[Senate Hearing 111-380]
[From the U.S. Government Publishing Office]


                                                        S. Hrg. 111-380
 
                  FIELD HEARINGS FOR FISCAL YEAR 2010 

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

                                HEARINGS

                               before the

                        COMMITTEE ON THE BUDGET
                          UNITED STATES SENATE

                     ONE HUNDRED ELEVENTH CONGRESS

                             FIRST SESSION

                               ----------                              


 May 28, 2009 (9am)--HOW INFRASTRUCTURE INVESTMENTS CAN BOLSTER NORTH 
    DAKOTA'S ENERGY AND AGRICULTURE ECONOMIES: THE U.S. 85 CORRIDOR

 May 28, 2009 (1pm)--HOW INFRASTRUCTURE INVESTMENTS CAN BOLSTER NORTH 
    DAKOTA'S ENERGY AND AGRICULTURE ECONOMIES: THE U.S. 85 CORRIDOR

July 2, 2009--FIELD HEARING TO CONSIDER HOW INFRASTRUCTURE INVESTMENTS 
   CAN FOSTER ECONOMIC DEVELOPMENT AND THE AGRICULTURE ECONOMY: US 52

November 12, 2009--FIELD HEARING ON INFRASTRUCTURE INVESTMENT: CREATING 
                    JOBS AND FUELING ECONOMIC GROWTH

   November 13, 2009--FIELD HEARING ON COMMUNITY ECONOMIC DEVELOPMENT

             [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

           Printed for the use of the Committee on the Budget
                               -------

















                  FIELD HEARINGS FOR FISCAL YEAR 2010



















                                                        S. Hrg. 111-380

                  FIELD HEARINGS FOR FISCAL YEAR 2010

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

                                HEARINGS

                               before the

                        COMMITTEE ON THE BUDGET
                          UNITED STATES SENATE

                     ONE HUNDRED ELEVENTH CONGRESS

                             FIRST SESSION

                               __________


 May 28, 2009 (9am)--HOW INFRASTRUCTURE INVESTMENTS CAN BOLSTER NORTH 
    DAKOTA'S ENERGY AND AGRICULTURE ECONOMIES: THE U.S. 85 CORRIDOR

 May 28, 2009 (1pm)--HOW INFRASTRUCTURE INVESTMENTS CAN BOLSTER NORTH 
    DAKOTA'S ENERGY AND AGRICULTURE ECONOMIES: THE U.S. 85 CORRIDOR

July 2, 2009--FIELD HEARING TO CONSIDER HOW INFRASTRUCTURE INVESTMENTS 
   CAN FOSTER ECONOMIC DEVELOPMENT AND THE AGRICULTURE ECONOMY: US 52

November 12, 2009--FIELD HEARING ON INFRASTRUCTURE INVESTMENT: CREATING 
                    JOBS AND FUELING ECONOMIC GROWTH

   November 13, 2009--FIELD HEARING ON COMMUNITY ECONOMIC DEVELOPMENT

                                   
           Printed for the use of the Committee on the Budget

                               ----------
                         U.S. GOVERNMENT PRINTING OFFICE 

50-924 PDF                       WASHINGTON : 2010 

For sale by the Superintendent of Documents, U.S. Government Printing 
Office Internet: bookstore.gpo.gov Phone: toll free (866) 512-1800; 
DC area (202) 512-1800 Fax: (202) 512-2104 Mail: Stop IDCC, 
Washington, DC 20402-0001 
















                        COMMITTEE ON THE BUDGET

                  KENT CONRAD, NORTH DAKOTA, Chairman

PATTY MURRAY, WASHINGTON             JUDD GREGG, NEW HAMPSHIRE
RON WYDEN, OREGON                    CHARLES E. GRASSLEY, IOWA
RUSSELL D. FEINGOLD, WISCONSIN       WAYNE ALLARD, COLORADO
ROBERT C. BYRD, WEST VIRGINIA        MICHAEL ENZI, WYOMING
BILL NELSON, FLORIDA                 JEFF SESSIONS, ALABAMA
DEBBIE STABENOW, MICHIGAN            JIM BUNNING, KENTUCKY
ROBERT MENENDEZ, NEW JERSEY          MIKE CRAPO, IDAHO
BENJAMIN L. CARDIN, MARYLAND         JOHN ENSIGN, NEVEDA
BERNARD SANDERS, VERMONT             JOHN CORNYN, TEXAS
SHELDON WHITEHOUSE, RHODE ISLAND     LINDSEY O. GRAHAM, SOUTH CAROLINA
MARK WARNER, VIRGINIA
JEFF MERKLEY, OREGON

                Mary Ann Naylor, Majority Staff Director

              Cheryl Janas Reidy, Minority Staff Director

                                  (ii)
















                            C O N T E N T S

                               __________

                                HEARINGS

                                                                   Page
May 28, 2009 (9am)--How Infrastructure Investments Can Bolster 
  North Dakota's Energy and Agriculture Economies: The U.S. 85 
  Corridor.......................................................     1
May 28, 2009 (1pam)--How Infrastructure Investments Can Bolster 
  North Dakota's Energy and Agriculture Economies: The U.S. 85 
  Corridor.......................................................    49
July 2, 2009--Field Hearing to Consider How Infrastructure 
  Investments Can Foster Economic Development and the Agriculture 
  Economy: US 52.................................................    97
November 12, 2009--Field Hearing on Infrastructure Investment: 
  Creating Jobs and Fueling Economic Growth......................   147
November 13, 2009--Field Hearing on Community Economic 
  Development....................................................   189

                    STATEMENTS BY COMMITTEE MEMBERS

Senator Conrad......................................1, 49, 97, 147, 189

                               WITNESSES

.................................................................



Gaylon Baker, Executive Director, Stark Development Corporation..74, 77
Dr. Brad Bekkedahl, Williston City Commissioner..................18, 21
Beth Berge, Chief Operating Officer, Griggs-Steele Empowerment 
  Zone.........................................................207, 210
Dr. Jerry Bergman, Director of the Williston Research Extension 
  Center.........................................................38, 40
Hon. Dennis W. Johnson, Mayor, City of Dickinson, North Dakota...63, 66
Mark Johnsrud, Power Fuels President.............................33, 37
Hon. E. Ward Koeser, Williston Mayor.............................15, 17
Ellen Linderman, District VI Director, North Dakota's Farmers 
  Union........................................................138, 141
Becky J. Meidinger, Development Specialist, Cooperstown-Griggs 
  County Economic Development Corporation......................198, 203
Keith Monson, President, M-Power, LLC..........................217, 220
Patrick Nygaard, City Council President, City of Jamestown.....123, 125
Allen Orwick, Mayor of Michigan, North Dakota..................170, 174
Connie Ova, CEO, Jamestown/Stutsman Development Corporation....128, 134
Dean Rummel, President, TMI......................................83, 85
Brent Sanford, Watford City Council President....................30, 32
Chuck Steffan, COO, Missouri Basin Well Service..................79, 81
David Tressler, Vice President of Manufacturing/Special Projects, 
  Dakota Growers Pasta.........................................134, 136
Benjamin Vig, Representative for the Twenty Third District, North 
  Dakota House of Representatives..............................176, 180
Francis Ziegler, Director of the North Dakota's Department of 
  Transportation.......................4, 8, 52, 57, 103, 109, 156, 162


 HOW INFRASTRUCTURE INVESTMENTS CAN BOLSTER NORTH DAKOTA'S ENERGY AND 
              AGRICULTURE ECONOMIES: THE U.S. 85 CORRIDOR

                         THURSDAY, MAY 28, 2009

                                       U.S. Senate,
                                    Committee on the Budget
                                                      Williston, ND
    The Committee met, pursuant to notice, at 9:04 a.m. in the 
Williston Community Library, 1302 Davidson Dr., Williston, ND 
58801.
    Hon. Kent Conrad, Chairman of the Committee, presiding.
    Present: Senator Conrad
    [presiding].

              OPENING STATEMENT OF SENATOR CONRAD

    The Chairman. The hearing will come to order. I want to 
welcome everyone to this hearing of the Senate Budget 
Committee. This is an official hearing of the committee, so we 
will be operating under the rules of the U.S. Senate and an 
official record of this hearing will be kept.
    I especially want to welcome our outstanding witnesses here 
today. They include Williston Mayor Ward Koeser; Williston City 
Commissioner, Dr. Brad Bekkedahl; the Director of North 
Dakota's Department of Transportation, Francis Ziegler; Watford 
City Council President, Brent Sanford; Power Fuels President, 
Mark Johnsrud; and the Director of the Williston Research 
Extension Center, Dr. Jerry Bergman.
    We will have two panels today. I'll ask each of the 
witnesses to make a statement. I'd ask them to hold it to 
approximately 5 minutes. Full statements will be made part of 
the official record. That will leave us some time for questions 
to each of the panels.
    And this is especially important because what we are trying 
to do is build a case for improvements that I think we all know 
need to be made to Highway 85 as we prepare for the next 
transportation bill that will go through the Congress either 
later this year or sometime next year.
    This hearing will focus on how infrastructure investments 
in Highway 85 can foster the energy, agriculture, and 
manufacturing economies in this part of the State. We need to 
ensure that Highway 85 has the capacity to handle the increased 
economic activity in this region.
    The energy development in this part of the State, 
particularly with the oil boom in the Bakken formation, is 
crucial to North Dakota's economy. And, I might add, the 
importance of this corridor goes well beyond our own borders. 
This region is now of significant national importance and needs 
to be seen in that way.
    Our State is already one of the leading energy producers in 
the Nation and the expansion of energy production in this 
region will play an increasingly important role in the national 
effort to reduce our dependence on foreign energy. Highway 85 
represents a critical lifeline for this energy development.
    This map shows why Highway 85 is so important to the energy 
production in our State. We have major gas plants and oil 
fields scattered up and down this road. You can see there the 
green line is Highway 85 and we have depicted on this map--at 
least those of you in the first rows will be able to see it--
the oil fields, the gas fields that are close-by this highway.
    Specifically, 400,000 barrels of oil a day are produced in 
the corridor region and a large percentage of that--of that is 
hauled over Highway 85 to tank farms for transport via 
pipeline. The highway connects six major east-west highway 
systems that service these energy developments. And the highway 
serves as a major route for the transport of oil rigs, pipe, 
steel, and supplies.
    We also have significant and growing manufacturing and 
agricultural businesses in this area that similarly rely on 
Highway 85 to transport their products. Unfortunately, as we 
all know, Highway 85 was never designed to handle the 
increasing number of heavy trucks and oversized loads currently 
traveling on it. The highway simply must be repaired to foster 
continued growth in these industries, to ensure a safe travel 
route, and to better serve the communities in the area.
    Let me say that a key reason that I'm holding this hearing 
today is because last fall I traveled on Highway 85 and, I'll 
tell you, it made quite an impression on me. It's very clear 
that the condition of that road has to be addressed; that there 
are safety issues and safety concerns that have to be attended 
to; and that there is simply a volume of traffic that has to be 
addressed as well. Highway 85 was never designed for this level 
of development. I think all of us who have traveled on that 
road know that those statements are true.
    Improvements to Highway 85 will also pay dividends for 
agriculture in the region. It will enhance the transportation 
of crops and livestock. It will help increase export 
opportunities with enhanced access to Canada, and it will help 
further diversify western North Dakota agriculture with the 
ability to attract more value-added agriculture businesses to 
the region. The manufacturing businesses in the region will 
also benefit from improvements to Highway 85.
    The North Dakota Department of Transportation's ongoing 
study of the corridor will form the basis for determining the 
necessary investments that must be made. Let me emphasize that. 
There is a process that is set up in the State of North Dakota, 
under the direction of Mr. Ziegler, who is the head of our 
Department of Transportation, to prioritize needs in the State 
and to determine what kind of upgrades are necessary. We are 
not prejudging that process here today.
    I got called yesterday by a former State legislator who is 
very concerned that we are holding a hearing focusing on 
Highway 85 when there are so many roads in the State that have 
been adversely affected by flooding. And we told him that you 
have to keep in mind what we're talking about with Highway 85 
is future transportation program funding. The moneys that are 
used to address the damage to roads from flooding are FEMA 
public assistance funds. That is an entirely different pot of 
money. And, in fact, earlier this week I was in Lisbon and La 
Moure working on that separate pot of money, the FEMA disaster 
assistance funds that flow as a result of the Presidential 
declaration that deal with the flooded roads that have been 
dramatically impacted all across the State of North Dakota. But 
what we're focusing on here today is a separate pot of money, 
the money that will flow to the State as a result of the 
transportation legislation that will be considered by Congress 
either later this year or next. I think it's very important 
that we make that distinction.
    I intend to continue to work at the Federal level to bring 
resources to address the needs here in North Dakota, both the 
needs in those areas that have been affected by flooding and 
the opportunities that exist for improving transportation so we 
improve the economic opportunity for a region like this one.
    Highway 85, as I indicated earlier, is a key lifeline, not 
just for this community, but, really, for the national effort 
to reduce our dependence on foreign energy.
    North Dakota benefited greatly from the last highway bill, 
which was completed in 2005. As a negotiator of that bill, I 
worked to make sure that North Dakota received significant 
funding increases for our highways and transit needs. 
Specifically, I worked to secure one and a half billion dollars 
for North Dakota, a 31 percent increase over the previous bill. 
Annually, that averages over $230 million a year for highways, 
with additional funding provided for transit systems.
    We did very well in comparison to other States. We received 
two dollars for every dollar in gas tax money we send 
Washington. That put us in the top four States in the entire 
United States in terms of our return on our tax dollar sent to 
Washington.
    I also worked to have Highway 85 designated as a high-
priority corridor. The designation means Highway 85 is eligible 
for special corridor funding from the Federal Highway 
Administration to help expand the area into an even greater 
trade corridor.
    Here are some of the priorities that I intend to work on as 
we begin consideration of the next transportation bill. The 
next bill, I believe, must identify sufficient funding so that 
infrastructure investments are secure and robust over the 
length and term of that legislation. States and communities 
must be able to rely on this source of funds.
    Next, any new transportation bill must maintain recognition 
that rural transportation needs are absolutely vital to the 
Nation. After all, most of the energy production for this 
country, most of the agriculture production is in rural areas.
    And, finally, I will fight very hard to secure funding for 
long-term investments for our nationally important corridors 
like Highway 85. I am particularly interested in hearing from 
our witnesses on the immediate investments that are needed in 
Highway 85 and what future investments are needed to support 
the energy, agriculture, and manufacturing enterprises so 
important in this part of the State.
    I am also interested in learning whether any of the $170 
million in Federal stimulus funds provided to the State for 
roads have reached this corridor or are planned for this 
corridor.
    And with that, we will turn to our witnesses that are here 
today. Again, I want to thank them for their attendance and 
their participation.
    We have with us today, as I indicated, Williston Mayor Ward 
Koeser; Williston City Commissioner, Dr. Brad Bekkedahl; and 
the Director of North Dakota's Department of Transportation, 
Francis Ziegler.
    Francis, I'd like to start with you, if we could. It is 
very important that at this hearing we make the case on the 
needs for this highway corridor. There is no one better to do 
that than our Director of Transportation in the State of North 
Dakota who enjoys a reputation as someone who makes these 
decisions based on a process that prioritizes the 
transportation needs of the State of North Dakota.
    Let me just say that while most of the funding for roads 
and bridges comes from the Federal Government, we look to the 
State Department of Transportation to set the priorities. In 
other States, they do it differently. They have a political 
process. We have not done that in this State. We try to follow 
in priority order the needs that are determined by the State 
Department of Transportation.
    And let me just indicate that we have a high degree of 
confidence in the State Department of Transportation to make 
these judgments in a professional and objective way. We work 
closely with Governor Hoeven. I note that his Chief of Staff is 
here, Lance Gaebe. We appreciate very much his participation. I 
think that sends a signal that the Governor takes us seriously.
    Senator Dorgan and Congressman Pomeroy, who were with me 
yesterday, said that they wanted to make certain that the 
record from this hearing is made available to them and that 
they will do everything they can to support the conclusions 
that we reach as a basis--as--as a result of this hearing.
    Again, Mr. Ziegler, thank you very much for your being here 
and I think based on my previous dealings in the previous 
transportation bills, the credibility that the North Dakota 
Department of Transportation has, not only here, but around the 
country, serves us very well.
    Thank you, and please proceed.

  STATEMENT OF FRANCIS ZIEGLER, P.E., DIRECTOR, NORTH DAKOTA 
      DEPARTMENT OF TRANSPORTATION, BISMARCK, NORTH DAKOTA

    Mr. Ziegler. Thank you, Senator. I certainly appreciate the 
opportunity to be here before your budget committee.
    I'd like to address the following three items: Federal 
transportation legislative issues, Senator, that you had 
already talked about, how critical that is for the future; how 
infrastructure investments can bolster North Dakota's economy; 
and the US 85 corridor.
    Federal investment in North Dakota's highways is in the 
national interest and it is imperative that the reauthorization 
of the Federal highway program continue to serve the needs of 
rural States, allowing us to continue to meet the demands being 
placed on our highway network, including US 85.
    This year, I know we have some legislators in the audience 
here, but we had an unprecedented sum of nonmatching general 
Federal fund dollars that came from our legislative body to 
help with the program.
    The Chairman. Let me just ask you to stop for a minute, 
Francis. Obviously, we're having some problems with that 
microphone. Why don't we do this? Why don't we, Tracee--we'll 
give you this microphone. OK.
    Mr. Ziegler. Testing. OK.
    Earlier this month, the legislative body passed a $1.35 
billion budget and that was--it's a highlight of what the 
department had received this year. Of that, about $750 million 
was Federal aid, and so we certainly appreciate that. But the 
infrastructure certainly needed it for the immediate assistance 
to cities, counties, and townships, and to the State DOT to 
help with our infrastructure. So that's what we're all about.
    Senator I did provide you with a full document. In the 
interest of brevity this morning, I will just highlight a few 
of the items.
    The Department of Transportation is very, very concerned 
about the highway account of the highway trust fund approaching 
a zero balance this summer. It will be highly disruptive to 
States if FHWA begins to delay payment of State claims to 
reimburse costs. As a zero balance gets closer, States will 
begin to curtail bid openings and work to avoid the risk of not 
having funds to pay for that work. If the program is disrupted, 
we certainly are going to be in trouble. We hope that Congress 
can address that and we appreciate anything that you could do 
to help with that.
    The other thing is that a multi-year highway and surface 
transportation authorization bill is also needed. The bill 
would recognize the benefit the entire Nation receives from a 
strong Federal investment in surface transportation. And it's 
important under this legislation that rural States be able to 
get their fair share. We do have a large population base, a lot 
of highway--excuse me, a lot of highways, a large 
infrastructure base with few people to pay for it, and so it 
gets--the Federal aid is very important to us.
    Federal-aid highways in our state, not just those in 
highway--not just those on the national highway system, No. 1, 
serve as a bridge for truck and personal traffic between other 
States, enable Ag exports and serve the nation's ethanol 
production and energy extraction industries, which are located 
largely in rural areas. They're a lifeline for remotely located 
and economically challenged citizens. They enable people and 
businesses to traverse the vast tracts of sparsely populated 
land, and they provide access to scenic wonders, and enable and 
enhance investments to address safety on these rural roads, 
such as Highway 85.
    Highway transportation between our country's major 
metropolitan areas is simply not possible without excellent 
roads that bridge these vast distances. FHWA data on tonnage 
origins and destinations shows that just over 59 percent of the 
truck traffic using North Dakota's highways does not either 
originate or terminate within the State. So we're a bridge 
State.
    A significant portion of the economy in our State is based 
on Ag, energy production, and natural resource extraction. In 
fact, the Governor's economic package has identified Ag and 
energy and advanced manufacturing, technology-based businesses, 
and tourism as growth industries, for which we need a good 
infrastructure.
    Ag is one sector of the economy where the United States has 
consistently run an international trade surplus.
    North Dakota is a major contributor of energy production in 
the nation. Our State is currently fifth in oil production and 
contains a large amount of coal reserves. Good roads throughout 
the State are paramount to the Nation becoming energy 
independent.
    Over the last three decades, tens of thousands of rural 
rail branch lines have been abandoned. The reduced reach of the 
rail network means that many areas, particularly rural areas, 
must rely more heavily on trucks. With this increased truck 
traffic in North Dakota and much of the upper Midwest, we are 
challenged with our ability to continue to move the products. 
The challenge is compounded by the necessity to impose spring 
load restrictions. Like congestion, load restrictions slow down 
commerce and add greatly to the cost of doing business.
    We have a chart over there, Senator. I know it's pretty 
hard to read, but you can see the red lines on chart one, and 
that shows the number of roads that we have load restrictions 
on in the spring of the year. So for a 3-month period of time 
in North Dakota, the commerce that can move on those roads is 
very limited because of the fact that we are limited to--
because of the load restrictions.
    Rural States like North Dakota face a number of serious 
obstacles in preserving and improving the Federal-aid highway 
system within their borders. We are rural, geographically 
large, have low population densities and extensive highway 
networks.
    Our road network has few people to support it. The per 
capita contribution to the highway account of the highway trust 
fund contributed--or attributed to North Dakota is $161 that 
North Dakotans put in, compared to the average of $109 per 
person nationally.
    These factors make it challenging for rural States to 
provide and maintain and preserve a modern system. I'll just 
give you an example. In our system, our orange plow trucks to 
remove snow and to seal the cracks that they have to seal costs 
$9,200 per year per mile. It takes about 2,000 cars a year just 
to maintain the snowplow operations and those maintenance 
operations in and around the State. So a Federal investment is 
certainly an important element.
    As it relates specifically to the Highway 85 corridor, 
transportation provides a vital link to our State's economic 
growth and is critical to almost all freight movements: 
Connecting manufacturers to retailers; farms to markets; 
shippers to pipelines, railroads, airports, and seaports. For 
this reason, the State has proceeded with a number of 
improvements on the TRE roadway or corridor that are part of 
the Statewide Transportation Improvement Program.
    On chart two, you can see it. It's in your testimony, 
Senator. It's probably pretty hard to see that on chart two. 
But all the way from the border of South Dakota up to Highway 
2, the department has, in the last decade, done quite a bit of 
work on this facility and is intending to do considerably more. 
The green portion from the top down on that chart shows the 
most recent efforts that are going to be made on some safety 
initiatives that we have going.
    We are also currently working on the--we have cosponsored a 
corridor study, as you already indicated, with the Teddy 
Roosevelt Expressway Coalition. And that's to study the whole 
197 miles of the TRE. The overall objective is to find out what 
is necessary, and it's done in three phases: To identify 
current to projected needs; to develop primary corridor 
improvement alternatives; and to refine preferred alternatives 
and prepare the required environmental documents.
    While we're doing that, we are, in concert, doing these 
safety efforts and making these safety efforts to make sure 
that the corridor is safe while we look to the future as to 
what it's going to be looking like down the road.
    Some of the main topics that have been brought up at some 
of the meetings and some of the hearings are everybody's 
interested in making improvements. Everyone is interested in 
safety. And so widening shoulders, lowering hills, adding 
turning lanes are all very important on this corridor.
    There are concerns about changes to 85 that could result in 
communities being bypassed. People fear that. So as we develop 
corridors, we have to recognize that, and our engineers will be 
looking at that as a concern that's been expressed. Residents 
living along the road have concern about losing land to the 
right-of-way, and so on. So those are just some of the things 
we're--we have been hearing.
    Phase one of the study is scheduled to be completed on May 
2010. And as each phase is completed, we'll determine what to 
do with the next phase.
    Senator I know you've always worked with us and we really 
appreciate the working relationship we have as we work to 
prioritize our projects, and we certainly hope to work with you 
again on this project to prioritize it and, as you said 
earlier, to put it in our list of high priorities that we have 
in our State. And as you can see from the red on chart one, 
there are a lot of priorities.
    In conclusion, Senator, we consider it essential that 
Congress, through the reauthorization process, recognize that 
significantly increased Federal investment in highways and 
surface transportation in rural States is, and will remain, 
important to the national interest. The citizens and businesses 
of our nation's more populated areas, not just residents of 
rural America, benefit from a good transportation network in 
and across rural States like North Dakota. With such 
legislation, we will be better equipped to address our 
statewide needs, which includes the US 85 corridor.
    Senator that concludes my testimony and I'll certainly be 
willing to answer any questions that you might have.
    [The prepared statement of Mr. Ziegler follows:]


    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
    

    The Chairman. Thank you. Is this working?
    Voice. Like it was before.
    The Chairman. Well, perhaps you can hear me even if it's 
not working perfectly. Francis, I think what we'll do is 
proceed with the rest of the panel. Then we'll come back to 
you. I do want to try to determine as best we can if there are 
matrix that apply to Highway 85 that tell us what kind of 
increases we're facing in terms of traffic through the corridor 
from what we have experienced in previous years. And that will 
be important to us in making the case.
    Before I come back to you on questions, I'd like to next go 
to Mayor Koeser and thank him for being here and ask you to 
proceed. It looks like we have got all kinds of microphone 
issues here.

  STATEMENT OF HON. E. WARD KOESER, MAYOR, CITY OF WILLISTON, 
                          NORTH DAKOTA

    Mr. Koeser. Thank you.
    The Chairman. Welcome. Good to have you here. Thanks for 
the leadership you've provided on this issue over many years. 
I'd note that, Mayor, you and Brad and others were just in 
Washington talking to us about the future of this region and 
the priorities that you've put on transportation needs.
    Mr. Koeser. Thank you.
    Good morning. My name is Ward Koeser and I have served for 
15 years as the President of the Board of City Commissioners 
for Williston. That would be commonly what we call mayor.
    Thank you, Senator Conrad, for coming to our city to hold 
this hearing so that you and the budget committee can better 
understand the issues relevant to our community.
    Although we're trying hard to diversify our economy, 
agriculture and oil remain as the main pillars holding up our 
economic base. Agriculture has played a key role ever since the 
settlers moved here more than a hundred years ago, while oil 
has been a part of our lives since oil was first discovered 
near Tioga in the early 1950's. The vast majority of our 
citizens in northwest North Dakota have ties to at least one of 
these two industries, with over 20 percent of Williston workers 
being employed in the oil field.
    The city of Williston has worked hard to provide the 
infrastructure needed for these and other industries to thrive. 
Improvements have been made to our water system, schools, 
airport, streets, and roads. We recognize that for our city to 
grow and prosper, adequate infrastructure must be in place and 
well-maintained.
    As we look to the years ahead and evaluate what needs to be 
done to position our community for a bright and prosperous 
future, we recognize that improving the connections of our city 
to the rest of North Dakota and the world needs to be a high 
priority. This is why we wholeheartedly support the development 
of the US Highway 85 corridor.
    Communities with strong agriculture and oil industries 
require a tremendous amount of transportation for the products 
produced. Thousands of truckloads of farm products, such as 
durum, wheat, peas, lentils, corn, potatoes, and sugar beets, 
need to find their way from the field to the elevator or 
processing plant. The farm trucks hauling these commodities 
need good, solid roads capable of handling heavy loads.
    The oil industry requires even more truck hauling. Pickups, 
trucks, and semis fill our roads as drilling, service, and 
production oil companies haul heavy equipment, water, diesel 
fuel, and crude oil from Williston to well site and well site 
to pipeline-loading facilities. Convoys of large and heavy 
trucks move oil rigs and travel to wells for production 
stimulation and other service jobs. Moving convoys of trucks on 
two-lane roads create safety issues, as travelers become 
impatient to pass slow-moving vehicles and risk their own 
safety, as well as those they meet on the road. A four-lane 
corridor in the heavily traveled areas would be of great 
benefit.
    Infrastructure improvements in the US Highway 85 corridor 
will help our oil and Ag industries grow to meet an increasing 
world demand. Our region has the potential to feed and fuel 
America. As the corridor improves, so will the speed and safety 
with which our products move to market. The Highway 85 corridor 
travels through the breadbasket of America and the energy 
beltway of the United States.
    It's common to see pickups and trucks with Texas, Oklahoma, 
and Colorado license plates in our community, and it's common 
for our oil field workers to travel south to other oil 
production regions of the country. A good road system for these 
workers to travel on saves time and money and provides for a 
safe arrival.
    The Bakken oil formation has the potential for us to meet a 
greater portion of America's demand for energy, but it will 
require an investment in infrastructure. As the benefits will 
be nationwide, it's fitting that the Federal Government should 
be involved in the funding of these improvements. An improved 
Highway 85 corridor will be good for Williston and especially 
good for America.
    Thank you again, Senator Conrad, for coming to Williston to 
hear from those most impacted by the oil and Ag industries.
    [The prepared statement of Mr. Koeser follows:]

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
    

    The Chairman. Thank you, and thanks for your testimony and 
thanks for the effort that you've made over the years.
    Is that working? You know, sometimes the technology just 
doesn't want to cooperate.
    Again, thank you, Mayor.
    Next, we have Dr. Brad Bekkedahl. Brad has been deeply 
involved in this effort for as long as I can remember and 
always is helpful on the insights he provides on the need for 
transportation improvements in the region.
    Brad, please proceed with your testimony.

STATEMENT OF BRAD BEKKEDAHL, D.D.S, CITY COMMISSIONER, CITY OF 
                    WILLISTON, NORTH DAKOTA

    Dr. Bekkedahl. Thank you, Senator Conrad. Good morning to 
you and your staff.
    One point I would make is that we need to invest in our 
infrastructure of microphones in the library, I think. So we 
would--we will correct that for your next hearing, sir. Thank 
you.
    My name is Brad Bekkedahl. I am currently the Finance 
Commissioner for the city of Williston. I want to thank you for 
bringing this Senate Budget Committee Field Hearing to 
Williston and allowing me the opportunity to present testimony 
on the importance of infrastructure investments for the US 85 
corridor. It is a crucial link in producing and moving the 
commodities produced in our agriculture and energy economy here 
in North Dakota. I hope my testimony of a success story for 
infrastructure investment will be an asset to the other 
testimony provided here today.
    My background for this presentation is my involvement in 
economic development issues for western North Dakota. In my 
role as an elected official, I have worked cooperatively with 
other local, State, and Federal officials and agencies to 
promote the development and diversification of our economies. 
In my research to perform these duties in 1996, I discovered 
the importance of infrastructure, particularly four-lane 
highway systems, to moving goods and services safely and 
efficiently from points of production, to manufacturing and 
adding value, and, finally, to distribution to destinations and 
final markets.
    In 1997, I was elected president of the Communities for a 
Modern Highway 2, a North Dakota communities group seeking to 
complete a four-lane corridor on US Highway 2 that was planned 
to go from Grand Forks in eastern North Dakota to Williston in 
western North Dakota, but had only been completed from Grand 
Forks to Minot. Working as an advocacy group to promote 
infrastructure development, we were able to get the last 100 
miles of this four-lane corridor completed in 2008. It was the 
successful coordination of planning and commitment at the state 
and Federal elected and agency levels that saw this completion 
in less than 7 years.
    At the time, no one could have predicted what would happen 
to the economy of North Dakota, particularly northwest North 
Dakota, but a crystal ball could not have even put the 
infrastructure in place at a better time. The development of 
legume crops on our summer-fallow ground has substantially 
increased our agricultural production capability, and 
investments by private capital have reacted with facilities to 
add value to these crops in our local communities. This 
increase in production has also increased our need for fuel, 
futilizer--fertilizer, and equipment. Highway 2 has been the 
corridor for much of that transit of goods in and out of our 
area, and its presence as a completed corridor has been a 
stimulus for our economy.
    We have also seen the largest expansion of our oil and gas 
industry east, west, and south of Williston due to the Bakken 
formation development. Again, Highway 2 has been a corridor 
that has facilitated the safe and efficient development of that 
resource play without risking the lives of local citizens that 
also use the highway system for their transportation needs.
    The relevance of where we stand today with the development 
of the Highway 85 corridor reminds me of where we were in 1996, 
partnering with you, Senator Dorgan, and Congressman Pomeroy as 
well at that time, and I see great potential for another 
success story for infrastructure investment in North Dakota.
    As a board member of the Theodore Roosevelt Expressway 
Association formed to promote infrastructure development on US 
Highway 85, I have been acutely aware of both corridors and 
their potential. In comparing the corridors, the one area of 
difference is the history of traffic we have that shows the 
already significant growth of industrial and commercial traffic 
on High--on the Highway 85 corridor. According to data provided 
by the North Dakota Department of Transportation, we have seen 
an increase in truck average daily traffic, ADT, from a testing 
location 5.1 miles north of Belfield of approximately 100 
percent from the period of time from 2004 to 2008, a 4-year 
doubling of traffic and trucks. It is apparent from the data 
that exists that this corridor is already seeing growth higher 
than the rest of North Dakota, which indicates our traffic 
numbers on the corridor are also being raised by the transport 
of goods and services south and north of our corridor area.
    The development of our partner corridors, the Ports-to-
Plains Corridor and the Heartland Expressway, are now impacting 
the Highway 85 system in North Dakota, which raises the 
significance of the infrastructure investment to a level of 
national importance.
    We see increasing movement of our agriculture commodities 
north and south of our corridor, as well as the majority of our 
equipment and production transportation related to oil and gas 
development at a time when we need to increase our domestic 
production capability to reduce our foreign oil dependency.
    Production of food and energy are critical to the strength 
and independence of our country, and this entire corridor is an 
infrastructure investment that makes sense to further promote 
that goal. Our partnership of three federally designated high-
priority corridors with nine States involved have significant 
national credibility at this time. Our nine States currently 
produce 14 percent of the total U.S. gross production--gross 
domestic production.
    We embrace seven of the top ten States for installed and 
potential wind energy, with currently producing 45 percent of 
the total U.S. wind production, and we transport 22 percent, or 
almost $45 billion, of United States agricultural goods, and 
contain 25 percent of the U.S. current ethanol refining 
capacity.
    This is a corridor properly positioned for infrastructure 
investment to buildupon the success already occurring. Since 
2004, North Dakota has led the Nation in percentage growth of 
exports and Highway 85 is an important corridor to that 
statistic. And as the statistics show, it is already a corridor 
with connections to transportation of a national significance.
    Senator Conrad, I appreciate the opportunity to be here 
today and thank you and your staff for your interest and 
involvement in such an important issue as infrastructure 
investment for the future of not only our State, but our 
corridor and our nation. Thank you, sir.
    [The prepared statement of Dr. Bekkedahl follows:]

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
    

    The Chairman. Thank you. OK. Is that working?
    The Audience. Yes.
    The Chairman. I'm not quite sure what the trick is with 
this, but it's working for the moment. Let's get right to it.
    Maybe I can start with you, Brad, and go right down the 
line on the witnesses on this panel. What are your views of the 
condition of Highway 85 currently? How would you describe the 
condition of Highway 85?
    Dr. Bekkedahl. I think, Senator, as you said in your 
opening statement, it's obvious that the road was never 
designed for the traffic level or the loads that are being 
placed on the surface at this time. We have significant 
rutting, and hydroplaning is becoming an issue in wet or rainy 
weather events. We have a significant number of people from 
this area and from Dickinson as well that just don't travel the 
road anymore because of the safety concerns.
    I think the mayor pointed out that the traffic that we see, 
particularly with the oil industry, it's a little slower moving 
because of the loads and the sizes that they take, but it also 
tends to run in convoys. And what happens is people become very 
impatient. They don't want to sit behind a convoy for 30 miles 
when they could be going 65 miles an hour and they're doing 45. 
And they tend to take risks because of that.
    As a personal note, about 3 weeks ago I was going to 
Bismarck for the weekend for National Guard duty, and I was 
traveling the road. And I was coming up a hill and on the other 
side of the hill, when I reached the peak of this small hill 
obstruction, there was a convoy of oil trucks coming toward me 
in their lane and three cars coming directly at me in the 
passing lane, which forced me into the shoulder and part of the 
ditch to actually let them pass at that time. And I'm sure that 
has happened to many people.
    So those instances have impacted the safety of the citizens 
using that road. So I would say that you're correct, the base 
is in bad condition at this time, needs significant overhaul.
    I know that the DOT has worked with us in identifying those 
concerns and reacting to them as best they can. In fact, I 
can't believe they reacted as well as they have with the 
funding and the issues that they have for planning on this 
road. So I commend them for that. But I think in the long-term 
pattern, we need to do much more.
    The Chairman. Mayor, what would be your assessment of the 
condition of Highway 85?
    Mr. Koeser. It would be similar to Dr. Bekkedahl's. I'm not 
an engineer, so I don't necessarily understand the basis and, 
you know, that part of the road structure, but I just know that 
people have a lot of concerns when they travel that road.
    I was speaking to someone not too long ago who actually was 
working in Watford City at the time and he was saying how you 
really have to plan extra time. Now, there's nothing wrong with 
that, but when people don't always plan extra time, then they 
take chances. So the safety issue, I think, is probably the 
biggest concern that I would have on the road, whether that be 
the--you know, the grooving and the hydroplaning or whether it 
would just simply be the fact that traffic in many times is 
moving in convoys, as has been stated already. People take 
chances.
    And when you mix the oil and agriculture together, it 
creates some challenges. So I just--I recognize that the road, 
when the road was initially built, I don't think anyone 
understood what agriculture would involve, the size of the 
equipment that's used as it is now, and, obviously, when the 
road was built initially, they didn't understand that there was 
going to be an oil industry developed in there. So what's 
happened over the years is these two industries have developed 
and they've both put great demands on roads. You know, you can 
have some industries that don't impact roads too much, but 
those certainly do.
    The Chairman. All right.
    Francis, how would you describe the condition of 85?
    Mr. Ziegler. Well, certainly, the Department of 
Transportation has recognized that it needs work. There's no 
doubt. And that's why we have chart two up there to indicate 
that we're looking at doing some safety work, providing some 
passing lanes and some turning lanes and those types of things.
    We have those types of issues statewide and, as my 
testimony indicated, not only the load restrictions, but we 
have load issues and can I--we do have--you asked about the 
matrix earlier. I do have a map with me today that talks about, 
yes, in some areas, certainly, the traffic has gone up. From 
Bowman north to the I-94, it's actually gone down considerably. 
And we can provide that information to you, Senator.
    But there are some other States--other parts of the State, 
I should say, that--I'll give you an example. North of 
Jamestown, we have those same situations, and so the department 
is looking at the funding that it has available and is 
prioritizing all that we have to do in this State to keep the 
system going.
    It's a daunting challenge some days when you--this past 
spring, we had an unbelievable amount of damage to our roadway 
system, and we attribute it to the fact we started out with a 
wet fall and a long winter, which got very cold, and so we had 
some freeze-thaw issues, and then this spring, we had a wet 
spring. And so the loads that were out there, and on Highway 
85, the same type of thing, those heavy loads really did a 
tremendous amount of damage to the roads. So we're struggling 
right now.
    The stimulus money couldn't have come at a better time. Our 
legislative body, along with Governor Hoeven's initiative to 
put $140 million into the system, couldn't have come at a 
better time. So we are equipped to date to help ourselves, but 
for the long run, we're going to need a good, strong Federal 
aid program.
    The Chairman. Well, thank you, and we have always worked in 
strong partnership on a plan that is responsive to North 
Dakota's needs and I know we'll do that again, Francis.
    Let me ask you this: Has the State received stimulus 
funding for roads, I think somewhere in the range of $170 
million?
    Mr. Ziegler. [Nods].
    The Chairman. Is some of that being deployed to this part 
of the State? Can you give us some sense of whether any of that 
stimulus money is coming into this corridor?
    Mr. Ziegler. Senator, I believe it is. We have some we did 
some microsurfacing last year and we're going to be doing some 
of the same type of work where Brad Bekkedahl indicated there's 
some rutting. So, yes, it is. We're going to be looking at 
doing some of that immediate repair so that--you know, we don't 
want cars hydroplaning on our roads, and that's concerning, and 
that's caused by heavy loads, though. Certainly going to put 
that money to use.
    And, in fact, Senator, we have about 50 percent of our 
stimulus money already obligated and ready to go. Sixty-eight 
million dollars will be done this year and then the remainder 
up to the 170 million will be done in 2010.
    The Chairman. Can I just say this? That in my driving on 
that road last fall, the rutting was very apparent. I mean, and 
I must say, there were places there that I was very concerned 
about. We were driving in a van.
    And the other thing I really noticed is people taking 
risks. And I think it's born of impatience when they're dealing 
with these convoys and you've got a--you know, truck after 
truck after truck and, you know, there are places where it's 
hill, truck, curve. I remember that's how my grandfather used 
to describe driving through Wisconsin: Hill, truck, curve, 
(expletive deleted). And so I think we know we have got issues.
    Francis, can you tell us and, look, we understand fully the 
extraordinary challenges that you confront because the cost, 
especially last year, of all of your inputs skyrocketed. When 
oil goes to $140 a barrel, asphalt skyrockets. Steel 
skyrockets. All of your diesel, all of your input costs jump 
dramatically; correct? And that's what you were faced with last 
year.
    Mr. Ziegler. That's correct, Senator. The asphalt prices 
were in the neighborhood of three to four hundred dollars a 
ton. After the as--the oil barrel price went up, it was at 800 
to 900 dollar a ton. So it about doubled.
    The Chairman. Yeah, so this is the reality of what we're 
having to confront.
    Do you have any estimates at this point of what kind of 
money would be necessary to address the concerns that we have 
all identified in the Highway 85 corridor?
    Mr. Ziegler. At this time, I don't have an exact number for 
you, Senator. We are--and that's one of the reasons we're doing 
the study, so that we know what the future holds and then what 
kind of repairs are needed. And that would be in addition to 
what you see on this--on chart two.
    But we certainly can get a better handle on those numbers 
and get those to you.
    The Chairman. OK. That would be hugely helpful because 
we're facing another crisis with our highway program, as you 
identified. We have, for this year alone, a five to seven 
billion dollar shortfall in the trust fund. We estimate the 
shortfall for next year to be in the nine to ten billion dollar 
range. There is going to have to be a source of funding to fill 
in that shortfall or States will be compelled to cut back; 
isn't that correct?
    Mr. Ziegler. That's correct.
    The Chairman. So we have to fill in that shortfall. In the 
budget that I presented to my colleagues that's now passed the 
Congress, we filled in that shortfall. We called for the 
committees of jurisdiction to come up with the money so that 
that shortfall would be met. And we called for it in both this 
year and next. And the committees of jurisdiction, especially 
the Finance Committee on which I also sit, are not very eager 
to take on that challenge, come up with that amount of money in 
this short a period of time, with all the other demands, but I 
think there's a general recognition it's got to be done.
    And this is important in terms of the functioning of our 
economy as well because it makes no sense to, on the one hand, 
provide a stimulus funding to provide more jobs and jobs that 
will be in this country, as well as improve the efficiency of 
our economy by addressing some of these transportation needs, 
and then have the states have to cut back because the trust 
fund is running a deficit. That doesn't make any sense to you, 
does it, Francis?
    Mr. Ziegler. I certainly agree with you.
    The Chairman. So that's something that we have to try to 
address.
    One other question I'd ask. If--Brad, if you--you've been 
involved in this for so many years. You did really tremendous 
work on Highway 2. What is--in your mind's eye, what do you 
think the future needs to be for this 85 corridor? What are the 
kinds of upgrades that you think are going to be necessary?
    Dr. Bekkedahl. Well, I think, Senator, the immediate 
upgrades would involve the safety considerations we have 
already brought to the DOT's attention and they're addressing 
at this time, which are turning capacities at major junctions; 
you mentioned the six major east-west highways that intersect 
this corridor, and those need to be addressed, and they're--I'm 
told they're using safety dollars for that at this time.
    The other would be to identify the safety issues in terms 
of obstructions, hills, curves, as you mentioned as well, and 
that would--in my mind, would involve passing lane capacity, at 
least to a route around those traffic areas and obstruction 
areas.
    I could see the traffic building, because it's becoming a 
corridor of national significance, north and south to the level 
of where someday a possible divided highway scenario could be 
in place as well. We see a divided corridor highway system 
south of us. Of the 2,300 miles already in this corridor, which 
are existing highway systems--this is not a new system--
approximately 1,400 miles of that is already a four-lane or a 
divided highway system. So we are part of that.
    And as I see that traffic growing south of us and north of 
us and passing or traversing through us, I think that could be 
an eventuality. So my issues would be safety, obstruction 
removals, rebuilding the base of the system to handle the 
loads, and possibly even acquiring right-of-way properties for 
possible expansion to a four-lane or divided system as the 
traffic and the need dictates.
    That would be where I'd go, sir.
    The Chairman. Mayor, what would be your observation? What's 
your vision for the future of 85?
    Mr. Koeser. I've always felt that, as mayor, one of my jobs 
is to look to the future. I need to spend as much time as I can 
saying, ``What's going to happen 5 years and 10 years down the 
road?'' And as I look at the region and, you know, if we take 
the agriculture and oil, if you look at agriculture, we have a 
very bright future. This is one part of the country that 
actually has water available for irrigation. So I see the Ag 
industry developing exponentially where you will find several 
times the amount of products being produced as they are to--as 
there are today. Whether that takes 5 years or 10 years or 20 
years, I don't know that.
    When I look at the oil industry, we recognize that this 
Highway 85 corridor sits right at the heart of the Bakken 
formation and we already recognize that there's, you know, four 
to five billion barrels of oil in that area, and maybe more 
than that. And although we're very supportive of the green 
initiatives and trying to find other ways to provide for the 
energy needs, that's going to take some time. It doesn't happen 
overnight. And even as it does happen, I think there will be a 
great demand and there will be a demand for oil energy that 
would exceed what we could produce in America.
    So I see that only growing. And what--it's hard to predict. 
Even those in the industry are hesitant to say what's going to 
happen.
    But when you combine the two, you know, as we commented 
earlier, it's one thing if you have a strong Ag industry and 
you have all the combines and the wide--the heavy equipment, 
the air seeders and whatever moving down the road. And it's 
another thing when you have an oil industry. But when you put 
those two together, I really see, in my mind, a need for a 
four-lane road system. That may start by having areas where you 
have four-lane segments. I've been on roads in Alaska where 
they do that, which allows--when there's a convoy, it allows 
people to get past them for several miles and it goes back to 
the two-lane. Maybe it would be phased in that way.
    But I see a very bright future for this region. It's kind 
of the last frontier of America and has tremendous potential. 
When you look at the water resources that we have here in the 
Missouri River and when you look at the oil resources we have, 
those are two commodities that the demand is not going to 
decrease for.
    The Chairman. Thank you very much. Let me--Francis, if I 
could ask you on a technical basis because you're our technical 
expert here, and this is something I very much want to get in 
the hearing record, from a technical standpoint, when this road 
was constructed and when improvements have been made previously 
in years past, I assume that this was built to a certain 
standard, certain engineering standard. When that was done, 
when this road was designed, when it was originally built, I 
assume that the standard that applied then did not contemplate 
what has developed. I mean nobody could have foreseen the 
development of the Bakken formation. Nobody could have foreseen 
what's happened with farm equipment, bigger, heavier. So help 
us understand so that when we talk to the technical people at 
the committees of jurisdiction, whom you know well--I'm 
thinking about the EPW committee now--help us with the language 
of how we would explain the standards that this road was built 
to and what would be required now. If we didn't have a road 
there, we had the current demands, what kind of a standard 
would be required?
    Mr. Ziegler. First of all, Senator, when we design a 
project or any road, let's say we start from zero, like we did 
on Highway 2 with those added lanes, that is a design life of 
20 years. And so what we do is we look at the anticipated 
traffic, both vehicular and truck traffic, and we I'm not going 
to get into a lot of details, but we use ESALs, and that's 
equivalent single-axle loading, that is going to be on that 
road. And so you can only project what you know. We can only 
design for what we know.
    So when you look out 20 years, you have to be very 
visionary to try to figure out what's out there and what's 
going to happen. So as that system was built, it was built on 
the basis that we could incrementally add more pavement to 
build structural stability to it. And, as you can tell, we have 
had to do that. We have gone back in and added structural 
stability to it.
    There comes a point in time where you have to go back and 
just redo it because the asphalt pavements that are out there 
have deteriorated to the point, due to loading and weather 
factors, to where you can't do it anymore. You go back and 
remill and start over.
    So the second part of your question, how would we look at 
it today, we would use the same parameters. We look out 20 
years, project what the truck traffic is going to be, what 
the--all traffic is going to be, and then go back and deal with 
that same criteria as we look ahead to the visions of what's 
going to happen. We would have to incorporate those heavier 
loads that are there today. And we're finding that----
    The Chairman. Is it fair to say--if I can interrupt, is it 
fair to say that nobody could have anticipated the energy and 
agriculture development that is--that has occurred in this 
corridor when that highway was originally designed and 
constructed?
    Mr. Ziegler. There was no way of noting--knowing that. It 
used to be, for those who are from the Ag world, we drove 
around with small single-axle trucks, and now you don't find 
very many farmers that don't have at least a tandem axle, and 
most of them have semis, to move their goods and services. So 
that's a big change for the Department of Transportation to 
take care of that kind of loading.
    The Chairman. You know, I've been driving on this road for 
40 years, and I tell you, the changes, I think they're the most 
dramatic of any place that I drive in North Dakota. You know, 
the energy development alone has just transformed the traffic 
pattern on on parts of 85. You referenced Bowman to 94, that 
the traffic has actually been reduced there, as I heard you say 
it. But north of 94, do your traffic counts show a significant 
increase in traffic by trucks?
    Mr. Ziegler. Senator, there are increases in segments. 
There are actually decreases in some of the segments. I have 
the information in front of me. 85 south of Watford City, that 
did have a decrease. But, in general, there has been an 
increase in traffic. It is in that neighborhood of a thousand 
to 2,000 vehicles a day.
    The Chairman. A thousand to 2,000 a day.
    And what percentage of that is truck traffic? Do you have 
that?
    Mr. Ziegler. Yes, I do. It's approximately 20 to 30 
percent.
    The Chairman. Truck traffic?
    Mr. Ziegler. That's correct.
    The Chairman. And, Brad, when you gave the numbers of, on a 
segment, a hundred percent increase in truck traffic, what 
segment did that involve?
    Dr. Bekkedahl. Senator, it was a--there was a marker placed 
about 5.1 miles north of Belfield, so I'm assuming it would be 
a traffic count that would be going north and south at that 
point.
    The Chairman. At Belfield?
    Dr. Bekkedahl. Just north of Belfield. So it would be 
whatever traffic was going out of Belfield north and coming to 
it south.
    The Chairman. As I heard you say it, this is a 2004-to-2008 
comparison?
    Dr. Bekkedahl. That's correct.
    The Chairman. OK. All right. Anything that any of these 
panelists would want to add to their testimony at this point 
before we go to the second panel?
    Mr. Ziegler. I would, Senator.
    The Chairman. Please proceed, Francis.
    Mr. Ziegler. Thank you.
    I would simply add, Senator, that whatever we do in 
transportation, we certainly ask that you and your committee 
work hard on the new highway bill. We would like the 
opportunity to work with you on that. Our State is very 
dependent on its Federal aid for its transportation system and 
we look to a bright future here in North Dakota. Our visions 
are very bright. A lot of good things happening in our State, 
and, certainly, pulling together with the Federal Government 
and the State Government, we can build an infrastructure system 
that will serve our citizens.
    The Chairman. Francis, maybe you could just tell us for the 
record, what percentage of your funding is from Federal 
sources?
    Mr. Ziegler. We are at 55 percent.
    The Chairman. Fifty-five percent Federal.
    And as we go into this next transportation bill, I think 
it's critically important that we, as we have done in the past, 
work together on a strategy and plan on how to maximize those 
Federal resources. You know, we are a very large State. We're a 
relatively low population State, but we're a State that is 
critically important to the economic future of the country 
because we have the greatest combined energy resources. If you 
look at all of the elements to reducing our dependence on 
foreign energy, our oil, our gas, our coal, our wind energy 
potential, our various fuel replacement potentials that we have 
in this State for biofuels, North Dakota really is an energy 
hub for the rest of America. And the 85 corridor is central to 
that energy hub.
    So there is a clear Federal responsibility here and, 
obviously, we have partnerships with the State and the local 
units of government. It requires all of us pulling together to 
get a result. And we'll need to be talking.
    Director Ziegler, I think very quickly, will be wanting to 
be talking to the Governor and Senator Dorgan and Congressman 
Pomeroy, as well, as we fashion our strategy for going forward 
with the highway bill. It is now very clear because of the 
shortfalls in the trust fund that these decisions are going to 
come sooner rather than later and so we need to be prepared.
    We always look forward to working with you.
    Mr. Ziegler. Thank you.
    The Chairman. Thank you, all.
    Mayor Koeser, delighted to have you here.
    Brad, thanks, as always, for the commitment that you've 
made to improvements in our transportation sector.
    Next, we'll go to our second panel, Watford City Council 
President, Brent Sanford; Power Fuels President, Mark Johnsrud; 
and the Director of the Williston Research Extension Center, 
Dr. Jerry Bergman. I'd call you to the witness table and thank 
this group of witnesses as well.
    As they're coming to the table, I'd just like to, for a 
moment, describe the witnesses that are part of this panel. Mr. 
Sanford is the president of the Watford City Council. Mr. 
Sanford is also a third-generation owner of S & S Motors, which 
is one of the oldest continuous businesses in Watford City.
    Mark Johnsrud is the president of Power Fuels, which is an 
oil field transportation company.
    And Mr. Jerry Bergman, Dr. Bergman, is the director of the 
North Dakota State University-Williston Research Extension 
Center and superintendent of the MSU Eastern Agricultural 
Research Center at Sidney, Montana. We'll forgive him for that.
    You know, I was with Senator Tester and I told him last 
week, I said, ``If you've got a Montana driver's license, in 
North Dakota, you're guilty.'' OK. That's a joke. Don't be 
writing me letters about how I'm picking on Montana. I was 
picking on Senator Tester.
    Jerry coordinates the research activities of the two 
stations that serve seven million crop acres.
    So what we wanted to do with this panel is to get kind of a 
diverse view. We have heard from elected officials and we have 
heard from our Director of Transportation. Now we wanted to 
hear from some of our private sector partners and those who 
have an involvement in the other major categories of economic 
activity on the corridor, and that's why this panel was 
selected.
    Brent, why don't we start with you. Again, the President of 
the Watford City Council. Welcome and good to have you here.

 STATEMENT OF BRENT SANFORD, PRESIDENT, WATFORD CITY COUNCIL, 
                   WATFORD CITY, NORTH DAKOTA

    Mr. Sanford. Thank you, Senator Conrad. I appreciate the 
opportunity to speak on behalf of the people of our region 
regarding the importance of Highway 85 to our communities.
    My name is Brent Sanford. I'm on the panel today 
representing Watford City and McKenzie County as a local 
business owner and as the city council president. I was born 
and raised in Watford City, the county seat of McKenzie County, 
which is directly south of Williston, along Highway 85. I 
graduated from the University of North Dakota, lived and worked 
as a CPA in Fargo, North Dakota; Phoenix, Arizona; and Denver, 
Colorado.
    In 2004, my wife and I decided to move home and become 
third-generation owners of S & S Motors, a 60-year-old 
automobile dealership. My grandfather started the business in 
Watford City in 1946 when he returned home from serving in the 
Navy during World War II. He owned the business for 28 years. 
Then my father owned the business for 30 years. The faces and 
franchises have changed over the years, but one thing has 
stayed the same. Our main customers are dryland farmers, 
ranchers, oil field service companies, utility companies, and 
their employees.
    Another thing has stayed the same: Highway 85 is the only 
way the people of Watford City receive their goods and 
services. With no rail and no major airport, every kernel of 
wheat and every calf are hauled out by truck. Every egg and 
strawberry, every nut, bolt, and two-by-four are hauled into 
Watford City by truck. If you drove to this meeting along 
Highway 85 today, it probably wouldn't surprise you to know 
that our local grocery stores have extreme produce losses 
compared to their competitors along interstate highways.
    But people from McKenzie County don't dwell on this. We 
make do with what we have. We're a hardy people. We're 
independent people. Our grandparents crossed the Missouri River 
and hauled their children over the bluffs and prairies to 
homestead where there were no roads and railroads. We're used 
to solving problems and challenges for ourselves. But with oil 
and clean water supply tightening worldwide, other people may 
be interested in what we have here in McKenzie County, and 
we're seeing that interest right now.
    We can grow food in McKenzie County without irrigation and 
we have some of the best oil reserves in the U.S. So our 
narrow, bumpy, potholed, rutted Highway 85 has become the 
concern of others from outside of our county.
    In western North Dakota we share the same concerns with the 
rest of the Highway 85 corridor from West Texas through New 
Mexico, Oklahoma, Kansas, Nebraska, Colorado, South Dakota, 
Wyoming, and Montana. These ten States make up the energy and 
agricultural production center of our nation. We share common 
characteristics in the sizes of our towns, the types of people 
living in our communities, the ways we make our living, and the 
types of goods we produce. We also share a common bond in that 
we are somewhat the forgotten region in regard to interstate 
transportation. You can go 300 miles east or west to reach a 
north-south-running interstate highway system in many parts of 
this Highway 85 corridor. This commonality has resulted in the 
alliance of three highway associations: The Theodore Roosevelt 
Expressway, the Heartland of North Dakota and South Dakota; the 
Heartland Expressway of Nebraska; and the Ports-to-Plains 
Alliance of Texas to Colorado. We are hoping our combined voice 
and unified vision will help bring attention to the challenges 
we face conducting our lives and our business along our 
existing highways. We also hope our combined voice and vision 
can bring light to the importance of the Ag and energy corridor 
and help convince Congress that development of our own Ag 
production and our own energy production is of vital national 
importance.
    As a sidenote, I was an active observer of the Highway 85 
problems on my last career stop before returning home to North 
Dakota. The last position I held before returning home was as 
the chief financial officer for Transwest Trucks in Commerce 
City, Colorado. My office overlooked the busy divided four 
lanes of Highway 85 as it entered the Denver metro area from 
the northeast. People's lives are affected every day by the 
bottleneck of traffic fighting through the middle of Denver as 
Highway 85 converges with I-25. The normal course of commerce 
in the entire west central region of the United States from 
Salt Lake City to Kansas City is hampered and disrupted by the 
lack of a seamless north-south route through eastern Colorado, 
away from I-25. While living and working in Colorado, the 
importance of moving Highway 85 to the east of Denver became 
very apparent to me.
    The people here today from the North Dakota DOT, the Ports-
to-Plains Alliance, and the Theodore Roosevelt Expressway have 
a storehouse full of information and statistics on what type of 
traffic is currently moving up and down our disjointed north-
south roads on the Highway 85 corridor. Although the existing 
levels of traffic warrant discussion and consideration for 
infrastructure improvements, when planning the next highway 
bill and transportation bill, I would urge you to have the 
vision of what could be moving over improved north-south routes 
on our highway system. I would urge you to hold the vision of 
wind turbines and drilling rigs being safely transported down 
four-lane highways rather than limping down potholed two-lane 
highways with no shoulders. I would urge you to hold the vision 
of thriving communities that appear along the interstate 
systems adjacent to Highway--I-25 in northern Colorado, like 
Windsor, Fort Collins, Loveland, Longmont, and Westminster, as 
opposed to the dying communities along Highway 85 only 10 to 20 
miles away running parallel to I-25 in northern Colorado and 
eastern Wyoming.
    I'd urge you to envision a vibrant Highway 85 Ag and energy 
corridor up and down the center of our country as visionary 
leaders did when developing the east-west routes of the Federal 
rail system and the Federal interstate highway systems. We need 
the support of Congress in this endeavor. This is larger than 
individual States and individual counties. We're asking for 
visionary leadership from you, Senator Conrad.
    Thank you for your time and consideration of this issue. 
This concludes my testimony.
    [The prepared statement of Mr. Sanford follows:]

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
    

    The Chairman. Thank you very much, Brent, for really 
excellent testimony. I appreciate it very much, and I think 
we're establishing a record here that will help us persuade our 
colleagues and others who will participate in the 
decisionmaking that we have got to address certain high-
priority areas in the country. This really is an interest that 
goes beyond the interest of a region, a state. These really 
have become national issues, especially with the development of 
the Bakken formation and the further development of American 
agriculture turning a way that is far more reliant on heavy 
machinery than it was when this highway system was originally 
designed.
    With that, we'll go to Mark Johnsrud, the president of 
Power Fuels, which is an oil field transportation company. 
Welcome to you, sir, and please proceed.

  STATEMENT OF MARK JOHNSRUD, PRESIDENT, POWER FUELS, WATFORD 
                       CITY, NORTH DAKOTA

    Mr. Johnsrud. Good morning, and thank you for inviting me 
to testify at this hearing this morning. My name is Mark 
Johnsrud and I am the president and owner of Power Fuels and 
Landtech Enterprises, which are companies that provide fluid 
handling transportation and services to oil companies in the 
Williston Basin.
    We currently employ roughly 30 people in western North 
Dakota and eastern Montana. And in the last years, our business 
has grown from roughly 60 employees to our current base of 
roughly 300 today. Our growth has been fueled by the expansion 
of the Bakken formation, which was started in Richland County 
several years ago and has moved into western North Dakota.
    The US Highway 85 corridor is a very important initiative 
to serve the growing energy industry. Highway 85 is the primary 
artery that provides essential access to the inflow and outflow 
of products to support the oil and gas industry. This includes 
a broad range of products, including drilling rigs, well 
casing, drilling fluids, frac sand, pipeline components, and 
the movement of crude oil.
    From the energy industry's perspective, we see the benefits 
of the US 85 corridor in the following categories: The long-
term planning and growth for our State, the safety aspect, and 
a tax base that is extremely important for North Dakota.
    2008 was a monumental year for the North Dakota petroleum 
industry. In April of last year, the U.S. Geological Survey 
released a report that estimates the Bakken formation to have 
between three to four and a half billion barrels of 
undiscovered, technically recoverable oil. This is a 25-fold 
increase from the amount of oil that can be recovered compared 
to the agency's 1995 report of 151 million barrels of oil.
    In 2008, North Dakota produced more oil than they have 
since the State established the measure to report. The State 
reported production of over 62 million barrels, which is up 39 
percent, compared to 45 million barrels extracted the year 
earlier. The 2008 shatters the previous record, which was set 
in two thousand--or, excuse me, in 1984, at which time we 
produced 52 million barrels.
    The Chairman. Mark, can I stop you right there because----
    Mr. Johnsrud. Yes.
    The Chairman [continuing]. I want to rivet the point in 
your testimony right here that you're making. You've just 
testified that the oil production in North Dakota went up 
almost 40 percent in 1 year, and I think this is a statistic 
that would be especially powerful with those that we need to 
convince. We all know that we are importing almost 60 percent 
of the oil that we use in this country. There is a strong 
consensus, in fact, rarely do I see a stronger consensus in 
Washington than exists on this issue, that it's absolutely in 
America's interest to reduce our dependence on foreign energy. 
That's what we're doing right here in this region, increasing 
oil production 40 percent. I don't think there's another part 
of the country that has had that kind of increase year over 
year.
    And if that kind of increase is going to be supported, 
you've got to have the infrastructure to move the product.
    Mr. Johnsrud. That's correct.
    The Chairman. And so I want to make certain that this part 
of the testimony is clear and that we direct some of our 
colleagues' attention to this specific point and some of their 
staff members as well.
    Thank you.
    Mr. Johnsrud. The next thing I'd like to address is the 
safety issue. Safety and safety training has become a primary 
focus of the energy industry. We currently participate in three 
safety-related data bases that our customers use to evaluate 
us. And the first thing they look at is our historical safety 
rating; No. 2 is they evaluate our training programs; No. 3 is 
they evaluate our written manuals to see what kind of a safety 
program we're developing. They come up with a total score.
    The larger companies today are using this scoring mechanism 
for vendor selection, and that's why we have to be very 
cautious as to where we're sending our employees, what we're 
asking them to do, and the conditions they're working in.
    The increase in traffic on Highway 85, especially truck 
traffic, and the fact the highway is a two-lane road increases 
the potential for more accidents. In addition, the combination 
of agricultural traffic, trucks, combines, and tractors, 
tourism traffic, and oil field traffic using a busy two-lane 
highway is a recipe for disaster.
    The Highway 85 corridor has become a critical component of 
the movement of oil to existing pipeline systems. Almost 59 
percent of the state's increase in oil production was from 
Mountrail County last year. A significant amount of that was 
trucked from Mountrail County to pipeline stations in Richey, 
Montana, and Fryburg, North Dakota. Trucks hauling oil will 
continue to be a major part of the movement of oil from the 
wells to the pipeline locations.
    The Chairman. Can I stop you again because, again, you've 
provided testimony here that is very, very important for my 
colleagueto hear and their staffs to understand.
    This oil, much of it is not being moved initially by 
pipeline. I find my colleagues have, in their mind's eye, this 
notion that the oil all moves by pipeline. In the first 
instance, gathering lines that then go to major pipelines. But 
that isn't the way it works, is it?
    Mr. Johnsrud. No.
    The Chairman. What really is happening is this oil is 
produced and then it is trucked to lines; isn't that----
    Mr. Johnsrud. That is correct. And part of it is is that 
over time we'll see more gathering lines that are put together. 
But because of how rapid this expansion has been and especially 
the other factor that most people don't realize is that when 
the oil boom was here several years ago, it took three to 4 
months to drill a well. Now they're drilling a well in 30 days 
or less.
    The Chairman. You know, I've found my colleagues--I just 
had a discussion the last week we were in session before coming 
home for this work period, and I was really kind of surprised 
how surprised they were. One of my colleagues said to me, 
``Well, Kent, don't you have''--in getting ready for this 
hearing, we were talking about it. And he said to me, ``Well, 
don't you have''--``Aren't those existing oil fields out 
there?'' I said, ``Yes, they are.'' He said, ``Well, why don't 
you have existing gathering lines?'' I said, ``Well, because we 
have got new wells that are being drilled that don't have 
gathering lines extend to them, and we have also got issues of 
pipeline capacity.''
    So you've got a lot of oil that is being trucked here, and 
being trucked for a considerable distance. How far would it be 
to the stations, the Fryburg station and the other one that you 
referenced?
    Mr. Johnsrud. From Mountrail County, we're somewhere 
between 120 and 170 miles.
    The Chairman. So this is really not what they think is 
happening; OK?
    Mr. Johnsrud. Correct.
    The Chairman. This is not in their head that this oil is 
being trucked those distances.
    Mr. Johnsrud. Mm-hmm.
    The Chairman. So this is also a very important point that I 
want to make certain is highlighted in the testimony.
    Mr. Johnsrud. And, you know, the I-85 corridor both going 
south from Watford City and then also going north to the 
Alexander leg for the Enbridge pipeline are extremely busy.
    The Chairman. Would you know how heavy these trucks are 
once loaded?
    Mr. Johnsrud. Yes. Most trucks today, because they're 
trying to maximize volume, weigh 105,000 pounds.
    The Chairman. One hundred five thousand pounds, so that's 
over 50 tons?
    Mr. Johnsrud. That is correct.
    The Chairman. OK.
    Mr. Johnsrud. And----
    The Chairman. I'm sorry to interrupt you, but I want to----
    Mr. Johnsrud. No, not at all. And this is----
    The Chairman [continuing]. I want to make certain that 
this--that people pay attention to this part of the testimony 
because it makes the case why you've got to deal with this 
differently than I think a lot of people are thinking about.
    Mr. Johnsrud. Well, I'm sure when this road was built, an 
80,000-pound truck was, you know, a tractor-trailer or 
something of that configuration, but 80,000 pounds was all that 
was contemplated at that time.
    The Chairman. All right.
    Mr. Johnsrud. I guess the next part I'd like to mention is 
our State infrastructure needs to continue to be a priority 
item for the Federal Government, for all that we have talked 
about. If North Dakota wants to continue to grow its energy 
business, we need to move this project to the top of the list. 
The oil and gas production taxes for 2008 was nearly $400 
million, up from $68 million in 2003.
    As a North Dakota resident, I'm pleased to see our State 
have an economic surplus in our budget. As we look at the 
challenging economy today and other States with deficit 
problems, we need to invest in projects like the US 85 corridor 
to keep the energy industry investing in North Dakota energy 
production.
    Thank you.
    [The prepared statement of Mark Johnsrud follows:]

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
    

    The Chairman. Thank you. That's very, very useful 
testimony. I think it will help us a lot.
    Jerry, do you want to proceed? Thank you so much for being 
here. We appreciate it very much. Jerry Bergman.

STATEMENT OF JERRY BERGMAN, Ph.D., DIRECTOR, WILLISTON RESEARCH 
           EXTENSION CENTER, WILLISTON, NORTH DAKOTA

    Dr. Bergman. Thank you, Senator Conrad.
    The Mon-Dak region of eastern Montana and western North 
Dakota has a three-million-acre land base. A dramatic growth in 
Mon-Dak agriculture production has resulted from the reduction 
of fallow acres due to conservation tillage systems and crop 
diversification. And as a result, we have two million 
additional crop acres since 1990.
    The Mon-Dak region is the No. 1 producing area in the 
United States in durum, wheat, peas, and lentils for both 
export and domestic markets. The Mon-Dak region is the last 
irrigation frontier in the United States and has the potential 
to develop up to one million new acres of irrigated agriculture 
to support expanded production and area processing of high-
value and value-added crops, both for food and energy and 
industrial uses.
    The Chairman. Let me interrupt you, too, because this is 
another key point. This whole hearing is about energy and 
agriculture and manufacturing, how they impact this corridor. 
You just used a statistic here that I want to make certain gets 
paid attention to. Two million acres, crop acres, increase 
since 1990?
    Dr. Bergman. Correct.
    The Chairman. OK. That is massive. And that involves the 
Montana and the North Dakota side?
    Dr. Bergman. Yes, and about 1.5 million of that's on the 
North Dakota side.
    The Chairman. Great. Well, that's a powerful point.
    Dr. Bergman. Yes.
    The Chairman. Please go ahead.
    Dr. Bergman. New large-scale agricultural processing 
industries are needed in the Mon-Dak region to support 
irrigation and economic development and job creation through 
growth in both dryland and irrigated agriculture. Investment in 
a four-lane divided US Highway 85 will be a key factor in 
attracting agricultural processing industries into our region 
and to allow us to fully capitalize and develop our water and 
land resources.
    The potential of the Mon-Dak region to develop our 
resources will be greatly enhanced with the completion of the 
US 85 corridor for safe, efficient transportation of our 
agricultural crops, livestock, and renewable energy products.
    And I thank you again for allowing me to testify in support 
of the US 85 corridor project.
    [The prepared statement of Dr. Bergman follows:]

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
    

    The Chairman. Thank you very much. This has been a very 
helpful panel. I appreciate it. I'd like to ask you a few 
questions, if I could, to further flesh out the record.
    Maybe, Mark, I can start with you and ask you how have 
conditions on US 85 been impacting the oil industry and its 
development? What would you say if one of my colleagues here--a 
group of my colleagues were here and, say, they ask you the 
question that they asked me, ``What's the condition of this 
road? How has it impacted oil field development and the 
movement of oil in this corridor?''
    Mr. Johnsrud. I guess I believe that, to this point, I 
would not say that it has necessarily hampered the development, 
but, as you look forward, it's going to start to hamper 
problems, such as if you have more accidents, if you have more 
issues. Some of the companies that we work for are extremely 
sensitive with regards to safety and one problem takes just a 
significant amount of time. One accident can create a small 
company like ours just heartache that will last forever.
    So, you know, how--it's really hard to define how you'd say 
how does it impact you, but it does, without any question.
    As I look at the next 3 months, at every safety meeting, I 
tell our drivers, ``This is the most dangerous time of the year 
because you're having people up here on''--``that are tourists, 
are looking, and when there's a buffalo or something else, they 
will just stop or pull over to the side of the road.'' And that 
just creates more problems.
    And, you know, if there's an accident, it's an unfortunate 
event for everybody involved.
    The Chairman. You know, you make a very good point.
    And this corridor--I think that's another point we need to 
make for our colleagues' understanding. Not only is this 
critical for energy and agriculture, not only for our State and 
region, but the country, this is also a major tourist 
destination in North Dakota.
    Mr. Johnsrud. Yes.
    The Chairman. Medora is--may be the leading tourist 
attraction in our State and it's right in the center of this 
region. So that adds a complicating factor.
    Brent, maybe you could help us. What would you say in terms 
of if I had colleagues here and they're saying, ``Why should we 
be concerned about this Highway 85 corridor?'' What would you 
say to them?
    Mr. Sanford. I guess I'll continue beating the drum on the 
Ag and the oil infrastructure that's necessary to continue 
developing those industries. It's fathomable to believe we can 
continue at current levels of production, which the two 
gentlemen on the panel have showed us an increase exponentially 
with what we have with basic safety improvements.
    But to have a vision for what it could be, I think takes 
the next step. To envision where we could go to facilitate a 
hundred percent growth again in oil production. The reserves, 
apparently, are there. The technology is here. The people that 
know how to get it out is here. The bottleneck is the 
transportation.
    And the same goes with agriculture as well. The know-how is 
here. The land is here. The bottleneck is transportation.
    That hasn't even touched on other opportunities that we in 
McKenzie County--Gene Veeder is here today. We have looked at 
economic development projects of all different types in 
McKenzie County. We really can't support light manufacturing in 
McKenzie County when we have no rail, no major airport, no 
port. The only way that goods are getting in and out is by 
Highway 85. We have given up on that. We can do tourism, we can 
do oil, we can do Ag. But there's no reason to say we couldn't 
do light manufacturing up here if there were a four-lane 
highway.
    The vision of what could be is--that's what I'm saying, 
it's going to take visionary leadership. It's exponential 
compared to what it is now.
    The Chairman. All right. Jerry, I'd like to go back to you. 
What specific benefits do you see accruing to this area's 
agricultural economy with improvements along the corridor? 
You've already made the case, which I think is a very, very 
important one, two million additional crop acres in this Mon-
Dak region, a million and a half of those in North Dakota 
alone, because of the change in planting patterns and the 
change of agricultural economics. What do you see as the role 
of Highway 85 in the future development as a result of those 
increased crop acres?
    Dr. Bergman. Well, one of the first questions when we visit 
with food processing companies is, ``Do you have a four-lane 
divided highway?'' And that is a very----
    The Chairman. And why is that important to them?
    Dr. Bergman. To move their finished products, both to 
export markets and to the east. Two-thirds of the population of 
the U.S. is east of the Mississippi and we actually have a 
great freight advantage to move product there compared to the 
West Coast. And to do that, we need good four-lane divided 
highways.
    The Chairman. OK.
    Any other points any member of this panel would want to 
make for the record?
    Mr. Johnsrud. I have one.
    The Chairman. Yeah.
    Mr. Johnsrud. I guess----
    The Chairman. Go ahead.
    Mr. Johnsrud. One more thing, I guess, I'd like to just 
comment on. We have talked about what's happened in the last 
year, a hundred percent increase in the traffic on Highway 85. 
Currently, there's 36 rigs drilling in the State and we're 
anticipating somewhere in the neighborhood of another, you 
know, 10 to 15 that will start drilling after load limits come 
off. So if we kind of interpolate that we're going to end up 
with 50 rigs drilling an average of this year, most of these 
rigs today are going to drill ten wells. That's adding an 
additional 500 wells.
    In the last couple years, we have seen a tremendous 
increase in the frac'ing and the stimulation of these wells as 
far as the amount of recoverable oil. And so as you take a look 
at, you know, this year and next year and 2 years, we can see 
that we're going to create a real problem just getting oil out 
of this area. But the additional stress that we're going to put 
on the highways is going to be monumental because while we see 
a 60 percent increase over the last year, we won't see that 
kind of increase again, but we're going to see--on a pure 
barrels produced per year, we're going to see the same kind of 
increase or more versus what we have in the past.
    The Chairman. Well, that's a very powerful point. All 
right. I'm going to thank this panel.
    And we have just got a few minutes remaining here. I want 
to--if there's somebody in the audience that would like to make 
a brief statement on this issue, we'd be happy to entertain it 
at this point.
    Again, I want to recognize that the Governor's Chief of 
Staff is here. I had a chance to speak directly to the Governor 
yesterday about this hearing and thanked him for having his 
Director of Transportation here and also sending his Chief of 
Staff. We appreciate that very much.
    If there's anybody that would want to make a statement for 
the hearing record, we'd certainly be willing to recognize 
them.
    Yes, sir. If you'd identify yourself for the record and 
tell us what you do.

   STATEMENT OF DWIGHT VANNATTA, NORTHEAST MONTANA LAND AND 
         MINERAL OWNERS ASSOCIATION, BAINVILLE, MONTANA

    Mr. Vannatta. Excuse me. First of all, I am guilty. I'm 
from Montana. And I thought I should lend a perspective here.
    The Chairman. If you would----
    Mr. Vannatta. First of all, I'm Dwight Vannatta from 
Bainville, Montana, which is just across the line.
    The Chairman. Could you help us with the spelling for the 
record?
    Mr. Vannatta. Dwight, D-w-i-g-h-t, Vannatta, V-a-n-n- a-t-
t-a.
    The Chairman. OK.
    Mr. Vannatta. And I'm with the Northeast Montana Land and 
Mineral Owners Association, excuse me, which lends to the oil 
production. I'm also with the Montana Farm Bureau. That has to 
do with the Ag end of it.
    The Chairman. OK.
    Mr. Vannatta. There's some statistics I think that would 
lend greatly to your efforts here because I also am retired 
from the railroad and I was in train service for 40 years. So I 
have knowledge about the amounts of grain, oil, fertilizer, and 
other products that have been distributed or hauled from this 
area. I worked out of Havre, Montana; from there to as far east 
as St. Paul, Minnesota, and as far west as Spokane, Washington.
    In those 40 years, there have been hundreds of miles of 
railroad that have been abandoned. And as a typical example, 
because I know personally of it, I saw the stats on it--in 
fact, at a Federal Railroad Administration hearing--where when 
the--what we call the north branch from Bainville, Montana, to 
Opheim, Montana, was abandoned or allowed to abandon, except 
for the bottom 50 miles, in 1978, we hauled an average of 
20,000 tons of grain per week off of that branch. That is a 
smaller production than you have over here where you get a 
little more rain.
    The--when----
    The Chairman. And all that I assume the point is that's 
moved to the roads now.
    Mr. Vannatta. Exactly. Twenty thousand tons of grain 
represents in excess of 600 18-wheelers, typical grain-hauling 
vehicles. So when you talk about the rutted roads, when you 
take that many vehicles of that size and put them on the roads, 
you're going to have ruts.
    Also----
    The Chairman. What is the--do you know--by off chance, do 
you know what the grain truck--typical grain truck would weigh?
    Mr. Vannatta. Very close to what Mark said an oil rig--or 
an oil crude-hauling truck would.
    The Chairman. Yeah, he was talking 50 tons for----
    Mr. Vannatta. Yeah. And, of course, when you're coming from 
the grain bin off of the farm 50 to a hundred miles to a grain 
terminal, a rail terminal, and you don't have the means to 
calibrate and weigh and everything, they're probably in excess 
of 160,000, you know. I would--that's the reality. I'm not 
trying to be derogatory or anything. It's just a reality.
    The Chairman. Francis, you keep your ears shut now.
    Mr. Vannatta. But like it was alluded to earlier about the 
only access in and out of Watford City was rail or highway. And 
that's very true because that rail line in there has been 
abandoned for some years now. And so all that production has 
been put on the road as well. None of these things were 
anticipated or could have been anticipated when the engineers 
that designed these highways did so.
    The Chairman. Can I just say this to you, Dwight? You may 
be from Montana, but you're a darn good witness.
    Mr. Vannatta. Well, OK. The Montana side of this is going 
to be interesting because I also belong to the Mon-Dak Energy 
Alliance that we have been working on to complete an energy 
complex. And because of that, it--there's going to be some more 
significant impact on our roads. And, also, because of that, 
there are going to be increased productions of agriculture, 
like Dr. Bergman alluded to earlier about the significant 
increase already.
    The Fort Peck Tribes on the Fort Peck Indian Reservation, 
the council told me that they have between 250,000 to 500,000 
acres available for production in oilseed and/or corn and other 
grains that they intend to implement because it's just been----
    The Chairman. Are those acres that are not being produced 
on now?
    Mr. Vannatta. Right. They have not been produced. They're 
just grazing and so forth.
    The Chairman. Grazing.
    Mr. Vannatta. Yes.
    The Chairman. And they're intending to turn that over to 
production?
    Mr. Vannatta. Exactly.
    The Chairman. So that would be very significant additional 
that's big.
    Mr. Vannatta. Yeah.
    And like Dr. Bergman also alluded to, the irrigation 
potential, because they also have significant water rights, 
they could just put vivid irrigation----
    The Chairman. Yeah.
    Mr. Vannatta [continuing]. And irrigate and increase their 
production over a normal dryland production system. OK?
    The Chairman. All right.
    Mr. Vannatta. Now, that portion of the corridor that goes 
to Culbertson and then into Canada, that will be impacted 
significantly by this increased production and by other 
entities, such as the CRP programs that will be coming out and 
not being allowed back in because they're a different----
    The Chairman. Ah--very, very good point. This is a point 
that's not yet been made at this hearing and I want to make 
sure this gets on the record. Thank you for saying it, Dwight.
    We know that because of the changing economics, land that 
has been in CRP has not been productive, at least not 
productive for crops that go to market, that a significant 
chunk of that land is going to come out of CRP and go back into 
production, meaning there will be even more demand on these 
road systems.
    Mr. Vannatta. And, also, like Jerry also alluded to is the 
various different crop varieties and species to be implemented 
into their crop rotation systems in order to offset the need 
for expensive fertilizer by implementing the legumes will make 
a significant impact, too, because there you have another 
source of another product that has to go in a different 
direction and a different way than when it is normally, you 
know, to Yakima or the West Coast or----
    The Chairman. Yeah.
    Mr. Vannatta [continuing]. To Chicago or otherwheres. It's 
going to go all over. And so that, too, will increase the----
    The Chairman. Yeah.
    Mr. Vannatta [continuing]. Impact on the roads.
    The Chairman. Yeah. You're exactly right. All right. Thank 
you, Dwight----
    Mr. Vannatta. Thank you.
    The Chairman [continuing]. Anyone else that would like to 
add a perspective to the record here before we close out? 
Jerry? Absolutely.
    Dr. Bergman. I have one more.
    The Chairman. Yes, sir. Maybe, Brent, you can pass him that 
mike.
    Dr. Bergman. A fuel for thought, not food. We have the 
potential on our CRP acres to convert a portion of that to 
biomass for energy once that technology is available. And when 
that's harvested, it can be dead-ripe and it would have no 
influence on habitat. So you could take a third of your acres 
of CRP for biomass for energy without infecting the habitat 
that's crucial to many of the people in our country.
    The Chairman. Well, thank you for that. Let me just say 
that we've just had hearings in Washington on this question of 
biofuels, and they tell me, I was just with the Secretary of 
Energy, that he believes they're very close to a breakthrough 
on biofuels that is also going to change the economics of that 
opportunity. So we have got a lot of food for thought here 
about likely changes that are going to have a big impact.
    Dwight, I'm so glad you mentioned the railroad situation 
because, you know, you think about those volumes that used to 
move on the rails that have now been pushed over onto these 
road networks. That's a big deal.
    Any other--yes, sir.

    STATEMENT OF MILT HANSON, PRESIDENT, NORTH DAKOTA BED & 
         BREAKFAST ASSOCIATION, ARNEGARD, NORTH DAKOTA

    Mr. Hanson. My name is Milt Hanson. I'm the owner of Old 
School Bed & Breakfast down in Arnegard and also the president 
of the North Dakota Bed & Breakfast Association.
    The Chairman. Welcome.
    Mr. Hanson. One thing that has been mentioned very slightly 
is tourism. Tourism is North Dakota's No. 2 industry. This part 
of the State is prime for tourism. Our Sara Otte Coleman, 
Director of North Dakota Tourism, is very active in increasing 
that. And what I see from my guests is they're competing with 
Mark's trucks. You know, they're out looking at the buffalo. 
They're out looking at the antelope and all of a sudden there's 
a hundred thousand-pound semi roaring up behind them, you know, 
by no fault of the semi driver. He's doing his job. But that 
tourist, he's come to see our country, see our beautiful 
country, see the Theodore Roosevelt Park.
    And hopefully with our State tourism's efforts, that the 
volume of traffic--you know, these guys up here are--you know, 
they talk about the weight limits on the traffic. Tourism 
depends on volume. You know, we talk about maybe a thousand 
vehicles a day. If--during the summertime, it's probably much 
greater than that going by my facility down in Arnegard. So 
to--an increase in the condition of Highway 85 directly 
benefits that segment of North Dakota's economy, which is, 
again, our No. 2 industry in the State.
    The Chairman. Very good point, and I'm glad you--very good 
point. I'm glad you made it.
    We're about at the end of our time here because I've got to 
go down to Dickinson for meetings there and we're going to have 
a similar hearing down there because we want to make sure we 
make the case in that community as well, in that region.
    So any we'll have one more that we can take. Yes, sir.

 STATEMENT OF ALLEN DOMAGALA, HULSING & ASSOCIATES, DICKINSON, 
                          NORTH DAKOTA

    Mr. Domagala. Allen Domagala. One----
    The Chairman. Could you just spell your name for our 
transcriptionist, so we get it correct on the record?
    Mr. Domagala. D-o-m-a-g-a-l-a. I'm with the architectural 
office Hulsing & Associates.
    One thing that all of this brings up is the Williston area 
is busy in construction processes, but you go to the eastern 
part of the State and everything is slowing down. We haven't 
experienced that, so our truck traffic continues trying to 
bring construction materials. We have got the other problem 
that without the increased capability of our highway system, we 
can't get trucks here. ``I go on four lanes.''
    So with that, a delivery comes to Bismarck. Then it 
shuttles off into a smaller truck. That might get to Minot and 
shuttles off to a smaller truck. Now with the four-lane there, 
it's making a little bit of a change.
    But we have had a recent project over the last year that 
the delivery was transferred four different times to get to a 
truck capable of getting to Williston.
    The Chairman. Wow.
    Mr. Domagala. We're in a construction boom and this is 
creating a problem that's always been there. If we can find a 
way to alleviate that problem, we'll continue on with our boom 
and bring the businesses back into town to be able to support 
them.
    The Chairman. Well, that must add a--a very, very good--
very interesting point. I've not heard that before from anyone. 
That must add a lot of cost when you've got to make all these 
shifts.
    Mr. Domagala. Absolutely.
    The Chairman. All right. Thank you very much--very much for 
that.
    Let me just indicate we have run out of time. We thank 
everyone for participating, all of our witnesses. I especially 
want to thank this panel, Brent, Mark, Jerry. I appreciate very 
much your participation. It was terrific. You did really an 
outstanding job that I think is going to be very helpful to us.
    To others who provided testimony here in the audience, 
thank you as well. It was, all of it, excellent comments. I 
just am very, very pleased with this hearing. I don't think it 
could have gone any better.
    So thank you very much, and we have got to keep working on 
this together. Thank you, all.
    The meeting will stand adjourned.
    [Whereupon, at 10:48 a.m., the hearing was adjourned.]


 HOW INFRASTRUCTURE INVESTMENTS CAN BOLSTER NORTH DAKOTA'S ENERGY AND 
              AGRICULTURE ECONOMIES: THE U.S. 85 CORRIDOR

                         THURSDAY, MAY 28, 2009

                                       U.S. Senate,
                                    Committee on the Budget
                                                    Dickinson, N.D.
    The Committee met, pursuant to notice, at 1:02 p.m. in the 
Student Center Ballroom, Dickinson State University, 900 Campus 
Drive, Dickinson, ND, 58601.
    Hon. Kent Conrad, Chairman of the Committee, presiding.
    Present: Senator Conrad [presiding].

              OPENING STATEMENT OF SENATOR CONRAD

    The Chairman. Welcome, everyone, to this hearing of the 
Senate Budget Committee. This is an official hearing of the 
committee, so we will be operating under the rules of the U.S. 
Senate, and an official record of this hearing is being kept.
    I especially want to thank our distinguished witnesses 
today. They include Dickinson Mayor Dennis Johnson and our 
Director of North Dakota's Department of Transportation, 
Francis Ziegler. They will be on our first panel, followed by a 
panel that will include the Executive Director of the Stark 
Development Corporation, Gaylon Baker; the Missouri Basin Well 
Service COO Chuck Steffan; and TMI President Dean Rummel. I 
look forward very much to hearing from this distinguished group 
of witnesses and taking their concerns and ideas back to 
Washington to share with my colleagues.
    This hearing will focus on how infrastructure investment in 
Highway 85 can foster the energy, agricultural, and 
manufacturing economies in this part of the State. We need to 
ensure that Highway 85 has the capacity to handle the increased 
activity in this region.
    The energy development in this part of the State, 
particularly with the oil boom associated with the development 
of the Bakken Formation, is crucial not only to our economy, 
but is important to the national effort to reduce our 
dependence on foreign energy.
    Our State is already one of the leading energy producers in 
the nation, and the expansion of energy production in this 
region will play an increasingly important role in the national 
effort to become less dependent on foreign sources. Highway 85 
represents a critical lifeline for this energy development, and 
in that context, it is not just a regional issue or a State 
issue; it becomes a national concern.
    This map shows why Highway 85 is so important to the energy 
production in our State. We have major gas plants and oilfields 
scattered up and down this road. Specifically, 400,000 barrels 
of oil a day are now produced in the corridor, and a large 
percentage of it is hauled over Highway 85 to tank farms for 
transport via pipeline.
    The highway connects six major east-west highway systems 
that service these energy developments, and the highway serves 
as a major route for the transport of oil, pipe, steel, and 
other supplies. We also have significant and growing 
manufacturing and agricultural businesses in this area that 
rely on Highway 85 to transport their products.
    Unfortunately, Highway 85 was not designed to handle the 
increasing number of trucks and oversized loads currently 
traveling on it. The highway needs repairs to foster continued 
growth in these industries, to ensure a safe travel route, and 
to better serve the communities in the area.
    Let me just say--and I'm intimately familiar with this 
because one of the key reasons I'm holding this hearing is 
because I was on Highway 85 last fall, and it was not a happy 
experience. And I think anybody who's traveled that road knows 
what I'm talking about. I'm talking about the wash-boarding, 
talking about the extremely heavy truck traffic, talking about 
the delays in movement in some parts of that roadway, talking 
about safety concerns that are raised.
    We certainly heard this at the hearing in Williston this 
morning, in what was really an outstanding hearing, I thought. 
Director Ziegler was there, and we had excellent witnesses 
there, and I think we are going to hear much the same in 
Dickinson.
    Improvements to Highway 85 will also pay dividends for 
agriculture in the region. It will enhance the transportation 
of crops and livestock. It will increase export opportunities 
with enhanced access to Canada and will help further diversify 
western North Dakota agriculture with the ability to attract 
more value-added agriculture to the region.
    The manufacturing businesses in the region will also 
benefit from improvements to Highway 85. Let me indicate that 
the North Dakota Department of Transportation's ongoing study 
of the corridor will form the basis for determining the 
necessary investments that must be made. We are not prejudging 
this process. In fact, we are relying on the North Dakota 
Department of Transportation's analysis to determine what 
direction should be taken for the future. That's the only--as I 
see it, the only reliable, objective way to determine what 
needs to be done for the future.
    North Dakota has benefited greatly from the last highway 
bill, which was completed in 2005. As Chairman of the Budget 
Committee and as a senior member of the Finance Committee, I 
was included in the final group that negotiated the differences 
between the House and the Senate on that transportation bill, 
and I worked hard in that conference committee to make certain 
that North Dakota received significant funding for our highways 
and transit systems.
    Specifically, I worked to secure $1.5 billion for North 
Dakota, a 31 percent increase over the previous bill. Annually, 
that averages out to over $230 million a year for our highways 
and bridges, with additional funding provided for transit 
programs across the State, as well.
    We did very well overall by securing two dollars for every 
dollar in gas tax money collected in our State, ranking us 
among the top four States in the Nation for return on our tax 
dollars. And I'm proud of that, and I don't think we have 
anything to apologize for. We have a very large State, 
relatively sparsely populated.
    We are critical to the national infrastructure because of 
our agricultural production, our energy production, and 
tourism, all of those components. North Dakota has got to 
receive more than we send in if we're going to maintain a 
national network of roads.
    I also worked to have Highway 85 designated as a high-
priority corridor. That makes us eligible for special corridor 
funding from the Federal Highway Administration to help expand 
the area into an even greater trade corridor.
    Here are some of the priorities I will focus on as we begin 
consideration of the next highway bill. The new legislation 
must identify sufficient funding. This is something that 
Director Ziegler, our distinguished administrator of the 
Transportation Department in North Dakota, has brought to our 
attention repeatedly. There has got to be a reliable source of 
funding for highway and bridge work all across the country.
    The current trust fund is insufficient. In fact, we know 
we're going to run out of money this year. We're going to have 
to have an injection of $5 to $7 billion this year to prevent 
withholding from States of the ability to go forward with 
contracts that have already been entered into. States and 
communities must be able to rely on their Federal partners.
    Next, any new highway bill must maintain recognition that 
rural transportation needs are vital to the nation. And 
finally, I will fight to secure funding for long-term 
investments for our nationally important corridors, like 
Highway 85.
    I am particularly interested in hearing from our witnesses 
today on the immediate investments that are needed for Highway 
85 and what future investments should be. Agriculture, 
manufacturing, energy, all of them will benefit by wise 
investments in our infrastructure. I'm also interested in 
learning whether any of the $170 million in Federal stimulus 
funds provided to the State for roads have reached the corridor 
or if they will.
    I want to again just indicate that I have enjoyed the 
working relationship we've had with the State. Mr. Ziegler, in 
my judgment, has been an absolute professional. He enjoys 
credibility, not only here in the State, but he certainly does 
with the congressional delegation. And I am happy to report 
with the people that we are trying to persuade in Washington of 
the special needs that attach to a State like ours, the special 
needs that surround Highway 85.
    With that, I want to turn to Mr. Ziegler for his testimony, 
and then we'll go to Mayor Johnson. I again just want to thank 
Mr. Ziegler for his leadership and for his partnership as we've 
worked to provide the kind of important funding that's 
necessary to move the economy forward.

  STATEMENT OF MR. FRANCIS G. ZIEGLER, P.E., DIRECTOR, NORTH 
      DAKOTA DEPARTMENT OF TRANSPORTATION, BISMARCK, NORTH

    DAKOTA Mr. Ziegler. Thank you, Senator. I'm Francis 
Ziegler, Director of the North Dakota Department of 
Transportation, and I want to thank you for the opportunity to 
appear before the Budget Committee today. Today, I'd like to 
address the following: Federal transportation legislative 
issues; how infrastructure investments can bolster North 
Dakota's economy, especially along U.S. Highway 85 corridor.
    The Federal investment in North Dakota's highways is in the 
national interest, and it's imperative that the reauthorization 
of the Federal Highway Program continue to serve the needs of 
the rural States, allowing us to continue to meet the demands 
being placed on our highway network, including Highway 85.
    That said, this year, for the first time ever, the State of 
North Dakota was able to commit an unprecedented sum of non-
matching State general fund dollars to help build North 
Dakota's transportation infrastructure. This year, we passed a 
$1.35 billion landmark transportation funding in North Dakota, 
which included about $750 million of Federal aid.
    This money will be used to fund maintenance and 
enhancements of the State's infrastructure, as well as grants 
for immediate assistance to cities, counties, and townships, in 
working to address weather- and flood-related damage to their 
roads.
    The highway account, Senator, as you indicated, of the 
Highway Trust Fund is projected to have a zero balance this 
summer. It will be highly disruptive to States if FHWA begins 
to delay payment to the State claims as we ask for 
reimbursement of costs. As a zero balance gets closer, States 
will begin to curtail bid openings and work to avoid the risk 
of not having funds to pay for the work.
    Furthermore, North Dakota already has contracts in place 
for which the Federal Highway Administration may not be able to 
provide this reimbursement of funds. The public may not be able 
to provide--the public at large, the jobs and transportation 
benefits of the program, would be denied, or at least delayed, 
if the program is disrupted. We hope that Congress can pass 
appropriate legislation soon so the trust fund will have those 
resources, as you indicated, Senator.
    A multiyear highway and surface transportation 
authorization bill is also needed. This bill would recognize 
the benefits the entire nation receives from strong Federal 
investment in surface transportation. Under this legislation, 
it's important for rural States like ours to receive at least 
its current overall share formula in other funds. Certainly, 
that result would be in the national interest.
    In support of the result, we'd like to emphasize a few 
reasons why investment in transportation infrastructure in 
rural States such as ours serve important national trends. 
First, North Dakota serves as a bridge for truck and personal 
traffic between other States. We need to enable agricultural 
exports and serve the nation's ethanol production and energy 
extraction industries, which are located largely in rural 
States.
    They're a lifeline for remotely located and economically 
challenged citizens; enable people in businesses to traverse 
the vast tracts of sparsely populated land that are major 
characteristics of the western United States; to provide access 
to scenic wonders, and to facilitate tourism. Also, to enable 
to enhanced investment to address safety needs in rural routes.
    Highway transportation between our country's major 
metropolitan areas is simply not possible without excellent 
roads that bridge those vast distances. The FHWA data on 
tonnage origins and destinations shows that just over 59 
percent of the truck traffic using North Dakota's highways does 
not either originate or have a destination in North Dakota. A 
significant portion of the economy in our State is based upon 
agricultural and energy production, and that--
    The Chairman. Francis, could I stop you on that point? 
Excuse me for interrupting, but you just made a point that I 
think we should highlight. What is the percentage of traffic 
going through here that does not originate in North Dakota?
    Mr. Ziegler. Fifty-nine percent.
    The Chairman. So almost 60 percent of the traffic here does 
not originate here. So when we're talking about a national 
transportation bill, if we're going to have a national system, 
we've got to have national support. And, you know, I get hit 
with this all the time, that North Dakota is getting a bigger 
share of the Federal Treasury than our population justifies, 
and we plead guilty to that. We get $1.80 back for every dollar 
we send Washington. I'm talking overall. On highways, we get 
two dollars back for every dollar we send. But there's a reason 
for that.
    If we're going to have a national system, we've got to have 
national support. And given our population density, and given 
the size of our State, if we don't get a disproportionate 
benefit with respect to roads and bridges, we would have a very 
bad system. Isn't that the case, Francis?
    Mr. Ziegler. That is correct, Senator.
    The Chairman. In your judgment, is the current formula 
sufficient? We know that there will be people coming after the 
formula, and they won't be looking to give us more. They'll be 
looking to take money that has traditionally come here. And in 
your judgment, is the current formula, is it critically 
important to maintain that?
    Mr. Ziegler. Senator, in my judgment, it's very critical 
that North Dakota maintain the current formula.
    The Chairman. Well, one of the things we're going to have 
to do soon after this hearing concludes is get together and 
work on our strategy for this next transportation bill, because 
we face, as I indicated at the outset, a shortfall of $5 to $7 
billion this year. That's going to have to be addressed.
    In the budget that I just wrote and my colleagues passed, 
we provided for that funding, and we provided for funding for 
the next transportation bill that is significantly in excess of 
what the trust fund will provide, because the hard reality is, 
the trust fund, if we just rely on the revenues of the current 
trust fund, we will not be able to come anywhere near matching 
the need that exists. Is not that the case, Director Ziegler?
    Mr. Ziegler. Senator Conrad, that is very much the case. In 
fact, our National Association has told us that the trust fund 
currently brings in approximately $32 billion, and the spend is 
approximately $40 to $41.5 billion, so there's a significant 
shortfall there.
    The Chairman. Well, let me just say that the budget that I 
wrote that my colleagues have agreed to is designed to meet 
that need at that higher level, understanding that that gap is 
going to have to be filled, and it requires the committees of 
jurisdiction to come up with the money to make up the 
difference so we're not just adding to the deficit.
    And I took a significant amount of heat for that 
insistence, but I think with our current financial situation as 
it is, we've got to insist that the next highway bill be paid 
for, and there is that gap. So the trust fund revenues are not 
going to be adequate.
    Mr. Ziegler. OK. I'll continue. A significant portion of 
the economy in our State is based on agricultural, energy 
production, and natural resource extraction. In fact, the 
government's economic strategy plan has identified Ag, energy, 
advanced manufacturing, technology-based businesses, and 
tourism as growth industries, because North Dakota holds a 
competitive advantage in those areas.
    These have been the focus of much of North Dakota's 
investments in economic development. Ag is one sector of the 
economy where the United States has consistently run an 
international trade surplus, not a deficit. Over the past two 
decades, roughly 30 percent of all U.S. Ag crops were exported. 
North Dakota is a major contributor of energy production in the 
nation. Our State is currently fifth in the Nation in all oil 
production and contains a large amount of coal reserves.
    Good roads throughout the State are paramount to the Nation 
becoming energy independent and providing Ag products to feed a 
hungry world. It's also worth noting that over the past three 
decades, tens of thousands of miles of rural branch lines have 
been abandoned nationwide. The reduced reach of the rail 
network means that in many areas, particularly rural areas, 
must rely more heavily on trucks to move goods.
    With increased truck traffic in North Dakota, much of the 
upper Midwest, we're challenged with our ability to continue 
the products. This challenge is really compounded by the 
necessity to pose spring load restrictions. Like congestion, 
load restrictions slow down commerce and add greatly to the 
cost of doing business.
    We moved the chart this afternoon to your left, Senator, so 
you can read it a little bit better, but if you will look at 
those lines on that chart, one, you'll see where we have load 
restrictions in our State, and it's pretty significant--
    The Chairman. Director Ziegler, I noticed immediately upon 
entering the room how you cleverly moved the charts to this 
side. I told them, we've got to get these charts blown up, 
because when they're over on that side, I couldn't read them, 
but here, I can see them clearly.
    Mr. Ziegler. Well, we want you to see them.
    The Chairman. You know I like charts.
    Mr. Ziegler. We've heard that. OK. Rural States like North 
Dakota face a number of serious obstacles in preserving and 
improving the Federal-aid highway system within our borders. 
We're very rural, geographically large, have low population 
densities, and have extensive highway networks.
    Our large road network has few people to support it. The 
per-capita contribution to the highway account of the Highway 
Trust Fund attributed to North Dakota is $161, compared to the 
national average of $109 per person. These factors make it very 
challenging for rural States to provide, maintain, and preserve 
a modern transportation system that connects the rest of the 
nation.
    Our budget to maintain--just to maintain, plow snow, seal 
cracks, and do some pothole patching, takes the transportation 
system about $9,200 per year per mile. It takes about 2,000 
vehicles a mile per day to generate that amount of revenue from 
the current motor fuel taxes. In fact, very few of our roads 
actually hit the 2,000 per day. In summary, our ability to 
address highway needs throughout the State depends in part on 
the resolution of some broader transportation legislative 
initiatives. We set forth today some of the many reasons why 
it's in the national interest for the Federal Government to 
continue to make substantial investments in transportation in a 
State like ours. A continued strong Federal funding role is 
appropriate.
    More specifically, on the Highway U.S. 85 corridor, 
transportation provides a vital link to our State's economic 
growth and is critical to almost all freight movements, 
connecting manufacturing to retailers, farms to markets, 
shippers to pipelines, railroads, airports, and seaports. For 
this reason, the State has proceeded with a number of 
improvements on the Teddy Roosevelt Expressway, U.S. 85 Highway 
corridor, that are part of the Statewide Transportation 
Improvement Program, or STIP, and that's on Chart 2. It shows 
all the improvements that we're looking to make on it.
    The Teddy Roosevelt Expressway is vital to serving the 
needs of western North Dakota and beyond our borders. The State 
of North Dakota and the Teddy Roosevelt Expressway Coalition 
are sponsoring a corridor study on 197 miles of the TRE located 
in North Dakota. The overall general objective is to prepare 
the TRE corridor master plan. It's scheduled to be conducted in 
three phases.
    The first phase is to identify the current and projected 
needs within the border or within the corridor. Phase two is to 
develop primarily corridor improvement alternatives to get 
ready to see what we need to do on it. And then third, to 
refine preferred alternatives and prepare required 
environmental documents.
    Kadrmas, Lee, Jackson, and Ulteig engineers have been 
selected to conduct the study, and phase one is underway. We've 
had some public hearings in Bowman, Belfield, Watford City, and 
in Williston, and some of the main topics that have been 
brought up at the meetings, there's an interest in making 
improvements, definitely, and safety is a big factor, that 
everybody talks about widening shoulders, lowering hills, 
addressing turning lanes, and so on.
    Concern about to changes to U.S. 85, though, that there's 
some concern about that it could result in communities being 
bypassed. Residents living along the roadway are concerned 
about losing land to the right-of-way. So on and on, but we're 
getting good input on those public hearings in addressing the 
corridor needs.
    Phase one of the study is scheduled to be completed in May 
of 2010. Senator, I know you've always worked with us, with the 
Department of Transportation, with our State, and with our 
Governor to develop a list of priorities as the Department of 
Transportation sees the needs, and we hope that you would do 
that again on this corridor and work with us to develop the 
priorities as they come out of the study.
    In conclusion, Senator, we consider it essential that 
Congress, through the reauthorization process, recognize that 
significantly increased Federal investment in highways and 
surface transportation in rural States is and will remain 
important to the national interest. The citizens and businesses 
of our nation's more populated areas, not just residents of 
rural America, benefit from a good transportation network in 
and across rural states like North Dakota.
    With such legislation, we'll be better equipped to address 
our statewide needs, which includes the U.S. 85 corridor. This 
concludes my testimony. I'm certainly willing to answer any 
questions that you might have.
    [The prepared statement of Mr. Ziegler follows:]

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
    

    The Chairman. Thank you, Director Ziegler. I want to take 
just a moment and recognize Lance Gabe, the Governor's Deputy 
Chief of Staff who is with us. We appreciate Lance very much 
for being here. In Williston, I introduced him as the 
Governor's Chief of Staff. On my trip down here from Williston, 
I was contacted by the Governor's Chief of Staff, who asked me 
if I knew something that he did not. He wanted to know if he'd 
lost his job and Lance was taking over, and I assured him that, 
as far as I knew, he was secure at his job, but I was happy to 
promote Lance, at least for the morning. Thank you very much, 
Lance, for being here.
    Next, we'll turn to Mayor Johnson, Dennis Johnson, our good 
mayor. We very much appreciate the leadership he provides in 
this community. Mayor Johnson, why don't you proceed?

STATEMENT OF HON. DENNIS W. JOHNSON, MAYOR, CITY OF DICKINSON, 
                          NORTH DAKOTA

    Mr. Johnson. My name is Dennis Johnson. I presently serve 
as President of the Dickinson City Commission. This is my ninth 
year in that capacity. I am a western North Dakota native and 
have lived in Dickinson the past 35 years. On behalf of the 
citizens of Dickinson and southwest North Dakota, it is my 
honor to extend to Senator Conrad a warm welcome to our 
community. We are pleased that you are here to hold this 
hearing regarding the U.S. 85 corridor.
    Dickinson is home to about 18,000 people. It is the largest 
city in the southwest quadrant of North Dakota. Dickinson, of 
the larger North Dakota cities has the most diversified economy 
and may be the most entrepreneurial city in North 
Dakota.Dickinson's economy is not overly dependent upon one 
economic sector. It participates in multiple economic sectors. 
There is a solid agricultural economy in southwest North Dakota 
consisting of both production agricultural and ranching. There 
is a robust energy economy in western North Dakota. Western 
North Dakota has oil, natural gas, lignite coal, and ethanol 
production. Currently, the Bakken Formation is one of the 
largest oil plays in the lower 48 States. The formation covers 
portion of western North Dakota, eastern Montana, and southern 
Saskatchewan.
    While much of our commerce historically travels east and 
west, the oil industry in western North Dakota travels 
predominately north and south, connecting the cities of 
Houston, Denver, Gillette, Dickinson, Sydney, and Williston. In 
addition to the oil and coal industry, this region also has 
electrical generation capacity that includes coal and natural 
gas-fired plants and wind generation.
    Dickinson has a growing manufacturing economy. There are in 
excess of 1,300 manufacturing jobs in our community. This is a 
high concentration, considering the size of our city. The 
manufacturing companies are a diverse group producing 
institutional furniture, food products, gravel handling 
equipment, electric thermal storage heaters, oil storage tanks, 
aircraft, electrical harnesses and circuit boards, and solar-
powered water mixing equipment.
    A very large majority of their manufactured products are 
marketed outside of North Dakota. Dickinson has a vibrant 
service economy. It serves a regional area that extends into 
Montana and South Dakota, providing education, retail, 
financial, medical, recreation, and other professional 
services.
    Dickinson State University's 2,800 students come from a 
large geographical area. The tourism economy is a significant 
contributor to the area's economy. Dickinson is the gateway 
community to the Theodore Roosevelt National Park and the 
historic town of Medora. Both are located within the scenic 
North Dakota Badlands, about 30 miles west of Dickinson. About 
500,000 people annually travel to the national park to enjoy 
sightseeing, camping, hiking, biking, and horseback riding in 
the Badlands. About 100,000 people during the summer attend the 
Medora musical in its outdoor amphitheater.
    People visit Medora and the Badlands because of its 
historical connection with Theodore Roosevelt. This area also 
attracts those who hunt and fish. Western North Dakota is well-
known for its world-class pheasant, water fowl, and mule deer 
hunting. Lake Sacagawea, located north of Dickinson, has 
excellent walleye fishing, boating, and other water recreation.
    Dickinson has a solid construction economy that services 
the local building needs of the region. Last year, the city 
issued 285 building permits totally just over $45 million in 
value. Housing values continue to rise within the city. While 
the Dickinson area economy consists of many diverse segments, 
an important common need for each segment is truck 
transportation. We are fortunate to be serviced by the 
Burlington Northern Santa Fe Railroad for inbound and outbound 
transportation for major commodities. However, most of the 
area's inbound and outbound transportation needs are met by 
trucks.
    A sparsely populated rural area such as western North 
Dakota is highly dependent upon the trucking industry. We are 
fortunate to be located on Interstate 94. I-94 provides area 
businesses with a safe and efficient outbound east-west 
corridor to markets. The I-94 corridor also provides Dickinson 
with quality inbound transportation service for goods and 
materials consumed by area businesses and citizens.
    It would be a great economic boost to this area if we had a 
highway similar to I-94 that would provide equally safe and 
efficient transportation in a north-south direction. In my 
opinion, it would make markets north and south of us more 
accessible. It would also be easier for our area to import 
goods from the north-south direction into our area. I also 
believe it would be safer for motorists moving in a north-south 
direction.
    I would encourage developing U.S. Highway 85 into either a 
super two or four-lane format. That concludes my testimony.
    [The prepared statement of Mr. Johnson follows:]

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

    The Chairman. Thank you very much, Mayor Johnson. I hope 
you'll let me call you Mayor. I know that you're really the 
President of the City Council, but let me ask you--turn to you 
first and ask you, how would you describe the condition of 
Highway 85? And remember, if you will, that we're trying to 
persuade people 1,500 miles away in Washington, colleagues, 
staffers, that there is a need for greater Federal funding for 
this corridor, as well as the highway needs of the entire 
State.
    I mean, if we're trying to describe so that a staff person 
on the EPW Committee in Washington can kind of get a sense of 
what we're dealing with if you drive up and down 85, how would 
you describe it?
    Mr. Johnson. Well, I'd be most familiar with the section 
from Belfield, North Dakota to Williston, North Dakota. I would 
describe it as being busy, with lots of truck traffic. You'll 
see a lot of trucks relates to the energy industry, of course, 
but it's not just industry. You'll see a lot of dry vans that 
are moving up and down that highway.
    I would describe it very similar to the way you described 
it from your trip last fall. It's rough and the shoulders are 
narrow. If you're traveling--and we travel at speeds of--right 
at 65 miles an hour--
    The Chairman. Right at 65?
    Mr. Johnson. Yeah, not above it. When I'm sitting next to 
the DOT Director, I'm right at 65. But at those speeds, with a 
two-lane highway with lots of truck traffic, the director noted 
that there's hills and curves, and so you'd have visibility 
issues. There are real safety issues there, and so I'd be very 
concerned about the safety aspect of it. And it's--when you're 
out traveling on the highway in a sedan and you have that much 
truck traffic there, it's I think a dangerous condition.
    The Chairman. You know, I described my grandfather going 
through the State of Wisconsin when I was a kid, and he'd call 
it a hill truck curve, and I added expletive deleted. And that 
was sort of my experience last fall on 85, hill truck curve--I 
won't say the expletive deleted. But, you know, it was very 
clear to me that we've got serious work that's got to be done 
there.
    Mr. Johnson. Let me add one thing, too. People who aren't 
familiar with North Dakota, most of what they've perhaps seen 
in the media about us is they viewed eastern North Dakota, 
which is very flat, has tremendously rich farmland. But out 
here in western North Dakota, we have buttes and hills, and we 
don't have that same flatness. And so there is a real safety 
element here in the west.
    The Chairman. Yeah, I'll tell you, it's one of the things 
that I experienced, that people get behind trucks. And we were 
in the situation where there were trucks going maybe 40, 45 
miles an hour, and people get impatient. And then you've got a 
hill, you've got a curve, and people take--they get impatient 
and they start to do risky things. And we certainly saw that 
last fall.
    Mr. Johnson. Well, and living in the Northern Great Plains, 
we do experience winter from time to time.
    The Chairman. We've been denying that, Dennis.
    Mr. Johnson. But when you're on a two-lane highway and you 
meet an oncoming truck and there is some snow on the highway or 
snow on the shoulder, you get a tremendous amount of snow fog 
also, which is a very dangerous condition.
    The Chairman. Let me ask you this. When you described, 
Dennis, a super two--those are the words I heard you use, as 
options and alternatives for the future, a super two or a four-
lane, what do you mean by that? What comes to your mind's eye 
when you describe a super two?
    Mr. Johnson. Well, when I think of a super two highway, I 
would perhaps think of one where there's say some controlled 
access to the highway. I would think of a two-lane highway that 
has wider shoulders. I would--there would be areas where there 
would be passing lanes, some of those hills or curves that 
we've talked about. But something that is certainly a 
noticeable step up from an ordinary two-lane highway.
    The Chairman. OK. Director Ziegler, what terminology do you 
apply? Obviously, that's a two-lane road now. How do you term 
it within the department in describing that road facility now? 
Do you just call it a two-lane? Is it a certain type of two-
lane? Do you have this super two terminology that the mayor is 
using, or how would you describe the options?
    Mr. Ziegler. Senator, currently, Highway 85 is a two-lane 
facility. It has some control access in the newer areas where--
what we consider control access on a corridor like this or a 
roadway like this is that we have no more than five approaches 
per mile. That's the control we've used. We've actually bought 
that when we buy right-of-way.
    As it relates to a super two concept, the mayor described 
it very well. Fundamentally, it's a wider segment of roadway. 
It provides passing, it provides climbing lanes where 
necessary, and it addresses those safety needs that we need to 
address on this corridor. I've personally--
    The Chairman. Is there any rule of thumb to how much cost 
that adds to go to that kind of improved road?
    Mr. Ziegler. Senator, to go to a super two on this 
corridor--I'd have to do some mathematic. We'll have our 
engineers do some mathematical efforts. But typically, we would 
need to add some shoulders, six, eight, ten-feet wide 
shoulders, and then an additional lane in the middle where 
necessary. It doesn't have to be a third lane or a passing lane 
continuously. You provide that at intervals.
    I have had the opportunity to drive on what is called a 
super two in Nevada between Laughlin and Vegas, and it's a very 
comfortable feeling, and what it allows is when cars get 
bunched up or trucks get bunched up, you can do passing at 
regular intervals. So that's the super two concept that the 
Mayor talked about.
    The Chairman.Could you provide for the committee kind of a 
rule of thumb--I'm not asking for it here, but could you give 
us some idea what cost that would add?
    Mr. Ziegler.To add to the shoulders and an additional lane, 
passing lane, at intervals, would in all likelihood be in the 
neighborhood of a million dollars for every mile that you would 
do that on.
    The Chairman. And so as a percentage, would we be talking 
about 120 percent of a typical two-lane, or can you give us 
some rough rule of thumb?
    Mr. Ziegler.If a typical two-lane is 24 feet plus 6-foot 
shoulders, which would bring that to a 36-foot roadway, this 
one would have to be at least 50-plus feet, and so you could 
just proportion of those costs. A typical two-lane--and the 
most current we have is the highway two-four laning. That cost 
us over a million dollars a mile, and we had owned the right-
of-way.
    And so if you took a million dollars a mile for a typical 
roadway if we started all over from scratch on this, I'm going 
to estimate that it would be $1.5 to $1.75 million dollars per 
mile.
    The Chairman. OK. That's very helpful. Let me ask you this. 
I asked you this question in Williston--I get asked, not 
infrequently, stimulus, we had $170 million of stimulus funds 
for highways in North Dakota that were allocated by Congress 
earlier this year. What's been the disposition of those funds? 
Are any of those funds flowing to this corridor, or will they? 
What can you tell us about that?
    Mr. Ziegler.Senator, first of all, we appreciate the 
stimulus funding. It came at a perfect time, when we had a 
tough winter, we have had a tough spring, a very wet spring, 
and our roadways have certainly shown a loot of damage. And it 
was good that our legislative body was able to help us out with 
that.
    But the stimulus money that we've put into place statewide 
has been to address a lot of the load-carrying capacity issues 
that would relate to that map with all the red roads. So we're 
doing overlays to help us with the spring activities, to keep 
that flowing.
    We believe that--Grant is going to be checking this 
afternoon with staff--that we have a micro-surfacing job coming 
onto this corridor to help with the redding and some of the 
loading issues.
    The Chairman.Let me just indicate that I was called 
yesterday actually by a former state legislator, and he was 
concerned that I was holding these hearings, putting a focus on 
Highway 85, when there are so many other road issues around the 
State, especially as a result of the extraordinary flooding 
we've experienced.
    And my staff shared with them that it's important to 
understand that those roads that have been affected by flooding 
are covered by FEMA funding under public assistance. So that's 
a separate pot of money. What we're talking about here in this 
hearing is a future transportation bill and the need to address 
key corridors as well as the road and bridge network across the 
State of North Dakota.
    But we need to put a focus on all of the priorities of this 
State, and very frankly, Highway 85 is a key priority, not only 
for this State, but for the country, because of the energy and 
agricultural production that moves on this highway. And as a 
gentleman said this morning in Williston, you've got to 
remember that a lot of this traffic that used to move on the 
rails is no longer moving on rails because many of these rail 
lines have been abandoned that has pushed a substantial 
additional load onto the road networks.
    So we've got kind of a triple whammy going on here with 85. 
We've got, No. 1, the dramatically increased energy traffic 
that is on this road, and these are 50-ton trucks. Then we've 
got the agricultural loads. We had testimony this morning that 
since 1990, a million and a half acres have been added to the 
crop base just in the North Dakota part of this region. A 
million and a half crop acres added. All of that production is 
being put on this road network.
    And then, No. 3, because of the removal of certain rail 
assets, an additional burden has been put on this road network. 
So you put that all together, it is like a triple whammy, and 
we've got to respond to it.
    And Director Ziegler, who I have high regard for, I think 
we have to put ourselves in his shoes as well. He faced 
dramatic increases in all the input costs to road and bridge 
construction in this State last year. You think of what 
happened when oil went to $145 a barrel. What happened to 
asphalt costs? What happened to all of the other inputs? What 
happened to diesel costs? What happened to the cost of steel?
    In fact, I'd ask you, Director Ziegler, for the record, 
maybe you could just give us some examples of the kind of input 
cost increases that you were faced with last year.
    Mr. Ziegler. Senator, they were significant. Asphalt prices 
were in the neighborhood of $300 to $400 per ton just before 
2005. From 2005 to 2008 and now again in 2009, we're seeing 
$700 to $900 a ton, but in that average of $800 a ton. So 
that--
    The Chairman. So more than a doubling just there.
    Mr. Ziegler. It's more than doubling just in that 
commodity. The steel prices have leveled off. We're currently 
building a bridge at Drayton, North Dakota, and we've got some 
good steel prices on that project, and so we're happy about 
that.
    Cement prices have leveled off, and actually dropped some. 
But it's the asphalt commodity that we use so much on these 
types of roads that has really driven up our costs.
    The Chairman.And, actually, last year, before this leveling 
off in cement and a leveling off in steel, you faced big run-
ups in those input costs, as well, did you not?
    Mr. Ziegler.Yes, we did. Cement had gone well over $100 a 
ton when it had been about $80, and steel prices had gone up at 
least 25 to 30 percent, but they've leveled off and actually 
come down.
    The Chairman. So we've got to understand if we're going to 
maintain the same road network and improve upon it, and the 
input cost for every mile go up dramatically, we've got to put 
more resources into the system if we're going to do just the 
same job that we've been doing. And if we want to make 
improvements and enhancements, the money's going to have to 
come from somewhere.
    I would just say to you, it's very clear that the revenue 
base of the trust fund is not going to be adequate to meet the 
needs. Isn't that the case, Director Ziegler?
    Mr. Ziegler. That is correct, Senator. In our National 
Association discussion, we're really concerned about that very 
point, is the fact that the 18-cent gas tax or 18.4-cent gas 
tax is only generating $32 billion, and we're spending at more 
than that, and we need more than that, Senator.
    The Chairman. Do you have any assessment from your National 
Association of what kind of expenditure will be required in the 
next transportation bill? Would you expect somewhere in the 
range of $42 billion to be required to meet the needs 
nationally?
    Mr. Ziegler. Senator, our association has done a neat 
study, and we're looking at in the neighborhood of $450 billion 
for a 6-year program.
    The Chairman. For a 6-year program?
    Mr. Ziegler. That's correct.
    The Chairman. Well, Director Ziegler, you've just given me 
a very sobering number.
    Mr. Ziegler. Those are the needs as our States see them. 
They're significant. Senator, as you recognize the fact that 
when the stimulus was addressed, the fact that infrastructure 
was valued in this country, and that's how we get people to 
jobs. That's how we get jobs for people.
    And so the infrastructure--like I always say, the 
infrastructure is the engine that drives the economy. And a 
good economy cannot be sustained without a good transportation 
system.
    The Chairman. No, and that's absolutely true. And it's, No. 
1, building these roads and bridges and maintaining them 
creates jobs, and they're jobs right here in America. No. 2, it 
also has the added benefit of proving the economic efficiency 
of America up against the competition we face internationally.
    So I argued in the stimulus package for far more for 
infrastructure. I argued for $200 billion of the package to be 
for infrastructure, because to me, it makes the most sense. You 
really get a big bang for the buck, not only in jobs, but in 
increased economic efficiency.
    Let me go back over these numbers, if I could. I heard you 
say for a 6-year bill, your National Association has now 
calculated that we would require somewhere in the range of $470 
billion?
    Mr. Ziegler. Senator, $450 billion.
    The Chairman. Four fifty. So that would be $75 billion a 
year on average. Seventy-five billion a year, and the trust 
fund is throwing off on about $32 billion a year, if I'm right.
    Mr. Ziegler. So that is a gap of $43 billion a year. Now, 
is your National Association--honestly, this is the first time 
I've heard these numbers, and honestly, it almost takes my 
breath away, I have to tell you honestly. So we're talking 
about a $43 billion gap. Has your National Association come up 
with options on how to close that gap?
    Mr. Ziegler. We have. In fact, our association did testify 
to the Policy Commission and the Infrastructure Funding 
Commission. In fact, there have been two of those types of 
commissions. Of course, one of the things that is almost taboo 
is to keep talking about gas tax, so there's public-private 
partnerships that are being talked about. There's bond banks 
that are being talked about. VMT is being talked about, as well 
as--
    The Chairman. What is that?
    Mr. Ziegler. It's basically a user fee, vehicle miles 
traveled user fee. And that is to say--
    The Chairman. What do you call that?
    Mr. Ziegler. Vehicle miles traveled user fee, a VMT fee.
    The Chairman. V--I see, it's V for Victor, VMT.
    Mr. Ziegler. VMT.
    The Chairman. Oy, oy, oy. This is worse than I thought. OK. 
Now I'm sorry I held this hearing. Well, I personally don't 
believe that gas tax is going to do it. I don't see the support 
for increasing the gas tax, with gas prices where they are and 
with gas prices where they've been, to the level that would 
close that gap, and so I think we're going to have to be 
thinking very, very seriously about other options.
    Do you have any good news that you could give me? Forty-
three billion, 6 years. That's a $258 billion hole that we've 
got to fill. Two hundred and fifty--that's real money, even in 
Washington. And what is--can you help us understand, that 
amount of money is to achieve what result?
    Mr. Ziegler. Senator, that amount of money is to achieve 
the result to take care of the needs that the States are seeing 
in the infrastructure condition of today. There are thousands 
of bridges out there that are structurally deficient. I'm 
talking about the entire country now.
    The Chairman. Yeah, yeah.
    Mr. Ziegler. Thousands of bridges that are deficient, roads 
that are in bad shape, and there's an infrastructure that has 
tremendous needs. And as you travel around the country--which I 
don't do all that much of, but had an opportunity last week to 
be in Pennsylvania for one of our spring meetings with our 
association, there's a lot of work that needs to be done.
    You know, our interstate system is just over 50 years old, 
and it was designed for 20 to 30 years. And so it's right 
there. It needs to be basically reconstructed. And obviously, 
the capacities have to be increased. The pavement thicknesses 
have to be increased because of the heavier loads that we carry 
today. I hated to ruin your day here, but I guess that's 
really--those are some of the realities.
    The Chairman. You know, honestly, this is the first that 
I've heard these numbers. I've been working on a gap, but it 
was a gap much smaller than this one. Let me ask you this. Do 
you believe that in any way, these numbers are gilding a lily 
or gold plating? Do you believe that there are savings we could 
achieve out of that amount and still have a responsible 
program?
    Mr. Ziegler. Senator, in every study and every needs and 
wants assessment, one has to take a look at the priorities and 
have to go back and reprioritize what it takes to really keep 
this economic engine going. And certainly, as an association, 
they've looked at that. But I couldn't say today what kind of a 
cutback we could make in order to still meet the needs and 
wants of some of the States that have put those dollars 
together.
    The Chairman. Well, let me just say this to you. And, 
again, I'm coming at this cold, because this is the first I've 
heard these numbers. But I've got to tell you, it is going to 
be extraordinarily difficult to meet those numbers. And I think 
we're going to have to look at cutting back. We're clearly 
going to have to look for additional revenue sources. But, 
honestly, we're going to have to cut, because I don't think 
there's an appetite for filling that big a hole, not with the 
economy in the situation that it's in.
    Mr. Ziegler. We certainly recognize that as an association 
and are working toward providing options how these things could 
be funded.
    The Chairman. OK. Mayor Johnson, any last thoughts or 
observations on what you've heard here today or anything that 
you'd want to make certain is included in the record?
    Mr. Johnson. No, sir.
    The Chairman. All right. Thank you. I want to thank you 
both for, again, excellent testimony. I've certainly heard some 
things here that are new to me, but important for me to know.
    Mr. Ziegler. If I could, Senator, make some closing 
comments.
    The Chairman. Yes.
    Mr. Ziegler. Highway 85 corridor is very important to us, 
as you can see from the chart. We are moving forward with quite 
a number of projects in the next few years, and so most of 
those are safety-type projects to make sure that we have a safe 
corridor. And I look forward to working with you and your staff 
to work together to help create the basis for the next highway 
bill. I know that you've worked very closely with us and the 
Governor's office, and we certainly appreciate that and thank 
you for it.
    The Chairman. Well, I have appreciated very much our 
working relationship, and I think very soon after these 
hearings have concluded, we need to get together and put 
together our strategy for this next transportation bill, 
because, especially after what I've heard here today, we've 
got--I knew we faced tough challenges, but I must say, after 
hearing your testimony and what the National Association has 
determined as what the needs are, we've got a much bigger 
problem than I had previously heard in testimony. All right. 
Thank you. Thank you so much, Mayor Johnson. Thank you, 
Director Ziegler. We appreciate it.
    Our next panel is made up of Gaylon Baker. Mr. Baker is the 
Executive Director for the Stark Development Corporation. He 
also serves on the Board of Directors for the Theodore 
Roosevelt Expressway. Chuck Steffan of Belfield, North Dakota. 
Mr. Steffan is the COO of Missouri Basin Well Service, which is 
a trucking operation for oil and gas field services. And Dean 
Rummel of Dickinson, North Dakota. Mr. Rummel is the President 
of TMI in Dickinson, which is a leading manufacturer of 
laminate casework products for schools, laboratories, and 
healthcare facilities.
    Welcome. It's good to have you here. I appreciate very much 
your participation in this hearing. Please know that your 
entire statements will be made part of the official record of 
this hearing, and we'd ask you to proceed and give us your 
thoughts on the opportunities that exist in the Highway 85 
corridor. Gaylon, welcome.

     STATEMENT OF GAYLON BAKER, EXECUTIVE DIRECTOR, STARK 
        DEVELOPMENT CORPORATION, DICKINSON, NORTH DAKOTA

    Mr. Baker. Thank you, Senator Conrad. My name is Gaylon 
Baker. I am Executive Vice President of Stark Development 
Corporation, the economic development office serving Stark 
County and its surrounding market area.
    I've been in this position for 14 years, having prior 
experience and training in metro area redevelopment, marketing, 
land use planning, business planning, housing rehabilitation, 
and regional planning. I'm a member of the Theodore Roosevelt 
Expressway Association Board of Directors. The Theodore 
Roosevelt Expressway Association is a part of the Ports-to-
Plains Alliance. The goal of a safer, more efficient corridor 
highway that spans our nation from north to south is shared by 
all of the alliance.
    Such a corridor highway will improve the future of North 
Dakota and its neighbors on several fronts. Our association 
could cite an impressive list of statistics that support the 
economic impact of north-south trade.
    North Dakota alone trades over $2 billion domestically with 
the other eight States in the Ports-to-Plains Alliance. Our 
State also realized $1.8 billion in exports by truck to Canada 
and $15 million in exports by truck to Mexico in 2008. Both of 
these export numbers are up over 200 percent since 2004. North 
Dakota's leading manufactured export is machinery, followed by 
transportation equipment, processed foods, and chemical 
products.
    North Dakota's exports of goods has risen sharply in recent 
years as more and more companies are finding markets across our 
country's borders, and as they have more grown more 
sophisticated in their marketing.
    Many of our local companies rely on U.S. Highway 85 for 
moving the equipment and goods that tie us to the large markets 
in the southwestern United States, in addition to Canada and 
Mexico. However, this movement is currently hampered by the 
condition and design of this critical roadway. Pavement 
conditions, lack of lane separations in critical locations, 
access points, lack of turning lanes, pathways through 
residential and commercial areas, and other concerns 
effectively restrict the potential of this roadway to meet the 
growing demand we are seeing.
    Western North Dakota is fortunate to be home to a number of 
businesses with the capability to sell extensively into out-of-
state markets. As a State located in the middle of the 
continent, our strength as an essential manufacturing and 
distribution point increases when we are connected to our free 
market partners to the north and south.
    Our area businesses, including agricultural, energy, and 
manufacturing, are leaders in research and development of 
methods and processes that add value and bring new money into 
North Dakota. They have studied potential markets thoroughly 
and subsequently focused on the specific segments to achieve 
success, in spite of what most of the country regards as a 
remote location.
    Adding value in specialization, I believe, are the future 
of American manufacturing, but we will see mass volume, 
repetitive production often go overseas. In mass volume 
production, other transportation methods are more efficient. 
Conversely, in specialized manufacturing done in smaller 
quantities, trucks are the most appropriate transportation 
choice. U.S. Highway 85 is a major trucking corridor for us.
    Several years ago, in 2001, Dickinson was chosen to host a 
population symposium, largely because at that time, we were 
recognized as an epicenter of out-migration, particularly among 
our young people. Key experts were hosted in an academic 
assessment of this problem, and many potential solutions were 
put forth.
    For local leaders, this was an opportunity to take stock of 
their situations in their communities. Fortunately, they did 
not just listen and walk away. They asked themselves, what can 
we do to become the place people want to live? The answer is 
multifaceted and includes recognition of cultural diversity, 
community recreation improvements, development of new housing, 
adding shopping opportunities, good-paying jobs, and improving 
our connections to the world around us.
    The diagram that you can't see below illustrates some of 
the many investments communities have connected to the U.S. 
Highway 85 corridor that they have made in themselves to become 
more attractive. Allow me to verbalize what's in the diagram, 
and my apologies for not having charts. The diagram illustrates 
the relative layout of Watford City, Belfield, Bowman, 
Dickinson, Richardson, Medora, and flags those many 
improvements that these communities have invested in for 
themselves. It's things like the Rough Rider Motel, the 
amphitheater, and the golf course out in Medora; the visitor 
center and the main street project in Watford City; the 
pavilion, the fire station, the veterans memorial, and the 
recreation area in Belfield; the library, the Dakota Winds 
Arena, and the Four Seasons Pavilion in Bowman; the West River 
Community Center, the Theodore Roosevelt Presidential Library, 
the downtown library remodel, and the Badlands Activity Center 
in Dickinson; the retro energy project, the highway incubator 
that's being planned, and the Cenex expansion, and the 
healthcare facility--thank you, by the way--in Richardson.
    And those are just some of the top-of-the-mind things that 
came to me as I wrote this. These investments have produced 
results. The net out-migration has either slowed or reversed 
for a number of communities. Today, Dickinson's population is 
climbing, not because the town has become a retirement haven, 
but because young families are choosing to stay or relocate 
here.
    The birth rates at St. Joseph's Hospital and at other 
hospitals in our area have been on the rise. Students are 
finding Dickinson State University and its proud host city to 
be attractive. Dickinson State University brings young people 
to the area for a period of their life, and they are staying 
because they like the upbeat tone and the social and cultural 
offerings.
    In turn, the economic development momentum of our area 
businesses has provided them with opportunity to visualize a 
prosperous future here. I have a couple more charts on paper, 
one of Dickinson State University fall enrollment, which has 
grown from around 1,800 in 1998 to 2,730 in 2008. Dickinson 
area total employment has climbed from about 9,700 in 1998 to 
12,200 in 2007, the last number I have available. That's about 
2,500 in about 9 years.
    So while our baby rate has improved, challenges do remain. 
Young families need to be confident that they themselves and 
the businesses they work for are connected to urban centers and 
markets. Any sense of remoteness and isolation on either of 
those fronts is frightening to them. Good connections, which 
are what we see as the future of U.S. Highway 85, are critical 
to sustaining our youthful population. That concludes my 
testimony.
    [The prepared statement of Mr. Baker follows:]

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
    

    The Chairman. Thank you very much, Gaylon. Next, we'll hear 
from Chuck Steffan, the COO of Missouri Basin Well Service. 
Welcome. Good to have you here.
    Mr. Steffan. Thank you.
    The Chairman. Please proceed.

  STATEMENT OF CHUCK STEFFAN, COO, MISSOURI BASIN WELL SERVICE

    Mr. Steffan. Good afternoon. My name is Chuck Steffan. I'm 
actually the Chief Operating Officer for Missouri Basin Well 
Service, but I accept your generous promotion, Senator, at 
least for the afternoon.
    The Chairman. I'm not sure pay will follow, but--
    Mr. Steffan. We have locations at Belfield, North Dakota 
and also Ross, North Dakota. We're primarily a transporter of 
production water, crude oil, and drilling mud in western North 
Dakota. We've been in existence since 1979. We have over 300 
employees, of which 270 of those are full-time drivers. We 
operate 175 tractor-trailers, which consist of double bottoms, 
bobtails, A trains, fifth wheels on the water side, and mostly 
tractor tank and pup trailers hauling oil.
    Our trucks will run 68 to 95 feet in length and could 
potentially haul payloads of 40 to 50 tons. The proposed 
Theodore Roosevelt Expressway is the primary corridor for our 
day-to-day business, as it is for most of the oil production in 
North Dakota.
    Most recently, the Bakken oil discovery is conservatively 
estimated at 3.65 billion barrels of oil and could be the 
largest oil deposit found in the U.S. next to the Alaskan 
oilfields. The T.R. Expressway lies in the heart of what the 
U.S. Geological Survey calls the largest continuous oil 
accumulation it has ever assessed.
    Most recently, the Sanish/Three Forks Formation, which lies 
directly under the Bakken, could potentially add additional 
barrels of production in the shadow of the T.R.Expressway. With 
time and technology, more of the estimated 167 billion barrels 
of Bakken oil in place could be recovered.
    The Chairman. Is that 167, that just in North Dakota?21Mr. 
Steffan. I believe it is.
    The Chairman. Because we've got--I have a much bigger 
number in my head for the entire Bakken, but that includes 
Montana and Canada.
    Mr. Steffan. Exactly. Best estimates given normal rates of 
exploration say this play will be in place for several decades, 
and production curves will obviously continue beyond 
exploration. We are currently hauling oil and production fluids 
from wells that have been in place since the 1950's. Given the 
lack of pipeline infrastructure and the infeasibility of 
pipelining all the products of oil production to their final 
destination, trucking fluids will continue to be an ongoing use 
for Highway 85.
    Our primary concern for Highway 85 is safety. Given the 
nature of the current oil exploration industry, and 
specifically, the Bakken, including the normal traffic 
generated by production, Highway 85 is the host to rigs 
bringing heavy equipment, drilling units, oilfield pipe, 
tankage, frac tanks, and fracing equipment to oil well sites 
throughout the Williston basin.
    Unlike North Dakota geological discoveries of the past, 
fracing has been used extensively to improve the recovery of 
oil and gas in the Bakken. It's typical to have 26 to 46 frac 
tanks in transit to each frac job. In order to fill one of 
those tanks, it usually takes two loads of a truck to fill 
those frac tanks, so there's a lot of activities going on when 
you have a fracing going on.
    In addition, fracing crews create their own convoy in 
transit to frac jobs, adding to existing traffic generated by 
the North Dakota oil industry. This traffic, added to the 
normal tourism traffic, Ag traffic, and other commerce, 
presents a safety concern that could be reduced by an expanded 
highway.
    Our second reason for support of the expansion of Highway 
85 is the efficiencies it would create in traffic flow, many of 
which were talked about earlier today, including turnout lanes 
and passing lanes that would be beneficial to all who travel 
this corridor.
    Finally, oil and gas revenues provide significant support 
to the current and rare budget surplus in the State of North 
Dakota. It seems logical that the State would consider it a 
sound investment to provide a thoroughfare to enhance future 
revenue production from the oil industry and to better holster 
commerce that would continue to support the State's budget.
    Just to give you an idea, since 2007, our company has grown 
250 percent in terms of our fleet and 400 percent in terms of 
the number of drivers that we employ. We project that if the 
current oil prices would happen to increase, we would see a 
continued growth in both our fleet and the number of drivers 
that we have.
    [The prepared statement of Mr. Steffan follows:]

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
    

    The Chairman. Chuck, could I ask you--I sat up in Williston 
and I was talking to a colleague before coming out, and I was 
talking about this hearing and what's happening in the oil play 
out here. He was kind of intrigued about the Bakken, and he'd 
seen some of the news reports about it.
    And what really surprised him--and it was interesting, his 
reaction--was that this oil is trucked so far, because in his 
head, you've got existing oilfields, so that would mean to him 
you'd have existing gathering systems going to existing 
pipelines.
    How would you explain it to somebody who thinks that's 
what's out here, that you have existing production, existing 
gathering lines going to existing pipelines? How long would 
your average run be with one of your trucks to haul oil?
    Mr. Steffan. Our average run would probably be about 70 
miles, but we do have one run where we were actually taking oil 
out of the Monmouth area up to Alexander, which about a 170-
mile haul. What's happening in some cases is that we're mixing 
oil of lower quality with oil of higher quality, creating a 
blend thats worth more money, so the economics are driving that 
situation.
    The Chairman. And how would you explain to people like my 
colleague, who was very surprised by this notion that we don't 
have existing gathering lines and pipelines to move this oil? 
How would you explain it to--
    Mr. Steffan. Well, we have a play that's really in an area 
that's different than what we've previously had before, when 
you talk about what's going on in the Kildeer area and heading 
north. We have, of course, in Montreal County, a very--one of 
the discovery fields in North Dakota, but some of that 
infrastructure has also seen the value of its time and it's had 
its usefulness.
    But a lot of that production is coming out of a new area, 
and it has to be pipelined or trucked to facilities actually 
that were just created. And the other thing is we've had 
enhancements in technology, so some of the existing 
infrastructure is not as efficient and productive as it once 
was.
    The Chairman. And what percentage of the oil, in your 
estimation, would be being trucked, versus moved through 
gathering lines and existing pipelines?
    Mr. Steffan. You know, off the top of my head, I would say 
about 50 percent of it's being trucked.
    The Chairman. So a very large percentage of the oil that 
needs to be moved is not moving through pipelines and gathering 
lines, it's moving on the road network?
    Mr. Steffan. Basically, what we're doing is taking it from 
the source of origination to a lack unit or a unit that's going 
to pump it out of State or to another destination. So you will 
never have a pipeline system from every well to a lack unit 
because of the cost of it. It's just more efficiently handled 
through trucks.
    The Chairman. Through trucks. OK. Very good. Thank you very 
much. Next we'll hear from Dean Rummel, the President of TMI in 
Dickinson. Dean, I hope you really are the President. I mean, 
I've been getting these--I've been inflating people's positions 
all day here.
    Mr. Rummel. You could certainly name me the CEO, if you'd 
like, Senator Conrad.
    The Chairman. That may come with certain resistance from 
other circles here.
    Mr. Rummel. Exactly.
    The Chairman. I don't want to get crosswise with the mayor.

  STATEMENT OF DEAN RUMMEL, PRESIDENT, TMI, DICKINSON, NORTH 
                             DAKOTA

    Mr. Rummel. Thank you, Mr. Chairman. Good afternoon. My 
name is Dean Rummel, President of TMI Systems Design 
Corporation and TMI Transport Corporation. TMI is the nation's 
largest manufacturer of institutional-grade laminated cabinets, 
countertops, and architectural woodwork, with consolidated 
sales exceeding $52 million in 2008. We've been providing 
products for education, healthcare, laboratory, and other 
commercial projects throughout North America for over 40 years.
    In addition to schools, hospitals, and laboratory projects 
across the United States, TMI's products are being utilized on 
projects, including the J. Paul Getty Museum in Los Angeles, 
the Bank One Ballpark in Phoenix, the Denver International 
Airport, the Cleveland Browns Stadium, and the Georgia Dome.
    TMI products are produced in modern state-of-the-art 
factories on our campus right here in Dickinson, consisting of 
over 150,000 square feet of manufacturing space. TMI Transport 
is a company-owned trucking company with 25 semi tractors and 
44, 53-foot trailers that deliver our products to each project 
site, and we haul other products back into this region for a 
number of different customers. We currently employ 360 full-
time, year-round employees and 45 seasonal college interns.
    TMI would strongly support, and we believe the area would 
benefit greatly, from the investment in the U.S. 85 corridor. 
As a manufacturer, we need to move our products to the various 
markets in the U.S. and western Canada. On the average, TMI 
Transport travels 1,300 miles to our first delivery in each 
truck. Our growth and success is dependent on roads, such as 
Interstate 94 that has provided easy access to the markets in 
the east and southeast United States.
    The U.S. 85 corridor would benefit the movement of product 
to Texas, Arizona, California, Colorado, New Mexico, Nevada, 
Oklahoma, and Wyoming. In 2008, TMI averaged about 1,000 
outbound loads, and nearly a third of our deliveries were to 
those eight States. There is no comparable infrastructure like 
Interstate 94 going north and south, and that can be, at times, 
a detriment to our success.
    Just last week, TMI Transport had a major accident en route 
to a delivery to two school projects in the state of Wyoming. 
Our driver took North Dakota Highway 22 South to Highway 79, 
and we rolled the truck--he rolled the truck while navigating a 
curve in the road just south of Reeder, North Dakota, just ten 
miles into the State of South Dakota.
    The road is narrow and it's unforgiving, and the driver 
wandered too close to the edge of the road. The conditions were 
good. The road was dry. It was during daylight hours. But the 
shoulder was soft and the damage to the truck, the trailer, and 
the cargo was extensive. We're thankful that our driver had but 
minor injuries and was released from the hospital the same day. 
If the U.S. 85 corridor were to become a reality, we probably 
could avoid an accident like that, because our trucks would 
utilize a more truck-friendly route.
    TMI has to rely on truck deliveries because it's not 
feasible to deliver to school and hospital job sites utilizing 
other modes of transportation, like rail. Institutional 
building contractors and construction managers operate under 
very compacted time schedules and they require deliveries on 
specific phases of the projects, along with special deliveries 
for breakages and shortages.
    Rail does work well for transportation of TMI's major raw 
materials, primarily particle board and plywood panels. That 
material is high-volume, heavy in weight, and is produced, of 
course, in forested areas of the country. We receive five to 
six carloads per week, and the freight costs are slightly less 
than by truck. Rail would not work for our outbound deliveries.
    On behalf of TMI, I would like to encourage the Senate 
Budget Committee to support this investment in the U.S. 85 
corridor. That concludes my testimony, Mr.Chairman.
    [The prepared statement of Mr. Rummel follows:]

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
    

    The Chairman. Thank you very much, Dean. Dean, do you 
believe TMI would be even more successful if you were the CEO? 
You don't have to answer that. In fact, it's probably better if 
you don't answer that.
    Mr. Rummel. Thank you.
    The Chairman. Well, we've got to have a little laugh along 
the way. Let me ask you this. Dennis, would you like to come 
back to the witness table?
    Mr. Johnson.--I was just commenting on what I might do--
Dean was the CEO.
    The Chairman. Oh, I get it. I get it. Let me ask you this. 
If you were to describe to my colleagues and their staffs the 
condition of Highway 85 now, how would you describe it, Dean? 
If we're just in conversation with them, as I am with my 
colleagues, trying to persuade them of something, what words 
would you use to describe Highway 85 and what's happening 
there?
    Mr. Rummel. Senator Conrad, I did talk to one of our 
drivers who drove a whole lot and kind of asked him that 
question because I kind of anticipated that you'd be asking me 
some tough things that I couldn't answer, because I don't drive 
U.S. 85 as much as, of course, they would.
    Usually, they actually try to avoid it. That's why our 
truck was going south on Highway 22. And it's just because of 
the amount of traffic that is on it. They choose to try and 
avoid that road. It is no better than all the other two-lane 
roads, and actually, they can cutoff 15 miles getting to I-90 
by going straight south on 22 and cutting across on 79. And so 
for 15 miles, they say it really does not make any difference. 
They would prefer, of course, to have a four-lane U.S. Highway 
85, because they would definitely use it. But they actually try 
and avoid it right now.
    The Chairman. OK. Chuck, how would you describe it? If you 
were visiting with my colleagues in Washington, trying to help 
them understand what conditions are like there, how would you 
try to describe it?
    Mr. Steffan. I believe there's segments of the highway that 
are definitely in need of improvement. We've got heavy loads 
going up and down that road. We've got many loads that are 
wider than normal. Even if you take a look at what's happened 
in agriculture, the economies of scale, we've got bigger 
equipment all the time. So one of the primary concerns we deal 
with is traveling down that road with heavy roads and working 
with the existing traffic that's out there, be it big Ag 
equipment or even big oilfield equipment and the visibility 
issues that are there.
    And we understand too that we create some traffic hazards 
ourself from the standpoint of the size of our rigs and the 
number of rigs going down the road. And actually, a wider road 
with turnout lanes would be beneficial from the standpoint that 
we know that if we travel slower, we actually create 
efficiencies from fuel economy. And so turnout lanes and 
passing lanes would be beneficial for everyone on that highway.
    The Chairman. You know, this isn't particularly relevant to 
this hearing, but I'd just be interested, what is the optimum 
speed from a fuel usage perspective? Do you do studies on that 
kind of thing?
    Mr. Steffan. For most of our trucks, it's about 60 miles an 
hour.
    The Chairman. Sixty miles an hour. Gaylon, how would you 
describe it? If you were trying to persuade one of my 
colleagues that Highway 85 needs more investment and 
specifically here, we're talking about Federal investment, how 
would you describe it?
    Mr. Baker. Well, in a word, I would describe it as unsafe, 
and that is because of the--not just because of Chuck's trucks 
or Dean's trucks, it's unsafe because of the visibility 
problems, the length of view you have on curves, that sort of 
thing, the rutting of the roadway, the narrow shoulders, 
where--and part of--we're fortunate to have part of Highway 85 
go through some pretty scenic areas. The problem is that people 
pull off and want to look, and you can come upon something like 
that pretty suddenly. Sadly, there have been some tragic 
accidents on Highway 85 in recent years. We don't like losing 
especially our young people that way, and that has happened, 
and we--the safety of that roadway I think is our primary 
concern. Certainly for tourism-type traffic, they too choose to 
avoid it because of the amount of traffic and especially heavy 
trucks.
    The Chairman. You know, I've got to tell you, after--I 
drove on it quite a bit last fall, and it made a very strong 
impression on me. I thought it was the worst road in the State, 
and I mean from every standpoint. The amount of traffic, I find 
really striking. When I was on it, the volume of trucks--and I 
don't know if that was just the couple of days I was on it were 
unusual, but it was really striking, the truck traffic, and the 
very heavy truck traffic, both energy and agriculture.
    The other thing that struck me is the rutting. I mean, 
there were places where you were in like grooves in the road, 
it was so worn down. And that is not safe. The other issue is 
the hills and the curves, because you--I remember very well 
going around a curve and running into one of these--I don't 
know if it was a convoy, but it was a series of trucks moving 
closely together, and they were moving at quite a slow speed, 
for whatever reason. You know, it was just an unsafe situation.
    Absent going to a four-lane, which I think has to be an 
option on the table here, especially if we're looking down the 
road to the additional development in the Bakken Formation, it 
seems to me four-laning, at least in parts of it, have to be on 
the table for consideration.
    Mayor Johnson talked about what he termed a super two. 
Well, I can see where that would be tremendously helpful in 
places in that road too. Passing lanes, wider turnoffs, broader 
shoulders, all of those things would certainly help. I think 
passing lanes would be enormously helpful and beneficial.
    I remember going up one of the hills as we were going up to 
Williston on 85 and again getting caught behind a whole series 
of trucks. You couldn't get past them. And there was just--
there were too many blind spots. You couldn't get past them. 
And they were going I'd say 45 miles an hour. At least it 
seemed like 45 to me.
    Actually, we wound up getting late to our next appointment 
because we spent so much time--and we had, we thought, plenty 
of time--on 85. But people that were in our group all wound up 
being late because of the conditions on 85.
    Anything else this panel--anything else you'd want to say 
for the record?
    Mr. Baker. Senator, as far as you were asking how do you 
fund something like this, and how do you refund the Highway 
Trust Fund, certainly, our transportation methods are moving 
somewhat away from pure gasoline and, of course, diesel fuel, 
which generates all the taxes. And, of course, the efficiencies 
in automobiles has helped us a lot in that way.
    There are other things that vehicles consume on a regular 
basis--tires or something like that--that a person could, I 
suppose, tack a small tax on. Certainly, it sounds to me like 
the solution will have to be multifaceted more so than just the 
reliance on a single source.
    The Chairman. I believe that, Gaylon, and I'll tell you, 
the numbers that our Director delivered today that the National 
Association sees as the need for the next highway bill if it's 
a 6-year bill, I mean, that's a really striking number. And if 
we have a gap anywhere close to that, we're going to have to 
think outside the box on where the money is going to come from.
    And there's no question in my mind the trust fund revenue 
is grossly inefficient to meeting the need that's out there. I 
have no doubt about that. So we've got a lot of work to do.
    I thank the three of you very much. I want to open it up 
now to those who are in the audience, if there's anybody here 
that would like to make a statement for the record. If you'd 
give your name and spell it so our transcriptionist is able to 
capture that for the record, and you tell us who you're 
representing, if you're representing an interest or an 
organization, and if not, just say that you're here as an 
interested, concerned citizen. Yes, sir?
    Mr. Brackel. Lynn Brackel, Bowman County Commissioner. One 
thing to consider on this corridor, we have received wind 
propeller--wind generators--the propellers coming down--85, the 
way I understand it, they cannot drive on an interstate system 
like 25 or 29. They have to get off on these side roads.
    Please consider trying to pass one of these trucks with 
this propeller out the back. We need to have something on this 
Highway 85, because we're seeing a lot of propellers coming 
through here, because they're manufactured in North Dakota.
    The Chairman. Yeah. Well, that's a very good point.
    Mr. Brackel. One thing to consider is the way the--in to 
corridor 85.
    The Chairman. Yeah. No, that's a very good point. Yes, sir. 
Other--yeah?
    Mr. Rolfstad. Senator, thank you for coming here to 
Williston. We appreciate it. Tom Rolfstad, Economic Development 
Director, Williston. Just a couple--
    The Chairman. Well, we're in Dickinson now though, Tom.
    Mr. Rolfstad. I know, but it's--town. But just a couple of 
things that I wanted to talk about. And he is the CEO. But a 
couple of things I wanted to mention was--one is as you look at 
the new highway bill, and I think particularly in these kind of 
tough times--and I'm sure you've seen some shocking numbers and 
a lot of--but it's not just DoT, and we appreciate your 
diligence on that. I think a lot of our folks are pretty 
excited about having you there on the Budget Committee and kind 
of adding the balance. So I applaud you for that.
    The Chairman. Not all of my colleagues have that view of 
me.
    Mr. Rolfstad. And that's why we appreciate it. You give it 
some balance.
    The Chairman. Well, thank you.
    Mr. Rolfstad. You give up--a lot of--you know, Will Rogers 
said the problem with common sense is that it's not so common. 
And we think you have common sense.
    The Chairman. Thank you for that.
    Mr. Rolfstad. But I did want to mention, as we look at the 
new highway bill, particularly in this environment, we've got 
to look at job creation. That is part of the highway package. 
But I guess I was actually surprised when the whole stimulus 
came out maybe how little of it was really infrastructure-
related. And there's other things, too. There's need for 
transportation lines and pipelines and various things if you 
look at our future, but so I think that's something we need to 
think about in terms of this highway bill. It certainly could 
be a way of helping to get the economy back on track.
    And as we restructure the country, our highway system and 
our railroads and our transportation runs east west and part of 
it is to make these more solid connections. And I guess I was 
quite intrigued when I heard Bill Dickinson speak at Senator 
Dorgan's energy conference last year. But it makes a lot of 
sense, and I don't know if it's getting traction in Washington 
or not, but I do see a lot of wind development in North Dakota, 
and as you look at the maps, this corridor is a wind corridor 
all the way to Texas, and we're all kind of oil and gas 
country, so natural gas for the off cycle kind of a solution.
    But we need to also have those transmission lines, just 
like we're not getting oil out of here by pipelines. That's 
probably our handicap with developing this kind of thing. But 
it might be better to put some of those wind towers through the 
middle section of the country than trying to go outside of 
Martha's Vineyard, put it out there where people don't want to 
look at them.
    But so anyway, I just feel like this is kind of an energy 
corridor, and we could be a big part--you know in terms of 
solving U.S. energy economies, but also start to diversify into 
greener ones.
    The Chairman. Well, thank you for those observations. I 
think many of us have this view that we can be an energy hub 
for the country, that we really have got it all. We've got the 
oil and gas. We've got the coal resource, we've got the wind 
energy potential, got the biofuels, all of it here. So North 
Dakota really is going to play I think an increasingly 
important role in this country's energy future.
    With that said, you reference in the stimulus package 
somewhat disappointed that there wasn't more for 
infrastructure. Let me just say, as somebody who argued for 
dramatically more infrastructure expenditure within the amount 
of the stimulus package--I argued strenuously for $200 billion 
of infrastructure, and the argument that was used against us 
was the delay, that it takes longer to do infrastructure 
projects and to get the money moving in the economy.
    My answer was, wait a minute. When they built the Pentagon, 
they built it in 9 months. And the answer that came back, well, 
you've got all these rules and regulations now that prevent you 
from moving as quickly. I said, ``Waive them.'' That's exactly 
what was done when we dealt with the flooding in Grand Forks, 
North Dakota. The one reason James Lee Witt is a hero in 
northeastern North Dakota is because he came in and he waived 
the things that prevented us from moving quickly, just waived 
them.
    They now say we didn't have the authority to do it. Well, 
too late. It's done. And I urge the administration and I urge 
my colleagues, put somebody in charge who has the ability to 
override rules and regulations that, yes, in normal 
circumstances, make perfect sense, but when you're in an 
emergency, just don't make any sense.
    Well, that wasn't very well-received, but that was my own 
view, is we would have been better off putting more money into 
infrastructure--roads, bridges, highway, rail, airports, 
movement of goods on our rivers, and even through our ports--
that all of that creates jobs right here at home, and in 
addition to that, improves our economic efficiency as a nation.
    You know, when you start racking up the cost to our country 
of all the delays because you've got these truck fleets, you've 
got Dennis's truck sitting out on the beltway in Washington, 
DC, you go out there during rush hour, everything is stopped 
dead. You know? There is an economic cost to that. It reduces 
our efficiency as a nation. It reduces our competitiveness as a 
country. So those are considerations as well.
    Any other comments? Yes, ma'am?
    Ms. Thiel. I'm Terri Thiel. I'm the Director of the 
Convention and Visitors Bureau here in Dickinson, and I want to 
address two--
    The Chairman. Terri, could you just spell your last name 
for the record?
    Ms. Thiel. T-H-I-E-L.
    The Chairman. All right. Thank you.
    Ms. Thiel. And I want to address the economic impact that 
you're going to have, but also some of the safety issues. The 
economic impact is that we have two national parks within this 
corridor system, and the park that is directly to the west of 
us is actually 100 miles between that north and south unit. 
Looking at the people that are traveling up and down this whole 
corridor, up and down, the majority of our visitors are from 
out of State, and that's how our State markets, is to bring 
these people from out of State. Well, we have in-State visitors 
as well.
    The amount of money that brings in is astronomical, and 
just reviewing that national park, is over 500,000 visitors a 
year. So that corridor also feeds all of these smaller 
communities. When you're starting up in Williston, Fort Buford, 
going down through Arnegard, down to Watford City, and down to 
Bowman or to Fort Hills[ph] and to the park and on, that all 
brings in those dollars.
    And when you're talking tourism, you're not talking just 
people who go see these attractions. You're also talking about 
people that are traveling for the visitor industry and the 
support systems that travel. Those are the trucks that are 
going to support that tourism industry, the ones that are going 
to the hotels or to these places that feed on them just for 
that industry alone.
    So it's a whole web of different things that go into 
tourism. This is why I often say we should really refer more to 
it as our industry. The tourism division markets heavily out of 
State and they also market internationally. We have people 
coming in from Norway, Germany, all of those on our road 
systems, where they're accustomed to--typically when you're 
taking vacations a much safer, more prudent system for 
visiting.
    So all that comes into that part of it, leading us, and 
then we're also looking at that safety factor. Part of the 
safety factor that has become very important is with the motor 
coach industry. You know, a few years ago, about 4 years ago, 
we had the Family Motor Coach Association come in to Minot for 
their State convention. During that time, we had these other 
clubs that are associated with that going into pockets of our 
State.
    These motor coaches are large, very large, and they're 
typically at an age that's probably a little bit more advanced, 
and they're a lot of times having also--
    The Chairman. What age would that be, that more advanced--
    Ms. Thiel. --at a very wise age, but at a--
    The Chairman. Is this--
    Ms. Thiel. Larger--
    The Chairman. Is this a shot at Director Ziegler?
    [Laughter.] Ms. Thiel. But at the same time, we've also got 
vehicles behind them. So if you're looking at these things 
going down the road--and some of it's like a motor coach, a 
vehicle, and a boat. They're long. Now here comes the oil 
industry. They've got their large vehicles going, and that 
really does become a concern with that. And I know we've talked 
about safety with that.
    The Chairman. Yeah. No, I'll tell you, it is a point that 
bears repeating, because it really--it does matter. You know, 
we had testimony this morning up in Williston, a gentleman that 
runs transportation for the oil sector, and he said--he went 
through the safety rating system that companies who are their 
customers apply to them, and it was a very stringent comparison 
that they apply to their potential suppliers, those who provide 
services to them, on what their safety record is, what their 
training is for safety, and what the steps they've taken to 
make improvements. And they make a decision on who they're 
going to hire based in part on their safety record.
    And he was very clear. He said, ``Look, this is very 
important to our competitive position and our continuing 
success as a company.'' Thank you. Yes, ma'am?
    Ms. Steiner. Vicki Steiner. I'm Executive Director for the 
North Dakota Association of Oil and Gas Producing Counties, and 
our counties support this project. On a personal note, I took a 
trip at the end of April, and I'd like to underscore the 
comments about unsafe. I know that my vehicle hydroplaned a few 
times, and I watched an oil tanker truck ahead of me. The water 
was coming down the ruts because of the hills, and it was 
pooling at the bottom. And when he was ahead of me, when he hit 
that water, the water shot up both sides, higher than his 
vehicle, and hit two oncoming vehicles, passenger cars, and for 
a split second, they couldn't see, and I was behind them. At 
that point, I thought--I was about--I thought, ``Maybe I should 
just go back.'' Then I thought, ``But, no, where do I turn 
around in this heavy rain? Maybe I should just go slower.'' So 
I took--put one wheel on the shoulder, one on the high part of 
the road, and I tried to take that as best I could, but when 
you would hit those pools, then you would find your vehicle 
kind of skidding.
    So it's definitely unsafe, and I think the path--a super 
two would be great, and in some places, I think a four-lane 
would be great.
    The Chairman. Yeah. I'll tell you, I had some of that same 
experience, hydroplaning. One of the days that we were on 85, 
it was raining heavily, and I also experienced this--I don't 
know what you'd describe it as, the water coming off those 
trucks, blinding cars coming the other way. I found that the 
most kind of concerning. OK. Yes, sir?
    Mr. Klewin. Senator Conrad, we do appreciate your interest 
in this project, and we've been out to your office in 
Washington, DC a couple of different times. I just wanted to 
explain--
    The Chairman. If you'll give your name for the record?
    Mr. Klewin. Excuse me. It's Cal Klewin, K-L-E-W-I-N, 
Executive Director of Theodore Roosevelt Expressway. We've been 
in your office several different times talking about our 
project, and one of the things that I think, and you're aware 
of, is we have a partnership, a nine-state partnership, and now 
including possibly two Canadian provinces.
    And one of the things that we've noticed all the way 
through the corridor in the center of the United States is we 
have energy in common, renewable fuels in common, and also 
agriculture. And we kind of are growing ourselves on those 
particular assets that they have going through the corridor of 
our country.
    And I think it's proven very positive that we have some 
strengths, and I think it's going to drive particularly real 
development in those strengths. And that's what our corridor 
partnership is about, and we do appreciate your interest.
    The Chairman. You bet. Thank you so much. Yes, ma'am?
    Ms. Kouba. I'm Marlene Kouba, from Regent. Farmer.
    The Chairman. Could you spell your name, too?
    Ms. Kouba. K-O-U-B-A.
    The Chairman. Thank you.
    Ms. Kouba. I represent North Dakota Women Involved in Farm 
Economics.
    The Chairman. Oh, very good.
    Ms. Kouba. And I'm wondering about the eminent domain and 
the easements involved in expanding this road. I know it's a 
bad road. I've been on it the last couple of years. And I'm 
also wondering if this could be another corridor between Mexico 
and Canada to make us another North American Union.
    The Chairman. Well, I don't think we're talking about any 
North American Union here. That's not really what we're talking 
about here. We're talking about specifically the needs on this 
road. And I tell you, the public input we've received is just 
overwhelming on the need to address the concerns on 85, and 
from really every element of the North Dakota community.
    I've heard it from the business community. We had testimony 
both here and in Williston. From the agriculture community, 
strong testimony on that in Williston. I've heard it from 
governmental officials up and down Highway 85. With the 
questions of eminent domain, those are really questions we 
should direct to Director Ziegler in the scoping process and 
the development of their plans, because they are best 
positioned to answer those questions. And I'm sure those are 
part of your considerations, are they not, Director?
    Mr. Ziegler. Yes, they are.
    The Chairman. Yes, we had--yes, this woman, and then the 
gentleman--first of all, I want to thank you for your patience, 
sir.
    Mr. Koppinger. No problem.
    The Chairman. OK.
    Ms. James. I'm Lyn James, and I'm the Mayor of Bowman--
    The Chairman. Yes. Good to see you, again.
    Ms. James.--here in the southwestern corner. Thank you. 
Good to see you. And I wanted to just piggyback onto Terri 
Thiel's testimony regarding tourism. Not only do we see North 
Dakota tourism, but being in the southwestern corner, we also 
see that there are a lot of tourists from Canada, as well as 
eastern Montana and North Dakota. We're kind of the funnel that 
takes people to the Black Hills. And there's a great economic 
impact there, too, just with them stopping in the different 
communities.
    And so there's not only North Dakotans using this road, but 
other people, and it's very important that we see an 
improvement. So we appreciate your support.
    The Chairman. You bet. Thank you very much. Yes, sir? 
Again, thanks for your patience.
    Mr. Koppinger. My name's Mike Koppinger. I'm here on behalf 
of SolarBee and SolarBee Transportation. We, as a training 
company, we know that probably the most dangerous aspect of our 
job is our travel. We spend about 60,000 miles a year 
traveling. And as the manager of transport, where we kind of 
MapQuest everything out and find what the best route to go for 
the highway.
    The Colorado market is probably our biggest market, along 
with Texas, Arizona, Nevada, California. So I would say 75 
percent of the time, when we leave Dickinson, we turn south at 
Belfield, and we head up 85. So on behalf of Solarbee, I just 
want to say that we totally support this corridor to that 
market area for so long.
    The Chairman. OK. Thank you very much. Anyone else, final 
words? Brock?
    Mr. Landbloom. Brock Landbloom, Director of Roosevelt 
Custer Regional Council. I think we should also note that when 
we developed this country, railroads went east and west. There 
was no connection to carry goods north and south. And the other 
thing is that it's only a partial interstate system on the 
front range by interstate 25, that goes from north to south. I 
think those are two items that I probably should throw out 
there are well.
    The Chairman. That's a very good point, very good point. We 
had a gentleman that came that was in the audience in Williston 
that stood up, and he'd been on the railroad for 40 years, and 
he described how abandonment of certain rail lines had moved a 
staggering amount of traffic onto the road networks. And so 
we've had really good contributions, not only from our formal 
witnesses, but people in our audience, as well, and we 
certainly appreciate that very much. Tom?
    Mr. Rolfstad. Yes. Senator, just one more comment, that--
but I think, as you--negotiate with urban states, and how we 
justify expenses in the rural areas, I kind of read back at all 
as my state commissioner, and I substituted for time to time, 
and I just happened to be at one of the meetings that this 
corridor had in Colorado. And it was early on in my learning of 
this thing, but talk about that I-25 corridor in Denver, 
that's--really, initially, that's where we want to run this 
through.
    Colorado kind of went through a paradigm shift when they 
recently expanded the I-25 highway from four lanes to six 
lanes, $100 million a mile to build that stretch. And their 
philosophy is now, ``We don't want traffic through I-25. We 
want it around the city.'' And Colorado looked at this 
alignment about the time I got involved in looking at eastern, 
central, and I-25 corridors. And they said, ``We're going to go 
60 miles east of Denver alignment, and that's going to be our 
alignment heading up to Scott's Bluff, Nebraska.
    And similar to the area up here, we can build four-lane 
highways for $2 million a mile to go to Denver just to expand 
for $100 million a mile. And I think somewhere I've heard about 
our counterparts have to get thinking about how do they get--
and that's just the traffic congestion, but there's a lot of 
other--every Federal agency had more complicated budgets when 
you congest the situation.
    The Chairman. It is a very good point, and I'm glad you 
made it, because, you know, I hear a lot, ``Well, North Dakota, 
North Dakota, North Dakota. You guys are getting a 
disproportionate share of Federal money for your population.'' 
And I hear it a lot.
    You know, the reality is there are reasons for it. We're 
going to be part of a national system. We've got a lot of 
territory to cover here with a relatively sparse population. So 
the Federal Government is going to have to have a 
disproportionate share. And that extends to many other parts of 
life here.
    And, you know, they've got to also look on the other side 
of the ledger. What are they getting from this State? Vast 
agricultural production, critically important energy 
production, oil, natural gas, coal, and, increasingly, 
renewable types of energy.
    So this country, we're the fifth largest oil producer in 
the United States. Most people don't think of North Dakota that 
way. Most people don't think of North Dakota as a State that 
produces electricity for nine States, but we do. Most people 
dont think of North Dakota as the place that's got the greatest 
wind energy potential of any State in the nation, but we do, 
and I think, as we go forward, it's going to be increasingly 
apparent that North Dakota has an awful lot of the things that 
America needs, and to get it, and to get it efficiently, is 
going to require some additional investment. And I don't think 
we can shrink from that. I think we have to be very direct 
about it, and we have to make the case, and that's what this 
hearing is about.
    And I especially want to thank the witnesses here today, 
the formal witnesses and those in the audience who stood up to 
provide their observations as well. With that, we'll declare 
the hearing adjourned, and thank you very much. The hearing is 
adjourned.
    [Whereupon, at 2:54 p.m., the hearing was adjourned.]


  FIELD HEARING TO CONSIDER HOW INFRASTRUCTURE INVESTMENTS CAN FOSTER 
        ECONOMIC DEVELOPMENT AND THE AGRICULTURE ECONOMY: US 52

                         THURSDAY, JULY 2, 2009


                                       U.S. Senate,
                                    Committee on the Budget
                                                    Jamestown, N.D.

    The Committee met, pursuant to notice, at 3 p.m. in the 
Jamestown College Furness Multipurpose Room, Reiland Fine Arts 
Center, 6000 College Lane, Jamestown, North Dakota
    Hon. Kent Conrad, Chairman of the Committee, presiding.
    Present: Senator Conrad
    [presiding].

              OPENING STATEMENT OF SENATOR CONRAD

    The Chairman. Thanks everybody for being here. I apologize 
for being late. It's all that construction out on the highway. 
We were earlier today going from Grand Forks to Fargo and I'm 
delighted to see those Federal and State dollars at work on the 
Eastern Corridor, and we had healthcare forums in Grand Forks 
and Fargo. So again I apologize for being late but I'm 
delighted to be here because I think this is an important 
hearing.
    This is an official hearing of the Senate Budget Committee, 
so we'll be operating under the Rules of the U.S. Senate and an 
official record of this hearing is being kept.
    I especially want to welcome our very distinguished 
witnesses today. They include the Director of North Dakota's 
Department of Transportation, Francis Ziegler, who we very much 
admire for his professionalism.
    The Jamestown City Council President Pat Nygaard. Thank 
you, Pat, so much for being here.
    Jamestown/Stutsman Development Corporation CEO Connie Ova, 
who will be on the second panel, as well as Dakota Growers 
Pasta Vice President of Manufacturing David Tressler who will 
also be on the second panel, and the Farmers Union District 
Director, District VI, Ellen Linderman.
    Thank you all for your willingness to participate and 
testify.
    There is a discussion right now in Washington on how to 
proceed with respect to the reauthorization of surface 
transportation programs. As Francis knows very well, the Trust 
Fund is running out of money, will run out of money, we 
estimate, in August. We need about an $8 billion infusion to 
make it through the rest of the year. Next year, we think we're 
about $10 billion short in the Trust Fund of meeting the 
requirements from the previous transportation bill.
    So it is critically important that we gather information 
and evidence to present to our colleagues because I suspect 
what is going to happen is a short-term reauthorization.
    It looks to me, Francis, like perhaps an 18-month 
extension, and in all likelihood a straight extension of the 
last transportation bill but nonetheless with room for special 
projects in States that can demonstrate a need that is 
supported by evidence. That's why this hearing is important 
today.
    I earlier did a hearing on Highway 85 out in Western North 
Dakota. Francis was good enough to participate in that.
    What we're attempting to do here is to make a record, an 
official record for presentation to the staff and members of 
the relevant committees, because they've made clear to us the 
only things that have any chance of being included, and I want 
to emphasize this, the only things that have any chance of 
being included are things that have a hearing record and things 
for which there is a demonstrated need. That's why this hearing 
is important here today.
    We believe that Highway 52 is a critical artery in the 
State of North Dakota. You all know--if we could go to that, 
Tim--Highway 52 goes from the Canadian border and comes down, 
connecting in Jamestown to 94 and then is jointly signed with 
94 going east. It is a key artery in North Dakota.

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

    Let's go to that next slide, if we could. Highway 52, in 
particular, has seen a large spike in truck traffic. Just 20 
miles to the north here, Highway 52 near Carrington, truck 
traffic has increased 47 percent from 2002 to 2008, and in the 
next 10 years commercial trucking in North Dakota is expected 
to increase by 42 percent.

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

    This is all part of the record to demonstrate the need for 
additional investment of Federal and State in Highway 52.
    The agriculture industry is reliant on the State's road 
network to move products and services. I think we all know 
that. Significant in growing agricultural businesses in this 
region rely heavily on Highway 52 to receive raw goods and 
transport their finished products to market. However, the 
continued growth of these value-added businesses is dependent 
on a transportation system that is both efficient and reliable.
    Similarly, our ability to track new companies and 
businesses to this region will depend on a quality 
transportation system. Unfortunately, Highway 52, like many of 
our nation's highways, is deteriorating. Heavy truckloads 
associated with our agriculture and manufacturing businesses 
have put added strain on this crucial roadway. The highway 
needs repairs to foster continued growth in these industries, 
to ensure a safe travel route, and to better serve the 
communities along its route.
    Let's go to the next slide, if we can, Tim. Improvements to 
Highway 52 will pay dividends for agriculture in the region. It 
will enhance the transportation of crops and livestock. It will 
increase export opportunities with enhanced access to Canada, 
and it will help further diversify North Dakota's agriculture 
and manufacturing economy by attracting more value-added 
agricultural businesses to the region.
    The North Dakota Department of Transportation is 
responsible for determining the priorities for road investments 
across the State. We rely on their prioritization process and 
have--that has high credibility with us.

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

    I want to emphasize I'm going to continue to work at the 
Federal level to bring additional resources to address the 
needs here. The reauthorization of the transportation bill will 
be an important vehicle for those Federal resources.
    If we could go to the next slide, Tim? North Dakota 
benefited greatly from the last highway bill which was 
completed in 2005. As a conferee on that bill, I made certain 
that North Dakota received significant funding for our highways 
and transit systems.

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

    We do know that it pays to have seniority in Washington 
because the most senior members are in the room when the bill 
is finally drafted and I had the privilege and the honor of 
being in that position in the last transportation bill.
    There, I worked to secure a billion and a half dollars for 
North Dakota, a 31 percent increase over the previous 
legislation. Annually, that averages out to $234 million for 
highways with additional funding provided for transit programs.
    We did very well in a competitive basis with other States, 
getting $2 for every dollar we send to Washington. That ranked 
us in the top four States in terms of a return on our gas tax 
dollars.
    I also worked to direct investments to Highway 52, 
including the Jamestown Bypass, and other high-priority North 
Dakota projects in the previous highway legislation.
    Here are some of the priorities that I intend to focus on 
as we begin consideration of the next highway bill. The next 
legislation must identify sufficient funding so that our 
infrastructure investments are secure and robust for the longer 
term. States and communities must be able to rely on them.

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

    Next, any new highway bill must maintain recognition that 
rural transportation needs are absolutely vital to the entire 
country. We are a United States of America, not a divided 
states of America. It is critically important that these rural 
areas get the funding that they need.
    And I also want to fight to secure funding for the critical 
arteries in our State, like Highway 52, to ensure that we 
maintain a nationally connected system.
    I'm particularly interested in hearing from our witnesses 
on the immediate investments that are needed to Highway 52 and 
what future investments are needed to support economic 
development and the agricultural economy so important in this 
part of our State.
    I'm also interested in learning whether any of the 170 
million in Federal stimulus funds provided to the State for 
roads have reached this highway. That's important for the 
record, as well, because that's part of what we're asked by the 
committees of jurisdiction.

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

    Let me conclude as I began by saying what is critically 
important at this hearing is that we set a record to take to 
our colleagues and to take to the staffs of our colleagues on 
the committees of jurisdiction. They have made abundantly clear 
to me that as we move toward a short-term reauthorization to 
meet the shortfall in the Trust Funds, that the only additional 
investments will be in areas that have held hearings and have 
demonstrated specific needs. That's the purpose of this 
hearing, and I'm delighted that we have outstanding witnesses 
to provide that evidence to the committees and their staffs in 
Washington.
    With that, I will turn first to our excellent Director of 
North Dakota's Department of Transportation Francis Ziegler, 
somebody who we've worked closely with in the past and we have 
high confidence in Director Ziegler and his entire team.
    I want to emphasize he has a team and they are well 
regarded not only in North Dakota but I want to say well 
regarded nationally and as we set these hearings, I can tell 
you the staffs of the Transportation Committees, the relevant 
committees of jurisdiction, were especially interested in 
hearing your testimony, Francis, and I think that's frankly a 
tribute to you.
    With that, if you'd go ahead and proceed with your 
testimony, and then we'll go to Mr. Nygaard before the second 
panel.

STATEMENT OF MR. FRANCIS ZIEGLER, P.E., DIRECTOR, NORTH DAKOTA 
                  DEPARTMENT OF TRANSPORTATION

    Mr. Ziegler. Thank you, Senator. Mr. Chairman, good 
afternoon. I'm Francis Ziegler, Director of the North Dakota 
Department of Transportation.
    Thank you for the opportunity to appear before you and your 
Budget Committee today.
    Senator our testimony is available and it's a little bit 
lengthy, but I will paraphrase today in the interest of time.
    US 52 is an important highway for moving people and 
commodities in North Dakota and it's part of the National 
Highway System. However, before discussing 52, I'd like to 
address some important broader transportation issues, those 
which you've already touched on.
    Number 1 is solvency of the Highway Account of the Highway 
Trust Fund and the continuity of the Highway Program in North 
Dakota and in the nation.
    Number 2, that rural states like North Dakota must 
participate at least proportionately in any future growth of 
the Federal Highway Transportation Program.
    Number 3, that additional issues with reauthorization 
legislation, and 4, the importance of the 52 corridor 
supporting North Dakota's economy.
    I cannot stress enough that Federal investment in North 
Dakota highways is in the national interests. It's imperative 
that legislation reauthorizing the Federal Highway Program 
continue to serve the needs of our rural states, as you have 
already said, Senator, allowing us to continue to meet the 
demands being placed on our highway network, including Highway 
52.
    Here's some background on what we're going here in the 
State to improve transportation. This year, the State of North 
Dakota committed an unprecedented sum in non-matching State 
General Fund dollars to help strengthen North Dakota's 
transportation infrastructure.
    Governor Hoeven recently signed into law a landmark $1.35 
billion transportation funding bill. While the state is doing 
its share, Federal investment in transportation is critically 
important.
    Let me turn to some of the Federal issues that we're 
concerned about. Again, as I mentioned, Senator, the Highway 
Account of the Highway Trust Fund is projected to reach a zero 
balance this coming summer, in August. It will be highly 
disruptive to states if the Federal Highway Administration 
begins to delay payment of state claims to reimburse us for the 
costs.
    Compounding North Dakota's situation is that, like other 
states, we already have contracts in place for which the 
Federal Highway Administration may not be able to provide 
reimbursements. This would create a financial crisis for the 
North Dakota Department of Transportation.
    Therefore, we certainly hope that Congress will pass 
appropriate legislation in July so that the Trust Fund will 
have resources to pay the highway work this summer that's under 
construction.
    Secretary of Transportation Ray LaHood recently proposed 
that solving the Highway Trust Fund shortfall be combined with 
the Highway Program extension of 18 months and an enactment of 
some reforms. We believe legislation to replenish the Highway 
Trust Fund and provide an extension to reinsure program 
continuity while Congress works on the long-term legislation 
should not be combined with reforms. We're concerned it might 
delay it and so we're pretty--quite frankly, Senator, very 
nervous about the financing of the----
    The Chairman. Can I stop you on that point and just to 
indicate we have expressed to the Secretary our concern about 
that, as well.
    We've urged the Secretary to consider a separation here. Do 
the extension on one track and the reforms that they propose on 
another track, so we don't slow down the necessary 18-month 
reauthorization.
    I think it would be unfortunate, given all of the other 
legislative agenda, now a Supreme Court nominee, all of the 
legislation that's moving, healthcare reform, energy 
legislation, and all the rest, to--I'm afraid add some of the 
reform provisions might unduly delay the legislation that's 
absolutely imperative which really buttresses your point.
    Mr. Ziegler. Thank you. We appreciate that, appreciate 
hearing that.
    The next highway transportation authorization bill needs to 
at least provide proportionate funding for rural states like 
North Dakota.
    A multiyear highway transportation authorization bill is 
needed. There's broad consensus that increased investment will 
serve the national interests. Many ideas have been advanced in 
recent years and Congress is now starting to shape that 
legislation.
    Currently, our department and others in rural states have 
clearly stated to Congress and various commissions that this 
next authorization must provide a rural state like North Dakota 
at least its current overall share of Federal formula and other 
funds.
    In addition to preserving our share of overall funding, I'd 
like to address some issues that concern us that are being 
proposed in the reauthorization process.
    Additional planning and reporting requirements and Federal 
oversight. The current Highway Transportation Program is very 
complex. We'd like to see processes streamlined so we can 
deliver projects more efficiently.
    Tying climate change to transportation legislation. Both 
the climate change legislation that passed the House of 
Representatives last week and the legislation reported by the 
House Highways and Transit Subcommittee last week would require 
all states to develop targets to reduce transportation-related 
greenhouse gases.
    States will be required to make efforts to increase transit 
ridership, walking and biking. While we in North Dakota have 
made great strides in this area, our state's very rural and 
have some winter seasons to deal with here and there's only so 
much we can do to promote biking and walking.
    The Chairman. First of all, Francis, don't we deny that we 
have a severe winter?
    Mr. Ziegler. Sometimes it gets kind of cold, Senator.
    The Chairman. I call it seasonably cool.
    Mr. Ziegler. OK. I like that. We'd like to ensure that the 
administration of the statute does not force a state like ours 
to undertake unrealistic efforts to reduce greenhouse gas 
control.
    National performance standards and targets. Performance 
measures are important and the State of North Dakota uses them 
in our project selection process. We believe that national 
performance standards should be general in nature and that each 
state should be allowed to establish its own specific 
performance measures with the broad general guidance from the 
Federal Government regulations.
    Let me now turn to reasons why the authorization 
legislation should continue to provide rural states, like ours, 
with at least their current share of the Highway and Surface 
Transportation Programs.
    First of all, we serve as a bridge state for truck and 
personal traffic. According to the most recent Federal Highway 
Administration data on 22 origins and destinations show that 
just over 59 percent of the truck traffic using North Dakota's 
highways doesn't originate here or it doesn't have a 
destination here.
    We also need to enable ag products that serve the nation's 
ethanol production and energy extraction industries which are 
located largely in rural states. A significant portion of the 
economy in our state is based on agricultural, energy 
production, and natural resource extraction.
    Ag is one sector of the economy where the United States has 
consistently run an international trade surplus, not a deficit. 
Over the last two decades, roughly 30 percent of all the U.S. 
ag crops were exported.
    Some other reasons are that the highways are a lifeline for 
remotely located and economically challenged citizens. It also 
enables people and business to traverse the vast tracts of land 
in sparsely populated areas and to provide access to scenic 
wonders and facilitate tourism.
    North Dakota is a major contributor of energy production in 
the nation. Our state is currently fifth in oil production and 
contains a large amount of coal reserves. Good roads throughout 
the state are paramount to the Nation becoming energy 
independent and providing ag products to feed a hungry world.
    Over the last three decades, over 1,500 miles of railroads 
have been abandoned and the reduced reach of the rail network 
means that many areas, particularly rural areas, must rely more 
heavily on trucks to move goods. With increased truck traffic 
in North Dakota and much of the Upper Midwest, we're challenged 
with our ability to continue to move these products. That 
challenge is compounded by the necessity to impose load 
restrictions.
    Attachment 1, which, Senator, is over your left should, 
shows how many of the state's roads were affected by load 
restrictions this spring. The US 52 did not have load 
restrictions and we're happy to note that. We worked very hard 
to make sure that that piece of roadway which we know carries a 
lot of commerce did not have a load restriction on it.
    Our large road network has a few people to support it. In 
North Dakota, there are about 16 people per lane mile of 
Federal aid highway. The national average is about a 129 people 
per lane mile. Per capita contribution to the Highway Account 
of the Highway Trust Fund attributed to North Dakota is a $161 
per person compared to the national average of a 109.
    Our budget to maintain, that is plow snow, seal cracks and 
do summer work, is approximately $9,200 per mile per year. It 
takes about 2,000 vehicles per mile per day to generate that 
kind of revenue from state motor fuel taxes.
    In summary, our ability to address highway needs throughout 
the state depends in part on the resolution of some broader 
transportation legislative issues. Accordingly, we believe 
that's why the national interest is for the Federal Government 
to continue to make substantial investments in the 
transportation of rural states like ours.
    Now I'd like to be very specific about the US 52 Corridor. 
Transportation provides a vital link to our state's economic 
growth and is critical and crucial to many great movements, 
connecting manufacturers to retailers, farms to markets, 
shippers to railroads, airports to seaports. The transportation 
infrastructure plays a key role in supporting the growing needs 
of the business industry and traveling public.
    The US 52 Corridor is important in serving these needs in 
the Northwest and Central part of North Dakota. In addition, 
the corridor also plays an essential role in supporting 
international trade with Canadian provinces. These two 
provinces have the fastest-growing economies in Canada.
    The DOT has recognized the importance of 52. From 1994 to 
2008, about a 143 million was invested in preserving this 
corridor. Major improvements include numerous projects in truck 
climbing and turning lanes from Minot north to the Canadian 
border.
    In the late '90's, there were major improvements in the 
segment from Fessenden to Carrington to improve the load-
carrying capacity. In the late '90's, four miles of four-laning 
was completing southeast of Minot and major reconstruction to 
the county line from there.
    In 2002, as you indicated, Senator, a truck bypass around 
Jamestown was constructed to improve the traffic flow, safety, 
and alleviate truck traffic through the city of Jamestown.
    In 2009, there are three projects scheduled along the 
corridor costing about 4.1 million. In addition, there are 
about eight million worth of projects scheduled for the years 
2010 through '12, and those are shown on Attachment 2 which is 
that second chart, Mr. Chairman, shows in color coding in green 
some of the major projects that we're going to be undertaking.
    Based on distress scores, rutting, and ride data, the 
information that we collect on all our systems, the corridor is 
in relatively good shape with the exception of two locations, 
Burlington to Minot and Fessenden south, and those need work 
and there's no doubt about it and that's why we selected those 
projects to go to work on.
    Traffic volume in the corridor ranges from just over 1,200 
vehicles a day near the Canadian border to just over 3,000 
vehicles near Velva. Most of the corridor carries about 500 
trucks per day. The largest truck volumes, up to 700 vehicles 
per day, are in the segment between Jamestown and Carrington.
    Attachment 3, that's pretty hard to read for you, Senator, 
that's the third chart, shows the total traffic in truck 
volumes along the 52 corridor and that's in our written 
document.
    Attachment 4 provides a graphic comparison of the total 
traffic on the major corridors in the state and that's the 
fourth chart up there.
    Truckers proceeding south on US 52 bypass around Jamestown 
must travel on I-94 which has an 80,000 pound load limit 
subject to certain exceptions. To enhance the movement of 
commodities, state legislation was passed allowing truckers to 
purchase a single trip or annual permits to carry loads up to a 
105,500 pounds on I-94. This state legislation is within the 
exception allowed by Federal law.
    We feel that Federal funding for substantial expansion on 
US 52 Corridor needs to be an enhanced appropriation. We're 
concerned about the earmarks and we want to make sure that we, 
like in the past, are allowed to work with and pull that all 
together for the new bill. We appreciate that opportunity.
    We continue to monitor the traffic, roadway conditions, and 
safety concerns along US 52 to ensure the safe movement of 
people and commodities.
    Mr. Chairman, in conclusion, we consider it essential that 
the Congress, through the reauthorization process, recognize 
that significantly increased investment in highways and surface 
transportation in rural states is and will remain important to 
the national interests.
    The citizens and the businesses of our nation?s more 
populated areas, not just residents of rural America, benefit 
from good transportation network in and across the rural 
states, like North Dakota.
    With such legislation, preserving program share for states 
like North Dakota, we will be better equipped to address our 
statewide needs, which include the needs of US 52.
    Mr. Chairman, that concludes my testimony, and I'd 
certainly be happy to answer any questions that you might have.
    One more thing, Senator. I know that you did a lot of work 
and we appreciate your efforts. There are projects that are now 
going into the Devils Lake Area that we'll be working on much 
quicker now that that little roadblock has been taken out of 
the picture.
    [The prepared statement of Mr. Ziegler follows:]

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
    
    The Chairman. Yes, we were able to break that logjam and I 
think it's going to be very meaningful up there and very 
important and we appreciate your good work and your help as we 
had to persuade the department that we had to have a little 
different policy approach in order to make this work and we 
appreciate our colleagues for supporting what needs to be done 
there.
    Let me ask you, if I can, Francis, before we go to Pat. 
Would you support a straight extension, an 18-month extension 
of the current transportation bill?
    Mr. Ziegler. Mr. Chairman, I would.
    The Chairman. Number 2, would you support a continuation of 
the ability to have earmarks as part of that extension?
    As you know, there's discussion now on precluding any 
earmarks.
    Would you support a continuation of earmarks in that 18-
month extension?
    Mr. Ziegler. Mr. Chairman, as in the past, we have worked 
very closely with you and your staff and certainly with that 
close cooperation, we would support that.
    The Chairman. That's very important and it's one of the key 
reasons we gotta hold these hearings. We gotta be able to 
demonstrate within the state that the Department of 
Transportation believes that that is the appropriate approach 
to delay some of the or at least put on a separate track the 
other reform provisions proposed by the Administration.
    So I should ask for the record, would you support dual-
tracking the reform provisions and the straight extension of 
the current transportation legislation?
    Mr. Ziegler. Mr. Chairman, the North Dakota DOT, along with 
our associations, would be very pleased to work with the dual-
tracking program to get the program extended and at the same 
time be working on any reforms that may be necessary.
    The Chairman. Yeah. I appreciate that very much. I think 
it's critically important. Time is short.
    As I indicated before, our projections are the Trust Fund 
is going to go cash negative in August and we need an $8 
billion infusion. We need by our estimates about a $10 billion 
infusion for next year.
    So I want to ask you that, as well. Working through your 
association, do you have estimates of the shortfall? Are the 
estimates that I've given roughly in the range of what your 
understanding is?
    Mr. Ziegler. Mr. Chairman, our association has reported $5-
8 billion shortfall and that's what you had said earlier, and 
then for next year, we had heard the same number, $10 billion 
shortfall, for the 2010 Fiscal Year.
    The Chairman. I think those are roughly right. I mean, I 
think, you know, the estimates of the Budget Committee were six 
to eight. We're looking at the shortfall--excuse me.
    We're looking at the shortfall being at the high end with 
what's happened with miles being down, revenue being down, 
costs still being--still staying up even though oil prices have 
come down substantially.
    As we look across the cost side of the equation, because we 
had that bottle-wave effect of a big run-up in energy prices 
last year, we're still stuck with high input costs.
    Is that your experience here? If you could tell us 
something for the record with respect to what you're 
experiencing in terms of the underlying costs?
    Mr. Ziegler. Mr. Chairman, we recently did a look at our 
inflation factors and from 2001 to 2007, our inflation was in 
excess of 50 percent. The numbers are in round numbers to over 
10 percent a year as far as the inflation factors.
    Even though asphalt prices did come down somewhat, Bacon-
Davis wages went up, fuel for the trucks that we so much depend 
on for road construction is up, and so it's just a touch over 
10 percent for inflation for each one of those years.
    The Chairman. Yeah. Can you tell us in terms of the last 
year, again for the record, what is your cost experience? Even 
though oil prices have dropped down substantially, you still 
see increased costs flowing through the system?
    Mr. Ziegler. Mr. Chairman, yes, we do. We're in excess of 
10 percent for this past year, also.
    The Chairman. For this year, as well?
    Mr. Ziegler. That's correct.
    The Chairman. I think that's important to get on the record 
and I thank you for that.
    Anything that you'd want to add?
    Mr. Ziegler. No, Mr. Chairman. Just appreciate the 
opportunity to be here today and to work with you on the new 
transportation bill and certainly hope that the extension can 
be granted soon.
    Thank you.
    The Chairman. This is going to be race and it's critically 
important. I hope my colleagues across the country are doing--
taking advantage of this break to do what I'm doing, to hold 
these hearings, to get on the record precisely what you have 
provided here. It's as clear as it can be the need to have an 
extension, to have it soon, to fill in the hole in the Trust 
Fund, and to do that, while preserving the ability of 
individual members to have earmarks based on their state 
priorities.
    Next, we'll turn to Pat Nygaard, the Jamestown City Council 
President.
    Welcome. You might want to separate those two a little bit 
to prevent feedback.
    Welcome, Pat. Thank you.

STATEMENT OF MR. PATRICK NYGAARD, CITY COUNCIL PRESIDENT, CITY 
                          OF JAMESTOWN

    Mr. Nygaard. Thank you, Chairman. My name is Pat Nygaard, 
and I'm the City Council President for the city of Jamestown. 
My testimony is also available in the back of the room, and 
I'll speak today as to how vitally important US Highway 52 is 
to the city of Jamestown and really our surrounding trade area.
    Thank you, Senator Conrad, for holding this hearing today 
and for initiating discussion on the importance of US Highway 
52. As you're aware, US Highway 52 is a major highway that 
stretches over 2,000 miles and passes through 11 states.
    From its point along the U.S.-Canadian border at Portal, 
North Dakota, to the Charleston Harbor in Charleston, South 
Carolina, this major highway is vitally important and nowhere 
is it more important than here in Jamestown, North Dakota.
    US Highway 52 is one of two major highways that intersect 
Jamestown and Stutsman County. It serves as a critical roadway 
through our trade area. A significant amount of truck traffic 
occurs on this roadway. In fact, so much--so many semi-trucks 
utilize this highway that the State of North Dakota constructed 
a bypass around the city of Jamestown in 2002, as Mr. Ziegler 
alluded to earlier.
    The importance of this highway is evident when you examine 
the effects it has on the various segments of our local and 
regional economy. This roadway serves the needs of our major 
industries, including agriculture, tourism, and manufacturing.
    As a major farm-to-market transportation route, US Highway 
52 is utilized by thousands of farmers throughout the area. 
During the spring of the year, you'll see many semi-trucks 
hauling grain from storage bins on the farm to our area 
elevators.
    Additionally, you will see air seeders, many manufactured 
just 35 miles to the east at Valley City, making their way up 
and down this highway. Throughout the summer and fall, you'll 
see everything from spraying and tillage equipment, combines, 
tractors and semis moving back and forth along this highway.
    During critical times of the year, US Highway 52 becomes 
even more important as weight limit restrictions prevent 
farmers from hauling grain on the county roadways. US Highway 
52 makes a great deal of this possible for our area farmers so 
that they may contribute--may continue to contribute to the 
agriculture industry, a vitally important sector of our local 
economy and, of course, the largest sector of our state's 
economy.
    While not to the level of Medora and the badlands of 
Western North Dakota, tourism does hold an important role in 
our local economy. Every year thousands of tourists visit the 
Frontier Village and National Buffalo Museum, home to the 
world's largest buffalo and two rare albino buffalo.
    Additionally, Jamestown lays claim to being home to perhaps 
the greatest Western novelist of all time Louis L'Amour and 
this alone brings additional tourism opportunities to our area. 
Also being the rural state that we are, many people visit our 
region each year to fish our area lakes and take advantage of 
our excellent hunting opportunities.
    Whatever their reason to visit Jamestown and our 
surrounding area, many of these individuals arrive here by way 
of US Highway 52.
    While the manufacturing sector has been hard hit in many 
areas of our country over the last decade, Jamestown 
manufacturers continue to succeed and collectively they employ 
a significant number of people in Jamestown and the surrounding 
area.
    Goodrich, a cargo system manufacturer, employs over 500 
people. Cavendish, a potato processing plant, employs 
approximately 250 people. Duratech Industries, an ag equipment 
manufacturer, employs over a hundred people. Agri-Cover, a 
manufacturer of tonneau covers for pick-up and grain trucks, 
employs over a hundred people. And Newman Signs, the 
manufacturer of those highway billboards you saw on your way 
into Jamestown, employs over a hundred people. I don't know if 
you flew or drove today, but no doubt you're very familiar.
    All these companies receive their raw materials and ship 
their finished products via our major roadways, including US 
Highway 52. In the case of Agri-Cover, they're a small town 
success story.
    This company started in the little town of Courtenay, 
located in Northeast Stutsman County, but the company founders 
realized that to ensure long-term success, they needed to 
relocate their company closer to a major transportation route.
    Their choice was to relocate the company just north of 
Jamestown along US Highway 52. In my opinion, this is clear and 
convincing evidence of the important role this highway plays in 
our local economy. Two expansions and 100+ employees later, 
Agri-Cover is a thriving company and wonderful employer.
    So whether it is agriculture, tourism, or manufacturing, 
you can see that this highway is critical to each. Given the 
important role this highway plays in each of these sectors, our 
Federal lawmakers should continue to place a high priority on 
US Highway 52 and make the infrastructure investments necessary 
to keep this a viable and structurally sound roadway.
    That would conclude my testimony, and if I can answer any 
questions.
    [The prepared statement of Mr. Nygaard follows:]

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
    

    The Chairman. Thank you very much for that excellent 
testimony, and, Pat, let me ask you one of the questions and 
this is going to sound a little strange but these are questions 
I get.
    Do you know of any local opposition to improvements on 
Highway 52?
    Mr. Nygaard. No, I wouldn't imagine there would be much. 
You know, generally, there--obviously the budget and the 
deficits we're facing are hugely important, but I think most 
people tend to come to agreement when it comes to 
infrastructure projects and how necessary they are.
    The Chairman. Well, I thank you for that. The reason I ask 
is, you know, around the country, especially in the more urban 
parts of the country, there are now some people who are in 
opposition to any major highway improvements. I've not found 
that anywhere near in North Dakota, but the fact is that we do 
see that in other parts of the country.
    Francis, I'm sure you hear that from your colleagues, and 
so I think it's important for the record. You are a local 
leader here. You know the sentiment in the community.
    Could you give us some sense of support for improvements on 
Highway 52 in the community as distinct from those who might be 
in opposition? You're indicating you know of no opposition.
    In terms of support, what would you say the level of public 
support is for improvements to 52?
    Mr. Nygaard. Well, I would say the level of support would 
be very high, just given the points I touched on in my 
testimony, given the different areas that it impacts, and then 
given the real-life examples of a manufacturer moving to be 
closer to that specific roadway to haul their finished products 
in and out of. So I think there's a case in point example right 
there.
    The Chairman. And we've seen testimony from the Department 
of Transportation with respect to the increase in traffic, 
traffic count numbers.
    Can you testify as to your own experience as a leader in 
the area for increased traffic and usage of Highway 52?
    Mr. Nygaard. Well, obviously the bypass is a statement 
right there as to the truck traffic. Obviously, you know, from 
the city's perspective, we are trying to get trucks to--get 
traffic to avoid the city, but as Mr. Ziegler pointed out, the 
greatest number of truck traffic was between Jamestown and 
Carrington and to just allow that traffic to go around the city 
was moved better and allow the trucks themselves to not be 
slowed down by the stop and go traffic of downtown Jamestown is 
certainly evident.
    The Chairman. I was able to get funding, the Federal share 
of that funding in the last transportation bill for the bypass.
    Can you tell us how the bypass is functioning?
    Mr. Nygaard. I think it's functioning very well. I mean, I 
know as a long-time Jamestown resident from growing up, it 
wasn't uncommon at all to see, you know, many semi-trucks 
throughout the day coming down Main Street which naturally 
isn't what you want, given somebody hauling hazardous material 
or anything like that.
    But it certainly has taken a lot of the wear and tear off 
of our local streets.
    The Chairman. Good. Director Ziegler, could you answer that 
same question in terms of how you assess the success of the 
bypass?
    Mr. Ziegler. Mr. Chairman, the bypass has been very 
successful and the fact is that we were approached--excuse me. 
We were approached after the bypass was opened with the segment 
of 94 being a problem, as I indicated in my testimony, where it 
could only haul 80,000 pounds and we were approached by a lot 
of truckers and so it gives you an indicator that they wanted 
to use the bypass. It was working well but for that short piece 
and so legislatively, we were able to fix that issue and now 
the truckers can move with a 125,000 pound load.
    The Chairman. Good. Excellent. Anything that either one of 
you would like to add?
    Mr. Nygaard. No, sir.
    The Chairman. All right. I appreciate very much your 
testimony, and thank you.
    I'll call the second panel to the witness stand. Jamestown/
Stutsman Development Corporation CEO Connie Ova, Dakota Growers 
Pasta Vice President of Manufacturing David Tressler, and 
Farmers Union District VI Director Ellen Linderman.
    As they're coming to the witness table, I want to thank 
Jamestown College for allowing us to have this hearing here. I 
want to say I have a special soft part in my heart for 
Jamestown College because my wife, when she came to North 
Dakota, the first place she came was Jamestown College.
    She was one of those people who was in the United States 
Navy and the only other woman in her Air Squadron was from 
Jamestown, North Dakota, and after their service in the Navy, 
they went back to New York, it was the midst of the garbage 
strike, and her friend from Jamestown said, `They don't even 
pick up the garbage here? I'm going back to North Dakota," and 
several weeks later, my wife waited to get on a subway train 
and to go to her work. She was going 2 hours each way each day, 
and she decided she wasn't getting on the train.
    She went to another part of the station and bought a ticket 
for North Dakota and never even went back to her apartment. She 
just came here, hooked up with her friend from Jamestown and 
enrolled in Jamestown College. So I will be forever grateful to 
Jamestown College.
    With that, we want to turn to our second panel. Delighted 
that you're here. Again, I want to make clear that the purpose 
here is to establish a record of the need for improvements to 
Highway 52 and that those improvements be funded to the extent 
possible in any extension of the transportation bill considered 
by Congress this year.
    With that, we'll go to Connie Ova, again the Stutsman--
Jamestown/Stutsman Development Corporation CEO.
    Welcome. Please proceed.

     STATEMENT OF MS. CONNIE OVA, CEO, JAMESTOWN/STUTSMAN 
                    DEVELOPMENT CORPORATION

    Ms. Ova. Thank you. It's nice to be here. As a side note, 
if I could express our thanks to you and to your staff for 
helping with FEMA to--for--to be able to encourage them to 
assist the county with the roads, with providing extra 
assistance for the grades. So very much appreciate it.
    The Chairman. Glad to do it.
    Ms. Ova. With that, I'll start my testimony. I also have my 
testimony available at the back if anybody's interested in it.
    I'm Connie Ova. I'm CEO of Jamestown/Stutsman Development 
Corporation.
    Thank you very much for the opportunity to appear before 
the Budget Committee today.
    Today, I would like to address the following. I'll give you 
a brief overview of Jamestown/Stutsman Development Corporation, 
JSDC, how good road infrastructure will assist existing 
business and also foster new economic development in a region.
    JSDC was organized to develop employment, to improve 
business conditions, and to advance the interests of the city 
of Jamestown and Stutsman County by implementing and sustaining 
an organized effort to attract new businesses and industries, 
support existing businesses and industries and encourage new 
business starts.
    The JSDC has an economic development program available to 
assist with expanding or relocating business. JSDC's mission is 
in concert with the city of Jamestown and Stutsman County and 
utilizing their supply of funding. JSDC is dedicated to area 
economic development, growth and diversification with specific 
focus on increasing and/or preserving primary sector jobs, 
business and industrial development, creating, fostering and 
maintaining business and trade activities, encouraging and 
providing incentives for business entrepreneurs to locate or 
relocate to our community.
    The Jamestown/Stutsman Development Corporation owns an ag 
process industrial park with 55 acres of land available for 
sale or lease directly adjacent to Cavendish Farms potato 
processing plant.
    In addition to that, JSDC owns the I-94 Business Park which 
has 30 acres available for manufacturing, warehouse 
distribution, or national services. The I-94 Business Park is 
home to Stutsman Harley-Davidson, to Infinity Building 
Services, and this fall will be the new home to Ag Country Farm 
Credit Services.
    In addition, JSDC recently purchased property east of 
Jamestown in Spiritwood Township. There, JSDC owns 100 acres of 
prime industrial property in the Spiritwood Energy Industrial 
Park, co-located with Cargill Malt and Great River Energy.
    I've included information in my handouts directly related 
to those sites and to opportunities available in this community 
and those sites, as all of our businesses, are reliant on good 
infrastructure.
    The JSDC's Strategic Plan was reviewed and updated most 
recently in January of this year by the JSDC Board of 
Directors. The plan for 2009 through 2013 includes seven 
strategies we are setting our sights on and what Strategy 
Number 1 is is transportation and distribution.
    To achieve that strategy, we are advocating that Jamestown 
geographic location is ideal to focus on the transportation and 
distribution of products and services with access to air, 
ground, and rail, and Highway 52 is a vital link in that whole 
system for highways.
    Our approach will be to gather or has been to gather data 
details, communicate with companies within the industry, 
establish criteria, and develop a business plan.
    We know that an efficient transportation system is 
essential for the future economic health of this region and 
state. Improvements to our public roadway system lower costs 
for producers and consumers and make North Dakota more 
attractive in a highly competitive market, highly competitive 
market for jobs and industry.
    Failure to maintain our public roadway system will result 
in lost jobs and opportunities for economic development to 
neighboring states. Jamestown is diligently marketing the 
advantage of its central location at the crossroads of major 
highways and railroads to attract new and retain existing 
businesses.
    North Dakota must have access to safe transportation 
services in all areas of the state to ensure personal mobility 
for work, pleasure and needed services. Maintaining a safe and 
trouble-free transportation system is critical for all to 
experience the quality of life we have come to expect in North 
Dakota.
    Without a good roadway system, people could not get to 
work, there would be no access to healthcare, education, and 
recreation. Farmers would not be able to get their goods to 
market, and manufacturers would be unable to ship their 
products or receive supplies. In short, the economy would shut 
down.
    But just having a public roadway system is not enough. The 
system must be well maintained, efficient, reliable, and 
accessible. Manufacturers rely more and more on just- in-time 
delivery which means much of the inventory they previously kept 
in their warehouses is now on trucks on the public roadway 
system for delivery to the plants at the time the manufacturer 
needs the supplies.
    It is critical to the economy that the roadway system 
supports consistent and reliable transportation so that this 
just-in-time delivery is successful. This requires a road 
system that is in good condition, has adequate capacity, is 
well maintained, even in inclement weather.
    Investments in the public roadway system support the 
economy through (1) direct job creation through construction 
activities, (2) indirect and induced job support, and (3) 
productivity gains.
    In addition to job creation and support, productivity gains 
are realized by investments that reduce travel times, make 
travel times more consistent, reduce crashes and reduce vehicle 
operating costs.
    Companies across the region, such as those that were talked 
about and represented here today, attest to the importance of 
the roadway system in terms of location, capacity, and 
condition to their ability to succeed in today's economy.
    Many areas of the state are seeking public roadway 
improvements that they believe are critical to support existing 
and share future economic development. Transportation costs are 
major costs of doing business which means a high-quality public 
roadway system is necessary to attract new businesses and 
support the growth of existing development.
    Agriculture is the Number 1 industry in this community and 
North Dakota. Good transportation is vitally important to those 
farmers needing to move commodities to markets, to transport 
equipment from farm to farm and field to field, and to receive 
goods and services, to provide food and fiber to the world.
    One of North Dakota's greatest resources is the quality of 
life that exists within its borders. Transportation services 
support North Dakotans with many quality of life benefits. 
North Dakotans value the ability to move and travel with ease. 
Our public roadway system provides the primary means to access 
recreation, education, healthcare and services.
    Increasingly, these quality of life issues are also 
critical to local economic development. Companies want good 
roads not only for business purposes but to attract and support 
a stable work force. High levels of accessibility and mobility 
are key to experiencing the quality of life Jamestown/Stutsman 
County has to offer.
    Most economic development professionals recognize the 
distinction between growth and development. As a result, our 
work involves much more than attracting the next big employer 
or simply increasing the number of jobs in the community. Our 
concern is also with increasing the quality of jobs available 
in the community. Doing so requires working to improve the 
operating environment in which businesses function. That 
operating environment includes and depends on transportation 
infrastructure.
    In conclusion, we consider it imperative that Congress 
recognize that significantly increased Federal investment in 
highways and surface transportation in rural states, such as 
North Dakota, is vitally important to economic development and 
to the continued growth of this state and nation.
    It is also critical to ensure the growth and delivery of 
safe and healthy North Dakota-grown food and fiber to the 
world.
    This concludes my testimony.
    [The prepared statement of Ms. Ova follows:]

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
        

    The Chairman. Thank you very much.
    Ms. Ova. You're welcome.
    The Chairman. Important testimony and I'm glad to have it 
on the record.
    As we do these hearings, we like to get the testimony of 
the local economic development leaders because, in our view, 
this legislation does have the double effect. Yes, it creates 
jobs and yes, it increases productivity. It enhances the 
competitive position of these communities and you've testified 
to that, and I thank you for it.
    Ms. Ova. You're welcome.
    The Chairman. Next, we have David Tressler who is the 
Dakota Growers Pasta Vice President of Manufacturing.
    Welcome, David. Please proceed.

      STATEMENT OF MR. DAVID TRESSLER, VICE PRESIDENT OF 
      MANUFACTURING/SPECIAL PROJECTS, DAKOTA GROWERS PASTA

    Mr. Tressler. Thank you, Mr. Chairman.
    Thank you for inviting the Dakota Growers to be a part of 
this U.S. Senate Committee hearing.
    Dakota Growers Pasta Company was established in 1993 as a 
cooperative to add value to each bushel of wheat delivered by 
the growers by adding profit to each share owned.
    The capacity in 1993 was 120 million pounds per year. 
Today, Dakota Growers is a C corporation with approximately 
$300 million in sales with a total company capacity of 500 
million pounds per year of dry pasta products. 270 million 
pounds are produced at the Carrington, North Dakota, location, 
and 230 million pounds in our New Hope, Minnesota, location.
    The current expansion will increase the capacity in 
Carrington to 330 million pounds per year beginning in 2010. 
Dakota Growers Pasta is the third largest manufacturer in the 
U.S. The Carrington, North Dakota, manufacturing plant employs 
270 full-time workers.
    Dakota Growers Pasta is the only pasta manufacturer with an 
identity-preserved capabilities, providing field- to-plate 
traceability. Carrington, North Dakota, is the headquarters of 
the company.
    Markets for our products include all 50 states and some 
foreign countries. The products that originate in Carrington, 
North Dakota, must travel over Highway 52 to its final 
destination. The service provided by Highway 52 is critical in 
continuing the success of this company.
    The use of Highway 52 by trucks and other services to 
Dakota Growers has grown. It is a vital link in the delivery of 
items all necessary in making pasta. Incoming traffic includes 
wheat, fuels, packaging, maintenance materials, operating 
supplies, support services, and labor to the plant. Outgoing 
traffic includes feed products and pasta. Total traffic now is 
over 1,200 trucks per month with an expected increase to 1,500 
trucks by the start of 2010 when the current expansion is 
completed.
    Trucks access Highway 52 from Minot to Jamestown for Dakota 
Growers. The majority of these trucks will return east on 
Highway 52. Twenty percent of the wheat is delivered by truck 
each year. Truck access provides a competitive edge by being 
economical transportation for our neighboring farmers.
    Retail shortage during the recent history left many pasta 
manufacturers without wheat for processing. The ability to 
access local wheat supply and trucks all year kept the 
Carrington plant in operation during this time and in business.
    Reliable truck delivery of wheat via Highway 52 is a vital 
link to take advantage of locally grown wheat necessary for 
maintaining the identity-preserved program that is key to 
Dakota Growers' success.
    In addition, numerous services and support people will be 
traveling the highway to the Carrington manufacturing plant.
    Dakota Growers Pasta's success is directly dependent on the 
maintenance of Highway 52 as a no-load-restricted road. Safety 
is a concern as the Highway 52 continues to--use of Highway 52 
continues to increase. It services many diverse users, from 
slow-moving oversized farm equipment being transported from 
field to field, grain trucks from field to market, families 
going shopping and services in local towns, tourists enjoying 
the area, oversized loads transporting large parts to a 
windmill development in the heart of the state, to a single/
double/triple trailer over-the-road semi-services, Dakota 
Growers is dependent upon many originating in the U.S. and 
Canada.
    All users are competing with nature and the environment for 
the use of the land that makes up this highway. Dakota Growers 
Company encourages the development of Highway 52 to encourage 
trucks to stay on primary roads with minimal stops or 
restrictions to promote safety.
    Improved durability to handle the increased numbers of 
large weight trucks, maintain high-profile Highway 52 as a 
primary snow route to be maintained during the winter months, 
promoting logical step to encourage continuation of the four-
lane road into Carrington. This will provide safe 
transportation environment for many diverse uses of the 
highway.
    Dakota Growers has gained confidence in its customers to be 
a viable competitor in pasta manufacturing industry. This is 
best illustrated by the capacity expansion now in progress. 
Improvements in Highway 52 will be a key infrastructure 
investment that will continue to foster economic growth in the 
agriculture economy and continued success of Dakota Growers 
Pasta Company.
    Thank you for this opportunity.
    [The prepared statement of Mr. Tressler follows:]

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
    
    The Chairman. Thank you, David. If I could just do a 
followup question with you.
    As a business leader, do you believe that in the taxpayers' 
interests, additional investments in Highway 52 are justified, 
looking at this from the taxpayers' perspective?
    Mr. Tressler. Mr. Chairman, I think from the taxpayers' 
perspective, it is in their best interests because it will help 
to foster Dakota Growers and the economy that is strengthened 
by that area, and I believe that they will get a return on that 
tax dollar.
    The Chairman. I believe that, as well. I think the record 
is very clear that these transportation investments not only 
create jobs, foster economic development, but also improve the 
competitive position of our country.
    We now not only compete domestically, we compete 
internationally, and if we're going to be competitive, we've 
got to have the most efficient infrastructure of any company--
any country in the world, and these investments in 
transportation are critically important to our continuing 
competitive position, and I think it's very useful to have 
somebody of your business background indicate that you believe 
these investments pay dividends, as well.
    Ellen Linderman, welcome. Good to have you here. District 
VI Director of the North Dakota Farmers Union.
    Why don't you share your perspective on the need for 
additional investments in Highway 52?

  STATEMENT OF MS. ELLEN LINDERMAN, DISTRICT VI DIRECTOR, ND 
                         FARMERS UNION

    Ms. Linderman. Thank you, Senator.
    My name is Ellen Linderman, and I am a farmer and a 
District Director for North Dakota Farmers Union.
    I have farmed with my husband Charles and our family in the 
Carrington area for the past 33 years. It doesn't seem possible 
but it is. I have--over the years, we have witnessed many 
changes in agriculture but one thing has remained constant, the 
need for a good transportation system in our area so that 
agriculture can grow and thrive.
    This in turn enhances the economic viability of our rural 
community. An integral part of the transportation system in our 
area is Highway 52 as it runs diagonally across the state from 
north of Minot down to Jamestown where it connects up with 
Interstate 94. It runs through what I consider the agricultural 
heartland of North Dakota.
    While we used to grow just a few crops, such as wheat or 
barley, at our farm, this is no longer true for us or our 
neighbors. We have expanded our crop diversity to include such 
things as corn, soybeans, sunflower, and other specialty crops.
    This was done for economic reasons as well as the increased 
availability of other crops that can now be grown in our region 
thanks to research and development.
    I have attached a list of the crops that can be grown in 
North Dakota, and I might add that there is ongoing research to 
hopefully expand this list to create even more economic 
opportunities for the farmers in our area. We have become very 
good at producing a wide variety of crops.
    Along with these new crops have come some new challenges 
for our infrastructure system. For example, when we harvest 
corn, there is a lot more volume per acre than with wheat or 
other traditional crops. This means that there is more trucking 
from the field to the farm to the local elevator. As a result, 
most farmers have switched from using--switched to using semi-
trucks for grain transport.
    Also, as elevators have become larger and fewer, we often 
have to haul grain a greater distance to access these 
elevators.
    With a wider variety of commodities on the farm, more trips 
either to the local elevator or often to a processor at 
considerable distance are required. With these newer crops, 
such as corn, there is also an increased need for inputs. While 
the inputs may be shipped via rail to certain points across the 
state, from there they are usually shipped by truck to local 
facilities and to the farms.
    I might also add that the machinery which has to be moved 
on roads from field to field has become larger and takes up 
more of the roads than it used to. Have you ever tried to pass 
a combine or a large tractor and farm implement lately?
    Actually, my husband, when he was coming in from the farm 
yesterday, when he came up against Highway 52, he had to sit 
there and wait for a long line of vehicles that was being 
slowed down because they were following a tractor with a baler 
behind it.
    Roads have to be built wide enough to accommodate this 
machinery. Even the local elevators that have access to 
railroads end up shipping part of their inventory by truck. 
Bulk commodities, such as wheat and corn, can be shipped on 
large unit trains, but other commodities are not grown in a 
large enough quantity or they need to be segregated and can't 
make use of unit trains. They have to be shipped via our road 
system.
    In some cases the end user of the commodity wants to know 
where it originated. This requires the use of trucks to take 
the commodity from the farm storage to the processor or the 
cleaning plant for bagging and further shipment.
    We grow food grade soybeans on our farm. We contract them 
with SB&B Foods at Castleton which is near Fargo. We have to 
store them on our farm until SB&B wants them. We were so 
thankful this spring for Highway 52/281 because there were only 
normal load restrictions in place so that we could move the 
beans when we needed to.
    We need to be a reliable supplier, as does SB&B, if we want 
to keep our customers happy. SB&B cleans, bags, and tags the 
soybeans and puts them in containers which go to the West Coast 
where they are then shipped to Japan for processing.
    This winter, we were among a group of soybean growers that 
traveled to Japan to visit with the processors. We learned from 
them how important food safety is to the consumer in Japan. 
They want to know where the soybeans come from and they want to 
know how they were grown. We saw bags of soybeans from our 
farms with the attached labels that indicated their origin.
    I believe this is the future of agriculture in the global 
economy. Highway 52, if it is in good year-round condition, 
allows us to be part of the global economy in a way that we may 
not have been--that we may not have considered when we began 
farming 33 years ago.
    SB&B is also considering contracting some identity- 
preserved wheat for shipment abroad. This again requires 
segregation so that the producer and the consumer are 
connected.
    Those who grow potatoes in our area also know the 
importance of Highway 52. Again, they truck potatoes to 
Cavendish Farms, a processing plant near Jamestown, on an as-
needed basis. This is also true of barley producers in our area 
who contract with the malting plant at Spiritwood.
    We also grow confection sunflowers which are sold in all 
those little bags you find at convenience stores across the 
country for human consumption. We haul seeds to the elevator 
but the elevator hauls them to Grandin for processing.
    There is a canola crushing plant near Velva, North Dakota. 
Some farmers in our area grow canola for shipment to that plant 
but more often it is grown to the north and west of that plant, 
again using Highway 52.
    While we are adept at producing a wide variety of crops, we 
have only begun to develop processing facilities which would 
further enhance rural economic development. In Carrington, we 
are fortunate to have Dakota Growers Pasta Company that has 
provided jobs for the community but it has also provided a 
market for our durum wheat.
    Although some durum is grown in our area, most of it is 
trucked via Highway 52 from the northwest area of the state. 
Again, the durum is stored on the farm at harvest and then 
hauled in later.
    There are all kinds of economic opportunities opening up in 
agriculture with the development of biofuels, identity-
preserved crops, organic crops, and even new types of 
feedstocks for livestock which would enhance livestock 
development in the state.
    However, if we do not have a reliable transportation 
system, all of the research and development in the world will 
not help us. We have to be able to ship our commodities on 
demand. If we are to develop processing plants locally, we need 
dependable roads. If anything, I expect to see an increase in 
the amount of agricultural goods shipped on our roads.
    I consider Highway 52 to be literally a life line to 
connect us to the global economy. Without it, our present 
progress may well wither and die as we will be left in 
isolation from the global markets.
    With a well-built modern Highway 52, we will be able to 
maintain our connection to processors and world markets and 
then continue to build on what we have already accomplished.
    Thank you for allowing me to give my testimony.
    [The prepared statement of Ms. Linderman follows:]

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
        

    The Chairman. Thank you for that excellent testimony.
    I want to thank this panel. You've provided important input 
to the committee and to the Congress and we appreciate it very 
much.
    I want to just--we're about at the end of our time, I know 
that, but I want to--I noticed the mayors here. Mayor Liechty, 
if you'd want to say something for the record, I'd invite you 
to come to the microphone.
    If you'd just identify yourself for the record? Certainly 
we all know you, Mayor Liechty.
    Ms. Liechty. Mayor Clarice Liechty, Mayor of the city of 
Jamestown, and I was in Norway visiting on a North Dakotans to 
Norway trip, so I did not have time to prepare anything, 
testimony here.
    But personally thinking, as a farmer and one who has a 
collection point for Red River commodities for sunflowers, it's 
Highway 52 is very important for farmers. It's important for 
moving product across the state. It's important for the city of 
Jamestown, also, because our agriculture community is very top 
in providing economic development for our community, and it's a 
life blood for our community.
    Thank you very much for coming to Jamestown and holding 
this hearing.
    The Chairman. Thank you very much for your testimony. I 
think it's important that the mayor of this community is 
sending a very clear signal of the importance of this vital 
roadway.
    I also want to recognize Lance Gabe who's here, the Deputy 
Chief of Staff of our Governor. I think that sends a signal how 
important the Governor of the state views Highway 52 and its 
development. Thank you, Lance, for being here, as well.
    Anyone else who would like to make a statement for the 
record? We've just got a few minutes remaining here, but if 
there's somebody here that would want to be heard publicly, I 
want to give them that opportunity.
    If you'd just identify yourself for the record and indicate 
what you do, your interest in Highway 52?
    Ms. Hager.
    Sure. Mary Hager, Wells County Commissioner and lifelong 
resident of Harvey, North Dakota, and I just wanted to touch 
base on how important Highway 52 is going through Wells County.
    We have Pheasant Co-op which has expanded over the years 
and their big push is probably their bean plant which people 
from all over North Dakota come and, of course, Highway 52 is 
very valuable.
    And again, in Harvey, the Prairie Towers, which is Harvey 
Elevator, they have expanded, and we have numerous farmers 
coming on Highway 52. So it's very vital to our county, along 
with a new organic flour mill and they have contracts over in 
Korea and it's very vital for Highway 52 for people to bring in 
their organic products. So Highway 52 is vital to us now.
    The Chairman. If I could ask you just for the record, I've 
asked others this, do you know of any opposition in your local 
area or in the county to improvements to Highway 52?
    Ms. Hager. There has been no opposition. Actually, I 
visited with various community members throughout the county 
that we were going to be attending this and their big thing 
was--and I mentioned it to Mr. Ziegler--when are we going to 
four lane from Minot to Jamestown? They feel it's very vital 
because of the heavy truck traffic.
    The Chairman. And let me just go the next step. Would you 
say--well, how would you characterize support for additional 
investments in Highway 52? How would you characterize the level 
of support in your community, in your county?
    Ms. Hager. High, very high.
    The Chairman. Very high.
    Ms. Hager. Very positive.
    The Chairman. Yeah. All right. Well, I think we've 
established a record that's very clear here today.
    I want to thank all the witnesses, everyone who's attended. 
I deeply appreciate it.
    You know, these are decisions that are going to be made in 
the coming weeks. It is very important that we fill the hole in 
these next weeks because the Trust Fund runs out of money, our 
estimates are, in August.
    Director Ziegler, I think, has a similar estimate of when 
that might occur.
    So this is a timely hearing and I'm very pleased that we've 
been able to do it, and I very much appreciate all of the 
witnesses here today.
    Thank you, and the hearing stands in adjournment.
    [Whereupon, at 4:11 p.m., the hearing was adjourned.]


 FIELD HEARING ON INFRASTRUCTURE INVESTMENT: CREATING JOBS AND FUELING 
                            ECONOMIC GROWTH

                      THURSDAY, NOVEMBER 12, 2009


                                       U.S. Senate,
                                    Committee on the Budget
                                             Michigan, North Dakota

    The Committee met, pursuant to notice, at 2:15 p.m. in 
Michigan, North Dakota
    Hon. Kent Conrad, Chairman of the Committee, presiding.
    Present: Senator Conrad.
    [presiding].

              OPENING STATEMENT OF SENATOR CONRAD

    The Chairman. Why don't we begin? The Committee will come 
to order. I want to welcome everyone to this hearing of the 
Senate Budget Committee. This is an official hearing of the 
Committee. So, we will be operating under the rules of the U.S. 
Senate, and an official record of this hearing is being kept.
    This hearing and others like it that I've been holding is 
especially important as we consider a new transportation bill 
for the country. As you know, we are operating on short-term 
extensions of the previous highway legislation, transportation 
legislation. And many of us believe we now need a longer term 
extension of that program to provide stability and assurance of 
funding to the states. We also believe it's critically 
important for our economy because almost no part of Federal 
spending does a better job of creating jobs and does a better 
job of improving the competitive position of our country.
    One of the things we know is transportation is absolutely 
essential to the competitive position of the United States. And 
so, I especially want to welcome our distinguish witnesses here 
today. They include the Director of North Dakota's Department 
of Transportation, Francis Ziegler; Michigan Mayor Allen 
Orwick; and District 23 State Assembly Representative Ben Vig, 
who also served on my staff for a time in Washington. It's good 
to see you again, Ben.
    Let me just indicate that the committees of jurisdiction 
have said, as we consider new highway legislation, unless there 
have been hearings with respect to specific products--projects, 
that funding that goes outside the formula, that is, moneys 
that move outside the formula, that go to so-called 
demonstration projects, will not be approved unless there have 
hearings about those projects. That's why we've done a series 
of projects around the state with respect to a number of the 
high-priority transportation corridors in the state.
    I wanted to come to this part of the state because, 
obviously, we have issues here as well. I think we'll hear that 
from our local representatives, and I expect to hear that from 
the head of our North Dakota Department of Transportation as 
well.
    This hearing will focus on how infrastructure investments, 
and particularly investments in critical highway projects, can 
foster economic development and help to produce jobs in our 
state.
    Let me go through a number of slides to make points that I 
think are critically important to have on the record.
    North Dakota, we all know, has fared better than the rest 
of the country during this recession. When the current 
recession began in December of 2007, the unemployment rate in 
North Dakota was 3.1 percent compared to a national rate of 4.1 
percent. Since that time, unemployment in North Dakota has 
risen, although modestly, to 4.2 percent; the national level of 
unemployment has risen to 10.2 percent.
    Even more alarming, nationally, is the statistic that when 
you combine unemployment with underemployment, the rate rises 
from 10.2 percent to 7.5 percent--17.5 percent: 17.5 percent of 
the people in our country either don't have work or don't have 
sufficient work, don't have the amount of work they'd like to 
have. That is a serious matter. That means one in every six of 
our fellow citizens does not have the work they would like to 
have.

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

    Although North Dakota has not been hit as hard as the rest 
of the country, we cannot consider ourselves an island. We're 
not exempt from layoffs. We've seen that in major industries in 
North Dakota. We have seen Melroe--Bobcat, for example, have 
significant layoffs because of the international market. So, 
we're no longer an island unto ourselves, and we've got to pay 
close attention to what's happening elsewhere.
    Let's go to the second one, if we can, Matt.

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

    The stimulus that was passed in February has played an 
important role in increasing economic output. Economists have 
estimated that stimulus contributed significantly to economic 
growth in 2009. Stimulus funds are expected to continue to aid 
gross domestic product growth into next year as additional 
funds flow into the economy. Here, you can see, these are the 
estimates from the economists of the difference that the 
stimulus package has made.
    I'd be the first to say the stimulus package was imperfect, 
but I also believe it was absolutely essential to prevent a 
collapse. Last year, I believe, our country and the rest of the 
industrialized world was on the brink of a financial collapse. 
I will never forget being called to an emergency meeting in the 
Leader's office with 15 of the leaders of Congress, Republicans 
and Democrats, the Chairman of the Federal Reserve, and the 
Secretary of the Treasury. At that meeting, they told us they 
intended to take over AIG the next morning, and they were not 
there to ask our consent; they were there to tell us they were 
doing it, and they told us the reason they were doing it is, if 
it was not done, that they believed there would be a global 
financial collapse. That's about as stark as it can be made. 
And they went through in some detail their reasoning as to why 
there would be extraordinarily serious repercussions if AIG was 
allowed to go under.
    With that, there followed months then of negotiation on an 
overall rescue package, and I was involved in those 
negotiations. I--one of the negotiations went all weekend. We 
went all one Saturday night after going for days before that, 
and during those deliberations we were told that if we did not 
reach agreement by 5 or 6 o'clock on Sunday night, that the 
Asian markets would open and they would collapse, and that 
would then be followed by our markets opening on Monday and we 
could expect them to collapse.
    You know, when you are told these things by the Secretary 
of the Treasury of the United States, I take them seriously. I 
don't think the previous Secretary of the Treasury, whether I 
particularly agreed with him on other policy matters or not--
that's not the issue. He and I had very significant 
disagreements on fiscal policy, but when he looks me in the eye 
and looks other leaders of the Congress in the eye and says, we 
face a global financial collapse unless we act, I'm not going 
to take the risk of his being wrong about that prediction.
    So, we did take action, and I think we did avert a collapse 
that would have been not just in this country but around the 
rest of the world as well.
    Let's go to that third slide, if we can, Matt.

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
    

    North Dakota has been awarded $700 million in stimulus 
funds thus far. These dollars will be used to fund high-
priority needs across the state. About half of the stimulus 
funds going to North Dakota will put people to work rebuilding 
our state's infrastructure. Transportation projects will 
receive $188 million, including 170 million to build and 
improve our highways and bridges. The state will also receive 
$168 million for other critical infrastructure needs, including 
several important rural water projects. Stimulus funds will 
also go to keep our teachers in the classroom, make our homes 
and businesses more energy efficient, put cops on the street, 
and fund many other high-priority needs.
    Let's go to the fourth slide, if we could, Matt.

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

    The North Dakota Department of Transportation has awarded 
about half of its $170 million in highway stimulus funds to 
some 94 projects across the state. And I'm sure Mr. Ziegler 
will update us on this in his testimony. Of the 83 million that 
has been awarded, 57 million in projects are complete, and 
about $26 million, as I understand it, are in progress.
    I hope my numbers agree with yours, Francis.
    The state Department of Transportation is in the process of 
identifying projects and awarding contracts for the remaining 
$87 million in highway stimulus funding. I will be very 
interested to hear Mr. Ziegler's testimony with respect to that 
effort. And let me say how much I respect the professionalism 
of the Department of Transportation under Mr. Ziegler. We can 
be very proud of the way North Dakota functions. We do not have 
the kind of political interference, the kind of corruption that 
we see in other places. The Department of Transportation, in my 
experience is first rate, and Mr. Ziegler is a dedicated 
professional.
    Nelson County will receive stimulus funding for two highway 
projects. This past summer, a stretch of County Road 1, just 
north of here, was resurfaced using stimulus funding. Next 
summer, as I understand it, Francis, Highway 2, just outside of 
Michigan, east to the county line, will be resurfaced using 
stimulus funds.

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

    Matt, let's go to the sixth chart, if we can.
    North Dakota benefited significantly from the last highway 
bill, which was completed in 2005. As a conferee on that bill--
a ``conferee'' is just a fancy name for somebody that's 
designated to work out the differences between legislation 
coming out of the House of Representatives and the U.S. Senate. 
Both of the chambers pass separate bills. Then you have to work 
out the differences. The people who are given the 
responsibility for working out the differences are called the 
``conferees.'' As Chairman of the Budget Committee, I now have 
the responsibility and, in many ways, the opportunity to serve 
on many conference committees to work out differences between 
legislation from the Senate and the House. So, as a conferee on 
that bill, I was able to make sure that North Dakota received 
significant funding for our highways and transit.
    And, I might say, we function differently than people--
representatives in other parts of the country. We try to adhere 
to the priorities set out by our own Department of 
Transportation. So, we don't do what some of our colleagues do 
in other parts of the country. They tell people: You name the 
road after me, we'll build the road. We don't do that in North 
Dakota. The Department of Transportation has a process by which 
they determine what the priorities are. And in my experience, 
it's been a pretty objective process, and we follow that 
process in any funding we are able to get over and above the 
formula funding. So, we go to Mr. Ziegler and his colleagues, 
and we say, what are your priorities? We're not in the business 
of second-guessing them.
    In the last highway bill, I worked to secure one and a half 
billion dollars for North Dakota, a 31 percent increase over 
the previous bill. Annually, that averages out to $234 million 
a year for highways, bridges, and the rest, with additional 
funding for transit programs. We did very well overall by 
securing $2 for every dollar in gas tax money collected in the 
state, ranking us among the top four states in the Nation in 
return for gas tax dollars raised.
    But let me indicate, we thought it was a great triumph when 
that bill was passed. Subsequently, we've faced hyperinflation 
in the most important cost elements to building highways and 
bridges. Concrete, steel, asphalt--all of these increased 
dramatically in cost, reducing what we thought we were buying, 
reducing the amount of highway miles, reducing the number of 
bridges that we could replace. And so, it is critically 
important now that we have new transportation legislation that 
deals with the current realities.
    Here are some of the priorities I will focus on as we begin 
consideration of the next highway bill: First of all, the next 
transportation bill must identify sufficient funding so that 
the infrastructure investments are secure and robust over the 
long term and so they are paid for. We simply cannot add more 
to the debt. The debt has already doubled over the previous 8 
years. It is scheduled to double again, rising to more than 100 
percent of the gross domestic product of the United States.
    That is an unsustainable course. And it is critically 
important that we, as a nation, face up to this, and this is 
something we can do. We've done it before. In the nineties, we 
not only balanced the budget; we stopped the raid on the Social 
Security Trust Fund. We can do this, and it's critically 
important that we do it again. States and communities must be 
able to rely on the funds that are promised to them.
    Next, any new highway bill must maintain recognition that 
rural transportation needs are vital to the nation.
    And, finally, I will fight to secure funding for the 
critical highway arteries in our state to ensure that we 
maintain a nationally connected system. Ever since President 
Eisenhower advanced the interstate highway system, there has 
been a recognition that these systems tie the Nation together 
and that these systems are critically important not only for 
the economic health of American but for our national security. 
And we have to again remind ourselves and remind our colleagues 
that those are the essential reasons for a national program.

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

    I am particularly interested in hearing from our witnesses 
today on the importance of highway investments in this region 
and its effect on economic growth. I'm also interested in 
hearing about what future investments are needed to support 
economic development and the agriculture and energy economy so 
important in this part of the state. And, normally, I would 
have just talked about agriculture, but I can't anymore because 
we now have very important energy installations. Earlier today, 
I was at the wind farm near Langdon, and we know we are now 
contributing to this nation's energy needs in this part of the 
state as well.
    With that, we'll turn to our witnesses. I'm delighted to 
have them here. I'm going to turn first to Mr. Ziegler, our 
very well regarded head of the North Dakota Department of 
Transportation.
    Francis, I'm delighted that you're here, and please proceed 
with your testimony. Again, you understand the importance of 
these hearings because we've got to lay the case before the 
next transportation bill is written. It is going to have to be 
done in the early part of next year. And so these hearings are 
especially important to lay the record and especially the 
record for rural states like ours. Thank you for being here.

STATEMENT OF FRANCIS ZIEGLER, DIRECTOR, NORTH DAKOTA DEPARTMENT 
                       OF TRANSPORTATION

    Mr. Ziegler. Thank you. Thank you, Mr. Chairman. My name is 
Francis Ziegler. I'm the director for the North Dakota 
Department of Transportation. And, Senator, I want to thank you 
for the opportunity to appear before your committee today.
    The title of today's hearing is ``Infrastructure 
Investment: Creating Jobs and Fueling Economic Growth.'' Let me 
say at the outset that we believe that transportation 
infrastructure investment creates jobs and strengthens the 
economy and provides additional benefits. Transportation--we 
say this often at the Department of Transportation: 
Transportation is the engine that drives the economy.
    The State of North Dakota has increased its financial 
commitment to transportation infrastructure. Earlier this year, 
Governor John Hoeven signed a bill into law that was a landmark 
bill that provided $1.35 billion in transportation funding. 
This includes a significant amount to rebuild roads; help 
cities, counties, and townships recover from the winter 
activities and the spring flooding.
    The DOT is also working on emergency relief projects, for 
many projects that are just about 40-50 miles west of here at 
Devils Lake. The majority of our ER work, our emergency relief 
work, is in the Devils Lake area.
    Senator I probably should have noted that while we have 
testimony--it's written testimony I will paraphrasing in the 
interests of time.
    The Chairman. I appreciate that, and your full statement 
will be made a part of the record.
    Mr. Ziegler. OK. Thank you.
    While the State of North Dakota is doing more than ever, 
Federal investment in transportation is critically important. 
Federal aid accounts for 52 percent of the current biennium, 
and that's without the American Recovery and Reinvestment Act.
    In the balance of my testimony, I'll discuss job creation 
and other benefits from transportation infrastructure 
investment, and the Federal surface transportation legislation.
    Under job creation and benefits, the transportation 
infrastructure investments create jobs in several ways. First, 
there are jobs on the site--workers operating heavy equipment, 
truck drivers, plant operators, flagmen, and others. Next, 
there are jobs in supplier and support industries. These can 
include jobs in the aggregates, asphalt plants and factories 
that make guardrails, signs, and other roadway infrastructure 
and hardware. In addition, when a contractor or supplier is 
involved in a project, its headquarters staff is strengthened, 
whether in job additions or in job retention. There is a 
general boost to the economy also from the onsite and supplier 
jobs in the local economy. Contractors and employees are at a 
local community. They spend their money at the local 
restaurants, gas stations and so on.
    The number of jobs that one project or group of projects 
creates can be hard to estimate, particularly when one goes 
beyond the project site jobs. Estimates developed in the last 
few years by the Federal Highway Administration are that for 
each $1 billion of Federal highway program dollars--and that's 
not taking into account the non-Federal match--results in 
27,800 jobs, both direct and indirect. About a third of the 
jobs----
    The Chairman. Maybe I could stop you on that, and just have 
you repeat that because this is one of the points--probably the 
single most important point we're going to need to make to our 
colleagues. And maybe you can just repeat that so we emphasize 
it in the record.
    Mr. Ziegler. The most recent study that was done by the 
Federal Highway Administration indicates that for every $1 
billion of Federal highway program dollars--that doesn't 
include any of the state's match on those Federal aid dollars--
results in 27,800 jobs, and that's both direct and indirect. 
And the direct jobs are about a third of that total. So, it 
would be about 8,000 jobs directly and the rest would be the 
indirect jobs.
    The Chairman. Thank you.
    Mr. Ziegler. A very significant number.
    We are confident, however, in addition to job creation, 
positive economic activity follows from transportation 
infrastructure investment. As you can see from the map, and I 
will show--my map is a lot harder to read than yours, Senator.
    [Laughter.]
    Mr. Ziegler. But you can see that--these are the ARRA 
projects--American Recovery and Reinvestment Act projects, and 
they're both 2009 and 2010. ER projects--as I said, they're 
mostly in the Devils Lake area. And then STIP projects, which 
is the general process that you talked about. It's our 
Statewide Transportation Improvement Program projects. We have 
them all over the state. And what we do, as you said Senator, 
we have a prioritization program that identifies the greatest 
need at the time, and that's where we put our money. And you 
can see that the entire state benefits from the jobs and--from 
the roads, first of all, that we schedule, and then from the 
jobs that come from that.
    The Chairman. Can I ask you, just on that point, Francis' 
I'm sorry to interrupt. What is the--can you help us understand 
how you do prioritization? How do you determine where these 
dollars go--state and Federal--in your prioritization process?
    Mr. Ziegler. What we do is we have eight districts. There 
are eight district engineers. One is here today--Wade Swenson 
from the Devils Lake District.
    The Chairman. Welcome, Wade.
    Mr. Ziegler. And what they do is they look at each one of 
the roads, and they're benefited by what we call as a ``Pave-
Tech Van'' that goes out and actually takes pictures of each 
road, and it records the roughness and it records the distress, 
the number of cracks, the number of alligator break outs, that 
are on that road. So, we have that information on what's called 
our pavement management system, and then we have the judgment 
calls that each district engineer makes. So, from that, we take 
the worst of the situations and we say, well, these need to be 
fixed. And so, we go down this prioritization list and create 
the project list. From there, we go public with that list. We 
go out to each one of the media outlets in those areas of the 
districts, and we say: Here's our plan. Do you have any input?
    From there, we get the input from the public, and 
oftentimes from cities and county commissioners and so on. They 
will provide their input to us. And from there, we create 
what's called a ``STIP,'' the Statewide Transportation 
Improvement Program. And that's how the process works.
    The Chairman. OK.
    Mr. Ziegler. The other thing that I do want to say is the 
final product is improved as we go around and do these 
projects. Logically it also saved money locally. All the cities 
that have Federal aid highways going through those cities also 
benefit from the fact that they don't have to tax their local 
citizens in order to get the roads done. I can speak of quite a 
few projects. We've done one major project in Devils Lake, and 
then we've also done major projects like in Bismarck with the 
ARRA funding, seventh and ninth pair. And we've gone throughout 
the whole state and made sure that we have accomplished our 
tasks around the state, rather than just funneling it into one 
area.
    Another benefit that I'd like to highlight is safety. I 
don't give a talk without having safety as being the No. 1 goal 
of the Department of Transportation. After all, our mission is 
to safely move people and goods. And so, rural transportation 
fatalities have been a concern, and, Senator, we're taking it 
very serious. Our state now has more fatalities than we've had 
since the early eighties. And the Department of Transportation 
has been working with our partners at the Highway Patrol to see 
what we can do in the area of fatalities. Both a smooth roadway 
system and a good transportation system is certainly going to 
help with the fatality issue and the safety issue.
    These investments are important to the economic 
competitiveness of the state. You know, one of the things that 
our ag sector has always helped the country provide a 
positive--you know, a very positive export margin. And so, as 
we send goods abroad, America benefits from it. And so, the 
transportation is necessary to help make that work.
    Better highways and the availability of public transit also 
help us in our daily lives, ensuring access to school, medical 
facilities, work, and others. Our planning process at the DOT--
we work to direct funding to projects that are prioritized, as 
I explained earlier, to provide these types of benefits.
    I'd like to now move into the surface transportation issues 
of the new transportation bill. Clearly, our ability to 
continue to invest in surface transportation infrastructure in 
North Dakota will depend in large part on surface 
transportation funding levels. AASHTO, our Association of State 
Highway and Transportation Officials, has recommended, for the 
6-year period from 2010 to 2015, a $375 billion program for 
highways and bridges, and 93 billion for other programs, and 
most of that is transit.
    The Chairman. So, if we just do the math for our 
colleagues, $468 billion in a 6-year program?
    Mr. Ziegler. That's correct, Senator.
    The Chairman. $468 billion. When you first shared these 
numbers with me, I almost fell off the chair, when we were over 
in Dickinson. You remember that.
    Mr. Ziegler. I remember.
    The Chairman. It's a tremendous amount of money--$468 
billion. But that is the professional recommendation of the 
highway and transportation officials around the country?
    Mr. Ziegler. That's right.
    The Chairman. OK.
    Mr. Ziegler. Beyond the overall funding level, however, to 
achieve continued progress in North Dakota, it is essential 
that rural states like North Dakota participate at least 
proportionately in any growth of the Federal highway and 
transportation program, both as to formula and other funds.
    In the House authorizing committee, a proposal has been 
outlined. The outline apparently calls for an increase in 
Federal highway program authorizations of the highway trust 
fund of about 110 billion over the next 6 years. That would be 
337 billion compared to 227 that the past bill had. The outline 
suggests that at least 50 billion of that 110 billion is 
reserved for a new program only for metropolitan areas and that 
another 25 billion is reserved for large nationally significant 
projects. We don't believe North Dakota would get any of those, 
Senator.
    The outline also refers to an infrastructure bank. The 
bank's funds may not be readily accessible to rural states like 
ours.
    So, we see a minimum of 75 billion of the 110 billion that 
North Dakota may not have access to.
    The Chairman. And this is from the House authorizing 
committee?
    Mr. Ziegler. That's correct, Senator.
    The Chairman. Just so people who are listening know, we 
always have problems with the difference between the House and 
the Senate. The House is based on population, and of course the 
big population states dominate. California has over 40 members 
in the House of Representatives. North Dakota only has one. 
I've often said I'd rather have our one than all 40 out there 
in California, but, nonetheless, they get 40 votes, and that 
creates a real problem. Thank goodness, in the Senate, every 
state has two. And the way we're able to get a good result is 
we have a much more favorable formula in the Senate than the 
House does, and then we go to conference committee, and we 
negotiate. So, I think it's important to understand that this 
is coming from the House authorizing committee--frankly, 
completely expected that they would favor the more populous 
parts of the country.
    Mr. Ziegler. Senator, this proposal would also provide an 
increased share of transportation investment in transit, and we 
certainly recognized that and use transit to a large extent 
here in North Dakota. We support instead, however, rather than 
the increase that they've talked about, a proportional growth 
in highway and transit programs. We're concerned with the 
reduced share of the transportation bill's programs compared to 
our current law. And certainly, Mr. Chairman, we appreciate 
your efforts to avoid any such result in the final legislation.
    I'd also like to address the impact of inflation on our 
transportation program. And, Senator, you already touched on it 
earlier. But in the past 8 years, the highway construction 
inflation in North Dakota has increased by 11 percent per year. 
And I have a chart here that shows how those percentages are 
increasing. We have the trend line, and then we have the 
overall index. And what used to cost $1 in 2001 costs $1.88 
today.
    The nation benefits from Federal transportation investment 
in and across rural states. I like to say that rural states 
serve as a bridge for truck and personal traffic between other 
states; it enables ag exports, as I said earlier, to serve the 
nation's ethanol production and energy extraction industries. 
It's a lifeline for remotely located and economically 
challenged citizens. It enables people and businesses to 
traverse the vast tracts of sparsely populated land, and it 
provides access to tourism facilities, which is our second-
largest industry.
    Senator we have details on each of those points, those 
bullet points, but in the interest of time, I will move right 
on to funding and financing considerations in my testimony.
    The Chairman. And your full statement, as we've indicated, 
will be made part of the record and is very helpful to us.
    Mr. Ziegler. OK. Thank you.
    The Chairman. Thank you for that additional detail.
    Mr. Ziegler. Moving on to funding and financing 
considerations, rural states like North Dakota face a number of 
serious obstacles in preserving and improving the Federal aid 
highway system in our borders. We are very rural. We are 
geographically large, have low population densities and 
extensive highway networks.
    Our large road network has few people to support it. In 
North Dakota, there are about 16 people per lane mile of 
Federal aid highway; nationally, it's 129. Our low population 
and traffic density also means that tolls are not an answer to 
funding transportation needs in rural areas. Our budget to 
maintain--that is, to plow snow, seal cracks, do pothole 
patching--costs about $9,200 per mile per year. It takes about 
2,000 cars per mile per day to generate the amount of revenue 
from state motor fuel taxes, just to pay for the maintenance. 
Very few state highways in North Dakota average 2,000 vehicles 
per mile per day.
    A couple other points I'd like to make is that the 
Department of Transportation has gone into a Pavement 
Preservation Program. Timely maintenance of the roadway surface 
improves ride quality and extends the life of the roadway, and 
it also helps with load-carrying capacity.
    While the program has been very effective, thin lift 
overlays can cause a problem for the future. As we add more 
thin lift overlays, what happens is the roadway gets narrower. 
And our concern with that is that we are getting feedback from 
the public that they don't like to see the narrower roads, that 
they like to see more of a shoulder on the road. That adds 
costs to our process.
    I want to move into increases in regulatory requirements. 
It takes about three to 4 years to complete a project that 
requires a full environmental review in our state. We have done 
projects quicker. An example is Memorial Bridge. We had that 
environmental impact statement finished in 18 months and 
actually got an award for it. But, fundamentally, it takes 
quite a while in order to go through the processes. And we'd 
just ask that we don't have more; we have--we know the process 
well. We just don't want to get into more regulations.
    We have been working with our national association on 
performance standards and performance measures. We believe they 
are very important. The State of North Dakota uses performance 
measures on our own. We have our own report card on how we're 
doing in our performance. What we would ask of a national bill 
is that, while we fully expect the performance measures to be 
developed and be part of a bill, we ask that they be general in 
nature and that each state be allowed to establish its own 
specific target for those performances.
    My second last point, Senator, is that we would ask that 
legislation ensuring continuity of the program is important. 
It's important the funding in such legislation be at levels as 
high as fiscal year 2009 levels. Without continuity and 
adequate funding, the highway construction industry loses 
confidence and possibly reduce employment or postpone equipment 
purchases.
    Senator in conclusion, we consider it essential that the 
Congress, through the reauthorization process, recognize that 
significantly increased Federal investment in highways and 
surface transportation in rural states is, and will remain, 
important to the national interest. Our entire nation benefits 
from a good transportation network in and across rural states 
like North Dakota. With such legislation preserving program 
share for states like North Dakota, we will be better equipped 
to generate jobs and economic growth in North Dakota as well as 
meet statewide transportation investment needs.
    Senator that concludes my testimony. I'd be happy to answer 
to any questions you may have.
    [The prepared statement of Mr. Ziegler follows:]

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
        

    The Chairman. Thank you very much, Francis. It would be my 
intention we go to the other witnesses and then come back for 
questions, but I would want just before we do that, before we 
go to the Mayor--you indicated that currently Federal aid 
accounts for 52 percent of the current biennial budget without 
covering the Recovery Act money. Do you have a calculation of 
what that percentage would be with the Recovery Act money 
included?
    Mr. Ziegler. Yes, I do, Senator. It's 58 percent.
    The Chairman. Fifty-eight percent with the Recovery Act 
money?
    Mr. Ziegler. That's correct.
    The Chairman. OK. Because I'm sure I will get that question 
from my colleagues. Thank you very much for that testimony. I 
appreciate it very much, and I appreciate your service to the 
state.
    Next, we will go to Mr. Allen Orwick, who is the Mayor here 
in Michigan.
    We are delighted to have you here, Mayor. I appreciate very 
much your willingness to testify so that we can make our case 
to our colleagues in Washington about the need for resources 
for the more rural parts of the country, and delighted that 
you've taken the time to be here to help us with that task. 
Please proceed.

   STATEMENT OF ALLEN ORWICK, MAYOR OF MICHIGAN, NORTH DAKOTA

    Mr. Orwick. Thank you, Mr. Chairman. I'm Allen Orwick, 
Mayor of Michigan, North Dakota, a small community of 345 
people located in northeastern North Dakota. Our city is 
honored to host a Senate Budget Committee hearing on 
Infrastructure Investment: Creating Jobs and Fueling Economic 
Growth, being held here today, November 12th, 2009. I hope that 
our city proves to be a gracious host while in attendance. I 
personally want to thank Senator Conrad for his invitation to 
testify before your committee.
    In 2008, Michigan, North Dakota, celebrated its 125th 
anniversary. This event commemorated the accomplishments of our 
community and the individuals who have called this special 
place home. When our founding fathers first established 
Michigan City in 1883, they could not have imagined the world 
in which we live. However, their sense of adventure, optimism, 
and community spirit is still found here today. It is with this 
mind-set that we work on a daily basis to make our community a 
better place for all who live and work here. Just as these 
pioneers did more than a century ago, we face the challenge of 
developing and providing a strong economic community, 
transportation system, and public infrastructure for our 
residents.
    Michigan is fortunate to have access to a major highway and 
rail line. These are significant assets to our community. Both 
are very instrumental in keeping Michigan a vibrant community. 
We are located on the Burlington Northern Santa Fe Railroad 
line which includes a transcontinental primary line reaching 
from Seattle to Chicago. This rail line provides an excellent 
source of transportation for goods and products being shipped 
to and from our local communities. Amtrak, North Dakota's only 
passenger rail service, operates the Empire Builder from 
Chicago to Seattle and maintains seven North Dakota stations, 
the two closest being Grand Forks, North Dakota, and Devils 
Lake, North Dakota. Hopefully, someday our country will invest 
in a ``fast train'' system that will provide a quick and 
affordable transportation alternative to automobile and 
airplane transportation. This would be an excellent way to save 
energy and relieve the stress on our current systems.
    Our location on U.S. Highway 2, a major four-lane highway, 
allows those who do not live in our city the opportunity to 
utilize our retail, manufacturing, and service industries. All 
these sectors rely heavily on a strong transportation system to 
survive. We have one of North Dakota's largest John Deere 
implement dealers located here. The owner feels that without 
U.S. Highway 2, his business would have a reduction in annual 
sales in excess of one-third.
    As North Dakotans, we need to drive great distances for 
employment opportunities, medical services, retail shopping, 
personal and professional services, and entertainment. Our 
local educational system, the Dakota Prairie School District, 
includes a majority of Nelson County. The grade school is 
located in McVille, North Dakota, and the junior and senior 
high school is located in Petersburg, North Dakota. These 
communities are 28 miles apart and are considered central 
locations within the district. Almost every student is 
transported somewhere daily during the school year.
    Maintaining our highway system is crucial to our survival. 
We cannot afford to neglect the roads on which our children and 
residents travel, sometimes in extreme weather conditions. 
Currently, a section of Highway 2 between Michigan and Lakota 
is in desperate need of repair. Hopefully, this will be 
addressed shortly.
    Within the city of Michigan, we have spent approximately 
$80,000 to repair curbs, gutters, and streets over the past 18 
months. We were fortunate to receive approximately $11,000 of 
economic stimulus funding to help offset this expense. Even 
with that aid, we have depleted our street fund and are not 
sure how we are going to address upcoming repair needs. As we 
look to the future, the City does not see how it will be able 
to maintain our current street system without funding from 
Federal and state agencies.
    Michigan is currently in the process of a sewer and lagoon 
repair project that we hope to have completed in 2010. The 
estimated cost of the project is $1.3 million. We have been 
notified that we will receive economic stimulus funding for 
about 50 percent of the project. This funding will be of a 
great benefit to our citizens, allowing the City to reduce the 
cost assessed to our citizens at a more affordable level.
    The biggest threat to Michigan's infrastructure and 
community as a whole at this time is the continual rise of Lake 
Laretta. Our runoff water is drained to the lake, which is 
currently at historic levels. Should Lake Laretta continue to 
rise, the water will move back toward the city causing 
flooding, loss of property and city infrastructure including 
our sewer system. We are currently working with the Nelson 
County Water Resource District to provide for a long-term 
solution to this problem.
    As far as our local economy, we have seen both ups and 
downs over the past couple of years. Our economy is very 
dependent upon the agricultural sector, but as we diversify, 
the national economy becomes more important to our businesses.
    The agricultural economy has been very strong with good 
crops and high prices the past couple of years. However, with 
current commodity prices, it looks as though that may be 
changing. This strength has proved beneficial to businesses 
that provide services and products for agricultural production. 
Our local implement dealer reports that these good years have 
resulted in increased sales and growth, allowing him to expand 
his work force by four positions.
    In contrast, when our school closed several years ago we 
were successful in bringing a wiring harness manufacturing 
company into our vacated school building. The facility was 
readied for them with the help of Federal funding. At their 
peak, the Fargo Assembly Company was running two shifts and 
employing up to 100 full-or part-time individuals. With the 
recent downturn in the national economy and increased 
competition as a result of this downturn, they have had to 
reduce their work force to 25 employees that are being limited 
to 16 hours per week.
    A recent addition to our business community is Heritage 
Arts Gallery and Gifts. This cooperative of local artists is 
located on the frontage road off of U.S. Highway 2. They have 
seen a decline in business as the national economy has slowed. 
They market their products to tourists throughout North Dakota 
but find their location on U.S. Highway 2 is their lifeline. 
However, restrictions placed on signage along the highway 
create a real roadblock in marketing their retail store to 
those same tourists traveling that lifeline. The manager feels 
that the tourism industry needs the support of state and 
Federal funds to allow for the establishment of new businesses 
and growth of those currently in operation. Not only do these 
funds need to be made available, but the businesses need help 
in accessing and utilizing the programs established for these 
purposes.
    Our most recent success story was the re-opening of our 
grocery store. In May of 2008, for the first time in our 
history, Michigan was without a grocery store. The community 
took on this project with our local Job Development Authority 
and raised $89,110 locally through public and private 
donations. In addition, we were successful in applying for and 
receiving a $70,000 USDA Rural Business Enterprise Grant. The 
Michigan JDA purchased the building and equipment from the 
previous owner, replaced and upgraded equipment, improved the 
facilities, including making the store handicapped accessible. 
The JDA now provides the store building and equipment rent free 
to our new grocer. From October of 2008 to October 31st, 2009, 
a regional grocer ran the store until a local owner could be 
found. That local owner took over on November 2nd, 2009, and is 
celebrating her grand opening on Saturday, November 14th, 2009. 
This would not have been possible without the financial help of 
Federal funds.
    In closing, I feel that it is important that we have--that 
we continue to invest in economic development and 
infrastructure, as they both improve the quality of life of our 
residents. The investment we make today will yield dividends 
now and well into the future. North Dakota is fortunate to have 
a strong economy in comparison to many parts of our country. 
Now is our chance to bring that to the next level so that our 
children and grandchildren will have an opportunity to also 
call North Dakota home.
    Thank you for your consideration and the opportunity to 
speak before you today.
    [The prepared statement of Mr. Orwick follows:]

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
        

    The Chairman. Thank you, Mayor--really excellent testimony, 
really exactly the kind of thing that we need in the record and 
we're looking for, and you've certainly provided to us. So, I'm 
very appreciative of the testimony you've provided for the 
Committee.
    Why don't we go next to Ben Vig, and then we'll go back to 
questions for the panel?
    Welcome, Ben. Good to see you.

STATEMENT OF BENJAMIN VIG, REPRESENTATIVE FOR THE TWENTY THIRD 
        DISTRICT, NORTH DAKOTA HOUSE OF REPRESENTATIAVES

    Mr. Vig. Thanks for coming here, Senator, and good to be 
here.
    I'm Ben Vig. I'm from Aneta, and I'm also State 
Representative for the 23rd Legislative District, which 
encompasses Nelson, Griggs, Steele, Eddy, Benson Counties, and 
Spirit Lake Nation.
    I think it's great that you're having these field hearings 
across North Dakota to see our transportation infrastructure 
first hand, and to see how some improvements are needed before 
the next congressional transportation bill is in the Senate or 
the House. I know you had similar hearings out west along the 
Highway 85 corridor.
    The last 10 days, farmers have been busy to wrap up 
harvest. In the Legislature, I serve on the Agriculture 
Committee where I am reminded that farming and ranching is our 
state's No. 1 industry, with one out of four jobs being 
agriculture-related. We wouldn't have a strong industry if it 
wasn't for the transportation infrastructure that we have.
    As I was hauling soybeans to Finley a couple days ago, I 
was sitting in the line at the elevator surrounded by semi 
trucks that had Finley and Hope and Sharon and Cooperstown, 
Town of Hatton, on the side of the trucks. We all haul grain to 
the Finely farmers' elevator because it is designated a 110-car 
unit grain elevator by Burlington Northern and Santa Fe. There 
was a process some 10, 15 years ago where BNSF wanted to 
concentrate toward larger grain elevators and send longer 
trains, primarily the 110 units, to these elevators, where in 
the past, BNSF would send a 54-car train to these elevators. In 
concentrating on our grain elevators, all the farmers connect 
on the rural state highways and drive to town, and these are 
the farm-to-market roads. As time goes on, we need to renew our 
investment in the farm-to-market roads across North Dakota.
    We in the state have over 7300 miles in state highways that 
our citizens rely on. As the farm trucks get longer, the farm 
machinery gets wider, and more construction occurs in our 
region for wind development, our farm-to-market roads need to 
be rebuilt, wide enough to handle our equipment today.
    As I was driving the grain truck home from Finley the other 
day, a combine went halfway down the road ditch to provide room 
to pass. In what other industry does a person traveling on our 
roads have to drive down the ditch to provide room for others? 
Frankly, I think our farm-to-market roads need more attention. 
I have seen other states have passing lanes on their highway or 
wider shoulders so there's no hazard to anyone. If progress was 
made for efficiencies in the railroad industry hauling our 
agriculture commodities to market, the ball was dropped when it 
came to farm-to-market roads and their efficiencies. We need to 
rebuild the foundation in our farm-to-market roads for safety 
purposes and for convenience to travelers. I would tremendously 
like to see this a priority in the next transportation bill.
    And I would remiss if I didn't mention our county and 
township roads. We have had high-volume crops in the past 
several years, such as more corn production and barley, which 
resulted in more truck traffic than normal. And with the oil 
pipeline coming through Nelson County here and wind farm 
construction, our county and township roads have been getting 
used a lot and, you know, that's great too.
    Last spring, we received a large amount of flooding from 
the melting snow, and the gravel was washed off the roads. The 
foundation on our township and county roads was being exposed, 
rutted up, and are in desperate need of repair. FEMA did 
provide emergency funds to put gravel back on and replace some 
culverts, but with over 75,000 miles of county and township 
roads in North Dakota, I think this is another vital part of 
our infrastructure that needs more attention.
    There are still a great number of people living on the 
land, working on the family farms, and we need a transportation 
system that we can be proud of--safe and convenient.
    Last week, I attended a conference in Bismarck on economic 
security and stability, which concentrated on people living in 
poverty. The presenters at the conference mentioned that 
transportation makes up one-sixth of a family's budget--or an 
individual's budget. Whether a person is commuting to work or 
going to a ball game or traveling to the doctor's office, 
transportation is a huge part of the budget. In communities 
like Michigan and Aneta, people are commuting to work, to 
school, to the doctor's office, to a hockey game--it seems like 
we're on the road all the time, and it costs money.
    Another aspect of our transportation system--it needs to 
include public transportation. Across my legislative district, 
I see people, so many of my constituents, live on a fixed 
income. Driving is quite expensive at the $2.80 a gallon for 
gas. Our communities have established senior citizen buses over 
the last several decades--our senior citizen buses for people 
to make trips to Devils Lake, Grand Forks, and Fargo. I know my 
grandma, like so many senior citizens, boarded the Steele 
County bus to make trips to Fargo, and the public bus is a 
necessity for her to go to the mall or to the drug store or an 
eye clinic as she does not like the urban driving. Public 
busing is very important for the people in our communities. 
Ensuring we have funds available for buses, preferably fuel-
efficient buses, funds for bus driving and operating budgets 
should be a huge priority in the next transportation bill.
    Portions of our country are working to develop high-speed 
rail to commute from city to city. As you know, we have Amtrak 
that travels through Michigan with depots in Grand Forks and 
Devils Lake. Developing a mass transit system that is efficient 
to operate for the public entities involved and is friendly to 
the family's budget is always a tough act to balance, but when 
public transportation brings less stress on individuals for 
traveling through crowded city streets or driving long 
distances--my grandma mentioned, why didn't she take the bus 
years beforehand? I think we need to start advertising the use 
of public transportation. With people working longer, working 
harder, and their income staying relatively stagnant, I think 
public transportation and mass transit is a way to save money 
while traveling.
    For putting people back to work in a national economic 
recession, I think rebuilding our infrastructure is a primary 
place to being. The American Recovery and Reinvestment Act was 
a great beginning, as it invested in our communities, not 
overseas; gave new projects to construction crews building the 
roads and waterways and many projects in our communities. And 
by rebuilding our farm-to-market roads so they can last another 
50 years, we will have created jobs, put people back to work in 
our local communities, much like what Governor Guy did back in 
the 1960's, when we built the state highway system in the day 
and the upgrades that took place across the state.
    With that, we need to rebuild the foundations of our county 
and township roads too. As I mentioned, farming and ranching is 
still our No. 1 industry in North Dakota, and we need the 
infrastructure to handle another 50 years or more of prosperity 
and people living on the land. We also need to look at building 
up public transportation, mass transit for North Dakota. 
Building the infrastructure so we can travel with ease to the 
doctor's office, to school, or a hockey game, we will have 
improved the quality of life, cut costs for the family budget.
    With all this, we often focus on putting people back to 
work or creating jobs in our community, but I asked some 
friends who are still in college and a couple of friends who 
are in the work force now about what it takes to live in North 
Dakota and what it takes to live in our communities, and they 
all said ``Money.'' We all need to have a salary that we can 
live on. After all, transportation is roughly one-sixth of a 
family's budget. You know what health care costs on a family's 
budget and what education costs are on a family's budget. As 
expenses continue to rise and income remains stagnant, $10 an 
hour doesn't pay many bills anymore. You probably have noticed 
as well the agriculture commodity prices have fallen 
dramatically too. Cutting expenses is always a priority in 
families' budgets, and I think working toward efficiency in 
transportation is a good step in the right direction.
    I would like to thank you again for coming to Michigan. The 
Mayor is here. I know he works hard on keeping the Main Street 
in town full and people coming to town and a beautiful city. 
And Francis Ziegler--I thank him for the work at the DOT. I 
know we've put many projects across the state, some state 
funding and American Recovery and Reinvestment Act. So, thank 
you guys for the work here, and I thank everyone for turning 
out.
    [The prepared statement of Mr. Vig follows:]

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
        

    The Chairman. Thank you, Representative Vig--excellent 
testimony as well. We appreciate it very much.
    Let's turn to, quickly, some of the key issues that we're 
going to face when we get back to Washington, because here's 
the problem that we've got: Director of Transportation Ziegler 
has pointed out that the national association of transportation 
leaders have identified the need in this country over the next 
6 years for transportation--highways, bridges, transit, and the 
rest--at $468 billion dollars.
    Mr. Ziegler, do you have available to you the amount of 
money that the trust fund, as currently constituted, could 
provide over that period of time?
    Mr. Ziegler. Senator, it's my understanding that the trust 
fund currently brings in, in gas tax, about 32 billion per 
year. So, taking that times 6, would be $192 billion.
    The Chairman. And 192 billion subtracted from 468 is 276 
billion, right?
    Mr. Ziegler. Right.
    The Chairman. So, we've got a $276 billion hole over the 
next 6 years if we are going to meet the amount that the 
transportation leaders of the country in all of the states have 
determined is necessary to continue the program as it is, and 
expand it for the population increases that we have had and 
that we will continue to have over that 6-year period. Isn't 
that the basis of the forecast?
    Mr. Ziegler. That is correct.
    The Chairman. So, we got a big problem here. We've got a 
hole that is much bigger than the funding source--we've got a 
need much bigger than the funding source. In fact, the size of 
the hole is bigger than the funding source.
    Mr. Ziegler. Right.
    The Chairman. And what would happen, Mr. Ziegler, in your 
judgment, in the country and specifically in North Dakota, if 
we were not to have resources of the amount recommended by the 
transportation professionals around the country?
    Mr. Ziegler. Senator, given the 32 billion that the trust 
fund brings in now, if that was the extent of the funding, it 
would cut our Federal aid approximately in half.
    The Chairman. It would cut our Federal aid approximately in 
half? And what would that mean--what would that mean to the 
road and bridge network across the state of North Dakota?
    Mr. Ziegler. Currently, the Department of Transportation 
does approximately 200 projects per year, and that's for both 
roads and bridges, and that includes the county roads under the 
Federal aid system. If you cut that in half, I think everybody 
recognizes the fact that we're only going to be able to do half 
as much. And it's going to provide--it's going to create an 
infrastructure that's going to have bridges that may have to 
close; it's going to have roads that are going to be rougher 
and they're not going to meet the standards of today. But the 
fact is that the entire transportation system will deteriorate.
    The Chairman. Mr. Ziegler, I have developed great respect 
for your professionalism over the time we've worked together. 
You are a straight shooter. If you were to tell the people of 
North Dakota, on a scale of 1 to 10, the seriousness with which 
you view cutting the number of projects that you could do in 
half, what that would mean to the road and bridge system in 
North Dakota--10 being extremely serious, 1 being not so bad. 
Where would you put it if--on a scale of 1 to 10, 10 being 
extremely serious, 1 being not so bad? Where would you put it 
if we had to cut the funding and the program essentially in 
half?
    Mr. Ziegler. Senator, it would be a sliding scale. I would 
start out by saying, initially we would be in that 6 to 7, as a 
rating, but it doesn't take very long--two, 3 years down the 
road, and we're looking at a 10, because what happens is, as 
time goes on, the infrastructure deteriorates. And so, maybe we 
can live for a year or two with less funding, but that 
transportation system keeps deteriorating, it will deteriorate 
to the point where it becomes a very serious issue, which 
brings it to that 10.
    The Chairman. And so, help us understand the way the 
current trust fund works, the funding mechanism that's 
available. How is the trust fund currently funded?
    Mr. Ziegler. The trust fund is currently funded with the 
gas tax of 18.4 cents per gallon on the Federal side, and then 
within the state, we have a 23 cents per gallon that's added 
onto that.
    The Chairman. OK. So, the Federal share is funded by 18.4 
cents a gallon.
    Mr. Ziegler. That is correct.
    The Chairman. The state share is 23 cents a gallon. Is that 
correct?
    Mr. Ziegler. That is correct. That is correct.
    The Chairman. So--and the reality is that funding level 
doesn't come anywhere close to meeting the projected need?
    Mr. Ziegler. That is correct.
    The Chairman. And so, either we are going to have to cut 
dramatically or we're going to have to find some other funding 
source or, for example, increase the gas tax substantially. 
Would that be a fair conclusion?
    Mr. Ziegler. That's--it's a fair statement to say that a 
revenue source will have to be found.
    The Chairman. A revenue source will have to be found. 
Either increasing gas tax or some other source of revenue?
    Mr. Ziegler. Yes.
    The Chairman. You know, it strikes me, as we study this 
issue, that the world is changing, and changing rapidly, with 
respect to funding a transportation system solely with gas tax. 
And I say that because you look at what's happening to 
technology. We've got the Chevy Volt coming along--they're not 
going to use gasoline. They're going to use electricity. We 
have other cars that are being developed that are also going to 
use other sources. So, there is not going to be any gas tax 
revenue from those vehicles. We have vehicles that do exist 
getting much better mileage. I see almost every night on 
television one manufacturer after another talking about the 
fact that their cars get more mileage than their competition 
and far better mileage than they have in the past. That means 
reduced revenue for the highway system.
    Mr. Ziegler. That's right.
    The Chairman. So, you know, if we kind of think ahead here, 
if we're going to have a lot of cars that run on electricity, 
not running gasoline, and we're basing all of the funding on a 
gas tax, does it strike you, Mr. Ziegler, that we'd probably 
better think about alternatives to a system that is solely 
financed by gas tax?
    Mr. Ziegler. Yes, it does, Senator.
    The Chairman. And the professional organization that 
includes the transportation leaders across the country--you and 
I were visiting before we began, and I--as I understood it, you 
were explaining that they have come up with a number of options 
for additional and different sources of funding. Is that the 
case?
    Mr. Ziegler. Senator, that is correct. The Commission on 
Transportation Policy and Funding that was created--I believe 
it was a bipartisan commission that did about 2 years of study. 
They went around nationally and sought input from leaders in 
transportation. They built a lot of the scenarios to what's 
going to happen in the future.
    Your point about the Chevy Volt is well made, and 
understand there are new cars coming into the market that will 
be in that 60-mile-per-gallon range--a significant decrease in 
utilization of gasoline and energy. While, as a country, that 
is very positive, we can be energy self-sufficient from a 
transportation perspective, it puts us in a quandary.
    And, therefore, this commission, as they were talking about 
the issues, went through and created a whole menu of options of 
what those revenues could be. And I don't have those uppermost 
in my mind, but some of them are PPPs--public-private 
partnerships. While North Dakota hasn't used public-private 
partnerships, which often relate to tolling because you sell 
the infrastructure and then you have--those investors toll it 
so that they can get their investment back out of it, tolling 
in North Dakota wouldn't work because we don't have enough cars 
to make tolling pay for itself.
    North Dakota has used public-public partnerships I'll share 
with you. We've gone into major cities--Fargo, Minot, Grand 
Forks--where the local governmental agencies will say, OK, you 
need some help on this? Interstate will help you. In fact, 
Fargo next year is going to be helping us pay for one lane of 
I-94 between 45th and 29. So, they're stepping up to the plate. 
But not every community can do that. So if----
    The Chairman. Michigan--let's ask the mayor. Could you do 
that?
    Mr. Orwick. We can't fix our potholes anymore.
    The Chairman. Yes.
    Mr. Orwick. And we're talking----
    The Chairman. I mean, you can't take care of your local 
situation.
    Mr. Orwick. That's right. That's correct, Senator.
    The Chairman. Well, other ideas that they came up with?
    Mr. Ziegler. Senator, like I said, I can't remember all, 
but the public-private partnerships, tolling, was one. VMT----
    The Chairman. And tolling--let's just be very clear. We 
need it on the record here. In a state like ours, tolling is 
not going to work, is it?
    Mr. Ziegler. It's not going to work.
    The Chairman. And it can't possibly work because we don't 
have the amount of traffic to have the tolls finance the 
infrastructure investment.
    Mr. Ziegler. That's correct. They had several other ideas, 
but the one that comes to mind is the VMT, which is vehicle 
miles traveled, and what that means is that for every--it 
becomes more of a user fee, rather than a gallon charge or tax. 
It becomes a user fee. If you put X number of miles onto your 
vehicle at so many cents per mile, that would be the charge 
that you'd have.
    The Chairman. And, you know, we're going to have--it seems 
to me we're going to have to have that as a component or we're 
going to have to have some other source dedicated to 
transportation, or we're going to see a dramatic deterioration 
in the quality of our transportation system in a state like 
North Dakota.
    Mr. Ziegler. That is correct.
    The Chairman. Is that a fair conclusion?
    Mr. Ziegler. It's a fair conclusion.
    The Chairman. And when we look at this vehicle miles 
traveled--for example, if somebody buys a Chevy Volt, they 
would have some kind of gauge or some kind of meter that would 
say how many miles they've traveled, and then they would get 
billed for that because otherwise they're not going to 
contribute at all to the transportation network that they rely 
on, and that's not fair. It's not fair to have just those who 
are on gas-powered vehicles, diesel-powered vehicles paying to 
provide a network for those of us who might be driving 
different kinds of vehicles. I mean, I must say I'm kind of 
intrigued with getting a Chevy Volt when that comes out, but, 
you know, they've got to be able to contribute, too, to the 
road network that they're using.
    Mayor, they've alerted me we're coming to the end because 
we've got to go on to New Rockford for an event there this 
evening. Anything that you would want to add to this 
discussion? You've said very clearly it's not going to work for 
you to have public-public partnerships. You have a hard time 
meeting the needs that you have locally now. And do I--can I 
conclude from your remarks on the importance of transportation 
here that you are open to some additional source of revenue to 
support the transportation system in this state and around the 
country?
    Mr. Orwick. Senator, I think it's important, especially in 
a rural state like North Dakota, that we have a transportation 
system. Without it, we couldn't live here. Physically, we 
couldn't live here. It has to be some sort of a mechanism put 
in place to make the process of bringing that revenue into the 
Treasury a fair method, because those of us who choose or who 
are able to live here have to drive 60 miles, 120 miles round 
trip to work, some people. Compare that to somebody living in 
New York City who doesn't. So----
    The Chairman. My daughter lives in New York, doesn't even 
have a car.
    Mr. Orwick. Yes. And so, she's not helping at all either, 
is she?
    The Chairman. No. I will remind her of that.
    [Laughter.]
    Mr. Orwick. Tell her the mayor----
    The Chairman. I don't think she'll take it well.
    Mr. Orwick. Tell her it was the mayor of Michigan, not----
    The Chairman. OK. That helps.
    Mr. Orwick. So, I think that that's one of our concerns, is 
that it's expensive enough to live here now----
    The Chairman. Yes.
    Mr. Orwick [continuing]. And so that we--if it gets to be 
too cost-prohibitive, we won't be able to maintain--to live 
here and utilize the roads that are out here.
    The Chairman. Yes. Ben, anything that you would want to 
add?
    Mr. Vig. Well, thank you, Senator. You've covered--you guys 
have covered quite a bit here with, you know, the whole system 
is funded right on gas tax, and so we need to look at 
diversifying some of the funding sources. And I'd reiterate a 
little bit, we need to work toward efficiencies in 
transportation so we can cut down on some of the family 
budgets, because it's expensive to travel to Forks or Devils 
Lake and round trip some days. Yes. The efficiencies are a 
priority.
    The Chairman. Yes, it's very clear that public 
transportation is going to have an increasingly important role.
    Mr. Vig. Yes.
    The Chairman. You know, we all love our cars, you know? I'm 
as guilty of it as anybody. I've got a big, old Buick Park 
Avenue--a 1999 Buick Park Avenue. And I've put almost as much 
money in it in the last 3 weeks as the car is worth.
    [Laughter.]
    The Chairman. I'm thinking, well, wait a minute, what's 
happening here?
    Let me--we've just got a few minutes left, but I want to 
make sure that if there's anybody in the audience that would 
want to comment for the record on transportation, that they 
have that opportunity to do so. There's a microphone right 
here. If you'd just go to the microphone, identify yourself for 
the record so that we capture that in the official record?
    Odell, any statement you'd want to make.
    Mr. Flaagan. Yes, Senator. I'm Commissioner Flaagan from 
Nelson County here, and----
    The Chairman. Odell Flaagan, for the record.
    Mr. Flaagan. Yes. And the reaching we do in the counties is 
very important for the Federal highway bill, because without 
that, for every county in the state, it would be losing a lot 
of money, because we can't afford it when we go to Bismarck to 
reach secondary roads and we get a new Federal highway report, 
and they say, well, you're going to be short 100,000 this year, 
it's not helping us out in Nelson County at all. So, I think 
you've got to work very well in Washington because that's got 
to be improved somehow. And I think maybe on funding you might 
have to go to registration on vehicles and maybe raise the gas 
tax to get other options, because we need the highway bill. 
It's very important. And not a cheaper one----
    The Chairman. Yes.
    Mr. Flaagan--to look forward to, Senator.
    The Chairman. You know----
    Mr. Flaagan. Thank you.
    The Chairman. I appreciate that, and you can see these 
options--none of them are very attractive, you know? Honestly--
raising the gas tax with the price of gasoline going up as much 
as it has. Of course, it's back down now some from what it was. 
But, still--I mean, if we look back historically, these prices 
are high; they're low compared to what people in other 
countries pay. You know, in Europe they're paying 4, 5, 6 bucks 
a gallon. Of course, they have different measurements in those 
countries. But if you do an equivalent--do you know what the 
equivalent would be, Francis? What they're paying in Europe for 
our gallon?
    Mr. Ziegler. Senator, I've heard that it is 5-6 dollars a 
gallon----
    The Chairman. Yes, I think so.
    Mr. Ziegler. And that is the equivalent. They're typically 
in liters----
    The Chairman. Oh, yes, they're in liters. Right.
    Mr. Ziegler. But that is--that's already been converted.
    The Chairman. Yes. So, we'd be talking dramatically more 
that they're paying. And, of course, as a result, as Ben says, 
they've chosen to go into more systems.
    Anybody else from the audience that would want come to the 
microphone, be identified for the record, and give us your 
input for the Committee's deliberations on this next 
transportation bill?
    I don't want to close anybody off. I know I'm getting the 
high sign that we've got to be on the road to get to New 
Rockford in time.
    Let me just close then by thanking especially the 
witnesses. I'm delighted, Mayor, that you were here. Ben, thank 
you for your contribution. Francis, as always, I have 
appreciated so much your input at the hearings we've held 
around the state. We're going to need to continue to do these 
because the committees of jurisdiction have again made clear to 
us that unless we have had hearings with respect to any add-on 
projects, they're just not going to get considered.
    So, anything that you want to bring to our attention, we 
should make sure we have a hearing on so that we're covered 
under that rubric. I think we've done some good work around the 
state out there on 85 and 52, but if there are others that you 
want to make sure are eligible for any add-ons above formula 
funding, we should make sure we do hearings on them. So, I'd 
welcome your input on that.
    We also need to think, I think--I think we need to expand 
our analysis of what options might be best for us, that we are 
pushing for in the funding fight that's to come.
    And thank you all, to people from Michigan and the Michigan 
area who have come to this hearing. We very much appreciate 
that, appreciate the hospitality of the community of Michigan 
in holding this Senate Budget Committee hearing on a topic 
that's critically important to our region, our state, and to 
the country itself.
    With that, the Committee will stand in adjournment.
    [Whereupon, at 3:39 p.m., the hearing was adjourned.]


            FIELD HEARING ON COMMUNITY ECONOMIC DEVELOPMENT

                       FRIDAY, NOVEMBER 13, 2009


                                       U.S. Senate,
                                    Committee on the Budget
                                          Cooperstown, North Dakota

    The Committee met, pursuant to notice, at 10 a.m. in 
Cooperstown, North Dakota
    Hon. Kent Conrad, Chairman of the Committee, presiding.
    Present: Senator Conrad.
    [presiding].

              OPENING STATEMENT OF SENATOR CONRAD

    The Chairman. I now call to order this hearing of the 
Budget Committee. This is an official hearing of the Committee. 
So we will be operating under the rules of the U.S. Senate, and 
an official record of this hearing is being kept.
    I especially want to welcome our distinguished witnesses 
today. They include Becky Meidinger, the Development Specialist 
at the Cooperstown-Griggs County Economic Development 
Corporation; Beth Berge, the Chief Operating Officer of the 
Griggs-Steele Empowerment Zone; and Keith Monson, the President 
of M-Power.
    This hearing will focus on how we can encourage economic 
development in Griggs County and the surrounding region. We'll 
have a particular focus on the impact of energy investments.
    I want to acknowledge the mayor, who is here. We're 
delighted to see you, Mayor. If you'd like to say a few words, 
we would certainly welcome that.
    The Mayor. Well, just a brief comment. I want to welcome to 
everyone here to the Senate Budget hearing, and they include 
the rain in Cooperstown. And I look forward to the information 
that we're going to receive.
    The Chairman. Well, I thank you for that. I thank you for 
the welcome to Cooperstown. And I want to say the importance of 
this hearing is that we establish in the record the reasons and 
rationale for the continued support--Federal support--for the 
empowerment zone. As you know, these matters have to be 
periodically reviewed by the Congress of the United States. And 
it is important that we establish in the record the reason and 
rationale for it, what it has accomplished, and what it seeks 
to do for the future.
    I would like to first note that North Dakota has fared 
better than the rest of the country during this recession. 
Nationally, the unemployment rate has climbed from 4.9 percent 
in December of 2007 to 10.2 percent in October of this year. By 
comparison, in North Dakota the unemployment rate has risen 
from 3.1 percent to 4.2 percent over that same period. It is 
important that we continue to make investments in the critical 
infrastructure, including highways, to enable North Dakota's 
economy to continue to grow and diversify.

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

    Historically, North Dakota has faced different issues with 
respect to unemployment. The problem of out-migration has been 
a distinguishing feature for our state. We need to ensure there 
are good jobs to keep our workers, particularly our young 
people, who represent the future of our state, here in North 
Dakota.
    Let's go to the second slide, if we can. This is John 
Fuher, by the way. John is my agriculture staffer in 
Washington. He's from Edgeley, North Dakota, and, I might say, 
did an outstanding job on the Farm Bill.
    The Chairman. The stimulus package passed earlier this year 
certainly was not perfect, but it's clearly having a positive 
impact on economic growth. Economists have now estimated that 
stimulus contributed significantly to economic growth in 2009. 
This chart shows what the economists are suggesting was the 
impact on economic growth of the stimulus package by quarter. 
Stimulus funds are expected to continue to aid economic growth 
into next year as additional funds flow into the economy.

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

    North Dakota has been awarded so far about $700 million. 
This funding is going to highways, infrastructure and water 
projects, education, energy projects, law enforcement, 
veterans, and housing in our state.

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

    Let's go to that fourth slide, John, if we can.
    Over $60 million of stimulus funding will be directed 
toward a variety of energy projects statewide; $25 million is 
set aside for the North Dakota State Energy Program. The goal 
of that program is to improve energy efficiency, reduce demand 
for electricity across the state, and help families reduce 
their energy bills. Another $25 million will go toward home 
weatherization. This will help families insulate their homes 
and take other steps to ensure that they are not faced with 
even higher home heating bills during the winter. And $11 
million will go to energy efficiency and conservation block 
grants which are used to retrofit government buildings to save 
taxpayer money.

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

    Fifth--let's go to that next one, if we can--we call this 
``capturing the wind.'' Importantly, North Dakota is at the 
cutting edge of the drive to develop alternative sources of 
energy. Of particular importance to this part of the state is 
the fact that we are rapidly becoming a leader in wind energy. 
Yesterday, I had a chance to visit the wind energy farm close 
to Langdon, North Dakota. Later today, I will be visiting the 
wind energy farm, the Ashtabula installation near Finley. And 
this is making a significant contribution to our economy in 
this part of the state.

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

    We know that North Dakota has the greatest on-land wind 
energy potential of any state in the nation, and we are often 
called ``the Saudi Arabia of wind.'' Selling wind power and 
other kinds of energy to Chicago and the other big markets will 
be a tremendous engine for economic growth in this part of the 
state. Companies across North Dakota, including in and around 
Griggs County, are investing in wind power. Investment in wind 
energy is projected to grow to over 2600 megawatts by 2012.
    You know, you think about where we started. That kind of 
investment in North Dakota is dramatic. Florida Power and Light 
told me yesterday they have already invested a billion dollars 
in wind energy in our state. We were trying to think when I had 
met with the board of directors of Florida Power and Light in 
Florida. I think it was eight or 10 years ago. I was asked to 
come and meet with their board of directors in Florida because 
they were interested in beginning to make wind energy 
investments in North Dakota.
    At that meeting, they told me that they were prepared to 
invest $1.3 billion in North Dakota if two things happened: if 
we extended the wind energy credit and, No. 2, if we could get 
the grid opened up so that they could deliver power from North 
Dakota down into the Chicago market. We got the wind energy 
credit extended. I authored that legislation, and my colleagues 
adopted it. We have had less luck opening up the grid. As you 
know, one of our big challenges is getting through Minnesota 
and through Wisconsin down into the Chicago market. Now, we've 
had some ability to move power out of the state, but not as 
much as we need to fully develop the potential of wind energy.
    I have introduced legislation, along with other colleagues, 
that would provide the ability to open up those corridors so 
that we could deliver wind energy from where it can be produced 
to where it is needed.
    Griggs and Steele Counties are uniquely positioned in terms 
of economic development, because one of only ten USDA Rural 
Development Empowerment Zones in the entire country is located 
here. Since receiving this designation in 1999, now 10 years 
ago, the Griggs-Steele Empowerment Zone has received $17.7 
million in Federal money. The empowerment zone is driven by 
four key principles in encouraging opportunities for rural 
economic growth: One, economic opportunity is the No. 1 
priority for the Griggs-Steele Empowerment Zone. The goal is to 
create jobs. Second, sustainable community development 
recognizes that successful economic development can only work 
when it is part of a coordinated and comprehensive development 
strategy to ensure a stable and high quality of life for 
residents. Third, community-based partnerships are needed to 
ensure that economic development efforts involve local 
individuals. And, fourth, a strategic vision for change ensures 
that a community shares a common view for revitalization.

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

    Let's go to that seventh slide. This is the last one.

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

    The Griggs-Steele Empowerment Zone has been involved in 
several recent projects for the area, including DataCom 
International. DataCom has located a division of their company 
here in Cooperstown. The Griggs County Museum--the empowerment 
zone helped fund projects at the museum. And the Cooperstown 
Community Activity Wellness Center--the empowerment zone 
provided grant funding for the wellness center to purchase new 
equipment.
    I look forward to hearing from our witnesses today about 
otherareas where the empowerment zone is assisting with 
economic development in the region, and I'm particularly 
interested in hearing what future energy investments are needed 
to support economic development.
    With that, we will turn to our witnesses today. And I'm 
delighted to have such a distinguished group of witnesses: 
Becky Meidinger, the Development Specialist at Cooperstown-
Griggs Economic Development Corporation, will be speaking on 
the role of the economic development corporation in spurring 
economic and industrial growth in Cooperstown and the 
surrounding area. Beth Berge, the Chief Operating Officer of 
the Griggs-Steele Empowerment Zone, will speak to the role of 
the empowerment zone in the revitalization of Griggs and Steele 
Counties. And Keith Monson, the President of M-Power--M-Power 
is a locally owned wind power developer located in Finley. Its 
Luverne Wind Farm generates approximately 150 megawatts of wind 
and is sited on privately owned farmland. One hundred and fifty 
megawatts of wind energy--I hope I've got those numbers right, 
Keith, but you'll correct me if I'm wrong.
    Welcome, witnesses. Let me just say that, under the rules 
of the Senate, witnesses are to be permitted to make their full 
and complete statements without being interrupted for people 
either agreeing or disagreeing with their testimony. And we'll 
observe that rule here. And when the witnesses are complete, 
we'll have a time for questioning, and then we'll also open it 
up to people who are here in the audience, if they would like 
to add to the hearing record.
    Again, I want to emphasize the importance of this to 
continue support for these efforts. It is critically important 
that we lay on the hearing record what has been accomplished 
and what the view is to what can be done in the future.
    With that, Becky, why don't you proceed?

   STATEMENT OF BECKY J. MEIDINGER, DEVELOPMENT SPECIALIST, 
   COOPERSTOWN-GRIGGS COUNTY ECONOMIC DEVELOPMENT CORPORATION

    Ms. Meidinger. Thank you, Senator Conrad, and thank you for 
the opportunity to present this information today, and welcome 
to the guests here.
    I am the Development Specialist for Cooperstown-Griggs 
County Economic Development Corporation, serving the community 
of Cooperstown and businesses within Griggs County. I'm also a 
member of the executive board for the South Central Dakota 
Regional Council, which serves a nine-county region whose focus 
is community economic development. And I am also a member of 
the board of the Economic Development Association of North 
Dakota, whose focus is to educate and connect developers 
throughout the state, addressing community economic development 
issues and programs. Through my board affiliations and my 
position for Griggs County, I have a good understanding of the 
community economic development issues and projects that our 
local community, our region, and the state are addressing.
    My focus today will be to bring awareness to the local 
community economic development projects and touch on some 
regional issues.
    The top industry in North Dakota is agriculture, followed 
closely by tourism. Our region is a prime location for 
agriculture, and our tax base for Cooperstown and Griggs County 
depends on our farmers and the agricultural businesses located 
here. We are also fortunate to be a key location for several 
manufacturing companies, both large and small, which enables 
our economy to be somewhat diverse. Additionally, we are 
beginning to capitalize on tourism opportunities for our county 
and region, particularly with the newest state historic site, 
the Oscar 0 Minuteman Missile facility. Cooperstown is also the 
location for the Cooperstown Medical Center, which is one of 
the largest employers within the county and a strong community 
asset.
    In order to understand what is happening with regard to 
jobs and the economy in our local communities, we need to 
understand that many of our economic successes or failures 
depend on the leaders and entrepreneurs within our community, 
and how willing they are to take the risks necessary to be 
proactive rather than reactive. Economic development in rural 
communities cannot take place unless community development is 
happening at the same time. Without the support of the 
community leaders, businesses will not grow and succeed.
    Fortunately, we have the leadership in place that supports 
successful businesses and expansions from the existing 
businesses, which has in turn spawned other business ventures 
and opportunities. While the rest of the country has been 
struggling, as Senator Conrad mentioned, with the high 
unemployment rates, plant closures, and a major downturn, North 
Dakota has been able to show a considerable budget surplus and 
has the lowest unemployment rate in the nation. However, in the 
rural communities and in Cooperstown, we are beginning to see 
the impact of that economic downturn.
    I recently spoke to two of our larger manufacturing 
companies, and they've had some negative impacts, which have 
included a few layoffs and others being cut back by their jobs 
by 50 percent. Fortunately, they are beginning to see an 
increase in sales, but one of the companies stated that if they 
didn't have their international sales, they would have had to 
close up shop. The differences in the euro and dollar have 
impacted their sales considerably.
    Due to the weather constraints, the farmers in the area 
have also struggled to get their crops off the fields, and that 
in turn has affected numerous local ag businesses and retail 
businesses.
    Fortunately, the Cooperstown Medical Center has been 
successful in hiring two new doctors and another nurse 
practitioner, which brings their total up to five for their 
providers. Through outstanding fiscal management and being able 
to develop a hospital district for the county, they were able 
to positively impact their bottom line and raise some of the 
wages as a result.
    Some of the issues that we deal with in rural communities, 
especially in rural North Dakota, are our aging population and 
out-migration of our younger adults. Our state has one of the 
eldest populations in the Nation per capita, but a low 
unemployment rate. Many of our elderly are continuing to work 
well past retirement age, if there is such a thing, many times 
because there are no other workers to do the jobs, and this is 
especially true in the farming community. Many of the larger 
farmers need to hire help to work their fields and find it very 
difficult to hire qualified people who want to work, so they 
continue to engage the ``retired'' farmers to help during the 
critical times.
    And there is also an extended need in these areas for some 
of the younger workers, but many of the local workers are not 
capable of driving the large farming equipment or have no 
desire to work the long hours or, quote, ``get their hands 
dirty,'' unquote, doing these types of jobs. Some farmers are 
choosing to access the agricultural visa immigrants, and this 
brings new people into the rural areas, many of whom are 
working to secure their green cards so they can stay in our 
area, which brings us new residents.
    There are also these types of issues with the manufacturers 
as well. And in our rural communities, we also have issues 
securing the services of plumbers, electricians, and heating 
and cooling tradesmen, again due to the aging population and 
many of them being close to retirement age, not wanting to take 
on large projects.
    Our school system no longer provides vocational education. 
It is difficult to encourage students in high school to 
consider these fields, as they are not exposed to the benefits 
of working in those fields during the formative years. There 
are apprenticeship programs available in the state, but many 
younger people will choose to move to one of the larger 
communities to take advantage of these programs as they will 
have more opportunities for training and monetary advantages in 
the larger communities.
    Our median household income in North Dakota and Griggs 
County has been rising slowly, according to the state data 
center, over the past few years, but is still well below the 
national average.
    Programs are available through the work force training and 
job service and through some of the programs that the 
empowerment zone provided, to increase the skill levels of the 
current work force, and there has been funding available 
through extended state programs to help businesses with this 
training. So this, in turn, has helped increase the wages for 
the employees and the efficiencies of the company.
    We still have a long way to go, but are moving in a 
positive direction. North Dakota also has an image problem with 
our weather that is very hard to overcome and especially 
difficult in the rural communities. This is a hard perception 
to overcome, but because of our current, positive state of 
affairs, we are beginning to see people willing to take a risk 
and move here. Within the past several months, we have had some 
new people move to Cooperstown from other states, including 
some from the east coast and west coast. They have been able to 
secure jobs here to support their families, but then have had 
difficulty in finding any type of housing that is suitable for 
their needs.
    And this leads me into a correlation between the community 
and economic development issues. Rural North Dakota has dealt 
with a housing shortage for many years. In Cooperstown, until 
this year, we have had no new housing units built (other than 
one set of condos) for the previous 10 years. Then about three 
to 5 years ago, the benefits from the empowerment zone started 
to kick in, positive things began happening in the community, 
and more jobs were available. Some of the younger couples 
moving to town were having babies, and we were finally starting 
to grow from within and without.
    Most people moving into a new community are not willing to 
purchase a house right away, but wish to rent. The existing 
rental units were built during the 1960's and have not really 
been updated to suit the needs of the new residents. Many of 
the houses that have been available for sale are in need of 
total remodeling or are out of the price range of these new 
families. Without suitable housing, these workers have been 
forced to find housing in the surrounding communities, if it is 
available, or not moving to the community to take the jobs.
    With the younger families--excuse me--coming for these jobs 
and wanting to have children, the need for qualified day care 
has also been an increasingly difficult issue for the 
community. Our current certified day care is filled to 
capacity, has a waiting list, and there is an increased need 
for infant care, as several babies have been born over the past 
3 years. In some cases, the parents have to choose whether or 
not to struggle finding a qualified day care or having one 
parent stay at home to care for the children.
    Housing and day care go hand in hand with the community 
economic development issues for a rural community working to 
increase the number of businesses, employees, and residents. 
The housing and day care needs have impacted the majority of 
our businesses, including agriculture, manufacturing, 
technology, and the medical center.
    So, what are we doing about these issues, and how are we 
addressing the needs? We have been able to use the empowerment 
zone programs to provide funding for several of these following 
projects to address these needs as well as the other additional 
funding that was available for other programs through the 
empowerment zone.
    Cooperstown has used the zone programs and funds to provide 
grants for nonprofits within the community: Griggs County 
Museum and the cold war interpretive site that is being built; 
the Griggs County Courthouse remodeling; WeeCare day care 
projects and programs. We established a Cooperstown Community 
Foundation, the endowment fund, which raised $100,000 over 2 
years to help support nonprofits in the community, and the 
Griggs County EDC utilized funds to help with community work 
force training. The city of Cooperstown used funds from the 
empowerment zone to help with updating their infrastructure and 
emergency service equipment and training.
    Many local businesses have utilized the loan programs to 
help grow and expand their businesses, purchase equipment, 
provide training dollars, and more. We have also leveraged 
those funds with other Federal funds and USDA rural development 
funds: Cooperstown has secured three different Rural Business 
Opportunity Grants for technical assistance, business 
training--or business planning--excuse me--strategic planning, 
and helping entrepreneurs in starting businesses. They have 
also secured a Rural Business Enterprise Grant in partnership 
with the Center for Innovation that supports businesses who 
need marketing assistance, technical and business planning, and 
feasibility studies. Cooperstown is currently partnering with 
the Eastern Dakota Housing Alliance to build an income-
qualified home using the Federal HOME funds and private 
donations.
    As far as the use of North Dakota funds to, again, leverage 
funding from the empowerment zone, several businesses were able 
to secure interest buy-down in the PACE and Flex-PACE programs 
from the Bank of North Dakota, and they have provided work 
force training funds to enhance the work force development; 
there have been various grants that were provided for tourism 
infrastructure, marketing and Web site development, and day 
care equipment, and so much more.
    Community success is hard to measure, but we have seen some 
very positive things happening in Cooperstown and some of the 
surrounding communities over the past few years. For 
Cooperstown, there have been several new businesses started, 
including an information technology company, several retail 
businesses, an expansion at one of the manufacturing companies, 
and a new manufacturing company. We have experienced a number 
of new employees at local businesses and have welcomed retirees 
moving back to the community. The City has diligently worked to 
maintain or expand the infrastructure, including new water and 
sewer lines, an updated lighting system, and road work that 
will be completed this next summer, updated water plant, and 
soon-to-be-completed drain system around the community to 
address the higher water table.
    There are two new homes being built in Cooperstown this 
year, including one being built by a farmer who is moving into 
the community and one being built as the community partnership 
home.
    The EDC has also begun working on a 16-unit RV park and 
campground to be completed this coming summer, which will be 
available for the construction crews coming into the area over 
the next several years due to the expansion of the oil 
pipeline, a water pipeline construction project, and additional 
wind farm construction activity, just to name a few.
    Our tourism opportunities continue to increase for our 
community, county, and region with the opening of the Oscar 0 
site, possible expansion of our community of the Sheyenne River 
National Scenic Byway, and the development of a dinosaur dig in 
our county.
    Additionally, the smaller communities in our county are 
also experiencing growth. Binford has been able to secure new 
buyers for their cafe, a new owner for their grocery store, a 
new building for a local insurance agent, a large expansion of 
a construction company's building, and the reopening of their 
fish plant. Hannaford was the recipient of a large USDA grant 
in loan and CDBG funds to update their water and sewer 
infrastructure, and also experienced a large Department of 
Transportation project that replaced the overpass going into 
the community. And they've updated and paved all the roads in 
the community. They are continuing to work on remodeling of 
their school which is no longer being used as a school 
building, and have secured grants from the empowerment zone and 
from USDA to help with this project. The building will be 
remodeled into offices and conference rooms for training in the 
community.
    As you can see, we have some great things happening that 
directly impact the economies of our local communities, which 
is very good. However, we continue to struggle with out-
migration issues, housing and day care issues, and the need to 
improve the services and quality-of-life aspects to encourage 
visitors and employees to choose to stay here. The ultimate 
goal will be to increase the population to a number that can 
support the basic services and businesses, and we are not there 
yet, but we are definitely beginning to show positive 
improvement.
    Thank you.
    [The prepared statement of Ms. Meidinger follows:]

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
        

    The Chairman. Great. Thank you very much for that 
testimony. My intention is to have each of the witnesses 
testify and then we'll go back to questions for the entire 
panel, and then open it up for others who are here who might 
want to testify on the subject of the hearing.
    We'll next go to Beth Burge, and Beth will be speaking 
about the history and performance of the Griggs-Steele 
Empowerment Zone, including how the $17.7 million in Federal 
funding has been used, and how grants and loans have helped to 
save and create jobs in the region.
    Welcome, Beth.
    Ms. Burge. Thank you.
    The Chairman. And please proceed.

STATEMENT OF BETH BURGE, CHIEF OPERATING OFFICER, GRIGGS-STEELE 
                        EMPOWERMENT ZONE

    Ms. Burge. Good morning and welcome to all of you. As 
Senator Conrad indicated, since the inception of the 
empowerment zone in Griggs and Steele Counties, we have been 
allocated $17.7 million over the last 11 years, for an annual 
funding of approximately $1.6 million per year. We've actually 
drawn $17.6 million and have a balance remaining of just a 
little over 100,000.
    Of the total funds drawn, approximately 14 percent has been 
used for the administration of the empowerment zone, with 43 
percent being used for the revolving loan fund program, 14 
percent for the equity fund program, and 29 percent being used 
for grant projects and other programs, including community 
reimbursements; business retention, expansion, and targeted 
recruiting; programs aimed at enhancing and developing housing; 
health care; renewable energy; tourism and recreation; and food 
processing and value-added agriculture within the zone. These 
programs and strategies were developed by the empowerment zone 
to help achieve its mission to increase population while 
maintaining rural values and lifestyles, to enhance community 
facilities and services to support revitalization, to end out-
migration, and to invigorate and diversify the economy.
    As GSEZ faced the end of its funding designation, 
originally scheduled for December of 2008, it was agreed that 
the empowerment zone would have to narrow its strategies and 
focus on creating and expanding business activity in the zone, 
while focusing on its own sustainability. Therefore, the work 
plan for 2009 primarily focused on providing loans and equity 
investments to businesses and organizations within the zone. 
The work plan also called for continued support of the 
community coordinator program, which has been a very successful 
way to improve the link between the zone and the communities. 
We currently help fund four coordinators representing seven 
zone communities.
    Plans for a reduction of staff and administrative costs 
were also implemented during the last half of 2008. With a 
reduced staff and budget, additional policies and procedures 
were implemented which place greater responsibility for 
executive authorization and decisionmaking on the board of 
directors, with increased reliance on the professional 
expertise and guidance from its Loan and Investments 
Committees, which are made up of local community volunteers.
    Toward the end of the first quarter this year, we received 
the good news that we would receive additional funding through 
the Federal Omnibus Budget of approximately $951,000. It was 
nearly half-way through the year before we could access these 
funds. So, one of the challenges we faced was that funds had to 
be drawn by December 31st of this year. In an effort to 
stimulate the zone's regional economy and to ensure that we 
would draw our funds by the 12/31 deadline, the empowerment 
zone offered loan funds at a special, reduced rate.
    Needless to say, our focus in the last 5 months was on 
evaluating and processing several loan applications, but by the 
end of September of this year, the board had approved nine new 
loans totaling $875,000, leveraging nearly twice that much in 
local bank loans, private investments, owner contributions, 
funds from the North Dakota Development Fund, interest buy-
downs from the Bank of North Dakota with matching interest buy-
downs from local EDCs and JDAs. Roughly half of these loans 
were for new businesses in the zone, with the remainder for 
expansion of existing businesses. In addition, these loans will 
help to create over 20 new jobs and will help to retain 
approximately 15 jobs in the empowerment zone region.
    Since facts and figures and general overviews rarely hit 
home or make their point, at this time we want to share some 
highlights of a few projects specifically in Griggs County 
which the empowerment zone helped to fund.
    To meet the continuous nursing shortage in rural North 
Dakota, the State Board of Nursing approved the offering of a 
Practical Nursing Program at Cooperstown Medical Center. This 
program provided an opportunity for CNAs employed at the 
medical center to attend the nursing program without leaving 
the area or their current job. By partnering with Lake Region 
State College and the empowerment zone, they were able to begin 
the training in August of 2008, and it ran for two semesters. 
I've shown six graduates, three of whom are still employed as 
LPNs at the medical center in Cooperstown.
    On July 26th of 2006, the city of Binford was dealt a 
horrific blow when their only grocery and hardware store was 
destroyed by an intense fire. The loss of this business to this 
community of 200 people was devastating. Known as ``Little Wal-
Mart'' to locals, it was a staple to many in the community, 
including elderly and those without transportation means. The 
store was also a major contributor to the Binford economy. 
Learning that the business owners did not intend to rebuild 
spurred Binford leaders and community members into action. 
Through numerous fund drives, they raised nearly $200,000 in 
donations from residents, school alumni, and neighboring 
communities. With a $50,000 grant from the empowerment zone and 
a $50,000 grant from South Central Dakota Regional Council, it 
happened. And almost a year after the date that the store was 
destroyed, a new Binford Grocery & Hardware store was open for 
business.
    To run the store, an agreement was reached with a grocer 
from Casselton who leases the building from the EDC and 
operates the business. Empowerment zone loan funds were also 
provided to purchase equipment and inventory for the store. 
Today, the store employs four people and boasts a sales 
increase of 5 percent for this year.
    Providing day care facilities in the zone was also another 
major project. And cities in Binford, Cooperstown, and Hope all 
received empowerment zone help to provide the much-needed day 
care.
    Early on, communities in the zone recognized the need for 
developing and improving infrastructure in the area in order to 
facilitate business development. Approximately $632,000 of 
empowerment zone funds, leveraged with an additional 600,000, 
was used to provide water, sewer, and roads to create or 
improve industrial parks in the communities of Cooperstown, 
Finley, and Hope. The empowerment zone has used nearly $1.5 
million of its Federal funds for the construction of new 
buildings and for the remodeling and renovation of existing 
buildings to support new or expanding businesses in the 
communities of Hannaford, Cooperstown, Binford, Hope, and 
Finley.
    One such example was by Dynamics 360, and when their 
company grew and needed a place to expand, they came to the 
empowerment zone and received help through the loan fund so 
they could build a new building here in Cooperstown. This 
expansion helped to create four and a half new positions and 
helped to retain ten and a half existing employees.
    The Posi Lock group of companies currently employs 63 
persons in Griggs County.
    One of the major projects undertaken by the empowerment 
zone in 2006 and 2007, together with leadership from 
Cooperstown-Griggs EDC, was in constructing a 21,000-square-
foot industrial building here in the city of Cooperstown. With 
infrastructure provided by the city of Cooperstown, the 
empowerment zone used approximately $267,000 of its own 
revolved funds from its revolving loan program to match a 
$250,000 USDA RBEG. An additional $770,000 was leveraged in 
loans from a local bank and other economic development agencies 
to complete the project.
    The industrial building was designed to provide available 
industrial space for new or expanding primary sector 
businesses. Today, the building is home to Yuletide Expressions 
and Prairie Innovators.
    One of our immediate challenges faced by the empowerment 
zone today is finding additional tenants to occupy the building 
in order to offset the building operation cost and its debt 
service. Other challenges today include working with existing 
businesses of which we have loans and equity investments. While 
one of our goals is to help secure repayment to the empowerment 
zone, our main goal is to help these businesses remain viable.
    To cite an example of an existing business which we 
continue to work with, I'd like to share the story of Binford 
Eagle Fisheries in Binford. When the marketing director for an 
upper fish producer cooperative in Binford was contacted by a 
Canadian fish marketer, Binford Eagle Fisheries was born. The 
company fillets mullets and ships to a buyer located in New 
York. The company in New York was unable to secure enough 
kosher mullet fillets to fill their market demand. Binford 
Eagle Fisheries had all the components they needed to get their 
company up and going strong. With a supplier, buyer, and an 
experienced fish marketer, the processing plant was ready to 
proceed. With the help of empowerment zone funds, Binford Eagle 
Fisheries was able to get the ball rolling.
    Binford Eagle Fisheries has the capacity to fillet up to 
50,000 pounds of fish a week, but they have had some 
difficulties with their previous supplier, but they hope to 
have secured a new supplier and are expecting to be in full 
production mode in the near future. Binford Eagle Fisheries is 
able to attract a number of temporary employees right from 
their local area, as a number of stay-at-home moms are eager to 
work on a seasonal basis during the school year.
    With the challenges we're continually faced with, I've been 
reminded that it is important to celebrate accomplishments 
along the way. Although Keith Monson plans to testify on behalf 
of M-Power, I would like to emphasize that through the 
empowerment zone resources and its technical assistance, the 
empowerment zone and Griggs/Steele Wind Development Group were 
instrumental in forming M-Power, LLC, the local wind energy 
development company.
    With the recent success of M-Power in selling its two 
construction-ready projects, some people might be thinking why 
didn't the empowerment zone invest more of its funds in M-
Power, which could have perhaps ensured its sustainability. But 
a big part of M-Power's success was obtaining buy-in and 
support for this project from the local communities and 
investors. These local investors literally became advocates, 
Ambassadors, fund raisers, negotiators, and managers for this 
project. Without their commitment and support, this project may 
never have succeeded.
    Griggs-Steele Empowerment strives to make the zone a better 
place to live and work. I think these projects help to show how 
empowering the citizens of a community, leveraging empowerment 
zone funds with other local and regional funds, and working 
together all contribute to the success of a particular region.
    On behalf of the Griggs-Steele Empowerment Zone, we'd like 
to thank you, Senator Conrad, for your past support, and we ask 
that you continue to support our cause, as we strive toward 
achieving our mission and working toward sustainability, so 
that our vision for a future where our friends and children no 
longer have to leave in order to make a satisfying life for 
themselves can truly be realized.
    Thank you.
    [The prepared statement of Ms. Berge follows:]

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
        

    The Chairman. Thank you very much, Beth, for your 
testimony.
    And we'll go next to Keith Monson. Keith is going to 
testify, I understand, focusing on the Luverne Wind Farm and 
the years? long effort of applying for Federal funds and 
organizing like-minded developers for this project.
    Welcome.
    Mr. Monson. Thank you, Senator.
    The Chairman. Please proceed, Keith.

       STATEMENT OF KEITH MONSON, PRESIDENT, M-POWER, LLC

    Mr. Monson. Senator Conrad, guests, and fellow zone 
community members, there's a fact sheet and Warren Enyart's 
testimony to the PFC up front that go into considerable detail 
of M-Power. So I'll let that presentation do that.
    My name is Keith Monson. I'm Chairman of M-Power.
    The Chairman. Keith, can I just interrupt you for a moment? 
And we'll make part of the record of the hearing the fact sheet 
that you have available for distribution.
    Mr. Monson. OK. The supporting documents go into great 
detail about the recent activities at M-Power and the resulting 
wind farm at Luverne. What I'll briefly address is the history 
leading up to the formation of M-Power, and the role the 
empowerment played in those efforts, and our experience as it 
relates to policy issues in moving forward.
    In the fall of '99, representatives of the Steele County 
JDA, and the Cooperstown-Griggs EDC informally agreed to 
research the possibilities of wind-generated electricity in our 
two-county area. At the urging of Jay Haley of EAPC Grand 
Forks, several members attended the AWEA Convention in Sioux 
City, Iowa. Hearing North Dakota mentioned time and time again 
during the sessions gave us hope that we were indeed on to 
something. Unashamedly introducing ourselves to anyone who 
would talk to us led to an after-hours meeting with many of the 
key power players within the wind industry at that time, 
including an Under Secretary of Energy who urged us to apply 
for a grant to put up wind monitoring towers. Kim Christianson 
of the North Dakota Energy Department pledged matching funds, 
and once the empowerment zone was officially organized, we 
approached that entity for an operating loan. It was this 
combination of funding that launched the first organized wind 
development group in the Upper Midwest.
    Realizing early on that North Dakota tax laws and economic 
climate were not on a level playing field with Minnesota, the 
newly formed Griggs/Steele Wind Development Group joined with 
Jay Haley in conducting meetings with landowner groups, EDCs, 
and other entities all across North Dakota--the end result of 
that effort being the organization of about 30 local groups 
interested in developing wind in their respective areas. About 
half of those groups then joined together to form WIND (Wind 
Interests of North Dakota), which acted as a coordinating force 
in passing legislation in the 2001 North Dakota legislative 
session, that put North Dakota on a par with Minnesota's 
incentives at that point in time.
    Each of the newly formed groups put up wind monitoring 
towers. Their wind data, along with their local contact 
information, was made available on the WIND Web site. As the 
general knowledge of North Dakota's wind regime became 
specifically detailed across the state, it wasn't long before 
the major players in developing wind-powered electricity were 
all over the place. Those were really exciting times, but the 
reality of the matter was that the transmission system was 
theoretically full, and the local utilities did not yet see 
wind as a viable option. In spite of considerable efforts, no 
one got anything done for several years.
    Then, finally, committed but unused transmission became 
available. The small projects started to be built and became 
successful ventures for all involved. It was at about that time 
that Warren Enyart was hired as CEO of the empowerment zone. 
His creation of a Renewable Energy Committee, along with an 
actual budget, gave renewed emphasis to the idea of bringing 
wind-generation projects to the zone. Still at a disadvantage 
being long distances from any major transmission lines, it was 
the community-based idea of the local utilities buying from 
customers and then selling back to them that got our foot in 
the door.
    As we proceeded forward with the community-based ownership 
idea, it became evident that the only incentive available--the 
PTC--was not available to a local group of landowners and 
investors. The PTC is based on passive income, which for all 
practical purposes limits its use to very large corporations. 
It was impossible for us to compete against another project 
that could utilize the PTC, as the tax credit provides about 30 
percent of the return on investment. We are very fortunate that 
Minnkota stuck with us and that Otter Tail and NextEra decided 
to buy the project from us, as they have never done that 
before. Had the 30 percent cash-back option now available been 
around 2 years ago, we very likely could have realized our 
original goal of a community-based project.
    Moving forward from here, if becoming energy self-
sufficient is more than just popular rhetoric, all Americans 
have to be allowed to participate. Incentives to do so have to 
be made available to everyone, and not targeted to specific 
developers or large corporations. Wind-generated electricity, 
in particular, has the potential to reach whatever level of 
production the industry can incorporate into their systems. 
While transmission lines from wind farms to increasing--to 
increasing loads is important, this will not be the final 
solution. Incentivized individuals, businesses, and landowner 
groups can develop distributed generation projects to fit their 
needs and investment appetites, and incorporate those projects 
into the existing grid with only moderate upgrades.
    Energy-rich states such as North and South Dakota, and 
Montana need outlets from their existing power grids. Areas of 
increased electrical growth need a source of supply to their 
existing systems. Moderate upgrades to the existing grids 
within the various ISOs, and strategically placed high-voltage 
lines between the regional ISOs, will go a long way in 
balancing supply and demand across the whole United States.
    Smaller distributed generation projects spread over a large 
geographical area would also mitigate the boom-and-bust effect 
of wind either blowing or not blowing, such as happens with 
large amounts of generation located in one small spot. The RECs 
served by Minnkota recently announced a surcharge to their 
customers due to lost income because of depressed merchant 
prices for electricity in times when the wind was blowing. If 
that same number of megawatts of generation were spread across 
the length and width of Minnkota's service area, rather than 
compressed in two very small locations, including our project, 
the natural movement of the weather systems through the area 
would average the electrical output over time. Strategically 
placed transmission lines between ISOs would further average 
outputs against usages over entire regions of the United 
States.
    Because of the high capital costs of developing wind farms, 
significant investors will still be necessary to the success of 
large community-driven projects. Those prospective investors 
need to have confidence about the status of the incentives that 
will affect their return on investments. The incentives, in 
whatever form they are, need to be extended over longer periods 
of time to allow for a continuity in development efforts, until 
other risks, such as third-party system impacts, can be defined 
and their associated costs adequately--equitably distributed.
    On behalf of M-Power, LLC, I want to thank you for this 
opportunity to provide these observations relative to economic 
development and the role played by wind power.
    Thank you.
    [The prepared statement of Mr. Monson follows:]

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
        

    The Chairman. Thank you very much, Keith, for your 
testimony as well.
    Let me get right to questions, and let me indicate to you 
the skepticism that greets at this moment any Federal 
expenditure among my colleagues. And so I'd like you to respond 
to the question that I'll be asked by colleagues. The question 
will go something like this: Senator Conrad, you're pushing for 
an extension of the Rural Empowerment Zones--how do you justify 
the additional Federal expenditure, given our levels of deficit 
and debt?
    So, Becky, you know, I will only have a few sentences to be 
able to respond to my colleagues. You know, they're not going 
to listen to me very long on an issue of this magnitude. So, 
what would you say in a few sentences if one of my skeptical 
colleagues were here and said, how do you justify the use of 
taxpayer money for these purposes?
    Ms. Meidinger. One perception is that it takes longer than 
just a few years to develop leadership that's willing to take 
the risks necessary to be able to identify what's needed and to 
then leverage the funds to be able to spend it on the 
appropriate priorities.
    Our empowerment zone has taken a while in getting organized 
and getting identified. They've struggled with some of the 
issues regarding the economy and the agriculture base 
leadership, whatever. We are on the right track. We are 
starting to show what it's going to take to grow our area. 
We're fortunate to be living in North Dakota at this point in 
time because we also have support from the state. We have 
leaders in place now that are working to leverage those funds 
for sustainability for the future, and I think it's critical 
that they give us an additional period of time to continue to 
develop that, because we are making a difference.
    The Chairman. Beth, what would you say? My colleague says 
to me: Kent, how can you justify these Federal dollars? What is 
it that you're accomplishing out there?
    What would you say to them?
    Ms. Burge. Creating the economic opportunities, of course, 
is our biggest accomplishment, I believe--creating the 
infrastructure so that new businesses can come here. You have 
to create a place for them to expand and to come. The tax 
credit incentives are a big plus for us. We'd like to see those 
extended. You should probably bring Becky along so she can help 
answer that question.
    [Laughter.]
    Ms. Burge. She does much better on the spot.
    The Chairman. Keith, what would you say?
    Mr. Monson. Well----
    The Chairman. Does this stuff make any difference? I mean, 
that's--you know, I've got a couple of colleagues who--I know 
exactly what they're going to say to me. They're going to say: 
Kent, I mean, what difference has this made? You've spent all 
this money. What difference did it make?
    Mr. Monson. Well, I would use M-Power as a single example. 
An investment on a zone park of about $175,000 helped cause a 
project in excess of $300 million. It's going to have annual 
income in taxes to North Dakota and the local communities 
probably in excess of a million dollars. And that's over a 20-
year period, and we're assuming re-powered for--their leases 
are 99 years.
    So, of the $17.7 million or whatever that was invested, 
you're going to get a return of probably--well, I don't know 
what it is--to the farmers that, you know--this is--we could--
we're paying it back in 20 years maybe in income to the county 
and the state of North Dakota. You take Steele County alone, 
they're going to get in excess of $600,000 to the county. 
Griggs County--it's over 200,000. That goes to the schools. 
That goes to infrastructure. You could actually lower the tax 
rate by several mils, just because this same project. It's a 
huge economic impact.
    The Chairman. You know, I--in listening to the testimony 
here this morning and knowing my colleagues, my suspicion is my 
best single point to make to them would be the fact that this 
money was available allowed a $300 million wind energy project 
to be developed which will directly reduce our need to import 
foreign energy, and we are 60 percent dependent on foreign oil 
today. As a nation, we're spending $500 billion a year, sending 
money to foreign governments to buy their oil. And this 
investment has helped build a project that will keep money here 
in America rather than sending it to Saudi Arabia, to Abu 
Dhabi, to Kuwait, and all the rest.
    You know, my sense is--because I'm not going to have long 
to make this point. My colleagues aren't going to spend long 
listening to my answer. They're going to ask these questions, 
but if I don't have something that is very specific and grabs 
their attention, you know, I'm going to lose them.
    And I think we've got to have very specific answers that 
are very clear, and I'll tell you right now what my 
colleagues--one of the things that's highest on their radar 
scope in terms of what's important for the country is reducing 
our dependence on foreign energy, and you've helped do that. 
You've helped--it is really quite remarkable what you have 
done.
    Now, Keith, you had testimony that I think is also very 
important, because you pointed out that production tax credits, 
as they were, are best positioned to be taken advantage of by 
companies that have passive income, and that makes it very 
difficult for a group of local investors to take advantage of 
those production tax credits.
    Now, we're expanding the incentive base to make it more 
possible for groups of local investors. That was included in 
your testimony.
    Mr. Monson. Right.
    The Chairman. Do you believe that that will make a 
significant difference for the future in terms of projects like 
this?
    Mr. Monson. Oh, tremendous. Tremendous. If we'd had to have 
30 percent cash-back available to us so we could have--the 
overall cost of the project wouldn't have increased, there was 
absolutely no doubt that Minnkota and Otter Tail would have 
bought from us being community based.
    The Chairman. Yes.
    Mr. Monson. An ideal situation where they buy from their 
customers and sell back to them.
    The Chairman. I tried to convince my colleagues for 10 
years to expand the credits in a way that would permit that, 
and it took until 2 years ago to convince them to do it. But 
that is going to make a big difference, isn't it?
    Mr. Monson. Oh, it's going to be a huge difference. And the 
other thing is the ultimate solution is distributed generation, 
because all of us now are going to pay an extra half a cent a 
kilowatt of electricity because of the Luverne Wind Farm. We're 
going to raise your electric bill, because when the wind blows, 
being all in one place, all of a sudden they've got too much 
electricity. The merchant price went from 3 and a half cents a 
year ago to under 2 cents this year. So Minnkota lost $20 
million that we're going to make up for because we built a wind 
farm. Now, if that wind farm was spread all over as the--every 
front comes through North Dakota northeast to southwest.
    The Chairman. I've noticed that.
    [Laughter.]
    Mr. Monson. If these things were spread out--it's blowing 
40 miles an hour here, 10 over here, and whatever. It's going 
to average. The other thing that will average that is if we 
could get a high-power line to get from here to Chicago. When 
it's blowing to beat heck here, Chicago still needs 
electricity.
    The Chairman. Right.
    Mr. Monson. Right now, when it's blowing to beat heck here, 
we're confined to within Misol [phonetic spelling]----
    The Chairman. Yes.
    Mr. Monson [continuing]. Because we can't get out of here.
    The Chairman. Yes.
    Mr. Monson. Now, all of a sudden, Misol's got more 
electricity than they know what to do with. And you can't store 
it, so you've got to use it. And when you have too much of 
something, you know what happens to the value.
    The Chairman. Yes. Plummets.
    Mr. Monson. It plummets.
    The Chairman. You know, I was very encouraged. I saw--I was 
watching an interview with the President a number of months 
ago, and the interviewer was asking him about wind energy 
potential, and the President actually talked about North Dakota 
and exactly what you've described--the need to be able to 
deliver power--and he said from a state like North Dakota so 
that it can get down into the Chicago market where it's needed.
    And, of course, what's happening is we get blocked because 
the transmission between here and there is taken. Isn't that 
right?
    Mr. Monson. Yes.
    The Chairman. And so, we can't get across Minnesota and 
Wisconsin to get that power down into the Chicago market where 
it's needed.
    One of the things that's in--that we got put into the 
stimulus package is tens of billions of dollars to upgrade the 
transmission grid in the United States. That money has begun to 
flow, and it's--even that it's tens of billions of dollars, 
that's not enough. It's going to take multiples of that to get 
this job done, but it's an important beginning to break the 
gridlock on the grid so we can move power where it can be 
generated and we're not locked into just this market. And 
that's exactly what you're saying, isn't it, Keith----
    Mr. Monson. Yes.
    The Chairman [continuing]. With respect to distributed 
power?
    Mr. Monson. When the electrical system was forming--and 
that's only 62 years ago that we got electricity--it was 
localized, and that's logical. Now we've got pockets. We've got 
Misol and Misol, and whatever, that are such dense islands. 
There's nothing connecting.
    The Chairman. Nothing connecting. Yes.
    Mr. Monson. All we have to do is connect them, and at 
186,000 miles per second, electricity will get there.
    The Chairman. Yes. Inner ties are critical to improving the 
sustainability of our entire system. That is also very 
important in terms of avoiding blackouts and brownouts in the 
more industrialized parts of the county, because they are very 
vulnerable because of the structure of the system that was 
built. And you're exactly right. It made perfect sense when it 
was constructed.
    Mr. Monson. Yes.
    The Chairman. It makes very little sense today.
    Mr. Monson. Yes.
    The Chairman. So, these are things that we're now making 
big investments in, to improve and upgrade.
    Let me ask the three of you, what do you believe would be 
the support level among people in the empowerment zone for a 
continuation of the funding?
    Becky, if we were to have a survey of people in this area, 
what do you think they would say about continuing the 
investment?
    Ms. Meidinger. I believe they would be strongly in support 
of it because they see what has been done. They see the need of 
what still needs to be done. And I think it would be important 
for them to be able to see it continued.
    The Chairman. OK. What would you say, Beth?
    Ms. Burge. I would agree that the majority of the people 
would be in favor of continued support.
    The Chairman. Keith, what would be your impression?
    Mr. Monson. I think it would be in excess of 100 percent, 
if people like Meryl and Felas and a few others would build 
toys.
    [Laughter.]
    The Chairman. OK. Let me go back before we open it up, 
because I want to make certain that people here also have an 
opportunity to testify in this. And that's the question of 
housing. If there's one issue I hear about repeatedly across 
North Dakota--obviously health care, because that's very much 
in the news media today. And you referenced the importance of 
the local health care facility, and I think we all know what a 
jobs generator that is.
    But if there's another issue that I hear especially in our 
rural communities, it is housing. Over and over and over, I 
hear that we've got jobs, but the problem is we can't get some 
people to come here to fill those jobs because we don't have 
adequate housing stock. We don't have enough apartments. We 
don't have enough single-family homes.
    You indicated there have been now for the first time in a 
number of years new construction of single-family homes. Did 
you also indicate there are some condominiums that are----
    Ms. Meidinger. There was a set of three condominiums that 
was built about 4 years ago.
    The Chairman. And were those for sale or for rent?
    Ms. Meidinger. For sale.
    The Chairman. For sale. And did they----
    Ms. Meidinger. Currently, they're--one that was sold, and 
they're renting two of them.
    The Chairman. Renting two of them.
    Ms. Meidinger. They're the higher end----
    The Chairman. Higher end.
    Ms. Meidinger [continuing]. Senior-friendly type----
    The Chairman. Uh-huh.
    Ms. Meidinger. Very nice ones.
    The Chairman. You know, the problem that we've got all 
across rural North Dakota is in the financing of rural housing, 
because, as you know, when you go to get an appraisal, it's 
very hard to support the construction cost for new property 
because if that property were to go up for sale, the appraisals 
show you would not cover the cost of that property. And I'm not 
sure any of us have come up with a solution to that problem, 
especially after what has happened in the housing markets over 
the last 3 years. Trying to convince a lender to put up money 
for a property that appraisal will not support is not going to 
happen because the regulators who come in and examine their 
loans will say to them: What are you doing here? You've put up 
100,000 for a property that, if it had to go on the market to 
sell, wouldn't sell for $100,000.
    What have you found? How did these new houses get built?
    Ms. Meidinger. One of them is being built by a farmer who 
is moving into town. The other one is being built in 
partnership--the Eastern Dakota Housing Alliance has HOME--
Federal HOME funds----
    The Chairman. Yes.
    Ms. Meidinger [continuing]. Available, and there are local 
community partners who have either provided services, a 
decrease in their labor costs, wholesale prices on their 
materials, donations toward the project.
    The Chairman. So, these are being financed in untraditional 
ways?
    Ms. Meidinger. Yes.
    The Chairman. They're not being financed with a traditional 
mortgage and a traditional home lender?
    Ms. Meidinger. Eventually, they will. This is for an 
income-qualified family that we're building this for, and they 
will be then securing a mortgage, but it will probably be 
through maybe one of the USDA programs, through North Dakota 
housing finance programs.
    The Chairman. OK.
    Ms. Meidinger. Probably not a conventional mortgage.
    The Chairman. OK. Well, I think that's an important point 
to get on the record, because at every one of these that we do 
and every stop that I have community forums, hearings, whatever 
the forum, this is an issue that has really created problems 
for us.
    I was with business leaders earlier this year who were 
talking about this as being--one of the most significant 
hurdles to getting jobs in the more rural parts of the state is 
the lack of housing stock. And you can't attract the employees 
you need because you don't have a place for them to live, and 
you can't get a mortgage for building a new place because 
appraisal won't support the loan-to-value issues that are 
important to any examiner who is going to go look at a bank's 
books.
    Let me--we just have a few minutes left, and I want to open 
it up to make certain that if there's somebody in the audience 
that would like to testify and be on the record on this issue, 
and either for or against, it's--we want to make sure that 
people have a chance to testify here.
    Is there anybody that would like to say something for the 
record for this hearing? Don't be bashful.
    Yes, sir.
    Mr. Julison. For the record, I'm Allen Julison. I'm the 
President of Griggs-Steele Empowerment Zone. I live over in 
Steele County, town of Hope. I farm. My [inaudible] deeds are 
not off yet.
    [Laughter.]
    The Chairman. We're especially pleased that you're here 
today.
    Mr. Julison. One I thing I want to stress to you and your 
community members is each dollar you give us is that long. We 
stretch it way out because we do the leverage you might--like 
Beth indicated in her report. We have very good local lenders 
in Griggs and Steele Counties that have partner with us on 
loans. We've got the Bank of North Dakota that does some 
partnering. We have grants available. And we take that dollar 
and we turn that--stretch it as long as we can to make it go a 
long ways. When you gave us this last round of $951,000--I 
mean, we've double that; we've tripled that on loans to 
existing businesses and new businesses.
    The Chairman. Because what that money does is leverage 
other money----
    Mr. Julison. Absolutely.
    The Chairman [continuing]. That would not otherwise be 
committed.
    Mr. Julison. Yes. Because that was your opening question to 
the panel----
    The Chairman. Yes.
    Mr. Julison. You know, you've got members asking you, you 
know, why should we have this designation? We really, really 
want this designation. I understand there's some legislation 
authored for five more years, and we need you to do everything 
in your power and try to get that legislation.
    The Chairman. OK.
    Mr. Julison. Thank you.
    The Chairman. All right. Let me just do this: There's some 
of my colleagues calling in right now.
    [Laughter.]
    The Chairman. Let me just see a show of hands for those who 
are in the audience for the purposes of the record. How many 
would support a continuation of funding for the empowerment 
zone? Just see a show of hands.
    And is anyone opposed? Does anybody think we should not 
extend it?
    Well, that's pretty clear. Let the record show that the 
show of hands was unanimous here that people believe that 
support for the empowerment zone ought to continue. That's 
about as clear as it could be. And let the record show that the 
mayor raised her hand.
    [Laughter.]
    The Chairman. Anyone else that would like to say a word?
    Yes, sir.
    Mr. Frandy. Could I take you backward? Pretty good subject 
here, and that's how it should be.
    The Chairman. Yes.
    Mr. Frandy. I'm the one that built the three condos.
    The Chairman. Oh, you are?
    Mr. Frandy. Yes, I am.
    The Chairman. Well, thank you for doing that.
    Mr. Frandy. It was a gift more or less. Lost money.
    [Laughter.]
    Mr. Frandy. But there is a model out there that I think 
might work.
    The Chairman. Could you identify yourself for the record, 
sir?
    Mr. Frandy. I'm Orville Frandy. I was--I'm a developer here 
in town. I'm also a realtor.
    The Chairman. OK.
    Mr. Frandy. I'm a farmer-rancher. I drill things and lots 
of those things. I was also the chairman of the empowerment 
zone at one time.
    The Chairman. OK.
    Mr. Frandy. There's a model out there I think will work 
because it works in Minnesota all the time.
    The Chairman. And what is that?
    Mr. Frandy. Cooperative.
    The Chairman. Cooperative? Hmm.
    Mr. Frandy. Yes.
    [Laughter.]
    Mr. Frandy. We've been chasing this for 2 years. We can't 
get the people in this area. They don't understand it. It's 
probably our problem for not making it understandable. I think 
it will work here. I think it will work in North Dakota. It's 
worked in Minnesota. There are 290-some models.
    The Chairman. Can you describe for us your understanding of 
how it would work?
    Mr. Frandy. What you do is you don't own the property. You 
own a collective of them. It's like a regular co-op.
    The Chairman. Yes. So, the members----
    Mr. Frandy. The members--they get shares. They don't get a 
deed. They get shares, and they own it like any [inaudible] 
collective. Say it's for five members. They simply take in--
have their own leadership.
    The Chairman. Yes.
    Mr. Frandy. They do all of that as a collective 
organization, just like a regular co-op.
    The Chairman. And can you tell us how they finance?
    Mr. Frandy. Initially--this could go many different ways.
    The Chairman. Yes.
    Mr. Frandy. They can go ahead and require an investment by 
them. It's a model--we're working on this--$150,000 units. So 
there's five of them. They're investing in this $40,000. Then 
they invest that money like you would normally do with one, and 
then they form a co-op. And they manage it as that. And then 
they operate.
    Now, here's the catch of why they're not jumping on this. 
You're going to have a payment of that initial $40,000, and 
you're going to have a monthly payment of a fairly serious 
number, probably $700 or $800. That's what stops them. They 
say, why would I want to do that? But they don't understand 
they're going to get a $150,000 unit for $40,000 plus the 
payments. This works in Minnesota all the time. And I can tell 
you why it's never coming to North Dakota. It's managed by HUD. 
That's where they get their--that's where they get their----
    The Chairman. Yes.
    Mr. Frandy [continuing]. Dollars. There's 90 of them in 
Minnesota. You get people in, in Minnesota----
    The Chairman. When you say 90 of them----
    Mr. Frandy. Units. They get as big as--they get as big as, 
in Minnesota, I think, 90 units in a single pod.
    The Chairman. Oh, I see. The 90 projects?
    Mr. Frandy. Yes, 90 projects.
    The Chairman. Not 90 housing units.
    Mr. Frandy. No, no.
    The Chairman. Ninety projects.
    Mr. Frandy. Thousands of them, of units.
    The Chairman. Thousands of units?
    Mr. Frandy. Yes. Here's the catch. HUD manages these 
things. There's nobody in the Minnesota area--or, I should say, 
our area--there's zero in North Dakota. In Minnesota, they're 
managed by either--I think it's out of Chicago--here they're 
managed by Denver.
    The Chairman. Uh-huh.
    Mr. Frandy. Nobody in Denver knows how to----
    The Chairman. Knows how to do it?
    Mr. Frandy. Yes. So, we're going to--we've been working 
with people----
    The Chairman. Yes. We're in the Denver region; they're in 
the Chicago region.
    Mr. Frandy. Yes. They know how to do it. And we've been 
trying to wager this. We just can't get strong enough to get--
you've got to have five people for our pod--roughly, now--to 
buy into it; $40,000 each. But they----
    The Chairman. Five people, they put up $40,000, then they 
own a share of a $150,000 unit----
    Mr. Frandy. Yes.
    The Chairman. And, of course, they then have an ongoing 
mortgage payment.
    Mr. Frandy. Absolutely. They don't like that either.
    The Chairman. Yes.
    Mr. Frandy. But----
    The Chairman. But, I mean, that's reality.
    Mr. Frandy. That's right. The people here--they're aged and 
they've been used to looking at houses--they bought their last 
house 40 years ago.
    The Chairman. Yes.
    Mr. Frandy. Forty thousand dollars bought the whole house.
    The Chairman. Yes. Well, I got to tell you, I mean, I've 
gone through that sticker shock myself, you know? You, buy--I 
tell you, you go to Washington, D.C., see what a house costs 
there. I mean, I was in shock for about 3 months buying a house 
down there because houses costs seven times what the equivalent 
house would cost here. I mean, the same kind of--you know.
    Mr. Frandy. We can't get the local people to understand 
this. That's one of our issues. That's their decision----
    The Chairman. Well, it's a different model.
    Mr. Frandy. Absolutely.
    The Chairman. It's a very different--it's a little hard to 
get your mind around if you've never heard of it.
    Mr. Frandy. They should get used to it because all these 
people sitting here are abandoned farmers.
    The Chairman. Yes. And are part of rural electric co-ops--
--
    Mr. Frandy. Absolutely.
    The Chairman [continuing]. Part of telephone co-ops, part 
of----
    Mr. Frandy. Yes. Anyway, that's the----
    The Chairman. OK, well----
    Mr. Frandy. If anyone studied it, I think you would find in 
this state--Minnesota does it all the time--study it in this 
state, I think you'd have some success.
    The Chairman. Is Tim outside there, Shawn?
    Mr. Ferguson. Yes, he is.
    The Chairman. This is Tim Moore. Why don't you come in the 
room so people can see you. Tim is in charge of my economic 
development operation in my office in Bismarck. He's a former 
vice president of the Bank of North Dakota, was with one of the 
largest accounting firms in our state before I convinced him to 
come back to work on these economic development issues for me. 
And I'm very fortunate to have him. He's very, very 
knowledgeable about finance.
    So, I'd say to you, if you have an issue of finance and 
you're looking for somebody that can help, Tim is on my staff 
in Bismarck, and he is one of the most knowledgeable people on 
any financial issue in our state, and he has worked in both the 
private sector and the public sector, and has a real record of 
accomplishment. So, Tim Moore is a person that can help. And if 
it's dealing with HUD in the regional office, Tim is somebody 
who should be involved in that effort.
    I'd also like to introduce my staff director on the Budget 
Committee in Washington, Mary Naylor. Mary is from Fargo, North 
Dakota. Mary has been with me almost 20 years, and she is the 
Staff Director of the Senate Budget Committee, a North Dakota 
native, very respected in the staffs of both the Republican and 
Democratic side for her knowledge of the Federal budget. And 
she is home with us now. She is visiting family in Fargo, but 
came up today to be here as well. So, thank you, Mary.
    Any final word from either of our witnesses? Any final word 
you want on the record? Or anyone else in the audience who 
would want to be recognized?
    Yes, Mayor.
    The Mayor. Senator Conrad, as mayor, I--you know, I have a 
real tie to this community, having grown up here, and the 
importance of economic development in this region not only 
touches upon the M-Power--the oil dependency from foreign 
countries, but I also see with our manufacturing base that we 
have products that are made right here in North Dakota that are 
shipped internationally.
    And there's a lot of jobs that are tied to help from the 
empowerment zone--the continued funding--that we can keep our 
small communities alive. And we have a beautiful building that 
we're looking for companies to bring more people in, and it's 
just--I look at the statistics and our small communities that 
are shrinking, and I believe that there are people that want to 
move to the small communities. They would love to, but they 
need that job to come here. And so, I, too, want to encourage 
whatever support you can give us on continuing.
    The Chairman. All right. Thank you, Mayor. Thank you very 
much for that testimony.
    I know that we've run out of time. We have to--in fact, 
we're going to go over to the wind farm next, because we want 
to make sure that we've had an ability to tell our colleagues 
that we've seen it first hand and are able to describe it to 
them, because I do think it is a very powerful argument. Mayor, 
you make an additional argument that I think is especially 
effective.
    I want to thank everyone, especially thank our witnesses 
here today. I appreciate it very much for your taking your time 
and contributing your insights to the work of the Committee. 
I'd like to thank everyone who has attended this hearing in 
Cooperstown. We very much appreciate it.
    With that, the hearing is concluded.
    [Whereupon, at 11:19 a.m., the hearing was adjourned.]

                                 
