    [House Hearing, 111 Congress]
    [From the U.S. Government Publishing Office]

     DEPARTMENTS OF TRANSPORTATION, AND HOUSING AND URBAN DEVELOPMENT, AND
                    RELATED AGENCIES APPROPRIATIONS FOR 2010

    _______________________________________________________________________

                                    HEARINGS

                                    BEFORE A

                               SUBCOMMITTEE OF THE

                           COMMITTEE ON APPROPRIATIONS

                             HOUSE OF REPRESENTATIVES

                          ONE HUNDRED ELEVENTH CONGRESS
                                  FIRST SESSION
                                    ________
       SUBCOMMITTEE ON THE DEPARTMENTS OF TRANSPORTATION, AND HOUSING AND
             URBAN DEVELOPMENT, AND RELATED AGENCIES APPROPRIATIONS
                     JOHN W. OLVER, Massachusetts, Chairman
     ED PASTOR, Arizona                TOM LATHAM, Iowa
     CIRO RODRIGUEZ, Texas             FRANK R. WOLF, Virginia
     MARCY KAPTUR, Ohio                JOHN R. CARTER, Texas
     DAVID E. PRICE, North Carolina    STEVEN C. LaTOURETTE, Ohio9
     LUCILLE ROYBAL-ALLARD, California
     MARION BERRY, Arkansas
     CAROLYN C. KILPATRICK, Michigan

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

                                    ________

                                     PART 4
                                                                       Page
     Department of Transportation.....................................    1
     Federal Aviation Administration Fiscal Year 2010 Budget and Next
    Generation Air Transportation System..............................   99
     Department of Transportation Oversight: Top Management Challenges
    and High Risk Series..............................................  165
     Transportation Challenges of Rural America.......................  249
     The Future of High Speed Rail, Intercity Passenger Rail, and
    AMTRAK............................................................  329

                                    ________

             Printed for the use of the Committee on Appropriations

     DEPARTMENTS OF TRANSPORTATION, AND HOUSING AND URBAN DEVELOPMENT, AND
                    RELATED AGENCIES APPROPRIATIONS FOR 2010

    _______________________________________________________________________

                                    HEARINGS

                                    BEFORE A

                               SUBCOMMITTEE OF THE

                           COMMITTEE ON APPROPRIATIONS

                             HOUSE OF REPRESENTATIVES

                          ONE HUNDRED ELEVENTH CONGRESS
                                  FIRST SESSION

                                    ________

       SUBCOMMITTEE ON THE DEPARTMENTS OF TRANSPORTATION, AND HOUSING AND
             URBAN DEVELOPMENT, AND RELATED AGENCIES APPROPRIATIONS
                     JOHN W. OLVER, Massachusetts, Chairman
     ED PASTOR, Arizona                 TOM LATHAM, Iowa
     CIRO RODRIGUEZ, Texas              FRANK R. WOLF, Virginia
     MARCY KAPTUR, Ohio                 JOHN R. CARTER, Texas
     DAVID E. PRICE, North Carolina     STEVEN C. LaTOURETTE, Ohio
     LUCILLE ROYBAL-ALLARD, California
     MARION BERRY, Arkansas
     CAROLYN C. KILPATRICK, Michigan

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

                                    ________

                                     PART 4
                                                                       Page
     Department of Transportation.....................................    1
     Federal Aviation Administration Fiscal Year 2010 Budget and Next
    Generation Air Transportation System..............................   99
     Department of Transportation Oversight: Top Management Challenges
    and High Risk Series..............................................  165
     Transportation Challenges of Rural America.......................  249
     The Future of High Speed Rail, Intercity Passenger Rail, and
    AMTRAK............................................................  329

                                    ________

                         U.S. GOVERNMENT PRINTING OFFICE
     53-756                     WASHINGTON : 2009

                                      COMMITTEE ON APPROPRIATIONS

                       DAVID R. OBEY, Wisconsin, Chairman

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

                     Beverly Pheto, Clerk and Staff Director

                                      (ii)

     DEPARTMENTS OF TRANSPORTATION, AND HOUSING AND URBAN DEVELOPMENT, AND
                    RELATED AGENCIES APPROPRIATIONS FOR 2010

                                  ----------

                                                Thursday, June 4, 2009.

                          DEPARTMENT OF TRANSPORTATION

                                    WITNESS

    HON. RAY LAHOOD, SECRETARY OF TRANSPORTATION

                           Introduction of Witnesses

        Mr. Olver. The hearing will come to order.
        I apologize. I had suddenly realized that I could barely
    see out of my glasses, so I had to make a quick trip to clear
    the fog away.
        I would like to welcome the Secretary of Transportation to
    our hearing this morning, Ray LaHood, a former Member of our
    august body and a very honored Member as well.
        Mr. Secretary, this is your second appearance before the
    subcommittee this year, and we are pleased to have you with us
    this morning to discuss the fiscal year 2010 budget request for
    the Department of Transportation.
        You have been on the job now a little over 4 months, and
    you are getting your political team in place to lead the
    Department in a new direction. The Department has a unique
    opportunity to set new policy with major multiyear
    authorizations that are pending for the aviation and the
    surface transportation programs.
        The budget, which was released nearly 1 month ago, requests
    a total of $72.45 billion for the agencies and programs within
    the Department of Transportation and represents a little more
    than a 2 percent increase over the fiscal year 2009 enacted
    level, excluding the Recovery Act funding that was passed
    earlier this year.
        In many ways, this budget represents a positive step
    forward for aviation and passenger rail programs, but there are
    some urgent challenges that lie ahead for the highway and
    transit programs.
        While the budget proposes modest increases for the Surface
    Transportation Program, there is a general lack of detail for
    the specific Highway, Transit, and Safety Programs. The surface
    budget before us has overall funding levels but little
    information on the individual programs for each agency. This is
    underscored by the nearly $40 billion from the General Fund for
    the highway and transit programs, which is described as a
    placeholder until the administration comes forward with its
    reauthorization proposal. This causes the subcommittee some
    difficulty as we move forward to put together the fiscal year
    2010 bill, which is further complicated by the CBO and OMB
    projections that the Highway Trust Fund will once again face a
    cash flow insolvency crisis toward the end of the present
    fiscal year.
        Additionally, the current transportation authorization,
    SAFETEA-LU, expires at the end of fiscal year 2009, and it is
    uncertain whether a reauthorization will pass before it
    expires, leaving in doubt future funding and revenue levels.
        It is imperative that the long-term solvency of the Trust
    Fund be addressed. Solutions have been proposed. In the last
    year, two congressionally designated commissions on
    transportation infrastructure have recommended substantial
    reforms and have strongly suggested that we need additional
    revenues to maintain and improve our aging surface
    transportation system.
        Given the national long-term impacts that a change in the
    financing structure could have, I believe the administration
    must exert greater leadership in this area and hope that you
    will provide more specificity on the budgetary needs of the
    highway and transit programs as well as the administration's
    suggestions on how these programs ought to be financed.
        As I mentioned at the outset, there is some positive
    aspects to the budget pending before us. With regard to
    aviation, I am pleased that the budget request acknowledges the
    infrastructure needs at the Nation's airports. The previous
    administration repeatedly sought to cut the Airport Improvement
    Program by over $750 million a year. The budget also proposes a
    robust $865 million in the FAA's NextGen program, which was
    created to modernize our Nation's aging air traffic control
    system.
        However, given the aviation industry's declining
    performance record, exemplified by the steady drop in on-time
    arrivals, the successful implementation of the NextGen system
    is vital to managing air traffic growth and reducing delays,
    and I fear that your $850 million request is too little and too
    cautious in addressing that challenge.
        I am not sure what is going on here. My light seems to be
    saying that my microphone is on, but I keep slipping in and
    out. Apparently, maybe just because I am not really talking
    directly into it. That might help.
        Mr. Lewis. You sound great, Mr. Chairman.
        Mr. Olver. I actually don't need much of a mike.
        Concerning passenger rail, I am pleased that the
    administration requested $1 billion for high speed and inner-
    city passenger rail to follow on the $8 billion appropriated in
    the American Recovery and Reinvestment Act. This is a
    significant step towards diversifying the Nation's
    transportation options and reducing congestion on our highways.
        Additionally, I am pleased that the administration has
    embraced the concept of livable communities. For too long,
    transportation, housing and energy policy have been viewed as
    separate spheres, with little or no coordination on the
    Federal, State, and local level.
        A few months ago, you and the HUD Secretary, Shaun Donovan,
    announced the new Sustainable Communities Initiative, and I
    want to learn more from you this morning on how the Department
    intends to move forward on that initiative.
        Last, I would like to commend your Department's
    implementation of the Recovery Act. As of May 8, your
    Department reports that over $7.5 billion in obligations have
    been invested in infrastructure projects across the country.
    These funds have been crucial in creating thousands of jobs and
    repairing our Nation's transportation infrastructure.
        Mr. Secretary, as I have just outlined, you are presented
    with many challenges but equally many opportunities. I strongly
    believe and I am sincerely hopeful that, under your leadership,
    we can break out of the historical practice of transportation
    silos and focus on holistic approaches of reduced congestion,
    improved modality, increased affordability, and reduced
    environmental impacts.
        Before we have an opportunity to hear from you, I would
    like to recognize our ranking member, Tom Latham, for any
    opening remarks that he would like to make.
        Mr. Latham. Thank you, Mr. Chairman.
        And good morning, Mr. Secretary Ray. It is great to have
    you here, and I look forward to your testimony today. We miss
    you in Congress, but I am very, very pleased that you are
    continuing to serve our country in your new role. I think the
    Department and the administration are going to be a lot better
    because of your leadership, your commitment to the programs,
    you are a great asset for the whole Department.
        I just want to thank you for your openness and coming to
    visit to talk about what we are looking at here in the future.
    I want to continue that dialogue, and as good personal friends,
    I am sure we will.
        I think we need, though, to really today probably cut to
    the chase about solvency of the Highway Trust Fund. That is a
    huge problem. There are both immediate needs, obviously with
    the shortfall, and in the future, the next 5 or 6 years to get
    through that authorization.
        I really appreciate the situation you are in, that you are
    working for the White House, and you need to represent their
    position. There is obviously a whole process that the
    authorizers need to complete, and you need to work with them,
    just as I hope the T&I Committee would work with us and
    appreciate the calendar and the process that we have. However,
    the clock is ticking, and time is short here.
        This has been a very bipartisan subcommittee, and Chairman
    Olver has been very gracious. And we are going to work together
    to make sure that we come up with as good a product as we can,
    working with the staff and the entire subcommittee. But you
    know, we probably won't agree with every provision down the
    road here, but I really have faith that we are going to come up
    with a good product.
        These issues, as you know, are extremely important for the
    people at home. And as we go around our districts and our
    States, all we hear about are the projects that need to be
    implemented or put in place, economic growth, safety concerns,
    all of those things.
        My concern, and again, I want to reiterate, it is not about
    you, but in the budget statement, there is the phrase in the
    testimony, ``The administration is developing a comprehensive
    approach for surface transportation reauthorization.
    Consequently, the budget contains no policy recommendations for
    programs subject to reauthorization, including those for the
    Federal Highway Administration, the Federal Motor Carrier
    Safety Administration, National Highway Traffic Safety
    Administration and the Federal Transit Administration.''
        We are in a bit of a quandary here. Chairman Obey said that
    we are going to have our bill marked up in July and off the
    floor before the August break. The Senate, probably, as usually
    happens, doesn't move quite as quickly. But we want to have a
    bill signed into law by the end of certainly this calendar
    year, and I want to work with the Chairman to make sure we get
    that done.
        I think everyone in the room knows full well that there
    will not be a Surface Transportation Reauthorization bill for
    signature this year, probably not even in 2010. And that puts
    us in a real difficult situation with the shortfalls,
    obviously, in the Trust Fund today. But there will be an
    appropriation bill, and we need to make sure that we get your
    input on this now because the train, whether it be high-speed
    rail or a local, is going to leave the station here pretty
    quickly, and we want to make sure that we work together to get
    it done. The States are depending upon their reimbursements
    beyond August, as you know, and they can't wait 2 years to get
    this all done.
        I really hope today we can just have dialogue. I know you
    are delivering the administration's budget proposal, but I do
    think you are going to hear a lot of concerns from the
    committee about the proposals or lack of some specifics as to
    what we need to go forward. I just hope you will go back to the
    administration and our good friends down at OMB, obviously,
    your being on the committee, we all know and love OMB, and make
    sure that they know how important it is to get these specifics
    to us as soon as possible.
        With that, Mr. Chairman, I appreciate it.
        And look forward to your testimony.
        Mr. Olver. Thank you, Mr. Latham.
        We are fortunate to have the ranking member of the full
    committee here today, Mr. Lewis from California.
        And Jerry Lewis, your opening remarks.
        Mr. Lewis. Thank you, Mr. Chairman. I do not have a formal
    statement, but I really have come to express my appreciation
    for the service of Ray LaHood in the Congress, and now the
    Secretary of Transportation. I look forward to the questions.
    Thank you.
        Mr. Olver. Thank you, Mr. Lewis.
        Mr. Secretary, the floor is yours. The full text of your
    testimony will be placed in the record. If you could contain
    your remarks to somewhere close to 5 minutes or so, then we can
    get on with the questioning.

                               Opening Statement

        Secretary LaHood. Thank you, Mr. Chairman, Mr. Latham, and
    members of the committee, for the opportunity to discuss the
    administration's fiscal year 2010 budget request for the United
    States Department of Transportation. I am grateful for the many
    kind remarks that all of you have expressed, and I appreciate
    that very much.
        The President is seeking a total of $73.2 billion in
    budgetary resources. This funding level supports the
    President's ambitious agenda for revitalization and enhancing
    our national transportation infrastructure.
        As you know, transportation is vital to the health of our
    economy and the American way of life. It is essential we
    continue to invest in these assets to keep our highways and
    rails in good repair, keep our freight and maritime shipping
    lines open, and keep all modes of transportation operating as
    efficiently and safely as possible.
        I am mindful that, on the road, on the rails, in the air,
    and on the water, safety always has been and will continue to
    be our chief concern at DOT. That is why over one-quarter of
    the Department's total budget request supports transportation
    safety.
        I want to highlight the President's funding request for
    some of our critical modes. First, high-speed and inner-city
    passenger rail. As you know, President Obama and Congress have
    made a historic $8 billion investment to jump-start new rail
    corridors around the Nation.
        Yesterday, we brought together eight Governors, along with
    the Vice President and myself, and we listened to them about
    their dreams and considerations for high-speed rail. The
    President's budget proposes to fund a 5-year, $5 billion High-
    Speed Rail State Grant Program. This represents a major
    commitment by the government to offer the traveling public a
    safe and sustainable alternative to driving and to flying. The
    budget also includes $1.5 billion in grant dollars to support
    Amtrak.
        When combined with the $1.3 billion provided in funding
    through the Recovery Act, Amtrak is poised at last to address
    its longstanding capital needs. With respect to aviation, the
    President's budget requests nearly $16 billion for FAA. This
    level will enable us to fund the FAA's highest priorities,
    including $860 million to keep the NextGen Air Transportation
    System moving forward.
        With these resources, FAA will also be able to fund
    additional air traffic control positions and invest in nearly
    3,500 airport infrastructure projects at 1,500 airports. It is
    vital that we fully fund FAA in order to ensure we can
    modernize our air traffic control systems, attract and retain
    the talent that is needed to keep our aircraft flying safely,
    reduce congestion at the busiest airports, and reduce
    aviation's impact on the environment.
        The maritime industry also plays a vital role in our
    economy, with nearly half of all U.S. foreign trade by value
    traveling by water. The President's budget seeks $346 million
    for the Maritime Administration. This includes $15 million for
    a new Presidential initiative to enable MARAD to work with the
    Department of Homeland Security on modernizing our intermodal
    freight and infrastructure links that tie ports, highways, rail
    networks into a seamless transportation network.
        I am pleased to report that MARAD has addressed budget
    issues at the U.S. Merchant Marine Academy which have concerned
    many in the past. And I have directed the agency to establish a
    Blue Ribbon panel of experts to examine the Academy's long-term
    capital needs. This is a very high priority for me. I want to
    make the Merchant Marine Academy the same jewel that Air Force,
    West Point and Annapolis are. And we are going to do that, and
    it is going to take some dollars to do it. But the Merchant
    Marine Academy is in very bad repair. They have 900 cadets
    there. I visited the facility, and we need to do some work
    there.
        The Blue Ribbon committee will report back in 6 months with
    a complete plan about what needs to be funded, how much, and
    what it will take to do it. And our previous deputy assistant
    secretary, Admiral Tom Barrett, will chair that group and
    report back, and I will keep all of you posted on that.
        I am confident the President's Transportation budget for
    fiscal year 2010 will help our Nation continue to develop our
    most vital infrastructure assets for the 21st century.
        The most significant challenge our Department faces going
    forward is the ability to identify resources, to meet our goals
    and provide the American people with the transportation system
    they need and deserve. Obviously, I am grateful to Congress for
    your interest, for providing the $48 billion in transportation
    funding through the economic recovery plan. This historic
    investment is making possible thousands of transportation
    projects around the country. As a direct result, we are helping
    to save or create good-paying jobs that so many families and
    communities need right now.
        And we are rebuilding, retooling, revitalizing our
    airports, roads, bridges, ports, transit systems, and more. But
    we must also recognize the two primary funding sources the
    Department has relied on, fuel taxes and airline ticket taxes,
    are no longer sufficient. As you know, last year the Highway
    Account of the Highway Trust Fund required an $8 billion
    infusion from the General Fund. The current reduction in
    economic activity on our roads has made the problem of
    sustainability even more serious. We remain at risk for another
    cash shortfall in the Trust Fund later this year, probably by
    mid August, and this situation puts even greater pressure on
    the General Fund to supply resources that have historically
    come from the Trust Fund, and we clearly cannot go down this
    path.
        The administration has inherited a system that can no
    longer pay for itself. We must think creatively as we search
    for sustainable funding mechanisms. In the meantime, I want to
    assure you we are working on a plan to address the potential
    Trust Fund shortfall this summer. We believe strongly that any
    Trust Fund fix must be paid for.
        We also believe that any solution must be tied to reform of
    the current highway program. It needs to be more performance-
    based and accountable to our priorities, including making our
    communities more livable and sustainable. We have pledged to
    work with Congress on these important challenges, and I am
    confident we will find the solutions.
        Mr. Chairman, thank you for the opportunity, and I look
    forward to your questions.
        [The information follows:]

        [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

                               HIGHWAY TRUST FUND

        Mr. Olver. Thank you, Mr. Secretary, for your statement.
        The tradition here is that I and the ranking member will
    have 5 minutes, and then we will go five by five, back and
    forth, in the order in which people have come into the room.
        So, with that, I will start with the first round of
    questioning.
        I am not sure exactly when, but there is some suggestion we
    may have votes some time not long after 11 o'clock. We
    certainly want to be out of here by noon, and we will move on
    as quickly as we can.
        Generally, Mr. Secretary, you have been very direct in your
    written testimony and also in your oral testimony about the
    state of the Trust Fund. And you have laid out exactly what we
    ran into last year, and you have stated quite clearly that we
    are going to run into the same thing again this year, with the
    ultimate being that there is the placeholder of about $36
    billion in there, coming from the General Fund, which
    ultimately gets settled somewhere in the reauthorization
    process.
        Mr. Secretary, you would remember that, in the last
    authorization process back 4 years ago, the position, really
    coming from, in a bipartisan way, both parties on the T&I
    Committee at the authorization level was that we needed more
    than what was being done. We needed more infrastructure. We
    needed to have more expenditure, but the agreement was finally
    reached to considerably limit what they had been asking for.
    And now here, in the next to last year of the authorization, we
    have already run into a problem, which has been exacerbated by
    the downslide of the economy as we go into this fiscal year.
        Now, the money in the Trust Fund goes pretty directly.
    Money is raised in specific areas. Money goes directly into all
    the surface transportation programs, but particularly highway
    and the transit programs for maintaining and improving and
    expanding the surface transportation systems.
        There is strong evidence that people around the country
    will support dedicated funding when it is clear, there have
    been referendum in various places to that effect, when it is
    clear that what is being asked for is being used for a purpose
    that people can see and that they may believe in. And I think
    maybe one of the most dramatic ones of those was in California
    where the people voted for a $9 billion authorization to build
    high-speed rail, which we hope that the kick-starting will
    certainly do.
        At the same time that you have been very direct about the
    problem, you have been like a dancer walking on a field of eggs
    as to the question of how this is going to be paid for along
    the way, though we have, clearly, the history of where
    dedicated funding can come from. And we have also the history
    of several commissions who have looked at this at great extent
    and then have made recommendations for some series of ways to
    raise money.
        Can you give us any indication of where we are headed or
    what you are going to be offering to the Authorization
    Committee on how one gets out of the pay-for question?
        Secretary LaHood. I think I have been very frank about the
    fact that the administration does not want to raise the gas
    tax. This is about one of the worst economic slumps that our
    country has seen. I have been in public service for 30 years,
    and I know many of you have, too. There are a lot of people
    hurting in America, and there are a lot of people out of work.
    I think that the last thing you want to say to people is that
    we are going to raise your gasoline taxes. A lot of people
    right now can't even afford to put a gallon of gasoline in
    their car because they don't have a job. We are not going to
    raise the gasoline tax. I will say that emphatically. We can't.
    The economy is in very bad shape. And so I don't think I have
    danced around on that one.
        What I have said is the Highway Trust Fund has been a great
    mechanism for building a state-of-the-art interstate system in
    America. We have a model for the world. The problem is that
    people are driving less. And when you drive less, you put less
    gas in your cars, and we have less money in the Highway Trust
    Fund. So we need to think creatively about how we can continue
    to use the Highway Trust Fund and build on it.
        And I have talked about some alternatives and hopefully
    some creative ways to do it. Some people like them, and some
    people don't like them, but there are about four or five things
    that we could do. I was in Miami where they, on an existing
    road, built what they call a ``HOT lane'' and used tolls to do
    it. So if you want to go faster and get out of congestion, you
    get in the HOT lane. And you can add capacity to highways by
    doing that. You can build bridges by tolling, and you can raise
    a lot of money to do it.
        We have also talked about public-private partnerships.
    There are people--maybe not right at the moment because the
    economy is not that great--who are willing to invest. When
    roads are being built, they are certainly willing to invest in
    the fiber to put broadband in areas of the country that don't
    have it. So there are many of these opportunities.
        In the Senate, they have talked a lot about the
    infrastructure bank. There are bills pending over there for
    that. And so there are other creative ways.
        But Mr. Chairman, and members of the committee, we are not
    going to be for raising the gas tax. We are just not, not right
    now.

                               FUNDING MECHANISMS

        Mr. Olver. Okay. Let me just use your quotes. I do commend
    you very strongly for being so direct about the difficulty with
    the Trust Fund, as I have said in my own comments. And the two
    comments that go in your written testimony that particularly
    come out to me, ``There simply is not enough money in the
    Highway Trust Fund to do what we need to do.'' And the
    authorizers are suggesting that we need to do much more than we
    have been doing in the past, that is my editorial comment. And
    then the further quote, ``We must think creatively as we search
    for sustainable funding mechanisms.'' So I am just looking for,
    what are those creative funding mechanisms?
        Secretary LaHood. Well, I mentioned three.
        Mr. Olver. You have mentioned several.
        Secretary LaHood. Some people like them; some people don't.
        Mr. Olver. Thank you very much.
        Mr. Latham.
        Mr. Latham. Thank you, Mr. Chairman.
        And I guess, kind of continuing the same line, the Trust
    Fund bankruptcy is coming. Like you said in your testimony,
    mid-August you look for it to be out of money. In Iowa, they
    are planning on doing about a half a billion dollars worth of
    work this summer, and obviously, a lot of that is to come out
    of the Trust Fund. And you said that you want to offset the
    money that goes in to replenish the Trust Fund. Can you give us
    any idea from the administration as to what those offsets will
    be, where this money is going to come from?
        Secretary LaHood. Thank you, Tom, for your earlier
    comments. I appreciate that very much. You and I and Mr.
    LaTourette came into Congress together, so we have, I think,
    developed wonderful relationships. When people ask me if I miss
    the House, I say I don't miss the roll calls, but I miss the
    relationships. I really do.
        We are trying to figure this out. We have made some
    recommendations to the administration. OMB gets involved in
    this. There are people in the White House that get involved
    with it. The leadership has to be involved with it. And we are
    going to come back to you with what we think is a way to pay
    for this. I mean, the administration is committed to paying for
    the $5 billion to $7 billion that is needed to plus up the
    Trust Fund in 2009, and it is about $8 billion to $10 billion
    for 2010. We are committed to paying for it, and I hope sooner
    rather than later we will be coming back to all of you and
    saying, here is how we think we should do it.
        Mr. Latham. In the supplemental just last week, the
    administration sent a budget amendment to release some stimulus
    funds for the flu pandemic preparedness. Is that a possibility?
        Secretary LaHood. Of using recovery funds? That is not
    something that we have had much discussion about.
        Mr. Latham. Okay.
        Secretary LaHood. To be honest with you, that money has
    really been committed in a lot of different ways. A lot of it
    is out the door.

                               RECOVERY ACT FUNDS

        Mr. Latham. And I commend you for doing--I wish we had a
    lot more money in your Department in that stimulus package that
    would have actually created more jobs in that regard--rather
    than some of the other places that the money has gone.
        Secretary LaHood. Well, I will say this, a lot of these
    projects are coming in under the expected cost, and we are
    going to use that money to fund more projects. So that part is
    good.

                                REAUTHORIZATION

        Mr. Latham. As far as the reauthorization, obviously, it is
    not going to happen this year, probably not next year; I don't
    think there is any appetite probably next year, with time
    limitations. Is there a plan B, or are you just going to
    continue the SAFETEA-LU programs? Is there any thought as to--
    --
        Secretary LaHood. Well, there is a part of the debate that
    is going on among our Department, the White House, OMB, and
    others, and the leadership here. I mean, that will be a part of
    how we plan to plus up the Trust Fund, and what we do about the
    way forward as far as authorization.
        Mr. Latham. Is there a date that----
        Secretary LaHood. Sooner rather than later. This discussion
    is going on just about every day at the White House. I was just
    on the phone with some folks down there to see if I could give
    you any more intelligent answers. And I am sorry I can't be
    more specific, but I want you all to know that this is on
    people's agendas.
        Mr. Latham. On the stimulus funds, how many full-time
    equivalent positions have you hired to get those dollars out? I
    guess my question also would be, when those funds are
    disbursed, are those people going to stay at the Department?
        Secretary LaHood. One of the things that I have discovered
    at DOT is that, with only a handful of political people, we
    have been able to do what all of you asked us to do in the time
    frames you set, and get the money out the door in 120 days with
    the existing professional staff.
        DOT has some of the most professional people that I have
    ever seen in the 30 years that I have been in government. The
    professional staff have done the work. These are full-time
    people that work at the Department and are thrilled to come to
    work every day because they are doing what they love to do,
    which is work with the State DOTs and the transit districts and
    the airport officials. And they are working with them on
    getting this money out the door.
        So the people that we have hired are the political people
    in the different modes. We didn't bring anybody on to help us
    with this. We used the professional people in the Department.
        Mr. Latham. And I commend you for doing a good job.
        Secretary LaHood. Thank you.
        Mr. Latham. Thank you, Mr. Chairman.
        Mr. Olver. Mr. Lewis.

                               MOVEMENT OF GOODS

        Mr. Lewis. Thank you very much, Mr. Chairman.
        Mr. Secretary, as you mentioned in your statement, goods
    movement is pretty critical to the impact of your Department
    upon our economic recovery. In the west, movement of goods,
    cargo from Long Beach or from the Port of Los Angeles is pretty
    fundamental; those goods flow through the Inland Empire in our
    territory and then go towards the east.
        Mr. Secretary, how does your Department plan to address the
    impact of goods movement throughout the country to help with
    this stimulus?
        Secretary LaHood. We have $1.5 billion in discretionary
    money. We put out guidance. And we believe that we will use
    some of the money to enhance our ports. The stimulus includes
    $28 billion for roads and bridges, $8 billion for transit, $1.3
    billion for airports, $8 billion for high-speed rail, and $1.3
    billion for Amtrak. For the $1.5 billion discretionary program
    that the Congress put in the economic recovery package, we
    believe we are receiving some significant projects that are
    intermodal. And there is nothing more intermodal than a port in
    order to expand capacity, and to relieve congestion. I think
    you will see a pretty good chunk of this money being used at
    ports around the country to do the things that you were just
    talking about.
        I was just at the Rotterdam port, and it is an economic
    engine for the Netherlands. And I know that ports around this
    country are an economic engine for the communities where they
    are located. And if we can use some of our dollars to help
    expand and relieve congestion, I think we have done a good
    service to the country.

                              ENVIRONMENTAL ISSUES

        Mr. Lewis. Thank you, Mr. Secretary.
        It might startle you to know that, when I arrived in the
    Congress a week and a half ago, I was considered to be somewhat
    of an environmental nut; that is, I was the author of the Air
    Quality Management District in Southern California. I know of
    the importance of the movement of goods as well as the movement
    of vehicles to improving our environment.
        Now having said that, there is probably nothing out there
    that is standing in the way of our efficiently moving forward
    with many of these programs that are driven by your Department.
    We do need policy action that will help the Congress interrupt
    this whole maze of conflicting, overlapping, et cetera,
    environmental requirements.
        I would be interested in knowing what your position may be
    regarding States waiving some of these requirements. And I
    specifically mention a relatively new thought, that is, maybe
    the Congress and the administration should consider helping us
    look at a special court to deal with environmental concerns to
    make certain that environmental interests are adequately
    addressed but at the same time don't stand in the way and drive
    a no-growth policy.
        Comments.
        Secretary LaHood. Well, I am part of a team of people that
    works in this administration, but our environmental portfolio
    has pretty much been around the idea of CAFE standards for
    automobiles. We have worked as a member of the Automobile Task
    Force. There is a group that is working at the White House on
    climate change issues. But our role relates a lot more to CAFE
    standards than some of the other things that you are talking
    about, Mr. Lewis.
        I would be happy to carry your thoughts back, but we don't
    necessarily have the jurisdiction, like the EPA would or they
    do at the Department of Energy, to do some of the things that
    you would probably like.
        Mr. Lewis. At the table, if, indeed, you are going to be
    able to directly have an impact upon what the environmental
    considerations, the lawsuits and otherwise, are doing to your
    ability to deliver product out there, I mean, it is pretty
    fundamental. So within that discussion, I would hope that you
    would at least think about the idea of a special court to deal
    with environmental concerns.
        Secretary LaHood. Yes, I will.
        Mr. Lewis. Thank you, Mr. Secretary.
        Mr. Olver. Thank you, Mr. Lewis.
        I am going to honor the placeholder that Mr. Rodriguez put
    into order. He was here before anybody else came and then went
    to do a quick markup somewhere else.
        Mr. Rodriguez.

                            AIR TRAFFIC CONTROLLERS

        Mr. Rodriguez. Thank you very much.
        And welcome back, Mr. Secretary.
        Let me ask you, on the air controllers, I know that a good
    number, or 80 percent, are scheduled to retire, and we have to
    go into a new system. I have been somewhat concerned about the
    diversity of that, and seeing how, as we provide the new air
    controller, that we have some diversity in terms of African
    American gender as well as Hispanic.
        I am wondering if you might want to comment on that because
    we have been working for a couple of years on trying to make
    something happen, and we just haven't been able to crack that
    nut in terms of trying to get through there and trying to get a
    little more diverse. And I know that they are actually picking
    them up off the street as far as I know in some cases.
        Secretary LaHood. We have a new administrator at FAA who I
    am sure will be before your subcommittee when you consider the
    FAA budget, and his name is Randy Babbitt. I think he has been
    3 or 4 days on the job. He is a former airline pilot of 25
    years, and also was the head of the pilots' union and a
    businessman. He knows of the concern in recruiting, that we
    really want to do a wide reach-out. And we have talked about
    this in the Department. We have talked about the idea of
    diversity when we are reaching out to fill a number of these
    FAA controller positions and other positions within the
    Department.
        This is a very high priority for the administration. It
    will be a high priority for Mr. Babbitt. And I will let him
    know of your expression of interest. I know that others on this
    subcommittee have had concerns. I know that there is a plan in
    place for us to do a lot more to reach out. And I want to
    assure you that we will do that. It is a priority.

                                      RAIL

        Mr. Rodriguez. Thank you. And I look forward to working
    with you there.
        In Texas, we have a rail, the South Orient, that basically
    the train runs at about 10, 15 miles an hour because of the
    conditions there.
        Secretary LaHood. Is that a passenger rail system?
        Mr. Rodriguez. No, it isn't.
        Secretary LaHood. Freight rail?
        Mr. Rodriguez. Yes, cargo rail. And there is a real need to
    improve the infrastructure there, and seeing what we might be
    able to do about that.
        Secretary LaHood. We work with our freight friends all the
    time on their opportunities to improve the railway grades. And
    freight is very important in our country. Really, it is very
    important to our ability to get to high-speed rail because we
    know that we are not going to have dedicated lines all over
    America, that freight rail is going to have to be a partner
    with us. So we have good relationships, and I will have our
    people look into this.
        [The information follows:]

        [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

        Mr. Rodriguez. I don't know if I have additional time, but
    also, as we look at major cities, looking at long-term
    transportation needs, such as San Antonio, and other
    communities between Austin and San Antonio, for passenger
    trains, I know there is a real need for them to come back with
    those master plans, not only for the States, but for the
    communities and the region. And I know the language is there to
    require that to occur. Is that my understanding?
        Secretary LaHood. Yes. On June 17, we will release the
    information, the criteria, the guidelines, the guidance for
    high-speed rail corridors or regions, and that will go out to
    every Governor and every State DOT. We have had regional
    meetings in which Texas was included, and I am sure your people
    were there. We will begin accepting applications in the fall
    and then making some allocations of money later this year.
        Mr. Rodriguez. Thank you very much, Mr. Secretary.
        Mr. Olver. Mr. LaTourette.

                                 STAR ALLIANCE

        Mr. LaTourette. Thank you, Mr. Chairman, for the
    recognition. Mr. Secretary, it is lovely to see you again.
        I was commenting before, and I will say it publicly, that I
    want to congratulate you and the administration for the naming
    of John McHugh as the new Secretary of the Army. You couldn't
    have a better person. The only consternation that it has
    created on our side is that, as the President's Chief of Staff,
    Mr. Emanuel, continues to pillage moderate Republicans from the
    House and increase the Democratic margin, Mr. Latham and I are
    a little disappointed because he has gone from LaHood, skipped
    Latham, LaTourette, and went right to the ``M''s. So maybe if
    we could revisit that issue, we would appreciate it.
        Mr. Olver. You might be next in line.
        Mr. LaTourette. You never know. You never know. Maybe not
    after these questions. We will see.
        Mr. Secretary, you and I have talked about the Star
    Alliance. And I thank you for your work in getting out some
    documents on April 7. But as you know, that continues, even
    though that application has been pending for over a year; that
    is mired at the Department of Justice.
        I am looking for some guidance. The statutory deadline has
    come and passed, June 1. I talked to the President's Chief of
    Staff in small, four-letter words that he understands, and I am
    just wondering what it is that we can do to----
        Secretary LaHood. Are you talking about the alliance
    between United and Continental?
        Mr. LaTourette. I am.
        Secretary LaHood. That will be resolved to your
    satisfaction.
        Mr. LaTourette. And soon?
        Secretary LaHood. Of course. We will meet the deadline.

                                HIGH SPEED RAIL

        Mr. LaTourette. Excellent.
        Let's go to high-speed rail. I understood, in response to
    Mr. Rodriguez's question, that the guidance is out----
        Secretary LaHood. It will be out on the 17th.
        Mr. LaTourette. The 17th. And then it is going to be an
    application process. And who is going to be the decider of who
    wins and who loses?
        Secretary LaHood. Well, there aren't going to be any
    losers. There are a lot of people around America who have been
    dreaming about high-speed rail. As I said, we had about eight
    or nine regional meetings. Over 1,100 people showed up at these
    meetings. We just had eight Governors in town yesterday to meet
    with the Vice President and myself. And we know there are
    people all over America dreaming about high-speed rail. We have
    $8 billion now, and another $5 billion in the budget. But the
    answer to your question is, DOT is going to make the decisions.
        Mr. LaTourette. Great. And maybe there won't be losers;
    there might be some people disappointed. But everybody will
    win, I am sure, with your leadership.
        Secretary LaHood. I will try and make a point, Mr.
    LaTourette, to make sure there are no disappointed people.

                                AUTO TASK FORCE

        Mr. LaTourette. Excellent. We look forward to that.
        I want to congratulate you as well on the FAA
    reauthorization in terms of getting Jane Garvey involved in the
    negotiations with the air traffic controllers. It is a travesty
    that the former Administrator of the FAA imposed a contract on
    those people. And Mr. Rodriguez has talked about some of the
    difficulties of recruiting, but I am a believer that not
    everybody is entitled to a contract that they love when they go
    to work, but everybody is entitled to a contract when there is
    collective bargaining that has been collectively bargained. And
    so thank you for your work and your service on that.
        On the question of the Trust Fund and TEA-LU, as you know,
    the Blue Ribbon panel appointed in the SAFETEA-LU legislation
    recommended a 40-cents-a-gallon tax increase. You have been
    pretty clear about that. It also talked about vehicle miles
    traveled.
        When Mr. Latham was talking, I heard this giant thud around
    the corner, and I think that was Jim Oberstar falling over when
    he said that we are not going to have a reauthorization this
    year or next year. Chairman Oberstar tells me he is going to
    have the bill on the floor the third week of June. And as you
    know, the missing piece, and again, I would think it would be a
    travesty not to have a reauthorization. I think that President
    Bush was poorly served by some bean counters when they came in
    at $256 billion over 6 years, which was clearly inadequate. And
    2 years later, we delivered that bill, and we continue to have
    some problems.
        So I hope whatever the fix is, if it is vehicle miles
    traveled, if it is tolling, I guess we are not going to have a
    gas tax, but whatever it is, we need to have that program in
    place. It needs to be a solid 6-year program so States can plan
    and make improvements and do all the things that are necessary.
        The last thing I just want to--the yellow light is on, so I
    will be real quick. This Auto Task Force is a disaster, and it
    is a disaster because decisions are being made--and I listened
    to a speech you gave where the administration didn't make any
    decisions on the auto dealers; it was the car companies. But by
    creating these structured bankruptcies for Chrysler and General
    Motors, the task force has created an environment where the car
    manufacturers are going into court, and they are waiving the
    dealers' day in court in Federal legislation. They are
    trampling over State franchise legislation, and people who have
    sold cars, and each car dealer, according to NADA, employs
    about 60 people, if you add up the Chrysler and the GM car
    dealerships and forget about the 30,000 UAW workers that have
    lost their jobs and the 20 communities that are now suffering,
    it is over 200,000 people that are losing their jobs. And,
    quite frankly, the Sopranos would be proud of what General
    Motors is doing in this letter that they have sent out, that
    not only if you question them, you are out; if you don't buy
    more cars, you are out. They wouldn't be able to do that
    without this structured bankruptcy facilitated by the Auto Task
    Force.
        I know the President, when he announced the Chrysler deal
    on April 30--I am not one of those Republicans who wants the
    President to fail. I think if he fails, the country fails. But
    he said no communities would be disrupted by the bankruptcies
    and nobody that worked for Chrysler would be disrupted as a
    result of the bankruptcy. That is not true. And I would hope,
    since we have had a double delegation; Congress has delegated
    it to the President, and the President has delegated it to this
    non-elected task force, I would hope that when the President
    comes back from the Mideast you would sit down and chat with
    him. We have to have fairness in this, Mr. Secretary, and it is
    just not fair.
        Secretary LaHood. Well, I wouldn't mind responding to that,
    if you wouldn't mind, Mr. Chairman.
        Mr. Olver. Briefly.
        Secretary LaHood. I got your point.
        Look, I don't know of another President who has done more
    for the American automobile manufacturer than this President in
    terms of taking an interest, and devoting a lot of time and
    energy. And the amount of money that has been loaned to the
    American automobile manufacturer is substantial. It is real
    money.
        I think the fact that Chrysler is about ready to come out
    of bankruptcy means that it was a pretty good blueprint for
    saving Chrysler. And I will just tell you this, Steve, the Auto
    Task Force did not tell GM or Chrysler which dealerships to
    close. We didn't. And the President didn't say, okay, now you
    have got to close this one in Peoria or this one in Cleveland,
    or whatever. We didn't do that.
        I have talked to the GM executive, and I have talked to the
    Chrysler CEO. These are very painful, hard decisions. They were
    not made lightly. I will tell you, the GM CEO has worked for
    the company for 25 years. His father worked for the company for
    35 years. He knows a lot of these employees. I am not saying he
    knows every salesman around the country. But these are hard
    decisions for these people.
        And I think the administration has done all that they could
    have done to save the American automobile manufacturer. And I
    think the Chrysler thing is going to show that it seems to be a
    pretty good blueprint for saving the automobile manufacturer.
        Mr. Olver. Mr. Pastor.

                                    NEXTGEN

        Mr. Pastor. Thank you, Mr. Chairman.
        Good morning, Mr. Secretary. Congratulations, and welcome
    back to the appropriation room.
        Secretary LaHood. Thank you.
        Mr. Pastor. First of all, I want to congratulate you and
    also thank you for recommending Victor Mendez as the Federal
    Highway Administrator. He had his hearing Monday, so I assume
    he will be coming to work for you very shortly.
        Secretary LaHood. Well, thank you for recommending him.
        Mr. Pastor. Well, since I gave you one good recommendation,
    maybe you want to go back to the ``L''s. And as you look for a
    railroad administrator, you might go back to LaTourette.
        Secretary LaHood. After his statement, I don't think he has
    a shot right now.
        Mr. Pastor. I want to talk about NextGen. And being on this
    committee over the years, I see deja vu all over again in terms
    of how the process is working and the possibility that the
    system may not come out on time or under budget, and would
    continue to have some problems. That troubles me because, like
    you, we fly here frequently.
        And then when the report came from ADOT IG, it kind of
    perked me up again. And one of the comments that is made is
    that, ``The FAA lacks a detailed plan as to how to transition
    from the existing system to the NextGen architecture. The FAA
    needs to develop a strategy for assembling a skilled workforce
    that can appropriately manage and integrate these complex
    systems and contracts.'' The one that I think that you will
    probably resolve, ``The FAA needs to develop a stakeholder
    initiative plan that will ensure that aircraft operators
    acquire NextGen equipment.''
        It seems to me, I know you will be looking at it, but in
    the past, we had problems in getting the Federal agencies that
    were involved in developing NextGen just getting together and
    working on it. In conversations I have had with some of the
    stakeholders, the airline industry, both commercial and
    general, and the air traffic controllers, there seems to be
    that there isn't involvement of the stakeholders as this system
    is being developed. I can tell you that with the existing
    system, we sat here a number of hours talking about the radar
    screen and the mouse because the air traffic controllers were
    concerned about how the equipment affected them and how they
    could use it.
        Talking to some of the airline people, they are saying
    there is a pilot project, that U.S. Air is going to be involved
    with NextGen in Pennsylvania. But I think the system needs to
    develop itself with the stakeholders having meaningful input so
    that, at the end, the aircraft industry, both commercial and
    general, knows how it is going to fit and how it is going to
    work. The air traffic controllers will know whether or not the
    system is one that they can use effectively, and FAA will have
    a system that can transition from the old to the new
    effectively and make our sky safer for the Americans who will
    be up in the air.
        So I bring those thoughts to you. And I know that you are a
    problem solver, but I am concerned that, in the past,
    everything has been done kind of isolated in a vacuum, and I
    would suggest to you that there is probably a better way of
    doing it.
        Secretary LaHood. Look, I think, Mr. Pastor, you should
    know that this is a new day at the Department of
    Transportation.
        Mr. Pastor. I know that.
        Secretary LaHood. The President has appointed about as good
    an FAA administrator as we can have to get to NextGen. That
    will be Randy Babbitt's number one priority. He was a
    commercial pilot for 25 years. He knows this stuff. He knows
    the importance of the airline industry having the best
    equipment in the planes.
        The other thing is, I think there is a commitment from the
    White House that we have to get to NextGen. The President
    understands this, and so do his people. I think we will be
    there sooner rather than later, and sooner than a lot of people
    would have ever imagined. This is a big, big priority for us.
    It can really help us in saving a lot of fuel. If you have the
    right equipment, you can direct planes in and out of airports
    so they don't have to fly all over kingdom come, and you can
    relieve some congestion and save some jet fuel. But the safety
    part of it is the most important part of it. And this will be
    the number one priority for Randy Babbitt, for his time at the
    FAA, to get us there. And we think we are going to get some
    help from the White House on the funding part of it, too.
        Mr. Pastor. Thank you.
        Secretary LaHood. Can I just also say I was in Phoenix
    recently and had a chance to meet with the controllers there,
    but also to tour the air traffic control----
        Mr. Pastor. Did you like the tower?
        Secretary LaHood. Congratulations. I think you had
    something to do with that. It is state-of-the-art. It is
    magnificent. The controllers love coming to work there.
        Mr. Pastor. I can point it out to Jeff Flake that that is
    what an earmark can do for you.
        Secretary LaHood. I will let you tell Jeff that.
        Mr. Olver. Be careful, his head will get even larger.
        Mr. Carter.

                                  SMART GROWTH

        Mr. Carter. Thank you, Mr. Chairman.
        And Mr. Secretary, I am pleased to see you. I always
    respected your wise counsel while we were colleagues, and
    certainly respect you on the big job you have taken on.
        Secretary LaHood. Thank you, Judge.
        Mr. Carter. First off, the first thing I was going to ask
    about is the first thing that Mr. LaTourette asked about. I
    have one of those hubs, and I am very happy to know that I will
    be able to report that that is going to have action very soon.
        Secretary LaHood. Yes, sir.
        Mr. Carter. Last time we all were here, you all talked to
    us about your concept of transportation as it relates to growth
    of cities and city density and so forth. And I had some
    questions and some concerns that I was trying to figure out. It
    really was less about transportation and more about density,
    but you all seem to be teamed on this. This smart growth idea,
    which would move us more to mass transit, if I understood it,
    we would basically turn the cities back into themselves and
    fill in the blanks before we would grow out any farther. And
    that raised a question that came to my mind, are we looking at
    a future of Federal land use planning, Federal zoning
    ordinances? Is there something that is going to restrict our
    city's outward growths to cause them to grow back into
    themselves and become a higher density? Is that the plan?
        And as part of that question, the EPA is already working on
    50--they got $50 million that they are out there working on
    smart growth already. Is this going to be a joint operation
    between DOT and HUD or how is this going?
        Secretary LaHood. Well, Judge, we are not going to create a
    national zoning department. We have no intention of doing that.
    We will leave that to local officials to decide what they want
    to zone and where they want to zone it.
        But I will give you an example. When I was in Houston, I
    took a light rail from downtown out to what I believe was one
    of the most comprehensive health communities in Houston where
    they have M.D. Anderson, the Children's Hospital, the Women's
    Hospital. And the people that I saw on that light rail were
    people who didn't want to get into their car and get into
    congestion in Houston and drive out there; and also people that
    maybe couldn't afford to buy a gallon of gasoline, but needed
    to go see their doctor. And that's what we are talking about--
    is creating opportunities for people who maybe don't want to
    own two or three automobiles.
        Look, every family is going to have a car. We are not going
    to eliminate cars. We are not trying to do that. We are trying
    to say to people, if you would rather get on a light rail or a
    bus or a metro line or a bike path or a walking path to go to
    your doctor, to go to the grocery store--or even a street car--
    then you should have the option.
        I mean, Portland is a classic example. They not only make
    the street cars there, they use them; and that enables people
    to think that they don't always have to get in their car to go
    somewhere, and they don't always have to sit in an hour and a
    half of congestion to go see their doctor or go to the grocery
    store.
        So we have the opportunity at DOT to work with EPA and HUD
    to create opportunities for people to use other modes of
    transportation. We are not going to get in the zoning business,
    though.
        Mr. Carter. Houston is a perfect example to talk about,
    because in 1960 I accidently got laid off on the other side of
    Houston trying to get back over to the southwest side of
    Houston, and found out to my chagrin that it was 168 miles
    across Houston by street. And so I wasn't going to walk home.
    But that's another story.
        Secretary LaHood. But maybe you could take a light rail.
        Mr. Carter. But a good light rail out of----
        Secretary LaHood. Yes, right.
        Mr. Carter. But the impression was given last time that the
    only way you would get the massive urban sprawl cities like
    Houston, L.A., and others to quit being further urban sprawl
    was there were going to be some kind of restrictions that say
    that, first, the cities filled--I believe this is exactly what
    the HUD Secretary said--would fill in the empty spaces inside
    the city before they moved out of the city. And they would
    correct some density areas and maybe make them higher density
    areas as the growth of the city's issues to provide the
    incentive for rail issues.
        I am all for high-speed rail. I am not knocking rail.
        It is interesting that that rail that you rode on, there
    used to be a trolley that ran up and down that street. They
    took it out before I was born.
        So, anyway, getting back to today, I am not so concerned
    about the rail as I am concerned about the density issues,
    because it looks like to me the Federal Government is going to
    have to impose restrictions to make people do that.
        Is that what you think they envision to do?
        Secretary LaHood. That is not what I envision to do. What I
    envision to do is create opportunities for people to use a lot
    of different modes so they have a lot of different options in
    the event that they can't afford a car or can't afford a gallon
    of gasoline, and they want to use a clean-burning light rail or
    a natural gas bus or a diesel bus and create the kinds of
    communities where you don't have pollution floating around the
    air, where you feel like you can go out and take a walk or ride
    a bike--you know, lots of options for people.
        Mr. Olver. And you are not going to get into zoning?
        Secretary LaHood. We are not going to become a national
    zoning department.
        Mr. Carter. That is good news. Thank you.
        Mr. Olver. Mr. Berry.
        Mr. Berry. Thank you, Mr. Chairman.
        I would associate myself with the nice remarks that have
    been made about you, Mr. Secretary. We are already talked about
    most of my issues before today, and I won't take up anybody's
    time.
        Do we have any problems that money won't solve?
        Secretary LaHood. No, sir.
        Mr. Berry. I was afraid of that. And I am glad to hear we
    are not going to have a national zoning commission, too. I
    applaud your efforts there.
        The reason they have got that situation in Portland is
    because Blumenauer won't let them have cars. He makes them all
    ride bicycles out there.
        Thank you, Mr. Chairman. I yield back.
        Mr. Olver. Ms. Kilpatrick.

                      METROPOLITAN PLANNING ORGANIZATIONS

        Ms. Kilpatrick. Thank you, Mr. Chairman.
        And good morning, Mr. Secretary. A breath of fresh air--
    thank you so much--and one of the excellent appointments the
    President has made.
        Secretary LaHood. Thank you.
        Ms. Kilpatrick. My region of the world is in decimation, as
    you know, but there is some hope, there is always some
    opportunity. We have the ports, highways, the freight rail
    lines, airports, the bridges, the international waterway, high-
    speed rail that comes from Chicago into Michigan--not across
    Michigan yet. We hope we will win one of those corridors, and
    we are working on it.
        We are primed to be one of the international gateways that
    the President talks about, and I want to work with you on it. I
    have done some work on it. We are ready for it.
        Our MPO--and we talked a little about this when we met
    recently, mine. I don't know about all of them, but all them
    need to be looked at; I am not sure how they fit. Mine had $100
    million out of the Recovery Act--can't yet find out what they
    are doing with it.
        The transportation authorization was due to Chairman
    Oberstar a week ago or so. We submitted 10 or 15 of them. Many
    of them--my MPO went to my district and asked them to ask for
    that. So I again I asked about them: What about the $100
    million? One of the things that Oberstar is requiring is that,
    if and when it is authorized, we have to have local money.
        I want to make sure our MPO works--helps on that. I don't
    know yet what they do.
        Secretary Napolitano was in our district last weekend
    looking at our bridges and waterways and the infrastructure
    needs and all that. One thousand less trucks a day cross that
    International Bridge.
        We were at $1 billion a day before the demise of the
    industry. We don't know what that is going to come to, but the
    whole traffic pattern, I am urging you to take a look at it. I
    am not opposed to one project over the other project. I want
    the encompassing vision that I talked to you about.
        If we use my hand, and this is the world, this is where
    Michigan is, back and forth. I want to do world stuff, and I
    want you to help us. Because as I said, as I started talking,
    we have the infrastructure for much of what is needed, the
    international waterway, our friendly neighbors with Canada. And
    doing what we need to do, not this project or that project
    based on old projections, but bringing it all together and
    becoming international to hire, to increase jobs, to increase
    our universities. I see all of that.
        We have a great university community, Wayne State, Michigan
    State, UofM right there. All of that needs to come together
    now.
        What I don't want you to do--and I think you told me you
    won't--don't get involved in this or that, because it is
    neither at this point--it is a bigger vision--a 1,000 less
    trucks a day, the revenue source decimated, people out of work.
        I love what you said before coming this morning. You have
    the vision, and I believe the President does too. I want to
    work with you on it. And, like Chairman Olver, as well, don't
    be bothered by individuals like myself talking about one this
    or that. It is a new America, and that is what I think we are
    building.
        So my question--it is not really a question, but a
    commitment from you, this light rail from Detroit to Ann Arbor,
    we started 5 years ago in the planning. We hope to get it
    reauthorized in the next session of whatever the LU is going to
    be, the next transportation bill. And Oberstar has said by
    October, Chairman Oberstar said he is going to have you an
    authorization bill, somewhere. I know some people said nothing
    is coming back.
        We need one, because transportation still is the engine
    that will fuel the development that we want to see.
        Can you speak on the MPOs? Have you had a chance to look at
    it? Are they archaic, need to be turned out? There has been no
    change in them. I chaired the transportation budget in the
    Michigan legislature. I have been here 13 years, so it had to
    be 17 years ago.
        Secretary LaHood. The MPOs did a good job over the last
    several years, but there is going to be reform of MPOs. They
    don't match the structure of America now. They need to provide
    a much wider opportunity for people. I have learned this from
    talking to Mayor Daley and other mayors who are hamstrung by
    the way that MPOs are structured now.
        We need to restructure them, reform them, make them look
    like planning organizations that reflect the area in which they
    now are operating. And they have to cover suburban areas, rural
    areas, so that they are much more inclusive.
        And I think we are working on that in the Department. That
    is one of our priorities.
        Ms. Kilpatrick. Thank you very much. And our MPOs are seven
    counties; two-thirds of Michigan's population live in those
    seven counties. I look forward to working with you on all the
    vision.
        Secretary LaHood. Yes. Let me just say also that your
    governor was with us yesterday for our discussions on high-
    speed rail. And her suggestion is that if we need facilities to
    build the high-speed rail equipment because of the Buy America
    provisions that are in the economic recovery plan, there is a
    lot of capacity.
        Ms. Kilpatrick. And, fortunately, a lot of coal factory
    capacity can be retooled.
        Secretary LaHood. But if we used the Department of Labor
    people to retrain people, to build train cars, equipment like
    that--that is something that your governor suggested and it is
    a good idea.
        Mr. Olver. Excellent concepts, excellent concepts.
        Ms. Roybal-Allard. We need to move on.

                                    TRANSIT

        Ms. Roybal-Allard. Thank you.
        Welcome, Mr. Secretary, and I also want to associate myself
    with the praises that you have been given.
        Secretary LaHood. Thank you.
        Ms. Roybal-Allard. I also would like to associate myself
    with the comments made by Mr. Rodriguez with regard to the air
    traffic controller positions; and I will be following up with
    Mr. Babbitt as well.
        Last year, as you know, Americans took 10.7 billion trips
    on public transit. That was the highest in 52 years. This
    increase in the use of public transportation requires expanded
    services and capacity, but with States, State budgets in
    crises, the opposite is happening. In fact, more than 80
    agencies across the Nation have been forced to cut service, lay
    off workers and raise fares. You have stated publicly in recent
    weeks that you are open to the idea of providing operating
    assistance to transit agencies.
        One idea that has been promoted by local agencies is to
    have the flexibility to use Federal capital moneys for
    operating assistance. Are you open to considering this option
    and, if not, what ideas are you considering to help transit
    agencies during this time of crisis to keep up with the current
    need?
        Secretary LaHood. I am open to this idea. If we provide
    money to buy all these buses and you don't have people to drive
    them or run the organizations, it is counterproductive.
        I am open-minded to this idea, and I know there is a
    provision already drafted. Somebody put an amendment on the
    Senate side to allow this to happen. I don't know if it will
    prevail or not, but I think it may be a part of the
    supplemental.
        But for the long term, I think we need to be open-minded.
    We need to have some flexibility about these things when there
    is a downturn in the economy.

                                HIGH-SPEED RAIL

        Ms. Roybal-Allard. Thank you.
        There has been a lot of discussion here about high-speed
    rail, and you said that there will be no disappointed people. I
    hope that is also going to apply to the communities that are
    going to be disrupted by high-speed rail, but will not be able
    to afford to even ride on it, on the high-speed rails.
        I particularly, you know, of course, focus on California,
    and I believe that this mode of transportation does, in fact,
    have potential for our growing and challenging transportation
    issues in terms of moving people quickly and efficiently.
        However, I have concerns about it, because building a high-
    speed rail route along existing highways, or existing rights-
    of-way in places like Los Angeles, for example, may minimize
    the negative impact to other communities.
        But the concern that I have that it would add to the
    damages that have already been done decades ago, when the new
    interstate system divided and destroyed poor communities and
    caused lingering health issues for residents. In my district
    alone, for example, communities are dissected by no fewer than
    eight State and Federal highways and several railroads.
        So building a new high-speed rail system along existing
    rights-of-way is far more disruptive and intrusive than
    proponents would like us to believe. And it certainly would be
    in communities like mine where, as I said, the residents in
    those communities aren't going to be able to afford the
    proposed fees or the charge of riding these rails.
        You have listed five elements that are important to the
    reauthorization of surface transportation, and one of them was
    creating liveable communities. I think there has been a little
    bit of discussion about that. I hope that it also means
    protecting existing communities.
        And the question that I have is, what is the
    administration's commitment to ensuring environmental justice
    for existing communities already negatively impacted by transit
    projects? And does the administration have any plans to
    mitigate any of these additional impacts for these communities,
    and will the administration promote fairness and justice by
    making sure that it is not only poor communities that share in
    the burden of high-speed rail, but you know, all communities.
        I am just talking from my experience, for example, growing
    up in Los Angeles, where freeways just destroyed communities,
    took away homes, when the logical route was actually to go
    through an industrial area, but for political reasons and so
    on, that didn't happen.
        So that is the concern that I have. And my question is,
    what is the commitment of the administration to ensure
    environmental justice and liveable communities for all
    communities?
        Secretary LaHood. Well, obviously there would be a
    commitment. I think we would be sensitive to some of the
    concerns that you have expressed here.
        I have talked to lots of people from California about high-
    speed rail. There is a lot of interest there. People have been
    working on it for 10 years. But, it will be up to the State and
    the people in California to decide what kind of proposal they
    put together.
        But I think we have to be sensitive to what you have just
    said here. You know, the last thing we want to do is be
    promoting liveable communities and then ruin neighborhoods. We
    are not going to be in that kind of a mode.
        And so what I would commit to you is that we will work with
    you. But I encourage you to also work with some of these high-
    speed rail advocates to make sure, when they send their
    proposal to DOT, it is not developing high-speed rail and
    destroying neighborhoods.
        We are not for that. I mean, that goes against what we have
    been promoting.
        And so we will work with you, but I also encourage you to
    work with some of these high-speed rail advocates because they
    are going to be sending us a proposal they they have been
    working on for 10 years. And I know you are well aware of that.
        But I will commit to you that we will be sensitive to this
    idea that these neighborhoods are important.
        Ms. Roybal-Allard. Thank you.
        Mr. Olver. Thank you very much.
        We are expecting to have some votes shortly. I think we can
    manage to finish our round and do so in a reasonable way.
        Mr. Price.

                                 TIFIA PROGRAM

        Mr. Price. Thank you, Mr. Chairman.
        Mr. Secretary, I will add my words of commendation, welcome
    and congratulations. We are very happy to have you where you
    are.
        Secretary LaHood. Thank you.
        Mr. Price. I have a question I will try to make brief,
    although it is a little complicated. Like many questions we ask
    on this committee, it is of national import, but it also has
    local and State implications.
        Let me try to formulate this very briefly. It has to do
    with the TIFIA program.
        Secretary LaHood. Yes.
        Mr. Price. I understand the program is somewhat in flux.
    And this may be a particularly timely question because I
    understand your credit committee, DOT's credit committee, is
    going to be meeting tomorrow to talk about this program and to
    review the new policy the Bush administration sought to impose
    regarding subsidy fees.
        The national concern, I would guess, is obvious. This
    program has undergone a good deal of fluctuation and change. In
    North Carolina, it is of interest because one of our major
    projects, I-540, the Triangle Expressway, is at stake. This is
    a $1.2 billion project. It is absolutely shovel ready. Our
    State DOT has completed the ratings process, and is set to
    issue a AAA bond to fund the remainder of the cost.
        But now the goal posts have been moved, and the additional
    subsidy they have been advised they have to cover is
    threatening to delay the bond issue, to require them, in
    effect, to start over. That is why we need to let you know
    about this situation and ask for your help.
        The TIFIA program went from being underutilized in the
    early years, as I understand it, to now being very much in
    demand, and is unable to cover the demand. The Department
    appears to have responded in a haphazard way to this change--
    abandoning the first-come, first-served principle at one point,
    dividing the available budget authority equally among projects
    in the pipeline, rather than on a percentage basis, instituting
    a new brand of subsidy fees; and imposing a moratorium on
    projects.
        It is kind of a muddle right now. So it is a good thing
    that you are looking at this. We are caught in the cross
    currents in our State. We are probably a good example of how
    this is not working.
        Our loan application was approved before the moratorium was
    imposed. But now we have been advised that we are going to have
    to pay a substantial subsidy fee under regulations that were
    not in place at the time the loan was approved.
        Initially, the fee was going to be 24 million with 20
    million covered by their equal share of TIFIA and 4 million for
    us to cover out of pocket. But in the spring, following a very
    minor change in the bond portion of the financing plan, which
    in no way affected the loan amount, we were told the subsidy
    fee would be 33 million, which is 17 million out of pocket.
        In the meantime, the ratings process had already been
    completed, earning a AAA score. It really doesn't seem right or
    sensible to have to go through that all over again to come up
    with an additional 13 million.
        This decision to divide the subsidy pot up equally because
    of a lack of funds seems to be fairly dysfunctional. It is not
    holding up well, and I could go into that in more detail, but I
    won't.
        I think you understand the problem and, of course, you have
    inherited it. But there is an opportunity now to get it right;
    and I want to say this is not just a matter prospectively of
    getting it right, but there are some projects in the balance
    that really are going to depend on some timely adjustment here.
        And that is the best I can do for a brief overview, and I
    appreciate your response.
        Secretary LaHood. Well, no, I am familiar with this. You
    have laid it out very carefully. These decisions are
    recommended to me, and the best thing for me to do is take that
    piece of paper that you just read from and take into account a
    number of things that have intervened and do the best that I
    can with it.
        Mr. Price. Well, I am very grateful for that. I will make
    sure you get that piece of paper and everything else you need.
    We are very grateful for your cooperation. Thank you.

                            AIR TRAFFIC CONTROLLERS

        Mr. Olver. Ms. Kaptur.
        Ms. Kaptur. Thank you, Mr. Chairman.
        Welcome, Mr. Secretary. I am like everyone else. I am sorry
    you are not here anymore. I am glad for your new appointment,
    but I miss you; and we wish you very well.
        Secretary LaHood. Thank you.
        Ms. Kaptur. I will take you through several things fairly
    quickly.
        Air controllers, I don't know if you have a figure with you
    on the number of air controllers that will be hired over the
    next several years, but I would certainly appreciate any
    information your staff could provide us about those recruitment
    efforts and how we, as a community, could better support--we
    have such high unemployment--perhaps recruiting future
    controllers in areas of high unemployment.
        I understand once they are recruited they enter a very
    difficult process where they have to pay their own hotel rooms
    and go out to Colorado and all this other stuff. I want to try
    to understand what happens to people when they go into training
    in this extraordinarily important position, and what we might
    do to support them during their training period, make the glide
    path easier.
        Would that be possible?
        Secretary LaHood. Of course, we will give you a report.
        The other thing is we are in very serious negotiations with
    the controllers right now, and it is going very well. I don't
    know what will happen, but I think we are going to have a
    happier controller group when the negotiations are over than we
    have had in the last several years.
        But we will give you a report on recruitment, how it is
    done, what happens after you are actually offered a job, your
    training and all of that. Some of that may change after these
    negotiations, but we will give you the update on that.
        [The information follows:]

        [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

        Ms. Kaptur. All right. Thank you, Mr. Secretary, very much.
    Greatly appreciate it.
        Number two, on both MORAD with Maritime Administration and
    with high-speed rail, I am wondering if you could identify
    someone in your Department to work with us, A, on convening a
    meeting of those who represent seaway communities, St. Lawrence
    Seaway communities, and talk a little bit about the--have a
    discussion about modernizing those seaway authorities as we
    move into this new millennium.
        I think people have ideas on energy and intermodal, and
    they need a way to do that. If you can think of a way to do
    that with Members, I would certainly greatly appreciate it.
        Secretary LaHood. We will do that.

                                HIGH SPEED RAIL

        Ms. Kaptur. And then I know both Mr. LaTourette and I,
    anchoring both ends of the State of Ohio, are very interested
    in that high-speed rail from the eastern side of Ohio, the
    greater Cleveland area, west of Toledo into Chicago. We are
    planning on convening sometime this summer in Ohio on that, and
    we would love to have someone from your Department join us on
    that.
        Secretary LaHood. We will be there. And your Ohio
    transportation administrator or secretary was with us
    yesterday, and I had a very good discussion with her. And she
    is right on top of all of this.
        Ms. Kaptur. Beautiful. I thank you.
        And then two final points. One is in the Recovery Act.
    There is $1.5 billion appropriated for discretionary grants for
    capital investments and surface transportation. I wondered if
    in the final moments you could discuss what you are going to be
    looking for as chief criteria in evaluating those.
        And, number two, as you do your work, if I have any
    suggestion for you through the massive programs you manage, in
    a place like I live, it would be great to have incentives or
    directives from DOT to get local communities to consolidate and
    manage their public fleets.
        We have city fleets, transit fleets, county fleets, fleets
    for the mentally disabled, postal fleets. So you have Federal,
    State, county, et cetera, with a green--if you could get them
    to think green and consolidated maintenance facilities with
    consolidated fueling, the amount of money we could save. And
    our garbage trucks only get 3 miles a gallon; the postal
    vehicles, on average, get 10 miles a gallon in regions like
    mine.
        I think that you have an enormous capacity to encourage.
    And I don't think communities are thinking this way. We could
    save a lot of money if we were to do this in a more intelligent
    way and manage our maintenance fleets, those doing the work, in
    a very proactive way. We could bring up the mechanics of the
    future, connecting to our local colleges and so forth.
        And right now in apprentice programs, this isn't being
    done. This is all very haphazard, too much duplication. And,
    frankly, the miles per gallon are proof in the pudding it is
    not working. And I doubt that my community is the only one that
    faces that.
        So if you could encourage, through the expenditure of some
    of these dollars that are coming down, that kind of
    consolidated effort, maybe you could have some prototypes or
    demonstrations or give awards to the communities that have done
    it right. But I just put that on the table as something to be
    considered.
        Finally, I have to ask you, you just returned from Europe
    where you were able to look at high-speed rail systems. I
    wonder if you could discuss that with us for a moment. I am
    particularly interested in the Chunnel between England and
    France. I think it is about 26 miles long or something, but I
    think about a chunnel between Ohio and Ontario and connecting
    two economic powerhouses and what it would take to do that in
    our country.
        Could you discuss high-speed rail?
        Secretary LaHood. Sure. On the 1.5 billion we are asking
    for projects of national significance, and we are looking at
    some port projects, just because there was no money for ports,
    really, in the economic recovery. But it will be more than
    ports--we will be looking at national significance, and
    intermodal projects, and we know that some ports are going to
    apply for expansion assistance.
        And on the high-speed rail, we took a train from Paris to
    Strasbourg. We went 200 miles an hour, state-of-the-art, very
    comfortable.
        In Spain, we went from Madrid to a town I can't think of
    right now, 250 miles per hour. There were 450 people on the
    train, they paid $65 one way.
        If the train does not arrive on time in Spain, the people
    get their money back. So anybody that boards that train is
    hoping it doesn't get there on time as long as it gets there.
    They get their $65 back. I mean, these are state-of-the-art.
        We are not going to have trains going 250 miles an hour in
    America. But what we are going to have is an opportunity for
    America to experience passenger rail service that is
    comfortable, efficient and cost-effective, and provide jobs to
    people to build these, to build the equipment, to build it in
    America.
        The companies that are doing this now in Europe are going
    to partner with American companies. They have the technology,
    they know how to do it. They are ready to do it. They were
    practically running us over in order to get appointments to
    talk to us. They are ready to come to America and share their
    expertise.
        So, people who travel to Spain and Europe and ride on the
    high-speed rail wonder why we don't have it in America. Well,
    we don't have it because it has never been a priority.
        Think if Eisenhower had signed a bill that said ``high-
    speed rail in the interstate system,'' do you know what we
    would have? We would have state-of-the-art high-speed rail. But
    we have state-of-the-art interstate and it is the model for the
    world.
        We are going to have high-speed rail. It is the President's
    dream. It is something that he is committed to. He is the one
    that put the $8 billion in economic recovery and another 5
    billion--if you all will go along with that--over the next 5
    years. Americans want this.
        And so--Europe has got it down to a real science, and so
    does Asia. And I encourage any of you on your next visit to hop
    on a high-speed rail line. It is coming to America.
        Ms. Kaptur. Mr. Chairman, I just wanted to ask the
    Secretary. I have heard from so many people, America can't do
    250 miles an hour; you have got a teeny little country like
    Spain and a massive country like the United States.
        I really can't understand technologically why we can't do
    250 miles an hour.
        Secretary LaHood. Well, it goes back to what Ms. Roybal-
    Allard was saying. We have communities shoehorned all over. It
    is pretty hard to make a train go from Washington through
    Philadelphia, through Wilmington, to get up to 250 miles an
    hour. I mean, you can't do it.
        Now, in California, you know, they have some dedicated
    opportunities here, but I think we have to be sensitive to what
    Ms. Roybal-Allard said about the communities that it is going
    to go through.
        You know, it is conceivable, you could start in Chicago and
    go to St. Louis and get up-- if I predict a speed here, that
    will be the headlines, so I am not going to do that.
        But, anyway, we are not going to get to 250 because America
    is already built out. If you get on the Spain train, it goes
    across the rural part of Spain. It is direct. You are going 250
    miles an hour, and it is very comfortable.
        Ms. Kaptur. Thank you.

                               FUNDING MECHANISMS

        Mr. Olver. Thank you.
        We are finished with our first round. The votes are holding
    up, so we will at least start again here and see how far we
    get.
        It is my turn now. I just want to go back to where I was on
    the funding issue for a moment.
        The Policy and Revenue Commission, which was part of the
    previous authorization bill, had assessed for the year before
    they made their report that the total expenditure in this
    country, in Federal, State and local funds for the transit and
    highway programs was about $85 billion.
        A major portion of that, more than half of that, is Federal
    money. And none of that came from any of the creative revenue
    solutions--because they offered some creative ideas about what
    could be done, including the ones that you had mentioned, Mr.
    Secretary--but also such things as customs duties and imposing
    fees on vehicle registrations and things of that sort, which we
    basically do not do from the Federal level. Our dedicated
    sources of money have been basically from the gasoline tax.
        And so it has only been the States that have used tolling
    and HOVs and public-private partnerships thus far. And it takes
    a fair amount of time to create those, if we decided to go that
    way at the Federal level, and a lot of competition with the
    States because that has been some of the way that they get
    their money.
        So your question of--your quote of, you have to be creative
    about this, you really are going to have to be creative about
    it to make it all fit together, I think.
        Now, I had wanted to contrast that--and I am going to add
    on just a little bit and go slightly farther than Mr. Pastor
    did on the NexGen issue. In your written testimony, your words
    on the Federal aviation--I will quote them for you. It says,
    ``Federal Aviation Administration should move toward a model
    whereby the Agency's funding is related to its costs, financing
    burden is distributed more equitably and funds are used to pay
    directly for services the users need.''
        That sounds very much like dedicated spending, the sort of
    thing that is most likely to be acceptable to people in
    general. I mean, I could relate other sorts of instances along
    the way. And so there--at the moment, we don't yet have a
    problem with our trust fund; that is what it is that is going
    on there.
        So it puts, again, all pressure on the T&I Committee and on
    the administration to come up with something that is going to
    be a funding mechanism that will get the kinds of money we
    need. The Policy and Revenue Commission had stated that we
    basically need twice as much money fairly soon and over a 50-
    year period, two-and-a-half times as much money, on average,
    year by year to do the kind of transportation, surface
    transportation system that we really need.
        My comment on the NexGen is this--and I am very pleased;
    you have already said that your new FAA administrator is very
    concerned about it and is going to move more quickly. I would
    hope your goal would be a rather specific one, to cut the time.
    This has been something we have been talking about for all the
    years I have been on this committee, which is most of the
    decade now; and it is now being said that we are headed onto a
    system that will get us NexGen in place by the year 2020. We
    ought to be able to cut that in half.
        Secretary LaHood. I agree.
        Mr. Olver. You agree. Okay. Then we don't have anything
    else. But you can't do it with 865 million. It is going to have
    to be larger once you get up and ready to go and know really
    what we have to do. We really have to put some effort; and the
    money, as Mr. Berry back there said, It comes down to how much
    money do you need to raise to get to where do you want to go?
        You don't need to comment. You have already done very well.
        Secretary LaHood. I want to tell you, at the White House,
    they are committed to helping us try and speed this up. And all
    it takes is money to speed it up, everybody knows--I mean, the
    stakeholders all know and the people that provide the equipment
    know.

                            AIR TRAFFIC CONTROLLERS

        Mr. Olver. Our traffic control system is antiquated.
        Secretary LaHood. It is. It is.
        Could I just comment? Let me just read this for Mr.
    Rodriguez, Mr. Pastor. I am sorry Ms. Roybal-Allard left, but I
    will send her a little note.
        There are four points here that the staff gave me, and I
    will put it on the record.
        Hispanic recruitment will be addressed in the air traffic
    controller organization's workforce diversity plan. The plan is
    currently being finalized and will be delivered to Congress
    June 16. So if Ms. Roybal-Allard's staff is here, I will give
    this to them.
        FAA, to date, has hired 765 Hispanic controllers,
    representing 5.14 percent of the controller workforce. But we
    will have a focus on doing better. But that is sort of the
    state of play right now.
        We will have this report to you in about a week.
        Mr. Olver. Thank you.
        Mr. Latham.

                             ESSENTIAL AIR SERVICE

        Mr. Latham. Thank you, Mr. Chairman.
        Mr. Secretary, as far as the Essential Air Service, there
    is a substantial increase in that; and basically, from what I
    see, it is pretty much to maintain normal services. It is
    important to two cities in my district--probably was for
    Peoria, too, I would guess.
        Secretary LaHood. Sure.
        Mr. Latham. Can you elaborate the reason for the size of
    that increase?
        Secretary LaHood. Because we got the memo on this, and we
    know this is important to Congress, and it is important to
    communities, and it is important to DOT and FAA that we have
    Essential Air Service.
        Mr. Latham. Are there going to be any proposals--and maybe
    this is a question for later on--to change it in any way, so
    that that we don't see these huge increases?
        Secretary LaHood. I will let you know about that. I don't
    know that there is, but I will check that out.
        [The information follows:]

        The Essential Air Service (EAS) program provides a vital link to
    the national air transportation system for many communities across the
    country. The Administration is committed to maintaining small
    communities' access to the national air transportation system, and the
    primary tool to ensure that is the EAS program. In this regard, the
    President's FY 2010 budget request includes $175 million, a $39 million
    increase over the 2009 level of $136 million (including the $13 million
    recently appropriated in the Fiscal Year 2009 supplemental), for the
    EAS program in order to meet the current needs as the demands for
    subsidized air service increase.
        The EAS program has remained fundamentally unchanged since its
    inception in 1978 while the aviation landscape has changed dramatically
    with the spread of the hub-and-spoke system, regional jets, and low-
    fare carriers. In order to ensure that the program remains responsive
    to the needs of rural America, we intend to review the challenges
    facing EAS and we look forward to working with Congress in an effort to
    restructure the program into a more efficient and sustainable program.

                                    TRANSIT

        Mr. Latham. Okay. I still have, as far as using stimulus
    money for operating in the transit, I mean, I understand where
    you are coming from as far as the difficulties communities and
    entities are having. My concern is, do you ever get that genie
    back in the bottle again afterwards, and will there be
    legislation or a proposal?
        Secretary LaHood. I think this. I think what people ought
    to think about is, during hard economic times we should be
    open-minded about allowing transit districts to do it. And then
    when things improve, then you could set a date certain on it,
    assuming that the economy is going to be better 2 years from
    now, which I think everybody does assume. You could say a date
    certain is the end of the availability of that amount of money.
        Mr. Latham. Is there precedent for any program that started
    up that ever ends?
        Secretary LaHood. Probably, but I can't think of any right
    now.
        Mr. Latham. There is nothing more permanent than a
    temporary government program. You know that. And that is my
    concern.
        Secretary LaHood. Yes.
        Mr. Latham. I don't think we ever get the genie back in the
    bottle again.
        I mean, I have great empathy for your----
        Secretary LaHood. You know, I am taking my cues on this. I
    went to a transit conference where you had transit people from
    all over the country. This is a big deal for them. I mean, they
    are hurting. They can ill afford to pay the drivers of their
    buses and to keep the doors open. I mean, it is a serious
    issue.
        And I think when people like that raise a serious issue,
    you have to be sensitive and try to figure out a way forward
    for them.
        Mr. Latham. No. I understand it, but I am just worried
    about long term. And it is a precedent that could be carried
    over in a lot of different areas, too, and that would be my
    concern.
        We tried in the full committee, or I had an amendment,
    about not supplanting local government shares and things--what
    they are already doing with the stimulus money, and that was
    already rejected in the committee. But this kind of goes down
    that same vein.
        Mr. Chairman, in the interest of time and the bells just
    went, I yield back. Thank you.
        Mr. Olver. Thank you.
        Votes have now been called, which means that we should be
    done here by 12 o'clock, certainly, if we have 15 minutes or
    so. If we take maybe 2 minutes, we can probably finish the
    round for everybody and get everybody one more question in.
        And Mr. Latham and I don't need to have any more time. We
    have had our time.
        I would say that in a couple of days we should pass the
    supplementary budget, which does have a 10 percent allowance in
    that legislation, to my understanding, at least. The problem is
    that the first round of the transit moneys had already been
    obligated before the legal authority is being provided. So it
    would hopefully work for the second round, the second year of
    the transit distributions.
        Mr. Pastor. I am going to go down the line in seniority as
    we go, 2 minutes each.

                                HIGH-SPEED RAIL

        Mr. Pastor. I will ask the question and then maybe in later
    conversation--in October, the railroad administrator or that
    office is supposed to come to us with a national railroad plan,
    as I understood from prior panels.
        In June, I think was it June 16, you are going to come out
    with the guidelines for high-speed rail.
        Secretary LaHood. Right.
        Mr. Pastor. I would hope that as we develop, that this plan
    is presented to us in October, and you have the guidelines that
    there is some kind of connection so that the national plan, if
    adopted, will follow some of the recommendations--which I am
    sure is going to include consideration of high-speed rail.
        So I would hope that when the national plan is provided
    that we are able to at least give you some of our comments.
        Secretary LaHood. Sure. Of course. Of course.
        Mr. Pastor. Because I agree that Amtrak is a great national
    railroad today, but it can get better, and we should do what
    Eisenhower did with our interstates and do a great job.
        Mr. Olver. Mr. Carter.
        Mr. Carter. Thank you, Mr. Chairman. I just have kind of a
    brief--in our last meeting we had, we talked about high-speed
    rail. We were talking about, unless I missed it, the rail
    speeds being 120, maybe to 150 miles an hour.
        Secretary LaHood. Yes, sir.
        Mr. Carter. But I am looking at the 200-plus right now.
        Secretary LaHood. No, sir. I mean, after meeting with these
    folks around the country, I think there are very few corridors
    or regions that are ever going to get to that speed.
        Mr. Carter. Well, we happen to have a proposal that might.
    Actually, they are going 200-plus on a proposal.
        Secretary LaHood. Okay.
        Mr. Carter. Dallas and San Antonio, and then Ft. Hood,
    which is our largest military installation down to Houston.
        Secretary LaHood. Okay.
        Mr. Carter. I was telling them we were not talking about
    200--but if there is a 200-mile-an-hour-plus proposal, it will
    be considered?
        Secretary LaHood. Absolutely.
        Mr. Carter. That is all. Thank you.
        Mr. Olver. Mr. Rodriguez.

                            AIR TRAFFIC CONTROLLERS

        Mr. Rodriguez. Mr. Secretary, welcome once again. And in
    the area of air traffic control, probably, I would ask if there
    are--I know there are additional resources. And you said it
    exactly right, the more resources, the quicker we can get into
    some of these areas. And I think we really need to move into
    that new technology as quickly as possible.
        Secretary LaHood. Yes.
        Mr. Rodriguez. And if you can, let us know maybe in the
    future in terms of what might be needed for us to do that. And
    it just seems that right now, since a lot of those new air
    traffic controllers are needed, we might as well come up with
    the new technology and move it up there as quickly as possible.
        Secretary LaHood. Good point.
        Mr. Rodriguez. Thank you very much.
        Mr. Olver. Mr. LaTourette.

                                AUTO TASK FORCE

        Mr. LaTourette. Mr. Secretary, one of the reasons I admire
    you is, in the 15 years that I have know you, you are a
    tremendously loyal person. And I know that you are now on Team
    Obama, and appreciate your loyalty, and I think you
    misunderstood my observations about the President's task force.
        I think the President has done a wonderful job. And my
    criticisms weren't of the President. My observation is that he
    is being poorly served by this nonelected automobile task
    force.
        So, Mr. Chairman, I would ask unanimous consent--and I will
    get you copies, Mr. Secretary--to insert into the record of
    this hearing an e-mail that they didn't want out, Chrysler
    didn't want out, the task force didn't want out, indicating
    that they tried to work this out. A lawyer on the task force
    told Robert Manzo at Chrysler, Forget about it; we are going go
    into bankruptcy.
        I want to submit an article that appeared the Detroit News
    that indicates that the auto task force tried to set the
    advertising budget for Chrysler, the new Chrysler, during the
    course of the bankruptcy.
        [The information follows:]

        [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

        Mr. LaTourette. I want to submit an article that appeared
    in Automotive News on June 1 that indicates that the task force
    directed--everybody is wondering why the GM bankruptcy is in
    New York. It is in New York, even though it is incorporated in
    Delaware and has most of its stuff in Michigan, because they
    had one poor little guy selling cars in Harlem. And that is how
    they got the hook to create it.
        [The information follows:]

        [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

        Mr. LaTourette. On the question of who picked the
    dealerships, Mr. Nardelli testified--whom you talked about
    earlier--submit his testimony from the bankruptcy proceeding
    that indicates when he was asked to quantify how much these
    things were costing the dealers, he said, We have never
    computed those costs.
        So it is not a matter of cost.
        [The information follows:]

        [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

        Mr. LaTourette. I would also submit for the record a
    transcript the Judiciary Committee had 2 weeks ago, a Wall
    Street Journal article where the witnesses testified that the
    auto task force, not one of them has any experience in the
    automotive business, making cars, selling cars, repairing cars.
    And as a matter of fact, the Wall Street Journal goes on to
    report, most of them don't even own cars, and those that do own
    cars own foreign cars.
        [The information follows:]

        [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

        Mr. LaTourette. The hearing is going on in New York
    currently in the Chrysler case, and the Chrysler dealers are
    testifying that the decisions were made by the car companies,
    not the task force, not based on upon how productive they were,
    how much money they were making, how good their service was; it
    is based upon how many times they got in a fight with Chrysler.
    And the same thing is going on with GM.
        So, Mr. Secretary, I am not criticizing the President, but
    I am now telling you we will own 61 percent of General Motors
    or will soon. The President has the opportunity to rein this
    stuff in and stop it.
        And I am just here to tell you that 300,000 Americans are
    not being treated fairly by these decisions, and they are not
    the fault of the administration. But by aiding and abetting
    this structured bankruptcy, the President has the ability to
    rein it in.
        I will give you these documents and ask you to look at it.
        Secretary LaHood. Mr. Chairman, may I just say this?
        I have told----
        Mr. Olver. Without objection, the items will be placed in
    the record of the hearing.
        Secretary LaHood. I have told Mr. LaTourette this
    privately, but I will say it publicly.
        When I saw him represent Mr. Traficant on the House floor,
    I told him, when I needed a lawyer, he would be the one that I
    would pick. This is the reason right here. He does his
    homework, and he obviously has done his homework.
        I did see your press conference that you held at the
    Capitol; and it, as usual, was very well documented and very
    thorough. And I appreciate that. I appreciate the points that
    you made.
        Mr. LaTourette. Thank you.
        Mr. Olver. Mr. Secretary, you really are good.
        Ms. Kaptur.
        Ms. Kaptur. I would just like to say, I would like to
    associate myself with the remarks of Mr. LaTourette and say
    that I think it is an abomination that the automotive task
    force has not come before this Congress, either Chamber.
        And I would have handled it as we did back in the 1970s
    with the Chrysler warrants and restructuring. The fact that
    this has been handled internally is shocking to me, as a
    citizen and a believer in our Constitution.
        And the automotive industry is in the trouble that it is in
    because of the damage that five major Wall Street banks did to
    this country and it brought down an industry that has been the
    lifeblood of the communities that I represent.
        I am very angry as a Member. I am doing everything I can to
    enlighten what is happening. I think what has been done is
    outside the authority of the TARP. And so I thank Mr.
    LaTourette for putting those items on the record.
        I just wanted to make a comment about a totally different
    subject, and that is the condition of medium-sized communities
    that lose air service because of the prejudice towards the
    large hubs. And Mr. Secretary, though I don't really have a
    formal question to you, I would say there are many communities
    in this country that have been terribly harmed with the lack of
    air service.
        And I see these large hubs getting bigger. Every couple of
    months the names of the airlines seem to change. Now I think we
    have got Delta Northwest or Northwest Delta, and the result of
    that for 1 month is cookies on the flights, but those are going
    to leave in a month.
        And we see this massive--these massive companies. And these
    large hubs get bigger and bigger, and the majority of
    communities across our country being forced to go further to
    have airline business taken from them.
        We haven't seen the robust development of the smaller
    flights serving these medium-sized communities. I would really
    urge you to look at the medium-size communities and the
    research that exists over there at DOT and see what can be done
    to strengthen service to medium-size communities that have lost
    carriers and service. I--just in my service here in the
    Congress, I can't believe the difference in terms of service
    from the communities that I represent.
        So I thank you very much and wish you well in your service,
    sir.
        Mr. Olver. Well, thank you very much, Mr. Secretary, for
    being with us today and for your responsiveness. You really do
    understand what we have to deal with as people who take our
    exams every 2 years.
        Thank you very much for being with us.
        And the hearing is closed. Thank you.

        [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

                                                Tuesday, June 16, 2009.

       FEDERAL AVIATION ADMINISTRATION FISCAL YEAR 2010 BUDGET AND NEXT
                      GENERATION AIR TRANSPORTATION SYSTEM

                                   WITNESSES

    HON. J. RANDOLPH BABBITT, ADMINISTRATOR, FEDERAL AVIATION
        ADMINISTRATION
    HENRY KRAKOWSKI, CHIEF OPERATING OFFICER, AIR TRAFFIC ORGANIZATION,
        FEDERAL AVIATION ADMINISTRATION
    MARGARET GILLIGAN, ASSOCIATE ADMINISTRATOR FOR AVIATION SAFETY, FEDERAL
        AVIATION ADMINISTRATION
    VICTORIA COX, SENIOR VICE PRESIDENT, NEXTGEN AND OPERATIONS PLANNING,
        FEDERAL AVIATION ADMINISTRATION
    NANCY LOBUE, DEPUTY ASSISTANT ADMINISTRATOR FOR AVIATION POLICY,
        PLANNING AND ENVIRONMENT, FEDERAL AVIATION ADMINISTRATION

                       Opening Remarks of Chairman Olver

        Mr. Olver. Okay. The hearing will come to order. I would
    like to welcome the new FAA administrator, Randolph Babbitt, to
    the subcommittee. Congratulations on your swearing in. You have
    been on the job just a little over 2 weeks, but you are well
    respected, with a long history in the aviation industry. You
    are going to need that.
        It is a pleasure to have you before the subcommittee to
    testify on the FAA's fiscal year 2010 budget request and give
    us an update on the status of the next generation air traffic
    system, so-called NextGen.
        FAA is requesting a $15.9 billion budget, which is a 3-
    percent increase over the fiscal year 2009 enacted level. This
    request recognizes that our Nation faces many aviation
    challenges driven by the conflict between explosive passenger
    growth and aging infrastructure. The aviation industry's
    declining performance record is just one symptom of this
    overburdened interface.
        For this reason, I am pleased that your budget rejects the
    previous administration's practice of severely overfunding the
    Airport Improvement Program, the AIP program, and requests $3.5
    billion, which is at or slightly above the 2009 enacted level.
    Over 3,400 eligible airports rely on these funds to invest in
    safety capacity, noise mitigation, and efficiency improvements.
        Additionally, I appreciate the important steps you have
    taken to improve morale within the FAA's workforce. The first
    step was committing to enter mediation with the air traffic
    controllers and move beyond the imposed work rules of the
    previous administration. The budget reinforces this commitment
    by requesting funding to hire almost 250 additional controllers
    and safety and technical staff. The subcommittee will carefully
    examine whether the resources requested in the budget are
    adequate to meet the Agency's operational and safety
    requirements.
        I also look forward to discussing the budget's request of
    $865 million for the NextGen aviation system. This program will
    replace our antiquated air traffic control system. This
    multiyear, multibillion dollar initiative is clearly a complex
    management undertaking, but I believe it is vital to reducing
    congestion, improving safety, and reducing the aviation's
    environmental footprint. So I am looking to you for suggestions
    on how this subcommittee can expedite NextGen's deployment
    timeline.
        The modernization of the world's most sophisticated yet
    outdated air traffic control system is a daunting challenge. It
    will require significant resources. Resources is the
    euphemistic term that we have around here for money. It will
    require diligent management and oversight on the part of the
    administrator and the FAA's senior leadership, and it will
    require careful implementation and coordination among the
    Agency's safety, operational and research lines of business.
    And that is why I see before me this array of important
    operational people that are involved in this. We look to each
    of you to ensure that the program stays on schedule and within
    its planned budget.
        Finally, I hope to hear of your vision for the development
    of renewable jet fuels. As you know, the aviation industry is
    responsible for 3 percent of our greenhouse gas emissions. That
    is expected to go up to maybe 5 percent within a 20-year
    period. Additionally, fuel costs now represent the largest
    portion of airlines' operating costs, about 30 percent.
    Developing a renewable fuel that meets aviation's unique
    operating requirements will be vital to an industry looking to
    provide affordable service in a carbon constrained economy.
        Before I recognize our ranking member, Tom Latham, I would
    like to acknowledge some of the members of your leadership team
    who have joined you at the witness table.
        We have Hank Krakowski, your chief operating officer, who
    is a fellow pilot, previously safety executive at United
    Airlines. And you, of course, as operating chief operating
    officer, are in charge of making all the workforces function
    properly in this process, I think, among other things.
        We have Margaret Gilligan, the Associate Administrator for
    Aviation Safety. We are always very interested in safety. And
    Peggy Gilligan is a 29-year veteran of the FAA and former Chief
    of Staff to four different FAA administrators.
        We have Victoria Cox, Senior Vice President for NextGen and
    Operations Planning, that is a really daunting task, a veteran
    of research and development programs at DOD and NASA.
        And, last, Nancy LoBue, who is the Deputy Assistant
    Administrator for Aviation Policy, Planning and Environment.
    And there, of course, is the area of alternative jet fuels.
        With that, I would like to turn it over to Mr. Latham for
    his opening comments.

                    Opening Remarks of Ranking Member Latham

        Mr. Latham. Thank you, Mr. Chairman. And good morning,
    everyone, on the panel here. It is good to have you. It is
    going to be an interesting hearing, I think. And Mr. Babbitt,
    you have had a lot of committees to address in your first few
    weeks on the job, and I appreciate your willingness to
    accommodate us as you continue to work into your role. I also
    thank you very much for coming by and to visit. I appreciate
    that very much. I look forward to working with you in the
    months ahead, and want to make sure that we help usher the
    transformation of our national airspace system in the most
    expeditious and effective way possible. I do have a few issues
    about which we hope to have a dialogue today, and they won't be
    a surprise probably to you or any of your great staff.
        One area, of course, is the strategic plan for hiring new
    controllers, and the succession planning that will ensure that
    able and adequate controller services are always available for
    the public. There are very few agencies in the government that
    are engaged in as large a hiring exercise as the FAA, and I
    think that all of us want to make sure that turns out to be
    successful. I have a few questions about the staffing increases
    for controllers, particularly in light of the renegotiation of
    the union contracts and the additional staff needed to oversee
    aviation safety. Clearly, your efforts in this area will be key
    to our success, or your success, in your tenure as
    administrator.
        I think, like everyone else, I am disappointed at the pace
    of the implementation of the NextGen project, just as I know
    the chairman is also, and I am sure many other people have real
    concerns. The FAA, perhaps, raised expectations unrealistically
    in the beginning, but now I think it is time to reassess and
    determine how we can best reap near- and mid-term benefits
    until waiting until 2020, which is the latest estimate for
    completion. And that delay probably also means higher costs,
    and I am sure the original estimate of $14 billion is maybe no
    longer valid.
        Whether it is NextGen, the upgrading of legacy systems, or
    the placement of controllers, I am concerned about the relative
    treatment of smaller airports compared to large airports. It is
    probably not a big surprise to anyone that is important to me
    that investments in and deployments of capital and human
    resources recognize that rural economies and towns depend on
    the air space system just as much as our urban counterparts.
        You must have a special position down there. I just want to
    point out, as a new member of this subcommittee, I have been a
    bit overwhelmed by the sheer number of acronyms and
    abbreviations in your Agency. Again, you must have an acronym
    czar down there or something, but you hold the record probably
    in government. Last count you had 527 distinct acronyms and
    abbreviations to describe various aspects. What do you pay this
    person? That is just incredible.
        With that, Mr. Chairman, I look forward to the testimony,
    and I yield back.
        Mr. Olver. Thank you, Mr. Latham.
        Mr. Babbitt, your complete written statement will be
    included in the record. If you can give an oral summary in
    around five minutes, then we can move quickly to questions. We
    intend to be out of here within the two-hour period.

                Opening Remarks of the Hon. J. Randolph Babbitt

        Mr. Babbitt. All right, sir. Well, good morning again,
    Chairman Olver, Ranking Member Latham, and other distinguished
    members of this subcommittee. It is a pleasure to be able to
    appear before you this morning to discuss the administration's
    budget request for fiscal year 2010. I want you to know that I
    certainly respect and appreciate the important role in this
    budget process, and I look forward to working with you in the
    short term and for years to come.
        Because aviation safety is my primary duty, and I do not
    take that charge lightly, let me start by saying that this is a
    budget that enables the FAA to pursue its paramount mission,
    advancing operational safety throughout the national Airspace
    system. That being said, I think we are all aware you do not
    have to turn too many pages in the newspaper to understand that
    we find ourselves in a very complicated financial time, and the
    airlines are not excluded from that. I also want to stress that
    this is a fiscally responsible request that will help us
    deliver on all of our performance goals.
        Our fiscal year 2010 budget request of $15.9 billion
    maintains safety and capacity gains while providing investments
    to meet our future system demands. We have made commitments to
    you, to the President, and to the taxpayer about controller and
    safety staffing, aviation research, as well as investments in
    infrastructure, airports, and NextGen. This budget will help us
    meet those commitments while we deliver the aviation system of
    the future. If you will, I would like to take the liberty here
    to detail some of the larger numbers in our Operation's
    submission.
        The fiscal year 2010 request of $9.3 billion includes $7.3
    billion for the Air Traffic Organization, or for those who like
    acronyms, ATO; $1.2 billion for Aviation Safety; and, the
    balance for support staff as well as Commercial Space
    Transportation. The equation for us is simple: Run the system
    safely and look to the future through NextGen and commercial
    space investments. You will be pleased to know that the budget
    also funds the hiring of additional air traffic controllers,
    aviation safety staff, and NextGen staff as well.
        I would also like to discuss our 10-year strategy for the
    air traffic control workforce. It calls for a net increase of
    107 controllers in fiscal year 2010. We are expected to hire
    more than 1,700 controllers over the next year to reach that
    goal, obviously considering retirements. More importantly, our
    controller workforce strategy allows us to put the right number
    of trained controllers in the right place at the right time.
        In the last 4 years, the FAA has hired more than 5,600 new
    air traffic controllers. That exceeded the original goal by 40
    percent. And flying as much as you and I do, knowing that the
    government is taking steps to match the number of controllers
    with traffic volume and workload is reassuring. I have heard
    that there are areas where we do not have the balance right. We
    have plans to make sure that we continue to bring these new
    employees on board, and we hope to carefully manage that
    process to ensure that our trainee program is accomplished in a
    timely manner and that they are hired in the places that we can
    employ them and where we need them.
        I also want to assure you that I intend to consider the
    staffing and training concerns of our controller workforce.
    They are truly out on the front lines. I respect their hard
    work and their input, and I want you to know that we are hiring
    controllers now faster than we ever have. We are providing them
    with quality training. They are making the grade, and that will
    help us to make the grade with them.
        Let me diverge for a second and address labor stability at
    the agency. As you know, labor talks are underway with the air
    traffic controllers. I am fairly optimistic that talks are
    proceeding well. Both sides are at the table and reporting good
    progress, and I think we will reach an agreement with them. The
    best agreements are reached when everybody involved at the
    table wants an agreement. And I believe that is the case now.
    We certainly have everybody there, and there is a good
    atmosphere that is overarching those talks.
        As far as labor stability is concerned, I want you to know
    too that I am not just talking about getting our largest union,
    NATCA, squared away. I am also talking about the other seven
    unions that we have, and I am also talking about the other
    15,000 employees that work at the FAA that are not part of the
    union. We have got to restore the confidence in our entire
    workforce. We need to make sure that we all have accountability
    and credibility within that workforce and across the board. It
    is my goal to see that all 45,000 employees of the FAA move
    with confidence in their skills and pride in their work. We
    have got to get that restored.
        With all of that as context, I appreciate the help that you
    are providing as we make headway with our inspector workforce
    as well. The result of staffing additions in 2007 through 2009,
    we now have 4,245 safety inspectors. This fiscal year 2010
    request maintains this increased level while adding aviation
    safety staffing by 30 additional positions. The requested
    staffing increase is consistent with the updated Aviation
    Safety Workforce Plan.
        Recognizing that the FAA's future workforce may be very
    different than it is today, last year we engaged the National
    Academy of Public Administration to help us identify the skills
    needed to accomplish the transition to NextGen. To respond to
    their recommendations, the FAA included $7 million to hire 104
    new staff in the ATO, the Air Traffic Organization's
    operational service units to support the development and
    deployment of the NextGen and of applications. These additional
    staff will help identify transition requirements, develop
    procedures, coordinate with the industry and stakeholders, and
    perform operational impact analyses.
        For Facilities and Equipment (F&E), this budget maintains
    the capacity and the safety of our National Airspace System
    while keeping our comprehensive modernization and
    transformation efforts on track.
        The request of $2.9 billion does represent a healthy
    increase of 6.7 above fiscal year 2009. The bulk of our
    investment--just slightly above $2 billion--will be spent in
    legacy areas. In many ways, this is the heart of the current
    system's infrastructure, and includes things like power
    systems, information technology, navigational aids, and weather
    systems.
        Looking to the future, the NextGen portfolio for F&E grows
    by 790 million. That is a 24 percent increase. The NextGen
    transformational program, such as ADS-B, Systemwide Information
    Management, Data Communications, National Air Space Voice
    Switch, are funded at $372 million. Approximately $392 million
    is provided for NextGen demonstrations, system development, and
    ``enabling'' activities.
        Our Research, Engineering and Development (R,E&D) funding
    request is a 5.3 percent increase. This year, we are increasing
    our emphasis on fire safety, propulsion and fuel systems,
    advanced materials, as well as aging aircraft; we are
    requesting a 15 percent increase for our R,E&D NextGen
    portfolio to about 65 million. This will support the enhanced
    NextGen research and development efforts in the areas of air-
    to-ground integration, weather information directly into the
    cockpit, and environmental research for aircraft technologies,
    fuels, and metrics. Our request also takes care of airports,
    which we believe this administration recognizes as an essential
    part of the aviation system infrastructure. As you know, their
    design, structural integrity, and ongoing maintenance have a
    direct impact on safety, capacity, and efficiency. The fiscal
    year 2010 request of $3.5 billion will allow us to continue our
    focus on safety related projects including runway safety area
    improvements, runway incursion reduction, aviation safety
    management, and improving infrastructure conditions.
        In closing, I would like to emphasize that our fiscal year
    2010 budget provides a total of $865 million in support of
    NextGen. That is a 24 percent increase. Step-by-step and
    procedure--by procedure, we are increasing the integration
    between aircraft and ground-based technologies. Both Secretary
    LaHood and I have made the delivery of NextGen one of our
    highest priorities, and I will be looking hard at every
    opportunity we can find to accelerate this transformation and
    the efficiency and environmental benefits it will bring.
        But I must underscore that the drive toward NextGen will
    find only success through collaboration, by bringing all the
    parties to the table, our employees, the industry, and the
    manufacturers to make sure that our focus remains where it
    belongs. The tragic accidents over the past few months are ever
    present reminders that we must maintain our vigilance. My
    testimony this morning is a commitment that we intend to do
    just that.
        So with that, I thank you. In closing, my staff and I look
    forward to any questions. I appreciate the consideration for
    letting me bring a team with me for recognizing my short
    tenure.
        [The statement of Mr. Babbitt follows:]

        [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

        Mr. Olver. Well, under those circumstances, I will
    certainly allow you to use whoever it is on the staff that
    really needs to answer the question that is being brought up as
    this goes on.
        Our usual procedure is to have rounds of 5-minute
    questioning by first myself and the ranking member, and then
    the other members who are present or as they come in.

                                    NEXTGEN

        Let me just start, sort of kicking off some words that you
    said earlier. And I won't quote them. But in this issue of
    NextGen, this is an enormous undertaking. Has the FAA involved
    its employees, its controllers, its inspectors, its safety
    technicians and such? Have you involved them in the planning at
    this stage? Can you give me some sense of that?
        Mr. Babbitt. Yes, sir. Let me speak to that, and I might
    ask Vicky or Hank to step in. We have not involved them to the
    extent that I would be comfortable with at this point. I think
    I could best describe it as a distraction with some labor
    concerns. I hope to put those concerns behind us with this new
    agreement that we are negotiating with the controllers. And I
    hope that both of us can focus on getting their participation.
    We certainly have had a lot of other components within the FAA
    deeply involved. But we are sorely missing the involvement of
    the controllers. And I do hope to engage them.
        Mr. Olver. Well, given the earlier words that you used
    about that being good form, at least I am willing to accept at
    this stage that that will be something that will be worked on;
    that will make an effort to engage those people who are very
    much affected by what it is that goes on.
        So we will pass that opportunity for Hank and Vicky to
    weigh in at this point. That is probably the best way to deal
    with it.
        My staff tells me that the NextGen program is expected to
    cost something in excess of $20 billion--I have long since
    forgotten that it was 14--through the year 2025, which implies
    that there is a timeline for the complete implementation of
    NextGen of somewhere around 2025. When Secretary LaHood was
    before us 3 or 4 weeks ago, I had made the comment and I have
    to sort of qualify the comment. But when I first served on this
    subcommittee, the key issues, the key controversies in new
    equipment and so on was STARS and common arts and so forth, and
    that argument went on for quite a while, probably through 2002.
        So probably we weren't really talking about NextGen until
    probably 2003. And I think looking back at the budgets, the
    first time that there are things assigned in the budgets--I
    have a little chart here. The first time that there was
    assigned money is actually 2007. But there was considerable
    talk before that time about the deficiencies of the present
    system, the problems with the present system, and the benefits
    from upgrades that we really needed to do.
        So I had said we have got to do this, to the Secretary, in
    half that time. And he said he agreed. So now I am left with
    the question of how--whether I was completely misunderstanding.
    I don't think he was particularly. He was very careful about
    the words that he uses. But I know you have an implementation
    plan that came before us that was issued in January of 2009.
    You referred to it in your testimony. It was very careful
    testimony about all the different things, all the problems, all
    of the needs and requirements and so forth in your written
    testimony about why we are doing this and what are the benefits
    that we hope to accrue. But I think that that plan actually is
    a sort of a mid-term plan that gets us to about 2018.
        Now, I had in my mind that we ought to be in full
    implementation of NextGen maybe by 2016 or 2017 at the latest.
    So I am out of sync here. I am impatient. But that is, in part,
    because I am older than everybody else at the table, at this
    side or that side of the table. And I had hoped to see NextGen
    in place at some point along the way. So would you like to--are
    you moving this? You said you would like to move it faster.
    What is your sense of a timeline for realistically getting
    NextGen in place? And then we will go from there.
        Mr. Babbitt. RTCA is a company that is allowed to bring in
    all the parties within our industry. We have tasked them with
    bringing in the users, the manufacturers, and the FAA; really
    looking at NextGen for the single purpose of, what are the
    priorities that the industry wants?
        We have two sides to this equation. We have all the
    technical equipment. And that too----
        Mr. Olver. And the $20 billion, that estimate is for the
    work that has to be done at the Agency?
        Mr. Babbitt. Yes, sir.
        Mr. Olver. And then there is another estimate of 20
    billion, which may be inflated.
        Mr. Babbitt. It could be. The other thing----
        Mr. Olver. Done by the industry.
        Mr. Babbitt. What we are doing is finding the areas. We
    know, for example, that many of the carriers have already put
    some of the equipment on board. They are capable of shooting
    these Required Navigation Performance approaches. Many of them
    have Area Navigation (RNAV), which is a very sophisticated
    navigation capability. They already have this equipment. We
    simply need to design the procedures so they can use them. The
    essence of this is that we are going to look back and see what
    they have, what we have, and what could we implement right now.
    I think what we drew out originally, and I will be corrected if
    I am wrong, is more of a linear implementation, and we put
    everything on the same plane we are going to put all the parts
    in.
        But some of the things do not bring us the savings. For
    example, in some of the big congested areas we get a much
    bigger benefit by redesigning the air space, implementing some
    of the technology, and shifting over to voiceless
    communications. So, we want the voiceless communications. It
    will improve safety. But that is not necessarily something we
    want to do first because we will not get the benefit for it at
    that point.
        The other thing that I want to mention in the budgeting is
    that this budget, while it might seem expensive, remember that
    we have to run systems in parallel. We are going to be
    introducing the very first leg of implementation of NextGen,
    which you will be happy to know is actually going live here
    shortly, and we are going to begin to use the first en route
    modernization technique. But, we have to run a parallel system.
    We are not going to shut the old system down and turn on the
    new one and really hope that it works well. We have the highest
    degree of confidence that it will. We are going to back it up
    with our other systems for a while. So there is some overlap in
    that area.
        Mr. Olver. Look, I am way out of time. But that is not your
    fault, it is my fault. In just finishing, and then I will give
    my ranking member similar time. But there are just so many
    moving parts to this. Your budget for this, this year, is $865
    billion. It is divided into more than 25 different line items
    that I suspect cover topics in every one of the people here and
    some other people who have also managerial--I suspect,
    managerial control.
        So the coordination of this is not running in series but in
    parallel. To get out the best that you can out of this and move
    as quickly as possible is an incredibly difficult and
    complicated task for all of you. And I just commend you for
    undertaking it.
        I will stop there and then come back, because I am going to
    try to understand this system a little bit better.
        Mr. Babbitt. All right, sir.
        Mr. Olver. Mr. Latham.
        Mr. Latham. Thank you, Mr. Chairman.

                                    NEXTGEN

        I am told that a number of NextGen components--I am just
    going to follow up on the chairman's comments. Like the next
    generation enabled weather program and the voice switch, to
    name a couple, their completion dates have slipped by at least
    a year, 2 years, 3 years. And that slippage always costs more
    money, obviously.
        Just to get a handle on it. Is the $20 billion what you
    actually expect this to cost?
        Mr. Babbitt. If you don't mind, I will defer to Hank. They
    have worked with these budget numbers a lot more closely than I
    have.
        Mr. Krakowski. And I will give it also to Vicky for some
    granularity.
        The one thing about the time line I would like to talk
    about, and this is important, we can not think of this as
    strictly a United States only system. Our airplanes fly in our
    border air traffic airspace and their airplanes fly in ours. So
    what we are embarking on is actually truly an international
    effort. There is an awful lot of work here to get this right,
    and we have to be so careful because we are going to be
    implementing the system in layers in a live system with real
    airplanes and people in it. When you think about accelerating
    it, you have to think about it very, very carefully.
        Ms. Cox. Thank you. If I could go to the question of the
    investment delays. Actually, we have transformational programs,
    the Automatic Dependent Surveillance Broadcast (ADS-B) is one.
    The program that you mentioned, the NextGen Network Enabled
    Weather and the NAS Voice Switch are transformational programs.
    Of the five current transformational programs, only two have
    gone to an initial investment decision. So they are not
    delayed. In fact, ADS-B and System-wide Information Management
    are the two programs that have awarded contracts and are
    actually proceeding. ADS-B achieved its inservice decision for
    broadcast services just 14 months after contract award and the
    program has been performing very well.
        For other programs, because we have not even gone to
    initial investment decision, which means we have not completed
    the investment analyses that are necessary for us to move
    forward, it is very difficult to come up with an accurate
    number for the total cost of the system. These five and next
    year's six transformational programs are going to be the bulk
    of the cost of the system going forward. Our estimate of $15
    billion to $20 billion--we think--is a good estimate out to the
    2025 timeframe, but that estimate will get better as we
    complete the detailed engineering studies, prototyping and
    development, and demonstrations that are necessary for us to
    truly understand where we are going.
        Mr. Latham. So you really can't--the problem we have is we
    have to deal with real numbers here rather than guessing out
    there. But that is fine.
        One thing that concerns me, even after certification and
    approval of technologies and ground systems, procedural design
    criteria have to be set by the FAA aviation systems standards.
    And according to your agency, as many as 7,200 procedures
    remain to be developed, and the GAO has identified this as one
    of the largest obstacles for the timely implementation of the
    NextGen.
        What, if anything, do you think you can do to streamline
    activities and the NextGen workload without compromising
    safety? And one question, too. Is there any pushback from the
    industry as far as the costs or the implementation of the
    NextGen?
        Mr. Babbitt. I think the biggest concern of the industry,
    and it is a fair one, is we do not want to do the equipage
    unless we know we can, in fact, use it. And it is a little bit
    of a, I think the responsibility falls on us, as it rightly
    should, but we need to be credible when we say we are going to
    have a system. If you put equipment in your airplane by 2010,
    you are going to be able to go in and out of airports using
    this equipment. That is a responsibility that we are going to
    have to accept. If we make that statement, then we need to be
    sure that we can do that.
        With regard to the high number of procedures, that is a
    very valid point. There is a pretty good history in this
    industry. We have a number of areas where we have broadened our
    ability to monitor and oversee and do various programs by
    authorizing other people. Airlines are a good example. I would
    not even want to guess how many inspectors we would need to
    check all of the pilots and mechanics in this country. So what
    we do, is the carriers send and recommend their bright senior
    pilots, and we certify them, we oversee them, we monitor them,
    and allow them to do some checking.
        I am asking that we look into something similar. We do the
    same exact thing for certification of airlines. We have
    provisions out there. There are companies that meet very strict
    FAA criteria that are allowed to essentially put together the
    certification package for an airline, saving the FAA an
    enormous amount of time. We sign off on it, we review it, but
    we do not do all of the legwork. That is something we are going
    to have to look at here. There are companies today that can
    design very sophisticated approaches.
        We acknowledge that we don't have the manpower, and we have
    to ask ourselves does it make sense to ramp up to build 7,000
    procedures with a lot of staff, and once they are built we do
    not need them. I do not know if this is the wisest decision,
    but we will have to look at it. This is something that we may
    say, look, it will be worth our while to allow companies that
    are qualified and competent to design some of these approaches.
    We would certify their work as opposed to doing the work.
        Mr. Latham. Thank you, Mr. Chairman.
        Mr. Olver. Thank you, Mr. Latham. Mr. Rodriguez.
        Mr. Rodriguez. Thank you very much. And welcome, Mr.
    Babbitt. I want to, first of all, congratulate you in making
    those comments about making sure we don't move to technology if
    they are not going to be utilized. I was a school board member
    one time, and when we moved to computers way back in the late
    1960s and early 1970s, and they sat there for a long time
    because we forgot the training component to it. So let me ask
    you about integrating the staff and making sure that the
    training as we move on--and if you have to refer it to Ms. Cox,
    how are we going to move on that? Because I know Ms. Cox
    mentioned not pilot projects but demonstration projects. How
    far are we from that as we move on that? Either yourself or Ms.
    Cox.

                                    TRAINING

        Ms. Cox. Thank you. We recognize that training is an
    integral part of the NextGen development and deployment.
    Training is built into our major acquisition programs, and we
    never introduce a new program just as we are introducing the En
    Route Automation System Modernization system (ERAM) today.
    Training is ongoing now, with Automatic Dependent Surveillance
    Broadcast, training is an integral part of the delivery and
    deployment of that capability just as it will be with all of
    our capabilities.
        We are looking at how we integrate a training plan, because
    we are going to be delivering so many of these new capabilities
    in a very shortened timeframe. We are working with our new
    training vice president in the Air Traffic Organization to
    develop the appropriate approach to that.
        Mr. Rodriguez. I have been working with a junior college
    for about 3 years to try to work with a Federal--the
    controllers. We have had some difficulty getting recognized
    there. And I know that some of your staff, for air controllers
    who were picked from I guess from the field with no training
    whatsoever, for training. So I was concerned in terms of what
    it would make sense that you would start looking at some
    facilities that would, for training, for the future.
        Let me be a little more specific on the demonstration once
    again. Do we have, is it best to approach some of these areas
    to look at specific demonstration projects? Or how do we--we
    don't transfer real quickly from one to the other. But how do
    we make that happen? Have we come up with some conclusions
    there?

                         DEMONSTRATION WITH CONTROLLERS

        Ms. Cox. We are working a number of demonstration projects
    in the field now, particularly focusing on procedures that take
    advantage of capability existing in the aircraft today. We are
    working with active controllers. We can't put a demonstration
    in place without working with the controller workforce. We have
    had a lot of success in several areas.
        LAX is a prime example of developing procedures for
    optimized profile descents. Today, about half of the arrivals
    in LAX take advantage of NextGen procedures called controlled
    descent approaches, and they are saving a lot of fuel there.
    The controller workforce is very supportive of those. There are
    400 flights a day utilizing that. We are looking at expanding
    that and are working in other airports and areas around the
    country for that.
        Mr. Rodriguez. As the chairman indicated, we want to move
    quicker on this. What do you need to do in order--from us in
    order to make that happen in some of these areas? I know there
    were a variety of six or eight areas that you have identified
    in moving forward. What do we need to do to--you know.

                                AIRSPACE DESIGN

        Ms. Cox. We are looking at areas that we can advance. The
    procedures area is one. We need an integrated national approach
    to both airspace design, putting in place routes that take
    advantage of satellite-based navigation capability in the
    aircraft today. These approach procedures allow us to get
    higher capacity at our most congested airports. We are looking
    for industry to make the recommendations through the task force
    that Mr. Babbitt referenced. We will be getting recommendations
    in August about which airports they would like for us to
    concentrate on and prioritize our efforts. We are looking at
    acquisition programs that we may be able to significantly
    advance in terms of delivery timeline without introducing
    significant risk to the programs. We are looking at what
    additional funding would be required to get us to that because
    the funding requests that we have in place today supports the
    implementation plan for NextGen that was published in January.
        Mr. Rodriguez. Quickly, as you look at that, how do you
    view the rural America in terms of this whole process? Can they
    play a major role in that implementation?

                                 RURAL AMERICA

        Mr. Babbitt. Absolutely. Let me add, that is one of the key
    components I think we may have overlooked. We focused on the
    key congestion areas. This is what NextGen will bring us, for
    example, if we are focused on probably the top 20 airports, we
    have commercial service into another roughly 400 airports.
    There are thousands of other airports in this country, and a
    lot of our commerce depends on getting in and out of those
    airports. Currently, we need equipment on the ground. If we are
    going to have an approach facility into any airport, it is
    required that we put facilities on the ground to give the
    airports horizontal and vertical guidance to runways.
        With NextGen, all of that comes from space. All we need to
    do is design the approaches. I have asked that at a minimum we
    should be able to design approaches that would give visual,
    horizontal and vertical guidance to the primary, prevailing
    wind runway of the next biggest airports of the country. If
    nothing else, the same people that are going in there under
    visual conditions will be able to go in there under safer
    visual conditions. The next step would be to give them an
    actual approach procedure in there, so when the weather is not
    good they have an approach to shoot into those airports. The
    only cost of doing this is designing the approach. We need no
    facilities. The equipment is in the aircraft. The navigation
    capability comes from the sky and the satellites.
        Mr. Rodriguez. Thank you.
        Mr. Olver. Thank you. Mr. LaTourette.
        Mr. LaTourette. Thank you, Mr. Chairman. Mr. Chairman, in
    your opening remarks you mentioned renewable jet fuels, and it
    hasn't come up in testimony today, but my understanding is the
    Air Force is changing their RFP on jet fuel to take out the
    word ``petroleum'' to permit renewable competitors. If the
    chairman has a minute, Ms. Kaptur and I would be happy to take
    the chairman to Ohio where we are growing algae that is being
    turned into jet fuel. We used to grow algae by mistake in Ohio;
    now we are growing it on purpose, for that specific purpose.
        Mr. Administrator, I want to congratulate the President of
    the United States, Secretary LaHood, and now you, for the
    approach that is being taken with the air traffic controllers.
    I have been a pretty vocal critic of the previous administrator
    and administration when it came to imposing a contract. I don't
    think you have a happy workforce when people don't get there
    and believe that their contract has been reached fairly. Mr.
    Forey is a constituent of mine, and he reports that you are
    down to three or four issues, and I congratulate you on that.
        Mr. Babbitt. Thank you.

                         AIR TRAFFIC CONTROL FACILITIES

        Mr. LaTourette. On the issue of air traffic controllers,
    though, now that I have thanked you, I am going to spank you.
    The Ohio Congressional Delegation sent a letter earlier this
    year asking that there be a moratorium on some of the
    realignments relative to air traffic control facilities. We got
    a nice letter back from the acting administrator saying that
    the review process is going to be transparent. We hear that a
    lot this year, transparent. But despite that, and despite the
    fact that when the FAA reauthorization bill that has passed the
    House and one day will pass the Senate, has a review process,
    it is my understanding that there is a continuation to the
    moving forward on the realignment on air control facilities and
    services in Ohio without the stakeholder input and some of the
    things that Mr. Oberstar's bill talks about.
        So I guess my question is--and I should also mention such
    notables when they served in the United States Congress as Ray
    LaHood, Rahm Emanuel, and Barack Obama, all supported the
    notion endorsed by the Inspector General. So I just would ask
    you where you fall now.
        Mr. Babbitt. Sure. We find ourselves in an odd situation.
    You know, we want to do everything possible. We talk about the
    amount of money that we are spending toward and the
    implementation of NextGen. That also contemplates a different
    deployment of the workforce and how we deploy the workforce.
    For example, we need to be somewhat flexible and scalable. The
    example that I have used recently and I think everyone is aware
    is Pittsburgh Airport came to us with a rather ambitious
    forecast. One of their primary subsequent airlines there
    forecast flight operations up to 400 flights a day. So we built
    a very robust air traffic control facility there. We staffed it
    completely, but because of a corporate realignment, instead of
    400 flights a day, I think they operated 35 flights a day. We
    now have a giant facility there, and a lot of people that
    simply are not needed. Any other business in the world, if this
    was a company that you and I owned, you would not leave the
    people in the empty factory. So how we realign those people, we
    can do these things digitally today.
        For example, it does not surprise anyone that we have
    events happen in the country, Super Bowl would be a good
    example, where air traffic just blossoms for two weeks. We are
    forced to fly literally hundreds of controllers into some of
    these facilities and put them up in hotel rooms to handle the
    overload. Under NextGen, we can do this digitally. We do not
    have to sit under the airplanes we control. For example, we are
    currently controlling all of the air traffic in Afghanistan
    from the Miami Center.
        Mr. LaTourette. I understand that. My observation would be
    and my request to you would be what the inspector general has
    endorsed. It is in 915. It calls for stakeholder input. And you
    really don't impress me, a guy from Cleveland, when you talk
    about Pittsburgh, I want to tell you. But we are just looking
    for stakeholder input.
        Mr. Babbitt. Sure. Hopefully, to round that out, when we
    get the controller contract, we will get their input. I would
    welcome their input into how we move with these facilities.

                            BURKE LAKEFRONT AIRPORT

        Mr. LaTourette. I appreciate that. While the yellow light
    is on, I just want to bring up a parochial issue. A former
    member of this committee, Lou Stokes, served 35 years and now
    he is representing a bunch of folks that want to put some
    windmills near Lake Erie in a place called Euclid, Ohio, which
    is in Marcia Fudge's district. And the FAA has issued a noticed
    of presumed hazard, and we are arguing about windmills being
    450; the FAA has indicated that they can be 403. It is
    impacting--the potential impact is on Burke Lakefront Airport
    in the city of Cleveland. And I would ask you and your staff to
    take a look at that, and if we could take a dialogue about
    whether or not we can get the extra 47 feet for our windmills
    so we can produce electricity.
        Mr. Babbitt. Yes, sir. I am very familiar with that regime
    and Part 77. I have actually done some work there myself. So
    absolutely, we will get back to you and coordinate.
        [The information follows:]

                   Windmills Near Burke Lakefront Airport, OH

        The Federal Aviation Administration has conducted an aeronautical
    study (2009-WTE-933-OE) of one wind turbine generator (WTG) at a height
    of 450 feet above ground level (AGL), 1,083 feet above mean sea level
    (AMSL), approximately 2.13 nautical miles (NM) northwest of the
    Cuyahoga County Airport (CGF) reference point and 8.1 NM southwest of
    the Burke Lakefront Airport (BKL) reference point.
        The study has found that the structure exceeds Title 14, Code of
    Federal Regulations, Part 77 obstruction standards and would require an
    increase in the Minimum Descent Altitude (MDA) at BKL from 1,400 feet
    AMSL to 1,500 feet AMSL.
        The FAA has determined the proposed WTG could be erected today at a
    height of 403 feet AGL, 1,036 feet AMSL. Further, if the proponent
    agrees to submit a ``2c'' survey, the FAA could approve a WTG at that
    location at a height of 417 feet AGL, 1,050 feet AMSL.
        A Notice of Presumed Hazard letter serves as the FAA's first
    attempt to negotiate with a proponent the height at which a structure
    would not have an adverse impact to air navigation. Further discussion
    with the FAA can be initiated at the proponents' request by contacting
    the FAA obstruction evaluation specialist or the office of System
    Operations Airspace and Aeronautical Information Management,
    Obstruction Evaluation Services Team.
        While further discussion cannot guarantee a resolution favorable to
    the proponent, the FAA will consider all mitigation proposals in an
    attempt to allow for a structure on the ground that would not adversely
    impact aviation.

        Mr. Olver. Ms. Kilpatrick.

                              CONTROLLER TRAINING

        Ms. Kilpatrick. Thank you very much, Mr. Administrator and
    team. Good to see you this morning. How close are we--let me
    start over. Former Administrator Garvey has been appointed to
    continue the negotiations. In my own town of Detroit and
    surrounding areas, we have mold, a mold problem in my new
    airport, number one. If you could get back with me on the
    status of that. They say it is one way. I want to hear from you
    all on the mold in the new Detroit metro towers for the
    controllers. Mr. Administrator, you mentioned earlier that you
    have hired 5,600 controllers over the last 4 years, and the
    budget, I think, is 1,702 or something like that that we are
    asking for. I am worried about the safety and the training.
    When I was on this committee before, they were retiring at a
    large rate and I know that is why you have the big influx of
    new employees. Are we safe? Is the training going well?
        Mr. Babbitt. Yes, we are. I think there is a little bit of
    a misunderstanding, and I am going to let Hank expand a great
    deal on this because he knows a lot more. But one of the
    things, I want to assure people that we certainly are safe.
    There is a misunderstanding when people say, well, there were
    trainees in the tower. Everyone starts somewhere. Everyone
    picks up a microphone and speaks for the first time once. But
    when they do that, they have a qualified controller with them.
    They are being mentored and monitored and so forth. So, yes,
    the system is safe.
        We did have the issue that a lot of the controllers were
    hired in a very short time span, which is unusual in business,
    because those people are all about the same age, and of course
    they all age together. And we are seeing a big retirement
    bubble that we are faced with. And so, Hank, you may want to
    expand on how we are dealing with that.
        Mr. Krakowski. I can tell you that a year and a half ago, I
    think we were in quite a bit of trouble trying to keep up with
    the system. But I think we are over the hump right now. I am
    going to give you some statistics.
        Right now we are seeing controller retirements lower by
    about 35 percent. Perhaps it is a function of the economy right
    now, but the controllers are not retiring as fast. So that adds
    some stability to the system. The ratio of new people, new
    hires in the system right now is at 26 percent, and that is
    kind of like a 40-year average of what we have always had. We
    have had it as high as 52 percent right after the PATCO strike.
        The other thing that is different is how we are training.
    Vicky alluded to a new Vice President for Technical Training.
    This is a new position just filled over the last two months. I
    will tell you that when I came into FAA a year and a half ago,
    coming from the airline industry like Randy, where we were used
    to high-fidelity flight simulators and distant learning and
    electronic training techniques, we were still training
    controllers in very old-fashioned ways.
        Ms. Kilpatrick. Antiquated.

                                TOWER SIMULATORS

        Mr. Krakowski. Absolutely. So we are in the process of
    acquiring 24 high-fidelity control tower simulators. About half
    of those are deployed right now. We will get the rest of them
    out this year.
        Ms. Kilpatrick. Are they in the 2010 budget?
        Mr. Krakowski. Yes, they are. They are already budgeted.
    But to a budget question, we have asked Mr. Sean Clark, our new
    Vice President for Technical Training who comes to us from
    industry, to take a look at everything we do with training,
    because we want to be leading edge. Not just training the
    people for the current system that they have to operate. We do
    have to get them ready to train NextGen as it comes on line.
    And as we sit here right now, I do not think my training
    organization is ready yet. That is why we brought Mr. Clark on.

                             TRAFFIC CONTROL SYSTEM

        Ms. Kilpatrick. I am convinced that you are moving in the
    right direction. I think you have a yeoman's job to do yet,
    though, to get them trained. In the reading in the briefing for
    the committee, it said that the traffic control system will be
    paid for by direct user charges levied on users of the system.
    Is that revenue adequate? Which users are we talking about? How
    much do you hope to gain from that?
        Mr. Babbitt. Having inherited that phrase, let me talk to
    it a bit. One of the problems that we have in this industry,
    and it has been around a long time, and that is we have a fixed
    budget that is established, and you do that for us and help.
    But the other side of it, where the money comes from, is highly
    variable. And we saw a downturn in the aviation industry.
    Traffic is off 15, 18 percent. When we tax those tickets,
    obviously our revenue goes right down with it. Ironically, the
    lower fares get, the lower the monies that we collect in fees
    get. So we are suffering the double whammy of airlines
    drastically reducing fares to try and keep traffic, and the
    reality is that they are even reducing traffic.
        The other side of that, not nearly as big an impact, but we
    collect and tax fuel. In general aviation, we tax the weigh
    bills in the cargo world. All of those are going the wrong way
    for us.
        Ms. Kilpatrick. Just came on. But Mr. Chairman, one last
    point. Because of that, and I think I woke up this morning that
    the airline industry is about to come to Congress and ask for a
    bailout like the autos. I am from auto country. Please don't do
    that. I don't know if that is the right answer. And your last
    comment, is that how we are moving?
        Mr. Babbitt. That would be a different group. I mean, that
    would not be our issue. I think it is important how we move our
    goods and services around, and the airlines are a key part of
    that. But that is not an FAA direct issue.
        Ms. Kilpatrick. Thank you.
        Mr. Olver. Thank you. Mr. Carter.
        Mr. Carter. Thank you, Mr. Chairman. I apologize that I was
    not here earlier. I had another subcommittee I had to meet
    with.

                        3-D PATH ARRIVAL MANAGEMENT TOOL

        In fiscal year 2010, FAA plans to identify a second
    location to demonstrate the 3-D path arrival management tool,
    which is designed to enhance the arrival efficiency and reduce
    fuel consumption, we have already talked about that, and
    emissions. It is my understanding that Bush Houston
    Intercontinental Airport was the original site selected for
    this demonstration, but the FAA moved the demonstration to
    another location because of other projects going on at Houston
    at that time. Will Houston be selected for the second
    demonstration location? If not, why not?
        Mr. Babbitt. I am going to plead a little ignorance on that
    one and get a little staff support here, if I may.
        Ms. Cox. As you know, there was a lot going on in the
    Houston area with the airspace redesign that was in place then,
    and we moved the 3-D path arrival management to Denver where we
    have been doing the demonstrations.
        Once we have gained confidence, and the demonstrations are
    about gaining confidence around the process, we will be doing
    an assessment for other areas that we can move that to. And
    certainly, Houston will be an area that we will look at in
    making that determination.
        Mr. Krakowski. And if I may add, we are deploying ADS-B in
    the Gulf of Mexico controlled from Houston for the helicopters,
    which is a real leading edge NextGen capability, which will be
    coming on line this year.
        Mr. Carter. Thank you, Mr. Chairman. That is all I have.
        Mr. Olver. Mr. Pastor.
        Mr. Pastor. Thank you, Mr. Chairman.
        Good morning. Congratulations. I join my colleagues for
    your work with the air traffic controllers, I think that is the
    right thing to do.
        On the wildlife hazard mitigation, at the suggestion of
    Brendan Kenney, about 5 years ago, we--I think about $800,000
    was allocated to do a study and I am sure that study is there
    somewhere. You may want to dust it off and see what that study
    showed, because obviously birds and planes, particularly
    engines sucking up birds is a problem.
        Mr. Babbitt. Yes, sir.
        Mr. Pastor. But that study is there. So you may use that to
    implement whatever needs to be implemented.

                                    NEXTGEN

        We recently went through a television converter box to go
    from analogue to DH, and it has been one hell of an experience
    because we have been on, we have been off. Personally, for me,
    I think there are two converter boxes. But television is not
    that important because it only deals with entertainment. But
    NextGen deals with my life, so it is very important. And that
    is why, I guess, you sense that the members are concerned that
    it comes on time and hopefully not too much above budget. But
    you made a comment that the airlines are giving some pushback
    because of credibility, whether or not the system is going to
    be utilized.
        Well, Next-Gen kind of reminds me about the converter box.
    I am not going to buy the converter box because I don't know if
    it is going to work. Similarly, I sat here for a number of
    hours dealing with STARS. The air traffic controllers came in
    and said the mouse was not the type that gave them the
    efficiency, the screen was not what would give them the
    efficiency. And I am saying, what the hell am I doing here
    worried about a mouse. And those concerns are being voiced
    today on Next-Gen. The airline industry is voicing them. I know
    there are some pilots that you have--pilot projects that you
    have out there. The air traffic controllers hopefully will come
    on board soon. And I think it is very important to get
    credibility from the airlines, and to make sure that the users,
    the air traffic controllers who will be using the equipment are
    happy with it. They are going to be happy with their contract,
    and now they are going to be happy with their equipment. So
    somehow you have to integrate these concerns. And I don't know
    whether this task force is the right way to do it.
        Not too long ago, I had Secretary Chu and he says we have
    to look at Mini Bell. Maybe what you need to do is bring in
    some of the industry, such as the air traffic and the
    technology people, to see if they are going in the right
    direction. Because I hate to see all this money, and then at
    the end we are here talking about whether or not the mouse is
    one that they like, and the industry is telling us it doesn't
    fit our aircraft and we didn't have a role. And so maybe what
    you need to do is kind of think out of the box and, say,
    bringing people in because the users, people are going to pay
    for it. I am very interested because of my safety. We can all
    see the progress made and be supportive. So I encourage you to
    do that the best you can and under the rules and regulations.

                                  RTCA PROJECT

        Mr. Babbitt. We are hopefully doing something very close to
    that with this RTCA project, where we have just that. We have
    the folks of the industry, the users, the manufacturers of the
    equipment. We have folks from Mitre to look at the science.
    And, again, I hope when we get the controller contract, we will
    get a lot higher level of involvement. I look to them for their
    input. We do look at these things. The human interface, we have
    learned a lot of things in science.
        NASA has been a wonderful source for us in how you design
    controls. Things like a mouse and the screen that you look at.
    We learned hardware, with the first generation of digital
    aircraft. The analogue displaying were better in depicting
    information to you. So we redesigned them. So we do learn. You
    are absolutely correct, and I take very seriously that we need
    to be accountable and credible to the industry, and I take that
    as a serious priority.
        Mr. Pastor. My time is up. And I appreciate and I look
    forward to working with you.
        Mr. Babbitt. Likewise.
        Mr. Olver. Ms. Roybal-Allard.

                            BACKUP PLAN TO SATELLITE

        Ms. Roybal-Allard. Thank you, Mr. Chairman.
        I am going to try and get in three quick questions. But
    first, I want to know exactly if there is a backup plan to once
    you move to satellite. When satellite loses a signal, is there
    a backup plan? For example, I have satellite TV. During the
    storm, the signal was lost three times. So what is that backup
    plan?
        Mr. Babbitt. You are right to ask. There are several layers
    of it. We are not going to do away with radar completely. We do
    not need as robust coverage, but we do need to separate the
    airplanes. But I will let Hank and/or Vicky add to that.
        Mr. Krakowski. And just for clarity, the satellites that
    are used around television transmission are very different than
    the GPS satellites. The GPS satellites are well proven in all
    kinds of weather and atmosphere and conditions. So we are at a
    high level of confidence that it will be okay.
        As Randy said, we will keep radars running. We are going to
    keep a lot of the radio technical infrastructure running. We
    are not going to turn it off, turn any of that legacy system
    off until we are absolutely assured that we have a level of
    safety necessary in NextGen.

    RECRUITMENT EFFORTS IN MINORITY COMMUNITIES FOR AIR TRAFFIC CONTROLLERS

        Ms. Roybal-Allard. Administrator, in June of 2008, the FAA
    produced a report detailing its recruitment efforts in minority
    communities for open air traffic controller positions. The good
    news is that African Americans are nearly about 34 percent of
    the incoming applicant pool. The bad news is that Latinos are
    only 6.3 percent of the applicant pool. So it appears that the
    FAA has had a very successful outreach in the African American
    community but was considerably less successful in the Latino
    community.
        In fact, I have been told by several people that the
    outreach in the Latino community was not seen as an aggressive
    outreach program. So in reviewing the report, I notice that
    there was no mention of using local Hispanic news media or
    national Hispanic television networks such as Telemundo and
    Unavision, both of which are both highly viewed by the Latino
    community.
        Could you just elaborate to what you about tribute to this
    lack of response in this Latino community, and what steps are
    being taken to correct it so that you can develop a more robust
    and effective program?
        Mr. Babbitt. Sure. I will be happy to do that. I cannot
    really look back and tell you why it did not, but I can tell
    you looking forward what we are going to try and do. I did see
    a report, and I know that the outreach programs were a focus of
    that concern. Apparently we were not looking in the right
    places. So I have been assured that we are evaluating. I take
    your input very constructively and what I would like to do is
    suggest that we might have staff get back in touch with you if
    there are better ways to communicate. I might even employ my
    wife, who was born in Puerto Rico, to add to the case. But what
    we would like to do is utilize every vehicle. And the numbers,
    candidly, as you pointed out, are showing us just exactly that.
    We are not reaching into the right places. We are not asking in
    the right places, and we need to fix that. So what I would like
    to do is get back with you and your staff, if you would not
    mind, and maybe you could help us.
        [The information follows:]

        [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

        Ms. Roybal-Allard. I am sure there are other members of the
    Hispanic Caucus who would also want to be helpful in that area.

                      HUMAN INTERVENTION MOTIVATION STUDY

        Funding for the human intervention motivation study, which
    is an air safety program, is going to expire this year. And
    this is an ongoing FAA program which provides substance abuse
    education and intervention to the airline industry, and it will
    be up for renewal in 2010. And according to the Pilots
    Association, this is an important and very valuable program and
    one which they would like to see expanded to cover the flight
    attendants as well. Yet, the administration budget has no
    funding for the HIMS.
        Making sure that pilots and flight attendants are not
    abusing alcohol and drugs is certainly an important safety
    issue, and so I am just wondering why there is no funding in
    the budget for this program. And if Congress were to put money
    into the program, what are your views in expanding it to flight
    attendants?
        Mr. Babbitt. First, we are funded through 2009. I do
    understand that. I found out myself, with my second week here
    on the job that the HIMS was missing. In my background as
    president of the Pilots Association, I appreciate what the HIMS
    program does. I was around when it was formed. I am a big
    advocate of it, and I would strongly support putting that in,
    and all safety related employees. We do not have any tolerance
    for alcohol abuse in this industry and this is a program that
    has been proven to be very effective. So I would be quite
    supportive of finding a way to put that in our budget.

                                      LAX

        Ms. Roybal-Allard. I have one more question that is more
    specific to LAX. And I have been told that the FAA-imposed work
    rules on controllers have eliminated incentives to work in high
    density facilities like LAX. And the one example that is given
    is that to work at LAX, most experienced controllers have to
    take a pay cut, and this has forced the FAA to hire controllers
    with limited experience to work at LAX and other busy radar
    facilities like the Southern California TRACON. It is also my
    understanding that, to date, not one of these trainee new hires
    assigned to LAX was certified, and that there are similar
    problems at the radar facilities. And also, facilities are very
    short-staffed, with the increasing wave of experienced
    controllers requiring.
        In testimony before our subcommittee, Secretary LaHood
    stated the FAA budget request includes funding to increase the
    number of new air traffic controllers. What is being done to
    address the more immediate and most serious problem of
    attracting and retaining experienced controllers at the most
    busy airports like LAX?
        Mr. Babbitt. If you do not mind, I will defer to Hank.
        Mr. Krakowski. We know Los Angeles has been a challenge for
    us, particularly with the fact that we got into the hiring
    program late some years ago. We had the large number of
    retirements that occurred. Some of it was the labor relations
    situation, which is starting to stabilize. I am encouraged that
    the retirement rate is going down right now and the new hires
    are qualifying. I am not familiar with your point that nobody
    is getting certified over there. That sounds inaccurate to me.
    I would like to get back to you on that.
        [The information follow:]

        [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

        Ms. Roybal-Allard. Let me just explain. My understanding is
    that while they are at LAX they are not certified. They haven't
    been able to pass the test to be certified. So then, they are
    moved to a less busy airport and they get their certification
    there. That is what we have been told. So I would appreciate
    your looking into it, because we really need to make sure that
    those that work at LAX are certified to work at such a busy
    airport. And also, if you would look into the incentive and the
    rules that are discouraging experienced people to go. Thank
    you.
        Mr. Olver. Thank you very much. Ms. Kaptur.

                               CONTROLLER HIRING

        Ms. Kaptur. Thank you. Thank you, Mr. Chairman.
        Welcome. Great to have you here today. Thank you for your
    work and your service. I wanted to, Mr. Babbitt, address the
    issue of employment levels. In your testimony--I am interested,
    coming from a region with double digit unemployment and rising,
    I am interested in the hires that you have here in your budget.
    You indicate a net increase of 107 controllers. You are going
    to hire 1,702. Does that mean that those people are retiring?
        Mr. Babbitt. I will let Hank talk about the staffing
    levels.
        Mr. Krakowski. The 1,702 that we are hiring will be 107
    more additional head count for controllers. So it takes into
    account those people who are not just retiring but other
    typical attritions that you have.
        Ms. Kaptur. So, essentially, how many more new interviewees
    would you have come through your door next year? 1,702?
        Mr. Krakowski. That is what we will end up hiring. You
    typically have two or three times as many actually go through
    the process of going through the interview. As an example,
    right now we have over 7,000 applicants in the pipeline for
    those jobs; 400 or 500 people are in process right now for the
    current hiring. So it is just a matter of going through the
    interviews and getting them out to the academy.
        Ms. Kaptur. So the window is still open for people to
    apply?
        Mr. Krakowski. It will always be open. We put out bids
    continuously. We have preemployment processing centers which
    travel around the country to actually process applicants
    faster. And that is all on the FAA web site and that is all
    available.
        Ms. Kaptur. It is interesting, because I ran into somebody
    the other day, quite a well known military person from our
    region who is retiring from one position and tried to get a
    job, was looking for Federal work and went to the government
    web site and so forth and ended up now working for DIA, Defense
    Intelligence. But that wasn't on the U.S.A. Jobs web site. That
    individual had to go into the DIA web site and dig around and
    so forth.
        All I want to know, I want to have an announcement in my
    area that basically says who you want to hire for next year in
    every category. How do I get that?
        Mr. Krakowski. We can take that back to HR.
        Mr. Babbitt. You mean throughout all government?
        Ms. Kaptur. No. Just FAA. I see you have got aviation
    safety, you have got technical staff here. So I am sure that--I
    would just like--any job in my region now, it is like a golden
    egg. And they are not connected to the Federal Government for
    the most part. We are not a government center like this place,
    Washington, D.C., where the top employers are all government.
    We live in the free market, and it is really hurting. And I
    feel part of my responsibility is to bring information. One
    thing I can do is to let people know where positions are
    available, The people who might not have families who work at
    the FAA or might have no connection to the union or anything
    else. But just to let them know. So I would greatly appreciate.
    Any position for which the FAA will be hiring, assuming you get
    this budget and even based on your 2009 budget, any information
    you can give me would where be greatly appreciated.
        The other question I have on the controller piece is, I
    understand from talking to individuals who have applied for the
    comptroller program, some of the difficulties that they have
    had in going through the academy out, where is it, Colorado or
    somewhere. Oklahoma City. And it is very difficult. They have
    to pay their own hotel bills and everything, and then they
    don't know whether they are actually going to be hired or
    something after that. What is the process for somebody that
    wants to be a controller? How difficult is it? If you are
    unemployed and you get in the line to get this job, and you try
    to get it, what happens to you?
        [The information follows:]

        [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

        Mr. Krakowski. Just like with the pilot career, which Randy
    and I had to go through, you start down a career path. But not
    everyone is successful. It is a tough, challenging job, and we
    have to make sure that the people who apply for this kind of
    work are prepared to function in it correctly. So just because
    we hire you as a new hire, and your first year is probationary
    as well, which is typical in the airline industry with pilots,
    it is a pretty tough rigor of work that you have to go to prove
    that you can do this work.
        Ms. Kaptur. I am not worried about that. What I am worried
    about is that they have to take their own money. And if you
    come from Toledo south end and you graduated from high school
    and you went into the military and came home, and now you need
    a job and there are no jobs, you are interested in maybe being
    a controller. What happens to you? And I am asking myself, can
    our community do anything to support them if they have to pay
    their own hotel bills while they are over there in Oklahoma
    City. What happens to them economically as they try to do this?
        Mr. Krakowski. They make per diem, so it pays their lodging
    and expenses, about $132 a day. Their base salary is about
    $17,000 while they are at the Academy. And then when they get
    deployed out to the field, it typically jumps on the average up
    around $30,000.
        Ms. Kaptur. Could you provide me with that information as a
    part of this effort?
        Mr. Krakowski. Yes.
        Ms. Kaptur. Thank you very much I truly appreciate it.
        Mr. Olver. Thank you. Mr. Berry.
        Mr. Berry. Thank you, Mr. Chairman.
        Mr. Administrator, congratulations. You have probably
    wondered in the last few weeks whether you won or lost.
        Mr. Babbitt. I have actually reached a conclusion.

                                MEMPHIS AIRPORT

        Mr. Berry. And we thank all of you for your service. And
    forgive me for being parochial. Even though Memphis is not in
    my district, I fly in and out of there, and it serves a good
    portion of the State of Arkansas that I represent.
        I can't imagine a worse situation than we have had for the
    last several years between the staff and the administrators of
    that facility. The administrators are arrogant, dismissive, and
    completely unresponsive, as far as I can tell, to anyone, their
    employees, me, or anyone else. And the morale there is
    horrible.
        Now, the decision has been made by the FAA to separate the
    tower and the TRACON. One of them, I can't remember which but
    one of them contains most of the experience in that operation,
    and now they are going to separate them where most of the
    experience is going to be in one place, and the inexperienced
    people, whether they are certified or not, I don't know, in
    another. But they are not going to be available to help
    somebody out when trouble arises.
        And I know that there would be no great loss if I perish
    because of a failure in the air traffic control system in
    there, but I have got a lot of constituents that don't deserve
    that. And so, I would ask you to reconsider that separation, at
    least until there can be some progress made between the workers
    and the bosses in that situation. And somebody needs to go down
    there and get somebody by the hair of the head, if it is
    available, and see if we can't get that mess straightened out.
    Because it is not a safe situation. Those people go to work mad
    every day, and I don't think that is a good thing.
        Mr. Babbitt. No, sir, it is not. I think you may recall in
    my opening statement, or if you were not in here one of the
    things I want to focus on is getting labor stability back.
    Again, I am not looking in the rearview mirror, I am looking
    forward. But I can tell when things are not quite right, and we
    have got a difficult atmosphere right now. We are going to try
    to start off and fix the controller contract. There are other
    agreements. There are a lot of other people that work for the
    FAA, and we want to change their attitude and their outlook and
    the culture here.
        Secondly, you will be, I hope, encouraged to know that I am
    meeting with some representatives from the Memphis facility and
    the president of the union to look at this. Having that out
    there, one of the issues that we discussed earlier with one of
    your colleagues, is that there is a rationale behind the
    separation of the TRACONs and the towers. Part of it has to do
    with adapting to get ready for NextGen. I think Hank may know a
    little more information and some of the fundamentals behind
    reductions in overtime and staffing. I can assure you that the
    level of safety was not compromised. Hank.
        Mr. Krakowski. I think that is the big point. I come from a
    strong background in safety, and we would not do this if we did
    not think it was safe. Safety has been enhanced at Memphis with
    the split, and here is why. Prior to the split, you had 45
    controllers who were certified and 19 trainees. When we did the
    split, we went to 62 certified controllers and only two
    trainees. Over time, it went down 77 percent. So the experience
    in the tower, the certifications, plus the mandatory overtime,
    that Memphis, Orlando, and a lot of the other facilities were
    struggling with because of this big churn of retirements and
    new hires coming into the system, we felt we needed to do some
    things to stabilize the overtime, the fatigue, and all those
    sorts of things. Memphis was part of that.
        I am hoping that, with this new labor agreement, if we can
    achieve it with NATCA, we can work out a heck of a lot better
    process than what we have been using.
        Mr. Berry. With all due respect, you are the only person I
    know who thinks it is things are any better in Memphis. And I
    don't know about the separating them and all that. That is your
    job. And I respect your obligation and expect that you will do
    it responsibly. But that is still a mess down there and it
    needs to be cleaned up. And I thank you for listening to me.

                                     TRACON

        Mr. Olver. Thank you, Mr. Berry. We will start a second
    round here. I would like to get a little bit better picture of
    what we are doing here. Are we going to end up--when NextGen is
    fully implemented, are we going to have a legacy program that
    is there for backup? Or have we been building more TRACONs,
    more TRACONs, tearing them apart or putting them together and
    so on? Are we going to have all those things that are
    necessary?
        Mr. Babbitt. No, sir. I will use an example to show where
    the system gets more efficient and while everybody has concerns
    in their own area. We look at a state that has maybe 10
    TRACONs. We could operate perhaps with two TRACONs. They would
    not necessarily be sitting under the----
        Mr. Olver. That is going to be quite an interesting job for
    you to get these stakeholders involved in that process. Every
    time you try to change the--I wanted to ask--let me just get a
    sense of what is going on here without really any of the
    examples of details, because the examples just get to one more
    place.
        Vicky, you talked about the Houston air space redesign. How
    long did it take to do that?
        Ms. Cox. It was a multi-year effort.

                               AIR SPACE REDESIGN

        Mr. Olver. How many of the 20 largest airports now have
    airspace design complete? Is it done in L.A., Southern
    California? It's not done in New York. That will be a big one.
    Multiyear effort, too, probably?
        Ms. Cox. Absolutely that one is. The Chicago airspace
    redesign is virtually complete.
        Mr. Olver. Which?
        Ms. Cox. Chicago.
        Mr. Olver. And which are the major ones that are complete
    now? Maybe Chicago and Houston?
        Ms. Cox. We are operating with new procedures in Atlanta
    that take advantage of satellite-based navigation.
        Mr. Olver. Is that the three that are farthest along in
    this process?
        Ms. Cox. I would say those are the top three.
        Mr. Krakowski. Those are the ones that are operational.

                                     ADS-B

        Mr. Olver. And how many of these airports have ADS-B in
    place now?
        Ms. Cox. Well, ADSB is not scheduled to be delivered with
    the ground stations that are required for full implementation
    until 2013. And the rule does not----
        Mr. Olver. For all places?
        Ms. Cox. For everywhere. It will be fully implemented
    domestically in 2013 in terms of ground stations.
        Mr. Olver. And we haven't done the rulemaking, and the
    nearest base design is the delivery of the ADS-Bs of any
    particular value at that point? Some values I get that you can
    get right away?
        Ms. Cox. We should be able to get value right away from
    equipped operators. So as soon as operators begin to equip, we
    can start to take advantage of the capability that ADS-B
    provides. So by 2013--and even next year in the Gulf of Mexico,
    we will have surveillance services with ADS-B where we never
    had any before.
        Mr. Olver. And the 20 largest places are likely to be the
    places that you have the most international involvement. But we
    do have to have the backup at least for a while. I am not sure
    the backup ever goes away.
        Ms. Cox. The backup may change. The nature of the backup
    may change. We are looking at about 50 percent of current
    radars as backup for the near term. In the far term we are
    looking at other capabilities such as multi-lateration as
    backup which won't require the radars.
        Mr. Olver. You see, I am still thinking in terms of how
    could one do by 2018 full implementation of what is only a
    partial, a mid-term implementation in the route to 2025?
    Because it seems to me we ought to be able to make some
    progress here. But what you are telling me is all of these
    features, all of these moving parts, all of them have to be
    moving at the same time. This is a horrendous job that you are
    involved in.

                                 AIRLINE DELAYS

        Mr. Babbitt. One thing that I think we should point out is
    we can focus on key areas. For example, if we fix the delays of
    the 10 largest airports in the country, we have essentially
    eliminated most of our end route delay.
        Mr. Olver. Of your delays. That would be great. There are
    problems that you can probably focus upon, but we aren't going
    to be fully implemented anywhere nearly as quickly as I would
    hope would be the case. That is a little depressing for me. But
    so be it. I am learning here a little bit. I wanted to ask
    Nancy LoBue on the fuel issue, what do you think are the most
    promising research programs that are going on? A couple of
    those. Could you describe very briefly a couple of those that
    are very promising?
        Ms. LoBue. Certainly. Right now, for aviation, we have a
    commercial aviation alternative fuel initiative. It is a
    cooperation by industry, manufactures, and the FAA. We have
    participation by DOE, NASA, and DOD. So it is a place where we
    can pull together a lot of the different initiatives. We have a
    number of demonstrations using different types of renewable
    fuels.
        Mr. Olver. Using them?
        Ms. LoBue. Actually using them in demonstration flights.
    Correct. Using feedstock----

                                RENEWABLE FUELS

        Mr. Olver. Where and by what mechanism are we producing
    renewable fuels that are--these are also carbon based fuels, I
    take it.
        Ms. LoBue. Right now we are in the process of----
        Mr. Olver. Of renewables.
        Ms. LoBue. Renewable fuels. Correct. We have a
    certification process ongoing as we speak. We are hoping to
    have certification by the end of the year on something that is
    a 50 percent petroleum, 50 percent Fisher-Trope system. By
    2012, we should have 50 percent biofuel, 50 percent petroleum.
    By 2013, 100 percent biofuel, certified to use drop in in the
    current engines of airplanes. That certification process is
    ongoing as we speak and the first piece of that when we get
    this 50/50 with the Fisher-Trope fuels----
        Mr. Olver. Let me just ask you. The Fisher-Tropes is making
    syngas and then putting together things again from the sin-gas
    that has been produced.
        Ms. LoBue. Correct.
        Mr. Olver. But it starts with fossil fuel.
        Ms. LoBue. 50 percent, 50 percent can be biomass.
        Mr. Olver. The other route is the biomass, which is
    probably oxygen pure pyrolysis that gets you some green oils
    essentially out of the biomass trying to get to ethanol.
        Ms. LoBue. No. Ethanol does not work for aviation.
        Mr. Olver. Fine. I will stop. I just wanted to get a sense
    of where--you have indicated the two procedures that you seem
    to be working on.
        Mr. LaTourette. Mr. Chairman, did you say pyrolysis?
        Mr. Latham. Did you know that he is a chemistry professor?
    A long time ago.
        Mr. Olver. Not in this field at all.
        Mr. Latham. I am becoming a little--being from Iowa, a
    little sensitive. Maybe your feeling about ethanol or something
    here. Soybeans are the answer. Soy diesel.
        Ms. LoBue. Yes, sir.

                             FAA COMPUTER SECURITY

        Mr. Latham. I am going to change the subject a little bit.
    Mr. Administrator, on May 7, the IG reported that hackers broke
    into the FAA computer several times in recent years, gaining
    access to personal information, including the Social Security
    numbers of 48,000 FAA employees, and took control of critical
    network servers. The report goes on to say that malicious codes
    were installed, passwords were stolen, and that the problems
    could have easily spread from operation support to mission
    control and operational networks.
        My question, I guess, would just be, what has been your
    response, the agency's response in trying to fix these
    problems? It is obviously of extreme concern to a lot of folks.
        Mr. Babbitt. You are absolutely correct. I am aware that we
    have a fairly robust review. I also know that we are meeting
    with Mr. Shapar who was recently confirmed. I am not quite sure
    of his technical title, but Chief Information Officer
    essentially.
        Mr. Latham. I am sure you have an acronym for it.
        Mr. Babbitt. I am sure we will come up with one. We will
    work on it. By the way, I am just as lost in there as you are.
    We really want to make sure and there is a very in-depth review
    going on. We would be happy to share with you. I also have a
    meeting scheduled next week with the Inspector General to
    review that report and to give him the track that we are on and
    make sure that he is comfortable that we are doing the right
    thing.
        Mr. Latham. Would any one of your able staff here be able
    to speak to it?
        Mr. Krakowski. I actually testified with our Chief
    Information Officer at a roundtable by the T&I committee last
    week on the IG report and the things we are doing.
        We concurred with all of the IG recommendations, and they
    express that they are satisfied with our commitments and our
    time tables for it. One thing I would like to say though is one
    of the advantages of an old crusty air traffic system is it is
    almost impenetrable.
        The systems that were attacked do not directly relate to
    controllers talking with pilots or what can happen on the radar
    screen. It is this old, hard-wired system. Some of the support
    things that do ground delay programs and things like that that
    had vulnerabilities.
        Mr. Latham. So the stovepipe thing actually works in this
    case.
        Mr. Krakowski. Yes.

                            AIR TRAFFIC CONTROLLERS

        Mr. Latham. On another subject. The budget submission makes
    no allowance at all for any kind of additional funding that
    will be needed relative to any air traffic controller
    negotiations. If fiscal year 2010 costs increase or materialize
    because of new contracts, are you going to come back with--and
    submit a budget amendment? Or how do you expect us to handle
    that?
        Mr. Babbitt. We are trying right now to work within the
    confines of the budget, and I think that we have, based on the
    numbers that I have heard. And interestingly, the majority of
    the negotiations--while anybody who says it is not about the
    money, it is probably about the money. The majority of these
    negotiations have not been about the money. They have been
    about work rules and about some professional things that
    concern the controllers and how they relate with their
    supervisors and their accountability and a lot of things that I
    find interesting were at the core of some of these issues. I
    would not say, however, that I could expect that we could
    achieve this and not face any increase.
        I would like to think that we could handle it, but to be
    candid with you, if we could not, I would tell you precisely
    where we went over and come back. Hopefully we would be
    finished with these negotiations and know the full impact
    before you are actually finished with this appropriation. So I
    would not want to delude anybody and say that we could do this
    all for free. I do not think that is realistic.
        Mr. Latham. If there is a plan, we would like to know about
    it, I guess. In the negotiations, is there any discussion at
    all about how you ensure--again, coming from a state of small
    regional airports--that there is a blend of the new and the
    seasoned controllers and the mix, for both small airports and
    the larger ones. Is there any discussion or is that part of any
    negotiation going on?
        Mr. Babbitt. I will defer to Hank. He has been a little
    closer to these negotiations. He has been briefing me on a high
    level.
        Mr. Krakowski. And I can give you the list of what those
    mixes look like in those facilities. Typically, we try to put a
    little higher level of training in the smaller facilities
    because that is where the apprenticeship starts. But, quite
    frankly, we have had some new hires, literally off the street
    hires who qualified at O'Hare Tower in a year, year and a half,
    who are just naturally good at what they do.
        So I think the difference is with a 26 percent trainee
    ratio across the country, some are a little higher, some are a
    little lower but that feels good to me, because you have got
    about 75 percent of the old guard mentoring the new people into
    this profession. That is what Randy and I are used to from our
    airlines career.
        Mr. Latham. Very good. Thank you, Mr. Chairman.
        Mr. Olver. Thank you. Mr. Rodriguez.
        Mr. Rodriguez. Real quickly. You mentioned earlier the
    design approach that would be something that we could take care
    of fairly quickly, and especially in rural America and
    throughout. Is that something that could be done nationwide in
    terms of just designing the approaches that would help I guess
    for future encroachment and that kind of stuff that could--and
    why not? So do you have a phase-in of that?
        Mr. Babbitt. We are looking at it right now. We haven't
    made the decision. I need to have a better understanding. I
    think all of us need to have a better understanding because
    there are certain parameters and guidelines that would have to
    be created to certify people that could do this. Other folks
    are going to be involved. Is this a road we want to go down to
    farm out some of the work traditionally done within the FAA?
        Mr. Rodriguez. You mentioned yourself, and I would ask you
    to not to--because you said that the rural America is kind of
    like an afterthought. I would ask that you take into
    consideration--not in those words, I know, but something that
    you need to prioritize also as we bring them in and how
    important that is.
        Real quickly, just on the fuel, and in talking about the
    fuel and cyber and air traffic control training. Has there been
    any collaboration with the Department of Defense, DOD? Because
    I know there is some new fuel research and I don't know how
    long it is going to take before it comes from the research to
    the actual implementation that doesn't burn, for example, that
    is being looked at for Afghanistan and Iraq. When it is hit,
    the gasoline--it is a new fuel that--some research that where
    it doesn't burn. And so is there any collaboration with the DOD
    in terms of some of the stuff that they are doing?
        Ms. LoBue. Absolutely. DOD is spending quite a bit of money
    obviously on fuels. The Air Force has a commitment that by 2016
    they will be using 50 percent alternative fuels. We have
    actually been able to leverage a lot of the work they are doing
    on the commercial side for a lot smaller amount of money. So
    they have been working with us in this CAFE initiative that I
    mentioned.

                            AIR TRAFFIC CONTROLLERS

        Mr. Rodriguez. And on the training face of it for the air
    controllers, they do a pretty good job of training their air
    controllers. I know I have Laughlin Air Force Base that does
    the training; I have Randolph Air Force Base that the pilots
    that come in, thousands, hundreds of them. Is there any
    coordination being done with the type of training that they do
    to the air controllers?
        Mr. Krakowski. It is all trained to standard, because
    civilian controllers control military traffic and military
    controllers control civilian traffic as well through their
    airspace. The concept works very, very well. However, I
    actually think there are opportunities to work closer with DOD
    in our approach to training and savings for the government.
        Mr. Rodriguez. Whatever you can do for us to help. Because
    I know how difficult it is. We have been trying to get the VA
    and DOD to work together for the last 15 years. It has just
    been like pulling teeth. So whatever you can do to make that
    happen, you know, and not reinvent the wheel in some of those
    areas where they might be doing a better job.
        And let me ask you a quick question on cyber. Have you done
    any cyber exercises on anything? You wouldn't know, but any of
    you?
        Mr. Krakowski. There is penetration testing and things like
    that have gone on.
        Mr. Rodriguez. Any cyber exercises that have actually
    taken--you know. We had one in San Antonio, a dark screen
    exercise where we actually went through a two-year process of--
    have you all done any exercises?
        Ms. Gilligan. Yes, sir. Traditionally, we coordinate with
    the Department of Homeland Security and TSA. We do tabletop
    exercises as well as exercise our continuing operation of
    government facilities. So we do a lot of that integration. I do
    think the experience FAA had will become a part of one of the
    exercises that we will go through to assure that we have
    addressed all the gaps.
        Mr. Rodriguez. Because as you go into the new system, you
    will probably open yourself up more to more vulnerability.
        Mr. Krakowski. It is a concern.
        Mr. Rodriguez. Make sure you keep that in mind from the
    cybersecurity perspective. Thank you.
        Mr. Olver. Mr. LaTourette.
        Mr. LaTourette. Thank you, Mr. Chairman.

                       REGIONAL JETS AND THE SCOPE CLAUSE

        Mr. Administrator, I want to rely on you and Mr. Krakowski
    because of your experience as pilots, and talk to you about two
    things that are driving me crazy. And that is regional jets and
    the scope clause. Maybe you can educate me. I think the scope
    clause is one of the things where the industry and the pilots
    are in cahoots with each other. The pilots like it because it
    guarantees slots for the type of aircraft that they carry. The
    airlines like it because they can fly people on little planes
    and don't have to pay them so much. I think a lot of us were
    shocked that the co-pilot on the Culligan flight on the
    Bombardier crash in Buffalo was making $18,000 a year.
        I guess I am wondering if the scope clause hasn't seen its
    day. And the reason, I was recently in Brazil. And not to diss
    Boeing or Airbus, but I was visiting Embry Air, and they have
    come up with this new generation of regional jets, the 170
    series and the 190 series. Cleveland is a hub to a great
    airline, but flying in their 140 series is like flying in a
    hypodermic needle. It is ridiculous. These 170s and 190s are
    nice, comfortable jets comparable to a 737 or a 300 series for
    Airbus. And I said, how come you don't fly some of these
    around? And they said the scope clause prevents them from
    coming into new markets, with things of that nature.
        I saw you on TV with Secretary LaHood talking about some
    new training for people who fly regional jets. And so I guess
    that is sort of a rambling question, but how do we--if we are
    going to update to NextGen, how do we update and treat pilots
    fairly, treat the airlines fairly, but also treat the traveling
    public fairly and get them nice, new comfortable planes?
    Basically, it should be a market-based decision. I mean, if you
    can fill 80 seats, you fly an 80-seat plane. If you can fly 140
    seats, you do that. So I throw that out to you because you two
    are pretty experienced pilots.
        Mr. Babbitt. Well, it is something I think you are aware
    that would not be under FAA's jurisdiction, neither the pay nor
    the scope clauses. Those are derived between negotiations in
    the carriers.
        Mr. LaTourette. I am just asking what you think about it.
        Mr. Babbitt. Well, ironically, I was a signatory to one of
    the very first scope exceptions. Because the term scope clause
    is actually not reflective of what it is. It is the reverse. It
    is----
        Mr. LaTourette. Lack of scope clause.
        Mr. Babbitt. Exactly. The original agreement was the pilots
    of one carrier agreed to do all the flying for that carrier.
    What they signed was exceptions to that rule to allow them to
    go outside and contract with other people.
        What I said yesterday in direct answer to that question to
    the press was, this is something that is a concern. I think it
    has been expressed by a couple of pretty seasoned pilots, the
    two gentlemen that did a marvelous job landing in the Hudson,
    just an absolute stellar performance of professionalism,
    cockpit discipline. Both of them were quoted--and I don't
    disagree with their quotes--that if you as an industry want to
    continue to attract the best and the brightest, you are going
    to have to do better than offer somebody $22,000 or $24,000 a
    year.
        I can look to my own--Hank. I am probably a few years older
    than Hank. When I was hired, probably half the pilots that I
    was hired with came from the military, and half of them were
    trained from military academies. If you had offered them a
    career that paid about $30,000 or $40,000, they would have gone
    and done something else. Even though they might enjoy flying
    and they enjoy this professional career, if there is no
    compensation, they will find another career path.
        Mr. LaTourette. And I think that leads to turnover, too. I
    mean, three times I have flown into DCA and we have touched
    down and taken back off. Making discreet inquiries, I was lucky
    enough to be on training flights from Cleveland to DCA. I am
    all for people getting training, but I like it when we land, we
    stay landed, and we don't leave again.
        Mr. Babbitt. So do the pilots.
        Mr. LaTourette. But you know, I have to tell you, they
    don't tell you anything. While the plane is shuddering and the
    plane is you are going back in the air, they don't talk to you
    for about five minutes. Then they come on and say, well, we
    couldn't land because a big gust of wind took us. And I got off
    the plane and there was no wind. So that wasn't it.
        Mr. Krakowski, how do you feel about the scope clause and
    sort of the----
        Mr. Krakowski. So, I agree with my boss, number one.
        Mr. LaTourette. Nice.
        Mr. Krakowski. But I think the effort that was started
    yesterday is going to be important, because I can tell you that
    the hardest flying that I have ever done in my life was flying
    turbo props for a commuter airline, the most fatiguing flying.
    The easiest flying I did was a DC-10 to Honolulu. The real
    rigor of intensity is in the regional carriers, and I think the
    steps started yesterday are going to help identify that.
        Mr. LaTourette. Thank you very much.
        Mr. Olver. Mr. Pastor.
        Mr. Pastor. It used to be that the pilots would blame the
    air traffic controllers.
        Mr. LaTourette. I know.

                           ALTERNATIVE FUELS RESEARCH

        Mr. Pastor. I guess you don't do that anymore.
        I basically have three questions. One deals with research
    and development. In a report that I have it says that
    alternative fuels research. We have the USDA, we have DOE, we
    have EOD, and you guys. And I wonder, do the four of you get
    together? And where are we on developing a fuel that will be
    nonpetroleum based? For example, algae, which I think we use in
    Arizona. The second question I have is, what are the priorities
    of the FAA on the AIP program? And, thirdly, we recently passed
    a law that said that we would inspect foreign aircraft repair
    locations at least twice a year. How is that going to affect
    your budget? Those are the three questions. And you can start
    either way.
        Ms. LoBue. Sure. So, for alternative fuels, we have a
    commercial aviation alternative fuels initiative. It is done in
    conjunction with all those other departments. We meet
    regularly. We have quarterly meetings. All of the different
    initiatives being done in many of the different organizations
    are talked about and coordinated. For instance, agriculture has
    money they got through the farm bill for biorefineries and
    green jobs. That is going to feed from things that the FAA is
    doing to create and certify the types of fuels that could be
    used for commercial airplanes.
        The reason that you have pieces of this broken up is the
    FAA is responsible for certifying and the safety of aircraft
    engines. We have that piece of the expertise. A lot of things
    like ethanol do not work at high altitude because it has a
    tendency to freeze.
        So there are some differences between the different types
    of fuels and the different types of things being produced. That
    is why we coordinate a lot of these efforts. We are, as I
    mentioned, this year going to get a certification of the first
    50 percent regular fuel, 50 percent Fisher-Trope, which is just
    really the first step. What we are really looking for to get to
    carbon neutral growth in aviation is that 100 percent renewable
    fuel or a biomass based fuel that will have a life cycle of
    less carbon. We are looking at in that the 2013 timeframe.
        In the meantime, when you get this first piece, then
    biorefiners will start producing and building up to be able to
    create the types of fuels we are going to need by 2013, 2014,
    2015.

                                      AIP

        Mr. Babbitt. The other two questions. The AIP, I can't--if
    you are looking for specific, I can get those to you. But in
    general terms, they are based upon the priorities of, you know,
    any particular airport's needs. Have they made their case? How
    do they contribute to the national transportation system? And I
    think to the most part my understanding is that we can
    accommodate the majority of those requests. Obviously, you want
    to see that that money is well spent and they are contributing.
        The last----
        Ms. LoBue. If I could mention something on that too. About
    60 percent of AIP goes to maintaining the current system, and
    you see a lot of the jobs there. About 40 percent goes to new
    capacity projects. So things like O'Hare Airport modernization
    and Philadelphia has new runways. We opened three new runways
    last November. That is that kind of other 40 percent of AIP.
        Mr. Babbitt. In the last year, the foreign repair station,
    that is under consideration. Actually, this has not been
    enacted yet. But we are prepared, and Peggy may want to speak
    to that. We have anticipated that, if it happened, we will be
    prepared to deal with it.
        Ms. Gilligan. We have estimated approximately 60 additional
    inspectors, 40 that would be based here domestically and would
    travel to do the oversight, and probably about 20 that we would
    put overseas. Positions overseas are quite expensive, as you
    know, and we are estimating somewhere around $16 million. That
    is not in the 2010 request, because when we built our budget
    the provision that is under consideration now had not gone
    forward. We will begin that process and probably look to add
    that into 2011 or 2012, whatever the appropriate budget level
    or year would be.
        Mr. Pastor. Thank you. Thank you, Mr. Chairman.

                                   INSPECTORS

        Mr. Olver. Are we also getting into the business of having
    foreign inspectors working here in this country? We are not
    paying for them. That, I take it, is their interests or their
    airlines interests?
        Ms. Gilligan. Yes, sir. The Europeans indicated that if FAA
    goes to two inspections a year of their repair stations, they
    will do the same for the 1,600 repair stations in the U.S. that
    hold their certificate. Right now, we do the oversight at those
    stations and we provide that information to the Europeans. They
    instead will come in and do their own inspections.
        Mr. Olver. Ms. Roybal-Allard.

                                      HIMS

        Ms. Roybal-Allard. I would just like some clarification on
    my previous questions. Am I correct in understanding that you
    have no objection to expanding the HIMS program to flight
    attendants?
        Mr. Babbitt. No, I do not.

                            AIR TRAFFIC CONTROLLERS

        Ms. Roybal-Allard. And Mr. Krakowski, you, as I understand,
    will be looking into what I have been told are imposed work
    rules on controllers that take away the incentives to work at
    places like LAX. And, secondly, the issue about trainees
    being--that fail at LAX, fail getting certified at LAX, then
    being sent to less busy and smaller airports to get their
    certification.
        Mr. Krakowski. That one is of interest to me because I was
    not aware that there is a lot of that going on. My perception
    is it happens occasionally.
        On the first point though, the current contract
    negotiations we are doing with NATCA, is having discussions
    with them on a plan that does reward the people at the intense
    facilities better. I think the old incentive concept that we
    used to use to get people to work at O'Hare or New York or Los
    Angeles got diluted over the years, and there are some
    refocused discussions going on right now.
        Ms. Roybal-Allard. Great. Thank you.
        Mr. Olver. Would you like to make another round?
        Mr. LaTourette. I would love to.
        Mr. Olver. Go ahead. I promised we would close around
    11:30.

                            FOREIGN REPAIR STATIONS

        Mr. LaTourette. I thank the Chair for the courtesy, and I
    will attempt to be brief. This foreign repair station question,
    I understand that you are ready to go. I also understand that
    the European Union and others have indicated that it is going
    to start a trade war, and basically they are going to insist on
    the same thing. And full disclosure, my brother is in the
    repair station business for General Electronic.
        I guess to you and Mr. Krakowski, what is your opinion of
    this? I mean, I will tell you it is--we all know it is a labor
    issue. You can call it a safety issue if you want to. I happen
    to like organized labor. But this is job protection. But it is
    being billed as a safety issue. So I guess, based upon the
    experience that all of you have around this table, is it really
    a safety issue? Are we seeing shoddy repairs at foreign repair
    stations, and will two FAA inspections at foreign repair
    stations on an annual basis make us safer?
        Mr. Babbitt. Well, I will give you my personal opinion.
        Mr. LaTourette. That is what I was looking for.
        Mr. Babbitt. The current system is covered by a bilateral
    arrangement. All the stations are inspected. If I understand
    the full ramifications, we would just switch inspectors and
    create a lot of additional travel and expense to create the
    inspections.
        I personally have not seen any degradation or any signs
    that the repair stations, regardless of where they are, are
    doing less than work that is up to the standards. Now, I am
    certainly open to people's review or if people have information
    that would suggest that we could improve the safety, it is
    worth looking at. But currently, I have to candidly say I have
    not seen any sign of that.
        Mr. LaTourette. Mr. Krakowski.
        Mr. Krakowski. Actually, you are looking at someone who was
    head of quality assurance for maintenance for my airline when
    we outsourced to Korea and to China. We had to put our stamp of
    approval on it, not only to us, but to the FAA that the quality
    of work there was equal to or better than what we had in the
    United States. I can tell you unequivocally we found that.
        Mr. LaTourette. Okay. And anybody else have a thought on
    foreign repair stations? I don't want to exclude anybody. I
    thank the Chair. And I thank all of you for your testimony.

                       CLOSING REMARKS OF CHAIRMAN OLVER

        Mr. Olver. I think, if I don't close out, we aren't going
    to get closed out. So I am going to do that. Nothing that has
    been said here today changes my view that we need to move away
    from the radar based system which we have been doing now for
    some time and putting in a certain amount of money. We will
    with your appropriation, if we give you that full appropriation
    this year, we will have spent almost $2 billion in moving in
    that direction. I have been interested that under ADS-B, the
    largest sum of money--the larger sum of money was last year's,
    the 2009 appropriation there. The 2010 is asking less. It sort
    of implies that we are farther along on ADS-B and we don't need
    big sums of money as what is viewed as the key backbone of this
    whole NextGen operation. I thought we would be moving on to
    ever higher numbers for ADSB. But nothing has changed my view
    that we need to move away from the radar-based system which had
    its genesis in the bon fires that were--I am told, to my great
    surprise, that were part of the first transcontinental air
    flights, so forth, that sort of thing. And to move on to a very
    important new technology for a whole series of reasons, you
    have all alluded to in your comments the benefits that one can
    get from that in terms of congestion and on-time performance
    and handling a much greater capacity through the NextGen
    system.
        I am disappointed that I am going to have to change my
    preconception that this was something that we would be--that
    would be possible to complete in a time frame I thought by
    maybe 2017 or thereabouts. And so the idea that we are--and I
    do recognize that you are talking about how careful one has to
    be; you have to make certain that each of these moving parts
    fits together and the gears are running. It is going to be a
    really daunting task and for all of you to take it on. There
    are just so, so many moving parts to this process. We have
    touched on a lot of them, and briefly here, but we are going to
    have a lot.
        Is there any way that we can get that, move that? It means
    very much with, very careful coordination. And I think if you
    are going to be able to move more quickly you are going to have
    to have the acquiescence of the workforce, in essence. Because
    if you end up--to go back to the first question I asked you,
    Mr. Babbitt, that if you don't have that, then there is sand in
    those gears all the way along.
        So thank you very much for being here. Thank you for doing
    this. This is an important, important project that we are
    involved in. And it is going to be costly. But there are I
    think really critical savings and benefits down the road. So
    thank you very much. We are adjourned.
                                               Tuesday, March 10, 2009.

     DEPARTMENT OF TRANSPORTATION OVERSIGHT: TOP MANAGEMENT CHALLENGES AND
                                HIGH RISK SERIES

                                   WITNESSES

    HON. CALVIN L. SCOVEL, III, INSPECTOR GENERAL, U.S. DEPARTMENT OF
        TRANSPORTATION
    KATHERINE SIGGERUD, MANAGING DIRECTOR, PHYSICAL INFRASTRUCTURE ISSUES,
        U.S. GOVERNMENT ACCOUNTABILITY OFFICE

                        Opening Remarks, Chairman Olver

        Mr. Olver. This hearing will come to order. My new Ranking
    Member, Tom Latham, has told me he is always ready to go, so we
    are all ready to go.
        The Subcommittee is in order. Today's Subcommittee meeting
    begins our Fiscal Year 2010 hearing schedule for the Fiscal
    2010 budget.
        First, I do welcome the new Ranking Member, Tom Latham. I
    look forward to working with him during this 111th Congress,
    and I trust we can have a good bipartisan relationship that
    builds over time out of working together.
        I also would like to welcome a new Member to the Committee.
    As other new Members come into the meeting today, I will
    welcome them and introduce them to everyone who is here. Steve
    LaTourette from Ohio is the new Member. You are the last of the
    line. You are there, the end of the line. I thought you were
    one before the end of the line. Steve has had a long time on
    the T&I Committee, so he brings a real understanding of the
    transportation issues with him, so we are very pleased to have
    him with us.
        Calvin Scovel, the inspector general of the Department of
    Transportation, and Kate Siggerud, managing director of
    physical infrastructure at the Government Accountability
    Office, are with us for today's hearing. Both the IG's Annual
    Top Management Challenges Report and the GAO's High Risk Series
    continue to highlight the nation's ongoing transportation
    challenges.
        The 110th Congress and the new administration will have to
    tackle many of these issues, so it is particularly important
    that we bring attention to the challenges that you have
    identified.
        The IG issued his Fiscal Year 2009 in November, and, as
    with previous years, the newest report continues to identify
    and make recommendations to enhance aviation safety, develop
    next-generation improved mobility, reduced congestion, and
    address surface transportation budget shortfalls, among other
    challenges.
        The GAO updated its High Risk Series in January and only
    lists one high-risk area related to transportation, that being
    funding the nation's surface transportation system, and that is
    a big area.
        The FAA's air traffic control modernization, which has
    appeared on the high-risk list since 1995, was removed this
    year, though it still remains, to a degree, because of next-
    gen, on the IG's, so we may have questions in relation to that.
        While I hope you will be able to spend time exploring the
    challenges in your reports, I will be particularly interested
    in an issue that does not appear in your published work;
    namely, the challenges associated with efficient and
    appropriate expenditure of the funds provided in the recently
    passed economic recovery package. There is over $40 billion
    provided for transportation programs in the new recovery law,
    and, within the 75 percent that will be distributed through
    existing formulas, we are requiring grantees to move rather
    quickly, 120 days to obligate for highways, 180 days to
    obligate for transit. It is imperative, with such short
    timelines, that funds are being used as intended.
        In addition, there are a couple of sizable new grant
    programs: $8 billion for high-speed rail and inner-city
    passenger rail and one and a half billion for surface
    transportation grants, taken in a very broad kind of a way,
    discretionary fund, in a very broad kind of way, whereas the
    earlier two are associated with extensive authorizations that
    were passed last year.
        The Recovery Act included $20 million for the IG to conduct
    audits and investigations, and I will be interested in how you,
    the IG, will be using those funds. I am also interested in any
    work that the GAO may do on the recovery package.
        So, in addition to the management challenges we both
    identified, I hope you will share your insights in these and
    other areas during the course of today's hearing.
        With that, I will introduce another new Member to the
    Subcommittee. Judge John Carter from Texas is here with us
    today. Thank you very much for being here.
        Mr. Carter. Chairman, thank you.
        Mr. Olver. And with that, I recognize the Ranking Member,
    Mr. Latham, for his opening remarks.

                     Opening Remarks, Ranking Member Latham

        Mr. Latham. Well, thank you very much, Mr. Chairman. Having
    never served on this Subcommittee before, there is going to be
    a learning curve, but I really look forward to working with
    you, and doing this on a bipartisan basis. We will probably
    have disagreements, but I pledge, I will never be disagreeable
    about it.
        I am very excited about the opportunities. We are at the
    epicenter, I think, of what is going on, when you look at
    transportation needs and the housing crisis that is out there.
    There are a lot of very important issues that we will be
    dealing with, trying to find the proper level of funding for
    the initiatives that we oversee. We are going to have real
    challenges in making sure that the funding that has been
    provided is spent wisely, and that is why I think this is a
    very appropriate and important hearing this morning.
        I look forward to the testimony, and I, too, would like to
    welcome our two new Members to the Subcommittee, Mr. Carter
    from Texas and Mr. LaTourette, who gave up 14 years on T&I,
    Steve, to come to the Appropriations Committee. I look forward
    to working together and to a very productive year, so thank
    you, Mr. Chairman.
        Mr. Olver. I appreciate the comments. Now, we would like to
    hear from the panel. Your complete written statements will be
    included in the record, and if you could keep your oral remarks
    to somewhere close to five minutes, within shouting range of
    five minutes, then we can move on to questions, and we will
    start with you, Mr. Scovel.

                    Opening Remarks, Hon. Calvin Scovel, III

        Mr. Scovel. Thank you, Chairman Olver. Good morning.
    Ranking Member Latham, Members of the Subcommittee, we
    appreciate the opportunity to testify today on the top
    management challenges facing the Department of Transportation.
        Each year, DOT spends about $70 billion on a wide range of
    efforts to enhance mobility and safety. The American Recovery
    and Reinvestment Act infuses an unprecedented additional $48
    billion for departmental programs, presenting new challenges on
    top of longstanding ones that we have identified over the
    years.
        To achieve the goals of the economic recovery program, it
    is important to recognize that an inherent tension exists
    between spending quickly and making sure that contracting and
    business practices are sound and that expenditures maximize
    efficiencies. To this end, we are encouraged by the initial
    steps DOT is taking to promote accountability, efficiency, and
    effectiveness over the recovery program; namely, its creation
    of a DOT-wide TIGER team.
        Secretary LaHood has expressed his commitment to these
    efforts, and my staff stands ready to do its part to further
    protect these funds from fraud, waste, and abuse.
        Today, I would like to discuss the Department's top
    management challenges across three cross-cutting areas.
        First, we need to ensure accountability, effectiveness, and
    efficiency in federal funding for transportation projects. Our
    work identifies four broad areas of potential vulnerability
    that DOT will need to address.
        They are, first, an effective acquisition workforce at the
    Department and with grantees to ensure that the goals of the
    economic recovery program are achieved.
        Second, effective contracting and grant mechanisms and
    financial processes that result in timely and sound decisions
    while avoiding wasteful spending.
        Third, proactive actions to combat fraud, waste, and abuse
    in an environment of significantly increased funding to state
    and local levels.
        Four, sustained oversight of highway and transit
    investments.
        DOT has initiates underway to address some of these
    vulnerabilities. In addition to the creation of the TIGER team,
    DOT managers are taking actions, such as modifying financial-
    management systems to track recovery funding and report on
    results and working with potential grantees so they can quickly
    submit proposals that will meet federal requirements.
        My staff has been working with DOT officials to support
    their efforts, and we have assembled cross-cutting teams to
    further review each operating administration's management of
    recovery program funds. We expect to issue the first in a
    series of reports by the end of this month.
        DOT's second top challenge is to improve oversight of
    aviation and surface safety. Our work has shown that DOT needs
    to focus on three vulnerabilities: maintaining public
    confidence in FAA's ability to oversee a dynamic aviation
    industry; addressing obsolescence in the nation's aging surface
    infrastructure and enhancing surface safety programs; and
    protecting against cyber security risks.
        DOT has taken actions this past year to improve safety on a
    number of fronts, including launching an industry-government
    partnership to improve runway safety and committing to data-
    driven, risk-based oversight of bridge safety.
        We have a significant body of ongoing work to identify
    risks in aviation and surface safety programs and will issue
    reports covering these topics in the next several months.
        DOT's third top challenge is to ensure the solvency of
    transportation trust funds, thereby improving mobility and
    reducing congestion. Specific challenges our work has shown in
    these areas include maintaining the solvency of the Highway and
    Aviation Trust Funds; operating and maintaining the National
    Airspace System while developing and transitioning to next-gen;
    and continuing efforts to reduce aviation and surface
    congestion.
        We will continue our ongoing work to report on DOT's
    efforts to address these challenges.
        In summary, it is critical that DOT reassess its business
    practices and investment-management portfolios to mitigate the
    inherent risks associated with a substantial increase in grants
    and procurement actions that will result from the recovery
    program. Such assessments should include a focus on building an
    effective acquisition workforce to hold grantees accountable
    for effectively managing their programs; establishing efficient
    contracting and financial-management practices to prevent
    fraud, waste, and abuse of new Recovery Act programs; and
    developing comprehensive oversight strategies to maximize
    highway and transit investments.
        These actions, together, are critical for successful
    implementation of the recovery program and advancing the
    Department's primary mission of transportation safety.
        That concludes my statement, Mr. Chairman. I would be happy
    to answer any questions you or any other Members of the
    Subcommittee may have.
        [The information follows:]

        [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

        Mr. Olver. Thank you have them, Mr. Scovel.
        I will move on to Kate Siggerud.

                       Opening Remarks, Ms. Kate Siggerud

        Ms. Siggerud. Thank you, Mr. Chairman, Ranking Member
    Latham, and Members of the Subcommittee. Thank you for your
    invitation to testify about the challenges facing the
    Department of Transportation and the Congress as we work to aid
    economic recovery and address reauthorization of surface
    transportation and aviation programs.
        We appreciate the opportunities we have had to work with
    this Subcommittee on this and other important issues. This
    hearing comes at an important time for the Department and the
    nation. We know that a safe and efficient transportation system
    is critical to the nation's economy and affects the daily life
    of most Americans, but the system is under strain, and
    estimates to repair, replace, and upgrade aging
    infrastructure--as well as to expand capacity to meet increased
    demand--top hundreds of billions of dollars, and there are
    growing strains on traditional funding for transportation
    projects exacerbated by the economic downturn.
        My statement today covers the efforts required of DOT,
    under the American Recovery and Reinvestment Act of 2009, and
    GAO's decisions regarding high-risk programs at DOT. I will
    also discuss the funding, safety, and mobility challenges
    facing DOT and the Congress in reauthorizing surface and
    aviation programs.
        With regard to the Recovery Act, DOT received about $48
    billion for investments in transportation infrastructure, with
    many of these dollars flowing through established programs with
    known strengths and weaknesses. The Act also established
    several new grant programs. For these, the Department will be
    challenged to create new criteria and new mechanisms.
        The Act gave GAO the immediate responsibility of reporting
    bimonthly on how states and localities are using the recovery
    funds, and, of course, it is at that level where projects are
    already being selected and where the results will be measured.
    Additionally, we will work with Congressional committees and
    cooperate with the Inspector General to determine other
    important areas needing oversight, using a risk-based approach.
        GAO's Biannual High Risk Report identifies federal programs
    at high risk for waste, fraud, abuse, mismanagement, or in need
    of a broad-based transformation. In our January update, GAO
    removed FAA's air traffic control modernization from the list
    and retained surface transportation financing. We removed ATC
    modernization because FAA demonstrated a strong commitment to
    resolving the underlying causes we had identified of cost
    overruns, schedule delays, and performance shortfalls. However,
    the next phases of the modernization include transition to the
    Next Generation air transportation system, which involves
    cooperation and investments by many stakeholders outside of DOT
    and for which the Department is requesting $800 million just
    for next year. We will monitor the projects closely and apply
    our high-risk framework in evaluating them.
        For surface transportation, the need to transfer $8
    billion, on an emergency basis, to the Highway Trust Fund last
    fall is a symptom of a larger problem. As shown in the graph to
    my right, under ``SAFETEA-LU,'' the decisions to spend down the
    Highway Account's balance and change methods meant to maintain
    a sufficient balance led to a crisis when revenues failed to
    meet projections. Even with the rescue last fall, today's
    Highway Account balance is lower than at this time last year.
        As Congress considers this crisis and the larger question
    of reauthorization, it will need to make important decisions
    about the size of these programs, whether and when to seek
    alternate sources of funds, and how to align users and
    benefits.
        We recently observed that improving or restoring mechanisms
    intended to preserve highway account solvency could help DOT
    better manage the account balance. Also, DOT could better
    monitor and communicate key indicators of revenue and spending
    to anticipate sudden changes in Highway account balances.
        With regard to reauthorization, besides the trust fund
    issue I just mentioned, DOT and the Congress will need to face
    decisions about how to maintain an appropriate balance in the
    Airport and Airway Trust Fund that funds FAA operations and
    airport-improvement projects. This graph shows that the balance
    declined steadily in recent years.
        Safety will also be a key issue as the number of crashes,
    injuries, and fatalities on the nation's roads have declined
    slowly, as shown on this graph, and the level remains
    unacceptable. DOT has effectively implemented programs aimed at
    the most intractable problems: unbelted driving and impaired
    driving. Nevertheless, fresh thinking is needed for these
    stubborn areas.
        For aviation, key concerns we have identified are the
    ability to continue the generally high level of safety, given
    problems with collecting and analyzing data, data that are
    called ``precursors,'' or indicators of safety risks in the
    absence of a crash. Regarding precursors, runway incursions
    remain an important focus of our work. The Inspector General's
    work on FAA's oversight of air carriers raised important issues
    about the quality and independence of this oversight.
        Improving mobility continues to be a difficult challenge.
    DOT and its partners struggle with steadily growing congestion,
    as shown here for highways, over the past two decades, even as
    we made significant investments in transportation. The need to
    maintain existing infrastructure often crowds out new capacity
    or efforts to make better use of existing infrastructure. The
    resulting congestion wastes time and fuel, impacts air quality,
    and, for freight traffic, constrains economic growth.
        In reauthorizing the key aviation and surface statutes,
    Congress and DOT have the opportunity to address systemic
    issues with current approaches, including tying funding to
    performance-related outcomes, addressing modal storepiping, and
    obtaining better data on performance.
        Finally, Mr. Chairman, DOT faces all of these challenges,
    including assisting this Committee and other committees with
    Recovery Act and reauthorization issues, with few officials
    named or confirmed to appointed posts.
        I am happy to answer any questions you may have.
        [The information follows:]

        [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

        Mr. Olver. Thank you very much.
        Well, I note from this that, Ms. Siggerud, you have now
    laid out GAO's interests as recovery and the FAA's trust funds,
    the funding issue there----
        Ms. Siggerud. Right.

                              GAO HIGH RISK SERIES

        Mr. Olver [continuing]. And then congestion and safety, as
    those going above and beyond your high-risk issue of the
    Surface Transportation Trust Fund and the funding of the
    Surface Transportation program.
        So you have expanded your high risk to four subs, I think,
    which are virtually the same ones that I give as the litany of
    things which the IG does face. So it suggests that the IG and
    the GAO are already working very closely together, and that
    sort of goes along with the new deputy IG, who comes out of
    GAO.
        So I am glad to see that working relationship is already
    there, and we will see how closely you work and how
    independently you work. There has to be some independence, but
    also some clear collaboration, I think, in the process for it
    to work truly well.
        For Mr. Scovel, you have laid out a series--I have tried to
    write them out as fast as you were speaking--a series of
    points, which started out with four points about the program
    for recovery, which I did manage to get down ``acquisitions
    workforce, contracting and granting, proaction to avoid waste,
    fraud, and abuse''--that is a series of words that I know we
    use often rather loosely, and I cringe, to a degree, every time
    the whole phrase is used--and then ``sustained oversight.''
        But then you went deeper into a series of three or four
    that bound the pyramid in threes and fours. After a while, I
    kind of got just a little bit lost in the series.
        So, in any case, I get from both of you that you are
    committed and will work collaboratively and cooperatively on
    issues, where it is possible, related to the recovery to make
    certain that that happens.
        I would like to just ask, we also have a 2009 budget, which
    is out there in process, and we are trying to prepare a 2010
    budget. The regular operations of all of these agencies that
    are a part of the transportation system have got to go on, and
    so we have imposed on top of the regular workings of the
    agencies a system of very fast, expedited kind of things which
    we have been focusing on for the issues of acquisitions and
    contracting and the avoidance of what could happen in there
    with that long phrase, and the kind of oversight that is
    needed.
        Do you see any problems with having these two? Are we going
    to run into problems with having these two tracks going on
    simultaneously? Either of you, would you care to comment on
    that?

                           USE OF RECOVERY ACT FUNDS

        Mr. Scovel. Mr. Chairman, I will take that on first.
        I think there is a risk. The Department, of course, is
    responsible for significant duties in the areas of safety,
    primarily, and the Department has long viewed that as its
    primary mission, as well as successful stewardship of sizable
    amounts of funds devoted to surface and aviation programs.
        The Recovery Act, of course, has infused an additional $48
    billion on top of that. Much of that Recovery Act money is
    going to flow through existing programs, but the staffs that
    will administer those existing programs in the various
    operating administrations are limited. On top of everything
    they have been doing before, they are now being asked to do
    much, much more, and, of course, it has the attention of the
    nation, from the president on down.
        I know Secretary LaHood and others at the Department--I
    certainly do--worry that attention, to some degree, will be
    focused on recovery matters, and we may lose sight of other
    serious interests like safety. So there is a risk.
        Mr. Olver. All right. Clearly, we need to keep an eye on
    that.
        Mr. Scovel. Yes, sir.
        Mr. Olver. I will take that as a suitable answer: There is
    a risk.
        Let me ask each of you if you quickly can tell me, what do
    you think are the two things that you would tell the
    secretaries, the new secretary of transportation, are the most
    pressing things that they should be concerned about? Would you
    like to answer that, two, just broadly, quickly?
        Ms. Siggerud. Absolutely. I am going to answer that in two
    ways.

                               HIGHWAY TRUST FUND

        First, on top of everything else that Mr. Scovel mentioned
    is the stress on the Department. Right now, we also have a
    Highway Trust Fund issue and the need to reauthorize the
    program by the end of the fiscal year, and that will require
    significant brainpower and support from the Department for the
    Congress to do that.

                                GRANT MANAGEMENT

        With regard to the Recovery Act, though, and handling that
    well, I think Mr. Scovel had the focus on the grant management
    and the acquisition workforce right on. That is an extremely
    important issue for this Department and for every other
    department in the government, to make sure that this Recovery
    Act is successful and that the projects that are funded are
    ones that the American people have faith will have the results
    that the Act intended.
        Mr. Olver. Do you wish to add to that a different one in
    your two than the two that the GAO has just identified?

                                     SAFETY

        Mr. Scovel. I would certainly agree with Ms. Siggerud, but
    I would ask the Committee's permission to add a third, if I
    could, and, of course, that has to be safety.
        We have got solvency of the trust funds, we have got proper
    administration of Recovery Act programs, but the Department has
    to keep its eye on safety.
        Mr. Olver. Thank you very much. Mr. Latham?
        Mr. Latham. Thank you, Mr. Chairman. In both of your
    testimonies, and, actually, I read the testimony--my wife was
    shocked last night that I was doing that--you both identified
    the trust funds as being a major concern, and I assume you are
    monitoring as to when it is going to be depleted again and will
    give us fair notice on that.

                        SOLUTION FOR HIGHWAY TRUST FUND

        What solutions do you have for the trust funds? Is the
    concept obsolete? Should we find a different way of funding, as
    far as structurally inside the government? Do you have any
    suggestions?
        Ms. Siggerud. I think there is a big-picture answer and a
    small-picture answer to what you said, and I will start with
    the big picture.
        Assuming, as we reauthorize these programs, we want to keep
    with the trust fund concept, it is very clear that decisions
    made in SAFETEA-LU to spend down the balance had a very
    disastrous effect when, in fact, revenues did not live up to
    the projections that were made, back in 2005, when the economy
    was in a different place.
        Both of the commissions that were assigned to study this
    issue have also talked about the importance of looking at
    alternative sources and the erosion of the value of the gas tax
    over time, and I think we need to take those thoughts and those
    recommendations very seriously, moving forward.
        The small-picture answer is that we have also taken away
    two mechanisms that were meant to monitor and try to keep the
    account in a solvent status over time, and that was changes to
    the way the Revenue Aligned Budget Authority concept worked, as
    well as changes to the Byrd test. That meant that, in fact,
    when we approach a very low balance in the highway account,
    there were not the kinds of alarm bells that would normally
    have been provided to the Department and the Congress with
    regard to the situation, and we have made recommendations in a
    report yesterday as to some technical fixes on that issue.
        Mr. Scovel. So we have assumed that the advantages to the
    Congress and to the Department and, of course, the nation of
    maintaining a separate trust fund for purposes of funding
    transportation projects would continue to be paramount and that
    we would prefer to continue with that system.
        It is clear that the bottom has fallen out of the Highway
    Trust Fund. I spoke, last week, with the Department's acting
    CFO, and, last night, with the secretary. They are keeping a
    very close eye on it. They have plans for meetings with OMB, in
    the very short term, to get it up on their radar scope. They
    anticipate being able to predict with much greater specificity
    this year than last year when we will be in the danger zone,
    and it is going to come quicker, sooner, than it was last year.
        Mr. Latham. Can you give us that projection today?
        Mr. Scovel. Well, I cannot today, but they are looking at a
    matter of a couple of months, certainly, and not mid-to-late
    summer, as happened last year.
        Ms. Siggerud. On that issue, I can say, the numbers we have
    seen indicate that revenues are lower than last year at this
    time, outlays are higher than last year at this time, and the
    overall balance is lower than last year at this time.
        Mr. Latham. In your testimony, Ms. Siggerud, you talk about
    the economic stimulus package and say that it is designed to be
    timely, temporary, and targeted, but you say it is a difficult
    challenge. First, they require lengthy protocols for
    transportation initiatives through lengthy planning and design
    periods. According to the CBO, even the projects that are on
    the shelf generally cannot be undertaken quickly enough to
    provide a timely stimulus to the economy.
        Second, spending on transportation infrastructure is
    generally not temporary because of the extended timeframes
    needed to complete projects.
        And, third, because of differences among states, it is
    challenging to target stimulus funding to areas with the
    greatest economic and structural needs.
        First, can you elaborate on that, and tell us if there is
    anything in place where we can make these dollars meet the
    needs, economically and infrastructurally, more quickly and to
    have them actually do what they are intended to do?

                              RECOVERY ACT FUNDING

        Ms. Siggerud. A couple of observations. This Act, unlike
    past acts that focused on infrastructure as an economic
    stimulus, does set specific deadlines for the major formula
    transit and highway programs by which states must obligate
    funds. So the Act does try to address the concept of spending
    this money in time to actually have an effect while the
    recession goes on.
        Mr. Latham. Does that compromise the other side about
    targeting where it is needed?
        Ms. Siggerud. Well, the decision made in the Act was that
    we would use existing formula programs rather than target the
    dollars based on, say, unemployment rates in states, so the Act
    was not responsive to that concern, yes.
        We will be in states, as I said, in 16 states, starting
    next week, looking at what procedures states are putting in
    place to spend this money, what their internal controls are,
    and how they are selecting projects. Our first report to the
    Congress on that issue will be April 17th and every two months
    thereafter.
        Mr. Latham. I see my time has expired.
        Mr. Scovel. Just to add, sir, the natural tension between
    the speed that the Congress and the president have instructed
    the Department to get the money out and the need for proper
    accountability.
        Mr. Latham. Thank you, Mr. Chairman.
        Mr. Olver. Mr. LaTourette.
        Mr. LaTourette. Thank you, Mr. Chairman. Mr. Chairman, I am
    very much looking forward to working with you and Ranking
    Member Latham. In 14 years on the Transportation Committee, we
    always had an expression that ``There is no such thing as a
    Republican road or a Democratic bridge,'' and we did not find a
    lot of partisan bickering, which is why I enjoyed that service
    so much.
        Thank you both for being here. I want to talk a little bit
    about the trust fund and its solvency.

                    HIGHWAY TRUST FUND AND BUDGET AUTHORITY

        Mr. Scovel, you are aware that the president, in his budget
    submission, has requested not dissolving the Highway Trust Fund
    but moving to budget authority and removing the firewalls that
    were established in T-21 and continued in SAFETEA-LU. I think I
    heard you say that you thought that the idea of a separately
    dedicated Highway Trust Fund continued to be important. Is that
    a fair?
        Mr. Scovel. I did. It was simply a practical observation
    that, to the extent there are designated revenues coming for
    this particular purpose, it certainly eases the burden on the
    Congress year to year.
        Mr. LaTourette. Do you agree with that, Ms. Siggerud?
        Ms. Siggerud. We have not looked at the details of what the
    president is proposing, so until we have had a chance to do
    that, I am not sure exactly what the effect of the president's
    proposal is.
        Mr. LaTourette. I think I have a pretty clear picture, and
    I think that the study that was authorized in SAFETEA-LU, when
    the report came back, and I can tell you, some of the
    recommendations are never going to be implemented. A 40-cent-
    per-gallon federal tax increase is probably a nonstarter,
    particularly during an election year. There was also emphasis
    on tolling, and then the whole notion of vehicle miles traveled
    has caused the resurface of the Black helicopter guys who talk
    about invasion of privacy and everything else.
        Clearly, we have to figure out how to get more money into
    the Highway Trust Fund, whether President Obama is successful
    in using budget authority or we continue with contract
    authority, as we have in the past.
        During the Bush administration, on SAFETEA-LU, we had a
    pretty big dust-up, in that his Department of Transportation
    recommended that we needed $375 billion over the six-year
    period to do maintenance and maintain our system in good
    repair.
        O.M.B, based upon looking at where the revenues were, said,
    256, and, as a result, we delivered SAFETEA-LU two years late,
    and we all agreed on about $300 billion for the six-year
    program.
        Secretary Peters repeatedly came to Capitol Hill and
    indicated that it is not a funding problem; it is an incursion
    problem, in that there are things that are paid out of the
    Highway Trust Fund that have nothing to do with highways, and
    probably the biggest one is transit. We all love transit, and
    we all know that mass transit is the key to the future, but
    mass transit does not participate to the Highway Trust Fund,
    and it siphons off about $58 billion a year over the six-year
    period.
        Would we be better to work with the new administration to
    say that the Highway Trust Fund is for highways and the things
    related to highways, and put offline some of the incursions,
    like transit, and the responsibility would be upon the federal
    government, this Committee, and the United States Senate to
    find a way to fund transit that did not invade the Highway
    Trust Fund? Mr. Scovel?
        Mr. Scovel. Sir, we have not had a chance to look at that.
    I can certainly see advantages to the position that you
    outlined, but, in the absence of work by my office, I would be
    remiss if I expressed an opinion here today.
        Mr. LaTourette. Ms. Siggerud.
        Ms. Siggerud. We also have not made that kind of specific
    recommendation you are talking about, Mr. LaTourette, but let
    me make a couple of observations where we have done work.
        What we have said is that the growth of the programs funded
    out of the Highway Trust Fund, starting from back in 1956, when
    we began the Interstate Highway program, have grown from a
    couple of programs to over 105 different programs that are
    funded--transit, safety, motor carrier safety, and a variety of
    others--all of which have important constituencies and
    important interests.
        We have said, nevertheless, in a time where we have
    constrained resources, it is important for the Congress to
    decide where it wants to focus those dollars most specifically
    and then determine where the federal government needs to make
    an investment in order to have the kind of transportation
    system that we would like.

                                      RABA

        Mr. LaTourette. You mentioned RABA. After the passage of T-
    21, we were pretty fat and happy here because, under RABA,
    revenue was exceeding our expectations in T-21, and extra dough
    was flowing out the door. When those revenues decline, you
    begin to see the fact of these incursions, if you will, and it
    is easy. People sort of treated it as a private slush fund.
        I happen to come from the covered-bridge capital of North
    America, and there is a Covered Bridge Fund that comes out of
    the Highway Trust Fund. I think that the concrete and asphalt
    guys would effectively argue that that has nothing to do with
    highways, it has nothing to do with safety, and perhaps the
    Congress should sort of step up to the plate and say, ``This is
    a Highway Trust Fund funded by an 18-cent gas tax, and this
    other stuff, if you want to do it, find the money someplace
    else.'' Does that sound reasonable?
        Ms. Siggerud. As I said, we have not made specific
    recommendations in that area, but we do think that the upcoming
    reauthorization provides an opportunity to rethink the goals of
    this program and the federal role in financing it.
        Mr. LaTourette. Mr. Scovel, anything?
        Mr. Scovel. I would agree. What you and Ms. Siggerud have
    been talking about are the tough policy calls for the
    administration and Congress.
        Mr. LaTourette. Which is why it will never happen.
        Mr. Latham. Just a point of personal privilege: I have the
    covered bridges in my district. The Bridges of Madison County
    are in my district.
        Mr. LaTourette. With no disrespect to the Ranking Member, I
    have the longest covered bridge in the United States of
    America. I also have the shortest covered bridge in the United
    States of America.
        Mr. Olver. Mr. Carter.
        Mr. Carter. Thank you, Mr. Chairman. I am looking forward
    to working on this Subcommittee.
        It is a real current issue where I come from, and I have,
    to my knowledge, no covered bridges.
        To get back to what we were talking about, the stimulus
    package that we have got, I spent a lot of time, back in my
    early years of practicing law, working with people who built
    roads, and these are supposed to be shovel-wet-ready projects,
    but the reality of the building of highways is, even if you
    have done everything ready for the movers to be out there,
    there are contracting issues and other issues that have to be
    dealt with before you are going to be pushing dirt.
        Do you all have in place, or as part of your four-point
    things that you were talking about that you are looking at on
    these projects, that makes sure that the quickness of pushing
    dirt is part of the formula, to try to get this into the
    stimulus? Are you working on that?

                            FAST ACTION ON STIMULUS

        And as you do that, I am very proud to see you are looking
    at oversight as at least two of your four formulas because when
    you get in a hurry, it is my experience, in almost anyplace you
    go, when you get in a hurry, there is an easy possibility of
    waste, fraud, and abuse becoming a major part of what happens.
    Would you like to comment on some of those things?
        Mr. Scovel. Certainly, Mr. Carter. Right now, we are
    working on the first phase of our Recovery Act work, in terms
    of trying to proactively identify for the Department what the
    risks and challenges are with Recovery Act funding and some of
    the best practices or lessons learned from the work that we
    have already completed. We are trying to highlight that for
    them so they will go in, eyes open, knowing what the problems
    might be.
        Phase 2, for us, will be a more in-depth examination of how
    each of the modes executes its programs with Recovery Act money
    and, at that point, sir, we will certainly be looking, not at
    every single project, but we will be trying to sample those
    projects and determine where the Department executed its
    responsibilities properly and where it might have fallen short
    in terms of maybe funding projects that were not shovel ready,
    were not generating the jobs that the Act is intended to
    accomplish and so forth.

                                   TIMEFRAMES

        Mr. Carter. Are you looking at timeframes to try to see how
    quickly you can get them in there, being secure that, in the
    Recovery Act, you are going to be doing the proper spending?
        Then also, there is talk of eliminating e-Verify, and part
    of this issue, in my part of the world, is jobs on the
    highways. Most of the contractors that are on the highways use
    e-Verify very extensively, and, with the elimination of e-
    Verify, this could be an issue in the State of Texas. Would you
    have any comment whatsoever on the use of or the elimination of
    e-Verify as it relates to jobs for Americans?
        Mr. Scovel. Well, my office has not yet had a chance to
    embark on this particular phase of our work, so I cannot
    comment on that. It is certainly a topic that we will consider
    as one of our objectives.
        Mr. Carter. I noticed, when we asked, how are we going to
    fund the trust fund, there was a lot of real nice talk, but
    nobody said, ``Well, this idea is thrown out there, or this
    idea is thrown out there.'' You just want to stay away from
    that. Is that what it is?
        Ms. Siggerud. I would be glad to talk about that. There
    have been recommendations from a number of commissions in this
    area, and they fall into a couple of categories.

                                    GAS TAX

        The first one, of course, is maintaining or increasing the
    gas tax. The gas tax has certain attractive properties that we
    need to think hard about in making decisions to move away from
    it. It is a well-established tax that is collected at low cost
    with low enforcement costs from a small number of excise
    taxpayers, and, over time--that is starting to change now--it
    has been a reliable tax. But that is starting to change, and
    so, hence, the look for other opportunities.
        There is a lot of talk about a vehicle-miles-traveled tax.
    As Mr. LaTourette pointed out, there are privacy issues. There
    are several demonstration projects going on that are testing
    how these privacy issues can be dealt with in the VMT arena,
    and I think we will see results from those soon that should
    help us determine how to move forward in that direction, if
    that is where the Congress wants to go.
        Finally, there are a number of debt proposals that people
    have made with regard to infrastructure bank funding, et
    cetera. From GAO's point of view, we are always concerned about
    whether that is the most cost-effective way to provide the
    infrastructure investment dollars.
        Mr. Carter. You are going to find that I am new on this
    Committee, and I do not know some things that I ought to know.

                                NATURAL GAS TAX

        On the use of natural gas, which is one that T. Boone
    Pickens has thrown out there for the public, to the tune of
    about $60 million of his own money, do we put a tax on natural
    gas that runs in cars?
        Ms. Siggerud. I have no idea what the answer to that
    question is.
        Mr. Carter. Neither do I. That is why I asked you.
        Mr. Scovel. I do not either, sir, but the advocates of the
    VMT fees would say that whether you are running with natural
    gas or any other alternative fuel, that would capture the use
    of the roads and more closely link use with cost to build and
    maintain the infrastructure.
        Mr. Carter. That is going to be a pretty unpopular thing to
    do. Thank you. Thank you, Mr. Chairman.
        Mr. Olver. Thank you, Mr. Carter.
        Well, I am going to continue for a moment. Let me just,
    before I do, recognize Carolyn Kilpatrick, who is returning to
    this Subcommittee after a two-year hiatus. She thought it was
    such a nice thing to go someplace else, that she decided to
    move, but now she is coming back, and we are very glad to have
    her back.
        Carolyn Kilpatrick is from Michigan, and she has decided
    she will wait one round, but go ahead.
        Ms. Kilpatrick. Yes. Thank you, Mr. Chairman, just for the
    opportunity. I was at another 10:00 meeting. I cannot do two at
    once, but thank you for your service, and I will yield for the
    second round.
        Mr. Olver. All right. Then I am going to continue, to a
    degree, where my colleagues that I should have to say, ``on the
    left,'' but ``on your right,'' were here.
        I am going to follow up a little bit since both of you have
    spoken cogently about the needs of the trust fund, and just in
    answer, you covered two issues--the gas tax and the VMT--with
    Mr. Carter, and neither of those shows up in the president's
    budget. In fact, it would appear that, in his budget, he has
    carefully avoided stepping on anything which would be the
    normal purview of the authorizing committee to decide how these
    monies are to be raised, but, Mr. Scovel, you were bold enough
    to actually list several options in your Management Challenges
    Report, and I will just list several of them.

                           VEHICLE MILES TRAVELED TAX

        One was increasing the current fuel tax. The second was
    imposing fees on vehicle miles traveled, and then imposing fees
    on vehicle registrations or sales, new tolls, and customs
    duties. I think the list might have gone on.
        Well, let me start with the vehicle-miles-traveled issue.
    Ms. Siggerud already made some comment on that, but this is not
    something that gets by on brief comment. How long might it take
    to implement such a thing, and what kind of demonstration
    projects have we had, here or elsewhere? Can you give us sort
    of a description of those sorts of things that are now going on
    here or in other countries? Where is the source of opposition
    to that mechanism?
        Mr. Scovel. I could take a stab at some of your questions,
    sir, we do not have work on that would permit me to address all
    of them. I am not familiar with what may be done in other
    countries regarding VMT. I am familiar with the demonstration
    project in Oregon involving a limited number of vehicles, and
    the report that I heard was basically an anecdotal report from
    the administrator of the program that thought it was feasible
    and fairly easily administered.
        In my testimony, I had instructed my staff to put together
    for this Committee a list of funding options, just kind of
    brainstorm it. So, of course, we came up with increasing the
    gas tax, VMT fees, heavy vehicle user fees, additionally,
    customs duties, tolls, registration, sales tax. Those are
    policy options for the Congress and the administration to
    consider.
        The key number of sticking points with regard to VMT,
    specifically, have to do with the privacy concerns that have
    already been mentioned. There is an equity concern as well for
    low-income, long-distance drivers, and the initial
    administrative startup fees for a VMT system, we believe, would
    be higher, certainly, than what we encounter now with the gas
    tax.
        The advantages, as I outlined earlier, with VMTs: It is
    simply a closer link between use and cost and the ability to
    incentivize drivers with the desire to use the resource (the
    road) efficiency and wisely.
        Ms. Siggerud. May I add, with regard to the Oregon Project
    and privacy, there were a number of steps taken there to
    protect the drivers' privacy, including having the transponder
    not retain a record of where the person had driven and also
    have it not be in a broadcast mode.
        The ongoing project at the University of Iowa that was
    funded in SAFETEA-LU is national in scope in a number of
    localities and tests. It tests how data can be collected, how
    the fees can be collected, and what are the different options
    for protecting privacy, and that is an ongoing project.
        Mr. Olver. Well, I guess this is more in the purview of the
    authorizing committee, but if either of you have more extended
    lists of the sorts of things that one might do in any further
    assessments of the relative merits, advantages, disadvantages,
    reasons for opposition, and public benefits versus private
    concerns, the issue of privacy is one, as you have pointed out,
    an issue there, and there are those who think, I understand,
    that that can be covered fairly easily.
        We would be interested, for the record, and we will put
    this in a question for the record in a broader way. Okay? Thank
    you very much. Mr. Latham?
        Mr. Latham. Thank you very much. I was interested in
    testimony earlier about the new programs that are brought forth
    in the stimulus package, and the supplemental grants for the
    surface transportation programs. I think there is $1.5 billion
    in transit set aside, transit improvements, plug money set
    aside for green transit. For rail, I guess, another $8 billion.
        How long does it take to set up, in this stimulus package,
    set up the rules and get the programs up and operating? What is
    the timeline?

                                OPERATING RULES

        Mr. Scovel. Well, sir, the timeline is running, and it is
    contained in the bill. The Department is working flat out in
    order to make those deadlines.
        Mr. Latham. Do they not have to write new rules and go
    through the whole process?
        Mr. Scovel. Yes, sir. They certainly will. Much of the
    money that flows through existing programs can be more easily
    accommodated in those timelines than will the new money, and
    high-speed rail is probably the biggest question mark on the
    Department's scope right now because it will be administered by
    the Federal Railroad Administration, which does not have a
    great deal of experience in this area.
        So they are talking about the need to write the criteria
    and the requirements to work with potential grantees to train
    their own workforce to properly administer that program in a
    very short period of time without an experience base.
        Mr. Latham. What is their timeline?
        Mr. Scovel. On that one, it is, if I am not mistaken, 90
    days in order to set out the criteria with applications
    required to be received within 180 days.
        Ms. Siggerud. That is correct. With regard to the
    recipients' use of the funds, there are not the same
    requirements to spend the dollars within a specific amount of
    time that apply to the formula money flowing out through the
    highway and transit programs.

                             STATES AND LOCALITIES

        Mr. Latham. I was interested in some of your testimony
    where you talk about supplanting funds from the states, and you
    say evidence suggests that increased federal highway grants
    influence states and localities to substitute federal funds for
    state and local funds they otherwise would have spent on
    highways.
        In 2004, we estimated that the states used about half of
    the increases in federal highway grants since 1982 to
    substitute for state and local highway funding, and that rate
    of substitution increased in the 1990s. I had an amendment to
    prohibit supplanting, basically, the states' projects that they
    would have done anyway with the federal funds, which was not
    made part of the bill. Would you elaborate on that?
        Ms. Siggerud. I think there are two important points there.
        The first is that the Recovery Act does require the
    governor to certify that he or she is not, in fact, supplanting
    federal dollars for state dollars. We will be focusing very
    specifically on that issue in the bimonthly reviews we are
    doing at the state level to see exactly how that concept is
    being implemented and what it means in various states.
        The concern about substitution is not quite as strong when
    we are in a severe recession, and states are facing very severe
    revenue crunches. It is really more when there are more dollars
    available to states that you see a higher substitution effect,
    but it is a concern, and we are working it into our plans for
    use at the state level.
        Mr. Scovel. I would agree with Ms. Siggerud. Particularly,
    GAO has the statutory responsibility to examine use of funds at
    the state and local levels, so they will be pursuing that.
        Mr. Latham. I find it interesting that some states have put
    up websites asking their constituents or citizens of those
    states to give them suggestions as to how to spend the money.
    Is there that much extra here or something? Have you been made
    aware of any of these projects?
        Ms. Siggerud. We are going to send our first teams out to
    states next week, and that looks like something that we ought
    to put on our list of things to check.
        Mr. Latham. Anyway, so everyone has a chance, I think I
    will be quiet.
        Mr. Olver. Thank you, Ms. Kilpatrick, would you like to
    pass again?
        Ms. Kilpatrick. Thank you. Thank you very much, and, again,
    AG and ALG, who are really crucial to what we do here.
        I am from Michigan, and I just met with the director and
    his team last week as it relates to a vision for
    transportation, and some of the dollars that are put into the
    recovery package, Michigan, of course, needs it, and really an
    ailing infrastructure all over America. I do not see that there
    will not be a shortage of funds sitting around, hopefully,
    which is one of the discussions we had as we passed the
    Recovery Act.
        Chairman Oberstar and Chairman Olver thought that it needed
    more and could do better. It is a quick stimulus. It does put
    people back to work quickly. One of the specifications was
    ``travel-ready projects''--that is the word being used right
    now--in 90 days, you all are going to do the criteria, and, in
    180 days, you must have shovels in the ground.
        I heard you say, ALG, that next week you all will be
    sending people to states to monitor and see what they have.
    What will be that process?
        Ms. Siggerud. That is right. In fact, Michigan is one of
    the states that we will be going to, either this week or the
    next week.
        Ms. Kilpatrick. Good. What kinds of things will you be
    looking for as we come for the resources?
        Ms. Siggerud. This will be a broad-based review, focusing
    on the various funds that are flowing to states, not only
    transportation but education, energy, and other programs that
    are going out to states.
        We will start with a look at the governor's office, of what
    the plans are for coordinating and putting in place ways of
    tracking these dollars, a key criterion for decisionmaking, and
    what kinds of internal controls are being put in place.
        We will then work with individual state departments to
    understand their approaches for selecting projects, monitoring
    projects, and making sure that they are delivering on the goals
    of the Act.
        Ms. Kilpatrick. Okay. And the timelines--it is in the law--
    let me just reiterate them again. Now, you will be making sure
    that whatever they put forth can adhere to those timelines as
    well?
        Ms. Siggerud. That will be one of the things we will be
    looking for, yes.
        Ms. Kilpatrick. Okay. And any projects that do not meet
    that; is there something in place where you would eliminate it
    or not let them do it or something to that effect?
        Ms. Siggerud. Well, GAO does not have the power to tell
    states what they can do, but we could certainly bring it to the
    attention of the Department and to the Committee as well.
        Ms. Kilpatrick. And the same for you, sir?
        Mr. Scovel. Yes, ma'am.
        Ms. Kilpatrick. Thank you very much. Thank you, Mr.
    Chairman.
        Mr. Olver. Mr. LaTourette.
        Mr. LaTourette. Thank you, Mr. Chairman. Since I have
    already incurred the ire of the Ranking Member by claiming the
    covered capital of the world, I am going to go all in and talk
    about ethanol.

                                    ETHANOL

        Have either of you done an analysis? In Ohio, for instance,
    40 percent of the fuel we burn is ethanol based. Ethanol is
    federally taxed at 10 cents; conventional gasoline is at 18
    cents.
        As we look to the solvency of the trust fund, have either
    of you looked at the impact on the trust fund if the ethanol
    subsidy were eliminated?
        Ms. Siggerud. Mr. LaTourette, we have work that is several
    years old on that issue, so I do not have the numbers right at
    my fingertips, but we could certainly submit that to your
    office.

                              AVIATION TRUST FUND

        Mr. LaTourette. If you would, I would appreciate that.
        I want to talk about the Aviation Trust Fund for just a
    second. In the last Congress, the House did its work on the FAA
    reauthorization, and the Senate--no big surprise there--did
    not, and my understanding is that the T&I Committee marked up
    the FAA modernization last week or the week before, and the key
    ingredient of that is the way that we are going to fund the
    Aviation Trust Fund for Next-Gen and some of the other things.
        Have either of you done an analysis of if the House T&I FAA
    bill became law, the impact that it would have on the funding
    stream and the balances in the Aviation Trust?
        Mr. Scovel. Our quick look at it, sir, and it is not based
    on lengthy research, is that the Aviation Trust Fund is going
    to decline, continue to decline, somewhat in balance, and there
    may be the need for a larger contribution from the general fund
    in order to make up that difference.
        Mr. LaTourette. Okay. And, Ms. Siggerud, you have not done
    that yet?
        Ms. Siggerud. What our work shows is, of course, there is a
    decline that we talked about, driven, in part, by the concept
    that spending amounts are based on revenues estimated early in
    the year. I believe that the House marked-up version has a
    requirement that, in fact, the Department should spend 95
    percent of anticipated revenues, which should help to avoid the
    problems we have seen in the past with balances at the end of
    the fiscal year.

                             COLLECTIVE BARGAINING

        Mr. LaTourette. Okay. Then the last couple of things are
    related to collective bargaining and things of that nature.
        One of the things that held up the FAA reauthorization in
    the last Congress was the dispute between the air traffic
    controllers and the Bush administration.
        Both of you have emphasized safety, and there are some
    people in this Congress that think that air traffic controllers
    make too much money and that we should pay them less and have
    less-experienced people.
        Have either of you done any work on the issue of the
    importance of a well-trained air traffic control workforce,
    and, in conjunction with that, my understanding is that about
    7,000 of them are retiring a year, the most experienced people.
    Just from my perspective, I do not think it is a job where you
    can just wake up and go in and say, ``I am going to guide 20
    aircraft today.'' It seems like pretty intensive work. Have
    either of you looked at the issue of the air traffic controller
    contract relative to the safety issue?

                        AIR TRAFFIC CONTROLLER STAFFING

        Ms. Siggerud. Not directly at the contract and its relation
    to safety. My office has done a lot of work, sir, regarding air
    traffic controller staffing levels and training requirements.
    We have ongoing work with fatigue and facility-level training.
        Clearly, it is a job that does require extensive training,
    and, in fact, it takes about three years for a controller to
    move from zero to the certified professional controller level,
    where he or she is able to work the scopes at all of the
    positions at his or her location. To the extent that the
    contract affects that, it is critical.
        Mr. LaTourette. I think it is demoralizing. What happens
    when you have a demoralized workforce is you get goofy things
    to happen.
        There was a report, a couple of years ago, that a
    controller was sent home because he was wearing gender-
    inappropriate pants, and so then, in retaliation, some other
    TRACON controllers came in wearing dresses. So that is the kind
    of stuff you get when you do not deal with people in good
    faith.

                                  DAVIS-BACON

        Last question before the red light goes on: Davis-Bacon.
    After the hurricanes in the Gulf Coast, the Bush administration
    suspended Davis-Bacon, and, to President Bush's credit, and
    also to his chief of staff at the time, Mr. Card, they did an
    analysis that showed that taking away Davis-Bacon did not save
    them any money on reconstruction, and, in fact, because of the
    anti-kickback provisions that are in the Davis-Bacon statute,
    it actually gave greater accountability and reliability.
        Have either of you done work on the effect of Davis-Bacon
    relative to efficiencies, cost, things of that nature?
        Ms. Siggerud. We recently issued a report looking at
    several federal requirements and how they apply to highway
    programs and the extent to which they are essentially pain
    points for state DOTs and whether, in fact, state DOTs are then
    opting out of using the federal highway program to avoid some
    of those requirements. This includes NEPA, Davis-Bacon, the DBE
    program, and a few others.
        The Davis-Bacon program was not among those that the state
    officials viewed as problematic in terms of their ability to
    comply with it or significant cost driving when compared to the
    other federal requirements that I just mentioned, and I can
    send that report to your office, if you would like.
        Mr. LaTourette. That would be great. Thank you so much, and
    thank you, Mr. Chairman.
        Mr. Olver. Mr. Pastor.
        Mr. Pastor. Thank you, Mr. Chairman, and sorry for being
    late, but other hearings get in the way.
        What I am going to do is go into the air traffic control
    system. I know that you pulled them off the high risk January
    of this year, and I do not know why, and I would hope you would
    continue to put them in the high-risk area because we still
    have great problems.

                                     STARS

        You took them off the list, but you say they have great
    challenges, and one of them, you talk about sustaining the
    current air traffic system and maintaining the facilities
    during the transition to Next-Gen. I have been here long enough
    to see the problems of STARS, and last year I got caught where
    one of the radar centers went down, and controllers were
    calling each other, on their cell phones trying to figure out
    what the hell was happening.
        What is the status of STARS? Have we solved some of those
    problems because they are going to be in place for 2025 is the
    anticipation it will be in place.
        Ms. Siggerud. Well, Mr. Pastor, if I can address the issue
    of the high risk decision that we made.
        Mr. Pastor. Sure. Right.
        Ms. Siggerud. It was not an easy decision, and we looked to
    our aviation experts, along with our IT experts in GAO, to make
    this decision. But the fact was we had identified a series of
    management and acquisition issues in the nineties that were
    leading to cost overruns, schedule delays, and a variety of
    other mismanagement problems.
        The Department has addressed those particular issues, and
    we felt that because the Department had addressed those issues,
    it was the right time to take those issues off the high-risk
    list. Moving to a new set of challenges really would have been
    moving the goal post in the middle of the game for the
    Department.
        We will continue to monitor the Next-Gen system very
    closely and look for particular issues, things like schedule
    slippage, whether the various stakeholders that need to
    participate in Next-Gen for it to be successful are, in fact,
    doing that, as well as the cost of the projects, in making a
    decision of whether this would, in fact, meet our high-risk
    criteria the next time we issue a report.
        Mr. Pastor. And your fourth one, challenge? You do. I read
    it to you.
        Ms. Siggerud. Okay.
        Mr. Pastor. It is basically that you have to sustain a
    system on the current system, and I have to tell you that what
    we saw last year when one of those radar centers went down, we
    went into chaos. Planes could not land, planes could not take
    off, and people were calling airports wondering what the hell
    was happening.
        Ms. Siggerud. That is a very, very important issue.
        Mr. Pastor. Well, I know it is, and STARS still has
    problems. So are we going to stay with the same system until
    2525 and then hope Next-Gen is transitioned in and will not
    have any problems?
        Ms. Siggerud. We have an ongoing request from the House
    Transportation Infrastructure Committee to monitor Next-Gen on
    an ongoing basis. The issue that you just raised will be an
    important part of what we are doing.
        Mr. Pastor. I understand. I know it is an important part.
    It has to be because for the next 15 years, the current system
    is what is going to keep the air traffic system afloat.
        So I will go back to the question. We had major problems
    with STARS. What are we doing for the next 15 years to ensure
    that the current system is going to keep planes up in the air
    with safety?
        Mr. Gerald Dillingham. Mr. Pastor, my understanding is that
    STARS is in place at 50 sites. A system called ``Common Arts''
    is in place at about 100 other sites. Together, those two
    systems are responsible for controlling traffic at the terminal
    radar approach control facilities, the TRACONs. Those are going
    to form the basis, in part, for Next-Gen, and FAA is going to
    have to modernize those TRACON systems at the same time they
    are imposing Next-Gen on top of it. It is going to be a tall
    order, but they are aware of the challenge.
        Mr. Pastor. Where is the money going to come from? Because
    that is your third point: To reconfigure, to enhance runways,
    to reconfigure facilities; that is another ton of money. So
    what are we doing in anticipation for 2025 so that the runways
    are extended, and the facilities are reconfigured so that Next-
    Gen can come in, and that is if it is even in place to come in?
        Mr. Gerald Dillingham. I know FAA has had a program of
    runway construction. In late 2008, they commissioned three
    runways, including one right out here at Dulles, and they have
    four or five others underway. They would argue that runways are
    the most efficient way to increase capacity.
        Mr. Pastor. I understand, but here you point out to me that
    runway construction is key to Next-Gen being part of it. Now,
    did Dulles consider Next-Gen when they were doing the runways?
    Are other airports using the stimulus money going to consider
    Next-Gen in doing their runways? There has to be some order to
    this thing.
        Ms. Siggerud. Yes. A couple of things. With regard to how
    it is funded, clearly, in reauthorizing the FAA statute,
    decisions about taxes and the general fund contribution will be
    an important part of what the Congress needs to think about.
        With regard to the runway issue, Next-Gen really depends on
    a partnership with airports, with airlines, and with a number
    of other federal departments, in addition to the Department of
    Transportation, to make it work, and to the extent that those
    partners are working together, it will be successful. To the
    extent that they are not, it will have problems.
        Mr. Pastor. Could I just finish one more question, Mr.
    Chairman?
        I guess what I am getting at, everybody is anticipating
    Next-Gen coming in by 2025. According to you, how we
    reconfigure the facilities and how we enhance runways is very
    important to bringing in the system and making sure it is
    successful. Is anybody paying attention, as runways are being
    built, and airports are asking for airport-improvement money to
    deal with runways and to reconfigure their facilities to say,
    how does this fit with Next-Gen?
        Ms. Siggerud. I would like to ask my colleague, Gerald
    Dillingham, to answer that question, if he could. He is our
    expert on Next-Gen.
        Mr. Pastor. I will ask my chairman here.
        Ms. Siggerud. Or we can submit a question for the record.
        Mr. Olver. Let him answer; otherwise, we will just have it
    for the record.
        Mr. Gerald Dillingham. Mr. Pastor, FAA's capital
    improvement plan and its operational evolutional plan include
    factoring in runways and the transition to Next-Gen. Next-Gen
    will not turn over at 2025. It is a transformation and
    transition that includes all of those kinds of things, and it
    is part of what they have submitted to Congress.
        They are watching to make sure that what you have pointed
    out as a serious issue is, in fact, addressed because, as you
    say, what we have now will, in fact, be a part of our system
    for the next 10 to 15 years and has to be integrated into with
    the new kinds of systems.
        Mr. Pastor. Thank you, Mr. Chairman.
        Mr. Olver. Ms. Kaptur.
        Ms. Kaptur. Thank you, Mr. Chairman, and, again, I
    apologize for being late. We had a concurrent defense
    appropriations hearing this morning.
        Thank you for your work. I have four short questions.
        One is, on the $48 billion in the recovery bill, as those
    are distributed to the country, will all of that money go
    through the states, or is any of it slated to go directly to
    municipalities or other transportation-related organizations?

                          FEDERAL-AID HIGHWAY PROGRAM

        Ms. Siggerud. For the Federal-Aid Highway Program, much of
    that money will go to states, but there is a requirement to
    suballocate to lower levels of government.
        However, when it comes to the programs for transit funding
    and for airport funding, that money will go to organizations
    like transit authorities and airport authorities to carry out
    the programs.
        Ms. Kaptur. All right. I thank you for that. The vast bulk
    of the money will go through the states.
        Ms. Siggerud. Because the largest part of the money to DOT
    is through the Federal-Aid Highway Program, yes.
        Ms. Kaptur. My question areas, in any of the formulas
    related to transportation in the recovery bill, is need or
    unemployment a factor, or is it merely funds distributed to
    COGS? In other words, if I look at the distribution for Ohio
    thus far, a region like ours, which has 14 to 17 percent
    unemployment and rising, gets a rather small slice compared to
    other places in the state.
        Our understanding, at the local level, is that is the case
    because the formula being used is a COG formula, not impacted
    by other factors, such as unemployment or need. Is that a
    correct understanding? Do I have a correct understanding?
        Mr. Scovel. That is my understanding as well, Ms. Kaptur.
        Ms. Kaptur. Thank you very much. How can we assure that the
    state is giving us everything we are due?
        Ms. Siggerud. In terms of the Recovery Act?
        Ms. Kaptur. Yes.
        Ms. Siggerud. Well, there is a fairly unprecedented level
    of reporting and transparency built into this Act, in terms of
    states needing to post their investment decisions, contracts
    let, et cetera. So the amount of information available will, in
    fact, be far more than is available through typical
    transportation spending at the state and local level.
        In addition, the Inspector General and GAO have both
    received specific funds for the purpose of monitoring and
    reporting on the implementation of this Act.
        Ms. Kaptur. If I were to ask you to compare areas of high
    unemployment in a state like Ohio, taking the COG districts,
    versus the distribution of funds, could you do that?
        Ms. Siggerud. I suppose it would be possible. Among the
    questions that we are going to be asking the states, and, in
    fact, Ohio is one of the states that we do plan to visit, is,
    how is the state making the decisions, once it has the money,
    with regard to the Federal-Aid Highway Program, and certainly
    among the criteria that the state could consider would be
    unemployment levels in different parts of the states, but those
    decisions are, right now, at the state level.
        Ms. Kaptur. At the state level. I thank you. That is very
    important information to us.
        The next question deals with green energy. Just really
    quickly, of the $48 billion, does DOT have a mentality about
    green energy and the expenditure of these dollars. The reason I
    ask the question is, whether it is our airport in my region, or
    whether it is a major bridge that is an I-280 bridge that spans
    one of our major rivers, the hardest job I have had with the
    transportation people at the state level and, frankly, at the
    federal level, is getting them to think about green energy
    powering our airport, our bridge projects. It has been
    unbelievable.

                                  GREEN ENERGY

        So my question is, is there a green energy mentality over
    at the DOT regarding facilities and how one integrates new
    green energy into the expenditure of funds?
        Mr. Scovel. Ms. Siggerud has been answering some of your
    questions as they pertain to the state level. You have just
    asked a question that has to do with the Department's
    implementation of Recovery Act funds.
        That would fall under my purview, and that is a topic that
    we could take on as one of our audit objectives----
        Ms. Kaptur. Oh, great.
        Mr. Scovel [continuing]. To determine if that is a
    criterion that any of the modal administrations are considering
    as they allocate money.
        Ms. Kaptur. I can tell you, you are going to run into a
    wall, and I do not understand it, but I know it exists. So I
    thank you for that. That is very good information.
        Finally, my last question is, high-speed rail, which is
    very important to us--I am so happy this is in the bill. I know
    Congressman LaTourette is on the eastern end of Ohio. I am on
    the western end of Ohio.
        What I want to know is, in terms of what you said about
    FRA's ability to really muscle up here, what do we do at the
    state level to assure right-of-way is available?

                                     AMTRAK

        I see, in your testimony, you talk about Amtrak's schedule.
    The problem with Amtrak in northern Ohio is they are on the
    same track as freight rail, and freight rail gets priority. So
    we need separate right-of-way so we can move those trains fast,
    not 70 or 80 miles an hour. I think, in the bill, it is 110
    minimum. Hey, I want to go 300.
        So we are nowhere on the same page, but we have to have
    that right-of-way. How do we work with FRA to help us do that
    quickly in Ohio? What do we do?
        Ms. Siggerud. Ms. Kaptur, I do not have an easy answer to
    your question. There are a number of high-speed rail corridor
    groups around the country that are working to try to plan
    corridors and to acquire right-of-ways. I am not sure of the
    status of the project in Ohio.

                                HIGH SPEED RAIL

        We do have a report coming out next week on high-speed rail
    issues that I think will be helpful to the Department, looking
    at, essentially, what is it that can make a successful high-
    speed rail project, in terms of its ability to deliver
    ridership to be cost effective and to compete with other modes
    of transportation?
        Ms. Kaptur. What do we have to do between now and 90 days
    and now 180 days to be ready on the FRA money in a state like
    Ohio on the high-speed rail? And that will be my last question,
    Mr. Chairman.
        Ms. Siggerud. At the state level, I think the corridor
    needs to be working with the Department to understand the
    criteria that the Department will develop, in terms of funding
    projects.
        Ms. Kaptur. The state department or the federal department?
        Ms. Siggerud. The federal department, the Federal Railroad
    Administration will be developing these criteria and submitting
    a strategic plan that will inform the funding decisions that
    follow for the $8 billion.
        Ms. Kaptur. I cannot speak for Mr. LaTourette, but if you
    could give us the name of the person we should meet with, we
    would sure appreciate it. Thank you. Thank you, Mr. Chairman.
        Mr. Olver. Thank you, Ms. Kaptur. On the last one, yes, Ms.
    Siggerud has pointed out that the law requires a strategic plan
    to be created by the Department of Transportation by the end of
    April for how the $8 billion for high-speed rail and inner-city
    passenger rail is to be laid out for the states to apply for.
    Then there is another longer period as well.
        So it is understood that those monies are not going out for
    ready-to-go projects, for shovel-ready projects.
        Ms. Siggerud. That is right.
        Mr. Olver. It is a long process involved in that.
        Ms. Siggerud. That is right.
        Mr. Olver. So after that strategic plan, then we will
    define what kind of guidance may go to the various places that
    could use high-speed rail, which, under the law, are the high-
    speed rail corridors that are already designated under
    authorizing law, and yours fit into that.
        So it is understood to take quite a period of time before
    the states can actually operate them, but then you should try
    to anticipate clearly the process because it will move
    eventually. Mr. Berry?
        Mr. Berry. Thank you, Mr. Chairman. I realize you guys do
    not run agencies that you are representing, but I just think it
    needs to be said, we have got so many areas in transportation
    that are way behind the curve, and for a great nation to allow
    itself to get into this situation, I think, is just
    inexcusable.
        Having said that, this situation between the FAA and the
    air traffic controllers is idiotic. Now, when they make a
    mistake, we cannot sit here and have you all or someone else
    sitting in those chairs saying, ``Well, gosh, that was a top
    priority, and we were really concerned about that, and we
    talked about that many times, and we are sure going to try to
    do something about that because somebody is going to already
    have gotten hurt real bad.'' And I hope that you will take this
    back to the agencies and, for crying out loud, get that fixed.
        We should not be talking about that the next time this
    Committee comes together. It should already be fixed. I have
    never seen anything to compare with the way that the
    controllers were jerked around by management in some of the
    towers that I represent, or represent an area awful close to
    them.
        To be on a plane going into one of those airports, knowing
    that everybody that was looking at a screen was mad, and they
    were mad when they woke up that morning, and justifiably so, in
    my opinion. This has got to be fixed right now. We cannot keep
    studying it, talking about it, or anything else, and it is just
    a matter of simple recognition of the dignity and having
    respect for your fellow workers and your fellow man. Thank you.
    Thank you, Mr. Chairman.
        Mr. Olver. I guess there is no answer required for that, so
    it goes back to me.
        I want to go back to Mr. Scovel. When you were given the
    opportunity to indicate what you thought were the critical
    questions for the new secretary to take up, you added to the
    list safety, in a general kind of way, and that, of course, is
    always a concern of our agencies, and we, in the Congress, are
    continually stressing safety in all aspects, whether it be
    highways or rail operations or air operations.
        Your office has identified aviation safety as a top
    management challenge year after year, and your most recent
    report highlights the need for FAA to exercise vigilant
    oversight of the aviation industry in three key areas, and
    those key areas, I think, are inspection and certification of
    air carriers, the inspection procedures for outsourced aviation
    repair facilities, and the implementation of technologies and
    systems to improve runway safety.
        Now, I want to examine one case of last year. I do not
    remember particularly the radar case that my colleague from
    Arizona was mentioning, but, last week, the FAA did announce
    that Southwest Airlines would pay a large civil penalty, seven
    and a half million, which could double if Southwest does not
    accomplish specific improvements.
        This is a case from last year. You must know the situation
    well. What is your assessment of their enforcement actions with
    regard to that, and has the FAA implemented adequate procedures
    to address the systemic problems beyond just one airline that
    they uncovered in that particular case? It probably has some
    carryovers in other situations. Would you care to assess that
    case a bit? If Ms. Siggerud wishes to comment, that is fine,
    too.

                               SOUTHWEST AIRLINES

        Mr. Scovel. Thank you, Mr. Chairman. We are, of course,
    familiar with the FAA civil penalty against Southwest Airlines.
    It originally started about a year ago at the $10 million-plus
    level. It has since been settled through negotiations at $7.5
    million.
        A key component, as you outlined, is the fact that
    Southwest must take compliance actions in order to bring its
    own maintenance practices fully up to FAA standards under the
    settlement, and the penalty can double, should the airline fail
    to do that.
        I think that is a prudent measure, on FAA's part. While
    $7.5 million may not strike many as a large sum of money, in
    the world of civil penalties for FAA violations, it is large.
    It is one of the largest on record, in fact.
        For FAA to build into the settlement the requirement for
    the airline to take further compliance measures, I think, is a
    wise one, rather than simply settling on trying to squeeze
    money out of the carrier.
        The much broader question is one that you mentioned as
    well, and that has to do with system-wide FAA measures to
    correct what certainly did happen at Southwest. Our work from
    last year shows that FAA's administration of its oversight,
    specifically at Southwest, was deficient. We recommended a
    number of measures that the agency should take in order to
    correct those.
        To its credit, the agency has moved out on a number of
    them, particularly concerning the voluntary disclosure
    reporting program, implementing a cooling-off period for
    inspectors who are leaving FAA before they can work for the
    airline that they used to supervise.
        They have also begun steps to put in place a national
    program to review inspection efforts at the local level. We
    think those are all commendable.
        However, we did have two other recommendations that FAA
    continues to study and that we continue, frankly, to push them
    on, and that has to do with creating a separate investigatory
    body to handle safety complaints raised by safety inspectors.
    Under the current method, such complaints are investigated
    largely at the local or regional level. We think that there is
    the danger that has happened at Southwest for those
    investigations to lack objectivity and credibility.
        We also recommended, in order to deter what we labeled ``an
    overly collaborative relationship'' between a couple of
    inspectors at Southwest and the carrier itself, that FAA rotate
    or transfer certainly supervisory inspectors at designated
    periods at three years, four years, whatever might be feasible.
        F.A.A has informed us that, for budgetary reasons, they do
    not consider that feasible, and they have proposed, as an
    alternative, further assessing or inspecting the climate
    between the inspection office and the carrier.
        We are evaluating that. We have some reservations. We will
    continue to work through those with the agency.
        Mr. Olver. Do you think that the actions and the back and
    forth between the IG and the FAA, as public as this one
    obviously has become, that that has caused other carriers to
    examine those very same issues? Have you sensed that that kind
    of movement is occurring so that those kinds of things will not
    happen with the others?
        Mr. Scovel. We have work underway for the House Aviation
    Subcommittee along those lines, and we are looking at the air
    transportation oversight system implementation at other
    carriers besides Southwest.
        We have found problems with the timeliness, largely, of
    inspections that are required under this ATOS system at other
    carriers as well.
        Mr. Olver. Thank you very much. Mr. Latham.
        Mr. Latham. Thank you very much, Mr. Chairman.
        Ms. Siggerud, I see Iowa is going to be one of the 16
    states that you are going to be monitoring, auditing, whatever.
        Ms. Siggerud. Yes.
        Mr. Latham. Can you tell us what factors you are going to
    be looking at? How do you measure the success, and are there
    some things different that you are going to be doing with the
    stimulus package than what you would normally do under regular
    programs, or are there some things that maybe we should think
    about incorporating into regular programs that you are going to
    be looking at?

                                      GAO

        Ms. Siggerud. Sure. What we have done at GAO so far to get
    ready to do this is look among the various parts of the
    package, including the transportation parts of the package,
    where are the large dollars, in terms of money flowing to
    states and localities, and where might there be risk based on
    past IG work on these programs.
        We are then putting together an overall program at the
    governor's office and the controller or state auditor office to
    look at internal control concepts across the state in all of
    the different departments and drilling down on specific issues
    related to the goals of the Act and how the individual
    departments in the state are setting up their programs to
    deliver on those goals and then reporting on it bimonthly. That
    is really what is different for GAO, is that rather than
    taking, say, a year to do the work, which we often do, and then
    reporting any problems we find at the end, we will be reporting
    to the Congress and the Department on a very real-time basis on
    issues as we identify them.

                                 CYBER SECURITY

        Mr. Latham. Very good. Mr. Scovel, on cyber security, last
    month, the FAA informed the Congress that they discovered a
    breach of security at one of their servers. It did not affect
    safety and operation of the airspace, but a lot of the
    employees were exposed, from a personal information standpoint.
        One of the issues that was identified by the IG, as far as
    your cyber security risk, was a need to enhance protection of
    personal identity information--basically, everything you warned
    Congress about, I guess, previously. Is there any way the FAA
    could have prevented the attack? Go ahead and answer that.
        Mr. Scovel. Well, FAA, as well as other agencies in the
    Department and other agencies across government, in fact,
    suffer from the same vulnerabilities when we are talking about
    implementing Internet-protocol-based software programs instead
    of proprietary programs developed for use in a closed system.
    That increases the vulnerability, and FAA has moved in that
    direction.
        Many of FAA's systems are interconnected, meaning that if
    there is a breach in one system, other systems can also be
    compromised.

                                 ADS-B PROGRAM

        Finally, to the extent that FAA has outsourced, that,
    naturally, too, increases its vulnerability, and FAA has
    outsourced some functions. The ADS-B program, which is a
    cornerstone of next-gen, has been outsourced and is under
    contract now, and the ground stations are being built, but that
    is not under the direct control of the agency, again; that is
    outsourced, and so there is further risk there.
        We have ongoing studies concerning Web application
    security, specifically as it pertains to air traffic control
    systems, and we have also been requested to look at the
    agency's security precautions with regard to the medical data
    it holds for pilots and others who have FAA licenses.
        We will be in a position to comment in detail on the
    agency's precautions once we finish that work.
        Mr. Latham. How many people were exposed, as far as their
    personal information?
        Mr. Scovel. Mid-40,000 is my recollection, 45,000, 48,000,
    or thereabouts, in the most recent breach at FAA last month.
        Mr. Latham. Did you wonder if the Department is putting
    enough emphasis on the issue? I see that they no longer have a
    designated senior official responsible for managing the
    information security program because that official was
    reassigned to Operations, apparently. You state that the chief
    information office has only issued a final policy on 11 of 52
    topics that require IT security policy.
        Mr. Scovel. Right.
        Mr. Latham. Is there anybody actually minding the store
    there? It does not look like there is the emphasis it should
    be.
        Mr. Scovel. Right. The Department suffered over the last
    couple of years when it comes to information security, and our
    annual FISMA report last year really called them to task for
    that.
        I know it had the attention of Secretary Peters last year
    and the deputy secretary as well, and it was one of the
    highlights from us to Secretary LaHood when he was coming in.
        The Department, as you know, does not now have an approved
    CIO, so we have an acting official in that capacity, as we do
    in a number of other key roles in the Department.
        Mr. Latham. But that has nothing to do with the transition,
    as far as the administration.
        Mr. Scovel. No, it does not. What we highlighted last year
    in our FISMA report was an ongoing problem, and when it comes
    time for the Department to get its grade from Congress, it
    probably will not be good this year.
        Mr. Latham. Thank you, Mr. Chairman.
        Mr. Olver. Mr. Pastor.
        Mr. Pastor. If you hear us with great concern about air
    safety, it is because we are on a plane twice a week, so, for
    us, it is very important.
        During the hearings with the FAA, we were told, and I think
    we have been told for the last three years, about the great
    number of air traffic controllers who are retiring, and this
    Committee, through the Chairman and Ranking Member, has been
    providing more money so that we can go out and recruit and get
    people into training.
        What is the balance, in terms of the retirement, and where
    are we on the recruitment so that we will not find ourselves
    short?
        Mr. Scovel. I can comment on that, Mr. Pastor. We have done
    extensive work on that in my office.
        You are absolutely correct. Air traffic controllers are
    retiring in large numbers. These are the controllers who were
    first hired after the 1981 PATCO strike.
        Since 2004, about 5,000 controllers have left the Service,
    not all of them due to retirement; others simply due to more
    routine attrition, but large number of them were retirees.
        To its credit, FAA has managed to hire up to fill those
    gaps, and, in fact, today, FAA has on its air traffic
    controller rolls more controllers than it did four or five
    years ago. What has changed, though, is the experience level
    across the workforce. In 2004, 15 percent of the controllers on
    the rolls were new. Today, it is 26 percent.
        A rule-of-thumb in the field in air traffic control is they
    can accommodate generally at most facilities a rookie level of
    about 25 percent. That means they can train them up at the
    facility level in fairly good confidence. Above that, it gets
    dicier. My office has studied a number of air traffic control
    facilities. Some are upwards of 40 percent in terms of the
    number of new controllers assigned to those facilities.
        It is a worrisome point because of the extensive training
    that is required when a new controller reports to a facility in
    order to bring him or her up to the certified professional
    controller level, and that entire process can take up to three
    years.
        Ms. Siggerud. Mr. Pastor, our analysis is very much in
    agreement with what Mr. Scovel said, and we have actually
    characterized FAA as being ahead of the curve, in terms of
    hiring up and staffing up to deal with the situation.
        Mr. Scovel. We are ahead of the curve, but by being ahead
    of the curve in the facilities themselves, we may be, in terms
    of training and experience, at more risk. I will put it that
    way.
        Ms. Siggerud. Right.
        Mr. Pastor. What is your assessment? As I understand, you
    have a decentralized system of training. You have various
    facilities, and at least, in my opinion, it may lead to unequal
    training, stressing different priorities.
        Now, what is your assessment of the current training, and
    is the decentralization something that we ought to look at, or
    is it working well?
        Mr. Scovel. We are looking at that, at the request of
    Chairman Costello on the House Aviation Subcommittee, and we
    will have a report on that later this year.
        A certain extent of decentralization is necessary because
    facility-to-facility conditions change, and requirements
    change, and the controller workforce at each facility needs to
    be trained to the local conditions.
        We have recommended, based on our past work, that FAA pay
    closer attention to lessons that can be applied nationwide
    across the entire air traffic control facility body, but we
    will be taking a look further to see whether FAA has attempted
    to implement that recommendation.
        Mr. Pastor. I guess you are using simulators more than they
    did in the past. Have you had a chance to evaluate that?
        Mr. Scovel. We have, and it is part of our ongoing work as
    well. Simulators have been in use fairly extensively for the en
    route centers and for the TRACONs for a number of years and
    successfully. What is new for FAA most recently is the use of
    simulators for the tower facilities. FAA and the controllers
    that we have spoken to are enthusiastic about the success of
    that program. We are taking a close look at it, but we think it
    holds great promise.
        Mr. Pastor. As I recall, and maybe you can correct me if I
    am wrong, but, as I recall, the contract that was negotiated
    with FAA and the air traffic controllers was a two-tiered
    system where basically the benefits and salaries of the
    experienced controllers that were in place were one way, as the
    new recruits come in and are put in the towers, or TRACONs,
    that they had differential pay, meaning that it was less, and
    also a difference in benefits and retirement, et cetera. So
    there is a two-tiered system.
        Have you had a chance to evaluate how effective that has
    been or how ineffective that has been?
        Mr. Scovel. We have, and we are, of course, aware of the
    most recent contract work arrangements provisions for a two-
    tiered system, but we have not been asked, and we have not been
    able to undertake any kind of study of its effectiveness, in
    terms of perhaps recruiting or retention.
        We do know, from talking to controllers, that the state of
    the contract is a matter of great concern to them. Some have
    indicated that that is a primary reason for the large number of
    retirements. We have found that controllers anecdotally have
    told us, in some cases, it is a reason. We could not peg it
    certainly as the prime reason. There are just so many
    individual reasons why controllers do retire.
        Mr. Pastor. That seems to be one that pops up and gets your
    attention.
        Mr. Scovel. It does, in terms of their satisfaction with
    the general work quality environment.
        Mr. Pastor. Thank you, Mr. Chairman.
        Mr. Olver. Mr. Berry? It was my intent to ask one more
    round of questions.
        Mr. Berry. Thank you, Mr. Chairman. Can you tell us where
    those centers are that had 40 percent new people?
        Mr. Scovel. Mr. Berry, I was thinking specifically of the
    Southern California TRACON. I am also aware of at least one
    other that has upwards of 40 percent. I can get you the list,
    as we have it, based on our current work after the hearing.
        Mr. Berry. That would be someplace Mr. Pastor and I would
    not want to go.
        Mr. Scovel. [Laughter.] I understand.
        Mr. Berry. Thank you.
        Mr. Scovel. Sure.
        Mr. Berry. Thank you, Mr. Chairman. The question is very
    important.

                                     MARAD

        Mr. Olver. Kate Siggerud, I want to cover one item here.
        Last April, I and the former ranking member, Mr.
    Knollenberg, along with the chair and ranking member from the
    Senate, wrote a letter to the GAO asking you to do an audit of
    past and present financial practices at the U.S. Merchant
    Marine Academy, which came after MARAD's acknowledgement of
    some troubling financial practices there.
        That final audit, my understanding is, it is supposed to be
    done within the next month or so, sometime next month. That
    gives about six weeks or so, to the end of that time.
        Is there anything you can tell us about that review, at
    this point, about any of the key findings of the audit, and do
    you find that there has been an Antideficiency Act violation in
    the process? Are we on target for the actual release of that
    report on time?
        Ms. Siggerud. Our accounting division in GAO has put a lot
    of work into that project, and what they have told me is that
    you can anticipate a mid-April report on this topic.
        I can give you a high-level overview of what they have
    found so far, and there are some significant concerns.
    Specifically, they have identified significant internal control
    weaknesses at the academy and some inappropriate activities
    between the academy and its affiliated organizations. In
    particular, this had to do with parking funds in inappropriate
    accounts at the end of fiscal years and those sorts of
    activities.
        The report will cover a couple of things: academy policies
    and procedures, as well as oversight that MARAD has conducted,
    and, as well, it will highlight selected activities and
    expenditures that we viewed as problematic.
        We have reached out and made senior MARAD and academy
    officials aware of some of these issues and are starting to see
    some action on them.
        Mr. Olver. But you are not, at this moment, ready to say
    that there is or is not an antideficiency violation?
        Ms. Siggerud. I would like to get back to you, for the
    record, after we talk to our accountants on that. What they
    have told me is significant internal control weaknesses.
        Mr. Olver. And you think the report is still on track.
        Ms. Siggerud. Absolutely.
        Mr. Olver. All right. Well, we will expect that.
        You were, at least, aware of this program, though I think
    the audit was certainly being done there. Do you have anything
    to add to that, Mr. Scovel?
        Mr. Scovel. Thank you, Mr. Olver. I do. As you know, the IG
    is responsible for auditing the Department's financial
    statements each year. In 2007 and 2008, we identified the
    payrolls at the Merchant Marine Academy as potential ADA
    violations.
        The Department, last year, undertook a study of that, a
    review. That was underway at the time GAO was asked to conduct
    its audit.
        I was informed, last night and this morning, that the
    Department has determined that there were, in fact, three
    Antideficiency Act violations, and the secretary, I am
    informed, has signed a letter to OMB to that effect.
        Mr. Olver. I see. I see. Well, of course, what the penalty
    is for that, whether it is hanging or something else, I do not
    know, but if the corrections are made, that is, of course,
    important.
        I thank you for that. We will follow up when we hear more
    about that.
        This has been a very good hearing. I am very pleased that
    you were able to join us today. We have had at least two rounds
    of questions from everybody who wished to have two rounds of
    questions, and I thank you very much for being here, and, with
    that, we will declare the hearing closed. Thank you very much.
                                              Thursday, March 12, 2009.

                   TRANSPORTATION CHALLENGES OF RURAL AMERICA

                                   WITNESSES

    JERRY FRUIN, Ph.D., ASSOCIATE PROFESSOR, DEPARTMENT OF APPLIED
        ECONOMICS, UNIVERSITY OF MINNESOTA
    FAYE MALARKEY BLACK, VICE PRESIDENT, LEGISLATIVE AFFAIRS, REGIONAL
        AIRLINE ASSOCIATION
    DALE J. MARSICO, CCTM EXECUTIVE DIRECTOR, COMMUNITY TRANSPORTATION
        ASSOCIATION OF AMERICA
    ROBERT SCHWARZ, EXECUTIVE VICE PRESIDENT, COMMUNICATIONS, PETER PAN BUS
        LINES

                       Opening Remarks of Chairman Olver

        Mr. Olver. This hearing will come to order.
        I have found the written testimony that you testifiers have
    provided extremely interesting, and I must say that it has made
    my mind--I could hardly sleep last night--the mind was working.
        In any case, I am expecting we will have a very interesting
    discussion.
        There are about five or six other Subcommittees of
    Appropriations that are holding hearings at the same time.
    Earlier this week, there was a time when 10 of the 12, I think,
    were all running at the same time. It makes things very
    difficult. So we will have people coming in and out, as others
    of their responsibilities take them elsewhere.
        I thank you very much for being here. Today's hearing will
    focus on the transportation challenges facing rural America,
    and I think, from the discussions, it would be fair to say that
    much of rural America is in, or close to, crisis at the present
    time.
        According to the Census Bureau, 21 percent of the U.S.
    population lives in rural areas. That comes to some 60 million
    people.
        Now, two years ago, my staff and I prepared this map that
    is shown here on your right to illustrate the disparate growth
    between the urban areas and the rural areas, the swiftly
    growing green areas, and the pink is not all of the rural
    areas, but it is the areas, the counties, that are actually
    losing population, have lost population, between the 1990 and
    the 2000 Census. That map is actually the genesis for today's
    hearing and discussion of the transportation challenges facing
    rural America.
        Those rural counties, as they lose population, are aging,
    and that is likely to result in a steeper drop in population in
    the next census, which is only a year and a half or so from
    now, as people of child-bearing age move, migrate, in order to
    get to opportunities, to education, to better medical services,
    and so forth. So that is why I suggested we may be close to
    crisis.
        Every Member on this side has communities and counties that
    are losing. We have two Texas Members, and if you look at the
    map and realize where New Mexico ends and Texas starts, there
    is a lot of territory there that is losing population. If you
    look up farther north, we have Dr. Fruin here, who comes from
    Minnesota, and if you take Minnesota, you will note that some
    of that territory is in southwestern Minnesota, and it is
    dramatically in the States of Iowa and South Dakota and North
    Dakota. My Ranking Member is from Iowa.
        So it affects all of us. Even I have areas. We do not have
    strong counties in Massachusetts, so we go by communities. I
    have lots of communities that are losing population in
    particular areas.
        In North Dakota, there are 53 counties; 47 of them lost
    population between the last two censuses, and 40 of those that
    lost population, counties with 1,000 square miles, have fewer
    than 10,000 people, and they are probably going to lose some
    more.
        Iowa, my colleague's home state; nearly half of its
    counties have lost population in the same census, and the same
    thing is likely to go on there. Not so many of them are under
    10,000 in total; only about 20 of them are under 10,000. So
    that sort of is a backdrop.
        Our topic is really the transportation issue, but it goes
    much more broadly, as you, who will be speaking to us shortly,
    have already indicated in your testimony. Rural transportation
    needs are often overshadowed by the transportation and mobility
    challenges in metropolitan areas, yet the rural areas also face
    unique transportation and mobility challenges that should not
    be overlooked by policymakers.
        Out of the 2.9 million miles of public roads classified as
    rural, less than 25 percent of these rural road miles are on
    federal-aid highway systems and, therefore, eligible for
    federal resources. Access to public transit within and across
    county lines; bus or rail service to metropolitan areas; and
    air service is also limited in most rural counties.
        While the vast majority of rural residents rely on cars to
    commute to work or school, some rely on public transportation
    where available, and where it is not available, they rely on
    Shank's mare or family and friends for where they need to get
    to.
        So, today, there is a handful of major federal programs
    that improve rural transportation access within federal
    highways. Urban and rural roadways and bridges compete for
    resources under the Federal-aid Highway program.
        The Federal Rural Transit Formula program provides transit
    capital and operating assistance to communities with fewer than
    50,000 people. Within that program, states are required to
    spend at least 15 percent of their formula funds for rural
    intercity bus services access, but that is waivable, it turns
    out.
        The Essential Air Service was created after airline
    deregulation, in 1978, to preserve air service into small
    airports in rural and small urban areas. The program provides
    assistance to more than 100 communities in the Lower 48 States
    and more than 40 communities in Alaska. Alaska is a bit of its
    own story.
        Regional airlines serve more than 600 airports across the
    nation and provide the only scheduled air service to 470-plus
    airports, and the general aviation community, while not
    scheduled, serves thousands of other small and rural
    communities. Each of these providers is essential to our
    national transportation network and critical to our ability to
    move people and goods to communities of all sizes.
        Now, our panelists today have a range of experiences using
    federal and state programs to provide transportation in rural
    areas or, in the case of Professor Fruin, someone who has done
    extensive research on rural issues and rural transportation. I
    hope that they will share with us what they see as major
    transportation challenges in rural America, and I am sure they
    are going to tie it to other matters that are part of the rural
    scene and the crisis that I say that we are at or near in those
    areas.
        Let me introduce the panel. Dr. Jerry Fruin, on my left and
    the audience's right, is an associate professor of applied
    economics at the University of Minnesota and has written
    extensively on the broader, road-related challenges in rural
    communities.
        Ms. Faye Malarkey is vice president of legislative affairs
    of the Regional Airline Association and has experience with the
    Essential Air Service program.
        Dale Marsico is the executive director of the Community
    Transportation Association of America, also known as `CTAA,'
    and, through their member organizations, they are expanding
    mobility and transit options for people in rural and urban
    America, but they think deeply about a lot of other issues
    related to rural America.
        Bob Schwarz is the executive vice president of Peter Pan
    Bus Lines, which provides intercity bus service throughout the
    Northeast.
        With that, with the introductions, let me recognize my
    Ranking Member, Tom Latham, for any comments that he would like
    to make.

                    Opening Remarks of Ranking Member Latham

        Mr. Latham. Thank you, Mr. Chairman; I appreciate your
    having the map up here to show the changing demographics that
    we have in rural America today.
        In my district, I have 28 total counties, some of which are
    losing population. The elderly population is increasing,
    percentage-wise, quite dramatically, but I also have what could
    be considered to be rural counties that are some of the
    fastest-growing counties in the country. Dallas County, just
    west of Des Moines, was number 10 in the nation, as far as
    growth.
        So we have got a real problem, as far as trying to figure
    out the best way to look at both the change in demographics, as
    far as decrease in population, but also in more rural areas
    where there is actually some growth going on, and to balance
    those needs. I think, as you point out, it is extremely
    important.
        I, too, want to welcome the panel here this morning and
    look forward to your testimony. I am particularly pleased to
    see that my part of the country is represented here, with Dr.
    Fruin from Minnesota. We can get into some Iowa-Minnesota
    jokes, if you would like. We have a history of doing that, as
    Deena from Minnesota here will attest to, but I think you can
    speak to the unique transportation needs, certainly, that we
    have in rural America.
        Throughout this hearing and, I think, other forums that we
    will have in the Subcommittee, I hope that we really are
    focused on the needs of my rural constituents in areas such as
    the safety of rural roads, the efficient movement of
    agricultural products, including the renewable products, which
    are offering such an economic boost to rural America, and the
    importance of maintaining the vast road structures that we have
    today in rural America.
        The State of Iowa is number 12 in the country in terms of
    the size of the road system. You may not believe that, but we
    have market-to-market roads. Every four miles, we have hard-
    surface roads in the State of Iowa. It is a pretty incredible
    system that is needed to get products from point to point,
    including the intermodal transfer areas, on points from which
    we need to ship not only within the state, and to other parts
    of the country, but internationally. So our needs are really a
    lot different than the more urban areas, and we have got to
    take that into consideration, I think, in the reauthorization
    of the new highway bill and looking at funding levels.
        On the rail side we really need to focus on the needs of
    states like Iowa, agricultural states, where we have got to
    maintain the connectivity. The short-line rail infrastructure
    is extraordinarily important to us for the smaller communities,
    as far as economic growth.
        I am the youngest of five boys, and when we were 10 years
    old, we each got a bicycle, and I remember, when I was 10 years
    old, that my bicycle was delivered in Alexander, Iowa, in a
    town of 160 people on the rail. We would buy from Montgomery
    Ward through mail order.
        Certainly, that system has been gone for a long, long time.
    There is no rail service there, and the whole thing has
    changed, but the change that has occurred in my lifetime is
    amazing.
        In aviation, certainly, we need to continue a dialogue. The
    importance of the rural airports, the small airports, general
    aviation--all very important, as far as attracting businesses
    and growth in those smaller communities. At the same time, we
    need to make sure that we are fiscally responsible, as far as
    what we do in aiding the rural areas.
        I look forward to this hearing, Mr. Chairman. Thank you.
        Mr. Olver. I hope I do not have to referee between Iowa and
    Minnesota.
        I do want to point out that, the current authorization
    bill, the SAFETEA-LU Authorization Bill, I was the author of an
    amendment, which was to be a three-part pilot program to put
    broadband down three different interstate highway rights-of-
    ways, one in your area being Route 90 westward from Madison all
    the way across South Dakota. That was supposed to go close
    enough to the Iowa line so that the build-out, by way of cell
    towers or something like that, from fiber optics that would be
    laid down the interstate right-of-way was supposed to help
    either of them. I do not know whether that has moved forward. I
    know some studies have been done about it, in the meantime.
        Anyway, I think I have mispronounced your name previously.
        Mr. Fruin. It is Fruin.
        Mr. Olver. It is Fruin.
        Mr. Fruin. It is Fruin.
        Mr. Olver. Okay. I thought it was perfectly reasonable. I
    thought that Tom knew something better when he said `Freun.'
    That was what I heard, in any case, so I was going to correct
    myself.
        In any case, now to our panel. Your complete written
    statements will be placed in the record, including, I think,
    each of you may have some glossy booklets or whatever that you
    want to put in the record. If you could keep your oral summary
    to around five minutes, then we will have a better discussion
    up here.
        So, with that, Dr. Fruin.

                          Opening Remarks of Dr. Fruin

        Mr. Fruin. Thank you. Mr. Chairman and Members of the
    Subcommittee, thanks for inviting me here to this hearing. I am
    Jerry Fruin. I am an associate professor of marketing,
    transportation, and logistics in the Applied Economics
    Department at the University of Minnesota. I have been studying
    these agricultural and rural transportation issues since 1975.
    My comments and opinions expressed here today are my own and do
    not represent an official position of the University of
    Minnesota.
        I want to cover, in this five minutes, if I can, six
    topics: first, the rural roads and rural road financing; a
    little bit about the effects of ethanol; something about the
    financial needs of the regional railroads and the need for
    container service throughout the rural areas; concern about the
    monopoly returns to the Class 1 railroads in some of the areas;
    and, finally, finishing transportation deregulation, and a
    little bit on the importance of water transportation for rural
    America.
        Rural roads. Because of the advances in technology, rural
    residents need better and safer rural roads. Because of the
    faster speeds of vehicles, there is a need for wider roads and
    safer intersections.
        Some of our roads today do not meet reasonable standards
    for today's use; other roads are adequate but will deteriorate
    if funds are not available for the required maintenance.
        A little bit about the reasons:
        First, the number and mileage of rural roads in some areas
    is excessive. Technological advances in transportation,
    agriculture, and related industries have eliminated the need
    for many roads, but habits, customs, and institutions have
    hindered the rationalization of this rural road system.
        Secondly, the traditional methods of funding rural roads
    and all roads have not kept up with inflation and the new
    demands, especially as programs to reduce gasoline consumption
    become effective.
        The traditional sources of highway funding have been
    gasoline taxes, vehicle operator license, and general taxation
    in rural areas, especially the property tax.
        As technology evolves, I know that road funding sources
    should include vehicle mileage taxes that would place hybrid,
    biofuel, and electric autos on the same basis as conventional
    gasoline vehicles.
        I am an advocate of congestion pricing, but that will not
    help the rural counties very much. On the other hand, I think,
    in the long run, it should be possible for commercial vehicles
    to develop weight, distance or ton-mile fees that we can use
    for truck user fees, and, in fact, the truck user fees should
    probably be able to be varied depending on road surface so that
    the appropriate agency can be reimbursed for road damage by the
    various-sized vehicles.
        And I might mention that, in the railroad system, we should
    be very careful about connectivity. In the 1980s, after the
    increase in truck weight limits on the federal highway road
    system from 73,000 pounds to 80,000 pounds, Minnesota made a
    commitment that all Minnesota towns would be served by at least
    one highway with an 80,000-pound road outlet. Meeting this
    commitment was then a priority of the Minnesota DOT and was
    accomplished.
        Now, I expect that the favorable economics of larger,
    heavier trucks, and the heavier weight limits allowed in both
    Canada and Mexico, will eventually lead to regulations allowing
    heavier vehicles on the U.S. truck highway system. When that
    happens, we will need to carefully design the rural road
    network so that communities will continue to have year-round
    access to whatever that newer weight system is.
        Ethanol. Corn ethanol and biodiesel had the advantage of
    fitting into the existing agricultural transportation system.
    Most, if not all, corn ethanol plants have been sited with
    adequate transportation, both in and out, although some of the
    earlier plants lack good access to rail service.
        The additional transportation needs were primarily for
    handling liquids; that is, tank trucks, tank cars, and so
    forth, liquid barges, and, in the near future, pipelines. But
    there have been changes in the pattern of corn shipments from
    farm to market. These were probably no greater than those we go
    through when farmers shift from a local elevator to a more
    distant, unit-train loading terminal.
        However, there is a big difference here. When we switched
    from a local movement to ethanol plants, the benefits stay in
    the community. When we are forced to haul grain long distances
    to the unit-train facilities, the benefits accrue primarily to
    the railroads and not the local community.
        Cellulosic ethanol. Biomass feedstocks for cellulosic
    ethanol will present transportation problems. Feedstocks such
    as wood chips and dry land grasses will have to be hauled from
    areas that frequently lack adequate farm-to-market roads. Even
    where adequate roads exist, many potential feedstocks are
    light, or less dense, than corn and soybeans. An efficient
    collection system will require larger vehicles, which will
    increase road hazards and have a safety impact on rural roads.
        Something about the financial needs of the regional
    railroads: The current system of short-line railroads is
    composed of discarded branch lines that were uneconomic. The
    equipment on the short lines was obtained and inherited from
    the older things and were obsolete at the time. Many of these
    railroads have not been able to generate the funds needed for
    further rehabilitation, for faster speeds, and the replacement
    of aging and obsolete bridges. Many of the short lines need
    funds to obtain more modern equipment, like jumbo hopper cars,
    to get favorable rates from Class 1 railroads.
        We should also do away with the paper barriers that tie the
    branch lines to their original parent railroad. A road should
    be allowed to exchange traffic with any railroad and not just
    the one it came from. Twenty years of servitude to the old
    master is too long.
        Mr. Olver. May I? I was a professor at one time, and I am
    still sort of--but you need to spend not more than a minute or
    so on each of your last three items, on each of them.
        Mr. Fruin. Okay. Containers. We need container yards in
    rural areas. The mainline railroads have closed the rural
    container yards, and we need the containers.
        Capitalism and monopoly returns to railroads. A portion of
    the mainline railroads' capital return is not unique technology
    management but the monopoly ownership of the lines. I do not
    advocate reregulating, but captive shippers should be
    protected, one way or another, including the possibility of
    allowing access by sophisticated shippers to the lines.
        Deregulating transportation. Finally, ``economic
    deregulation'' means allowing the free entry of firms into a
    business and the freedom to set prices. We think that free
    entry and the freedom to set prices will allow competition to
    keep prices in line. We do not look at economic deregulation as
    having anything to do with the states' need to set safety
    issues and things like that.
        Finally, water transportation. Any survey of agricultural
    and rural transportation would be remiss if it did not include
    water transportation. The majority of U.S. corn and soybean
    exports are barged down the Mississippi River. The Great Lakes
    and St. Lawrence Seaway connect the corn and wheat belts and
    the industrial heartland with the Atlantic community.
        Water transportation is the lowest-cost, safest, and most
    energy efficient, and environmentally friendly method of moving
    large quantities of bulk commodities.
        In my opinion, we are underinvesting in our nation's
    waterways, thereby contributing to transportation logistical
    inefficiencies, both in rural America and in the U.S. economy.
        So thank you, and I will answer questions you may have.
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        Mr. Olver. Thank you. Ms. Malarkey Black.
        Ms. Malarkey Black. It makes me feel like a newlywed.
        Mr. Olver. Okay.

                     Opening Remarks of Ms. Malarkey Black

        Ms. Malarkey Black. Good morning, Mr. Chairman and Members
    of the Subcommittee. My name is Faye Malarkey Black, and I
    represent the Regional Airline Association.
        On behalf of RAA, thank you for the opportunity to share
    our thoughts with you today.
        For the past 30 years, regional airlines have played a
    critical role in our nation's air transportation system,
    providing safe, efficient, cost-effective, and convenient air
    service to every corner of the country.
        As you noted, today's regional airlines serve more than 600
    airports and provide the only source of schedule airline
    service at just about 75 percent of our nation's commercial
    airports.
        The drastic fuel cost fluctuations of recent years,
    alongside the severe downturn in our nation's economy, have
    created a very challenging operating environment for regional
    airlines. Capacity is down across all segments of the
    commercial airline industry, yet regional airlines are
    experiencing the deepest cuts.
        In 2008, regional airlines suffered a net loss of 243
    nonstop routes. That is compared to a net loss of 101 mainline
    routes.
        The Essential Air Service program, designed to provide
    continued air service to smaller communities in a deregulated
    airline market, has been underfunded and, frankly, under attack
    in recent years. In fact, more than 80 years of air carrier
    operational experience was lost when EAS providers Air Midwest,
    Big Sky, and Skyway stopped providing service last year.
        Simply put, these airlines were no longer able to tolerate
    the financial losses forced upon them by EAS program policy.
    When these carriers shut down, more than 40 EAS airports lost
    all of their scheduled air service. Although other airlines are
    stepping in to restore the service as quickly as they can, some
    of these routes remain without air service today.
        As a result of these disruptions, DOT experienced
    substantial cash savings in 2008. This makes forecasting the
    EAS budget a complex undertaking. Many of the EAS carriers who
    went out of business were operating in sizable financial
    losses. It is just not feasible for replacement carriers to
    profitably serve the same markets at the same rates.
        Significant carrier cost increases further complicate
    forecasting. In some instances, fuel costs have more than
    tripled in current DOT rate-making procedures compared to
    previous years.
        These factors are substantially increasing EAS program
    costs overall. This means Congress must look beyond historic
    spending levels when projecting current funding needs.
        Despite these challenges, EAS carriers remain firmly
    committed to the program. While we agree with other
    stakeholders on the need for reform, RAA urges Congress to make
    only those changes that would truly enhance air service under
    the program.
        To this end, we applaud this Committee for prohibiting
    troublesome community cost-sharing proposals that have
    threatened this program in the past.
        In order to restore health to the program, RAA urges
    Congress to implement a number of simple reforms.
        First, if the EAS program is to succeed, it needs funding
    of at least $200 million annually. This represents the absolute
    minimum funding level necessary just to continue service to
    current EAS communities. It does not account for newly
    qualified communities, and it does not allow for expenditures
    on things like marketing or other programs.
        Second, we advocate an increase in the air carrier profit
    margin allowance from five to 15 percent. This modest
    adjustment would not represent a windfall to EAS providers but
    would simply provide insulation against cost fluctuations and
    reduce instances of service termination notices being filed as
    the sole means of a carrier's survival. Eliminating these
    service termination notices would go a long way towards
    restoring faith in the program.
        Third, we urge Congress to increase the per-passenger
    subsidy cap to $300 and index it for inflation.
        Fourth, we advocate lengthening DOT contract life spans
    from two years to five. Longer contracts help airlines finance
    aircraft and would stabilize air service, from both the carrier
    and community perspectives.
        Finally, we encourage Congress to embrace the commitment
    made to communities back in 1978, when it promised they would
    not lose their air service in a deregulated airline market. I
    can assure you, you will find the EAS providers to be your
    engaged and committed partners in this important effort.
        Thank you for the opportunity to testify on this important
    issue today. I look forward to responding to your questions at
    the conclusion of the panel.
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        Mr. Olver. Thank you very much. Mr. Marsico.

                         Opening Remarks of Mr. Marsico

        Mr. Marsico. Good morning, Mr. Chairman, and thank you for
    your invitation to be here. I am Dale Marsico from the
    Community Transportation Association.
        I would begin by saying, as usual, I agree with your
    observations on many things but, particularly, your observation
    that there is a crisis in rural America's mobility. I think
    that as best we could sum this current situation up is that we
    have been fighting a holding action, for many years, on the
    subject of mobility in rural America, and we are losing ground.
        Although all of the modes have great difficulty, we are
    most concerned about the ones that affect people and their
    movement, and in the glossy piece of, I guess, attachment that
    we did mention, we talk about that in some great length. But
    let me just say that we have four priorities in rural
    transportation that we feel are absolutely essential for this
    year and the years ahead.
        One of them is improving surface mobility in rural America
    by strengthening regional and intercity connections that rural
    residents and communities require.
        The second thing is that we think that we need to continue
    to guarantee adequate transportation resources in the
    healthcare field for medical patients, especially those who
    live in rural areas that participate in Medicaid and Medicare.
        The third: We think we need to invest more resources in
    helping local communities design transportation programs that
    help rural residents work outside the areas that they call
    home, and we think that there are special needs of our veterans
    and their families, especially those in the veterans' medical
    care area that also require attention.
        First, about connecting rural America. For 30 years we have
    been trying to stave off disaster in rural America by using a
    new definition of ``public transportation'' to serve
    communities and people that live in rural America. These are
    often identified as the Section 5311 programs that are
    currently administered by the U.S. Department of
    Transportation.
        As you mentioned, Mr. Chairman, 15 percent of those funds
    are set aside for intercity buses, but 15 percent, when you
    consider the size of the rural program, is insufficient to
    maintain the connectivity between communities. We think that
    the next reauthorization needs to identify new ways to connect
    those communities, either by rail or by intercity bus, to
    create a flexible, cost-effective network to connect
    communities so that people in rural areas have the same option
    as those in urban areas to go from place to place.
        We think that the decreasing size, in the last 10 years of
    our intercity bus system, as well as our intercity rail system,
    has been extraordinarily hard on the rural communities who are
    on the lines of those services and makes it very difficult for
    people to go from place to place in a cost-effective manner.
        On the healthcare side, we would just point out that almost
    every one of the healthcare solutions that has been offered and
    the discussions that have taken place on healthcare reform are
    always about outpatient medicine, and outpatient medicine
    clearly requires strong transportation, especially for our
    seniors, who are now participating in very complex medical
    strategies, like dialysis and outpatient chemotherapy, that
    often mean that they cannot drive themselves or have a friend
    take them back and forth for these continuous treatments, and
    we were very concerned about proposals to dismantle the
    transportation benefit provided for dialysis patients and other
    seniors in Medicaid.
        I want to thank you, at this time, Mr. Chairman, for your
    work in H.R. 7122 to continue those benefits for our seniors
    and for people who are low income in our Medicaid program,
    especially in rural areas because without that access, they
    can, obviously, not maintain the quality of their health, or
    their lives, when it comes to chemotherapy or dialysis, really
    hang in the balance.
        We also think that it is time that Congress took a look at
    this from the Medicare perspective because Medicare currently
    has no nonemergency transportation benefit for people living in
    rural areas, and people who need the kind of service, like we
    talked about for dialysis, often dial 911 when they have no
    alternative, costing the taxpayers a lot more money than if we
    had a benefit to help people who have those special needs.
        We know that Congress has been very busy trying to address
    the employment situation in rural America. We think that the
    programs and ideas that take place in the stimulus bill were
    good, but we think that our efforts in JOBLINKS are important
    because communities cannot design transportation programs to
    serve special populations without help, and we think that the
    technical-assistance opportunities that we have provided with
    others in JOBLINKS in the last several years have been
    important ways to stretch those dollars further.
        As you mentioned about our numbers of people living in
    rural America, 40 percent of our veterans live in rural America
    today, and, as you know, the complications of outpatient
    methodologies for them, the kinds of specialized equipment that
    they often need to come back and forth for outpatient
    treatment, especially our younger veterans with very
    complicated, outpatient methodologies for recovery, is at a
    critical level by a lack of good service in rural communities
    for lift-equipped vehicles and specialized vehicles and
    services that help veterans and their families stay at home and
    also help the returning wounded warriors by providing the kind
    of help that they can get closer to home, as opposed to being
    institutionalized.
        All of these issues affect the transportation of people in
    rural areas, and almost every one of the issues, whether they
    be transportation related to economic situations or healthcare
    situations, all have transportation as an important ingredient
    which needs to be addressed.
        We have no national strategy for moving people in rural
    communities. We think the reauthorization is a good idea in
    transportation, to take a look at it, but we must have a much
    broader, national strategy that addresses these problems so
    that we can just stop fighting that rear-guard action and
    actually work with rural communities in rural states to solve
    these problems.
        So we hope that your Committee, Mr. Chairman, will continue
    to address these basic needs that are absolutely necessary for
    everyone who calls rural America their home. Thank you.
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        Mr. Olver. Thank you very much. Mr. Schwarz.

                         Opening Remarks of Mr. Schwarz

        Mr. Schwarz. Good morning, Mr. Chairman, Congressman
    Latham, Subcommittee Members. It is a pleasure to come before
    you today.
        It is a little scary to be sitting here, particularly in
    front of Congressman Latham, because Iowa offers the best rural
    intercity bus program in America, and I would probably be well
    advised to listen to you, sir, and hear why rather than try to
    offer my suggestions to you, but I will do my best.
        Perhaps if Peter Pan was located in Iowa, we could have
    delivered your bicycle in our baggage bays, or, certainly, we
    could have delivered the seed from your family business to
    major markets.
        Peter Pan Bus Lines is the largest independent bus company
    in the United States. We provide fixed-route, intercity bus
    service throughout New England and partner with Greyhound Lines
    to provide bus service throughout the Northeast Corridor.
        Although Peter Pan continues to operate numerous rural
    routes in New England, we have had to reduce that service
    because of its increasing unprofitability and the lack of
    government support for it. Our experience mirrors the decline
    in rural service provided by Greyhound and other intercity
    providers throughout America.
        Although the spread of the private automobile has been the
    main reason for the decline, the imbalance in federal support
    has also been a major contributing factor.
        Nathan Associates did a comprehensive study of net federal
    subsidies to public transportation entities and found that over
    the 45-year period, 1960 to 2005, intercity bus received only
    three-tenths of one percent of total federal subsidies,
    compared to 43.6 percent for mass transit, 22.3 percent for
    commercial airlines and 9.8 percent for intercity rail.
        Motor coaches are the most affordable transportation mode.
    When subsidies are needed for rural services, intercity buses
    can provide those services at the least cost. Peter Pan and
    other bus companies are very interested in expanding their
    rural services. In fact, Congressman Olver, I think, by looking
    at your map, maybe Peter Pan should consider relocating. But
    this can only be done in conjunction with government programs
    that encourage and even remove impediments to the provisions of
    these services.
        Here are our recommendations on how those government
    programs should be structured or modified.
        Section 5311[f], rural intercity bus program. Congress
    established this program in order to strengthen and enhance
    rural intercity bus service. The program has not been
    successful in providing essential operating subsidies for rural
    routes. This is because of the requirement that subsidies be
    limited to 50 percent of net operating costs, which means that
    a local community must come up with the other 50 percent. That
    rarely happens in the context of intercity service.
        FTA proactively addressed this problem by establishing a
    pilot program. The private-matched pilot program is already
    producing results. At least 10 states have started, or are
    planning to start, a new federal feeder service under the
    program, but there are many other states that are hesitant to
    do so until the program is made permanent.
        Thus, we recommend that the Congress enact legislation
    making permanent the FTA private-match program.
        Another issue with the Section 5311[f] program is that if
    the governor certifies that there are no unmet intercity bus
    needs in his or her state, the state may use the 5311[f] funds
    for local transit. Some states have certified without any
    meaningful examination of rural intercity bus needs. I have
    personally experienced this situation.
        SAFETEA-LU attempted to fix this problem by requiring
    states to engage in a public-consultation process prior to
    making any determination about the adequacy of rural bus
    service. We recommend that the Committee oversee FTA's efforts
    to enforce this requirement and require FTA to withhold or deny
    funding to any state that fails to comply with the requirement.
        Intermodal terminals. I know, Congressman Olver, intermodal
    terminals are very important to you. You have been a leader in
    this field, and we appreciate it very much.
        In order for rural intercity bus services to succeed, they
    must be linked, not only to trunk line bus services but also to
    the services of other modes, such as air, rail, and local
    transit. This enables people in rural communities to move
    seamlessly to and from the national transportation network.
        SAFETEA-LU took a significant step towards the inclusion of
    intercity buses and intermodal terminals by making the
    intercity bus portion of those terminal facilities fully
    eligible for FTA funding. However, we believe much more needs
    to be done to enhance the development of intermodal terminals.
        In too many communities, there is no intermodal
    transportation center, and the intercity and local modes of
    public transportation are not linked in a manner that
    facilitates their usage. This is largely due to the stovepipe
    nature of federal transportation funding, which makes it very
    difficult to plan and fund intermodal terminals.
        Thus, we recommend that Congress enact an intermodal
    transportation center fund for the purpose of constructing
    intermodal passenger terminals that link all transportation
    modes, including intercity bus.
        I have other suggestions, but I have exceeded my time, and
    I apologize.
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        Mr. Olver. Thank you very much. I think you have laid out
    quite a table of thoughts here, and so I think we will have a
    good discussion as we move along.
        We will take five minutes per person. I get to define who
    speaks next, and it is basically in the order of how people
    came in.
        So let me take my first five minutes here. Really, there
    are so many things that I could now discuss, but I want to get
    to one thing.
        Dr. Fruin, in the time that I was already constraining you,
    you pointed out that you wanted to complete--in fact, the
    subtitle of one of your sections is ``Finish Deregulating
    Transportation.''
        Here, we have three folks who are saying and defining what
    greater needs there are because of what we did in air service
    to try to ameliorate the problem of the loss of service that
    would have occurred if there had not been anything done to the
    Essential Air Service.
        We have Mr. Marsico, who is talking about the enormous
    needs in rural communities for healthcare issues. I will use
    that one, but it is all of the issues along the way that there
    needs to be considerable federal input in that, and we have Mr.
    Schwarz also.
        And I might point out that you, just before the comments on
    finishing deregulation, had pointed out that, in the short-line
    rail systems, there was much too little being done by the
    federal government to keep them viable so that the rural areas
    could themselves be viable.
        Now, I do not know. Is there a contradiction here, or would
    you like to explain yourself, and I will let them comment?

                         DEREGULATION OF TRANSPORTATION

        Mr. Fruin. Basically, I said deregulate. I did not say stop
    subsidizing. I did not say stop aiding. I was pointing out that
    we still have areas that are not served because we have
    regulations that prohibit it. My experience recently in that
    has been taxicab deregulation and deregulating household good
    movement, things like that that are holdovers.
        When I say ``deregulation,'' I mean freedom of entry and
    freedom to set prices. I do not mean put people out of
    business. Let them be there. If they can make a case for
    subsidies, then we will spend the money, but do not let them
    stand up and say, ``That guy should not come into business
    because he will take business away from me,'' or, ``I do not
    want that new service because that will interfere with mine.''
    That is the sort of deregulation that I am talking about.
        Before that, I think I was talking about the returns on
    capital that go to the mainline railroads because of the legacy
    positions and no competition. I believe in competition and let
    two competing modes compete on the basis of their service, and
    if there is a need that we cannot fill, then subsidize them.
        Mr. Olver. So could I summarize that? I am beginning to
    understand your sense that, yes, you want to deregulate, but
    you do not have a problem with subsidies, and the subsidies
    that are being suggested are significant. Both Mrs. Black and
    Mr. Schwarz were saying that, and, obviously, one has to make
    certain that you have a balanced transportation.
        So would you agree that we need a balanced transportation
    system for the rural area that covers rural needs, if they are
    to be viable, and that the government really will have to step
    in in places to make certain.
        Mr. Fruin. Absolutely.
        Mr. Olver. That would suggest that some modes might not be
    appropriate for particular areas, and they would have to be cut
    off perhaps in this mixture.
        Mr. Fruin. Well, in the long part of my testimony, I am
    saying that we should cut back on the number of rural roads
    because that system has not yet been rationalized. We
    rationalized the railroad system, and we have the branch lines
    that are providing service but are not generating sufficient
    funds to rehab their track and to buy the sort of equipment
    they need to be able to exchange traffic with the mainline
    railroads.
        Mr. Olver. Okay. I think we will have more time to talk
    about that later. Mr. Latham.
        Mr. Latham. Thank you, Mr. Chairman, and I guess I would
    kind of follow up on that.
        How do you suggest that we address the connectivity on the
    rail? There is a proposal in Congress, to use tax credits for
    the companies to help improve their rail lines with the spurs,
    but what do you suggest?

                           TAX CREDITS FOR RAIL LINES

        Mr. Fruin. I have no problem with the tax credit. I
    actually think it would be more efficient if we were able just
    to allow grants to those railroads that need it to maintain
    their track and to modernize their fleets. It is a matter of
    the mechanism, and I think that outright subsidies are probably
    more transparent and may be better designed than a general tax
    credit that relies on the tax code rather than specific, proven
    needs.
        Mr. Latham. Okay. I am not sure if I totally agree with you
    on that because I do not know if the government is then picking
    the winners and losers rather than allowing a market solution.
        Mr. Fruin. Yes.
        Mr. Latham. Did you see a similar problem in the rural
    roads, as far as connectivity? You mentioned that you do not
    think some of the rural roads are necessary. I can tell you
    from where I grew up, there used to be, on every section of
    land in Iowa, four families living there. Today, though you
    have one family that is actually involved in agriculture, that
    land is still there, and you still need to move the product off
    the land itself. So what do you say?

                                  CONNECTIVITY

        Mr. Fruin. I say that that system was designed in the
    1850's for 160-acre farms, and I wrote this paper originally in
    1977 and said 320-acre farms. If you look at my text, I say it
    was 160-acre farms. Now, it should be adequate 1,000-acre
    farms. So close down those roads and put it back in farmland,
    four acres for every mile of roads you close.
        Mr. Latham. You would go over big at home. [Laughter.]
        See, that is why the wind comes from Minnesota down through
    Iowa. I have a big argument whether Minnesota blows or Iowa
    sucks. [Laughter.]
        Anyway, here we go. At least we are not doing Norwegian
    jokes.

                              HIGHWAY CONSTRUCTION

        I guess I will ask you this question, too, about highway
    construction. It is often described as a local economic
    stimulus. Can you tell me, how many of those jobs are actually
    taken by people in rural America versus how many are filled
    from urban areas, employees who come out? Are there any
    particular types of road projects that maybe would be more
    effective, as far as job creation in the rural parts?
        Mr. Fruin. Well, when we let road contracts, I cannot
    guarantee that any local guys get jobs, but, remember, all of
    the subcontractors, if you build a road, you are going to get
    local gravel, you are going to go to the local asphalt pit, and
    they will be spending money in the small towns. So there is a
    big stimulus there.
        There might not be too many jobs that are apparent, but
    asphalt, gravel, truck drivers, and the spending in the
    community have definitely a stimulus impact.
        Mr. Latham. Are there any particular types of projects that
    are better, do you think, than others? Do you have any thoughts
    on that?
        Mr. Fruin. I think the shovel-ready concept is the fastest.
        Mr. Latham. Okay. Thank you, Mr. Chairman.
        Mr. Olver. Mr. Carter, having been here at the time that
    the Big Apple came down.

                             GOVERNMENT REGULATION

        Mr. Carter. Thank you, Mr. Chairman.
        I had other questions, but, Doctor, you said something that
    tweaked my memory of something we are dealing with in my
    district, so I am going to ask you about it because it is
    basically a government-regulation situation.
        I live in one of those green areas, but, as far as our
    neighbors to the south, Austin, Texas, are concerned, we are
    still the rural folks up north. Now, we are almost as big as
    they are, but they do not realize that.
        So they regulate their taxi service in Austin, Texas, and
    they determine who gets to provide taxi service.
        Meanwhile, they would never come up to our county, which is
    35 miles away, in their taxis. So we have had an entrepreneur
    that has come into our county and put in a taxi service, a very
    good taxi service.
        Now, the City of Austin, when he takes people to the
    airport, is trying to prevent him from being able to stop or
    park at the airport because he is not part of their approved
    taxi service. I like the idea that everybody ought to be able
    to freely provide transportation services, if they can compete.
        Would you like to comment on that, that I can take back to
    my folks back in Austin?
        Mr. Fruin. These are the exact reasons that we deregulated
    taxicab service in Minnesota because a suburban cab can go to a
    hotel and take somebody downtown, but they are not allowed to
    pick them up and take them back, and all of those other sorts
    of things. That is why, for the very same reasons, we
    deregulated, and we are very happy.
        Mr. Carter. Well, that is an issue that I am constantly
    getting phone calls over.
        Mr. Fruin. Uh-huh.

                              RURAL TRANSPORTATION

        Mr. Carter. I want to talk, one more question, about rural
    transportation. I believe it was Mr. Marsico. You were talking
    about the veteran transport. Well, that is a real issue in my
    district.
        Like I say, I am the big green spot in the middle, but all
    of the surrounding counties around that green spot are rural
    counties, and there are some pretty good miles out in Texas,
    and so it is like 160 miles from the top of my district down to
    the bottom of my district.
        I have vets that live 130 miles from the nearest vet clinic
    that they can get to. They are very unhappy about the fact that
    it costs them a lot of money, especially when the gasoline went
    up through the roof on us, just to go get ordinary healthcare
    services for vets. Would you like to comment on that and what
    solutions are out there?
        Mr. Marsico. Well, actually, I would like to comment that
    there is an innovative demonstration that is going on near you,
    in Lufkin, Texas, that was originally started by a former
    member of Congress, working with the local community transit
    system, Charles Wilson, who has got a contract situation that
    was put together between the transit folks, the local
    community, and a private bus company to provide fixed service,
    specialized for veterans, from Lufkin to the VA centers in
    Lufkin and also further down toward Houston, but it is a
    scheduled service where everybody came together, and the local
    transit providers provide feeder service to get those veterans
    there.
        The problem that has occurred over the last year, I mean,
    we had a tremendous fight that we worked with to help people
    get the reimbursement raised for veterans on the mileage. I
    mean, we were down around 14 cents a mile, but the other side
    of that is that our veterans, especially the younger ones,
    require lift-equipped vehicles, which drives the cost of
    service up.
        We have not had much luck dealing with the Veterans
    Administration about these kinds of services because they say,
    ``That is not our issue or concern. People will get there.''
    But it does not recognize the tremendous burden that families
    also have to provide that care, and, aside from that, we have
    this mentality over there that everybody who participates in
    the VA healthcare system looks like they did in maybe 1945,
    where everybody has got a car in a one-person family, and they
    can take a whole day to drive somebody for their treatment.
        The truth is, and we have held hearings around the country
    with our friends in the veterans area, that we have people,
    especially by themselves--single, elderly people--young people
    by themselves--who cannot imagine it. So we think it needs a
    comprehensive review, and we also think it needs, you know,
    more looking at demonstrations, like the one in Lufkin, that
    seems to work. Until we get that, we are going to continue to
    have difficulty, and I hope that we could talk to you further
    about supporting our efforts.
        The whole issue of whether it is veterans or Medicare is
    that our government does not see the transportation as
    essential, even though they believe that all outpatient
    methodologies are better for the patient.
        Mr. Carter. Thank you, Mr. Chairman.
        Mr. Olver. Mr. Rodriguez.
        Mr. Rodriguez. I happen to represent a district that is
    probably the largest in the nation. I have 785 miles that
    stretch through the Mexican border, from El Paso to San
    Antonio, so I have both urban and rural, and I know I have a
    great deal of difficulty with my veterans getting access. Some
    of them go 300 to 400 miles in order to get access, and so a
    lot of them do not get access.
        So the need, in terms of transportation, is something that
    we need to continually work on. I find some difficulty, in
    terms of the road closures. I still have areas that do not even
    have any roads.

                                    GAS TAX

        Anyway, I was going to ask you about, on the rationale for,
    at least, when we pay for gas now, for every gallon, we pay
    taxes on it, and the mileage on it. We had a vehicle that put
    60,000 for the office in just less than a year, and they do not
    want to lease them out to us anymore.
        You made some comments on the veterans, in terms of how
    best, because I have communities that have to travel hundreds
    of miles before they get to healthcare and to go to the grocery
    store. People in Sanderson, Texas, have to go a good distance
    to find the first Wal-Mart, you know, and so they do not exist
    in those areas.
        But I wanted to see how we can expand on not only the bus
    system but also air travel. I can hardly wait for me to be able
    to take the flight that even a smaller plane that will take us,
    and I thought we were moving in that direction, in terms of
    with the new air-control systems and all of that.
        What do we need to do, number one, for getting flights,
    Mrs. Black, in terms of for small, and maybe some feedback on
    whether we ought to look at rail or bus or alternatives because
    my small towns are connected through rail--Sanderson, Alpin,
    and all of those communities--but we do not see them go through
    there that often, and that creates a problem.
        So, Mrs. Black, if you could help me, in terms of what we
    might need to do to enhance?

                                    CARRIERS

        Ms. Malarkey Black. Sure. From the carrier perspective, one
    of the most important things that a carrier looks at when
    assessing the community aside from traffic and obviously
    whether or not they can profitably serve the market is the
    commitment of the community. We have a lot of communities that
    are very committed, but they do not have the funding or the
    airport facilities. So, you know, the first step, I think, is
    to have the committed community and to look at your population
    and do some assessments and figure out who would be traveling,
    what would be the use, and make the case to the airlines.
        One thing with regional airlines is to the extent that they
    are interlining and co-chairing with the majors, we do not
    always make scheduling decisions for those smaller communities.
    So the best approach is to talk to a mainline carrier and
    demonstrate to that carrier that this is a profitable market;
    that you would provide speed in terms of traffic to the airline
    system, and once you make that case, there have been some
    examples where there has been new air service. There are
    programs out there.
        I am not an expert on the small community air service
    development pilot program, but that is a program that is in use
    by smaller communities in the past as well for the community
    partners either with an airline or another factor, and is able
    to get some grant money to set up that service so you can
    perhaps have some incentives to the airlines to come do a
    marketing program, things like that. But I think the bottom
    line is the committed community and the fact that the community
    is willing to put some funding in a partnership with the
    airline is one of the best steps that you all can take from the
    community perspective.

                                   BUS SYSTEM

        Mr. Rodriguez. On the bus system, let me ask you, I would
    think that in some cases I see these huge buses and a lot of
    them are sometimes less than half full. Does a mini-bus make
    any difference in terms of use of gas? I guess the staffing
    looks good, you know, as an expenditure.
        Mr. Schwarz. Congressman, I think that it does not become
    necessarily a question, a lot of people think that a mini-bus
    versus a normal regular motorcoach, there is a big difference
    in the economics. The answer is no, quite frankly, and also,
    quite honestly, if you are a young person that is a soccer
    player that is traveling with your team to go play soccer, a
    mini-van is a great experience, but perhaps someone of my age
    would not appreciate riding in a mini-van.
        But I would like to share an experience with you that I am
    very encouraged about. As I visited this distinguished building
    this morning, I was introduced to Congresswoman Brown from
    Florida, and Congresswoman Brown said when she found out I came
    from a bus company, Peter Pan, she said, ``why do you not
    provide bus transportation to veterans?'' and, sir, I have to
    tell you I am very proud to say Peter Pan Bus Line provides
    free transportation to veterans.
        But she is going to be holding hearings that she invited us
    to come to on testimony because she feels that there should be
    a transportation program transit as well as intercity bus that
    provides free bus passes to veterans. And why I think bus
    companies, intercity bus companies such as Greyhound, which is
    obviously very prominent in Texas, is perfectly suited for
    this. Those of us that obey the law and are ADA compliant,
    motorcoaches have wheelchair lifts, and therefore it is easy
    for us to accommodate those veterans that need to ride in
    intercity buses. In fact, it would be great if this committee
    could help oversee the continued funding of the OTRD
    accessibility program so that those of us that try to obey the
    law can continue to make sure that our buses are wheelchair-
    lift equipped.
        Mr. Rodriguez. Thank you.
        Mr. Olver. Mr. LaTourette.
        Mr. LaTourette. Thank you, Mr. Chairman, and Mr. Schwarz, I
    had the pleasure of having Congresswoman Brown as my Ranking
    Member when I was Chairman of the Railroad Subcommittee, and
    she is from Jacksonville, Florida, and is a passionate advocate
    of all forms of transportation.
        Dr. Fruin, I do not want to pick on you, but I promised our
    Ranking Member I would not talk at all about the ethanol
    portion of your testimony, and instead I want to talk to you
    about the Class 1 railroads and your observations, and I wrote
    down that you are not for re-regulation, so being from
    Minnesota, I assume you are familiar with the distinguished
    Chairman of the Transportation Infrastructure Committee, Mr.
    Oberstar.
        Mr. Fruin. Yes.

                                 CARE COALITION

        Mr. LaTourette. Are you familiar with his efforts and the
    CARE Coalition to re-regulate the railroads?
        Mr. Fruin. When we say ``re-regulate''----
        Mr. LaTourette. Right.
        Mr. Fruin [continuing]. I am not quite sure what we are
    saying because I think what I am saying is that there are
    routes that we do not have competition.
        Mr. LaTourette. Right.
        Mr. Fruin. And that it has been impossible for the shippers
    to get rate relief even though in the law we are supposed to
    continue to provide moderate--shipments at moderate cost, and
    my philosophy is that transportation is a public good, and the
    mere fact that I have a monopoly position and no competition
    does not give me the right to get monopoly profit, and it is
    the law of our government, not necessarily to regulate, but to
    ensure that the rules are there so that the shipper gets a fair
    deal.
        Mr. LaTourette. Fine, and I think we are all with you on
    that, but are you aware of the recent rulings and adjustments
    by the Surface Transportation Board in that area relative to
    captive shippers, small shippers?
        Mr. Fruin. Well, the one I am aware of recently was a very
    large shipper, a major one, and it was a $300 billion ruling,
    but that does not protect the--the small shipper cannot afford
    to roll the dice and spend two or three million dollars trying
    to get a $500,000 back.
        Mr. LaTourette. Right, I get you on that, but you know,
    sometimes when I ask people in this coalition--I have a box
    manufacturer in my district that is a member of the coalition.
    I said, well, why do you not put it on trucks, and they say,
    well, it is more expensive. So what is the deal? I mean, if it
    is more expensive, then why is not the train transportation
    that exists in the area, there is competition. It just does not
    happen to be from another railroad.
        Mr. Fruin. There are areas of the country that are in
    commodities like coal and grain that are just very expensive,
    and in fact in some cases are shipped anyway, and we pay for it
    in our utility bills, and we should not be. In other cases, the
    grain just is not grown there because the rates would be
    prohibited.
        Mr. LaTourette. Let me talk to you about financing and the
    short lines in particular. You are familiar with the RIF
    program, Railroad Investment Funding that was made available
    and really beefed up in SAFETEA-LU, I think it is about $40
    billion?
        Mr. Fruin. I am not that familiar with it.
        Mr. LaTourette. Okay. In addition to what Mr. Latham was
    talking to you about relative to tax relief, the RIF program,
    as a Republican, I had a great deal of disappointment in the
    Bush Administration, and it made it almost impossible for any
    short-lines. I do not think they approved any applications
    except DME up by you. You are familiar with that?
        Mr. Fruin. Yes.
        Mr. LaTourette. And it seems to me that the blending of tax
    relief that Mr. Latham was talking about together with a robust
    utilization, hopefully the Obama Administration will utilize,
    was not free money as you advocated, but it was very, very low
    interest money to make significant improvements on short-lines
    in particular to create an improved connectivity is the way to
    go. Would you agree?
        Mr. Fruin. I would agree with that, and now that you
    mention the program and explained it, that is the one that we
    never got any money out of it.
        Mr. LaTourette. That is what I am talking about. One person
    did. I think the only new railroad that I am familiar with in
    the country was DME.
        Mr. Fruin. But did they really give it?
        Mr. LaTourette. DME?
        Mr. Fruin. Yes.

                                  RIF PROGRAM

        Mr. LaTourette. Well, I think they did, but I will tell you
    I am aware of a lot of short-lines in other parts of the world
    that made application, and for whatever reason, even though we
    had this--I know what the reason is. OMB scored it poorly, and
    they made the determination it was not cost-effective. But I am
    going to tell you that I hope that now, you know, the new
    sheriff is in town. I keep hearing that, the new sheriff is in
    town. I hope the new sheriff decides that the RIF program is
    worthwhile and his OMB permits those funds to flow forward.
        Mr. Fruin. Well, many of the cost benefit analyses we do
    are inadequate because we are not really looking at all the
    benefits or all the costs.
        Mr. LaTourette. Well, I am a big believer. I think we
    should build railroads all over the country because it not only
    helps the railroads, it puts people to work as well.
        So thank you for this round, Mr. Chairman.
        Mr. Olver. Thank you. This is going very well, but I wish
    we had invited the whole of the rural caucus to listen to this
    set of conversations. It would have been quite interesting, I
    think.
        What have I done? I have forgotten what I wanted to ask.
    Mr. Marsico--well, I think maybe I would like this to go to
    all. The President has as one of his key initiatives in this
    stimulus bill the expansion of broadband to rural areas around
    the country. Given what we have talked about, and let me make a
    comment here that I forgot to make in my opening statement, if
    you can believe that. While our major metropolitan areas are
    just continuing to grow, over 60 percent of all rural counties
    have lost populations in the period between 2000 and 2007, and
    such de-populations usually carries with it disinvestment in
    all kinds of public services, not just transportation, but
    education and medical services, and job opportunities all up
    and down the line.
        So can the broadband initiative, if it really reaches
    ubiquitously to all parts of the country, can it stem the tide
    of disinvestments in job opportunities, can it be used to stem
    that for medical purposes and such? I ask it first to you,
    Dale, and then comments from the others.

                              BROADBAND INITIATIVE

        Mr. Marsico. Well, you know, that is the kind of question
    you answer by saying I am not so sure that all of our futures
    will be solved by the Internet. But I would say that based on
    the kinds of issues that I addressed in our testimony and the
    kinds of needs by the people, for instance, we talked about
    whether they would be our veterans or our health care issues, I
    do not think the expansion of broadband is going to solve their
    problems.
        Their problem is in direct relation to what you were
    speaking about, that we know that health care facilities move
    further and further away from rural communities because all
    public health expenditures have to have a high rate of return
    and they have to have a large mass of people to maintain their
    efficiency.
        So just having medical records easily available or
    activities related to the web will not solve that problem
    because we have declining facilities, and many of the job
    opportunities that still exist will always be in more urbanized
    areas where work will be created, so we will not be able to
    reverse it with one single item.
        Quite frankly, as you look at the employment situation,
    maybe that has an impact longer term, but in the short term
    unless that would generate a lot of jobs in rural America, I do
    not think it is going to affect any of our primary concerns.
        Mr. Olver. Okay, let me ask Dr. Fruin. Do you have a
    feeling about the benefit of broadband ubiquity?
        Mr. Fruin. From a rural development point of view,
    broadband is important, but just as important as the
    transportation infrastructure, the labor force, the education
    of the workforce and things like that, broadband will help a
    community maintain its position, but it has got to have those
    other things there also.
        Mr. Olver. Broadband can also have an effect upon those
    very things--the education aspect and doing things by distance
    learning, of course.

                         VETERAN LIVING IN RURAL AREAS

        Let me ask you, Dale, you have talked about veterans and
    the Census Bureau says 20 percent of Americans live in rural
    areas by their definition. You say 40 percent of veterans live
    there. Now, that may not be the same areas, but it sounds to me
    as if there is a disproportionate number of veterans living in
    the rural areas. Would you give me why you think that is?
        Mr. Marsico. Well, I think that is essentially true, and if
    you think for a second about some of the ways, particularly the
    army has reorganized, especially that relates to our National
    Guards, you will find, for instance, that almost a huge
    percentage of the support elements that provide logistics come
    out of South Dakota, and you will find that other guard units
    in our states, especially in the rural areas, are specialized.
    You will find a lot more of those people who have been called
    up in the last war having a rural base.
        So, I think that is where we start to get that issue, and
    also, quite frankly, we from time to time have lots of strange
    discussions with the Veterans Administration about the status
    of our National Guard people who come from rural areas and are
    called up for military service overseas not getting the same
    level of benefits, and, of course, transportation as well.
        So, that kind of plays into our vision and the numbers that
    we get from the VA that, you know, 40 percent of them are
    living in rural communities.
        Mr. Olver. I think you have touched on--I think it is
    broader in that sense. I think that people in the military have
    disproportionately come from rural areas in the first place in
    order to get--because there were no job opportunities or poorer
    educational opportunities, and they get educational benefits,
    and some push forward on the job opportunities when they come
    back, but a lot of them want to go back into those areas so
    they are there, and that is where they came from and that is
    where they are likely to go for awhile.
        Mr. Marsico. Well, that is particularly true----
        Mr. Olver. Anyway, I have overused my time.
        Mr. Marsico. Right. The older people who are retired, and,
    you know, cost of living being what it is.
        Mr. Olver. Mr. Latham.
        Mr. Latham. Thank you, Mr. Chairman.

                               DISABLED VETERANS

        Just talking about transportation for veterans. Would you
    get major pushback from DAV, the Disabled American Veterans
    Association, because I know that they take great pride in what
    they do and offer a lot of--in Iowa, the transportation
    services to the VA hospitals. I mean, is there a lot of
    pushback with that?
        Mr. Marsico. I think what actually we gather is a lot of
    fear. We do have examples, as I mentioned, in Texas. We have
    had--we did a major demonstration and it is currently working
    in the Pacific Northwest, around Seattle, where we try to
    explain that these services can be integrated but not
    displayed, and I think if you talked with our friends at the
    DAV or the DVA, you will see that most of their transportation
    needs are directed towards ambulatory individuals and not those
    in wheelchairs. So, there is a special subculture of service
    needs that they cannot address.
        So, we have been dialoguing with them about that, and,
    quite frankly, we have had a difference of opinion with them
    from time to time, that the mileage reimbursement program is
    not the solution, especially for the people who need
    specialized care.
        But I think in lots of places we have been able to
    demonstrate that this can be a working coordinated partnership
    and we need to continue to discuss that with them.

                         IOWA SYSTEM OF TRANSPORTATION

        Mr. Latham. Mr. Schwarz, you mentioned earlier, and I
    appreciate the compliment--you said Iowa had the best system in
    the country. Would you explain why that is the best or what
    makes it the best?
        Mr. Schwarz. Mr. Chairman, excuse me.
        Congressman, I do not know why that is. But in preparing
    for this hearing----
        Mr. Latham. Well, you are honest anyway. [Laughter.]
        I like that.
        Mr. Schwarz. Thank you. In preparing for this assignment,
    we did research and it said Iowa had the best rural intercity
    bus program in America. You can rest assured, sir, I would be
    happy to follow through on this and I will be happy to send you
    my thoughts as to why. It just came to our attention that for
    some reason Iowa has these programs and it is very successful,
    but at this point I cannot tell you exactly why. I was kind of
    hoping you would tell me.
        Mr. Latham. Well, I can assure you we have a very active
    group of people involved in transit in Iowa, and every county
    and every community is very much involved with it; not that we
    ever get any requests for funding or anything from those folks,
    but----
        Mr. Marsico. I could help in that category.
        Mr. Latham. I am sure you could.
        The essential air service. I have got two communities in my
    district where it is absolutely critical to maintain. They are
    in the lower end as far as per passenger boarding, with over
    $600 in per passenger subsidies, and several in the three-four
    hundred dollar category.
        Have you ever done any study in which you compare with
    Amtrak? There are some Amtrak subsidies that are several
    hundred dollars per passenger, also. I mean, is that
    sustainable? How can we use it? Can we justify that?

                              COMPARISON TO AMTRAK

        Ms. Malarkey Black. We have not done a direct comparison
    with Amtrak. We would like to have the resources to do that
    kind of research, but lack them, unfortunately. But we do think
    that it is justifiable, and it just comes down to whether you
    think philosophically it is an important program or not.
        When the program, during its inception in 1978, we never
    really envisioned that it would cost this much to provide the
    service, but the realities are that fuel costs have just
    skyrocketed in some recent years. There are other issues--the
    cost of operating a 19-seat aircraft has gone up quite a bit,
    and the market realities are such that these costs have
    increased.
        For those communities that are within 210 miles, there is a
    subsidy cap now of $200. We think it is appropriate--it has not
    been looked at in--I do not have it in front of me, but I think
    about 17 or 18 years, and we think it is appropriate to make
    adjustments to that given the cost increases facing the program
    and carriers. We think it should be indexed for inflation. We
    think that is appropriate.
        But some sort of a cap is realistic on the closer-in
    communities. That said, when you are far out, that is what you
    need. You need that air service. It really is essential, we
    believe. It is an economic driver of the communities. We make
    the argument that there is no better stimulus to the rural
    economy than air service because if a business is looking to
    relocate there, one of the first things they ask is, can I get
    there. So we think it is very important, and we do justify the
    expenditures.
        Mr. Latham. Okay. Very good. Thank you, Mr. Chairman.
        Mr. Olver. Mr. Carter.
        Mr. Carter. This may be a totally philosophical question,
    but I thought about this. As we see transportation start to
    have major issues about change, fuel usage, conversions,
    electric cars, and all these things, we are a state that is
    bound by the automobile and the pickup trucks. I mean, that is
    the nature of being in Texas.
        But in truth, as my colleague Ciro points out, we also have
    distances that need air miles, need train miles, and other
    things because we are using cars to cover those miles, and as
    the world looks like it is going to make a change on that, if
    you are designing the perfect world for a large rural area, and
    when I say large, you can look at ours, I mean, it is large,
    what kind of combinations would you put together that would be
    a good system that would allow people to move to the critical
    medical areas, to the VA services areas and so forth, because
    you get out around Sanderson or some place like that in Texas
    and you just do not have any choice but to drive 300 miles.
        If you had your perfect world, how would you design it?
    Doctor, I will start with you, and let everybody talk about it.
        Mr. Fruin. I would expand two things: the bus service, I
    would not expand rural rail service for passengers because that
    just does not mix because of the need for speed and stops, but
    I would emphasize the bus service, and in my perfect world we
    would have a lot of point-to-point pickups. I am talking about
    taxi service and stuff like that. I am not at all sure that I
    want to spend the $200 to go on an airplane. Why do I not spend
    $150 and have a limousine service to go from one airport out
    actually to where the person's home is.
        Now how I would pay for that, I do not know, but I think it
    would be cheaper than maintaining airports, airplanes and
    things like that for the few people that do that traveling.
        Mr. Carter. Air service?
        Ms. Malarkey Black. You know, that is the issue Dr. Fruin
    brings up, and regional air service, in particular our short-
    haul service, we compete against the cars and trucks and buses,
    and so that is something that we have to keep in mind.
        That said, again, the businesses do not want to necessarily
    have to take that long car ride, and so I think investment in
    the area is important. But there are some other factors.
    Airport access is critical in some of the more remote
    communities getting into an airport.
        You know, two years ago or last year we had some talk of
    spot auctions and things like that at the hub airport. So one
    of the things we find important is to make sure the spokes can
    actually get into the hubs. We start talking about limiting
    access there, and that has a real effect on rural
    transportation.
        Highway safety is important so that you can get to the
    airports and airport access and development there, so that is
    an intermodal concern of ours, and I guess the final thing is
    to remember that the airlines are competing against the car and
    the automobile, and in many cases we are taxed at much higher
    levels than they are. So one of the things that the government
    can do is to watch those taxes and fees because they do have an
    impact on how much the airlines can reinvest in the system and
    provide that important access to air service.
        Mr. Marsico. I think that states like Texas and the rest of
    our country need a balanced system where we have options for
    local communities to help them make the best decision of how
    they need to meet their service needs, but we also need a
    system that is fair in the allocation of resources.

                             INTERCITY BUS PROGRAM

        My colleague discussed this intercity bus program, that is
    a DOT program, the 53.11[f] program. It is 15 percent of the
    smallest programs in USDOT, and obviously if you believe, as we
    do in our efforts, and I agree with the Doctor, the intercity
    bus program is absolutely vital to solving the connectivity
    problem. You cannot do it by setting aside 15 percent of the
    smallest program and then say that we are going to have a fair
    and balanced system for rural America, and I think that is the
    issue that is in play for all of the issues as it relates to
    transportation.
        It costs more money to provide service in rural America and
    it does not matter about the number of people sometimes. For
    instance, in Congressman Oberstar's district, we have less
    rural transportation money than we had in the last
    reauthorization because of a population change. But it cost
    just as much money to provide the service from point A to point
    B as it did before, and that now that we have less people
    aggregate does not solve our problem. It still costs a lot of
    money to go from point A to point B. And when those people are
    older and they cannot drive and there is no intercity bus for
    them, it is an extraordinary issue. It is a resource
    allocation. So I think we have enough experience to solve the
    problem. We do not have enough resources and we do not have
    enough fairness.
        Mr. Olver. Would you like to add briefly to this? Because
    you are down the line near the end of the line here.
        Mr. Schwarz. I would only say I should probably not add
    much more comment after what this gentleman said. I think he
    said it all. Except I would just simply say, Congressman, I
    really believe that intermodalism is the way to go. It is a
    tremendous asset to bringing all modes of transportation,
    whether it is the taxicab, whether it is the train, whether it
    is the railroad or the airlines or intercity bus. It does
    provide, and you can set up, intermodal facilities. They can be
    large or they can be small.
        I was really encouraged when I read recently that Vice
    President Biden and the new Secretary of Transportation were in
    Miami, Florida, and they allocated a tremendous new intermodal
    facility that is going to take old dilapidated bus terminals
    and other modes of transportation, and it is going to breed new
    life into that mode of transportation, and I just think it is
    the way to go. And as you begin to look at allocating resources
    and making things available, I think that is going to begin to
    contribute.
        One other thing that I think, particularly for Congressman
    Olver, that we need to be concerned about if you think there is
    a crisis on the horizon now, you come from a community or a
    state such as Massachusetts that has huge fiscal problems with
    the transportation infrastructure. Apparently the way we are
    going to get out of it is by fuel tax; raising the tolls. So
    those people that depend on automobiles, quite frankly, and
    that have economic constraints will no longer be able to use
    their automobiles to get from rural communities to whatever
    major city or tertiary city that they choose to go to. It
    simply will no longer be an effective mode of transportation.
        Mr. Olver. Mr. Rodriguez.
        Mr. Rodriguez. Let me just--I know we have talked in terms
    of some of the needs. Maybe I will direct a little more
    question in terms of--because I know the funding, how do we go
    about that because when I heard about the mileage figure, well,
    that is going to discriminate against rural communities, and so
    I wanted to see if maybe you can give me some feedback on
    vehicle mileage, you know, as to why--you know, would you not
    believe that that would hamper rural communities?

                             VEHICLE MILES TRAVELED

        Mr. Fruin. No more than high gasoline taxes have in the
    past. I mean, if we look at how we fund things now, we rely
    primarily on the gasoline tax and other taxes. There is a major
    concern about--well, we reduced fees for green automobiles, so
    that is less money coming in. So my feeling is that a well
    designed mileage tax would basically impact people on how many
    miles they drive, and also you would put the weight/distance
    tax back in the position of being on the goods that are shipped
    these distances.
        So, yes, if you are too far away from some place you are
    going to pay more, but you are now and I do not know how you
    ever get around the problem of distance and----
        Mr. Rodriguez. Yes, because they are already paying more
    because of the number of gallons that they are utilizing, and
    you add in on top of that, and so they still have to travel 150
    miles to go see a doctor or go get groceries.
        Mr. Fruin. No, I am not really adding that on top. I am
    saying change the gasoline tax system today to a mileage tax
    because now you have a gasoline tax that is related to fuel
    consumption.
        Mr. Rodriguez. The possibility of going back to rail and
    bus and air travel, I know that they told me if I wanted to do
    some--a train that is already going, I think it goes every
    three days from L.A. to New Orleans, through a bus in San
    Antonio, and a lot of my communities, but it only does it every
    three days. They almost become self-sufficient if you do it
    daily because people are able to go to San Antonio and come
    back in the same day.
        Does some of that make sense in terms of moving and
    initially subsidizing some of that for the long term?
        Mr. Schwarz. Well, relative, sir, to intercity bus, I think
    absolutely. You have the road network connecting closer places.
    Providing subsidies to intercity bus service is the cheapest
    form of transportation. You certainly could provide it on a
    continuous basis so that people become familiar with it and
    plan their lives around it to utilize it, whether it is to buy
    their groceries or go to Wal-Mart or get medical care,
    certainly, and it is the easiest form of transportation to set
    up and get going quickly. The road network is there. The
    infrastructure is there. You can do it.

                                  TUBULAR RAIL

        Mr. Rodriguez. There is some new technology also, the
    tubular rail, you know, because the first thing I encounter is
    property rights and things like that, but does the new concept
    of tubular rail go on top of the existing roads on that, and
    sometimes it makes it a little more--I do not know whether it
    makes more sense to look in terms of long term and seeing those
    transportation modes might need to change. Any of you have any
    comments on that, not only just tubular, but also--you know,
    because I am looking forward to small planes that I can just
    get on actually in San Antonio without having to go through
    Dallas or Houston.
        Mr. Schwarz. I will offer a comment on that, sir.
        In Massachusetts, there has been talk of similar devices
    with commuter rail or types of rail service to follow, for
    example, the turnpike system, and I think it is fair to say the
    cost of providing sets of service is just impossible, quite
    frankly. It is just impossible.
        Ms. Malarkey Black. Speaking to your interconnectivity
    issue, that is very important to airlines, having the other
    forms of transportation to get to that city airport, to bring
    passengers to the airport is important. That would create
    traffic on the routes, particularly on the regional routes
    where we need more passengers, and so that is very important.
        So philosophically we think subsidizing programs like that
    are important. I think the caution I would counsel is to be
    very careful that you do not set up a competitive environment
    between the programs. The essential air services are
    underfunded as it is, so talking about taking some of the
    subsidy dollars available for that program and spending it on
    intermodal access would not be appropriate because you simply
    would run out of the money just to provide the air service that
    you have. So that is the caution that I would throw out there.

                                    FAIRNESS

        Mr. Rodriguez. Let me just--you mentioned something about
    the unfairness, Mr. Marsico. Do you want to elaborate a little
    bit more, any of you, in terms of the way we have it structured
    now in terms of how it might be unfair?
        Mr. Marsico. I would just say that in the last three major
    reauthorizations we have waged vigorous campaigns to change the
    allotment on the public transit side for rural transportation
    and the intercity bus, and again, just looking at the map, we
    need to figure out how we arrive at a system that provides more
    than 15 percent of the rural program, which is the smallest
    program in the public transit budget, for transportation needs
    of all of the communities that are in rural America and build a
    process of connectivity.
        I think, you know, until we have a better way of doing that
    or better applications we are not going to get there.
        Mr. Olver. I think that may be a case where we are going to
    need to send our ambassador to the TNI committee to carry that
    case this time. Thank you.
        Mr. LaTourette.
        Mr. LaTourette. Thank you, Mr. Chairman, and Dr. Fruin. I
    am just going to make one observation and get off you and talk
    to the other witnesses.
        This whole issue of the railroads and regulation and rates
    and everything else, it has long been my view that everybody
    has got to put everything on the table to get there from here.
    You just cannot take the skin out of the hide of the Class 1
    railroads.
        By that I mean if you talk to the railroads, they have a
    common carrier obligation. So if you look at what happened to
    Minot, North Dakota, they will tell you that it is only one
    percent of their business but it is probably about 90 percent
    of their liability and risk and everything else, and a chlorine
    spill can shutdown or bankrupt the short line and another
    railroad.
        So if we are going to talk about pricing and taking care of
    the captive shippers, we have got to get the lawyers out of it.
    They cannot continue to make a ton of money. We have to
    consider, I think, the same system that we have with the
    airlines where there is a capped responsibility in case of a
    disaster. They have to have some predictability so they can get
    insurance, and if you are going to make them carry chlorine,
    you should recognize that has a responsibility cost and
    everything else, and then we could have a rate adjustment.
        So if you, since you are from Minnesota, if you could go up
    there--go up to Duluth and beat on Mr. Oberstar just a little
    bit, maybe we can get some of these things resolved.

                               PASSENGER SUBSIDY

        Ms. Malarkey Black, did you say that you were advocating
    say a $300 per person customer subsidy?
        Ms. Malarkey Black. Well, there is a cap right now----
        Mr. LaTourette. Right.
        Ms. Malarkey Black [continuing]. On the per passenger
    subsidy. So the DOT does not go down and give money to the
    passengers. They obviously make payments to the airlines. That
    is broken down so $200 is the subsidy cap. But that has not
    been adjusted for inflation.
        In the meantime, air carriers have had, as I mentioned,
    tremendous cost increases, not just the fuel, but with other
    places. And so DOT has been flexible actually in recent years
    with its exercise of that per passenger subsidy cap, and we
    think that is appropriate and absolutely necessary because
    otherwise you would have communities who really needed the
    service not getting the service because the outdated subsidy
    cap does not reflect the current market reality.
        Mr. LaTourette. I am all with you, and the Chairman and I
    have been on the same side of the Amtrak discussion. There are
    some people around this town that do not think that Amtrak
    should have any federal subsidy, and they point to the fact
    that if you are going to travel a long distance on Amtrak it is
    pretty expensive. I mean, the subsidy part is pretty expensive,
    but I think to provide service to people that do not have
    service you have to recognize that is just like the postal
    service. When we require them to go to every address no matter
    where the address is, it has a cost that is different than
    others.
        How many members are in your association? How many
    different airlines?
        Ms. Malarkey Black. Well, we only have maybe four that do
    essential air service.
        Mr. LaTourette. Okay.
        Ms. Malarkey Black. But we have maybe three dozen airline
    members.
        Mr. LaTourette. What is the biggest aircraft that any of
    your members fly?
        Ms. Malarkey Black. I think we have, and that is a moving
    target----
        Mr. LaTourette. Right.

                                   EMBER AIR

        Ms. Malarkey Black [continuing]. Because we have got
    manufacturers that are bringing larger aircraft online. I think
    the 90-seat passenger aircraft manufactured by Ember Air----
        Mr. LaTourette. Yes. Apparently there is a 170 series that
    is new.
        Ms. Malarkey Black. Yes.
        Mr. LaTourette. That is a beautiful plane, by the way. And
    do your members get into the SCOPE clause discussion at all?
        Ms. Malarkey Black. They sure do. We do not at the
    association level, but our members do inasmuch as--let me
    rephrase that. Our members do not necessarily get involved in
    SCOPE clauses. As you know, that is a major airlines' issue
    with their organized labor, but it is certainly something that
    impacts regional airlines, and it sounds like you are alluding
    to the type of aircraft.
        Mr. LaTourette. Right.
        Ms. Malarkey Black. The size of aircraft that they can
    operate. So that has been a factor. We have seen some
    relaxation in SCOPE. Certainly it had to happen after the
    terrorist acts of 9/11, but SCOPE is still a factor and it is
    still impacting the aircraft choices of some of our members.
        Mr. LaTourette. I will tell you that I was just at Ember
    Air last month, and looked at the 170 series and the 190 series
    that they are coming up with, and I said--my major airline is
    Continental, and I said, why fly these hypodermic needles that
    they have. These RJ-140s are horrible, and the 50 seaters.
        Ms. Malarkey Black. We like those too.
        Mr. LaTourette. I am sure you think they are swell, but as
    a customer, I think it is like flying in a hypodermic needle.
    So I said, why cannot, you know, since Continental really
    helped Ember Air take off in the mid-nineties, why can you not
    help them sort of roll out and divert from the 140 series, give
    them to other airlines that find them to be good for those
    markets, and they said it was the SCOPE clause. They said you
    cannot permit an 80-seater or a 90-seater or an 188-seater to
    come into and compete with others, and that seems like
    something that came about as a result of--well, it seems
    outdated to me, and perhaps we should revisit it.
        Mr. Chairman, I think I am going to ask you and Mr.
    Oberstar to do that.
        To the bus and transit gentlemen, Mr. Marsico, I think it
    might have been you that mentioned regionalism, and if it was
    not you, I apologize, it was you, Mr. Schwarz.
        One of the problems that we have from my outlook with rural
    transportation is it is twofold. Some people move to the
    country because they do not want buses and airplanes and
    things. I can remember when I proposed a water line in one of
    my rural areas, there is still an effigy hanging from a tree if
    you drive down State Route 528, because they do not want a
    water, they do not want a sewer because that means development,
    that means city folk, that means a whole lot of other things.
        But regionalism, I think, is key. When you talk about not
    only intermodalism, but regionalism, and one of the problems
    that we have is we have all these local bailiwicks, and so I
    have a county that has a bus service that is supported by the
    sales tax, but you cannot take that bus out of the county. It
    stops at Ashtabula, it cannot go into Lake County. Got one in
    Lake County, it cannot go into Cuyahoga County.
        So it seems to me as we look at efficiencies, and we have
    this problem no matter what the service is. Talk about the
    police service, for instance. They used to be in charge of the
    crime lab when I was prosecutor, and every police chief wanted
    their own bomb kettle, you know. And I said, well, we only have
    one bomb a year, so how about if we buy one bomb kettle for the
    county, and when you have got a bomb, we will bring it to you.
    But you know, every police department wanted their own to put
    in the 4th of July parade.
        It is the same way with a lot of this other stuff. And so
    as we look at efficiencies and if, Mr. Marsico, we take your
    observation to heart and say that you need to be bigger than a
    15 percent set aside, do you think it is unreasonable that we
    also demand that you and your members are regional in scope,
    and maybe if we are going to buy a bus at a rural agency, they
    should have to team up with the rural agencies around them and
    make sure that you can actually get from point A to point B.
        Mr. Olver. That should be a simple answer.
        Mr. Marsico. No. How could you disagree with that?
        Mr. LaTourette. That is what I am thinking.
        Mr. Marsico. I think that some of the examples we pointed
    out as well as in the glossy material that was cited says that
    around the country that does work well, but it requires
    leadership, and also some of the dynamics that are involved
    also about the future of the intercity bus systems because we
    think instead of just giving the rural people, you know,
    additional equipment to build more rural service, that kind of
    displaces the intercity bus system. We need to develop, as I
    pointed out in the Lufkin example, a system where you integrate
    intercity bus with those local services for the connectivity
    that is missing in our current transit vision and looking at
    that as an unmet need.
        That can actually be met, we believe, by working strongly
    with our partners in the bus industry primarily for all the
    reasons, including cost effectiveness. We had a very good
    intercity bus system linking and stopping in rural America
    until it became uneconomically infeasible to manage from the
    Fairbock.
        Mr. Olver. Okay.
        Mr. Marsico. That issue is a little bit different but I do
    believe that on the other side, you are absolutely right, and I
    think we have a good record to show for it, and I think our
    longer testimony discussed it. But we do not want to displace
    the good work that is currently being done in the intercity
    area because that has its basic advantage to rural America that
    could be lost forever.
        Mr. Olver. Okay. We are getting close to time here. I would
    like to get one more round which may put a little bit of
    pressure of three or four minutes per person on the round as we
    go. I would like to engage all of you. We have had some
    discussions here that I think could be integrated. In fact, Mr.
    Carter kind of started.

                               RURAL DEVELOPMENT

        I am wondering if there is room somewhere here, we all
    worry about rural development, and it seems to me we have done
    little bits and pieces, and maybe we ought to think in a
    broader kind of a way. There are some places here where there
    are such large blocks of territory where the crisis in rural
    America is at its worst, I think, where there might be room for
    big demonstration. I am wondering, for instance, Doctor,
    whether there are a group of counties that might get together
    and think about your idea of creating more useful land by not
    having so many roads. Maybe it is even four miles apart rather
    than two miles apart down the road, and in that process you
    take into account the need for short-line railroad, and its
    role in a comprehensive kind of a system that carries that,
    that in a group of counties you might have one essential air
    service that allows--you might take 10,000 square miles or
    something like that in a group, and think about it in a block.
        There are places where that could be done in those big
    blocks of areas. There are a couple of huge Indian reservations
    out in--connected Indian reservations which have the worst
    unemployment, the worst kinds of opportunities, the worst
    house, the worst medical services, and anything you can think
    of, were to try to do something that would be beneficial for
    the whole of them over time; that you could get into the bus
    issues, the medical issues, and the service kinds of thing all
    in some kind of relationship.
        I would like to see if there is not some way that the kinds
    of things we have been talking about this morning could educate
    us and allow us to get a more comprehensive look at rural
    development in general, not just transportation, but to
    integrate these other issues. The transportation, obviously you
    can deal with it. If you have others, cover it quick; thoughts
    from anyone of you.
        Ms. Malarkey Black. I think from the airline perspective
    what you are talking about is regionalization. We have heard
    this before. The GAO has come up and said things like you ought
    to just consolidate a couple of EAS airports and it would
    increase your traffic and so on. Two observations.
        The first is that we would just ask consideration that the
    airlines have made investments in these airports where they are
    currently serving, and the service is incumbent upon connecting
    to a hub. So it does get to be logistically challenging to try
    and put all----
        Mr. Olver. We have computers these days. We can challenge--
    we can do planning. We can figure out--I have not been able to
    figure out how you get water transportation in most of the high
    plains regions. You need a navigable river unless you are going
    to let your Corps of Engineers build to Oklahoma City with a
    navigable waterway or something again.
        Ms. Malarkey Black. That is certainly frightening. The
    other side of it is that there are some members of Congress,
    senators, who might have a primary opposition on that.
        Mr. Olver. Really?
        Ms. Malarkey Black. Yes.
        Mr. Olver. Well, that is okay. I would not be surprised.
    Judge Carter is leaving. He is. [Laughter.]
        Mr. Olver. Quick comment, quick comment so I can get onto
    the other two?
        Mr. Marsico. I would like to make a quick comment. One,
    there are such efforts going on across the country now. There
    is a very good one which we participated in last year that is
    called the Yellowstone Business Partnership where they bring
    local elected officials, community leaders, economic
    development people together to talk about trying to prioritize
    areas within their region to develop an economic strategy that
    would address some of the issues that you do, and I think I can
    find you a list later and send you some, but I think they are
    worthy of taking a look at.
        Mr. Olver. If we could get groups like this to talk with
    them and raise all the issues that are of great importance to a
    group that was intending to do something like that, or willing
    to, that might work.
        Do either of you need to say anything more?
        Mr. Schwarz. Mr. Chairman, I would just say when do we
    begin.
        Mr. Olver. Okay, that is a good answer.
        Mr. Fruin. Regionalization brings efficiencies in many of
    these areas, and how do we do it. That is what we have got to
    do.
        Mr. Olver. Okay. All right. Mr. Latham. I will not speak
    again.
        Mr. Latham. I am enjoying it. It is wonderful. [Laughter.]
        You mentioned Iowa's transportation system or bus system,
    that has been one of the key elements. In Iowa, we do not talk
    about this community as a bus system or whatever, but it is
    usually multi-county system orientation in Iowa, and that is
    what we have really worked on as far as economic development.
        The rural communities have finally figured out that they
    cannot fight the one next to them, and have them both succeed,
    so what they are trying to do is figure out each of their own
    roles and to work together on a regional basis, and that really
    has been much more successful. But that is I think a model we
    have all got to look at, but I do think there are some
    different issues as far as the air service.
        Dr. Fruin, in the local governments, you know, in rural
    areas, we are facing a lot of things such as out-migration
    obviously, population, lower education levels oftentimes as far
    as independent colleges, and immigration issues, which are
    manifest. Postville, Iowa is in my district: It has obviously
    gotten a lot of publicity as has the consolidation of the
    farms.
        How do the communities and counties on a regional basis
    make good economic decisions as far as transportation or
    infrastructure investments with this kind of changing? Is there
    a formula? Is there some way for them to really know what they
    should be doing and what is a waste of money?
        Mr. Fruin. I have not seen any formula.
        Mr. Latham. Is there best practices or best ideas?
        Mr. Fruin. Well, basically, I think one has to study the
    transportation patterns and put the resources into improving
    the infrastructure where it is used. We cannot afford for a
    road every place. We have to say, okay, where are our
    population centers, and what are our connectors. Connectivity
    is the key, not a perfect uniform system all over, I think
    together with good infrastructure, and let the rest of it go to
    pot. [Laughter.]
        Mr. LaTourette. Would that be all of Iowa? [Laughter.]
        Mr. Fruin. I do not want to answer that.
        Mr. Latham. Closing the roads sounds like a really great
    idea unless you live in the area. [Laughter.]
        Mr. Fruin. But, Congressman, some of those roads nobody
    lives on. Some of them are not even----
        Mr. Latham. What they are called is dead roads.
        Mr. Fruin. Yes.
        Mr. Latham. Certainly. They are not maintained as it is,
    there is very little cost.
        Mr. Fruin. Well, when the bridge goes out, that's 30 to 100
    thousand dollars.
        Mr. Latham. But if it is low, we call it dead roads. They
    do not fix it. Maybe you do in----
        [Laughter.]
        Mr. Fruin. I am afraid we sometimes do. [Laughter.]
        Mr. Latham. Well, you have Mr. Oberstar. [Laughter.]
        I am going to quit there unless anyone has any comments or
    if you have the golden plan for the communities.
        Okay, thank you, Mr. Chairman.
        Mr. Olver. Mr. LaTourette.
        Mr. LaTourette. Thank you, Mr. Chairman. The Ranking Member
    chastised me for not knowing about the light system, so maybe
    at the next hearing you could turn it just a little bit and I
    can----
        Mr. Latham. We will put a light in front of you.
        Mr. LaTourette. Thank you. I appreciate that very much.
        Just some clean up from the last question. Mr. Schwarz, I
    heard you say that SAFETEA-LU perhaps has fixed the 5311
    governor certification problem from your perspective, at least
    the tools are in place and now it is a matter of enforcement.
    Is that right?
        Mr. Schwarz. Yes, sir. That is absolutely correct.
        Mr. LaTourette. And then, I had a lot of my transit guys in
    last week, and they indicated that, and I understand, Mr.
    Marsico, that 15 percent is too small in the smallest program,
    but are you experiencing the same difficulties that are
    relative to capital versus operational ability to allocate
    funds?
        Mr. Schwarz. Absolutely, and quite frankly, originally in
    the stimulus discussion there was some possibility of having
    some operating cost and it began as a process about a year ago
    setting aside 1.6 billion in the TNI committee at least to try
    to offset the energy cost that local transit systems
    experienced during the high energy period, which really wiped
    out a great deal of the reserves for operating and forced
    people to make these very severe decisions in raising the fares
    that are very much a penalty for a lot of low-income workers
    who left the transit in high numbers.
        Yes, it is a big issue. We could not get it into the
    stimulus bill. Our recommendations for safety is that the
    current system says that if you are in a community of 199,999,
    you can use your federal funds for transit, for operating if
    you need to, or for capital. But if you have 200,001 people,
    you are automatically excluded.
        Mr. LaTourette. Right.
        Mr. Marsico. And when local transit agencies had such a
    write-off on the cost of energy, it seems crazy to us to pursue
    that, and one last thing is we think that people can decide
    that at the local level, and, you know, there are some
    proposals that, well, maybe 10 percent could go for this, 10
    percent for maintenance, 5 percent for this. We do not believe
    that we need any more boutique programs. We think people ought
    to be able to decide that based on their needs. But yes, that
    is a huge issue, and quite frankly, we have these significant
    service cuts that are going on now. It is only going to
    increase because local and state governments that fund the
    operating costs of transit are going to be the last to recover.
        Mr. LaTourette. Right. And I am a big fan of flexibility
    and I hope that TNI committee gives additional flexibility on
    operations versus capital because the observation was we can
    buy buses, but we have no one to drive them.
        Mr. Schwarz. That is right.
        Mr. LaTourette. So that is your experience as well on the
    rurals?
        Mr. Marsico. At all levels.
        Mr. LaTourette. Okay. Then last, Dr. Fruin, I will come
    back to you. I mean, as we talk about rail and everything else.
    One of the problems that some of us have in this country with
    the whole transportation funding mechanism, regardless of
    whether it is tied to vehicle miles traveled, is that we
    continue to have this disparity between donor and donee states,
    and I think that, again, back to the rail discussion: If we are
    going to talk about fixing things, I think that if we are going
    to fix the 1956 model based on gasoline excise tax, we should
    perhaps not be rewarding states like Massachusetts that have a
    tremendous amount of interstate highway system, and so they get
    a greater percentage of the funds, and it is not really based
    on what they pay into the system.
        How do you feel about that?
        Mr. Fruin. We have a national highway system.
        Mr. LaTourette. Right.
        Mr. Fruin. And we should collect the funds for the entire
    system and allocate them to where they are needed.
        Mr. LaTourette. Right.
        Mr. Fruin. And I will not make any judgment about
    Massachusetts. [Laughter.]
        Mr. LaTourette. Fine. You are a much smarter guy than I am.
        Mr. Fruin. We need a national highway system.
        Mr. LaTourette. Right.
        Mr. Fruin. And we do have that donor/donee problem.
        Mr. LaTourette. Right.
        Mr. Fruin. And we have got to overcome it, and have the
    interconnection and all that stuff that goes into it.
        Mr. LaTourette. Thank you. Thanks, Mr. Chair.
        Mr. Olver. Well, thank you. I am going to close. Thank you
    all very, very much for the comments. You may want to
    communicate with us and where we need corrections, correcting
    or whatever it happens to be, or education.
        To Mr. Marsico, I trust you have about a dozen or so copies
    of your glossy----
        Mr. Marsico. Yes, I have.
        Mr. Olver [continuing]. So that at least each of our
    members can have a copy of your glossy. If you have other such
    things of that nature, that would be great.
        Mr. Marsico. Okay.
        Mr. Olver. And with that I very much appreciate your
    comments this morning. I really intended to explore that last
    one that I was starting on a little more thoroughly, but we
    will not do it now. So thank you very much, and with that the
    hearing is over.
                                              Wednesday, April 1, 2009.

      THE FUTURE OF HIGH SPEED RAIL, INTERCITY PASSENGER RAIL, AND AMTRAK

                                   WITNESSES

    SUSAN FLEMING, DIRECTOR, PHYSICAL INFRASTRUCTURE ISSUES, U.S.
        GOVERNMENT ACCOUNTABILITY OFFICE
    JOLENE M. MOLITORIS, DIRECTOR, OHIO DEPARTMENT OF TRANSPORTATION
    MATT ROSE, CHAIRMAN, PRESIDENT, AND CEO, BURLINGTON NORTHERN SANTA FE
        RAILWAY
    JOSEPH BOARDMAN, PRESIDENT AND CEO, AMTRAK

                       Opening Remarks of Chairman Olver

        Mr. Olver. The subcommittee will come to order.
        My apologies, but sometimes those bells go off at odd
    times, and we have left all of you sitting like starlings on a
    line here for quite a period of time. But I think we will
    probably not be disturbed now, so we can go on to 5 o'clock, or
    later.
        Today's hearing is about the future of high speed rail,
    intercity passenger rail, and Amtrak. On March 10th this year,
    our Nation lost Robert Nelson, who headed the Northeast
    Corridor Project for President Kennedy and the Office of High
    Speed Ground Transportation for President Johnson. Dr. Nelson
    was the father of the Metroliner in the Northeast Corridor,
    precursor to Amtrak's Acela service, and accomplished much for
    high speed rail. Yet over 40 years later we are still trying to
    accomplish the greater rail speeds that Dr. Nelson and his
    researchers envisioned for the United States.
        Travelers on intercity passenger rails in industrialized
    parts of Europe or Asia experience high speed trains on
    dedicated track with top speeds of nearly 200 miles per hour.
    As the GAO found in their most recent report on high speed
    rail, about which we will be hearing shortly, the national
    governments in those countries funded the majority of the
    capital costs for these high speed lines.
        Within the current budgetary climate, the U.S. Government
    is unlikely to pursue the type of funding arrangement and cover
    the capital costs for the types of dedicated intercity high
    speed rail systems found in the rest of the world.
        Yet, with a modest capital investment, we could implement
    higher speed rail in a number of intercity corridors. The
    Passenger Rail Working Group which was part of the National
    Surface Transportation and Revenue Study Commission issued a
    report that showed a $7 billion investment per year over 8
    years would maintain and upgrade the existing Amtrak system,
    continue the development of planned new rail corridors, and
    create new routes to link major urban areas.
        And now, for the first time since Dr. Nelson established
    the Metroliner service in the Johnson administration, the
    United States under the leadership of President Obama is again
    recognizing the economic and environmental benefits of a robust
    intercity rail program.
        The recent recovery law contained $8 billion for the
    development of high speed and intercity rail in the United
    States. The President will also include an additional $1
    billion for this initiative in the fiscal year 2010 budget
    request with a total 5-year commitment of $5 billion for high
    speed rail. These are modest investments that will help reduce
    train travel time between major metropolitan areas, but even
    with these commitments, challenges will remain.
        Building true high speed rail with dedicated lines would
    require billions more, and increasing speed on existing lines
    must be reconciled with freight rail usage and ownership in
    many cases.
        In the case of the Northeast Corridor, where Amtrak owns
    the majority of the line, funding may not be available directly
    to Amtrak because the Northeast Corridor is not technically a
    designated high speed rail corridor, though it is the only
    corridor which operates at commonly accepted high speeds. This
    is particularly troublesome, as a number of needed capital
    improvements would reduce travel time in what is our most
    heavily traveled corridor.
        We have a distinguished panel today to help us understand
    these challenges. Susan Fleming is the Director of Physical
    Infrastructure Issues at the GAO, the Government Accountability
    Office, and was in charge of the GAO's new report on high speed
    passenger rail.
        Jolene Molitoris is the director of the Ohio Department of
    Transportation and former Federal Rail Administrator under
    President Clinton, and has some big projects in Ohio to tell us
    about.
        Matt Rose is the chairman, president and CEO of Burlington
    Northern Santa Fe Railway and former member of the National
    Surface Transportation and Revenue Study Commission.
        And finally, Joe Boardman is the President and CEO of
    Amtrak and, before joining Amtrak, was the Federal Rail
    Administrator under President Bush.
        With that, I would like to recognize our ranking member,
    Tom Latham, for any comments that he would like to make.

                    Opening Remarks of Ranking Member Latham

        Mr. Latham. Thank you, Mr. Chairman.
        And I, too, apologize for being late because of the votes
    we had on the floor, but welcome the panel.
        Mr. Boardman, I wasn't a member of the subcommittee last
    year, but I guess you were testifying on behalf of the budget
    for Amtrak, and this year, you are Amtrak. So it is kind of a
    different position to be in.
        But the topic of the high speed intercity rail really got a
    lot more interesting this last year with the final stimulus
    agreement that came down with the never-seen-before $8 billion
    in it. Add to that the fact that we as a Nation have not
    entirely come up with a plan or program for rail while everyone
    was speculating as to who got the $8 billion in the bill--is it
    L.A. To Las Vegas or the Northeast Corridor or the Midwest--a
    lot of questions out there.
        I think the assumption that this $8 billion had to be some
    sort of an earmark is a testament to how much work needs to be
    done in the area of planning and vetting and negotiating and
    implementing a passenger rail investment policy. While the $8
    billion is a lot of money, when we look around at a list of
    hopefuls out there, it is plain to see that it is not a lot of
    money and is not going to go very far with high speed rail
    today.
        I also want to say that I am supportive of passenger rail,
    and I think there are a lot of areas of the country where it is
    the best solution. I actually wish Amtrak would go through some
    of the more populated areas in Iowa rather than skirt through
    all the rural areas. I think we could have a lot better
    ridership.
        But I do think that there are a number of communities that
    really dream of having rail today, but the local investment
    climate probably just isn't there, and it is going to be very
    difficult to get it in place.
        But I look forward to the testimony and the questions.
        And I thank you, Mr. Chairman.
        Mr. Olver. Thank you.
        We will now turn to the panel. Each of you has written
    testimony, which will be included in its entirety in the
    record. If you can summarize your testimony within 5 or 6
    minutes each, that would be fine. I would appreciate that.
        And we will start with Ms. Fleming, with your statement.

                      Opening Remarks of Ms. Susan Fleming

        Ms. Fleming. Thank you, Mr. Chairman, Ranking Member
    Latham, members of the subcommittee.
        Thank you for the opportunity to discuss the economic
    viability of high speed rail in the United States.
        As we have all experienced firsthand, existing capacity
    limitations on the highways and in air travel have caused and
    will continue to cause severe congestion and delay. Adding
    physical capacity in these modes has proven difficult, and the
    dependence of these modes on fossil fuels raises significant
    environmental concerns.
        This has led to new interest in examining how high speed
    rail systems can fit into the national transportation system.
    My testimony today has three parts. I will discuss corridor and
    service characteristics that suggest potential for a viable
    high speed rail system; key challenges in developing high speed
    rail; and actions the Federal Government must take to maximize
    the investment of stimulus and other Federal funding in high
    speed rail.
        First, high speed rail tends to attract riders in corridors
    of up to 500 miles in length, with high population and density
    along the corridor, and heavy travel demand and strained
    capacity on existing transportation modes. In addition,
    corridors where right-of-way is available for rail purposes and
    that are relatively flat and straight can help lower the
    substantial upfront construction costs.
        Characteristics of the proposed high speed rail service are
    also important as high speed rail attracts riders where it
    compares favorably to travel alternatives with regard to door-
    to-door trip times, frequency of service, reliability, safety
    and price.
        Project sponsors typically must trade off some level of
    ridership to reduce the substantial costs. For example, most
    domestic projects under consideration are incremental projects
    on tracks shared with existing passenger and freight rail, a
    choice that limits the travel time, competitiveness, and
    reliability attainable on more expensive dedicated track or
    guideway.
        Moving on to my second point, I would like to highlight two
    of the key challenges to the development of high speed rail.
    The biggest challenge cited by all of the project sponsors and
    stakeholders we interviewed both here and abroad is securing
    the upfront investment to fund the substantial construction
    costs. High speed rail systems, whether they constitute
    incremental improvements or new dedicated tracks, are
    expensive.
        In our study, incremental projects ranged from $4 million
    to $11 million per mile, while projects on dedicated track
    ranged from $22 million to over $130 million per mile. While
    the $8 billion in stimulus funding is a major down payment for
    high speed rail, given the high costs of the proposed projects,
    it may not stretch very far.
        Second, while corridors may exhibit characteristics of
    economic viability, decision makers face challenges in
    obtaining accurate forecasts of ridership, costs, and public
    benefits. Uncertainties regarding these forecasts can undermine
    confidence in proposed projects' claimed benefits, erode public
    and political support, and exacerbate challenges in securing
    public and private financing.
        Finally, we believe that the Federal Government must
    develop a strategic vision and plan for how high speed rail
    fits into the national transportation system. This step is
    critical in order to establish a clear Federal role, clearly
    identify expected outcomes, and establish performance and
    accountability measures.
        The Federal Government also must develop incentives,
    methods, and analytical tools to ensure that credible and
    reliable ridership, costs, and public benefits are developed.
        In conclusion, it is important to recognize that high speed
    rail does not offer a quick or simple solution to relieving
    congestion. High speed rail projects are costly, risky, and
    take years to develop and build.
        Given the rare opportunity for the Nation to invest
    substantial sums in these projects, it is imperative that we
    establish a framework to invest this money wisely and ensure
    that the Nation reaps the benefits of a more integrated and
    performance-oriented transportation system.
        Mr. Chairman, that concludes my statement. I would be
    pleased to answer any questions you or any members of the
    subcommittee might have.
        [The prepared statement and biography of Susan Fleming
    follows:]

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        Mr. Olver. Thank you, Ms. Fleming.
        Ms. Molitoris.

                    Opening Remarks of Ms. Jolene Molitoris

        Ms. Molitoris. I will try to follow that 4.5-minute lead.
        Thank you, Mr. Chairman, Ranking Member Latham.
        And if you permit me to recognize Congressman Kaptur and
    Congressman LaTourette, my colleagues and advisors from your
    committee to Ohio. They have been so very helpful to us.
        I want to thank you so much for inviting me here today, and
    to describe Ohio's vision about passenger rail in Ohio.
        And it might be noted that, as we speak, Mr. Chairman, the
    Ohio General Assembly is voting on Ohio's transportation
    budget. And for the first time, it includes a statement of
    support and encouragement on passenger rail in Ohio.
        And during the last few weeks, during the discussion and
    sometimes debate on this issue, it has been remarkable the kind
    of outpouring that has come from every part of Ohio, from
    university students and developers and contractors and
    environmentalists and city leaders, mayors and so on. It is
    remarkable, but yet it is understandable because the result,
    the return on investment for investing in passenger rail and
    rail of all kinds, is definable and important. And it would be
    interesting if, perhaps later, with regard to the words
    ``expensive'' and ``investment climate,'' it might be a topic
    that could be discussed.
        The Governor of Ohio, Ted Strickland, included in his State
    of the State the importance of beginning our process with the
    beginning of service on the 3-C Corridor, as it is called,
    going through the heart of our major population centers,
    touching more than 60 percent of our population, and reaching
    almost 6 million of our citizens.
        At the same time, we are doing what we call parallel
    tracks, if you talk in rail lingo, and we are pursuing the
    institution of service, which has not been on that corridor
    since 1971.
        And we are working hand in hand with critical partners, and
    that is the freight railroads and Amtrak. These are critical
    partners to be successful in establishing the first step
    towards high speed rail.
        It is also important to note that in the 14 States where
    passenger rail is sponsored by State investment, none of the
    higher speed services ever started at 110 or 120. They started
    at the 79-mile-an-hour speed.
        So the 3-C Corridor is one track, and the Ohio Hub Study is
    the other track. That is the Regional High Speed Plan, which
    was passed by the legislature in 2007. And we are using
    stimulus money to do the beginning engineering work on that
    multicorridor study, and it will include corridors like Toledo
    to Pittsburgh, Toledo to Columbus, and Cleveland to Cincinnati.
        I want to mention the freight partnership, because I think
    it is very important. And I am not mentioning it just because
    Matt Rose is sitting next to me. The fact is, Matt Rose doesn't
    come to Ohio, unfortunately, but we have two remarkable major
    Class I railroads, CSX and Norfolk Southern. Our Governor has
    spoken to the CEOs of both railroads, and the lead passenger
    people from each railroad have begun to come several times
    already to Ohio because that partnership is crucial. And we
    have made a commitment that any investment in passenger will be
    a win-win for both passenger and freight.
        Let me just mention that our stimulus funds are multimodal
    in investment, and we have invested in freights there. For
    example, we have approximately $119.8 million invested in rail
    projects and intermodal projects, and our State stimulus has
    $100 million in logistics investment because we recognize the
    importance of freight to our economy and that of our country.
        In terms of my closing comments, Mr. Chairman, I would like
    to encourage a couple of things. First of all, this country
    needs a transportation plan. We are coming up on our
    authorization, and we still, after almost 20 years of talking
    about one Transportation Department, still have silos that
    separate us. And until we understand how each investment can
    leverage the benefit for not only the initial investment but
    the other transportation modes, we can't get the best bang for
    our buck.
        That is why, in the Department of Transportation in Ohio,
    we are in the midst now of what we call a transportation
    futures plan. And even though departments traditionally around
    the country spend perhaps 80 percent of the dollars on highways
    and bridges--because, for example, in Ohio State transportation
    dollars, gas tax money can only be used for that--we must be
    able to leverage those other dollars and integrate our systems
    to get the best return on investment. And that is what we are
    all about at the department.
        We believe that it is crucially important that passenger
    service and high speed rail become a recognized investment, a
    recognized part of our system. And we are excited about the
    fact that, bipartisanly, in Ohio, that is the statement that is
    being made.
        Finally, I would like to recommend that the $8 billion have
    some recognition of the importance of service that is
    beginning, like the 3-C Corridor would be, or maybe
    reintroduced could be said, since it has not been there since
    1971, because although there are 14 other States with wonderful
    opportunities to go faster, startup service in Ohio and perhaps
    elsewhere can really affect the map. And if you look at map of
    this country, there is a void right in the middle, and it is
    the State of Ohio.
        So we hope that we can present a compelling message to our
    Secretary. We thank you very much for bringing forward this
    opportunity to discuss this critical issue. And we believe
    that, with the leadership of the President and this Congress,
    that high speed rail and rail passenger service will come to
    the map in the center of the State, and Ohio will be part of
    the connected system in our country.
        Thank you very much, Mr. Chairman.
        [The information follows:]

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        Mr. Olver. I can't help but say, having come from the
    eastern part of the country and been a mountain climber, I
    always thought the void was everywhere from the Appalachians to
    the Rockies, and you defined it as Ohio.
        Ms. Molitoris. Only for rail passenger service.
        Thank you.
        Mr. Olver. Mr. Rose.

                        Opening Remarks of Mr. Matt Rose

        Mr. Rose. Good afternoon, Chairman Olver, Ranking Member
    Latham.
        As a freight railroad CEO and member of the National
    Transportation Service Revenue Study Commission and an early
    supporter of the One Rail Coalition, I have had a lot of time
    to think about what the national vision for passenger rail
    ought to be.
        In my testimony today, I would like to outline the vision
    that the commission embraced for intercity passenger rail and
    also give you a technical view of high speed rail from the
    perspective of a freight railroad.
        In sum, the commission's model for intercity passenger rail
    in America is to develop several regional corridors for high
    speed rail--110 miles per hour and above--where feasible and
    economically viable, coupled with a more reliable 79-to-90-
    miles-an-hour passenger rail service in other key corridors
    where it will continue to make sense from a density,
    utilization, and cost perspective. We believe this vision could
    generate the public support and the political will necessary
    for a successful passenger rail system in this country.
        Hopefully the Federal Government, in partnership with the
    States, can operationalize this vision, given the strong
    support for intercity passenger rail signaled by Congress and
    the administration.
        Since you have my written testimony, let me state my
    conclusions and recommendations to you and then discuss some of
    the technical elements of passenger rail that I think are
    relevant to them.
        First, develop a realistic national vision for passenger
    service that works for all stakeholders, including freight
    railroads and the Nation's shippers, and fully fund it. The
    commission model I just mentioned is a good starting point.
        Second, in developing passenger rail policy, I urge you to
    observe some of the basic principles of fairness for passenger
    use of freight right-of-way and be realistic about the kind of
    passenger service that can be achieved given the limitation of
    joint use. Generally those limitations are based on the laws of
    physics and the consequences that flow from them.
        During the commission's deliberations, the Wisconsin DOT
    Secretary and chairman of the States for Passenger Rail, Frank
    Busalacchi, and the late great Paul Weyrich and I spent a lot
    of time debating the issue of freight and passenger rail
    interface. It is a worthy exercise because we came to a good
    understanding of these issues which formed the basis of trust
    for the development of a One Rail Coalition, a group consisting
    of passenger, freight, and environmental interests which
    advocates for the public benefits of both freight and passenger
    operations.
        We agreed on certain key principles, the same ones that
    have assisted BNSF and many other communities on our network,
    including Seattle, Chicago, Albuquerque, St. Paul, Minneapolis,
    and L.A., which realized a partnership that achieves
    outstanding commuter rail service without degrading the present
    or future freight service. These communities rightly recognize
    their stake in both passenger and freight rail service.
        You have outlined in more detail in my testimony, but in
    sum, they are to negotiate with the freight railroads at an
    arm's length, protect the Nation's present and future freight
    rail capacity, ensuring that the liability indemnification is
    comprehensively addressed.
        Speaking as a freight railroad CEO, let me turn to the
    issue of passenger service operations. I want to make three
    points about train speeds. First, increasing reliability,
    example on-time performance of current 79-miles-per-hour Amtrak
    service, is often the best use of public funds and enough to
    meet market demand in certain corridors.
        Second, increasing Amtrak speeds from 79 to 90 miles per
    hour is possible in some corridors, although not all because it
    can be costly and complicated in joint freight-passenger train
    environments. Track would need to be upgraded from Class IV to
    Class V, which would lead to a step level increase in
    maintenance with related outages needed for work. But
    increasing passenger train speeds to 90 miles per hour can be
    done in some freight tracks.
        Third, sustained train speeds of 110 miles per hour and
    above require separating passenger from freight operations.
    Further, I believe that these high speed passenger rail lines
    should be grade separated from the highway interfaces as well.
        At these higher speeds, freight and passenger rails don't
    mix for the following reasons: First, maintaining track
    surfaces to very high passenger rail engineering standards,
    given the damage done by heavy freight trains; second, managing
    the traffic flow of superfast trains overtaking slower trains;
    and finally, engineering the different curve elevation
    requirements at 110 miles per hour.
        Where it is possible for the public to purchase freight
    railroad right-of-way, we must assure sufficient capacity
    remains in the corridor to operate safely and protect the
    ability to serve current and future rail shippers.
        I would like now to address an issue important that has
    become very important in the discussion of passenger and
    freight interface, Positive Train Control, or otherwise known
    as PTC. Congress has placed a multibillion dollar mandate to
    install PTC on what effectively could be 90 percent of the
    freight railroad network. The unprecedented costs, which we
    estimate could be in excess of $1 billion when fully
    implemented just on BNSF in 2015, is driven by the requirements
    in the mandate that are mostly outside of our control, namely
    passenger trains where passenger trains utilize the network and
    where, pursuant to our statutory common carrier obligation, we
    haul toxic chemicals.
        BNSF began developing this train control technology in
    1984, which led us to create what we now call Electronic Train
    Management, or ETMS. It was never intended to be implemented on
    the scale envisioned by the 2015 mandate included in the Rail
    Safety Bill passed by Congress last year.
        It represents a tremendous financial burden to the freight
    railroads, but also on Amtrak and commuters on jointly used
    lines, and the costs will have to be fairly allocated between
    all participating parties. If you have not heard about this
    from these constituents, you soon will.
        In response, you should consider a variety of funding
    sources to assist the rail sector in meeting the PTC mandate. I
    urge you to fully fund the PTC grant program created in the
    Rail Safety Bill and use intercity passenger and high rail
    speed programs funded in the American Recovery and Reinvestment
    Act to fund PTC, since these kinds of programs have previously
    been paid for, for safety technology investments.
        In addition, Congress has made train control tracking and
    communications systems eligible for Department of Homeland
    Security rail security grants, given the mandate's inclusion of
    rail lines carrying these highly hazardous materials.
        Finally, the freight railroads continue to support a rail
    infrastructure tax credit which makes PTC eligible for the 25
    percent tax credit for the rail infrastructure expansion
    activities.
        I look forward to your questions.
        [The information follows:]

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        Mr. Olver. Thank you, Mr. Rose.
        Mr. Boardman.

                      Opening Remarks of Mr. Joe Boardman

        Mr. Boardman. Mr. Chairman, Mr. Latham. This morning, I
    thought the best place to start was to talk about where we are
    today in terms of higher speed transportation or higher speed
    rail.
        First of all, we are America's intercity passenger
    railroad. We operate in 46 states, 310 daily trains, and we
    serve 515 stations.
        Our central operation, though, for high speed is on the
    Northeast Corridor. Even though we do many of the shorter
    corridors and some of them at a higher speed, the real high
    speed for us is on the Northeast Corridor. And I think what I
    picked up from your original comments was that this was about
    an incremental process. And as I listened to the other three
    presenters here today, GAO is really talking about this as a
    very high speed or a high speed rail at 150 miles an hour. What
    Matt is talking about is a rail at an incremental increase to
    90 or to 110 miles per hour. And then beyond that, you have
    significant costs. And what Jolene was really talking about is
    there are lots of things we can leverage to get to 110 miles
    per hour.
        So, to me, there is a deal here today to be talked about.
    And that deal is what you talked about up front, and that is
    that what we need most to do with the $8 billion that is out
    there today is take that incremental step to 110 miles per hour
    for high speed rail. It is the safer way to go. It is Positive
    Train Control as needed. We don't need to change or close grade
    crossings at 110 miles per hour. We need to make changes in the
    grade crossings and install four quadrant gates, perhaps.
        All railroads are resistant to increasing beyond the 79
    miles per hour, whether it is 90 or to 110. But there is no
    requirement in that range of speeds to make such changes. And
    we are now in a situation where we have to do Positive Train
    Control on all intercity passenger routes and HAZMAT as well.
        So I think there is an opportunity here to see this
    incremental improvement, which I think is what is most
    important for America for energy self-sufficiency, for the
    environment, and for our future mobility.
        If you look at slide 3, and you can look very quickly to
    see what happens when you get to high speeds, especially beyond
    110 miles per hour, because what you see in the south end of
    the service that we do Acela on, which is generally speaking
    New York City to Washington, today we have 63 percent of the
    combined air-rail ridership.
        On the north end, you can also see, which is closer to your
    heart, Mr. Chairman, that we have picked up percentage
    increases every single year, 2006, 2007, and 2008; up now to 49
    percent going by rail as opposed to air.
        And slide 4 just gives us a quick history of where this
    really was all pulled together from, from 1935 to 1971, but it
    wasn't until the DOT invested large sums of money that we could
    get the service at 125 miles per hour and extend the
    electrification on the north end of that line and raise our
    speeds really to 135 to 150 miles per hour.
        And in the next slide, it really talks about, what did we
    do to get that done? Where were we pre-1976, and now where are
    we today? Where we had signal and train control, we now have
    universal Automatic Train Stop, and ACSES is now available on
    the Northeast Corridor. ACSES is the Positive Train Control.
    That is operating today, and it is the only place that positive
    train control is operating today, with the exception, Matt, of
    your ETMS systems that you are testing out in the West.
        So when you look at our interlockings, our grade crossings
    or electrified segments, we are now an electrified railroad on
    the whole corridor. That is where we need to be once we are
    above 110 miles per hour. We see that as something that we can
    continue to improve.
        In slide 6, it gives us--and you and I talked about this a
    little bit--an idea or snapshot of, where are the pinch points,
    the difficulties for us on the Northeast Corridor? And I just
    picked out one particular section from Newark into New York
    City, and can you see we have a 90-mph territory where we have
    to slow down to 70 mph for Portal Bridge, which is one of our
    pinch points, and a major investment is needed there. The back
    up to 90, down to 75 as we go into the approaches to the
    tunnel, and then 60 miles per hour as we go into the tunnel
    itself. So we see lots of bottlenecks on the south end of this
    operation.
        When you get to the north end, the first thing--and I think
    we talked about this privately as well--the first thing we
    could do is to look at the fact that Amtrak doesn't control the
    whole line. There are about 60 miles that Connecticut and New
    York actually operate. And in many cases, we are down to as low
    as 30 to 45 miles per hour. And it is really a section that
    could change immediately if Amtrak controlled and operated that
    particular section of the railroad. We could reduce time almost
    immediately with no investment.
        When you look at how would we make investments, we talked
    about a couple different ways to do this. Right now we operate
    between New York City and Washington in 2 hours and 45, or 2
    hours and 50 minutes. If we were going to take 15 minutes out
    of that time, the cost today is a little over a half a billion
    dollars, $625 million. And the breakdown for that, in terms of
    what we would have to do, is up on the slide.
        If you take the next 15 minutes to get down to 2 hours and
    15 minutes, the total cost is at $5 billion because every time
    you add to the reduction in time for us, we have huge costs.
    And I identify some of those on slide 9. For example, the B&P
    tunnel, the Baltimore tunnel built right after the Civil War,
    to really make the changes we would need to make there and you
    could probably save 8 to 10 minutes, you are talking about over
    a billion dollars to rebuild that tunnel.
        We have other bottlenecks. I talked about the Portal
    Bridge. We are talking about $1.5 billion to replace the Portal
    Bridge. As some of the other folks here have said here today,
    for us to find the dollars to make the real changes that are
    out there today, we have a backlog of projects that need to be
    done to stop those kinds of bottlenecks.
        But there is hope, and there is an opportunity, because
    when you look at what was done for the Keystone Corridor, for
    example, one of the only corridors that is still growing in
    ridership at a double digit, 14 percent a year, we were able to
    cost-share with the State of Pennsylvania for $145 million, and
    Amtrak upgraded that particular line. And that service now has
    allowed us to cut 15 minutes off the Harrisburg-to-Philadelphia
    trip and about 30 minutes off the Harrisburg-to-New-York-City
    trip. We replaced nine diesel-powered locomotives and round
    trips to 12 electrified round trips, and ridership has grown as
    much as 20 percent and nearly 20 percent again in 2008. And we
    are still seeing it grow at 14 percent, even in the environment
    we are in today.
        So we know making these investments in the state of good
    repair and increasing the speeds, and I think when you really
    look at, again, that incremental speed, when you look at really
    what does 110 miles per hour do? It uses that existing freight
    railroad right away. We need to make some changes in capacity,
    but it diverts passengers mainly from their autos, so we are
    trip-time competitive with autos to a large extent over a 200-
    to-250-mile range.
        It doesn't attract quite so many air passengers, except in
    the case of Harrisburg because they stopped air service. So it
    definitely does in that particular case. It produces congestion
    relief, especially in the urbanized areas. It requires Positive
    Train Control, but we require that now all over the county, or
    equivalent signaling and control systems. And it allows highway
    and rail grade crossings to remain in place, but it upgrades
    their safety, and it is one of the things again that Jolene
    talked about the section 130 program and the highway program,
    the surface transportation reauthorization. This is where
    highways can help rail and reduce congestion on the highways by
    making rail safer and allowing us to run faster. And it uses
    conventional rolling rail stock.
        On slide 11, rail is an inherently efficient smaller
    footprint, greener. It has lower fuel costs overall, and it is
    a clean operation, whether you look at it for the Hiawatha
    service, and I think that is one where Matt talked about, in
    some cases, you don't need to increase the speed. And Hiawatha
    would be one of them, and Frank Busalacchi would tell you that
    they can make the increases in passenger ridership at 79 mph
    between Milwaukee and Chicago. And the San Joaquin in
    California is a great model for communities and States, like
    New York State, that need to increase the kinds of connectivity
    that is necessary to make rail passenger service work. And then
    we have a Southwest Chief that really talks about the fact that
    the real benefit for Amtrak is the thread that it provides on
    surface transportation coast to coast, border to border, for
    connectivity for anybody on the surface transportation mode in
    the United States.
        Slide 12 is the picture that GAO painted, and that is that
    we have, and I think Matt painted this to some extent, this is
    the trillions model. This is the model of getting to the very
    high speed rail. This particular rail is what we look at for
    Europe and other kinds of locations. Where there is a need to
    do that, and an opportunity to do that, and you have the
    investment potential for a straight line rail in an area that
    you don't have to--and I think Susan said it right--where it is
    flat and where you can really build this at a reasonable cost,
    there are places for that kind of rail in this country. It is
    not on the Northeast Corridor, and it is not the incremental
    process that we can see for the future, because what we really
    have and we are very good at is adaptive reuse.
        This bridge on slide 13 was built by Whistler's father, and
    I myself looked up George Washington Whistler--I guess his wife
    was Whistler's mother in the famous painting--and this
    particular bridge in the north end of our service was built in
    1835. It was double-tracked in 1860. It was widened with a
    cantilever in 1910, and electric catenary in 1999, and Acela
    operated on it in the year 2000. It is a 125-mile-per-hour
    bridge in a 150-mile-per-hour railroad, but it is adaptive
    reuse. And that is what we are dealing with so much of the
    investment out there today.
        But aging really is an irreversible process. And I
    particularly liked this AEM-7 locomotive on slide 14 since it
    has 911 on the front of it. This particular slide was meant to
    identify equipment types, and you started out with a tribute to
    somebody that was around at the time that our baggage cars were
    built. Our diners were built over 60 years old. We are talking
    about locomotives that are over 30 years old. The newest
    category of cars on this line are between 15 and 20 years old.
    We need to replace equipment. And that is a large part of what
    we need to do to improve high speed rail or reliability in this
    country for all railroads.
        We have got several corridors that have strong
    developmental potential; an extension and perhaps
    electrification between here and Richmond. It is a natural
    feeder to the Northeast Corridor. It can be a 110-miles-per-
    hour corridor with less investment than many corridors, but it
    needs to be electrified.
        There is the Michigan-to-Chicago corridor where we are
    already running some service at 95 miles per hour. There is a
    strong interest by the State as there is a strong interest by
    Ohio and a strong interest by New York and many other States to
    improve their service, but there is not a great deal of State
    money these days. They are in very difficult situations all
    across the country, and that drives a different discussion on
    policy and how we spend this $8 million that is available for
    high speed rail or higher speed rail in the United States.
        Even Amtrak in slide 16, you can almost see if you look at
    this slide, and this is just Amtrak's annual capital needs,
    what was requested and what was received or appropriated over
    the last several years. This is the first year in 2009, where
    the appropriation was greater than the requested funding. And
    if you went back through the years, you could begin to see that
    the areas that were short or scarce of the funds that were
    requested have a large part to do with the state of good repair
    backlog. To address that backlog, we need to make the
    improvements that are necessary for the Northeast Corridor and
    other projects throughout Amtrak.
        But we have a great opportunity today, I think, because the
    stimulus request that came out was a request that we took very
    seriously, very quickly; $850 million for our capital projects;
    and an additional $450 million for security that we also
    included for safety programs, especially for the tunnels in and
    out of New York. It was to preserve and create jobs and
    stimulate the economy.
        We will finish these projects, totaling $1.3 billion,
    within the 2-year period that we have been given to do that. We
    have received most our approvals from the FRA on the projects
    at this point in time. And they are projects like the Niantic
    River Bridge that was on one of my earlier slides, like ACSES
    on the Northeast Corridor and the ITCS line in Michigan, which
    is part of the Positive Train Control, and additional
    investments in Positive Train Control to support what Matt was
    talking about earlier in terms of his ETMS system and the
    interoperability between all the PTS for the future, and ADA
    compliance, and a frequency converter to make our electricity
    more reliable on the Northeast Corridor, and maintenance
    facility improvements and smaller fixed bridges. Nearly more
    than half of the dollars that will be spent will be outside the
    Northeast Corridor to improve what we know is necessary across
    this country.
        We think that, if there is any future stimulus, we need to
    talk about equipment. And I think Matt put his finger right on
    it that we need to talk about how we roll out Positive Train
    Control across the United States and take advantage of more
    travel at the 110 miles an hour.
        And with that, I will end by saying that we see it as an
    improvement in a safer, greener, and healthier system to make
    these things happen. Thank you.
        [The information follows:]

        [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

                                HIGH SPEED RAIL

        Mr. Olver. Well, thank you very much, Mr. Boardman.
        Toward the end of your comments, I had been wondering where
    the timer was that flashed red at a particular time. You spent
    almost as much time as the other three together, I think, in
    going through that presentation. But yours is one train that
    actually runs, as I commented earlier, within the range of high
    speed rail.
        So what we will do now is go 5 minutes, myself, and then
    the ranking member. And then questions by the other members of
    the subcommittee. We have a good turnout today. This is a
    matter of greater interest, not just because we have two
    members from Ohio, one right on the edge of Ohio and Detroit,
    Michigan. And so it goes.
        We are in quite an interesting time here. My staff has
    given me questions, and I usually don't think much about those
    questions. So you will have to bear with me. I am ad-libbing in
    a sense here. They sort of understand that that happens and is
    likely to happen.
        We are in a very interesting time. We have rail advocates
    all over the country, everywhere around the country, who want
    passenger rail to come back. They haven't thought about all of
    the different levels of problems that you four have seen and
    worked with along the way.
        But we have had probably 50 different proposals for high
    speed, for higher speed rail, improvements to passenger rail in
    various places around the country. All the way to Maglev
    projects which didn't go. We never had any money for them. And
    now, with the PRIIA authorization last fall, there are
    authorizations for high speed rail of a billion and a half and
    for intercity passenger rail of roughly a billion and a half,
    and for Amtrak improvements, mostly to be distributed, but much
    of it on the Northeast Corridor, totaling something like $7
    billion or thereabouts, roughly $11 billion of authorizations
    there.
        And it started out with the request for a plan. A plan
    which was to be done by the Secretary of Transportation, or the
    Administrator of the Federal Railroad Administration, I am not
    quite sure, that would take until 1 year after the enactment of
    that, which would take us into October.
        Now, we went out of session, so Members of Congress had
    much time to think about that shortly thereafter. And then in
    February, we have also an $8 billion amount which appeared not
    quite out of the blue--well, maybe out of the blue in the sense
    of ``blue'' versus ``red'' in the Presidential campaigns and so
    forth. And that one comes up with $8 billion for high speed
    rail, but for both the high speed rail and the intercity
    passenger rail program combined, and further, it calls for a
    plan within 60 days of the enactment, which for a much larger
    sum of money is now asking for the plan to be done within 3
    weeks from now, 60 days from the enactment.
        Now each of the first three testifiers have pointed out
    that there ought to be a national plan, and my guess is that,
    at this point, the plan is whatever is the sum total of all--
    the floodgate is open. All that money has been thrown there
    with the expectation that there is going to be more coming in.
    We will be working within authorizations on the intercity
    passenger rail and the Amtrak arrangement most likely on high
    speed rail. They are already well beyond the authorization
    levels in last year's PRIIA bill--of the last fall's PRIIA
    bill, and the President has indicated that our budgets are
    going to have an additional $1 billion each year for the next 5
    years. I suspect we are headed up to $5 billion to $10 billion
    per year in this bunch of combinations.
        But the plan now becomes the dreams and aspirations of
    every Member of Congress, every man, woman and Member of
    Congress or the Senate put together in a combination in sum
    total. Here we are in a startling position of where we might go
    over the near future.
        Ms. Fleming has indicated that we can be concerned at least
    if we are going to go to the high, the really high speed rail
    kinds of things on questions of topography and questions of the
    accurate estimation of ridership and potentials along those,
    and very much an indication of where really high speed rail for
    the kind of investments, as she has pointed out, are between
    $22 million and $130 million per mile, whereas the incremental
    approach from starting out with Class III at 59-miles-per-hour,
    60-miles-per-hour road and getting up to Class IV and then on
    to the Class V, which Mr. Rose, you have talked about, gets you
    up to the 90 miles an hour. I don't know whether it is Class VI
    that gets you to the 110, but something along those lines; that
    these are incremental, and you may be able to make grand
    progress in those areas between $4 million and $7 million per
    mile.
        And I must say, Mr. Boardman's estimate of what is needed
    to bring up above the 110-miles-per-hour range--they are able
    to operate in much of the area, but to do so safely and
    reliably and so forth, even the $5 billion of the 200 miles of
    the south end, essentially, is--I am already on red. I am
    already on red.
        But I just wanted--my last comment was going to be, because
    I am not going to ask you a question, I am going to let you
    think about that and see what may come out of it and then turn
    to my ranking member.
        But the number of billions of dollars for the little over
    200 miles is already in the $25 million per mile just for the
    improvements on what is already a much improved kind of a
    program that is running in substantial parts of it up in those
    higher speed ranges.
        So we have a problem. And the States don't have any money
    now. The feeding frenzy that is developing basically, it is
    developing because it is 100 percent Federal money. I don't
    know that anybody thinks that there can be 100 percent money at
    the Federal level over the long haul in the ranges or sizes of
    money that are needed.
        I lay all of that out, and I turn over to my ranking
    member, Mr. Latham.
        Mr. Latham. Thank you, Mr. Chairman. That was a great
    question.
        Anyway. I just like you to know, I really respect my staff.
    They are all wonderful.
        Okay. Mr. Rose, in Iowa, we have a lot of railroad, and it
    is very important as far as moving our agricultural products or
    manufacturing goods; also, a lot of coal goes across the State.
    Extremely important. Your vision as to the idea of cooperation
    in having freight and passenger rail on your lines, is that
    shared universally by your other associates or counterparts in
    the railroad industry?

                             FREIGHT/PASSENGER RAIL

        Mr. Rose. I think there is probably a little bit of
    difference. At BNSF, we have been successfully out executing
    these agreements. We have what we call commuter principles. The
    first one is ``Do no harm to the freight side of the
    business.'' The second one is, ``Do no harm to the freight side
    of the business.'' The third one is, ``Do no harm to the
    freight sides of the business.'' You get it.
        If you do it right, it is a benefit for the public to be
    able to provide this passenger service. If you get it wrong,
    then you have really harmed your State in terms of industrial
    development and economic commerce to move things around. I have
    been in my job now for 9 years, and I will tell you, 9 years
    ago, that every railroad almost was against this type of
    public-private partnership in passenger rail. And in 9 years,
    we have moved a long ways. We realize that there is a lot of
    interest for public need, public good to make accommodations.
    We just have to make sure that we don't mess up the freight
    railroad side of it as we do these kind of things.

               BALANCE OF TRANSPORTATION AND ENVIRONMENTAL POLICY

        Mr. Latham. One of the really large complications such as
    where I live in Ames, Iowa, is the mainline of the UP that goes
    east to west across Iowa and going right through downtown; 110
    trains a day, mostly coal trains going through. And it would be
    very difficult to intersperse passenger rail in that. But it
    would be great, also, if we could do that. We have a great
    depot at which nothing stops in Ames, Iowa.
        Is there anything that we can do? I suppose money, but as
    far as incentives to change that equation? And also, the Amtrak
    in Iowa goes through southern Iowa. It doesn't go through any
    populated county.
        Mr. Boardman. My family is from Clarinda County--Clarinda
    in Page County.
        Mr. Latham. Easy for you to say.
        Mr. Boardman. I never lived there.
        Mr. LaTourette. He doesn't write them so much.
        Mr. Latham. He knows how to spell it, but not how to say
    it. I am sorry, go ahead.
        Mr. Rose. So I think the biggest thing that could come out
    of there is a national vision which would include a national
    priority. One of the things we have not done well in the past
    is tie together our needs for our energy policy, as well as our
    transportation policy. And I would submit that we really do
    live in a different world today than we did just 10 years ago.
        And if you take a step back and think about the energy
    needs, the climate issues in our country, and transportation,
    and start to think about what the future could be. So my point
    is that, right now, you are exactly right; every State is
    calling us saying how--this is free money. Manna from heaven.
    How can we get some of this? And quite frankly, you all are in
    very difficult positions.
        I traveled to China, and they do it differently there. It
    is called communism. One guy makes a decision; this is where we
    are going to put a high speed passenger rail or Maglev, and I
    am planning my society, and I will have my people here, and
    they will take this train to their work location, and don't ask
    any questions. There is only one guy in charge. And it is
    pretty effective. But I know that is not the reality here that
    we live in.
        And so--but what is going to happen is, during this time,
    we are going to get a lot of people saying, I got to have
    passenger rail and probably what, unfortunately, will happen
    from this is that there will be dollars thrown at passenger
    rail operations and lanes that won't make any sense.

                               AGENCY NEGOTIATION

        Mr. Latham. If I could ask, in your statement, ``a
    negotiation has to be at arm's length,'' can you tell me what
    that means between the passenger and freight? And who is going
    to start this negotiation?
        Mr. Rose. It is really where an agency, typically a State
    commuter agent, comes to us and says, we would like to run a
    commuter operation. So at arm's length, instead of Congress
    getting involved and mandating, we have shown that we have been
    successful. These are very difficult. We just recently
    completed one in Minneapolis with the North Star where we were
    able to come to agreement on liability, services and costs. And
    that was through using outside or modeling and using capital
    costs that everybody could agree upon the methodology and the
    liability.
        Things are very, very difficult. This is, again, the
    freight rail; on our freight rail, 99 percent of all of our
    revenue comes from freight; 1 percent comes from passenger.
        Mr. Boardman. Could I comment on that? Amtrak is the arm
    for intercity passenger rail. The arm that he is talking about.
    It is Amtrak legally and in terms of what we are responsible
    for.
        Mr. Latham. Thank you, Mr. Chairman.
        Mr. Olver. In order of arrival here, next would be Mr.
    Rodriguez.

                        POSSIBILITIES OF HIGH SPEED RAIL

        Mr. Rodriguez. Thank you.
        Let me thank you for being here with us. I think the
    Chairman talked a little bit I guess because we don't have I
    think a vision in terms of where we want to go. And I think
    each area and each sector has their own group.
        I know, in Texas, we talked about fast rail from San
    Antonio to Houston, Houston to Dallas. Back to Austin and San
    Antonio in the 1970s, and as you well know, that has not
    materialized.
        But in the report that GAO had talked about the importance
    of coming up with a strategic vision in terms of high speed and
    that kind of thing. And nationally as well, as you know, the
    importance of looking at intercities. Houston has moved with
    some intercity types of thing. Dallas. San Antonio is looking
    at that.
        The potentials, I am not sure in terms of the funding.
    Maybe some of you can talk about that, because we have a major
    area medical center where a lot of concentration as well as the
    intercity where we could possibly have some rail back and
    forth. And I would want you to comment on how we go about
    looking at funding those aspects.
        I also represent a lot of rural area and for freight. I
    have actually a rail that is owned by the State that goes from
    Presidio to San Angelo that travels about 10 or 15 miles per
    hour, but it has a lot of potential because it comes from
    Mexico, from the Pacific side. Usually we get it from the
    Atlantic side; this is from the Pacific side, and the potential
    there. Can you elaborate on the possibilities of what might be
    viable not only in terms of rural but urban areas?
        I will just throw it out. And I know from the strategic
    plan, maybe from the GAO first?
        Ms. Fleming. You want me to kick it off?
        We recommend that the Department of Transportation work
    with Congress and other stakeholders to develop a vision and
    clear goals linking it to the national transportation system in
    terms of rail. This has been done in other countries. I think
    it is an important step. It is very critical in order to
    establish what the clear Federal role is; to determine what
    expected outcomes are; as well as setting up some performance
    and accountability measures. And again this is learning from
    folks who have been doing this, this is kind of the first
    lessons learned.
        Mr. Rodriguez. We don't have a requirement now from the
    States or on the national on that vision?
        Ms. Fleming. No.

                                STATE RAIL PLANS

        Mr. Boardman. Can I comment on that, please?
        The FRA does have a requirement for all States now to have
    a rail plan. It is not the entire process, but there is a
    requirement.
        And the kinds of things that you were talking about,
    Congressman, would make it into the rail plan. And the reason
    the rail plan was put together was to make it the same as the
    highway system, because the highway system today in every State
    has to have a State Transportation Improvement Program, or STIP
    as they call it. And once you make a project on that STIP, you
    have to find a way to finance or fund that project.
        Rail projects did not traditionally make it on that list.
    And part of the thing that you did in the last two
    authorizations is, the first year you put I think about $30
    million out that would provide assistance to the States and now
    about $90 million, I think, this past year on a different
    program, and it requires there to be a State rail plan. On the
    stimulus, that requirement doesn't exist at this point in time.
    But in terms of getting the kinds of projects that you are
    talking about, the States are required to do that if they want
    that funding.
        Ms. Fleming. Can I just add one more thing? Again, it is a
    plan for a national vision and linking in terms of the overall
    national transportation system. But then the next step is
    coming up with clear procedures for evaluating the various high
    speed rail projects and proposals to look at costs and
    benefits. So I think it is a several-pronged approach; you need
    basically a framework in order to be sure that your money is
    being spent wisely and it is a worthy investment.

                          NATIONAL TRANSPORTATION PLAN

        Ms. Molitoris. Mr. Rodriguez, I would like to comment the
    need for a national transportation plan. As Joe mentioned, the
    State rail plan is a requirement. However, there is State
    highway plan requirement as well. I think it is critical that
    we understand as a Nation how those investments affect the
    entire system. And right now there is no such requirement. That
    is why our department in Ohio has begun a transportation
    futures plan.
        And the cost-benefit analysis is very important, because if
    you only look at bottom-line investments and do not value the
    impact on the environment, the impact on the availability of
    this kind of transportation choice, the impact by getting
    people off the highways, those are all very important. Because
    the more autos you get off the highways, the more trucks that
    can go to the intermodal yards where they connect with trains,
    and we need to understand all of that. Right now, without a
    total integrated transportation plan, we don't really know the
    cost and benefit of what we are investing and what we are
    getting in return.
        Mr. Rodriguez. And I gather that also includes both
    freight?
        Ms. Molitoris. Yes.
        Mr. Rodriguez. Thank you very much.
        Mr. Olver. Mr. LaTourette.
        Mr. LaTourette. Thank you, Mr. Chairman.
        And thank you all for your testimony. And it is nice to see
    all of you.
        I didn't meet you before, Mrs. Fleming, but it is nice to
    meet you.
        And when you two got dressed this morning, did you consult
    with each other? I am talking to you, Jolene.
        I have to tell you, and let me say something nice about the
    director of the Ohio Department of Transportation. I met her
    when she was the FRA administrator in the Clinton
    administration, and in our part of the world, Conrail's assets
    were acquired by CSX and Norfolk Southern. If it had not been
    for Commissioner Molitoris, we would have had a larger mess
    than we wound up having, and I am eternally grateful to her
    assistance for that.
        The problem with this, and I invite your observations,
    without a national plan, we are not going to get this done. And
    I would point to the last highway bill, SAFETEA-LU, where we
    had designated the projects of regional and national
    significance, above-the-line funding, and each thing had to be
    half a billion dollars. And we behaved ourselves in the House,
    and I know that Chairman Olver and Ranking Member Latham will
    behave themselves over here. But when it got over to the other
    body, they were just pigs. What they did, they divided that $17
    billion up, and everybody got $150 million so they could go
    home and put out a press release. But you can't build anything
    significantly for $150 million, and the reason that that
    program was initiated was so that you could really build
    something. Like the Inner Belt in Cleveland and the Inner
    Harbor in Toledo and like the Spence Bridge in Cincinnati. But
    we have money just sitting there.
        If we don't approach this universally, and by that, I mean,
    not only do we have to have a national plan, I think all the
    interest groups have got to have some skin in the game. And by
    that, I mean, if I were Matt Rose or if I were CSX or I was
    Norfolk Southern, I would never let a passenger train on my
    system until you solve a bunch of problems. You have to get the
    lawyers out of the situation. You have to have a way to
    determine what liability is going to be, like we have in the
    air travel system. That is, if we have an accident, you know
    what it is, so you can buy insurance and adjust the risks.
        I don't know what your liability agreements are, Matt, but
    the lawyers are smart enough, that if they are your tracks,
    they will run through the State's budget; they will run through
    Amtrak's budget; and then they will come get you. And until we
    include them in this process, I think you are going to have a
    problem.
        The other thing you mentioned is your common carrier
    responsibility. A lot of people don't recognize that you said
    99 percent of your revenue is from freight; 1 percent is
    passenger. How much of your revenue is from carrying chlorine?
        Mr. Rose. One-tenth of 1 percent.

                                   LIABILITY

        Mr. LaTourette. One-tenth of 1 percent. How much of your
    liability is tied to carrying chlorine and hazardous materials?
        Mr. Rose. Sixty to 80 percent.
        Mr. LaTourette. Can you decline to carry?
        Mr. Rose. No.
        Mr. LaTourette. Because of your common carrier
    responsibilities. So if you are talking about taking a train
    that goes 79, in Jolene's case, or 90 or 110, and against
    trains that are going 35, 40 miles per hour, and they are
    carrying chlorine, we have to do something about the freight's
    common carrier responsibility as well. And so that is what I
    mean by, this has to be a universal solution. We just can't
    come to the freights and say, give us a bunch of right-of-way,
    and we will pay you a little bit of money, and yes, you can
    still be sued and, yes, you have to carry all of this bad
    stuff. Anybody have an observation about that?
        Mr. Rose. I would just say, in the GAO report, I think they
    identified the issue of the liability question that needs to be
    clarified, and it has got to be clarified right here in
    Washington, D.C. We are very much in support of that.
        And the liability issue, Congressman, is really at heart of
    this issue, because the railroads, the way that these commuter
    arrangements work, the railroads really will make de minimis
    amounts of money on these. The railroads the get some
    additional capacity, which will be good, but that pales in
    comparison to the potential liability.
        Mr. LaTourette. This government made a decision in air
    transportation that we are going to have a national air system.
    When you make that decision, we have to do certain things. If
    we are going to have a national passenger rail system, we are
    going to have to do the same things relative to liability and
    common carrier, and I would throw in the FRA and other
    agencies.

                              TRAIN SPEED AND BULK

        Mr. Boardman, the reason that your Acela train doesn't go
    as fast as it could is because it is like an elephant on roller
    skates. They junked it up so much with weight and restrictions
    and everything else that it couldn't handle the curves on the
    existing infrastructure that you have; isn't that correct?
        Mr. Boardman. No, I would say--I understand what you are
    saying in terms of the size and the buff strength. But I think,
    in a mixed freight corridor, you have to do that to adjust the
    risk. And that is the same with a lot of locomotives that we
    operate. But I think today, between New York and Washington, it
    takes 4 to 5 hours to drive. It takes 4 hours and 45 minutes.
    We are already high speed in terms of that.
        Mr. LaTourette. It is a great system, but am I wrong,
    because of the configurations that was required by some of the
    regulations, you got a bigger set of cars than you needed and
    the brakes broke and fractured under the stress and you had to
    slow down on curves because the car was too wide because the
    yaw--or whatever you engineers talk about when you go around
    the corner--it was yawing this way, it was running into stuff
    potentially, right?
        Mr. Boardman. I think we would not buy another set of
    trains in a consortium the way we did it.
        Mr. LaTourette. There you go.
        Thank you, Mr. Chairman.
        Mr. Olver. Ms. Roybal-Allard.

                             ENVIRONMENTAL PLANNING

        Ms. Roybal-Allard. Mr. Boardman, first of all, let me take
    this opportunity to thank you for working so closely with
    California to maximize the State's significant capital
    investments in passenger rail service so that we can meet our
    transportation needs.
        There are many Americans who are familiar with the Amtrak's
    Northeast Corridor from Washington to Boston. But I think there
    are many that are not aware that the Southern California
    Corridor is Amtrak's second most popular route. So, on behalf
    of my constituents and my State, I want to thank you and your
    employees for working so well with California. And there are
    many that believe that that partnership is really a model for
    others to follow.
        Mr. Boardman. Thank you. I have suggested to my friends in
    New York upstate that they go to California and look at that
    model.
        Ms. Roybal-Allard. I have for some time listened with keen
    interest to conversations about high speed rail in our Nation
    and in California in particular. And I believe that this mode
    of transportation has the potential to meet our growing
    challenges of moving people quickly and efficiently.
        Nevertheless, I have noted with concern that presentations
    on proposed routes in, for example, my State have focused on
    using existing rights-of-way along our freeways and our
    railroads. Now this may seem less intrusive and disruptive than
    creating new routes in already heavily urbanized areas, and I
    know that cost also is probably a factor. However, we cannot
    ignore the historical fact that many of the existing rights-of-
    ways for freeways and for railways disrupted and divided poor
    and minority communities.
        In my Los Angeles district alone, communities are dissected
    by no more than eight State and Federal highways and several
    railroads. Building a high speed rail route along existing
    rights of way in Los Angeles may minimize the negative impact
    to other communities, but I fear that it will add to the
    damages already done decades ago when the new interstate system
    divided and even destroyed poor communities, one, for example,
    where I was born, and has caused lingering health issues for
    children and residents who today are still suffering from those
    environmental impacts.
        Therefore, building a new high speed rail system along
    existing rights-of-way is far more intrusive and disruptive
    than many proponents will have you believe. And it certainly
    would be to my constituents, many of whom probably won't even
    be able to afford the price of riding the high speed rail that
    is being proposed for the Los Angeles area.
        And so I just felt that it was important, because in none
    of the discussions that I have heard, regardless of where I am,
    has any attention been paid to the fact that some of these
    proposals are going to again impact poor, minority communities
    that have had historically and even now do not have the
    influence or political clout that more affluent areas have to
    fight these projects.
        So my question is for Ms. Fleming and also for the
    panelists. In your experience, is adequate weight given to
    environmental justice issues such as the ones I have described
    in the review and planning process of new transportation
    infrastructure projects?
        Ms. Fleming. I think you raise an important issue. One of
    the things that we recommend is that there needs to be better
    methods and analytical tools to quantify costs as well as
    benefits. And that is something that is not currently done in
    this country as well as in some of the other countries that we
    visited. So it is an area that is very critical and important,
    because determining viability for high speed rail is really
    looking at those particular factors.
        So you absolutely raise an important question, and it is an
    area that we feel needs to be further explored and have better
    methods and tools.
        Ms. Roybal-Allard. What weight do your agencies give to
    environmental planning when you are planning major new capital
    projects?
        Ms. Molitoris. Representative, the whole NEPA process
    really is very important as it looks at the impact on people
    and neighborhoods. And we give it a very high priority. One of
    the difficulties is that, in the history of our country, much
    of our population centers built up around railroads, rivers,
    and ways of transporting goods. And--
        Ms. Roybal-Allard. And historically, through the poor
    minority communities, who were not able to fight those
    projects. I mean, I think that is an important point that has
    to be recognized.
        And with these projects that are being proposed, then it is
    just continuing the harm and the damage that has been done to
    these communities. And in the case of high speed rail, if the
    cost of a ticket is what I am hearing for Los Angeles, I
    guarantee you that those who are going to be the most
    negatively impacted are not going to be using it.
        Ms. Molitoris. Well, may I just say that I believe--I can
    only speak for our department, but our administration is
    focused on an involvement process that is real, where all of
    the participants who are going to be affected have an
    opportunity to be part of the decision-making.
        One of the challenges is, where else can you go? Mr. Rose
    mentioned sort of the Chinese model, and you know, they kind of
    put a string between here and there where they want to go, and
    they just take out everything. And we can't do that, and we
    won't do that. And so the opportunity for these kinds of
    systems sometimes can be something that can bring economic
    viability to communities as well.
        If you look at some of the State-sponsored systems--I will
    just mention Maine as an example--with a small population and
    few cities, and they did institute service in 2001 or 2002, and
    they have realized 8,000 new, or will realize by I think 2020,
    8,000 new jobs and investments equaling $3.3 billion. So this
    can bring opportunity for work and have a positive impact. I
    don't think it is an easy equation. It is a very important part
    of the process of bringing these to fruition.
        And I would say that our goal in starting at the 79-miles-
    per-hour level is to work with people all along that corridor.
    In fact, the process is going on right now. And I have gotten a
    lot of good feedback from these very populated meetings by
    many, many different parts of our society. And there is great
    interest. We just have to do it right. And I think
    understanding that this is service that should be serving the
    people is really our first priority.

                                    OUTREACH

        Ms. Roybal-Allard. I would like to talk to you about the
    outreach because, historically, the outreach done in these
    kinds of communities, it really doesn't reach the people
    themselves, the ones that are going to be impacted, and you
    hear from those that mostly will benefit. So I would like to
    talk to you further about the kind of outreach that needs to be
    done.
        Ms. Molitoris. I would be very pleased to do that.
        Mr. Olver. Mr. Carter.

                                 RAIL IN CITIES

        Mr. Carter. Thank you, Mr. Chairman.
        I am new at all of this and this is all very interesting. I
    guess I have to fall back on the experiences that I have got.
    It seems to me, listening to what Louise was talking about over
    there, I kind of agree that existing track issue is, of course,
    the easy way to do it. But it has also got problems.
        We have a transportation institute at Texas A&M, and when I
    first came to Congress, I represented Texas A&M. And I went
    there, and they told me the solution for moving everybody and
    everything is to get out of the cities. And so we came up with
    this brilliant idea to create the Trans-Texas Corridor to get
    everyone out of the cities. Sort of the Chinese model with a
    Texas flavor. The Chinese model with a Texas flavor is just
    about as popular as terminal cancer in Texas. There are people
    who are arming themselves to stop the Trans-Texas Corridor as
    we speak, and everybody thinks it is going through their
    backyard, and they are very unhappy with it.
        So, I guess I would really like to ask Mr. Rose, because
    when I went to visit you folks, we also talked about getting
    the trains out of the cities, as far as freight is concerned.
    That is a model that you all would like to see, right?
        Now, but the passenger trains are going to have to go to
    the cities. So would the better solution be, they keep your
    tracks and pay for moving you out of the cities?
        Mr. Rose. Okay, so you have said a couple of things. I
    think, first off, when we do build rail lines, it is always
    hard. It is just different degrees of hard.
        I would say, though, if we today were trying to build the
    interstate highway system back that we built in the 1950s and
    1960s, we would find the same issue. And until we have a
    national priority to say that we are going to focus on energy
    conservation, to change our mode of transportation in this
    country, and there are going to be huge sacrifices, done right
    and remediating the environmental impact to people and
    communities, then we are always going to be stuck and nobody is
    going to want to do anything.
        As far as your specific question of freight railroads and
    cities, there are probably half a dozen cities on our railroad
    that would like for us to move out of the city, and we are more
    than willing to do that. But we don't get the economic benefit
    of that that accrues to the city. So the issue always comes
    back to cost.
        And I can go through, whether it is downtown Denver or
    downtown Fort Worth or Houston rerouting around the city or San
    Antonio, or you can just go on and on and on, and when you
    think about rerouting around a city, it probably starts with
    $100 million and goes up from there.
        Mr. Carter. I guess my question is, if you are going to
    start a passenger rail system for the United States, and
    obviously, Texas is probably last on the list--you have got
    California and the East Coast that are going to be where all of
    this is going to be done. But my question is, if we are going
    to have to build new tracks, you also mentioned in your
    testimony that the solution may be a new track for high speed
    rail. If they want to get to 150 miles per hour, it is going to
    be a new track. Wouldn't you agree?
        Mr. Rose. Correct.
        Mr. Carter. Even if it is Amtrak operating it, they are not
    going to do 150 miles per hour with the tracks running through
    Taylor, Texas, I promise you that. If they are going to build
    new tracks, wouldn't it be better, because they have to go into
    the city, wouldn't it be better that the rural tracks be built
    for you rather than for them?
        Mr. Rose. I understand your concept, and if you think
    about, for passenger, you have to go to the main area of
    population. You have got to get to the population
    concentration, and that is why the European service works so
    well, because you go right downtown London, right downtown
    Paris.
        But we have to--one of the things that we all talk about,
    gee, we would really like the European rail network; why can't
    we do that? We have taken two different paths. Europe taxed
    their gas significantly. Back when gas was a buck-25, which
    seems like a long time ago, gas in Europe was $4.50 a liter.
    Gas today, you add up all these little bottles of water, these
    bottles of water are still more expensive than gas. And until
    we recognize a national environmental, national energy policy,
    which then butts up to a national transportation policy, this
    is all going to be really frustrating for everybody. Europe has
    done it.
        Mr. Carter. I agree we are not talking about the energy
    issue right here.
        Mr. Rose. But we should.
        Mr. Carter. Because it is part of the problem.
        Mr. Rose. It is part of the equation.
        Mr. Carter. I am not going to get into that. But I wanted
    to make sure that I understood that you still think you all
    ought to be outside of town.
        Mr. Rose. Yes, it is just a matter of dollars.
        Mr. Carter. So the truth of the matter, what we need to do
    is rebuild the freight system and the passenger system?
        Mr. Rose. Not so much. The vast majority of freight systems
    really do operate outside of the major cities. But there has
    been a number of cities that would like for us to relocate out,
    and again, we have got to figure out how to pay for it.
        Mr. Boardman. Just a comment, if I could. First, I would
    like to correct the idea around here that we don't have a
    national passenger rail system. That is why we exist, or we
    think one of the strongest reasons why we exist. And we think,
    also, that it has a large part to do with what the strategic
    plan is, if you look at how you connect to that system for the
    future.
        Matt, I didn't know you had a downtown Texas. You have a
    downtown in Texas? No, I am kidding.
        Mr. Carter. Come to Dallas. We will show you a downtown.
        Mr. Boardman. The idea is that railroads still need to get
    their products to where the people live. If you fill up the
    roadway with trucks, Jerry Nadler would argue with you that
    what he wants to do is get a tunnel in New York so that rail
    gets back into New York, so they don't have as many trucks
    downtown. So it is a bigger problem than just deciding to
    operate rail outside of the city.
        And part of the difficulty with the growth of the
    interstate system is that we have had this spread-out
    development, so that it is hard to serve that population base
    with anything but a truck or automobile, and that is trouble
    for passenger and for freight rail.
        Mr. Carter. I know my time is probably up, but one more
    question. If you looked at Houston or Los Angeles, bringing
    something into downtown Houston, you are a long way from your
    destination. And from my limited experience in Los Angeles, I
    think you are there, too. And that is other issues that you are
    going to have to move people inside the city to get them to
    where they need to go.
        Thank you, Mr. Chairman.
        Mr. Olver. Ms. Kilpatrick.
        Ms. Kilpatrick. Thank you, Mr. Chairman.
        And thank you all for your testimony.
        Michigan will spend $5.8 million next year to Amtrak to
    assist us as we move forward. I was happy to see, under page
    15, of the low-hanging fruit, because we are there. I think
    when President Obama put in the recovery package the $8-plus
    billion for intercity rail, high speed passenger corridor that
    we are talking about today, high speed rail, that it may have
    been a little premature just in terms of the discussion that we
    are having now.
        Everyone doesn't need it. Everyone doesn't want it. Certain
    corridors of the country do. In Michigan, one of our main
    problems now that we have everybody on board, and it is high
    speed rail from Chicago and about 75 miles into Michigan; we
    are trying to build the next 75 miles that will take it across
    to Detroit. There are a lot of things that are happening there.
    We want it, but I do believe, too, that we need a plan.
        I think we do ourselves a disservice, with limited funds;
    $8 billion sounds like a lot, but it is not a lot of money for
    these United States of America, number one. Nor does everybody
    want or need it. And there needs to be, as you said, GAO, some
    parameters, and that has not happened yet.
        I don't know if this committee, Mr. Chairman, probably not,
    the authorization committee or maybe our new Secretary. But
    there needs to be something before we start chipping away, as
    Congressman LaTourette said earlier; it is sporadic and we
    don't have a plan.
        Where I come from, we want high speed rail. As a matter of
    fact, when it leaves to Chicago, it goes to high speed, and
    then it gets to Michigan and stops, and then it gets to the
    university level; Kalamazoo is the city where it changes.
        Amtrak, we love you. I have been on this committee a couple
    of other times, and you are in a positive environment now. I
    have been on this committee when they hated Amtrak. I am happy
    to see you have a role to play, and we support you, and so does
    the Chairman at the time, too.
        The plan, that is number one. We need a national plan, a
    vision. I think the President putting the money out there is a
    carrot, because many of the States are broke, Michigan anyway.
    What else? This $8 billion plan that we talk about, the use of
    the railroad lines that you mentioned, sir, that is one of the
    prospects.

                           PASSENGER AND FREIGHT RAIL

        We are having--I used to want to help with this line I am
    talking about and use the rail lines. I am convinced, after
    working with North Carolina and Houston and the others, that
    freight needs to be used just for freight. Your concern is that
    the passenger trains may take your schedule. I am trying now to
    look for new lines that would parallel, and it is 100 lines, 50
    to be exact and then another 50 that would make it possible.
    But from the railroads point of view, would you rather not use
    passengers on your rail? Would you rather keep it freight? You
    and other rail lines?
        Mr. Rose. No, I mean, I think, generally, if we had to
    choose one or the other, we would rather keep them pure for
    freight. But that is not the alternative we were offered.
        Ms. Kilpatrick. That is not what you were offered? Right.
    Well, they will if we think it will mess with your freight
    lines. Much of your revenue is from freight, and this mixed,
    whether it be one or the other or both, I think it is
    problematic. At least what we see now. And we have been on for
    like 5 or 10 years, just trying to get to that.
        I see that Norfolk Southern has some lines in our area that
    they may want to sell. We would rather buy them from them, our
    State and Federal Government, and let them do the freight and
    us do the line, and it would run parallel. It is a great
    opportunity.
        Mr. Rose. Yes, in some cases--we sold a line to the State
    of New Mexico, and then we run our freight lines back on their
    line. There are different configurations of what we can do.
        Ms. Kilpatrick. Right. And in all of that, Amtrak has a
    role to play. I like your vision, and you get it, and you are
    the director, and you better get it.
        Mr. Boardman. Or I am going to get it.
        Ms. Kilpatrick. I look forward to working with you.
        We do need a plan. Every part of the country doesn't want
    it or need it. And with the limited dollars that are
    available--they can grow over the next decade. And we look at
    other countries. They do it in their sleep. There is no reason
    we don't. Except the automobile, which unfortunately is in a
    different situation now, and people are now looking at rail
    lines.
        I look forward to working with all of you, and Mr.
    Chairman, as we put the budget together and some foresight, we
    might initiate the discussion about, what is the vision, and
    what is the plan, and who does get it and who doesn't?
    Everybody doesn't want it.
        With that, I yield back. Thank you.
        Mr. Olver. Thank you. We probably we are supposed to see a
    plan in another 3 weeks.
        Ms. Kilpatrick. Yeah, right.
        Mr. Olver. Mr. Pastor.

                           DESIGN OF A NATIONAL PLAN

        Mr. Pastor. Good afternoon.
        It is very interesting. Sometimes when you are on a
    committee long enough, it is deja vu all over again, but in a
    different sense. For the past 10, maybe 8, years, my goal up
    here, and I wasn't affected by it personally because the Amtrak
    line runs 200 miles south of; me--was to protect Amtrak because
    it was our national passenger system. And I remember one year
    the President zeroed it out. It was just a matter of trying
    to----
        Mr. Olver. Not the Amtrak President.
        Mr. Pastor. Not the Amtrak President. The Decider, the
    Decider decided. And we were talking about how many peanuts in
    a bag that we would sell, and whether or not we would have
    plastic containers for the food and how many times you would
    clean the train. It was very interesting.
        Two years ago, the Chairman and the Ranking Member at the
    time decided that they were going to set up a fund for $30
    million for intercity rail system, and we all said hallelujah,
    we are now going beyond Amtrak and looking where other needs
    are.
        But as I sit here, and I took advantage of it. I called the
    administrator and said, we have a line between Phoenix and
    Tucson, and send me a guide, and we applied. I don't know how
    many cities applied or how many States applied to get that
    initial grant. So we were going along.
        But I am persuaded today that, even in the authorization
    and in the appropriation, it depends on a member's initiative
    and drive to develop whatever they can for their particular
    State or their district. And yet we have lingering questions
    that we will never develop a national plan.
        So where is Eisenhower when we need him? I am told he
    decided as a decider to do an interstate highway plan, and it
    was laid out, and we were motivated to do that plan, and I
    guess we have accomplished it. We have added to it.
        But in all reality, who has and who should have the
    responsibility of designing or coming up with the national plan
    that would accommodate passenger and freight rail, and deal
    with the issues?
        The ones I have seen in Europe, they are dedicated lines.
    Dedicated lines to passenger. I asked them, where is the
    freight? Freight is over there. Why do you do that? Well,
    because having freight and passenger is a conflict. And we
    decided that we were going to have a dedicated passenger line
    and a dedicated freight line. You go to the Chinese in Shanghai
    with Maglev and the lines they are putting in, and they said we
    decided as a country, freight, if they have a freight system, I
    don't know, but passenger was very important to us, and this is
    where the lines are. I imagine same thing happened in Japan.
    And it was a political determination of the nation as a people
    to say it is what we want, and we will provide the resources to
    do it.
        And I agree with my friend, Steve LaTourette, that until we
    have the political will to say we want to have a national
    passenger line, to make sure that Amtrak goes throughout the
    Nation and connects these metropolitan areas, because it saves
    the environment, the congestion you don't have, et cetera, et
    cetera, that we will be discussing, Mr. Rose, how much of your
    line do you want to give up between here and there, and do you
    want to give it up or not?
        And somehow, I think I agree with Steve that we need to sit
    down and say, hey, let's have the political will. If we want to
    do it, do it. Amtrak is there. How do we build with Amtrak? And
    not put the issue to the freight lines saying, you have to
    share or else, you know it is not at arm's length.
        And every country I have seen where they have a national
    line that does passengers, it is because they had the political
    will to do it, and they were willing to pay for it. And until
    we get to that point, I think we are here counting this, that,
    and the other, and we will not move forward in creating. And I
    think our country should have and has and should continue to
    improve the national passenger line that we have and just have
    the political will to separate where we can, and where it makes
    sense, the freight and the dedicated lines for passengers. But
    I am glad we are not talking about how many peanuts in a bag.
        Mr. Boardman. Just to comment back on that, because I think
    one of the things I am seeing here, and I think, Mr. Pastor, I
    hope our planning the--I can't say ``our'' anymore--FRA's
    planning process is working well on your line.
        Mr. Pastor. It shouldn't be my line; it should be our line.
        Mr. Boardman. This is not a strategic plan that we can deal
    with. And I have thought about this in terms of a strategic
    plan and thought about the different strategies. This is a
    tactical plan. And while we might have a desire to have a
    strategic plan, and in some senses we do, strategic plan to
    implement Positive Train Control across the United States, but
    now it becomes tactical. It becomes, how do we get this done?
        We have a sense of urgency, or at least I do. I have got to
    get $1.3 billion spent right in the next 2 years, by February
    of 2011, period. We have got to get it done. We were already
    deciding before this came out, how would we spend this? How do
    we get the right projects there, and how do we know it is going
    to get done?
        What I am most worried about, and I would think, Jolene,
    that you might be the most worried in this process, because in
    order for us to get the $8 billion spent within the 3 years,
    which is what we have been given, we have got to decide right
    now what needs to be done.
        And if you are going to run a new service from Cleveland to
    Columbus to Cincinnati, you have to figure out, how do you pay
    for it later on operationally? That is not in the cards right
    this minute at all. It is only capital.
        So when you go out to look at, what do we do, from my
    perspective, and you look at the national map where Amtrak
    operates, or the national map where the high speed rail pieces
    are and how they fit together, we have in a sense, without
    having it written, a strategic plan that needs to have the
    pieces of tactical ability or tactical resource adopted to it.
    And we don't have much time to do that.
        So Matt Rose and Joe Boardman and Jolene or whoever else
    from the State have to go in together to the FRA and say, this
    is what we are going to do to reduce travel time, to improve
    the reliability of the track in the next 3 years; can we get
    this to 90 miles per hour? Can we be 90 percent on time? Can we
    take 30 minutes out of the schedule?
        Right now is beyond right our ability for us to get the
    larger thinking done. And I believe that the larger thinking,
    in many ways, has been done in bits and pieces all the way
    along.
        When the commission was put together--I know this is a long
    answer, I am sorry--but when the commission was put together,
    the idea was not to have a commission that the administration
    ran. The language was put in Sherry Boehlert's hands in the
    Science Committee from New York State, from us, when I was
    commissioner of transportation in New York, we wanted Congress
    to do this just like we did in the past. And I have a copy of a
    book that--Hamburger, are you still here? When did get that
    out? The one you were on, the old one. About 1976. And if
    anybody doesn't have a copy of that, that gives you an idea of
    the kinds of things that were addressed back then. I will stop.
        Mr. Olver. Ms. Kaptur.

                         EFFICIENT TRAINS IN THE WORLD

        Ms. Kaptur. Thank you, Mr. Chairman.
        There is nothing more awesome to me as a Member of this
    Congress, and we thank you all for coming today, than to go to
    Kuwait and to see the full military power of the United States
    at the end of a sword. If you have never been to camp--how many
    people here have been to Camp Arifjan? Well, America, as you
    know, is totally dependent, if the Saudis pulled their money
    out of this economy, we would crash even harder, one-seventh of
    it is held up by their dollars. There is no more important
    strategic objective for this country than to become energy
    independent in our lifetime for the sake of our kids and
    grandkids.
        The idea that we are putzing around on high speed rail, I
    am looking at these pictures here. We knew how to cut through
    mountains to build roads. We knew how to go through deserts.
    And we even bridged oceans and bays when we were serious about
    doing something great for America. We have forgotten we can do
    it domestically. We don't have to put all of our soldiers'
    lives at stake halfway around the world because we haven't
    figured out how to run this country.
        So I operate by two rules for this, representing the fifth
    largest rail center in the United States of America and the
    busiest Amtrak passenger terminal in the State of Ohio, with
    over 50,000 ridership annually: Make no small plans, Robert
    Moses told us how to do that. And for me, my rule is rail has
    got to be three to four times more efficient than the
    automobile; 120 miles an hour doesn't do it for me. It is
    almost laughable that we are in the 21st century, and we are
    talking about 90 or 110? We have to be competitive.
        And so it seems to me that we need a big vision. And I know
    just the place to do it. Where the land has no mountains, and
    it has no water, and it is as flat as it can possibly be
    because they invented bowling there. And that is from Toledo to
    Cleveland and Toledo to Chicago. And that is the line. That is
    the line.
        Anybody here ever ride the Lake Shore Limited. Okay. Well,
    sometimes it starts in Chicago, and if you can get to Toledo in
    13 hours on a journey that by car takes 4, you are lucky. You
    are lucky. And if you want to go east, you get on the train at
    3:30 a.m. Or 6:15 a.m., and despite that, 50,000 people still
    get on and get off at Toledo. And I have been in that corridor
    many times, and I say to myself, what is wrong with us? We
    landed a man on the moon, and we cannot move rail, high speed
    rail around this country? You go to other countries, and you
    see it. It is embarrassing.
        And in addition to our strategic vulnerability, we don't
    live in the same world as our parents did. When I was born--and
    you can figure out the year--there were 146 million people that
    lived in this country. By 2050, there will be 500 million, and
    it is growing every day, and we are acting like it is 1946, and
    it isn't.
        So you don't have to figure out where I am on this issue. I
    have three questions. Number one, in terms of, and these are
    for the train guys, what is the most, in terms of mileage and
    energy efficiency, what is the most efficient train system that
    exists in the world today as far as amount of fuel used and
    speed? What speed maximizes the efficiency? What system can you
    tell me about for passenger? What exists?
        Mr. Boardman. We will research that, and get back to you. I
    don't know.

                            FUNDING HIGH SPEED RAIL

        Ms. Kaptur. Question number two, what percent of high speed
    rail anywhere in the world, after we build the thing which is
    the easy part, in terms of finance, how do you pay for it? The
    passenger fees or whatever you have to do, sell gimmicks in
    your train stations, whatever you do, what do we do, put
    something on the gas tax? What is the transportation solution
    in terms of paying for it?
        And then, Director Molitoris, I loved your testimony. The
    only thing is when you identified the high speed rail corridors
    in Ohio, you mentioned Cleveland, Columbus, Dayton or
    Cincinnati. And I am just curious why you didn't mention the
    one that we put in the Federal legislation. So those are my
    three questions, and I am in time.
        Mr. Boardman. I answered the first.
        Matt, yours is next.
        Mr. Rose. Go ahead.
        Ms. Molitoris. Mr. Chairman, Representative Kaptur, in my
    oral testimony, I did. I apologize that it was not listed. But
    the PEIS, we are going on two tracks right now, and the PEIS
    for the Ohio Hub Plan includes Cleveland to Pittsburgh,
    Cleveland to Columbus, Toledo to Cleveland, and Toledo to
    Columbus, and Columbus to Cincinnati. And we are doing that
    PEIS work now, and we are also looking at ways to apply for
    grants to do the EIS, which, the PEIS is at $7.5 million
    internally for Ohio and the actual EIS, the full-blown out, is
    $50 million. So we are looking at an application for a grant
    for that.
        Let's see----
        Ms. Kaptur. Somewhere we are listed, even though it was not
    in the formal testimony?
        Ms. Molitoris. And I apologize. We will send an amended and
    corrected version. And I apologize for that.
        Ms. Kaptur. Thank you for that. And thank you for being
    here. We admire your work so much.
        Yes, Mr. Rose wanted to make a statement.
        Mr. Rose. I appreciate your vision. I think you have hit
    the nail on the head. One of the things that you mentioned was,
    how are other networks paying for this? And we get into this
    trick logic that passenger rail doesn't pay. Well, passenger
    rail doesn't pay anywhere in the world. And by the way, highway
    systems don't pay either.
        And so, Congressman, you asked the question, who should be
    in charge of this? Well, it should be the DOT. That is logical,
    right? It should be the Department of Energy. That is a little
    less logical. But I mean, how can we possibly plan our society
    in the future without thinking about the energy impact of
    transportation? I know that we are bifurcated in the way we
    govern, but energy is as critical to transportation; it is like
    bread and water.
        Ms. Kaptur. And I look at that and think, that is not what
    should be up there. That is 1946. We need something better.
        Mr. Rose. The third group that should be responsible for
    this, you will be shocked, the Department of Commerce. I mean,
    think about, as a society, what we--what you all do up here is
    find ways to make sure that our people can have work and that
    we can produce goods, right? And yes, even transport them
    within the United States as well as globally. And then the
    fourth group is the housing group, because there are some
    cities in our country that are taking a whole different
    approach to housing, which combines with transportation, and
    yet we always come back to say, well, DOT is in charge of all
    of this; that is just one slice of it.
        And again, I hate to get back to places like China and
    other places, but they are kind of figuring this out. They have
    got to put their transportation systems next to where people
    are going to live, and they are going to provide transportation
    systems to get them to work and their goods to market.
        And by the way, the environmental thing is probably the
    latest issue to the party, but that is very much an important
    issue, along with energy, that literally, 5 years ago, when we
    were thinking about transportation systems, we weren't thinking
    about a carbon-restrained market, and we really weren't
    thinking about fuel either at all. And life has changed.
        Ms. Fleming. May I add a couple points? One, we believe
    that public benefits need to be valued and quantified. Again,
    internationally, they do a better job at that. For instance,
    France right now is working on doing a multivariational
    analysis where they are going to consider the pollution
    reduction, economic development, congestion reduction.
        And the second point is, there are some real lessons learn
    from the international countries. First, I would highlight that
    there is a commitment or priority by the national government to
    develop high speed rail. These systems would not have occurred
    without the financial investment by the national governments.
        And what they started in most of the countries was an
    initial trunk, and that was really, in most cases, 75, 100
    percent financially funded by the national governments. And
    then they expanded along the way.
        And the last point is that, in Europe, the systems
    basically are steel wheel on steel rail. And the reason for
    that is in order to be able to connect with downtown areas, but
    also to be able to connect with other country systems. You
    can't do that with Maglev type technology. You may get the
    faster speeds, but you are not going to be able to utilize and
    connect with existing rail networks.
        Mr. Pastor. Can I ask a question very quickly? When you
    said flat, no water, and ready for train, I thought we were
    talking about Arizona.
        Ms. Kaptur. Hey we are happy to connect to Arizona, just so
    you don't take our water.
        Mr. Chairman, I just want to express the opinion: I support
    a national plan. As a planner by profession, I support
    planning.
        However, I liked what you said, Ms. Fleming, about start
    with a trunk line where you have people who have the will to do
    this, and let's get it done and show the rest of the country.
    And I think Congressman LaTourette and I know just how to do
    that.
        Mr. LaTourette. We do.

                                 LENGTH OF PLAN

        Mr. Olver. Well, I don't know that I am in any better
    position than I was in the first situation. This is a wonderful
    conversation.
        But quickly, if I could, how long would it take to develop
    a plan that incorporated all of these different ideas?
        Ms. Fleming, your comments here at the last moment, very,
    very important. The cost benefits. How do you do this without,
    as you said in your earlier comments, without spending a lot of
    money? At one point you said you are afraid we are going to
    spend a lot of money without the best benefits, with far from
    the optimum benefits the way this goes. We have a stimulus bill
    which has an exemption from planning, except that that money
    has to be spent on the one thing that has been created at an
    earlier time, sort of piecemeal, by T&I but with added--I
    helped to add to it and so forth--of the 11 corridors which are
    designated high speed rail corridors.
        They didn't bother to put in the designation of our one
    really appropriate corridor, most appropriate corridor maybe
    from the original comments that you made, Ms. Fleming, of
    populations, high population density in a very restricted kind
    of an area, very short-term area.
        You are not going to build high speed rail in the terms of
    European rail if there are 500 miles between two stops. You are
    going to do it where it is three stops maybe in that 500 miles
    rather than only long distances between major metropolitan
    areas.
        How long would it take to incorporate all of these things
    that you have been talking about around the edges of this idea?
    Everybody agrees there has to be a plan. How long it would take
    to do such a plan properly, by the Federal Government leading
    that planning process through the Secretary of Transportation
    and so forth?
        Mr. Boardman. Too long. It will be too long. And a cost-
    benefit analysis----
        Mr. Olver. Even 3 weeks from now, we are going to be
    operating on something that has to be done in 3 weeks.
        Mr. Boardman. Mr. Chairman, in all due respect, you said to
    us, to me, that we, all of the sudden, got this $8 billion,
    amazing. I don't know if that is the word that you used. You
    may have used stronger words than that. But here we were with
    $8 billion to spend, and we don't have a plan to spend it, and
    yet we need a plan to spend it.
        Mr. Olver. As Ms. Kaptur pointed out, we have never had a
    Federal commitment to money. The Federal commitment to money
    first appeared in the authorization bill last fall and then is
    implemented with a big new sum of money coming down the road.
    And here we are all running to catch up. We have done that
    planning before.
        Mr. Boardman. But a lot of the interstate highway system
    was never built that passed any muster for cost-benefit
    analysis. But because of a political decision, it was because
    this place needs to be connected to that place, and therefore,
    it gets built, and we need to get it done.
        Part of what we need to do here today is a collaborative--
    it is the freight railroads, it is Amtrak, and the States.
        Mr. Olver. You have to bring freight in.
        Mr. Boardman. Bang, go do it.
        Mr. Olver. I am getting close to the end of my time again,
    already. Europe--Cleveland, no disrespect meant to Toledo or
    Ashtabula. That is your big city, isn't it?
        Mr. LaTourette. No.
        Mr. Olver. What is your big city? You do come into the
    Cleveland suburbs.
        Mr. LaTourette. I do come into the Cleveland suburbs, and I
    am a Clevelander.
        Mr. Olver. But Cleveland to Columbus to Cincinnati sounds
    like one of those very best appropriate places that Ms. Fleming
    has been talking about.
        But in even what planning had been done, the high speed
    rail corridors, only one of those 11 corridors is on dedicated
    track. The kind of thing that really is intended to go 150
    miles an hour, that is the California system. All of the others
    are intended to go incrementally, which gets you right into the
    face of the problem that we were talking about with freight. We
    can incrementally go up from Class III to Class IV, to Class V,
    and so forth, with those expenditures in the $4 million to $7
    million per mile. And when we get there, we will not have
    figured out what we are going to do with freight.
        That is the point at which freight and passenger cannot
    operate on the same track. Then it has to be separated. Then
    you have to have grade separations and dedicated track and so
    forth if you want to go farther.
        So we really are stepping off here without looking to see
    where we are going, in a way.
        Ms. Fleming. May I make a couple of comments, Mr. Chairman?
        Mr. Olver. Yes.
        Ms. Fleming. I think two points. One, we did not use speed
    as a threshold in our work. We really used the FRA definition,
    which is the time competitiveness with other modes. So speed
    was not what we used.
        Mr. Olver. Authorizers have used a rather vague 110 limit.
    It doesn't really--it isn't a fixed line.
        Ms. Fleming. That is right. That is right. That is right.
    So, as you know the corridor characteristics are extremely
    important. Having that population density----
        Mr. Olver. But her density is almost perfect for that.
    There are 100 miles between each one----
        Ms. Fleming. But it is also very critical, not just what
    the corridor looks like today, but how that service is set up.
    It has to compare favorably with other alternatives. You want
    to get people out of their cars, maybe not considering
    airports. So the door-to-door trip time is critical, as well as
    the frequency and reliability of service. So those things, I
    just wanted to make sure you understood that.
        Going back to the plan, a couple points. The plan could
    just be, what are the goals for this high speed rail system?
    You know, it should clearly articulate that as well as, what is
    the Federal role as well as other stakeholders, and then you
    can build upon that. So I think clearly articulating, what is
    the national vision and goals for having a high speed rail
    system? How does it fit into the national transportation
    system?
        So you know, you can build with that kind of framework. And
    then you will have all of these projects that we have heard
    about today, so you really want to develop policy and
    procedures for making those important decisions in trying to
    decide, you know, where to put your money, so to speak.
        Mr. Olver. Mr. Latham.
        Mr. Latham. Thank you, Mr. Chairman.

                                    DISTANCE

        Ms. Fleming, in the GAO report you studied a number of rail
    systems in other countries, and many of those countries are
    much smaller than the U.S.--I mean, Japan is about the size of
    Montana. Spain is Oregon doubled. France is about the size of
    Texas. And in your report on page 16, you have got a chart
    about utilization of rail over different distances. And it
    becomes apparent that it really peaks between 314 and 469
    miles, and then just falls off dramatically from there.
        And I guess in a way that kind of begs the question as to
    whether we should be looking for utilization more in these
    ranges of distances that are more convenient? And we are
    competing with air. You know, it takes 6, 7 hours to take the
    train down to Charlotte from D.C.; hour and 20 minutes in an
    airplane. You have airport and all of that time involved. But
    where is the best place we can go? Do you know? Can you tell us
    what we should be focusing on first, distance wise? Where the
    biggest utilization is?
        And I have ridden the trains in France and across Europe.
    And they are electric. And if you are going to have high speed
    rail, it is going to be electric. One huge advantage France has
    is they are 80 percent nuclear energy. So you are very
    environmentally clean to start with. You have a cheap supply of
    energy to run those trains on. Isn't that also part of the
    whole equation, too, if we are going to have high speed rail?
        Ms. Fleming. To answer your first question, what our work
    found that, 100 miles or less, passengers are not really
    willing to leave their car. That is the threshold on the lower
    end. On the higher end, anything over 500 miles, folks would
    rather hop on a plane and go use that mode of transportation.
    So what we really found is up to 100 to 500 miles seems to be
    the threshold that folks, again, if it is time competitive, and
    it is door-to-door, are willing to consider, particularly if
    all of those other things are in place in terms of the service
    is reliable, it is frequent, the price point is there. And that
    seemed to be the threshold for, again, the systems that we
    looked at.
        Mr. Latham. Mr. Boardman, do you have any comment?
        Mr. Boardman. Yes, I do. You used Charlotte as one of the
    examples, but the example is not Washington to Charlotte; the
    example is Charlotte to Atlanta, 245 miles and 110-miles-per-
    hour or 150-miles-per-hour rail service becomes very
    competitive. If you want to fly from Atlanta to Charlotte,
    oftentimes you will fly from Atlanta to Newark or Atlanta to
    LaGuardia and then back to Charlotte. Because of those long
    distances, and the FAA's studies show you that part of the
    reason you have congestion, air congestion, in New York City is
    not because people want to go to New York, but they have to go
    to New York to get to where they want to go. So they fly, to
    get from Atlanta to Charlotte, they fly to New York and back to
    Charlotte. It makes no sense from a policy standpoint to do
    that when you could have exactly what is being talked about
    with rail in that corridor, and it is a perfect corridor.
        Mr. Latham. But to have that high speed train, you have to
    have electric trains.
        Mr. Boardman. To do over 110. But I think, personally, that
    we should electrify everything in this country on rail.
        Mr. Latham. Then we get back to the whole debate, do we
    build more coal energy? If we can't build nuclear, how are we
    going to produce all of this energy that we need? We don't have
    a grid in this country to make it uniform so that you can have
    electricity everywhere you go.
        Mr. Boardman. I think you are exactly right when you
    connected the two. I think the electricity and rail and the--
    not only the environmental but the mobility issues are
    connected to rail and to electricity, clearly.
        Mr. Latham. Anybody else have any comment?

                           RANGES OF HIGH SPEED RAIL

        Mr. Rose. I just think, again, somebody mentioned
    population growth; 300 million people in this country. We are
    going to 337 million by 2030. Our airports, we have a number of
    airports that are jacked up; 30 percent of all the take off and
    landings at American airports are less than 350 miles. So we
    are going to end up building a whole new set of airports and
    new airplane capacity. Again, if we looked at of this
    holistically, you would make a different decision.
        Mr. Latham. So is the answer to my question that we should,
    first of all, focus in on that range for high speed rail?
        Mr. Rose. From my standpoint, Congressman, and this answers
    your frustration, too, the elephant in the room is that when
    you are talking about high speed rail with these 11 or 12
    corridors that is bantered around, you could be easily looking
    at a trillion dollars. And when we say that, everybody steps
    back and says that is not doable.
        But if you think about a trillion dollars over 10 years,
    and you think about how it could change travel and change
    energy dependency and change environmental issues, and change
    commute times, that, to me, is the issue why we get into this.
    I call it ``passenger rail on the cheap'' when we want to go on
    a freight rail and put it to 79, and we can incrementalize
    ourselves into it because we don't want to deal with the real
    deal. And the real deal is probably a trillion dollars for
    these 11 or 12 separated corridors, high speed, 150.
        And then, if you want to do it, you have got the issue of
    how you are going to power them; probably electrification. If
    you are going to do those, then you could put a transmission
    line in the railroad.
        Mr. Boardman. You are still going to have to have the
    regular rail service that meets it because you are not going to
    stop at every station. So you will need that. For the 10 years
    that I was commissioner of transportation for New York, I spent
    $30 billion on highway and transit. Just about $3 billion a
    year. So the numbers to me are not as big as what they appear
    to be when you really pull them all together, and that is
    exactly what Matt is talking about.
        Mr. Latham. I just have one closing point. I don't want to
    make it political or anything. But the fact of the matter is,
    in the last 9 months, we have obligated or spent in this
    government $5.3 trillion. If we had taken one of those trillion
    dollars and put it into this, the whole country would have been
    a hell of a lot better off.
        Mr. Boardman. You are right. Exactly.
        Mr. Olver. If we planned first. If we had a comprehensive
    plan.
        Mr. Latham. No, let's get a plan and spend it there rather
    than waste it.
        Mr. Olver. Mr. Pastor.
        Mr. Pastor. The other issue that we tend to forget is the
    population shift that is occurring and where the population
    growth is. It is all going towards Texas and west. And so if
    that is what is happening to this country, what consideration
    are you going to give it in terms of protecting the environment
    it still has and the cost benefit, et cetera?
        But I don't think many people are willing to say that is
    what is happening, but that is the reality. More congressional
    districts are going to shift west, and so that is another
    reality. And I am just going to open it up. I know that you
    wanted to make a comment.
        I still would like to get your thoughts on this development
    of a plan. You already told me who should be involved and how
    realistic it is to get it done in time. We are not going to get
    it done in time to spend $8 billion, but where should we put
    the priority?
        Ms. Molitoris. Mr. Pastor, a couple of things, first of
    all, on the plan, I think we need to do a plan that has both
    the incremental and the high speed elements. That is what we
    are doing in Ohio. There has been a lot of comment that sounds
    like it is an either/or situation. And I don't want to do Joe's
    work for him, but if you look at the 14 corridors that have
    State-sponsored service right now and you look at the needed
    support from the State every year--somebody talked about, I
    think you did, Joe, the annual investment that is required--out
    of those 14 corridors, 12 of them are--the highest one is 11.2
    and below. Only California and Illinois spend more.
        Plus, they create a lot of opportunity to grow ridership.
    When you talk about France and Spain and China and Japan, they
    never gave up their rail passenger service. They have invested
    in it over the last 50 years. When we made other decisions. I
    think Matt said it; we had a different plan.
        So I remember riding on a New Jersey Transit train into New
    York, and I was talking about somebody saying, this is really
    great; I am happy I am on this train. And she looked at me kind
    of blankly as if, what was I talking about? And I said I was
    from Ohio, and we don't have as much as you do. And she looked
    at me as if it was unimaginable because it is so much a part of
    life in the northeast. We need to make it a part of life in
    Ohio for the majority of our citizens.
        We have an opportunity, I think, with the vision of
    Congresswoman Kaptur and Congressman LaTourette to really focus
    on high speed in that north corridor and in other areas. At the
    same time, we can create opportunity for other corridors to
    build up from 79. I don't think we have to say it is all or
    nothing, one or all.
        And I think a plan, if partnerships are involved, can be
    done in a reasonable amount of time, a year, I think we can do
    that. We are going to have our plan done by the end of the
    year, but we are not a country. We are a State.
        Mr. Olver. Mr. LaTourette.
        Mr. LaTourette. Thank you, Mr. Chairman.
        First of all, it makes me nervous that you studied the map,
    and you know about Ashtabula. I am very nervous. Actually,
    Ashtabula has a storied history. It is where the Ohio crime
    families smuggled whiskey from Canada in during prohibition and
    distributed it to Cleveland and Youngstown. Probably didn't go
    to Toledo, Marcy.
        Ms. Kaptur. Other gangs controlled us.
        Mr. Pastor. They used the train, right?
        Mr. LaTourette. They did. The Interurban.
        One of the disappointments--and I don't want to
    overemphasize this plan business, but one of the
    disappointments I have had as a Republican was that we always--
    in one case, President Bush gave zero, as Ed mentioned. And in
    other cases, we always had to fight to give Amtrak enough to
    fail. I mean, we always nibbled around the edges; $800 million,
    a billion, a billion 2, a billion 4, never enough to take care
    of your backlog or never enough to put new rolling stock on the
    tracks.
        And part of the plan has to be, we are either going to make
    the societal decision that we are going to be in the passenger
    rail business, or we should get the hell out of it and close
    down Amtrak and be done with it. But this sort of nibbling
    along is ridiculous. I for one think that a trillion used to be
    a lot of money around here. It is not so much any more. And I
    for one say spend the trillion, get this thing done, and get it
    done right.
        You know, I think this hearing has demonstrated, and I am
    glad we are all in agreement that this pilot line is going to
    be from Chicago through Toledo to Cleveland, and so we don't
    have to worry about it anymore.
        Mr. LaTourette. And I do think that if you build it, they
    will come. And I think we have to have one really nice
    service--I would like it to be where Marcy and I want it, but
    if it has to be someplace else--but I think if you show people,
    hey, this is a better way than getting down in your underwear
    at the airport and waiting for an hour and taking the plane, or
    driving in your car, they will do it. And that's how they have
    been successful.
        The other thing we have to get out of our head is that
    we're not going to have to subsidize this as a government.
    We're going to have to make that choice.
        When we were in France, I asked somebody, what was the cost
    of a ticket? How much is subsidized? Seventy percent.
        So this complaining that, oh, Amtrak, we've got to give
    them $1 billion. It's nuts, if you're going to be in the
    passenger rail business, it's not a money maker. It's a way to
    get your people to work and to get people around. And so I hope
    we go in that direction.
        But we're really whistling in the wind until we solve the
    Chicago problem. My friend, Jim Oberstar, always talks about
    the fact that if Matt offloads a container, a C-tag, it takes
    18 hours on his train to get from Seattle to Chicago. It takes
    18 hours to get from the west side of Chicago to the east side
    of Chicago before it can come east.
        So when you talk about the plan, I hope that part of the
    plan--and this is where the Senate screwed it up in the highway
    bill--is to fully fund the CREATE program and get the
    bottlenecks taken care of, whether it's Long Beach, whether
    it's Chicago, and get this show on the road.
        The question that I have--and, Mr. Boardman, I have been
    waiting 3 years to ask you this question. Since you no longer
    work for the Bush administration, when you were the
    Administrator at FRA, we had really bumped up the RIF program,
    the Railroad Investment Fund, to $40 billion, I think was the--
    --
        Mr. Boardman. Thirty-five.
        Mr. LaTourette. Close enough, $35 billion. And we could
    never get you guys to spend it.
        Now we had a professor from Minnesota in here the other
    day, and he was proposing to rip up all the roads in Iowa. And
    he was complaining--he had consumed, I think, some of the Kool-
    Aid with these guys who want to re-regulate the railroads and
    roll back, go back to the Staggers Act days.
        So what's the bias? That money was sitting there, and I
    think you only approved the DM&E line, right? Did anybody else
    get any money?
        Mr. Boardman. I don't think we ever approved the DM&E line,
    did we, Matt?
        Mr. Rose. No. You gave money to the DM&E but not the----
        Mr. Boardman. No, we didn't ever approve the DM&E. That was
    competitive with another railroad.
        Mr. LaTourette. Right. Well, it was competitive with
    another railroad.
        But as we move forward, I mean, just like we are talking,
    this is like sewers to me. You've got a main line, and then
    you've got all these laterals that have to run off it. And
    that's the way it's going to have to be with rail, too.
        So what was the problem with getting that money out to
    short lines so they could connect to the main line so that the
    chemical guys and the rural coal guys would quit complaining?
        Mr. Boardman. There was a policy point of view in the
    administration that didn't allow the money to come out very
    quickly--or at all, in some cases. That policy point of view
    has changed. And it's changed also I think with the railroads
    that are interested, the freight railroads, at least some of
    them, and now the larger ones are interested in that particular
    fund as well. And we see it as a realistic way to do financing
    for longer assets like locomotives.
        Mr. LaTourette. Right. And, Mr. Chairman, I would just say,
    you obviously have great sway with the new administration. I
    would just urge you to ask the President and Secretary LaHood
    to let our money go and make these improvements.
        Mr. Olver. Ms. Kaptur.
        Ms. Kaptur. I would just like to place some recent American
    history on the record.
        If we think back to the first Arab Oil Embargo in 1978 and
    the capture of the Iranian hostages--some of us lived through
    that, and we saw a President of the United States lose an
    election for many reasons, but the primary one was because our
    entire economy was sent into a terrible nosedive and he had no
    ability to pull us out.
        The oil imports and the cost of those drove this economy
    into a terrible, terrible recession; and I began my career in
    Congress shortly thereafter trying to pick up the pieces in
    districts like I represent.
        Then I served in Congress during the 1980s; and then we
    approached the first Persian Gulf war, which was fought over
    the oil field between Kuwait and Iraq. We tried to establish
    the international line again between those two countries. They
    said that was the reason for our going in there. We can't seem
    to extricate ourselves from there again, now the second largest
    set of oil fields in the world.
        And we also watch the movement of our military and other
    strategic assets into the area of Georgia, Azerbaijan,
    everything that just surrounds the Caspian Sea.
        We have to fight a political fight in this country to
    convince the American people that our soldiers' lives are worth
    more than protecting oil. That's my closely held view. And this
    is part of the answer.
        We seem to forget that we are totally dependent upon
    imports, totally. And I don't know why it's so hard to remind
    ourselves that it really is our lifeblood and that it
    circulates through our veins every day, and that we simply have
    to build our way out of this as a country. This is an important
    part of the solution.
        We also have something happening in our country that is
    truly amazing. The three Os--Olver, Oberstar and Obey. We just
    need to put those circles together, and we get our high-speed
    rail.
        Mr. Boardman. You might want to have Obama in that as well.
        Ms. Kaptur. Obama. Oh, that's a good line. I can use that.
    Great. Great. Great. Great. There you go. Do we have another O?
    Is there one in the Senate? All right. Let's add Obama to it.
        So this will never happen again, this alignment. I served
    in Congress 27 years. This will never happen again. We have an
    opportunity we cannot let get by us.
        The other thing, getting down to the nitty-gritty, I want
    to place on the record passenger ridership on Amtrak for the
    State of Ohio. I want to brag, as a representative from the
    station that has the most passengers in Toledo. But I also
    represent Sandusky, Ohio. Those combined have an annual
    ridership of over 56,322, double the ridership out of the
    Cleveland system and quadruple out of Cincinnati.
        I think it's important to understand that, to really see
    where the people are, where they are going. And to also say
    that I think we ought to reward communities and any trunk lines
    we establish, those places that have not torn down their rail
    stations but have improved them, those that have put in
    infrastructure to handle passengers. And there are
    opportunities in other places where services have truly been
    underutilized. I think we ought to reward good measure as part
    of this plan where people have been trying.
        So I wanted to place that on the record.
        I also want to ask--the people that are before us today,
    Mr. Chairman and members, really are the best our country has.
    You know more about this on the national basis than anybody.
    You might be able to add some additional private carriers to
    the group, but, nonetheless, really, you know----
        I know what Director Molitoris did before, Mr. Boardman,
    what you're doing now. And I truly ask your advice, and could
    you provide to the record the best individuals you know that we
    could privately consult with, or maybe bring up to a briefing,
    responsible for passenger rail development in other countries
    that are the most efficient, the most well-financed, the most
    well-thought-through.
        I went to one presentation by--is it Alsten--out of New
    York. I was very impressed with that presentation, but it's the
    only one that I have really had on the actual systems. And I
    think we need a little inspiration beyond what we have had
    today from all of you. So if you could give us additional
    suggestions, I would truly appreciate for the record.
        Mr. Chairman, I would like to place the record of Amtrak in
    Ohio into the official record of today's hearings.
        Mr. Olver. Well, it is almost 5 o'clock. I will try not to
    go beyond about 1 minute after 5 in my own comments, and we are
    going to close.
        I want to thank you all. This is almost the end of a series
    of hearings that we are having where people testifying are
    supposed to help us think, make us think, which is a major part
    of what has been going on here. It's been a good conversation.
    I think it's been a good conservation. You really--as Marcy
    just said, you have a huge amount of experience and a huge
    amount of knowledge about the system. I wish we could put it
    together. We should sit you around and make the plan.
        I do want to just mention that in a series of similar
    hearings from 2 years ago it was out of that that the
    sustainable Communities Initiative that was just announced by
    two of the secretaries that Mr. Rose mentioned ought to be part
    of it. And I have spoken to each of them how really there is a
    three-legged stool, which should include Energy, and you add in
    Commerce. Because I usually talk about how we have the
    responsibility for housing and for transportation, for HUD and
    for transportation. We don't have either Commerce or Energy.
        And so in the housing, you are driven to the business of
    what are the communities going to look like and where are you
    putting your housing to--and then, of course, where are you
    putting your jobs? I talk about the jobs, but I've never really
    talked about it in terms of bringing the Commerce Department
    in. But the Energy Department, that three-legged stool I think
    is very critical.
        We are surrounded here by Ohio. We are besieged by Ohio on
    the right and on the left, essentially.
        Ms. Kaptur. There are two Os in Ohio.
        Mr. Olver. Well, in any case, I appreciate it very much. I
    thank you very, very much for being here, for helping us to
    think and making us think today.
        With that, the hearing will be closed. Thank you.

                               W I T N E S S E S

                                                                       Page
    Babbitt, J. R....................................................    99
    Boardman, Joseph.................................................   329
    Cox, Victoria....................................................    99
    Fleming, Susan...................................................   329
    Fruin, Jerry.....................................................   249
    Gilligan, Margaret...............................................    99
    Krakowski, Henry.................................................    99
    LaHood, Hon. Ray.................................................     1
    Lobue, Nancy.....................................................    99
    Malarkey Black, Faye.............................................   249
    Marsico, D. J....................................................   249
    Molitoris, J. M..................................................   329
    Rose, Matt.......................................................   329
    Schwarz, Robert..................................................   249
    Scovel, C. L., III...............................................   165
    Siggerud, Katherine..............................................   165

                                   I N D E X

                                  ----------                              --
    --------

                          DEPARTMENT OF TRANSPORTATION

                                                                       Page
    Air Traffic Controllers..................................20, 35, 44, 47
    Auto Task Force..................................................24, 47
    Environmental Issues.............................................    19
    Essential Air Service............................................    45
    Funding Mechanisms...............................................16, 43
    High Speed Rail..........................................23, 32, 41, 46
    Highway Trust Fund...............................................    15
    MARAD Questions for the Record...................................    59
    Metropolitan Planning Organizations..............................    29
    Movement of Goods................................................    18
    NextGen..........................................................    26
    Opening Remarks, Chairman John W. Olver..........................     1
    Opening Remarks, Ranking Member Tom Latham.......................     3
    Opening Remarks, Hon. Ray LaHood, Secretary of Transportation....     4
    Rail.............................................................    20
    Reauthorization..................................................    17
    Recovery Act Funds...............................................    17
    Smart Growth.....................................................    27
    Star Alliance....................................................    23
    TIFIA Program....................................................    33
    Transit..........................................................31, 45
    Written Statement, Hon. Ray LaHood, Secretary of Transportation..     7

                        FEDERAL AVIATION ADMINISTRATION

    3-D Path Arrival Management Tool.................................   136
    ADS-B............................................................   154
    AIP..............................................................   161
    Air Traffic Control Facilities...................................   132
    Air Traffic Controllers...................................157, 158, 162
    Airline Delays...................................................   155
    Airspace Design..................................................   131
    Airspace Redesign................................................   154
    Alternative Fuels Research.......................................   161
    Back-up Plan to Satellite........................................   138
    Burke Lakefront Airport..........................................   133
    Closing Remarks of Chairman Olver................................   163
    Controller Hiring................................................   146
    Controller Training..............................................   134
    Demonstration with Controllers...................................   130
    FAA Computer Security............................................   156
    Foreign Repair Stations..........................................   163
    Human Intervention Motivation Study............................142, 162
    Inspectors.......................................................   162
    LAX..............................................................   142
    Memphis Airport..................................................   152
    NEXTGEN...................................................126, 128, 136
    Opening Remarks, Chairman John W. Olver..........................    99
    Opening Remarks, Ranking Member Tom Latham.......................   101
    Opening Remarks, the Honorable Randolph Babbitt, Administrator,
      FAA............................................................   102
    Recruitment Efforts in Minority Communities for Air Traffic
      Controllers....................................................   138
    Regional Jets and the Scope Clause...............................   159
    Renewable Fuels..................................................   155
    RTCA Project.....................................................   137
    Rural America....................................................   131
    Tower Simulators.................................................   135
    TRACON...........................................................   153
    Traffic Control System...........................................   135
    Training.........................................................   130
    Written Statement, Hon. J. Randolph Babbitt, Administrator, FAA..   105

     DEPARTMENT OF TRANSPORTATION OVERSIGHT: TOP MANAGEMENT CHALLENGES AND
                                HIGH RISK SERIES

    ADS-B Program....................................................   244
    Air Traffic Controller Staffing..................................   234
    Amtrak...........................................................   239
    Aviation Trust Fund..............................................   234
    Collective Bargaining............................................   234
    Cyber Security...................................................   243
    David-Bacon......................................................   235
    Ethanol..........................................................   233
    Fast Action on the Stimulus......................................   228
    Federal-Aid Highway Program......................................   238
    GAO High Risk Series...........................................222, 243
    Gas Tax..........................................................   229
    Grant Management.................................................   223
    Green Energy.....................................................   239
    Grant Management.................................................   223
    High Speed Rail..................................................   240
    Highway Trust Fund...............................................   223
    Highway Trust Fund and Budget Authority..........................   226
    MARAD............................................................   247
    Natural Gas Tax..................................................   229
    Opening Remarks, Calvin L. Scovell, III, DOT Inspector General...   167
    Opening Remarks, Chairman John W. Olver..........................   165
    Opening Remarks, Katherine Siggerud, Managing Director, U.S. GAO.   191
    Opening Remarks, Ranking Member Tom Latham.......................   166
    Operating Rules..................................................   231
    RABA.............................................................   227
    Recovery Act Funding.............................................   225
    Safety...........................................................   223
    Solution to the Highway Trust Fund...............................   224
    Southwest Airlines...............................................   242
    STARS............................................................   235
    States and Localities............................................   232
    Timeframes.......................................................   228
    Use of Recovery Act Funds........................................   222
    Written Statement, Calvin L. Scovell, III, DOT Inspector General.   169
    Written Statement, Katherine Siggerud, Managing Director, U.S.
      GAO............................................................   193
    Vehicle Miles Traveled Tax.......................................   230

                   TRANSPORTATION CHALLENGES OF RURAL AMERICA

    Amtrak...........................................................   316
    Broadband Initiative.............................................   314
    Bus System.......................................................   311
    CARE Coalition...................................................   312
    Carriers.........................................................   310
    Connectivity.....................................................   307
    Deregulation of Transportation...................................   306
    Disabled Veterans................................................   315
    Ember Air........................................................   322
    Fairness.........................................................   320
    Gas Tax..........................................................   310
    Government Regulation............................................   308
    Highway Construction.............................................   308
    Intercity Bus Program............................................   318
    Iowa System of Transportation....................................   316
    Opening Remarks, Chairman John W. Olver..........................   249
    Opening Remarks, Dale J. Marsico, CCTM Executive Director,
      Community Transportation Association of America................   272
    Opening Remarks, Faye Malarkey Black, Vice President, Regional
      Airline Association............................................   262
    Opening Remarks, Jerry Fruin, Associate Professor of Economics,
      University of Minnesota........................................   253
    Opening Remarks, Ranking Member Tom Latham.......................   251
    Opening Remarks, Robert Schwarz, Executive Vice President, Peter
      Pan Bus Lines..................................................   299
    Passenger Subsidy................................................   321
    RIF Program......................................................   313
    Rural Development................................................   324
    Rural Transportation.............................................   309
    Tax Credits for Rail Lines.......................................   307
    Tubular Rail.....................................................   320
    Vehicle Miles Traveled...........................................   319
    Veterans in Rural Areas..........................................   314
    Written Statement, Dale J. Marsico, CCTM Executive Director,
      Community Transportation Association of America................   275
    Written Statement, Faye Malarkey Black, Vice President, Regional
      Airline Association............................................   264
    Written Statement, Jerry Fruin, Associate Professor of Economics,
      University of Minnesota........................................   256
    Written Statement, Robert Schwarz, Executive Vice President,
      Peter Pan Bus Lines............................................   301

      THE FUTURE OF HIGH SPEED RAIL, INTERCITY PASSENGER RAIL, AND AMTRAK

    Agency Negotiation...............................................   385
    Design of a National Plan........................................   395
    Distance.........................................................   403
    Efficient Trains in the World....................................   397
    Environmental Planning...........................................   389
    Freight/Passenger Rail...........................................   384
    Funding High Speed Rail..........................................   398
    High Speed Rail..................................................   382
    Length of Plan...................................................   400
    Liability........................................................   388
    National Transportation Plan.....................................   387
    Opening Remarks, Chairman John W. Olver..........................   329
    Opening Remarks, Joe Boardman, President and CEO, Amtrak.........   358
    Opening Remarks, Jolene M. Molitoris, Director, Ohio DOT.........   338
    Opening Remarks, Matt Rose, Chairman, President, Burlington
      Northern Santa Fe Railway......................................   346
    Opening Remarks, Ranking Member Tom Latham.......................   330
    Opening Remarks, Susan Fleming, Director, Physical Infrastructure
      Issues, U.S. GAO...............................................   331
    Outreach.........................................................   391
    Passenger and Freight Rail.......................................   394
    Possibilities of High Speed Rail.................................   385
    Rail in Cities...................................................   391
    Ranges of High Speed Rail........................................   404
    State Rail Plans.................................................   386
    Train Speed and Bulk.............................................   388
    Transportation and Environmental Policy..........................   384
    Written Statement, Joe Boardman, President and CEO, Amtrak.......   363
    Written Statement, Jolene M. Molitoris, Director, Ohio DOT.......   340
    Written Statement, Matt Rose, Chairman, President, Burlington
      Northern Santa Fe Railway......................................   349
    Written Statement, Susan Fleming, Director, Physical
      Infrastructure Issues, U.S. GAO................................   333