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


 
 DEPARTMENTS OF TRANSPORTATION, AND HOUSING AND URBAN DEVELOPMENT, AND 
                RELATED AGENCIES APPROPRIATIONS FOR 2009

_______________________________________________________________________

                                HEARINGS

                                BEFORE A

                           SUBCOMMITTEE OF THE

                       COMMITTEE ON APPROPRIATIONS

                         HOUSE OF REPRESENTATIVES

                       ONE HUNDRED TENTH CONGRESS
                             SECOND SESSION
                                ________
   SUBCOMMITTEE ON THE DEPARTMENTS OF TRANSPORTATION, AND HOUSING AND 
         URBAN DEVELOPMENT, AND RELATED AGENCIES APPROPRIATIONS
                 JOHN W. OLVER, Massachusetts, Chairman
 ED PASTOR, Arizona                 JOE KNOLLENBERG, Michigan
 CIRO RODRIGUEZ, Texas              FRANK R. WOLF, Virginia
 MARCY KAPTUR, Ohio                 ROBERT B. ADERHOLT, Alabama
 DAVID E. PRICE, North Carolina     JAMES T. WALSH, New York
 ROBERT E. ``BUD'' CRAMER, Jr.,     VIRGIL H. GOODE, Jr., Virginia
Alabama                             
 LUCILLE ROYBAL-ALLARD, California  
 MARION BERRY, Arkansas             

 NOTE: Under Committee Rules, Mr. Obey, as Chairman of the Full 
Committee, and Mr. Lewis, as Ranking Minority Member of the Full 
Committee, are authorized to sit as Members of all Subcommittees.
                    Kate Hallahan, David Napoliello,
            Laura Hogshead, Lisa Pena, and Alexander Gillen,
                           Subcommittee Staff

                                ________

                                 PART 4
                                                                   Page
 U.S. Department of Transportation................................    1
 Federal Aviation Administration..................................  329
 Highway and Transit Programs: The DOT Perspective on the Urgent 
Funding Needs for Today and Tomorrow..............................  701
 Thoughts and Recommendations From the National Surface 
Transportation Policy and Revenue Study Commission................  857

                                ________

         Printed for the use of the Committee on Appropriations


PART 4--TRANSPORTATION, AND HOUSING AND URBAN DEVELOPMENT, AND RELATED 
                           AGENCIES FOR 2009
                                                                      ?

 DEPARTMENTS OF TRANSPORTATION, AND HOUSING AND URBAN DEVELOPMENT, AND 
                RELATED AGENCIES APPROPRIATIONS FOR 2009

_______________________________________________________________________

                                HEARINGS

                                BEFORE A

                           SUBCOMMITTEE OF THE

                       COMMITTEE ON APPROPRIATIONS

                         HOUSE OF REPRESENTATIVES

                       ONE HUNDRED TENTH CONGRESS
                             SECOND SESSION

                                ________

   SUBCOMMITTEE ON THE DEPARTMENTS OF TRANSPORTATION, AND HOUSING AND 
         URBAN DEVELOPMENT, AND RELATED AGENCIES APPROPRIATIONS
                 JOHN W. OLVER, Massachusetts, Chairman
 ED PASTOR, Arizona                 JOE KNOLLENBERG, Michigan
 CIRO RODRIGUEZ, Texas              FRANK R. WOLF, Virginia
 MARCY KAPTUR, Ohio                 ROBERT B. ADERHOLT, Alabama
 DAVID E. PRICE, North Carolina     JAMES T. WALSH, New York
 ROBERT E. ``BUD'' CRAMER, Jr.,     VIRGIL H. GOODE, Jr., Virginia
Alabama                             
 LUCILLE ROYBAL-ALLARD, California  
 MARION BERRY, Arkansas             

 NOTE: Under Committee Rules, Mr. Obey, as Chairman of the Full 
Committee, and Mr. Lewis, as Ranking Minority Member of the Full 
Committee, are authorized to sit as Members of all Subcommittees.
                    Kate Hallahan, David Napoliello,
            Laura Hogshead, Lisa Pena, and Alexander Gillen,
                           Subcommittee Staff

                                ________

                                 PART 4
                                                                   Page
 U.S. Department of Transportation................................    1
 Federal Aviation Administration..................................  329
 Highway and Transit Programs: The DOT Perspective on the Urgent 
Funding Needs for Today and Tomorrow..............................  701
 Thoughts and Recommendations From the National Surface 
Transportation Policy and Revenue Study Commission................  857

                                ________

                     U.S. GOVERNMENT PRINTING OFFICE
 43-749                     WASHINGTON: 2008

                                  COMMITTEE ON APPROPRIATIONS

                   DAVID R. OBEY, Wisconsin, Chairman
 
 JOHN P. MURTHA, Pennsylvania       JERRY LEWIS, California
 NORMAN D. DICKS, Washington        C. W. BILL YOUNG, Florida
 ALAN B. MOLLOHAN, West Virginia    RALPH REGULA, Ohio
 MARCY KAPTUR, Ohio                 HAROLD ROGERS, Kentucky
 PETER J. VISCLOSKY, Indiana        FRANK R. WOLF, Virginia
 NITA M. LOWEY, New York            JAMES T. WALSH, New York
 JOSE E. SERRANO, New York          DAVID L. HOBSON, Ohio
 ROSA L. DeLAURO, Connecticut       JOE KNOLLENBERG, Michigan
 JAMES P. MORAN, Virginia           JACK KINGSTON, Georgia
 JOHN W. OLVER, Massachusetts       RODNEY P. FRELINGHUYSEN, New Jersey
 ED PASTOR, Arizona                 TODD TIAHRT, Kansas
 DAVID E. PRICE, North Carolina     ZACH WAMP, Tennessee
 CHET EDWARDS, Texas                TOM LATHAM, Iowa
 ROBERT E. ``BUD'' CRAMER, Jr.,     ROBERT B. ADERHOLT, Alabama
Alabama                             JO ANN EMERSON, Missouri
 PATRICK J. KENNEDY, Rhode Island   KAY GRANGER, Texas
 MAURICE D. HINCHEY, New York       JOHN E. PETERSON, Pennsylvania
 LUCILLE ROYBAL-ALLARD, California  VIRGIL H. GOODE, Jr., Virginia
 SAM FARR, California               RAY LaHOOD, Illinois
 JESSE L. JACKSON, Jr., Illinois    DAVE WELDON, Florida
 CAROLYN C. KILPATRICK, Michigan    MICHAEL K. SIMPSON, Idaho
 ALLEN BOYD, Florida                JOHN ABNEY CULBERSON, Texas
 CHAKA FATTAH, Pennsylvania         MARK STEVEN KIRK, Illinois
 STEVEN R. ROTHMAN, New Jersey      ANDER CRENSHAW, Florida
 SANFORD D. BISHOP, Jr., Georgia    DENNIS R. REHBERG, Montana
 MARION BERRY, Arkansas             JOHN R. CARTER, Texas
 BARBARA LEE, California            RODNEY ALEXANDER, Louisiana
 TOM UDALL, New Mexico              KEN CALVERT, California
 ADAM SCHIFF, California            JO BONNER, Alabama                 
 MICHAEL HONDA, California          
 BETTY McCOLLUM, Minnesota          
 STEVE ISRAEL, New York             
 TIM RYAN, Ohio                     
 C.A. ``DUTCH'' RUPPERSBERGER,      
Maryland                            
 BEN CHANDLER, Kentucky             
 DEBBIE WASSERMAN SCHULTZ, Florida  
 CIRO RODRIGUEZ, Texas              
                                    

                  Rob Nabors, Clerk and Staff Director

                                  (ii)


 DEPARTMENTS OF TRANSPORTATION, AND HOUSING AND URBAN DEVELOPMENT, AND 
                RELATED AGENCIES APPROPRIATIONS FOR 2009

                              ----------                              

                                      Thursday, February 7, 2008.  

                   U.S. DEPARTMENT OF TRANSPORTATION

                                WITNESS:

HON. MARY E. PETERS, SECRETARY OF TRANSPORTATION
    Mr. Olver. The Committee will come to order. I would like 
to welcome you, Secretary of Transportation Mary Peters, back 
to the Subcommittee, as well as Ms. Scheinberg, the Assistant 
Secretary for Budget and Programs.
    Madam Secretary, thank you for being here. We appreciate 
your taking the time to present and answer questions about the 
President's Fiscal Year 2009 budget for Transportation. I know 
we sometimes have different perspectives on transportation 
policy, but I always appreciate your candor, accessibility and 
your willingness to work with us.
    Madam Secretary, much has happened since the last time you 
appeared before our Subcommittee. The tragic collapse of the I-
35 bridge in Minnesota has placed a spotlight on the 
deterioration of our nation's infrastructure. The Highway Trust 
Fund will become insolvent in Fiscal Year 2009, and the future 
viability of federal transportation financing is up for grabs.
    With these issues as a backdrop, last month, a super 
majority of the National Surface Transportation Policy and 
Revenue Study Commission released recommendations to shore up 
the nation's finances for transportation and infrastructure 
through tolling, congestion pricing, private-public 
partnerships and raising the federal fuel tax.
    Concerning aviation, the percent of on-time flight arrivals 
in 2007 dropped to 73.4 percent, the worst year for delays 
since 2000. Controller departures and retirements continue to 
exceed FAA projections. The FAA estimated that 700 controllers 
would retire in Fiscal Year 2007, but the actual figure was 
828. Even more worrisome, The Washington Post recently reported 
the ratio of certified controllers to trainees has plummeted 
from five-to-one in 2000 to three-to-one today.
    With transit, we find a growing need to improve our 
nation's public transportation systems. A case in point: the 
SAFETEA-LU created a new, Small Start program for small or less 
expensive fixed guideway projects, such as bus rapid transit, 
commuter rail and streetcar projects. While this program is 
only a few years old, I note from your budget request that 
there are sufficient projects in the pipeline to utilize the 
fully authorized level of $200 million. Clearly, this speaks to 
the demand for a slightly less heavy form of transit.
    Finally, Amtrak continues to experience record ridership. 
The ridership increased to almost 26 million passengers in 
Fiscal Year 2007, up nearly 10 percent from Fiscal Year 2006. 
Not surprisingly, with higher ridership has come increased 
revenue, but the capital needs of the system remain large.
    The Passenger Rail Working Group, part of the larger 
Commission, recently issued a report that estimated $7.4 
billion would be needed each year between 2007 and 2015 to 
maintain the existing Amtrak system, to continue the 
development of planned new corridors and to create new routes 
to link major urban areas.
    The issues I have just mentioned combined with increased 
population growth and demographic shifts in the coming decades 
will continue to strain an already overburdened transportation 
system. The needs of the system are clearly great.
    As you know, the National Surface Transportation and 
Revenue Study Commission performed a detailed analysis of the 
resources needed to both maintain and improve our highway 
transit and rail infrastructure. On the high end, the 
Commission pegged the funding needed to maintain, upgrade and 
expand our transportation networks across the surface areas at 
$225 billion annually over the next 50 years, yet, at a time 
when we should be working together to increase federal 
investment in transportation infrastructure, the President's 
budget would erode federal involvement and resources in 
transportation in my opinion.
    This budget in many respects is a carbon copy of the budget 
submitted by the President last year and does little to meet 
our future challenges. The highway and transit guarantees are 
not met. The Airport Improvement program is again cut by $765 
million or about 22 percent from the Fiscal Year 2008 level. 
The budget for inner-city passenger rail would force Amtrak to 
shut down or severely cut rail service. In addition, the budget 
for Amtrak does not appear to acknowledge the unanimous 
recommendations of the Presidential Emergency Board that was 
made up totally of appointees by President Bush.
    Finally, the essential air service, which has broad 
bipartisan support, would be cut by $75 million or 60 percent 
from the Fiscal Year 2008 level.
    I am particularly concerned about the administration's 
proposal to borrow funds from the Mass Transit Account to fund 
the shortfall in the highway program. This is a very temporary 
and I believe a shortsighted fix.
    We will get to questions and we will hear your thoughts on 
some of these issues, but, Madam Secretary, I strongly believe 
that the federal government must stay an active partner with 
the states and local governments in funding our transportation 
infrastructure, and I fear that there has been a deliberate 
effort by the administration to slowly chip away at the federal 
role in transportation, and I hope we can explore that issue 
more today with you.
    Now I would like to recognize my Ranking Member, Mr. 
Knollenberg, Joe Knollenberg, from Michigan for any opening 
remarks that he would like to make. Joe?
    Mr. Knollenberg. Mr. Chairman, thank you very much and 
Madam Secretary, good to see you. Ms. Scheinberg, thank you.
    Let me add my welcome obviously to your being here today. 
We are going to begin this process of evaluating the 
President's proposal to allocate something like in excess of 
$68 billion to transportation programs and to solve some of the 
transportation-related issues.
    I believe we do stand at a crossroads in this Nation's 
surface infrastructure in a number of ways and for a number of 
reasons. We are at the end of the SAFETEA-LU authorization, and 
even though I note that the contract authority for 2009 is 
reduced by about $1.8 billion compared to 2008, I assume that 
that is the correct amount to meet the agreed-upon figure of 
$286 billion, which was authorized by the Act. Is that not 
true?
    We are now at the point of reauthorizing the programs and 
perhaps redirecting funds to meet new or different priorities, 
including congestion and maintenance of roads and bridges. We 
are also at a crossroads in terms of how we finance future 
highway programs. Big gas tax increases, whatever their 
variety, may or may not keep the Highway Trust Fund solvent, 
but at what cost is that to low-income families and small 
businesses across the country?
    One thing is for sure however: The current level of 
receipts is not going to be sufficient to fund the current 
program with a projected shortfall in 2009 of an estimated $3.2 
billion, and your proposal to borrow from other funds and 
programs only postpones the day of reckoning.
    I could not agree more with your submitted statement, that 
long-term we need major reforms to not only what we finance, 
but how we finance it. We are at the crossroads in air traffic 
as congestion mounts in every major airport around the country, 
and public complaints and criticism over delays are mounting 
every day.
    We have the opportunity to move to the next generation of 
satellite technology, but at what cost and what actual impact 
on air safety and on delays on the ground? When can we 
realistically expect those? Reforms have been proposed, and 
your budget assumes their enactment in large part, so we will 
get into that a little later in the questioning. But that has 
not occurred yet, and if it does not very soon, the system 
faces collapse instead of a new generation.
    We are also at the point of no return with Amtrak, and let 
me explain that. Year after year, there is a call for reform, a 
call for reduced costs and a call for better service, yet, year 
after year, we fund the same system pretty much. Something I 
believe needs to happen here, and I am not sure I know what it 
is, but the status quo does not seem to be the option or the 
solution.
    Finally, but importantly, the demand of the administration 
and the Congress is to produce and use more alternative fuels. 
This fuel is no less hazardous than any other fuel that is out 
there, and the safe transmission from the many, many refiners 
that are cropping up throughout the Midwest to the consumer 
will be a major responsibility of DOT in the near future.
    Madam Secretary and Chairman Olver, these are some of the 
highlighted topics that I have and I hope to explore with the 
Secretary this afternoon and to look forward into some of these 
areas that require complete oversight of how we are going to 
move forward. So, with that, I yield back the balance of my 
time and I look forward to your commentary. Thank you.
    Mr. Olver. Thank you, Mr. Knollenberg. Madam Secretary, the 
floor is yours. Your complete written statement will be 
included in the record, and let us say if you can keep your 
oral testimony to somewhere between what I was using and what 
my Ranking Member was using, that would be fine, and we would 
be able to move on to questions. So, Madam Secretary.

                     Statement of Secretary Peters

    Secretary Peters. Mr. Chairman, thank you so much. Members 
of the Subcommittee, it is a pleasure to appear before you 
today. I want to thank you for the opportunity to be here to 
talk about the highlights of President Bush's $68 billion 
budget for the Department of Transportation for Fiscal Year 
2009.
    We are working with the President to hold the line on 
spending, but we still want to give travelers and taxpayers the 
best possible value for their transportation dollars by 
transforming the way our transportation system works and is 
funded.
    Nearly 31 percent of our budget supports safety programs, 
building on our successes in making travel safer. We are 
focusing on problems like runway incursions, motorcycle 
crashes, and most importantly, emphasizing a data-driven safety 
focus that allows us to target resources more effectively. This 
budget also builds on our comprehensive efforts to identify new 
partners, new financing, and new approaches to reduce 
congestion.
    The Bush Administration has moved very aggressively on 
short-term measures to provide passengers relief from chronic 
flight delays, especially in the New York area, and we have 
proposed real reform of our aviation system to use market 
forces more effectively to address congestion and delays, 
modernize how we pay for airports and overhaul the Nation's air 
traffic control system.
    Our Fiscal Year 2009 budget more than doubles--in fact, it 
triples--the funding for the transformation from radar-based to 
satellite-based navigation systems, providing $688 million for 
this Next Generation Air Transportation system, or we call it 
``NextGen.''
    We are also aggressively pursuing effective new strategies 
to reverse the growing traffic-congestion crisis with forward-
looking States and with cities through our Urban Partnership 
Program and our Corridors of the Future Initiatives. Over 30 
major cities responded to our call for innovative plans that 
actually reduce congestion and do not simply slow its growth.
    The Fiscal Year 2009 budget encourages more of this type of 
bold thinking by dedicating 75 percent of discretionary highway 
and transit funds to fight congestion. It gives priority to 
projects that combine various road pricing, transit and 
technology solutions, and we are currently conducting another 
nationwide competition and will be announcing the cities that 
could benefit from this competition very soon.
    To further promote innovation, the President's budget makes 
$175 million in ISTEA and TEA-21 inactive earmarks available 
for innovative programs to fight congestion in metropolitan 
areas and along major highway corridors. These projects will 
help us find a new way forward as we approach the 
reauthorization of our surface transportation programs in 2009.
    Fiscal Year 2009 is the final year of the current surface 
transportation authorization, as we all know, called ``SAFETEA-
LU.'' The President's budget completes a six-year, $286.4 
billion investment by providing $52 billion in 2009 for 
highway, highway safety and public transportation. To honor 
that commitment, even with anticipated shortfalls in the 
highway balances, the President is requesting temporary 
authority to allow what we call ``repayable advances'' between 
the two accounts in the trust fund. This flexibility will get 
us through the current authorization without any impact on 
transit funding in 2009.
    But as you have both mentioned, unreliable trust fund 
revenues are another sign that we need to move away from our 
reliance on the past systems, primarily gasoline taxes, and be 
open to new ways to finance our infrastructure in the future.
    It is increasingly clear that America's transportation 
systems are indeed at a crossroads. The President's budget 
builds on the exciting things that we are doing at the 
Department of Transportation to help us move forward with a new 
course, a course that delivers high levels of safety, takes 
advantage of modern technology and financing mechanisms, and 
mitigates congestion with efficient and reliable transportation 
systems.
    I thank you, Mr. Chairman, for the opportunity to appear 
before you today. I look forward to working with each of you 
and the transportation community to ensure that America 
continues to have the best transportation system in the world. 
Thank you.
    [The information follows:]

    [GRAPHIC] [TIFF OMITTED] T3749A.001
    
    [GRAPHIC] [TIFF OMITTED] T3749A.002
    
    [GRAPHIC] [TIFF OMITTED] T3749A.003
    
    [GRAPHIC] [TIFF OMITTED] T3749A.004
    
                         funding for safetea-lu


    Mr. Olver. Well, Madam Secretary, you have become quite 
good at holding that down to within a five-minute period.
    We will now move on to the questions, and as has been our 
usual procedure, the Chair and Ranking Member will each, in the 
first round, have 10 minutes, and then we will start five-
minute sequences with the Members, as many rounds as we get to 
here in the time that we have allotted for us.
    I probably, in my 10 minutes, will only get just about to 
the point of a question, so let me get going.
    Last year, at this time, we had very different projections 
before us about the status of the Highway Trust Fund and its 
solvency. If the SAFETEA-LU funding guarantees were honored, 
the balance in the highway account for the Highway Trust Fund 
would drop to around a negative $700 million by the end of 
2009, according to OMB.
    A similar projection by the Congressional Budget Office 
showed that honoring SAFETEA-LU would drive the highway account 
into the red, a negative $3.6 billion--both projections 
negative, but CBO, dramatically more negative.
    Since that time, several things have changed. The enacted 
funding level for the highway program for Fiscal Year 2008 was 
actually $1 billion higher than those SAFETEA-LU guarantees. 
That was a move by the Committee to address the concerns over 
the aging infrastructure, in light of the collapse of the I-35 
bridge in Minnesota.
    We also spent a little more in Fiscal Year 2007 than was 
projected, and making matters worse, current highway account 
estimates made by both OMB and CBO for Fiscal Years 2008 and 
2009 are lower than the estimates that we were using a year 
ago.
    All of this points to a greater deficit in the highway 
account, yet despite those trends, CBO shows the highway 
account balance two and a half billion dollars less negative by 
the end of 2009 than they had projected last year that it would 
be, and OMB, conversely, projects a deficit which is $2.3 
billion more negative by the end of 2009 than what OMB was 
projecting a year ago. If you followed that reasoning, they 
were, last time, projecting $700 million negative, and now they 
are up to a little over $3 billion negative.
    So although the roles are reversed, we still have a $2 
billion difference from those estimates, and, Madam Secretary, 
I wonder if you could identify for us some of the underlying 
assumptions in the President's budget and CBO projections, if 
you are familiar with those, that have led to this $2 billion 
difference.
    Secretary Peters. Mr. Chairman, I would be pleased to 
answer that, and I will also ask our assistant secretary for 
budget and programs, our CFO, Phyllis Scheinberg, to talk about 
some of the factors that are affecting this as well.
    As you indicated, the Administration's latest estimate for 
the Highway Account of the Highway Trust Fund predicts a 
shortfall of $3.2 billion in Fiscal Year 2009. Mid-session 
estimates, as indicated, released in August of 2007, predicted 
a $3.8 billion shortfall, a slight improvement in the Highway 
Account of the trust fund's long-term viability.
    This improvement is based primarily on Fiscal Year 2007 
actual receipts being slightly higher than were projected at 
mid-term--they are better by $700 million--and Fiscal Year 2007 
actual outlays being a little bit lower than had been 
projected. So the income came in a little higher, and the 
outlays came in a little lower. That constitutes some of the 
reason for movement.
    As you indicated, Mr. Chairman, projections are showing 
decreasing receipts for both Fiscal Year 2008 and Fiscal Year 
2009, so we remain concerned about what the balance of these 
accounts would be.
    Now, some ask, why is there a difference between CBO's 
estimates and OMB's estimates for the trust fund? The 
Congressional Budget Office projects $1.1 billion shortfall in 
the Highway Account in Fiscal Year 2009. We have comparable 
estimates, for the most part, but some of the differences are 
technical assumptions that are used to support the 
calculations.
    For example, OMB takes what I would call a more prudent 
approach to the outlays. They assume that all valid obligations 
that are currently on the books will begin spending during the 
Fiscal Year 2009 budget year, and, additionally, OMB reflects 
faster spending of the earmarked funds.
    On the other hand, CBO reviews the historical outlay 
streams, which indicate that earmarked funds, especially, do 
not always begin to spend out in the first year and do not 
spend out as rapidly as the other funds do.
    So this apparent contradiction, I think, underscores the 
fact that we need to talk about, with respect to the current 
highway programs, the fact that earmarks and special-interest 
programs spend out at a slower rate and especially at a time 
when state and local governments need all of the money they can 
get their hands on. To have the slower spending does become 
problematic, but it also affects the balance in the Trust Fund, 
Mr. Chairman.
    Mr. Olver. Madam Secretary, did my staff tell you that I 
was going to ask that question?
    Secretary Peters. No, sir, but my Assistant Secretary 
thought you might.
    Mr. Olver. Okay. All right. Well, I will have to study the 
answer. I am usually fairly good at numbers.
    Secretary Peters. It is a moving target.


                     CORPORATE AVERAGE FUEL ECONOMY


    Mr. Olver. Okay. Thank you. I am going to pass on to my 
Ranking Member, Mr. Knollenberg.
    Mr. Knollenberg. Thank you, Mr. Chairman. In the 2007 
Energy Bill, there is a requirement that new cars and light 
trucks, and I know you are familiar with this, in the 2020 
model year, must achieve a combined fuel economy of at least 35 
miles per gallon. Please explain, if you would, NHTSA's role in 
ensuring that the auto industry meets this standard and the 
associated activity. You can be brief in that statement, if you 
will.
    Secretary Peters. Mr. Chairman and Mr. Knollenberg, I 
absolutely will be brief. Under the new law, the Energy Act, 
NHTSA has the authority and the responsibility to issue fuel 
economy regulations for the model years 2011 through 2019. In 
fact, we are in the process right now of writing regulations 
and hope to, in the very near future, get those out for 
comment.
    Mr. Knollenberg. Will NHTSA's research or testing programs 
be able to coordinate with DOE and the EPA as the new vehicle 
technologies are developed to implement these higher fuel 
economy standards? Is that going to be possible?
    Secretary Peters. Yes, it is, sir. We certainly will confer 
with EPA and with DOE, and especially as new methods of fueling 
automobiles come online. But we felt it was important, and 
certainly the President felt it was important, for one agency, 
one entity, to have the responsibility for writing the rule and 
then conferring with the others. So that is what we are doing.


                           MOTORCYCLE SAFETY


    Mr. Knollenberg. I am thinking of both the plug-in hybrids 
and also the new generation of diesel-fuel vehicles, and there 
are many of those that are widely used in Europe, and, in 2009, 
we will have an opportunity to get more of those vehicles in 
play here, too.
    Motorcycle fatalities--you know something about this, being 
a motorcyclist yourself--have increased for the ninth year in a 
row. What is NHTSA doing to reduce the number of crashes 
involving motorcycles?
    Secretary Peters. Mr. Knollenberg, you are right. I know 
something about this. I have crashed a motorcycle myself and, 
fortunately, had a helmet on the day I did, so I did not 
sustain very serious injury. But I am a bit emblematic of what 
we are seeing in motorcycling.
    We have seen a substantial increase in the number of 
motorcycle injuries and deaths, and it is disproportionate, 
even to the number of increased riders. Some people say it is 
because more people are riding today, and that is not entirely 
the case. The proportion is going up substantially. In fact, in 
my age group, and I will just tell you that I am eligible for 
AARP, there is a 400-percent increase in motorcycle crashes.
    We are taking the $7 million that SAFETEA-LU authorized for 
motorcycle safety grants, and using those funds for motorcycle 
safety training and awareness.
    We remain concerned because these fatalities and injuries 
have increased for 9 years in a row. When Norm Mineta was 
Secretary of Transportation we set a goal of having a fatality 
rate of 1.0 fatalities per 100 million vehicle-miles traveled. 
We have not met that but we have made some progress. If we were 
to segregate out motorcyclists from passenger automobiles, we 
would achieve that rate by next year. That is the significant 
impact that motorcycle crashes are having on the overall 
fatality rate.
    Mr. Knollenberg. You have more motorcycles, more riders, 
and more accidents, but not necessarily beyond, if you would 
progress to how many more motorcycles are on the road today 
than, say, 10 years ago?
    Secretary Peters. I will get that number back to you, Mr. 
Knollenberg. I do not have that right in front of me. But the 
crashes and fatalities are disproportionate to the increase.
    [The information follows:]

    The number of registered motorcycles in 1996 was 3,871,599. This 
compares to 6,686,147 registered motorcycles in 2006, an increase of 73 
percent over this ten-year period.
    The fatality rate for motorcyles in 1996 was 55.82 per 100,000 
registrations. This compares to 71.94 in 2006, an increase of 29 
percent over this ten-year period.

    Mr. Knollenberg. They are.
    Secretary Peters. That is the real concern.

                           CHILD SAFETY SEATS

    Mr. Knollenberg. That is the answer that I want.
    I see that you released a new campaign on child safety 
seats as well, and DOT is requesting some $7 million for the 
Child Safety Seat Incentive Grants. How will these grants 
actually be used to increase safety for children?
    Secretary Peters. That is a very good question, sir. We are 
allocating the grants to the states. In fact, just a couple of 
weeks ago we rolled out a new star rating system for car seats 
based on the ease of putting these seats in.
    One of the things we found with car seats, unfortunately, 
is that they sometimes are improperly installed. If they are 
improperly installed, they do not provide the same protection 
to the child that they would otherwise.
    The other thing we are doing is getting out information 
that children need to be in either a booster seat or a child 
safety seat and in the back seat of the car until they are, I 
believe, 65 pounds and four-foot-nine. Sometimes parents take 
children out of those seats earlier than they should, thinking 
that they do not need to be there. The unfortunate fact is that 
seatbelts do not properly restrain a child that is under four-
foot-nine or under 65 pounds. So we are encouraging parents to 
look at the star ratings on car seats so that they know what is 
easy to put in. How do you know if it is put in right or not?
    I will tell you that, as a grandmother, my son-in-law is 
the average person who installs car safety seats because he 
does a very good job of it, but it is not easy to do.
    So we are providing some education on this, but most of the 
money will go out to the states in grants.

  NATIONAL SURFACE TRANSPORTATION POLICY AND REVENUE STUDY COMMISSION

    Mr. Knollenberg. Let me go on to another area: surface 
transportation policy and the revenue study performed by the 
Commission.
    I know that you are strongly opposed to the Commission's 
recommendation to greatly increase the gas tax at the federal 
and also at the state levels, and I certainly agree that a tax 
of this magnitude will have significant unforeseen 
circumstances. But so might electronic tolling, and, as you 
know, the concept has not been universally supported.
    Let me ask you two quick questions, just to get your 
reaction and find out if the Department has really analyzed the 
potential outcomes of both proposed solutions.
    Would it not be fair to say that electronic tolling, for 
the first time, sets up a class system that unfairly advantages 
higher-income drivers and eliminates what has, up to now, been 
thought of as an equal-access infrastructure in this country?
    Then the second question: Has the Department analyzed the 
implications of such a system on lower-income drivers?
    Secretary Peters. Sir, I will answer your second question 
first. We have not analyzed the impact. In fact, we are in the 
process of identifying a study to do that. The data that we 
have today indicates that, where pricing is used, we generally 
have very high approval rates for people in the lower-income 
ranks to those pricing systems, especially if it is a toll lane 
or a high-occupancy toll HOT lane, as opposed to a facility.
    We find that they use the facility occasionally, not every 
day but on occasion. The other factor is that people in the 
lower-income ranks often live farther away from their jobs, so 
the gas tax, which is regressive, has a greater negative impact 
on them. Tolling and pricing, however, sometimes give them 
options.
    An example I have often used, and perhaps I have even 
mentioned to you before, is that people who are in the lower-
income ranks more often have children in day care as opposed to 
an au pair, a nanny, or someone who watches their children at 
home. If they are late picking that child up, there are very 
significant late fees--I call it an impound fee for getting 
your own child back--at the end of the day. They are very 
expensive.
    If a lower-income driver had the occasion to use a HOT lane 
so they could pick up their child on time and not have to pay 
that late fee, then that would generally be cost effective for 
them to do that. But, again, we are looking at studies of this. 
In three different surveys, and I will get you the specific 
data, well over 50 percent--in some cases, it is as high as 70 
percent--of people in the lower income ranks approve the use of 
toll lanes.

                  ECONOMIC IMPACT OF THE GASOLINE TAX

    Mr. Knollenberg. I am going to go in another direction now. 
I would like to get into this area of, would it not be fair to 
state that, other than a tax on food and medicine, there is no 
more regressive and hurtful tax on low-income families than a 
huge increase in the gas tax.
    Has the Department looked into this deeply, explored the 
implications of this tax on lower-income drivers and, of 
course, small business? I see nothing about this in articles, 
newspapers, or magazines, and until the report was made 
available by the Commission, I do not think it was even public.
    If you would just respond with your view as to the 
implications of this tax and how it would impact the lower-
income grouping of people and also small business.
    Secretary Peters. I will do so, Mr. Knollenberg. It does 
have a very high, disproportionate effect on lower-income 
families to pay significantly higher fuel costs. In fact, 
transportation cost, as a percent of budgets for lower-income 
individuals and families, is a higher percentage than it is for 
families as they move up through the income ranks. So it has a 
very significant effect on those families, especially as we 
have seen fuel costs escalate recently.
    I have talked anecdotally to people about the impact, but 
certainly it does have a much higher effect on lower-income 
people, and especially on small businesses who depend on having 
their vehicles out on the road to make deliveries or service 
calls. This is another area, sir, where there is not a lot of 
documentation, but we are collecting information and will be 
doing further analysis.

                      ALTERNATIVES TO TOLLING FEES

    Mr. Knollenberg. Just a final question. A lot of people may 
conclude that both mechanisms are inappropriate. Were there any 
other options you considered or had discussions about that 
might help solve the congestion problem but would not involve a 
tax in the form of tolling or a direct surcharge?
    Secretary Peters. I will give you a bit of an answer that 
uses technology, Mr. Knollenberg. If, for example, you are 
using electronic tolling that is collected via a transponder, 
it would be possible for a jurisdiction to subsidize 
transportation costs for lower-income individuals, that is 
``open-road tolling,'' to allow people of a certain income to 
be subsidized. Their transponder would simply read ``paid,'' or 
they would pay at a significantly lower rate than others would. 
That is one of the ways that is helpful.
    Another proposal, that Mayor Bloomberg has offered up in 
New York City to price entry into lower Manhattan similar to 
what is done in London today. The advantage of what he has 
proposed is that all of the money that he would collect from 
the system, which would substantially reduce congestion and 
improve air quality in lower Manhattan, would then be used to 
build, expand, and improve the transit system, thereby offering 
more opportunities for people who do not drive into the city.
    I spoke to one councilwoman there, and she said that less 
than five percent of the population of her district drives into 
the city. The rest of them use transit, and she, in fact, is 
very supportive of what the mayor has proposed because it would 
put significant additional investment into improving transit 
systems.
    Mr. Knollenberg. Thank you, Madam Secretary, and I will 
save another question for the next round on that same subject.
    Mr. Olver. Thank you, Mr. Knollenberg. Mr. Rodriguez?

                          TRANSIT SMALL STARTS

    Mr. Rodriguez. Madam Secretary, let me ask you. Congress 
passed the Small Starts program for the express purpose, at 
least, it is my understanding, to try to establish a quick path 
for securing federal funds, and the proposed rules of the 
Department basically require the limited projects to go through 
a variety of multiyear, multimillion-dollar review processes, 
and yet the intent was to try to make it as simple as possible. 
It seems like the Department made it extremely complex and very 
bureaucratic.
    So why was the agency so, in terms of ignoring the 
congressional intent, to create this fast track to speed up 
federal investment in the communities?
    Secretary Peters. Congressman, you are correct that it took 
too long, and the process was very complex for the Small Starts 
program. Part of that had to do with the rule-making process 
that was undertaken and the very long time it took. But that is 
not a good excuse.
    I will tell you that when I became Secretary, about a year 
and a half ago, I met with Administrator Jim Simpson, who had 
recently become the Administrator of the Federal Transit 
Administration. We agreed that we needed to do something about 
that.
    I am very pleased to report to you today that we have 
proposals ready that would expend the full $200 million for 
small starts that the Chairman spoke about earlier today. We 
think that these projects have a tremendous ability to provide 
public transportation in areas where heavy rail or heavier 
systems are not appropriate.
    Mr. Rodriguez. What do you estimate in terms of how the 
process is going to be, based on your recommendations now 
versus what we have?
    Secretary Peters. Congressman Rodriguez, I will get back to 
you on that. I do not have a timeframe, and I do not want to 
speak inaccurately, so I will get back to you.
    [The information follows:]

    FTA has significantly reduced the effort required to produce 
information for FTA by project sponsors of Small Starts projects 
compared to that for New Starts projects. Below are specific examples:
     Small Starts projects that do not significantly increase 
system-wide operating costs do not require a financial plan, as do New 
Starts projects.
     Small Starts projects have two major project approval 
milestones: Project Development and Project Construction Grant 
Agreement. New Starts projects have three major approval milestones: 
Preliminary Engineering, Final Design, and Full Funding Grant 
Agreement.
     Small Starts projects use opening year travel forecasts 
and are permitted to use simplified travel forecasting methods. New 
Starts projects must use regional travel forecasting models and prepare 
opening year as well as 2030 forecasts.
     Small Starts projects are required to submit far less 
information about their transit-supportive land use and plans and 
policies compared to New Starts projects.
     Overall, because of the reduced level of paperwork and 
analysis required, FTA has been able to significantly reduce the 
timeframe for Small Starts Project Development approvals compared to 
New Starts.
     For Small Starts projects, the timeframe between Project 
Development approval to obtaining an FTA funding recommendation has 
ranged from to 6 to 9 months. This compares to a 2 to 4 year timeframe 
typically required for a New Starts project between Preliminary 
Engineering approval and receipt of a Full Funding Grant Agreement.

    Mr. Rodriguez. We have gotten complaints from not only my 
area and background but throughout that people also made a 
serious investment in terms of trying to go after some of the 
application programs, and they spent a lot of hours working on 
very expensive programs in terms of trying to reach out for the 
2007 funding in terms of going and seeking out some of those. 
Then only a very few number were actually granted.
    So all of these other people that submitted applications, 
it was, like, for nothing, except that they had to invest a 
great deal of resources throughout the nation to try to seek 
this, and then, like, an arbitrary decision was made that that 
was not going to get funded.
    Secretary Peters. Congressman Rodriguez, I will ask the 
Assistant Secretary to tell you how many Small Starts are 
included in the President's budget with the $200 million this 
year.
    I will tell you what I believe is absolutely accurate, and 
I will confirm this for you: every project that is ready to 
move forward is funded in the President's budget.
    Mr. Rodriguez. And there was some implication that there 
was some favoritism played also.
    Secretary Peters. Sir, I did not know that. I would be very 
happy to hear more about that and look into it.
    Ms. Scheinberg. Congressman, there are 13 Small Start 
projects in the President's 2009 budget. This is fully funding 
the authorized level of $200 million. This is the first time we 
have had a full complement of projects ready to go.
    Part of the problem in the past was that the projects were 
not ready. I appreciate what you are saying. We are talking 
about a brand-new program. This program did not exist before 
2007, and, in the process of promulgating the regulations, we 
went out to the communities to find out what kinds of projects 
people would be looking for. So there was some give and take 
going on. I think probably what you are referring to is some 
startup issues in a new program.
    The Congress funded this program at a reduced level last 
year, and we would encourage the Congress to fully fund it in 
the 2009 budget.
    Mr. Rodriguez. You are looking at an additional 13 or 13 
total?
    Ms. Scheinberg. Thirteen new projects in 2009.

                  OUTLAY RATES FOR DESIGNATED PROJECTS

    Mr. Rodriguez. Let me ask you, Madam Secretary, you made 
some comment as you were giving your response, and you said 
that earmarks slow down the spending. An earmark tells you 
directly what to do with it. You just send a check. It should 
not slow you down at all.
    Secretary Peters. Congressman, let me explain the basis of 
my remark. As you and I discussed earlier today, I spent 17 
years at the Arizona Department of Transportation administering 
programs like this.
    If the earmarked project is not yet on the state 
transportation improvement plan, the TIP, then it has to go 
through the process to get in that plan to be eligible. Of 
course, environmental and planning studies most often have to 
be done, too.
    Mr. Rodriguez. I understand, but a lot of times most of the 
projects that are funded are projects that have been out there 
for some time and are things that have been eyesores. So that 
might apply to a very small percentage of the earmarks, not all 
of them. That would be my stereotype, that most earmarks are 
already projects that are serious and that need to be taken 
care of.
    Secretary Peters. Congressman, you are exactly right. If 
they have already gone through the TIP process, then they do 
spend as rapidly or more rapidly than the others. 
Unfortunately, that is not always the case, and that is why, as 
a group, earmarks do spend out a little bit slower than other 
projects do.
    Mr. Rodriguez. Thank you.
    Mr. Olver. Thank you. Mr. Wolf?

                   DULLES CORRIDOR METRORAIL PROJECT

    Mr. Wolf. Thank you, Mr. Chairman, and welcome, Madam 
Secretary and Assistant Secretary Scheinberg. I appreciate your 
being here.
    I want to just comment and talk about a transportation 
project which is of critical importance to my congressional 
district, to Northern Virginia, to the nation's capital, and, 
quite frankly, to the entire country.
    I appreciate your being here today, and I want to publicly 
thank you for your assistance regarding the Dulles Corridor 
Metrorail Project. We are indebted for your willingness to have 
a pause where we can come together and kind of deal with this 
and work this out. I also want to urge Members, if you have not 
seen the article in USA Today in yesterday's paper, you ought 
to see it. It is a pretty impressive article. I do not know if 
any of the other Members have read it. We will send a copy 
around to the Members of the staff. I was impressed with the 
article, and I urge people to read it.
    I know you understand the importance of bringing needed 
transit to the Dulles Corridor. This region has the second-
worst traffic congestion in the country. The region has been 
talking about for decades--I think there have been five 
congressional studies--Senator Cannon had the first one--with 
regard to connecting the nation's capital to the international 
airport, which serves as America's gateway.
    Bold ideas often take bold leadership. This region faced a 
similar decision over 20 years ago when Congress considered the 
future of Dulles and National Airport, the only two federally 
operated airports in the nation. They were in the pits. Decay 
was at Reagan National. Dulles had 2.1 million passengers. That 
is all. The first bill I introduced when I got elected, and I 
got criticized for it--I got criticized by this body because 
they were all worried about losing their congressional parking 
spots at National and Dulles Airports.
    My first bill was to introduce a bill to transfer Dulles 
Airport over. We went through a battle. There were some Members 
of this Committee and other committees who sent ``Dear 
Colleague'' letters criticizing me and saying, if this 
happened, the end of the world was coming.
    Fortunately, Secretary Dole had the vision, and you fly out 
of one or two of those airports--I do not know which one, but 
Reagan National is a modern airport, clean, efficient, and 
Dulles now has, and I just got the figures today--National had 
the best year ever, 18.7 million passengers, and Dulles had the 
second-best year, 24.7 million passengers.
    Today, I was at the National Prayer Breakfast. Four 
thousand people in the room; most of them came through one of 
those two airports, and I would wager and think, although I do 
not bet--I was the author of the National Commission on 
Gambling, and, quite frankly, there is too much gambling, and 
both political parties have taken the gambling money, a plague 
on both of them.
    I will tell you, though, that that airport has made all the 
difference in the world, and most of the people in that room 
probably came through Dulles.
    Something needs to change. Some said, ``Well, it won't 
happen if we do this,'' and, fortunately, Secretary Dole was 
willing to buck the Congress and buck everybody else, and we 
now have transferred those over.
    Today, the Metropolitan Airport Authority has transformed 
both Washington Dulles International Airport and Ronald Reagan 
Washington National into first-class facilities, and you know, 
obviously, because you fly into them.
    There is an opportunity today, as Secretary Dole did, to be 
bold, have the vision to understand the importance of this 
transportation project, and it is a transportation project. It 
is not a redevelopment project. It is a transportation project 
to move people from the airports and to move people that are 
living out in that corridor, not only for this region but for 
the nation.
    The original 103-mile Metro system is often called 
``America's Subway'' because it serves not only those who live 
in this region but the many visitors to the nation's capital 
who come from across America. Steny Hoyer and I, for years, 
used to work in this Committee when I was in the minority. We 
always tried to support Metro, and if we did not have Metro in 
this region, the traffic would be unbelievable.
    There is a vital need today to extend ``America's Subway'' 
so that it can continue to be the transportation link to 
America, and the federal government has a responsibility to be 
a partner in this project: federal employees evacuation. Those 
airports are owned by the federal government. They are not 
owned by anybody else. They are held by the airport authority 
to promote them, but the federal government ultimately owns 
them.
    To assure the continued success of a thriving asset, I am 
confident, as the project discussions continue, you will make 
sure we have a fair process free from outside influence, which 
may have a conflicting agenda. There are probably a couple of 
lobbyists out here. If we could infrared them, I would ask them 
to stand up and tell them, are they working for the public 
interest, or are they working for a private company?
    I watched in my area the Dulles Greenway. We had a public-
private partnership. This company, McCrory, bought it out, and 
now it is $4.80 to go 13 miles. I see somebody smiling. If you 
get on at Route 28 and go to the first exit, it is $4.80. 
Talking about a single parent, where are the lobbyists for the 
single parents? Is there, if you want to stand up, a lobbyist 
for the McCrory Company who wants to take this over?
    So I see all of these agendas, and I put this on paper so I 
will not get too far outside of the realm, but this should be 
in the public interest. This should be in the public interest, 
done on merit, honesty, integrity, truthfulness, and that is 
the way we want it approached. I am encouraged and grateful for 
your willingness to work with Governor Kaine, and the governor 
is really doing everything he can.
    We have asked the governor, and he has agreed, to bring in 
the best minds that there are, and he has agreed to do that, to 
come together, whereby we can hopefully get this thing moving. 
I believe this is a project which can be one that you can take 
pride, later on, as secretary of transportation.
    The last issue: When I was chairman here, I fought hard, 
and I might say, I also abolished earmarks--that only lasted 
for about one year. The fact is, when I became chairman, my 
governor called me up and said, Why are you abolishing earmarks 
now when you have just taken over as chairman? That only lasted 
for one year.
    Another thing we urged to do was to reduce the federal 
match from 80/20 down to 50/50. I thought that was a pretty 
bold move. The match now for this project, for the first 
segment, is 70 local and 30 federal, and if you do the entire 
process, it is roughly 85 local and 15 federal.
    So I hope, and I appreciate your willingness to work 
whereby we can do this so moms and dads and people coming into 
that airport have this. Had Secretary Dole not done this, I do 
not know where those airports would have been, and I think the 
same type of vision and boldness, if we can come together to 
bring the best minds, honesty, integrity--we are not looking to 
cook any books to change anything--I think we can build this so 
we can all be proud of it.
    That is really not a question, and I think my time is 
probably up. I have been working on this for years, and this 
Committee has funded this, if my memory serves me, at about 
$250 million. We have got to build it. Thank you very, very 
much.
    Secretary Peters. Congressman, thank you for your 
leadership. I do appreciate that. We received a very 
substantive response from Governor Kaine and the project 
sponsors, and we are going through that in a great deal of 
detail. I commit to you and this Committee that it will 
continue to have my personal attention.
    Mr. Wolf. Thank you very much.
    Mr. Olver. Mr. Wolf, I would not have dared to stop you in 
that oration, and for you, Madam Secretary, I think that Mr. 
Wolf has offered you a fine legacy there, identified a fine 
legacy for you. So thank you very much for your returned 
comment, not in the form, by the way, of a rebuttal of any sort 
at all. Thank you. Mr. Price.

                PUBLIC-PRIVATE PARTNERSHIP PILOT PROGRAM

    Mr. Price. Thank you, Mr. Chairman. Let me add my welcome. 
Madam Secretary, we appreciate your presence here today and 
your testimony.
    I am going to raise one matter very briefly and ask you to 
respond for the record. It has to do, as you may recall, with a 
meeting that you and I had last April and a letter that we sent 
you as a follow-up to that, to which, unfortunately, we have 
not had a reply, and I hope we can get one because it has to do 
with this innovative approach that the FTA has proposed for 
transit funding. It has to do with the public-private 
partnership pilot program, the so-called ``Penta-P program.''
    I have expressed for some time a concern that the FTA's 
guidelines appear to limit the potential benefits of public-
private transit partnerships to innovative procurement, where 
it seems to me the more significant financial benefit may be in 
finding private sector funding to support transit new starts 
and to have innovative financing arrangements to facilitate the 
completion of transit projects that might otherwise be held up.
    So I am still interested in that. There is a local angle on 
this, as you may recall, but it is not just a local concern. It 
is a concern for the direction of this program. So I will 
submit for the record a more pointed question, which I hope you 
can provide us with a response for.
    Secretary Peters. Congressman, I will do that, and my 
apologies to you if we have not responded to your earlier 
letter. We will look into that immediately.

  NATIONAL SURFACE TRANSPORTATION POLICY AND REVENUE STUDY COMMISSION

    Mr. Price. Fine. Thank you. I want to back off from 
particular matters of this sort and look at the overall funding 
picture, if I might. You are, of course, Chair of the National 
Surface Transportation Policy and Revenue Study Commission. I 
congratulate you for that work, although you dissented from 
some of the major conclusions of this Commission that we have 
just been studying.
    You are well aware that the final report makes proposals 
for improving the nation's transportation system that, in the 
context of today's funding, appear very ambitious, indeed. The 
Commission reported that, as a nation, the U.S. should be 
spending between $224 billion to $340 billion per year for the 
next 50 years on its surface transportation system from all 
levels of government, not just the federal government, but the 
Commission also recommends a continuing strong role for the 
federal government. So a good portion of that would be federal 
funding.
    When we turn to this year's budget request from the 
administration, we are talking, I believe, about just over $50 
billion for surface transportation and $68 billion for your 
entire Department. So that pales in comparison to what the 
Commission suggested, and, in fact, it falls short of what we 
thought we had coming by virtue of the authorized levels in 
SAFETEA-LU.
    In addition, as you well know, the Highway Trust Fund is 
expected to be insolvent by Fiscal Year 2009.
    So there are funding gaps. There are major funding gaps in 
terms of what the nation's transportation experts have said are 
needed in the way of dollars.
    I think, if the pie is not expanding in a way that lets us 
take care of some of these challenges, we are going to not only 
fall short overall, but we are also going to exacerbate the 
existing problems that we have that we are all too familiar 
with.
    I come from a donor state in terms of highway funding, and 
I know very well that, under these funding circumstances, we 
are never going to solve that donor state inequity.
    I am in a community that wants to be forward looking and 
get into mass transit, but I know very well that we are going 
to exacerbate the conflict between highway funding and transit 
funding when we really should be doing both, unless we can get 
a better overall funding level.
    So I want to ask you about that in general, and I also want 
to ask you, of course, about the Commission's proposal as to 
how this might be paid for. The Commission recommended 
increasing the federal gas tax by between seven and 22 cents 
over a period of five years. I know you disagreed with that, as 
well as with the overall recommendations as to the federal 
role. But any way you look at it, with the trust fund running 
out of money, there are going to have to be some new revenue 
sources, and if not a gas tax, which you have opposed, what do 
you suggest in terms of the revenue to fund the transit needs 
we know we are going to have, let alone those that have been 
projected by the Commission?
    Secretary Peters. Congressman Price, I would be pleased to 
answer, and, Mr. Chairman, I will be as brief as possible in 
answering the question.
    There were many things in the Commission's report, Mr. 
Price, that I did agree with. We need to have a higher level of 
investment. We need to make sure that we are paying attention, 
in a multimodal sense, to what our transportation needs are in 
this nation in the future. Freight transportation is very 
important, especially as we compete in a global marketplace.
    Where I disagreed with the other members of the Commission, 
as did two others--so three of us filed a minority report--is 
the almost predominant dependence on the gas tax for the next 
18 years, continuing through 2025. I also disagreed on having 
substantial increases in that gas tax, between five and seven 
cents a year over a five-year period, which according to the 
recommendation, would require state and local governments to 
raise their gas taxes as well in a proportionate amount.
    Right now, the Federal funding comprises about 40 percent 
of overall transportation funding, so the nine members of the 
majority of the Commission suggested that the additional 40 
cents contribute to the 40-percent federal share. But there 
would also be corollary increases on a state and local level.
    My basic disagreement with increasing the fuel tax has to 
do with several things. First of all, I think it is politically 
untenable, when we are paying the high prices that we are today 
for fuel, and every indication is that it will go further. But 
if that were my only concern, I would have supported the 
Commission's report and would have filed that objection.
    My real concern is that this body had a very ambitious 
energy package late last year. That package said that we want 
greater fuel efficiency, and we are in the process of making 
sure that cars will be significantly more fuel efficient in the 
future. That is good for our economy, and that is good for our 
environment.
    We want alternative and renewable fuels, preferably fuels 
like fuel cells or other things that will not have a negative 
impact on the environment at all and will not require us to be 
dependent on foreign nations that do not have our best 
interests in mind for oil.
    So I see us increasingly moving away from fossil-based 
fuels, and that has been the predominant method of funding 
transportation since President Eisenhower proposed the 
interstate highway system.
    Sir, I have spent well over 20 years of my life in the 
transportation field, and if I honestly thought that the gas 
tax were the right method into the future, I would support 
that. But I do not. I think we have to diversify our funding 
for surface transportation. I think we have to have funding 
that can be used on the best mode, whatever the best mode is, 
to provide the transportation. The funding should be fungible 
and be able to be spent on that.
    I believe that the Federal role should reflect only those 
things that are truly in the Federal interest. When the federal 
role is broader than what perhaps is the Federal interest, too 
much opportunity comes to spend money in other places. I think 
there is no better evidence of that than the fact that, today, 
in the highway and transit programs, we have 108 different 
programs that slice and dice up this money that donor states 
like yours and other states remit, to Washington. And it comes 
back to them with many strings attached about how and where 
they can spend it, instead of allowing state and local 
governments to make that determination.
    I feel very strongly that we should collect revenues at the 
closest possible level to those who have authority over 
spending them so that the public has recourse, and, in most 
cases, that would be state and local officials.
    But in conclusion, I do think there is an important Federal 
role. I think the Federal Government does need to provide 
leadership. I just do not believe that the Federal Government 
has to manage every one of these programs, and I truly do not 
believe, and the Commission agreed with this, that we need 108 
programs. Thank you.
    Mr. Olver. I suspect that Mr. Price will have some 
followups in the next round. Mr. Walsh?

                   NON-DEFENSE DISCRETIONARY SPENDING

    Mr. Walsh. Thank you, Mr. Chairman. Thank you, Secretary 
Peters, for your comments today and for your service to the 
country and also to your deputy.
    I just want to make a couple of general comments on what I 
have seen in the last number of years, as a subcommittee chair 
and now as a ranking member. It seems like all of the savings 
that this administration expects us to find are in nondefense 
discretionary spending. There does not seem to be any real 
pressure on entitlements. There does not seem to be any real 
pressure on defense, homeland security discretionary spending. 
It all seems to come in the nondefense discretionary portion of 
the budget.
    In fact, in this bill, based on my staff analysis, we will 
be spending $6 billion less than last year on discretionary 
spending for our transportation in the country. At the same 
time--I am not sure if this number is right, but it is 
somewhere in the neighborhood of 22 to $23 billion on homeland 
security. If that is true, and I am not sure of my numbers, we 
are spending just three times as much on our national 
transportation system as we are on homeland security. It is an 
astounding amount of money, considering the fact that there was 
no Homeland Security Department six years ago.
    I saw this happen when I had the VA/HUD Subcommittee when 
we had EPA. Stag grants having slashed. State revolving fund 
has been dramatically reduced, and the population increases the 
pressures on our waters--lakes, river systems, drinking water 
systems--get heavier and heavier.
    I also had NASA in that budget. The President came out in 
favor of a mission to Mars with all of these goals and rallying 
around NASA, and then there was no money to follow. You cannot 
get to Mars without a few bucks.
    So I just really worry about where we are going with our 
transportation infrastructure. We saw the bridge collapse. 
There is a number of other bridges similar to that in 
construction all across the country that are in very bad 
condition, and yet we are spending actually a dramatically 
smaller amount of discretionary funds for our infrastructure. 
As I said, it is not just transportation; it is waste water, it 
is drinking water. In fact, it is NASA's infrastructure, too, 
that is 1960's construction with no new money going into any of 
those areas to speak of.

                           RUNWAY INCURSIONS

    Let me just specifically, and I am not sure if you are 
prepared to answer this--you can answer this one by responding 
back in writing, if you would. A recent study was done 
regarding runway incursions at airports. We all know about the 
dramatic increase in air traffic since September 11, 2001. It 
has gone up dramatically. It has been estimated that there was 
one runway incursion per day, each day, between the years 2001 
and 2004. We now have technology that can help us to manage 
that and dramatically reduce the potential for accidents and 
loss of life, and they are estimating that hundreds of people 
could be killed in those accidents if we do not do anything 
about it.
    Last year, we spent about $40 million on this ASDEX ground 
transportation management system. This year, we are going to 
spend less. We have got 200-plus airports that need this type 
of coverage, and yet we are only somewhere near 30, 35 airports 
in the country that now have it. Some of those are being 
upgraded. The others have no systems to protect against this.
    This is a serious problem, and yet, again, we are reducing 
the amount of money we are putting into this very dramatic 
potential problem. So if you could comment on the ASDEX system 
implementation and why you are reducing the amount of money for 
it.
    Secretary Peters. Congressman Walsh, unless I am misreading 
my notes from our budget, we actually are putting significantly 
more money into the ADS-B program and actually into next 
generation technologies overall.
    This year our budget request includes $688 million for 
these NextGen technologies, and, as you indicated, ADS-B is one 
of the best technologies helping us on the incursion issue.
    I have been meeting, on a regular basis, with our acting 
administrator, Bobby Sturgell, and, in fact, two days ago, he 
and I discussed a very aggressive plan, in the near term, mid 
term, and longer term, to take action to prevent and eliminate 
potential runway incursions. We are concerned about them. There 
are more planes flying today, and there is more traffic. We are 
still using a very outdated, radar-based technology in the 
short term until NextGen is fully on board. But, again, this 
has our attention.
    We recognize the potential that technology brings to us. In 
addition to the $330 billion for ADS-B, we are also including 
$400 million for another surveillance technology, $29 million 
for data communications, including network-enabled weather that 
will let pilots have access to weather right in the cockpit, 
and another $40 million on trajectory-based operations.
    I will get you a more substantive breakdown of this, but 
just to wrap up here, our funding this year has increased by 
over $470 million for this type of technology so that we can 
move our airspace operations into the future.
    [The information follows:]
    In clarification, the FAA's FY 2009 request for ASDE-X reflects the 
approved September 2005 program baseline for deployment to 35 airports. 
It also supports the FAA's commitment to accelerate system deployment 
to 2010 instead of 2011. ASDE-X is currently fully operational at 12 
airports.
    Much of the deployment activity and the funding needs to occur in 
FY 2008. Because it takes three years for an ASDE-X system to become 
fully operational, funding has already been obligated for the system 
hardware, planned software, and system enhancements for all 35 sites. 
The FY 2009 request is sufficient to support the activities in the 
approved ASDE-X project schedule.
    In the approved business case, the FAA determined that the maximum 
benefit would be achieved by deploying ASDE-X to airports with larger 
traffic counts and/or more complex operations, e.g. airports that use 
the same runway(s) for arrivals and departures. The ASDE-X system also 
requires certain infrastructure. For instance, the system depends on 
flight data from an automation system (ARTS IIE or STARS) in the 
Terminal Radar Approach Control (TRACON) and incoming flight data from 
airport surveillance radar (ASR-9 or ASR-11). The 35 airports 
identified in the current ASDE-X business case met the business case 
criteria and had the required infrastructure.
    Since very few, if any, additional airports would meet the business 
case criteria for an ASDE-X system, the FAA is evaluating low-cost 
ground surveillance (LCGS) systems for other airports. The FAA is in 
the process of preparing a business case for LCGS and testing 
prototypes in Spokane, Washington. FAA plans on expanding this test to 
more sites this year. To date, FAA has spent $4.5 million on this 
project and is assessing if it is an alternative safety measure for 
less busy airports not scheduled to receive the ASDE-X system.
    ASDE-X alone does not solve the entire runway incursion problem. 
FAA is deploying runway status lights (RWSL) which integrate airport 
lighting equipment with approach and surface surveillance systems to 
provide a visual signal to pilots indicating that it is unsafe to 
enter, cross, or begin takeoff on a runway. RWSL will be installed at 
21 ASDE-X airports, with two support systems located at Oklahoma City, 
OK. The Runway Status Light program has FY 2008 funding of $9.0 million 
and an FY 2009 request of $26.9 million.
    Additionally, the Runway Incursion Reduction Program (RIRP) is a 
contributor project of the Advanced Technology Development and 
Prototyping Program (ATDP). The RIRP has initiated activities to 
promote safety technologies. The program is funded at $8.0 million in 
FY 2008 and FAA is requesting $10.0 million in FY 2009 to promote 
runway safety technologies, reduce incursion, and reduce the risk of a 
runway collision

    If I may, sir, just briefly, in terms of our overall 
budget, the President has asked us to hold the line on 
nondefense discretionary spending and non-Homeland Security 
spending, and we certainly have done that. I think that with 
respect to the focus on homeland security and defense, there is 
no better evidence of the need to expend money there than the 
fact that this Nation has not endured another terrorist attack 
in the last seven years. The President has talked about 
entitlement programs and is greatly concerned about those, but 
he also, with us, put together the budget that we felt best met 
our nation's needs at this time.
    Mr. Price. One last comment. I think the point I was trying 
to make was as defense and other security discretionary funding 
becomes a larger and larger portion of our discretionary 
budget--it is much more than half now--we cannot find those 
savings in nondefense discretionary without dramatically 
affecting the infrastructure of the country.
    Secretary Peters. Thank you.
    Mr. Olver. Thank you. Ms. Roybal-Allard?

                     GRANTS TO MITIGATE CONGESTION

    Ms. Roybal-Allard. Secretary Peters, to qualify for a U.S. 
DOT Congestion Reduction Demonstration Grant, the Los Angeles 
County Metropolitan Transportation Authority has proposed 
converting high-occupancy vehicle lanes into high-occupancy 
toll lanes on sections of three of our local interstate 
highways.
    As you know, many of my colleagues are very concerned about 
what affect this and other proposals, such as charges per mile 
driven, will have on lower-income communities. In awarding 
congestion-reduction grants, to what degree does the Department 
take into consideration the impact a proposal would have on 
modest-income commuters and car-pooling programs, and how does 
the Department ensure that these new programs do not result in 
a pay-to-drive policy where only commuters with higher incomes 
are able to take longer road trips and use less-congested lanes 
than those of lesser means?
    Secretary Peters. Congresswoman, it is an important 
consideration, and certainly the L.A. area has put together a 
very ambitious proposal for converting high-occupancy vehicle 
lanes to high-occupancy toll lanes.
    We have studied surveys that have been done in several 
areas, and I will get the specific data to you, as I indicated 
to others on the Committee that I would:

    The Department of Transportation currently has reference to three 
formal studies:
     Orange County, California--Continuation Study to Evaluate 
the Impacts of the SR 91 Value-Priced Express Lanes: Final Report 
(December 2000), p 131. In 1999, over 50% in all income categories 
approve allowing Single-Occupancy Vehicles (SOVs) using HOV lane 
capacity for a fee. Among respondents with annual incomes less than 
$25,000, 51% approved. http://ceenve.calpoly.edu/sullivan/SR91/
final_rpt/FinalRep2000.pdf
     San Diego California--1-15 Managed Lanes Value Pricing 
Project Planning Study (Telephone Survey Report, February 2002, p. 25.) 
Overall support for ``FasTrak'' congestion pricing program was 66%. 
Support was 60% among those with annual incomes below $40,000. Support 
was 59% among those with incomes between $40,000 and $70,000. http://
www.sandag.org/services/fastrak/pdfs/2002_fastrak_public_outreach.pdf.
     Minneapolis, Minnesota--MNPass Evaluation Attitudinal 
Panel Survey, Final Report, August 2006, p.2. Overall support for 
allowing single drivers to use carpool lanes by paying a fee was 65% 
one year after MnPASS implementation (71% higher income, 61% middle 
income, and 64% lower income.) http://www.mnpass.org/pdfs/
mnpass_attitude-study.pdf
    It is important to note that relatively few HOT lane drivers are 
everyday users. Instead, most use the priced facility on an as-needed 
basis, which is typically a few days per month. Low income travelers, 
just like middle and upper income travelers, often have work, medical, 
family, and social appointments for which they must or want to be on 
time. High speed, reliable trip times allow them to keep their 
schedules, and they are willing to pay for that quality of travel. For 
example, in Minneapolis, there are close to:
     20,000+ total toll lane subscribers who have the 
electronic toll collection device needed to access and pay for the I-
394 priced lanes;
     3,500 of the total 20,000 subscribers who use the facility 
on any given day (but not the same 3,500 each day); and
     a couple hundred ``everyday users,'' i.e., the same 
individuals using the facilities 4-5 weekdays per week.

    Low-income respondents to these surveys overwhelmingly like 
systems where there is that type of conversion, and there are 
several reasons for that.
    One, it gives them an option to use when they need it. If 
they are going to be late picking up a child at day care, which 
we have talked about before, then they have the option of using 
the toll lanes. But it also lures other people off the lanes so 
they have less-congested conditions to deal with. I believe 
that the L.A. proposal is consistent with this. Car-pools, 
high-occupancy vehicles, and transit systems do not pay. In 
fact, bus rapid transit, for example works significantly better 
in a hot-lane configuration than it does in a regular HOV-lane 
configuration because those buses are kept moving.
    The other opportunity we have by using transponders and 
collecting tolls electronically, or what we call ``open-road 
tolling,'' is that transponders for lower-income individuals 
can be programmed to pay less or not pay at all, depending on 
what the local jurisdiction would like to do. We are having 
discussions with those who have applied for congestion-
reduction grants about whether or not that is something that 
they would want to factor in.
    I know that Mayor Villaraigosa is very interested in 
looking at this type of system. In fact, he and I had planned 
to take a trip together to look at some systems, but he 
ultimately was not able to go.
    You raise a valid concern. We are very aware of it, and, as 
I told Mr. Knollenberg, we are going to be doing some studies, 
particularly on the impact on low income.

                        CORRIDORS OF THE FUTURE

    Ms. Roybal-Allard. With some 40 percent of the goods 
traffic at the Ports of Los Angeles and Long Beach having a 
destination outside of Southern California, the prompt and 
efficient movement of goods between manufacturing centers and 
markets is naturally critical to our economy. Goods that are 
shipped out of the region by rail or on our highways via trucks 
make it extremely important that our highways, as well as our 
rail systems, are operating in a very efficient manner.
    Can you tell us what the status of the Corridors for the 
Future program is, particularly with respect to the I-5 and the 
I-10 corridors, and what is the current status of the Southern 
California Freight Congestion Initiative, which looks into 
these problems?
    Secretary Peters. Certainly. Congresswoman, on the I-5 
corridors, part of the Corridors of the Future, we are having 
ongoing discussions with the project sponsors and those who 
proposed I-5 as a corridor for the future. We think it is 
tremendously important because of the amount of traffic that 
that corridor carries, and, as you said, it intersects an area 
where there is a lot of freight and goods movement, as well as 
commuter traffic.
    I will get a written report to you that tells you exactly 
where we are with that particular corridor.
    [The information follows:]

    The Department's National Strategy to Reduce Congestion on 
America's Transportation Network contains a strong focus on forging 
stakeholder consensus on developing immediate and long term congestion 
solutions. The National Strategy targeted major freight bottlenecks in 
Southern California and development of stakeholder consensus on 
transportation solutions. The Department spearheaded a Federal, State 
and local cooperative effort that is actively working to achieve 
sustainable and efficient freight transportation operations in the 
region in harmony with California's Goods Movement Action Plan.
    In October 2007, DOT along with U.S. EPA Region 9, California's 
Business, Transportation and Housing Agency, the Southern California 
Association of Governments and other Federal, state and local agencies 
signed the Southern California National Freight Gateway Cooperation 
Agreement. The agreement is a public commitment by the signing parties 
to work together to improve regional freight throughput capacity in 
balance with environmental and community concerns. The agreement 
creates a forum to promote better understanding of the underlying 
considerations, potential impacts and alternatives for proposed 
Southern California transportation projects that affect goods movement.
    Signatories to the agreement will work to develop a Strategic 
Framework for achieving sustainable and efficient freight 
transportation operations in the area consistent with California's 
Goods Movement Action Plan (GMAP.) This framework will focus on 
improvements of the transportation decision-making process and the 
environmental review process.
    During this time, DOT has set up a Gateway office in Long Beach 
California to be proactive with the state and local governments, ports 
and the public regarding goods/freight movement in the California area. 
The Maritime Administration staffed this office with a Gateway 
director, who participated in the GMAP development process as did a 
U.S. EPA staff member.
    As for the Corridors of the Future Program, DOT is working with 
each corridor to create a development agreement that sets forth a clear 
path to achieving the goals of the program. Over the past few months, 
DOT held an initial negotiation meeting with each corridor and agreed 
to work towards executing the development agreements this spring.
    Specifically, with respect to 1-5, DOT met with representatives 
from Washington, Oregon and California on January 10, 2008. Subsequent 
to that meeting, the States and DOT formed a negotiating team. DOT is 
preparing a draft development agreement to be used by the parties in 
their negotiations. DOT hopes to have a signed development agreement by 
late spring 2008.
    With respect to 1-10, DOT met with representatives from California, 
Arizona, New Mexico, Texas, Louisiana, Mississippi, Alabama and Florida 
on February 12, 2008. Subsequent to that meeting, the States and DOT 
formed a negotiating team. DOT is preparing a draft development 
agreement to be used by the parties in their negotiations. DOT hopes to 
have a signed development agreement by late spring 2008.

    In terms of Southern California ports, we are actively 
working with them to reduce congestion, and certainly the 
Alameda East project is one that I think will help 
tremendously. But as you and I have discussed in the past, that 
area takes a disproportionate impact of all of the freight 
traffic that comes into L.A.-Long Beach because the traffic has 
to move through the neighborhoods of Los Angeles before it 
ultimately gets on its way.
    We are working aggressively with the port and with the 
highway community in that area to see what we can do to fix 
things. One of the things that we have found to be successful 
is what we call ``congestion pricing,'' or pricing differently 
for different times of day so containers that move through 
during peak periods of time pay more than containers that move 
off peak.
    What that has allowed us to do, and very successfully so 
far, is to ``de-peak'' demand in certain areas, keep the 
traffic flowing smoothly, and, therefore, get more throughput 
than we otherwise would, but with less negative impacts on the 
neighborhoods and on the environment.
    It is an area where I have our deputy administrator for 
maritime working very personally and very directly on that 
project for me, and we will continue to report progress to you.
    Secretary Peters. Thank you.
    Mr. Olver. Mr. Pastor, my vice chairman.

              CROSS BORDER TRUCKING DEMONSTRATION PROJECT

    Mr. Pastor. How are you, Madam Secretary? I want to 
apologize, first of all, for being late. It is not that I did 
not want to be here for the entire two hours, but I was 
presiding over the chair, and so I have probably missed part of 
the discussion, but there are two subjects I would like to 
discuss with you.
    One deals with a program that is very close and dear to 
your heart, and that deals with the pilot program you wanted to 
do with the Mexico trucks. I tell you that it has been debated 
here in the House and the Senate now for a number of years, 
that, there was a limitation on the use of funds to allow the 
pilot program to go forward, which was signed by the President 
and is now the current law.
    I guess there is some misunderstanding or confusion on what 
is going to happen to the pilot program. I would caution you 
that because of the separation of powers and currently the 
law's limitation of funds that possibly you would consider 
looking at the law that Congress has passed and signed by the 
President, that does limit you with funds. So, with caution, I 
advise you that probably that program, as of yet, should not be 
implemented. So I bring this, constitutional argument to you so 
that you may look at it. If you would like to respond, I would 
be happy----
    Secretary Peters. Mr. Vice Chairman, I would like to 
respond briefly, and I realize that there is not exactly 
unanimity in terms of opinion on what we are doing with this. 
You know that I have tremendous respect for you, as a fellow 
Arizonan. I have known you much longer than I have been in this 
position and have great respect for you.
    We do understand that the Consolidated Appropriations Act 
for Fiscal Year 2008 prohibits spending 2008 funds to establish 
a cross-border trucking program, and I assure you, we will not 
use any 2008 funds to establish a program. We will, however, 
based upon an interpretation of our attorneys, continue to 
implement the program that was started in February 2007.
    Safety is the first, the last, the most predominant concern 
we have, and we have held those drivers and those trucks coming 
across the border from Mexico to not just the same, but even 
higher standards than we are holding U.S. trucks and U.S. 
drivers.
    The program is fully reciprocal, in that a limited number 
of U.S. drivers and U.S. trucks can go into Mexico, the first 
time they have been able to do that. And Mexican trucks and 
Mexican drivers can come into the U.S. and go beyond the Free 
Trade Zone, where they were limited in the past.
    I have established a very rigorous evaluation process for 
this program because safety is so important, and I have asked 
our former Inspector General, Ken Meade, Former Congressman Jim 
Colby, and Former Deputy Secretary of the U.S. Department of 
Transportation Mort Downey to form an independent evaluation 
panel to ensure that we are meeting all of the rigorous safety 
requirements of this demonstration program. We will evaluate 
everything that we are doing and ensure that we can tell the 
American people that we are not putting them in danger by 
engaging in this demonstration program.

                ALTERNATIVES TO THE CURRENT GASOLINE TAX

    Mr. Olver. We will let you regroup for a follow-up on that 
one.
    We will start a second round here, and we clearly should 
have time for everybody to have their five-minute period.
    I would like to follow up just a little bit on some 
comments that were made by my colleague from North Carolina, 
Mr. Price, who then had to be elsewhere. The whole issue of the 
pricing seems to me to be very critical.
    Madam Secretary, you said that the price of gasoline is 
high. It is clearly high. But the price of tolling and of any 
of the congestion mechanisms that you might come up with, or 
the public-private partnership, already embeds the price of 
gasoline in it, and those prices are going to continue to go 
up, too, as we move forward.
    So as we try to bring in these other mechanisms, which some 
other places have used--London has used, as you indicated, and 
New York has proposed to use. They have very good public 
transportation systems that connect to all around Manhattan or 
the whole subway system of New York City so that people wanting 
to come in have many choices. They can choose to not drive in 
or to drive in, knowing that they have a very good option for 
something else.
    But building those is exceptionally expensive, and trying 
to impose them in places where there is not a very solid 
transportation system is going to be a very expensive thing, in 
the first place, and at the higher prices; none of these are 
going to be low prices.
    So my sense here is that, yes, we have used the gasoline 
tax as a way to fund.
    Do you have a sense of what you think, or did in total, the 
balance of tolling and public-private partnerships and 
congestion pricing, as well as gasoline tax--should be? Do you 
believe we are not going to not use gasoline taxes again? How 
do you see that going over time? What are the kinds of 
mechanisms for which we raise revenues for a system that has to 
have local and state and national inputs into? What do you 
think is the sense of how that will evolve?
    Secretary Peters. Mr. Chairman, I think we have to 
diversify our funding sources as we move forward.
    There were two areas where I was in disagreement with the 
rest of the commissioners, and one of those areas was 
quantifying the overall needs. I think the overall needs, at 
$225 billion over 50-years is perhaps overstated because there 
was not the same rigorous benefit-cost analysis performed on 
every mode of transportation.
    But that said, you are right. We have to have more funding. 
We cannot continue to be as competitive as we need to be as a 
nation if our transportation system is not serving us well. I 
have often stated that my job is to ensure that the 
transportation system is an accelerator on the economy, not a 
brake, so we have to find new ways to fund it.
    One of the things that appeals to me about pricing is that, 
first, it moves us away from burning fossil-based-fuel. It also 
can help us manage demand very effectively.
    When we pay gasoline taxes, it is an indirect mechanism and 
indiscriminate in terms of when and how you use the system. You 
pay the gas tax when you fill your car. As you said, it is 
related to the number of miles you travel, but it is not 
related to when and how you use the system.
    We recently completed a household travel survey at the U.S. 
Department of Transportation, and 50 percent--this was amazing, 
even to me--50 percent of the people who are using the highway 
system during peak periods are not commuting to work and back. 
In fact, a full 20 percent of them are actually retired 
individuals, my sister among them. If she paid, to go out and 
pick up her dry cleaning or meet her friends for coffee during 
rush periods, she would not do it. But because she does not pay 
directly, she does do it.
    Studies indicate that by using pricing mechanisms, we can 
get 40 percent greater throughput for the same lane 
configuration than we could otherwise. So I think pricing helps 
us in dense urbanized areas. You are correct, you have to have 
alternatives.
    We can use pricing mechanisms in areas where there are 
densities and demand that would warrant it, thereby freeing up 
increasingly scarce public dollars for areas that cannot 
successfully use pricing, particularly rural areas where safety 
and accessibility continue to be a problem.
    Other areas have used fuel taxes, development fees, income 
taxes, or sales taxes to fund transportation. I think we need 
to diversify our funding portfolio.
    The Commission and I also agreed that at some point in the 
future, we will have what I will call a ``vehicle-miles-
traveled system.'' That basically is a utility-type model where 
I will pay for the amount of miles I drive, the time of day 
that I drive, the weight of my vehicle, how many people are in 
my vehicle, whether I am driving in my own neighborhood, or I 
am driving on a congested commuter corridor. Technology makes 
all of this possible today.
    We do need to deal with privacy concerns. There are big 
privacy issues, but, nonetheless, I believe we can satisfy 
those concerns and eventually move to a vehicle-miles-traveled 
system. All 12 commissioners did agree on that.
    Mr. Olver. I will follow up on that in the next round. Mr. 
Knollenberg?

                     GRANTS TO MITIGATE CONGESTION

    Mr. Knollenberg. Thank you, Mr. Chairman. On the congestion 
pricing initiative, for which you used existing funds, for 
example, that were targeted to specific projects in prior 
years, there is one that comes to mind. When Congress passed 
the year-long CR for 2007, a large chunk of discretionary 
money, some $800 million, was parceled out to five cities in 
five states: New York, Massachusetts, Minnesota, Washington 
State, and Florida.
    I have some major concerns with that decision. Can you 
explain what factors you used to come up with your decision to 
provide money to those select cities and nobody else? I would 
also state that that money was formerly known as a series of 
earmarks by a variety of members of the House, and so just your 
response, please.
    Secretary Peters. Congressman Knollenberg, I would be 
pleased to do that. Here again, I recognize that we are not 
always of unanimous opinion on this.
    Because congestion is such a pervasive problem in the 
United States today, when the year-long continuing resolution 
was passed for Fiscal Year 2007, we elected to target money at 
major cities where there was significant congestion. We could 
provide relief that would then be replicable in other areas as 
well and also the Corridors of the Future that I mentioned 
earlier, these travel-and-trade corridors.
    We held a competition, and, to my recollection, there were 
26 cities who applied for these congestion-pricing grants. I 
mentioned briefly the project in New York earlier. There are 
projects in San Francisco, Seattle, Miami, and in Minneapolis. 
Each of them is a little bit different and piloting, if you 
will, new ways of relieving congestion in the near term and 
making travel better for everyone.
    We have talked a bit about the condition of our highways, 
and some believe that our nation's infrastructure condition is 
deplorable and falling apart. The bridge collapse in 
Minneapolis is an absolute tragedy, but early results from 
National Transportation Safety Board indicate that it was not 
neglected and fell down. In fact, overall, our Nation's highway 
pavements and bridge conditions are slightly better than they 
were 10, 15, or 20 years ago. So we are making progress.
    Where we are making no progress is in the performance of 
the system. In spite of a 100-percent increase in funding over 
the last 25 years, performance is 300-percent worse.
    Mr. Knollenberg. Here is the focus of my asking this 
question. I heard from a variety of people around the country 
who are very upset with that decision because they did not get 
it. In fact, in my own state, in my own backyard, the Smart 
program; they were denied money. They thought they were going 
to be able to compete, but they could not compete, could not 
even get heard.
    So I am not faulting that you had to make a decision. You 
did have to make a decision, presumably, but I am wondering if 
there were not some people that were overlooked, and, frankly, 
I do not know that that decision--time will tell--was one that 
was really the best for the entire country because there are a 
lot of people out there that do live in big cities, in many 
cases, but do have a need that certainly should be centered in 
that grouping that was picked from.
    Here is what I wanted to also say. On the subject of the 
local transit agencies around the country, there are so many of 
them, and I know these are big cities, and yes, in big cities 
they have congestion, but you have congestion in suburban 
areas, et cetera, because I do in my own area. So I wonder if 
you would repeat that decision in the future where there is 
some sum close to a billion dollars that comes into your lap 
that you wanted to put somewhere. How would the decision be 
made then? Would you have any thought about changing what you 
did this time?
    Secretary Peters. Congressman, you raise a valid point, and 
I am sorry that the cities in your state were not selected. We 
had many meritorious applications and we did spend those monies 
within the statutorily required areas.
    In fact, we are conducting another round of competition 
today. We have proposed, in the President's budget, to make 
available $175 million to do another round----
    Mr. Knollenberg. I was just coming to that, as a matter of 
fact. That is the ISTEA funds?
    Secretary Peters. That is old unobligated funds from ISTEA 
and TAE-21. Should this body adopt the budget as we have 
proposed, we hope to have another round.
    The other thing is the first five cities that were 
selected, New York, for example, have to get state-level 
enabling legislation. The General Assembly has to make a 
decision by the end of March of this year. If they do not, we 
will bring that money back and reallocate it to other 
meritorious cities. So there still is an opportunity to go back 
to cities in Michigan.
    Mr. Knollenberg. It is the determination that you made to 
suggest that they were inactive, and, obviously, you found 
enough inactive situations to consolidate these funds to reach 
that $175 million mark. This would be an ongoing process. Is 
that what you are suggesting?
    Secretary Peters. We hope it would be because we think we 
can relieve congestion in major cities and medium-sized cities, 
who also are suffering from congestion. In fact, cities of over 
200,000 are seeing dramatic increases in congestion. We hope to 
continue it, sir. That would certainly be the will of this body 
as we move forward with the appropriation process.
    Mr. Knollenberg. Would these be smaller grants?
    Secretary Peters. We would anticipate that they would be.
    Mr. Knollenberg. Thank you, Mr. Chairman.
    Mr. Olver. Mr. Rodriguez.

              CROSS BORDER TRUCKING DEMONSTRATION PROJECT

    Mr. Rodriguez. Thank you very much. Let me follow up on 
Congressman Pastor's question. Given the situation that, Madam 
Secretary, the 2007 monies that were to be used for the pilot 
project, the question, I guess, would be a legal question I 
would ask for the record: Does the Department have the legal 
authority to disregard congressional intent, or is it a matter 
of just budgeting from one year to the other and still 
disregarding language that ought to be taken into 
consideration?
    I wanted to put that for the record because it seems, 
unless I misunderstood, that the pilot project continues 
because of utilizing resources from 2007, but the intent of the 
language was to prohibit that from occurring. So I just wanted 
to put that for the record.
    Secondly, I put language, Madam Secretary, on the 
appropriation bill cycle at the conference process at the very 
end, and I was successful in including language there with 
Senator Hutchison that prohibits the State of Texas from 
privatizing existing roads paid by federal dollars to be made 
into private toll roads, and I just want to get your feedback 
on that, whether you are going to maybe abide by that, at least 
for this year, based on your last comments on the trucking.
    Secretary Peters. On the trucking issue, let me reiterate 
the specific language says that ``none of the funds made 
available under this Act may be used to establish--'' and I am 
adding emphasis on the word ``establish'' ``--a cross-border 
carrier demonstration program.''
    That is the interpretation of our attorneys. I am not an 
attorney, so I will not debate you on the legal merits of that. 
I can respond to this Committee in writing about our 
interpretation of that particular issue.
    [The information follows:]

    The Administration has looked very closely at the Consolidated 
Appropriations Act, 2008, and section 136 thereof in particular. By 
prohibiting the use of funds ``to establish'' a cross-border motor 
carrier demonstration program, section 136 does not prohibit spending 
to continue to implement the ongoing cross border demonstration 
project, which was established in September 2007--well before enactment 
of the current appropriations act. Consistent with the appropriations 
act prohibition, FMCSA will not establish any new cross-border 
demonstration programs with Mexico.
    The appropriation bill passed by the House of Representatives (H.R. 
3074, 110 Cong. Sec. 410 (2007)) would have barred spending ``to 
establish or implement'' a cross-border demonstration project. However, 
the enacted version of the bill is more narrowly drafted and prohibits 
only use of funds ``to establish'' such a project.

    To the question about Texas and tolling, I recently met 
with Senator Hutchison. We talked about the provision that you 
and she and others sponsored. We fully understand what is to be 
done and are enforcing that through the process of working with 
the State of Texas.

                     AIR TRAFFIC CONTROL WORKFORCE

    Mr. Rodriguez. Okay. Thank you very much. Secondly, my 
understanding is that we also have a significant problem when 
it deals with air controllers and the fact that we have a large 
number of them retiring.
    My concern has always been, and I initially verbalized that 
last year, and I think Senator Roybal-Allard also talked about 
the diversification of that group as we train the next batch of 
air controllers. Where are the institutions now that do some of 
that training?
    Secretary Peters. Congressman, I will get back to you on 
the specific locations. There are five locations that are 
certified schools, as well as Oklahoma City, but let me get 
back to you on the record with that so that I can be accurate.
    [The information follows:]

    The Controller Training Institute program is available at the 
following schools:

Arizona State University, Mesa, AZ
Community College of Baltimore County, Baltimore, MD
Community College of Beaver County, Beaver Falls, PA
Daniel Webster College, Nashua, NH
Dowling College, Shirley, NY
Embry-Riddle Aeronautical University, Daytona Beach, FL
Florida Community College, Jacksonville, FL
Green River Community College, Auburn, WA
Hampton University, Hampton, VA
Inter American University of Puerto Rico, Bayamon, PR
Kent State University, Kent, OH
Lewis University, Romeoville, IL
Metropolitan State College of Denver, Denver, CO
Miami Dade County College, Homestead, FL
Middle Georgia College, Cochran, GA
Middle Tennessee State University, Murfreesboro, TN
Minneapolis Community and Technical College, Eden Prairie, MN
Mount San Antonio, Walnut, CA
Purdue University, West Lafayette, IN
University of Alaska, Anchorage, AK
University of North Dakota, Grand Forks, ND
University of Oklahoma, Norman, OK
Vaughn College of Aeronautics, Flushing, NY

    FAA is opening the AT-CTI program for new schools to apply again 
this year. FAA forwarded the announcement information and appropriate 
contacts to its corporate civil rights for distribution to their 
constituents.

    The Chairman mentioned, at the outset of this hearing, 
about air traffic controllers. I need to say, I have the 
highest respect for the men and women who perform that very 
important task every day. What we are facing right now is a 
period of increased retirements, for several reasons. Many of 
the air traffic controllers who came on board after the PATCO 
situation back in the 1980's are now reaching retirement age.
    So we do do a very extensive workforce plan to address 
these retirements. In fact, last year, we missed, as the 
Chairman indicated, the number of retirees by about 128 
retirees. We had also planned to hire just under 1,400 last 
year, and we actually hired 1,800.
    As you mentioned, training is important. We call those who 
have not been fully certified on every aspect 
``developmentals.'' I assure you that we do not put an air 
traffic controller on a terminal to do a certain task that is 
not certified. Because of this big hiring and retirement phase 
that we are going through now, there are going to be more 
developmentals in our workforce. This is a period of time that 
we will work through, but we are very concerned and will not 
put anyone who is not fully certified on a terminal to work 
that terminal.
    Mr. Rodriguez. I would like to get that additional 
information from you as we move forward because I would also 
like to see some diversification occur in that area when it 
comes to air controllers and the type of training.
    I know that we were also talking about moving into a 
different system for air controllers where, I gather, they all 
will have to go through some training completely. Where are we 
on that, real quickly?
    Secretary Peters. Congressman Rodriguez, that training is 
designed and being implemented in certain areas where we are 
rolling out early phases of what we call the ``NextGen Air 
Transportation System.''
    The legacy system that we are using today is largely based 
on ground-based radar, and that has been the system that most 
of our air traffic controllers have been trained on and have 
been using. But as we begin to implement phases of this NextGen 
technology that I spoke about earlier, the controllers are 
being trained on that equipment.
    There will have to be overlap. We cannot simply turn off 
the legacy systems and turn on NextGen. So as we make that 
transition, the controllers will be trained to operate the new 
equipment.
    Mr. Olver. Thank you. Mr. Wolf?

                   FOREIGN INVESTMENT IN U.S. ASSETS

    Mr. Wolf. Thank you, Mr. Chairman. Madam Secretary, this is 
really an issue--Jim Walsh's question triggered it. You can 
relax. I am not asking you to get into detail. Hopefully, you 
will say, ``Yes, I will,'' at the end, but this is the issue.
    I worry about our country, insofar as the selling off of 
America. I had a study done last week, which I will share with 
the Committee. The number of foreign interests that are coming 
in and buying up our country are the Saudis. There were 15 
people on the airplanes on 911 that killed people from my 
district in the attack on the Pentagon, 15. This fellow, 
Alwaleed bin Talal, who has bought a portion of Citicorp, which 
is in the study which I will share with the Members, has been 
accused of anti-Semitic activities, anti-Christian activities, 
the radical Wahhabism.
    If we sell off America to the Chinese, the Chinese now--
there are five Catholic bishops in jail. There are Protestant 
pastors in jail. They have plundered Tibet, and I urge every 
Member here. There is a U.S.-China Commission Report that 
almost no Members, other than Mr. Price--God bless him--I think 
he has left--that I went up and read. It is a top-secret, 
classified report. Read it to see what the Chinese are doing to 
us.
    I wish I could lay it out, but I cannot, but every Member, 
I did a ``Dear Colleague.'' I do not think anybody reads ``Dear 
Colleagues'' anymore, but I did a ``Dear Colleague'' to every 
Member, urging them to go up and read the report. China is 
responsible, to a large degree, for the genocide in Darfur. I 
was the first Member to go to Darfur. They could stop it today.
    So when we sell off our assets--I wish Secretary Paulson 
would spend more time talking to the Congress about a long-term 
deal, and I am going to get to that, than he does spending time 
in China talking to the Chinese. There is a bill, the Cooper-
Wolf Bill. We have 72 co-sponsors. Secretary Paulson told me 
that if I got the leadership to be for this bill, they would be 
for it.
    Congressman Hoyer has come out for the bill. I appreciate 
Steny's leadership. John Bainer is on the bill. Blunt is on the 
bill. Jim Cooper, who probably has forgotten more about these 
issues than most people.
    We have 72 co-sponsors. We set up a national commission, 
putting everything on the table, but if we do not deal with 
Medicare, Medicaid, all of the entitlements that we begged the 
administration, and I appreciate the President mentioning it. I 
would have hoped he would have said, ``I am going to come up 
here, hand in glove, and work in a bipartisan way.''
    David Walker, and I will send everyone a copy, just sent me 
a letter. He said there is a tsunami, a financial tsunami, off 
the coast.
    I have 12 grandkids. If somebody told me--we are on the 
beach, and there is a tsunami down at Ocean City, and it is 
coming in, I would do everything I can. But we just stand by 
and do nothing.
    Financial Times, a month ago, and I will send this to every 
Member, said Moodys will downgrade our triple-A bond rating to 
a junk bond status in 10 years, junk bond status in 10 years. 
The Cooper Bill sets up a national commission: eight 
Republicans and eight Democrats. They take a year to go around 
the country with everything--Medicare, Medicaid, tax policy, 
too. Many of my friends from the other side say, Well, you 
know, we put everything on the table. This would be a gift to 
the next President, whoever he or she is.
    So my question is, and this is also a moral issue--the 
Tenth Commandment says, ``Thou shall not steal''--we are 
stealing from our children and our grandchildren, and we have 
an obligation to our parents. My dad fought in World War II. He 
was in the Marine Corps Reserves. He was in the Navy. My 
father-in-law fought in World War II. They did not fight to 
have us sell our nation to foreigners. It is okay when the 
British come in, when the Chinese come in.
    Also, this will have, and I hope you take it back, this 
will have an impact on our foreign policy if the U.A.E. and the 
Saudis and the Chinese control Morgan Stanley, Citicorp, and 
large companies.
    So this is an issue, and I would hope that we could get the 
administration to say, not next year but in this Congress, and 
I am going to look for every opportunity I can, and this is a 
bipartisan bill. Frankly, I think the American people are 
thirsty for something that is bipartisan. There is a similar 
bill in the Senate. Senator Conrad and Senator Gregg, and I 
believe Senator Voinavich is on it from Ohio.
    I hope you will take the word back to the President and to 
the cabinet. We need the administration not to just say, 
``Okay, Congress, send it to me,'' but we need to come up and 
advocate. We can do this for our country, but I think the worry 
that I have, and maybe I am alone--sometimes maybe I feel 
things that others do not feel--when we sell off our assets, 
and I saw an article in the Washington Post the other day--one 
out of five jobs in South Carolina are foreign-owned companies. 
Now, it is okay if it is Canada, it is okay if it is Great 
Britain, but China that is allowed the genocide to take place 
in Darfur, I do not want them to own our country. I do not want 
them to own our large banks, and I certainly do not want the 
Saudis, who funded all of the madrassas up along the Pakistan-
Afghan border, where Mullah Mohammad Omar went to, that 
literally brought about 9/11.
    So the message is, no answer. I know you are not the 
secretary of--but you are highly respected, to take it back and 
say, ``Mr. President, this guy, Wolf, from Virginia, he said, 
We need you to participate, and we need Paulson,'' and Paulson 
moved the goal post on me. He said, Wolf, you get Bainer, you 
get Blunt, you get the leadership. Well, Steny Hoyer has come 
out for it, John Bainer is on the bill, and Blunt is on the 
bill. We really need the administration to take this up. With 
that, I yield back the balance of my time.
    Secretary Peters. Congressman, I will take that message 
back. Thank you.
    Mr. Wolf. Thank you. I welcome any co-sponsors on the 
Committee. We have 32 Democrats on it, too, so it is totally 
bipartisan.
    Mr. Olver. Would you like to sign on?
    Secretary Peters. I do not think I am qualified, sir.
    Mr. Olver. Mr. Pastor?

                  AMTRAK PRESIDENTIAL EMERGENCY BOARD

    Mr. Pastor. Thank you, Mr. Chairman. I will look forward to 
reading the legal beagles and their opinions. I was told that, 
in the House version, we had established and implemented it, 
but the Senate then changed it, and then I am told the history 
is that one truck came across, and then we stopped the program 
with the Senate language in implementing the pilot. I look 
forward to getting a response.
    I am curious. For the longest time I have been here, we 
have been dealing with Amtrak and dealing with the President's 
budget and how he tries to zero out Amtrak, and, in a 
bipartisan manner, we restore some of the monies. But the 
workers of Amtrak worked without a contract for about eight 
years, and recently, in December, the Presidential Emergency 
Board basically came out with a recommendation that Amtrak 
provide retroactive pay for the workforce over a period of 
time.
    I could not find in the budget whether that recommendation 
which was supported by all of the members of the PEB, who, I 
imagine, were all the President's appointees, included the 
retroactive pay for the workforce of Amtrak.
    Secretary Peters. Congressman Pastor, let me explain why it 
was not in the budget. The President's budget was completed 
well in advance of the PEB recommendations, and, as you 
indicated, the recommendations did find in favor of the unions.
    What is going on right now is that Amtrak management has 
negotiated a settlement agreement with the unions that is in 
the process of being ratified. However, I am told that those 
ratifications will not be completed until March.
    There are several alternatives that Amtrak can pursue. We 
will continue to monitor the situation. Joe Boardman, who is 
our Federal Railroad administrator, sits on the Amtrak board 
and keeps me informed, but the simple fact is the budget was 
completed well in advance of those recommendations having been 
received.
    Mr. Pastor. Talking about the railroad administrator, last 
year, when he was here for the Amtrak hearing, we talked about 
the program. Following that the Chairman of the Subcommittee 
funded planning grants which will be made available for city-
to-city connections. At the time, we talked about the 
possibility of linking Phoenix, Maricopa County, with Tucson, 
Pima County, and, by doing that, you would probably connect 
with commuter rail about 85 percent of the population in 
Arizona. As you know, this would help address congestion that 
we have on the freeway today.
    To follow up, a representative from administrator's office 
will be going to Phoenix February 22nd, for a meeting with 
ADOT, members of the congressional delegation, and other 
leadership, to talk about the possibility of ADOT receiving a 
grant. I was just curious. What is the time schedule that you 
have in application and then evaluation of the grants and then 
possible funding of a grant to a successful applicant?
    Secretary Peters. Congressman, I will go back and check if 
we have current authority, or if we need to wait for the 
appropriation bill to be adopted. But you are correct. We have 
proposed for at least the second year in a row, $100 million 
for grants. You may not know, but I first studied that Phoenix-
to-Tucson corridor when I was deputy director at Arizona DOT in 
the late 1990s and absolutely understand the need for it.
    At the time, because there were not viable transit systems, 
at least on the Phoenix end, that seemed to be problematic, 
but, of course, that is not the case today, and you and many 
others have supported a very good transit project that is going 
in in Phoenix.
    The team, as you indicated, will be meeting in Phoenix with 
the DOT folks in mid-February, around Presidents' Day break, 
and should they come back and make a recommendation, we will 
move as expeditiously as possible. I just need to confirm to 
you whether or not we have funding available in the current 
year or have to wait until the budget is passed to have that 
planning grant money available to us, unless the assistant 
secretary may know.
    [The information follows:]

    The Consolidated Appropriations Act, 2008, appropriated $30 million 
for the new intercity passenger rail grant program. Under this 
competitive grant program, a State or States would apply to FRA for 
grants for up to 50 percent of the cost of capital investments 
necessary to support improved intercity passenger rail service that 
either requires no operating subsidy or for which the State or States 
agree to provide any needed operating subsidy. Several States have 
already expressed interest in this program, and are anxious to submit 
applications. On February 19, 2008, FRA issued a Notice of Funds 
Availability (NOFA) in the Federal Register (Vol. 73, No. 33) 
officially announcing this program. Arizona would be required to apply 
under this process outlined in the NOFA. The FRA FY 2009 budget 
requests an additional $100 million for this program.

    Mr. Pastor. Mr. Chairman, wasn't there money in this 
omnibus bill that we just passed and signed, $30 million?
    Secretary Peters. Thirty million dollars. That is what I 
was not positive about. So it could happen very quickly, then.
    Mr. Pastor. But there is $30 million available. Well, thank 
you very much.
    Mr. Olver. Thank you. Ms. Kaptur?
    Ms. Kaptur. Thank you, Mr. Chairman. I am sorry for not 
having been here on the first round. I had a competing Budget 
Committee hearing, and I have a competing Defense hearing while 
I am here. So it is just great to be here. Secretary, welcome 
back.
    Secretary Peters. Thank you.

              CROSS BORDER TRUCKING DEMONSTRATION PROJECT

    Ms. Kaptur. I have four quick questions. One, what can you 
do to bring back within the border commercial zone the Mexican 
trucks that are involved in this study that your Department is 
conducting in violation of federal law? We voted to only allow 
those trucks within the border commercial zone. You violated 
the law. What are you going to do to bring those trucks back 
within that zone?
    Secretary Peters. Congresswoman, we have looked at the law, 
and we will not use any 2008 monies to establish a program. 
However, our interpretation is that we are not establishing a 
program. That program was established prior. We are continuing 
a very limited, one-year demonstration program that would allow 
a maximum of 100 Mexican companies and their trucks to come 
into the U.S. and a maximum 100 U.S. companies and their trucks 
to go into Mexico.
    We have set very rigorous safety standards for that 
program. We have an independent evaluation panel, and we will 
certainly evaluate, at the conclusion of this phase of the 
program next year, the progress and the safety.
    Ms. Kaptur. Well, that is a very interesting interpretation 
of the law. Congress voted very strongly for that as part of 
the bill, and, obviously, I am not pleased with what you are 
saying to me, and it is a mystery to me why, with all of the 
other transportation needs we have in this country, you are 
spending money on a program that we specifically asked you not 
to do.
    Secretary Peters. Congresswoman, if I may, Congress 
reauthorized the NAFTA Treaty in 1994 and, since that time, has 
put numerous requirements, good and substantial requirements, 
on the U.S. Department of Transportation for moving forward 
with implementing that NAFTA provision and, indeed, have 
appropriated over $500 million since 1994 to set up and operate 
that program. So we certainly are----
    Ms. Kaptur. Which program, the data testing or the 
commercial zone?
    Secretary Peters. This would be the program that would 
allow implementation of the NAFTA provision.
    When I became Secretary in 2006, I felt the prudent thing 
to do, rather than opening the border in its entirety, would be 
to set up a very limited demonstration program by which we 
could have a limited number of trucks and companies go on 
either side of the border and put very strict safety 
requirements on those, the same, actually more, safety 
requirements than U.S. trucks and U.S. drivers are required to 
adhere to.
    Safety is, was, and remains my highest priority in this 
program.
    Ms. Kaptur. And you said there were 100 Mexican companies 
participating.
    Secretary Peters. No, ma'am. There are not 100. In fact, 
right now, there are 13 Mexican companies that are operating 
that have been authorized by a pre-authority safety audit to 
operate 58 vehicles, and there are four U.S. companies that are 
operating 41 vehicles going in the opposite direction right 
now. This is all part of this process. In spite of extensive 
evaluation and surveying, there have been no safety incidents 
involving these vehicles to date.
    Ms. Kaptur. When you said you were implementing the NAFTA 
provision, which provision are you referencing?
    Secretary Peters. This is a provision for cross-border 
trucking, Congresswoman, and I would be happy to get back to 
you with a specific citation of when that law was passed.
    [The information follows:]

    Mexican trucks were allowed to operate in the ``border commercial 
zones'' prior to the NAFTA. Before 1982, Mexican trucks were allowed to 
operate in the United States under the same conditions as U.S. and 
Canadian trucks. The Bus Regulatory Reform Act of 1982 imposed a 
moratorium on issuing new operating authority to for-hire Mexico-
domiciled motor carriers to operate beyond the border commercial zones. 
However, Mexican trucks were allowed to continue operating in the 
border zones and Congress established a certification requirement for 
such operations in section 226 of the Motor Carrier Safety Act of 1984, 
as amended by section 9111(g) of the Truck and Bus Safety and 
Regulatory Reform Act of 1988.
    In Annex I to the NAFTA, at page I-U-19, the United States 
specifically recognized the existence of Federally-certified border 
zone operations that were not subject to the 1982 moratorium. The NAFTA 
intended to expand the scope of Mexican cross-border truck services by 
modifying the moratorium on new operating authority to provide such 
services beyond the border commercial zones in two separate phases 
(page I-U-20). Because border commercial zone trucking was an 
established practice recognized by the NAFTA, the Agreement does not 
include a provision allowing such operations, and none was necessary.

                          AIRSPACE SEPARATION

    Ms. Kaptur. I would appreciate that. I want to move on to 
air travel.
    Is it true that the FAA has reduced the air space between 
planes from 2,000 to 1,000 feet? Is that true, the air 
separation?
    Secretary Peters. Congresswoman, I do not know that. I do 
not believe that is the case, but I do not know. I know there 
are different requirements for different types of aviation, 
both horizontal and vertical clearances. What I can do is get 
back to you on the record with the specifics, and, if variances 
are allowed, what are the circumstances, and which are allowed.
    [The information follows:]

    The FAA implemented the Reduced Vertical Separation Minima (RVSM) 
in Continental US airspace on January 20, 2005. RVSM applies to an 
exclusionary airspace, from 29,000 feet to 41,000 feet, in which 
properly equipped and certified aircraft with specially trained flight 
crews can be separated by 1,000 feet vertically. The previous break 
point above which the 2,000 feet separation standard applied was 29,000 
feet.
    FAA implemented Domestic RVSM after extensive testing to ensure the 
safety of these procedures. Previously, FAA applied the RVSM standards 
in oceanic and Alaskan Flight Information Regions (FIRs), proving that 
the target level of safety would be maintained. Implementation aligned 
US airspace and procedures with those used by the International Civil 
Aviation Organization (ICAO).
    For non-RVSM equipped aircraft operating between 29,000 feet and 
41,000 feet, and all aircraft operating at or above 41,000 feet, the 
vertical separation standard remains 2,000 feet.
    FAA has made limited exceptions in the RVSM rules to allow non-
equipped aircraft to operate in the exclusionary airspace, or to 
transition through the exclusionary airspace to altitudes above 41,000 
feet. These exceptions require specific approval by air traffic 
control. Special markings on the controller main display monitor 
identify these aircraft.

                    AIR TRAFFIC CONTROLLER TRAINING

    Ms. Kaptur. Yes. I am very interested if, in fact, the FAA 
has, in the last year or two, adopted a policy to collapse that 
airspace between planes as the number of planes is increasing, 
and it is my understanding that that has been done. I would 
like verification, and I thank you for that.
    Also, are you aware that when air controllers go for 
training, they have to leave their home communities many times 
and go to the place where the training is provided and that, in 
fact, many of them have to quit their jobs in order to do that, 
and they are at another location, whether it is Colorado or 
wherever it is? And it is quite expensive for them to maintain 
themselves. Many of them are putting their expenses while they 
are away from home on credit cards.
    Are you aware of what goes on in these training programs? 
And then, many times, even upon graduation, they may have to 
wait up to two years to get a job. Have you ever looked at the 
glide path for training of controllers and how easy or 
difficult it is for them to get to the point where they can 
actually be hired?
    Secretary Peters. Congresswoman, I do know it is very 
extensive and complex training, and the work they do is also 
very complex. They do a very good job of it.
    We recently made a change, that while those who have been 
hired go through the training programs in our large facility, 
for example, at Oklahoma City, they are paid a per diem or cost 
of living while they are there taking that training.
    At one point in time, that had not been the case and both 
Acting Administrator Sturgell and I felt it was appropriate to 
do that. So they are being paid a per diem while they are being 
trained, and I believe they are actually being paid wages. Is 
that accurate?
    Ms. Scheinberg. Yes.
    Ms. Kaptur. Do you know what wage level? Are they at 
minimum wage?
    Ms. Scheinberg. It is above minimum wage, but we can get 
you the exact amount.
    Ms. Kaptur. But you are paying for their lodging now.
    Ms. Scheinberg. Yes. They are getting paid while they are 
being trained, and they are getting paid for their expenses.
    Ms. Kaptur. And they are not incurring debt, then, while 
they are being trained.
    Ms. Scheinberg. Hopefully, not. Much of the training is 
occurring in Oklahoma City, which should not be a high-expense 
area.
    Ms. Kaptur. And then do you have the glide path to hiring? 
Do you know how long it is before, once they are trained, 
before they are hired? Can you provide that for the record, 
please?
    Secretary Peters. Ma'am, I will get back to you on the 
record for that. I do now have numbers that indicate that we 
had planned to hire just about 1,400 controllers last year. We 
actually hired 1,815 controllers, again, into this retirement 
wave, but we will give you a timeline for the training.
    [The information follows:]

    Applicants selected from announcements that require previous air 
traffic control experience (i.e., Veterans Recruitment Appointment, 
Remote Monitoring and Control, Re-instatement, etc.) are hired at the 
Academy Grade (AG) level. The current AG pay is $33,100 plus the 
appropriate locality percentage for their assigned facility.
    Applicants that are selected from announcements that do not require 
previous air traffic control experience (CTI and General Public) are 
hired at the FG-l pay level. The current FG-l pay is $17,046 plus the 
appropriate locality percentage for their assigned facility.
    ATCS students attend the Academy as their first duty station and 
receive long-term per diem. The current long-term per diem rate for the 
Oklahoma City area is $48.60/per day for lodging and $30.60/per day for 
meals and expenses for a total of $79.20/per day.
    When controllers are hired, they are offered a facility location 
with their formal job offer. As a result, trainees know where they will 
be placed prior to their Academy training. Therefore, there is no lag 
time between successful graduation and placement in a facility. 
Trainees report directly to their assigned facility immediately upon 
graduation from the Academy.

    I do know that controllers are trained on various aspects 
of their duties, and once they are certified to perform a 
certain task, they can work on a terminal and perform that task 
while they are still being trained for other tasks. They do not 
have to wait until they have completed all of their training 
before they can be hired to work on a terminal.
    Ms. Kaptur. Thank you very much. Thank you, Mr. Chairman. I 
just want to say, I will be submitting some questions for the 
record, just so the secretary is thinking about the Midwest, 
the Saint Lawrence Seaway System, and we will have some 
questions on that and high-speed rail from Pittsburgh, 
Cleveland, Sandusky, Toledo, Fort Wayne, Gary, Chicago. We will 
have some questions about that.
    Secretary Peters. I look forward to those, ma'am. Thank 
you.

          CROSS BORDER TRUCKING CONGESTION RELIEF, AND TRANSIT

    Mr. Olver. Madam Secretary, we are just about at the point 
where my Ranking Member and I will close. I am going to make a 
couple of comments, and it will probably take the full five 
minutes, and then let it go over to him. Thank you very much 
for your being here today.
    Secretary Peters. Thank you, sir.
    Mr. Olver. My guess is, my suspicion is, in the issue that 
has been brought up about the Mexican trucks, that the legal 
interpretation is going to be based upon the idea that what was 
established during Fiscal Year 2007 and before we ended up 
passing something in December, that what was established.
    I will wait and hear what the interpretation actually is.
    Just, very quickly, going back, most of the congestion 
implies a lack of capacity, and we can encourage people to not 
do things at times when things are likely to be congested, if 
they do not have to be there, if it is not absolutely 
necessary.
    The private-public-partnership aspect; we have examples of 
cases where some of our toll roads have essentially been sold 
off for a fixed price, but then, if you look at what the price 
is that the purchaser of the toll road is going to get in terms 
of profits, what they have projected as profits, many times 
that over a reasonable period of the lifetime of that asset.
    So one really has to wonder whether we are getting, and 
that goes to the Texas case a little bit, I think, whether we 
are getting a good price for that situation. And clearly, if 
you are tolling, if you are tolling only what was already 
there, another lane of what was already there, you are not 
getting any additional capacity. And, in addition, we have 
problems in other places that have tried this that get into the 
questions of security and privacy and the reliability of the 
transponder systems and so forth. Are we really ready to deal 
with all of the issues I have just raised?
    I do not need you to answer this right now. But it seems to 
me there are problems involved in this one that are pretty 
extensive, and we are going to need some gas tax revenue, the 
good old traditional gas tax revenue, for a while at least 
until we sort out some of these other issues.
    On another point, Madam Secretary, in our hearings last 
year, we had learned that FTA and HUD had been working together 
on a program entitled ``Realizing the Potential: Expanding 
Housing Opportunities Near Transit,'' and, in the final budget 
last December, half a million dollars was assigned to each of 
those two agencies, one of which is in your bailiwick; the 
other one, in the jurisdiction of this Subcommittee, to work 
together on developing a practices manual for local communities 
that wanted to establish or increase mixed-income, transit-
oriented development and so on.
    I am interested in your views on the current relationship 
between the Department of Housing and Urban Development and 
your Department and how you think the federal government could 
help promote transit near affordable housing. Do you think 
there should be a coordinated federal role in that area?
    Secretary Peters. Mr. Chairman, yes, I think there should 
be, and, in fact, there is. Based on your leadership, FTA and 
HUD have an interagency working group to better coordinate 
transportation housing programs so they can look at more 
affordable housing, particularly near transit locations, and, 
as part of this effort, they developed a best-practices manual. 
This will assist communities as they plan for the future.
    They have also developed action plans on new ways to better 
coordinate both housing and transit programs together, and that 
was submitted to this Committee, I believe, in June of last 
year.
    The issue of transit-oriented development is incredibly 
important and a very good opportunity to move forward in the 
future. In fact, in April, FTA and HUD, in conjunction with the 
Center for Transit-Oriented Development, which has now been 
established, published a report called ``Realizing the 
Potential: Expanding Housing Opportunities Near Transit,'' 
which had several key findings.
    Localities can better coordinate their housing plans with 
their transportation plans. Housing investments need to 
consider the locations of retail and commercial development in 
order to maximize travel by foot or by transit in more walkable 
communities, and the private development market should partner 
with local governments to better integrate transit and housing 
solutions.
    In fact, these recommendations are being applied, as we 
speak, in Charlotte, North Carolina. Charlotte is developing a 
transit system and working with housing along that corridor. We 
should be able to report back to you with real-world examples 
of how this is working well together.
    Mr. Olver. I will ask, from time to time during this 2008 
year, about the progress of that, and I hope very much that 
your memoranda of agreement have teeth in them.
    Secretary Peters. I suspect it did. I cut my teeth writing 
contracts.
    Mr. Olver. Okay. Mr. Knollenberg.

                            HIGHWAY BRIDGES

    Mr. Knollenberg. Thank you, Mr. Chairman. I will be fairly 
quick here, but I do want to bring up the Minnesota Bridge 
situation. I know Congress added in the 2008 Omnibus bill a 
billion dollars as a funding method for the inspection of 
bridges.
    My question is, are you confident that the condition of 
these bridges and their operation does not mandate additional 
money for the 2009 budget? In particular, I would like to know 
what your assessment of the condition of that bridge was and 
why it happened there. What might we expect around the country, 
if you have any idea about that. I do not know how much of an 
investigatory process you have established, but I would be 
interested in knowing what you have learned about bridge 
repair, because there are a lot of bridges around the country 
besides that one. So if you would respond.
    Secretary Peters. Absolutely, Congressman Knollenberg. 
Congress did, very assertively, move forward last year, in the 
budget that was recently enacted, by funding a $1 billion 
program to further bridge inspection and repair. We are in the 
process of implementing that right now.
    We have proposed, in the President's budget this year, $4.5 
billion for the bridge program, and that is up from $4.2 
billion in the prior year.
    I asked each of the states, and through the Federal Highway 
Administration, to complete an analysis of bridge inspections. 
I have also asked them to inspect again specifically the type 
of bridge that collapsed in Minnesota and asked that this be 
done shortly after the tragic collapse occurred there.
    I further asked our Inspector General to do a very rigorous 
scrub of our bridge-inspection program and report back to me 
the adequacy/sufficiency of that program, how data from that 
inspection program is then being used to prioritize projects 
for bridge renewal or replacement, and things like that. That 
work is ongoing. The states have completed their initial 
investigation of this type of bridge as well as a real scrub of 
their bridge-inspection programs.
    We found a few places where they are going back and doing 
some additional work.
    As to the specific I-35W bridge, NTSB, of course, is the 
body that will ultimately make findings about what happened 
with that bridge, and we have worked very closely with Mark 
Rosenker and the other members of the NTSB literally from the 
morning after the collapse when we met there just at daylight. 
All of us were very aggrieved about what happened and wanted to 
try to find out why it did happen. That is why, I ordered 
inspections of all similar types of bridges because the bridge-
inspection report, and I will get you the specific ratings, 
indicating that that bridge should not have collapsed the way 
it did.
    Mr. Knollenberg. Should not have collapsed?
    Secretary Peters. It should not have collapsed, based on 
the rating and the inspection reports.
    What NTSB has found to date, and this a point-in-time 
finding, as they have indicated to me, is that gusset plates 
were undersized, a design error when the bridge was originally 
built, and the bridge had stood for 40 years. Gusset plates are 
metal plates that various beams are bolted into, and, in this 
particular bridge, the design error was that they put half-
inch-thick gusset plates when they should have put a full-inch-
thick gusset plates.
    From what Mark Rosenker and the NTSB have been able to tell 
me to date is that some of the video that they have of the 
bridge collapse would indicate a puff of concrete dust in that 
area. That is why they made the initial finding that these 
undersized gusset plates may have contributed to the collapse.
    Mr. Knollenberg. Well, these undersized plates apparently 
were not big enough in the case of the Minnesota bridge. Did 
that send out an alert across the country that they had better 
check them all out?
    Secretary Peters. Absolutely, sir. In fact, we have done 
that as well. We do not believe that it is a pervasive problem 
among bridge designs. Nonetheless, the day that NTSB gave us 
that information, the Federal Highway Administration sent out a 
directive for all states to check the loading on all of their 
bridges that have that particular design feature and go back 
and look at the design plans and make sure that they do not 
have undersized gusset plates in other areas.
    NTSB is very clear that there may be other issues. This is 
not a conclusive, final finding; they will continue with their 
investigation. As they have done in the past, when they find 
something that they believe is an issue that we need to take 
action on immediately, they report that to us, and that 
certainly was the case with this gusset plate design.
    Mr. Knollenberg. I wonder what they are doing about this 
plywood that, as you pass under a highway bridge, does not give 
you a lot of comfort? You have a four-foot-by-eight-foot 
plywood piece or two or three or four to hold up what must be 
something coming down. So I hope they look at those, too.
    Secretary Peters. That falsework is supposed to be taken 
down once the bridge is completed, but we will ask our--
    Mr. Knollenberg. That is not a recommended process, is it, 
putting up plywood?
    Secretary Peters. Sir, plywood is generally only used to 
hold the forms in place when they are doing pours of concrete, 
and, in most cases, that ``falsework,'' as we call it, should 
be moved once the concrete is set, but we will check on that.
    Mr. Knollenberg. Thank you very much. I appreciate your 
being here today.
    Secretary Peters. Thank you, sir.
    Mr. Knollenberg. Thank you, Ms. Scheinberg. I appreciate 
your being here as well. Thank you.
    Ms. Scheinberg. Thank you, sir.
    Mr. Olver. Thank you, Madam Secretary, for being with us 
today. That concludes the hearing. Thank you.

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                                           Thursday, March 6, 2008.

                    FEDERAL AVIATION ADMINISTRATION

                                WITNESS

HON. ROBERT STURGELL, ACTING ADMINISTRATOR
    Mr. Olver. The hearing will come to order. I would like to 
welcome the acting FAA Administrator, Bobby Sturgell, to the 
subcommittee.
    Mr. Sturgell, I understand that you are wearing multiple 
hats, that of the deputy administrator as well, and I am glad 
you could come before the subcommittee to testify on the FAA's 
fiscal year 2009 budget request.
    The FAA is requesting a $14.6 billion appropriation, a 
reduction of $272 million from the fiscal year 2008 enacted 
level. Like last year, the budget proposes a new account 
structure, eliminating two existing accounts and replacing them 
with two new ones. As you know, our Nation faces a number of 
aviation challenges, explosive passenger growth, increasingly 
congested airspace, an antiquated Air Traffic Control System in 
desperate need of modernization, and an aging and changing 
workforce. Over the last dozen years, air traffic grew from 545 
million passengers a year to over 750 million. It is expected 
to reach a billion by the year 2015. And further forecasts 
indicate that passenger travel could double or even triple by 
2025.
    General aviation is also growing. The number of general 
aviation aircraft in use is currently 230,000, expected to grow 
to 275,000 by the year 2020, as very light jets begin to occupy 
the Nation's airspace. As passengers and air traffic increase, 
so do delays. Last year, delays and consumer complaints reached 
an all-time high, with nearly one in four flights experiencing 
15 minutes or more delay. Delays cause more than just passenger 
headaches. DOT's own estimates indicate that aviation delays 
cost the Nation as much as $15 billion a year.
    To mitigate the effects of congestion, the FAA is employing 
a number of mechanisms, redesigning airspace, instituting caps 
on operations, and embarking on a multiyear, multibillion 
dollar effort to modernize the national air system. To address 
the limitations of the antiquated air traffic technology, the 
FAA is requesting $688 million for Next Generation air traffic 
control programs, which will transform the National Airspace 
System. FAA estimates that NextGen will cost $4.6 billion over 
the next 5 years and require billions more beyond 2012. The IG, 
however, has cautioned that the software development effort to 
bridge the gap between the current system and future NextGen 
architectures could cost as much as $50 billion. Clearly, this 
is an extremely complex and expensive endeavor.
    We must also invest in the people who ensure the day-to-day 
safety of the air traffic system. Since 2005, the FAA has had 
to significantly increase its hiring effort to offset the 
increase in controller retirements over projections. As a 
result, composition of the workforce has undergone a 
fundamental transformation, and this could have serious safety 
implications. The Washington Post recently reported that the 
ratio of certified controllers to trainees has plummeted from 
five to one in 2002 down to three to one today. As more than 
half of the world's air traffic is managed by FAA controllers, 
we must ensure that an adequate number are well trained.
    Finally, the lack of mutual agreement between FAA and the 
controllers concerns me deeply, and I urge you to continue 
discussions with them and others in the FAA workforce.
    Before we have the opportunity to hear from you and Ranking 
Member Knollenberg, I would like to take a moment to 
acknowledge Cheryle Tucker, who is sitting beside me here, has 
worked on the subcommittee for the last 7 years for both Mr. 
Knollenberg and me. This will be Cheryle's last hearing before 
she heads to the committee's surveys and investigations staff. 
I think that is why she is smiling. Cheryle has handled just 
about every account within DOT at one time or another and has 
worked tirelessly to ensure limited Federal resources are 
directed toward programs that benefit the greater good. Cheryle 
has also been a strong mentor to the staff, and I know they 
have appreciated her leadership on the subcommittee's staff. 
After the hearing, I hope you will all take a moment to wish 
Cheryle well in her new position.
    With that, let me recognize my ranking member, Mr. 
Knollenberg from Michigan, for any comments he would like it 
make.
    Mr. Knollenberg. Thank you, Mr. Chairman.
    I, too, want to salute Cheryle. She has been extraordinary 
in so many, many ways. We are sorry you are leaving, but we can 
see a smile on your face. As the Chairman has said, maybe that 
is a reason for you to be excited about where you are going. 
So, hopefully, that will be the case.
    Let me add my welcome, obviously, to Acting Administrator 
Sturgell and to his staff who are here this afternoon. We do 
appreciate your coming to update us on the major changes facing 
the airline industry and, in particular, the FAA as reflected 
in the 2009 budget request. Mr. Chairman, I cannot think of any 
greater set of issues facing us today than the future of air 
traffic in this country. A recent study entitled, ``The 
Economic Impact of Civil Aviation on the U.S. Economy,'' which 
was released last July, estimated that aviation accounted for 
over $1 trillion in economic activity in 2005. This represents 
about 6 percent of the Nation's gross domestic product. It 
created over 10 million jobs and flew over 30 billion tons of 
revenue-ton miles of cargo.
    And needless to say, a safe, efficient, and growing air 
traffic system is essential to the Nation's sustained economic 
growth. In fact, the annual rate of growth of air travel demand 
has matched the rate of growth of the economy almost precisely 
each year over the last 25 years. In spite of how critical to 
the economy the National Airspace Program or System is, we find 
ourselves bogged down and mired in the status quo. We still do 
not have a reauthorization of the program. Instead, we have yet 
another extension, only 9 months in duration, and no real 
prospect for a reformed or modernized program. This extension 
takes us to June 30th, about the time the summer holiday season 
moves into full swing.
    In fact, the chances of real reform and modernization seem 
to be less likely today than they have been to this date. I 
hope I am wrong about that, and perhaps the acting 
administrator can shed some hope or light on the status of 
negotiations with the authorizing committees. I think we would 
all welcome a breakthrough. At the moment, however, the chances 
for real reform and modernization or even a multiyear 
reauthorization seem to be less likely today than they have 
been right along. But simple extensions often bring with them 
both short- and long-term downside risks, and this extension is 
no different.
    The most recent extension, for example, required a 25 
percent reduction to stay within the allotted contract 
authority, and that reduction will cause many airports to lose 
a substantial portion of their protected or saved funding that 
has been appropriated in prior years. Unintended or not, this 
is the kind of outcome that is realized by not having a long-
term reauthorization in place in a timely manner. I intend to 
ask the acting administrator to elaborate on just which 
airports are going to lose funds and how significant a problem 
this is going to be this year. The long-term consequences are 
just as disheartening. According to the budget information 
provided so far, the current trust fund mechanism would 
actually be adequate to cover the costs of putting in place the 
Next Generation equipment and facilities in a timely manner. 
The administration thinks the makeup of those revenues should 
be changed. I do not know if the administration's proposal is a 
better idea or a fairer solution, but we all know that the 
airport congestion problem gets larger each and every day. To 
the extent that NextGen is part of the solution, we had better 
again on with implementing the program, in my opinion.
    Before I leave that topic, however, I also want to raise 
some concerns about the budget request for NextGen that is 
before us today. There is in total I believe some $680 million 
for Next Generation activities all combined, and about $630 
million in equipment and facilities. At the same time, the 
funding for the current system and equipment upgrades is 
reduced by some $235 million compared to the current year. I 
want to be sure that what is given up in current upgrades is in 
fact less important than the new addition of Next Generation 
technology. I do not want to see NextGen implementation take on 
a life of its own and end up superseding other activities that 
should be considered a higher priority. I will follow up on 
that during the questioning period.
    The Department has just issued its National Airspace System 
Capital Investment Plan. One of the more interesting features 
of the plan is its discussion of how rapidly the nature of 
aviation is changing: Smaller, regional jets flying point to 
point, and very light jets flying to smaller airports. 
Consider, for example, the regional jets now are 34 percent of 
the traffic handled at the 35 busiest airports. All of this 
suggests that the workload will increase. And where it 
increases may well be away from the large hubs. The FAA has a 
new contract with air traffic controllers. And I would like to 
explore where the administrator believes that the FAA has 
sufficient flexibility to make rapid changes in skill mixes and 
staffing levels at airports and TRACONS to keep pace with the 
changing operations and demands of the aviation industry.
    Finally, we have all heard the Department describe its 2009 
budget, and I endorse and congratulate the department for that 
emphasis. Certainly the rapid increase in predicted air traffic 
demands that we provide all the controllers the equipment and 
technology that we can afford. I am somewhat disturbed by the 
fact, however, that in spite of a new increase in new entrants, 
new aircraft needing operational standards, new unmanned 
aircraft, and very light jets, that the size of the Aviation 
Safety, the AVS program, remains flat from 2008 until 2013. I 
would like to get a better understanding of the rationale 
behind that and how the FAA intends to fill that gap and 
workload.
    Now, Mr. Chairman, our subcommittee has some very difficult 
choices to make. We find ourselves, all of us on the 
subcommittee, faced with rapidly rising costs for programs 
throughout the bill, and not just the FAA, but across the bill. 
It seems that at every hearing we hear about the shortfall in 
funding or the essential increase needed to keep pace with the 
economy. We have to meet infrastructure requirements in the 
transportation sector, and we have to continue our support for 
housing and services for nearly 5 million low-income 
individuals and their families.
    I hope to delve into some of these issues, assuming there 
is time, that I have raised here today, and I look forward to 
working with you to sort out how we meet all these priorities 
for the committee as we move forward in the weeks ahead. I 
yield back now, Mr. Chairman. Thank you very much.
    Mr. Olver. Mr. Sturgell, your complete written statement 
will be included in the record. And I would urge you to, in 
your informal remarks, to make them fit somewhere within the 
time frame that we have taken here, each of us. Thank you.
    Mr. Sturgell. Fair enough. Good afternoon, Chairman Olver, 
Congressman Knollenberg, it is a pleasure to testify before you 
and the committee to discuss the Federal Aviation 
Administration's budget request for fiscal year 2009. As the 
operators and regulators of the world's safest aviation system, 
we believe the 2009 budget request of $14.6 billion will 
provide adequate funding to support all our critical 
priorities, priorities on which the flying public and the 
taxpayer depend.
    Mr. Chairman, you maintained many times that safety must be 
the FAA's primary concern. That concern has been evident in 
your unwavering support of our critical safety initiatives, 
especially on the staffing front. Funding provided by this 
committee in fiscal years 2007 and 2008 will allow us to 
increase our controller workforce by over 500, and over the 
last several years, as has been pointed out, our safety staff 
by over 400. Our budget request continues that emphasis, with 
more than two-thirds of the funding dedicated to the safety 
mission.
    The subcommittee has been very clear that our industry's 
remarkable safety record must not be just maintained but 
improved in the future, and I certainly concur with that. We do 
have to avoid complacency, despite having the best safety 
record over the last 5 years here that we have ever had. We 
should always be striving for continuous improvement in that 
record. I think we are being particularly aggressive in 
ratcheting up the level of safety on our runways in particular. 
Last year we had eight runway incursions--only eight--that 
involved commercial aircraft. That is out of 61 million total 
operations. So a very small number, but a number that we need 
to continue to drive down smaller and smaller.
    We have taken several actions over the last year with the 
industry and the airport community. I want to particularly 
thank our controllers and flight standards inspectors unions, 
who have been involved in this Call to Action effort to improve 
runway safety. Everybody on every front has stepped up, the 
airports, the air carriers. As a former airline pilot, I would 
like to thank particularly the chief pilots and the safety 
officers from the carriers who have been involved in meetings 
with our senior flight standards people. They have been getting 
the word out to the pilots individually about the importance of 
this area and the need to continue to improve it.
    On the technology front, we are looking at further 
deployment of ASDE-X. Runway status lights will be our next 
major safety program in this area, and the budget has $26 
million for that program in 2009. It is this kind of push on 
technology and focus on people that I think the NextGen program 
represents. We made sure everybody has had a seat at the table. 
And for those who say we do not have plans for it, the plans 
are there, and they are being continuously developed with 
everyone involved: all the stakeholders, the industry, the 
labor unions. NATCA, for example, participates in four 
committees that are shaping the Next Generation Air 
Transportation System. The Institute Management Council, where 
they are one of 16 members, this was a congressionally formed 
council to ensure industry stakeholder involvement in it. A 
couple of committees that we have: Air Traffic Management 
Advisory Committee and Air Traffic Procedures Advisory 
Committee, as well as the Operational Evolution Partnership.
    You did mention the staffing effort with the workforce. We 
hired over 1,800 controllers last year. We are going to hire 
1,800 again this year. And the 2009 budget has another net 
increase of over 300 controllers. So we are moving forward in 
that effort.
    Again, I just want to echo some of the comments from Mr. 
Knollenberg about the need for, in the long run, finance 
reform, a reliable revenue stream. If we do not have 
predictable funding, then we end up in a series of extensions--
six this year, I believe--with kind of a state of flux. And it 
is a problem for an operating agency like the FAA.
    Finally, I will throw in my sentiments and recognition of 
Cheryle. She has been great to work with, both personally with 
me and with our staff. I will do my best to keep her involved 
with us as long as possible and as much as we can.
    So thanks very much Cheryle, Mr. Chairman, Mr. Knollenberg.
    [The justification follows:]

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    Mr. Olver. Thank you for your statement.
    We will now turn to questions. And as usual, I and Mr. 
Knollenberg will each take 10 minutes. We do not seem to have 
much competition here. They are going to call votes any minute 
now. Maybe not any minute, but not too long. And let's see if 
we can get at least two rounds of 10 in here before we have to 
move on and go back to the other part of our job, voting.
    I think it is truly remarkable that our controllers, we 
have at least half of the whole air traffic in the world, and 
it is covered by our controllers functioning. To have the 
safety record that we do have is, in fact, I think quite 
remarkable. And you are right, we have to maintain that and try 
to improve on what it is. It always is a big matter. But I have 
to say that the FAA has done a fine job in achieving what has 
been achieved. I started to talk about the ratios of the 
certified professional controllers, the CPCs. We are the only 
people who may do the training on sites after one is finished 
with the academies, and the number of trainees that are being 
done. And within a very short period of time, we have gone from 
a ratio of about five to one of the CPCs to the trainees now 
down to three to one. That is 83 percent down to 75 percent of 
the total being CPCs versus now only 75 percent in that system, 
which means that a lot of new people are coming in.
    You mentioned the figures 1,800 for the last 2 years, and 
then some more people that this budget will provide for. But 
that is what is feeding that quick turnover. We are told that 
we still have turnover in terms of the number who may retire 
over the next few years, between now and 2012 or 2013, that a 
substantial majority of the workforce is in position to be able 
to retire. So the situation does continue. Am I using the 
figures correctly? I know the IG, I was basically using the 
IG's figures on the ratio of CPCs to trainees. Do you agree 
with those?
    Mr. Sturgell. The three to one would match up with what I 
think the current ratio is, which is, we are just under 25 
percent in terms of developmentals versus the entire workforce. 
And that has increased substantially.
    Mr. Olver. You agree it was five to one only a few years 
ago, a handful of years ago.
    Mr. Sturgell. I cannot say without knowing the particular 
year, but I would say, I think that number has probably gone up 
10 percent in the last 2, 3 years or so. You know, we were 
under a long period there where the hiring needs were not that 
great. So it was natural that the developmental ratios were 
fairly low. But look at what happened before the strike versus 
after the strike. Before the strike, we were at 44 percent or 
so in terms of developmentals. After the strike, I think the 
peak was in the low to mid-50s in terms of percentage. And of 
course, that slowly came down. So, you know, what we are seeing 
is a turnover in the workforce that is a natural result from 
the activity after the strike in terms of hiring a large number 
of people throughout that decade. And controllers can retire at 
age 50 with 20 years of service, or any age with 25 years of 
service. That is what we are seeing.
    Mr. Olver. Now, when you talk about the period after the 
strike, you are talking about back into the early to mid 1980s 
I take it, when the ratio of trainers to trainees might have 
been close to 50 percent; the ratio might have been close to 
one to one.
    Mr. Sturgell. Right. But that was almost a decade-long 
effort, replacing that workforce.
    Mr. Olver. Okay, but this clearly indicates a fairly 
substantial transformation in the composition of the controller 
workforce as that ratio of trainers to trainees comes down, as 
it seems to be doing and as it will if we are continuing to 
replace a fair number. What implications does that have for the 
safety of the system?
    Mr. Sturgell. Well, just to go to the numbers themselves 
again. Our workforce plan, which we put out 3 years ago in 
anticipation of this hiring and retirement wave, sets it up 
such that we are planning on keeping the system percentages at 
below 35 percent in terms of developmentals. So we set this up 
to manage this transition, I think, fairly well. Right now, we 
are at 25 percent. So I expect the number will increase over 
the next couple of years.
    Mr. Olver. So you are not any worse under your training 
plan than two to one as a ratio of trainers to trainees.
    Mr. Sturgell. That is correct.
    Mr. Olver. Essentially.
    Mr. Sturgell. Essentially, right.
    Mr. Olver. Yeah. Okay. But, now, is it possible to sustain 
the reduction in training time if we are going to have an ever-
reducing number of trainers to trainees? Is it possible to 
sustain that under those circumstances?
    Mr. Sturgell. It is possible, and we are seeing those 
results.
    Mr. Olver. But you have not reached that point yet. You are 
headed downward further.
    Mr. Sturgell. Well, prior to this effort, we saw full 
certification timeframes in the neighborhood of 3 to 5 years 
for en route and 2 years for the towers. Our latest 
information, based on the most recent people achieving CPC 
status, we have got the en route down to 2.4 years or 2.6 
years, and the tower down to 1.4 years. So we are making gains. 
And we are making those gains by using advanced simulators. We 
are taking advantage of what the pilot community said, and we 
are buying en route simulators. We are buying tower simulators, 
and we are going to start buying TRACON simulators. So I think 
it is achievable.
    Mr. Olver. Do you see training time increasing at 
facilities where there is a high denominator in that ratio, a 
high proportion of controllers? Do you anticipate that?
    Mr. Sturgell. Sir, the challenge at this point is drilling 
this farther down to the individual facility levels and making 
adjustments at those facilities where we do have higher amounts 
than we would otherwise like, and just, you know, a continual 
emphasis on training over the next several years.
    Mr. Olver. I hope I am not causing you a problem. I had 
data given to me in percentages, and I could not quite figure 
out what for a while, and I turned it into ratios. And you seem 
to be working in percentages and me in ratios.
    Mr. Sturgell. Right.
    Mr. Olver. And so I am turning them back into, trying to 
return them into ratios. Okay.
    Look, given that we are hiring heavily, has that led to any 
change in the caliber of the people who are coming into the 
controller ranks?
    Mr. Sturgell. I think we have got a very high caliber new 
hire controller workforce. We have now got 23 colleges and 
universities that we are working with to bring in new hires. 
For example, last year, of those 1,800, over a thousand came 
from these colleges. The bulk of the rest came from the 
military, experienced controllers from the military.
    Mr. Olver. Do you see any change in the ratio of where 
those are coming from?
    Mr. Sturgell. Of where----
    Mr. Olver. Whether they are coming out of the schools, the 
CTI schools, the universities, the military?
    Mr. Sturgell. We are actually increasing the percentages of 
the CTI school students and the number of schools themselves. I 
expect that will further increase again this year. We are going 
to try to add some more schools to that program.
    Mr. Chairman, I do want to go back to a couple of points 
real quick that you made. I want people to understand that not 
just do we train controllers with CPCs, but we also use 
contract trainers, many of whom are former controllers and 
sometimes former controllers at the facility where they are 
doing the training.
    Mr. Olver. You are using contractors.
    Mr. Sturgell. We use an extensive number of contract 
support.
    Mr. Olver. Cheryle has assured me that I knew that.
    Mr. Sturgell. And with respect to safety, we do not put 
people on these positions unless they are certified for that 
position unless they have gone through the training for that 
position and they have been checked out. The agency has always 
used developmental controllers to staff the positions for which 
they are certified. And it is important, for example, if you 
are certified on one, two, or several positions, that you get 
experience in those positions during your training cycle.
    Mr. Olver. Okay. Well, I have troubled you enough I think 
for the moment. Mr. Knollenberg? We are going to at least get 
his 10 minutes in this time clearly.
    Mr. Knollenberg. Well, I accept the time, whatever it is, 
Chairman.
    I want to turn first, Mr. Sturgell, to the AIP, the Airport 
Improvement Program. I am trying to get a handle on what may be 
a serious, even if unintended, consequence of the most recent 
extension. Is it not the case that many of the smaller eligible 
airports will protect or save their allotment from one year to 
the next, and that airports can protect, they can protect their 
allotment for 3 years? Is that not true?
    Mr. Sturgell. The nonprimaries can protect it for 3 years, 
yes.
    Mr. Knollenberg. Is it true also that the 25 percent 
reduction in AIP contract authority that was included in the 
most recent extension applies to the saved or protected portion 
of the funding as well as what might be called the current year 
allotment?
    Mr. Sturgell. It does.
    Mr. Knollenberg. Both?
    Mr. Sturgell. Yes.
    Mr. Knollenberg. Was this known to the authorizing 
committee members before the bill was passed?
    Mr. Sturgell. My understanding is that they were aware of 
this, and that, I believe, one of the reasons for this was to 
help protect our important safety projects like runway safety 
areas. We have got a tremendous effort going on in runway 
safety areas with our discretionary funding. And the other 
piece was to protect the letters of intent which we have 
previously committed. So I think that is the reasoning behind 
it.
    You know, whether this is a big problem or not, what we are 
trying to do to mitigate this is that we are using the oldest 
money first so that new money that may be reduced will actually 
still have other years left in its life.
    Mr. Knollenberg. I guess what I really was meaning by that 
question, did you or your department express that this outcome 
would occur to the Members or the staff?
    Mr. Sturgell. Mr. Knollenberg, my understanding is that the 
Congress knew what it was doing here, and this was the language 
we got. That is my understanding of the situation.
    Mr. Knollenberg. Okay. Can you tell us how many airports 
had protected prior year funds and will lose a portion of their 
protected funds, and how much each will lose? That may be a 
tough question. But if you can get that information to me 
quickly if not via a response.
    [The information follows:]

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    Mr. Sturgell. I think we can get it to you probably in a 
week or so.
    Yeah, as far as the overall number, it is somewhere around 
550. Where we are in the process right now is we have got the 
allotments. We are dividing this up and figuring out the 
airports. This will go to the regions, and the regions will 
then contact the individual airports and try and work through 
these issues with them in terms of letting them know how much 
and all that. We will get you some detailed information though.
    Mr. Knollenberg. Great. Have you informed the impacted 
airports of the fact that the saved or the protected funds were 
cut by the 25 percent reduction as of this time?
    Mr. Sturgell. Yes, I think they are aware of that. What I 
do not think at this point they are aware of is what 
specifically does that mean with respect to whatever specific 
project they had planned, or ongoing, or the actual dollar 
amount. That is still being flowed down to the regions and 
quickly to the airports themselves.
    Mr. Knollenberg. I know it is going to vary across 
airports, but can you give us an idea of how serious a problem 
this could be? In other words, do you have a recommendation for 
fixing the problem if you believe the problem is serious and 
needs to be fixed? Or do you believe perhaps that it is not a 
problem?
    Mr. Sturgell. Again, Mr. Knollenberg, there may be 
individual airports that will have a substantial problem here. 
I think generally the way we are trying to address it in terms 
of using the older money first will prevent any kind of broad 
substantial or significant problem with this.
    Mr. Knollenberg. The FAA has requested $2.7 billion for AIP 
for 2009, which is about the same, I believe, as was enacted in 
2008. I am aware, however, that the needs estimate for the air 
side improvements alone ranges from $7 billion to $10 billion 
per year. I am interested in how you arrived at the 2009 
estimate, given the needs estimate. But more importantly, given 
that the AIP program level is not likely to ever be $7 billion 
to $10 billion a year, what is your recommendation for closing 
that gap, or what are you assuming will happen to reduce the 
backlog over the long run?
    Mr. Sturgell. Sir, we put out the needs estimate through 
the NPIAS, the National Plan of Integrated Airport Systems, 
every other year. And this fall we will have an updated version 
of that. We did see a drop off in needs after 9/11. That has 
come back over the last couple of years and there is a greater 
need now. AIP, though, was never intended to fully fund all of 
the airport needs as a Federal program generally.
    Mr. Knollenberg. Yeah.
    Mr. Sturgell. The large airports these days and a lot of 
the medium-sized commercial airports are very complex financial 
entities. They do a lot of their funding from debt and bonds, 
through passenger facility charges, things like that. If you 
look at the AIP portion, for example, I think it generally runs 
10 to 30 percent of an airport's funding, these types of big 
airports. They have other ways to do that. So when you look at 
our level, and I understand the concerns about the level, but I 
think it needs to be taken in context with the reauthorization 
proposal, which proposed a PFC increase that would bring in 
another $1.5 billion in new money.
    Mr. Knollenberg. I would hope so.
    Mr. Sturgell. So along with some other changes, I think 
that is the right way to look at that figure.
    Mr. Knollenberg. According to GAMA, the General Aviation 
Manufacturers Association, the number of revenue shipments 
increased by 13 percent, and the billings increased by 24 
percent during 2005 and 2006. These are huge increases. Is that 
trend going to continue and will that increase significantly 
after the relative costs of general aviation compared to the 
total cost of operating the National Airspace System? So is it 
going to increase significantly? And just your comment on that 
huge trend it seems is in place.
    Mr. Sturgell. They are enjoying a great period of economic 
growth, that part of our industry in particular.
    Mr. Knollenberg. So they are not hurting?
    Mr. Sturgell. No, they are growing, which is good to see. 
It is an important part of the industry. I think it is going to 
continue to grow in the foreseeable future. And I believe, if 
you ask them, they are all saying, wow, when is it going to 
slow down? That is their big question, because it is not in the 
cards right now. It continues to grow.
    Mr. Knollenberg. It does not appear to be slowing down. 
Does there appear to be any reason why it should?
    Mr. Sturgell. Not to my knowledge.
    Mr. Knollenberg. We all remember last summer was a 
particularly difficult time at airports in the northeast, 
especially JFK, LaGuardia and Newark. Are the operating 
measures that were put in place to ease delays last summer 
still in effect? And will they remain in effect this summer as 
well?
    Mr. Sturgell. There are a couple of things we are doing on 
that line. The most prominent would be caps at these airports. 
LaGuardia has been under a cap in terms of number of flights 
per hour. We did reach a voluntary agreement at JFK on caps, 
which I think will reduce delays at that airport next summer. 
And we are currently in the process of doing the same thing at 
Newark airport. So we are trying to take the region as a whole. 
Lowering the number of operations per hour and spreading them 
throughout the day will help in decreasing delay.
    We are also looking at other measures, like operational 
improvements. The aviation rulemaking group that got together 
last fall came up with a list of 77 items that they thought 
would improve it. We have agreed to focus, with the industry, 
on about 17 of those. We are about halfway through getting 
those done before the end of this summer. We have got eight 
done. We have got nine we are working on.
    Mr. Knollenberg. So you are making progress.
    Mr. Sturgell. We are making progress on that front.
    Mr. Knollenberg. Looking a little further down the road, 
while the Administration's initiative to modernize the Nation's 
Air Traffic Control System, NextGen, will certainly help to 
reduce delays in the future, full implementation is not 
planned, they tell me now, until 2025. That may have been the 
ordained date from the beginning. But what initiatives are you 
planning to address delays in this interim? In that interim?
    Mr. Sturgell. Operational improvements: we are always 
trying to improve upon our ability to deliver the airplanes 
safely and efficiently. We are implementing a large number of 
satellite-based procedures, both RNAV and RNP procedures, which 
are helping reduce delays and save fuel for the airlines as 
well. Airport construction should continue to remain in the 
forefront this year. We are going to open up Dulles, Seattle, 
and Chicago. We have had a great run over the last 7 or 8 years 
in terms of airport construction. When you look around the 
system, though, there may be areas where there is just not any 
room to build. And so you have to start doing things like 
taking a regional approach to the airport systems. For example, 
the Port Authority in New York has now purchased Stewart. And 
then, if there is truly no capacity, which I think should be 
first and foremost, you are going to have to start looking at 
the efficient use of the individual airport and how you want to 
maximize that airport. Whether the focus should be on passenger 
through-put or some other measure is a question we are all 
going to have to address in the future.
    Mr. Knollenberg. Well, I appreciate your responses. I guess 
my time has expired. So I will turn it back to the Chairman 
then for his role in the next level.
    Mr. Olver. We have the good news that we are not having any 
more votes today, so we now are free, to continue. Normally we 
turn to 5-minute sequences here. Okay. We will go to 5-minute 
sequences at this point, and I will take a 5-minute sequence. 
You have already mentioned the New York area situation. The New 
York area situation, which seems to be our most complicated 
system, had exceedingly heavy traffic. And the whole airspace 
was redesigned probably 30, 40 years or so ago. And, then, 
again, you had instituted a new redesign program there over the 
last few years. Is that now, that redesign program in full--I 
recognize that Mr. Knollenberg asked about measures that you 
had taken. Was that part of the measure that he was saying had 
been instituted a year ago or something like that? Give me a 
little bit further about that.
    Mr. Sturgell. Sure. The airspace redesign project for the 
Philadelphia/New York/New Jersey metropolitan area began about 
a decade ago. Congress appropriated about $53 million for this 
effort. And last September, we reached a record of decision to 
make some changes to that airspace. In December, about 3 months 
after the record of decision, we implemented, on a very limited 
basis, what we call dispersal headings at Newark and 
Philadelphia.
    Mr. Olver. Dispersal?
    Mr. Sturgell. So Mr. Chairman, right now, or prior to this, 
airplanes would go off the end of the runway, and they would 
have a fixed route to fly for a certain number of miles before 
being turned on their course. So there are restrictions in 
terms of how long the controller has to wait to get enough 
separation between those two aircraft to send the next one off. 
Dispersal headings give the controller the ability to use more 
than one heading off the end of the runway. So if you start 
turning an aircraft away, now you can launch another aircraft 
sooner. And this project is all about reducing delay, which is 
the net effect of that kind of an operational change. We are 
seeing improvements in delay reduction.
    Mr. Olver. You have seen improvements?
    Mr. Sturgell. At Philadelphia and at Newark, for the 
limited time that we have been using these headings. As you 
know, this has been very controversial. We are in 12 lawsuits 
now, I think, if I get the number right. But I think we took 
all the right steps here.
    Mr. Olver. Capped flights have been only associated with 
Kennedy, then, and LaGuardia, while the others have not capped 
either Newark or Philadelphia?
    Mr. Sturgell. Well, Philadelphia is not capped in terms of 
total operations. We do not see the level of delay at 
Philadelphia that we saw at Kennedy. So there are several 
pieces to this. Caps are one piece of this congestion reduction 
activity. The operational improvements we talk about, the list 
of 77, that is another piece. A third piece is the airspace 
redesign. Other than these initial heading changes, we will not 
have any other operational changes with noise effects until the 
fall.
    Mr. Olver. My impression is that the delay system, some of 
the worst certainly have been in that New York system.
    Mr. Sturgell. It is.
    Mr. Olver. And then it ripples into virtually every place 
else.
    Mr. Sturgell. It does.
    Mr. Olver. And you are thinking we are now beyond that, 
that the redesign is managing to have some impact on that?
    Mr. Sturgell. Well, this is a very, very small piece of the 
redesign. The redesign is going to take several years to----
    Mr. Olver. Redesign just in that area, just in that----
    Mr. Sturgell. Just in that Philadelphia/New York/New Jersey 
area.
    Mr. Olver. Where else are you in the midst of--can you 
describe some of the other key places where you are doing 
redesign?
    Mr. Sturgell. Sure. We have done a lot in Chicago that will 
be coming on line with the new runways. We are currently making 
some changes in the D.C. area with the airspace that the 
Potomac TRACON controls. We did some airspace redesign in south 
Florida when Fort Lauderdale became such a significant delay 
problem a couple of years ago. Improving the airspace is as 
important to delay reduction, safety, and efficiency as runway 
projects. It is a very important part of the system.
    Mr. Olver. This sounds like a lot of moving parts. I am 
wondering when we will begin to see people smiling and not 
complaining about the level of delays and that ripple effect 
that seems to have been coming out of that area.
    Mr. Sturgell. Well, there will still be delays.
    Mr. Olver. Weather delays.
    Mr. Sturgell. Weather delays and some level of delay with 
the operation itself. But we are predicting right now at 
Kennedy that we will see a 15 percent reduction over last year 
and a more significant reduction in chronic delays over an 
hour, which I think are the delays that really get to people.
    Mr. Olver. By next year.
    Mr. Sturgell. By this summer, yes.
    Mr. Olver. By this summer?
    Mr. Sturgell. Yes.
    Mr. Olver. You think you can begin to see some results that 
you are going to rely on?
    Mr. Sturgell. Yes. We had a similar problem in Chicago 
several years ago, and we have caps at Chicago, which we intend 
to lift pending the development of their new runways that are 
coming on line in the fall. But it took us about three rounds 
of voluntary reductions to get to a level of delay reduction 
that we thought worked for the system. So this is our first cut 
at New York.
    Mr. Olver. You will get much better with time. Mr. 
Knollenberg.
    Mr. Knollenberg. Mr. Chairman, would Mr. Rodriguez like to 
precede me?
    Mr. Olver. Well, we were sort of starting that second 
round, and I was giving him time to gather his thoughts.
    Mr. Knollenberg. I can do it either way.
    Mr. Olver. Are you ready to go?
    Mr. Rodriguez. My problem is, I do not gather my thoughts, 
but that is okay. Thank you.
    Thank you very much for yielding.
    Mr. Knollenberg. You are welcome.
    Mr. Rodriguez. Let me ask you, I know that we have been 
talking about going into a new system for the air controllers. 
Where are we at on that situation?
    Mr. Sturgell. Well, we have the plans right here today. We 
have already begun implementing parts of the Next Generation 
air transportation system. The 2009 request has ramp up in 
research, engineering, and development dollars as well as a 
ramp up in capital program dollars; $600-plus million of it is 
dedicated to the efforts surrounding the Next Generation 
system.
    Mr. Rodriguez. And I know the administration has requested 
a 22 percent cut on resources for, I think, is it for the 
renovations and those kind of things? Does that have an impact 
on that?
    Mr. Sturgell. 22 percent cut in renovations. Sir, it was 
pointed out earlier there is a reduction in some of the legacy 
dollars.
    Mr. Rodriguez. Airport Improvement Programs.
    Mr. Sturgell. Okay, Airport Improvement Programs. The level 
we proposed is not the level that was enacted in 2008. I think 
you need to look at the level we proposed in conjunction with 
our reauthorization proposal. It increased passenger facility 
charges, which would bring an additional $1.5 billion to the 
airport community. So when you add up the $1.5 billion and the 
$2.7----
    Mr. Rodriguez. You are sure that is not fuzzy math? I saw 
that in the VA Committee for 8 years.
    Mr. Sturgell. This is an increase.
    Mr. Rodriguez. This is actual dollars coming in. Okay. Now, 
does that have any impact on implementing this program as we 
look in terms of renovating and looking at the technology that 
is going to be utilized?
    Mr. Sturgell. Well, we are certainly hoping airports 
continue to construct and build new runways, which will be 
important for the system.
    Mr. Rodriguez. As we go into the new system, you know, what 
is the proposal in terms of the requests and the training that 
is going to be needed, and also, in the retirement of the air 
controllers, in terms of the percentage dropping out and we are 
having to retrain?
    Mr. Sturgell. This year and last year, we have increased 
the controller workforce by over 500. The 2009 request has 
another net increase of 306 controllers. So we are continuing 
to grow this workforce. As I see it, what we want is not fewer 
controllers, but controllers able to handle more traffic. With 
a much more automated system, they will be able to do that.
    Mr. Rodriguez. Okay. And now, the only thing I can tell you 
is the difficulty we are having with Border Patrol people as we 
try to train as much more we are having some problems with the 
quality and those kind of issues. And so you are saying you 
have got 500 in 1 year?
    Mr. Sturgell. Over 2 years.
    Mr. Rodriguez. Over a 2-year period?
    Mr. Sturgell. Over 2 years. And another 300. Training is 
going to be one of this agency's highest priorities over the 
foreseeable future. It is going to be extremely important that 
we execute on the training.
    Mr. Rodriguez. I know also Congresswoman Roybal-Allard and 
others have brought up the issue in terms of diversity in that 
area.
    Mr. Sturgell. Right.
    Mr. Rodriguez. The only way I figure that you are going to 
get that diversity is where those schools are located. And I 
know there are some attempts out there for some to get 
certified in that area. Have you all looked at that at all?
    Mr. Sturgell. We expect this spring to be adding additional 
schools to our Collegiate Training Initiative program, which is 
where we are getting over half of our new controllers.
    Mr. Rodriguez. Okay. Well, I would hope as you get those 
new schools that you look in terms of the locality of those 
schools to look at that diversity. Otherwise, it does not 
happen.
    Mr. Sturgell. I think that is important, yes.
    Mr. Rodriguez. Internationally, as we look--do you have 
any, in terms of what occurs here internationally in our places 
abroad, do you have control over that?
    Mr. Sturgell. We have a number of international offices at 
the FAA, and we do a large amount of work in the international 
arena.
    Mr. Rodriguez. How are we doing there? Do you feel 
comfortable where we are at?
    Mr. Sturgell. I do. I think we are working very effectively 
with the Europeans to harmonize changes in air traffic, as well 
as making agreements with folks like China, which we see is a 
country rising in the aviation ranks.
    Mr. Rodriguez. Okay. Because as we look at that new 
proposal by the President for $1.4 billion to Mexico, and I am 
wondering if there is any attempt there to try to work with 
that other committee as it deals with those resources, if some 
of that could be utilized in Mexico. And also, actually, I do 
not think we provide anything for Canada, but if we are 
allowing resources to go in there as a way of also safeguarding 
our situation there right across the border with Mexico and 
looking at those resources. Is there any attempt that you know 
right now?
    Mr. Sturgell. We have a substantial amount of involvement 
with both Mexico and Canada at the FAA. In fact, once a year, I 
meet with the heads of my counterparts from Mexico and from 
Canada. And we are involved in a number of activities and air 
traffic oversight.
    Mr. Rodriguez. And one last question if I can, Mr. 
Chairman, and I will stop, I promise. That is, I just heard 
this morning when we talk about internationally, and also 
Mexico and other places, although it was in Spanish, the 
problem we have with language. I heard that on TV today. That 
seemed like a very serious situation there. At least what I 
heard over the TV, where the person was telling them, you know, 
do you have authorization? And I think it was Chinese, I am not 
sure, and did you hear that?
    Mr. Sturgell. I did not.
    Mr. Rodriguez. On TV?
    Mr. Sturgell. I did not.
    Mr. Rodriguez. Somebody in your department I am sure 
probably heard that. We have got a serious problem when they 
are told to stop and they do not have--and the person is 
assuming they are saying something else and was not getting it. 
And so have we had any problems with that?
    Mr. Sturgell. Well, English is the language for the 
international aviation community. And all the nations are 
involved in English proficiency and training in the English 
language.
    Mr. Rodriguez. Then I am going to tell you what somebody 
would say when you say that, si. Give you another question, si. 
That is the way it sounded when the person was talking to him 
over the intercom as he had his plane coming in. He was 
reacting as if he understood, and he did not, at least 
initially.
    Mr. Sturgell. Interesting. I will look forward to hearing 
about the story then.
    Mr. Rodriguez. You will hear about it.
    Mr. Olver. Mr. Knollenberg.
    Mr. Knollenberg. Thank you, Mr. Chairman.
    Mr. Sturgell, last summer the FAA launched an ambitious 
runway safety initiative. It was called, or is called, Call to 
Action. What is the status of this program, and how has it 
helped reduce runway incursion?
    Mr. Sturgell. We had 24 total runway incursions last year. 
We initiated that Call to Action because last year we started 
seeing a rise. We were having a very good year, and we started 
seeing a rise in the numbers, some human factors, and issues 
that were of concern to us. So we brought the community 
together--the airport community, the operators, the FAA, the 
unions involved--and we set some goals in a number of areas, 
things like lighting and markings for airports, simulator 
training for pilots, and air traffic procedures at individual 
airports. We went to 20 different airports. The fall has not 
gone as well as I would have liked, but the actions and the 
responses have been extremely good. And we are now at a point 
where I think we have seen a reduction; we are tracking with 
our performance goal for this year. We are going to continue to 
focus on this area and do more follow up. And again, we will be 
deploying more technology in the runway safety area as well.
    Mr. Knollenberg. So you see it as a positive kind of thing?
    Mr. Sturgell. I do. I think it has had a very positive 
effort, and I commend everybody that has been involved in it.
    Mr. Knollenberg. I would like to turn just a moment to get 
a feel for how well the ASDE-X system is working as a near- and 
a mid-term safety improvement. I understand that there were two 
incursions last week, or perhaps it was the week before, but 
nonetheless, what happened was wings apparently got clipped on 
different planes. In your opinion, would the installation of 
ASDE-X have prevented those incidents? And I am relating back 
to the last couple weeks on these incidents.
    Mr. Sturgell. Mr. Knollenberg, I think what you are 
referring to is a ramp incident. These are cases of planes 
taxiing and perhaps the pilot misjudging the distances between 
the wing tips, as opposed to a runway incursion. I think those 
events are still under investigation, so I am not sure what the 
final result is.
    Mr. Knollenberg. You do not know if that has an impact or 
not?
    Mr. Sturgell. I do not think on these particular incidents.
    Mr. Knollenberg. In the eight commission places that ASDE-X 
has been installed has it eliminated the class A and class B 
incursions?
    Mr. Sturgell. It has not eliminated them. And I do not know 
that we can ever eliminate this issue because of the human 
factors involved. Certainly technology would help, and 
certainly we are taking a layered defense approach. It has a 
lot of benefit to us in this area.
    Mr. Knollenberg. This is maybe a futile example, but is it 
like the automobiles perhaps, if they can do something about as 
you approach the vehicle, it starts to buzz in the cockpit or 
some such so they know they are a little closer than they 
should be? Maybe that does not apply as well to the 
aeronautical end of it. But it does work on automobiles. I know 
that.
    Mr. Sturgell. The NTSB has been at us for years to get a 
direct warning into the cockpit. And we are working very hard 
to find that particular solution. This is an area you cannot 
let up on. You have to keep driving and driving the number 
down.
    Mr. Knollenberg. Based on what you know now, would you 
recommend that ASDE-X installation be accelerated despite 
these----
    Mr. Sturgell. I have accelerated it the best that I can. We 
brought it to Chicago about 2 years ahead of time, and we are 
bringing it to Kennedy about a year ahead of time. So, at this 
point, we have done what we can. That may end up adjusting the 
cost of the program in the long run. But I think that is money 
that is well spent.
    Mr. Knollenberg. Yeah. I have an interest in this because I 
understand that Detroit is scheduled for----
    Mr. Sturgell. This year.
    Mr. Knollenberg [continuing]. For August installation. So 
it does interest me. But it does continue, and it will continue 
for as long as you can see right now.
    Mr. Sturgell. Yeah. We have got it going to 35 of our 
biggest and most complex airports. We are looking at a lower 
cost system to go at smaller airports.
    Mr. Knollenberg. Actually the damage that is done in these 
incursions typically is pretty minor, isn't it; or am I wrong.
    Mr. Sturgell. Fortunately we haven't had one in many, many 
years. These can be very catastrophic collisions.
    Mr. Knollenberg. Obviously, I know, but it seems to me that 
you are winning to some extent by virtue of what has taken 
place thus far. So we should stay tuned is what you are saying?
    Mr. Sturgell. We are working very hard on this particular 
area.
    Mr. Knollenberg. Thank you very much.
    Mr. Olver. I am going to continue a little bit on the ASDE-
X here. I have a feeling my Ranking Member is working from my 
playbook here as well, but I will try to cover a little bit of 
additional ground, maybe not quite as specific.
    You mentioned 35 places the ASDE-X system is sort of the 
platinum standard for at least cost. I mean platinum is fairly 
costly these days, passed $200 an ounce more than a few days 
ago, and you have only installed--is it 11 or is it 8?
    Mr. Sturgell. I think 11 is right.
    Mr. Olver. That is now installed. Are you still headed 
toward trying to do 35, is that the plan? My impression was the 
recognition of how expensive this was, that you were now 
looking at some lower-cost kinds of provisions in testing those 
out. So I would like to ask you something about how this 
testing on the lower-cost incursion prevention mechanisms that 
you are working out, how that is--when are we going to see 
results of that and how is that going to change what you think 
is the appropriate place that we use ASDE-X versus some of the 
lower-cost stuff.
    Mr. Sturgell. The ASDE-X program is planned for 35 
airports. I don't see it being any fewer than 35 airports.
    Mr. Olver. Is that supposed to be the busiest? When you 
speak of busiest, is it enplanements or is it operations or a 
combination of both, or what?
    Mr. Sturgell. It is operations and a number of factors: 
operations, type of operations, complexity of the airport 
itself, past history at the airport. There are a number of 
things that go into the investment decision, and it is the gold 
standard right now. It is about $14\1/2\ million per airport 
for that system.
    Mr. Olver. You never make it easier for me. I can't keep 
all of those different things in the right cubbyhole for the 
right ratio of the total scoring that goes into how you make 
that decision. I was looking for something that I could see a 
list of airports and go down it and find number 35 and say, 
well, that is where we are going.
    Mr. Sturgell. I could give you that list, yeah.
    Mr. Olver. But it wouldn't relate to any one of the other 
lists, I suppose, is the problem.
    Mr. Sturgell. The other technology that is coming behind 
this is runway status lights, which interact with ASDE-X, and 
which we now have at Dallas/Fort Worth and San Diego. And Los 
Angeles just put up their own money to allow us to bring this 
system there for further testing. Right now we are looking at 
an investment decision this summer and going forward in 2009 to 
some extent.
    You talked about lower-cost systems. We are testing two 
systems in Spokane that are much, much lower cost than the 
ASDE-X system and do not have all the bells and whistles of 
ASDE-X. But it is another tool, additional information that we 
can give to the controller workforce to help in this area.
    Mr. Olver. Are you hoping then to do this group of other 
mechanisms that are lower cost than our platinum system up to 
the point of 35, or is--do you have any idea where it is going 
to be appropriate, how far up the list of complexity business, 
enplanements, whatever that factor is, how far up--are you 
really planning to do only 35, or is that still very much up in 
the air and all the others on the lesser mechanisms?
    Mr. Sturgell. Right now we are only planning ASDE-X at the 
35 airports under the current program. We have not made any 
concrete decisions about what to do with numbers 36 and beyond. 
Part of it does go to the investment case, the business case, 
the cost of technology, and the problems at the particular 
airports in terms of runway incursions or traffic management or 
other safety issues.
    Mr. Olver. Okay.
    Mr. Sturgell. That is just part of our acquisition 
management process and our investment analysis of these 
technologies.
    Mr. Olver. I want to--let's see where we are here. I am 
still green--well, I am about to go yellow or red.
    You can have another round here.
    Mr. Knollenberg. Me?
    Mr. Olver. Yes, Mr. Knollenberg.
    Mr. Knollenberg. Thank you, Mr. Chairman.
    I am going to move into another question on the next 
generation. According to your NAS capital investment plan, 
between 2009 and 2013 the Nation will invest over 3 billion in 
new technology and over 300 million in research to implement 
the next-generation technology for aviation travel. I have been 
told that the total funding by 2025 will be between 15 and 20 
billion by your own estimate; is that right?
    Mr. Sturgell. That is correct.
    Mr. Knollenberg. Annual funding request will steadily rise 
over the next 5 years to reach a staggering 900 million in 2012 
and 2013. Needless to say, those of us in the business of 
appropriating funds need to be cautious before we jump into 
that ocean.
    As a matter of process and to get a better handle on who 
needs what, is it possible for JPDO to submit a consolidated, 
unified cross-agency budget request showing all the partners 
and how each is part of or impacted by the request? If you do 
that now just for internal purposes, could you share that with 
this committee if you were in that process at the present time?
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    Mr. Sturgell. I think the individual departments and 
agencies involved in the NextGen system and JPDO highlight 
next-generation programs in their individual budgets. I think 
we ought to be able to put that together for you and show you 
what other agencies are spending in this area as well.
    Mr. Knollenberg. Next, the NextGen transformation indicates 
that 5 new business models have to be decided: The ADS-B 
system, white information management, data communications, 
national voice switch and weather enabler. I don't know what 
the last one is, but I know you do.
    Has a business model for each of these been approved or are 
initial investment decisions still pending on some; and, if so, 
which ones among those that I mentioned?
    Mr. Sturgell. I think investment decisions for some of them 
are still pending. They are in various stages. ADS-B was a 
program that we began last year and I have pretty much approved 
that program in segments. You have a contract in place. After 
an initial 3-year period I believe we will make the decision on 
whether to continue with that effort or not. But as far as our 
own acquisition analysis, that is the most advanced program of 
the five that you listed. And I guess the next one would be the 
systemwide information management system, which I think Phase I 
has been through our process and approved.
    Mr. Knollenberg. Uh-huh.
    Mr. Sturgell. The others are in various states of 
investment analysis. These are five foundational programs that 
are part of this system.
    Mr. Knollenberg. Does it look like all of them will be 
implemented in time, maybe at a different pace, but 
nevertheless they are all being considered?
    Mr. Sturgell. They are all being considered. I think the 
question, as you said, comes down to time. Are we going to be 
able to roll out some of the changes to the system fast enough 
to keep pace with the predicted demand? Our focus area is the 
2015-2016 time frame because that is where we see at least two 
times growth in some particular areas which could become 
problems for us.
    Mr. Knollenberg. Some of this will be based on existing but 
yet-to-be-fully-tested kind of technologies, too, I would 
assume. So you are partially blind about guaranteeing what will 
develop in the next few years. But sometimes we will have to 
wait for some other research, I guess, to blend into the 
formula here to bring about a success.
    Mr. Sturgell. There is a fair amount of research involved. 
I think the difference, though, is that a lot of this 
technology exists and has been proven in different areas. 
Certainly, we've had ADS-B up in Alaska for many years now. It 
is a proven technology and a number of countries around the 
world are moving out with it. Systemwide information 
management, the Department of Defense is heavily involved in 
these types of programs. NASA is heavily involved in better 
weather forecasting products.
    Mr. Knollenberg. That is such a buttress of what you are 
trying to accomplish, I would think, isn't it?
    Mr. Sturgell. Right.
    Mr. Knollenberg. I noticed earlier that NextGen technology-
related funding has increased to $631 million. Funds to upgrade 
existing systems would be reduced by $237 million from the 2008 
enacted levels. Given the long lead times that NextGen 
implementation will involve, and given the rather urgent needs 
to upgrade equipment and facilities now, I would like your 
assurance and explanation why the trade-off is worth it. You 
believe it is?
    Mr. Sturgell. Sure. Mr. Knollenberg, two things I think you 
need to consider: One is that the actual funding level for the 
capital programs goes up by about $210 million, so that is part 
of the trade-off. The other one is if you look at some of the 
legacy programs, they are in stages where they are winding 
down. The En Route Automation Modernization program, for 
example, ERAM, is down $165 million in 2009 from its 2008 
request, and that represents where that program is in its life 
cycle. The ATOP oceanic system is down by about $32 million in 
2009 because it is largely deployed and it has been a very 
successful program.
    Mr. Knollenberg. I guess my question is why we are not 
sometimes greatly accelerating the implementation of runway 
lights and the STARS to avoid accidents now. I presume that is 
the case, is it not? The fact that we are not----
    Mr. Sturgell. We are trying to move out on these programs 
as quickly as we can.
    Mr. Knollenberg. Accelerating, are you, at a very rapid 
pace?
    Mr. Sturgell. I think bringing in ASDE-X in a year is 
something that is going to be very challenging. It is something 
that has probably not been done before.
    Mr. Knollenberg. So innovation is part of your repertoire.
    Mr. Sturgell. Yes, yes.
    Mr. Knollenberg. Thank you very much.
    Mr. Olver. I think we are going to run down eventually here 
back and forth. We can hardly keep ahead of each other, I 
think. I want to take up----
    Mr. Knollenberg. Truce.
    Mr. Olver. I want to take up one more sort of staffing 
issue. You know we have spent a lot of time back and forth over 
the controllers and training and how to get the training time 
down. A number of years ago, you know, and the numbers as you 
pointed out gross new trainers--the 1,800, 1,800 and 500 more 
we are putting in--what that will end up with by the end of the 
year we will see. But we rarely talk much about the other large 
group of technicians and inspectors, maintenance technicians, 
and inspectors. And I think that the IG has indicated in some 
recent report, maybe you know what I am talking about--but I 
think you said by the year 2012 something like 50 percent of 
the inspectors are eligible for retirement. That is a number 
not well--we are well into the 72 percent. We have already gone 
through a certain portion of the 72 percent. They have already 
retired in the case of controllers. How many more we will have 
by 2012, I don't know exactly, in that 4- and 5-year period.
    But now on the inspectors, how much of a problem do you 
think that is going to provide us?
    Mr. Sturgell. I think the FAA is representative of the 
Federal Government as a whole. It is not just our controllers, 
it is other parts of the agency. A lot of parts of the agency 
face the same retention and recruitment challenges we are 
facing in the controller workforce. Inspectors----
    Mr. Olver. Providing for only about 40, I think is the 
request in new inspectors, do you think that that is 
representative of the need if we have got that many--if 50 
percent is right, that is a big group, isn't it? Is the 
inspectors 3,000, something like that?
    Mr. Sturgell. It is over 3,000. The increase in the 2009 
budget is the part of that workforce that oversees the Air 
Traffic Organization, the Safety Oversight Office. Over the 
last several years, Mr. Chairman, the Office of Aviation Safety 
has, with your support and Senate support, gone up by over 400 
people. That is a much higher rate than we have typically grown 
that workforce. What we need to do is balance that workforce 
out and, with that kind of increase, that we take 2009 and make 
sure they have the right training, that they are deployed in 
the right places, and that they have the right tools to conduct 
the effective oversight that they need to do. That is where we 
are.
    Mr. Olver. You have sort of triggered into what I was going 
to go into next, which is my understanding is that we have a 
lot of outsourcing of maintenance of our fleets, of airplanes. 
I don't know, when I say a lot, maybe you can tell me what 
proportion of the maintenance by, for instance, legacy airlines 
is now being done in other places? I am hearing we have sites 
in Singapore, in Europe, in Central America, El Salvador, 
Mexico and so forth, that are going on. Can you give me a sense 
of how much movement there is to do the outsourcing of this 
maintenance?
    Mr. Sturgell. I can't tell you offhand what percentage is 
outsourced. I think we have that data, and I could get you that 
data.
    Mr. Olver. I would like to have that data, what is the best 
we know and how that is growing, some sort of rate of what it 
was in the last--in 2006, and what the rate--I love graphs that 
tell me where we are headed. You can get a trend line rather 
than having one dot on the line, which doesn't tell us very 
much.
    [The information follows:]

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    Mr. Sturgell. Right.
    Mr. Olver. Then it is useful, I think.
    Mr. Sturgell. I can get you that. It is a global industry 
and there are 700 foreign repairs stations that we oversee at 
this point, but there are 4,000 domestic repair stations here.
    Mr. Olver. How many inspectors are we using to keep track 
of those locations? And it can't get down to looking at what 
and verifying what has been done with each of the planes, I 
would assume.
    Mr. Sturgell. Each one of these gets either----
    Mr. Olver. They don't have to work at these places----
    Mr. Sturgell. They either get an inspection from us 
annually or a renewal, the foreign repair stations. They also 
get overseen by other countries for which they are doing 
business with their carriers, as well as the country where they 
are located. Aviation safety has evolved: it is no longer just 
you go out and touch the airplane, you kick the tires, that 
kind of inspection and oversight process. That is still a piece 
of it, but it has moved to a much more risk-based system safety 
approach in terms of overseeing the systems involved, the work 
involved, and the carriers and these repair stations.
    Mr. Olver. Oh, is 40--30 enough here?
    Mr. Sturgell. It is 30.
    Mr. Olver. Cheryle tells me it is 30.
    Mr. Sturgell. Cheryle is right.
    Mr. Olver. Well you could tell me, you could correct me. I 
would be perfectly happy if you correct me. Do you think that 
is meeting the needs of this outsourcing situation as it is 
evolving?
    Mr. Sturgell. I do, because of the growth in the workforce 
over the prior years. Again, it is a growth level that we 
traditionally have not used. Now we are developing a staffing 
model over the next year and a half or so which will help us 
nail down our needs more precisely.
    We have been submitting staffing plans to the Congress 
about where we are with this workforce.
    Mr. Olver. I will wait and see what data you give me as to 
how the outsourcing and proportions of that kind of work is 
moving over a period of time. If you have that kind of data, 
that would be good.
    Mr. Sturgell. Sure.
    Mr. Olver. And from my point of view, on the other large 
group of your employees, which is the maintenance technicians, 
my understanding was there was a labor agreement which set a 
floor of 6,100 persons in the maintenance technician category. 
How are we in relation to that? I understand there is a 
grievance that has been issued because that is somewhat below. 
Is it actually somewhat below and what gets done about that?
    Mr. Sturgell. Sure. You are correct. We do have a 
contractual agreement with our airway system specialists, our 
technicians in the air traffic organization, which requires us 
to maintain a level of at least 6,100 persons in this 
workforce.
    For about 2 years we had achieved that. In January, which 
as you know is traditionally a high retirement month for folks 
in the Federal workforce, we went below the 6,100. We were not 
able to recruit enough to match the unexpected attrition we had 
during that time frame. So we missed January, and I suspect we 
will likely miss February because we need to ramp up the hiring 
side. I am hoping we can get this corrected quickly. There is a 
ULP that is filed, you know. We will probably be required to 
maintain this level for the months which we have missed it 
beyond whatever date----
    Mr. Olver. That agreement may have been made years ago. Is 
there any reason to think we don't need 6,100 people in that 
category nowadays?
    We seem to have more planes all the time, we are expecting 
more traffic. Probably there will have to be a certain amount 
of maintenance done on all of it, even if a fair amount of it 
is relatively moderate.
    Mr. Sturgell. Right. We are in contract negotiations with 
that union, which do include the staffing level. Right now 
there are some issues related to litigation, which I can't 
really get into in terms of where we are, but we are expecting 
some----
    Mr. Olver. There are always issues.
    Mr. Sturgell. Yeah. We have 9 unions, and we have 44 
bargaining units. The agency is over 80 percent unionized and 
these agreements ofte take a long time to work through.
    Mr. Olver. Thank you very much.
    I have just about run out.
    Mr. Knollenberg. You are finished? That is good because of 
the fact that I have a 4 o'clock appointment----
    Mr. Olver. If you want to close out, or I will close it 
out.
    Mr. Knollenberg. I will do that and be relatively brief on 
this. Following up on Mr. Olver's question concerning the AVS 
resource cap. With respect to the increase in delegators or 
designees, outsourced individuals I guess, is there any concern 
that most designees are members of the industry that you are 
charged to regulate?
    Mr. Sturgell. Mr. Knollenberg, I know people raised that as 
an issue, but I think it is important to understand that the 
folks who are designees on behalf of the FAA prize that 
designation. And my sense is that they value that and they 
would not want to jeopardize that.
    Mr. Knollenberg. You did say prize, right?
    Mr. Sturgell. As in value, yes.
    Mr. Knollenberg. With respect to the safety management 
system, how dependent is the risk-based model on self-reported 
information that is exempt from penalty. As a general matter, 
has the ability of individuals to report without the threat of 
punishment provided the FAA with valuable and verifiable 
information?
    Mr. Sturgell. I think the voluntary self-disclosure systems 
that are in place have played a substantial role in improving 
the safety record of the industry. Now, I know there are 
individual cases where there are lapses in certain events, but 
I don't think that should affect the overall benefit we get 
from these programs. Of course disclosure, who is involved, 
that kind of thing, it is very important that we protect that 
to the maximum extent possible to make these programs work.
    Mr. Knollenberg. There is a requirement to have the 
confidentiality of this information to be protected----
    Mr. Sturgell. Right.
    Mr. Knollenberg [continuing]. Through that process, right?
    Mr. Sturgell. It is extremely important.
    Mr. Knollenberg. We are aware that the workload for the 
engineers and other staff needed to install this new surge of 
new-generation equipment, as well as the other facilities and 
equipment, will increase significantly.
    However, it appears that the staffing level for the F&E, 
facility and equipment, declines by more than--and this is a 
little out of my book, beyond my book, I should say-- declines 
by more than 50 work years to 2,830 work years. I know there is 
a significant thing happening here. I just don't know how to 
interpret it precisely.
    If that is correct, and if so, what is the rationale for 
the declining workforce in a new era of increased equipment 
installation?
    I can repeat that question if you wish, but if you got it 
down----
    Mr. Sturgell. I will look into the numbers. I know the 
dollar amount has gone up, but I think the numbers are less 
important than the particular skill sets. We have increased in 
areas like program management, contracting officers, 
contracting technical representatives, systems engineers, which 
are going to be important as these new programs come on line.
    Mr. Knollenberg. The traffic management specialist manages 
the flow of air traffic nationwide in the system command 
center, and as you well know, are considered the most 
experienced, I presume, and the most senior controllers in the 
FAA; is that not true?
    Mr. Sturgell. I don't know if that is true as a general 
statement. The workforce overall is fairly senior. They are 
certainly one of the more specialized parts of the workforce.
    Mr. Knollenberg. Given the large number of controllers 
leaving and being replaced by the entry-level controllers over 
the next several years, what measures do you have in place to 
be sure that the command center will always have the level of 
experienced controller or controllers available?
    Mr. Sturgell. Well, we do have capability to use 
recruitment bonuses, incentives like PCS moves, and different 
things like that to attract people into these positions. I see 
the traffic flow management piece of the agency playing a 
bigger and bigger role in our operation of the system itself, 
just like the rest of the workforce. We are putting a lot of 
emphasis on recruiting and bringing in the right people, and I 
am not seeing any issues along that line at this point.
    Mr. Knollenberg. I think I am complete with my questions 
and I want to appreciate very much your being here, Mr. 
Sturgell. This is helpful to us and it is also important that 
we have this tug of war, so to speak, and it is not a tug of 
war, it is just asking information and getting----
    Mr. Sturgell. I appreciate the discussion.
    Mr. Knollenberg. I think we have had a good discussion 
today, Mr. Chairman. I will yield back to you and I am 
convinced I am done, too.
    Mr. Olver. Well, I thank you.
    Mr. Berry, you have arrived just in time to forestall our 
adjournment. So we will let you have 5 minutes now, okay.
    Mr. Berry. Well, I apologize for my tardiness, Mr. 
Chairman, and I appreciate you yielding me some time. I will be 
as brief as I know how.
    The air traffic controllers in the locations in the 
district that I represent, the morale is terrible. We have 
press accounts on a frequency that is, I think, of concern 
about near accidents and things that are going wrong in the 
towers and on the runways, and complaints from the people that 
are doing the air traffic controlling that they are being 
basically abused by whoever the managers are on those locations 
with their work rules.
    I know you imposed a labor contract without collective 
bargaining in the fall of 2006. Why was that done?
    Mr. Sturgell. Mr. Berry, as much as we would have liked to 
have reached a voluntary agreement, the parties were simply too 
far apart on the few remaining issues that were left. We did 
reach agreement on over 90 percent of the issues in that 
contract. But on the few remaining, like specialty pay, we were 
just too far apart. So we followed the law. We followed the 
procedures that Congress put in place, and the litigation just 
this month or a couple of weeks ago has come to an end with the 
Federal Labor Relations Authority. They have ruled that we did 
follow the law and we did bargain in good faith. As much as we 
would have liked to have gotten a voluntary agreement, we just 
could not.
    Mr. Berry. Do you consider that there is any risk involved 
in the extended hours and the uncertainty of the hours that are 
being imposed on some of these ATC workers and the unusual 
requests that are being put on them by having them come in 2 
hours earlier one day, then the next, and work through two 
heavy schedule times during the day and things like that?
    Mr. Sturgell. Well, I would be interested in the specifics 
to which you are referring. But I would say, in general, it is 
not unlike the way we have run the system before this contract. 
Sometimes we do call people in ahead, sometimes we call them in 
for overtime. It is the nature of the business. We have tried 
to set our staffing to the traffic levels we see at facilities. 
And as we discussed earlier, we are in a tremendous transition 
period in terms of number of retirements and replacing those 
retirements with new controllers, and there is a lot of 
training going on.
    I know we have individual facilities that we need to better 
focus on. Butwe are at 2 percent overtime, and systemwide the 
workforce continues to grow and the training continues to take 
place. If there are specifics that I think were inappropriate, 
I will take a look at them.
    Mr. Berry. I have to tell you I think you have a serious 
problem in Memphis and somebody needs to see about it this 
afternoon. I am going to fly in there in the morning, and I 
would like to have it fixed before I get there.
    Mr. Sturgell. And the problem goes to----
    Mr. Berry. I think you have a serious morale problem and a 
management team that has abused workers, and it creates a 
safety issue for the entire--that cover a huge part of the map 
down there, and it reaches almost to here anyway. And I am not 
an air traffic controller nor an expert in these matters, but I 
know unhappy people when I see them, and they come to me a lot. 
And I don't think that they are being frivolous or just trying 
to cause trouble or anything like that. I think there is a 
problem there and I think it needs to be dealt with.
    Mr. Sturgell. Well, I appreciate that. I think they do a 
great job, and the Fed Ex hub there is a tremendous asset to 
the economy. I will talk to the chief operating officer about 
it.
    I do want you to know we have tried in a number of areas to 
resolve the lingering dissatisfaction from the contract of 
September 2006 which has been in place about 18 months now. We 
made a substantial settlement offer last summer. There is a 
substantial settlement offer on the table today. So I am hoping 
we can get there.
    We have also instituted or are instituting other things 
like a child care subsidy and tuition reimbursement. I started 
talking to TSA about a new program to get that started for our 
controllers. We are working on this a great deal, and I just 
want you to know that.
    Mr. Berry. Thank you. Thank you, Mr. Chairman.
    Mr. Olver. Thank you, Mr. Berry.
    You have raised that issue antenna up and we will follow 
that up. Thank you very much for being with us today. We are 
very grateful for your testimony and for the back-and-forth 
that has gone on in the course of the afternoon. Thank you very 
much, the hearing will be adjourned.

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                                          Wednesday, April 2, 2008.

HIGHWAY AND TRANSIT PROGRAMS: THE DOT PERSPECTIVE ON THE URGENT FUNDING 
                      NEEDS FOR TODAY AND TOMORROW

                               WITNESSES:

PHYLLIS SCHEINBERG, ASSISTANT SECRETARY FOR BUDGET AND PROGRAMS AND 
    CHIEF FINANCIAL OFFICER, U.S. DEPARTMENT OF TRANSPORTATION
JAMES SIMPSON, ADMINISTRATOR, FEDERAL TRANSIT ADMINISTRATION
JAMES RAY, ACTING ADMINISTRATOR AND DEPUTY ADMINISTRATOR, FEDERAL 
    HIGHWAY ADMINISTRATION

                   Opening Remarks by Chairman Olver

    Mr. Olver. The Committee will come to order. Let me welcome 
Phyllis Scheinberg, the Assistant Secretary of Transportation 
for Budget and Programs; Jim Simpson, the Federal Transit 
Administrator; and Jim Ray, the acting Administrator for the 
Federal Highway Administration.
    This year's surface transportation hearing is going to 
consist of two panels. This morning we will explore with this 
panel whether the President's fiscal year 2009 budget request 
for surface transportation programs to prepare the nation to 
meet our short and long-term transportation challenges.
    Our second panel this afternoon will be with members from 
the National Surface Transportation Policy and Revenue Study 
Commission, and Commission members will share their views on 
what policy and transportation financing changes may be needed 
to ensure that our surface transportation system is able to 
meet the demographic and economic challenges into the future.
    For our panel this morning, the most immediate challenge 
that the Congress will face is the solvency of the Highway 
Trust Fund. The Highway Trust Fund will go broke in fiscal year 
2009, and the future viability of transportation financing is 
in doubt. The administration has put forward two proposals to 
forestall the impending collapse of the Highway Trust Fund.
    First, the administration has recommended underfunding the 
highway program. President's budget requests $39.4 billion for 
the highway program, which is $800 million below, again, the 
amount guaranteed in the SAFETEA-LU authorization.
    Even with this adjustment, the administration projects that 
the highway account will still run a negative balance of over 
$3 billion by the end of 2009, so short funding the guarantees 
will have very little impact on keeping the highway account 
solvent.
    The second proposal from the administration is both short-
sighted and controversial. The administration has recommended 
allowing the highway account to borrow money from the mass 
transit account to make up the shortfall. Now, this proposal is 
potentially harmful to transit, certainly.
    Taking money from the mass transit account will only hasten 
the bankruptcy of that account as the backlog of transit 
projects nationwide grows. The proposal is also extremely 
short-sighted in that it does nothing to address the long-term 
solvency of the overall fund and provides no guidance as to how 
to pay for the urgent future needs of our highway system.
    Concerning transit, the administration has requested 
$10.135 billion for Federal Transit Administration, which is 
just over $200 million below the amount guaranteed in SAFETEA-
LU. Every year the need to improve our nation's public 
transportation system grows. A case in point, SAFETEA-LU 
created a New Small Starts Program for smaller, less expensive 
fixed guide way projects, such as bus, rapid transit, commuter 
rail and streetcar projects.
    While this program is only a few years old I would note 
from the budget request that there are sufficient projects in 
the pipeline to utilize the fully-authorized level of $200 
million. The National Service Transportation Policy and Revenue 
Study Commission believes our nation's annual public 
transportation needs are in the range of $26 billion to $46 
billion, which is at least two and a half times this year's $10 
billion request.
    Yet, the President's budget does not even meet the fully-
authorized level for the New Starts Program. Furthermore, 
communities across the country have complained that the new 
starts process has become too lengthy and that FTA does not 
adequately incorporate economic development and land use 
criteria into the rating system for new starts, as required by 
law.
    Mr. Simpson, I hope we can explore these issues with you 
when we get to questions. I am also very interested in 
promoting a transit-oriented development and the need for 
affordable housing within these transit corridors. In the 2008 
budget, which was enacted in December, the Congress included 
funding for both the FTA and HUD to develop a best practices 
manual for local communities who want to establish or increase 
mixed income, transit-oriented development.
    We also requested that the FTA and HUD report back to us on 
how they would better coordinate and provide incentives within 
existing programs to promote affordable housing near transit, 
and I will be interested to hear more about FTA's progress on 
that endeavor with HUD.
    Finally, I would like to close with some general thoughts 
on our surface transportation systems. How we fund and think 
about transportation is clearly at a crossroads. The needs of 
the system are rising. The Policy Commission recommended an 
average of $225 billion annually over the next 50 years.
    That is far more than twice what we presently invest in 
surface transportation by federal, state and local governments 
combined in order to maintain, upgrade and expand our 
transportation networks; yet, our ability to adequately fund 
even the present level of investment in transportation is 
clearly in doubt.
    From the ideological fervor to inject so-called premarket 
principles into transportation through congestion pricing, the 
privatization of our public roads, and constant opposition to 
raising further federal revenues for the system to the yearly 
budget request that would shortfund our rail and transit 
system, I fear that there has been a deliberate effort by the 
administration to slowly chip away at the federal role in 
transportation.
    Federal government must, in my view, remain an active 
partner with the states and local government when it comes to 
funding our transportation infrastructure. So I hope that we 
will be able to discuss each of your views on the proper role 
of the federal government in transportation policy this 
morning.
    Now, before we have an opportunity to hear from you, I 
would like to recognize my Ranking Member, Mr. Knollenberg, who 
was former Chair of this Committee, now Ranking Member, for any 
opening remarks that he would like to make.

               Opening Remarks by Congressman Knollenberg

    Mr. Knollenberg. Mr. Chairman, thank you very kindly, and 
thanks to all of you for being here today, Ms. Scheinberg, Mr. 
Ray and Mr. Simpson. I think that you can judge by the number 
of people that are here--and the reason for that is the fact 
that there is several hearings that have pulled everybody away.
    In fact, I think that check has already been made, and too 
many hearings and not enough people is what it amounts to, but 
we will get into it. Mr. Chairman, thank you. I appreciate your 
comments.
    Let me also add, I appreciate your coming before us this 
morning as we continue to evaluate the President's proposal to 
allocate some $51.7 billion for highways, for highway safety 
transit programs, as well as to discuss the future of surface 
service and public transportation programs and the means by 
which these programs will be funded in the years to come.
    As you know, fiscal year 2009 marks the final year of the 
current surface transportation authorization, SAFETEA-LU, and 
in just a few months Congress will begin the task of 
reevaluating the overarching objectives for the Federal Aid 
Highway and Transit Programs, perhaps even redirecting funds to 
meet priorities to address transportation related issues, such 
as congestion mitigation and the aging surface transportation 
and transit infrastructure.
    According to the Texas Transportation Institute's 2007 
Annual Urban Mobility Study, which was released in September of 
2007, which you are all familiar with, our nation's drivers sit 
in traffic on an average of 38 hours per year and waste 26 
gallons of fuel doing so.
    The recent collapse of the Minnesota's I-35W bridge during 
rush hour disrupted personal travel patterns as well as the 
movement of goods and freight, but even more so, a spotlight on 
the condition of the nation's transportation infrastructure.
    With statistics, such as those found in the TTI report, and 
tragedies like the I-35W bridge collapse, it is apparent that 
we have become a nation of too many people taking too many 
trips over too short of a time period on a system that is too 
small.
    For these reasons, we find ourselves in a unique position, 
a crossroads, if you will, of our nation's surface 
transportation infrastructure. This country is facing some hard 
questions. How do we combat congestion efficiently and 
effectively? Do we simply build more roads or will that just 
create more incentive to drive?
    Do we build a different infrastructure, such as high speed 
rails, instead of more roads or do we live with what we have 
for the most part, and keep it in good order and perhaps better 
allocate the cost of using highways to those who use it the 
most or cause the most damage?
    I asked this question of the Secretary and had not yet 
received a response, but I think it is worth pursuing again. 
We, in my opinion, are looking at the highway version of the 
perfect storm. At the very time we are seeing rapidly 
diminishing trust fund revenues both of the prominent solutions 
are to increase taxes, one on gasoline and one on access to 
highways; yet, we, as a nation, have just decided to pursue the 
opposite pathway.
    We have decided that it is best to reduce gasoline 
consumption through the use of new, advanced technology, such 
as the new diesel engines, hybrids, electric vehicles, lithium 
ion batteries, et cetera. We also, as a nation, have adopted 
the policy to reduce gasoline consumption at a great cost to 
the taxpayers, and we have decided to pursue alternative modes 
of transportation as well.
    As a result, the old assumptions are no longer valid. 
Gasoline consumption will no longer be so directly tied to the 
amount of travel or the amount of damage done to the highway 
system. All of this suggests that perhaps neither of the 
approaches are allocating the costs of highway maintenance of 
construction to those who will actually be using the system and 
doing the damage.
    Now, one could pursue this for a moment in both this 
morning's hearing and later this afternoon with the second 
panel, and perhaps an even more daunting question would be how 
do we pay for any and all of this because it is clear that the 
current level of highway receipts will not be sufficient to 
fund the current program. I know you all are aware of that.
    This past January the Office of Management and Budget 
projected that the Highway Trust Fund would face a 2009 
shortfall of $3.2 billion. I have heard more, I have heard 
less, but it is in that ballpark.
    In order to honor the guaranteed funding levels under 
SAFETEA-LU, the President's fiscal year 2009 budget proposal 
requests that temporary authority be granted to the Secretary 
of Transportation to advance funds between the highway and mass 
transit accounts to cover insufficient fund balances. Now, such 
a budgetary gimmick has not been used I believe since the 
1960s.
    That assumes that the funds would be there and that somehow 
it could be repaid, both of which are very huge ifs. Just one 
month prior to the release of OMB's estimates the report of the 
National Service Transportation Policy and Revenue Study 
Commission recommended an increase of 40 cents per gallon 
federal gasoline tax to be phased in over the next five years 
with automatic increases every year thereafter tied to 
inflation.
    Now, there is no guarantee that either of these suggestions 
will keep the Highway Trust Fund solvent. In my opinion, I 
believe the Chairman agrees with me, proposals to borrow from 
other funds and programs only postpone the day of reckoning. 
Big gas taxes, whatever their variety, come at what cost to low 
income families and small businesses across the country.
    These are hard questions, I know, but nevertheless, hard 
questions that require a not just ideological answers but real 
life solutions and real taxpayer dollars. We need measured 
reforms to not only what we finance but how we finance. As I 
noted with Secretary Peters who came before this subcommittee, 
I am also troubled by several other areas in the President's 
budget proposal for highways, as I am sure others on this 
subcommittee feel as well.
    I believe that we should carefully explore the unilateral 
decision by the Secretary to sweep $175 million in funds 
previously appropriated by the Committee and allocate those 
funds to five cities for a demonstration program on congestion 
pricing. Why those five? We will have a question about that.
    While certainly supportive of the Secretary's opinion that 
the price of travel should determine who gets to ride, this 
subcommittee has yet to agree to that as a matter of policy. 
The subcommittee needs to explore why the five cities were 
chosen and why their selection will in any way yield results or 
allow recommendations that are in any way representative of the 
nature of congestion that is widespread and diverse throughout 
the country.
    Mr. Chairman, I will have questions for the three 
witnesses, the specifics of the request for their respective 
programs and the pathway forward. I appreciate the opportunity 
to highlight what I think are some very serious issues for not 
just this subcommittee but for the whole Congress.
    To paraphrase the budget submission by the Federal Highway 
Administration, I look forward to exploring these topics this 
morning in an effort to strive to achieve progress in realizing 
the improvements to the nation's highway and transit system 
while looking ahead to the next surface transportation 
authorization and the challenges that lie ahead.
    With that, I yield back my time. Thank you, Mr. Chairman.
    Mr. Olver. Thank you, Mr. Knollenberg. Now, we will hear 
from the panel. Ms. Scheinberg, I hear you are going to be 
providing oral testimony for the Department. Your written 
statement is before us. We will then go on from there to your 
right, and then to your left, I guess, or maybe I should be 
doing the opposite, but we will do it that way.
    Ms. Scheinberg. Okay.
    Mr. Olver. We will do it that way. So, Ms. Scheinberg, your 
opening statement.

            Oral Statement by Assistant Secretary Scheinberg

    Ms. Scheinberg. Thank you, Mr. Chairman. On behalf of my 
colleagues, I want to thank you and the members of the 
subcommittee for the opportunity to appear before you today to 
discuss the President's budget for the Department of 
Transportation's surface transportation programs for Fiscal 
Year 2009.
    I am very pleased to report to you that the President's 
budget for all of the Department's programs is $68 billion. Of 
this amount, 76 percent, or $51.7 billion, would go to our 
highways and for highway safety and transit programs. As you 
mentioned, fiscal year 2009 is the final year of the current 
surface transportation authorization known as the Safe, 
Accountable, Flexible, Efficient Transportation Equity Act: A 
Legacy for Users, or SAFETEA-LU.
    Our request fulfills the President's commitment to provide 
the total six year, $286.4 billion investment that was agreed 
to when SAFETEA-LU was enacted in 2005. It does so without 
raising taxes or subsidizing transportation spending with other 
tax dollars. The President's request for the Federal Highway 
Administration reflects the final installment to the total 
agreement for SAFETEA-LU.
    It totals $40 billion in new budgetary resources and 
reflects a downward adjustment of $1 billion in accordance with 
the statutorily directed, revenue aligned budget authority 
calculation. The requested funding will be used to improve 
highway safety, improve the Nation's highway system.
    The request also encourages new approaches to fighting 
gridlock by proposing to use $175 million of inactive earmarks, 
and 75 percent of certain discretionary program funds, to fight 
congestion. The President's request for the Federal Transit 
Administration's 2009 budget provides a record level of 
funding, $10 billion, for federal public transit programs.
    Funding will be used to increase transit system capacity 
and improve safety. It will also leverage private investment in 
public transit through joint development activities. FTA's 
request fully funds what is needed in fiscal year 2009 for the 
New Starts and Small Starts Programs. The request for the major 
capital investment grant of $1.6 billion includes funding for 
15 existing and two pending full-funding grant agreements.
    When completed, these projects will encourage transit-
oriented development and promote new economic activity 
throughout the nation. Receipts in the Highway Trust Fund have 
not kept pace with SAFETEA-LU's funding levels. This has 
resulted in the continual decline of the cash balances of the 
Highway Trust Fund.
    During fiscal year 2009, we are projecting a possible $3.2 
billion shortfall in the highway account of the Highway Trust 
Fund. However, the mass transit account is expected to remain 
solvent throughout this time with an estimated balance at the 
end of fiscal year 2009 of $4.4 billion. This would leave a 
combined total of $1.2 billion in the Highway Trust Fund at the 
end of fiscal year 2009.
    To ensure that we can continue to meet our commitments to 
SAFETEA-LU, the Administration is proposing a new flexibility 
to manage the funds in the Highway Trust Fund. By allowing 
repayable advances between the Highway Account and the Mass 
Transit Account we will be able to support authorized levels 
for surface transportation programs.
    Within the existing tax structure our proposal would not 
impact the transit program in fiscal year 2009. The President's 
budget builds on the exciting things we are doing at the 
Department of Transportation to help us move forward on a new 
course, a course that provides a high level of safety and 
mitigates congestion.
    As we look to the next surface transportation 
authorization, we have an opportunity to come together and 
completely reassess our approach to financing and managing 
these programs. The Department looks forward to working with 
the Congress to address the challenges we face in 
transportation and to meet our transportation financing needs.
    Thank you for the opportunity to appear before you this 
morning. My colleagues and I would be happy to answer your 
questions.
    [The information follows:]

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    Mr. Olver. Thank you very much. I have been reminded that 
the plan here was that we would go directly to questions after 
your oral statement, so we will do that. I am going to turn, 
again, to my distinguished Ranking Member to start the 
questioning here. That is going to allow us to get to the other 
members of the subcommittee more quickly, rather than passing 
so much time through me.

                       ECONOMIC IMPACT OF TOLLING

    Mr. Knollenberg. Mr. Chairman, thank you very much for 
yielding that time to me, and I will begin with the first 
question. This would be for Administrator Ray.
    In the creation of the Urban Partnership and Corridors for 
the Future Program, the Department has clearly come down on 
tolling as the best method for easing congestion and has 
rejected the notion of a significant increase in gasoline 
taxes, is that correct?
    Mr. Ray. That is correct, sir.
    Mr. Knollenberg. Did the Department estimate, and will it 
consider as part of its two initiatives, the potential adverse 
impacts that both tolling and a gasoline tax may have on low 
and moderate income families and on small business, and is the 
economic impact of each being assessed, and, if not, why not? 
Those couple quick questions, if you can respond, and I have a 
follow-up question.
    Mr. Ray. Sure. Yes, sir. I appreciate the question. It is 
one that we are very sensitive to and receives a lot of 
attention around the country. First and foremost, let me 
suggest that low-income citizens share the same transportation 
needs as high-income citizens, and we are very sensitive to 
that.
    The data, frankly, does not indicate that these types of 
approaches would treat low-income individuals unfairly. In 
fact, studies of SR 91, which I am sure you are familiar with 
in California, show that only about a third of the users are, 
high-income individuals.
    If you think about this in a real life experiment, if you 
were a plumber and you make your living based on how many 
houses you can get to in a given day, congestion is your enemy. 
Buying your way into a free-flow, reliable and safe 
transportation network is something that is absolutely in your 
interest.
    A recent survey shows that 51 percent of those with incomes 
below $25,000 support the mechanisms in place in SR 91, and 
those numbers actually go up and vary with other systems across 
the world and across the country.
    I would also suggest that the gas taxes are applied to us 
evenly as citizens, everyone pays the exact same amount 
depending on the state that they are in, and that there is 
really no way to offset that burden.
    Most of the time our low-income individuals live far from 
urban centers. They are the ones that are commuting the most; 
they oftentimes have the least fuel efficient vehicles, and 
right now the system that we have is not dynamic enough to take 
into account the impact on low-income individuals, but tolling 
can.
    You can direct subsidies, if you wish to, from a policy 
perspective to those on the lower economic strata.
    Mr. Knollenberg. The economic impact of those that are in 
the lower income bracket still is going to be a factor.
    In regard to the second, the tolling situation which you 
just brought up, with respect to tolling, does the Department 
agree that this would fundamentally alter what has always been 
a system that provides equal access historically and equal 
benefit to all to one that would provide more access and 
benefits to the wealthy at the expense of low and moderate 
income families?
    Mr. Ray. I think not. I think that certainly there are a 
number of policy opportunities at our disposal with pricing and 
tolling that could target subsidies, whether they be free 
credits or discounted rates onto the systems. We can do that in 
a more effective way than we can with the gas tax.
    So there is that opportunity and let me give you two 
statistics in terms of equal access. We certainly believe in 
equal access to the system, but right now the system is being 
used in largely irrational ways. Over 50 percent of the users 
during the a.m. and the p.m. peak periods are not making a trip 
to and from work.
    In the a.m. peak periods here in the Washington, D.C., 
area, 23 percent of the users are retired. Now, we are not 
suggesting that these folks should not have access to the 
system during that time period. What we are suggesting is that 
some of those citizens have flexibility in their schedules.
    We could make smarter use of our system with pricing 
strategies. We could squeeze more productivity out of our 
system and the Government Accountability Office recognizes this 
in its own studies.

                       STATES' USE OF TOLL ROADS

    Mr. Knollenberg. You know, the other thing is how many 
states actually have a system? I know California does and there 
are some others, but just quickly, how many states have that 
kind of a system in place right now?
    Mr. Ray. Minnesota probably has the most advanced toll road 
in the world right now. It functions very well, and it comes 
with a performance guarantee. If your average operating speed 
drops below 45 miles an hour, your ride is free. Northern 
Virginia will put in place another dynamic system within the 
next few years.
    Mr. Knollenberg. With not having some figures from the 
Minnesota situation, I think we have got numbers from the 
California side, but if you can?
    Mr. Ray. We would be happy to provide that, sir.
    [The information follows:]

    [GRAPHIC] [TIFF OMITTED] T3749A.638
    
    [GRAPHIC] [TIFF OMITTED] T3749A.639
    
    [GRAPHIC] [TIFF OMITTED] T3749A.640
    
                    REVENUE ALIGNED BUDGET AUTHORITY

    Mr. Knollenberg. This question, the next question, is for 
Secretary Scheinberg. The Department's budget proposal counts 
the fact that it maintains the $286 billion multiyear levels 
authorized by SAFETEA-LU.
    While the President's request of $40.1 billion is required 
to maintain the guaranteed funding levels, I note that the 
fiscal year 2009 contract authority levels and the FHWA's 
budget submission did not include the downward adjustment that 
is statutorily mandated by the revenue aligned budget authority 
calculation and SAFETEA-LU.
    Now, if you heard all that and got it all down, I do not 
want to repeat it a second time, but if both contract authority 
and obligation limitation are to be reduced pursuant to 
SAFETEA-LU, why even mention the reduction in the obligation 
limitation and not the reduction in contract authority? In 
other words, why is it even being mentioned?
    Ms. Scheinberg. We are reducing both the contract authority 
and the obligation limitation for the fiscal year 2009 budget.
    Mr. Knollenberg. All right. If the fiscal year 2009 
contract authority levels are to be reduced by $1 billion, and 
I think you mentioned that, is it a fair assessment that 
although the amount being requested by the President fulfills 
the last installment of the guaranteed SAFETEA-LU funding 
levels that in all actuality it is an overestimate of what will 
actually be required. Would you agree with that?
    Ms. Scheinberg. You are referring to RABA, which is the 
Revenue Aligned Budget Authority. The mechanism was established 
in TEA-21 to adjust for actual receipts versus the estimated 
receipts in the original bill.
    Each year we go through this exercise, and in many years, 
the adjustment was positive. This year, reflecting the fact 
that SAFETEA-LU overestimated the receipts that were going to 
come in, the adjustment is a negative $1 billion. We have 
followed the same formula each year. The fiscal year 2009 
budget shows a negative $1 billion in both contract authority 
and obligation limitations.

                  FTA FISCAL YEAR 2009 BUDGET REQUEST

    Mr. Knollenberg. I know this is not average fodder for most 
people, but it is one that we question because it does kind of 
throw us a curve in trying to determine what is being done, but 
I appreciate your response. I have a question now for 
Administrator Simpson. This does not require a lot of talk. It 
is a very short question, by the way.
    The FTA is requesting $10.1 billion for fiscal year 2009, 
which is a $644 million increase over 2008 levels. How will 
these additional funds be used, and have all programs received 
a slight increase or will the additional funding be used to a 
limited, specific initiative?
    Mr. Simpson. Over 85 percent of the formula program is 
funded at the SAFETEA-LU levels. The $202 million reduction 
from SAFETEA-LU in our 2009 budget request is primarily from 
the New Starts Program, not the Small Starts Program. The Small 
Starts is fully-funded at the $200 million limitation. All 
projects in the New Starts Program will be funded.
    The short answer is everything in the program will be 
funded. We took a little bit of a haircut on the administrative 
budget which we just believe is good government.
    We did not hire people, and we cut our travel and things 
like that. And we cut a little bit of our own just internal 
discretionary research money because quite honestly I, as the 
Administrator, am not happy with some of the outcomes from some 
of our research. We are refocusing our research and working in 
collaboration with the Research and Innovative Technology 
Administration organization within DOT. So all programs are 
being funded.
    Mr. Knollenberg. Nothing is left out?
    Mr. Simpson. Nothing.
    Mr. Knollenberg. You are just adding a pinch to whatever is 
in there?
    Mr. Simpson. Every New Start and Small Start Project will 
be funded fully, and every formula program will be funded at 
the SAFETEA-LU limit.

                          CLEAN FUELS PROGRAM

    Mr. Knollenberg. And one quick question. This would also be 
for you, Administrator Simpson. I would like to talk about the 
FTA's role in supporting the President's 2010 plan. The FTA is 
requesting $51.5 million for the Clean Fuels Grant Program.
    Since the conversion of the program from a formula-based 
last April, how many grants have been awarded, and on average, 
what was the amount of the award? Then, secondly, what is the 
FTA doing, aside from purchasing clean fuel buses, to 
contribute towards reaching the goals set forth in the 2010 
program?
    Mr. Simpson. Right. Well, first and foremost, we can start 
with 2008. We have $49 million as per SAFETEA-LU for clean 
fuels. I believe this Committee asked for an additional $24 
million from the discretionary funding of 2008, so this year 
alone we will have at least $73 million for clean fuels. I am 
happy to report that the number of clean fuel and hybrid buses, 
purchased exceeds 26 percent of the total now.
    So we are seeing a big uptick in hybrid technology, which 
you know better than I, works to clean the environment. We also 
have $3.3 million in fiscal 2009 for clean fuels and electric 
drive research. We have the SAFETEA-LU mandated National Fuel 
Cell Technology Program, which is $49 million over four years, 
and that is matched dollar per dollar, so that is a total of 
$98 million.
    We have several demonstration projects, and if you would 
like, I can send you those for the record. I could go on if you 
would like as well.
    Mr. Knollenberg. It would be a help, if you would. Just a 
clean, quick sheet. I see my time has expired here, so I do not 
want to extend at the moment, but, yes, we would not mind 
having some of that data.
    [The information follows:]
    Mr. Simpson. Fine.
    [GRAPHIC] [TIFF OMITTED] T3749A.641
    
    Mr. Knollenberg. Thank you. Thank you, Mr. Chairman. Thank 
you very much.
    Mr. Olver. We will now move to individual questions. Mr. 
Cramer. You are back on the five-minute rule.

          HIGHWAY-RAILROAD INTERSECTION IN HARTSELLE, ALABAMA

    Mr. Cramer. Thank you. Yes, sir, I think I can do that. I 
will have to talk fast, though.
    Administrator Ray, this is a question for you that you may 
need to take for the record. But I tried to help one of my 
local communities, Mr. Aderholt and I share parts of a town 
called Hartselle. I have the main part of it. But there is a 
big dangerous intersection, railroad intersection there, CSX. 
We are trying to build a bridge overpass there. The state DOT, 
Alabama State DOT says that we are in an impasse over an issue 
regarding CSX is requesting an increase in liability limits 
insurance from a certain cap and they have been denied that.
    So would you take that for the record? I am told that there 
are certain criteria that FHWA uses to determine liability 
limits coverage. So if you could shed some light on that in 
general I would appreciate that.
    Mr. Ray. Of course, sir. I would be happy to take that back 
and we will get an answer back to you for the record.
    [The information follows:]

    [GRAPHIC] [TIFF OMITTED] T3749A.642
    
                TOLLING AND PUBLIC/PRIVATE PARTNERSHIPS

    Mr. Cramer. All right. And then I want to come back to the 
issue of tolling. Secretary Peters was in my state and talked 
about the issue of tolling and public/private sector 
partnerships with regard to tolling. And in my area of Alabama, 
north Alabama, there are some 20,000 BRAC-related jobs that are 
coming to my area, so we have our version of struggles with 
congestion and moving work forces, income levels around our 
area. And there is a particular corridor that will be 
enormously expensive that we tried to engage the governor in to 
try to move these federal employees for the most part across 
this arsenal there. Could you shed some light on how you see 
public/private sector partnerships with regard to tolling, 
particularly my city that this would be in a medium size city 
of 300,000?
    Mr. Ray. I would be happy to answer the question, sir. 
First and foremost, public/private partnerships can take a 
number of forms. In fact, I would suggest that we have not even 
seen the full panoply of forms that they can take. The most 
common is, as you have mentioned, tolling and direct user 
pricing. That is how the private sector recoups its investment 
and makes a return on equity.
    We have estimated, and others have estimated, that there is 
the potential for $400 billion of private investment in 
American infrastructure today. I would like to compare that to 
the total amounts used or invested over the life of SAFETEA-LU 
of $286.4 billion. We are talking about a significant amount of 
money to invest in American infrastructure today. Once a state 
decides to take advantage of that, there are a number of paths 
they can take.
    Mr. Cramer. But is that strictly up to the state to decide 
that, the state DOT? Or is it state DOT in partnership with 
you?
    Mr. Ray. It depends on the facility. If there is an 
existing interstate right-of-way or if there is an existing 
interstate facility that the state wants to bring the private 
sector in and put tolls on, then it is a partnership with us. 
If it is a state-only facility, then there is no federal role. 
There may be some intersection or issue where we have to 
provide access to the interstate or otherwise, but it depends.
    We would be happy to work with your staff and explain some 
of these nuances to you. The private sector can bring a 
tremendous amount of efficiency both in the design and the 
construction of these facilities, as well as the management of 
these facilities to make sure that they are managed 
appropriately, and do not break down into parking lots. 
Certainly it was not the intent for our major arterials and 
interstate system to be parking lots restricting access. They 
were supposed to provide access and connectivity.
    Mr. Cramer. Then who owns that project in a public/private 
sector partnership?
    Mr. Ray. The way the model is manifesting itself in the 
United States is consistent with the way it has manifested 
itself across the world. Ownership remains with the public 
entity. So in your case, it would be the state DOT or the state 
DOT would hold it in trust for the public, for the state. They 
would hold the ownership; they would own the deed to that.
    The way the model is manifesting itself here is that the 
state enters into a concession agreement to allow the private 
sector to build and operate the facility for a period of time 
after which full title would revert back.
    Mr. Cramer. And who controls the tolls during that period 
of time?
    Mr. Ray. Again that is a matter to be determined in an 
agreement. The contract is executed between the state and the 
private entity in terms of toll caps, revenue sharing, what the 
tolls will be, and how they will be levied.

                          TOLLING FLEXIBILITY

    Mr. Cramer. And then how about flexibility, would work 
forces, say you have a federal work force that has to travel 
this particular route to and from work--can exceptions be made 
for the payment of tolls there based on getting from point A to 
point B, or do you have any experience with that?
    Mr. Ray. Sir, what I would say is that these models and the 
technology have enabled maximum flexibility. We can target 
these and we can do some creative, amazing things.
    Mr. Cramer. And you are doing that in places around the 
country?
    Mr. Ray. Well, not so much with targeting federal 
employees, but you can target things in very interesting and 
dynamic ways. There is no reason that you could not think about 
it in other ways. I have not heard the federal employees 
mechanism. But you could do a number of things.
    I would like to mention, though, there is a bar of course. 
We have a critical interest in interstate commerce. So if a 
state or a private entity were charging tolls to interfere with 
interstate commerce, we would have to intervene. We would have 
to have some say in that because that is vested at the federal 
level.
    There are certain things that are appropriate at a state 
and local level, there are certain things that are appropriate 
at a federal level. Our forefathers vested interstate commerce 
here.
    Mr. Cramer. Well, I want to be more aggressive in working 
with you. Obviously we do not know as much about toll roads as 
some other areas of the country. And this is not an easy thing 
to kind of go back home and advocate for--
    Mr. Ray. Sure.
    Mr. Cramer [continuing]. Without a full grip on the 
information.
    Thank you, Mr. Chairman. Thank you.
    Mr. Olver. Those questions opened quite a bunch of 
opportunities. I could imagine that we would have exemptions 
for members of staff and members of Congress and things like 
that. My goodness.
    Mr. Cramer. Sure.
    Mr. Olver. My goodness.
    Mr. Walsh.
    Mr. Walsh. Mr. Chairman, I came in after a number of the 
other members and I would just assume wait a little while to 
see if I could go back in turn later on. I would be prepared to 
wait.
    Mr. Olver. I will give you an exemption meanwhile farther 
down the road.
    Mr. Walsh. Thank you.
    Mr. Olver. Mr. Rodriguez.

                         NEW TOLL ROAD PROJECTS

    Mr. Rodriguez. Thank you very much.
    Let me first of all indicate do we know how many states 
have already started to move on the toll road situation or how 
many do we have? I do not know who can answer this question.
    Mr. Ray. There are a number of states. We can get the exact 
number to you later.
    Mr. Rodriguez. Can you get that for me? I would appreciate 
it.
    [The information follows:]

    Presently, there are about 25 states that either have or are 
planning to have toll facilities. Most of these include states with 
existing toll (i.e., turnpike-type) facilities, such as New Jersey, 
Illinois, and Florida. Of these states, 5 are tolling existing or new 
highway lanes to create high occupancy toll (HOT) lanes or express toll 
lanes.

    Mr. Ray. Absolutely.
    Mr. Rodriguez. I know we have language in Texas at least 
not to use existing roads that have been paid for by taxpayers 
to be turned into the private sector for the purpose of toll 
roads. Do we have, you know, do we have any of those occurring 
in any other states?
    Mr. Ray. Sir, let me see if I understand the question 
correctly. Texas is the first one to restrict that. There are 
concession-type arrangements being conducted in other states 
similar to what was taking place in Texas before Senator 
Hutchison's amendment to the legislation that prevented that in 
the State of Texas.

                     USE OF THE HIGHWAY TRUST FUND

    Mr. Rodriguez. And let me also ask you, I know, Madam 
Secretary, you talked about no taxes but it reminded me of my 
child when they said that the tuition was going to remain the 
same and the fees kept going up. In this case you are raising 
the fees and doing those items. Do we know what that amount of 
revenue that would be anticipated based on trying to balance 
the budget on toll roads and fees?
    Ms. Scheinberg. The reference to no taxes is specifically 
for 2009 to keep the transportation program within the Highway 
Trust Fund, without going outside of the trust fund to pay for 
2009 programs.
    Mr. Rodriguez. What is the anticipation of the 
Administration that the deals with fees that would be coming 
into the former toll roads and those kinds of things?
    Ms. Scheinberg. The Federal Government and the federal 
programs do not receive any of those revenues.
    Mr. Rodriguez. What are the amounts of resources, I know 
the same thing with the VA budget there were fees and co-
payments on the part of veterans coming in, in this case it was 
part of balancing the budget, how much of these resources that 
are anticipated would be used in terms of trying to balance the 
budget that is being proposed in the later years?
    Ms. Scheinberg. Revenues from fees that are levied at the 
state and local level go back to the state and local 
governments. The federal gas tax has stayed at 18.4 cents per 
gallon and the Administration is not proposing new fees.

                         CONGESTION MITIGATION

    Mr. Rodriguez. Okay. Now, I know that, you know, we had 
that language in Texas to restrict that from using existing 
roads. And I know that they are working on some other forms of 
mechanisms in order to make some of that happen. As it deals 
with highways and then mass transit, you know, what is the 
anticipated, you know, in terms of the Administration's 
perspective in terms of looking at how do we reduce the car 
loads on those highways and using some other, you know, and 
prioritizing mass transit, other forms of, you know, what are 
the plans on the part of the Administration?
    Mr. Ray. I think I can respond and then defer to my 
colleague from the Federal Transit Administration.
    First and foremost, you can price and toll for a number of 
reasons. One, you can do it for revenue generation; and two, 
you can do it for facility management. This is what is 
happening in New York City; you may have read a little bit 
about Mayor Bloomberg's ideas. You can toll for congestion 
management. If you toll for congestion management, it is really 
a surface transportation solution. Whether you are talking 
about buses or mass transit on light rail, there is tremendous 
opportunity there.
    I will let my colleagues address this further.
    Mr. Rodriguez. I apologize. Maybe there is a 
misunderstanding of the question. More in terms of as we look 
at in terms of the future how do we come to grips with the 
situation that we need, you know, the resources for highways 
but the other way would also be to try to fund programs that 
allow for mass transit and reduce the flow so that we do not 
have to move in that direction?
    Mr. Ray. We estimate that if you were to implement 
congestion pricing, in the 50 most urbanized areas, that would 
produce revenues in excess of $100 billion. Those dollars could 
be used for highway as well as for transit purposes. Also, 
price signals are a very valuable tool. User demand tells us 
what facilities need to be expanded, what facilities need to be 
built, and what transportation solutions need to be 
implemented. We really see this as a multi-modal solution to 
congestion.
    Again, our urban centers are the heartbeat of our economic 
lifeblood. Seventy-five percent of our GDP is produced in our 
most urbanized areas. Congestion is robbing us of opportunity 
there.
    Administrator Simpson, would you like to comment on the 
transit side?
    Mr. Simpson. Thank you.
    In a nutshell, the way I see it as the FTA Administrator is 
there is no such a thing as congestion mitigation unless 
transit is part of the equation, unless you want to get people 
rollerskates and skateboards, which I know we do not want to 
do, or have them stay home. If you look at the structure of the 
urban partnership agreements, a major component of each one is 
transit.
    And I will just take New York City, which happens to be the 
biggest one. We are about to grant New York $324 million to 
implement a very aggressive and a very provocative congestion 
mitigation plan for Manhattan, without going into details. That 
one-time, one-shot investment of $324 million will unleash, let 
us call it profit, of at least $300 million a year. New York 
pays for the additional amount of public transportation that is 
needed. So the goal is to free up the highway system because 
the arteries are clogged, to free commerce and all the things 
that go along with it, and then to use a lot of that money to 
make sure the roadways are adequate. Then you have to have 
robust transit; without robust transit it is a non-starter.
    Mr. Rodriguez. Yes. Let me just give quickly one example. I 
know we have had on the border we have had to because of 9/11 
we, you know, started to look at the issue of security. But it 
has also hurt the border communities tremendously. In some 
cases we have lost 20, 40 percent of the, you know, traffic 
back and forth for commerce in the local communities. And there 
is some, you know, efforts there in terms of looking at 
something that makes more sense in terms of coming and going 
that, you know, and I would hope that we always keep that in 
mind in bringing down the number of vehicles on our highways.
    Thank you.
    Mr. Olver. Mr. Aderholt.

                      HIGHWAY PROJECTS IN ALABAMA

    Mr. Aderholt. Thank you, Mr. Chairman.
    Thank you each for being here this morning. Thank you for 
your testimony. I want to mention the high referral road 
program, of course a part of the HSIP. We have been told that 
it is somewhat burdensome on the states as they try to 
implement this program. But saying that, even though with the 
fact that it can be burdensome, from what we have been told, it 
has been very helpful in trying to improve safety conditions in 
many areas. And for that reason I want to say that it has been 
a good program. The feedback that we are getting has been very 
positive.
    The other program I wanted to mention that you mentioned in 
your testimony I think on page 2, you talk about the use of the 
$175 million in active earmarks. And it is our understanding 
that our state, Alabama, has not been contacted about any of 
these projects. As you know, there are often environmental 
issues which slow down projects.
    And such is the case, in particular with one of them, is a 
project which would in fact alleviate congestion in an 
industrial area near the airport. So I guess with that being 
said I would just like to note my concerns about that that, you 
know, sometimes these environmental and various other issues 
can slow down projects sometimes is the reason for that. And so 
that I would just say maybe take a closer look at this and 
reevaluate this particular issue. If you would care to respond 
to that?
    Mr. Ray. Yes, I would. The $175 million that the President 
has proposed for congestion is broken into two parts. Of this 
amount, $75 million is for the Corridors of the Future Program. 
We have already solicited and selected the corridors. That 
money is meant to facilitate the wonderful dialogue that we 
have seen come from the states. At least in the context of this 
program, no longer does state transportation forecasting and 
planning start and stop at state borders. People are looking at 
problems existing in other states, neighboring states, and even 
further downstream and looking at how to solve problems from a 
corridor context.
    The $100 million is intended for congestion reduction. So 
there may be an opportunity for Alabama. There has not yet been 
a solicitation. We do have the urban partnerships and the 
congestion reduction demonstration solicitation out. But there 
may yet be future opportunities should the Congress give us the 
$175 million that the President has requested.

                         HIGHWAY PROJECT DELAYS

    Mr. Aderholt. Let me ask your opinion on two matters which 
as we approach the reauthorization of the Federal Highway 
Program, what can be done in a future bill to alleviate the 
delays that occur due to environmental studies and historical 
studies?
    Mr. Ray. First and foremost, Congressman, I would like to 
tell you that the average time for an environmental review to 
be completed has crept up to 68 months. We at the Federal 
Highway Administration see this as unacceptable. Five-and-a-
half years is, frankly, a tragedy, and we need to do much 
better.
    Now, SAFETEA-LU did provide us some new tools to reduce 
that time frame. It takes some time for these processes to be 
implemented. Frankly, it takes some time for states to become 
comfortable with them and begin using some of the new tools. 
But I think you will see some new ideas from this 
Administration about how to bring that number down even 
further, especially with the inflationary costs of 
construction. While it is important that we do things in an 
environmentally sensitive way, we must do things more quickly.
    So let me just say that I hear your concern. We share it 
and are working hard to correct it.
    Mr. Aderholt. Do we need more specific laws about how 
agencies respond by certain timelines, or perhaps boost their 
budgets so they can accomplish this? Is that something that we 
should consider?
    Mr. Ray. It is certainly something worth considering and 
discussing. Those are concepts that we have discussed 
ourselves. There are some accompanying legal issues that would 
have to be dealt with. But I think those ideas and others are 
going to be the subject of a lot of debate through the next 
reauthorization. We have to bring that 68 month number down.
    Mr. Aderholt. I realize that there are a lot of federal 
agencies who are required by law to be involved but yet answers 
are very slow forthcoming from those agencies. So that was 
something that was----
    Mr. Simpson. Can I add something on SAFETEA-LU?
    Mr. Aderholt. Please.
    Mr. Simpson. SAFETEA-LU did add some provisions to have 
more of that. And it has been successful. So in the next 
reauthorization it should be looked at. But SAFETEA-LU has been 
helpful, at least at the FTA level.
    Mr. Aderholt. It is helpful to some extent anyway.
    Mr. Simpson. Yes.
    Mr. Aderholt. Okay, thank you.
    Thank you, Mr. Chairman.
    Mr. Olver. Ms. Roybal-Allard?

                      TRANSIT SYSTEM USER BENEFIT

    Ms. Roybal-Allard. Administrator Simpson, first I would 
like to commend you and the FTA for fostering a very 
cooperative working relationship with the Los Angeles Metro 
which is the lead agency for the Eastside Light Rail Project, 
located in my district. As you know, the project is proceeding 
smoothly, it is on time, and on budget. And when it is 
completed it is going to play a very important role in 
connecting my eastside community to the rest of the metro 
system in L.A. County.
    One exciting thing about the project is also the fact that 
it is going to generate much-needed economic development in the 
area. And so we are looking forward to starting the service 
next year. Again, I want to thank you, your staff at 
headquarters here in Washington, as well as your regional 
staff--for being so cooperative.
    Mr. Simpson. Thank you.
    Ms. Roybal-Allard. Mr. Simpson, the FTA relies on a formula 
called the Transit System User Benefit----
    Mr. Simpson. Right.
    Ms. Roybal-Allard [continuing]. To evaluate the worthiness 
of projects. The benefits of using just a piece of a 
methodology are not very clear to transit agencies in my 
district. A concern is that the formula places a 
disproportionately heavy emphasis on cost effectiveness which 
has not fully taken into account the potential economic 
development benefits of the transit project to a community. For 
example, the eastside project that I just spoke of earlier was 
one of the most highly-rated projects when it was evaluated 
several years ago. However, in spite of this high rating it was 
still a major struggle to obtain the full funding grant 
agreement, largely because of the restrictive nature of the 
TSUB formula.
    I am also told that the TSUB is creating a situation where 
transit agencies make changes to their projects in order to 
increase the TSUB measurement even though the changes do not 
necessarily benefit the project. I understand and support the 
goal of trying to maximize federal investment by allocating 
dollars to the most worthwhile projects but it appears that it 
is becoming increasingly more challenging for worthwhile 
projects to satisfy the threshold requirement imposed by TSUB.
    In an effort to avoid any of these concerns, is the 
Administration considering revising the TSUB formula or 
considering any other approaches to measure the potential 
economic success of a project?
    Mr. Simpson. Congresswoman, the House T&I Committee had two 
stand-alone hearings on new starts process last year. We 
occupied four hours of the Congress's time to talk about TSUB 
and cost effectiveness in the New Starts process. And I 
probably spent an hour just talking about TSUB, which 
unfortunately we cannot do today. But in a nutshell you should 
know that L.A. does very well because of urban density. So if 
you look at it as a national program, L.A. is at an advantage 
because they have so much density so that it really does help.
    And for those of you that do not know, TSUB is the closest 
thing to a true cost/benefit analysis. I like to use analogies 
because it saves original thought. If you were talking about 
getting into school, you could look at the SAT scores. Really 
good schools every individual is different around the country. 
They need one metric that is cross-cutting. For them, that is 
the SAT score. For us it is the TSUB. We look at economic 
development and other measures. But at the end of the day, the 
TSUB says if you have a lot of mobility and you are getting 
people from point A to point B quickly in a cost-effective 
matter, you have a good surrogate measure for economic 
development.
    There is really not enough time now to talk about the 
economic development issue, unless you would like to discuss it 
during the second round. It is very complex. But if you have a 
good project with good mobility, then you will have good 
economic development. We have been trying to measure economic 
develoment, and have hired the best transportation economists 
in the country. We have had a group working on this. It is a 
lot harder to quantify economic development. than TSUB.
    The last thing which really bothers us, and that is 
probably a subject for another time, is we have come along with 
these multi-year projects and all of a sudden, the projects 
exceed the cost estimate by 20 or 30 percent. You have to start 
taking station coverings away or taking hubcaps off the buses 
and things like that. I will tell you that it is the perfect 
storm in this global economy, putting the pressure on 
commodities. We have seen a run-up of 37 percent from 2003 to 
2007 in commodity prices. And the Inspector General just put 
out a highway report which hit my desk this morning that said 
from 2003 to 2007 commodity prices in projects have gone up 47 
percent.
    We take that into account, but I do not know if we have 
been keeping up with it. This is unprecedented as long as the 
New Starts process has been going on. We are trying, in a real 
life fashion, to deal with it. We look at the commodity costs 
and normalize everything, and then the Federal Government 
shares as well. We probably need a couple hours just to discuss 
this issue. But in an environment where you have unlimited 
projects and limited resources TSUB is the closest thing to a 
true cost/benefit analysis. Other departments like the Army 
Corps of Engineers and three or four other federal agencies 
have come to the FTA to say, could you show us how you do your 
TSUB and your cost/benefit analysis because we do not have 
anything like it? It is really cutting edge.
    Ms. Roybal-Allard. I see that my time is up. I wanted to 
make the one comment that if it is true that transit agencies 
are downgrading materials or they are delaying necessary 
railcar purchases, in the long run it is going to be much more 
costly.
    Mr. Simpson. Absolutely.
    Ms. Roybal-Allard. So I see we need to find some balance 
there.
    Mr. Simpson. Absolutely. We are aware of it. We are on the 
same page.
    Ms. Roybal-Allard. Okay.
    Mr. Simpson. Absolutely, positively.
    Ms. Roybal-Allard. Thank you, Mr. Chairman.
    Mr. Olver. Mr. Wolf.

                       DULLES METRORAIL EXTENSION

    Mr. Wolf. Thank you, Mr. Chairman.
    I want to welcome all three of you. I am in another hearing 
next door where I am the Ranking Member. But I wanted to come 
over to tell you to go back and tell the Secretary that I want 
to thank her personally for her openness on this rail thing, 
willing to look at this. And so I think I would have been 
neglectful had I not come back to say thank you. Please tell 
her that I said thank you.

                      PUBLIC/PRIVATE PARTNERSHIPS

    And then I was going to leave. But I think the comment was 
made by Mr. Cramer to Mr. Ray, I just wanted to tell you as you 
are push these public/private partnership perhaps there needs 
to be some standards. There is if you could take a look at the 
Greenway out in Northern Virginia, that is about a 13-mile 
road. The tolls will be $4.80. It is having an impact on my 
area. What they are currently finding are trucks, heavy, heavy 
dump trucks and all who are using the road. Initially people 
got on the road, it was very low, kind of bait and switch, have 
it low, come and enjoy. Now new communities have been built up 
along there. It is now $4.80. In fact, if you get on and go for 
1.1 miles it is $4.00, it will be $4.80. It will be the most 
expensive toll road in the world: $4.80 for 1.1 miles.
    No standards. And so I think the department, I think 
public/private partnerships can be very, very helpful but it 
needs some standards. Now, as I said on trucks and truck 
safety, many trucks that were on the road are leaving the road 
and now are cutting, in order to save money are now cutting 
through neighborhoods, residential neighborhoods. And it has a 
safety aspect. Because if you ever go out on a truck inspection 
many of these trucks are bald tires and brakes are not very 
good. So it is really impacting.
    We have a mom and dad, maybe the husband works at Tysons, 
the wife works downtown, it will be almost $100 a week for 
tolls. Or maybe you are taking somebody to daycare or to a 
ballet lesson or to something else to get off, if you live in 
Leesburg, get off, go in and come back on it is now more 
expensive than, it will be more expensive than your cable bill.
    And so this is 12 miles. I am not talking about 100; 12 
point whatever miles. So I think the committee and the Congress 
and maybe, Mr. Ray, knowing that public/private partnerships 
are important to the country there ought to be some, some 
standards. And the concern is now we have this Australian 
company, McCary, has hired a powerful lobbyist in the state 
legislature, actually has hired a former Secretary of 
Transportation whose job was to help us, now he is hurting us. 
And it is really having an impact.
    Now, we are really the test state for what is going to take 
place around the country. So I hope that Congress, I know Mr. 
Oberstar is interested, I think the department should say, 
okay, we are going to have these public/private partnerships, 
what are the standards that ought to go in? Who owns this? How 
can the public be protected?
    And do you have any comments about that, about if we can 
have some standards that a community could look to as they were 
thinking of doing this?
    Mr. Ray. I do. Sir, let me just say that we appreciate and 
we understand your concerns. You are not the only one to 
espouse them. This is occurring across the country.
    Toll rates are certainly something that can be addressed 
through the contractual mechanism. That does not mean that they 
should not be addressed through a public policy forum, either 
by the state legislature or possibly in this body. But let me 
also caution you and others that we are learning so much so 
fast. Pocahontas Parkway just outside of Richmond, no one would 
do that deal the same way that it was done, and that is just 12 
to 14 months old. The Commission report, which you will hear 
about later, has come forward with a number of restrictions.
    I am not sure that we know enough about this very youthful 
model to come out from a kind of central government position, 
and then layer restriction upon restriction. We need to be very 
cautious about what we do, otherwise we will risk stifling 
innovation and the creativity that we see coming from these.
    The Dulles Greenway is one of the earliest ones. Again, no 
one would do a deal like the Greenway again. I think we need to 
decide as a country how much tolerance we have for mistakes 
along the way, because we will make mistakes. How can we 
recalibrate and make up for those mistakes? We need to maximize 
the learning opportunity so that we can advance the country as 
fast and as quickly as possible.
    Mr. Wolf. Should you be publishing standards or that any 
locality would go to to see what should be looking for?
    Mr. Ray. We established guidelines and a list of smart 
practices. We are publicizing those around the country.
    Mr. Wolf. Could I get a copy so I could see what you are 
doing?
    [The information follows:]

    FHWA espouses ``smart practices'' when we discuss Public Private 
Partnerships (PPPs) around the Nation. There are a number of resources 
from which we draw in this regard, and several of the resources are 
highlighted prominently on the FHWA PPP website at www.fhwa.dotgov/ppp. 
These include ``Case Studies of Transportation Public-Private 
Partnerships in the United States'' (http://www.fhwa.dotgov/ppp/
us_ppp_case_studies_final_report_7-7-07.pdf), and ``Protecting the 
Public Interest: The Role of Long Term Concession Agreements for 
Providing Transportation Infrastructure'' (http://www.usc.edu/schools/
sppd/keston/pdf/20070618-trans-concessionagreements.pdf). FHWA is 
participating in a follow-up report to the ``Protecting the Public 
Interest'' paper as a National Cooperative Highway Research Program/
Transportation Research Board effort. It is expected to be completed by 
the end of the year.
    Further, FHWA has developed a ``PPP Toolkit for Highways'' (http://
www.ppptoolkitfhwa.dot.gov) and continues to expand this resource. The 
Department also is developing a document specifying best practices/
guidelines for PPPs.

    Mr. Ray. Absolutely.
    Mr. Wolf. Anyway, if you have any help with the Greenway, 
we have asked the Attorney General, who has agreed to do it for 
an outside ethics but to comment, we are waiting for his 
comment. But nobody can justify $4.80 for 1.1 miles. I just do 
not think you can. And I think you find, and so if anybody has 
any thought on what this committee could do for the Greenway we 
would be certainly open to offering that amendment.
    But in closing, please take back to the Secretary I wanted 
to thank her very, very much. Thank you.
    Thank you, Mr. Chairman.
    Mr. Olver. Mr. Wolf, of course, is a former chairman of 
this subcommittee so he speaks from long experience. I have 
heard the term ``Lexus road'' in some different way but it 
certainly seems it would also apply to that kind of situation. 
Although I am hearing that trucks have gotten in very heavily 
now; surely not low income people are getting in on that one I 
would guess.
    Ms. Kaptur?

                      PITTSBURGH-CHICAGO CORRIDOR

    Ms. Kaptur. Thank you, Mr. Chairman, very much. Welcome.
    Ms. Scheinberg, I wonder if you could take a message back 
to the department for me. I would like the Department's help in 
brokering a conversation between the governors of Pennsylvania, 
Ohio, Indiana and Illinois maybe when they come into town and 
your key people that are looking at rail corridors, high speed 
rail between Pittsburgh and Chicago and right-of-way easements. 
It is hard to find the right people to put in a room to have 
that discussion.
    The reason I mention it while you are all here, even though 
you are the transit and highway folks, is because I represent 
the longest segment of Ohio Turnpike. And, of course, we have 
the Pennsylvania and the Indiana Turnpike and they all connect 
very close to the Pittsburgh-Chicago corridor. And let me posit 
this thought because the answer they always give us when we 
talk about high speed rail, and I mean really high speed: well, 
we do not have any dedicated revenue source, so therefore we 
cannot do it. And we never seem to be able to move anywhere.
    Well, it is my understanding that in terms of turnpike 
funding those, the Ohio Turnpike, which is I-80/90, Interstate 
80/90, receives no federal funds because it is a state 
turnpike. And I do not know about Pennsylvania and I do not 
know about Indiana, but as we look towards a new highway bill 
one of the thoughts in my mind is in my region what I see 
happening in Ohio is that because those federal gas tax dollars 
do not come back to I-80/90 in the north they are expended 
elsewhere in the state for I-30, I-70, Indiana to Pennsylvania 
Freeway corridors. So technically the aorta of my region is the 
Turnpike. But it is more costly as a corridor because people 
have to pay the toll.
    So I see all these stories, you know, Columbus, fastest 
growing city in Ohio. You know, I--I guess 70 whips through it, 
free road. Here I am in the industrial north, beleaguered 
region of the state, with this economic tourniquet we call the 
Turnpike. And I cannot even bring back the gas tax dollars that 
my people pay to that interstate corridor.
    Is Ohio the only state that has this anomaly of not using 
federal funds for the turnpike corridor or is this endemic 
across the system? Mr. Ray.
    Mr. Ray. Please.
    Ms. Kaptur. All right.
    Mr. Ray. That is common across the country.
    Ms. Kaptur. That is common.
    Mr. Ray. Where a turnpike or tolling exists on the 
interstate, you do get credit for the interstate miles that you 
have. But federal interstate maintenance funds cannot be 
expended on those tolled portions, which means they have to be 
expended elsewhere in the state.
    Certainly within the State of Ohio it is the State 
Department of Transportation and the state legislature who 
decide where those funds go to within the state. And where the 
funds go has to do with the statewide plan, et cetera. While 
the system that you have articulated is correct, the fact that 
those dollars are sent to the south and elsewhere is more of a 
state decision than it is a flaw in the federal system.
    Ms. Kaptur. I hear what you are saying.
    Mr. Ray. Right.
    Ms. Kaptur. And but in looking forward rather than 
backwards, you know the greatest force in the world is inertia. 
Boy, that is true in everything. You know, you try to change 
something, you get caught up in history from 50 years ago or 
more. I want your best thinking about the turnpike corridor and 
its under utilized capacity.
    Even its easements as we look at that particular corridor 
and we are looking at revenue, now you have to think pretty big 
for this, we cannot be down into, you know, subtitle FD0125, 
no, we have to think big. We have an old system we have 
inherited. And what are the powers that we have to create high 
speed rail between Pittsburgh and Chicago? That is the 
discussion I want to have.
    And I want to put every asset we have on the table. And I 
want to look at where we are not using federal authorities 
effectively or just because of bureaucratic whatever that we 
have inherited we cannot look at it fresh and say, okay, as we 
move towards a new highway bill what can we do to relieve the 
congestion and create a high speed corridor there, even using 
some of the highway powers we currently have that we are not 
utilizing effectively?
    And when you say, you know, depend on the State of Ohio; 
hey, if I had to depend on the State of Ohio for anything I 
could not get it done. All right? So that is not an answer for 
me. If you look at the politics of a place like Ohio, 
Cleveland, it is called the 3 C's: Cleveland, Columbus, 
Cincinnati. They have the political power down in the 
statehouse. And all you have to do is look at a map of Ohio and 
where the highways are to understand the power of Ohio; right? 
And you will see how skewed it is.
    There is another Ohio, it goes from Toledo, which I 
represent, down to Marietta. There is no highway. There is a 
reason for that. It goes back to who settled in which cities 
when. Now it is 2008, so I am just asking your best thinking if 
you could help me broker a meeting, Ms. Scheinberg, back you 
know at the department bringing together these forces across 
the region to take a fresh look at that corridor. And I am 
thinking there is some role that some of the authorities you 
currently have could play in helping us find a financing answer 
to high speed across that. Even though ``rail'' is not in your 
title you have some of the power that I think is a part of the 
answer. But we have to think fresh.
    Is it possible for you to help me broker that meeting?
    Ms. Scheinberg. I would be glad to.
    Ms. Kaptur. Great.
    Mr. Ray. May I just follow up very quickly? I am sorry; I 
know we are short on time. But the Corridors of the Future 
Program, which I managed, facilitated some very innovative 
thinking about how to use highway right-of-way and how to 
provide multi-modal transportation solutions, whether you are 
talking about freight or people, through these corridors. We 
have seen those types of ideas, which I found to be very 
exciting, elsewhere in the country. I certainly will carry your 
message back and am happy to work with you on that.
    Ms. Kaptur. Thank you. We do not want to be buried in any 
one instrumentality, we want to cross across them.
    Mr. Olver. Ms. Scheinberg, consider this meeting a mandate.
    Mr. Walsh. From a regional planner and economics planner, 
and she is adamant about that.

                RECONFIGURING I-81 THROUGH SYRACUSE, NY

    Mr. Walsh. Thank you, Mr. Chairman. I would like to ask a 
question of Mr. Ray.
    I represent central New York, Upstate New York and 
Syracuse. Through Syracuse runs Interstate I-81. It is an 
elevated highway. It requires a tremendous amount of 
maintenance because of our winters and the use of salt and so 
on, so they are constantly working on the superstructure of 
that. There are a number of people in the community who have 
decided that this creates a barrier within the community 
keeping neighborhoods apart. So there has been this interesting 
discussion and debate about what to do about the elevated 
portion of Route 81.
    It also uses up a tremendous amount of valuable real 
estate. It is tax exempt also, as you would imagine. So our 
city's tax base is less than 50 percent of the real estate in 
Syracuse is taxable, partially because of the interstates that 
run through the city. So, and within the last 15 years or so a 
bypass was built to take traffic around the city connecting 
Route 81 at the north end of the city and the south end of the 
city.
    So the question is what sort of funding mix would there be 
if indeed this idea, people coalesced around this idea of 
dropping that down, putting it back on the surface, all through 
traffic would go around the city and just commuter traffic and 
otherwise people coming into the city and out of the city would 
utilize this now-level roadway? Would it be a mix of local, 
state, federal and just give me your general comments of a 
project like that?
    Mr. Ray. Sir, I think it would have to be a mix of funding. 
But there are enormous cost implications of that, depending on 
where you are in the useful life of that particular facility. 
And, of course, we want to maximize the economic benefit of 
investments that we have made in years past. Certainly we would 
have to look at those. But I think certainly you would be 
looking at a mix.
    The other thing that I would suggest is even though the 
particular area that you are talking about does not have as 
dense a population as Mr. Simpson's hometown of New York City, 
there is still a significant population. I think there would be 
opportunities to look at tapping into the private marketplace 
for solving some of these transportation solutions too.
    Mr. Walsh. For example?
    Mr. Ray. Well, the number that I put out earlier was that 
we estimate approximately $400 billion of----
    Mr. Walsh. I heard that, yes.
    Mr. Ray [continuing]. Private equity available today.
    Mr. Walsh. Why would a private developer want to help us 
take the elevated portion of Route 81 down to the ground level?
    Mr. Ray. They would be looking to do it for a return on 
investment.
    Mr. Walsh. How would they get a return on that?
    Mr. Ray. Well, it could be through a variety of mechanisms. 
Again, there are a couple of different paths. One could have 
the state provide an availability payment, similar to the way 
that I pay for my house. I write a mortgage check every month 
and at the end of my mortgage, I take title to the house. You 
can do it through an availability payment where you pay a 
private entity to provide that facility to you. You are 
factoring the cost over a number of years; we could talk about 
how long that arrangement could be.
    Mr. Walsh. Where is the revenue stream to the private 
developer?
    Mr. Ray. It is built into the availability payment. The 
state is making an availability payment to the private sector.
    Mr. Walsh. I am not sure I understand ``availability 
payment.''
    Mr. Ray. For every day that a facility is available to the 
State of New York, or any state, the state would pay the 
private sector a payment for having that facility available. We 
can define availability a number of ways. Is there more than 
three-quarters of an inch of snow on the road? Is there too 
much garbage there? The contractual mechanisms can be very 
detailed as to what constitutes ``available'' but we would pay 
an availability payment for that facility to be delivered to 
us.
    Of course there is the construction cost that would be paid 
by the public sector or the private sector. Things do not come 
free in this world; the actual cost of the asphalt and the 
steel will be there. There is obviously an element of rate of 
return. Through the traditional mechanism, if we are issuing 
bonds at the state and local level to build something, there is 
a rate of return on those instruments. There is a rate of 
return in this availability model as well, and that would be 
paid to the private sector in the long run.
    Certainly tolling and applying tolls as a direct user fee 
is another. The private sector is open to a number of revenue-
generating mechanisms.
    Mr. Walsh. I do not know how you could have a toll road--
you could have it now on the elevated portion of this, it would 
be relatively easy to do, but once you take that down all these 
city streets will have access to this road, so there is no way 
to do that.
    Mr. Ray. Let me say this, the technology is moving----
    Mr. Walsh. And I would not want it anyway, but.
    Mr. Ray. Technology is moving at such a quick pace that it 
is technologically feasible to charge people for their exact 
usage and no more.

                OWNERSHIP OF THE INTERSTATE RIGHT-OF-WAY

    Mr. Walsh. Well, I cannot imagine people wanting that.
    But the last thing is on an interstate there is a fairly 
substantial right-of-way. Does the Federal Government own that 
interstate, that right-of-way?
    Mr. Ray. Originally the Federal Government paid its 
portion, and that has varied a little bit over time as to what 
the original federal investment was. The right-of-way belongs 
to the state.
    Mr. Walsh. The state owns the right-of-way?
    Mr. Ray. That is correct.
    Mr. Walsh. So conceivably if you took that down and you 
narrowed the right-of-way that real estate would then be 
available for sale or otherwise other utilization?
    Mr. Ray. It could be. There are some legal issues that you 
have to deal with. If the Federal Government paid for the 
original right-of-way, then the proceeds of that have to be 
spent on Title 23 purposes. We can certainly talk to you about 
the intricacies of that, the nuances of that, later. But in 
effect, there is a mechanism to sell unneeded space.
    I should mention there are also federal requirements on the 
right-of-way and the space that is needed for an interstate 
facility.
    Mr. Walsh. Thank you very much.
    Thank you, Mr. Chairman.
    Mr. Olver. I heard you to consider the cost of the Big Dig. 
And also----
    Mr. Walsh. Well, we are not going underground.
    Mr. Olver. Okay, that is true. But, yes, you were getting 
around to where the right-of-way is, and those are of value, 
and also the air rights for development over the top. I suppose 
it could have an impact about for a city that has lost a third 
of its population in the last four or five decades you know.
    Mr. Walsh. Real estate does become more valuable as it 
frees up.
    Mr. Olver. Mr. Pastor?

                      TRANSIT-ORIENTED DEVELOPMENT

    Mr. Pastor. Thanks, Mr. Chairman. Good morning to the panel 
members.
    Mr. Simpson, let me invite you December 27 of this year we 
will open up the Valley of the Sun metro light rail system. And 
as of today even though costs of the land is quickly increasing 
we still have within that 20-mile corridor land that is low 
density development and also in some areas undeveloped in terms 
of economic or housing.
    I know the last year through the Chairman's initiative we 
funded HUD and FTA to come back and look and tell us what 
incentives could be provided so that the corridor would reduce 
congestion, increase the economic development, and also 
hopefully provide affordable housing so a community could 
sustain itself. Where are we on that?
    Mr. Simpson. Well, we have a robust program and it is 
moving right along. We did provide the full report on 
affordable housing, almost a year ago, at the last 
appropriations hearing. At this time have an interagency 
working group. In 2008 the Committee directed $250,000 for HUD 
and $250,000 for FTA to move forward.
    We have an important report on this. A lot of it gets back 
to the local level. But I have to tell you that FTA is doing 
everything that it can to promote affordable housing. We know 
why it is needed and it is necessary.
    Mr. Pastor. Right. Right.
    Mr. Simpson. People who cannot afford automobiles, in 
particular, need to be near transit for a number of reasons.
    Mr. Pastor. And also we will remove some old cars out of 
the freeways and highways, yes.
    Mr. Simpson. It is only a matter of time. We work very 
closely with the Center for Transit-Oriented Development. And 
our regional administrators are around the country touting the 
success of transit-oriented development particularly with 
affordable housing. At the end of the day it gets to the profit 
motive and programs that HUD may have available to investors 
and to builders who are actually building the property. Again, 
a lot of it is at the local level, but we at FTA are supporting 
affordable housing near transit at every opportunity we can.
    And we are coming out with another report for you by the 
end of June.
    Mr. Pastor. Okay. So that report will be available?
    Mr. Simpson. Yes. It is more of a strategic plan, an action 
plan.
    Mr. Pastor. It is an action plan?
    Mr. Simpson. Yes.
    Mr. Pastor. Do you think in that plan will be initiatives 
and incentives for the development in terms of grants or tax 
exemptions or?
    Mr. Simpson. Well, the FTA's role is somewhat limited. We 
stop at the transit side, but we are working with our 
counterparts. I am not trying to punt this, it is just that it 
is more on the side of HUD.
    Mr. Pastor. Okay.
    Mr. Simpson. And a lot of city, state and local taxing 
authorities to do that.
    Mr. Pastor. Yes, because I think if you try to reduce 
congestion and improve the mobility of people----
    Mr. Simpson. Right.
    Mr. Pastor [continuing]. If you use those corridors, the 
light rail corridors more effectively and providing house and 
economic development that you will achieve reducing congestion.
    Mr. Simpson. Yes. Well, you are very lucky in Phoenix; you 
have land that is available, which is good. And a lot of it is 
vacant, which allows those local policies to encourage 
affordable housing.
    Mr. Pastor. I think that is why we are kind of saying hurry 
up as quickly as you can.
    Mr. Simpson. Yes.
    Mr. Pastor. Because as you well know, once that light rail 
starts running the land values start going up and people bring 
plans.
    Mr. Simpson. Yes.

              I-10 AND THE CORRIDORS OF THE FUTURE PROGRAM

    Mr. Pastor. And sometimes we do not have the foresight at 
the local levels to ensure that we use multi-use along the 
corridor.
    I saw where the Corridors of the Future provided $8.6 
million for I-10 from California to Florida. In between Phoenix 
and Tucson is the I-10 which, as you well know, is getting 
congested. And a lot of it is due to the trade that we are 
having from the Far East coming into Long Beach, coming into 
L.A. that now many of the truckers and distributors are finding 
it easier to use Phoenix and Tucson as a hub. And so now you 
find more 18-wheelers on I-10 in that area. And you also know 
that the population growth between Phoenix and Tucson is 
increasing, it is probably right now the fastest growing area 
in the United States.
    And following a lead from my colleagues we have applied to 
the Railroad Administrator for a planning grant to develop a 
rail, intercity rail system between the two cities' 
metropolitan areas. At the same time we have need for increased 
capacity on the interstate. And so the question is this: where 
did that 8.6 go and where can we get part of the action?
    Mr. Ray. Sir, let me start by saying I am acutely aware of 
the transportation problems affecting your citizens because my 
wife is one.
    Mr. Pastor. Oh, good.
    Mr. Ray. I spend a fair amount of time out in your neck of 
the woods.
    Mr. Pastor. Hopefully you have driven I-10.
    Mr. Ray. Interstate 10 through Phoenix, especially at the 
wrong time of day, can be quite grueling. Sir, I would have to 
get into specifics of where those dollars went. The purpose of 
Corridors of the Future program was not to fully fund the 
transportation solutions across those corridors.
    [The information follows:]

    The I-10 Corridor of the Future received $4 million in Interstate 
Maintenance Discretionary (IMD) funds related to the widening of I-10 
in Arizona from the Gila River Indian Community to the I-8 interchange. 
The remaining $4.6 million is under the Delta Regional Transportation 
Development Program for the widening of I-10 in Louisiana from I-12 to 
SR-3246.

    Mr. Pastor. I understand.
    Mr. Ray. It was to highlight critical corridors that we saw 
both from the standpoint of mobility for our citizens and also 
from the standpoint of freight mobility. Certainly, those 
issues are very relevant to I-10. The idea was to provide some 
seed money. The $75 million that the President has requested as 
part of the broader $175 million will be part of an effort to 
facilitate this dialogue, to help the states work together. As 
a status update, all of the states are now in the process of 
negotiating comprehensive development agreements, so all the 
states along I-10 can create a framework to solve congestion 
problems across the entire corridor.
    We are particularly happy with the efforts that Victor 
Mendez and other Arizona DOT folks have put into this. I think 
it is a great effort. And you are absolutely right, the 
congestion, the growth, and the change in demographics that is 
occurring in Arizona, that is the front line of the fight on 
congestion in this country. Let me be very clear, the growth 
rates that Arizona is seeing are unlike any other place in the 
country and the Corridors of the Future program are part of an 
effort to try to solve that.
    Mr. Pastor. Well, on your wife's behalf and my behalf 
hopefully you will keep your eye on I-10 between Phoenix and 
Tucson and make sure that the money is used wisely and to 
ensure that. We all recognize that in a very short time, the 
next 15 to 20 years, this part of the world is going to be 
within the megacities that we find the five largest megacities 
of the United States.
    Mr. Ray. Absolutely.
    Mr. Pastor. And so we are trying to address the congestion 
problems, the mobility problems today. So thank you very much.
    Thank you, Mr. Chairman.

                         CONGESTION INITIATIVE

    Mr. Olver. Thank you. We have a series of votes coming up 
here so we are going to have to finish up within 15 minutes or 
so. And I am going to take a few of those right now. And then 
we will not come back. So we will finish up here with whatever 
time my Ranking Member probably has to say about it. Okay?
    I want to go back and explore just a little bit. In the 
2007 budget there were no earmarks because you had full 
discretionary--you had use of discretionary funds, virtually 
all of which since we had not earmarked discretionary accounts 
for those parts you then used the something like $850 million 
to feed these five major congestion accounts, five cities. And 
I wanted to ask how many of those five states have now 
authorized the tolling as you required?
    I mean it seems to me one of the things--is that you 
departed rather significantly from the intent of those programs 
because you sort of swept up monies from several different 
programs in both transit and highways that had very specific 
intents related to them and put them into this congestion 
account that went to these five cities.
    One of the things, for instance, you had in those was to 
each of the cities were required to implement tolling as part 
of their plan to receive the grants. Have all of these five now 
reached agreements, the urban partnership agreements that do 
adopt your requirement for tolling?
    Ms. Scheinberg. I would like to answer your question and 
then provide further comments for the record. Not all of the 
cities have achieved final agreements.
    Mr. Olver. Which ones have?
    Ms. Scheinberg. Miami already had the authority. San 
Francisco recently obtained it. The others are very close to 
getting it.
    But may I expand on the question? I think this is a very 
important issue. This morning we have heard from the members of 
this subcommittee about problems in their areas; problems in 
corridors, and problems in urban areas. This is exactly what we 
were trying to address in these programs.
    Mr. Olver. Okay, fine. I understand that. But Mr. Ray 
earlier commented that some of the things that we had early 
efforts at we certainly would not do the same way now. So we 
had experience earlier from some of the problems that might 
give us direction for these. Presumably that has been done. I 
am sure that we would not end up finding in Indiana that the 
toll road, the Indiana Turnpike would be sold off in the way 
that it was. Not that that was done by you, that was done by 
Indiana.
    And I just want to go on. Did you have legal opinions that 
these 12 programs, dozen programs in FTA and FHWA could be 
lumped together in this kind of a way and given out as this 
congestion initiative? I am talking about the 2007 budget----
    Ms. Scheinberg. Yes, I understand.
    Mr. Olver [continuing]. When these grants were actually 
made in August----
    Ms. Scheinberg. Right.
    Mr. Olver [continuing]. Of 2007?
    Ms. Scheinberg. Yes.
    Mr. Olver. Okay.
    Ms. Scheinberg. The answer is yes. But I will ask.
    Mr. Ray. Just for a point of clarification, and it may not 
have been your intent but let me just clarify. The various 
programs were not lumped together per se.
    Mr. Olver. Money was drawn from all those programs.
    Mr. Ray. That is correct.
    Mr. Olver. And put into a pot and then given out in five 
large grants.
    Mr. Ray. That may have been the way that it appeared to 
you, although that is not in practice actually what occurred. 
There were applications for funding under each program. The 
legal eligibility requirements of each particular program were 
met. So whether money was coming from interstate maintenance--
--
    Mr. Olver. Right. We are really under a time bind right now 
and I want to get--you can answer that in writing for this 
committee. I think it would be very important.
    Mr. Ray. Happy to.
    Mr. Olver. Because it has been very controversial both here 
and on the other side of the Capitol----
    Mr. Ray. Sure. We would be happy to.
    Mr. Olver [continuing]. On the part of both parties in that 
instance.
    [The information follows:]

    The Department of Transportation allocated funds from existing 
FHWA, FTA and RITA discretionary grant programs to contribute toward 
funding the Urban Partnership Agreements (UPA) and Corridors of the 
Future Program (CFP), under the Congestion Initiative. DOT obligated 
allocated or reserved funds for qualified UPA or CFP recipients in 
accordance with the authorizing legislation and implementing 
regulations of each existing discretionary grant. In the Federal 
Register notices soliciting UPA and CFP applications, applicants had to 
apply separately to each of the grant programs from which they sought 
funding and had to meet each program's statutory requirements.
    The authorizing statutes of the discretionary grant programs cited 
above, together with the Revised Continuing Appropriations Resolution, 
2007, authorize the allocation, appropriation and obligation of funds 
to the eligible projects within the UPAs and designated CFP. The lack 
of Congressional earmarks in the Revised Continuing Appropriations 
Resolution, 2007, permitted the Secretary to exercise her discretion to 
award various DOT grant programs.
    Each of the relevant discretionary grant programs permits the 
Secretary of Transportation to exercise her discretion in awarding 
grants consistent with statutory criteria. Where Congress does not 
mandate distribution in statute or provide specific weights to the 
criteria associated with funding project activities, the Secretary is 
free to select projects and obligate funds consistent with the purpose 
of the availability of funding under the program. See the following two 
references: (1) 31 U.S.C. 1301(a). Comp. Gen. Opinion B-228675 (August 
17, 1978). The General Accounting Office approved the Department of 
Health, Education and Welfare's ``cross-cutting'' grants provided that 
the grants were limited to projects within the scope of the grant 
programs. (2) Illinois Environmental Protection Agency v. EPA, 947 F.2d 
283 (7th Cir. 1991). The court permitted the United States EPA to 
reallocate grant monies where the appropriations act did not earmark a 
specific sum of money for grants and funds were used for the express 
purpose for which they were appropriated.

              USE OF FISCAL YEAR 2008 DISCRETIONARY FUNDS

    Mr. Olver. Now let me just go on, add to it. In the 2008 
budget you asked us for the same $175 million of positions 
essentially, of transfers, use of the monies from old earmarks 
which we refused to do. But you also had some discretionary 
money in the 2008 budget. Now, can each of you tell me whether 
that discretionary money that was not earmarked in the 2008 
budget has that also been since you had the, assumed you had 
the authority, and I would like to see your legal, what your 
legal opinions were that gave you the authority to pull those 
things together and use them in that way, you are indicating 
that, yes, in each one you did have that but I want to see it 
on paper--what has the discretionary money in the same accounts 
been going to for the 2008 budget, have you planned on how that 
is going to go out?
    Mr. Simpson. Do you mean on the transit side?
    Mr. Olver. Well, both sides.
    Mr. Simpson. We have not planned for it yet on the transit 
side. We have basically our discretion----
    Mr. Olver. But you have the authority you believe to put it 
back into more congestion accounts?
    Mr. Simpson. In 2008?
    Mr. Olver. Yes.
    Mr. Simpson. With the limitation of 10 percent for UPAs.
    Mr. Olver. For 10 percent.
    Mr. Simpson. We have about $96 million. We need to deduct 
$24 million for the clean fuels, so we have about $9.6 million 
for UPA and about $62 million left for the buses.
    Mr. Olver. Okay. And maybe in this instance since we are, 
maybe we ought to get you both to sort of summarize how you 
intend to use those monies in the same instance given the 
constraint of the 10 percent that was placed on it? Then you 
are asking this year for us to give you the 175 back and, and 
your intent is clear from what has been your testimony, to 
again put a sizeable portion of that, well, that plus some more 
of your discretionary money if there is any left when we get 
finished with this budget into again more congestion things.
    When do we wait and see exactly what happened with the 
original ones to see what the tests show before we go charging 
ahead with these approaches?
    Ms. Scheinberg. Mr. Chairman, we are learning every day 
from this example. We are learning how----
    Mr. Olver. But we have not learned much yet. We could not 
have learned much from the original 850----
    Ms. Scheinberg. No. We----
    Mr. Olver [contiuning]. Since that was only put on the road 
last August.
    Ms. Scheinberg. Yes. I agree.
    Mr. Olver. And you are saying that you do not yet have the 
agreement with four of the five states because to use it they 
have to have this tolling thing done. They already had it in 
Miami for the Florida case. And the others have not happened 
even though of course New York, Mr. Simpson has pointed out 
quite clearly that New York has a great commitment toward using 
transit as a part of it. You have the 2nd Avenue sub, you have 
the eastside access or Long Island access and a whole bunch of 
other big problems there. So, yes, we have to make this all fit 
together.
    Should we not test clearly what we have from the ones, the 
big ones that got out?
    Ms. Scheinberg. We want to learn from those and others. As 
you said, there are just five cities. We have of over 50 cities 
and localities that have come in, asked and competed for this 
money.
    Mr. Olver. For much smaller specific kinds of things?
    Ms. Scheinberg. Exactly. The 2008 money is smaller. So we 
are looking at different size cities, covering different size 
areas. We need to learn from this so that we can be ready for 
the next reauthorization. If we wait for these things to 
totally play out we will not have the information for the next 
reauthorization.
    These are the kinds of problems that these cities have. We 
need solutions.
    [The information follows:]

    The budget proposes to redirect $175 million in unobligated 
balances for inactive projects authorized in the Intermodal Surface 
Transportation Efficiency Act (ISTEA) of 1991. The funds will be used 
to carry out the Department's National Strategy to Reduce Congestion on 
America's Transportation Network (the ``Congestion Initiative'') and 
will support metropolitan area congestion reduction demonstration 
initiatives and the Corridors of the Future Program.
    The Department requests $100 million to fund qualified projects in 
2009 that would implement congestion pricing along with complementary 
transportation solutions, including transit service and innovative 
operational technologies. In December 2007, DOT received approximately 
20 applications from a wide range of jurisdictions.
    The Department requests $75 million in the FY 2009 budget to 
support the Department's Corridors of the Future Program (CFP), which 
is part of the Department's Congestion Initiative. In September 2007, 
the Department identified Interstates 5, 15, 10, 69, 70, and 95 as 
nationally significant Corridors of the Future, whose improvement will 
alleviate congestion and provide national and regional long-term 
transportation benefits.
    The Department will be entering into Development Agreements with 
the States along the Corridors during FY 2008. The $75 million 
requested will support projects negotiated and included within the 
Development Agreements that demonstrate an aggressive approach to 
congestion management. Selected projects are expected to include 
technology purchases to support electronic tolling and other 
intelligent transportation system technologies, financing analysis and 
targeted infrastructure investments.
    In addition, the Department requests that 75 percent of the funds 
available for allocation under discretionary programs be designated for 
support of critical congestion relief projects. Projects that combine 
various road pricing, transit and technology solutions would receive 
priority consideration and be selected by the Department according to 
transparent, competitive, and merit-based criteria. Projects eligible 
for funding under this provision would include, but would not be 
limited to, those congestion reduction projects supported by the 
Department in FY 2008.

                    FUTURE OF THE HIGHWAY TRUST FUND

    Mr. Olver. All right, we know that we have got to close 
here very shortly. I will take the argument that you want to 
make on how fast these things should be done. But let me point 
out, when I started on this subcommittee, and I have now been 
Ranking Member on it for a couple of terms and now Chair, but I 
have been on the subcommittee for some years before, within 
this Administration we started out with a trust fund balance in 
the $8 billion range. It was always a goal to keep it up there 
in the $6 to $8 billion dollar range. I cannot remember 
precisely what it was, but on the trust fund part of it was in 
the highway account and part of it in the transit account.
    Now we are down to the point where you by the request in 
the budget are asking that we allow the last bit of the highway 
fund to go into the transit fund because if there is $1 billion 
left that is what others in your own administration have said 
is within the margin of error depending upon what the economy 
happens to be doing in the course of a year. So we may be down 
to both of them being at the end of their life. And what I was 
coming to is here that you are leaving us, going out the door 
at the end of this year, you are leaving us with a problem that 
where the monies have been stripped. And you are saying, and I 
agree, that the gasoline tax is not a reliable thing for the 
future given what our policies are and having to get away from 
the use of gasoline and wanting to reduce our usage and all of 
the other efforts that we are making are designed to try to be 
more efficient about this process.
    But how quickly are we going to--you are asking us to move 
to these other procedures, at least by the policy of the 
Administration, which was to not do anything about gasoline 
increases all of that goes back to my comments earlier that it 
looks to me as if this is a process of reducing dramatically, 
dramatically, the proportion of the surface transportation 
construction and maintenance, development and maintenance funds 
that will come from the Federal Government. That worries me 
greatly.
    Now, we do not have more time. We are going to have to give 
my Ranking Member two minutes as I think we still have enough 
time. You can answer anything you want on that in writing here. 
I am sorry we do not have a little bit more time to explore it.
    [The information follows:]

    [GRAPHIC] [TIFF OMITTED] T3749A.643
    
    [GRAPHIC] [TIFF OMITTED] T3749A.644
    
          SC PROPOSAL TO BORROW FROM THE MASS TRANSIT ACCOUNT

    Mr. Knollenberg. Thank you, Mr. Chairman. I will be as 
brief as I possibly can.
    But I did want to ask a question about the solvency of the 
Highway Trust Fund. I mentioned that at the beginning. And I 
have reservations about the Department's proposal to allow the 
highway account to borrow from the mass transit account to 
cover its insufficient balances. And the other thing is, what 
authority does the department have to make such a transfer 
absent any specific authorization? And has some, has 
legislation been submitted to the Ways and Means people?
    Ms. Scheinberg. The legislation is in the budget as 
appropriations language.
    Mr. Knollenberg. So it has just been offered. But it has 
not--have you clarified anything with the Ways and Means people 
or with the T&I folks?
    Ms. Scheinberg. We have submitted legislation that has been 
used in the past. We also cleared it through the Treasury 
Department. This legislation can be used as a general provision 
for the appropriations bill.
    Mr. Knollenberg. But have either one of these agencies been 
contacted? And what is their opinion right now about passing 
this legislation?
    Ms. Scheinberg. It is not really in their jurisdiction; it 
is in your jurisdiction, Congressman.
    Mr. Knollenberg. It seems to me we went through the others 
too I think the last time, did we not?
    Ms. Scheinberg. This is inside the Highway Trust Fund. It 
is not new revenue.
    Mr. Knollenberg. Yes. Well, I guess we are going to have to 
get out of here.
    Mr. Olver. We will ask, if we have further here we will 
have to ask it in questions.
    Ms. Scheinberg. Okay.
    Mr. Olver. But you have gotten at least the gist of where I 
was headed anyway.
    Thank you very, very much for being with us this morning. 
Very interesting.

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                                          Wednesday, April 2, 2008.

 THOUGHTS AND RECOMMENDATIONS FROM THE NATIONAL SURFACE TRANSPORTATION 
                  POLICY AND REVENUE STUDY COMMISSION

                               WITNESSES

JACK SCHENENDORF, VICE CHAIR, NATIONAL SURFACE TRANSPORTATION POLICY 
    AND REVENUE STUDY COMMISSION [OF COUNSEL, COVINGTON & BURLING]
FRANK BUSALACCHI, COMMISSIONER [SECRETARY OF TRANSPORTATION, WISCONSIN 
    DEPARTMENT OF TRANSPORTATION]
RICK R. GEDDES, COMMISSIONER [DIRECTOR OF UNDERGRADUATE STUDIES, 
    CORNELL UNIVERSITY DEPARTMENT OF POLICY ANALYSIS AND MANAGEMENT]
STEVE HEMINGER, COMMISSIONER [EXECUTIVE DIRECTOR, METROPOLITAN 
    TRANSPORTATION COMMISSION]
    Mr. Olver. The Subcommittee will come to order. I am 
pleased to welcome members of the National Surface 
Transportation Policy and Revenue Study Commission to the 
Subcommittee. The Commission was created by the SAFETEA-LU 
authorizing legislation in the summer of 2005. It recently 
issued a report entitled ``Transportation for Tomorrow,'' which 
details the long-term surface transportation policy and 
financing changes the Commission believes Congress and the 
Executive Branch must begin to implement.
    The report concluded that we need to significantly increase 
our investments in surface transportation and dramatically 
restructure the way we allocate transportation resources to 
remain economically competitive and to also meet the challenges 
of the country's changing demographics.
    The Commission's final report was endorsed by nine of the 
12 commissioners. Of those nine commissioners that endorsed the 
final report, five were appointed by Republicans and four by 
Democrats, so it was a very bipartisan result.
    Today, we want to hear about the work you have done on 
surface transportation policy over the last two years, and we 
are looking forward to that testimony. Before I recognize my 
Ranking Member and my chairman, I do want to introduce the 
members of the Commission to the group.
    Jack Schenendorf, vice chairman of the Revenue Study 
Commission, of counsel to Covington & Burling since 2001, my 
understanding is that you spent 25 years on the T&I Committee--
--
    Mr. Schenendorf. Yes, sir.
    Mr. Olver [continuing]. And was chief of staff of that 
committee from 1995 to 2001. So I want to welcome you back to 
the Hill. That is a wonderful background for this.
    Frank Busalacchi has been the secretary of transportation 
to Wisconsin DOT since 2003. I had the opportunity to meet 
Frank a few months ago at a meeting in Chairman Obey's office, 
where I received a briefing on the Commission's work. You, I 
know, have been a strong advocate for passenger rail, and I am 
pleased that you are with us today.
    We have Ray Geddes, director of undergraduate studies at 
Cornell, Department of Policy Analysis and Management. Ray is 
an economist who has authored a number of books and essays on 
corporate governance and regulation. Thank you for being here.
    Finally, Steve Heminger, the executive director of the 
Metropolitan Transportation Commission in the San Francisco Bay 
Area. Mr. Heminger, thank you for your being here also.
    Now, let me recognize the big chairman for his opening 
comments.
    Mr. Obey. Mr. Chairman, I am going to have to leave early, 
so I do not want to take any time talking. I just came here to 
listen for as long as possible. I am glad to be here.
    Mr. Olver. Okay. You cannot sit there and listen for long, 
I am sure.
    All right. Then to my distinguished Ranking Member, Mr. 
Knollenberg, a previous chairman of the Committee, and my 
partner in this.
    Mr. Knollenberg. Thank you, Mr. Chairman, and welcome, 
Commissioners, one and all. I would like to extend my 
appreciation for you being here today because we are going to 
spend some time this afternoon discussing some of the findings 
and the recommendations that you are making, as well as the 
views of the dissenting commissioners.
    Mr. Chairman, we are nearly six months into the 2009 Fiscal 
Year, and this is the final year of the current surface 
transportation and authorization SAFETEA-LU, and I can think of 
no better time than now to address the future of surface 
transportation programs and the means by which these programs, 
or these types of programs, will be funded in the years to 
come.
    In the coming months, Congress will begin the task of 
reevaluating the overarching objectives for the Surface 
Transportation program, perhaps redirecting some funds to meet 
priorities in order to address the transportation-related 
issues, such as congestion mitigation, the movement of 
commodities, and the nation's aging surface transportation 
infrastructure.
    According to the Texas Transportation Institute's 2007 
Annual Urban Mobility Study, which was released last September, 
our nation's drivers sit in traffic something like, on average, 
38 hours a year and waste 26 gallons of fuel in doing so. Last 
summer's collapse of the Minnesota I-35W bridge during rush 
hour disrupted travel patterns, as well as the movement of 
goods and freight, but, even more so, it shined a spotlight on 
the deteriorating condition of this nation's transportation 
infrastructure.
    With stats such as those found in the PTI report and 
tragedies like the I-35W bridge collapse, it is apparent that 
we have become a nation of too many people taking too many 
trips over too short a timeframe on a system that is too small.
    For these reasons, we find ourselves facing some hard 
questions regarding our nation's surface transportation 
infrastructure. How do we combat congestion efficiently and 
effectively on an infrastructure that we have clearly outgrown? 
Do we simply build more roads, or will that just create more 
incentive to drive? In lieu of more roads, we do turn to a 
different type of infrastructure, such as high-speed rail. That 
is a question. Do we just live with what we have in an effort 
to keep it in good order, establish a means for allocating more 
of the costs associated with using highways to those who use it 
most or cause the most wear and tear?
    As I noted in this morning's hearing, in my opinion, we are 
looking at a highway version of the ``perfect storm.'' At the 
very time that we are seeing rapidly diminishing trust fund 
revenues and rapid increases in fuel prices, both of the 
prominent solutions being discussed are to increase taxes, one 
on gasoline and one on access to highways, yet we, as a nation, 
have decided to move in a different direction: alleviate stress 
on the environment and reduce our dependency on gasoline.
    Many Americans are opting to take advantage of the 
technological strides made in recent years to reduce gasoline 
consumption by purchasing vehicles powered by a new generation 
of diesel engines, hybrids, electricity, and also any other 
alternative fuels that may be available.
    As a result, the old assumptions may not be reliable 
anymore. In a nutshell, if you look at this, these trends, if 
they continue, gasoline consumption will no longer be as 
closely or directly tied to the amount of travel or the amount 
of damage done to the highway system as much as it has in the 
past.
    All of this suggests that perhaps raising the gas tax--I 
know some of you agree with that--and assessing access fees are 
not the most equitable or efficient means of allocating the 
cost of highway maintenance and construction to those who will 
actually be using the system and doing the most damage. Then 
the question is, how do we pay for any or all of this? It is 
clear that the current level of highway receipts will not be 
sufficient to fund the current program, let alone any future 
programs.
    This past January, OMB projected that the Highway Trust 
Fund will face a shortfall of some $3.2 billion in 2009. That 
is just around the corner. There appears to be a short- and a 
long-term solution that are being discussed, and, in the short 
term, the president's Fiscal Year 2009 budget proposal requests 
that temporary authority be granted to the secretary of 
transportation to advance funds between the highway and the 
mass transit accounts to cover insufficient fund balances. Such 
a budgetary gimmick has not been used since the 1960s that I am 
aware of, and that assumes that the funds would be there and 
that somehow it could be repaid, both of which are huge if's.
    Other long-term recommendations to partially solve our 
looming funding question were put forth in the report by our 
panel of witnesses and their fellow commissioners. One such 
recommendation was an increase of 40 cents per gallon federal 
gasoline tax to be phased in over the next five years, with 
automatic increases every year thereafter tied to inflation.
    Mr. Chairman, you and I both know that there are no 
guarantees that either borrowing from other programs or big tax 
increases will keep the Highway Trust Fund solvent, and I have 
serious reservations as to what type of ripple effect some of 
these proposed taxes will have on our society overall, in 
particular, those struggling to make ends meet on a daily basis 
and on small business.
    I cannot think of a more regressive tax on low- and 
moderate-income families than a 40-cent-per-gallon increase in 
taxes on gasoline. In my opinion, and I believe the Chairman 
would tend to agree with me, proposals to borrow from other 
programs only postpones the day of reckoning, and big tax 
increases, whatever their variety, come with significant 
adverse impacts on the very families that we are trying to help 
with the other half of our bill, and that is the HUD half.
    Now, I realize that some may prefer to call these increases 
``user fees.'' Well, let us call them what they are. They are 
taxes. In my opinion, we need major reforms to not only what we 
finance but how we finance, and, Mr. Chairman, I will have some 
questions for the witnesses regarding the specifics of the 
Commission's recommendations.
    I appreciate the opportunity to highlight what I think are 
some very serious issues for not just this Subcommittee but for 
the upcoming reauthorization process, too, and I share the 
Commission's vision, and I quote, ``to create and sustain the 
preeminent surface transportation system in the world.''
    I look forward to exploring these topics with you, and, at 
the moment, I will yield back the balance of my time. Thank 
you, Mr. Chairman.
    Mr. Olver. Thank you, Mr. Knollenberg.
    We will go to the panel. We have lined you up here with the 
commissioner who was the vice chairman of the Commission, and 
then the rest of you are alphabetical. So, Mr. Schenendorf, it 
is your turn. All of your formal testimony will be in the 
record. You can do with it as you wish in your oral testimony.
    Mr. Obey. Mr. Chairman, I just have one question. How did 
we let an authorizer in? [Laughter.]
    Mr. Olver. Those are the old days.
    Mr. Schenendorf. Thank you, Chairman Olver. Thank you, 
Chairman Obey, Ranking Member Knollenberg, and other Members of 
the Subcommittee. I am Jack Schenendorf with Covington & 
Burling Law Firm in Washington, and I was honored to be vice 
chair of the Commission, and I am testifying in that capacity.
    In my allotted time, I would just like to briefly summarize 
five of our key findings and conclusions and recommendations.
    First, the next transportation bill has to be bold and 
transformational. Simply put, we have outgrown our aging 
surface transportation system. New leadership must step up with 
a vision for the next 50 years that will ensure the U.S. 
prosperity and global preeminence for the generations to come.
    We cannot have a healthy and robust economy without having 
a healthy and robust surface transportation system. We must act 
now. There is not time for delays. There is not time for more 
studies. This next transportation bill needs to be the bill.
    Second, any effort to address future transportation needs 
of the United States must come to grips with the sobering 
financial reality of such an undertaking. We are recommending 
that all levels of government and the private sector invest at 
least $225 billion annually over the next 50 years to upgrade 
our existing network to a state of good repair and to build the 
more advanced facilities we will require to remain competitive. 
We are spending less than 40 percent of this amount today.
    Third, we recommend that the federal government be a full 
partner with states and local governments and the private 
sector in addressing this looming transportation crisis. Our 
national transportation system is essential to our national 
security, to our economic prosperity, to our global 
competitiveness, and to our way of life. Our transportation 
crisis requires a national solution.
    At a time when countries around the world, from China and 
India to the European Union to Panama, are pursuing major 
national infrastructure investments, how ironic and how 
unfortunate it would be if the federal government was to 
abdicate its responsibilities? Moreover, the problem is simply 
too big to be dumped in the laps of state and local governments 
and the private sector.
    Fourth, we are recommending fundamental and wide-ranging 
reform. Since completion of the interstate system, the federal 
program has had no clear mission. It is now essentially a bloc 
grant model with little or no accountability for specific 
outcomes.
    We believe that a mission or sense of purpose must be 
restored to the federal program. That is why we are 
recommending that the 108 existing Surface Transportation 
programs be replaced with 10 new federal programs that are 
performance driven, outcome based, generally mode neutral, and 
refocused to pursue objectives of genuine national interest. 
These programs include a state-of-good-repair program, a 
national freight program, and other programs that will be 
discussed by my colleagues.
    Fifth, to close the investment gap, we are recommending a 
wide range of revenue enhancements. There is no free lunch when 
it comes to infrastructure investment. We will need a 
significant increase in public funding to keep America 
competitive, and we have recommended a number of different 
types of increases at the federal level. We will also need 
additional private investment, we will need more tolling, and 
we will need to price for use of the system. Simply stated, we 
must use all of the financial tools available to us. The users 
of the system should pay, and money derived from transportation 
should stay in transportation.
    In closing, let me just say, it was already mentioned that 
of the nine commissioners that supported this, five were 
appointed by Republicans, four by Democrats. It is the full 
range of the political spectrum from one end to the other, 
everywhere in between. We have a CEO of a major railroad, a CEO 
of a major trucking company, a CEO of a major user of the 
system, the secretary of transportation of a state, a local 
official. So it is a very diverse group of commissioners who 
strongly support our recommendations.
    Let me just close by saying that our parents and 
grandparents gave us a great gift with the interstate system. 
They gave us a new system with excess capacity that has served 
this country very, very well and has helped this country to 
grow and to build itself into what it is today.
    Well, as has been stated, that system is aging, we have 
outgrown it, and we need to do for our children and 
grandchildren what our grandparents and parents did for us, and 
we need to do it soon, and we need to do it efficiently. Thank 
you.
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    Mr. Olver. Thank you, Mr. Schenendorf. Mr. Busalacchi?
    Mr. Busalacchi. Thank you. Good morning, Chairman Olver, 
Chairman Obey, Ranking Member Knollenberg, and Members of the 
Committee. My name is Frank Busalacchi. I am secretary of the 
Wisconsin Department of Transportation and also chair of the 
States for Passenger Rail Coalition.
    As a state DOT secretary, I see firsthand how 
transportation affects our citizens' lives. Serving on the 
Commission allowed me to consider how federal policy could be 
crafted to best serve citizens nationwide and to assure that 
states work together to achieve national goals.
    Let me speak briefly to issues not addressed by my 
colleagues.
    The commissioners adopted inner-city passenger rail as a 
part of our multimodal vision for the future. Rail can help 
alleviate congestion, high gas prices, and global warming 
impacts. We heard testimony from state and local officials 
asking for additional public investment in passenger rail.
    To assist the Commission in advising Congress, I engaged a 
working group to provide analysis. They created a 20/50 map and 
cost estimates for rail improvements connecting cities in 
corridors of 500 miles or less. Of the 10 new programs 
recommended, inner-city passenger rail is the only modal-
focused program. The federal government will fund 80 percent of 
the program, similar to the funding partnerships for highways, 
transit, and aviation.
    The commissioners recognize the problems of a limited 
passenger rail system, lack of transit options in some cities, 
inadequate freight capacity, and congestion. There were strong 
voices as well for the transportation challenges of rural 
America.
    Our transportation system is a network that passes through 
urban, suburban, and rural areas. ``Connecting America,'' a 
national program for smaller cities and rural areas, assures 
that states with rural populations will continue to receive 
federal transportation funds. We need to support all segments 
of our national network. Without this federal commitment, 
between 20 and 25 states would miss out on the economic-
development and quality-of-life benefits that come from 
improved transportation.
    Your predecessors showed wisdom in establishing the Highway 
Trust Fund to build the interstate system, rejecting Clay 
Commission's original recommendation for debt financing. For 50 
years, the trust fund has been the primary mechanism for 
funding our transportation system. However, its revenues have 
not been raised in over 15 years; nor is the fund index 
protected from inflation.
    Commissioners are concerned that the balance of the highway 
account of the trust fund is projected to fall negative $1.4 
billion by the year 2009. I am troubled by the administration's 
2009 budget proposal and its unwillingness to outline a long-
term solution that assures the growth and predictability of 
revenues to fund our nation's surface transportation needs.
    In my written testimony, I outline the potential impact of 
a negative cash balance on my state, assuming no other formula 
changes or corrective action. In 2009, Wisconsin's funding will 
be reduced by close to $100 million. All states will be 
similarly affected.
    We spoke plainly in our Commission report: There is no free 
lunch when it comes to financing. We recommended a variety of 
revenue sources, and it came down squarely on the side of pay-
as-you-go financing. The Commission looked at long-term leases 
by private investment companies used to build interstate 
tolling projects. Our roads and transit systems are public 
assets and should be protected. We should not allow private 
companies to take their profits from infrastructure built with 
public funds.
    The current issues plaguing Wall Street and our economy 
speak to this issue: The government must assure that the public 
is not assuming the risk associated with investment decisions 
made by the private sector. It was a bold vision and a strong 
commitment to funding the interstate highway system that made 
it possible 50 years ago. Today, our highway and aviation 
systems are congested, and it is time to create a truly 
multimodal system. A strong federal partner will be required to 
help finance the Commission's vision for the preeminent 
transportation system in the world. Thank you.
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    Mr. Olver. Thank you very much. Mr. Geddes.
    Mr. Geddes. Thank you, Mr. Chairman, Chairman Obey, 
Committee Members, and Fellow Commissioners. Thanks for the 
opportunity to appear today, and thank you for the opportunity 
to serve on this Commission. It has been an honor to serve with 
such a wonderful group of people, and thank you for taking a 
careful look at this crucial issue that is facing our nation 
today.
    As you know, there was a minority report filed. I was one 
of the signatories of the minority report, and I am happy to 
discuss in detail my reasons for signing onto the minority 
report, but I would like to start off by emphasizing the number 
of areas where the Commission was unanimous in its 
recommendations to Congress, and I think those are critical to 
articulate.
    The Commission was unanimous in its recommendations for the 
use of increased tolling, congestion pricing, private 
investment, performance standards, enhanced use of performance 
standards, enhanced use of cost-benefit analyses, increasing 
our efforts to improve safety on our nation's roads, 
streamlining the number of federal programs that are out there. 
As Commissioner Schenendorf mentioned, there are 108, and our 
Commission's recommendations would reduce those down to 10. 
That is a significant streamlining. Increasing the speed of 
project delivery is something that the Commission is unanimous 
on, and I encourage you to carefully consider the 
recommendations that the Commission has made as a whole.
    But I would like to note from there that I believe that the 
nation is essentially on the verge of a major paradigm shift in 
the way that transportation services in the United States are 
going to be funded and managed.
    I believe that this largely will stem, partly, I would say, 
will stem from what I view as the political unfeasibility of 
raising fuel taxes at this time or in the foreseeable future. I 
predict that it is going to be very difficult to increase fuel 
taxes by anything other than a very small amount, perhaps not 
at all, in the future, for a couple of reasons.
    First of all, fuel prices are now very high, by historical 
standards, and I believe that the economic forces that are in 
place that cause those high fuel prices are not going away in 
the future, that they will remain sustained for the long term 
and that that will reduce the political feasibility of relying 
on the fuel taxes as we have in the past.
    Basically, what we are seeing is standard Economics 101 
competition amongst various groups for a scarce resource 
driving up the price. There is a global price for crude oil, 
and we are seeing China, developing countries overall, but 
mainly China and India, increasing the demand for fuel, 
resulting in very high fuel prices that are not, in my view, 
going to be alleviated unless you believe that the rate of 
growth of those economies is going to slow.
    The middle class is growing in those countries quite 
rapidly. Along with the middle class growth comes increases in 
car ownership, the desire to own a car, and that will drive the 
demand for this type of fuel. We already have seen the truckers 
strike in the past couple of days regarding high fuel prices, 
so I think that gives us some indication.
    The second point is Mr. Knollenberg's point regarding the 
regressivity of fuel taxes. There was a 2007 study done by the 
comptroller of the State of Texas which assessed all of the 
State of Texas's taxes, which include sales taxes, franchise 
taxes, natural gas taxes, school property taxes, and, using 
standard measures of regressivity, the gas tax was the most 
regressive tax of all of those taxes.
    So I do not believe that the nation, at a time when it is 
concerned about enterprise and inequality, is going to 
significantly raise a tax that is that regressive.
    I believe that these also apply at the state level for fuel 
taxes. States are going to have that difficulty in raising the 
funds, but yet our Commission, and I think, again, unanimously, 
has understood the massive needs of the transportation system 
in the United States. So where is that funding going to come 
from?
    Well, clearly, in the short term, it is going to continue 
to come from fuel taxes, but over the longer term, I believe we 
are increasingly going to have to rely on alternative revenue 
sources. I believe those must come from increased use of 
pricing and toll concessions or public-private partnerships. 
Indeed, data indicate that this is already occurring.
    From 2000 to 2004, revenue from tolls increased 21 percent, 
while that from fuel taxes increased 2.4 percent, so a very 
significant difference in trends there.
    So I believe that what we should be doing, in a policy 
sense, is focusing on facilitating and managing this paradigm 
shift that I see occurring, and I believe our Commission has 
already laid the groundwork for that facilitation. As I 
mentioned, we unanimously support the use of tolls and toll 
concessions.
    This paradigm shift raises a host of important policy 
issues, a vast array, which would take me far too long than I 
have in my oral testimony here to discuss, but I believe it 
will raise important issues of regulation, and essentially our 
transportation system is a network industry, and the economics 
profession, from which I come, has a vast amount of experience 
with regulating network industries, such as telecommunications, 
electricity, and natural gas.
    To make a couple of concrete suggestions, just to suggest 
some of the nature of the things that I think we should be 
talking about, given that you believe there is a paradigm shift 
that is going to take place.
    First, regarding toll concessions, I believe we should 
avoid any type of rate-of-return regulation. Other industries 
have experimented with rate-of-return regulation. It has been 
used for a number of years, and those industries are moving 
away from rate-of-return regulation in favor of various types 
of what we call ``incentive regulation,'' regulation that is 
designed to give firm, solid incentives. Rate-of-return 
regulation is well known for generating a host of negative 
incentive effects, such as blunting the incentive to innovate, 
and I believe one thing our transportation system really, 
really needs is the incentive to innovate.
    I was impressed to learn on the Commission about the number 
of ways that innovation could be brought into our system, new 
materials for roads, faster use of electronic tolling. There is 
a whole host of innovations that could be brought in. Second, 
rate-of-return regulation has the effect of blunting incentives 
to keep costs down, so I think we need to avoid that.
    The second point that I would make, essentially in 
conclusion, is that flexibility in the way we approach this, I 
think, is key, and the new learning suggests that a sort of 
centralized, one-size-fits-all approach may not be the way that 
we want to go.
    Instead, we would want to adopt a flexible approach to this 
new paradigm, and I would just quote from a recent article that 
I was reading in a prestigious journal in economics called the 
Journal of Economic Literature. It is from the December 2006 
issue. It is essentially a survey article that is surveying the 
economics literature on infrastructure regulation, and it is 
written by a New Zealander by the name of Graham Guthrie.
    It was just this quote that struck me about this. It says: 
``The two most important lessons to be drawn from the 
literature surveyed here are that there is no single 
combination of regulatory settings that is best in all 
situations and that the various components of a regulatory 
scheme are interrelated. The most appropriate regulatory scheme 
for a given situation will depend on the characteristics of the 
firm and the industry being regulated, as well as the 
institutional environment,'' which, to me, suggests that a 
flexible approach in this case is warranted.
    So these are just some examples of things that I think we 
are going to have to confront in this new paradigm, and I hope 
those thoughts are helpful. Thank you.
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    Mr. Olver. Thank you. Mr. Heminger.
    Mr. Heminger. Thank you, Mr. Chairman, Mr. Chairman, Mr. 
Knollenberg, Members of the Committee. In my brief testimony, I 
would like to describe four of the 10 new surface 
transportation investment categories that Jack mentioned in his 
that would telescope the program from over 100 down to 10, and, 
in a way, they are our answer to the question which we thought 
was critical in our work: How do you define the federal 
interest in surface transportation?
    The first of these new programs has the working title of 
``Metropolitan Mobility,'' and, in simple terms, it is designed 
to decongest our major urban areas. We have focused on major 
metropolitan areas with more than one million residents in our 
work. These 50 or so areas capture an astonishing 90 percent of 
national market share for three key transportation indicators: 
traffic congestion, transit ridership, and population exposure 
to air pollution. In a nutshell, these major metros are where 
the action is.
    We think the nation should set ambitious targets to reduce 
traffic congestion in these areas, not just slow the rate of 
increase. As former transportation secretary and Congressman 
Norm Manetta has said, alas, another authorizer, ``Congestion 
is not a fact of life.''
    The second program area is traffic safety, one that Rick 
touched on, where our track record as a nation is really a 
tragedy. Every year, as you well know, 40,000 of our fellow 
citizens die on the nation's highways, which is equivalent to a 
9/11 every month, month after month, year after year.
    In addition to the horrible human cost, the economic 
consequences are enormous. According to a study released just 
last month by Triple A, the annual cost of traffic crashes in 
lost earnings, medical bills, and other economic impacts is 
nearly two and one-half times the annual cost of traffic 
congestion in the nation's urban areas.
    Our Commission report proposes, again, a performance-based, 
outcome-oriented approach, an aggressive but achievable goal of 
cutting traffic fatalities in half by 2025. We can reach that 
goal, but only if the combined might and muscle of our federal, 
state, and local governments are brought to bear.
    When it comes to the third area that I would like to 
discuss briefly, environmental protection and enhancement, the 
Federal Surface Transportation program, in a way, is living in 
the worst of both worlds: too much process and too few results. 
On the process side, the average time to complete an 
environmental impact statement for a highway project is about 
five years. Perversely, it can take even longer for 
environmentally friendly rail extensions to run the gauntlet of 
the Federal New Starts program.
    The process is clearly taking too long, and with 
construction inflation running a seven to 10 percent a year, it 
is costing us a boat load of money. In this area, I would like 
to acknowledge that there is actually a fifth member of our 
Commission present, Tom Skanky, from the great state of Nevada, 
and it was Tom's special passion to have us focus in this area.
    We fully support maintaining all of the relevant 
environmental standards that govern how and where we build 
transportation projects, but our report contains a series of 
detailed recommendations for complying with those standards in 
ways that are both faster and smarter.
    On the results side, the transportation sector is the 
fastest-growing and largest source of greenhouse gas emissions 
in the United States, and while this Congress is to be 
commended for raising CAFE standards for the first time in 
decades last year, much more will need to be done in the 
transportation arena to confront the challenge of global 
warming.
    For our part, we recommend a new federal investment program 
called ``Environmental Stewardship.'' This program would 
consolidate several existing categories, but it would represent 
a larger percentage of total funding in the Federal Surface 
Transportation program because of the importance we place on 
maximizing both the economic and environmental potential of the 
nation's transportation system.
    The fourth, and final, area I would like to touch on is 
energy security, which has become a critical transportation 
issue. As you know, the nation's mobility is largely dependent 
on gasoline and diesel fuel, and the transportation sector 
accounts for two-thirds of U.S. petroleum use. Federal 
transportation policy must work in tandem with national energy 
policy to reduce reliance on petroleum fuels.
    Our Commission recommends that a transportation energy 
research and development program be authorized for $200 million 
annually over the next decades, as was recommended by another 
bipartisan Commission on National Energy Policy in 2004. While 
this use of federal fuel tax funds would be unprecedented, it 
is a strategy that the public supports.
    We have talked a little bit about the fuel tax already this 
afternoon. I would draw your attention to polling conducted 
last year by the New York Times and CBS News, which found that 
64 percent of Americans would be willing to pay higher gas 
taxes if the money were used for research into renewable energy 
sources, and the investment would reduce our dependence on 
foreign sources of oil.
    In conclusion, let me say this: The inefficiencies and 
underinvestment that plague the nation's transportation network 
are not just about concrete, asphalt, and steel. They 
jeopardize our national security, they damage our ability to 
compete in a global economy, and they harm our enviable quality 
of life. We simply cannot afford to pass this problem on to the 
next generation. As Jack indicated at the outset, the time to 
act is now. Thank you.
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    Mr. Olver. Thank you very much. There is an old 
psychological experiment--by the way, I am just making a quick 
comment and then I will go into--questions as quickly as 
possible. There is an old psychological experiment, a list of 
things that the person being tested is asked to remember. You 
can remember the first and the second and maybe the third and 
the last and everything else in between, which is why we only 
have four people. I am not even sure that I can remember what 
all four of you will have said. But, I particularly enjoy you, 
Steve Heminger, for putting it in four clear items, which I can 
actually jot down quickly enough along the way.
    I want to ask a couple of quick questions. Jack, you have 
said, and I must have misunderstood this the first time, you 
had said at least 225 billion per year and I think that growing 
over the period of 50 years is 340 or something like that. Is 
that roughly correct?
    Mr. Schenendorf. No. The range of our findings found that 
what we needed to invest was in the range of 225 billion a year 
to 340 billion a year, depending upon how much pricing you do. 
If you do maximum pricing, that forces the number down to about 
225 billion. If you did no pricing at all, you would be up in 
the 340 billion range.
    Mr. Olver. But that implies sort of a jump from where we 
are now.
    Mr. Schenendorf. Yes, sir.
    Mr. Olver. But this is 225 billion of federal, state, and 
local investment, where our present investment in those three 
areas is roughly this year 85 or 86 billion dollars. That is 
two-and-a-half times, right in one jump. In my understanding of 
this, I thought you were going to maybe 125, a 50 percent 
increase, and then going up by a percent, a couple of percent 
per year until you got to a higher number.
    Mr. Schenendorf. Well, I would say that, obviously, as this 
program, if Congress enacted something similar to this, it 
would have to be a transition period, in which the rules were 
changing, the programs were changing, and obviously the funding 
would be changing.
    Mr. Olver. Okay.
    Mr. Schenendorf. So, we did not say absolutely have it be a 
step jump.
    Mr. Olver. Okay.
    Mr. Schenendorf. But, obviously, it has to phase up to that 
level pretty quickly.
    Mr. Olver. Then let me just ask Mr. Geddes, you said, you 
gave a list of things that the Commission was unanimous about. 
There was a whole group, longer than just four, seven or eight. 
And then you said later, that you had thought unanimous, is 
that correct, on the issue that we need a substantially 
increased investment in service transportation? Is the idea 
that we need to go up to that level of 225, is that agreed to 
by the Commission, as a whole----
    Mr. Geddes. I do not think the specific----
    Mr. Olver [continuing]. In the terms that Schenendorf has 
said?
    Mr. Geddes. I believe what we all agree on is the need for 
substantial increases in investment. The particular number----
    Mr. Olver. Particularly for the number of the----
    Mr. Geddes. Right, right. I am happy to go into the 
discussion of why. As Commissioner Schenendorf said, the 225 
billion dollar number is based on the use of tolling. One of 
the recommendations of the minority report is that the proceeds 
from tolling be used on transportation, but that number does 
not assume that there proceeds are, in fact, used on 
transportation.
    I have sort of more of a conceptual problem with the notion 
that we can simply take a step back and say here are the needs 
of the system. As an economist, the term ``needs'' to me is a 
very alien, foreign term. I think more in terms of the demand, 
what are people willing to pay for, like the way we would have 
any other good provided. So, you can come up with models that 
say any positive net present value project should be funded and 
those are needs, but I am not sure I believe that the----
    Mr. Olver. I understand what you are saying. That 
complicates my characterization here a good deal. My 
understanding was that the Commission on the issue of transit 
is suggesting that we should be doing somewhere between 26 and 
40, 45 billion dollars per year, which is a big step up. But, 
again, it is sort of like that two-and-a-half times step upward 
for transit purposes and I am putting in the back of my mind 
exactly what you said. But, we are now this year going to be--
the request is 10 billion dollars now for this year.
    In the case of rail, which is Frank's major role, we have a 
hard time coming up with 500 million for capital investment in 
passenger rail, which is Amtrak, and the terrible fight about 
it every year. We have done exactly nothing on high-speed rail 
in this country. That whole thing in a balanced transportation 
system has not been touched. And I think your recommendation 
there, as a Commission, or at least the majority now--I am 
accepting that maybe the minority does not agree with these 
kinds of needs within your caveats--that that should be 
somewhere in the seven, eight billion dollars year on an 
ongoing basis.
    My goodness, I note that Korea, in two-and-a-half years 
with its new program opened from Puson to Seoul, has gotten up 
to 40 million passengers per year. And we, and all of Amtrak, 
which we have been struggling with, like a fishbone caught in 
our throat, have not reached--well, we have gotten to about 26 
million passengers per year for the whole system. But, we 
refuse to put more than a half a billion dollars per year in 
the capital funding and that is saying nothing about freight 
rail and so on.
    The Assistant Secretary this morning gave us a table, which 
showed the erosion of the trust fund over the years, in 
particular that erosion has been dramatic since the 2005 
SAFETLU was adopted and now we are going to, in this year, be 
within a margin of error, essentially, on what money gets 
funded. It is gone in the fiscal year 2009. So, the crux of the 
issue is how you fund this. Whatever it is, our needs, our 
demands, however you put it, the crux is the possible funding. 
That is enough for me. Mr. Knollenberg.
    Mr. Knollenberg. Thank you, Mr. Chairman. In the Commission 
report, there were several recommendations, and this is for Mr. 
Schenendorf, by the way, several recommendations to increase 
revenues to support the multi-modal trust fund, one of which 
was the levying of a federal ticket tax on all transit and 
passenger and rail trips and the imposition of a federal 
freight fee to finance freight-related improvements, plus the 
redirection of a share of Customs taxes paid on all imports, 
increases in container fees, state fuel taxes, and other 
highway user fees and the use of variable pricing on the 
tolling mechanisms. However, out of all of these, the most 
talked about, I believe, was the Commission's recommendation to 
increase the federal gasoline tax by at least 40 cents a 
gallon, as they pointed out, to be phased over five years, et 
cetera. Whatever taxes are imposed or increased, the impact on 
many segments of society can be very severe. Before making this 
recommendation, did the Commission have experts to do an in-
depth analysis of the differential impacts that a 40 cent per 
gallon federal gasoline tax or, in fact, any other proposed 
tax, user fee, increase would have on families of low, median, 
and very low income? If so, what were their findings and, if 
not, do you not think that the economic and social impacts on 
those least able to afford the tax should be a critical factor 
in your analysis and your final outcome?
    Mr. Schenendorf. Yes. I mean, I think you have stated 
correctly that we did have a wide range of recommendations on 
the tax area. Our recommendation on the fuel tax was 25 cents 
to 40 cents, depending upon whether it is 225 or the 340, 
somewhere in that range, five to eight cents a gallon over five 
years. I would say that we do have an extensive analysis of a 
number of different factors of a number of different ways that 
are in our report. We have an entire chapter on it. It goes 
through this analysis.
    I would disagree with the gas tax being the most regressive 
way to fund this program. First of all, these investments help 
America. We have to have a strong economy. You cannot have that 
without having a strong surface transportation system. So, 
everybody--the jobs that people have, how much they are able to 
earn, how we are willing to compete in the world, how much 
money we have for education, how much money we have for 
national defense all flows from a strong national economy and 
you cannot have a first-class economy with a second- or third-
class transportation system. So, everybody benefits by those 
investments in that system.
    The question is what is the fairest way to do it.
    Mr. Knollenberg. That is what I am coming to.
    Mr. Schenendorf. And when you have a national network the 
way we do, having everybody pay through a gas tax, spreads it 
out over the widest base, so that people are actually paying 
less than they might otherwise pay. Compare this to congestion 
pricing. Congestion pricing is the most regressive. That is 
imposing a fee that basically is forcing people to not be able 
to drive. So, when you congestion price, it is the lowest in 
society that are not going to be able to use those lanes. The 
hot lanes in Northern Virginia--
    Mr. Knollenberg. I understand that. But the gas tax is the 
one that impacts people. We have people in Michigan, for 
example, that do not have a job. They do not have to pay the 
gas tax. But, those that do are paying mightily, because now 
with gasoline prices above 3.50, and this is just one tax, I 
talked about several options or recommendations you made here. 
But, I do think if they piggyback, let us say, all the others--
let us take the gasoline tax, the transit tax, the passenger-
rail--the state fuel tax and the federal tax ticket on transit, 
those are others, if they parallel, in fact, come along with 
the gasoline tax, you have got yourself a severe problem, I 
think, with the low, the median income people.
    You are saying investment. Now, tax may be one way of 
investing; but, honestly, there are other things that can be 
done besides taxing people.
    Mr. Schenendorf. Well, I think that it is a question of 
what is the fairest overall way at the end of the day. If you 
just look at this hot lane project in Northern Virginia, this 
14 miles that has been touted as a national model, if you take 
the gas tax, let us take it at the high end, the 40 cents per 
gallon, let us say that a driver gets 20 miles to the gallon, 
let us say they drive 20,000 miles a year, that driver would 
pay about two cents per mile. It would pay a total of about 400 
dollars. The average price to just use those new lanes on the 
Beltway are five to six dollars a day. That is 120 dollars a 
month. That is 1,400 a year. That is three times what the gas 
tax would cost over the year just to drive on that one segment 
of the Beltway. So, all of these approaches are going to cost 
more. The question is only what is the best way, as a society, 
to pay for all of this.
    What we are recommending is a combination, try to use the 
gas tax, try to use other things, use tolling in some places, 
congestion pricing in others, but try to do it in a balanced 
way, so that obviously if you are going to use congestion 
pricing, you are going to need transit in that area. You may 
need to subsidize people for transit.
    Mr. Knollenberg. Let me interrupt, Mr. Schenendorf. I want 
to go to Mr. Geddes real quickly for a quick question. I hear 
you, but I also know that--Mr. Geddes, you mentioned in your 
comments that the federal gas tax is a very highly regressive 
tax in the sense of how it disproportionately hits the poor. 
Other than the study conducted by the Controller of Texas, in 
your research, were you able to locate any national or regional 
data regarding by which such attacks would impact the low-
income family and, if so, can you tell us quickly?
    Mr. Geddes. Yes. Thank you, very much, for the question. I 
asked the chief economist at the U.S. Department of 
Transportation to help me out on a literature search on this 
and we sort of did it together and the best we were able to do, 
in terms of a rigorous--there is standard way of measuring 
regressivity of a tax in public finance. It is something called 
a suit's index. And the only thing that we were able to find 
that compared these types of taxes was for the State of Texas. 
I can go back and try to do a more exhaustive survey, if you 
would find that helpful. But, basically, the best we could do 
was Texas.
    Mr. Knollenberg. That survey would be interesting. If you 
can supply some information relative to that, we would like to 
have it.
    Mr. Geddes. Yes, sir. I would be happy to.
    Mr. Knollenberg. Thank you, Mr. Geddes.
    Mr. Heminger. Mr. Knollenberg, can any of the rest of us 
get in on this question?
    Mr. Knollenberg. I think the Chairman rules on time.
    Mr. Olver. Go ahead.
    Mr. Heminger. And, look, I am not an economist, but the way 
I look at the issue is this. The federal gas tax is 18 cents. 
It was raised to that level in 1993 when the average retail 
price for gasoline in America was about one dollar. It is now 
over three. That two dollar runup has probably been regressive, 
but not a penny of it has benefitted the people paying that 
charge. There is no investment in infrastructure out of any of 
that money and quite a bit of it is going to places that are 
meaning to do us harm, not benefit. The way I look at it, to 
the extent there is some regressivity in the tax, if it is, as 
a user fee should be, benefitting the people who pay it, by 
reinvesting in the transportation system, then I think you 
start to see both sides of the equation. What we have been 
doing for the last decade or more is just watching the price go 
up and getting nothing for it. I mean, in my neighborhood, the 
price goes up five cents over the weekend and our 
recommendation is five cents per year to try to invest in our 
infrastructure.
    Mr. Knollenberg. Looking back to deal with things--what you 
are looking backward at, you are right, it is not that much 
money and by going to 40 cents, it would not be that much more. 
But, along with that does not just come a gas tax, it comes 
from other taxes, too, that are added on. I just relayed what 
some of those were. So, we are going to get more than just a 
gas tax.
    Mr. Heminger. Congressman, you are correct and all I would 
ask you to do is to weigh the cost and the benefit----
    Mr. Knollenberg. Well, that is what I am going to do.
    Mr. Heminger [continuing]. Because what----
    Mr. Knollenberg. That is exactly what we want--
    Mr. Heminger [continuing]. We have been doing for the last 
many decades now is we have not been paying the cost, at least 
not to the government. We have been paying it to the oil 
companies. But, we have also not gotten the benefit, because 
our system is falling apart.
    Mr. Olver. Let me go to Mr. Obey here and we will let you 
answer something in the next round.
    Mr. Heminger. Okay, all right.
    Mr. Obey. Thank you, Mr. Chairman. Let me confess to be 
absolutely rabidly biased on this issue. I am not in the 
slightest bit neutral on this issue. I do not like the gas tax, 
but I have spent virtually all of my career fighting 
politicians, who want to get credit for the benefits of public 
services that they provide without also being willing to take 
credit for the revenues that it requires in order to provide 
those benefits. And I spent a good deal of time in my state 
legislature arguing with the governor, who wanted to borrow 
like crazy to build highways today and stick a successor with 
the necessity to pay for them tomorrow. And I have had a 
bellyful of that kind of public service.
    And with respect to regressivity, I do not think there is 
anything in the transportation area quite as regressive as high 
user fees or tolls, which can literally price out of use the 
lowest income people in this population. That is the point that 
you were making.
    Another thing I detest about this town is euphemisms. And 
we have all of these wonderful terms that we use, public-
private partnerships, et cetera, et cetera, ad nauseam. Mr. 
Busalacchi and anybody else, who wants to comment, when we talk 
about public-private partnerships, would you do me a favor and 
cut through the bull gravy and tell me exactly what they mean? 
What are they? Is there a consistent model? Do they mean 
privatization of our public highways and other public 
infrastructure? Does it mean loss of public ownership or what 
public rights are lost? You mentioned the Hot Lanes on the 
Capital Beltway. Who is the private entity involved in that 
plan? How will it work? Who will own the roadway? What are the 
benefits to taxpayers and road users who have already paid for 
the Beltway? Is it true that such contracts last decades?
    I understand, up to now, many of the companies who are 
involved in these deals are foreign-owned and controlled. Is 
that true? How much foreign ownership is there in existing 
public-private partnerships? What does this mean for control of 
our infrastructure by the federal government, by state and 
local government? Those are just a few of the questions that 
are bugging me.
    Mr. Heminger. Well, if I could, Mr. Chairman, I just--what 
the Commission, I think one of the key things that we had 
talked about for me was that I was not going to agree to that 
language unless it was left up to the states. And I think the 
report specifically says that it is up to the states, if they 
want to do it or not. It is obvious in our state, we do no 
tolls. We made a policy decision. So, the public-private 
partnerships are off the table. We do not want congestion 
pricing either, because we think it is punishing and it is 
punitive on the taxpayer.
    I have an awful lot of distrust for public-private 
partnerships. I made it very obvious in various discussions 
that we had on it. I do not believe that there is any good that 
comes of it. And as I have said in earlier testimony in front 
of the T&I committee, this is all about making money. This is 
not what is doing the right thing. We need to do the right 
thing here. I deal with this every single day. Nothing against 
the rest of the Commissioners, but I am a DOT secretary. Our 
infrastructure is in terrible condition. We are dealing with it 
in the State of Wisconsin each and every day. We can have 
economic theories and everything else, but I deal with it every 
day. Projects that--an interstate system that we built----
    Mr. Obey. If I could interrupt. You will probably deal with 
this even worse, because our legislature was so mindless that 
they eliminated indexing.
    Mr. Heminger. Absolutely. You are absolutely right and it 
was a terrible, terrible decision on their part. But, we put 
roads up in the 1960s that cost 80 million dollars. We are 
replacing them for 800. This is going on throughout the United 
States today. There is no way that we will get to the finish 
line here unless we make a significant investment.
    And Steve is right, we will get something for that 
investment. When this Commission started, the price of oil was 
50 dollars a barrel. It is over 100 dollars now, in two years. 
We have to deal with this. And I understand this is not going 
to be an easy decision. Raising taxes is never an easy 
decision. But for the good of the country, we have to make this 
investment. It is an investment. And if at the end of the day, 
public-private partnerships and some of these other things are 
part of the mix, they are part of what is in the toolbox, that 
is fine. But, I can tell you that they will only be a very, 
very small piece of this enormous problem that we have right 
now.
    Mr. Geddes. Mr. Chairman, I would really like to respond to 
your point. On the lingo, I am with you 100 percent. Call it 
what it is, whether you want to--a lot of people use toll 
concessions as the term. I think of it as just a long-term 
lease, where the public entity remains in control through the 
lease, the same way a landlord remains in control of their 
property through a lease through a renter. Even though toll 
concessions can be very long and two projects in the United 
States have had long leases, those toll concession agreements 
can be renegotiated at any time. And they are, they have been, 
in fact, renegotiated. So, the toll concession agreement allows 
the public entity to remain in control of the infrastructure 
even though there is a private investor providing the capital 
that we so sorely need. The Commission agrees that we sorely 
need capital to come into this activity and to fund bridges, 
roads, and tunnels, and refurbish what we already have. We can 
get that capital----
    Mr. Obey. But, you, also, have to divert part of what is 
collected for the profit for a private entity. It seems to me 
that that is a losing proposition, in terms of the dollars 
available for investing in public service.
    Mr. Geddes. Typically, you only fund these projects through 
tax-free municipal debt, which means, of course, the federal 
government does not get the tax on that debt, but it also means 
there is no equity investment. So, you are going to get less 
investment, if you do not have equity holders. You are giving 
the equity holders an expected rate of return, but you are 
getting a massive additional amount of capital because of the 
compensation, the rate of return.
    But, I wanted to make a more fundamental point, which is we 
are talking about development of China and India. And as we all 
know, they are developing their infrastructure like crazy. I 
heard somebody say 90 new airports are coming in, in China, 
roads, bridges, tunnels, all over the place. That is not being 
paid for with the fuel tax. That is all being done with private 
investment. And the predominant model for funding these 
things----
    Mr. Obey. Well, the Chinese government's economy, it is a 
government that could not care less about the needs of the 
poor.
    Mr. Geddes. Well, I am happy--I do want to discuss--I am 
happy to discuss the--if we could put the equity issue aside 
for just a second, I just want to note that if we go to France, 
if we go to Spain, if we go to Chile, if we go to Korea, we go 
to Japan, the way that they fund this--we go to China, the way 
they fund this in these countries is with these long-term 
leases, these toll concessions through private investment. But, 
I would also add, in the United States, in other network 
industries, I know we are all thinking about transportation, 
but if we go to other--to an economist, other industries that 
are similar in structure, such as electricity, natural gas, 
telecommunications, that infrastructure is funded through 
private investment. It is only this one part of the global 
economy that is funded through this fuel tax mechanism. And I 
am suggesting that this paradigm shift needs to be facilitated 
to make it consistent with what we do not only in other 
countries, but in other industries.
    I would just like to say something about the regressivity 
of the congestion toll, if I may. There are people, who 
represent the south Bronx and some of the poorest communities 
in New York City that are supporting Mayor Bloomberg's proposal 
for congestion pricing, because it helps them. The poor 
disproportionately take public transit. And when the roads are 
smoothly rolling, the buses and all, they go smoothly, as well. 
So, congestion pricing is actually a progressive tax. The 
people that drive into the city of New York are 
disproportionately wealthy and the tax would hit them. So, I 
think it is inaccurate to say that the congestion pricing is 
regressive.
    Mr. Olver. Mr. Schenendorf.
    Mr. Schenendorf. Well, I mean, I fundamentally disagree 
with that. Congestion pricing is set at a level to basically 
ration the system, so people, who have lesser means, can afford 
to drive on the road. But, to your original question, I mean, 
there are all sorts of--these are basically private tolling, 
giving leases for private tolling. There are all sorts of 
different arrangements. You really have to look at each one 
individually. What we tried to do in the Commission report is 
find a balance where there is a place for private investment, 
there is a place for tolling, but only where conditions are met 
that aligns it with the public interest.
    One of our concerns has been that some of these 
arrangements to date have had some real problems. In the 
Chicago skyway, part of those tolls are being used to pay off 
the debt of the City of Chicago and for home heating oil 
subsidies. In New Jersey, we heard about increases in toll 
rates that would be used to pay off the debt, so you have 
drivers basically paying off the debt of New Jersey and the 
governor, in his press conference, stated that that was okay, 
because it would be out-of-state people and commercial people 
that would be paying for it. That is the kind of balkinization 
that the Constitution was meant to overcome from the Articles 
of Confederation, that type of sectionalism and regionalism 
where everybody just taxes people as they please.
    And the other item I just wanted to mention was that we do 
have recommendations that there be limits. I think the 80-year, 
90-year concessions are in issue. And I think, also, in this 
hot lane proposal, that revenue stream that is being generated 
by that congestion pricing, there is no limit on the amount of 
profits that that private company can make for that 80-year 
period. So, they have an incentive to raise those prices as 
much as possible. There is a sliver of it that would go back to 
the state when it goes over a certain amount. But, the bulk of 
those profits, the bulk of those revenues would go--and that is 
a revenue stream that has lost the infrastructure for 80 years.
    Mr. Olver. We are going to have to stop here for a series 
of votes. But, I was going to let Mr. Heminger have a comment. 
We have not yet had--we have a few minutes yet. But, those of 
you, who are walking out, when we come back, we will go to five 
minutes for anybody, who comes back.
    Mr. Heminger. Mr. Chairman, very quickly. I will sidestep 
the theological debate. But, just very practically, about half 
of that shortfall that you mentioned at the outset, doing your 
math, is rehabilitation of the existing systems. There are not 
a lot of investment bankers, who want to pay for that. That is 
going to need public funding. A lot of the expansion that we 
need to do in America is public transit and a lot of public 
transit projects, as you know, operate at a loss, not a 
surplus. So, I think the very important practical point is that 
there are a class of projects, highway expansion, freight 
expansion in high growth areas, where there will be a pretty 
big revenue stream generated by tolls or fees, where public-
private partnerships I think will make sense. I would say that 
in the majority of cases, all the rehabilitation, most of the 
public transit, the model does not work.
    So, we can argue until the cows come home about whether it 
is a good public policy or not, but my sense is that in most 
cases, we are going to need robust public funding from 
somewhere, if we are going to make the investment.
    Mr. Olver. Okay. We are going to need to recess probably 
for about half an hour. I think it will be--if we have this 
correct, the next several votes will go fairly quickly. But, we 
will be back here as soon as we can. I am interested that you 
have tried to avoid the theology.
    [Whereupon, a brief recess was taken.]
    Mr. Olver. We are a little bit breathless here, but I think 
we have everyone here that wanted to go back. Ms. Kaptur?
    Ms. Kaptur. Thank you, Mr. Chairman, and gentlemen, thank 
you, very much, for being with us today. I think I walked into 
the room at the point at which Commissioner Heminger was 
stating our over reliance on oil and I could not agree with you 
more. It is interesting, I recall that the Exxon-Mobile profits 
last year were 40 billion dollars, 40.6 billion dollars, the 
largest profit of any corporation in American history. And what 
I really do not understand is why, when we have seen gas prices 
rise from 2.16 cents a year ago, I paid 3.50 last year or 3.58, 
whatever it was--I am the pump thinking not a penny of this is 
going to benefit the country. And I do not understand why we do 
not have some type of mechanism, or I wanted to ask you what 
that might be, but these rising--we could impose a windfall 
profits tax on these companies. I would vote for it in a 
heartbeat and my constituents would all cheer. So, that is one 
solution.
    Another one is to have some kind of indexing formula, in 
terms of these rising prices. I would be interested if you have 
any suggestions on how to do that.
    I, also, wanted to just mention that I went to an excellent 
presentation in my district recently of firms that are involved 
in high-speed rail, passenger rail around the world, not so 
much here in the United States. It was really disappointing. 
And they went through what was done. One project in France, 
they were connecting, I think, from Paris to Strausburg, just 
really magnificent. If you are familiar of what they are doing 
there, any of you have any knowledge of these systems around 
the world? And your ideas for financing high-speed passenger 
rail across this country separated from freight. We have a 
particular problem in the Pittsburgh, Cleveland, Toledo, Ft. 
Wayne, Gary, Chicago corridor, in that we have to share track 
with freight. It is an impossibility. Passenger will never work 
unless it has its own right-of-way. Any thoughts there about 
how to work between states, a consortium of states? We would 
like to have a high speed that gets up to Kenosha there around 
the lake and how we would do that.
    So, the first question, what are the options for moving 
some of those higher gas prices out of the pockets of Exxon and 
into public infrastructure in this country? Any thoughts on how 
best to do that? And then, secondly, high speed way, options 
for financing.
    Mr. Heminger. Ms. Kaptur, maybe I can try the first. I know 
Frank Busalacchi, I am sure, can do the second. If I could just 
note a personal privilege here. I grew up in Toledo, so I am 
happy to be talking to you here.
    Ms. Kaptur. No wonder I agree with so much of what you say.
    Mr. Heminger. Look, there are two ways, you mentioned one 
of them, to try to deal with the issue that we have an excised 
tax. That is how we fund transportation, per gallon tax. And it 
loses pace, because unless you vote to raise the rate, you fall 
behind. One way to do it is with indexing and several states 
have enacted indexing. Some of them, as you have heard from Mr. 
Obey, have repealed it, as well, as enacting it, when they find 
that it does not quite work the way they like. But, that is a 
way that we do recommend. If the Congress is going to adjust 
the fuel rate, to index it, so that you do not have to keep 
doing it all the time.
    A second would be to have an ad valorem tax, which we have 
in California. Our sales tax in California is also levied on 
gasoline. And pursuant to a ballot measure we enacted a few 
years ago, that money is now dedicated to transportation and 
that revenue source have been growing like gangbusters, as you 
might imagine, with the price going up. So, if we had something 
that was sensitive either to the price of the fuel or was 
indexed to use or was indexed to the construction cost index, 
if we had something that would get past the hurdle of a 
Congress or a legislature every couple of years having to 
actually take a vote and raise the rate, that is why, in part, 
we have not seen an increase in the federal tax since 1993. So, 
we recommend all of those kinds of strategies to you, as 
something that if we are going to swallow the pill, and none of 
us are here suggesting that it is an easy thing to do, let see 
if we can swallow a pill that will have some sting power and 
not lose 25 percent of its purchasing power.
    Ms. Kaptur. Sir, if I could interrupt you, what if the 
federal government were to require indexing as a condition of 
their receipt of federal dollars back to the states? What if we 
were to make it uniform?
    Mr. Heminger. Well, I think one way to have the states 
follow is for the federal government to lead, frankly. And if 
the Congress were to enact indexing, I think you would see a 
lot of states following along, in part, because, if you look at 
some of--the volume of revenue increases that we are 
recommending are very substantial, because the needs are very 
substantial. If Congress were to act in anything like that 
amount, the states would have to follow, because they have to 
match it just to come up with the money. So, your leadership 
will have a cascading effect around the nation.
    Ms. Kaptur. I know my time has expired, but does anybody 
want to take a stab at the rail question?
    Mr. Busalacchi. I will do that.
    Ms. Kaptur. Yes, sir.
    Mr. Busalacchi. And thank you for asking the question.
    Ms. Kaptur. You are welcome.
    Mr. Busalacchi. I think it is important to remember that we 
are experiencing in this country right now a significant 
upsurge in people riding passenger rail, intercity passenger 
rail in this country. The numbers in all the corridors are up 
and we do not anticipate them coming down. As gas prices go up, 
our numbers in passenger rail are going to go up.
    We submitted a plan to the Commission that the Commission 
accepted. And I say ``we,'' we formed this passenger rail 
working group while the Commission was going on. We submitted 
that report and the Commission accepted the report. We have to 
work this out with the freight rails. Now, I understand that 
being on their track is very difficult and that is why our 
suggestion is that we have expansion, that we add track. It 
will be costly, it will be costly, but we need to do this. And 
if we do this, the trains will operate on time and the number 
of people riding trains will increase. But at the present time, 
it is not going to work unless we incorporate this with the 
freight rails. We cannot fight over this. We would be wasting 
way too much time if we did this. But, we must have expansion 
of that system. And that is what we are--that is what our rail 
working group is suggesting, segment this in these 500-mile 
corridors, where there is congestion, where there is a lot of 
people. And if we do that, if we do that, we feel that 
eventually, eventually, Congress will see that this has been 
very successful, because we are convinced it will be 
successful, and then maybe we can talk in terms of what our 
friends in California are talking about, where they are talking 
about super high-speed rail.
    Ms. Kaptur. Yes.
    Mr. Busalacchi. But right now----
    Ms. Kaptur. What they are doing in France is phenomenal.
    Mr. Busalacchi. It is phenomenal, but I do not think it is 
realistic for this sector right now. I think we are talking in 
terms of 90 mile an hour trains here, not 200 mile an hour.
    Ms. Kaptur. I am into the 200-300 mile per hour.
    Mr. Busalacchi. And I am, too. I love them. I have gone 
over to Europe. I have been to China. I have been to Japan. I 
think they are terrific. But, to get this program moving now, 
we will not be able to do that. I think it is important for us 
to understand that as the gas prices go up, we are asking 
ourselves what is the tipping point. What is really going to be 
that significant point that we are going to get to where people 
are going to say, I am not going to drive anymore. If I have to 
go to Pittsburgh from wherever, I am going to take the train. 
They are doing it in Milwaukee, from Milwaukee to Chicago. And 
when that happens, though, are we ready? And we are not. Amtrak 
will come in here right now and they will tell you that they 
are not ready. If we have a mass exodus of people from the 
automobile to get on to intercity passenger rail, we are not 
ready. We need to make this significant investment, add 
capacity. It will be money that will be well worth it to give 
people an option, give them an alternative to the car.
    Ms. Kaptur. I think Mr. Schenendorf wanted to comment.
    Mr. Schenendorf. Yes. I just wanted to say that I think in 
our studies, we concluded that it was absolutely essential to 
have high-speed rail in these dense corridors. You could not 
solve the transportation problems without that and that is why 
we recommended paying for it from the trust fund, because it 
benefitted all of the roads that are in that corridor by taking 
people off the highways and it was absolutely essential to have 
that high-speed rail.
    Ms. Kaptur. Let me just place on the record----
    Mr. Olver. We have some votes that are going to be counted. 
We have two people, who need to make their comments----
    Ms. Kaptur. All right, Mr. Chairman, let me just say that--
--
    Mr. Olver [continuing]. Here before we can all let these 
folks off.
    Ms. Kaptur [continuing]. The report only says 110 miles per 
hour. I would not agree with that. I think it should be double 
that, minimum.
    Mr. Olver. I am going to take a few minutes and then give a 
few minutes to Mr. Knollenberg. We probably have 10 or 15 and 
then we are going to let you go, because we at least have now 
seen all of your faces and we can get back to you with follow-
up questions. Mr. Geddes, the majority here is saying a full 
set of mechanisms. You have gone, you have indicated for the 
wide range of funding using tolling, congestion, fuel tax, 
private-public partnerships, and so on, in whatever form they 
happen to turn up in and a bunch of other things. The minority, 
in its minority statement, did not include fuel tax at all. Is 
that a case where you do not believe fuel tax should go up at 
all or are you thinking that it should go up in some modest way 
in the meantime? Because, at one point, you made the comment 
that it was a key part of the funding mix for a period of time. 
Are you just seeing that as just becoming an ever smaller piece 
of the mix with never a change in the 18.4 cent? Because, it 
looked as if the minority position was no fuel tax addition.
    Mr. Geddes. I think the position that I have, as a member 
of the minority, is that the fuel taxes will remain in place 
and they will remain a mechanism----
    Mr. Olver. At 18 or are they going to go up?
    Mr. Geddes. Federal fuel tax at 18.4 cents a gallon.
    Mr. Olver. That is the position of----
    Mr. Geddes. Right.
    Mr. Olver [continuing]. The minority?
    Mr. Geddes. Right. And they will continue to be in place. 
They will not be reduced.
    Mr. Olver. At the moment, roughly 40 billion dollars a year 
comes into the trust fund and we send it out into the transit 
fund and into highway fund, the highway, part of the transit 
fund--excuse me, the highway fund and the transit fund are part 
of the whole trust fund. And if we leave that exactly, that 
portion is going to continue to come down probably----
    Mr. Geddes. The federal portion.
    Mr. Olver [continuing]. The federal portion, as we move to 
alternative fuels or to more efficient vehicles or whatever it 
happens to be. Now, the majority is saying, and you sort of--
well, you do not agree, the majority is saying we have serious 
needs for our economy. And I wish I would have time to talk 
about how you all view the question of whether it is going to 
be an economic stimulus, because it is being talked about in 
the short term about economic stimulus, which is a different 
question. We have really been talking about the long term sorts 
of thing. If we do not raise revenues and we are trying to get 
to anything like the 225, which they are saying, then we are 
putting all of it on top of congestion pricing and a bunch of--
and tolling and public-private partnerships and so forth. So, 
that is the position that basically, it is going to have to be 
on these other things, nothing more on the gasoline tax, right?
    Mr. Geddes. Well, there are two issues essentially. One is 
the use of taxes to fund transportation, as opposed to prices 
or tolls. That is one. So, use of tax--the tax mechanism or a 
pricing tolling mechanism.
    Mr. Olver. Well, I must say that I pretty much take the 
view that Mr. Heminger says, not quite perhaps as violently as 
Mr. Obey. But, one could go up, if not five cents, in lumps of 
five cents, one could go up a couple of cents per year, 
something like that, every couple of years or two or three 
years and it would be within less than 10 percent of the noise 
on the variation in gasoline taxes. It goes on. I do not see 
how we can get out of this without keeping the gasoline tax 
there, as an item, and I generally agree that it really prices 
very close to what the market is. You have the choice of 
whether you want to use your gas or not use your gas.
    Mr. Geddes. As an economist, I simply believe that a more 
direct user fee is a better way go to. That is basically it.
    Mr. Olver. Mr. Knollenberg, we are apparently--I am being 
told that we need to go back, because this vote is going to be 
reached quickly, most of the people there.
    Mr. Knollenberg. So, how much time do I have?
    Mr. Olver. Take two minutes.
    Mr. Knollenberg. All right.
    Mr. Olver. I will stand in front of the----
    Mr. Knollenberg. This, to me, is a quick response, but let 
me try it. Thank you. Mr. Geddes, very quickly, if you could 
just answer this yes, no, maybe, or whatever. But with respect 
to tolling, do you agree that this would fundamentally alter 
what has always been a system that provides equal access and 
equal benefit to all, to one that would provide more access and 
benefits to the wealthy at the expense of the low and the 
moderate or low-income families, that tolling would do that?
    Mr. Geddes. No, I absolutely disagree with that.
    Mr. Knollenberg. Okay. That is good, that is fine. Now, 
this next question for Mr. Heminger, if he would. One of the 
longest running debates that we have it seems is about the size 
of big government. And the Commission, I believe, recommended 
the creation of a sort of new federal bureaucracy, is that 
right--that is what I am calling it--that would operate outside 
of the executive and the legislative branches of government and 
it would be essentially in charge of establishing a national 
surface transportation policy. I am very concerned about that. 
I am concerned about the fact that--if you would just shed some 
light on what their power would be. For example, this new 
independent national service transportation commission, who 
would sit on this commission and how would those people be 
selected? My understanding is also that it requires a two-
thirds vote, is that right?
    Mr. Heminger. Congressman, that whole idea came about after 
a lot of debate. The models we looked at were the BRAC process, 
which is a way for the Congress to deal with a very difficult 
political decision in sort of an up or down aggregate way and 
also at the Postal Regulatory Commission, which now has the 
power to set postal rates, which used to require an act of 
Congress. It is clearly probably the most radical idea that we 
suggested.
    Mr. Knollenberg. Is it just a recommendation then?
    Mr. Heminger. It is a recommendation, as are all of our 
recommendations. But, I will tell you, Congressman, that it was 
motivated by our concern about the inability of the Congress to 
raise the fuel tax and it was also motivated by our concern 
about the fact that we do not seem to have a national strategy 
for investing in transportation. We looked to that model of one 
way to accomplish those two things. There are doubtless other 
models to do so. So, we would not ask you to throw the whole 
baby out with the bath water on the basis of that one 
recommendation.
    Mr. Knollenberg. I assume it is something for 
consideration, then, consideration only, at the moment, and 
does two-thirds ring a bell, though, about the requirement?
    Mr. Heminger. Yes.
    Mr. Knollenberg. That is two?
    Mr. Heminger. That is right.
    Mr. Knollenberg. Okay. With that, I conclude my 
questioning. Again, thank you all, very, very much.
    Mr. Olver. Thank you, very much. We will let you go at this 
point. We all know where we can find you if we have follow-up 
questions.


                           W I T N E S S E S

                              ----------                              
                                                                   Page
Busalacchi, Frank................................................   857
Geddes, R. R.....................................................   857
Heminger, Steve..................................................   857
Peters, Hon. M. E................................................     1
Ray, James.......................................................   701
Scheinberg, Phyllis..............................................   701
Schenendorf, Jack................................................   857
Simpson, James...................................................   701
Sturgell, Robert.................................................   329


                               I N D E X

                              ----------                              

       U.S. Department of Transportation, Office of the Secretary

                                                                   Page
Access of Rural Airports to NEXTGEN Network Enabled Weather 
  (NNEW).........................................................    68
Accessibility Issues (STB).......................................   313
Administrative Expenses (FTA)....................................    71
Air Traffic Control Training.....................................    41
Air Traffic Control Workforce....................................    34
Air Traffic Controller Fatigue...................................    64
Air Traffic Controller Hiring....................................    54
Airspace Separation..............................................    40
Alaska Railroad (FTA)............................................   233
Alternatives to the Current Gasoline Tax.........................    29
Alternatives to Tolling Fees.....................................    15
Amtrak Presidential Emergency Board..............................    37
Annual Accident Data (FTA).......................................   103
Appropriations History (MARAD)...................................   268
Assistance to Small Shipyards (MARAD)............................   305
Authorized New Start Projects (FTA)..............................    94
Ballast Water (MARAD)............................................   306
Budget ``Object'' Classification (STB)...........................   309
Carry-Over Balances by Account (MARAD)...........................   270
Case Completion Timelines (STB)..................................   310
Child Safety Seats...............................................    13
Common Carrier Obligation (STB)..................................   323
Congestion Reduction Initiative (FTA)............................   262
Contingent Commitment Authority (FTA)............................   102
Contracting (FTA)................................................   266
Coordination of Transportation Planning..........................    69
Corporate Average Fuel Economy...................................    11
Corridors of the Future..........................................    27
Cross Border Trucking............................28, 31, 39, 42, 56, 66
Dulles Corridor Metrorail Project................................    17
Economic Impact on the Gasoline Tax..............................    14
Enrollment in United States Merchant Marine Academy/State 
  Maritime Schools...............................................   302
Essential Air Service............................................    63
Foreign Investment in U.S. Assets................................    35
Formula and Bus Funding (FTA)....................................   107
FTE Request, FTE On-Board, and Vacancies (MARAD).................   273
Full Funding Grant Agreements Funding (FTA)......................    89
Funding for SAFETEA-LU...........................................    10
Funds Administered by MARAD......................................   271
Grants to Mitigate Congestion....................................25, 31
Highway Bridges..................................................    44
Highway Congestion...............................................    57
Information Technology (MARAD)...................................   305
Integration of Rural Airports into NEXTGEN.......................    68
Job Access and Reverse Commute Program (FTA).....................   228
MARAD Operations Funding Detail (MARAD)..........................   270
Marine Trade (MARAD).............................................   303
Maritime Guaranteed Loan Program, Title XI (MARAD)...............   290
Motorcycle Safety................................................    12
National Surface Transportation Policy and Revenue Study 
  Commission.....................................................13, 21
New Freedom Program (FTA)........................................   230
New Starts Funding for FY 2009 (FTA).............................    80
Non-Defense Discretionary Spending...............................    23
North American Free Trade Agreement..............................    51
Number of Vessels on Ship Disposal List (MARAD)..................   274
Oil Discharges from Obsolete Vessels (MARAD).....................   277
Opening Statement by Chairman John W. Olver......................     1
Opening Statement by Mary E. Peters, Secretary, Department of 
  Transportation.................................................     4
Opening Statement by Ranking Member Joe Knollenberg..............     3
Outlay Rates for Designated Projects.............................    17
Outreach (STB)...................................................   317
Oversight Activities (FTA).......................................   241
Pending/Proposed Full Funding Grant Agreements Funding (FTA).....    93
Public-Private Partnership Pilot Program.........................    20
Questions for the Record from Chairman John W. Olver.............    47
    Questions for the Record for the Federal Transit 
      Administration.............................................    71
    Questions for the Record for the Maritime Administration.....   268
    Questions for the Record for the Surface Transportation Board   309
Questions for the Record from Congressman Ciro Rodriguez.........    53
Questions for the Record from Congressman Ed Pastor..............    51
Questions for the Record from Congressman Robert B. Aderholt.....    68
Questions for the Record from Congressman Robert E. ``Bud'' 
  Cramer.........................................................    58
Rail Energy Transportation Advisory Committee (STB)..............   314
Recoveries (FTA).................................................   239
Research and University Research Centers (FTA)...................   243
Retirement Projections (MARAD)...................................   274
Risk Level and Location of Vessels on Ship Disposal List (MARAD).   276
Runway Incursions................................................    24
Savannah Disposal (MARAD)........................................   288
Schoolship M&R (MARAD)...........................................   301
Security Issues (FTA)............................................   103
Ship Construction Account (MARAD)................................   294
Ship Disposal Appropriations and Distribution of Funds (MARAD)...   279
Ship Disposal Deadline (MARAD)...................................   282
Ship Disposal Funding and Costs (MARAD)..........................   289
Staffing (STB)...................................................   310
Staffing History (MARAD).........................................   273
State Maritime Schools (MARAD)...................................   294
Status of Vacancies..............................................    47
STB Calculations and Methodologies (STB).........................   319
Streamlining Regulations.........................................    61
Title XI Oversight (MARAD).......................................   294
Tolling..........................................................    58
Transit Oriented Development (FTA)...............................   264
Transit Small Starts.............................................    15
Transportation in Parks and Public Lands (FTA)...................   253
Trust Fund (FTA).................................................   235
Unobligated Balances for New Starts Projects (FTA)...............    83
User Fee Collection (STB)........................................   309
Written Statement by Mary E. Peters, Secretary, Department of 
  Transportation.................................................     6

                    Federal Aviation Administration

Acquisition Workforce............................................   646
ADS-B......................................................... 583, 629
Advisory Committees..............................................   546
Air Traffic Congestion...........................................   659
Air Traffic Controllers..........................................   681
Airport and Airway Trust Fund Statistics.........................   572
Airport Improvement Plan.........................................   651
Airport Tower Equipment..........................................   692
Airspace Redesign................................................   561
Annual Leave.....................................................   449
ASDE-X....................................................580, 667, 697
Assessments by OST...............................................   412
Automatic External Defibrillators................................   455
Average FTE Costs................................................   400
Average FTE Costs for Controllers................................   501
Aviation Safety..................................................   688
Collective Bargaining Statute....................................   454
Commercial Space Transportation..................................   540
Contract Maintenance Support Contracts...........................   417
Contract Tower Program...........................................   548
Contracting......................................................   586
Controller Attrition.............................................   494
Controller Incentive Pay.........................................   443
Controller New Hires.............................................   490
Controller Retirement Waivers....................................   500
Controller Staffing............................................456, 693
Controller Training..............................................   506
Controller Training Institute Schools............................   510
Executive Compensation System....................................   424
Executive Positions..............................................   391
Executive Positions Unfilled.....................................   399
Facility Safety..................................................   633
Faulty Parts Supplied by Aviation Manufacturer's Suppliers.......   634
Field Maintenance--``Other Object'' Costs........................   423
Flight Service Stations..........................................   521
GSA Rent.........................................................   408
Health Benefits..................................................   401
Inspectors.......................................................   516
John F. Kennedy Airport and Operations CAP.......................   616
Low Cost Ground Surveillance.....................................   617
Managing Major Capital Projects..................................   641
National Air Traffic Controller Association (NATCA) 
  Representation.................................................   439
New York/New Jersey/Philadelphia Airspace Redesign...............   614
NEXTGEN...................................................626, 671, 695
Office of Communications Positions...............................   553
Official Time....................................................   435
On-Board Staffing by Office......................................   385
Opening Statement by Chairman John W. Olver......................   329
Opening Statement by Ranking Member Joe Knollenberg..............   330
Opening Statement by Robert Sturgell, Acting Administrator, 
  Federal Aviation Administration................................   332
Operational Error Statistics.....................................   532
Operations Budget by Organizational Element......................   577
Other Services...................................................   413
Outsourcing and Safety Oversight.................................   631
Overseas Personnel...............................................   523
Questions for the Record from Chairman John W. Olver.............   380
Questions for the Record from Congressman James T. Walsh.........   696
Questions for the Record from Congressman Robert E. ``Bud'' 
  Cramer.........................................................   692
Questions for the Record from Ranking Member Joe Knollenberg.....   651
Regional Offices.................................................   554
Runway Incursions and Low Tech Solutions.........................   620
Runway Incursions Statistics.....................................   537
Runway Safety..................................................623, 696
Runway Status Lights.............................................   585
Short-Term Incentive (Executive Bonus) Awards....................   427
Sick Leave.......................................................   451
Special Pays.....................................................   442
Sunday Premium Pay...............................................   453
Supervisor Workforce.............................................   514
Ten Year Tables..................................................   564
Travel--Operations Funded........................................   429
Union Workforces.................................................   432
Use of Cost-Plus-Award Fee (CPAF) Contracts......................   644
User Fees Credited to Operations Appropriations..................   409
Workers Compensation.............................................   402
Working Capital Fund.............................................   410
Workload Measures and Industry Trends............................   380
Written Statement by Robert Sturgell, Acting Administrator, 
  Aviation Administration........................................   334

     Highway and Transit Programs: The DOT Perspective on the Urgent 
                  Funding Needs for Today and Tomorrow

Additional Reduction to the Federal-Aid Highway Program..........   766
Appalachian Development Highway System...........................   770
BYRD Test........................................................   768
Clean Fuels Program..............................................   720
Congestion Initiatives.........................................741, 841
Congestion Mitigation............................................   727
Congestion Pricing...............................................   825
Deficient Bridges................................................   831
Dulles Metrorail Extension.......................................   732
Economic Impact of Tolling.......................................   714
Emergency Relief Program.........................................   798
Environmental Review.............................................   815
Federal Highway Administration...................................   837
Federal Transit Administration...................................   839
FTA Fiscal Year 2009 Budget Request..............................   719
Future of the Highway Trust Fund...............................744, 855
Highway Account Borrowing Authority..............................   753
Highway Program at Zero..........................................   759
Highway Project Delays...........................................   729
Highway Projects in Alabama......................................   728
Highway Public-Private Partnerships..............................   805
Highway Trust Fund.............................................726, 749
Highway-Railroad Intersection in Hartselle, Alabama..............   722
I-10 and the Corridors of the Future Program.....................   739
Infrastructure Investment as Economic Stimulus...................   823
Innovative Finance...............................................   817
Limitation on Administrative Expenses............................   796
New Toll Road Projects...........................................   726
Opening Statement by Chairman John W. Olver......................   701
Opening Statement by Phyllis F. Scheinberg, Assistant Secretary 
  for Budget and Programs/Chief Financial Officer, Department of 
  Transportation.................................................   705
Opening Statement by Ranking Member Joe Knollenberg..............   703
Ownership of the Interstate Right-of-Way.........................   737
Pittsburgh-Chicago Corridor......................................   734
Public/Private Partnerships......................................   732
Questions for the Record from Chairman John W. Olver.............   749
Questions for the Record from Ranking Member Joe Knollenberg.....   837
Reconfiguring I-81 Through Syracuse, NY..........................   736
Revenue Aligned Budget Authority...............................719, 760
SC Proposal to Borrow from the Mass Transit Account..............   748
State Gasoline Taxes.............................................   828
State Matching Funds.............................................   770
States' Use of Toll Roads........................................   715
Strategic Management on Human Capital............................   811
The Federal Role in Highways.....................................   825
The Policy Commission Report and the Federal Gas Tax.............   827
Tolling and Public/Private Partnerships..........................   724
Tolling Flexibility..............................................   725
Transit Orientated Development...................................   738
Transit System User Benefit......................................   730
Urban Partnerships...............................................   805
Use of Fiscal Year 2009 Discretionary Funds......................   743
Written Statement by Phyllis F. Scheinberg, Assistant Secretary 
  for Budget and Programs/Chief Financial Officer, Department of 
  Transportation.................................................   708

 Thoughts and Recommendations from the National Surface Transportation 
                  Policy and Revenue Study Commission

Opening Statement by Chairman John W. Olver......................   857
Opening Statement by Ranking Member Joe Knollenberg..............   858
Statement by Frank J. Busalacchi, Commissioner, National Surface 
  Transportation Policy and Revenue Study Commission.............   875
Statement by Jack Schenendorf, Vice Chair, National Surface 
  Transportation Policy and Revenue Study Commission.............   863
Statement by Rick Geddes, Associate Professor, Department of 
  Policy Analysis and Management, College of Human Ecology, 
  Cornell University.............................................   889
Statement by Steve Heminger, Member, National Surface 
  Transportation Policy and Revenue Study Commission.............   899