very severe limits here, especially 
again, Mr. Geddes says here that there is a very low rate of 
return to transportation projects. At the same time, we are 
going to finance everything, including maintenance, with the 
private money. It doesn't quite add up in my mind.
    I guess one other issue I would raise is you guys include, 
as I recall, indexation as one of your factors, and we haven't 
indexed. Roughly, according to analysis I have seen, we lost 
about 28 percent of the purchasing power between 1993 and 1996 
and in the last 3 years, it looks like about 10 percent a year 
because of the costs, the run-ups in construction.
    By the rule of sevens, the Federal investment in 
infrastructure under the Administration or the minority report 
proposal would be halved within ten years.
    Mr. Heminger. Congressman, if I could also mention, I think 
it is important to look at the modal question as well. I think 
it is probably the case that private capital will be more 
interested in highway capacity that can be tolled, freight 
capacity that can be freed, so they can generate income and pay 
themselves back.
    Transit projects, by and large, as you know, require a 
public subsidy for their continued operation. Now there are 
some. We are building a project in San Francisco in the Bay 
Area at the Oakland Airport, where we think that incremental 
piece of the system may generate a surplus, and so there is a 
revenue stream.
    Mr. DeFazio. That is the one to the Oakland Airport?
    Mr. Heminger. The Oakland Airport Connector, correct.
    Mr. DeFazio. Is that a PPP or was it?
    Mr. Heminger. It is.
    But, by and large, I think a lot of public transit projects 
will not be of the nature that they can generate a surplus to 
attract private investment. So that is another whole class of 
important improvements that may not be amenable to that 
strategy.
    Mr. DeFazio. Mr. Weyrich, when you pointed out, I was 
fascinated that you could just quantify the returns we are 
getting out of some of this transit investment, the rail and 
light rail and street car. Somehow, I mean maybe we could put 
your folks in touch with the FTA folks. They say they can't 
quantify that, and the Chairman referenced that in terms of the 
cost-benefit analysis.
    Mr. Weyrich. We have met with them and argued the case as 
has the head of the street car coalition, and they are just 
blinded to the subject. I mean it is not a case of they are not 
having the information. It is a case of they are not willing to 
listen to the information. I am sorry that that is the case.
    Mr. Simpson is a friend of mine. He says he has read all of 
my publications on transit and so on, but apparently he hasn't 
learned much.
    [Laughter.]
    Mr. DeFazio. Well, I am not sure I identify him as the root 
of the problem.
    Do you do analysis to the level of this much?
    Of course, part of the Portland street car was funded by 
the local improvement district. So we did put some costs on the 
developers, and they assumed those costs willingly because they 
knew they were going to come out ahead.
    But have you done analysis which would go to the point of 
these products produce this much economic activity and the tax 
returns out of that to the local government or the Federal 
Government would be about X?
    Do you show what kind of ultimate return if you want to 
look at it as we put the money out, how much of it we are 
ultimately realizing back in terms of the increased economic 
activities?
    Mr. Weyrich. I believe we have.
    Mr. DeFazio. I would like to get a look at that.
    Mr. Weyrich. My colleague, Bill Lind, has done a lot of 
that activity.
    Mr. DeFazio. He did? That would be helpful.
    Mr. Weyrich. It is almost predictable today if you have the 
right kind of corridor. Now, if you don't and you are not 
serving areas where people want to go, then you can't get the 
development that we are talking about. But given that you are 
serving an area that people want to traverse, I think it is 
fairly predictable what kind of result you will get.
    I mean even my little city of Kenosha, Wisconsin has 
generated all kinds of housing and museums and buildings and so 
on, and yet they want to extend the line four miles. They have 
been very frugal. It is the lowest cost line in the Country, 
and yet FTA won't give them a dime.
    Mr. DeFazio. It doesn't meet the cost-benefit analysis.
    Mr. Weyrich. Yes. Yes, exactly.
    Mr. DeFazio. Okay. Just one other, again, I am sorry 
because I hate to pick on people when they are not here, but I 
will refer to the minority report and not necessarily to Mr. 
Geddes.
    The congestion pricing which they advocate, I don't see any 
recognition. It seems to me congestion pricing should follow, 
say, the construction of the mass transit alternative. You want 
to say to people: Okay, we want you out of your car, but hey, 
guess what? You can get there in a more fuel efficient way in a 
comparable amount of time and not an extortionate expense.
    As opposed to that, it appears to me that they may be 
saying we are going to use the congestion pricing to begin to 
build alternatives or other projects, which seems to me really 
kind of perverse or inverse in terms. I think you touched on 
some of those issues in a way in the report.
    Mr. McArdle. If I might, Congressman, From the perspective 
of New York, which some people would have to be the first of 
the congestion question.
    Mr. DeFazio. Yes.
    Mr. McArdle. Most of the people who now drive into 
Manhattan are doing so in large measure because either they are 
subsidized or they live in areas that were developed without 
mass transit, particularly in the outer boroughs of New York 
City and out on Long Island. They are not driving in because 
they want to necessarily. They are driving in because it is 
simply the fastest way to get into Manhattan. They don't have a 
mass transit option.
    If you are going to price and then not give them a faster 
option, people are going to walk out the door in the morning 
and, if it is snowing like today, they are not going to want to 
walk to a bus stop and then spend more and more time. They are 
going to hop in their car.
    You will never actually change people's behavior until you 
give them a ride that is a comparable in comfort to what they 
get in their automobile, and that is really what we are 
advocating.
    Mr. DeFazio. I think that is an excellent summation.
    I would go on to observe that both you, the Commission as a 
whole and the minority, and the Administration have criticized 
earmarking. I would note that the congestion pricing in New 
York is being driven by an unauthorized earmark of funds by the 
Administration, and they are essentially bullying New York into 
adopting congestion pricing and have given them a deadline by 
which they must have congestion pricing. As opposed to this 
growing out of a local concern, it is being dictated to them.
    Mr. McArdle. I have made an observation, Congressman. We 
already have congestion pricing in Manhattan. You can pay 60 
and 70 dollars a day to park your car, and people pay it 
because they have a car, tourists particularly, out-of-towners. 
It is just not a public price. It is captured by the garage 
owners and everyone else. So you are already paying a 
congestion price.
    Adding $3 to somebody who is now paying $70, half of whom 
are already getting it subsidized by their business, is not 
going to change behavior. People are driving. It is because 
they have to, not because they want to.
    Mr. DeFazio. Thank you. Thank you. I appreciate it.
    Mr. Schenendorf. Could I just add a point on the congestion 
pricing?
    Mr. DeFazio. Yes.
    Mr. Schenendorf. On the congestion pricing, we tried to, in 
our report, suggest some conditions that would apply in these 
kinds of settings because it all gets down to the deal. Part of 
the thing in congestion pricing people say is, well, if you can 
congestion price, that will generate revenue that you can then 
invest in the corridor and to provide alternatives. It would 
provide expanded capacity.
    But if you look at the arrangement that was just agreed to 
in Northern Virginia where you are going to be paying the one 
that I cite in my testimony which is the five or six dollars 
average per trip, the congestion pricing revenues that come 
from that are going to the private sector for unlimited 
profits. There is no cap on the profits. None of that money is 
going back into providing alternatives or into expanding 
capacity.
    So the way that the deal is set up and how the revenue 
stream is used is a very important issue when discussing these 
things. Sometimes it is going back into or could be used for 
alternatives. Other times, it is being siphoned off and is just 
going to go. For that particular deal, the private sector gets 
to keep all of the money subject to no price limitations 
whatsoever.
    Mr. DeFazio. I wasn't aware of that. Thank you for pointing 
that out.
    Thank you, Mr. Chairman.
    Mr. Oberstar. Mr. LaTourette, have you a second wind?
    Mr. LaTourette. All set.
    All set. Then I have a few more.
    Commissioner Weyrich, did I hear you say my little City of 
Kenosha?
    Mr. Weyrich. Well, I am from that area.
    Mr. Oberstar. Well, just parenthetically, I have three 
precocious granddaughters living in Kenosha.
    Mr. Weyrich. Really?
    Mr. Oberstar. Whom I come to visit frequently and have seen 
the trolley and rejoice in its rejuvenation and have seen the 
investment that it has created and the re-stimulus or stimulus 
that it has provided to the Kenosha economy. I was thrilled 
with your observation about it as a prime example of success in 
transit.
    Mr. Weyrich. You know how little that system was built for.
    Mr. Oberstar. Yes.
    Mr. Weyrich. I mean it was under $4 million a mile. You get 
these grandiose systems, $20 million, $40 million a mile and so 
on, and it is making the consultants rich. But you see where it 
can be built for much less and still be very functional and 
really beautiful in the landscape there against Lake Michigan.
    Mr. Oberstar. Exactly, exactly, it is marvelous.
    One of the greatest dis-services that was done to 
transportation was the development by the U.S. Post Office at 
the time, not U.S. Postal Service, of hub and spoke 
distribution of mail. Some hotshot came up with the idea that 
it would be a great idea to take a letter mailed in Chisholm, 
my home town, to Buhl next door, five miles away, and drive it 
90 miles to Duluth, sort it and then drive it 85 miles back to 
Buhl from Duluth to be delivered instead of using the railway 
post office where it was worked overnight and dropped off very 
efficiently.
    Then the railroad convinced the Postal Service to take the 
RPO out, and then that segment was uneconomical. So they could 
apply for discontinuance to the ICC and drop their LCL service 
as well as their passenger service, and our rail passenger 
service disappeared across the whole iron ore mining country of 
northern Minnesota.
    Mr. Weyrich?
    Mr. Weyrich. At the time that this was occurring, 1967.
    Mr. Oberstar. Exactly.
    Mr. Weyrich. I was working for the late Senator Gordon 
Allott of Colorado, and we asked for a GAO investigation of 
what was happening. They came back and said that a fellow by 
the name of Hardigan had initiated 364 illegal contracts with 
Sedalia-Marshall-Boonville Stages, an airmail taxi company, to 
which he then became vice president after he initiated this.
    We asked the Justice Department to move on it, but of 
course they were dis-inclined to do so. There is one of the 
swindles that took place at the time.
    Mr. Oberstar. Very, very keen observation.
    A very sad chapter in the history of transportation because 
legion are the mayors of communities that invite me and have 
done over years to come and look at the transit systems, the 
trolley systems, the light rail that they once had in place and 
ripped up after World War II because of the automobile. Now 
they want to replace that transit that they once had. Boise, 
Idaho is a prime example.
    They want to recapture that lost past, and we have to help 
them do that. You rightly point out the intermodalism that is 
needed to do so.
    On price versus faster option, a very, very keen 
observation, a ride comparable to what you get in your 
automobile. Some have heard me cite my own personal experience. 
I won a scholarship when graduated from St. Thomas College in 
St. Paul to study at the College of Europe and Brugge, Belgium, 
European Economic Studies at the time of the creation of what 
we know today as the European Economic Community.
    I traveled. Well, this was before aviation. So I traveled 
by passenger rail to the East Coast from Minnesota, the Queen 
Mary to Le Havre, rail to Paris, rail from Paris to Brussels to 
Brugge, a six hour trip from Paris to Brussels. May of last 
year, that 6 hour trip was 80 minutes on the TGV.
    I also traveled to Perpignan, 288 miles. It was four and a 
half hours by steam locomotive. Now, 29, 30 years later, that 
same trip was two hours and one minute with school children 
writing homework on the train, a ride comparable, better than 
what you get in your automobile. We need to be able to do that 
in the United States as well.
    China is investing $162 billion in that kind of high speed 
passenger rail. They are investing that much or somewhat less 
than that but billions in freight rail to the interior of the 
country.
    In the Minneapolis-St. Paul area, travelers just going to 
work and back spend $2 billion a year on parking fees. That 
money could be better invested in a regional transit 
distribution system.
    Your report spends a good deal of time and numbers of pages 
on the VMT, Vehicle Miles Traveled financing, and you raise 
four principal issues--evasion, privacy, wear and tear, 
administrative costs--and suggest a goal of 2025 of getting to 
that financing method. In your deliberations, do you think 
there is a way of short-cutting that time frame?
    Mr. Schenendorf. I think we have tried to make some 
suggestions on National Academy of Sciences work, additional 
pilot projects that would be more expansive than the Oregon 
case to try to accelerate the time frame that it would take. 
There are just a lot of unknowns here.
    There are some breakthroughs. The technology is such that 
they can be put in automobiles pretty quickly if it is going to 
develop a way to retrofit existing vehicles to allow for the 
technology. So I just think there are a lot of unknowns here, 
but the goal is to try to get to that kind of VMT fee as 
quickly as one can, assuming these problems can be overcome.
    Part of it too will depend upon what the replacement fuels 
are as we go forward, how we power our vehicles 10 years, 15 
years from now. If all of a sudden, there is one fuel that 
replaces the current motor fuel, then it is conceivable that 
that would be another method of raising revenue. But on the 
assumption that is not going to really work, then it is really 
the VMT that would be the main goal, and we think we are 
recommending things to get here as quickly as you can.
    Mr. Oberstar. Is it a consensus among the commissioners 
that the VMT is a long term viable, responsible substitute 
policy option, substitute for the current gas tax or user fee?
    Mr. Schenendorf. I think it is and maybe from the 
commissioners here, if anybody had any reservations. The 
Transportation Research Board has an extensive study that comes 
to the same conclusion. I think we came to a very similar 
conclusion.
    There are lots of different things you can do with the VMT. 
There are lots of different ways it could be structured on 
pricing, on just a straight fee, various fees for different 
classes of vehicles. So, once you actually got the fee in 
place, there is a lot of different things you could do with it, 
but I think all of the commissioners that signed the report 
were comfortable with the recommendations.
    Mr. Oberstar. And weight carried on the road surface, is 
there sort of a threshold below which you wouldn't factor in 
weight as a charge and above which you would such as heavy 
trucks?
    Mr. Schenendorf. Well, you certainly could. I mean you 
could structure this any way that you wanted. I think it would 
be envisioned that similar to the different classes you have 
today, you would have different classes of vehicles under that 
system as well, including heavy trucks paying a different rate.
    Mr. Oberstar. Is there additional backup material to this 
section in electronic form that you will be publishing?
    Mr. Schenendorf. We have a Volume 3 which is going to be a 
virtual volume, if Susan is still here, and that is going to 
include a lot of the background materials for this.
    Mr. Oberstar. I have staff who could access that for me. If 
I learn the computer, then who needs you?
    [Laughter.]
    Mr. Heminger. Mr. Chairman, if I could speak for myself.
    Mr. Oberstar. Yes.
    Mr. Heminger. Jack is accurate that we have signed the 
report and so we stand behind the recommendation, but I do 
believe the obstacles he has laid out that need to be addressed 
are not small. As you know and as we note in our report, there 
are currently about 1,400 taxpayers for the Federal fuel tax. 
With the VMT fee, it is potentially everybody. So the cost of 
collection is a very serious issue.
    I also believe personally that the privacy question is one 
as well. Even though this kind of fee is being collected in 
Germany from vehicles, from heavy vehicles, in the United 
States, we have I think a different sense of privacy and civil 
liberties perhaps than Europe does and may be willing to 
tolerate less the level of intrusion that some may view this 
fee involves because it involves tracking the movement of your 
vehicle.
    So I don't think they are necessarily showstoppers, but I 
do believe that the issues that we lay out in the report that 
need to be addressed are quite considerable and will take some 
time, both technically and politically, to get through.
    Mr. Oberstar. That is a wise cautionary note.
    Mr. McArdle?
    Mr. McArdle. Congressman, the weight issue is critical and 
it is critical for the passenger vehicle as well as the truck. 
What I have heard from people is why should SUVs pay the same 
fee when they are imposing more wear and tear on the roads. So, 
something that respects the weight. The way power to weight 
works well, I think is critical.
    On the technology side, I would simply point out to you 
that the mobile phone industry, both here and in Europe 
particularly, have worked out very effective ways of pay as you 
go collection systems, and that is really what we are talking 
about, something electronic that they use to capture that 
revenue and in fact to respect the kinds of privacy issues that 
are out there that become critical. I suspect that is the 
direction that we will be heading in.
    That is a technology they use and have figured out how to 
maintain their revenue streams without the kind of evasion that 
everybody should worry about.
    Mr. Oberstar. That is a very good observation, a very keen 
observation. I am concerned about weight on the road surface. 
Pavement condition is a factor in determining the investment 
portfolio into the future. Just as when the rail sector went to 
286,000 pound rail cars, you had to develop heavier rail, steel 
rail, better ballast and better ties and going to concrete 
ties, in fact. Is that right, Mr. Rose?
    Mr. Rose. Yes, we did.
    I think what we want out of the Commission report is for 
transportation in this case to be properly priced.
    Mr. Oberstar. VMT is a good approach, but it is an 
appropriate cautionary flag for us. Don't expect it to happen 
overnight.
    Freight movement is critical, as you have pointed out, to 
the future of transportation. Your report does not address one 
item that I have been nurturing for some time, and that is 
short sea shipping. This has gained success in Europe but has 
not found a home in the United States until just recently when 
I included it in our energy conservation package.
    That is point to point shipping on the saltwater coasts and 
on the Great Lakes, a way of moving containers at lower cost to 
avoid congestion points and something that is not competitive 
with but complementary to, supplementary to rail shipment of 
containers.
    It seems to me, for example, we are not going to, in a 
short period of time, break the Gordian knot of Chicago because 
we simply did not put enough money into Federal funds in the 
last transportation bill into that project, the CREATE project.
    Bypassing Chicago by moving containers from, say, Duluth-
Superior port that are coming in from Prince Rupert Island 
through Canada into the United States at International Falls 
and then some of them moving to Duluth and then going east 
relieves that congestion. It shouldn't take so long to move 
goods through Chicago as it does, but it does because we 
haven't addressed that problem.
    Are you familiar with the concept of short sea shipping and 
do you have some comments there, Mr. McArdle?
    Mr. McArdle. Certainly, it is something that people on the 
East Coast and the I-95 corridor are looking at aggressively 
because it is an effective alternative to trying to add lane 
capacity on I-95. I think you are going to see it emerge from 
Newport and Savannah through the Northeast largely because the 
truck congestion on I-81 and other places is so heavy.
    I am also told it is being very aggressively pursued along 
the Gulf Coast, particularly as investment in the Panama Canal 
expands capacity to come through and bring containers into 
places like Tampa and the like. People are actively proposing 
it and investing in short sea shipping--say that fast--
specifically to, in fact, feed the container volume along that 
area, given the kinds of rail congestion that they see emerging 
over time.
    Mr. Oberstar. Any others?
    Project delivery, I won't prolong this now, but project 
delivery is critical. I referenced provisions on streamlining 
in the current law. Do you have a section that expands upon 
that concept, Mr. Schenendorf?
    Mr. Schenendorf. Yes, we have expanded upon that concept 
and, as I think Commissioner Skancke has indicated, this was 
one of the important areas that the Commissioner really focused 
on because even if we get the reforms of the programs and even 
if you get the additional money, in order to really earn back 
the trust of people plus to actually get these facilities in 
place, we simply have to shorten the time frame.
    One of the ways we think that it will be easier is the 
performance-based programs that we are talking, the eligible 
projects. The solutions will be developed at the local level 
and up through the State. So the projects that are being funded 
will already have gone through an exercise with the public of 
this is what we need to do to reach the congestion target of 20 
percent, and there will have been a buy-in at the local levels 
in those metropolitan areas.
    All these different plans that are being developed and 
stitched together to be the national plan, there will be a lot 
of bottom-up planning and project identification which should 
make those projects less controversial when you actually get 
ready to go ahead and build them because they will have been in 
this plan that was developed in the way that the locals all had 
input at the time.
    Mr. Oberstar. Well, there is much more food for thought in 
your report. As I indicated at the outset of the hearing, Mr. 
DeFazio will be conducting subsequent hearings on aspects of 
this report and on the various provisions of the existing 
SAFETEA law and our total body of transportation law.
    But your report really causes all of us to rethink 
fundamental principles all over again. That is a big challenge, 
but that is one that we are up to on this Committee. At least, 
I am up to it. I know Mr. DeFazio is. I know others on the 
Republican side are. We are not going to stick our heads in the 
sand as this Administration has done.
    We have to note that just because there are new alternative 
or synthetic fuels, their impacts on the Highway Trust Fund 
will not adversely affect the fund so long as we generate 
revenues from. If persons using hydrogen fuel are driving on 
the roadway, they have to pay their fair share and pay their 
way in using it. Those filling stations can be collection 
points. Electrical outlets can be collection points. We have to 
proceed forward on that.
    Despite global warming and high gas prices, the internal 
combustion engine is not going to disappear from the road 
overnight. We have got 270 million of them on the road. Until 
China started building cars, we had 60 percent of all the cars 
and half of all the trucks in the world rolling on America's 
highways.
    As your report rightly notes, the user fee collected at the 
pump will continue to be the backbone of our revenue stream for 
the future transportation system.
    As we gathered here in this room, meeting, the Department 
of Transportation was sending out e-mails, a whole list of them 
across the Country, denigrating the Commission's report. They 
have better things to do with their time than to stick their 
heads in the sand and be captives to the past.
    A knee-jerk reaction to the Minneapolis bridge collapse was 
to say, oh, we don't need to have a trust fund for 
structurally-deficient bridges. Well, we have more bridges 
collapsing than we do. But do we have to wait until a bridge 
collapses? Do we have a graveyard mentality in this system like 
the FAA had at on time? No.
    Twenty years ago, I conducted hearings in this Committee 
room on the bridge program, 20 years after the collapse of the 
Mianus Bridge. A witness at that hearing said, 20 years ago, 
the years that have passed still have left bridge inspection 
and maintenance in the Stone Age.
    And so, we proposed fixes to it, including a reporting 
system within the Federal Highway Administration. Nothing that 
the chairman of the NTSB said this week reduced the number of 
structurally-deficient bridges in this Country, and nothing but 
an investment in those bridges and better maintenance and 
better assessment of their condition is going to fix the 
problem. Failure to act just delays the day of reckoning.
    This Commission has pointed out how we can get to that day 
of reckoning, how we can avoid a day of reckoning, in fact.
    As we proceed, we will be calling on you, Mr. Vice Chair, 
and you, other members of the Commission, to come and help us 
think our way through the policy maze to craft a new vision, a 
sustainable vision, a sustainable program for the future of 
transportation in America. That will be your lasting epitaph 
and gift to America.
    Thank you very much for your hard work.
    Mr. Schenendorf. Mr. Chairman?
    Mr. Oberstar. Yes.
    Mr. Schenendorf. Thank you very much. It has been an honor 
for us to appear before you today. I can say for all of the 
commissioners, individually and collectively, we stand ready to 
help in any way that we can.
    Mr. Oberstar. Thank you.
    The Committee is adjourned.
    [Whereupon, at 3:03 p.m., the Committee was adjourned.]
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