[Senate Hearing 110-1237]
[From the U.S. Government Publishing Office]


                                                       S. Hrg. 110-1237

 
               A HEARING TO RECEIVE THE REPORT OF THE 
               NATIONAL SURFACE TRANSPORTATION POLICY 
               AND REVENUE STUDY COMMISSION
====================================================================


                                HEARING

                               before the

                              COMMITTEE ON

                      ENVIRONMENT AND PUBLIC WORKS

                          UNITED STATES SENATE

                       ONE HUNDRED TENTH CONGRESS

                             SECOND SESSION

                               __________

                            JANUARY 31, 2008

                               __________

  Printed for the use of the Committee on Environment and Public Works



      Available via the World Wide Web: http://www.access.gpo.gov/
                            congress.senate

                               __________




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               COMMITTEE ON ENVIRONMENT AND PUBLIC WORKS

                       ONE HUNDRED TENTH CONGRESS
                             FIRST SESSION

                  BARBARA BOXER, California, Chairman
MAX BAUCUS, Montana                  JAMES M. INHOFE, Oklahoma
JOSEPH I. LIEBERMAN, Connecticut     JOHN W. WARNER, Virginia
THOMAS R. CARPER, Delaware           GEORGE V. VOINOVICH, Ohio
HILLARY RODHAM CLINTON, New York     JOHNNY ISAKSON, Georgia
FRANK R. LAUTENBERG, New Jersey      DAVID VITTER, Louisiana
BENJAMIN L. CARDIN, Maryland         JOHN BARRASSO, Wyoming
BERNARD SANDERS, Vermont             LARRY E. CRAIG, Idaho
AMY KLOBUCHAR, Minnesota             LAMAR ALEXANDER, Tennessee
SHELDON WHITEHOUSE, Rhode Island     CHRISTOPHER S. BOND, Missouri

       Bettina Poirier, Majority Staff Director and Chief Counsel
                Andrew Wheeler, Minority Staff Director


                            C O N T E N T S

                              ----------                              
                                                                   Page

                            JANUARY 31, 2008
                           OPENING STATEMENTS

Boxer, Hon. Barbara, U.S. Senator from the State of California...     1
Inhofe, Hon. James M., U.S. Senator from the State of Oklahoma...     4
Isakson, Hon. Johnny, U.S. Senator from the State of Georgia.....     6
Alexander, Hon. Lamar, U.S. Senator from the State of Tennessee..     9
Barrasso, Hon. John, U.S. Senator from the State of Wyoming......    10
Bond, Hon. Christopher, U.S. Senator from the State of Missouri..    11
Voinovich, Hon. George, U.S. Senator from the State of Ohio......    13
Craig, Hon. Larry, U.S. Senator from the State of Idaho..........    16
Lieberman, Joseph, U.S. Senator from the State of Connecticut....    79

                               WITNESSES

Schenendorf, Jack L., of Counsel, Covington and Burling, Llp.....    17
    Prepared statement...........................................    20
    Responses to additional questions from:
        Senator Lieberman........................................    30
        Senator Carper...........................................    31
        Senator Inhofe...........................................    33
        Senator Bond.............................................    33
        Senator Voinovich........................................    34
Busalacchi, Hon. Frank, Wisconsin Secretary of Transportation....    38
    Responses to additional questions from:
        Senator Lieberman........................................    38
        Senator Carper...........................................    40
        Senator Bond.............................................    40
        Senator Voinovich........................................    41
Rose, Matthew K., Chairman, President and CEO, BNSF Railway 
  Company........................................................    44
    Responses to additional questions from:
        Senator Inhofe...........................................    46
        Senator Bond.............................................    46
        Senator Voinovich........................................    47
Skancke, Tom, CEO, The Skancke Company...........................    50
    Responses to additional questions from:
        Senator Lieberman........................................    52
        Senator Carper...........................................    52
        Senator Inhofe...........................................    54
        Senator Bond.............................................    55
        Senator Voinovich........................................    57

                          ADDITIONAL MATERIAL

Joint Study Committee on Transportation Funding, Final Report....    81


A HEARING TO RECEIVE THE REPORT OF THE NATIONAL SURFACE TRANSPORTATION 
                  POLICY AND REVENUE STUDY COMMISSION

                              ----------                              


                       THURSDAY, JANUARY 31, 2008

                                       U.S. Senate,
                 Committee on Environment and Public Works,
                                                    Washington, DC.
    The full committee met, pursuant to notice, at 10:35 a.m. 
in room 406, Dirksen Senate Office Building, Hon. Barbara Boxer 
(chairman of the full committee) presiding.
    Present: Senators Boxer, Inhofe, Carper, Cardin, Klobuchar, 
Warner, Voinovich, Isakson, Barrasso, Craig, Alexander

           OPENING STATEMENT OF HON. BARBARA BOXER, 
           U.S. SENATOR FROM THE STATE OF CALIFORNIA

    Senator Boxer. I want to apologize for delaying this 
hearing. We had an urgent Democratic Caucus meeting about the 
stimulus package and FISA. So forgive me for pushing this back.
    The rules today, each of us will have 5 minutes to open and 
the early bird rule going back and forth. Then as I understand 
it, the chair of the Commission will go a little bit longer 
than 5 minutes. So we will be happy to listen to your entire 
statement and we will hold everybody else to 5 minutes, and we 
look forward to that.
    So I will begin with my opening statement. On August 1st, 
2007, the collapse of the I-35 West bridge in Minneapolis 
claimed the life of 13 and injured 145 people. This tragedy 
served as an urgent wake-up call that we can't neglect our 
Nation's crumbling infrastructure. The current highway, transit 
and highway safety programs of SAFETEA-LU expire at the end of 
2009, as we all know. Today we begin our process of developing 
a new authorization for those programs.
    As we prepare for this new authorization, it is clear that 
continuing the current programs at their current funding levels 
is not sustainable and will not fix our Nation's crumbling 
infrastructure, will not meet the needs of our growing economy 
and will not adequately address growing congestion. With 
increased investment, we can improve goods movement, reduce 
congestion, improve air quality and quality of life and provide 
the necessary infrastructure to support our growing economy.
    Today, we hear the recommendations of the National Surface 
Transportation Policy and Revenue Study Commission. Congress 
charged the Commission with examining and then developing 
recommendations on the current condition and future needs of 
the surface transportation system, short-term funding sources 
and long-term alternatives to replace or supplement the gas tax 
as the principal source of revenue for the Highway Trust Fund.
    In reviewing the Commission's recommendations, it is clear 
to me that there is no easy answer to the challenges we face. 
But without action by us, our infrastructure will further 
deteriorate, congestion will increase, additional lives will be 
lost and our economy will suffer.
    Let's look at some examples. According to the Department of 
Transportation, the cost to our economy from traffic congestion 
alone is as high as $200 billion per year, $200 billion, 
traffic congestion. I know I have a lot of examples of that in 
my State. And the Census Bureau expects a 50 percent population 
increase over the next 50 years. So you put that together and 
you have one looming crisis.
    Freight movement is expected to nearly double over the next 
30 years. But traffic through West Coast ports could triple 
over the same period. We already have mayors coming to see me 
and Senator Feinstein just from our State saying, that as much 
as they want to increase the capacity at our ports, the air 
quality is so terrible that they would take a pass on that. And 
that is very, very dangerous. That is why we need to do more to 
clean up the air.
    If we don't aggressively pursue safety improvements, more 
lives will be lost on U.S. roads. In 2006, almost 43,000 people 
died and 2.6 million were injured. The consequences of inaction 
are not acceptable. We must meet our current and growing needs. 
If we act, the Commission's report suggests that by 2025, we 
could cut fatalities in half and reduce per vehicle delay on 
major urban highways by 20 percent.
    The Commission determined that we need to invest at least 
$225 billion annually from all levels of government and the 
private sector over the next 50 years to upgrade our surface 
transportation system. But this is not the only voice. Mayor 
Bloomberg, along with Governors Rendell and Schwarzenegger, 
recently announced they are forming a non-partisan coalition to 
push for Federal infrastructure investment. They, too, have 
recognized our Nation's great need.
    The Commission's report is a significant contribution to 
the debate of future needs. It clearly states the Commission's 
view of why it is vital to invest in our transportation system. 
They offer us recommendations on how to proceed.
    Now, of course, identifying needs raises the question of 
who pays and how. Unfortunately, the media coverage of the 
report has focused upon the call for a significant increase in 
the gas tax. I think that this does a disservice to the 
findings and recommendations. I personally don't think that is 
the route to go.
    The discussion on financing will explore a myriad of 
options, several of which are discussed in the report. While 
the gas tax continues to fund our program, we know it is not a 
sustainable, long-term source of funding. Options could include 
private sector investment, pricing through tolls and the like, 
charges for vehicle miles traveled. Global warming and other 
important environmental considerations need to be integrated 
into our transportation planning.
    Senator Dodd has proposed a national infrastructure bank. 
He has a bipartisan bill on that would identify and help 
finance infrastructure projects with bonds. And Warren Buffett 
has identified facilitating the sale of municipal bonds as a 
viable investment option for our future.
    Our job on this Committee is to identify the needs of the 
Nation and develop an effective, efficient program to meet 
them. So I thank all the commissioners for the many hours they 
spent on developing this report. I appreciate so much those of 
you who are with us today for taking the time to share the 
Commission's findings with the Senate. I look forward to the 
testimony.
    I also wanted to mention that Secretary Peters, who chaired 
the Commission, could not be with us today, but I ask unanimous 
consent that her statement be placed into the hearing record.
    [The prepared statement of Secretary Mary Peters follows:]

     Statement of Hon. Mary E. Peters, Secretary of Transportation

    Chairman Boxer, Ranking Minority Member Inhofe and members 
of the Committee, I thank you for the opportunity to submit my 
statement for the record today.
    Let me begin by saying, over the last 20 months, this 
Commission has met on numerous occasions and has engaged in 
wide ranging discussion in a serious effort to address the 
Nation's current and future transportation needs. I believe 
this time has been well spent and I value and appreciate the 
contributions by all of my fellow Commissioners. Although I 
fundamentally disagree with a number of central elements of the 
Commission's Report, that disagreement in no way detracts from 
my respect for my colleagues on the Commission. They are to be 
commended for their hard work and dedication in the production 
of the report.
    While I am attaching the Minority Views Statement to my 
statement for the record, I would like to highlight the key 
reasons why I was ultimately unable to sign on to this report. 
As most are aware, America's transportation system has a 
serious and growing problem. The most important challenge we 
face is the consistent decline in transportation system 
performance and a fundamentally flawed investment strategy. Our 
surface transportation economic model is fundamentally broken 
and this failure is impacting our families, business 
productivity, distorting real eState markets and degrading our 
environment.
    I was pleased that the Report recognizes the importance of 
the transportation system to our Nation's economic growth. The 
Report does identify that there is a need and opportunity to 
simplify, consolidate and streamline Federal programs and 
funding categories. I believe and the Report acknowledges more 
focused programs will deliver better results for the Federal 
taxpayer. I would also like to commend the Report for 
identifying there is a need for greater accountability and 
rationality in investment decisions. I strongly support 
recommendations to improve the targeting of investments through 
a greater emphasis on performance and outcomes.
    Unfortunately, the Commission Report maintains a strong 
emphasis on status quo solutions at a time when I strongly 
believe that the country needs an entirely new transportation 
policy. A key recommendation of this Report is a massive 40 
cent per gallon Federal gasoline tax over the next 5 years, 
with automatic increases every year thereafter tied to 
inflation that would more than triple Federal fuel taxes from 
current levels by 2018. I have testified before this Committee 
previously and have stated for the record the Country's 
transportation problems do not stem from lack of spending or 
from insufficient tax levels. In fact, it is precisely the 
ineffectiveness of traditional taxes and the politicized nature 
of transportation spending decisions that are themselves the 
problem.
    In addition, I was also extremely troubled by several other 
recommendations in the Report. Among the most troubling 
proposals, the Report recommends: creating a new Federal 
bureaucracy outside the executive branch and legislative branch 
that will assume various central planning responsibilities; new 
Federal regulation limiting States' ability to attract the 
growing volume of private sector capital available to invest in 
the country's transportation infrastructure; a sustained 
Federal role that is not justified by any analysis of a 
legitimate national interest; and new Federal taxes on public 
transportation and intercity passenger rail trips. As I have 
stated before, Federal centric policy will not solve our 
transportation problems.
    I truly believe there has never been a more exciting time 
in the history of surface transportation. We are at a point 
where meaningful change is not only conceivable, but actually 
being implemented in various parts of the U.S. In order to 
ensure that the pace and scale of this bottom-up reform 
movement increases, Federal transportation programs should be 
re-focused on two basic objectives. First, we should reward, 
not constrain, State and local leaders that are willing to 
stand up, acknowledge failure and pursue fundamentally 
different strategies to financing and managing their 
transportation systems. Second, the Federal Government's 
investment strategy should emphasize the interState system and 
other truly nationally significant transportation investments 
based on clear, quantitative parameters, not politically 
contrived ones.
    Ultimately, the Commission Report chooses to take the path 
of higher taxes, more wasteful spending, more congestion and 
greater pollution. I believe there is a better path to take and 
wiser decisions to make. Again, I thank this Committee for 
allowing me to submit my testimony and I look forward to 
working with you.

    Senator Boxer. With that, I will call on Senator Inhofe.

          OPENING STATEMENT OF HON. JAMES M. INHOFE, 
            U.S. SENATOR FROM THE STATE OF OKLAHOMA

    Senator Inhofe. Thank you, Madam Chairman. I did have a 
chance to talk to Secretary Peters, so I think she has very 
significant things to add to this.
    It is safe to say that the anticipation of the Commission 
report has been very high. We recognize that we need to give 
critical thought to our transportation policy as we move into 
the reauthorization in 2009. The results of the Commission's 
study will be an important part of those deliberations.
    First, I want to thank the individual commissioners for 
their part and their efforts. I recognize that it took time and 
dedication on your part to not only attend meetings and public 
hearings, but some of you had to learn an entire new sub-
culture, the Federal Aid Highway world. This next bill will be 
my fourth reauthorization, and I am still learning. So I know 
it wasn't an easy job for you guys.
    I think the important lessons to take from the report are 
that if we don't take dramatic action, growing congestion and 
deterioration of the pavement conditions will choke the U.S. 
economy. Another key finding is that both the current models of 
stovepiped modal decisions in the current program structure are 
outdated. That being said, I am not sure I agree with all of 
your conclusions specifically. I am concerned that the report 
seems to expand the role of the Federal Government at the 
expense of the States. I have long been an advocate of just the 
reverse.
    Now, I have a complete statement I will ask be made a part 
of the record. But let me just ad lib for a moment, Madam 
Chairman. First of all, this is really fun, because it shows 
the world that Senator Boxer and I can get along and can agree 
on some things. We have both been very much concerned.
    When we worked on this bill, and my experience with the 
transportation committees started back when I was in the House. 
The first year was 1987. So we have been through quite a few of 
these over the years. As you look back at the group, I see 
several attendees here that were at a speech I made last night, 
as you look back over the years, you can see that we have 
really been doing it the same way since the Eisenhower 
Administration. That is the reason all of us, Senator Boxer and 
myself, and everyone up here who was a part of the 2005 bill, 
felt that it is important to put this Commission together to 
really explore other alternatives.
    I asked you, Mr. Rose, if you had a chance to really vent 
some of the observations from other States like Indiana, 
California, Texas. It has been my feeling that there is going 
to have to be something other than just highway taxes, gas 
taxes to support this if we are going to take care of the 
future.
    Let's look at what we did. This bill that we passed, the 
reauthorization bill, and at that time, Republicans were the 
majority so I was the author of that thing, that was the 
largest non-defense spending bill, I think, in our history. And 
yet that only, maybe came close to maintaining what we have 
today. So it is just not adequate.
    So my concerns are to try to get something that is new, 
different, new and different approaches. I am hoping that we 
will be able to have this as the first such meeting to explore 
these approaches. I appreciate, Madam Chairman, getting right 
onto this.
    [The prepared statement of Senator Inhofe follows:]

        Statement of Hon. James M. Inhofe U.S. Senator from the 
                           State of Oklahoma

    Thank you Madame Chairman. It is safe to say that the 
anticipation for the Commission Report has been high. We 
recognize that we need to give critical thought to our 
transportation policy as me move into reauthorization in 2009. 
The results of the Commission's study will be an important part 
of those deliberations.
    First, I want to thank the individual Commissioners for 
their efforts. I recognize that it took time and dedication on 
your part to not only attend meetings, and public hearings but 
some of you had to learn an entire new subculture, the Federal-
Aid Highway world. This next bill will be my fourth 
reauthorization and I am still learning how this program works, 
so I congratulate and thank you for sticking with it to come up 
with this comprehensive report.
    I think the important lessons to take from the report are 
that if we don't take dramatic action, growing congestion and 
deteriorating pavement conditions will choke the US economy. 
Another key finding is that both the current model of stove 
piped modal decisions and the current program structure are 
outdated.
    That being said, I not sure I agree with all of your 
conclusions. Specifically, I'm concerned that the report seems 
to expand the role of the Federal Government at the expense of 
the States. I have long advocated for the reverse. I am a firm 
believer in a national transportation system, but think our 
current Federal-aid program has expanded beyond that to be a 
State and local system paid for with Federal-aid dollars.
    I am interested in hearing more of your thoughts behind 
some of the recommendations. For example, I believe you are 
heading us in the right direction in collapsing the program 
into more targeted focus areas, but I am not sure I agree with 
all of your new programs. Nonetheless, I appreciate you 
starting the discussion and look forward to learning more of 
what you envision. As stated earlier, if we are to successfully 
address our pressing infrastructure needs, I believe we need to 
think beyond individual modal needs and talk about how they all 
work together.
    Certainly, for this to be successful, highways users cannot 
be the only mode contributing. If I understand your 
recommendation, I believe your transit user fee proposal is 
indication you agree with me on this point.
    Two of your proposals, environmental streamlining and 
increased focus on safety, were among my highest priorities 
during the last reauthorization. We labored long and hard to 
reach consensus on streamlining the environmental approval 
process, so I am curious to better understand what more you 
propose be done. Likewise, we created a new core Safety program 
that requires States to develop a comprehensive safety plan 
that must focus on the biggest safety problems in the state, 
then use the new Safety money to address those problems. Again, 
I am interested in your views on why that is not working.
    Finally, I have to comment on the proposed financing 
mechanism. I believe increasing the Federal fuel tax by the 
amount proposed in your report is not doable. Furthermore, I am 
not convinced it is necessary. Certainly, given the balances in 
the Highway Trust Fund, an increase in the fuel tax must be 
considered, but not to the level you propose. I had hoped that 
the Commission would have considered in more detail alternative 
financing mechanisms that could eventually replace the fuel tax 
as the primary method to collect revenue for transportation. As 
vehicles become more fuel efficient, the existing funding model 
of paying per gallon of fuel will not be effective.
    Again, I appreciate your efforts and thoughtful 
recommendations and look forward to discussing them further 
with you.

    Senator Boxer. Thank you, Senator Inhofe, so much. And yes, 
this is an area where we will continue to work very closely 
together.
    In early bird rule, I have Senator Isakson next.

           OPENING STATEMENT OF HON. JOHNNY ISAKSON, 
             U.S. SENATOR FROM THE STATE OF GEORGIA

    Senator Isakson. Thank you, Madam Chairman.
    This is a critically important hearing today and I commend 
the Commission on its work and thank you for taking your time 
to be here today.
    Transportation infrastructure is a critical resource in my 
State of Georgia, the tenth largest State in the Country and 
one of the fastest-growing. Furthermore, transportation is 
essential to the commerce and provision of goods and services 
throughout the Nation. The task ahead of us is challenging, 
creating the necessary programs and finding the necessary funds 
to maintain and improve the infrastructure is indeed going to 
be difficult.
    Finding solutions in my State of Georgia has been 
especially daunting. The Georgia Department of Transportation 
estimates a $7.7 billion transportation funding shortfall 
during the current 6-year period. In Fiscal Year 2007 alone, it 
was estimated that maintenance, safety and other transportation 
improvements were short by nearly $445 million. I recognize the 
Committee does not have jurisdiction over revenue-raising 
measures, and the responsibility lies within the jurisdiction 
of other committees.
    However, Chairman Baucus, of the Subcommittee on 
Transportation Infrastructure and I as the Ranking Member, also 
recognize that today's hearing is determined to be a discussion 
of reauthorization of the surface transportation program, and 
this report's suggestion condensing the 100 current Federal 
surface programs into 10 new focus areas that are outcome-based 
as opposed to the current system that is modality-based.
    However, I do not think that this Committee can discuss new 
programs or focus areas in a vacuum without including in that 
discussion realistic expectations about what funds are 
available. This has to be a coordinated approach with other 
committees, because we need to understand and know what is 
possible and what is not possible from a revenue standpoint. 
Congress too often, with the best of intention, authorizes 
programs that far exceed resources available for it only to 
have these programs suffer or even fail for lack of funding. We 
are in just such a circumstance today.
    We need to be cognizant of that in the debate going forward 
and recognize we will need to partner with our revenue-raising 
committees in the House and Senate to ensure we are not 
creating conditions where we are unable to solve America's 
transportation infrastructure.
    On that note, I do believe that current revenue-raising 
mechanisms for surface transportation are broken and no longer 
appropriate for funding our Nation's surface transportation 
program. I recognize we are facing a $340 billion problem. But 
I am not sure that just recommending an increase to the 
existing fund-raising mechanism, for example, 40 cents a gallon 
on gasoline, is the right solution to approach. It is time to 
look at the entire revenue-raising measure, the challenges of 
the 21st century, the differences in the way fuels operate, 
vehicles operate and other modes of transportation operate, to 
ensure we make a financial recommendation that is best for the 
21st century.
    Madam Chairman, the suggested focus that the Commission has 
outlined are of great interest. For example, in September, this 
Committee held a hearing on bridge safety. In my State of 
Georgia, we have 9,000 bridges statewide and Georgia DOT 
inspects a minimum of every 2 years with many being inspected 
annually. Fifty percent of the bridges are on-system, 50 
percent of the bridges are off-system, which means they are 
either city or county-controlled. In Georgia, approximately 
1,100 bridges are classified as structurally deficient, with 
200 of these being on the system and 900 being off-system.
    The National Asset Management Program as recommended by the 
Commission is an attractive solution to ensure that these 
bridges are maintained and the tragedy in Minnesota is not 
repeated. The ports of Savannah and Brunswick in my State are 
growing at a tremendous rate. The freight transportation 
program to relieve congestion, increase intermodal connections 
and reduce time and cost to the supply chain appear they will 
ensure that the port growth is not choked off. I commend the 
Commission on its work.
    I have long advocated for inter-city passenger rail along 
the I-75 and I-85 corridor, in particular, the I-85 corridor. I 
also believe the Federal Government should provide the 
infrastructure, but not necessarily in an Amtrak subsidy-type 
basis, but more of an aviation type of a model, where the 
private sector delivers the service, the Government puts in the 
infrastructure. I think that makes an awful lot of sense from 
the standpoint of commuter rail.
    I am pleased to see the Commission's recommendations on 
national access programs for smaller cities and rural areas. 
When many people think of Georgia, they think of metropolitan 
Atlanta and often forget that so much of our critical State is 
rural. I have long advocated for connections to these rural 
communities to the economic centers of my State for moving 
freight, moving people and moving commerce. I look forward to 
hearing from the Commission on this report.
    Finally, my greatest interest in the Commission's 
recommendation on congestion relief is for our metropolitan 
area. In the city of Atlanta today, it is estimated that it 
takes over 1 hour a day just to commute to and from work, and 
time period is growing at a rapid rate. Further, only 4 percent 
of our metropolitan community uses mass transit. I look forward 
to hearing the Commission's suggestions on strategies that 
include expansion of transit, highways, road capacity and 
inter-modal connections.
    Madam Chairman, I thank you for the time and I yield back 
the balance of my time.
    [The prepared statement of Senator Isakson follows:]

        Statement of Hon. Johnny Isakson, U.S. Senator from the 
                            State of Georgia

    Thank you Madam Chairman.
    This is a critically important hearing that we are having 
today. Transportation infrastructure is a critical resource to 
my State of Georgia, and our Nation, in providing greater 
mobility and a higher quality of life. Furthermore, 
transportation is essential to the commerce and the provision 
of goods and services throughout our Nation. The task ahead of 
us is challenging. Creating the necessary programs, and then 
finding the necessary funds to maintain and improve the 
transportation infrastructure is becoming increasingly 
difficult.
    Finding solutions in my State of Georgia have been 
especially daunting. The Georgia Department of Transportation 
estimates a $7.7 billion transportation funding shortfall 
during the current 6 year period. In fiscal year 2007 alone it 
was estimated that maintenance, safety and other transportation 
improvements were short nearly $445 million.
    I recognize that this Committee does not have jurisdiction 
over revenue raising measures, and that responsibility lies 
within the jurisdiction of the Committee chaired by my 
colleague Senator Baucus, who also chairs the Subcommittee on 
Transportation and Infrastructure on which I am the Ranking 
Member. I also recognize that today's hearing is intended to be 
a discussion of a reauthorization of the surface transportation 
program, and this report's suggestions of condensing the 100 
current Federal surface programs into 10 new focus areas that 
are outcome based, as opposed to the current system that is 
modally based.
    However, I do not think this Committee can have a 
discussion about new programs or focus areas in a vacuum, 
without also including in that discussion realistic 
expectations about what funds are available. This has to be a 
coordinated approach with the other Committees, because we need 
to understand and know what is possible and what isn't possible 
from a revenue standpoint. Congress too often, with the best of 
intentions, authorizes programs that far exceed the resources 
available for it only to have those programs suffer or even 
fail for lack of funding. We need to be cognizant of that in 
this debate going forward, and recognize that we need to 
partner with our revenue raising Committees in the House and 
Senate to ensure we are not creating conditions whereby we are 
unable to solve America's transportation and infrastructure 
needs.
    On that note, I do believe that the current revenue raising 
mechanisms for surface transportation are broken and no longer 
appropriate for funding our nation's surface transportation 
infrastructure. I recognize that we are facing a $340 billion 
problem, and am not sure how raising the Federal motor fuel tax 
by upwards of "40 per gallon when we have demonstrated that 
this mechanism is failing, solves that problem.
    Madam Chairman, the suggested focus areas that the 
Commission has outlined are of great interest in my State. For 
example, in September this Committee held a hearing on bridge 
safety. In preparation for that hearing I contacted Georgia DOT 
and learned that Georgia has approximately 9,000 bridges 
statewide, and GDOT inspects all of them at a minimum of every 
2 years with many being inspected annually. 50 percent of these 
bridges are ``on system'', which means they are controlled by 
the state, while 50 percent are ``off system'', which means 
they are either city or county controlled. In Georgia, 
approximately 1,100 bridges are classified as structurally 
deficient, with 200 of these being on system and 900 off 
system. The National Asset Management Program as recommended by 
this Commission is an attractive solution to ensure that these 
bridges are maintained, and the tragedy in Minnesota is not 
repeated.
    The ports of Savannah and Brunswick in my State are growing 
at a tremendous rate. The Freight Transportation program to 
relieve congestion, increase intermodal connections, and reduce 
time and costs to the supply chain appears that it will ensure 
that these ports growth is not choked off.
    I have long advocated for intercity passenger rail along 
the I-75 and I-85 corridors in the south to relieve congestion 
on those interstates in our region. I believe that the Federal 
Government should provide the infrastructure, but instead of 
Amtrak running the routes on a government subsidy we should 
instead leave it to the private sector to compete and provide 
service. I am pleased to see the Commission's emphasis on this.
    I am also pleased to see the Commission's recommendations 
on a national access program for smaller cities and rural 
areas. When many people think of Georgia they think of 
metropolitan Atlanta, and often forget that so much of our 
State is rural. I have long advocated for connections for these 
rural communities to the economic centers of my State for 
moving freight and people. I look forward to hearing from the 
Commission on this.
    Finally, my greatest interest is in the Commission's 
recommendations on congestion relief for our metropolitan 
areas. In metropolitan Atlanta, the average roundtrip commute 
time is over 1 hour per day. The impact on business and 
families as a result of this congestion is very real. Further, 
only 9 percent of our metropolitan community uses mass transit. 
I look forward to hearing the Commission's suggestions on 
strategies that include an expansion of transit and highway and 
road capacity.
    Madam Chairman, in Georgia we have been working on this 
issue for some time. I would like to submit for the record a 
report that the Joint Study Committee for Transportation 
Funding in our State Legislature put forth with its suggestions 
on addressing Georgia's transportation congestion problems. We 
must keep in mind as we move forward that any changes we make 
here in Washington have a tremendous impact on our State 
Departments of Transportation, and other stakeholders in our 
States. We must work in partnership with the States to ensure 
that we maximize our programs and resources as we work toward 
the common goal of ensuring that we meet infrastructure demand 
for the next century.
    Madam Chairman, I yield back my time.

    Senator Boxer. Senator, I really appreciate your comments, 
and also the work you do with Chairman Baucus on the 
subcommittee. It is crucial. Thank you.
    Senator Alexander, you are next.

          OPENING STATEMENT OF HON. LAMAR ALEXANDER, 
            U.S. SENATOR FROM THE STATE OF TENNESSEE

    Senator Alexander. Thank you, Madam Chairman, Senator 
Inhofe. I thank all of you for your work on this. I really look 
forward to this.
    If there was anything that we could do to reduce congestion 
on America's roads, the American people would congratulate us 
and double our approval ratings overnight. So we are going to 
take this, I am going to take this seriously. In the mid-
1980's, when I was Governor of Tennessee, Saturn and Nissan had 
just come to our State. I was trying to understand what we 
could do to bring the auto industry there. We had a good 
location, a right-to-work law and low taxes. But what I 
realized was we had a poor four-lane highway system.
    So we had three big road programs build what the truckers 
said was the best four-lane highway system in the Country, 
built a lot of interstate-quality roads with 100 percent State 
money. And today a third of our manufacturing jobs are auto 
jobs, where 25 years ago, almost none were. In order to do 
that, we had to pay the bill, which meant doubling the gas tax 
and every Republican voted for it and almost every Democrat. 
The only people who got in trouble were those who didn't.
    Now, I say that because I hope that we don't have a big 
discussion about revenue before we have a big discussion about 
what we need to do. We can get all hung up on how to pay the 
bill but pay the bill for what? So the first thing we need to 
talk about are your recommendations to envision what should the 
greatest country in the world have as a transportation system 
for the next 20, 25 years, and then we can recommend how to pay 
the bill. And I imagine that most Americans would be grateful 
to pay the bill to reduce congestion and keep our jobs.
    The subjects I am interested in are the following. I hope 
to hear your comments on them. I will list them briefly. How 
can we give States more flexibility to contract in a more cost-
effective way? Senator Bond's home State has a way of improving 
all of its bridges by 2012 and maintaining them for 25 years 
with Missouri making no payments until after the construction 
is finished and using existing Federal dollars to do it.
    A second point is, Senator Isakson and others have proposed 
a 2-year budget for the Federal Government and I would like to 
understand exactly what inefficiencies are caused by our 
failure in Congress to have an orderly budgeting process. I 
know it must be billions of dollars every year from the 
inability to let contracts on an orderly basis. So what can we 
do with existing dollars if we had a more orderly system here, 
what opportunities are there to do more of what Missouri is 
doing?
    I would like to understand much we lose by applying 
rescissions to the highway funding, in other words, by taking 
money out of the existing Highway Trust Fund and using it for 
other purposes, and make sure that we Senators understand that.
    I would like to make sure I understand, too, why we don't 
have some sort of efficiency rating for States based upon their 
efficient use of their roads. Senator Bond and I used to go to 
Governors conferences. And we would brag about how Missouri was 
ahead of Tennessee or vice versa.
    I can guarantee you that if Tennessee were 50th in the 
Country in terms of the efficient use of existing roads, that 
is because we were doing construction in rush hours and not 
getting, and just doing a sloppy job of the roads we already 
have, a person could win a Governor's race based upon that. So 
why don't we rank States 1 to 50 based upon the efficient use 
of the roads, and let Governors' campaigns be based upon that 
as we go ahead?
    So I am very much looking forward to this. I thank you for 
the time you have spent on it, and I would end where I started: 
I hope we will focus first on imagining the kind of 
transportation system that a great country ought to have. I 
believe most Americans will respect us for that if we do that, 
and it would be an exciting thing to do and vitally important 
for our Country.
    Then second, let's talk about how to pay the bill. Of 
course, that is an important subject and there are many ways to 
do it. But let's don't start out talking about how to pay the 
bill when we haven't even had a consensus yet of what we are 
paying the bill for.
    Thank you very much, Madam Chairman.
    Senator Boxer. Senator, you speak for me on that point.
    The order I have, and if anyone says I am wrong, is 
Barrasso, Bond, Voinovich and Craig. So we will go to Senator 
Barrasso.

           OPENING STATEMENT OF HON. JOHN BARRASSO, 
             U.S. SENATOR FROM THE STATE OF WYOMING

    Senator Barrasso. Thank you very much, Madam Chairman. I 
want to thank members of the Commission for being here today.
    This is a topic in which I am very interested. Wyoming is a 
very large, rural State, and we have about five people living 
in every square mile of the State. So people are spread out. We 
rely heavily on the Highway Trust Fund, and it is appropriate, 
because much of the damage done to our roads is not done by the 
people of Wyoming, it is done by the large trucks as part of 
our Nation's commerce, moving product from east to west, west 
to east. For each of those large trucks, that does more damage 
than many, many cars.
    So it is appropriate for us as we look to the Federal 
Government for help, because this is part of national commerce. 
As we heard earlier this morning, that national commerce and 
those products are going to double and have that same impact on 
our roads.
    In the Wyoming State Senate, I was chairman of our 
transportation committee. We did push within the State of 
Wyoming for additional State money to go into our highway 
system. Every year I was chairman of the committee, we were 
able to accomplish that. We were able to accomplish it also 
without raising the gas tax. I have heard much already around 
the State of Wyoming about your recommendation that the gas tax 
be raised. I have significant concerns there.
    As we proceed through this process, I will tell you I hope 
that we can discuss proposals that are truly equitable and that 
don't pit big cities against rural America and highways against 
transit. So I thank you very much for being here and look 
forward to your comments. Thank you, Madam Chairman.
    Senator Boxer. Thank you very much, Senator Barrasso.
    Senator Bond.

          OPENING STATEMENT OF HON. CHRISTOPHER BOND, 
            U.S. SENATOR FROM THE STATE OF MISSOURI

    Senator Bond. Thank you very much, Madam Chair and Ranking 
Member Inhofe, for having this very important hearing today. It 
is vital that we initiate this discussion and special thanks 
goes to members of the Commission, especially those here today. 
Because you have taken on a global subject and given some very 
interesting outlooks on how we deal with it.
    In addressing this issue, we need to take a hard look at 
the best way to balance our critical national infrastructure 
needs with helping American families keep more of their hard-
earned money. Most people call me conservative, but I am 
infrastructure conservative. You can't have good economic 
growth unless the Government plays its role in assuring that 
vital infrastructure. I believe, as I know you do, that 
transportation infrastructure is an absolutely vital component 
of our economy. We need to bring the infrastructure of this 
Nation back to the point where it can promote and sustain 
strong economic growth.
    Now, Governor Alexander and I had numerous discussions 
between the States of Tennessee and Missouri who could provide 
best transportation. I can tell you that there was something I 
learned as Governor, when we were trying to bring jobs into the 
State. Jobs went where there was good transportation; if you 
had a four-lane highway, and especially if you had good rail 
service, and if you had adequate water transportation. Too 
often we limit our focus just to the highways. We drive on them 
every day, but we know that the much more efficient and 
environmentally friendly way of transportation will be rail and 
water.
    So the long-term financing and infrastructure problems we 
face today need to be evaluated in depth, and all the viable 
solutions need careful consideration.
    The one thing that is clear in this debate is the need for 
action. With the growth of our population, coupled with 
expanding global economic activity, our Country cannot 
withstand the consequences of inaction. As I pointed out in our 
arguments over the 2002 Water Resources Development Act, which 
we finally managed to pass in 2007, that we were in great 
danger of losing our agricultural exports to Brazil and other 
countries were they were developing water transportation. One 
of our great exports to Latin America were the barges and tow 
boats that we used to be able to use on our rivers. We were 
shipping them the means to compete more effectively in 
transportation to take their products to the market, while we 
were sitting land-locked with our highways over-crowded, our 
rails at capacity and our water resources under-utilized.
    We need a good starting point in understanding our current 
infrastructure situation and the possible solutions. However, 
as we move into these discussions, there are a couple areas of 
concern in the Commission's recommendations. It is important to 
address possible alternatives to the recommendations regarding 
the increased Federal role, the gas tax hikes and the rise in 
tolls. We did, in the SAFETEA measure, provide streamlining 
that cut, some people say, 10 to 15 percent of the cost of 
highway construction by making the process run more smoothly. 
That was an easy one. I think we have taken the easy solutions. 
We need to take a look at the tougher ones now.
    And while I respect the Commission's report, it is my hope 
that this report will foster the discussion of possible 
alternatives, rather than narrow the scope of solutions. I will 
have a question either I ask or submit for the record, that 
kind of bothers me on how the Department of Transportation can 
effectively administer 10 new focus areas, eliminating the 
modal-focused divisions that we currently have, and how we as a 
Congress can do a better job in exercising oversight of those 
areas where they cross jurisdictional lines. Undoubtedly our 
transportation infrastructure is in need of an overhaul. We 
should strike a balance with the need and the everyday needs of 
the American family. We have difficult decisions.
    But your report has given us a good starting point. We very 
much appreciate your work and we look forward to hearing from 
all of you and working with the entire Commission and our 
Committee to solve these problems.
    [The prepared statement of Senator Bond follows:]

       Statement of Hon. Christopher Bond, U.S. Senator from the 
                           State of Missouri

    Thank you Chairman Boxer and Ranking Member Inhofe for 
holding this hearing today. This hearing is a great opportunity 
to initiate the necessary conversation of how to move this 
country forward to meet our country's transportation needs.
    In addition, thank you to all the members of the commission 
for their hard work on this report, and especially to the 
members testifying today. It is your work that has brought 
needed attention to this issue.
    In addressing this issue, we need to take a hard look at 
the best way to balance our critical national infrastructure 
needs with helping American families keep more of their hard 
earned money. Many call me a conservative but I am an 
infrastructure conservative.
    I believe, as many do, that our transportation 
infrastructure is a vital component of our economy and that we 
need to bring the infrastructure of this nation back to the 
point where it can promote and sustain strong economic growth. 
For this reason, the long term financing and infrastructure 
problems that we face today need to be evaluated in-depth and 
all viable solutions need careful consideration.
    However, the one thing that is clear in this debate is the 
need for action. With the growth of our population, coupled 
with the expanding global economy, our country cannot withstand 
the consequences of inaction. I hope that our discussion today 
will be a good starting point from which we can better 
understand our current infrastructure situation and the 
possible solutions to this situation.
    However, as we move forward in our discussions, there are a 
couple areas of concern in the commission's recommendations. It 
is important to address possible alternatives to the 
recommendations regarding the increased Federal role, the gas 
tax hikes and the rise in tolls. In SAFETEA, we managed to 
streamline the Federal process.
    Also, I will have to question how the Department of 
Transportation can administer the 10 new focus areas 
eliminating the modal focused divisions and how we exercise 
effective congressional oversight. Additionally, the Commission 
focused a great deal on highway but needs to expand the focus 
to include efficient rail and water (WRDA).
    While I respect the commission's report, it is my hope that 
this report will foster the discussion of possible alternatives 
rather than narrow the scope of solutions.
    Undoubtly, our transportation infrastructure is in need of 
an overhaul; however, we should strike a balance to strike a 
balance with that need and the everyday needs of the American 
family. We have difficult decisions before us, but this report 
can make those decisions more informed and more effective.
    Again, I thank the chair and the commission for their hard 
work. I look forward to hearing from the other commissioners 
and to working with the entire commission to move forward in 
solving America's infrastructure needs.

    Senator Boxer. Thank you, Senator Bond.
    Senator Voinovich.

          OPENING STATEMENT OF HON. GEORGE VOINOVICH, 
              U.S. SENATOR FROM THE STATE OF OHIO

    Senator Voinovich. Thank you, Madam Chairman. I am pleased 
that you are holding this hearing today and really appreciate 
the commissioners being here and the time that you put into 
making this report available to us.
    Federal transportation policy is of real importance to my 
State, because Ohio has one of the largest surface 
transportation networks in the Country, the tenth largest 
highway network, fifth largest volume of traffic, fourth 
largest interState system and the second largest number of 
bridges. Fourteen percent of all freight that moves in the 
United States moves in through or out of Ohio--the third 
greatest amount in the 50 States.
    Throughout my career, I have worked to increase funding for 
infrastructure. As Governor, during ISTEA, I sought to increase 
Ohio's rate of return from the Highway Trust Fund from 80 to 85 
percent. In 1998, as Chairman of the National Governors 
Association, I was involved in negotiating TEA-21, and I fought 
to even out highway funding fluctuations and assure a 
predictable flow of funding to the States, which is extremely 
important. I remember the days when it would go up and down and 
you couldn't do any planning. I think we have been able to 
correct that.
    During consideration of SAFETEA-LU, I pushed for increased 
funding. I thought the total funding levels were well below 
what was appropriate and necessary for the Nation's 
infrastructure needs. At that time, we knew that what we were 
doing was inadequate. I predicted that the money spent in that 
authorization bill would not be enough. Sadly, I was right. 
Because of the rising cost of construction and energy, the 
purchasing power from SAFETEA-LU has significantly declined. In 
effect, we are not even going to keep up with inflation as a 
result of SAFETEA-LU. Everyone at this table knows how the 
projects that people anticipated to go forward aren't going 
forward because the money has evaporated.
    So as I say, I have been looking forward to this report for 
a long time. If any of us think that we can deal with these 
problems without more money, we are being intellectually 
dishonest. I hope that the next President of this Country 
clearly understands that. It is time to level with the American 
people.
    Recently we have been talking about putting together an 
economic stimulus package to jump-start the economy. We ought 
to look at how our inadequate highway system is hurting our 
economic situation here in the Country and impacting our 
competitive position in the global marketplace. I know how 
important highways are, I am a former Governor. Remember that I 
doubled the exits on the Ohio Turnpike when I was Governor. We 
went to three lanes on the Ohio Turnpike, made a big difference 
and helped the economy. We have to understand those things.
    As ranking member of the Clean Air and Nuclear Safety 
Subcommittee, I am also aware of the relationship between 
highway planning and air quality. I am glad that you talked 
about that in the report.
    I have also been a champion of public-private partnerships. 
The Diesel Emission Reduction Act, which Senators Carper, 
Clinton and I championed during the Energy Bill and the last 
Highway Bill, is a great example of this, how we are going to 
spend Federal money, get the private sector involved and really 
do something about reducing diesel emissions.
    I support the Commission's recommendations on improving and 
streamlining the delivery of transportation projects. One of 
the things I campaigned on when I ran for the Senate was to 
reduce the time it takes to complete transportation projects. 
Even though, as Senator Bond mentioned, we have done some good 
work, we really need to look at that again. We need to revisit 
this. I couldn't believe this, I thought we had made some real 
significance, but your report says that it takes 13 years on 
average to complete major projects? Thirteen years? 
Unbelievable.
    The report echoes what I have been saying for years: it is 
the Government's role to provide the infrastructure for 
American business. Unless we develop this infrastructure of 
competitiveness, our children and grandchildren are not going 
to be able to enjoy the same standard of living or quality of 
life that we have been able to enjoy. We owe you a great debt 
of gratitude for the time that you have spent on this report. I 
can tell you for sure that we are going to take your 
recommendations into consideration when we put the next Highway 
Bill together.
    Thank you.
    [The prepared statement of Senator Voinovich follows:]

       Statement of Hon. George Voinovich, U.S. Senator from the 
                             State of Ohio

    Mrs. Chairman, I am pleased that you are holding this 
hearing today. I would like to thank the Commissioners for 
being here and for all your hard work and strong leadership in 
putting together this report.
    Federal transportation policy is of particular importance 
to my State because Ohio has one of the largest surface 
transportation networks in the country. The State of Ohio has 
the 10th largest highway network, the fifth highest volume of 
traffic, the fourth largest interState system and the second 
largest number of bridges. 14 percent of all freight that moves 
in the United States moves in, through, or out of Ohio--the 
third greatest amount of any state.
    Throughout my career, I have worked to increase funding for 
infrastructure. As Governor, during ISTEA, I fought to increase 
Ohio's rate of return from the Highway Trust Fund from 80 
percent to 85 percent. In 1998, as Chairman of the National 
Governors Association, I was involved in negotiating TEA-21 and 
I fought to even out highway funding fluctuations and assure a 
predictable flow of funding to states.
    During consideration of SAFETEA-LU, I pushed for increased 
funding. I thought the total funding levels were well below 
what was appropriate and necessary for the nation's 
infrastructure needs. Even, the Federal Highway Administration 
acknowledged that more funding was needed. In 2004, Federal 
Highways stated that the average annual investment level needed 
to improve our highways and bridges would be $118.9 billion. 
The average annual investment level necessary to just maintain 
the current condition and performance of highways and bridges 
would be $77.1 billion.
    I predicted that the money spent from that authorization 
bill would not be enough. Sadly, I was right. Because of the 
rising costs of construction and energy, the purchasing power 
from SAFETEA-LU has significantly declined. As a result, 
highway projects have had to be canceled and states and locals 
have had to step-up and assume more of the financial burden, 
and they are doing so at a time when many states are projecting 
severe budget shortfalls.
    I have been looking forward to reading this report for a 
long time. If any of you think that we can deal with these 
problems without more money, you are being intellectually 
dishonest. And, I hope the next president understands this 
clearly.
    Recently, we have been talking about putting together an 
economic stimulus package to jumpstart the economy. I think our 
failure to invest in the improvements necessary to keep pace 
with our growing population and increasing demands is one of 
the roadblocks standing in the way of moving our economy 
forward. Investing in our nation's transportation could create 
hundreds of thousands of jobs and move our sluggish economy 
down the road to recovery. Manufacturing states, such as Ohio 
with a ``just-in-time'' economy, cannot be competitive with 
failing infrastructure where traffic congestion and bottlenecks 
in our rails and waterways is the norm. I am very encouraged 
that this report recognizes the link between our infrastructure 
and our ability to compete in the global market.
    As Ranking Member of the Clean Air and Nuclear Safety 
Subcommittee, I am well aware of the important relationship 
between highway planning and air quality. I am pleased that 
this report emphasizes environmental stewardship and recommends 
more State flexibility on funding efforts to improve our air 
quality.
    I have always been a champion of public private 
partnerships. The Diesel Emissions Reduction Act, which 
Senators Carper, Clinton and I championed during the energy 
bill and last highway bill, is a great example of this. The 
Federal Government provides funding for private entities to 
retrofit their vehicles to help reduce emissions. One of the 
findings of the report was that public private partnerships 
should play an important role in financing our national surface 
transportation system and for reducing our energy consumption. 
I hope that we can encourage this in the next authorization 
bill.
    I also support the Commission's recommendations on 
improving and streamlining the delivery of transportation 
projects. As a former Governor and Mayor, I have been 
frustrated at how long it can take to finish a highway project 
from beginning to end. In fact, during my first Senate 
campaign--as part of my platform, I pledged to reduce this 
timeframe. I am pleased that this report acknowledges this lag 
time--major projects take nearly 13 years on average to 
complete. During the last highway bill, we tried to expedite 
the environmental review process but there are still many 
improvements that need to be made as the report recognizes.
    This report echoes what I have been saying for years--it's 
the government's role to provide the infrastructure for 
American business, and unless we develop an infrastructure of 
competitiveness, our children and grandchildren will not be 
able to enjoy the same standard of living and quality of life 
that we have enjoyed.
    The American people must be made aware of the 
infrastructure challenges our nation faces. Hopefully, with 
your participation, Commissioners, our hearing today can shed 
more light on this critical issue.

    Senator Boxer. And last but certainly not least, Senator 
Craig.

            OPENING STATEMENT OF HON. LARRY CRAIG, 
              U.S. SENATOR FROM THE STATE OF IDAHO

    Senator Craig. Madam Chair, thank you very much.
    Commissioners, this is a bit of a unique panel. Most of us 
have either served in State legislatures, dealt with 
transportation, you have a Governor, a Governor and a Governor 
that just left, who knew their political fortunes were based on 
doing the right things in transportation. You have a mayor.
    Senator Barrasso and I come from those States that are 
unique to the formula: lots of lane miles and darned few 
people. But lane miles that, as the Senator said, are critical 
crossings for the commerce of America across the western 
States. Having said that, my State of Idaho is in an 
interesting microcosm at the moment, because we are one of the 
fastest-growing States in the Nation, third now, because the 
metro area of Boise-Nampa-Caldwell is growing so rapidly it is 
sucking up all of the transportation money that once spread 
across the State. And it has to, just to keep things moving 
there, because it is hard to catch up with where you are or 
where you need to be when you are growing as rapidly as we are. 
So that in itself becomes a fascinating anomaly.
    Mr. Rose, you have a right-of-way in Sand Point, Idaho, 
that I am very interested in. Because it is another anomaly. 
Rails and roads used to go right down here, and then the 
communities built around them. All of a sudden, they become too 
big. We want to put a highway system on your right-of-way. We 
have been negotiating with you for 10 years. I am ready to sign 
the contract. Are you?
    [Laughter.]
    Senator Craig. But my point is quite simple. All of these 
are real, very real problems that we have to deal with. I was 
in Spain a week ago, and at an ambassador's reception, and into 
the embassy walked a young man who had just negotiated a 75-
year lease on a toll road in Chicago, between Chicago, I think, 
and Indiana. A Spanish government, a Spanish company had taken 
it over, going to run it for 75 years, collect the toll. Why 
are we letting that happen? Because we have no other way to 
finance roads. I think they own or they have leased now for 75 
years one of the Pennsylvania turnpikes and toll roads.
    So there are interesting, unique things happening out there 
in this transportation system of ours that I find fascinating. 
Just before the Christmas recess, this Committee, under the 
chairmanship of Senator Boxer, completed a climate change bill. 
We are all very interested in cars that are cleaner, that burn 
less fuel. I am a Senator who, for the first time in 27 years 
changed my position and helped lead a change in CAFE standards 
for fleets in this Country. Yet we are saying we have to ask 
more per gallon of gas to fund the system, when we are saying 
we are going to burn less gas per car per unit? And if we are 
good at what we do by 2030 we will more hybrids and plug-in 
vehicles and they are going to be electrical and they are not 
going to pay a dime, or very little, gas tax. That ought to be 
our goal.
    So a funding mechanism, a new formula on how we finance, 
because they will be wearing out the roads, they will be 
lighter, they won't do as much damage, but the heavy trucks 
will still be there, unless we do what others are saying, what 
Senator Bond has talked about in water transportation and rail 
transportation. Phenomenal challenges for our Country, but 
directly tied to our economic vitality. There is just no doubt 
about it.
    We in the west, as we grow and populate, are still going to 
have those unique rural anomalies. Drive 500 miles across my 
State on the interState and see few people. But it is bumper to 
bumper trucks moving from Chicago to Los Angeles or Chicago to 
San Francisco or any place in between. It must continue to 
happen.
    So those are going to be challenges. Personal investment in 
rural America will be critical as we work our way through that. 
So let me conclude and listen, as we all will, to you and your 
reports. Mr. Rose, we will talk about the right-of-way later.
    Thank you.
    Senator Boxer. Senator Craig, let me say that I agree with 
your comments on the gas tax. It is just--it is going to be, if 
we succeed in getting off of the fossil fuels----
    Senator Craig. And that is our goal.
    Senator Boxer. That is right. So we have to now think much 
more creatively about miles traveled and other ways to think 
about this. I have talked with Senator Inhofe and we are really 
going to work very hard together across party lines. I would 
say, this doesn't reflect a lack of interest, it reflects 
interest in FISA and the stimulus package. That meeting was 
just going very strong when I left. So know that I will be 
talking to all my colleagues. This is a bipartisan approach 
that we are taking to this issue.
    Well, now we get to you, and we are just so pleased to have 
members of the Commission here. We will start with Mr. Jack 
Schenendorf, who was appointed by Speaker Hastert and was the 
Vice Chair of the Commission. We welcome you, sir.

  STATEMENT OF JACK L. SCHENENDORF, OF COUNSEL, COVINGTON AND 
                          BURLING, LLP

    Mr. Schenendorf. Thank you, Chairman Boxer, Senator Inhofe 
and other members of the Committee.
    I am Jack Schenendorf, I am Of Counsel with Covington and 
Burling law firm in Washington, DC. I had the honor of serving 
as the Vice Chair of the Commission.
    Given the subject matter of today's hearing----
    Senator Inhofe. Let me interrupt just a minute, Madam 
Chairman.
    You should also say you have all this extensive background 
working on the committees. Way back when I was in the House, 
Jack was in the transportation committee and has extensive 
background there.
    Mr. Schenendorf. I worked for 25 years on the House 
Transportation Committee.
    Senator Boxer. Well, we know you are qualified.
    [Laughter.]
    Mr. Schenendorf. Given the subject matter of today's 
hearing, it is true a special honor for us to appear before 
this Committee. For it was the leaders of this Committee, men 
such as Senator Al Gore, Sr., and first-term Senator Prescott 
Bush, who just over 50 years ago, in cooperation with President 
Eisenhower and their counterparts in the House, had the wisdom, 
the vision and the political will to establish the interState 
highway program and to ensure adequate investment by creating 
the Highway Trust Fund and almost tripling the Federal user tax 
on motor fuels.
    These leaders understood that the Nation's transportation 
system was in crisis and at a crossroads. They knew the 
importance of transportation to our economy, our national 
defense and our quality of life. They understood that the 
political generation that pays for transportation improvements 
is not usually the political generation that benefits from the 
rewards. But they were willing to sacrifice and make the tough 
decisions, so that America would have a bright and prosperous 
future. We owe then an enormous debt of gratitude.
    Madam Chairman, our commission has concluded that our 
transportation system is once again in crisis and at a 
crossroads. We have outgrown our aging highway, transit and 
rail systems. Now is the time for new leadership to step up 
with a vision for the next 50 years that will ensure U.S. 
prosperity and global preeminence for generations to come. It 
is in this context that we respectfully make our 
recommendations to Congress for the next transportation bill, 
which is scheduled to be considered in 2009.
    We are recommending that Congress start with fundamental 
and wide-ranging reform. The Commission does not believe that 
the Federal program should be reauthorized in its current form. 
Instead, we are calling for a new beginning. We believe that 
Congress must restore a mission or sense of purpose to the 
Federal program. That is why we are recommending that the 
existing 108 some odd Federal transportation programs be 
replaced with 10 new programs that are performance-driven, 
outcome-based, free of earmarking, generally mode-neutral and 
refocused to pursue objectives of genuine national interest.
    U.S. DOT, State and regional officials and other 
stakeholders would establish performance standards in the new 
Federal program areas and develop detailed plans and cost 
estimates to achieve those standards. These plans would then be 
assembled into a national surface transportation strategic plan 
which would guide Federal investment. All levels of government 
would be accountable to the American people for achieving the 
results promised. We are also recommending the project delivery 
time be reduced dramatically and we are recommending a BRAC-
type commission to help depoliticize the process.
    Reform, though necessary, will not be enough on its own to 
produce the transportation system the Nation needs for the 21st 
century. We also need adequate investment. We must upgrade our 
existing transportation network to a State of good repair and 
we must expand capacity and build the more advanced facilities 
we will require to remain competitive.
    We need a system that emphasizes modal balance and mobility 
options, one that dramatically reduces fatalities and injuries, 
one that is environmentally sensitive and safe, one that 
minimizes use of our scarce energy resources, one that erases 
wasteful delays, one that supports just-in-time delivery and 
one that allows economic development and output more 
significantly than ever seen before in history.
    Accomplishing these objectives will be expensive. We must 
come to grips with the sobering financial reality of such an 
undertaking. We estimate that all levels of government, 
including the Federal Government and including the private 
sector, will need to invest at least $225 billion annually for 
the next 50 years. We are spending less than 40 percent of that 
amount today.
    Therefore, we have proposed a comprehensive set of 
financing recommendations. As a general matter, we strongly 
support the principle of user financing. We recommend 
continuation of budgetary protections for the Highway Trust 
Fund and we recommend that revenues generated by 
transportation, including concession fees, be used only for 
transportation purposes and not be diverted to non-
transportation uses.
    More specifically, for the long term, we are recommending 
that we transition to a VMT fee as quickly as possible, 
provided that substantial privacy and collection cost issues 
can be addressed. We have suggested specific steps for the next 
reauthorization bill to hasten this process. Like the National 
Academy of Sciences, though, we believe it will take until 
about 2025 to get this system up and running in the interim, 
the period between 2010 and whenever we can move to the VMT 
fee, whether it is 2025, 2030, whatever that timeframe is, we 
are recommending a range of financing options to be 
implemented. These include an increase in the Federal Motor 
Fuels tax, a Federal freight fee, dedication of a portion of 
existing customs duties, a ticket tax on transit and inter-city 
rail passengers, increased use of tolling, congestion pricing, 
private financing, including concessions, and increased State 
and local revenues. In other words, to close the investment 
gap, we must use all of the financing tools available to us in 
this interim period.
    Let me close by saying that a failure to act would be 
devastating. The United States would be unable to compete 
effectively in the global marketplace. Our status as an 
economic superpower would be jeopardized. Jobs would be lost 
and our quality of life would safer substantially. Eventually, 
we would reach the point of catastrophic failures. Tragedies 
like the I-35 bridge collapse in Minnesota would become all too 
common.
    We cannot sit back and wait for the next generation to 
address these ever-increasing needs. It will be too late. The 
crisis is now, and we have a responsibility and obligation to 
create a safer, more secure and ever-more productive system. We 
must do for our children and grandchildren what our parents and 
grandparents did for us. We need to create and sustain the 
preeminent surfaced transportation system in the world, and we 
need to do it now.
    Thank you.
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         Responses by Jack Schenendorf to Additional Questions 
                         from Senator Lieberman

    Question 1. I have a question about your newly proposed 
``Metropolitan Mobility'' program, which will be geared to 
reduce traffic congestion. I agree that all solutions to ease 
congestion must be explored, including tolling and possibly 
congesting pricing. In your report, the Commission specifically 
stated that funds authorized under the Metropolitan Mobility 
program will be reserved for urban areas of 1 million or more 
in population. Can you explain to me how you arrived at that 
figure? As you know, there are a number of small cities in 
Connecticut, including Hartford, New Haven, Stamford, and 
Bridgeport. Each of these cities has serious traffic congestion 
problems. New Haven is a good example. If you have ever driven 
from New York City to Boston, you are well aware of the traffic 
problems along I-95 and even the Merritt Parkway. According to 
recent consensus estimates, New Haven's population is close to 
125,000, with 600,000 people residing in the Greater New Haven 
area. Under the Commission's proposal, New Haven would not be 
eligible to apply for funding in the Metropolitan Mobility 
Program. How would a city such as New Haven--which exists at 
the juncture between two major interstates (I-95 and I-91) 
resolve its congestion problems. After all, traffic congestion 
does not always arise in direct connection because it is the 
nexus in the northeast corridor between New York and Boston.
    Response. In proposing the Metropolitan Mobility program, 
focused on large cities, the Commission recognized that 
congestion must be addressed through a regional approach. 
Accordingly, the Commission explicitly recommended that 
eligibility for this program use a broad definition of 
``metropolitan area'', such as the combined statistical areas 
(CSAs) defined by the Office of Management and Budget. Under 
this definition, Fairfield, New Haven, and Litchfield counties 
would be included in the New York-Newark-Bridgeport CSA, and 
would thus be eligible for funding under this program. 
Hartford, Middlesex, Tolland, and Windham counties would also 
be eligible as part of the Hartford-West Hartford-Willimantic 
CSA.

    Question 2. I would like to ask a question about the 
independent commission you have proposed creating, tentatively 
named NASTRAC (National Surface Transportation Commission) in 
your report. I understand the advantages of creating an 
independent commission to make difficult policy decisions, such 
as closing military bases with BRAC and raising postal rates 
with the Postal Regulatory Commission. I would like to hear 
more about how you think an in dependent transportation 
commission would operate vis-a-vis Congress. In your report, 
you State that the Commissions' revenue recommendations would 
be sent directly to Congress. The recommendations would then be 
subject to a congressional veto, requiring 2/3 recorded vote of 
both Houses within 60 days of receipt. If no action was taken, 
the recommendations would become law. I understand that other 
independent commissions, such as BRAC, work in similar ways. 
But if an independent transportation commission was created, I 
worry that Congress would be ceding much of its authority over 
transportation policy in the Unites States. I also worry that 
Congress may be ceding an important representational function.
    Therefore, my question is what is Congress's role in 
transportation policy if many of the revenue decisions are 
turned over to an independent commission? I understand that an 
independent commission would work with the departments of 
transportation from each state, but how can a ten-member 
commission possibly master the particular needs of all 50 
states?
    Response. We did not spell out the details of exactly how 
NASTRAC would operate, but our vision was that Congress would 
retain a strong role in guiding surface transportation policy. 
Congress would continue to be responsible for multi-year 
surface transportation authorizing legislation and for 
oversight of surface transportation programs. Among other 
things the surface transportation legislation enacted by 
Congress would establish the individual Federal programs 
through which funds would be allocated to the States, establish 
eligibilities for funding under each program, and define the 
parameters under which NASTRAC would operate. In our study of 
comparable BRAC and postal setting apparatus, we saw that there 
were adjustments made by Congress in the authorities provided 
to those entities over time. If after operating with NASTRAC 
for a period of time there were changes that Congress wished to 
make in its operations, those changes could be made in 
subsequent legislation.
    In our report we recommended 10 program areas that we 
believe should be the foundation of an overall Federal surface 
transportation program and outlined how those programs might be 
administered. We envision that NASTRAC would oversee certain 
aspects of U.S. Department of Transportation (U.S. DOT) 
implementation of the laws passed by Congress. We did not 
envision that NASTRAC itself would work extensively with the 
State departments of transportation in developing the national 
plans in each program area that would be the basis for funding 
decisions. That would be the role of the U.S. DOT, working 
through its extensive field office organization that has day-
to-day contact with the State departments of transportation. 
The U.S. DOT would consolidate State and metropolitan level 
plans from the various States, ensuring that projects included 
in the plans appear to be cost-beneficial and contribute to 
meeting agreed upon performance standards. The U.S. DOT would 
then integrate the individual programmatic plans into an 
overall national strategic plan for surface transportation that 
would be presented to the NASTRAC.
    The NASTRAC would oversee development of performance 
standards and plans to meet those performance standards to 
assure the credibility of the plans developed under the 
Department's technical criteria. Its primary role, however, 
would be to recommend funding levels and any necessary changes 
in user fees to provide the Federal share of funds needed to 
carry out the plan.

    Question 3. I would like to delve further into the decision 
making process that NASTRAC will use when setting national 
transportation policy objectives. In your report, you State 
that the U.S. Department of Transportation would lead the 
strategic planning process in consultation with State 
departments of transportation, metropolitan planning 
organizations, and private sector interests. The U.S. 
Department of Transportation would then submit a consolidated 
plan to NASTRAC for approval as the consolidated national 
strategic plan. I am interested to know more about the criteria 
that NASTRAC will use when determining if a component of the 
U.S. Department of Transportation's strategic plan will become 
part of the national plan.
    The Commission has also recommended that NASTRAC make 
revenue recommendations to Congress, and also be granted the 
authority to change the amount of Federal funding a project 
should receive based on performance. How is Congress supposed 
to act on the revenue recommendations of NASTRAC knowing that 
these funds may be reallocated.
    Response. We envision that NASTRAC would review several 
aspects of the strategic plan presented by the U.S. DOT. One 
important area we anticipate that NASTRAC would want to review 
is whether multi-State transportation projects are adequately 
represented in the plans. Another area would be to assure that 
plans in the various program areas are adequately integrated, 
especially in metropolitan areas where passenger and freight 
transportation needs must be jointly considered. We anticipate 
that NASTRAC would want to be assured that projects included in 
the various plans all contribute to applicable performance 
standards and that appropriate procedures for assessing whether 
projects are cost-beneficial were used. The NASTRAC might also 
be want to be assured that the procedures for developing plans 
in various States were sufficiently compatible that they did 
not distort the relative needs among the States.
    We envision that in setting up NASTRAC Congress would 
specify the conditions under which a larger Federal share could 
be provided. We do not envision that NASTRAC would apply a 
different Federal matching share to a large share of total 
funding. To reward innovation and high performance, we thought 
NASTRAC might be given the authority to temporarily change the 
Federal share for particular programs in individual States. 
These changes would be included in funding recommendations 
NASTRAC would send to Congress, so Congress would be aware of 
any changes to standard matching shares before they acted on 
NASTRAC's recommendation.

         Responses by Jack Schenendorf to Additional Questions 
                          from Senator Carper

    Question 1. Most Americans understand the value of a gas 
tax and the impact on consumers is relatively minimal. However, 
the public must be assured that their money won't be wasted--
not simply more highway miles and more road congestion. If the 
additional revenue from a higher gas tax can go toward a better 
product, then it's a good idea. Is the gas tax increase 
recommended in this report solely a matter of resources or is 
there some prioritization or improvements to projects we build 
that are needed as well?
    Response. The Commission was unanimous in concluding that 
simply raising the Federal fuel tax and putting more money into 
the same programs will not be acceptable. The Commission 
strongly believes that before Federal financial support for 
surface transportation is increased, the Nation's surface 
transportation programs must be fundamentally reformed. Our 
recommendations include limiting the scope of programs eligible 
for Federal assistance to the ten programs identified in our 
Report, making State and local agencies receiving Federal funds 
accountable for meeting specific performance objectives, 
reducing unnecessary and wasteful project delivery requirements 
and requiring that major projects be subject to benefit-cost 
analysis. Such reforms are needed to ensure the projects that 
are selected for implementation are effective in addressing the 
national interest.

    On March 3d 2007, I introduced the National Infrastructure 
Improvement Act. This legislation creates a commission to look 
at the State of infrastructure throughout the country--
including rail, roads, bridges, airports, and food control 
structures. The commission would then make recommendations to 
Congress and the President about how to maintain our current 
infrastructure while meeting future needs and safety 
requirements. While your report was a good start in 
highlighting the need to sustain the US surface transportation 
system, a more detailed plan as called for in my bill is 
necessary. How does the Commission anticipate that the specific 
steps needed to achieve the wide-ranging reform recommended by 
the report will be developed and prioritized? What in your 
report do you expect that transportation agencies can begin to 
implement immediately. What required congressional approval?
    Most of the Commission's recommendations related to the 
Federal program would require congressional approval. The 
Commission described several short-term steps that could be 
taken to generate revenue for the Highway Trust Fund. The long-
term restructuring of the Federal transportation agencies would 
hopefully take place in the next reauthorization of SAFETEA-LU. 
Meanwhile, there are certainly some tools, techniques, and 
processes outlined in the report that could be implemented by 
State and local governments on their own.

    Question 3. New transportation development has numerous 
environmental effects, including the additional runoff from 
paved surfaces. Lack of coordination between transportation and 
land use policies can cause this effect to be overlooked during 
project planning. This lack of coordination can lead to 
unintended storm water pollution. Unfortunately, Senator 
Warner's amendment to include storm water runoff in the last 
surface transportation reauthorization was not successful. How 
do the Commission's recommendations ensure that agencies 
representing transportation, environment and land planning 
interest at the Federal, State and local levels work together 
to consider all the impacts of new infrastructure to ensure 
that transportation investment does not require greater 
taxpayer investment elsewhere as storm water treatment?
    Reducing project delivery time was a major priority for the 
Commission. Overall, we recommended handling environmental 
mitigation issues early such that potential mitigation could be 
considered while the range of alternatives were being developed 
rather than restricting the options for serious consideration. 
We also believed that projects should be reviewed by the 
governmental parties at the Federal and State levels in an 
integrated and systematic manner, not just handling 
requirements on a sequential basis. That lead agency approach 
is now in law but not nearly as often in practice today.

    Question 4. In Delaware, tolls make up a significant 
portion for State programs. The Delaware Department of 
Transportation (DelDOT) finances the maintenance of both State 
Route 1 and a portion of InterState 95 by collecting tolls from 
users of these roads at a rate sufficient to cover the costs of 
maintaining these roads. The report recognizes the important 
role that tolls play in funding highway projects and recommends 
providing new flexibility for tolling and pricing. Implementing 
congestion pricing was mention specifically. What other 
flexibilities would be given to states and local governments?
    The Commission recommends that States and localities be 
given a great deal of flexibility in determining the financing 
and design of their capital improvement plans to address 
performance objectives. The use of tolling, pricing, and 
public-private partnerships should be encouraged where such 
mechanisms are in the national interest. Pages 47 through 51 of 
Volume I of our report identify a number of criteria that 
should be met to ensure that the use of these mechanisms is in 
the public interest.
    Our recommendations regarding speeding project delivery are 
intended to provide State and local grant recipients with 
greater flexibility in completing environmental reviews, to 
allow projects to be advanced more quickly in a manner that is 
still consistent with our environmental objectives. Our 
proposal to replace 108 existing Federal surface transportation 
programs with 10 plan-driven programs is also intended to 
provide States and local governments with additional 
flexibility. Each State and local government would be permitted 
to tailor their capital investment plans to reflect the 
preferences of their communities while meeting agreed-upon 
performance standards. States and local governments would be 
free to determine the modal investment splits and financing 
mechanisms that would work best for them, rather than having 
their investment patterns be artificially constrained by 
numerous Federal funding categories.

        Response by Jack Schenendorf to an Additional Question 
                          from Senator Inhofe

    Question. The commission report does seem to explicitly 
define the role of State and local governments. Could you 
succinctly describe the role of State and local governments 
under the commission's proposal?
    As State and local governments own and operate the vast 
majority of the nation's existing transportation assets, they 
will bear primary responsibility for planning and implementing 
the capital improvements necessary to improve the system. The 
Commission's proposal envisions the USDOT, in cooperation with 
State and local governments, and a range of public and private 
stakeholders would develop national performance standards for 
each applicable program area; the USDOT would then work with 
each State and major metropolitan area to develop specific 
performance standards for their programs.
    State and local governments would be tasked with developing 
comprehensive plans to meet these performance objectives, 
identifying the mix of activities including capital investments 
across any and all modes as well as operational improvements, 
and the estimated costs. States and local governments would 
have a great deal of flexibility in developing their plans to 
fit their communities and their customers. They would tailor 
their relative investments in different modes, their use of 
tools such as congestion pricing, and their utilization of 
public private partnerships, as necessary to address the 
particular circumstances they are facing.
    While States would have greater flexibility under the 
Commission's proposal, they will also have more accountability. 
Once their plans have been approved and funded, State and local 
grant recipients will be held accountable for achieving the 
specific performance objectives they had agreed to. Failure to 
make adequate progress toward meeting such standards could 
result in their receiving a lower Federal matching share in 
future years. Conversely, matching rates could be increased for 
grant recipients that exceed performance objectives, or as an 
incentive to reward creativity and innovation in the design and 
implementation of State and local plans.

         Responses by Jack Schenendorf to Additional Questions 
                           from Senator Bond

    Question 1. While I don't necessarily agree with all of the 
conclusions found in your national commission report, I am 
curious why it is that you chose to expand the Federal role 
rather than reduce it? Would each of you please comment on what 
you believe the Federal role in government should be? What 
would you propose the Federal role should be if a gas tax 
increase were not agreed to by Congress?
    Response. I do not think that the Commission recommended an 
expanded Federal role. The Federal contribution will remain, on 
a percentage basis, about what it is today. And in some 
important ways, we reduced the Federal role.
    Let me start by saying that we kept a strong Federal role 
for a variety of reasons. The Federal Government has played an 
important role in building the Nation's infrastructure from its 
earliest days. Decisions made about transportation in one State 
can influence the success of commerce and economic growth 
throughout the whole Nation by either promoting or impeding the 
interState flows of goods and services. Similarly, the 
efficient movement of citizens and goods within congested major 
urban areas is critical to the productivity of these areas, and 
by extension, to the economic vitality of the entire Nation. 
Americans are also entitled to transportation that is safe and 
an environmentally sound, regardless of where they may be in 
the Nation, thus justifying a Federal role in ensuring these 
objectives. Each of the 10 programs described in Volume 1 of 
the Commission Report is introduced by an explanation of why 
the Federal role is necessary.
    Given the need for a strong Federal role in these 10 
programs, and the enormous investment needs of the 
transportation system, the Commission supports a substantial 
increase in the level of Federal funding for these programs. 
However, as I mentioned above, the Federal contribution will 
remain about the same on a proportional basis. State and local 
governments, with the help of the private sector, will have to 
significantly increase their funding contribution as well.
    Clearly, in the event that Congress does not increase the 
Federal fuel taxes, the importance of the Federal role in 
transportation would remain and the investment needs would 
remain. Therefore, Congress should look for another source of 
Federal revenues to replace the Federal fuel tax. It is 
imperative that the Federal Government contributes its fair 
share.
    The failure of the Federal Government to increase the motor 
fuel tax, or find an equivalent source of revenues, would be 
tantamount to dumping our national transportation crisis on 
State and local governments. We do not believe that State and 
local governments can handle the entire burden, even with the 
help of the private sector. Our transportation network would 
suffer. Our economy would suffer. And our way of life would 
suffer.
    Congress should also expedite the transition to the Vehicle 
Miles Traveled (VMT) fee. VMT fees are linked directly to each 
vehicle's actual travel, which may or may not vary by time of 
day. In the Commission report, the transition year from fuel 
taxes to VMT fees is projected to be 2025. However, we 
recommend that Federal research funds be targeted aggressively, 
beginning almost immediately, to overcome the technological, 
institutional, and privacy concerns that might otherwise impede 
a more rapid transition to VMT fees and the funding and 
operational efficiencies they will enable. Hopefully, we will 
be able to transition to a VMT-approach, assuming the problems 
and concerns can be worked out, as soon as possible and earlier 
than the estimated 2025.

    Question 2. I worked hard along with my colleagues, Senator 
Inhofe, Senator Reid, Senator Baucus and Senator Jeffords to 
make sure that spending levels on SAFETEA were as robust as we 
could make them during life of SAFETEA. Although SAFETEA was a 
44 percent cumulative increase in spending for highways, 
transit and safety about TEA-21 (SAFETEA was 286.5 billion and 
TEA-21 was 198 billion), I was told the day that we passed it 
that the buying power remained the same from bill to bill due 
to the increased costs of labor, materials (steel and 
concrete). Would each of you please comment on this and what 
your view would be of the next authorization?
    Response. The funding increases in SAFETEA-LU were an 
important step forward, but they still fall far short of what 
is needed to avert a national transportation crisis. The next 
reauthorization bill should increase investment to the levels 
recommended in our report.
    Moreover, we need to address project delivery. The buying 
power of the funding authorized under SAFETEA-LU has declined 
further subsequent to its passage, as the recent sharp 
increases in the prices of construction materials that you have 
cited have continued. This trend makes it critical that our 
recommendations for speeding project delivery be incorporated 
in the next reauthorization. Our report illustrated that, based 
on recent inflation trends, the cost of a project started now 
and completed by 2011 would be half as much as the same project 
if its completion were delayed until 2021. Shaving time off of 
the project delivery process will yield savings that could then 
be applied to other projects, substantially reducing the 
overall funding needed to meet national objectives. Until we 
can do that, inflation will continue to severely diminish or 
even eliminate the impacts of increased funding levels on the 
performance of the surface transportation system.

    Question 3. The commission's report raises some issues of 
jurisdictional concern to those of us here on the Hill. You 
propose to eliminate all existing programs of the FHWA, FTA, 
FMCSA, NHTSA and the FRA and replace them with 10 new programs 
that cross agencies and modal lines. As a practical matter, how 
do you think that this goal could be accomplished here in the 
Senate, and for that matter within the Department of 
Transportation?
    Response. The Commission believes there is great value in 
realigning activities of the U.S. Department of Transportation 
along functional lines. Not only would this likely save money, 
but it would increase coordination and help deliver the right 
blend of transportation projects in a timely manner. It would 
put the proper focus on problem solving in terms of outcomes 
and system performance rather than any one means to get there.
    The Commission acknowledges that, in the short term, this 
type of realignment would require major statutory, 
bureaucratic, and regulatory changes. The Commission did not 
speculate how a realignment would impact congressional 
operations. The Commission has utmost confidence that Congress 
and executive branch agencies could oversee such a 
transformation of transportation-related activities.
    Moreover, it may be possible to structure the program in a 
way that meets the Commission's goals, while at the same time 
respecting current jurisdictional realities.

         Responses by Jack Schenendorf to Additional Questions 
                         from Senator Voinovich

    Question 1. As a former Governor, I believe states should 
have maximum flexibility to use their highway dollars to meet 
their own unique transportation needs. I am interested in 
hearing about the Commission's recommendations to restructure 
the Department of Transportation programs so that are focused 
on national interests and performance.
    How will this proposal promote State and local decision 
making authority? How will funds be allocated on a state-by-
State basis? Does this new approach eliminate the donor/donee 
status based on these new categories?
    Response. The Commission believes that the multitude of 
narrowly focused highway and transit programs that have been 
created in recent surface transportation legislation reduces 
State and local flexibility to target Federal funds toward 
either national or State and local interests. The 10 new 
Federal program areas we have recommended reflect not only 
national surface transportation priorities but State and local 
interests as well. State and local transportation agencies will 
have much greater flexibility in how they spend Federal funds 
than under the current program structure. This flexibility will 
allow them to meet Federal performance standards in a way that 
is best suited to their unique local transportation needs.
    We recommend changing the current method for allocating 
funds among States with ``pass through'' to localities as match 
the comprehensive plans. State and local agencies would develop 
plans for achieving performance standards in each of the main 
program areas. Funds would be allocated to States in proportion 
to the cost to implement their plans compared to the cost to 
implement all State plans. This is essentially the same method 
that funds were allocated to construct the InterState System. 
The equity programs that currently guarantee a minimum return 
to States would be eliminated, but we believe that all States 
would receive sufficient Federal funding to contribute to 
meeting their highway and transit improvement needs.

    Question 2. Through 2055, the Commission estimates that the 
Nation will need to invest $255 billion annually to maintain 
and improve the existing surface transportation system--almost 
a tripling of the $86 billion annually spent on all modes 
today. The Commission also recommends that the Federal 
Government share of total investment would be maintained at its 
current 40 percent level. This implies that states would have 
to increase their revenues to match the increase in Federal 
funds.
    Is it reasonable to believe that states will triple 
investments in transportation infrastructure? At the current 
required 80/20 match, would states have to raise State gas tax 
or other forms of revenue to match Federal funds as it grows? 
Did the Commission consider giving states flexibility on the 
match component for State DOT projects?
    The Commission believes that increased expenditures from 
all levels of government and the private sector will be 
necessary to compensate for past investment failures while 
addressing significant increases in future demand. As indicated 
in our report, based on the investment gap we identified, the 
non-Federal share of additional investment requirements--from 
State, local and private sources--could range between the 
equivalent of 34 and 63 cents per gallon of fuel tax. While 
State fuel taxes are likely to remain an important part of the 
funding mix, we anticipate that individual States and local 
governments will draw upon a wide array of other financing 
mechanisms as well. We recommend that the Congress provide 
States with new flexibility for tolling and pricing, and 
encourage the use of public-private partnerships where States 
or local governments are willing to use them. The revenues 
generated from such sources, along with increased revenues from 
other financing mechanisms that States may opt to employ, would 
reduce the size of any fuel tax increases that may be required. 
Our report includes an analysis of the advantages and 
disadvantages of a variety of revenue sources that individual 
States and local governments might opt to utilize in closing 
the investment gap.
    In terms of matching rates, our report proposes that the 
Federal share for particular activities could be adjusted as an 
incentive, rewarding States and metropolitan planning 
organizations (MPOs) that demonstrate creativity and innovation 
in meeting their performance objectives. However, we believe 
that the large increase in Federal investment that we have 
proposed should be matched by a commensurate increase in 
funding from other levels of government, so we would not 
recommend significant changes to the matching rates we have 
proposed.
    While the prospect of tripling the current level of surface 
transportation infrastructure investment is daunting, we 
believe that the American people will rally behind this cause. 
They will only do so, however, if we can adequately communicate 
the benefits that can be derived in terms of lives saved, time 
saved, and overall improvements to people's quality of life. 
Such an increase in investment, coupled with the programmatic 
reforms that we have recommended, are essential to the long 
term economic health of our Nation.

    Question 3. Can you elaborate on the vision for National 
Surface Transportation Commission and could you discuss the 
pros and cons of the impact this commission functions as it 
relates to national program priorities?
    Response. The National Surface Transportation Commission 
(NASTRAC) is envisioned to provide an independent assessment of 
nationwide surface transportation investment requirements and 
to recommend to the Congress funding levels to meet those 
requirements. The NASTRAC would review nationwide plans 
developed for each of the 10 program areas recommended by the 
National Surface Transportation Policy and Revenue Study 
Commission. NASTRAC would ensure that plans address key 
national performance standards and that proposed projects would 
be cost-beneficial. The NASTRAC would coordinate with the U.S. 
Department of Transportation which would consolidate plans 
developed by State and local transportation agencies in 
cooperation with key stakeholders.
    The advantage of NASTRAC in the Commission's view is that 
it would remove decisions regarding surface transportation 
funding from the political process. The Commission did not make 
this proposal lightly and recognized how controversial it would 
be. We believed, however, that the only way to adequately fund 
surface transportation programs would be to create an 
independent body to make funding recommendations. Congress 
could veto NASTRAC's recommendations, but we hoped that the 
political cover provided by the independent commission would 
make it easier for Congress to accept funding levels in the 
long term interest of the country without undue concern about 
short term political pressures to constrain funding. We believe 
the Base Realignment and Closure Commission is serving Congress 
well and we hope that NASTRAC could be equally effective.
    The biggest disadvantage of our NASTRAC proposal is the 
difficulty Congress will face in developing a consensus to 
create such a Commission. We recognize that it would take some 
decision making responsibilities away from congressional 
committees, which understandably is difficult, but it would not 
take away congressional oversight responsibilities or dilute 
the role of Congress in enacting periodic legislation to 
reauthorize surface transportation programs.

    Question 4. During our consideration of SAFETEA-LU, there 
was a significant debate between the donor and donee states. 
Did the Commission review equalizing the rate of return to all 
of the states?
    The Commission believes that the lack of a clear Federal 
vision or mission, such as there was in the InterState era, 
significantly contributed to the donor-donee debate. While the 
Commissioners recognized the congressional interest in equity 
with respect to the amount of Federal funds returned to each 
State, there nevertheless was a consensus that funds should be 
allocated to the States in relation to the needs of States for 
investment in key program areas being recommended, without 
specific consideration of equity. Restoring a sense of national 
purpose to the Federal program should help to address the 
donor-donee issue.

    Question 5. I have long advocated for an increase in the 
gas tax. However, in this climate, I am uncertain of the 
feasibility of this.
    If the gas tax cannot be increased, how much more do you 
think we generate from other financing mechanisms to invest in 
our nation's transportation system in the short term? How 
crucial is a user free increase to meeting our future 
transportation needs?
    The potential revenue-generating potential for different 
Federal, State, and local funding mechanisms is explored in our 
report. Exhibit 5-17 in Volume II of our report includes 
estimated revenue generation from fuel taxes, motor-fuel sales 
taxes, heavy vehicle use taxes, tax credit bonds, customs 
duties, investment tax credits, container fees, motor vehicle 
registration fees, motor vehicle sales taxes, general sales 
taxes, tolling/pricing, local option taxes and impact fees. The 
advantages and disadvantages of these options are evaluated in 
Exhibits 5-20 and 5-21.
    While other financing mechanisms can and should be utilized 
to defray a portion of fuel tax increases where possible, the 
fuel tax remains the most obvious source of revenue to address 
the infrastructure needs that we have identified in the short 
and medium term. Failure to increase revenues above current 
levels will cause us to fall further and further behind in 
meeting our transportation needs, causing us to face a steady 
decline in the physical condition of our infrastructure assets, 
and significant degradation of the operational performance of 
the system.
    Beyond 2025, we anticipate that the factors that you have 
identified will make it necessary to transition to a new 
revenue source. The most promising alternative that has been 
identified to date are Vehicle Miles Traveled (VMT) fees linked 
directly to each vehicle's actual travel, which may or may not 
vary by time of day. We support additional research and pilot 
projects to overcome the technological, institutional, and 
privacy concerns that would need to be overcome in order to 
make such a mechanism feasible.

    Question 6. Senator Carper, Senator Clinton and I have been 
working on legislation to establish National Infrastructure 
Commission. This commission would examine all at our nation's 
infrastructure needs. This legislation passed the Senate last 
year. We are not waiting for the House. In your experience, do 
you think this type of commission would be helpful? Do you have 
any advice for how to put it together?
    Commissions can play a very helpful role in defining needs, 
identifying solutions and building consensus. While there is 
always value in expanding the field of knowledge about the 
Nation's infrastructure, I do not think that a new commission 
is necessary with respect to transportation infrastructure. 
Study after study, including our 20-month study, has made it 
clear that we are not investing enough in our national surface 
transportation network. In my view, we do not need any more 
transportation studies. We need action. We strongly encourage 
Congress to act on the recommendations outlined in our report.
    With respect to non-transportation infrastructure, I do not 
have a view as to whether a new study would be useful.
    With respect to how a new commission should be put 
together, I do have two suggestions. First, if the desire is to 
have an independent commission, I would respectfully suggest 
that Federal legislative or executive officials not be included 
on the commission. Second, I recommend that adequate funding be 
included to ensure that the Commission can hire its own staff 
and contract for independent studies.

    Question 7. We are currently considering economic stimulus 
legislation. How important do you think is transportation 
infrastructure to providing an economic boost to the economy?
    Response. The Commission did not consider whether 
transportation investment should be part of a short-term 
economic stimulus package. My own personal view, based on my 
professional experience of over 30 years, is that 
transportation investment would be an effective component of a 
stimulus package.
    In my view, Congress should consider including in the 
stimulus package three elements related to transportation.
    First, Congress should include a provision to fix the 
Highway Trust Fund's cash deficit problem in 2009. This problem 
is causing uncertainty in State and local governments and the 
private sector, and could cause them cut back on planned 
investments. Fixing the problem will remove this uncertainty 
and allow planned investment to go forward.
    Second, Congress should include a provision to bolster 
Highway Trust Fund revenues to ensure that funding in 2010 and 
beyond will not be less than SAFETEA-LU levels. Again, this 
will provide State and local governments and the private sector 
sufficient certainly to ensure that they do not retrench from 
planned investments. The Commission's recommendation to 
dedicate a portion of existing revenues derived from customs 
fees to the Highway Trust Fund could be helpful in this regard.
    Third, Congress should provide $15 to 20 billion for ready-
to-go transportation projects. Not only will this investment 
help stimulate the economy in the short to medium term, but it 
will produce long-term benefits by contributing to economic 
growth and international competitiveness.

    Question 8. I have always been a champion of public private 
partnerships. During the last highway bill, I worked with the 
Ohio delegation on an intermodal facility that is going to 
create 10,000 jobs. Unfortunately, this project has hit some 
snags because there were barriers at FHWA and the State during 
the project implementation. Many people do not recognize the 
important of these types of partnerships.
    What do you recommend for breaking down these barriers and 
for the public to recognize how the public benefits and when 
the Federal Government partners with a private entity?
    We spent considerable time during our Commission meetings 
discussing public-private partnerships and also heard many 
views regarding such partnerships at the public hearings we 
held across the country. In our report we recommended a number 
of safeguards to assure that the public interest would be 
protected when States undertake public-private partnerships. 
Putting appropriate safeguards in place should help build 
confidence that both the public and the private sectors will 
benefit from public-private partnerships. This should help to 
break down barriers and earn the trust of the public.

    Senator Boxer. Thank you very, very much.
    Our next speaker is Hon. Frank Busalacchi, Wisconsin 
Secretary of Transportation, Commissioner, appointed by 
Minority Leader Pelosi, she was then Minority Leader, now 
Speaker.


  STATEMENT OF HON. FRANK BUSALACCHI, WISCONSIN SECRETARY OF 
                         TRANSPORTATION

    Mr. Busalacchi. Good morning, Madam Chair, Ranking Member 
Inhofe and members of the Committee.
    My name is Frank Busalacchi. I am Secretary of the 
Wisconsin Department of Transportation and the Chair of the 
States for Passenger Rail Coalition. As a commissioner, I have 
had a unique opportunity to share my perspective and goal for a 
new direction in national transportation policy, one that 
includes a Federal-State funding partnership for inter-city 
passenger rail similar to the partnership that exists for 
highways, transit and aviation.
    The Commission heard testimony from State and local 
officials and others asking for additional public investment in 
inter-city passenger rail. The Commission agrees that passenger 
rail must be a part of a multi-modal solution. It can help 
alleviate highway and airway congestion, high gas prices, and 
the impacts of global warming. We don't envision rail replacing 
other transportation modes. We see rail providing greater 
mobility to help meet the needs of our growing and our aging 
population.
    To assist the Commission in advising Congress, I engaged 
the passenger rail working group to provide analysis. This 
group created a 2050 map and cost estimates for passenger rail 
improvements. The map's focus is city to city connections in 
corridors of 500 miles or less.
    The map provides one perspective of the future of passenger 
rail. It is entirely illustrative. Individual States will be 
responsible for their own rail plans, and with congressional 
support, they will be empowered to implement them.
    Of the ten new transportation programs recommended by the 
Commission, inter-city passenger rail is the only modal-focused 
program. The Federal Government will fund 80 percent of the 
program, similar to the other modes.
    Fifty years ago, a bold vision and strong commitment to 
funding the interState highway system made it possible. Today, 
both our highway and aviation systems are congested. It is time 
to invest in another mode and to provide our citizens a modal 
choice.
    I commend my colleagues on the Commission for agreeing to 
this bold new vision for passenger rail. We are united in our 
view that this Nation needs passenger rail if it is to achieve 
its vision of being the preeminent transportation system in the 
world.
    Thank you.

         Responses by Frank Busalacchi to Additional Questions 
                         from Senator Lieberman

    Question 1. I would like to ask a question about the 
independent commission you have proposed creating, tentatively 
named NASTRAC (National Surface Transportation Commission) in 
your report. I understand the advantages of creating an 
independent commission to make difficult policy decisions, such 
as closing military bases with BRAC and raising postal rates 
with the Postal Regulatory Commission. I would like to hear 
more about how you think an independent transportation 
commission would operate vis-a-vis Congress. In your report, 
you State that the Commission's revenue recommendations would 
be sent directly to Congress. The recommendations would then be 
subject to a congressional veto, requiring 2/3-recorded vote of 
both Houses within 60 days of receipt. If no action were taken, 
the recommendations would become law. I understand that other 
independent commissions, such as BRAC, work in similar ways. 
But if an independent transportation commission was created, I 
worry that Congress would be ceding much of its authority over 
transportation policy in the United States. I also worry that 
Congress may be ceding an important representational function.
    Therefore, my question is what is Congress' role in 
transportation policy, if many of the revenue decisions are 
turned over to an independent commission? I understand that an 
independent commission would work with departments of 
transportation from each state, but how can a ten-member 
commission possibly master the particular needs of all 50 
states?
    Response. Early on the Commission determined that it was 
important to look at transportation issues from a clean slate 
perspective. We tried to think less about the political process 
that creates a transportation authorization bill and more about 
identifying the issues and crafting solutions.
    The NASTRAC is meant to address two current issues related 
to transportation financing: inadequate revenues to fund the 
system and politicization of project decision making. Those who 
support the Commission report stand behind the needs number 
identified in the report and it is staggering to think about 
raising the revenues needed to support the transportation 
system we envision. Public officials and members of Congress 
are aware of the problems associated with raising taxes on 
motor fuels. They will most likely face the same problems 
attempting to implement tolls, congestion pricing or road 
privatization. If the public doesn't support the value 
associated with the project they will oppose the revenue 
increase--regardless of the form it takes.
    The notion of the NASTRAC--to more dispassionately look at 
a rolled-up national plan, price it and send the revenue needs 
number to Congress for an up or down vote--was our attempt to 
diffuse the politics associated with Members of Congress 
supporting a motor fuel tax increase. This goes hand-in-hand 
with the national plan, the roll-up of many local and State 
plans which the revenue increase is designed to support.
    In my view the NASTRAC shouiCi'not in any way detract from 
congressional authority over the transportation program. 
Congress would retain its traditional role of developing an 
authorization bill that establishes the funding and program 
parameters for the multiyear program. Local governments and 
states would then create their plans for applying Federal funds 
to projects. (This may be much like the creation of the current 
State Transportation Improvement Plan [STIP] with some process 
outcome modifications) US DOT and, ultimately, NASTRAC would 
assure that the plans address key policy goals (as outlined in 
the authorization bill) to have a positive cost-benefit ratio 
and have appropriate performance standards. In its oversight 
role NASTRAC would help to assure that State and local 
governments and all other entities receiving Federal 
transportation funds meet the national requirements. This non-
partisan review and approval of the national plan was intended 
to help Congress with its oversight roles.
    Commissioners who supported this concept expect that 
Members of Congress will carefully evaluate the pros and cons 
of this approach and we encourage that evaluation.

    Question 2. I would like to delve further into the decision 
making process that NASTRAC will use when setting national 
transportation policy objectives. In your report, you State 
that the U.S. Department of Transportation would lead the 
strategic planning process in consultation with State 
departments of transportation, metropolitan planning 
organizations, and private sector interests. The U.S. 
Department of Transportation would then submit its consolidated 
plan to NASTRAC for approval as the consolidated national 
strategic plan. I am interested to know more about the criteria 
that NASTRAC will use when determining if a component of the 
U.S. Department of Transportation's strategic plan will become 
part of the national plan.
    Response. The Commission did not outline the criteria that 
NASTRAC would use for approving these plans. Instead, the 
Commissioners believe that MPOs, States, the private sector and 
USDOT would work to create specific criteria for each of the 
ten programs. Each program would include planning requirements, 
how to establish project cost-benefit information, and 
performance and accountability requirements. NASTRAC would use 
those criteria after the technical and program experts 
developed them.

    Question 3. The Commission has also recommended that 
NASTRAC make revenue recommendations to Congress, and also be 
granted the authority to change the amount of Federal funding a 
project should receive based on performance. How is Congress 
supposed to act on the revenue recommendations of NASTRAC 
knowing that these funds may be reallocated?
    Response. In general, Congress should be confident that 
what NASTRAC sends up to the Hill will have been reviewed and 
vetted by US DOT, the State or local government entities and 
when involved (e.g. the freight program) the private sector. As 
a result, the funding and project plan will generally hold. It 
is the Commission's hope that the cost-benefit analysis will 
result in strong project performance.

        Response by Frank Busalacchi to an Additional Question 
                          from Senator Carper

    Question. The report highlights passenger rail 
transportation as a key component of the Commission's vision 
for the future. The Commission believes that intercity 
passenger rail is a critical missing link in the nation's 
surface transportation system. I have long been a proponent of 
dedicating cent of gas tax revenue to intercity passenger rail. 
Does the Commission support devoting a portion of the gas tax 
for passenger rail?
    Response. I was a strong proponent of including intercity 
passenger rail in the Commission's report. I believe it is time 
to provide Federal funding support to passenger rail, as has 
been done for decades for highways and transit.
    The Commission recommends that intercity passenger rail be 
supported by the following revenue sources: 80 percent from the 
Surface Transportation Trust Fund (partially motor fuel tax-
financed) and 20 percent from the General Fund. Ticket taxes, 
similar to those imposed on airline tickets, would be 
collected, with the ticket tax revenues deposited into the 
Surface Transportation Trust Fund.

         Responses by Frank Busalacchi to Additional Questions 
                           from Senator Bond

    Question 1. While I don't necessarily agree with all of the 
conclusions found in your national commission report, I am 
curious why it is that you chose to expand the Federal role 
than reduce it? Would each of you please comment on what you 
believe the Federal role in transportation should be? What 
would you propose the Federal role should be if a gas tax 
increase were not agreed to by Congress?
    Response. At the beginning of work together, the Commission 
committed to a full slate of public hearings. I participated in 
those hearings, and we heard from citizens and transportation 
experts from all over the country. The vast majority of those 
who testified told us the Nation needs to focus on our 
infrastructure and must make investments to upgrade and expand 
our system. When asked specifically about the Federal role, the 
vast majority of those who testified said they believed the 
Federal role must grow.
    In my comments during the EPW hearing, I indicated that I 
believe our citizens expect two things from the Federal 
Government: a strong defense and strong infrastructure. We've 
been very successful at investing in the first, but not the 
second.
    The strength of our transportation system is its national 
character. Roads and rails crisscross the Nation, and these 
interState systems serve both passengers and freight. Users do 
not see a significant difference driving on the interState 
highways in different states. I believe that Federal strategic 
leadership and funding is critical to assuring a national 
system perspective among the states and local governments and 
consistent performance. Otherwise, and I can assure you of 
this, states and local entities will focus on their own self 
interest in making investment decisions.
    As to your question on the gas tax, the Commission 
envisioned that possibility in its ``do nothing'' vision. I 
think there will be a good deal of variability among states and 
local governments on what they are willing and able to invest; 
this would lead to the continued degradation of our 
transportation system.

    Question 2. I worked hard along with my colleagues, Senator 
Inhofe, Senator Reid, Senator Baucus and Senator Jeffords to 
make sure that spending levels on SAFETEA were as robust as we 
could make them during the life of SAFETEA. Although SAFETEA 
was a 44 percent cumulative increase in spending for highways, 
transit and safety above TEA-21 (SAFETEA was $286.5 billion and 
TEA-21 was $198 billion), I was told the day that we passed it 
that the buying power remained the same from bill-to-bill due 
to the increased costs of labor, materials (steel and 
concrete). Would each of you please comment on this and what 
your view would be of the next authorization?
    Response. The Commission heard testimony on the loss of 
purchasing power due to inflation in the construction industry. 
In my role as Secretary of the Wisconsin Department 
ofTransportation, I know that between 2003 and 2007, the 
significant increase in commodity prices for petroleum, 
concrete, asphalt, steel and construction machinery reduced the 
improvements that states and local transportation agencies 
could fund. One way to address this issue would be to index the 
Federal motor fuels tax to the consumer price index. Our 
revenue source, whether it be vehicle miles traveled, gas tax 
or any other mechanism, should include a mechanism to address 
the impact of inflation on the program.

    Question 3. The commission's report raises some issues of 
jurisdictional concern to those of us here on the Hill. You 
propose to eliminate all existing programs of the FHWA, FTA, 
FMCSA, NHTSA and the FRA and replace them with 10 new programs 
that cross agencies and modal lines. As a practical matter, how 
do you think that this goal could be accomplished here in the 
Senate, and for that matter, within the Department of 
Transportation?
    Response. The Commission felt a new beginning was necessary 
to address the problems that have arisen in our transportation 
system over a period of 50 years. Providing funding in silos to 
the different modes creates real difficulties for states and 
local governments who must find ways to fund multi-modal 
projects. The nation needs a multi-modal, intermodal system.
    While the Commission's recommendations will need to be 
phased in over time, Congress could begin work now to 
consolidate the US Code titles related to highways and transit 
(Titles 23 and 49), which have always been separate. During the 
transitional period to the new programs, it would be important 
to advance projects to completion that are already underway. I 
would encourage Congress to consider transforming US DOT into 
an intermodal agency that could bridge the divide across 
administrations and begin to look at problems from the 
perspective of the 10 different programs outlined in the 
Commission report.
    From a State DOT perspective, there is no question that the 
FHWA-model has always been easier to work with than the FTA-
model. The history of the partnership, program and funding, has 
instituted a culture of working in FHWA that more outcome-
driven.

         Responses by Frank Busalacchi to Additional Questions 
                         from Senator Voinovich

    Question1. I As a former Governor, I believe states should 
have maximum flexibility to use their highway dollars to meet 
their own unique transportation needs. I am interested in 
hearing about the Commission's recommendation to restructure 
the Department of Transportation programs so that they are 
focused on national interests and performance.
    How will this proposal promote State and local decision 
making authority? How will funds be allocated on a state-by-
State basis? Does, this new approach eliminate the donor/donee 
status based on these new categories?
    Response. I believe that the Commission approach, in 
recommending the 10 program areas, will actually enhance State 
and local decision making and their ability to choose the right 
transportation solution to their transportation issue. 
Depending on the program, each government entity will need to 
create a plan that addresses: project cost-benefits, 
performance measures and institutional accountability. For 
example, accountability may rest at the metro level for the 
Metropolitan Mobility plan. With most other plans, the 
accountability will rest with the states. The general notion is 
that Congress would authorize funds based on the needs 
identified in each of these plans. Ultimately, US DOT and the 
NASTRAC would assure the State and local plans address the 
requirements related to projects, performance and 
accountability.
    I agree that there are unanswered questions related to 
implementation detail in the Commission report. We were 
constrained to stay at a 50,000-foot level. I look forward to 
working with stakeholders and Congress during the 
transportation authorization bill to fill in some of those 
details that must be addressed in the broader vision that the 
Commission outlined.
    On the donee/donor issue, I replied in Question 4 that the 
Commission tried to create a vision that would mitigate this 
issue?--which relates to size of pie, rather than what we want 
to accomplish at the national level. I do believe that states 
must generally feel they are treated fairly under any new 
approach.. At the same time, I hope that the policy discussion 
associated with the next bill addresses the purpose of the 
program, rather than how the 50 states carve up a diminishing 
funding pie.

    Question 2. Through 2055, the Commission estimates that the 
Nation will need to invest $255 billion annually to maintain 
and improve the existing surface transportation system--almost 
a tripling of the $86 billion annually spent on all modes 
today. The Commission also recommends that the Federal 
Government share of total investment would be maintained at its 
current 40 percent level. This implies that states would have 
to increase their revenues to match the increase in Federal 
funds.
    Is it reasonable to believe that states will triple 
investments in transportation infrastructure? At the current 
required 80/20 match, would states have to raise State gas tax 
or other forms of revenue to match Federal funds as it grows? 
Did the Commission consider giving states flexibility on the 
match component for State DOT projects?
    Response. State highway investment is, in my states, 
already considerably higher than the required 20 percent match 
for Federal funds. While this is true in Wisconsin, it may not 
be the case in all states. In the passenger rail mode, 
depending on how match requirements are defined, it is true 
that more states will need to develop a source of funding for 
the strategical portion of their project costs. Again, in 
Wisconsin, we are ready to match up to $400 million in Federal 
funds with State bond funds.
    The Commission report did provide some flexibility on the 
match issue, but generally came down on an 80/20 arrangement. 
However, the Safety and Energy Security programs have higher 
match ratios of 90/10 and 100 percent Federal, respectively. 
The Commission sought to equalize treatment between the surface 
modes of highways, rails and transit.

    Question 3. Can you elaborate on the vision for the 
National Surface Transportation Commission and could you 
discuss the pros and cons of the impact this commission 
functions as it relates to national program priorities?
    Response. I have outlined my view on NASTRAC in questions 
1, 2 and 3 of Senator Lieberman.
    Fundamentally, I believe the NASTRAC is the mechanism that 
the Commission settled on to assure that an outside group with 
program and technical expertise, reviewed the work of the 
states and local governments and provided their professional 
perspective to Congress that if the projects outline the plan 
were completed, these projects serve the national interest.

    Question 4. During our consideration of SAFETEA-LU, there 
was a significant debate between the donor and donee states. 
Did the Commission review equalizing the rate of return to all 
states?
    Response. The Commission agreed that Federal investments 
should have a positive cost-benefit, associated performance 
measures and that states should be accountable for the 
investment. There was agreement among all Commissioners that 
the donee-donor debate was not productive because it did not 
support a national system strategy. Instead, what the 
Commissioners tried to assure was that all states would be 
eligible for funds to put their system into a State of good 
repair, addressing investment needs in both urban and rural 
areas.
    As I indicated in Question 1t I do believe it is critical 
that we shift off the donor-donee debate, but at the same time, 
work to assure that all states feel they are treated fairly in 
the authorization bill.

    Question 5. I have long advocated for an increase in the 
gas tax. However in this climate, I am uncertain of the 
feasibility of this.
    If the gas tax cannot be increased, how much more do you 
think we generate from other financing mechanisms to invest in 
our nation's transportation system in the short term? How 
crucial is a user fee increase to meeting our future 
transportation needs?
    As Highway Trust Fund revenues decrease in the future due 
to increased fuel efficiency and use 
ofalternativefuelstwhatdoestheCommissionrecommendto maintain a 
reliable source of highway funding?
    Response. Commissioners who support this report are keenly 
aware of how sensitive raising the gas tax, or any tax is. Our 
strong view is that it will be difficult to raise revenues from 
any source, whether it is public-private partnerships, tolls, 
congestion pricing or user fees. I believe the motor fuel tax 
will be a sound revenue mechanism for use over the next 10 
years. I also believe that increasing the motor fuel tax would 
be compatible with an energy policy goal of reducing reliance 
on oil-based fuels. We expect that higher taxes may result in 
less usage. That is why, during this shorter-term window, the 
Commission recommended a 25-to 40-cent increase in the motor 
fuel tax over 5 years and that the tax be indexed after 5 
years.
    Motor fuel tax revenues could continue to shrink in 
relation to the increasing costs of infrastructure investment 
needs as a result of high prices at the pump. That is why the 
Commission recommended that Congress implement a vehicle miles 
traveled (VMT) approach as soon as possible. The transitional 
groundwork must be laid out in the next authorization bill.
    As for private sector involvement in our system, there may 
be some projects where the public sector investment can be 
protected and private sector investment goals can be satisfied. 
I think those projects will be limited; AASHTO has supplied the 
perspective that P3s, tolling and congestion pricing, could 
supply seven to 10 percent of the needed revenues. The real 
issue with tolling (whether private or public sector supported) 
is that much of the revenue generated on a particular segment 
of roadway must be reinvested into the maintenance and 
technology: and ultimately reconstruction, on that segment. 
This is especially true of congestion priced roadways which are 
extremely technology intensive and thus, expensive to maintain.

    Question 6. Senator Carper, Senator Clinton and I have been 
working on legislation to establish a National Infrastructure 
Commission. This commission would examine our nation's 
infrastructure needs. This legislation passed the Senate last 
year. We arc now wailing for the I-louse. In your experience, 
do you think this type of commission would be helpful? Do you 
have any advice for how to put it together?
    Response. I was not familiar with Senate Bill 775 prior to 
your question, but I have reviewed it to respond to this 
question. Based on my understanding, the bill seeks to evaluate 
a number of issues related to our nation's infrastructure 
(broadly defined), including: economic development and 
competitiveness, age and condition, methods of financing, 
investment needed to maintain and improve by all levels of 
government, the impact of local development patterns, the 
impact of deferred maintenance and the collateral impact of 
deteriorated inFrastructure.
    As a response to the evaluation of these issues, the 
Commission will make recommendations on a number of issues, 
including: an infrastructure plan that details national 
priorities; improvements and methods for delivering projects, 
analysis and criteria that could be used by State and local 
governments for assessing conditions and guidelines for uniform 
reporting by Federal agencies. The legislation further 
envisions that the eight-member Commission will do its work 
between 2008 and 2010.
    I certainly think the work of the Surface Commission would 
assist in addressing many of the surface transportation issues 
that you outline in your legislation. With that said, I have a 
couple recommendations, based on my Commission experience.
    First, this legislation, in addition to surface 
transportation, also encompasses air transportation and the 
broad spectrum of infrastructure projects (water, sewage 
treatment, dams, etc). The scope and breath of the Commission's 
charge may be extremely challenging, especially in the 2-year 
timeframe. There is a certain amount of ramp-up with Commission 
work, when Commissioners are charting their work plan and 
getting to know one another. It will likely take in the range 
of three months before their time together becomes productive. 
Finally, our Commission started 6 months late, due to the slow 
appointment of members by the Administration. All of that said, 
you may want to consider providing this Commission a slightly 
longer timeframe for their final report.
    Second, $4 million is likely not adequate funding for the 
charge. Our Commission received $2 million and requested 
another $2 million in the technical corrections bill, which we 
never received. We needed to rely on Commissioners to pay for 
many aspects of the work (documents, facilitators, analytical 
work, additional staff) and we had to enlist the help of 
stakeholder groups to host the field hearings. I would guess 
that a Commission with the broad responsibility that you 
envision will require more than $4 million to adequately cover 
the issues you envision without relying on external help. When 
Congress asks for the time and expertise of Commission members, 
Congress should assure that the Commission they have created 
has adequate resources to do their work.
    Third, assure that the Commission does outreach and can 
discuss their findings, after their report is available, with 
the public. Our Commission does not have the revenue to do 
this, and we are missing a critical opportunity to educate the 
public on the importance of our surface transportation system 
and our findings.
    Fourth, and this is a very important issue in my view, the 
legislation should specifically State that an administration 
appointee does not fill the chair position of the Commission. 
There are many issues with this approach and they should be 
avoided.
    Finally, I would encourage Congress to carefully consider 
the issues outlined in our Commission report, and perhaps, 
revisit the charge of this new Commission in light of the 
progress we made. I believe there are elements of the proposed 
Commission's charge that may not be necessary in light of the 
Surface Commission's recommendations.

    Question 7. We are currently considering economic stimulus 
legislation. How important do you think transportation 
infrastructure is to providing an economic boost to the 
economy?
    Response. In my testimony before the House Transportation 
and Infrastructure Committee,
    I indicated that I believed the states were ready to 
deliver projects within 6 months of passing a stimulus bill for 
infrastructure. Since that time, the American Association of
    State Highway and Transportation Officials (AASHTO) 
surveyed the states and found that states could deliver 
projects. I strongly urge Congress to pass another Stimulus 
Bill that includes an infrastructure element. The bill should 
use the current system to get money out the door, as quickly as 
possible, to projects in the states. This bill would mean jobs 
to our citizens and would provide a long-term investment for 
the Nation.

    Question 8. I have always been a champion of public private 
partnerships. During the last highway bill, I worked with the 
Ohio delegation on an intermodal facility that is going to 
create 10,000 jobs. Unfortunately, this project has hit some 
snags because there were barriers at FHWA and the State during 
the project implementation. Many people do not recognize the 
importance of these types of partnerships.
    What do you recommend for breaking down these barriers and 
for the public to recognize how the public benefits when the 
Federal Government partners with a private entity?
    Response. I agree that transportation has had a long 
tradition of Public-Private Partnerships (P3s). We have 
successfully implemented P3s in Wisconsin; a most recent 
example is our intermodal terminal in downtown Milwaukee. But I 
would agree with you, this project has not been easy to 
implement, especially working with FTA and FHWA on different 
governmental funding streams.
    However, there are some P3s, specifically the long-term 
leases in Chicago and Indiana, where I do have concerns and 
spoke about those concerns in my February 2007 testimony before 
the House Transportation and Infrastructure Committee. My 
fundamental concern is assuring that an asset, paid for and 
owned by taxpayers, is getting the best value from the private 
sector entity. In addition, I want to assure that we consider 
access in these deals. I am very concerned about the cost of 
using toll roads when a private sector entity has the option of 
raising tolls each year based on three different factors 
(Indiana deal). We must assure that if we toll roadways, our 
citizens can afford the tolls or have other convenient and 
cost-effective modes of travel.
    In the end, I believe the Commission devoted a tremendous 
amount of time to this issue and developed an approach that 
encourages private investment, but still protects our ' 
citizens' interests. We encouraged these deals to the extent 
that they help address our revenue gap, but still protect the 
public sector interest.

    Senator Boxer. Thank you, sir.
    Matthew Rose, we welcome you. You are Chairman, President 
and CEO of BNSF Railway Company. And you were appointed by 
Speaker Hastert, at that time Speaker Hastert.

STATEMENT OF MATTHEW K. ROSE, CHAIRMAN, PRESIDENT AND CEO, BNSF 
                        RAILWAY COMPANY

    Mr. Rose. Thank you, Madam Chair, Senator Inhofe.
    I am usually associated as the freight rail individual on 
the Commission. Pat Quinn, who is the former ATA chairman, and 
the co-CEO of U.S. Express, is not here with us today, so I 
will focus my remarks on the overall freight message.
    The last 20 months have been spent in holding field 
hearings all over our great Country, testimony from experts 
from all transportation constituencies. What we found is that 
goods movement was not only a global competitiveness and an 
economic growth issue, but it was truly a key element of our 
commuter congestion. Eliminating choke points and increasing 
freight capacity solves a number of problems, including 
relieving commuter congestion.
    The problem is really evidenced in two ways. First, the 
average commute times for everybody in the United States is 
growing. Second, the supply chain costs, as a percent of GDP, 
which has had a 25-year downward trend over the last couple of 
years, has started to reverse and started to increase again, 
impacting our global competitiveness. Expected population and 
economic growth will result in significant worsening of both of 
these indicators.
    The Commission made a number of recommendations aimed at 
increasing freight capacity and targeting these choke points, 
which I will briefly highlight. However, even more 
fundamentally, the Commission brought freight into the policy 
stable in a meaningful and mode-neutral way. Personally, I am 
pleased that the Commission recognizes freight rail's critical 
role in moving gross ton miles from the highway to the 
significantly more fuel-efficient and environmentally friend 
freight railroad network. The Commission essentially concluded 
that freight capacity needs to be expanded systematically over 
the next 50 years, and also determined that freight rail market 
share should be increased.
    In sum, here is what the report recommended with regard to 
freight. The Commission made freight-related programmatic 
recommendations that I predict will be hotly debated in the 
freight stakeholder circles. The Commission believes that there 
ought to be a freight program to help expand and de-congest 
freight networks. For example, to expand inter-modal connectors 
and do more projects like the Alameda Corridor.
    The Commission recommended more funding for freight 
projects from a variety of sources and broad eligibility across 
programs for freight programs. Additional funding should 
include gas tax revenues and also a portion of the customs 
fees, any revenues that the Federal Government might realize 
from greenhouse gas regulation and potentially a freight fee. 
Trade is the key driver for these increasing volumes, so I 
think that customs duties are a particularly appropriate source 
of revenue to help fund some of these freight programs.
    Diverting just 5 percent from the customs duties would 
generate about $2 billion a year and would not displace any 
freight between ports of entry. Also, collection and 
administration is already established. The Commission was not 
specific about the form of any freight fee which Congress might 
authorize, such as a container fee or a waybill surcharge. But 
it did clearly State that it must not burden commerce. No local 
and State proliferation of such fees, no private sector 
administration, collection requirements, and steamship lines, 
trucking companies and rail companies will find it hard to pass 
on a fee to the ultimate consumer.
    The Commission also recognized that the payers of such a 
fee must realize the benefit of improved freight flows. This is 
a fundamental user fee principle. Shippers agree to pay for the 
Alameda Corridor because they could see the benefits of 
capacity and throughput as well as the benefits to the 
surrounding Los Angeles neighborhoods.
    Although it will no doubt be asked, should there be a 
freight trust fund, the rail industry has long had no trust 
that the funds would flow to the projects that meet the goals 
of goods movements versus the political earmarking process. The 
Commission makes a variety of recommendations for creating 
transparency and accountability in directing these funds to 
high priority freight projects. Achieving responsible 
governance around project funding will be critical to obtaining 
the freight community's support. I could not support any 
freight fee and related program without it.
    Second, the Commission advocates promoting private 
investment. The report recognizes that private investment is 
and always will be the primary means of meeting the goal of 
expanding the freight rail network to meet continuing demand. 
It states that rational economic, safety, security, labor, 
environmental policies are all fundamental to sustaining 
private investment. It also supports incentivizing private 
investment in freight railroad network expansions, including 
investment tax credit for expansion expenditures.
    From a public policy standpoint, you should weigh every 
freight-related proposal against whether it will expand or 
constrict investment in the freight railroad capacity. Thank 
you very much.

          Response by Matthew Rose to an Additional Question 
                          from Senator Inhofe

    Question. There is a delicate balance between damaging the 
nation's economy by allowing congestion to worsen ad by raising 
taxes and tolls to unnecessarily high levels. How comfortable 
are you that you struck the correct balance? Is the goal of the 
20 percent reduction in congestion on somewhat arbitrary? Was 
economic modeling done to measure the impact of congestion and 
tolls on the economy?
    Response. There is a critical equation that must be solved 
in the next surface transportation bill increased fees from 
whatever source balanced against the necessary maintenance and 
expansion of the nation's infrastructure. In general, I believe 
investments made with additional user fees would preserve and 
promote economic development to support the added costs, 
whether they come from gas taxes, tolls or VMT fees. 
Furthermore, the performance-based prerequisites for 
infrastructure spending called for in the Commission report 
should help calibrate which investments are worthy of public 
participation.
    There was no modeling done to measure the impact of tolls 
on the economy; however, the Texas Transportation Institute 
(TTl) has long analyzed the impact of congestion on the 
economy. TTl reports that the cost of highway congestion in the 
nation's urban areas increased 60 percent, from $39.4 billion 
to $63.1 billion, from 1993 to 2003. The U.S. DOT estimates 
that the cost of congestion across all modes of transportation 
could be three times as high-approaching $200 billion per year-
if productivity losses, costs associated with cargo delays, and 
other economic impacts are included. If you factor in all modes 
and forecast to 2020, it is clear that the cost of congestion 
will be well over $200 billion. We can only assume that these 
numbers will climb as more congestion builds on all segments of 
our surface transportation system.
    Additionally, specific to freight, total logistics costs, 
which are about 10 percent of OOP, are increasing as demand is 
outstripping available capacity. For example, from 2005 to 
2006, transportation costs increased 9.4 percent, and inventory 
and administrative costs increased 13 percent. This trend will 
ripple through the economy beyond merely the users of the 
freight system (both truck and rail). China has much higher 
logistics costs than the United States, about 18 percent of 
OOP. Their response has been to increase spending on 
transportation infrastructure, which will bring down logistics 
costs and increase their comparative advantage in the global 
marketplace.

           Responses by Matthew Rose to Additional Questions 
                           from Senator Bond

    Question 1. While I don't necessarily agree with all of the 
conclusions found in your national commission report, I am 
curious why it is that you chose to expand the Federal role 
rather than reduce it? Would each of you please comment on what 
you believe the Federal role in government should be? What 
would you propose the Federal role should be if a gas tax 
increase were not agreed to by Congress?
    Response. I believe the report attempted to more sharply 
focus Federal dollars on national priorities so that, in some 
respects, the Federal role may be reduced. I support sharply 
focusing the Federal program aimed at national priorities-
interState commerce and providing a Federal partnership to an 
even larger regional effort around congestion relief. The 
programmatic streamlining contained in the report, and other 
reforms such as improved project permitting processes and 
improved planning, are important to matching the more focused 
Federal role to Federal funding.
    State and local governments and public private partnerships 
also will have to significantly increase funding contributions 
to meet transportation demand. Regional priorities should be 
consistent with national programs and priorities but, in some 
instances, will go beyond. The envisioned Federal role remains 
a partnership, recognizing that State and local governments 
must do more but are not always best positioned to promote and 
support important national transportation priorities. They 
certainly cannot fund all of them.

    Question 2. I worked hard along with my colleagues, Senator 
Inhofe, Senator Reid, Senator Baucus and Senator Jeffords to 
make sure that spending levels on SAFETEA were as robust as we 
could make them during life of SAFETEA. Although SAFETEA was a 
44 percent cumulative increase in spending for highways, 
transit and safety about TEA-21 (SAFETEA was 286.5 billion and 
TEA-21 was 198 billion), I was told the day that we passed it 
that the buying power remained the same from bill to bill due 
to the increased costs of labor, materials (steel and 
concrete). Would each of you please comment on this and what 
your view would be of the next authorization?
    Response. I fully associate myself with the response of 
Vice Chairman Schenendorf who stated for the record in response 
to the above question the following:
    ``The funding increases in SAFETEA-LU were an important 
step forward, but they still fall far short of what is needed 
to avert a national transportation crisis. The next 
reauthorization bill should increase investment to the levels 
recommended in our report.
    Moreover, we need to address project delivery. The buying 
power of the funding authorized under SAFETEA-LU has declined 
further subsequent to its passage, as the recent sharp 
increases in the prices of construction materials that you have 
cited have continued. This trend makes it critical that our 
recommendations for speeding project delivery be incorporated 
in the next reauthorization. Our report illustrated that, based 
on recent inflation trends, the cost sofa project started now 
and completed by 2011 would be half as much as the same project 
if its completion were delayed until 2021. Shaving time off of 
the project delivery process will yield savings that could then 
be applied to other projects, substantially reducing the 
overall funding needed to meet national objectives. Until we 
can do that, inflation will continue to severely diminish or 
even eliminate the impacts of increased funding levels on the 
performance of the surface transportation system.''

    Question 3. The commission's report raises some issues of 
jurisdictional concern to those of us here on the Hill. You 
propose to eliminate all existing programs of the FHWA, FTA, 
FMCSA, NHTSA and the FRA and replace them with 10 new programs 
that cross agencies and modal lines. As a practical matter, how 
do you think that this goal could be accomplished here in the 
Senate, and for that matter within the Department of 
Transportation?
    Response. The Commission discussed the value in realigning 
activities of the U.S. Department of Transportation along 
functional lines. There was discussion of increased 
coordination to deliver transportation projects in a timely, 
mode-neutral manner. The Commission weighed whether this 
approach would put the proper focus on problem solving in terms 
of outcomes and system performance rather than anyone means to 
get there. I personally have concerns about how the safety 
functions of these agencies would be affected by any major 
realignment and spoke out during Commission proceedings about 
the need to ensure that agencies which have primarily safety 
jurisdictions remain independent and focused on that important 
function. Nevertheless, I do agree with Vice Chairman 
Schenendorfs response that it may be possible to structure the 
program in a way that meets the Commission's goals, while at 
the same time respecting current jurisdictional requirements 
and political realities.

           Responses by Matthew Rose to Additional Questions 
                         from Senator Voinovich

    Question 1. As a former Governor, I believe states should 
have maximum flexibility to use their highway dollars to meet 
their own unique transportation needs. I am interested in 
hearing about the Commission's recommendations to restructure 
the Department of Transportation programs so that are focused 
on national interests and performance.
    How will this proposal promote State and local 
decisionmaking authority? How will funds be allocated on a 
state-by-State basis? Does this new approach eliminate the 
donor/donee status based on these new categories?
    Response. I concur with the response to this question 
provided by Vice Chairman Schenedorf:
    ``The Commission believes that the multitude of narrowly 
focused highway and transit programs that have been created in 
recent surface transportation legislation reduces State and 
local flexibility to target Federal funds toward either 
national or State and local interests. The 10 new Federal 
program areas we have recommended reflect not only national 
surface transportation priorities but State and local interests 
as well. State and local transportation agencies will have much 
greater flexibility in how they spend Federal funds than under 
the current program structure. This flexibility will allow them 
to meet Federal performance standards in a way that is best 
suited to their unique local transportation needs.
    We recommend changing the current method for allocating 
funds among States with ``pass through'' to localities as match 
the comprehensive plans. State and local agencies would develop 
plans for achieving performance standards in each of the main 
program areas. Funds would be allocated to States in proportion 
to the cost to implement their plans compared to the cost to 
implement all State plans. This is essentially the same method 
that funds were allocated to construct the InterState System. 
The equity programs that currently guarantee a minimum return 
to States would be eliminated, but we believe that all States 
would receive sufficient Federal funding to contribute to 
meeting their highway and transit improvement needs.''

    Question 2. Through 2055, the Commission estimates that the 
Nation will need to invest $255 billion annually to maintain 
and improve the existing surface transportation system--almost 
a tripling of the $86 billion annually spent on all modes 
today. The Commission also recommends that the Federal 
Government share of total investment would be maintained at its 
current 40 percent level. This implies that states would have 
to increase their revenues to match the increase in Federal 
funds.
    Is it reasonable to believe that states will triple 
investments in transportation infrastructure? At the current 
required 80/20 match, would states have to raise State gas tax 
or other forms of revenue to match Federal funds as it grows? 
Did the Commission consider giving states flexibility on the 
match component for State DOT projects?
    Response. I concur with the response to this question 
provided by Vice Chairman Schenendorf:
    ``The Commission believes that increased expenditures from 
all levels of government and the private sector will be 
necessary to compensate for past investment failures while 
addressing significant increases in future demand. As indicated 
in our report, based on the investment gap we identified, the 
non-Federal share of additional investment requirements-from 
State, local and private sources-could range between the 
equivalent of 34 and 63 cents per gallon of fuel tax. While 
State fuel taxes are likely to remain an important part of the 
funding mix, we anticipate that individual States and local 
governments will draw upon a wide array of other financing 
mechanisms as well. We recommend that the Congress provide 
States with new flexibility for tolling and pricing, and 
encourage the use of public-private partnerships where States 
or local governments are willing to use them. The revenues 
generated from such sources, along with increased revenues from 
other financing mechanisms that States may opt to employ, would 
reduce the size of any fuel tax increases that may be required. 
Our report includes an analysis of the advantages and 
disadvantages of a variety of revenue sources that individual 
States and local governments might opt to utilize in closing 
the investment gap.
    In terms of matching rates, our report proposes that the 
Federal share for particular activities could be adjusted as an 
incentive, rewarding States and metropolitan planning 
organizations (MPOs) that demonstrate creativity and innovation 
in meeting their performance objectives. However, we believe 
that the large increase in Federal investment that we have 
proposed should be matched by a commensurate increase in 
funding from other levels of government, so we would not 
recommend significant changes to the matching rates we have 
proposed.''

    Question 3. Can you elaborate on the vision for National 
Surface Transportation Commission and could you discuss the 
pros and cons of the impact this commission functions as it 
relates to national program priorities?
    Response. I endorsed the concept of the National Surface 
Transportation Commission (NASTRAC) with the proviso that I was 
concerned about its political viability in Congress. As 
envisioned, it would provide an independent assessment of 
nationwide surface transportation investment requirements and 
recommend to the Congress funding levels to meet those 
requirements. Although that is not the same as choosing and 
funding projects, and certainly would have no impact on the 
congressional oversight function, I was concerned that an 
argument could be made that it usurps congressional authority 
and prerogatives. However, an equally compelling argument can 
be made that insulating decisions regarding surface 
transportation funding from the political process, such as 
through an independent commission, would make it easier for 
Congress to allocate funding without undue concern about short 
term political pressures.

    Question 4. During our consideration of SAFETEA-LU, there 
was a significant debate between the donor and donee states. 
Did the Commission review equalizing the rate of return to all 
of the states?
    Response. No, it did not. The Commission based its 
recommendations on system needs and performance outcomes, not 
donor-donee concepts. However, it is my view that funding based 
on need and premised on performance will be a good proxy for a 
fair donor/donee relationship. The Commission believed that the 
re-orientation of a Federal program and funding mission, in an 
era of overall increased funding to meet transportation needs, 
will provide a constructive alternative to the donor-donee 
analysis.

    Question 5. I have long advocated for an increase in the 
gas tax. However, in this climate, I am uncertain of the 
feasibility of this.
    If the gas tax cannot be increased, how much more do you 
think we generate from other financing mechanisms to invest in 
our nation's transportation system in the short term? How 
crucial is a user free increase to meeting our future 
transportation needs?
    Response. The report contained a discussion of options. I 
believe that the Congress should move quickly to develop and 
implement a VMT fee system that is workable and fair and does 
not cross-subsidize users of the highway system.

    Question 6. Senator Carper, Senator Clinton and I have been 
working on legislation to establish National Infrastructure 
Commission. This commission would examine all at our nation's 
infrastructure needs. This legislation passed the Senate last 
year. We are not waiting for the House. In your experience, do 
you think this type of commission would be helpful? Do you have 
any advice for how to put it together?
    Response. I would not oppose a commission which is tasked 
with looking at infrastructure needs across all sectors. 
However, there has already been a substantial amount of 
analysis done, particularly in the area of transportation 
infrastructure. It is my view that Congress could develop 
legislative proposals based on the existing body of research 
and solicit input on them from the public and private sector 
entities which have done the work. Given the amount of time 
available before the current surface transportation 
authorization lapses, this would seem to be necessary.

    Question 7. We are currently considering economic stimulus 
legislation. How important do you think is transportation 
infrastructure to providing an economic boost to the economy?
    Response. There is no doubt that transportation investment 
provides a stimulus to the economy. The stimulus proposal with 
which I am most familiar--the 25 percent railroad expansion 
investment tax credit--will provide an estimated 20,000 jobs 
for each additional billion that railroads spend to expand 
their networks, which the Commission deemed essential to 
meeting future freight demand.

    Question 8. I have always been a champion of public private 
partnerships. During the last highway bill, I worked with the 
Ohio delegation on an intermodal facility that is going to 
create 10,000 jobs. Unfortunately, this project has hit some 
snags because there were barriers at FHWA and the State during 
the project implementation. Many people do not recognize the 
important of these types of partnerships.
    What do you recommend for breaking down these barriers and 
for the public to recognize how the public benefits and when 
the Federal Government partners with a private entity?
    Response. The Commission report strongly supported the 
concept of such partnerships. albeit with a number of 
safeguards that the Commission felt were essential to 
preserving the public's confidence in these joint ventures. In 
the railroad industry, we have a long track record of public 
private partnerships to fund projects which have benefits not 
only for freight mobility in an area, but contribute other 
public goods such as cleaner air, reduced truck and auto 
congestion. The private good is increased capacity and through-
put. The paradigm requires a fair determination of each's 
benefits and correlating financial participation. There have 
been barriers to successful rail project PPPs, such as 
eligibility limitations for public funds, which ought to be 
reviewed and eliminated in the upcoming surface transportation 
reauthorization legislation.

    Senator Boxer. Thank you very much.
    And then we hear from an appointee by Leader Reid, Tom 
Skancke, CEO of the Skancke Company and Commissioner. Welcome.

       STATEMENT OF TOM SKANCKE, CEO, THE SKANCKE COMPANY

    Mr. Skancke. Good morning, Chairman Boxer, Ranking Member 
Inhofe and members of the Committee. My name is Tom Skancke.
    It has been an honor and a privilege to serve on this 
Commission for the past 22 months with such a distinguished and 
incredible group of people. I cannot imagine 12 other 
individuals who could have served our great Nation in such a 
better capacity.
    I would also like to thank you for the additional time that 
you gave this Commission to complete our work. We needed the 
time and this report is very compressive and very thoughtful.
    As my colleagues know, I have spent most of my professional 
life working in the private sector to bring to completion 
important, needed transportation projects across this Nation. I 
do so within the framework of the rules and regulations and 
laws passed by Congress. And I must say that we have a 
transportation crisis in this Nation that we have never seen 
before, and one which will likely not change unless we as a 
Nation do something quickly and swiftly.
    I would like to thank each and every one of you for 
bringing up a topic this morning that is very near and dear to 
my heart. And I want to focus my comments today on the project 
delivery process that causes a lot of waste in both time and 
money in our program. As we started our transportation program, 
we found that as we continued to try and improve our system, we 
seemed to be adding more government to the process, not less. 
We seemed to add more years onto our project delivery process, 
which is already costing the American taxpayer billions and 
billions of dollars in time and productivity through inflation.
    We have been throughout this Country in public hearings and 
in our research. We found that when we add one Federal dollar 
to a transportation project in our Nation, it can add an 
additional eight to 10 years to the project delivery process, 
making that project go from 5 years to 14 years from the time 
of conception to completion.
    I will never forget about 7 years ago I had a meeting in 
Southern California with the CalTrans district director 
regarding a $1.5 billion interchange and highway expansion 
project. She told me that if she could not get $100 million in 
one of the authorizations that she didn't want the hassle and 
the trouble with the Federal dollar, because it would slow her 
project down by at least 10 years.
    My friends, that is just unconscionable. The Utah 
Department of Transportation does not put one Federal dollar in 
their major capital program, because it adds too much time to 
the delivery process. Instead, Utah uses their Federal dollars 
for routine striping, painting, rehabilitation and preventive 
maintenance programs. These are all meritorious programs, but 
they do not meet the goals that the Federal program intended to 
address and the Nation's needs as a whole.
    Now, some will say that this is all about the NEPA process. 
And I will tell you that the elaborate processes surrounding 
NEPA are a part of the problem, but they are not the entire 
problem. We are all environmentalists to some degree. We all 
want to save our own piece of the environment, and we should.
    However, in my humble opinion, we are being environmentally 
irresponsible when we take 14 years to deliver a transportation 
project in this Nation. We are being irresponsible when we are 
not insisting that all Federal agencies take advantage of the 
latest changes in the laws and therefore resist the 
coordination that you all provided in SAFETEA-LU when they 
conduct the NEPA reviews.
    We are being derelict to the environment when we take 10 
years to perform an environmental assessment that ultimately 
results in a finding of no significant impact. These laws need 
to be updated and brought into the 21st century. These laws are 
old, some are dated. And they need to be reviewed and updated 
so that the outcomes better protect our environment, not used 
to stop a transportation project or harm the environment.
    I realize that this is a political hot button here in 
Washington, DC. and across the Nation. I will likely have to 
start my car from a remote location after I leave this hearing 
today. But with all due respect to my colleagues and members of 
this Committee who have served this Nation so well for many 
years in the transportation arena, and have dedicated their 
lives to this issue, don't you think it is time to cut the 
project delivery time to 5 years and be more environmentally 
responsible by getting the review process done in 2 years 
instead of 5 years or 10 years?
    When you add one Federal dollar to a project, you can add 
10 years to delivery time. The New Starts Program in transit is 
even worse. Let me explain to you briefly the cost to the 
American taxpayer. A $1 billion project today in 2008 dollars 
delivered in 2022 costs the American taxpayer an additional $3 
billion to $4 billion. That cost is in review time, inflation, 
product cost increases, the public bidding process and the 
like.
    Ladies and gentlemen, we are spending money we just don't 
have, and we are spending future money that can be better spent 
elsewhere.
    If I may, Madam Chair, if that $1 billion project took 5 
years instead of 14 years, we could not only have more projects 
earlier to meet the community's needs, but we could have more 
money to authorize more projects. We could maybe upgrade 200 
more $50 million interchanges. We could fix 150 bridges. We 
could add additional freight and passenger rail lines, improve 
our transit systems, and we could add capacity equal to 
hundreds of additional miles with new technology, lanes, up-to-
date design to provide congestion relief and still have money 
left over for more bike lanes, pedestrian walkways and have a 
cleaner, safer, healthier environment.
    At this time when the President and you all as Members of 
Congress are considering enacting an economic stimulus package, 
let me point out that the payoff for transportation investment 
is dramatic. Federal Highway Administration research has 
estimated $1 billion in investment can generate an overall 
40,000 new jobs in either direct or indirect induced jobs. 
Numerous academic studies have demonstrated that the investment 
in public capital, such as transportation facilities, have a 
positive effect on private output and productivity. 
Streamlining the project delivery process means that our 
economy would realize these benefits sooner, not a decade down 
the road.
    Senator Boxer. Tom, if you could just wrap up.
    Mr. Skancke. I most certainly will.
    In closing, Madam Chair, I would like to point out a couple 
of things for you. This Commission ran out of money in August 
2007. I think it is important to point out that all of us paid 
our own way to and from Washington, DC. to complete this work. 
That is how seriously we took this project.
    Commissioner Frank Busalacchi from Wisconsin paid for the 
inter-city passenger rail report out of his budget; Steve 
Hemminger paid for the executive summary of this report. We 
took this job very seriously for the past 22 months. This was a 
30 hour a week, non-aid full-time job for many of us.
    I want to thank each and every one of you today for your 
years of dedication to our Nation and the people who live here. 
It is an honor for me to be here today and be a part of this 
Commission. I look forward to any questions you may have. Thank 
you.

           Response by Tom Skancke to an Additional Question 
                         from Senator Lieberman

    Question. One of the Commission's recommendations is to 
improve project delivery by decreasing the time from inception 
to completion. Right now, it takes an average of 13 years to 
finish a Federal transportation project. In principle, I agree 
with you that 13 years is too long, and poses many problems 
from a planning perspective because costs exceed allocated 
budgets over time. However, I would like you to elaborate on 
the Commission's suggestion that regulations should be revised 
to allow for a simple Environmental Impact Statement (EIS) 
rather than the current requirement for a draft and final EIS. 
My experience is that communities often learn a lot about a 
proposed project when the draft EIS is made public, and their 
concerns are frequently addressed in the final EIS. How will 
the streamlining of the EIS process impact the ability of 
communities and environmental groups to comment on major 
transportation projects as they progress through the planning 
phase?
    Response. I am greatly concerned about the time it takes to 
get a project approved, and I know my fellow Commissioners 
share this frustration. The Commission's suggestion for a 
revised EIS process would allow for the same participation and 
opportunity to comment, but it would reduce the redundancy that 
exists in the current EIS documentation process. Under the 
simple EIS process, public participation during the preparation 
of the draft EIS would be the same as it is with the current 
process. The issuance of the draft EIS would be followed by a 
required public hearing and additional opportunities to comment 
before a project decision is made. Response to public concern 
and input would be addressed in the Record of Decision rather 
than in both the final EIS and Record of Decision. The need for 
a final EIS fully documenting the same issues addressed in the 
draft EIS that needs no further analysis would be eliminated. 
The Record of Decision would become the document for addressing 
public concerns on the draft EIS. In my opinion, we are being 
environmentally irresponsible when we take 13-15 years to 
deliver an infrastructure project in our county. We can do 
better than that. We're the United States after all.

           Responses by Tom Skancke to Additional Questions 
                          from Senator Carper

    Question 1. Most Americans understand the value of a gas 
tax and the impact on consumers in relatively minimal. However, 
the public must be assured that their money won't be wasted--
not simply more highway miles and more road congestion. If the 
additional revenue from a higher gas tax can go toward a better 
product, then it's a good idea. Is the gas tax increase 
recommended in this report solely a matter of resources or is 
there some prioritization or improvements to the projects we 
build that are needed as well?
    Senator, all the Commissioners felt that just raising the 
Federal fuel tax and putting more money into the same programs 
is not the answer to our problems. Our hearings throughout the 
country made it clear that the public will not support a gas 
tax increase unless the entire program is changed from top to 
bottom. We made several recommendations to accomplish this. One 
that is especially important to me is to drastically reduce the 
long project delivery time period which contributes enormously 
to the cost of all projects. In addition, I, and my fellow 
Commissioners feel that Federal dollars need to be better 
targeted to those projects that clearly affect the national 
transportation system and are cost beneficial. This reform 
needs to take place whether or not you concur with our 
recommendation for an independent Commission to oversee a 
national surface transportation plan.

    Question 2. On March 3, 2007, I introduced the National 
Infrastructure Improvement Act. This legislation creates a 
commission to look at the State of infrastructure throughout 
the country--including rail, roads, bridges, airports, and 
flood control structures. That commission would then make 
recommendations to Congress and the President about how to 
maintain our current infrastructure while meeting future needs 
and safety requirements. While your report was a good start in 
highlighting the need to sustain the U.S. surface 
transportation system, a more detailed plan as called for in my 
bill is necessary. How does the Commission anticipate that the 
specific steps needed to achieve the wide-ranging reform 
recommended by the report will be developed and prioritized? 
What in your report do you expect that transportation agencies 
can begin to implement immediately? What requires congressional 
approval?
    Response. Senator, we recognize that our report did not go 
into specifics in some areas because we felt that this was best 
left to the congressional process. However, one thing that we 
feel must be done immediately is to ensure that the Highway 
Trust Fund has enough money to pay its obligations. This needs 
to be done in advance of any reform. In addition, we do not 
suggest that new rules and procedures apply to projects already 
in the pipeline.
    However, we believe the Congress needs to establish a 
transition process in the next reauthorization bill, which 
among other things, requires a shift to performance-based 
planning by States and others, and which will return the 
Federal program to it ``national'' purpose. Other changes such 
as the reorganization of DOT may take somewhat longer as it 
requires major administrative change. As to your question on 
the need for congressional legislation, the answer is an 
unqualified ``yes''. In particular, the structure of the U.S. 
Department of Transportation, and funding formulas are in large 
part set by statute, and therefore the recommendations by the 
Commission to reorganize the agency from a modal stovepipe to 
one centered on programs, and which establishes new funding 
formulas, and an independent Commission, will take both 
legislation and time. The process, however, must begin with the 
upcoming reauthorization. Congress could direct a newly created 
NASTRAC to do the drafting with the assistance of DOT, or it 
could direct DOT itself to provide draft legislation Congress. 
Congress of course would have the final say in the reform of 
our surface transportation program.

    Question 3. New transportation development has numerous 
environmental effects, including the additional runoff from 
paved surfaces. Lack of coordination between transportation and 
land use policies can cause this effect to be overlooked during 
project planning. This lack of coordination can lead to 
unintended stormwater pollution. Unfortunately, Senator 
Warner's amendment to include stormwater runoff in the last 
surface transportation reauthorization was not successful. How 
do the Commission's recommendations ensure that agencies 
representing transportation, environment and land planning 
interest at the Federal, State and local levels work together 
to consider all of the impacts of new infrastructure to ensure 
that transportation investment does not require greater 
taxpayer investment elsewhere, such as stormwater treatment?
    Response. As a resident of Las Vegas, one of the fastest-
growing metropolitan areas in the United States, I know 
firsthand that we need to closely coordinate transportation 
with land use planning. My fellow Commissioners agreed with me, 
and the final report notes the following: ``The Nation's 
population is expected to swell to 420 million residents by 
2050. Given the immensity of this increase, it is essential 
that the surface transportation system be transitioned away 
from fossil fuels, and that planners incorporate transportation 
into thoughtfully planned, efficient, and environmentally 
sustainable communities.''
    The Commission recommended handling environmental 
mitigation issues early by considering them in an integrated 
fashion, looking at overall resources rather than in a 
sequential, project-by-project basis.
    In my discussions with the U.S. Department of 
Transportation, I learned that there are already some 
initiatives underway related to these recommendations. Many 
State transportation agencies and local governments are joining 
with resource and regulatory partners to identify and map their 
watersheds and other green infrastructure resources, so that 
environmental data will be available to better guide land use 
and transportation decisions.
    In 2006, the Federal Highway Administration and seven other 
Federal agencies published Eco-Logical: An Ecosystem Approach 
to Developing Infrastructure Projects. This approach addresses 
an alternative to the resource-by-resource, project-by-project 
approach to environmental protection. It looks instead at the 
ecosystem and the current and proposed land use for that area. 
FHWA is currently awarding grants to 14 State and local 
agencies based on the Eco-Logical approach.
    The FHWA is also working closely with the Transportation 
Research Board to develop an outcome-based ecosytem-scale 
approach and corresponding crediting system.
    The U.S. Environmental Protection Agency and the FHWA are 
leaders in the Green Highways Partnership. This is a 
collaborative effort with mid-Atlantic State and local 
governments, non-governmental officials, and the construction 
industry. It is an attempt to engage collaboratively on highway 
improvements.
    With respect to stormwater management, mitigation from 
Federal aid highway projects is currently an eligible 
construction expense, and has been for some time. New 
construction and reconstruction projects must meet current 
environmental standards. Additionally, stormwater retrofits and 
stand-alone projects for stormwater abatement are eligible for 
both National Highway System and Surface Transportation Program 
funding, with some limitations.
    Stormwater pollution may be a problem on older facilities 
that were built prior to current requirements and do not 
adequately address the runoff from the roadway. However, for 
facilities that are new or are being rebuilt, those issues are 
being addressed as part of the construction or reconstruction 
project, and hopefully they should not create any burden on 
local facilities, or on the taxpayer, for stormwater treatment. 
For older facilities that are not planned for improvements in 
the foreseeable future, the SAFETEA-LU provisions for stand 
alone projects for stormwater abatement and treatment may be an 
option.

    Question 4. The report discusses ineffective investment 
decisions, a problem that is partially attributed to the lack 
of performance standards. I stand behind any programmatic 
changes that lead to making better use of public money for 
transportation. Linking funding to performance is a step in the 
right direction. Benefit-cost analysis is referred to 
throughout the report as an economic tool to be used to make 
informed decisions. What provisions does the commission 
recommend for ensuring that this--as well as other proven 
economic tools--is utilized broadly and appropriately, so that 
waste is minimized?
    Senator, as I said in my earlier answer, the Commission 
heard loud and clear that the public will not fork over more 
money unless it can be assured that it is spent in a way which 
makes a difference, particularly in terms of congestion, 
safety, and efficiency. We debated the best way to achieve 
this, and we determined that the future surface transportation 
system must be based on fundamentally different project 
selection procedures. This new process would require the 
development of plans by each State and major metropolitan area. 
These plans would be at the system level, i.e., a combination 
of investment and operations and technology in the context of 
community situations and decisions These comprehensive plans 
would be conceived and assessed in terms of how they can be 
expected to attain performance standards that we set as a 
Nation. Individual projects would have to be shown to make a 
contribution to those plans that are cost-beneficial. These 
investment plans would essentially determine eligibility for 
Federal funding.
    We think that subjecting each project to a rigorous and 
transparent analysis at the beginning will lead to better 
project decisionmaking. However, this alone is not enough. We 
also strongly feel that recipients must be held strictly 
accountability for meeting the established performance 
standards. The success, or failure, of grant recipients in 
meeting these standards would be evaluated, and would be taken 
into account in determining Federal matching ratios in the 
future. With this overall structure in place, we believe that 
provide grant recipients will have powerful incentives to 
select and implement projects efficiently and to minimize 
waste.

           Responses by Tom Skancke to Additional Questions 
                          from Senator Inhofe

    Question 1. The report points out the waste of taxpayer 
funds attributable to excessive delays in project delivery due 
to lengthy and often redundant environmental reviews. Many of 
the problems identified are the same problems we heard about 
prior to drafting SAFETEA-LU and even TEA-21 before that. Some 
of the recommended solutions seem similar to ideas we tried to 
incorporate in Title VI of SAFETEA-LU. Could you please comment 
on what, if any, impact these SAFETEA-LU provisions have had? 
Were we on the right track and now just need to wait a little 
longer to realize the benefits? Or did we miss the mark?
    Response. Overall, there appear to be encouraging 
developments around the country, but it is still too early to 
determine whether or not improvements will align with 
congressional expectations. This is because SAFETEA-LU mandated 
changes in the planning and environmental review processes are 
not pervasive or integrated in common practice sufficiently to 
be reflected in performance metrics. The Federal Highway 
Administration has been working with the General Accounting 
Office to answer similar questions associated with an ongoing 
audit of SAFETEA-LU 6001 and 6002 requirements.
    As shown in the report, I believe that we can go much 
further and must be more aggressive in our efforts to be more 
cost-effective with our planning and project development 
processes. Although the States complete environmental reviews 
in many different ways, most believe they did not need to make 
major changes to their existing processes to comply with the 
requirements added by SAFETEA-LU. My sense is that those 
changes were perceived as institutionalizing a more disciplined 
project management, essentially ``tightening up'' the 
environmental review process. If undertaken, the work at the 
project level might be accomplished with more speed but only 
after complying with the new requirements. We need to go beyond 
simply efficiency within the existing institutional 
arrangements.
    Even the limited experience has been mixed. Some State 
transportation departments and resource agencies have noted 
challenges in their efforts to implement the post-SAFETEA-LU 
changes. For example, the so-called ``resource agencies'' have 
themselves rather limited resources to take on what might be 
considered extra responsibilities. Despite extensive outreach, 
resource agencies and local public authorities still have 
incomplete knowledge about post-SAFETEA-LU requirements. There 
are concerns about paperwork slowing down efforts to complete 
environmental reviews. However, some States do not believe that 
the additional documentation requirements are not overly 
burdensome. They noted that the new documents, especially the 
coordination plan, help to achieve better management and 
oversight of projects.
    Some State transportation agencies and FHWA Division 
Offices note that the new statute of limitations could lead to 
cost savings. It limits lawsuits and to a period when it would 
not cost as much to change project plans. If no lawsuit is 
filed, work can proceed on a project without the risk of a 
lawsuit and cost escalation.
    Overall, I understand from the Federal Highway 
Administration that it may take between three and 5 years to 
discern the effects that SAFETEA-LU made to the environmental 
review process. That does not mean, however, that we cannot 
continue to develop common sense approaches that might be 
implemented in the next reauthorization bill.

    Question 2. On March 3, 2007, I introduced the National 
Infrastructure Improvement Act. This legislation creates a 
commission to look at the State of infrastructure throughout 
the country--including rail, roads, bridges, airports, and 
flood control structures. That commission would then make 
recommendations to Congress and the President about how to 
maintain our current infrastructure while meeting future needs 
and safety requirements. While your report was a good start in 
highlighting the need to sustain the U.S. surface 
transportation system, a more detailed plan as called for in my 
bill is necessary. How does the Commission anticipate that the 
specific steps needed to achieve the wide-ranging reform 
recommended by the report will be developed and prioritized? 
What in your report do you expect that transportation agencies 
can begin to implement immediately? What requires congressional 
approval?
    Response. Senator, as I indicated in an earlier response, 
the Commission suggested several short-term proposals to 
increase revenue for the Highway Trust Fund--which is the most 
immediate need. Certainly many of the proposals we suggest will 
take some years, and congressional legislation to implement, 
but we believe the reauthorization of SAFETEA-LU should begin 
this process. In the short term, I would strongly suggest that 
Congress take steps to permit transportation agencies the 
ability to speed up the project delivery process which 
currently adds many years and countless dollars to the 
completion of needed projects.

           Responses by Tom Skancke to Additional Questions 
                           from Senator Bond

    Question 1. While I don't necessarily agree with all of the 
conclusions found in your national commission report, I am 
curious why it is that you chose to expand the Federal role 
rather than reduce it? Would each of you please comment on what 
you believe the Federal role in transportation should be? What 
would you propose the Federal role should be if a gas tax 
increase were not agreed to by Congress?
    Response. Senator, the Commission believes that the 
national focus of our surface transportation system has been 
diluted over the last two reauthorization cycles. The need for 
a national system of transportation is absolutely critical to 
our economic vitality as a country. Individual states have an 
important perspective and set of responsibilities for 
construction and maintenance of that system. However, the sum 
of those perspectives are not necessarily equal to a national 
one. A decision by one State can influence the success of 
commerce and economic growth throughout the whole Nation by 
either promoting or impeding the interState commerce. Every 
American is entitled to the benefits of a surface 
transportation that is efficient and safe, whether they live in 
Whitefish, Montana, or St. Louis, Missouri. The Commission 
believes that Congress must reaffirm the historic, and 
constitutional, role of the Federal Government in 
transportation and commerce.
    We described the need for a strong Federal role in each of 
the 10 programs described in Volume 1 of the Commission Report. 
Given the need for a strong Federal role in these 10 programs, 
and the enormous investment needs of the transportation system, 
the majority of the Commissioners advocated a substantial 
increase in the level of Federal funding of these programs. If 
Congress does not increase the Federal funding for 
transportation, through gas taxes or other means, the need for 
a robust NATIONAL transportation will not go away, but the 
ability of the Country to achieve that goal will be 
compromised.
    Certainly, some of the program reforms recommended in the 
report such as simplifying and consolidating Federal 
transportation programs so they function more efficiently; 
focusing those programs on clearly defined national interests, 
using performance goals and better investment tools would allow 
our current existing Federal dollars to go further. The 
majority of the Commission, however, determined that this alone 
would not cover all the needs built up over many years.

    Question 2. I worked hard along with my colleagues, Senator 
Inhofe, Senator Reid, Senator Baucus and Senator Jeffords to 
make sure that spending levels on SAFETEA were as robust as we 
could make them during the life of SAFETEA. Although SAFETEA 
was a 44 percent cumulative increase in spending for highways, 
transit and safety above TEA-21 (SAFETEA was $286.5 billion and 
TEA-21 was $198 billion), I was told the day we passed it that 
the buying power remained the same from bill to bill due to the 
increased costs of labor, materials (steel and concrete). Would 
each of you please comment on this and what your view would be 
of the next reauthorization?
    Response. The Commission heard a great deal of testimony 
relating to the decreased buying power of the funding 
authorized under SAFETEA-LU due to the dramatic increases in 
the prices of construction materials that you have cited. This 
trend makes it critical that our recommendations for speeding 
project delivery be incorporated in the next reauthorization. 
Our report illustrated that, based on recent inflation trends, 
the cost of a project started now and completed by 2011 would 
be half as much as the same project if its completion were 
delayed until 2021. Shaving time off of the project delivery 
process will yield huge SAVINGS that could then be applied to 
other projects, substantially reducing the overall funding 
needed to meet national objectives. Until we can do that, 
inflation and the increase in the cost construction materials 
(for whatever reason) will continue to severely diminish or 
even eliminate the impacts of increased funding levels on the 
performance of the surface transportation system. I believe 
that before we can ask the tax paying public to pay more for a 
transportation system that is broken, we need to prove to them 
that our Government can save and the project delivery process 
is one way we can prove to save billions.

    Question 3. The Commission's report raises some issues of 
jurisdictional concern to those of us here on the Hill. You 
propose to eliminate all existing programs of the FHWA, FTA, 
FMCSA, NHTSA, and the FRA and replace them with 10 new programs 
that cross agencies and modal lines. As a practical matter, how 
do you think that this goal could be accomplished here in the 
Senate, and for that matter within the Department of 
Transportation?
    Response. Senator, the Commission recognizes that 
organizing DOT by function rather than mode would be a 
fundamentally different approach to doing business for the 
agency. However, we believe it makes sense because it would 
increase coordination and help deliver the right blend of 
transportation projects in a timely manner. I do not feel it 
would be appropriate for me to suggest how Congress would 
choose to organize itself in relation to such a change, but am 
fully confident that it is up to the task.

           Responses by Tom Skancke to Additional Questions 
                         from Senator Voinovich

    Question 1. As a former Governor, I believe states should 
have maximum flexibility to use their highway dollars to meet 
their own unique transportation needs. I am interested in 
hearing about the Commission's recommendation to restructure 
the Department of Transportation's program so that they are 
focused on national interests and performance.
    How will this proposal promote State and local 
decisionmaking authority? How will funds be allocated on a 
state-by-State basis? Does this new approach eliminate the 
donor/donee status based on these new categories?
    Response. Senator, as I said in answer to several other 
questions, the Commission strongly believes over the last 
number of years the surface transportation program has lost the 
national focus that created the extraordinary system which has 
so greatly contributed to our growth as an economic super 
power. States play a critical and indispensable role in 
building and maintaining that National system. However, the 
Commission is enormously concerned that the multitude of 
narrowly focused highway and transit programs that have been 
created in recent surface transportation legislation actually 
reduces State and local flexibility to target Federal funds 
toward either national or State and local interests.
    The 10 new Federal program areas we have recommended 
address national surface transportation priorities, as well as 
State and local interests. Under the planning structure we 
propose, State and local transportation agencies will have much 
greater flexibility in how they spend Federal funds than under 
the current program structure. This flexibility will allow them 
to meet Federal performance standards in a way that is best 
suited to their unique local transportation needs, while at the 
same time ensuring that the needs of the Nation as a whole will 
be served.
    As to the allocation of funds, we recommend changing the 
current method. As I indicated earlier, State and local 
agencies would develop plans for achieving performance 
standards in each of the main program areas. Funds would be 
allocated in proportion to the cost to implement these plans. 
Individual citizens benefit from the investments far beyond the 
piece that they are traveling on at any particular time because 
the performance of the overall route or corridor is influenced 
by the traffic flow on the entire route as well as parallel 
ones. That is why the funding for constructing the InterState 
System was apportioned out to the entire system on a cost to 
complete basis as segments were completed. We are all in this 
together rather than looking year by individual year as to how 
much funding one State receives compared to how much fuel is 
purchased (as a proxy for how much Federal fuel tax is accrued) 
in that State. We believe that the focus should be on all 
States receiving sufficient Federal funding to contribute to 
meeting their highway and transit needs.

    Question 2. Through 2055, the Commission estimates that the 
Nation will need to invest $255 billion annually to maintain 
and improve the existing surface transportation system--almost 
a tripling of the $86 billion annually spent on all modes 
today. The Commission also recommends that the Federal 
Government share of total investment would be maintained at its 
current 40 percent level. This implies that states would have 
to increase their revenues to match the increase in Federal 
funds.
    Is it reasonable to believe that states will triple 
investments in transportation infrastructure? At the current 
required 80/20 match, would states have to raise the State gas 
tax or other forms of revenue to match Federal funds as it 
grows? Did the Commission consider giving states flexibility on 
the match component for State DOT projects?
    Response. As one of my fellow Commissioners, in describing 
the recommendations in the Report, stated--``There is no free 
lunch.'' The Commission believes that all levels of government 
need to increase their funding for transportation. Only this, 
along with increased private sector investment, will compensate 
for years of under investment and at the same time address 
increases in future demand.
    Based on the investment gap we identified, the non-Federal 
share of additional investment requirements--from State, local 
and private sources--could range between the equivalent of 34 
and 63 cents per gallon of fuel tax. Certainly State fuel taxes 
will remain an important part of the funding mix, however, we 
believe that States and local governments will begin to use 
other financing mechanisms as well. In this regard, we 
recommend that the Congress provide States with new flexibility 
for tolling and pricing, and encourage the use of public-
private partnerships where States or local governments want to 
use them. The advantages and disadvantages of various revenue 
sources are described in our Report.
    As I indicated in some earlier responses, our report 
proposes that plans meet performance standards, projects be 
cost beneficial, and that recipients be held accountable for 
results. In terms of matching requirements, the Federal share 
for particular activities could be adjusted as an incentive, 
rewarding recipients that demonstrate creativity and innovation 
in meeting their performance objectives. However, given the 
large increase in Federal investment that we have proposed, we 
believe that this major commitment to surface transportation 
should be matched by a commensurate increase in funding from 
other levels of government.
    The Commission heard over and over, that users of the 
system recognize the need for significant additional investment 
in the nation's transportation infrastructure, provided it is 
spent wisely to address congestion, improve safety, and have a 
direct impact on their quality of life. The Commission strongly 
believes that the combination of increased funding and program 
reforms, are absolutely critical to both the short and long 
term economic health of our Nation. As a nation we must restore 
faith in our transportation system that we can deliver the 
preeminent transportation system in the world. We do that by 
bringing integrity back to the program and restore the trust 
the American people have not had for many years.

    Question 3. Can you elaborate on the vision for the 
National Surface Transportation Commission and could you 
discuss the pros and cons of the impact of this commission 
functions as it relates to national program priorities?
    The role of the National Surface Transportation Commission 
(NASTRAC) is to provide an independent assessment of nationwide 
surface transportation investment requirements and to recommend 
to the Congress funding levels to meet those requirements. As 
described in the Report, NASTRAC would work closely with the 
U.S. Department of Transportation. The focus of the experts and 
program managers at U.S. Department of Transportation would be 
to ensure that plans address key national performance 
standards, and that proposed projects included in the plans are 
cost-beneficial, consolidating the plans developed by State and 
local transportation agencies in cooperation with key 
stakeholders into a national strategic plan. Its unique role 
would be to look at the linkages between the nationwide plans 
developed for each of the 10 program areas described in the 
Report, and serve to assure their integration.
    The very important advantage of NASTRAC is that it would 
remove decisions regarding surface transportation funding from 
the political process. We recognize this is a very 
controversial proposal. After much thought and discussion, 
however, we concluded that this was the best way to return a 
national focus to surface transportation system, adequately 
fund it, and reduce the number of earmarks that have so eroded 
the confidence of the public in regard to transportation 
decisionmaking.
    Under our proposal, Congress could certainly veto NASTRAC's 
recommendations, but we felt that an independent commission 
would make it easier for Congress to accept funding levels in 
the long term interest of the country without undue concern 
about short term political pressures. The Base Realignment and 
Closure Commission appears to working well, and we have every 
expectation that NASTRAC could be equally effective.
    We recognize that it will be difficult to achieve a 
consensus to create such a Commission, and that some decisions 
now made by Congress would be made by the Commission. However, 
congressional oversight responsibilities would continue as well 
as the need for Congress to enacting periodic reauthorization 
legislation..

    Question 4. During our consideration of SAFETEA-LU there 
was a significant debate between the donor and donee states. 
Did the Commission review equalizing the rate of return to all 
of the States?
    Response. The Commission did not specifically consider this 
issue. However, several Commissioners questioned the 
advisability of the Federal Government collect taxes and simply 
returning money to the States without any oversight of whether 
those taxes were spent in a manner which reflected the Federal 
interest in the national surface transportation system. 
Commissioners recognized congressional interest in equity with 
respect to the amount of Federal funds returned to each State, 
but there was a consensus that funds should be allocated to the 
States in relation to the needs of States for investment in key 
program areas without specific consideration of equity. Again, 
the Commission believes that is imperative that Federal surface 
transportation policy return to a national vision. Finally, we 
believe that with increased investment at all levels, the need 
to focus on rate of return would be diminished.

    Question 5. I have long advocated for an increase in the 
gas tax. However, in this climate, I am uncertain of the 
feasibility of this.
    If the gas tax cannot be increased, how much more do you 
think we generate from other financing mechanisms to invest in 
our nation's transportation system in the short term? How 
crucial is a user fee increase to meeting our future 
transportation needs.
    As Highway Trust Fund revenues decrease in the future due 
to increased fuel efficiency and use of alternative fuels, what 
does the Commission recommend to maintain a reliable source of 
highway funding?
    Response. Senator Voinovich, I couldn't agree with you 
more. However, as I have said in my answers to previous 
questions, how can we expect the American tax payer to keep 
paying when we have a system and a program that is broken? It 
takes a minimum of 13-15 years to deliver a transportation 
project in this country and that is both fiscally and 
environmentally irresponsible. The waste in the program is 
outrageous. We can build a 5000 room hotel in Las Vegas in 
thirty-six (36) months, maybe less, and it takes 13 (13) years 
to build thirty (30) miles of highway. If we apply performance 
standards, create a cost/benefit analysis and cut the project 
delivery time by 9-10 years we save billions ultimately 
restoring trust back into the trust fund and then we can ask 
the American tax payer to pay more.
    The potential revenue-generating potential for different 
Federal, State, and local funding mechanisms is explored in our 
report. I would refer you to Exhibit 5-17 in Volume II of our 
report. This Exhibit includes estimated revenue generation from 
fuel taxes, motor-fuel sales taxes, heavy vehicle use taxes, 
tax credit bonds, customs duties, investment tax credits, 
container fees, motor vehicle registration fees, motor vehicle 
sales taxes, general sales taxes, tolling/pricing, local option 
taxes and impact fees. The advantages and disadvantages of 
these options are evaluated in Exhibits 5-20 and 5-21.
    While other financing mechanisms are available, and can and 
should be utilized to defray a portion of fuel tax increases 
where possible, the fuel tax remains the most convenient, 
immediate source of revenue to address the infrastructure needs 
that we have identified in the short term. In any event, if we 
do not increase revenues above current levels, we will face an 
ever increasing gap in meeting transportation requirements of 
this country.
    In the longer term, which we have defined as 2025, we feel 
it will be necessary to transition to a new revenue source. At 
the moment, the most promising of these is Vehicle Miles 
Traveled (VMT) fee. This fee would be directly linked to each 
vehicle's actual travel. This fee could also be adjusted by 
time of day or other travel conditions. The Commission strongly 
supports additional research, pilot projects etc., to overcome 
the legitimate technological, institutional, and privacy 
concerns associated with this type of fee. Depending upon the 
speed with which the country can address the technological and 
administrative issues associated with implementation of such a 
fee and the speed with which the public adopts alternative 
fueled vehicles, the time at which this new approach to a more 
direct user fee will be sooner than 2025.

    Question 6. Senator Carper, Senator Clinton and I have been 
working on legislation to establish a National Infrastructure 
Commission. This commission would look at all of our Nation's 
infrastructure's needs. This legislation passed the Senate last 
year. We are now waiting for the House. In your experience, do 
you think this type of commission would be helpful? Do you have 
any advice for how to pull it together?
    Response. Senator, our Commission spent almost 2 years 
examining the Nation's surface transportation needs. Certainly 
additional information relating to the Nation's transportation 
infrastructure would be extremely valuable. However, in the 
case of our surface transportation infrastructure, our 
Commission believes that we cannot delay a decision. We believe 
that we have made the case and pointed the way forward. Many of 
the issues are, frankly, philosophically based in our view of 
the future. The upcoming NEW authorization bill will provide 
Congress the opportunity to address the recommendations in our 
Report.

    Question 7. We are currently considering economic stimulus 
legislation. How important do you think is transportation 
infrastructure to providing an economic boost to the economy?
    Response. The Commission did not hear testimony regarding 
using transportation investment as a component of a short term 
economic stimulus bill. The Commission did hear a great deal of 
testimony about the importance of transportation investment to 
long term economic growth and international competitiveness. As 
we know that there are many meritorious projects ready to go 
and address the backlog in investment, I believe that they 
should be advanced for their transportation benefits as well as 
they employment benefits. However, I do not have the expertise 
to address whether in the short term; transportation investment 
would be an effective component of a larger measure to 
stimulate the economy. My personal opinion is that no American 
truly wants a hand-out they want a job. They want to preserve 
their personal integrity, their home and self worth. A $1 
billion investment in transportation infrastructure creates at 
least 47,000 direct and indirect jobs according to the Federal 
Highway Administration. Let's put Americans back to work and 
improve our infrastructure at the same time.

    Question 8. I have always been a champion of public private 
partnerships. During the last highway bill, I worked with the 
Ohio delegation on an intermodal facility that is going to 
create 10,000 jobs. Unfortunately, this project has hit some 
snags because there were barriers at FHWA and the State during 
the project implementation. Many people do not recognize the 
importance of these types of partnerships. What do you 
recommend for breaking down these barriers and for the public 
to recognize how the public benefits when the Federal 
Government partners with a private entity?
    The Commission spent a great deal of time, in fact too much 
time, discussing public-private partnerships. We also had the 
benefit of much testimony on PPPs in our hearings. In our 
report we recommend a number of safeguards to assure that the 
public interest would be protected when States undertake 
public-private partnerships. We believe that when appropriate 
safeguards will help build confidence that both the public and 
the private sectors will benefit from public-private 
partnerships.
    It is true that some Commissioners were concerned that the 
safeguards recommended to protect the public interest might 
have a ``chilling'' effect on the desire of the private sector 
to engage in them.. We probably would benefit from additional 
study on how to protect the public interest without creating 
barriers to private sector investment.
    Frankly, at the present time the U.S. is not very familiar 
with PPPs. The domestic industry is in an immature State but 
has much to learn from experiences abroad as well as other 
utility industries. As time goes on, and various types of 
arrangements are put into place, some of the barriers you 
describe will probably not seem so significant. I firmly 
believe that in the future, it will be easier for governmental 
agencies and the private sector to work together to their 
mutual benefit on surface transportation projects.
    Senator, we need every dollar from the public and private 
sectors to accomplish the goals and objectives outlined in our 
report. I personally believe that we can do this. This is the 
United States of America! We are letting our Nation down by not 
making the investment we should be to sustain the current 
system we have built over the last 50 years, moreover, making 
the needed investment for the future generations to continue to 
have the preeminent surface transportation system in the world. 
We have an obligation to our country to do so.

    Senator Boxer. Thank you very much.
    We are going to start the question time. I just want to 
say, I was unaware that you had run out of the funds. You had 
so much dedication to continue your work, by paying all those 
expenses. I just want to say, I know I speak for every one of 
us here on both sides of the aisle, how much we appreciate 
this.
    This is really important work that you are doing, and it is 
exciting to see bipartisan interests. So much of our work, 
unfortunately, is partisan in nature. But we have so much 
common ground, all of us, on this matter. It is wonderful that 
you are out there helping guide us.
    So since we are going to write a new bill in 2009, what I 
hope to work on with my wonderful friend, Jim Inhofe, this year 
is setting the stage for that bill. And to the best of our 
ability, to reach a consensus on some basic viewpoints that 
will be reflected in the bill. For example, I am putting now a 
few that I think may well be unanimously endorsed, such as user 
financing. It is an important point, because there are a lot of 
ways to go after that. I think that Senator Alexander is right, 
we certainly need to know exactly what we need to raise. But I 
think we have to simultaneously look at the most fair way to do 
it.
    Budgetary protection for the Highway Trust Fund. That is 
essential. I have always been for that. I think hopefully most 
of us, if not all of us, want to make sure that those funds are 
for the stated purpose. I think improvements in the delivery, I 
mean, which I think, Tom, you were most eloquent on, are 
important.
    So with that in mind, let me start with you, Commissioner 
Skancke, and ask you, because I thought you made a very 
important point, we try to protect the environment, and 
sometimes we do it well and sometimes we don't. You are making 
a good point, if these projects are delayed, and one of the 
major functions is to reduce congestion, then by taking 13 
years instead of 6, which is what the Commission wants to do, 
you are adding to greenhouse gases, you are adding to air 
pollutants that harm our kids.
    So I think you make a good point. Since I would agree with 
you that is a notable and laudable goal and would like to see 
us do it, what would be some of the ways you would go about 
doing that?
    Mr. Skancke. Thank you, Madam Chairman. In the report, we 
specifically outlined, and I will just address a couple of 
those items for you.
    Senator Boxer. Please.
    Mr. Skancke. One is a preliminary environmental document 
and a final environmental document, EIS. Our recommendation is 
that you don't need to do both. You can initiate as much public 
input by just doing either a preliminary or a final. But you 
can have as much public input as you can have through the 
process. In our discussions with departments of transportation 
directors across the Country, they pretty much know in the 
first 90 days meeting with a group which alignment is going to 
be the best.
    Now, we don't want to predetermine an alignment. But when 
you go out and do public hearings, you know in the first 90 
days about what is going to be the best location for a highway, 
both environmentally and for use. So one of the streamlining is 
to get departments to coordinate, reduce the number of 
documents that you have to submit, and really force other 
agencies to cooperate with the Department of Transportation.
    Senator Boxer. So if I could just cut through, you are 
saying that if we had a certain amount of time on the front end 
to take in all the public input, guidance and so on, look at 
all the available options but not call that an official 
preliminary EIS, would that change? Would we have to change 
NEPA to do that?
    Mr. Skancke. No, I don't believe so.
    Senator Boxer. OK. Well, that is one good suggestion.
    Based on your conversations with transportation experts 
around the Country, what do you believe the consequences would 
be if the Federal Government continued current levels of 
funding for infrastructure into the future? Now, we know the 
current levels of funding backed by gas tax are even going 
down. But if you could put it into some stark terms, and I 
would ask Jack and Frank to respond to that.
    Mr. Schenendorf. It would be an absolute disaster to 
continue current levels of funding, even if we are able to 
maintain the SAFETEA-LU levels. That level represents an 
enormous under-investment. What is going to happen if we 
continue at those levels is the system is going to continue to 
deteriorate, you are going to wind up with catastrophic 
failures of our existing system, and you won't be putting in 
place the additional new facilities that we need to be able to 
compete in the 21st century.
    So it will hurt our economy, it will hurt the American 
people. They will have less jobs and it will change our quality 
of life in a very unfavorable way.
    Senator Boxer. I appreciate that, Jack. Frank, would you 
like to add to that?
    Mr. Busalacchi. Sure, Senator. Thank you. Let me just give 
you a couple of factual examples here of what Jack is talking 
about, and I think a little bit about what Tom is talking about 
from my perspective as a secretary of transportation.
    In Milwaukee, Wisconsin, we are in the process of 
rebuilding an interchange, which is a key interchange in the 
heart of downtown Milwaukee. We built that interchange in the 
1960's for $80 million. We are replacing it for $810 million. 
We are going to embark on another project in 2009, rebuilding 
interState 94 from the Illinois State line up to Milwaukee, 35 
miles of road. We built that for about $120 million. It is 
going to cost us $1.9 billion to redo it.
    Senator, this is going on throughout the United States, not 
just Wisconsin. We are kind of like a parallel between what is 
going on in every State in the Union. The interState system is 
shot. It needs to be replaced. Not just the interState system, 
all the roads.
    Senator Boxer. So your point is, if we were to stay at 
current levels of funding, finish the sentence.
    Mr. Busalacchi. We wouldn't even come close, Senator, to 
accomplishing what we need to do. This is very serious. And 
this is what this Commission has dealt with for the last 20 
months.
    Senator Boxer. Well, you caught my attention.
    Mr. Busalacchi. Thank you.
    Senator Boxer. Senator Inhofe.
    Senator Inhofe. Thank you, Madam Chairman.
    I was going to get into that. I think you have covered it 
pretty well, except for the record, you might share with us, it 
is kind of a delicate balance that you are dealing with. On one 
hand you have the damage to our economy, on the other hand, you 
have the taxes and tolls, as what would be right.
    But the question I would like to ask, I had a couple of 
things in my opening statement. One was, I thought that we were 
going the wrong direction when we were going toward the Federal 
Government and away from the State and local governments. Do 
you see your report as doing that?
    Mr. Schenendorf. I do not. I think that the area where you 
might say the Federal Government is being asked to do more, it 
is not that it is being asked to do a different function. It is 
being asked to be a full partner the way it is today, which 
would mean more money, raising more money for the Federal 
portion of this. But the overall percentage of Federal capital 
investment we envision being very similar to where it is today.
    In many respects, this is turning the program back to State 
and local governments. Because in these performance-based 
plans, while the Federal Government will be involved in helping 
set the standards, if you look at the, let's take the 
metropolitan areas, where you are going to reduce congestion by 
20 percent by 2025 in the face of the growth that is coming. 
Those plans would be developed at the local and State level as 
to how to best do that for that particular area.
    Senator Inhofe. OK. Let me ask this question. When was the 
report finished? I know when it was submitted, but when was it 
finished?
    Mr. Schenendorf. It was finished, December 20th is when we 
had the final vote on the report.
    Senator Inhofe. The question I would ask, I talked about 
this in the opening statement, that when we talk about 
increasing, and you gave some suggested levels, up to certain 
amounts of fuel tax, to make these things happen, if this 
report was actually finished on December 20th, it happens that 
on the, I remember it was December 18th, I believe, that the 
Energy Bill passed. I think that is right, because that was my 
48th wedding anniversary. I don't forget those things.
    [Laughter.]
    Senator Inhofe. So you only had 2 days between the time 
that you were aware of the CAFE standards and the projections 
that you made. Anybody else?
    Mr. Schenendorf. Well, I would just add that the proposal 
to increase the fuel tax at the Federal level is at an interim 
period while we are transitioning to something like a VMT tax.
    Senator Inhofe. Yes, but my question, let someone else 
answer, Jack, when you are calculating the proposed tax, did 
you include your calculations to affect what you anticipated 
would be the CAFE standards? Because you couldn't have known at 
that time. Did you do that?
    Mr. Rose. No.
    Senator Inhofe. OK. I hate to have Jack hog this thing, but 
I have to ask you this question. The VMT thing has always been 
fascinating to me, but I can't figure out how it can be 
enforced. Do you have a short answer on how you would work on 
that?
    Mr. Schenendorf. That will be one of the challenges. 
Obviously it would be a GPS, satellite-based type of system, 
which would basically track where vehicles are, much the way 
your GPS system does. And there are certainly privacy issues 
with it. There are certainly VMT-related issues.
    Senator Inhofe. Well, don't waste a lot of time on that 
one, because that isn't going to happen.
    [Laughter.]
    Mr. Schenendorf. But that is out in the future. That is a 
ways away. And the gas tax, based on all the studies we had, is 
a viable----
    Senator Boxer. That is thousands of years away, though, we 
are going to track where people take their cars. I don't think 
so. I think we have a better way to get to the same point.
    Add more time to Senator Inhofe.
    Senator Inhofe. Well, I know I don't need more time. But 
Senator Craig had some interesting things, I have heard him 
talk about this before, where there are some foreign investors 
who come in and do these things. Do you guys have any thoughts 
about this? Can you expand on this?
    Mr. Busalacchi. Well, Senator, I have some thoughts on it. 
The overall Commission, we felt that there is going to need to 
be investment on all different aspects of finance out there. I 
have to say that I was one of the commissioners that was 
probably kind of negative, and still am, about public-private 
partnerships, tolling and things like that. Because I just 
don't know that we know enough about them.
    But the thing that I caution everybody on, when you are 
talking about public-private partnerships and this innovative 
financing, it is going to come nowhere near, nowhere near 
solving the problem that we have with revenue here. We are 
going to try to do something with inter-city passenger rail. We 
need this investment for highways. We need this investment for 
bridges. Public-private partnerships are not the panacea that 
everybody paints them.
    Senator Inhofe. I don't think anyone here is suggesting 
that. We are suggesting, it is kind of an all of the above 
thing, when we talk about the energy crisis, we need coal, oil, 
gas, nuclear, all of the above renewables and all that. So I 
think that would be, it is already in the mix.
    Mr. Busalacchi. Yes.
    Senator Inhofe. But politically there are problems with it. 
If you don't believe it, there is no one on this panel from 
Texas, but I can assure you there are problems with it.
    Mr. Rose. Senator, I don't think there is anything 
inherently wrong with foreign investment. It is really the 
governance that is set up to have foreign investment come in. 
We spent some time looking at some of the privatization of some 
of the roads, some of the State roads and debating that issue. 
So I think it more around the governance, not around whether it 
is foreign or not. There is a lot of high quality capital out 
there that quite frankly, can go a long way to help some of our 
transportation needs.
    Senator Inhofe. Thank you very much. Thank you, Madam 
Chairman.
    Senator Boxer. Senator Cardin?
    Senator Cardin. Thank you, Madam Chair. Let me thank all of 
you for your service on this Commission. I share the Chairman's 
concern about failure to adequately provide the budget support 
that we should have done.
    I applaud your recommendations in looking at realigning the 
transportation programs of our Country into a more effective 
and efficient system. I think that is important. It is made 
more difficult because of the lack of resources that we put 
into public infrastructure in this Country. I think the 
President's budget will probably make it even more challenging 
for us to deal with these issues.
    Currently, we invest less than three-tenths of 1 percent of 
our GDP in non-defense structures and buildings in this 
Country. We are paying a heavy price for that in transportation 
infrastructure. Some of you have already mentioned that. But we 
look at our economy and way of life, there is no an estimated 
3.5 billion hours a year that Americans spend in traffic jams. 
You start to calculate that in dollars into our economy, so 
there is a direct economic impact.
    We know the safety issues. My colleague from Minnesota, 
Senator Klobuchar, knows first-hand, if we don't tend to our 
bridges and roads what can happen. And the energy efficiency 
issues, the amount of wasted energy in this Country. We need to 
become energy-independent and wean ourselves off of foreign 
oil.
    Then the environmental issues have been raised many times 
by our chairperson as to what we need to do about reducing 
greenhouse gases and how transportation can help.
    I want to ask a specific question dealing with an area that 
I am very concerned about. I am concerned on your 
recommendations as to whether my fears are well-founded or not. 
Assuming we had adequate funding, I am worried that mass 
transit and passenger rail could be shortchanged. We have a 
problem in my community with freight rail versus passenger 
rail. Here you have a specific program to deal with freight, 
and I am for freight being efficiently handled. But when my 
commuters are fighting with the freight trains on the MARC 
system, trying to get from Baltimore to Washington, we have to 
curtail service on passenger rail, because freight takes 
priority.
    We have a significant problem in this Congress dealing with 
Amtrak, and whether we would have adequate funding for rail. 
Then I look at our mass transit systems and look at our rapid 
rail systems, the Washington system, which is the second 
busiest in the Nation, is decaying. I went and visited one of 
the stations and saw the platforms literally falling down. I am 
concerned that because of the lack of specific attention to 
mass transit and passenger rail in the categories that are 
mentioned that it is going to be difficult to get the type of 
public investment in these areas even if adequate resources 
were made available for transportation in this Country.
    Could someone help me on this issue?
    Mr. Schenendorf. I think that we feel it is the exact 
opposite. We feel that transit, inter-city passenger rail are 
going to do very, very well. There is a specific program 
dedicated for inter-city passenger rail to put that in these 
dense corridors, maybe anywhere from 12 to 16 corridors, 300 to 
500 miles in length. So we have a dedicated program to do that.
    Senator Cardin. And I saw that, but that is not my specific 
concern. I am for passenger rail, I am very much for that. And 
Amtrak today is the major vehicle for us to help.
    I come from two urban centers in Maryland, Washington and 
Baltimore. One has a very mature, comprehensive rapid rail 
system. The other has a much more modest. Both need expansions, 
both need modernization. Both are fighting to get that. Where 
in this bill would we see that?
    Mr. Schenendorf. They will get that in the metropolitan 
program, where the goal would be to have a performance-based 
standard to reduce congestion by a certain amount in the face 
of the growth that is coming. Our analysis is that in that kind 
of analysis, the transit systems, the expansion of transit 
systems will be essential to meeting those targets.

    You can't meet those targets with highway construction. You 
are going to need transit, you are going to need congestion 
pricing, you are going to need additional road capacity, you 
are going to need land use changes to do it, you are going to 
need new ways to tele-commute. You are going to need all of 
those things in order to be able to reduce congestion by 20 
percent from today's levels in the face of the growth that is 
coming between now and 2025.
    So we think transit will be a big winner in that program. 
It will be part of the solution. But it is going to have to be 
an enhanced part of the solution.
    Mr. Busalacchi. Senator, it is going to take a large 
investment to implement the program that we are suggesting with 
inter-city passenger rail. A lot of the passenger rail that 
occurs, and you know this, in your State and in the East, 
occurs on freight rail track. There has to be capacity 
improvements. There has to be expansion. We need to work this 
out. Obviously, Matt and his people are running a business. We 
have to understand that.
    But there is a huge advantage to the entire Country if we 
implement this program and invest what we are suggesting is 
invested. In my State alone, we are finding out throughout the 
Country that more and more people are using mass transit, more 
and more people are using inter-city passenger rail. So we know 
that the appetite is there for these programs.
    Chicago-Milwaukee, I would like to extend that to Madison. 
Madison I would like to extend to Minnesota. We can do this, 
but it is going to take this partnership with the Federal 
Government, the same partnership that we have with highways and 
airports. It is going to take the same commitment.
    If we get that commitment, believe me, we will help with 
the congestion. This will help. You are not going to get--I 
don't want to leave here with anybody thinking that we are 
going to get people out of the car. We are going to figure out 
a way to operate these cars, you are going to get up in the 
morning, put a can of peas in the car and you are going to go.
    I mean, we are going to figure that out. I am confident of 
that. But we need to provide this modal shift to the American 
people, because they have shown that they want this.
    Senator Cardin. Thank you. Thank you, Madam Chair.
    Senator Boxer. Thank you very much. I am thinking about the 
can of peas.
    [Laughter.]
    Senator Boxer. Senator Isakson, you are next.
    Senator Isakson. Thank you, Madam Chairman.
    I have two things. Mr. Skancke, I totally agree with your 
statement about expediting the construction of surface 
transportation. In fact, we have had some bills, streamlined 
bills on one side of this Congress and the other, but never 
have gotten one through both bodies.
    But I notice on page 33 of the report, when you go into the 
role of the independent commission, the independent commission, 
I understand, has one purpose, it seems to me, and that is to 
act like a postal commission or a BRAC commission from a 
standpoint of recognizing--actually establishing the funding 
mechanisms subject only to a veto override vote in both houses. 
Am I correct there?
    Mr. Skancke. Sure.
    Senator Isakson. I have two questions in that regard. The 
first question is, if you want to streamline the process and 
you are adding a new commission that is an addition to the 
process, does that run the risk of protracting even further the 
ability to construct?
    Mr. Schenendorf. It is not meant to. That commission is 
meant to be a much smaller body and simply to rubber-stamp the 
process along the way, so that this independent commission 
would help to depoliticize some of the issues as to how much it 
is going to cost, whether or not things were done in accordance 
with the planning process that was set forth, and then what 
level of funding does the Federal Government really need to 
provide.
    So it is not envisioned as something that would get into 
individual projects and as they are moving it is more looking 
at the overall programmatic approach to the program.
    Senator Isakson. Which brings me to this question. I would 
assume then, that being the case, the DOT and the Congress are 
establishing the transportation infrastructure priorities and 
the Commission establishes how you pay for it? Is that correct?
    Mr. Schenendorf. The Commission would establish what that 
level was that you needed to fund the programs at to accomplish 
the performance-based objectives that those programs have.
    Senator Isakson. But the point I am trying to get to, we on 
the Transportation and Infrastructure Committee, we would pass 
SAFETEA-LU for 6 years, the highway authorization bill, which 
would include the projects that are therefore enumerated. Then 
the separate commission would then look at that, quantify it, 
establish what it would take to pay for it, and make that 
recommendation that would then be subject to a two-thirds vote 
of both bodies.
    Mr. Schenendorf. I think what they would do is, you would 
set up the program initially and then the plans would come to 
you and when you did the reauthorization bill, they would be 
suggesting the levels of funding that would be needed in order 
to carry out the program that you have placed into law.
    Now, you may in that bill change the programs. Obviously 
Congress can change anything as you go along. But they would be 
giving you, in the context of SAFETEA-LU, when that bill came 
up, they would have been recommending levels of funding and 
levels of the user taxes that would be necessary to accomplish 
the program as it was in the law. So you would have that as a 
guidepost in the reauthorization process.
    Senator Isakson. And I am thinking about what you 
recommended here, I am not coming down on one side or another. 
But the one point is, if you take a postal commission/BRAC 
approach on the funding issue and free Congress to only talk 
primarily about what it wants funded or what it wants billed. 
You are almost giving Congress the ability to determine what 
the infrastructure is going to be, and its cost without the 
responsibility, so to speak, of paying for it. That might be a 
pretty dangerous situation.
    So there needs to be an equal check and balance. I know you 
are giving a two-thirds vote check for Congress on the back to 
balance the Commission. But there is no check on Congress on 
what it might be recommending that runs that price so far up.
    My other question real quick was on, and I think Senator 
Inhofe was asking about it, the VMT, is that currently being 
done anywhere?
    Mr. Schenendorf. There was a pilot project in Oregon, and 
it is still going on. They just finished one report. But there 
is a pilot project there, and we are recommending a number of 
studies and additional pilot projects as we go forward to look 
at different ways that it could be set up in order to work and 
still cover the privacy concerns and the collection concerns.
    Senator Isakson. One additional question, if I can, on 
that. Mr. Busalacchi, tell me, in this type of project, how are 
they determining knowing how much vehicle miles traveled the 
vehicles are making? Are you having to check odometers? Is 
there some type of----
    Mr. Busalacchi. Yes, and that is really a good question. In 
Oregon, there is probably only two or three gas stations where 
they really are doing it. I went to Oregon to see the project, 
the pilot project that the university is doing.
    You purchase gas just like you normally do, but there is a 
computer. And the computer will determine the amount of miles 
that you are using on the roads in that particular State. As 
this system gets advanced, it will be able to determine what 
miles you are driving in any State. So if you cross the State 
line from Oregon into the State of Washington, it would 
calculate the miles in the State of Washington as well.
    So the project, before everybody says they don't like it, 
the project does have some good to it, in that you would be 
able, through these computers, you would be able to control the 
number of miles that are being driven on the roads. And to take 
it a step further, just from a local DOT guy's standpoint, we 
could gather an awful lot of knowledge on what roads are being 
used in our State and when they are being used from a system 
like this. So there are a lot of good things. And I know there 
are privacy concerns. But there are a lot of good things with 
this program. It is a very good program.
    Senator Isakson. Madam Chair, and again, I have to study 
this. I am not opening or shutting any doors right now. But I 
drive a Ford Escape hybrid. I have always wondered how you deal 
with this issue of taxing miles per gallon and you are 
protracting the number of miles per gallon a vehicle is 
getting, and your revenues actually go down, even though your 
mechanism might raise it up. But this seems like a way to take 
into consideration usage of the highways, rather than fuel 
burned.
    Mr. Busalacchi. That is exactly right. And that is what it 
is intended to do. I think somebody in their opening remarks 
had said that they are concerned because of the hybrids, the 
electric cars and everything else. And yet those automobiles, 
and those vehicles are still impacting this cost to the road 
system. That is what this system does. This system catches all 
of that.
    But it is going to take a number of years. We are 
advocating in our report for the Government to spend a 
substantial amount of dollars to develop this system. We know 
there are privacy concerns and some other concerns. But it is 
something worthwhile looking at.
    Senator Isakson. Thank you, Madam Chair.
    Senator Boxer. Well, if I just could say, speaking for 
myself, there are other ways to figure out how many vehicle 
miles we are using, other than having some Big Brother system 
tracking your every move. One would be when you register your 
car, you say, you certify, I am using this for pleasure, I am 
using it for business, et cetera, and you can estimate how many 
miles you go. There is a chart, the more miles you go, the 
higher fee you pay. You could put in your vehicle miles, or it 
could be based on what you traveled the last year, rather than 
all this.
    And before I will support spending one dime on coming up 
with this system, and then finding out we have spent millions 
of bucks, I sure would like to talk more about that. Because I 
do believe in an honor system. I do believe you just have 
people certify the mileage they put on that car the year before 
if they assume it will be approximately the same.
    We did a little calculation, I was sharing it with Senator 
Inhofe's staff, with Ruth, of how many cars there are on the 
road, 247 million, almost 248 million total vehicles 
registered. So we could figure this out. And we know how many 
are passenger cars, we know how many are motorcycles, we know 
how many are light trucks, we know how many are tractor-
trailers. There is also the issue of the weight and what impact 
it has on the road.
    So I just want to lay it out here as Chairman of this 
Committee, it just sort of, when I get a feeling about 
something, I want to share it. And I think Senator Inhofe and I 
had a similar feeling at first about it. I am not speaking for 
him. But I think there are other ways to get to vehicle miles 
traveled, other than setting up some elaborate thing which, in 
you own words, will take until 2025 to figure it out and maybe 
by 2020, somebody says, we have already spent a billion dollars 
on this. I am just not interested in that.
    Mr. Busalacchi. Senator, I don't believe that any of the 
commissioners are totally married to any system. I think what 
we are seeing is that there is a definite impact to the 
infrastructure in this Country, and that we have to figure out 
a way of protecting the Highway Trust Fund. That is really what 
we are trying to do.
    Senator Boxer. We agree. All I am saying is, the vehicle 
miles traveled is a brilliant way. I agree with the Commission, 
vehicle miles traveled is the way to go. There are easier ways 
than this convoluted deal that, we spend money and 2025, you 
know, look, I believe in high-tech. I come from the high-tech 
capital. And I saw when computer voting came in, oh, this was 
going to be touch-screen, blah, blah. It doesn't always work. 
You know how many miles you put on your car last year. And when 
you got to register that, you could just specifically State, 
this is what I did this year and I certify I am going to, it 
will be approximately the same, or it will be cut in half 
because I retired.
    I think that is a much better way to go without having to 
deal with all of this money for high-tech, anyway. I guess 
Senator Isakson is open-minded on the point. I am not open-
minded on the point. I do embrace vehicle miles traveled, I 
really think that is so smart.
    So we will turn to a great member of this Committee, 
Senator Klobuchar.
    Senator Klobuchar. Thank you so much, Chairman, and thank 
you so much to all of you. It is good to see you again.
    Thank you again, Chairwoman Boxer, and our four panelists. 
Mr. Busalacchi was with me in Minnesota, with Congressman 
Oberstar. We had a transportation forum that was very good.
    Mr. Busalacchi. A lot of fun.
    Senator Klobuchar. Yes, it was. Congressman Oberstar is 
always a good time----
    [Laughter.]
    Senator Klobuchar. The thing that I wanted to focus on, 
first of all, just to follow up on this a little bit, I was 
sitting here, thinking about this vehicle miles traveled and 
Senator Isakson and his hybrid. The one thing you would lose on 
this would be that when the tax is assessed, as it is now, per 
gallon, it creates some incentive, it is already there, 
obviously, from cost, for more efficient cars. Because this 
will be just based on pure use of the road, which is appealing, 
because that is what we are trying to upgrade, and the roads. 
But the thing you lose is that people who have less efficient 
cars now have to pay more tax, because they have to get more 
gas.
    Senator Boxer. Would the Senator yield on that point?
    Senator Klobuchar. Yes.
    Senator Boxer. If you don't do away with the gas tax, you 
still have that as the base, the gas tax. So that is that 
incentive. Plus the other incentives you get for buying those 
cars. But you are right, it does do away with that. But I think 
there are other rewards and the other financing mechanisms.
    Senator Klobuchar. And as the price of oil goes up, 
clearly, you are going to have the incentive to have more 
efficient cars. Because it is so expensive to run them.
    Mr. Schenendorf. You could also set different rates for 
different classes of vehicles, for different weight vehicles. 
So you can never get to the point where you can actually tell 
how many vehicle miles traveled. It doesn't have to be just one 
rate, it can be a variety of rates, depending on the weight of 
the vehicle, the mileage that the vehicle gets. So there are a 
lot of different ways to do it.
    Senator Klobuchar. Have you looked at Senator Dodd's 
proposal for transportation funding with the bonding and the 
infrastructure funding that he has? Have you discussed that as 
a group at all?
    Mr. Schenendorf. We had some discussions about it. I think 
that we came down really on the pay-as-you-go approach and 
tried to minimize the amount that we would provide in the way 
of debt servicing out into the future, that future generations 
would have to pay. So most of the recommendations that we have 
are in the area of pay-as-you-go, collect the money now and put 
the investment in place.
    We looked at some of the bonding, and I think we think it 
can play some role. But again, for the bulk of the program, we 
think the pay-as-you-go system is a good one.
    Senator Klobuchar. I just spent the month of January going 
around our State. I visited 47 counties in January and 
Minnesota, which was quite an undertaking, and traveled on a 
lot of roads, as you can imagine. One of the things that I 
noticed, and our State gets a lot of understandable attention 
on, because of our bridge falling down, was just the lack of 
improvement to our roads in the rural part of our State. One of 
the things that is most challenging about this was of course 
because of the next century's economy we are heading toward 
with the energy revolution. I think the Department of 
Agriculture estimates that truck freight in rural America is 
going to double by the year 2020. To me it seemed like as I 
went around our State and saw all these plants going up and the 
wind turbines and all this understandable excitement with the 
climate change issues and things like that, all the 
possibilities were heading into the next century's economy with 
a transportation system that is stuck in the last century.
    So one of the things I would like you to comment on, I know 
you have this national access program for smaller cities and 
rural areas that you have recommended out of your Commission, 
but if you could elaborate on that in terms of the rural roads 
and what you think is the best way to proceed there.
    Mr. Schenendorf. Well, I think the intent of that program 
is to really have a set of performance standards again for 
providing access and mobility in rural areas and smaller 
communities. So I think there is a strong feeling that we 
needed to tie all of America together with a first-rate road 
system.
    So in that program, you would see upgrading a lot of two-
lane rural roads to four-lane divided highways, so that all of 
America can be tied together and they can have access to the 
same kinds of transportation network that everybody else does. 
So we view it as a very important program and a complementary 
program to the program for metropolitan areas of a million or 
more, this would be the rest of America, in connecting the rest 
of America together.
    Senator Klobuchar. Other comments on this?
    Mr. Busalacchi. Senator, I think the program that we have 
put in the report would cover the rural areas. Our States are 
so similar, we are like twins. But I think this program would--
--
    Senator Klobuchar. Except that the Packers did better than 
the Vikings.
    [Laughter.]
    Mr. Busalacchi. I know, I am still in mourning.
    I really think that the program we are suggesting would 
work very well for our States, because it would fit into this 
rural situation that we have. In the State of Wisconsin, we 
have less than 6 million people. We have to make sure that we 
take care of the metropolitan areas, but also we have to take 
care of rural Wisconsin, rural Minnesota. So this program would 
work very well.
    Mr. Schenendorf. And just so you know, too, the State of 
good repair program would bring the rural roads into a State of 
good repair. That is in addition to the rural access issues. 
And the National Freight Program would envision upgrading a lot 
of corridors through rural areas where you have major movement 
of freight in interState commerce.
    Senator Klobuchar. Thank you.
    Senator Boxer. Thank you so much, Senator.
    Senator Barrasso.
    Senator Barrasso. Thank you, Madam Chairman.
    Just a couple of quick things. One is, I heard that the 
Commission ran out of money and you are doing this out of your 
own pockets. People talk about public service, this is a real 
commitment and I want to thank each and every one of you for 
what you are doing for our Nation. Thank you very much.
    Mr. Busalacchi, if I could visit with you, you run in 
Wisconsin, you call it WisDOT?
    Mr. Busalacchi. WisDOT.
    Senator Barrasso. In Wyoming, we call it WyDOT. So I will 
ask you as if I were asking our own director of the Department 
of Transportation, in this report, they used the word 
performance a lot. I think over 200 times, if you do a word 
count. I know pay for performance has become a bit of a buzz 
word now. I hear talk about the $80 million for a project that 
now is at $810 million and the $120 million at $1.9 billion.
    COUld you give me some practical examples of how that 
paying for performance might work and how it would be 
effective? Because I don't want it to just be a buzz word.
    Mr. Busalacchi. No, we are doing it now. Since I have been 
the secretary in Wisconsin, we have really enacted standards in 
our entire program. The project that I explained earlier, the 
Marquette interchange, $810 million, is on time and it is on 
budget. We are 10 months away from finishing that project.
    We instituted a lot of performance standards in that 
program and in our entire program. So there are huge savings 
here. What my fellow commissioner here has been saying about 
performance standards and project delivery is true. We have 
shown that it is true. There can be a huge savings here. So 
from my standpoint, what we are doing in the State, this can be 
a very, very valuable cost-saving program.
    Senator Barrasso. That is encouraging, because I think the 
public hears the stories about Boston, whatever it was, the Big 
Dig or something, with the overruns and the expenses. I think 
when we can point, as you can, to successfully implementing 
performance standards and paying for that level of performance, 
I think that will do a lot to help guarantee some public 
confidence in going forward with that.
    Mr. Busalacchi. Our department has worked very, very 
closely with our contractors and with our consultants. Our 
program with them has worked very, very well. We have learned, 
Senator, a lot of lessons from around the Country: Boston, 
California and other parts of the Country. We have a lot of 
lessons that we have learned and we have implemented those into 
our program in Wisconsin and they are working well.
    Senator Barrasso. We are going to have to restore public 
confidence as we go forward.
    Mr. Busalacchi. There is no question about it. This project 
that we are doing in the heart of Milwaukee, downtown 
Milwaukee, caused a lot of anxiety in the city when we started 
this project. There was a lot of talk about, we were going to 
go way over budget and there were going to be traffic delays 
and everything else. I believe, quite frankly, that we restored 
public confidence. And when you do that, you can do a lot of 
things off of that confidence of the public.
    Senator Barrasso. Mr. Vice Chairman, on another point, the 
report talks about de-politicizing this project by having an 
unelected commission. I still scratch my head to say, is this 
actually going to just add another layer of politics. If you 
would like to comment on that, please.
    Mr. Schenendorf. Well, I hope not. That certainly would not 
be the intent of it. The intent would be to have independent, 
respected transportation experts who would basically be able to 
verify, I mean, a part of when you go back and you look at 
SAFETEA-LU and you look at that debate that took place, here on 
the one hand you had the Department of Transportation study 
saying, here is the level of funding, you had others in the 
Department saying, no, this is what you need, and Congress was 
stuck with these two, huge varying estimates of what needed to 
be done.
    The theory is, if you had a commission like this that was 
respected, they would be able to have the oversight and be able 
to say, yes, this is the need, this is the amount of investment 
you would have to do to meet the programs that you have 
established, and this is the implication with respect to how 
much you would have to raise fees in order to do it. So 
Congress would have something to look to to give it that kind 
of expert advice, then it would be up to Congress to decide 
what levels it wanted to actually fund the program at.
    Senator Barrasso. Thank you. Thank you, Madam Chairman.
    Senator Boxer. Thank you so much.
    Senator Bond.
    Senator Bond. Thank you, Madam Chair. Again, I think an 
hour or so ago, somebody mentioned the possible bringing in of 
foreign investment. I hope that they will clear up some 
misinformation-information about that. One of the dumbest 
things Members of Congress ever did was block the Dubai World 
Ports deal. Because when we off-source $8 billion, which would 
have to be paid back from foreign sources, those facilities, we 
still have the facilities here and we don't have their $8 
billion that could create jobs, could deal with the other 
challenges we have. It is a bad strategic move to insult one of 
our best strategic allies, and it is the worst signal we can 
send to allies in the Muslim world.
    Having said that, I just wanted to get that off my chest, 
but if you have foreign investment, we need those dollars. If 
they buy a facility here, they are not going to take it home. 
It is absolutely outrageous to say that we can't do it.
    Now, speaking of other things I am concerned about, while I 
am worked up, you talked about freight transportation. I will 
admit, I only had a chance to read this, I have been involved 
in some other things going on on the floor for the last couple 
of weeks. When you talk about freight transportation, there is 
a sideways glance on the second page, talking about all the 
Federal Aid Highway System. There is a line about intermodal 
connections, such as those near port facilities, where 
congestion increases.
    I know my good friend Matt Rose was on this Commission. If 
you are talking about freight, the most effective and efficient 
ways of moving freight are not on our highways. We talk about 
congestion on our highways, we need to be thinking more about 
freight. It is not just freight rail. I don't know if they had 
anybody from waterways on this Commission. But that takes the 
burden off of the highways. The rails are at their capacity.
    I would like to know from Mr. Rose, well, first, I would 
add gratuitously when people say freight rail is tying up 
passenger service, who do you think built the rails? If the 
private sector is going to pay the money to build the freight 
rails, then I don't think we can complain when they have to use 
the rails for freight and that interferes with passenger 
service. There has to be a better balance. I bet Mr. Rose has a 
view on that.
    Mr. Rose. First off, we did not look at the water system, 
outside of the port system. We did not look at the inland port 
of the United States.
    Senator Bond. That is what I was afraid of. When the 
Transportation Department covers it, the Transportation 
Department doesn't pay attention to water transportation, which 
has to be in the mix.
    Mr. Rose. Right. In regard to your question on the conflict 
of passenger and freight, the real objective is to not displace 
freight at all, because all that would do is move more trucks 
back to the highway, which is going to cause more and more of a 
problem, more and more of a challenge.
    What has happened in our Country is that we have gotten 
delusioned by how do we get a world-class passenger rail system 
like Asia? How do we get a world-class passenger rail system 
like Europe? And it is real simple: it is a separated right-of-
way from freight. They do not run a combination freight rail 
and passenger rail network when you are running 300 kilometers 
an hour. While they don't have good freight railroad networks 
like we have in the United States, it is just the opposite, we 
don't have good passenger rail networks. It is because we are 
trying to utilize that same right-of-way.
    So the answer is going to be a significant investment in 
passenger rail if that is where as a society want to go. I 
think that the sooner it is, the better. We all believe that 
fuel prices will continue to go up. We need to give people an 
alternative to get out of their cars to something that will 
work.
    Senator Bond. That would be great, if foreign investors 
wanted to invest and bring the Shinkansen, Grande Vitesse here, 
if they want to invest in it, we would love to have them.
    Let me conclude very quickly by saying that I agree with 
the Commission that 108 programs should be reduced. But if you 
say no Member of Congress can have any input in where the 
dollars are spent, i.e., no earmarks, you overlook Article I of 
the Constitution and you ignore some of the most egregious 
earmarks exercised by the Department of Transportation. I could 
give you a list of them. They make dumb decisions, too. We need 
to fight them out on the floor and talk about some of the waste 
that has gone into the mis-application of dollars, Federal 
Transit Authority dollars being taken away from helping older 
adults transportation buses, for example, and putting it into a 
scheme for imposing tariffs or tolls in major cities, most of 
which don't have the ability to do tolls.
    So before we jump on that no earmarks, I want to have a 
word. And I would like to submit for the record a question 
about how you would see the Department of Transportation 
administering these programs, if you focus not on the modal 
side and how we would oversee it.
    Senator Bond. Madam Chair, I apologize to you and my 
colleague from Ohio. But I had a few thoughts I just needed to 
share.
    Senator Klobuchar.
    [Presiding] Senator Voinovich.
    Senator Voinovich. Thank you.
    First of all, thanks again for the time you have put into 
this. I don't know whether Mr. Skancke is coming back or not, 
but Mr. Schenendorf and Mr. Skancke spoke very passionately 
about the need for us to do something and the impact it is 
going to have on our competitive position in the global 
marketplace, and also on the question of what kind of a America 
our kids and grandchildren are going to live in.
    The problem is that it has to become a national priority. I 
just checked with my staff member, and I guess you guys had 
some kind of a press conference. I think you ought to get 
together over a cup of coffee and figure out--maybe getting 
hold of ASHTO and some of the other groups--how you can get 
some kind of a crescendo that will get this topic out into the 
political campaign this year.
    Maybe it is a letter to each of the candidates, or maybe 
wait until the decision is made as to who they are. But get 
them to start speaking about this problem and face up to it. 
Because unless you can get the public really engaged and 
understand how crucial this is, we are not going to get it done 
next time. We won't. That is the way this place works.
    I worked on the 4(f) program during this last highway bill. 
We got a little teeny thing done on that. But all the other 
groups came in and said, we don't want you to do this, you have 
to go through all the loops and hoops. We suggested maybe that 
one person should be the quarterback with all those groups that 
are involved, that those people would have to get their reports 
or their concerns in within, say, 60 days. No, we just want to 
do it, we want to leave it the way it is, it is this low-
hanging fruit that could save enormous money. You need to 
engage in that.
    On this issue of performance-based standards, as you have 
talked about I have to tell you, when I was Governor, it took 
us there years to come up with what we call objective standards 
in determining which projects would be tier one, tier two and 
tier three. But once we did that, we had something that we 
could look at that was objective, and it got it out of the 
arena where the former Governor said, whatever you want, you 
have it.
    The other issue was earmarks that come out of Congress for 
projects that are never going to go anywhere. The money just 
sits there and doesn't really make any difference.
    So the point I would like to make to you is, I hope that 
you would really give serious consideration to figuring out how 
you can get this topic on the national agenda, and it should be 
a focus on this campaign that is coming up for the President of 
the United States. Unless we face up to our infrastructure 
needs here, we have some basic problems, like all of the 
infrastructure of competitiveness, that if we don't get at this 
stuff, we are really in deep trouble.
    What are your thoughts on how maybe we can make this 
happen?
    Mr. Schenendorf. We very much agree. I will tell you, the 
nine commissioners that are supporting the report are all very, 
very involved, very, very engaged. We plan to take the message 
out on this report. We plan on also talking to the groups to 
see how they can help us get that message out, so that we can 
talk to people.
    We have felt that that was the No. 1 issue that needed to 
be faced here, talking about giving the program a new sense of 
mission and a sense of purpose that people can understand and 
get that buy-in from the American public. Because without that 
buy-in from the American public, there is no way to raise the 
revenues that will be needed for this program. We are in 
agreement.
    Mr. Busalacchi. Senator, let me just say, I think the key 
word that I have used throughout this report is awareness. You 
have really hit on a hot button topic with me. And that is, it 
just always seems like transportation is not warm and fuzzy. 
For some reason, it really isn't. Yet the American people 
expect two things out of their Government, Federal Government. 
One is a strong defense, which we provide, and a strong 
infrastructure, which we are failing on.
    Yes, we have to get out to the public and we have to get 
this in front of the candidates. I agree with you, this has to 
be an issue that must, must be talked about. The dollars that 
need to be invested here are substantial.
    This is an investment in America. It is not like we are 
going to spend this money and it is just going to go up in the 
moon. This is an investment in our Country. I think the 
Commission feels very, very strongly about this. This is why, 
as we got into this and we started looking at these numbers, 
these daunting numbers of our infrastructure, we became more 
and more committed and we just became kind of like united in 
what we were doing here. Because all of this investment, 
whether it is inter-city passenger rail or transit or highways 
or bridges, it is all very, very important to this Country.
    So I agree with you, you have really hit on a very 
important topic here.
    Mr. Rose. Senator, I think the biggest problem is that our 
networks have run so well for so long, the investment that was 
made in the Eisenhower presidency and the development of the 
rail networks, we have had so much excess capacity, quite 
frankly. And as the capacity is filled up, we have had a hard 
time articulating it.
    Right now, the people who study this say right now that we 
are seeing $65 billion to $70 billion a year of costs in terms 
of congestion. It is very hard for people to understand, what 
does that mean on a $13 trillion or $14 trillion economy. 
People understand that their commute times are going up, but 
what they have missed is that over the last 20 or 25 years or 
so, our highway miles have gone up by 9 percent, but our VMTs 
have grown by 97 percent. It is just the math, the way the math 
works, when we go from 300 million to 350 million, you are 
going to put so many more VMTs through this thing, and people 
don't think about what the cost of that is going to be.
    We know that other people in the world are making 
incredible investments. China just announced a $44 billion rail 
investment. We can say they are a developing country and all 
that, but the bottom line is, we have not had a national vision 
for our transportation network.
    Senator Klobuchar. Senator Carper?
    Senator Carper. Welcome. Thank you very, very much for your 
willingness to serve on this Commission and for the good work 
that you have done.
    We have any number of commissions that are formed that 
report back to the Congress and the President. Some of their 
work is quickly forgotten and set aside. I know there have ben 
concerns raised about some of the recommendations that you have 
made. But the fact that overwhelmingly, you have made these 
recommendations, difficult recommendations in some cases, I 
think your work will not have been for naught. When we have a 
new Administration, new President, new Congress, I believe we 
will have the opportunity to seriously take up and move forward 
on much of what you suggested.
    My friend Senator Voinovich and I used to serve as 
Governors of our States. We understand, I think, full well, the 
need for investments in infrastructure, in part because of 
those responsibilities. He and I have co-authored legislation 
that has passed the Senate, it is over in the House, that would 
seek to build on the work that you have done. What we have 
called for is the creation of yet another bipartisan 
commission, eight-member panel, four appointed by, in this case 
by Republicans, two by the President, one each by the 
Republican leader in the House and in the Senate, then four 
appointed by the Democratic leaders, two by the speaker and two 
by the Democratic majority leader in the Senate.
    The idea would be for them to look, not to duplicate what 
you have done, but to instead look at the other components of 
our infrastructure, which would include certainly rail. But it 
would include water, wastewater, it would include levees and 
dams, airports, too. It would seek to put on the desk of the 
next of the next President and the next Congress a series of 
recommendations, including prioritizing these recommendations 
and also trying to help us with figuring out how to pay for 
these proposals, much as you have sought to do in the work that 
you have done.
    But I want to thank you for your work. Let me just ask, if 
I may, one of my favorite ``gee whiz'' comments that I like to 
drop on people is with respect to fuel efficiency of moving 
freight, and I suppose people, too, by rail. I always like to 
ask people, how many gallons of diesel fuel do you suppose it 
takes to move a ton of freight by rail from Washington, DC. to 
Boston, Massachusetts. People take gases. But it is one gallon, 
one gallon of diesel fuel to move one ton of freight by rail 
from Washington to Boston. We know that it is a lot more 
efficient to move people by rail than it is in our cars, trucks 
and vans, too.
    I know that you have done some work in your commission that 
recognizes the importance of rail, whether it is on the freight 
side or on the passenger side going forward. But just take a 
moment and talk to us about how you have focused on putting 
extra investments, extra funding in support of passenger rail 
and in support of freight rail.
    Mr. Schenendorf. Well, we have two people here who are 
experts, and I will turn it over to them. But just in general, 
we have created, the only modal program that we are 
recommending is an inter-city passenger rail, to have an 
interstate-style program to put inter-city passenger rail in 
our densest corridors. Because without that inter-city 
passenger rail, you can't meet any of these congestion targets. 
You have to get people off the roads, in these 300 to 500 mile 
corridors.
    Senator Carper. And there are plenty of them, yes. I am 
told that over half the people in America now live within 50 
miles of one of our coasts, which creates just any number of 
densely populated corridors, especially along our coastal 
areas.
    Mr. Schenendorf. Right. So we have a very strong 
recommendation on that. Then we also believe that the programs 
that we have for freight, the programs that we have for 
mobility in metropolitan areas are going to mean that when you 
try to meet those performance standards, they are going to 
require extensive rail-related movements. The goal of the 
Commission report is to grow the market share of freight rail, 
to grow transit, so that transit is a real option for people.
    So I think the way we have structured the program, it is 
our belief that both mass transit rail and inter-city passenger 
rail and inter-city freight rail are going to grow and grow 
significantly, because they are a big, big part of the 
solution.
    Mr. Busalacchi. Senator, the investment is going to have to 
be substantial because of the fact that passenger rail uses the 
freight rail tracks. So there is going to have to be expansion. 
We are going to have to work this out.
    Senator Carper. That is outside of the Northeast Corridor. 
In the Northeast Corridor, as you know, between Boston and 
Washington, it is just the opposite, freight trains use 
Amtrak's track. And yesterday, one of them got in our way.
    Mr. Busalacchi. But I think the point is that we are going 
to have to increase that capacity.
    The thing that really concerns me about the inter-city 
passenger rail is that if gasoline prices continue to 
skyrocket, continue to go up, which I think they are going to, 
and we get this exodus of people to mass transit, inter-city 
passenger rail, are we prepared to accept this mode of travel? 
Do we have the infrastructure to handle it? And quite frankly, 
the answer is no, we don't.
    Senator Carper. And my question is, what were your 
recommendations with respect to how to pay for that?
    Mr. Busalacchi. There are all kinds of different options. 
Obviously one of the things that the Commission came up with 
was the increase in the gas tax, ticket fee. There are all 
kinds of options.
    Senator Carper. Tommy Thompson and I both served on the 
Amtrak board of directors at different times. We were always 
interested in the notion of some day, when you do raise the gas 
tax, whether it is by 3, 4, 5, 6, 10 percent, whatever, but to 
include in there a half cent increase that would go to 
passenger rail service that would be used just for capital 
investment. Just for capital investments in some of these 
densely populated corridors.
    And I think my time has expired, so go ahead and then we 
will call it quits. Thank you, Madam Chair.
    Mr. Schenendorf. This program would have a dedicated stream 
of funding that would be funded from the trust fund. It would 
come mostly from gas tax revenues, but also from a ticket tax 
that we are proposing. And it would be a dedicated stream of 
funding, very similar to the way transit capital is funded now, 
with a general fund component. And it would be a guaranteed 
funding stream, in order to put the kind of passenger rail 
system in place, similar to the way we put the interState 
system in place. So over a certain period of time, you would 
know that these corridors were going to be constructed on a 
cost to complete basis.
    Senator Carper. Good. Well, again, thank you very much, 
Madam Chair, you have been generous with the time.
    Let me just mention to you and Senator Isakson, if I may, 
interesting things going on in terms of ridership at Amtrak. 
The last quarter, October 1st through December 31st, ridership 
in the Country and system-wide is up about 15 percent, revenues 
are up by about 15 percent, which suggests that people are 
tired of the congestion and they are tired of what they are 
having to pay for the price of gasoline.
    Senator Klobuchar. Yes, Senator Carper, we are seeing the 
same thing in Minnesota, where we just put a light rail line 
in. It has much more ridership than ever projected, a short 
line from Minneapolis to the airport. Now we are looking at 
other lines, and I just think there is going to be an increased 
interest in this. I agree with Mr. Busalacchi, but that we are 
just not ready for it. We have to start thinking ahead here, 
because there are just areas of our State where we never 
thought people would be crying out for public transportation 
like Anoka, Minnesota. They are because of the congestion and 
because of the cost.
    Senator Carper. Madam Chair, I have a couple more questions 
I would like to submit for the record and ask our panel to 
respond to them at their convenience. Thank you.
    Senator Klobuchar. Senator Isakson, do you have any more?
    OK, thank you very much. This has been a lot of food for 
thought. We have to get moving on this. We appreciate it.
    The hearing is adjourned.
    [Whereupon, at 12:42 p.m., the committee was adjourned.]

       Statement of Hon. Joseph Lieberman, U.S. Senator from the 
                          State of Connecticut

    And thank you for convening this important hearing to 
receive the report of the National Surface Transportation 
Policy and Revenue Study Commission. The commission consisted 
of an expert blue-ribbon panel, and we must consider their 
proposals seriously as we develop a national transportation 
policy for the twenty-first century. In my statement, I will 
highlight several key elements of the report that I believe 
warrant further debate as we move forward this year.
    Our system does need reform. The Commission's findings 
concerning the length of time it takes from a Federal 
transportation project's inception until its completion are 
revealing, but not surprising. For example, the I-95 New Haven 
Harbor Crossing Corridor Improvement project in Connecticut may 
take a total of 27 years to complete--and that is without any 
complications or delays! Planning began in 1989, and the first 
phase of construction did not start until 2001. However, while 
I am concerned about the amount of time it takes to complete 
transportation projects, I am equally supportive of a 
comprehensive environmental review process that fully evaluates 
the impact a proposed project will have on the local community. 
It is a challenge of this committee, I believe, to figure out 
ways we can reduce inefficiencies in transportation project 
delivery without sacrificing the environment and I would like 
to thank the Commission for addressing the importance of 
environmental stewardship in future transportation planning.
    One way we can improve efficiency in our transportation 
planning is to increase emphasis on performance and outcomes. 
Cost-benefit analysis can play an important role in this type 
of significant reform. While I am generally supportive of these 
principles, we need to hear more about how these determinations 
will be calculated on a national scale. As a Senator from the 
State of Connecticut, I am charged with a duty to represent the 
needs of my constituents. The Commissioners note in their 
report that developing performance standards and integrating 
them into a new system for prioritization would be a 
``challenge'' since local conditions are disparate and not 
readily comparable. I think we can all agree that objective 
criteria must play a role in funding decisions, but that still 
begs the question of what specific variables will be used. For 
example, the number of cars and the volume of freight which 
travel over a bridge on a daily basis is certainly an indicator 
of the economic benefit gained from rehabilitation. 
Nonetheless, there are countless bridges--including several in 
Connecticut--which would not measure up on a competitive usage 
barometer but are in dire need of immediate repair.
    The final recommendation I will address is the creation of 
an independent National Surface Transportation Commission. I 
hope that during today's testimony, the committee will receive 
more details from the witnesses about how this independent 
commission would function in practice. I understand the 
rationale to depoliticize how we pay for transportation 
projects. However, I am concerned about Congress ceding its 
authority to guide and implement national transportation policy 
to an independent commission, a concern also raised by the 
dissenting commissioners. The report explains that an 
independent commission will give a ``voice'' to stakeholders 
and commuters alarmed about the enfeebled State of our nation's 
transportation infrastructure. I am unsure how a ten-member 
independent commission can provide a representational voice--on 
such a large scale--to those frustrated with the current 
transportation system. I know that earmarks are a dirty word in 
Washington, DC these days, but they do serve a purpose because 
lawmakers generally know their states better than Federal 
bureaucrats. The bottom line is that Congress shouldn't abuse 
its authority to authorize and appropriate transportation 
funding, and we must make decisions that address national 
needs. I think our challenge today is engaging in an extended 
debate about what processes will best match our long-term goals 
for developing the next iteration of transportation and 
infrastructure policy in the United States.
    I applaud the Commissioners for their efforts, and welcome 
them to the hearing.
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