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


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

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

                                (110-98)

                                HEARING

                               BEFORE THE

                              COMMITTEE ON
                   TRANSPORTATION AND INFRASTRUCTURE
                        HOUSE OF REPRESENTATIVES

                       ONE HUNDRED TENTH CONGRESS

                             SECOND SESSION

                               __________

                           FEBRUARY 13, 2008

                               __________


                       Printed for the use of the
             Committee on Transportation and Infrastructure




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

                                  (ii)

                                CONTENTS

                                                                   Page

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

                               TESTIMONY

Boylan, Christopher P., Vice Chair, Government Relations, 
  American Public Transportation Association.....................    36
Mullett, C. Randal, Vice President, Government Relations and 
  Public Affairs, Con-Way, Inc...................................    36
Peters, Hon. Mary E., Secretary, United States Department of 
  Transportation.................................................     4
Rahn, Pete, Director, Missouri Department of Transportation......    36

          PREPARED STATEMENTS SUBMITTED BY MEMBERS OF CONGRESS

Altmire, Hon. Jason, of Pennsylvania.............................    46
Carnahan, Hon. Russ, of Missouri.................................    47
Costello, Hon. Jerry F., of Illinois.............................    48
Rahall, Hon. Nick J., of West Virginia...........................    52
Salazar, Hon. John T., of Colorado...............................    55
Tauscher, Hon. Ellen O., of California...........................    58

               PREPARED STATEMENTS SUBMITTED BY WITNESSES

Boylan, Christopher P............................................    63
Mullett, C. Randal...............................................    70
Peters, Hon. Mary E..............................................    80
Rahn, Pete.......................................................    82

                       SUBMISSIONS FOR THE RECORD

Safe Routes to School National Partnership, Deborah A. Hubsmith, 
  Director, written statement....................................    89

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

                              ----------                              


                      Wednesday, February 13, 2008

                  House of Representatives,
    Committee on Transportation and Infrastructure,
                                                    Washington, DC.
    The Committee met, pursuant to call, at 10:00 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.
    It is with great appreciation for and admiration of those 
who slugged their way through the icy Washington and suburban 
streets this morning. I know that myself I had to dodge a few 
fallen trees and fallen branches. But I made it through. Now, 
if my voice will only hold up, I have been fighting an upper 
respiratory infection for the last month, and it is winding 
down.
    So I will spare you a very long opening statement and 
simply say that we heard from the majority members of the 
Commission on the report, the national commission on the future 
needs of transportation, National Policy and Revenue Study 
Review Commission. The Commission was very blunt in pointing 
out a clear assessment of the needs and an analysis of 
solutions, a range of options, recommendations to achieve those 
investments in policy objectives that were set out in the 
report that I thought was very clear and very well written. I 
have read about 95 percent of it now.
    It very clearly frames the choices facing the Congress as 
we develop policy options for the future for the traveling 
public, the users of our great interstate and national systems. 
We are on the threshold of a new transformational era of 
transportation. We called it the Fourth Transformational Era in 
the history of transportation over the last century. Very stark 
in the Commission's report was their blunt assessment that 
there is no free lunch in transportation infrastructure. 
Rebuilding the portfolio of highway, transit, bridge needs in 
this Country is expensive. But we have a very rich portfolio of 
surface transportation, and it is not an option to ignore, it 
is a requirement for us to invest in, maintain it and expand 
upon it.
    The Department of Transportation in its 2006 report for the 
Bureau of Transportation Statistics, says that passenger 
vehicle miles traveled over the previous decade grew 50 
percent. Truck traffic grew 100 percent. But our roadway 
capacity grew .65 percent.
    I don't think we need necessarily to have vehicle miles to 
expand at the same ratio as vehicle miles traveled, but we do 
need to continue the upgrading and the capacity enhancement of 
at lest our existing portfolio and I think the Commission has 
pointed us in the right direction. I think that is two years of 
hard work, very intensive hearings across the Country, produced 
one of the finest Government reports that I have observed in my 
years of service in Congress.
    Secretary Peters was a minority view on that report. And we 
look forward to hearing her contrasting views this morning.
    Mr. Mica?
    Mr. Mica. Thank you, Mr. Chairman, and thank you also for 
granting the request of the minority to have the Secretary 
appear in a separate panel.
    Mr. Oberstar. We invited her to appear in the first panel, 
or to appear separately on the same day but that was not 
possible.
    Mr. Mica. Right. And she is here today, and we thank you 
for affording her this separate opportunity to present her 
opinion.
    Also, I highly recommend that you sell your car and that 
you afford yourself mass transit and move close to the Hill and 
walk like I did this morning. I had no problem getting here. I 
got rid of the car and I see Bill Millar up there, he will be 
glad to give you all the bus and transit route. I think Metro 
was running on time in spite of the ice and snow this morning. 
If we could get more folks to do that, we would have less 
congestion.
    But we do need, and I might take issue with the 
Administration, more money for mass transit, so we will give 
everybody a little plug here.
    Mr. Oberstar. Sounds like we have a convert over here.
    Mr. Mica. I am one of the strongest advocates.
    But I think that what we need to do is, it is not always 
how much money you spend, it is sometimes how you spend it. 
There is no question we do need more money, and the Commission 
did identify the fact that we have a huge demand. We need to be 
spending three or four times what we have in building our 
infrastructure.
    But there are some things that the Commission identified, 
Mr. Chairman, again, for the record, long-term options, I think 
they presented excellent long-term options which I support. I 
think political timing on the political reality we have to deal 
with, the 40 cent proposal went over like a lead balloon. And 
timing is everything in politics or dramatic proposals. But the 
need is there, we will identify that.
    And lastly, I loved the testimony from Commissioner 
Skancke, and let me quote him: ``If you add one Federal dollar 
to a transportation project, that adds a minimum of 10 to 14 
years to the project before it actually gets started. That 
costs time and money.'' Then as far as costs, for a billion 
dollar project today, by the time you would finish it under a 
Federal schedule, would add $3 billion to $4 billion in costs. 
So we could get more for sometimes the same amount or a little 
bit more if we better utilize our funds.
    But the options that are presented are great. I look 
forward to hearing the Secretary's comments. I apologize, too, 
Mr. Chairman, I love the Secretary, she is very popular, very 
photogenic, but I am on Government Reform and Roger Clemens is 
stealing the show today. I am a senior Member of that 
Committee, so I will be hopping back and forth. I am required 
in both places and apologize in advance.
    And I welcome Kareem Golden, a student leader from my 
district, who is shadowing me today.
    Thank you so much, Mr. Chairman.
    Mr. Oberstar. Thank you for your opening comments, Mr. 
Mica. We greatly appreciate your being here.
    The Secretary is not under the same kind of scrutiny that 
Mr. Clemens is in the hearing next door, by any means. She is 
drug-free.
    [Laughter.]
    Mr. Oberstar. Although I must say, we would welcome a 
surface transportation on steroids.
    [Laughter.]
    Mr. Oberstar. Mr. DeFazio.
    Mr. DeFazio. Thank you, Mr. Chairman.
    Mr. Chairman, I will be very brief so we can move ahead and 
hear the testimony of the Secretary and get into questions.
    The bottom line of the Commission was the reality that most 
Americans recognize on a day to day basis, that our 
transportation system is in dire need of major investment. I 
mean, not only do we have bridges, as in your State, falling 
down, we have nearly 150,000 bridges that are either 
functionally obsolete or structurally obsolete. I think if we 
posted all those bridges with big signs saying, caution, you 
are about to drive over a bridge that is structurally 
deficient, it might get the attention of the traveling public 
and get them even more interested in seeing increased 
investment.
    Increased investment at this time would also be opportune, 
given both our problems internationally with our huge trade 
deficit. You can't export the jobs and the economic activity 
that comes from transportation investment, makes us more 
competitive internationally, and certainly we need jobs at this 
point in time. So for a host of reasons, the report was timely. 
And I look forward to disagreeing with the Secretary over how 
we are going to reach those goals of investment.
    Thank you, Mr. Chairman.
    Mr. Oberstar. Thank you, Mr. DeFazio.
    Mr. Petri.
    Mr. Petri. Thank you very much, Mr. Chairman.
    I just would like to say briefly that our Country is in a 
competitive situation in a rapidly-changing world. Over the 
last 40 to 50 years, we have radically reformed major sectors 
of our economy by deregulating different modes to lower costs, 
doing business in the American economy, so that we could 
maintain our standard of living and have a future for our 
children.
    If we under-invest in our infrastructure, we are going to 
be losing efficiency as a society and becoming less competitive 
going forward. So I frankly have been disappointed that the 
Administration has not provided more leadership in this area in 
helping focus attention and gathering the resources necessary, 
not just throwing money at the problem. But if we continue to 
decline as a society in the efficiency with which we move goods 
and people, it is going to raise costs and over time, move 
activity to other places in the world and we will be poorer for 
it.
    The Chairman spoke of this being a transformational period. 
I hope it is a period where people use the opportunity, it is a 
crisis because of the financial uncertainty right now 
surrounding the bursting of some bubbles and so on. But it is 
also an opportunity. Paul Krugman recently wrote a column sadly 
saying he thought the economy might be slow for not just six 
months but for a number of years, and that infrastructure 
investment was a logical way of helping to move through this 
period. I hope we do take that opportunity to think about it, 
get good advice and then build a program to not just deal with 
the economic slow-down in the short term, but do that and help 
make our Country more competitive longer term with adequate 
infrastructure.
    The Commission recommended major restructuring of the way 
we do this, which I think is wonderful, because it will 
increase public confidence that the money that is invested in 
infrastructure is well spent, not frittered away on what are 
called earmarks or projects sometimes misunderstood, sometimes 
probably appropriately understood as not appropriate. But in 
any event, thank you, Mr. Chairman, for having this hearing, 
and I look forward to hearing the Secretary.
    Mr. Oberstar. Thank you. Thank you very much for those 
thoughtful remarks, born of many years of serving as the Chair 
of the Surface Transportation Subcommittee.
    Madam Secretary, we welcome your comments and thank you for 
participating with us this morning.

 TESTIMONY OF THE HONORABLE MARY E. PETERS, SECRETARY, UNITED 
              STATES DEPARTMENT OF TRANSPORTATION

    Secretary Peters. Mr. Chairman, thank you so much. Ranking 
Member Mica, Members of the Committee, I do appreciate the 
courtesy that you and the Chairman have offered me to appear 
here today.
    As was indicated, there is a Clemens hearing going on, 
which may be more interesting, but I would argue that ours is 
the more important hearing. And again, for the record, Mr. 
Chairman, I have never taken human growth hormones, ever.
    [Laughter.]
    Mr. Oberstar. I am counting on that. And this is a more 
important hearing, believe me.
    Secretary Peters. We women really don't want to grow 
bigger, we want to be smaller. That is what we look forward to 
doing.
    Let me begin by saying, over the past 20 months, the Policy 
and Revenue Commission met on numerous occasions, engaged in 
wide-ranging discussions with many people around the Nation 
about the current and future transportation needs of our 
Nation. I believe that this time has been very well spent, and 
I value and appreciate the contributions by all of my fellow 
commissioners.
    Although I do disagree with some of the central elements of 
the Commission report, that disagreement in no way detracts 
from my respect for my colleagues on the Commission. They are 
to be commended for their hard work and their dedication.
    Last week, the Administration released its fiscal year 2009 
budget, which funds the final year of the $286.4 billion 
SAFETEA-LU authorization. It is clear that we are just limping 
over the finish line, with the Highway Trust Fund's short-term 
future unclear and its long-term in serious jeopardy. This 
highlights the significant limitations in our current policies 
and it demands a new direction. It is short-sighted to continue 
reliance on a fuel tax at the same time we are pushing 
increased energy efficiency, better air quality standards, and 
a reduction in our dependence on foreign oil.
    Given the significance of our transportation challenges and 
the resultant effective on our economy and quality of life, it 
is imperative that we work together to reach a bipartisan 
consensus on the nature of these challenges. While we may not 
always be able to reach complete agreement on the appropriate 
solutions to our surface transportation problems, we must come 
together and agree on a common definition of what the problem 
is and recognize that fundamental change is indeed required.
    I have spent many years working in this field, and I have 
concluded that the central problem in transportation today is 
not how much we are paying for infrastructure, but perhaps how 
we are paying for infrastructure. Our current transportation 
funding, an indirect user fee, provides the wrong incentives 
and signals to both users and owners of the system, resulting 
in over-use of the system, especially during peak periods. I 
often compare this to the Tragedy of the Commons, when it was 
over-used, to a point that the Commons, of course, was no 
longer productive. In fact, I believe that the chronic revenue 
shortfalls that we face are more a symptom of the problem than 
the cause.
    Americans overwhelmingly oppose gas tax increases, because 
real world experience tells them that they don't provide a 
benefit to them. This is evidenced by a failure in system 
performance. Over the past 25 years, despite substantial 
increases in Federal, State and local transportation spending, 
much of it from fuel taxes, we have witnessed a rapid growth in 
highway congestion. In the past 25 years, highway funding has 
increased 100 percent, while congestion during this same period 
increased by 300 percent. The system failure is impacting our 
families, our businesses and our environment.
    Americans have become increasingly disgruntled about the 
declining performance of the transportation system, but also 
are unwilling to support transportation-related tax increases. 
Some in the transportation field argue that we have simply 
failed to communicate the importance of transportation to the 
average American. To me and to other observers, this represents 
a failure in public confidence and traditional approaches.
    Public opinion surveys confirm this view. A recently-
released survey out of Washington State found that voters 
preferred high-speed variable tolling to gas tax increases by a 
margin of 77 to 17. This survey is consistent with a number of 
others conducted across the United States that have found 
deteriorating support for gas taxes and growing support for 
direct charges.
    I agree with those who call for greater Federal leadership 
and the Commission report does call for that. I do not concede, 
however, that Federal leadership simply implies substantially 
greater Federal spending and dramatically higher fuel taxes. In 
fact, it is far more critical that the Federal Government 
establish clear policies, provide appropriate incentives and 
allocate resources more efficiently than it is for substantial 
increases in Federal spending.
    It is essential that we on the Federal level work together 
and demonstrate this type of leadership. I truly believe that 
there has never been a more exciting time in the history of 
surface transportation.
    Mr. Chairman, I agree that it is a transformational era. We 
are at a point where meaningful change is not only conceivable, 
but is actually being implemented in various parts of the 
United States. We have before us a tremendous opportunity; an 
opportunity to make significant changes that will reverse the 
substantial performance declines in the Nation's surface 
transportation infrastructure. This will benefit the American 
businesses and families that depend on our infrastructure every 
day.
    Mr. Chairman, again, I thank the Committee for allowing me 
to testify. I look forward to working with you to address these 
transportation challenges.
    Mr. Oberstar. Thank you very much for your statement. I 
found it interesting that you made a distinction between how 
much and how. You say the issue is not how much we pay, or I 
would say invest, but how we invest.
    Apart from Social Security, the most successful social 
experiment in this Country has been the Highway Trust Fund, in 
my opinion. I have leaders from transportation sectors of major 
industrialized countries throughout the world coming to the 
U.S. to visit with, and the first question they ask, whether it 
is the Minister of Transportation of France, last year about 
this time, or the Minister from Argentina, the Chair of the 
Argentine Transportation Committee, who say, how do you do it 
in America, how do you build this interstate highway system, 
how do you maintain this great network of roads and create the 
mobility? The Highway Trust Fund, dedicated revenue stream, it 
has been enormously successful.
    I believe the Highway Trust Fund and the user fee must 
remain the cornerstone of transportation financing for the 
future. Do you agree or disagree with that?
    Secretary Peters. Mr. Chairman, I do agree that depending 
on user fees is the best way to go. I think my question is, 
what kind of a user fee is best.
    Mr. Oberstar. You wouldn't do away with the existing user 
fee?
    Secretary Peters. No, Mr. Chairman, not the existing.
    Mr. Oberstar. Okay. It is good to establish that. Proceed.
    Secretary Peters. At least not at this point in time, Mr. 
Chairman.
    Mr. Oberstar. Not at any point in time, I will tell you.
    Secretary Peters. Let me talk about why I think there are 
problems with the gas tax and our continued dependence on the 
gas tax into the future. It is a more indirect than a direct 
user fee. And even though it is related to use of the system, 
when the interstate highway system was being built, what was 
then established and served us very well, as you said, Mr. 
Chairman, was a gas tax that was incrementally increased to 
equate to the cost to complete the interstate highway system. 
And again, it did deliver one of the most impressive 
infrastructure projects this world has seen to date.
    But today, there are problems with the gas tax. It is 
ineffective at reducing congestion. And that really gets to the 
basis, Mr. Chairman, of what I was saying, it is not how much 
but how. Because when we pay on a demand basis, and not every 
road, I concede, would be susceptible to that, but when we pay 
on a demand basis, we gauge our use a little bit differently. 
It leads to over-consumption during peak periods.
    The recently-completed household travel survey I think 
underscored some of the issues that we are facing. During peak 
periods of time, we tend to think that most of the users of the 
transportation sytem are commuting to work and back. In fact, 
the truth is, only about 50 percent of them are making commute 
trips to work and back. Twenty percent of them are retired, 
which could argue that they have some discretion when and how 
they use the system. So this tells us that through a small 
change in pricing, we can incentivize some people not to use 
the road during peak periods and get much better use out of 
that road.
    The gas tax contradicts our energy policy, a very good 
piece of legislation that this body just recently enacted, that 
tells us we want to increase fuel efficiency in our vehicles, 
we want to lessen our dependence on foreign oils and we want to 
increase the use of alternative and renewable fuels. And the 
yield is simply not sufficient, it is not reliable and it is 
not sustainable to carry forward our transportation system in 
the future.
    Further, we have what I call a failure of consumer 
confidence. If the public were clamoring for the gas tax to 
have been increased, we would have done it a long time ago.
    Mr. Oberstar. Well, I have to interrupt you at that point, 
Madam Secretary. I didn't mean for you to have a soliloquy on 
this subject. Your statement that the public is overwhelmingly 
opposed to an increase in user fee belies the failure of 
leadership at the top. If the Administration, if you as 
Secretary were advocating for it, a lot of people who are 
undecided about this or confused by it would come around to 
support it.
    When I am traveling in my district, when I am traveling in 
other parts of the Country, and have a serious discussion about 
user fees, people understand it, they know it is directly 
related to their transportation needs, they know that the money 
goes into the trust fund and out in the form of improved roads 
and bridges and transit systems. So I think the advocacy of 
privatization, tolling and rationing as the solution to the 
Nation's transportation crisis is a narrow, myopic, uninspired 
and fragmented approach. It does not rise to the merit of being 
called a policy.
    Mr. Petri?
    Mr. Petri. I have two questions. One, I know the Commission 
was appointed by representatives from the Administration and 
House and Senate, a number of people who took their 
responsibilities very seriously and had a lot of background. 
The Commission worked very hard to attempt to reach a 
consensus, but ultimately failed. The two questions are if you 
could discuss the areas of disagreement or the conflicting 
visions of the future where you were unable to bridge; and 
secondly, the point you made about yes, there is congestion, 
but only at certain times and in certain areas that we could 
probably run the system more efficiently with some kind of 
congestion pricing or other way of dealing with it.
    Could you flesh that out a little? Would the idea be, that 
if you were to, for example, raise the gas tax or some other 
fee on everyone and then give a discount if they didn't drive? 
It might work better than charging people extra if they did 
drive. I don't know. I am just curious as to how much thought 
has really been given to how that sort of thing would work. We 
are familiar with what has been going on in Europe and London 
and some other areas.
    And cities do have, not pricing, but they do have rules, 
trucks aren't allowed in during certain hours, so they have to 
do deliveries at night. It has been suggested for the Alameda 
Corridor, if we would run trucks back and forth from the Port 
of Long Beach at night, they wouldn't have had to go through 
this tremendous expense. But that involves changing a lot of 
systems and there is resistance from people who work there and 
everyone else.
    Anyway, if you could address those in the brief time 
remaining, I would appreciate it.
    Secretary Peters. Congressman, I would be pleased to do 
that.
    There are many recommendations in the Commission report 
that I do support and did agree with, as did other Members of 
the minority. The key importance of our transportation system, 
the multi-modal nature of that system and how that must 
continue into the future. The opportunity to simplify Federal 
programs and funding categories was an area of agreement, as 
was the proposal for streamlining the current planning and 
environmental processes.
    We also agreed that we needed to make much efficient 
investment in transportation in the future, and that we needed 
to link Federal participation to that in the case of the ten 
proposed programs that the majority commissioners recommended 
to more clearly define Federal interest. I think is where, 
Congressman Petri, that I really believe we need to focus in. 
We had a compelling national interest when we were building the 
interstate system, and people signed on to doing that, and 
there was a great deal of public support for doing that.
    But today, the Federal surface transportation programs are 
so bifurcated, some 108 of them, in our highway and transit 
programs, that there isn't a compelling Federal interest that 
is being served. This leads, then, I think, to sub-optimization 
of the revenues and the resources that we have.
    Where I disagreed with other members of the Commission was 
the over-statement of future needs. I think that they used the 
highest investment instead of the most probable or that which 
is truly cost-effective in making. Increasing the Federal fuel 
tax, we have talked about, I do not concur with. And the large 
Federal role in funding and managing the system, as well as the 
governance commission. I think that there is much we can do by 
streamlining these programs and putting more of the authority 
and responsibility back down to the State and local level.
    I have spent most of my adult life in this field. If I 
truly thought the gas tax was the way to go, I would be the 
first to advocate that. But I simply do not. This is not an 
ideological opinion. It is an opinion based on my serious 
examination of the gas tax over time. The Federal interest, in 
terms of going forward, has to be defined very, very clearly. 
We should collect, at the Federal level, only those revenues 
that are attendant to those needs, and again, give the State 
and local governments or the private sector more opportunity to 
invest.
    Let me talk about what I mentioned and your question about 
congestion pricing. Congestion pricing and pure revenue tolling 
are actually two different concepts. Congestion pricing is 
designed to spread traffic flows more efficiently to reduce the 
enormous economic costs of congestion and to reduce pollution. 
It does this by incentivizing, via price signals, just a small 
number of people not to use the road at that given period of 
time.
    I would call to your attention what I call the ``August in 
Washington'' phenomenon. Many of us who happen to be in town 
here_those who can get out of town do_but those of us who are 
in town here in August find that the transportation system 
works significantly better than it does the Tuesday after Labor 
Day, when it all goes to heck in a handcart. What happens 
during August is that, due to vacations and the like, 
approximately 50 percent of commuters don't use the road. A 
small usage reduction makes an enormous difference in how 
efficiently that road operates. Gas taxes are use fees, but 
they simply are too indirect to influence decisions about when 
and how to use the road.
    Mr. Oberstar. Thank you, Madam Secretary.
    We are in the midst of a vote on the House Floor on the 
motion to adjourn. But there are_392 haven't voted yet. So we 
will go next to Mr. DeFazio. I just want to observe that while 
you critiqued the Commission for having picked the highest end, 
the reality in transportation statistics is that actual 
performance has outpaced all projections in the history of 
transportation. We have always seen greater use than was 
predicted.
    Mr. DeFazio.
    Mr. DeFazio. Thanks.
    Thank you, Madam Secretary. First, to correct a problem 
with your testimony, I am certain your staff would like to 
correct this, because you presented it both to the Senate and 
here.
    Actually, in Washington State, the history is two years 
ago, state-wide initiative, they passed a gas tax, state-wide. 
Recent polling in the metropolitan area, general metropolitan 
area having to do with a larger, more ambitious program, has 
about a tie between the gas tax and congestion pricing. That is 
King County area, the urban center.
    The thing that is referred to in your testimony is a 
bridge. The polling was only on the issue of tolling a bridge. 
Now, there's very little controversy over tolling bridge 
projects. That was the issue. So the statement here is totally 
inaccurate. That is not a general sentiment shared by the 
people of Washington State, particularly outside the urban 
area. It is about even in the urban area. But when you look at 
one specific project, should you apply tolling, yes.
    Now, as to the issue of the private investment. We had 
Macquarie come in, look at a project in Oregon, Newberg-Dundee 
bypass, it is a big bypass, something that we can't fit in the 
State plan, very, very expensive. They said, yes, we can build 
it. But in order for it to pencil out for us, you will have to 
toll the existing infrastructure in the vicinity to drive 
people onto our project. And so do you support, taxpayers have 
paid for existing State or Federal highways, that we would toll 
those in order to facilitate some private, for-profit 
investment to deal with another problem?
    Secretary Peters. Mr. Chairman, what I believe we need to 
do, what our responsibility at the Federal level is, is to 
protect and ensure that the Federal interests are met in 
tolling projects. The way we do that is incorporating standards 
for conducting, operating and maintaining the interstate, 
connectivity with other parts of the transportation system, the 
mobility of products, that it is conducive to interstate 
commerce, that there is transparency in the process, fair and 
open competition and safety is addressed.
    In terms of dealing with tolling existing sections of 
highway versus only those new, there is much less acceptability 
to tolling existing sections of highway. I would also say, Mr. 
Chairman, where there is an opportunity to increase the 
efficiency of the overall system, I wouldn't rule it out. I 
think State and local governments have to have the opportunity 
to look at it.
    Mr. DeFazio. Thank you, but again, that is a problem here. 
People want to make a profit if they are going to invest. And 
to invest they say, well, you have to toll your existing 
infrastructure. I tell you, that would enjoy 1 percent or 0 
percent support in my State. I imagine Arizona wouldn't be too 
much different if you said, gee, we are going to make you pay 
to use the highways you have already paid for. I don't think 
people in Arizona are that different than the people up in the 
Northwest.
    So that presents sort of a conundrum if we are going to 
depend upon private investment. Then you used the word protect. 
I guess I am puzzled that the minority report objects to the 
conditions that are suggested by the Commission on the PPPs. 
Now, I understand that you can attract a lot more interest from 
the private sector if you say hey, we are going to give you a 
license to print money. You are going to have non-compete 
agreements, we are going to toll the surrounding 
infrastructure, you can control all the tolling, no limits, or 
like in Indiana, we will put a floor on your toll increases.
    But the Commission said, if you want to protect the public 
interest, you need to have conditions. Why would the minority 
report object to modest conditions to protect the public 
interest? Even Mr. Duvall, when he was here, a year ago or so, 
admitted that non-compete and other things were problematic, 
people should be aware of them. In fact, he said that you would 
post some of those things on a web page next to the paean, your 
wonderful piece which extols the virtue of PPP on your website. 
But we have yet to get that, I have asked three times. There 
are some pitfalls here.
    Would you agree that non-competes are a potential pitfall 
and other things with PPPs?
    Mr. Oberstar. Excuse me, on conclusion of the Secretary's 
statement we will recess for the vote. We have 36 seconds. I 
will leave, because it takes me a little longer to walk over 
there.
    Secretary Peters. I will try to get this in in the next 36 
seconds. In terms of tolling existing interstates, I favor it 
only if improvements are made that improve the overall system 
itself. In terms of non-compete clauses, I do think those have 
to be looked at very, very carefully. We know on State Route 
91, one of the earliest projects in the United States, a 
stringent non-compete clause became a limiting factor that 
later had to be dealt with. So I would agree that there are 
problems with non-compete clauses.
    My disagreement with the Commission majority on this issue 
is that the Commission report would place numerous conditions 
on public-private partnerships, beyond what I think is 
necessary to protect the Federal interest. And in fact, the 
Commission purports to substitute its judgment for State and 
local officials who are entering into these agreements with the 
private sector. So yes, there do need to be some limitations to 
protect public interest. But those can be done in a manner that 
doesn't kill the opportunity to attract private sector 
investment.
    Mr. DeFazio. But in giving total latitude to public 
officials and ignoring some of the concerns raised by the 
Commission, let's look at Mayor Daley's Skyway project. Money 
was diverted to the general fund of the city for one year 
consumption in general fund projects from the payments they 
received for that project. You don't believe we should have 
restrictions on these projects, that the money would have to go 
back into transportation projects, or even more specifically, 
as the Commission recommends, into the corridor that is 
relevant to that transportation project, if you are going to 
assess tolls or congestion prices?
    Secretary Peters. Mr. Chairman, as a transportation 
professional, I would prefer the investment go back into the 
system. However, in the case of the Chicago Skyway, that route 
was actually losing money. It was costing the city of Chicago 
money, and the mayor took and monetized an asset that was at 
the end of the day in the public interest of the people in that 
region.
    Mr. DeFazio. Right, but he did divert the money and you 
don't agree with diverting the money to non-transportation as a 
policy. So I think if we were protecting the Federal interest, 
the public interest, we would want to say that it is Federal 
policy, where the Federal Government is a partner or has a 
significant interest in a PPP or it has a significant effect on 
the national transportation infrastructure, that we would want 
to see that money used for widely-recognized infrastructure 
deficit.
    You do agree that there is a current infrastructure deficit 
and we do need more investment without determining where that 
money comes from? You would agree with that statement?
    Secretary Peters. I absolutely agree with that statement.
    Mr. DeFazio. That is good. I am going to keep going, 
because that will save you time. If I miss the vote to adjourn, 
it is not going to cost me my Congressional career, I can 
guarantee that.
    [Laughter.]
    Mr. DeFazio. So you used the word ``over-consumption,'' and 
talked about the discretionary travel, 50 percent. At the same 
time, you pointed to the fact that here in D.C., that when 
people are on vacation, i.e., they don't have to go to work, I 
don't think they randomly go out and drive around at rush hour, 
that traffic problems pretty much abate when those people don't 
have to work. I think there is almost a contradiction here.
    I really would like to see, I know there is one consultant 
out there who is citing some thing to say that 50 percent of 
the travel at rush hour is discretionary. I would assume what 
he is talking about is, some people are driving their kids to 
school before they go to work, and he would say that was 
discretionary. Some people are picking up their kids after 
school and moving them around after work.
    I don't know where he gets it, but I have to tell you, the 
seniors aren't rushing, at least in my part of the Country, to 
get out and drive around in rush hour, they are just not. I 
really would like to see some real substantiation as opposed to 
one consultant's opinion based on one relatively small sample. 
I just really doubt that.
    But beyond that, the question becomes, and Mr. Mica 
referred to this, unfortunately he had to go to more important 
things, like baseball, but he talked about mass transit, and 
the fact that you need that option, and it worked, particularly 
today. But the problem is, if you raise the prices for 
congestion pricing and you don't dedicate that money into 
building the mass transit, then the people aren't going to have 
an option in the future.
    In the present tense, many people don't have an option when 
you impose congestion pricing. You have just sent them a 
message that is, sell your house, quit your job, get another 
job, if they don't have a viable, comparable alternative in 
terms of time and cost by mass transit. And there are a heck of 
a lot of people who don't have that today, because of our lack 
of investment.
    Do you recommend imposing congestion pricing when people 
don't have a viable alternative and they are work commuters? 
Isn't there an incredible equity issue here? The execs won't 
care. They will get to work faster. And they can pay the 10 
bucks. But the factory line worker is going to say, gosh, I 
can't afford 10 bucks to get to work, I am going to have to 
leave an extra hour early, because I can't take that road any 
more.
    Secretary Peters. Mr. Chairman, let me answer that question 
in a couple of ways. First of all, increasing gas taxes, 
especially on lower income people in our population, is very 
much a burden. In fact, it is a bigger burden on those 
individuals than having the option of paying a congestion fee. 
Time is as valuable to people in the lower income ranks as it 
is to everyone else. In fact, in some cases it is more 
valuable. I have often used the example of a mother or father 
trying to pick up a child from day care, and if they are late, 
they pay pretty horrendous late fees for getting their own 
child back at the end of the day. If they had the option of 
getting on a HOT lane and paying that fee, then they would be 
very apt to do that.
    But it also frees up revenue. When we use pricing like 
this, it frees up revenue for other routes. In fact, where 
those options are available, in San Diego, for example, on the 
fast track on I-15, 60 percent of the support comes from those 
with incomes of less than $40,000. In Orange County, State 
Route 91 express lanes, 51 percent of the support from those 
with incomes less than $25,000. And Minnesota's I-395 MnPass, 
64 percent of the support from low-income individuals there.
    Again, the gas tax is more regressive. It puts a greater 
burden on those with low income. They often have strict work 
schedules; they often have to live farther away from their 
jobs. Occasional use of a congestion pricing system like this 
would be important.
    I think what Mayor Bloomberg is proposing to do in New York 
City is a very good example and speaks to the issue that you 
are talking about. If he is successful in implementing a plan 
to have a congestion pricing fee for lower Manhattan, which 
would put the money that is earned from that into improving 
transit throughout the region. I think that is a very good 
idea.
    Mr. DeFazio. The problem, of course, is the improvements, 
and people in New York have said, hey, all the people who live 
over here don't have a transit option right now, they are just 
going to have to pay, these people here do have it, and I don't 
know the geography up there. The problem is when you impose, 
because we are not going to raise taxes in any way or increase 
other investment, but we are going to sort of work toward the 
future of the congestion pricing issue, create inequities. In 
fact, your own staff, and I don't believe this was the 
Commission, I am told this was, well, Commission staff 
analysis, sorry, it is the Commission staff, which you would 
disagree with, I guess, being the minority on the Commission, 
says that the fuel tax, the congestion pricing is at least 
twice as inequitable as fuel tax by income group. And I don't 
think they are talking about rich people.
    And let me give another example. I drive a funky old car at 
home. I can squeeze out 20 miles per gallon when I am really 
lucky in my 1964 Dart. Now, here we go, we don't have tolls, 
but if I had to pay a $1 toll, I live out east of Eugene in a 
smaller town, and the 105 is getting kind of congested. So 
let's say we go to a $1 congestion toll. That would be 
basically, if I get 20 miles per gallon and I had to pay a $1 
toll, it figures out that I would have to drive 400 miles to 
break even here.
    I have a question, and a lot of lower-income people are 
driving less fuel-efficient cars. I hang on to mine for 
sentiment, I also don't like making car payments. There are 
real questions here, between the gas tax and I believe the 
congestion pricing, when you apply it in the real world onto 
what the equivalents would be. I think that is something that 
really needs to be done.
    Let me get to another issue. As I understand the minority 
position, you are proposing basically to phase out Federal 
investment in the system. Is that correct?
    Secretary Peters. Mr. Chairman, I would intend to do that 
over time. But this is an area where I didn't disagree with the 
other members of the Commission, in terms of over time, we 
should phase into a vehicle miles traveled system, as opposed 
to either gas taxes or tolling and pricing in the short term. 
And really a vehicle miles traveled system is a form of 
pricing.
    Mr. DeFazio. Well, what I meant is that you are proposing 
that there would be no increase in the Federal gas tax not even 
to compensate safer construction inflation, which is running 
about 10 percent a year. So that means a year from today, the 
Commission would say we are grievously under-investing at the 
Federal level. You would disagree with that.
    A year from today, they would suggest we need a dramatic 
increase. If we freeze it, we actually in real dollars decrease 
our investment at the Federal level a year from today by about 
10 percent. In fact, using the rule of sevens, basically within 
a very few years, we are going to have cut our investment in 
half in real dollars. You do acknowledge that there is 
tremendous construction cost inflation?
    Wouldn't you even want to just hold the Federal portion? 
Wouldn't you even want to just keep it at the current level, 
say index it to construction cost inflation or something else?
    Secretary Peters. Mr. Chairman, I did suggest and do 
suggest that we keep it at the current level.
    Mr. DeFazio. In real dollars, so we would index it?
    Secretary Peters. No, sir, in actual dollars.
    Mr. DeFazio. So only in nominal dollars.
    Secretary Peters. Here is also what I suggest we do. I 
talked earlier about the Federal role. I refer also to a very 
good GAO report on this topic. We don't have a clearly-defined 
Federal role today. That has manifested itself, as I said 
earlier, in 108 different programs in highway and transit. We 
need to narrow the focus of the Federal role, have the Federal 
Government do and collect money to support only those things 
that are truly in the national interest. Then we need to give 
more State and local discretion more prioritization.
    I would say hypothetically that of the 18.4 cent Federal 
gas tax that we collect today, 12 cents supports Federal issues 
directly. The balance of that should either be returned to or 
kept by the State. Over time, we need to move to more direct 
pricing.
    Let me give you just an idea of what is out there, the 
opportunity that we have to bring in new revenues. If 
congestion pricing were done on all congested roads, and this 
is based on the C&P report, the cost to maintain that system 
would be reduced by $21.6 billion a year, to $57.2 billion a 
year. That is less than we are paying today.
    Two economists at Winston and Langer did a study that said 
if congestion pricing was used in the largest metropolitan 
areas, the 95 largest metropolitan areas, it would generate 
$120 billion a year while solving congestion, allowing tax 
reduction. I am not suggesting that we reduce the taxes at this 
point in time, but I do think we need to move to a more direct 
user pay over time.
    Mr. DeFazio. Again, I find some contradiction there. If the 
cost to maintain would drop so dramatically, that implies that 
those are trips that would never be taken as opposed to 
congestion avoidance, congestion tax avoidance where people 
would choose alternate routes or different times. So we are now 
at the point of it, we are not just saying that 50 percent of 
the travel at rush hour is discretionary, we are saying that 50 
percent of all travel is discretionary, which I find really 
hard to believe, particularly with current gas prices, that 
people are out there just kind of cruising around at the worst 
times of day, for fun. I just don't find those numbers 
credible.
    I would like to relate to home things. So Phoenix has some 
traffic problems now. Would you recommend that Phoenix impose 
tolls and congestion pricing in the Phoenix area to deal with 
those problems, or would you suggest additional investment and 
construction, some transit and other things are necessary? That 
just seems to me a real critical point here. For your home 
State, do you think where you have no tolls, that they should 
start to impose tolls and congestion pricing to deal with their 
problems, rather than increasing investment, whether it comes 
at the Federal level or the State level?
    Secretary Peters. Mr. Chairman, I actually did try to 
implement some of those projects when I was the director of the 
Arizona Department of Transportation.
    Mr. DeFazio. You tried to implement congestion pricing or 
tolling?
    Secretary Peters. I actually tried to implement pricing of 
the HOV lanes to convert them into HOT lanes and allow single 
occupant drivers to purchase rights to use those lanes. We also 
looked at tolling the new crossing at Hoover Dam.
    Mr. DeFazio. But someone didn't go along with that, like 
the legislature or someone?
    Secretary Peters. There were numerous people who didn't go 
along with that. And the idea may have been a little early. 
Today, in the Phoenix area, I think converting the HOV lane 
system, which is a pretty mature system, to a HOT lane system, 
would help tremendously. There is unused capacity in the HOV 
lane system today. And I do think that Arizona, and other 
States, should look at pricing as one of the options for 
raising revenue to do projects. Certainly there is public 
opposition to these things. But you have indicated that you 
don't necessary concur with the statistic I gave earlier, and 
we will give you others. By the way, also, we will give you the 
background documentation for that.
    Mr. DeFazio. Yes, I just, again, if the avoidance is $23 
billion, then I mean, since the maintenance has to be done, and 
it relates to, you weren't talking about dealing with 
congestion and enhancing the system, you were talking about 
maintenance. Maintenance, you can have the car bumper to bumper 
on the road, or you can have one car driving down the road. If 
you have the same number of cars, but, I suppose the speed does 
make some, well, actually it probably costs more to maintain 
the road for the higher speed if it is less congestion. That 
statistic just didn't make sense.
    Secretary Peters. Mr. Chairman, what I was referring to is 
in the conditions and performance report, there are two levels 
of funding that are suggested. One is cost to maintain, the 
other is cost to improve. Cost to maintain doesn't necessarily 
discount any additions or improvements to the system.
    Mr. DeFazio. Okay. Mr. Mica? Is the vote over?
    Mr. Mica. They are in fact nowhere near. I have been around 
here 20 some years and I have never seen that kind of media 
show.
    Mr. DeFazio. I did not know you would come back, I was 
waiting for the Chairman.
    Mr. Mica. You go out and say, ``Mica is attacking the 
Secretary,'' and we will get them in here.
    [Laughter.]
    Secretary Peters. Mr. DeFazio, for the record, my very 
first car that I bought by myself was a 1964 Dodge Dart. It is 
a great car.
    [Laughter.]
    Mr. Mica. Thank you, Madam Secretary, and thank you, Mr. 
DeFazio, for yielding.
    Just a couple of quick questions. One of the things--I 
heard they are going to do this every 20 minutes. They are 
throwing their toys out of the playpen on our side.
    [Laughter.]
    Mr. Mica. I think all of us agree that we need more net 
money into the Nation's infrastructure. That is pretty much 
agreed upon, right, Secretary?
    Secretary Peters. Yes, it is.
    Mr. Mica. There are some figures that are thrown around. We 
did the $284 billion bill. The American Society of Civil 
Engineers says that we need about $1.6 billion for five years 
investment.
    The question is how we get there, and the Commission did 
bring forth the 40 cent gas tax. I think that it would be 
interesting for you, and I don't know if you have done the 
calculations, to come back and see what can be saved by 
revamping the process, revamping some of the Federal 
guidelines. I have been through a couple of projects. One was 
an interchange I started in central Florida. I had dinner the 
other night at a restaurant just off of it. I showed someone, I 
said, we broke ground there, but it took 15 or 16 years to get 
the approvals. By that time, the funding had doubled or 
tripled, just like your fellow commissioner had cited.
    So calculate what we could say in revamping the process, 
and then we lack a Federal policy of public-private 
partnership. Some people are slamming them, and maybe some of 
them aren't appropriate. The Chairman and the Subcommittee 
Chairman sent out a letter to secretaries of States saying 
there has to be this, and it sent chills through the Country. 
What is his name, Mitch Daniels, got into a deal where there 
was foreign investment money.
    And there is lots of foreign investment money that could 
buy up our infrastructure. But there are policy questions that 
remain unanswered. Rendell came before us and at first was 
going to put I-80 on the open block, and then he got burned, 
and now they are selling it to the Pennsylvania Turnpike 
Authority, raising the revenue. Now they have English and all 
the guys in upstate Pennsylvania yelling about, they are 
tolling us to put transit money in Philadelphia. Again, I am 
just telling you what I hear.
    You took, Administration people and our own candidates slam 
earmarks, but you took $853 million when we failed to earmark, 
well, we did earmark 1,155 projects. You turned it into five. I 
don't remember having a public hearing on those five. I don't 
remember--I never met with the bureaucrats who made the 
decision. I don't count you as a bureaucrat, I have met with 
you. But those who made that intimate decision on how to 
dispose of the $853 million. You chose five projects to put it 
on. And that is earmarking by bureaucrats.
    What I am saying is, we need to sit down, and Mr. DeFazio, 
this goes to you, Mr. Oberstar, the leadership of the Committee 
here, to sit down and decide what public policy is in these 
public-private partnerships, and how we do leverage that money. 
What are the rules of the game? I don't know. I am the Ranking 
Member. I don't have a clue. I don't think anybody can come 
before us right now and tell us exactly what the rules of the 
game are.
    And when you are selling something, like they are going to 
sell 300 miles of I-80, I guess it is, to an entity, there is 
Federal money in that. Certainly it is an interstate. Another 
thing, let me ask you, I did not see any recommendation on 
expansion of the interstate specifically. Was there in the 
Commission report?
    Secretary Peters. Yes, sir, there was.
    Mr. Mica. I am sorry, I did not see it. Could you tell me 
what the vision for the interstate is, which is our major 
Federal surface transportation project we started some 50 years 
ago?
    Secretary Peters. Sir, the report did include improving the 
interstate as well as maintaining and operating it. I don't 
have the specific numbers, but I will get those and get back to 
you. I believe they were broken out in the report, but I will 
check that and get back to you.
    Mr. Mica. Again, that is our major surface. And mass 
transit, of course, I think you emphasized the need for mass 
transit, rail alternatives, things of that sort. So again, I 
think, Mr. Chairman, I was just saying, we really need to sit 
down and decide what Federal policy is for these Federal 
public-private partnership sand define what can be done, who 
can invest, who can sell off the interest, how the money can be 
used, if it is raised. I would hope that we could work 
together.
    Actually, this is a great building time because it is 
before the next major transportation bill, and then have that 
definition so everybody knows the rules of the game. And we can 
meet the objections, if folks have objections, if people don't 
want foreign investment and buying up our interstate, if they 
don't want sale of interstate to some entity, and where the 
money is allowed to go.
    So I think those are important questions. I would love your 
recommendations, and then I would also like to see how you 
could calculate where we could get toward the $1.5 billion in 
bonding, in speeding up the process, in public-private 
partnerships, your recommendations of how we achieve that. Can 
we get that?
    Secretary Peters. Absolutely, sir, and I will answer that 
briefly now. Probably about tomorrow afternoon, we will get 
that. Most of it we have. Recently, I read a GAO report that 
talked about the role that public-private partnerships are 
playing in transportation and infrastructure in the U.S. They 
have identified a wide variety of the benefits, but also talked 
about some of the parameters that have to be placed on those. I 
have listed a little earlier in my testimony or my responses 
some parameters that I think are important. I do think that we 
need to take this on very quickly and get together and decide, 
perhaps even through a rulemaking process in the near term, in 
advance of the next bill, what are the important parameters.
    My concern with the majority Commission report is that they 
placed numerous restrictions on public-private partnerships, 
beyond which I felt was prudent to do, in my opinion, and 
substituted their judgment for that of State and local 
officials. I do think whether or not there is Federal money, 
and certainly when there is Federal money involved, there is a 
Federal interest, but whether or not there is Federal money 
involved, we do need to make sure that these roads are 
constructed to the operating and maintenance standards of the 
interstate, if indeed they are on the interstate, that they 
connect with other portions of the transportation system, if 
they do provide mobility for people and products, they are 
conducive to interstate commerce. I have listed out about a 
half a dozen or so requirements that I think would be prudent, 
and have that discussion.
    Let me go to your discussion about how we can save money. 
You talked about what can be saved by revamping the process. 
When I was highway administrator, we estimated at that point in 
time that federalizing a project added somewhere between 12 and 
24 percent to the cost. That would be if the project could be 
constructed in the same virtual time frame that it otherwise 
could. As Commissioner Skancke pointed out, that is not the 
case today. And as Mr. Chairman mentioned, when we have 
significant inflation and construction costs and materials, 
well in excess of the rate of inflation, then the sooner we can 
build these projects, the better off we are, because we are 
saving money. There are Federal processes that draw this out.
    That is one of the reasons that I think it is so important 
to narrow the Federal focus to what is truly in the national 
interest, and then let the States do the rest of the projects, 
with the balance of the money, using other sources, 
diversifying, of course, we need to do that as well.
    In fact, when I was director of Arizona DOT, we had a 
program that we called the HURF swap. HURF in that language is 
Highway User Revenue Fund. It was the State equivalent of the 
Highway Trust Fund. We would basically take the Federal money 
that might have otherwise gone to a local government, because 
it was so much hassle for them to use Federal money, and 
substitute State money for that. But we would only give them 90 
cents on the dollar, because we were taking on the process 
burden requirements.
    So that is an idea of what Mr. Skancke I think was trying 
to get to in terms of how we could save money: narrow the 
Federal focus, collect at the Federal level only that which is 
attributable to the Federal role, and diversify or deploy the 
balance to the State. One of the things that Fred Salvucci used 
when he was selling the central artery project, and I think 
this is important to remember, he said to people, this is 10 
cents on the dollar, we can get this project for 10 cents on 
the dollar, we put up 10 cents, Federal Government will put up 
the rest of it. So they didn't take the political heat for 
raising fees, and that project, particularly because of the 
federal requirements to complete interstate system, as we all 
know too well ballooned all out of proportion. There wasn't 
respect for the money because they weren't collecting it, they 
weren't answering to citizens for collecting it.
    Mr. Mica. You may have heard of my 437-day plan. That is 
the plan that I propose for any replacement infrastructure 
projects. That is how long it will take to replace the 
Minneapolis bridge, 437 days. The staff told me through the 
normal process it can take anywhere from four to seven years.
    Secretary Peters. Easily.
    Mr. Mica. I am going to go vote, Mr. Chairman.
    Mr. Oberstar. We will recess for this vote. I got about 90 
percent back here, then I realized there was another vote.
    I just want to observe, Madam Secretary, about project 
acceleration. We provided new authority in SAFETEA-LU for 
permit approval process acceleration. I am disappointed that 
the Federal Highway Administration has not called the States 
together to convene the State departments of transportation and 
move them in the direction of implementing vigorously this 
permit acceleration, permit streamlining procedure that we 
included in the bill.
    In Seattle, when they were in the process of doing the 
monorail, they used exactly this process that I crafted for 
SAFETEA-LU. They completed permitting in 44 weeks instead of 44 
months. If there is a need to improve this process, we can do 
that. But I don't accept an Administration that says, oh, we 
have to speed up the process but then doesn't use the tool 
available in existing law to encourage States to move ahead and 
to be vigorous and creative in speeding up permit approval, 
while not in any way denigrating the environmental process, the 
historic preservation reviews, and the other permitting that is 
needed in our highway construction program.
    Secretary Peters. Mr. Chairman, if we are not aggressively 
implementing that, I assure you we will. Because having worked 
as highway administrator during the time that that bill was 
passed, I very much appreciate the work that you and others did 
to streamline the processes.
    Mr. Oberstar. We will stand in recess pending this vote.
    [Recess.]
    Mr. Oberstar. With apologies for these interruptions, my 
votes on the House Floor are procedural motions.
    The Committee will resume its sitting. Mr. DeFazio will 
assume the Chair, and pending that, Mr. Baird is recognized.
    Mr. Baird. I thank the Chairman and I thank Madam Secretary 
for being here.
    I would like to get your thoughts a little bit on the issue 
of transit. I happen to have a great concern about congestion 
on our highways and also about global warming and our carbon 
footprint. I am particularly interested in several question: 
how you think transit should be funded, where should the 
resources come from; what do you think the Federal share should 
be and how that should be calculated; and your thoughts about 
how the cost benefit index is calculated for the merits of 
transit vis-a-vis the cost.
    Secretary Peters. Congressman, thank you for the 
opportunity. First of all, transit is important, it is a very 
important part of our transportation network and one that is 
enjoying increasing ridership, as I think you will hear, from 
the next panel of witnesses. Today that is funded approximately 
half by the general fund, and 20 percent of the Highway Trust 
Fund goes to support transit today.
    I think that is a fairly good mix. But as we look to the 
future, I don't think we are going to be able to depend on the 
gas tax, and therefore, the Highway Trust Fund, as much to do 
that. That may push more of the expenses into the general fund, 
but I think there are other ways to attract investment to 
transit also.
    In terms of benefit cost, having served now a little over a 
year as Secretary, and looking at the New Starts process, I am 
not sure we are looking for the right things. The transit 
administrator and I have talked about that as well. When you 
look at cost-effectiveness and how we_by statute_calculate it 
today, I am not sure it gives us the best read on which 
projects are most important to fund.
    At the end of the day, I think it is important for local 
officials, metropolitan planning organizations, Governors, 
local elected people like county supervisors or mayors, to make 
a decision about where transit makes the best sense for them, 
and then to have more latitude to spend dollars that they get, 
where they think it is most important to do it, as opposed to 
going through this very difficult, and I confess it is a 
difficult process to get a full funding grant agreement from 
the Federal Government.
    Mr. Baird. Do you have some thoughts about the changes you 
would like to see in terms of how cost benefits are calculated? 
It sounds like you have some variation, or some ideas that 
would be different from statute.
    Secretary Peters. I would. I think today we don't consider 
potential economic benefit of the project. I think that is one 
shortcoming that we don't necessarily do today that we should. 
I will talk about transit-oriented development, for example. 
Sometimes it is a chicken and egg thing, if the transit is 
there first, does the development occur, or vice versa. But the 
two can complement each other substantially. I think to be able 
to take into consideration that type of investment, especially 
when local officials have done the prerequisite zoning and are 
looking at what might build in that corridor, a multi-use 
housing, high-density housing, things like that, I think those 
are factors that I personally would like to see us give more 
credence to than we are able to today.
    Mr. Baird. You mentioned that you would possibly see the 
general fund as absorbing a greater percentage of the cost of 
transit projects. Given that the recent budget projects a 
minimum $400 billion surplus, not counting borrowing from 
Social Security and not counting realistic costs for the war, 
it is hard for me to understand where we would get that money 
for transit from the general fund, given that transit takes 
pressure off our highways, thus making road-based freight 
traffic more expeditious.
    It seems to me that shifting the burden to a fund that 
doesn't have resources from a source of revenue that actually 
benefits from getting vehicles off the road, I am not sure I 
understand that rationale. Maybe you can elaborate on that.
    Secretary Peters. Congressman, you make such a valid point. 
I think we have to, when we consider investments in surface 
transportation infrastructure across the broad range, we can't 
do that in a vacuum. We can't assume that there aren't other 
demands on the funds. There are many demands, and as you talked 
about the entitlement programs that are taking an increasing 
share of our non-defense discretionary revenues in the future, 
so we have to look at other sources of funding. We also have to 
look at the opportunity cost of this money.
    When I say the general fund, I don't mean move total 
dependence into the general fund by any means, because it 
certainly will not sustain that. But I think for example, using 
tax increment financing, for example, when we know that 
economic development is going to occur in a corridor, to be 
able to devote some or part of the revenues toward building a 
transit system. I think certainly fares are an appropriate user 
contribution. But we all know that they are not going to 
eventually pay for the project in itself.
    I would be more a fan of diversifying funds. My home town, 
Phoenix, Arizona, has a half cent sales tax, half of which goes 
to transit and half goes to road-building. I think those are 
ideas that have certainly enjoyed favor in other communities 
around the United States.
    Mr. Baird. One last pitch for a proposal which I raised 
before and probably won't go anywhere. But we have by 
estimates, a $1.6 trillion infrastructure deficit. Many of us 
are concerned that when we put the Social Security funds in a 
so-called trust fund, which we are going to immediately borrow 
back, there is really no tangible mechanism for paying back.
    I have actually floated the idea of investing our Social 
Security trust funds in the transportation infrastructure fund, 
so that our people could use that money to build lasting 
infrastructure. What is happening now is Macquarie Bank and 
others, retirement funds from other countries, are investing in 
our infrastructure, while we are just borrowing with no plan to 
pay back our retirement funds.
    With that, I yield back and thank the Chair.
    Mr. DeFazio. [Presiding] I thank the gentleman.
    Mr. Coble?
    Mr. Coble. Thank you, Mr. Chairman.
    Madam Secretary, it is good to have you with us.
    Mr. Chairman, I want to associate myself with statements 
made by the distinguished gentleman from Washington regarding 
vehicular congestion, congestion, Madam Secretary, involving 
hundreds of thousands of passengers in our various airports. 
These are problems that are crying out for solutions, and they 
are problems that are not going to vanish. Vehicular and 
airport congestion obviously negatively impacts productivity.
    On another point, Mr. Chairman, I believe the distinguished 
gentleman from Oregon touched on this earlier, involving 
bridges. Madam Secretary, I don't want to be portrayed as a 
prophet of gloom and doom, but I suspect most everybody in this 
hearing room, prior to week's end, will probably cross an 
unsafe bridge. These are problems crying out for solutions. And 
I am not blaming you for this, it is not your fault. But it is 
the nature of the beast, I guess.
    Let me put a two-part question to you, Madam Secretary, 
given this disjointed day, you may have already touched on it, 
I think you touched on the second on in response to Mr. Baird's 
question. But my questions are, to share with us, in your 
opinion, what is the appropriate role for private sector 
companies in building and operating highways and transit 
facilities and systems, A, and B, and this may be some 
overlapping, what are your most significant points of 
disagreement with the majority position in the Commission 
report?
    Secretary Peters. Congressman Coble, I would be pleased to 
answer those questions. First of all, in terms of an 
appropriate role for the private sector, I think there is a 
role. And as Congressman Baird pointed out, pension funds from 
other countries, other areas, are being invested in U.S. 
transportation infrastructure today. So we have a lot of 
opportunity, I think, to attract private sector investments.
    Where it is an appropriate role for the private sector to 
invest is where we are protecting the public interest. I talked 
about some of those requirements earlier. Building to 
standards, operating to standards that we have on the balance 
of the interstate, not limiting interstate commerce, 
transparency, those are things I think are appropriate.
    Where the private sector will invest, though, is frankly 
going to be where there is a level of congestion and a level of 
traffic that make it cost-effective for them to do so. That is 
where I think this whole concept of pricing is so important. 
Where there is demand for projects based on congestion that is 
building or is there already today, the private sector will 
look favorably upon those projects. All of them are not going 
to pencil out, if you will, in terms of private sector 
investment. But many of them will. And those are the 
opportunities, I think, to attract private sector investment, 
to add to what we are collecting from the public basis here 
today.
    The areas where I most disagreed with the rest of the 
commissioners, I will answer that. First of all in quantifying 
the overall problem, they largely used the ``cost to improve,'' 
with some additions for passenger rail and other things. I 
think ``cost to maintain'' is more appropriate funding level, 
supplemented by private sector investment.
    I think that increasing the gas tax by 40 cents is not the 
right way to go, either in the near term or in the long term. I 
think we need to move away from dependence on the gas tax, not 
increase our dependence on it. This has to do with energy 
policy, the lack of efficiency, issues like that that I think 
are important.
    I think the Federal role needs to be very clearly, and I 
would argue, narrowly defined, so that the Federal Government 
is only taking responsibility for and funding those things 
which are truly in the national interest. I would observe that 
108 programs are not all truly in the national interest, that 
we need to narrow that role.
    Mr. Coble. Thank you, Madam Secretary. Now, if not the 
increase in gas tax, and I don't disagree with you about that, 
where do we go for the solution?
    Secretary Peters. Congressman, that is an excellent 
question. I said earlier, I am not advocating that we stop 
collecting the 18.4 cents that we are collecting today. We 
should continue to do that. But we need to prioritize where we 
are spending that money. Just like you and I have to do in our 
homes, just like businesses have to do, when we are dealing 
with tough times and not a lot of money, we have to decide 
which is the most important to fund. So I think we need to 
narrow the scope of what those funds are being used for today. 
I suspect that we probably could do that by some 20 percent. I 
won't offer up any specific programs, but I think there is an 
opportunity to probably recapture approximately 20 percent of 
what we are spending in a variety of other ways today.
    I think as has been pointed out earlier, streamlining the 
process by which we do Federal project approvals, and making 
that happen quicker and easier, can save us money. Because time 
is money when we drive these programs out. And again, I think 
there is incredible potential in the private sector, and their 
willingness to invest in transportation infrastructure, if we 
create the right environment.
    Mr. Coble. That is a fair response. My time is expired, but 
I would like for you, Madam Secretary, Mr. Chairman, if I may, 
perhaps submit to the Committee your detailed suggestions and 
recommendations regarding the prioritization, if you would do 
that.
    Secretary Peters. I would be happy to, sir.
    Mr. Coble. Thank you, ma'am. Thank you, Mr. Chairman.
    Mr. Oberstar. Mr. Capuano.
    Mr. Capuano. Thank you, Mr. Chairman.
    Madam Secretary, I actually like some of the things you are 
saying. I like the concept of flexibility, I have no problems 
with public-private partnerships, according to the States, let 
them decide. Fine by me. If it needs to be loosened up to let 
people do it, fine by me. I actually don't think they will 
work, but I wouldn't mind being proven wrong. That is fine.
    I like the idea of flexibility. I would like to see some 
flexibility in the split between the highway and the transit 
funds. Why not give it to the States, let them decide if they 
want transit or highways? What is the difference? Some States 
want highways, some States want transit. Either way, people are 
going to work, and transportation is improved.
    It is interesting to me, though, I do have a couple of 
questions. You say the tolls are so popular. The Massachusetts 
Turnpike Authority just raised their tolls, and it now costs 
$3.50 for me to get to the airport and home. I am just curious, 
how much do you think it should cost me to get through that 
tunnel?
    Secretary Peters. Congressman, I don't want to hazard a 
guess on that, because I don't know what the costs are.
    Let me put it this way. I don't think people wake up in the 
morning and say, gee, I would like to pay a toll today. But I 
think when faced with either increasing taxes or paying a toll, 
and a toll where they might see immediate improvement in their 
commute, they are more willing to do that. One of the issues 
that we have with public transit authorities today is there 
isn't necessarily that nexus between additional tolls and 
infrastructure improvement.
    Mr. Capuano. On the tolls, for instance, in Boston, there 
are two ways in that you pay tolls, through the Mass Turnpike 
or through the Tobin Bridge, but there are a dozen ways in that 
you don't pay tolls. Are you suggesting we put tolls on every 
single road that goes into Boston?
    Secretary Peters. Congressman, I am certainly not. And I am 
very much with you in that I think those decisions ought to be 
made by State and local governments, people who are answerable 
to those who have elected them directly.
    Mr. Capuano. Fair enough. And last I knew, I was, and your 
boss is, I am answerable to people. I guess as far as the 
politicization of the whole system, again, I don't disagree 
with you, but I want to parse it a little bit. When you say 
politicization to me, that means, for instance, we just tried 
to do something in this Committee a little while ago to 
prioritize structurally deficient bridges. I personally think 
it is a good policy, if we are going to spend any Federal 
dollars, to tie some strings to it, such as, you have to use 
this money to do structurally deficient bridges. It doesn't 
matter which one you do. Every State that I am aware of has 
more bridges that are structurally deficient that need to be 
done than they have money or anybody has money to fix. I think 
that is perfectly good.
    Is that okay with you, or would you consider that a 
political interference?
    Secretary Peters. Congressman, I think it is okay, but I 
think before we tax the public further to improve these 
bridges----
    Mr. Capuano. Even with existing money.
    Secretary Peters. No, I don't have a problem with that, 
identifying money like that. And Congressman, let me again 
state, I don't have a problem with Congress letting their 
preferences be known. But when we have 108 different highway 
and transit programs, we have a very confused Federal purpose. 
There is a very good GAO report that deals with this issue, and 
we need to narrow our Federal focus.
    Mr. Capuano. I agree with that entirely. But in the final 
analysis, though, there is still going to be X number of 
dollars in the Federal program, it may be one program instead 
of 108 or whatever the number is going to be. But there are 
still going to be Federal dollars and State dollars and private 
dollars all in that pot.
    Secretary Peters. I very much support what you said, give 
the money to the States, if they want to build all transit, 
fine. If they want to build all highways, fine.
    Mr. Capuano. What I would like to see at some point, 
though, I would like to see some numbers from your office or 
from those who would disagree with this, that substantiates the 
fact that the needs of this Nation can be met without gas tax 
revenues or a change in that. I am not a gas tax advocate, I am 
just, I am a highway, actually transit advocate, and it costs 
money to build things. I don't know any other way to do it.
    Secretary Peters. You are right. Roads are not freeways. 
That is our problem, they called them freeways. They are not.
    Mr. Capuano. Everybody knows they are not free.
    My last point, too, it is interesting to me that we are 
talking about highways and transit and ground transportation 
today. And the answer to that is to basically limit access with 
congestion pricing, which I don't think is necessarily a bad 
concept, or to increase toll access, to do something about the 
revenue side of it.
    When I talk to my FAA friends, their way to fix their 
congestion problem is just to build more runways. No discussion 
whatsoever about access limitation or different fee structures. 
I would love it, I mean, transportation is transportation. I 
don't understand these silos that were built, but they need to 
be torn down. I would strongly encourage you to talk to your 
friends at the FAA to enlighten them that, yes, on occasion a 
runway is necessary, not a problem. But there might be other 
ways as well to address that congestion issue that maybe you 
seem to be advocating a little bit more than they are.
    Secretary Peters. Yes, sir, I certainly will, and last time 
I checked, they worked for me.
    Mr. Capuano. Then would you please remind them of that?
    Secretary Peters. Yes, sir, I will.
    Mr. Capuano. Thank you.
    Mr. DeFazio. Congresswoman Drake.
    Mrs. Drake. Thank you, Mr. Chairman. Madam Secretary, it is 
nice to see you today.
    We know that you do support strong accountability and 
reliance on cost benefit analysis. What I am curious about is, 
are we certain that both U.S. DOT, State and local governments 
have the tools they need to really analyze these road projects, 
know that they will accomplish the goals in the end? Are we 
using some of the new technologies in modeling and simulation 
to really look at what this road will do or what this transit 
will do in order to make sure that we are making good 
decisions? That would be number one.
    I also think we all agree with flexibility, and giving more 
flexibility to the States and local governments. One question I 
have always asked in my local government is why don't we allow 
businesses to contribute to a transit fund instead of requiring 
them to meet certain zoning requirements on parking? Nobody is 
going to ride the transit if you can go park your car. So I 
think we hurt ourselves as well as give people some of those 
choices.
    I also think that there are other revenue sources out 
there, that we are so hung up on gas tax and tolls, and all of 
us are aware of John Peterson and the work that he has done in 
deep sea drilling of natural gas, which would give us revenue 
sources back to the State and Federal Government as well.
    I am also curious, just to ask the last question, how you 
would look at other measures that give more flexibility to the 
States, such as a bill that I have in, that would allow 
Virginia to decide how to use their HOV lanes without being 
penalized. We all know HOV works in Northern Virginia, and they 
have been very, very successful. But in the Hampton Roads area, 
we can't get people on them. So the lane miles we could open up 
I think would be incredible.
    So my question is about, are we using new technologies, are 
we really looking at whether our investments are working, more 
flexibility to have other revenue sources and other measures 
that would let States decided, how do we want to deal with our 
transportation issues.
    Secretary Peters. Congresswoman Drake, thank you for the 
opportunity. One of my concerns with the Federal program today 
is it is too focused on process and not focused on performance. 
We need to change that. We need to do these benefit analyses, 
and as you said, use technology that is available. Some States 
actually are doing that. Washington State does that, and 
Director Pete Rahn from the Missouri Department of 
Transportation_who will testify on the next panel_also has done 
some very good work in that area, particularly with 
prioritizing in a very innovative program to improve bridges 
throughout the State of Missouri. So I would recommend your 
talking to him about that particular issue.
    I do believe we need to have more flexibility. I think 
carving dollars up into silos the way we do today does not 
promote the highest and best use of those dollars, and 
certainly doesn't let local communities make decisions about 
what might be best for them, where and how to spend that money. 
All of these programs have strings attached to them that we are 
dealing with today, that we monitor today. I think there are 
much better ways to simplify that.
    In terms of how to pay for it, I truly think that direct 
user fees are the best way, because then we make choices. Just 
like if I decide to go to an early bird dinner or the late 
dinner or a matinee instead of an evening show, I make value 
choices. I make value choices in the way I pay for my 
electricity by the time of day that I use it. So I think 
pricing on our system would give us that flexibility. It could 
be adjusted for low-income people who could be subsidized, it 
could displace revenues that would otherwise not be available 
for public projects. There are a variety of reasons that I 
think it is the best method.
    To go back to what Mr. Capuano talked about, I said earlier 
today, and I don't think you were here, what we have I think in 
infrastructure funding across the broad range, that I have 
responsibility for today, is the Tragedy of the Commons. It 
encourages over-use, at peak periods of time in the air, at the 
airports and on our roadways. If we can price just a small 
portion of the population out of those peak periods, we can 
get, in some cases, 40 percent greater throughput by not 
letting it break down.
    I think your idea of converting the HOV lanes to what works 
best from the Hampton Roads area is a good idea. I dislike the 
fact that we have so much to say about how and where you use 
your roads in the State. I don't like that, and I am a former 
State official, so I have been on both sides of this.
    Mrs. Drake. Thank you, Mr. Chairman.
    Mr. DeFazio. Mrs. Napolitano.
    Mrs. Napolitano. Thank you, Mr. Chairman. I am glad that we 
are having this interesting dialogue on transportation, simply 
because as I have spoken from here before, it is extremely 
critical in my area. We have had great conversations with 
Secretary Peters, thank you very much. She has seen the areas 
in the greater Los Angeles and surrounding communities of how 
important transportation is and the gridlock we currently have.
    So to me this is a conversation that bears more input and 
more questioning. And I have shared that utilization of 
highways for pay will not work necessarily in our area, because 
it is something that has been inherently a failure in the past, 
with the State back in the 1990s.
    However, it is important for us to continue, and if you 
have the flexibility you are talking about, to have the State 
focus on where the greatest need it, and be able to continue to 
fund them. Part of it, and we have discussed this with the 
State transportation as well as Federal transportation 
committees, about being able to double-deck, to be able to 
utilize a second level to, whether it is mass transportation or 
truck traffic, then we could begin to talk about the 
possibility of charging for the use of a faster area to travel 
on.
    While we sometimes, those of us that are lucky to have 
good-paying jobs, that we can afford to pay for the passes, 
many of the working class cannot. So that is another, one of 
the main reasons it may not work in some of the major areas. 
Are you supportive of in putting elevated highways to be able 
to accomplish this, especially in the greater areas of concern?
    Secretary Peters. Congresswoman Napolitano, I think it is a 
good idea. The caution that I would say is, let's go on talking 
with the public about this, because it would have more of an 
intrusive effect on communities, especially if it is a 
residential area. If it goes through an industrial area, I 
certainly wouldn't have a problem with that. In fact, I 
considered double-decking Interstate 17 in Arizona when I was 
there.
    Mrs. Napolitano. And I talk about 5, because 5 runs through 
a little bit of my district. I know before the Joint Power 
Authority was established there, they were totally against 
building a second level. Now they are asking for it simply 
because they see the impact when one vehicle causes a backup 
and people just stream off the freeway into their areas, and 
their concern is for the safety of their communities.
    And it is something that is going to have to happen if we 
are going to expand that freeway by two lanes. It is a Band-
Aid. By the time it is done, it will be outdated. So if you are 
going to be able to work with the State and be able to promote 
utilization of the infrastructure that is already there, to be 
able to add that second level, or at least be able to work with 
the State and those of us who are very much interested in 
making that happen.
    The container fees from the port is another issue. They are 
reticent to increase paying for per container increase. Yet we 
have congestion and the environmental quality for the trucks 
that back up. I know that EPA is already working with the ports 
to ameliorate part of the congestion. What suggestions do you 
have for the freight industry to be able to address that?
    Secretary Peters. Congresswoman, I think one of the things 
that is working very well in the L.A.-Long Beach area_and 
certainly could be expanded_is pricing the use of the port. By 
this I mean higher prices during peak periods of the day, lower 
prices off peak. In fact, we have already seen some pretty 
impressive results from doing that in terms of spreading the 
demand out over a longer period of time. Again, we are getting 
better throughput from the infrastructure without adding 
infrastructure, which as you said is very difficult to do in 
those areas.
    I know that there are some environmental concerns that you 
and I have talked about, and we certainly need to continue to 
deal with these. I think your suggestion of perhaps an overhead 
structure that is a high speed lane, that also could help a bit 
within a port area, because you can get traffic out of the city 
more quickly, rather than the stop and go. So pay your money, 
get on the express lane and get out a little bit more quickly. 
I think that would make a lot of sense as well.
    Mrs. Napolitano. Right, and just to wrap up, just a comment 
that people may complain, they complain about the high cost of 
gasoline. But they are willing to pay for more gas tax, if it 
is going to improve the infrastructure that they travel on. 
Californians have a love affair with their cars, and 
unfortunately, that is not good for the environment, but it is 
something we can certainly work on.
    Secretary Peters. Congresswoman, if I might go back to the 
low-income folks who you said who maybe wouldn't be able to 
afford these transponders or these passes, the beauty of the 
technology that is available to us today on what we call open 
road tolling is, you could credit some money on those 
transponders on for some segment of low-income population and 
say, okay, we are going to give you $50 or something like that 
and already credit that on their transponder. The point is, 
there are ways to subsidize low-income folks for things like 
this.
    But also the fact that other people are paying for a part 
of the infrastructure frees up money to improve their part of 
the infrastructure along the lines of what Mayor Bloomberg has 
proposed.
    Mrs. Napolitano. And not only that, but if you would come 
up with some kind of a media blitz to be able to notify those 
that don't need to use the freeways during peak hours, 
retirees, people going somewhere, that that might help.
    Mr. DeFazio. Representative Brown.
    Mr. Brown. Thank you, Mr. Chairman, and thank you, Madam 
Secretary, for coming today and being part of this debate.
    I know we are looking at, I guess, the next reauthorization 
bill to TEA-LU, and I know it is probably already underway. 
Some suggestions I would make as we look at how transportation 
is going to be addressed in the next five to six years, I know 
back in 1954, I guess, somewhere thereabouts, when the original 
interstate system was actually presented and improvements 
started, it seems like that we haven't done much to address 
transportation needs on a big scale since then, recognizing 
every 10 years we do a redistricting based on the current 
population. There has always been a continuous population shift 
from the Northeast and Midwest down to the South. I don't know 
that the interstate system addresses the current needs that 
were presented back in 1954.
    And also to even expand more on that, the need for movement 
of goods has been also shifted. I know it is being shifted even 
as we speak, we talked about Los Angeles and how that corridor 
was adopted. But given the Panama Canal is going to be 
enlarged, and with that, we will be able to shift larger 
containers from the West through the Canal over to the East, 
which means there is going to be more of an impact on the 
eastern ports, including the one at Charleston.
    I would hope that we could develop some kind of a new 
strategy to address, I know we are looking at I-73, and I am 
grateful that we were able last Friday to sign a decision so we 
can move forward to buying right-of-way, which will help us a 
little. But you are right, we recognize the tremendous cost of 
some $2 billion to complete that 35-mile stretch, just to 
connect us with our Interstate 95.
    Back in 1954, when they developed the formula where 90 
percent was Federal, 10 percent was State, it seems like to me 
the Federal Government is actually imposing more and more 
responsibility of building highways, even Federal highways, 
back to the State level. We've done some creative things, even 
in South Carolina, when we introduced the infrastructure bank 
and we allocate special funding in order to fund it, even like 
a penny sales tax in some of the counties in my district who 
fund highways.
    Could you share with me your vision of what the next 
generation might look like? I was just proposing, like in I-73, 
which is a critical issue for our part of the Country, and I 
know there are other corridors around the United States that 
need to be addressed. And I would hope that somehow 
incorporated into the next reauthorization bill there would be 
some plan to build those highways, with some kind of Federal 
initiative, with some kind of Federal earmark funding to make 
it happen. Congestion is certainly heavy on the roads we have 
now. I think instead of expanding some of those routes, we 
ought to look at the new patterns of traffic needs and create 
new routes.
    Secretary Peters. Congressman Brown, I think you make such 
a good point. Back in 1956 and the subsequent years, when the 
interstate system was laid out, it was laid out to connect 
America's major cities together. But it also was reflective of 
what the economy was and what freight patterns were at that 
point in time.
    What we are seeing today is changes in those patterns. 
Freight is moving in different routes, you mentioned the Port 
of Charleston, Panama Canal expansion, things like that. In the 
Southeast, for example, where textiles and tobacco used to be 
the major portions of the economy, today that is not the case, 
it is high tech, it is other things. So the interstate system 
as laid out originally served a very good purpose for its time, 
but it isn't necessarily where nor operating the way we need it 
to do today.
    I think an important part of the Federal responsibility is 
looking at freight and goods movement in the United States 
today, not just where it is today but where we contemplate it 
will be in the future and looking perhaps at projects of 
national and regional significance that would help us move that 
commerce in the future, and perhaps adding to, or certainly 
adding connectors to our interstate highway system. This is 
something that I think my fellow commissioners and I did a very 
good job of talking about, and suggested that we do this 
freight analysis and we do something significant about freight 
movement.
    Mr. Brown. I know that this highway 73, and I keep 
mentioning it, it's a connect from Canada down through to the 
Midwest, I guess, to Myrtle Beach. Canada is our number one 
trading partner. And so this would give us a direct connect 
route with Canada. I know there are a lot of other needs out 
there that could be addressed, with similar importance. But I 
just feel like we could look at a new image of where the 
interstate system has come and where it might go to reach the 
further needs.
    Secretary Peters. Congressman, I think the thing we have to 
do, though, is stop doing some of the things we are doing 
today. Our money isn't always correctly prioritized in the best 
way it could be today. So in looking at issues like this, and 
contemplating what we need to do for the future, we need to 
also say what are we going to stop doing, because Government 
doesn't ever do a good job of stopping doing things.
    Mr. Brown. That is true, a lot of programs never end. I 
agree with that. I look forward to working with you on the new 
reauthorization.
    Secretary Peters. Thank you.
    Mr. Brown. Thank you, Mr. Chairman.
    Mr. DeFazio. Mr. Hall.
    Mr. Hall. Thank you, Mr. Chairman, and Madam Secretary, 
thank you so much for being here today.
    As a representative of a district with 13 deficient 
bridges, and with a lot of rail and passenger vehicle commuting 
going on, we are very interested in how we can improve our 
surface transportation system. I am pleased to see that the 
Commission included emissions reductions and environmental 
responsibility among the guidelines for our new era of 
transportation policy.
    I wanted to ask you, given that Westchester County, which 
is part of the 19th District, now has biodiesel hybrid buses 
doing their bus loops around the country and have found it to 
be actually a savings, a net savings and to improve their air 
quality and so on and also there is a lot of public support and 
enthusiasm about this.
    Would it be consistent with this approach to use 
transportation funds to support the purchase and development of 
hybrid buses, engine locomotives, transit fleets, that are 
either hybrids or run on biofuels or both, associated 
infrastructure and other new transportation technologies?
    Secretary Peters. Congressman, I do think it is 
appropriate. In fact, some laws today allow the purchase of 
those vehicles. It was part of what the Commission recommended 
in the go-forward position as well. Where I would focus more on 
the issue of emissions is back to talking about congestion. 
Cars sitting, stuck in traffic, trucks, motorists who are not 
moving, such as what Congresswoman Napolitano deals with in her 
district, and you do as well in yours, is where we have a 
tremendous, tremendous opportunity to relieve congestion and to 
improve the air quality.
    In fact some studies have indicated that if we are able to 
implement the program that Mayor Bloomberg has advocated in New 
York City, it would have the same effect as the entire light 
duty truck rule in terms of fuel economy standards and removing 
emissions from the air. I think it is a very important part of 
what we have responsibility for doing, and another reason that 
I am less inclined to support the gas tax for the long haul.
    Mr. Hall. Yes. Just an aside about the gas tax, the price 
of, or the profit, I should say, for the major oil companies 
since 2001 to today is up by a factor of 300 percent. That is 
felt by the average family, the average working person, as if 
it were a tax. There is no difference, really, in terms of the 
impact on them. The difference is where it goes. It doesn't go 
into programs that can help us develop our new transportation 
technologies. It goes to wherever the oil companies decide to 
invest it, which is usually in perpetuating the same kind of 
energy use that they are already profiting from.
    But that is a longer conversation than we can have in my 
five minutes. I wanted to ask you about----
    Mr. DeFazio. I will give you extra time for that 
conversation.
    [Laughter.]
    Mr. Hall. I wanted to ask you about the Commission's vision 
of growth as a driver, and development as a driver of 
transportation demand, the demand on the surface transportation 
system. And if you could elaborate somewhat on the degree to 
which smart growth principles might prevent sprawl and decrease 
commuting times and how much they were a favor, how you 
envision them affecting the implementation of our work in the 
future.
    Secretary Peters. Congressman Hall, we did talk about the 
issue of growth and development and how that impacts 
transportation patterns. One of the very good things that came 
out of the report was a new program called ``Metropolitan 
Mobility,'' what was suggested by the majority commissioners, 
to really look comprehensively at land use development, what is 
happening in communities and then structure the transportation 
solutions to meet what that community decides they want to do 
and how they want to develop. And again, having a great deal of 
fungibility, so that the dollars could be spent in a manner 
that best helps those communities meet their needs.
    So there was a lot of discussion about that. I support 
doing that, I just don't think the Federal Government should 
collect the money and then give it back to them to do it. I 
think states should collect the money and keep it, instead of 
sending it to the Federal Government, where it takes on not 
only a Federal identity but a host of other requirements that 
are not necessarily conducive to that community.
    Mr. Hall. Thank you. One more question. In the Commission's 
report there is a good deal of discussion of expedited siting, 
streamlining of project approval, and other initiatives to get 
projects moving faster, which of course everybody would agree 
is a good objective. However, as we have seen in other 
infrastructure debates, sometimes these goals can get out of 
balance. In your discussions of streamlining, was the use of 
eminent domain or the bypassing of NEPA or environmental impact 
statement requirements considered or meant to be implied in the 
report?
    Secretary Peters. Congressman, in terms of NEPA, or other 
aspects of that, there was no consideration of bypassing those. 
There was discussion of the overall process for getting an EIS 
done, environmental impact statement. The majority 
commissioners suggested that we go to a one step process. My 
concern with that, and I am one of the biggest fans of 
streamlining the environmental processes, but my concern is we 
don't want to impact any of the public comment periods, the 
opportunity for the public to comment, to be involved in 
project development. Because at the end of the day, they are 
going to live with these projects. So I think that we have to 
be very careful not to circumvent the opportunity for that 
involvement while streamlining, but I think we can do both.
    Mr. Hall. Thank you very much, and thank you for your work 
with the Commission. I just wanted to comment that when I was 
stuck in a traffic jam, coming down yesterday to catch the 
Acela, which was the rest of my trip, and the best part of my 
trip to Washington, my hybrid turned off at every traffic jam 
and every stoplight and put out no emissions and used no fuels. 
So there are a lot of good solutions available.
    Thank you, Mr. Chairman. I yield back.
    Mr. DeFazio. Thank you. Mr. Shuster?
    Mr. Shuster. Thank you, Mr. Chairman. Thank you, Madam 
Secretary, for being here today. I think there is no dispute 
that we have to find money to invest in our infrastructure in 
this Country. Across the Country, across the political 
spectrum, I think everybody agrees. The debate I guess we are 
having is, where do we get it. I think sometimes as 
Republicans, we have a knee-jerk reaction, whether it is fees 
or taxes, not to do any of them. Again, not that you are taking 
a position against all of them, but as I talk to my colleagues, 
some of them are against tolling, some of them are against 
congestion pricing, some of them are against raising the gas 
tax. None of those solutions are a perfect solution to finding 
the money.
    Again, as Republicans, I think it is important to point out 
that we have a role laid out in the Constitution, whether it is 
for national security, whether it is maintaining post roads or 
interstate commerce. All those clearly state that we have a 
role as a Federal Government to participate in a national 
transportation system. And it is the core of our global 
competitiveness, we have to have the roads to get to the ports 
to ship our goods overseas and ship goods into America. So it 
really is a core of how we are going to be able to compete 
going into the future, having a good transportation system, 
highways, rail, the whole system.
    Looking the three major ways to raise money, the gas tax, 
tolling, and private-public partnerships, which in 
Pennsylvania, the tolling issue with 80 and the private-public 
partnership with the Pennsylvania Turnpike being sold or 
leased, are very hot-button issues. I wondered if I could have 
you comment on the tolling of I-80. Again, it is a very hot-
button issue.
    The greatest two concerns I have are the time it takes to 
get money after you have tolled and then get the money coming 
in is going to be years. That is an issue. But an even greater 
concern is that that money will go into southeastern 
Pennsylvania, into Philadelphia and into the transit system, 
and that money should stay on the road bed on 80 and expanding 
our road systems.
    Could you comment on that situation on Route 80?
    Secretary Peters. Yes, Congressman Shuster, I would be glad 
to.
    In terms of I-80, the State has made an application to toll 
Interstate 80. The Department has not gone back to them to get 
some information on their application, so we certainly haven't 
made a decision on it yet. The process under which they have 
applied is the Interstate Rehabilitation, and I forget some of 
acronyms that have to do with it.
    But it does place restrictions on where and how funding can 
be used from tolling. The funding can be used first for debt 
service on the facility and for the operation, maintenance and 
upkeep of the facility. It can allow for a reasonable rate of 
return, assuming there is a private sector investor or private 
party involved in the transaction. But it cannot be moved and 
used off-system. It has to be used on that facility for the 
reasons roughly that I outlined. I will follow up with you with 
a very specific response of everything that is involved and 
where and how those funds can be used.
    I wanted to briefly touch on the fact that even it tolls 
are implemented, there is some time before the money actually 
accrues. What is available, though, is bonding against that 
money. There is a pretty good system that says, if you are 
going to be collecting these tolls, we can front-load that 
through bonding or loan programs or other things, and let the 
facility have the money up-front. But there again, there are 
strict restrictions on where they can use the money.
    Mr. Shuster. And that is on the congestion pricing. I 
disagree with my colleagues and agree with you. I think that 
the studies prove that congestion pricing causes the traveling 
public, commerce to be smarter, wiser, when they travel. I 
think that certainly is an alternative, and a good one. Again, 
the timing issue on that, congestion pricing, if you are going 
to do it in New York, is it that the money flows immediately or 
pretty close to it?
    Secretary Peters. It does. It will start being collected 
immediately. But again, knowing that that money is coming, you 
can go to the bond market and basically front-load, so that you 
can have the cost of implementation of the system up front, and 
then pay that back over time.
    Mr. Shuster. Right. And a final question. Pennsylvania was 
have criticized in this Committee in that they spent, I forget 
the exact figures, about $1.6 billion on the bridge program, or 
they were supposed to spend $1.6 billion on the bridge program. 
It appears as though they didn't spend that money, and it is 
just an appearance, because of the way we wrote the law. 
Pennsylvania, if you are going to reconstruct five miles of 
roadway and there are four bridges on it, you have to have a 
separate contract under the Federal law for each bridge and the 
roadway. Pennsylvania reflects that money out of there to be 
able to come back and say, we want to have one contract for 
that, because we will save millions of dollars.
    Is there any way that you at the Department can change 
that, or do we have to do that legislatively?
    Secretary Peters. I didn't realize that was a problem. I 
will look at it, and if we need a legislative change, I will 
let you know. I think you are exactly right, there is a 
misperception that bridge money isn't always being used. As you 
said, too often it is incorporated in a larger project and 
isn't singled out as a bridge construction.
    Mr. Shuster. Pennsylvania actually spent over $2 billion in 
a two or three year period, $500 million more than what was 
supposed to be spent under the legislation. So again, thank you 
very much for being here today. We appreciate it.
    Secretary Peters. Thank you.
    Mr. DeFazio. Madam Secretary, we are having another series 
of votes. I know your time is precious, these will be the last 
few questions.
    Just back to the issue where you talked about all the 
additional money we are spending, I guess at the time I didn't 
raise the point, but I would like to raise the point, we have 
here a very interesting study called Twenty Years Behind: Smart 
Investments in Minnesota's Transportation Infrastructure. I got 
out of a little bit of my question previously, where I asked 
wouldn't you even look at indexing the existing gas tax, so 
that at least its contribution would maintain at the current 
and adequate level, and you demurred on that.
    In this case, what they did is they looked back 20 years 
ago, over 20 years in Minnesota, they took all the Federal 
money, they took all of the State money and they adjusted it 
for two things: inflation, purchasing power, and vehicle miles 
traveled. And today's Federal investment in Minnesota in terms 
of real dollars on the ground, because of construction cost 
inflation, and vehicle miles traveled, is one half of what it 
was 20 years ago.
    So I guess I come to a different conclusion when you say, 
gee, we are investing this vast amount more money and it is 
failing us, no, we are not really. In real dollars and in the 
growth of use of the system, we are investing at about half the 
rate we did 20 years ago. I think that is sort of a basic 
fallacy of this premise that somehow this vast amount of money 
is being spent inefficiently. There is no vast amount of money 
being spent. We are spending less than 2 percent of our GDP on 
all our infrastructure. China is spending 9. We are not keeping 
up here. And I guess I just feel strongly that when we talk 
about the money that I believe there is a significant and 
continuing Federal role and you don't.
    I guess I have a question about the 60/40 or the 12 of the 
18 cents. Where does transit fit into that? Does transit come 
out of the 12 cents that would be retained for the Federal 
Government and give the other 6 cents back to the States?
    Secretary Peters. Mr. Chairman, I actually differentiated, 
60 percent to highway, roads and bridges, a good portion of 
which can be flexed, by the way, 20 percent to transit. So we 
have basically a 20 percent factor that we might be able to 
look at.
    Sir, I do believe there is a Federal role. I do believe 
Federal leadership and Federal vision is important. I just 
don't think the Federal program should be as bifurcated as it 
is today.
    Mr. DeFazio. Well, I think we could agree on that part, 
bifurcated. I am for simplification. I am also for more 
efficiency. We did pass standards or changes in the 
environmental standards after an incredible amount of work in 
SAFETEA-LU. To the best of my knowledge, there is no rule 
implementing those changes that we thought would streamline the 
processing and create more efficiency for Federal programs. Can 
we expect a rule to implement those some time?
    Secretary Peters. Mr. Chairman, I will go back and look 
into that. I don't know where it is right now, but I can assure 
you that it was a very high priority for me when we worked on 
the bill together.
    Mr. DeFazio. That would be great, because the clock is 
ticking and it has been a few years.
    If I could, on another point which was raised, I can't 
remember who was raising it--oh, it was Mr. Baird, I believe, 
on transit-oriented development. We had Mr. Weyrich in, who was 
arguably as far to the right as some of the advisors to the 
Administration, the Reason Foundation people and all that. But 
he says his economists can easily quantify the economic 
benefits of transit-oriented development, and in fact, he 
believes that he can prove that with the Federal investment 
that is made, that the benefits are so high that ultimately, 
the Federal Government is going to more than recapture its 
small investment.
    But somehow the Federal Transit Administration is unable to 
quantify the economic benefit and follow some of the other 
standards that we set in SAFETEA-LU for evaluating transit, in 
particular, streetcar, light rail projects, Small Starts-New 
Starts. Can you enlighten us there why somehow someone who 
arguably represents a group pretty far to the right feels the 
investment can be justified and can be measured and the 
Department can't figure that out?
    Secretary Peters. Congressman, I want to make sure that I 
speak accurately, so I am going to tell you what I know based 
on my knowledge of this issue, and then I will get back to you 
on the record. The process by which these projects are 
evaluated today does not allow that comparison to be made. It 
is an issue that Administrator Simpson and I have talked about 
at length, and believe would be appropriate to be able to 
include the economic benefit of the project----
    Mr. DeFazio. But the law does require that we include that.
    Secretary Peters. I will go back and look at the process. 
We have both been a little frustrated by it.
    Mr. DeFazio. Okay. That is great. And then I would just 
come back to, I would like for people to either follow up or 
not follow up. We had Mr. Duvall in last year and we pointed 
out that you put up on your website this sort of model 
legislation for PPPs. We pointed out there was no cautions in 
there about non-competes and other problems. He said, well, 
that was coming. Then we had this other fellow, who I always 
say should work for the State Department, Jeff Shane was in. He 
would be a great diplomat. And he said, yes, it was coming.
    It is still not there. I think you would agree, despite 
some of your reservations about restrictions on PPPs, that non-
competes are particularly problematic. We had the S.R. 91 
problem in California, where the State had to buy the road back 
to do what they said was a safety improvement that the vendor 
said was violating the non-compete clause. As I pointed out to 
the folks from Indiana, let's just say we had a proposal from a 
company that was looking at coming to Oregon or going to 
Australia and there were some transportation issues. And what I 
put to Indiana is, I said, you can't build it, if someone in 
the middle of Indiana on some lower value farm land wanted to 
build a huge industrial project and you were competing with 
Australia, you would have to go to Macquarie from Australia and 
get their permission to build the interchange. You have lost 
control of the asset and/or your transportation system, and 
within 10 miles on either side of it, you can't build anything 
that would compete with that road.
    I think there are some pitfalls here, and we can disagree 
on the margins. But I think, and Chairman Oberstar and I have 
undertaken to provide some direction, but I really would hope 
that the Department will deliver on the promise that we had and 
granted, it wasn't from you, but from Mr. Duvall and Mr. Shane 
over the last year, that you would put up sort of questions, 
answers, problems, lessons learned kind of thing.
    Secretary Peters. Sir, we will do that, and my apologies if 
we have dropped the ball on that. Again, I spoke earlier about 
the GAO report that has just come out. I think it gives us a 
good basis to move forward with some parameters to establish 
what is in the Federal or the public interest.
    Mr. DeFazio. Yes, they do say here in the GAO report, page 
10, Secretary of Transportation should direct the Federal 
Highway Administrator to clarify Federal Aid Highway 
regulations on the methodology for determining excess toll 
revenue, including reasonable rate of return to private 
investors and highway, public-private partnerships that involve 
Federal investment. They go on to say, Congress should consider 
directing the Secretary of Transportation in consultation with 
Congress to develop and submit to Congress objective criteria 
for identifying national public interests in highway public-
private partnerships.
    Secretary Peters. I agree. In fact, I don't know that we 
have to wait for you to direct us. We will go ahead and start 
working on that and consult with you.
    Mr. DeFazio. Great. With that, I will thank you for your 
generous allocation of time and your testimony. Apparently we 
have five votes, so the Committee will stand in recess until 
those five votes, then we will take up the next panel. Thank 
you, Madam Secretary.
    Secretary Peters. Thank you, Mr. Chairman.
    [Recess.]
    Mr. DeFazio. The Committee will come back to order.
    We will go in the order as was listed. Mr. Pete Rahn, 
Director, Missouri Department of Transportation; followed by 
Mr. Christopher P. Boylan, Vice Chairman, Government Relations, 
American Public Transportation Association; and then Mr. C. 
Randal Mullett, Vice President, Government Relations and Public 
Affairs, Con-Way, Inc. Please proceed.

   TESTIMONY OF PETE RAHN, DIRECTOR, MISSOURI DEPARTMENT OF 
 TRANSPORTATION; CHRISTOPHER P. BOYLAN, VICE CHAIR, GOVERNMENT 
   RELATIONS, AMERICAN PUBLIC TRANSPORTATION ASSOCIATION; C. 
RANDAL MULLETT, VICE PRESIDENT, GOVERNMENT RELATIONS AND PUBLIC 
                     AFFAIRS, CON-WAY, INC.

    Mr. Rahn. Mr. Chairman, Members of the Committee, I am Pete 
Rahn, Director of the Missouri Department of Transportation and 
President of AASHTO. Thank you for this opportunity to provide 
the perspective of State DOTs on the report of the National 
Surface Transportation Policy and Revenue Study Commission.
    AASHTO commends this Committee for establishing the 
Commission and we are proud that one of our own, my colleague, 
Frank Busalacchi, Secretary of the Wisconsin Department of 
Transportation, served on the Commission.
    Through the testimony of our members and a series of 
reports, AASHTO provided substantial input into the Commission. 
In May 2007, we convened transportation leaders from around the 
Nation in a transportation vision for the 21st century summit. 
The resulting vision document was co-signed by 21 national 
transportation organizations. Much of that input has been 
reflected in the Commission's report.
    We believe the Commission got the big ideas right, 
including the need for fundamental reform of the Federal 
transportation program, the need for significant additional 
investment, a strong Federal role and a shared funding 
responsibility by Federal, State and local governments, the 
need for a multi-modal approach with greater emphasis on 
transit and inter-city passenger rail, an increase in Federal 
revenues, be it through taxes or other means, the need to 
transition to an alternative revenue source 20 years from now, 
greater use of tolls and public-private ventures to supplement 
revenues at the State and local levels, systematic planning to 
guide investment to where it is most needed, a performance-
based program, accountability for results and investment 
focused on matter of genuine national interest.
    We believe the Commission was accurate in its assessment 
that the U.S. needs to invest $225 billion per year from now to 
2050 to meet national needs. Today, we are investing less than 
40 percent of that amount. We also believe they were correct in 
their assessment that the only way to increase funding to the 
levels needed is for all levels of government to continue to 
fund their share.
    State and local governments, even with the aid of private 
partnerships, will not be able to meet national investment 
needs without a strong Federal partner. With the explosion of 
international trade and the expansion of the global economy, we 
must improve the reliability of our freight system for 
interstate commerce. Now more than ever, we need a strong 
Federal partner. With the continuing growth of this Nation and 
the concentration of population in urban areas that produce 86 
percent of our Nation's GDP, we must reduce congestion so that 
people and freight can move freely. Now, more than ever, we 
need a strong Federal partner.
    The Commission called for reform of the Federal program to 
ensure that it is performance-based, accountable and focused on 
issues of true national significance. They call for 
restructuring the program to address ten priorities: 
preservation, freight, metropolitan congestion, safety, 
connecting with rural America, inter-city passenger rail, 
environment, energy, Federal lands and research. We want to 
work with Congress to make sure that these reforms are 
implemented in ways that can work at the State level and also 
to craft programmatic solutions that meet the needs of all of 
our States, large and small, rural and urban. We agree with the 
Commission that it takes too long to deliver transportation 
projects and that reforms must be instituted to speed project 
delivery.
    When Congress first proposed the idea of creating the 
national commission, one of its fundamental questions was 
whether it could continue to rely on the Federal fuel tax as 
the main source of revenue to support the Highway Trust Fund. 
We find it instructive that the Commission determined that the 
fuel tax will continue to be a viable source of funding, but 
that a transition to an alternative, such as a VMT tax, will be 
needed by the year 2025.
    It will be up to Congress to determine how to sustain the 
solvency of the Highway Trust Fund and how to increase future 
revenues, so that the Federal share of the surface 
transportation funding can be increased to the levels needed. 
We are depending on the Senate and House to find ways to avert 
the immediate funding crisis pending this year, so that States 
receive highway and transit funding at the levels guaranteed in 
SAFETEA-LU.
    When these programs come up for reauthorization in 2009, 
unless Congress finds ways to sustain highway and transit 
funding, over the short run, States will face a dramatic cut in 
their highway and transit programs. Frankly, over the longer 
term, both the Federal Government and the States must step up 
to the plate with additional funding to meet current and future 
demands on the highway and transit infrastructure.
    As one way to help, AASHTO proposed the creation of a 
national BRAC-like commission with limited responsibility to 
address user fee rates to the Highway Trust Fund.
    Mr. DeFazio. Thank you.
    Mr. Boylan?
    Mr. Boylan. Thank you, Mr. Chairman and Members of the 
Committee.
    Before I start my remarks, I would like to preface it with 
a little bit about the MTA system which I represent, and also 
the 1,500-member American Public Transportation Association. 
The MTA's history is one of dis-investment in the 1950s, 1960s 
and 1970s that left us in dire straits. In the last 10 or 12 or 
20 years we have spent over $60 billion to rebuild the system. 
In the process, we have reclaimed what was a regional and 
national treasure.
    The numbers from that investment, the reinvestment in that 
system, have spoken for themselves. Our ridership over the last 
10 years is up nearly 50 percent. In fact, we are seeing riders 
that we haven't seen since 1952, before everyone had a car in 
their garage. Our on-time performance is up from the low 80 
percents into the upper 90 percents. Our mean distance between 
failure is down. Our bridge and tunnel traffic moves faster 
than it had moved before, because of investments in 
technologies.
    And when we talk to our customers, they tell us because it 
is because of the improvements and the investments that we have 
made in the reliability and the performance of our system. None 
of that would be possible without a strong commitment from New 
York State, New York City, our other local partners, and of 
course, Mr. Chairman, the Federal Government. We are grateful 
for that continued and stable support.
    So that is why the work of the Commission holds such 
relevance and resonance for the MTA and for my transit 
colleagues at APTA. Their work was thorough and they clearly 
drew a link between a successful and internationally 
competitive U.S. and the investments needed to improve our 
national infrastructure. They also understand that if we 
retreat on investing in that infrastructure, or if we do only 
the bare minimum, we will exacerbate what we call our growing 
crisis of capacity in terms of our systems, as populations grow 
over the next 20 years and our systems are operating at 
capacity today.
    Either scenario will leave us at a competitive disadvantage 
in the global marketplace as Europe and Asia continue to 
invest. I found some of the comments about Asia and the folks 
who are visiting here in Washington very interesting this 
morning. We have had no less than eight to twelve systems visit 
us in the past year, five of which were from China, Beijing, 
Shanghai and others who are building systems in the next five 
years that will equal or surpass the system that it took us a 
hundred years to build. So there are some pretty significant 
national competitive issues at play.
    We naturally liked the fact that the Commission calls for a 
bold approach and reinforces a strong Federal role. We also 
particularly like the fact that they believe that transit has a 
pivotal role in a balanced, inter-modal system. We like the 
idea of performance measures, increased efficiencies, improved 
product delivery, and even private participation. They are all 
good areas to explore. But as we know from past experience, 
none of those alone, or perhaps even collectively, will solve 
the transportation problems or adequately address the magnitude 
of the need. They are just too great. Substantial, immediate 
and real investment is needed.
    Now let me turn my attention to a few of the areas 
highlighted in the Commission's report quickly. The report 
notes that public transportation infrastructure needs about $13 
billion a year in investment, something that will grow to $21 
billion to $34 billion by 2020. Our own industry sees the need 
today at about $40 billion a year. So we know that the need is 
considerable, real and growing.
    As I mentioned earlier, at APTA we are particularly pleased 
that the Commission calls for an expanded Federal role. The 
report notes that public transportation and inter-city 
passenger rail will play a significantly larger role in 
America's mobility. Our transit systems work symbiotically with 
highways to alleviate congestion, allowing for more efficient 
transportation of passengers and goods. And the inter-
relationship is readily acknowledged by our partners at AASHTO, 
ARTBA, the Chamber of Commerce and others with whom we work. It 
will continue to be critical as our population and economy 
grow.
    One thing we find particularly troubling, as I wrap up, Mr. 
Chairman, we are troubled that some people see public 
investment in transportation as a drag on the Federal budget on 
the economy, rather than the catalyst that it is. It certainly 
has been a catalyst in the New York area, with many transit 
systems. We believe that there is continued return on 
investment. Maybe they don't show up on the balance sheets of 
our transit system, but they certainly show up on the balance 
sheets of companies throughout the Country.
    I will wrap my remarks up, thank the Committee, and I would 
be happy to answer questions as we go forward.
    Mr. DeFazio. Thank you.
    Mr. Mullett?
    Mr. Mullett. Thank you. Mr. Chairman and Members of the 
Committee, thank you very much for the opportunity to testify 
today.
    My name is Randy Mullett. I am Vice President of Government 
Relations and Public Affairs for Con-Way, Inc. I am testifying 
today on behalf of the U.S. Chamber of Commerce.
    Last fall, the Chamber testified in front of this Committee 
that there is abundant evidence that America's infrastructure 
is not only showing its age, but also showing that it lacks 
capacity to handle the growing volume of people and goods that 
are moving today. We wholeheartedly agree with the commission 
that continued under-investment and business as usual 
transportation policies and programs will have a detrimental 
effect on United States' competitiveness and on the everyday 
lives of all Americans. To avoid these dire predictions and to 
meet the needs of the economy of the future, the next era in 
surface transportation will require a multi-modal and 
intermodal approach that will assure U.S. competitiveness in 
the global economy. This is a name that emphasis the need for 
the Federal Government to play an important role.
    Although every level of government will need to step up to 
the plate, it is the Federal Government that bears primary 
responsibility to ensure that infrastructure investment is 
better aligned to support our national interest of economic 
growth, personal mobility, interstate commerce and foreign 
trade.
    The Chamber is pleased to see that the Commission calls for 
a transportation system that explicitly values freight 
movements. On a typical day, about 43 million tons of goods, 
valued at $29 billion, moves nearly 12 billion ton miles on the 
Nation's interconnected transportation network. According to 
the Federal Highway Administration, without new strategies to 
increase capacity, congestion may impose an unacceptably high 
cost on the Nation's economy and productivity.
    We also agree with the Commission that metropolitan 
mobility, congestion relief and small city and rural 
connectivity deserve national focus and resources. 
Increasingly, congestion imposes additional costs on employees 
and employers alike. State and local chambers of commerce known 
well that their communities need transportation choices. Those 
options are a valid aspect of economic development strategies.
    The Chamber commends the Commission for its strong 
statements on the need to speed project delivery. It is 
appalling that major highway projects take approximately 13 
years to advance from project initiation to completion. 
Regulatory red tape and lawsuits can bring even the most 
common-sense improvements to a grinding halt. We concur with 
the Commission that it is possible, and indeed essential, to 
speed project delivery while adequately addressing 
environmental and community impacts. This must be a top 
priority in the next authorization.
    When it comes to funding and financing, every option must 
be considered to address the enormous needs of our Nation's 
transportation infrastructure. As a nation, we must face this 
fundamental fact. We cannot separate transport growth from 
economic growth. We are a growing people and a growing country 
with aging infrastructure. We must fix what we have, and if we 
want a new road, a new runway or a new transit system, we must 
pay for it.
    Additionally, while chronic under-investment is a major 
contributor to problems across all modes of transportation, the 
Chamber encourages Congress to examine ways to spend 
infrastructure dollars more wisely. We must address the 
diversion of funding away from intended uses and the lack of 
resource prioritization that marked many Federal transportation 
programs. The public must have confidence that transportation 
programs will deliver real solutions to real problems or they 
will not support increased investment in any form.
    In conclusion, last fall when the Chamber presented 
testimony to the full Transportation and Infrastructure 
Committee, it pledged to engage the business community through 
the Let's Rebuild America campaign. The Chamber has followed 
through on that pledge by waging a battle in the media to make 
infrastructure a core national economic priority, by 
identifying regulations that get in the way of private 
investment, and by speaking out on the need for increased 
public investment.
    With the release of the Commission's report, all 
transportation and infrastructure stakeholders have started 
coming to the table. Working together, we are going to put an 
end to the intramural squabbles that have traditionally divided 
these stakeholders. We are going to rally and unite around an 
urgent and compelling mission: to rebuild America.
    Thank you very much for the opportunity to be here today. I 
look forward to answering any questions.
    Mr. DeFazio. Thank you.
    We will have a quick round of questions. I will direct 
mine, I know Mr. Rahn has a plane to catch, so I will direct a 
question to you and then if John has any questions of you, we 
will direct them, then we will dismiss you, then we can go to 
the other two members of the panel.
    From the perspective of your State, the congestion pricing 
discussion that we had earlier on public-private partnerships 
where even the Commission leans fairly heavily, at least for 
their lower number, on congestion pricing. Obviously, Secretary 
Peters puts all of her eggs in the congestion pricing and 
private-public partnership tolling basket.
    As secretary of a State department of transportation, how 
much do you think this would help your State with your 
problems? No more Federal investment, Federal investment frozen 
and declining because of the cost of construction in real 
dollars. And we are now giving you license to go out there and 
do congestion pricing, private-public partnerships and all 
these other things. Do you think that will do the job for you? 
No tax increases in your State, either.
    Mr. Rahn. Mr. Chairman, the scenario that you have just 
painted is a very limited one from the standpoint of actually 
being able to address all of our problems. The Missouri system, 
and I am not speaking on behalf of AASHTO at this point. Of our 
32,000 mile system for which we are responsible, 265 miles 
carry 20 percent of our traffic. Then, I have 27,000 miles that 
carry 20 percent of our traffic. So obviously, public-private 
partnerships are not a solution for those 27,000 miles of our 
system, but they might very well apply to those very few roads 
that carry a lot of traffic.
    So I believe, both from the State of Missouri, and I would 
also add that the position of AASHTO is that public-private 
partnerships do have a role. But it is a relatively small role_
it might represent somewhere between 7, 8, 9 percent of the 
resources we need to have available to us. But it is not the 
silver bullet that is going to solve the problems of 
transportation.
    Mr. DeFazio. So you don't think a private-public 
partnership pricing model is particularly viable for those 
27,000 miles of not heavily populated and utilized road area?
    Mr. Rahn. That is correct.
    Mr. DeFazio. One other quick question. I was puzzled, and 
we were trying to gather some information from the States, both 
about projects ready to go, and we appreciate your 
organization's cooperation on that in terms of a stimulus 
package. I still feel it was a mistake to omit that.
    But the second part is, I was puzzled because I thought the 
no-brainer is, we have to fix the trust fund issue. We heard 
from the California Department of Transportation, the 
Commission, they have a paper they have written saying, not one 
smidgen of impact if the trust fund goes into deficit in the 
State of California. How about, are there any other States in 
that position and/or do you think that is a credible thing for 
California to say?
    Mr. Rahn. Mr. Chairman, I wouldn't comment on California's 
view. I don't know what the facts are that drove them to that 
conclusion.
    Mr. DeFazio. Have you heard from any other States who feel 
like that?
    Mr. Rahn. I have not. There might be one or two other 
States that are in a position to have a view that it would have 
a minimal impact on them. But the fact is, my estimate would be 
that at least 45 States, if we see a 45, 50 percent loss of 
funds in 2010, that that is going to have a devastating impact 
on our highway programs across the Country.
    Mr. DeFazio. And won't it roll back? Because many of these 
are multi-year. My State, for instance, has balanced budget 
requirements and everything like that. If we looked out into 
next year saying, the money might not be there to finish this 
project, wouldn't there be some people who wouldn't initiate 
projects this year because of that uncertainty?
    Mr. Rahn. I believe that for those projects for which 
multi-year commitments are going to be necessary, I think that 
for that sort of a project, you are going to find them being 
put on hold. There is, however, a current estimate I have heard 
now that the Federal program, given the deficit for 2010, might 
well be a $20 billion program instead of the current $43 
billion. We have already adjusted our STIP, and it is 
devastating in 2010 to see the projects that are now being 
shoved to the side just in the event that in fact Federal 
funding does go away. And it is going to have a noticeable 
impact on the citizens of Missouri and those people who choose 
to travel through Missouri.
    Mr. DeFazio. Thank you.
    John, do you have any questions of him? We don't want him 
to miss his plane.
    Mr. Boozman. Just very quickly, being from Arkansas, we 
adjourn Missouri. I want to compliment you on your leadership. 
I have had several projects that we are working with Missouri 
with, and again, we appreciate your hard work and your 
leadership.
    And that is really all I have to say. I know that you have 
a flight to catch. But again, we appreciate your hard work and 
like I say, the leadership on a lot of different projects that 
we are trying to get accomplished.
    Mr. Rahn. Thank you.
    Mr. DeFazio. Thanks, Mr. Rahn. We are going to dismiss you 
now so you can catch your flight without too much anxiety. I 
know how that is.
    Mr. Rahn. Thank you, Mr. Chairman.
    Mr. DeFazio. We will have some questions for the other two. 
And if we have any other questions for you, we will submit them 
in writing.
    Mr. Boylan, Mr. Mullett, I raised an issue with the 
Secretary about essentially what freezing the gas tax means in 
terms of the diminished buying capacity, used the example of 
the Wisconsin study over time. Do you think it would be 
prudent, I mean, not even getting into increasing, saying, 
okay, let's look at it, but wouldn't it at least be prudent to 
index the gas tax to the cost of, say, construction inflation 
or something else, so that the Federal share wouldn't diminish 
and ultimately head toward insignificance or zero? Would you 
support such an approach?
    Mr. Boylan. I would suggest that the need is so great now 
beyond what the present resources provide that there needs to 
be some credible and immediate method to get there. Again, our 
history at the MTA is that we present the program of needs and 
the political environment determines what it is. But I will 
tell you that the need has grown dramatically in New York and 
throughout the transit industry. We definitely need a new and 
dedicated and predictable source of revenue. The most immediate 
one that comes to mind is the existing revenue stream.
    Mr. DeFazio. Mr. Mullett?
    Mr. Mullett. The Chamber has gone on record as saying that 
they would support reasonable increases. I don't believe that 
we have tied that to a specific index. They have tied those 
reasonable increases, though, to be more certain that the 
projects that they would be funding would have national 
significance and would not be diverted off into things that did 
not meet that criteria.
    Mr. DeFazio. Mr. Boylan, somehow your agency is able to 
quantify economic impact from your investments in transit. Do 
you think you could help the FTA with that, because they are 
having a heck of a time trying to figure out how to calculate 
economic impact with transit investment?
    Mr. Boylan. Both we and the American Public Transportation 
Association do have models that show what we think.
    Mr. DeFazio. Really? You have models?
    Mr. Boylan. We have models.
    Mr. DeFazio. Do you mean like in a computer and stuff, 
where you could plug in some assumptions and come up with 
something?
    Mr. Boylan. Yes. We created one back in the 1980s, along 
with the Port Authority of New York.
    Mr. DeFazio. Maybe you could lend a laptop to the FTA with 
that hard drive model in there and let them run it, see what 
happens.
    Mr. Boylan. We would be happy to do so.
    Mr. DeFazio. That would be great.
    Mr. Mullett, the Chamber, we don't usually see the Chamber 
wanting to talk about any increases in taxes or fees unless 
they are expecting something reasonable to result to your 
constituents, your membership. Do you think there are 
measurable impacts, such as those Mr. Boylan has laid out from 
transit investment that benefit the larger business community 
and the value of property?
    Mr. Mullett. I think there is great evidence that supports 
those conclusions. There is also, I think, even more evidence 
that supports the downside for not making those investments.
    Mr. DeFazio. Really. So where would we look there, like the 
numbers on hours lost in terms of just-in-time delivery or 
hours lost by individuals in terms of being caught in 
congestion? Is that what you are talking about?
    Mr. Mullett. Yes. I think there is plenty of that kind of 
evidence that has been found.
    Mr. DeFazio. So if the Secretary, or at least the 
Department in an earlier hearing said that they measured, I 
think she said in her minority report, actually, the cost of 
congestion at $200 billion a year, if indeed--that is a little 
higher than most other estimates--but if it is that high, 
wouldn't it be prudent to invest some increment of $200 billion 
a year in order to lower that number? Couldn't we kind of come 
out ahead in the end there?
    Mr. Boylan. Our rule of thumb in New York is that if they 
eliminated our system, they would have to build 15 extra lanes 
on the Long Island Expressway just to handle the current 
traffic. We know that we are doing something that helps 
alleviate potential congestion in our region. Certainly, the 
region could not survive if it had 15 lanes on the LIE. So I 
think we know there is a connection.
    Mr. Mullett. And I think given the framework that you have 
established, the cost benefit in that is pretty obvious. If you 
will indulge me for a second, I will put on my trucking hat for 
a minute and I will put forth that the highway system is our 
assembly line that we must use but have no authority to improve 
or invest in ourselves. So we are hopeful that by looking at 
these things, you all will make a determination that wherever 
the funding comes from, that investment certainly is necessary 
if we are going to continue to allow ourselves to grow.
    Mr. DeFazio. Great. Thank you.
    I have a large group here, I am going to turn the 
conclusion over to Ms. Hirono. I appreciate her coming here on 
very short notice. She will have some final questions and 
unless some other Member appears, that will be the end. Again, 
I thank you for your time. We look forward to a better 
transportation future jointly, together. Thank you.
    Ms. Hirono. [Presiding] Good afternoon. It is just us now.
    [Laughter.]
    Ms. Hirono. I do have a couple of questions for our panel. 
Mr. Boylan, the FTA currently provides the New Starts projects 
with a full funding grant agreement which is one of the most 
reliable agreements in transportation financing today. But if 
the Commission would have us move to a cost-to-complete 
scenario, these successful FTA grant agreements may be 
discontinued.
    What is your opinion of the value of an FFGA? I have a 
particular interest in this, as you may be aware that the city 
and county of Honolulu is one of the New Start projects on the 
books.
    Mr. Boylan. I think there needs to be an overhaul, of 
sorts, of the New Start process, if you will. Whether the cost-
to-complete is the accurate alternative or not, I don't think I 
am prepared to comment on that. But I will tell you that the 
process of getting a full funding grant agreement and the 
hurdles that one has to go through for what are in many 
instances on their face wise local decisions and good 
investments for Federal dollars and the like, the process is 
burdensome, laborious. We just signed two full funding grant 
agreements in the last two years, both of which took anywhere 
from eight to nine years to complete.
    In that eight or nine years, the cost of the projects 
necessarily escalate. And not all on the FTA, by the way. I 
don't want to suggest that all the time in that eight or nine 
years was the responsibility of the FTA. There were local 
issues, obviously, that had to be overcome. But the process 
does need to be slimmed down. There certainly needs to be cost-
effectiveness criteria.
    You don't want to have the Federal Government spending 
money inappropriately. But there has to be a better way to do 
some of this. We are very happy to work with the Committee to 
construct something new. But something has to be done to change 
that, because if you speed that product delivery, you save time 
and money and at the end of the day, we want to deliver a 
project that you want to finance and not the process to get to 
the end.
    Ms. Hirono. So probably something short of cost-to-complete 
kind of a process would be advisable?
    Mr. Boylan. Something between the two that I think will 
probably work for us.
    Ms. Hirono. And you will be happy to work with us as we try 
to figure that out?
    Mr. Boylan. Absolutely.
    Ms. Hirono. For Mr. Mullett, the Commission's minority 
calls for a vision that would devolve the highway program back 
to the States and allow the private sector to fill in the gaps. 
We heard the Transportation Secretary talk about that. Do you 
believe that such a system would develop and maintain a 
national system designed to move interstate commerce?
    Mr. Mullett. I believe that there is a strong role for the 
private sector, there is a strong role for local and State 
governments. But the primary responsibly for interstate 
commerce and our Federal national highway system has to remain 
with the Federal Government. A cobbled-together bunch of local 
solutions does not make a national system that is going to be 
efficient or effective for our economy.
    Ms. Hirono. Is that a position that the Chamber has taken 
as a body?
    Mr. Mullett. Yes. The Chamber is supportive of all 
solutions that are on the table now being part of the total 
solution. But they do believe that a strong Federal presence is 
important.
    Ms. Hirono. I think I read in one of their earlier 
testimonies that something like 40 percent of funding from the 
Federal Government is desirable, and you would agree with that, 
to continue that level of participation?
    Mr. Mullett. Yes, and I can't comment on that previous 
testimony, because I am not familiar with that.
    Mr. Boylan. It is about right. In the transit part of the 
ledger, it is varied over the last 20, 25 years from 40 to 50 
percent of the investment. It certainly needs to be in there, 
certainly at greater levels, but yes.
    Ms. Hirono. Having served in State government, I would 
agree that we need to maintain a really very strong Federal 
role in our national transportation system.
    That is it, folks. This hearing is adjourned. Thank you 
very much.
    [Whereupon, at 1:45 p.m., the Committee was adjourned.]

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