    [House Hearing, 114 Congress]
    [From the U.S. Government Publishing Office]

         CONTINUED OVERSIGHT OF THE CALIFORNIA HIGH-SPEED RAIL PROJECT

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

                                    (114-50)

                                 FIELD HEARING

                                   BEFORE THE

                                SUBCOMMITTEE ON
                           RAILROADS, PIPELINES, AND
                              HAZARDOUS MATERIALS

                                     OF THE

                                  COMMITTEE ON
                       TRANSPORTATION AND INFRASTRUCTURE
                            HOUSE OF REPRESENTATIVES

                        ONE HUNDRED FOURTEENTH CONGRESS

                                 SECOND SESSION

                                   __________

                  AUGUST 29, 2016 (San Francisco, California)

                                   __________

                           Printed for the use of the
                 Committee on Transportation and Infrastructure

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

             Available online at: http://www.gpo.gov/fdsys/browse/
            committee.action?chamber=house&committee=transportation
                                     ______

                             U.S. GOVERNMENT PUBLISHING OFFICE

    21-416 PDF                     WASHINGTON : 2017
    -----------------------------------------------------------------------
      For sale by the Superintendent of Documents, U.S. Government Publishing
      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 TRANSPORTATION AND INFRASTRUCTURE

                      BILL SHUSTER, Pennsylvania, Chairman

    DON YOUNG, Alaska                    PETER A. DeFAZIO, Oregon
    JOHN J. DUNCAN, Jr., Tennessee,      ELEANOR HOLMES NORTON, District of
      Vice Chair                         Columbia
    JOHN L. MICA, Florida                JERROLD NADLER, New York
    FRANK A. LoBIONDO, New Jersey        CORRINE BROWN, Florida
    SAM GRAVES, Missouri                 EDDIE BERNICE JOHNSON, Texas
    CANDICE S. MILLER, Michigan          ELIJAH E. CUMMINGS, Maryland
    DUNCAN HUNTER, California            RICK LARSEN, Washington
    ERIC A. ``RICK'' CRAWFORD, Arkansas  MICHAEL E. CAPUANO, Massachusetts
    LOU BARLETTA, Pennsylvania           GRACE F. NAPOLITANO, California
    BLAKE FARENTHOLD, Texas              DANIEL LIPINSKI, Illinois
    BOB GIBBS, Ohio                      STEVE COHEN, Tennessee
    RICHARD L. HANNA, New York           ALBIO SIRES, New Jersey
    DANIEL WEBSTER, Florida              DONNA F. EDWARDS, Maryland
    JEFF DENHAM, California              JOHN GARAMENDI, California
    REID J. RIBBLE, Wisconsin            ANDRE CARSON, Indiana
    THOMAS MASSIE, Kentucky              JANICE HAHN, California
    MARK MEADOWS, North Carolina         RICHARD M. NOLAN, Minnesota
    SCOTT PERRY, Pennsylvania            ANN KIRKPATRICK, Arizona
    RODNEY DAVIS, Illinois               DINA TITUS, Nevada
    MARK SANFORD, South Carolina         SEAN PATRICK MALONEY, New York
    ROB WOODALL, Georgia                 ELIZABETH H. ESTY, Connecticut
    TODD ROKITA, Indiana                 LOIS FRANKEL, Florida
    JOHN KATKO, New York                 CHERI BUSTOS, Illinois
    BRIAN BABIN, Texas                   JARED HUFFMAN, California
    CRESENT HARDY, Nevada                JULIA BROWNLEY, California
    RYAN A. COSTELLO, Pennsylvania
    GARRET GRAVES, Louisiana
    MIMI WALTERS, California
    BARBARA COMSTOCK, Virginia
    CARLOS CURBELO, Florida
    DAVID ROUZER, North Carolina
    LEE M. ZELDIN, New York
    MIKE BOST, Illinois

                                      (ii)

         Subcommittee on Railroads, Pipelines, and Hazardous Materials

                       JEFF DENHAM, California, Chairman

    JOHN J. DUNCAN, Jr., Tennessee       MICHAEL E. CAPUANO, Massachusetts
    JOHN L. MICA, Florida                CORRINE BROWN, Florida
    SAM GRAVES, Missouri                 DANIEL LIPINSKI, Illinois
    CANDICE S. MILLER, Michigan          JERROLD NADLER, New York
    LOU BARLETTA, Pennsylvania           ELIJAH E. CUMMINGS, Maryland
    BLAKE FARENTHOLD, Texas              RICK LARSEN, Washington
    RICHARD L. HANNA, New York           STEVE COHEN, Tennessee
    DANIEL WEBSTER, Florida              ALBIO SIRES, New Jersey
    SCOTT PERRY, Pennsylvania            RICHARD M. NOLAN, Minnesota
    TODD ROKITA, Indiana                 ELIZABETH H. ESTY, Connecticut
    JOHN KATKO, New York                 GRACE F. NAPOLITANO, California
    BRIAN BABIN, Texas                   JANICE HAHN, California
    CRESENT HARDY, Nevada                PETER A. DeFAZIO, Oregon (Ex
    MIMI WALTERS, California             Officio)
    LEE M. ZELDIN, New York
    MIKE BOST, Illinois
    BILL SHUSTER, Pennsylvania (Ex
    Officio)

                                     (iii)

                                    CONTENTS

                                                                       Page

    Summary of Subject Matter........................................    vi

                                   WITNESSES

    Hon. Sarah E. Feinberg, Administrator, Federal Railroad
      Administration:

        Testimony....................................................     3
        Prepared statement...........................................    41
    Dan Richard, Chairman of the Board, California High-Speed Rail
      Authority:

        Testimony....................................................     3
        Prepared statement...........................................    46
        Responses to questions for the record from the following
          Representatives:

            Hon. Jeff Denham of California...........................    58
            Hon. Blake Farenthold of Texas...........................    61
    Jim Hartnett, Executive Director, Caltrain:

        Testimony....................................................     3
        Prepared statement...........................................    62
        Responses to questions for the record from Hon. Jeff Denham,
          a Representative in Congress from the State of California..    64
    Stuart M. Flashman, J.D., Ph.D., Attorney, Law Offices of Stuart
      M. Flashman:

        Testimony....................................................     3
        Prepared statement...........................................    66
    Robbie Hunter, President, State Building and Construction Trades
      Council of California:

        Testimony....................................................     3
        Prepared statement...........................................    96
        Responses to questions for the record from Hon. Jeff Denham,
          a Representative in Congress from the State of California..    99

              PREPARED STATEMENTS SUBMITTED BY MEMBERS OF CONGRESS

    Hon. Anna G. Eshoo, a Representative in Congress from the State
      of California..................................................    24

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

         CONTINUED OVERSIGHT OF THE CALIFORNIA HIGH-SPEED RAIL PROJECT

                                  ----------

                            MONDAY, AUGUST 29, 2016

                      House of Representatives,
    Subcommittee on Railroads, Pipelines, and Hazardous
                                             Materials,
                Committee on Transportation and Infrastructure,
                                                        Washington, DC.
        The subcommittee met, pursuant to call, at 9:06 a.m., in
    room B040, San Francisco Federal Building, 90 7th Street, San
    Francisco, CA, Hon. Jeff Denham (Chairman of the subcommittee)
    presiding.
        Present: Representatives Denham [presiding], Farenthold,
    Capuano, LaMalfa, Huffman, and Lofgren.
        Mr. Denham. The subcommittee will come to order.
        I ask unanimous consent that noncommittee members be
    permitted to sit with the committee at today's hearing and ask
    questions.
        Without objection, so ordered.
        First let me welcome our guests in attendance, as well as
    our witnesses, and I want to thank Ms. Pelosi. We had a nice
    conversation. This is a beautiful Federal building, and we
    enjoy this beautiful space being here in the bay area.
        This hearing is about one thing, and that is continued
    oversight by the Federal Government. There is a huge investment
    by the Federal taxpayers, as well as by the State taxpayers. So
    the main focus of this hearing will be on that oversight. This
    project has been awarded nearly $4 billion in Federal funding,
    and it represents nearly 40 percent of all high-speed rail
    funding awarded by the Federal Railroad Administration, the
    FRA.
        That is why I focused on this project since I became
    chairman of the Subcommittee on Railroads, Pipelines, and
    Hazardous Materials, and unfortunately I have watched as costs
    have gone up and up, and project plans have continued to
    change. When the voters of California approved this as Prop.
    1A, they approved a $33 billion project that had equal funding
    from State, Federal, and private investors. Since then, this
    project has risen to $43 billion, then over $100 billion, and
    then cut back down to $64 billion by cutting off San Diego and
    Sacramento.
        The 2016 business plan recently approved by the authority
    also had a new focus, connecting the Central Valley segment
    with the bay area via an electrified Caltrain corridor, with no
    near-term progress on closing the existing rail gap across the
    Tehachapi Mountains in southern California, meaning right now
    Amtrak has to let their passengers off to get on a bus, take
    the bus over the Tehachapis, and then get back on a train
    again. So this is something that we are going to have to
    address as this project moves forward through phase 1.
        Today I want to explore what was originally promised to
    Californians when they approved Prop. 1A in 2008, where the
    project stands now, and whether there is a realistic plan to
    complete the project that was sold to voters. We must also look
    at the Federal taxpayer and what they are going to be on the
    hook for in the future. Meeting the project mandate may be more
    difficult than before if the 25-percent set-aside from the
    California Cap and Trade Program does not produce the revenues
    the authority is currently counting on. The early Cap and Trade
    options have not raised the revenue the State was originally
    expecting, and I look forward to discussing my concerns on that
    issue today.
        I am also happy FRA Administrator Feinberg could be with us
    today, as her agency recently amended the grant agreement with
    the authority for the sixth time. I want to discuss the changes
    made in that agreement and also talk more broadly about what
    the ongoing Federal involvement with this project will be.
        California voters narrowly passed in 2008 this plan before
    voters. If the project is going to move forward beyond current
    activities, we need to know what the State and Federal
    obligation is. If the authority can't provide specific
    deliverables and a timeframe, then I believe it would be time
    for Californians to go back to the polls to vote on whether to
    continue this project.
        We have many problems facing California, most notably one
    of the worst droughts that we have ever seen. The money
    allocated to this project was part of the Federal stimulus
    package, which was done 8 years ago. In a State grappling with
    the lack of an adequate water infrastructure, we could have
    built long-term, sustainable water storage for a fraction of
    the cost. There are many shovel-ready projects that will
    directly benefit millions of California residents, including a
    number of rail projects in the bay area, a number of
    transportation projects across the State, and most critical is
    water infrastructure that could be built.
        I would now like to recognize the ranking member, Mike
    Capuano from Massachusetts, for 5 minutes for any opening
    statement he may have.
        Mr. Capuano. Thank you, Mr. Chairman.
        First of all, thank you all for having us here, and thank
    you for coming.
        This is an important issue, as is any time the Federal
    Government spends your tax dollars. In this particular case, it
    is billions of dollars. I myself am a strong proponent of the
    concept of high-speed rail any place in this country that can
    support it. Certainly, I think there is a good argument by any
    stretch of the imagination that California should be able to
    handle and support a high-speed rail system.
        I live in an area where what we have is old, and we
    struggle with problems of how to get it to a true high-speed
    system. You are building a new one, and my hope is that you can
    lead the way to show us how to improve our system.
        One way or the other, America is going to have high-speed
    rail across this country. It will take time, it will cost
    money, and there will be mistakes made. There may or may not
    have been mistakes made here already, or there will be if there
    hasn't been already. That is normal. That is a normal part of
    the process. But I think that makes these oversight hearings
    even more important. Even if you are doing the best job
    possible, there are still differences of opinion, there are
    still people who make mistakes, things happen that you didn't
    anticipate, and therefore it is our responsibility to try our
    best to make sure that Federal tax dollars are spent as wisely
    as possible. That is why I wanted to come to California, and
    that is why I am looking forward to the testimony here today.
        With that, I will yield back so we can hear from people who
    know what they are talking about.
        Mr. Denham. Thank you, Mr. Capuano.
        Let me first welcome our other Members here: three
    Californians, Ms. Lofgren, Mr. Huffman, Mr. LaMalfa; and the
    vice chair from the great State of Texas, Mr. Farenthold.
        Our panel is with the Honorable Sarah Feinberg; Mr. Dan
    Richard; Mr. Jim Hartnett, Mr. Stuart Flashman; and Mr. Robbie
    Hunter.
        I ask unanimous consent that our witnesses' full statements
    be included in the record.
        Without objection, so ordered.
        Since your written testimony has been made part of the
    record, the subcommittee will request that you limit your
    testimony to 5 minutes.
        Ms. Feinberg, you may proceed. Thank you very much.

      TESTIMONY OF HON. SARAH E. FEINBERG, ADMINISTRATOR, FEDERAL
     RAILROAD ADMINISTRATION; DAN RICHARD, CHAIRMAN OF THE BOARD,
     CALIFORNIA HIGH-SPEED RAIL AUTHORITY; JIM HARTNETT, EXECUTIVE
    DIRECTOR, CALTRAIN; STUART M. FLASHMAN, J.D., PH.D., ATTORNEY,
         LAW OFFICES OF STUART M. FLASHMAN; AND ROBBIE HUNTER,
     PRESIDENT, STATE BUILDING AND CONSTRUCTION TRADES COUNCIL OF
                               CALIFORNIA

        Ms. Feinberg. Chairman Denham, Ranking Member Capuano,
    other Members who have joined us, thank you for inviting me to
    today's hearing.
        Much attention has been paid to the urgent need for the
    United States to build a modern transportation system to keep
    up with our growing population, increased congestion, and more
    diverse economy. Congress rightfully recognized nearly 8 years
    ago that in order to achieve this goal, our transportation
    system must include more reliable, more frequent, and faster
    passenger rail service. Congress passed two landmark pieces of
    legislation that established FRA's High-Speed Rail Program, and
    then through the Recovery Act provided the seed money to build
    the system.
        FRA and Congress conceived of a high-speed and intercity
    passenger rail program to be national in scope but led by the
    State in execution. With the launch of the program, there was
    immediate and significant interest. States submitted nearly 500
    applications requesting more than $75 billion worth of
    projects, far exceeding the funds Congress had made available.
    FRA eventually awarded $10 billion to nearly 150 rail projects,
    including $3.5 billion to California.
        With California's growing population, the State was
    understandably focused on building out a high-speed rail system
    that would serve its growing communities, because 2 railroad
    tracks can carry as many travelers in 1 hour as 16 lanes of a
    congested freeway. As the chairman knows and as anyone who
    lives, works, or visits the bay area or the Los Angeles area
    knows, they can recount far too many nightmare stories about
    congestion on the roads and in the sky: vehicular and air
    traffic at all times of day, constant commuters, families and
    businesses, hours of time and resources they can spend
    otherwise.
        The L.A. to San Francisco flight alone has become one of
    the busiest and most delay-prone air markets in the United
    States. One in every five flights is late by more than an hour.
    And the challenges of moving more people and goods in a safe
    and efficient way will only continue to grow. By 2050,
    California is predicted to be home to another 12 million
    people. To add capacity to California's transportation system,
    the California High-Speed Rail Authority is leveraging the
    majority of the $3.5 billion that FRA awarded to construct the
    first 119 miles of rail in California's Central Valley.
        The Federal investment made in California's high-speed rail
    is significant, and FRA takes its obligations to protect the
    taxpayers' investment seriously. FRA closely monitors the
    California project, as we do with all grants. With all major
    and ambitious transportation projects, there have been and
    remain important challenges that demand continued attention.
        Consistent with grants management and oversight best
    practices, FRA works closely with all of our grantees to ensure
    that taxpayer dollars are spent wisely and that contractual
    agreements are current and adhered to.
        To be clear, and despite reporting to the contrary,
    ensuring that a project is meeting its obligations and amending
    contractual grant agreements is not only a due diligence
    requirement but it is also standard practice for any agency
    that oversees grants.
        Last spring, the California High-Speed Rail Authority and
    FRA executed the Sixth Amendment to ensure that the contractual
    agreement that exists between the two entities accurately
    reflects the current project status. California High-Speed Rail
    Authority also requested FRA's approval of a $60 million
    working capital advance for right-of-way acquisitions needed to
    allow construction work to progress and remain on schedule.
        A working capital advance is one of the approved payment
    methods allowed under the Federal Government's stringent grant
    payment rules. This tool is available to any grantee and can be
    used effectively for timely right-of-way acquisition on large
    infrastructure projects across the country. In fact, other
    agencies, like the Department of Health and Human Services and
    the Department of Homeland Security, also use the same method
    of payment.
        Mr. Chairman, in closing, for centuries leaders in
    California and across the United States have fulfilled bold
    projects. Many of these projects haven't been easy or without
    challenges, but they are worth the persistence and dedication
    because they are necessary to move our country forward. I
    believe this project is no different.
        We continue to look forward to working with California,
    with Members of Congress, with your staff and your committee as
    we continue to make progress in bringing this project to
    completion. Thank you, and I look forward to your questions.
        Mr. Denham. Thank you, Ms. Feinberg.
        Mr. Richard, the floor is yours.
        Mr. Richard. Thank you. Chairman Denham, Ranking Member
    Capuano, and other Members of this committee and the Congress,
    my name is Dan Richard. I am the chairman of the California
    High-Speed Rail Authority Board. I appreciate the opportunity
    to appear before you today to provide an update on the progress
    that California has made in developing the high-speed rail
    system.
        The Federal Government, through actions by the Congress and
    the administration, has provided some $3.5 billion to commence
    design and construction of the system, funds that have proven
    vital to our initial efforts. Accordingly, oversight by the
    Congress through this committee is an important function to
    bolster public confidence that these funds are being well
    spent.
        I am pleased also to share this panel with Administrator
    Feinberg of the Federal Railroad Administration. FRA has been a
    strong partner in this program, and we appreciate her
    leadership and that of her staff and her predecessors.
        Mr. Chairman, I would like to summarize four key points in
    outlining our current status and progress.
        First, the California high-speed Rail program is an
    essential element of the State's endeavor to build a
    sustainable economic future. The voters in 2008 approved what
    will ultimately be an 800-mile system with the first phase of
    520 miles to connect Los Angeles, San Francisco, and the
    Central Valley. But what is more important here is that
    California is building much more than a high-speed train
    system. Our legislature in 2012 embarked on a $13 billion
    statewide rail modernization. High-speed rail is the backbone
    of that system, but that system extends to major improvements
    such as Caltrain electrification here on the San Francisco
    peninsula, improved Amtrak service, regional rail like
    Metrolink in Los Angeles, the ACE Train that is important in
    your district, Mr. Chairman, and much more.
        All told, this rail modernization of California through
    statewide, regional and local systems will vault us into a more
    sustainable future and one that is also cheaper to build and
    maintain, much cheaper, in fact, than the cost of the
    equivalent mobility of new highways and airports required to
    sustain the 50 million people that we must serve by the middle
    of this decade--excuse me, by the middle of the century.
        Second, high-speed rail construction in California is now
    underway. It is proceeding smoothly, and we are maintaining
    effective management and cost control of the program. We now
    have three sets of construction packages totaling $3 billion in
    progress across about 110 miles of the Central Valley. Hundreds
    of workers and scores of companies, including small business
    and disabled veteran businesses, are on the job.
        But the indirect impacts have engaged thousands more
    already across the State. All of these construction contracts
    have come in under our engineer's estimates. In fact, the
    combined total, considering our low and high ranges, is that we
    have seen winning bids come in between $500 million and $1.7
    billion less than we estimated these packages would cost us.
        We have overcome startup problems like slower-than-expected
    right-of-way acquisition and higher costs for third-party
    contracts, but we are still well within our budget
    contingencies.
        Third, our recent 2016 business plan marked a milestone in
    the development of the project. By emphasizing the completion
    of an initial operating segment from the Central Valley to the
    Silicon Valley, we laid out a plan that can be accomplished
    with available funds that are in hand or expected. Silicon
    Valley is the engine not only of California's economy but of
    the Nation's, and yet it faces severe limitations on housing
    and expansion. The Central Valley is historically an area of
    underinvestment. The prospect of connecting these areas of our
    State has generated enthusiasm in both regions. Significantly,
    based on more advanced engineering and experience to date, now
    our estimate for the total system completion has been reduced
    by some $6 billion.
        My last point is that while we know this program has a
    controversial history and has had its share of hurdles, we are
    not only on track but I want to emphasize that we are
    absolutely fulfilling the purposes of the State bond act that
    launched this effort.
        With respect, Mr. Chairman, I noticed that there was a
    statement that was included in the committee's notice of this
    hearing that said that the program no longer provides full
    high-speed rail service from Los Angeles to San Francisco. This
    is not correct. We are absolutely fulfilling the mandate of
    providing 200-mile-per-hour electrified service that is
    designed to achieve transit from L.A. to San Francisco in 2
    hours and 40 minutes or less without an operating subsidy.
    There are no changes from that commitment.
        As you know, we adopted the so-called blended system to
    share tracks with regional rail in urban areas like Caltrain,
    but that only constitutes about 15 percent of the track area,
    and this was suggested by one of your colleagues in the
    Congress and by local elected Representatives, and was
    recommended by an independent peer review group as something
    that could dramatically reduce costs while meeting the bond act
    requirements.
        Unfortunately, this is one of many false narratives that
    have grown up around this program. I hope today's hearing will
    allow us to examine those issues and correct the record.
        Mr. Chairman, thank you again for the honor of appearing
    before this committee. We look forward to your questions.
        Mr. Denham. Thank you, Mr. Richard.
        Mr. Hartnett, you are recognized for 5 minutes.
        Mr. Hartnett. Thank you very much, Mr. Chairman and
    Members. Good morning. Thank you for your attention to this
    issue and for inviting us to share a local perspective.
        I am Jim Hartnett, the executive director of the Caltrain
    commuter rail system and the CEO of the San Mateo County
    Transit District. I am also a past member of the California
    High-Speed Rail Authority Board of Directors and a former mayor
    of Redwood City.
        When voters approved Prop. 1A in 2008, it wasn't just about
    connecting the State with high-speed rail. It was also about
    improving transportation connectivity on existing systems. The
    measure included significant resources dedicated to upgrading
    local transportation services to feed the statewide network and
    to improve mobility options for surrounding communities.
        Large-scale, visionary projects like high-speed rail can
    and should be planned and delivered in a way that prioritizes
    investments in local improvements while also making incremental
    but significant progress toward the long-term vision.
        During my time on the California High-Speed Rail Authority
    Board, I worked with my colleagues to ensure that this approach
    would be embraced. The product of those efforts was SB 1029,
    which appropriated funding for high-speed rail construction in
    the Central Valley, but also directed over $1 billion for local
    and regional improvements on the bookends in southern
    California and the bay area. In our case, this State funding is
    being used to leverage over $1 billion in local, regional, and
    Federal funds to upgrade the Caltrain corridor and allow us to
    deliver more service at a time when our communities need it the
    most.
        Caltrain is struggling to accommodate unprecedented
    regional growth. Two thousand sixteen marked our sixth
    consecutive year of record-setting ridership. As Highway 101
    and 280 have become more and more congested, employers have
    turned to Caltrain as the preferred commute option between San
    Francisco and Silicon Valley. As a result, our peak-hour
    service is well over 100 percent capacity, with ridership on
    some trains exceeding 125 percent of available seats.
        The Caltrain corridor is arguably the most economically
    productive area in the State. The communities served by our 51-
    mile railroad are responsible for 14 percent of the State's
    GDP, 20 percent of California tax revenue, and are the
    birthplace of over one-half of California patents.
        However, the region cannot continue to thrive without
    equipping the 150-year-old rail corridor with a modernized
    transit system capable of accommodating current and future
    ridership demand.
        Fortunately, with local, State and Federal help, Caltrain
    has been able to advance the Caltrain Modernization Program.
    The centerpiece of this program is the transformation of the
    corridor from its diesel fleet to a system that features high-
    performance electric trains capable of delivering cleaner,
    faster, and more frequent service to peninsula communities.
        When complete, electrification of Caltrain will be able to
    serve more riders at more stations. As a result, 619,000
    vehicle miles traveled will be eliminated every day and the
    system's emissions will be reduced by 97 percent, eliminating
    over 176,000 tons of CO2 annually.
        Caltrain and the California High-Speed Rail Authority have
    worked with several local, regional and Federal partners to
    secure funding for the Caltrain Modernization Program as an
    early investment in the high-speed rail system. Six bay area
    funding partners have agreed to commit significant local funds
    in order to leverage over $700 million in high-speed rail and
    State funding, and these investments have positioned the
    project to receive almost $650 million in Federal Transit
    Administration discretionary grant funds.
        Thanks to these commitments, Caltrain was able to authorize
    contractors to begin design work on the project. The next steps
    will be construction of the project and the procurement of
    electric trains, work that will create over $2.5 billion in
    economic value, including almost 10,000 new jobs during
    construction.
        Meanwhile, we are also collaborating with the California
    High-Speed Rail Authority as it begins the environmental
    process for additional improvements that will be needed to
    equip the corridor to accommodate high-speed rail service. When
    high-speed rail is extended north of San Jose, Caltrain and the
    California High-Speed Rail Authority will share the corridor
    and operate on a blended system to San Francisco. The planning
    and design of these improvements will be carefully considered
    to ensure that impacts on surrounding neighborhoods are
    minimized and benefits are realized.
        Thank you very much, Mr. Chairman.
        Mr. Denham. Thank you, Mr. Hartnett.
        Mr. Flashman, you are recognized.
        Mr. Flashman. Thank you, Chairman Denham. Good morning,
    Chairman Denham, Mr. Capuano, and Congress Members. Thank you
    for the opportunity to testify today.
        Let me start by saying that I have no conceptual problem
    with high-speed rail. High-speed rail systems in other
    countries have shown they can, if planned and implemented
    prudently, be cost-effective and improve transportation
    efficiency while reducing greenhouse gas emissions.
        Here in California, however, too much has been promised and
    too little will be delivered. I will focus on legal issues
    affecting the California high-speed rail project's use of State
    funds and the associated risk to the Federal Treasury from the
    California High-Speed Rail Authority's, or CHSRA's, use of
    Federal grant funds for construction and other activities.
        Before doing that, I want to comment briefly on CHSRA's
    current financial situation and why this issue is important. As
    my written testimony explains in more detail, CHSRA currently
    has only two sources of funds: $3.5 billion in Federal grant
    funds, and State funds, primarily Prop. 1A funds, plus a much
    smaller contribution from the greenhouse gas Cap and Trade
    auction proceeds.
        Prop. 1A asked that CHSRA seek private funding, but no
    private entity has stepped forward to invest funds in the
    project to this point. There are good reasons for that. CHSRA
    has over $6 billion in appropriated funds, but restrictions on
    using Prop. 1A funds for construction prevent CHSRA from using
    those funds. Consequently, CHSRA current construction funding
    is limited to its Federal grants plus a small amount of Cap and
    Trade auction proceeds. In essence, CHSRA is like a steam
    engine with almost no coal left to shovel in its fire box. It
    may keep going for a while longer, but it will eventually run
    out of steam and stop cold.
        The California Legislature, in writing Prop. 1A, was aware
    that voters were worried about the risk in approving more
    general obligation bonds that would eventually be on their
    shoulders. Consequently, it put into the measure what the
    California Court of Appeals has called a financial
    straitjacket, intended to reassure voters that the funds would
    not be wasted. There are stringent procedural and substantive
    requirements on how and when CHSRA can use the bond funds.
        While the courts have allowed the legislature to
    appropriate bond funds without fully complying with Prop. 1A,
    those same courts have made clear that before those funds can
    be used for construction, CHSRA will have to comply with Prop.
    1A's requirements. With CHSRA's currently politically motivated
    design, that is virtually impossible.
        Prop. 1A requires CHSRA to show it has available all the
    funds needed to complete construction of a usable segment that
    will be suitable and ready for high-speed rail operation. CHSRA
    optimistically estimates that its current usable segment from
    Wasco to San Jose will cost over $20 billion. At most, CHSRA
    has maybe $6 to $8 billion in available funding. Unless CHSRA
    can show where it has squirreled away over $10 billion, it
    cannot meet that requirement.
        In addition, service on that segment must be able to run
    without a public operating subsidy. Even if you accept CHSRA's
    highly optimistic ridership estimates, its usable segment is
    very unlikely to be able to do so. Consequently, no Prop. 1A
    funds can be used to build that segment.
        Even if CHSRA could meet these procedural requirements,
    Prop. 1A's substantive requirements would still block use of
    Prop. 1A funds. Prop. 1A requires that trains be able to travel
    from the Transbay Transit Center in San Francisco to Los
    Angeles Union Station in no more than 2 hours and 40 minutes.
    With the indirect route that CHSRA has chosen, making the trip
    in less than 3 hours is basically impossible. Nor can the
    current legislatively mandated blended system meet the required
    30-minute travel time between San Francisco and San Jose.
        Further, the blended system, which requires CHSRA and
    Caltrain to share the same tracks between San Jose and San
    Francisco, also precludes meeting Prop. 1A's 5-minute headway
    requirement.
        As for using Cap and Trade funds, that system is currently
    under legal challenge. Even if it survives, the current funding
    is only $4.5 million this year, and Cap and Trade's
    authorization runs out in 2020. With the legislature having
    rejected its extension and indicating a preference for a
    revenue-neutral carbon tax where the collected funds would be
    rebated to businesses and the public, that would leave no
    proceeds to fund high-speed rail.
        In short, despite its optimistic statements at this point,
    CHSRA has no viable financial way forward.
        As I said at the start, I believe a prudently planned and
    executed high-speed rail system could be beneficial for
    California. Unfortunately, CHSRA has given no indication that
    it intends to rethink its current disastrous course, which will
    result in more litigation but no useful rail project.
        Thank you.
        Mr. Denham. Thank you, Mr. Flashman.
        Mr. Hunter, you may proceed.
        Mr. Hunter. Good morning, Chairman Denham, Ranking Member
    Capuano, members of the subcommittee. I appreciate the
    opportunity to appear before you today to discuss the
    California high-speed rail construction program.
        I am the president of the State Building and Construction
    Trades Council of California. I am an iron worker by trade and
    spent 27 years working in the field building skyscrapers and
    bridges throughout California. Our council represents in excess
    of 400,000 skilled and trained California construction workers,
    including 48,000 apprentices that have graduated or the
    equivalent from California high schools.
        Each and every one of these workers work for private
    construction companies building our harbors, airports, water
    treatment plants, freeways, transit systems, dams, as well as
    the vast majority of commercial and residential projects
    throughout the State.
        These contractors that we work for need a streamlined,
    highly trained, competent work force to compete, using the
    least amount of people, building projects in the shortest
    timeframe, done once, done right, under the lowest bid.
        The workforce that we represent drives the economy of
    California. They set aside a portion of their hourly wage for
    their pension and medical benefits and even in retirement are
    not a burden to the State or the Federal Government.
        I am very proud to report that at this very moment, several
    hundred of these workers, who are residents of the Central
    Valley, are on the job building the high-speed rail in the
    Central Valley. This is an area where, during the Great
    Recession, we have had unemployment in excess of 60 percent,
    and the Valley itself has been a traditionally--has had some of
    the highest unemployment statewide in the general population.
    Now these workers are building the high-speed rail system that
    will transform the Valley and all of California.
        Of course, I am happy that these workers are earning a
    paycheck, supporting their families, and driving the economy.
    But I am also gratified that they are creating a third mode of
    transportation, something that California desperately needs
    right now and that will greatly benefit the people of the State
    of California for generations to come.
        Furthermore, the project is being built efficiently and
    economically. The best value bids for the first construction
    packages have ranged from 13 to 45 percent below the engineer's
    estimated cost, resulting in savings of hundreds of millions of
    dollars so far.
        Decades from now, I believe California will look back with
    gratitude at the vision of this generation's leaders, whose
    foresight resulted in a magnificent, efficient high-speed rail
    system, less congestion on our roads, airports, and a healthier
    environment. We simply cannot afford to not build this vitally
    important infrastructure project.
        California's transportation system is already overtaxed,
    and our population will pass 50 million by mid-century. Doing
    nothing will ultimately cost far more than building this
    essential system today. High-speed rail is the only viable
    means of making sure our transportation infrastructure can meet
    our growing demand.
        Continuing to build more and more freeways and airports
    would be more expensive, more environmentally damaging, and
    less efficient for moving millions of Californians up and down
    the State.
        In fact, the nonpartisan Legislative Analyst's Office has
    reported that the project would, and I am quoting, ``alleviate
    the need to build over 3,000 miles of freeway, and 5 airport
    runways and 90 new departure gates--at a cost of nearly $100
    billion--that would otherwise be necessary to accommodate
    interstate travel by 2030.''
        By saving $100 billion, the project pays for itself. To
    remove any doubt, just look at the spectacular success of high-
    speed rail around the world. We have learned from places like
    Spain, France, China, Germany, Japan, and many other countries
    that high-speed rail is the more efficient and preferred mode
    of transportation between population centers between 100 and
    500 miles. That is precisely the corridor California's high-
    speed rail will serve.
        High-speed rail is working breathtakingly well everywhere
    else in the world. California needs its great benefits even
    more. As the 2008 ballot summary language points out, high-
    speed rail will provide long-distance commuters with a safe,
    convenient, affordable, clean and reliable alternative to
    driving and high gas prices. It will reduce traffic congestion
    on California's highways and at the State's airports. It will
    reduce California's dependence on foreign oil. It will reduce
    air pollution and global warming greenhouse gases. It will
    provide fast, time-saving connections between California's
    major population hubs. It will bring thousands of good jobs to
    working families across the State.
        We cannot afford to fall behind the rest of the country,
    the rest of the world. Our State needs the economic,
    environmental, and quality-of-life benefits of a third mode of
    a clean, fast, mass transit system to meet the needs of our
    children and grandchildren just as generations before us paid
    for and built the infrastructure that has supported today's
    population and economy. We need to build this system.
        I would say that we have built the infrastructure of
    California, the building trades, for over 130 years. We were
    criticized heavily on the Golden Gate Bridge. It was the first
    bridge to nowhere. The Hoover Dam----
        Mr. Denham. I'll ask you to wrap up. We are a little over
    time already.
        Mr. Hunter. The Hoover Dam was a boondoggle that was going
    to bankrupt the country.
        Thank you, sir.
        Mr. Denham. Thank you, Mr. Hunter.
        I would like to thank each of our witnesses for their
    testimony today.
        There are a number of different questions here on the
    update and progress of this project. Our goal is to get in two
    rounds of questioning, so I would ask Members to keep their
    time allotment to 5 minutes, as well as our witnesses to answer
    any questions as succinctly as possible.
        I am going to start off today's round here, mostly focused
    on the most recent changes.
        As you and I had talked, Ms. Feinberg, on the last change,
    the fifth change to the agreement about the tapered match, I
    once again talked about my concern about spending all Federal
    dollars first and then owing the State dollars. My concern with
    tapered match is it leaves California on the hook, and the only
    penalty or the only way to extract that money would be to hold
    up rail dollars, highway dollars, or even education or housing
    grants. So I still have that big concern about the last change
    to the grant agreement.
        But specifically on this sixth change, when I had sent out
    my statement earlier in the year about this being a blank
    check, I know that you had taken some concern with that.
        Actually, let me address this to Mr. Richard first. My
    concern is with this most recent change is that it is a blank
    check to spend money and get beyond the ARRA funding of 2017.
    This is being used for working capital. So my concern is that
    you could make a request at the end of 2017 to get beyond the
    original congressional mandate to allow you to spend money
    beyond that.
        From the experts that we have talked to in the construction
    sector, a $2.6 million burn rate is a pretty high burn rate to
    be able to accomplish spending the $3.5 billion by the end of
    2017. So the concern is that you get close to the 2017
    deadline, you go back to FRA and you say we are going to need
    future dollars and we are putting the working capital in ahead
    of time. Mr. Richard?
        Mr. Richard. Mr. Chairman, I can certainly understand that
    concern. Let me allay your concerns this way. First of all, the
    number we should be focused on is not $3.5 billion but $2.55
    billion, because the remaining $980-some-million is fiscal year
    2010 money that does not have any kind of statutory deadline
    for expenditure. So under the Stimulus Act, we have to spend
    $2.55 billion by September 2017. We are about 70 percent of the
    way through that right now. Between invoices we have been
    giving to Ms. Feinberg's agency and work that has been accrued
    but not yet invoiced, we are at $1.8 billion. The burn rate to
    accomplish the rest is less than the average burn rate that we
    have seen in the last 3 or 4 months. So we have no doubt that
    we are going to meet the ARRA deadline for the expenditure.
        Let me just say with respect to your concern, the purpose
    of the working capital request was simply to get ahead of money
    for land acquisition. Land acquisition is the most fundamental
    piece of the construction. If we can't deliver the parcel, the
    contractor can't do the work. So that is what we are using it
    for, and basically I would just say to you what you want to do
    with the ARRA money is what the Congress intended, put people
    to work. Waiting until the last minute, it is just not the way
    the program is going right now.
        We got off to a slow start on real estate acquisition. We
    want to make sure we don't fall behind on that again. The
    working capital helps us get the real estate land acquisition
    done. But this is all about people building things, and they
    are doing it right now, and the burn rate is such that we will
    accomplish the 2017 deadline.
        Mr. Denham. So you can commit, then, that you will not
    request an advance payment for the ARRA funds in 2017 to keep
    you on the congressional deadline?
        Mr. Richard. That--I will commit to that.
        Mr. Denham. Thank you.
        And, Ms. Feinberg, you would also commit that if there was
    such an advance request at the end of the 2017 deadline, that
    you would not approve such a request?
        Ms. Feinberg. Correct. We see no--we have no interest in
    going beyond the September 2017 deadline, and beyond that we
    don't think there will be a request for it.
        Mr. Denham. Thank you.
        Mr. Hartnett, the initial operating segment has changed.
    The blended approach is a somewhat new idea. The question that
    I received is primarily about safety in the community along
    your line. If the track is now electrified, with pedestrian
    traffic being the biggest issue of train accidents, do you
    expect this new electrification to change any safety concerns?
        Mr. Hartnett. I do not. We currently serve over 65,000
    riders a day. Our safety record is good. The pedestrian safety
    issues are primarily with respect to trespassers on our line,
    and a number of the trespassers are intentionally there. That
    does create safety concerns, but we do work well to address
    that.
        Mr. Denham. And I am not questioning your safety record.
    You guys have a good record. My concern is that these are now
    going to be hot tracks, and recognizing that we have
    pedestrians and trespassers in those areas, does that create a
    new challenge?
        Mr. Hartnett. It does not in the sense that--fortunately,
    it is not a third rail. You can walk on them. You can be on the
    tracks and not be subject to electrification. It is overhead
    wiring, which has a tremendous safety record. I have had the
    privilege of living off and on in Japan for 8 years using their
    electrified services, and you can do it in a very safe manner
    with electrification itself, not enhancing any safety risks.
        Mr. Denham. So the speed of the train, if the train can
    actually get to 200, 220 miles an hour, does that create any
    safety concerns to the communities?
        Mr. Hartnett. It won't be going at that rate of speed
    through the peninsula. So the speed is not going to affect the
    safety. The trains for us in particular are going to be quicker
    in the sense that, because they are electrified, they can slow
    down quicker and speed up quicker, which actually makes it
    safer overall in terms of our service, and I think in the
    blended service as well.
        Mr. Denham. So if the train is not going to hit those high
    speeds in San Jose to San Francisco, how do we expect to hit 2
    hours and 40 minutes or 2 hours and 30 minutes?
        Mr. Hartnett. That would be a design question. I think Mr.
    Richard can respond to that.
        Mr. Denham. Mr. Richard?
        Mr. Richard. Thank you, Mr. Chairman. The train was never
    going to go at those speeds in the urban areas, even before the
    blended service. In fact, I don't know if my staff brought it,
    but one of the things I would like to submit to the committee
    is a page from our 2008 business plan which was before anybody
    even talked about blended service, when they were only talking
    about a single high-speed rail separate service. That map shows
    that in the urban areas, the speeds were going to be around 120
    miles an hour. This is because of the geometry. You have to
    have the curves to go at those high speeds. You are really
    taking a lot of land in urban areas. It is very expensive. You
    see it in other countries. As you come into the cities, the
    trains go slower.
        One of the great things about the blended service--and this
    is one of the reasons the independent peer review group
    recommended to the legislature that it support the blended
    service--was the notion that you could maintain essentially the
    same speeds in the urban areas that we would have with separate
    tracks but at a cost reduction of about $20 billion between
    north and south. That is why we decided that we would be able
    to do that.
        It may have some impact on capacity. Mr. Flashman raised
    that question. We can talk about it. But it really has no
    impact on the speeds. I just want to say to you for the record,
    right now our engineers are telling us that the current design
    would get you from Los Angeles to San Francisco with the
    blended service in about 2 hours and 33 minutes. We are about 7
    minutes ahead. So that has never been a concern that we have
    had.
        Finally, just on your earlier point, part of the
    electrification program will be the installation of intrusion
    detection devices and other advanced mechanisms to try to
    minimize or eliminate unauthorized entry into the corridor
    there.
        Mr. Denham. And what does that mean?
        Mr. Richard. Fencing, electronic intrusion detection,
    things like that.
        Mr. Denham. So like some type of sensor that would allow
    you to know whether or not trespassers went on there, on the
    walls of the sides of the----
        Mr. Richard. Right. I think it is sensors and fencing, but
    before I get myself to a place where I don't know what I am
    talking about, perhaps I can supplement that answer for the
    record for the committee.
        Mr. Denham. Certainly. It is more out of curiosity for the
    future of what those residents are going to be looking at, if
    you could provide that to the committee.
        Mr. Richard. Yes, sir.
        Mr. Denham. We would appreciate it.
        Mr. Hartnett, does the Caltrain go 120 miles an hour today?
        Mr. Hartnett. It does not.
        Mr. Denham. What is the current speed?
        Mr. Hartnett. We are generally at 79 miles per hour.
        Mr. Denham. And on a blended track, you have an opportunity
    to have Caltrain on the same tracks as California high-speed
    rail would. Do you anticipate an increase in speed for
    Caltrain? What would it be?
        Mr. Hartnett. We are not going to increase our speed with
    the Peninsula Corridor Electrification Project. We are going to
    increase our quickness. With the diesel fleet, it takes a very
    long time to slow down and stop at a station, and a very long
    time to get out of the station and move up. So while going at
    the same top speeds, we will be able to get into the stations
    quicker and get out of them quicker. So we will be able to, for
    example, a ride that would currently take an hour, San
    Francisco to San Jose, if we use the same stops, it could be 45
    minutes instead of an hour. So we will have choices as to go
    quicker up and down the line or to stop at more stations, both
    of which will enhance our capacity. We have modeled increasing
    Caltrain's speed to 110 mph in a blended system, but the final
    decision on speed has not been made.
        Mr. Denham. Thank you.
        And finally, the last question, Mr. Richard. We talked
    about the initial operating segment, the initial construction
    segment. Mr. Flashman had said Wasco. Is it Wasco, Shafter,
    somewhere in-between? And where is the initial construction
    segment? Can you define both ends of the initial construction
    segment?
        Mr. Richard. The initial construction segment, which is the
    subject of our grant agreement with the Federal Government,
    is--I think it is 130 miles from Madera down to the Bakersfield
    area, north of Bakersfield. We stopped short of going into
    Bakersfield so we could work with that city to look at an
    additional alignment. So it is somewhere in the area of Wasco.
    At the moment I am forgetting the precise road that it stops
    at. That is the Central Valley segment, which will be the spine
    of the system.
        When we made the change in the business plan, we said we
    need to connect the Central Valley to the Silicon Valley. Let's
    build no further south right now than we are building, which is
    why it seems a little odd to be stopping kind of in the middle
    of an almond orchard and turn around and connect to San Jose
    and San Francisco.
        But what we also said in our business plan was that it
    really makes sense to enhance the service into San Francisco
    and to reach down to Bakersfield. That is an additional $2.9
    billion, and we will be coming to the Congress and talking
    about the benefit of that connection because it generates $4.7
    billion of additional ridership revenue.
        Mr. Denham. Thank you, sir.
        Mr. Richard. I am sorry. I did not mean to go on.
        Mr. Denham. I did not mean to cut you off. I want to hear
    much more about this, but I have gone over my time.
        Mr. Richard. And I apologize, but I am very happy to work
    with you on this because we think it will be an important
    enhancement.
        Mr. Denham. Thank you.
        Mr. Capuano?
        Mr. Capuano. I am going to defer to my California hosts and
    let them go first.
        Mr. Denham. Mr. Huffman, you are recognized for 5 minutes.
        Mr. Huffman. Appreciate that. Thank you.
        Thank you, Mr. Chairman, for having this hearing, and
    thanks to our terrific witnesses for joining us.
        I especially want to welcome you, Administrator Feinberg.
    It seems like just yesterday I was touring in Marin and Sonoma
    County on the Smart Rail project, which is an exciting project
    where our communities are bringing back commuter rail. Thanks
    to the support of your agency and others, that is going to be
    reality in just a couple of more months. It will open on day
    one as one of the safest passenger rail systems in the United
    States, again with your support for Positive Train Control, so
    thank you very much.
        I appreciate that Mr. Hunter in his remarks reminded us
    that there was another really big, transformative, and yet
    controversial project nearby. It happens to be the defining
    southern feature of my congressional district, the Golden Gate
    Bridge. What people sometimes don't appreciate, because it is
    such an iconic piece of infrastructure now that is taken for
    granted, is that it was very controversial in its time. Over
    2,000 lawsuits were filed to stop this project in the 1930s. It
    went through several different designs. They were all very
    controversial. There were huge cost overruns. Yet, if you went
    to my district today, or I would say anyplace else in
    California, and asked people if you would like to go backward,
    they would probably laugh at you. It has been a huge success.
        So when we talk about this project and the promise of high-
    speed rail, we should talk about cost, we should talk about
    budgets and plans and the challenges this project faces. But we
    should also think about the cost of inaction and the benefits
    it brings.
        So, Mr. Richard, I am especially grateful to have the
    conversation with you at this point in the project's history
    because in a prior life as a State legislator on the budget
    committee, I do remember lots of conversations with your
    predecessor where I had lost confidence in the ability of
    California to realize the promise and the vision of high-speed
    rail. The project was in complete drift, and yet today
    construction is underway. Construction contracts are coming in
    under budget, and it does seem that through innovation and
    creativity we are poised to actually make this happen in
    California, and it is in no small part due to your leadership,
    so thank you for that.
        That doesn't mean your critics have gone away, so I want to
    ask you about a couple of points that Mr. Flashman has very
    eloquently laid out in his remarks. Specifically--and these are
    points that we have heard for some time now as criticisms of
    the project--the assertion that financially you can't get there
    from here because of limitations and constraints on funding in
    Prop. 1A and the Federal funding, that when you add it all up,
    the dollars just don't connect and you can't get there from
    here.
        And the second one is the impossibility of achieving the
    speed and travel times that have been promised, I believe,
    between Wasco and San Jose.
        So I want to give you a chance to speak directly to those
    claims that have been levied, and also to the extent you can
    because, again, these are not new claims--they have been part
    of litigation--what the courts have said as well about these
    matters.
        Mr. Richard. Thank you, Congressman. Thank you for your
    kind remark there.
        There are several things I would say. First of all, when
    the voters in 2008 went to the ballot, the legislature put
    before them a bond measure that said to them we want to get
    started on high-speed rail. In fact, the opening line was it is
    the intent of the people of California to build a high-speed
    rail system. But that bond measure, by its terms, made it clear
    that the money was not all in hand. There was $9 billion. By
    law, it required to be matched, so it could only be half of
    what could be spent. They talked about Federal money. There was
    no Federal program. There was no stimulus program. It hadn't
    been created yet.
        They talked about saved money. There was no other saved
    money. They talked about the private sector. The private sector
    has historically done this at certain points in the project and
    in history around the world, but basically the people were told
    this is a down payment, we are going to get started.
        Sometimes people say to me, well, you are admitting that
    you don't have all the money in hand to build the entire system
    right now. That is true. In Ms. Lofgren's district, they are
    building BART to San Jose. I helped start that project 15 years
    ago. They are still finding pieces of the money to finish it.
    That is just the nature of transportation projects. We build
    them in pieces.
        The legislature in its wisdom, and the people in their
    wisdom, said we understand you are going to build this in
    segments. We want them to be usable segments. We don't want our
    money wasted on something that isn't going to have value. So
    the courts have basically found that we could do that.
        I am sorry, I don't mean to go over on this, but we have
    the dollars in hand between the bond funding, the Federal
    money, and the Cap and Trade money we have been allocated, to
    build an initial operating segment from the Central Valley to
    the Silicon Valley. Are there some uncertainties about that?
    There are. Do we think they are being resolved? We think they
    are being resolved favorably, and we have confidence we can
    build it, and the independent peer review group told the
    legislature that they think this is a financially responsible
    and constrained plan.
        Let me just stop there. I don't want to go on and on, but I
    think I addressed the question of before.
        Mr. Huffman. Thank you, Mr. Richard.
        Mr. Denham. Mr. Farenthold, you are recognized for 5
    minutes.
        Mr. Farenthold. Thank you very much.
        Administrator Feinberg, I would like to start with you.
    There is a high-speed rail project entirely privately funded
    going on in Texas, my home State, right now. They are looking
    at going from Houston to Dallas at an estimated cost of about
    $10 billion for the project cost.
        I understand things are more expensive in California. I
    just paid $3 for a Dr. Pepper here. But we are looking at money
    six times more expensive for a rail that isn't even twice as
    long. Do you have any thoughts on the cost differential? And
    then I will pass that along to Mr. Richard as well, if he wants
    to. I will allow you to pump that to Mr. Richard if you would
    like to.
        Ms. Feinberg. Well, they are very different. The reality is
    they are just very different projects. I will let Mr. Richard
    weigh in on this, but there are more stations and more stops in
    California and a much longer distance that will be traveled.
    They are just fundamentally different projects. But we have
    really enjoyed working with the folks in Texas who are working
    on this project, and we have very high hopes for success
    because I think that segment between those two cities is a
    perfect example of where--a significant game changer for that
    economy and for people's lives there.
        Mr. Farenthold. As a steward of the taxpayer dollars, I am
    concerned about the cost.
        Mr. Richard, if you would like to weigh in on that for a
    second, it would be appreciated.
        Mr. Richard. Congressman, this is a very complex State both
    geo-physically as well as economically. I had the chance one
    time to drive from Los Angeles up to Fresno and back to the bay
    area, and I thought I wish everybody could do that drive with
    me and then ask the question why this costs so much.
        Over mountains, through ravines, through built-up urban
    areas, it is just a very complex topography. We have earthquake
    issues that, fortunately, you don't have to deal with in Texas.
    I spent a lot of time in Texas in my youth. I worked at NASA as
    a kid. I think you are pretty flat down there in Texas compared
    to some of the area here. That is one of the big drivers.
        Mr. Farenthold. Let's talk about land acquisition.
        Mr. Richard. Yes, sir.
        Mr. Farenthold. Where are you on that? Do you have the
    entire--do you have contracts for the entire route of the land?
    How much of that are you going to be able to get through
    negotiating with the landowners? What are we looking at with
    respect to exercising eminent domain?
        Mr. Richard. Well, I stated, Congressman, that I felt that
    if we could get all of the land that we need without ever
    having to resort to eminent domain, that that should be our
    policy and that should be our approach. Unfortunately, that is
    not the reality. Part of the reason it wasn't the reality is
    that when we had litigation and so forth, we actually had
    lawyers running around telling people don't settle with these
    guys because we think the project is going to go away, and that
    was really unfortunate. We ended up having to go to eminent
    domain in some of those situations.
        But we have about 1,300 parcels that we need to get, I
    think 1,100 parcels for the first 130 miles. I think we are
    about 700-some-odd into that.
        Mr. Farenthold. So barely halfway.
        Mr. Richard. That is why the working capital request that
    we could accelerate that.
        Mr. Farenthold. That is more of a rural segment. You sound
    like you are cutting through some urban areas like San
    Francisco.
        Mr. Richard. But there are some important urban areas
    there. In Fresno we moved an entire food processing operation,
    but most of it is rural. You are right.
        Mr. Farenthold. And how much of this is going to be
    elevated versus at grade?
        Mr. Richard. We are going to do as much at grade as
    possible. One of the reasons that some of the contract bids
    came in below our estimates were that their engineers were able
    to suggest areas of at grade. I don't have the specifics in my
    head, but I would be happy to supply that to you and the
    committee.
        Mr. Farenthold. That is fine. I would point out the entire
    Texas system is above grade. It is either in a viaduct type of
    arrangement or on a berm. I wonder how much going over people's
    property might not be worth looking at.
        Finally, I only have 30 seconds left, and I apologize for
    not being an expert on California geography. I can understand
    there being a lot of people who might want to go from L.A. to
    San Francisco. You have a fair amount of options once you get
    there of how to get around the city, on the BART or an Uber
    lift. But from Madera to Bakersfield, you get there, what do
    you do when you get there, and what do you think of how that is
    going to affect your ridership demand to fund your ongoing
    operating over numerous years until you get the endpoints
    built?
        Mr. Richard. I am tempted to refer you to the House
    Majority Leader about Bakersfield.
        Mr. Farenthold. I do not want to get crossways. I have been
    to Bakersfield, so I know there is not a lot of--there is no
    subway in Bakersfield.
        Mr. Richard. I think the main point, very quickly,
    Congressman, is that the legislature and the people in
    California deliberately said we want you to connect areas of
    the State. We are not building a straight line from San
    Francisco to L.A. We are going through the Central Valley. It
    is an area that has been left behind.
        Just very quickly, three of the five most impoverished
    areas in the United States are in the Central Valley in
    California, despite the great wealth that we have there.
    Twenty-one percent of the kids have asthma. It has three of the
    five worst air quality districts. And if you want to get from
    Fresno to Los Angeles by air, it is $700. It is an area that
    has been disconnected from the rest of the State.
        The excitement around our opportunity to connect the
    Central Valley and Silicon Valley, which is bursting at the
    seams, and to move not only housing but investment and
    manufacturing facilities there is enormous, and it gives
    diversity to the Central Valley. So there is a real strong
    economic reason why this program is structured the way it is,
    and I think we are going to see a tremendous uplift in the
    economy of the Central Valley that is going to benefit people
    far and wide.
        Mr. Farenthold. Thank you, Mr. Richard.
        Mr. Denham. Ms. Lofgren?
        Ms. Lofgren. Thank you. Thank you, Mr. Chairman, for
    allowing me to participate in this hearing.
        It has already been said that it is not just what we are
    building but what would happen if we didn't build this, and I
    think it is important to keep that in mind. California is going
    to have a lot of growth. It needs to be accommodated. To try to
    meet that growth with airports and roads is just not viable.
        I know also, before I ever ran for Congress, I was in local
    government, and I remember building big projects. It is easy to
    criticize, harder to build. When we built Highway 85 down in
    Santa Clara County, the section from 101 to 280 was done and it
    took decades to get 280 to the southern 101. So you do these in
    pieces, and that is just the way big construction projects go.
        I just want to mention the 2016 draft business plan that
    was approved, because I think it is a knockout achievement. Not
    only does it reduce the cost for the initial segment, it is
    easier to get through that mountain range than the southern
    mountain range, and it will be so important economically not
    only for Silicon Valley and my district but I think also in the
    Central Valley.
        In San Jose, traffic congestion is through the roof, and
    affordable housing is a big challenge. The median price of a
    house in the bay area in June was $751,000. The median price of
    a house in Santa Clara County last month was $1.045 million. So
    we are bursting at the seams, and the capacity to connect the
    Central Valley and Silicon Valley is going to help Silicon
    Valley survive, and it is also going to provide tremendous job
    opportunities for people who live in the Central Valley. It
    will take an hour to get from Merced to San Jose. My chief of
    staff lives in San Jose and it takes her longer to get from
    parts of San Jose to downtown.
        So this is really going to be an economic lift-up for our
    State, and it is worth remembering that most of the job growth
    in the State of California actually occurred in Silicon Valley.
    We got plenty of jobs, and we are not shy about wanting them to
    go to people in other regions.
        So, as someone said, there is high poverty in the Central
    Valley. I chair the California Democratic Delegation. Our
    delegation is very supportive of this high-speed rail project.
    We have cochairs of the Congressional High-Speed Rail Caucus,
    Jim Costa, John Larson and myself. So we are really very
    pleased with what is happening here.
        Now, I guess we have a second round of questions coming up,
    but one of the things that I wanted to ask--and I think it is
    great that Ms. Feinberg is here. Thank you for coming once
    again. Mr. Denham, the chairman, asked for the California High-
    Speed Rail Authority's agreement with the FRA to be reviewed by
    the GAO last year, and it is my understanding that they have
    concluded that the California High-Speed Rail Authority has
    complied with its agreement with the FRA. Do you have any
    disagreement with that GAO conclusion?
        Ms. Feinberg. I don't. In fact, the GAO has looked into
    California high-speed rail several times. I think it is now the
    most investigated and most audited project in U.S. history. I
    don't know if that is something to be proud of or not, but I
    think it is worth being proud of that they have succeeded and
    the GAO has never found a significant issue.
        Ms. Lofgren. So it is your testimony, then, that not only
    is the California High-Speed Rail Authority currently in
    compliance but they have been in compliance.
        Ms. Feinberg. Yes.
        Ms. Lofgren. Thank you very much.
        You know, I was interested, Mr. Richard and Mr. Hartnett--
    this is really an issue for up the peninsula, not in my
    district, but the intrusion on blended rail. We know that there
    has been an epidemic of suicides among teenagers, high school
    students, in the mid-peninsula area. I was pleased to hear that
    you are going to have some intrusion devices. Is it your belief
    that with the ability to stop these trains faster and these
    intrusion technologies, that we might have a better chance of
    saving these young lives?
        Mr. Hartnett. Together with fencing, there will be
    additional fencing that will help for those who have a spur of
    the moment desire, so the fencing will be just a natural
    barrier. I can't speak to the high-speed rail intrusion
    devices, but there is experimentation with a variety of methods
    to detect folks going on the tracks, including video feeds.
        But in that area of youth suicide, we have worked very
    closely with the school districts and the communities on the
    broader issues, which we have to continue to do because the
    ultimate solution isn't going to come from fencing and devices.
        Ms. Lofgren. No. It will come from the children themselves.
        Mr. Hartnett. So that is something we continue to work on.
        Ms. Lofgren. Thank you.
        I see my time has expired, Mr. Chairman.
        Mr. Denham. Thank you, Ms. Lofgren.
        Mr. LaMalfa?
        Mr. LaMalfa. Thank you, Mr. Chairman and panelists. I
    appreciate it.
        What the voters voted for in 2008 was a $33 billion
    project, a high-speed train, one train, not switching trains,
    from S.F. to L.A. A year later the number was adjusted up to
    approximately $42 or $43 billion, adjusted beyond what the
    voters saw, beyond what the voters approved. And then finally,
    after much agitating from the State legislature, we had a
    hearing in November of 2011 where the admission was that there
    wasn't going to be 1 million jobs created by high-speed rail
    but something called 1 million job years, and that the cost was
    no longer just $33 or $43 billion, it was $98.5 billion, triple
    the price.
        Now, if I am seeking to, let's say, enclose my garage and
    build a bathroom inside, I might get a bid for $33,000, not $33
    million, and they tell me the price a few months later is
    $43,000, and then when the trucks show up and they start
    construction they say it is $98,500--you can see where I am
    moving the decimal points here--I am going to say that is a
    breach of contract. I am going to tell you to take a flying
    leap, especially since the completion date initially was 2020
    and now it is 2033. So I don't get my garage enclosed for an
    additional double or more of the time.
        This is the recent contract with the voters of California.
    It is why I carried two bills as a new State senator, SB-22, to
    say don't spend any money until you actually have a plan. You
    don't even have a plan yet on how you are going to go through
    Bakersfield, how you are going to go through the Tehachapis,
    where the funding will come from. You are still $55 billion
    short of the change projection, down to $68 billion after the
    scramble, from $98.5 up to $118 scared everybody for a blended
    system.
        So this is indeed something that the taxpayers should be
    looking at and saying we have been taken to the cleaners on
    this. That is why my second bill was SB-95 saying put it back
    on the ballot and ask the voters once again what they think of
    something that is triple the price, that isn't meeting the mark
    anywhere near the time, nor are the so-called environmental
    benefits of this, of the green project, will be saving C02. I
    almost laughed when I heard one of the solutions during
    construction would be that they are going to plant trees to
    offset the concrete and the construction equipment being used
    in there, since we are worried about C02 these days.
        So, Mr. Flashman, I want to drill down with you on that for
    a moment here. Of the different projects--there are green
    projects, there are Cap and Trade replacement projects--what
    are the ones that are the most eligible, the highest priority,
    the most bang for the buck? Briefly, please.
        Mr. Flashman. I am not sure I can name any one specific
    project, but the aim of AB-32, which is what set up the whole
    idea of doing a Cap and Trade project, was to get greenhouse
    gas emissions down to 1990 levels by 2020.
        Mr. LaMalfa. Will high-speed rail do anything to help that
    by 2020 or 20-anything?
        Mr. Flashman. Well, at some point maybe it will. It
    certainly can't by 2020. It is still going to be under
    construction in 2020. It won't actually start operating--at
    this point they are estimating 2025.
        Mr. LaMalfa. So should high-speed rail be pulling these
    greenhouse gas option funds, then?
        Mr. Flashman. Well, I am handling the lawsuit which
    basically is saying it should not.
        Mr. LaMalfa. OK. So if we are looking at the benefit,
    perhaps, of high-speed rail in this and greenhouse gas and the
    option, the most recent one was somewhere around $8 million I
    think was the auction generation----
        Mr. Flashman. That is correct.
        Mr. LaMalfa. The projections I have is that for the $55
    billion funding gap, since there is no Federal money coming
    into it, there is no private money coming into it, it would
    take about maybe over 6,000 years to pay off the funding gap
    with the high-speed rail new-found money--excuse me--coming
    from the greenhouse gas options.
        Mr. Flashman. Obviously, if it is going at the current
    rate, it is not going to be very much help at all. I am sure
    the Governor would like to see Cap and Trade extended. He is
    talking about sending it at least to 2030, maybe to 2050. If
    they could extend it to 2050, they hope they could securitize
    it.
        Mr. LaMalfa. But at this rate of options, it is not going
    to pull a whole lot. Thank you.
        Mr. Hartnett, currently you don't have 120-mile-an-hour at-
    grade trains running with your Caltrain system?
        Mr. Hartnett. That is correct.
        Mr. LaMalfa. But you expect you will have 120-mile-an-hour
    at-grade crossing with high-speed rail with Caltrain?
        Mr. Hartnett. Well, high-speed rail will determine the
    speed, but we have tested out in our conceptual analysis the
    blended system that they can operate at 110 mph----
        Mr. LaMalfa. How can you fence for an area for people to
    not have access to 120-mile-an-hour trains, especially when you
    come to an at-grade crossing where cars are, people are,
    pedestrians are? How do you fence the whole area for a rail
    going across a highway or road or street?
        Mr. Hartnett. Well, fencing doesn't go across the grade
    separations.
        Mr. LaMalfa. At-grade I am saying.
        Mr. Hartnett. And it doesn't go across the at-grade
    crossings. We have gates, and there would be an opportunity to
    establish quad gates that will be down well before the----
        Mr. LaMalfa. How easy is it for a pedestrian to pass
    between those gates and run out on the track?
        Mr. Hartnett. It is not easy at all to go through the quad
    gates.
        Mr. LaMalfa. For a pedestrian?
        Mr. Hartnett. Correct.
        Mr. LaMalfa. It doesn't take a limbo champion to go
    underneath one of those gates.
        Mr. Hartnett. The quad gates are set up to provide maximum
    security for----
        Mr. LaMalfa. For automobiles and motorcycles.
        Mr. Hartnett. Not just for automobiles and motorcycles; for
    pedestrians.
        Mr. LaMalfa. So a pedestrian will not be able to penetrate
    the tracks easily at an at-grade crossing?
        Mr. Hartnett. They will not be able to do so easily. Like
    with anything else, if a pedestrian wants to come off a
    platform or otherwise get onto the tracks, it will be possible
    to do.
        Mr. LaMalfa. Sorry, the time. I would love to see an
    illustration of how a pedestrian cannot go around those gates
    at an at-grade crossing.
        Thank you, Mr. Chairman.
        Mr. Denham. And we would ask you to submit any plans or
    drawings you might have to the committee.
        Mr. Capuano, you are recognized for 5 minutes.
        Mr. Capuano. Thank you, Mr. Chairman.
        I want to thank the panel for your thoughtful comments.
        Before I begin, I would also like to submit a letter for
    the record from Representative Eshoo, who couldn't be with us
    today, who is in support of the project.
        Mr. Denham. Without objection.
        [The letter from Congresswoman Anna G. Eshoo follows:]

     [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

        Mr. Capuano. Thank you.
        I want to stay away from the local issues, to be perfectly
    honest, as far as safety and getting access to rail. Good luck.
    You couldn't keep me off the train tracks when I was a kid. You
    are not going to be able to keep people off who want to get on.
    You do the best you can, God bless you, but that is not a big
    issue to me because I know you are trying the best you can, but
    you are not going to do it.
        I am just curious, though, and I really don't know the
    geography of California, but on the presumption that--I am not
    even going to use San Francisco--San Jose is a job center to a
    certain extent, San Francisco being at the end of the line,
    once this high-speed rail is built, let's assume it can do
    everything you want it to do, go the speed you want, have the
    stops you have, give me an idea of where would I be if I got
    off the train after about 45 minutes on the train,
    approximately?
        Mr. Richard. Starting in San Jose?
        Mr. Capuano. Yes. I assume you will have a stop at San
    Jose.
        Mr. Richard. Yes, we are.
        Mr. Capuano. Approximately.
        Mr. Richard. I would say 55 minutes from San Jose you will
    be in Fresno in a car on your way to Yosemite.
        Mr. Capuano. OK, and I really don't know. Has anybody
    considered the suburbs of Fresno as a bedroom community to San
    Jose? Did anybody consider that today?
        Mr. Richard. Actually, today, it is not considered today,
    but I will tell you that there are people in San Jose that----
        Mr. Capuano. The reason I ask is because I am sure that
    some people do that commute.
        Mr. Richard. Yes.
        Mr. Capuano. The average person is more than willing, and I
    am sure they do it here like they do everywhere else, to
    commute give-or-take an hour back and forth to work. The whole
    idea of high-speed rail is, yes, to connect San Francisco and
    L.A., that is all well and good. But for me, it is more about
    providing affordable housing for people who want to work,
    because you cannot afford it here. You might be able to afford
    it 45 minutes south of San Jose, wherever it might be, in a
    town now where property values are half that, or whatever they
    might be. It is no different here than it is on the east coast.
        So for me, I actually think connections to suburban
    communities is of more value to this rail system than San
    Francisco to L.A. To be honest, 2 hours and 40 minutes, good
    luck. I just took the train from Boston to Philly, and we
    allegedly hit 150 miles an hour a few times, and maybe we did,
    maybe we didn't, but we hit every stop on time. It was a great
    ride. I am glad I did it, but it was about 5 hours. I think you
    will be able to do better, but you don't have the same problems
    we have with curving track and the like. We have other problems
    that would take a lot of money to address.
        But either way, affordable housing for workers is one of
    the biggest problems we have in Boston, and keeping our
    talented young people to fuel our economy is hard because they
    can't afford housing. It is kind of simple. And honestly, you
    are not getting many young people either because they can't
    afford to come here. That being the case, anything you can do,
    we can do, this country can do to maintain the economic centers
    of our country is a good thing.
        Now, whether this particular project is it, I will leave
    that to the people of California to decide, because though
    there is a lot of Federal money here, it is mostly State money,
    and it is your prerogative.
        We had a project that is similar. By the way, this is not
    the most investigated project in the history of the country.
    The Big Dig is.
        [Laughter.]
        Mr. Capuano. But let me tell you, criticize it all you
    want, it works. It did exactly what it said it was going to do.
    It didn't solve all of our problems, but it solved the problem
    it was meant to address. It cost a lot of money, and more than
    60 percent of it was State money. And, by the way, when we ran
    over, here is how we funded it. We borrowed against future
    Federal highway funds. Every year for about 10 years after
    that, we took several hundred million dollars of Federal
    money--that we would have otherwise used to build other
    things--to pay off the debt. So the concept of advanced
    payments is not new. Call it a different name. It is a choice
    by the people of California as to what is the most important
    thing for them, which is why I won't get into whether this is
    or isn't the best use for that. That is up to you.
        We thought it was the best use for the Big Dig. Now, as a
    former mayor at the time, my city got stuck and had nothing for
    a while. In the long run, over time, it was worth it. But I say
    that more as a lesson to be learned. This is not the first big
    project, it is not even the most recent big project. It is not
    the project with all the problems that you ever had.
        Land acquisition? I come from the most densely populated
    area of the country. Good luck with land acquisition. I can't
    imagine that there is a farmer--and by the way, Mr. Flashman,
    that is how you say it, ``fahmer''----
        [Laughter.]
        Mr. Capuano [continuing]. In the Central Valley that would
    be happy to part with his land any more than my triple decker
    in Dorchester is happy to part with theirs. So, yes, land
    acquisition is a difficult thing and is absolutely necessary.
        Whether you get this project done or not on the timescale
    you want, good luck. I support it in general. I will do what I
    can to help, within reason. I am fighting for those same
    Federal dollars for my Northeast Corridor, and I want a high-
    speed rail from Boston to Springfield to do all that stuff we
    just talked about.
        I want to warn everybody here, when it comes to Federal
    dollars, the pie is shrinking. The struggle for those dollars
    is growing. Every city wants a subway now. It used to be a
    handful. Now we all do. Everybody wants a commuter rail system.
    Only used to be a handful. High-speed rail is the next big
    thing. We used to have one, not really high-speed but kind of a
    medium-speed rail, called Amtrak in the Northeast Corridor,
    from Boston to Washington, the only rail corridor in the
    country that makes money, the only one. Why? Density of
    population. And it is not people going from Boston to DC,
    Boston to New York, New York to Philly, Philly to DC, DC to
    Baltimore. It is those middle stops that make the system.
        And I say all that not because you don't know it, but I
    think it is important for people to understand that when we
    talk about these massive projects, it is not just one big
    massive project we are talking about, but we are actually
    talking about a series of smaller projects that are tethered
    together. You are not going to make money from San Francisco to
    L.A., but you might make money from San Francisco to San Jose,
    San Jose to Fresno, Fresno to whatever bedroom community it
    might be. Again, I don't know the geography of California that
    well.
        I would warn people to think of it in those terms. Again,
    to do it or not do it. That is your decision, because every
    dollar we spend in the Federal Government, you have to match 3
    or 4 to 1. Federal dollars are not going to save you, but
    Federal dollars will help.
        With that, I really don't have too many questions. I just
    want to make sure that I understood this project for what it
    was. I did have one question, but I will wait for the second
    round because I have already gone over. Thank you, Mr.
    Chairman. I usually don't pay attention to the clock.
        Mr. Denham. You don't usually pay attention, but I have to
    say that normally you are way under the guidelines, so a lot of
    discretion here. You are always way too kind with giving your
    time to other Members.
        That concludes our first round, and we do have time for a
    second round. I would like to start off the same way that I
    said in many of my conversations with Mr. Capuano as we have
    looked at projects around the country, as well as I have stated
    in every hearing that we have had now: I support high-speed
    rail. We are going to have high-speed rail in this country. We
    have a higher speed rail in Florida. I have a great promise on
    the Texas private effort. I think at some point we have to get
    high-speed rail in the Northeast Corridor with the huge
    ridership that we have there.
        My concern here is that there is a commitment that has been
    made to the voters. It was a $33 billion project. And at some
    point we have to bring some trust back into Government. We have
    an obligation for Government to do what it said it was going to
    do. And I get it, there were cost overruns in the Bay Bridge,
    there were cost overruns in Golden Gate Bridge. This was an
    issue passed by voters, and I think we have to have priorities
    in this State, and we have to have some trust in Government. We
    need to do what we say we are going to do or it should go back
    before the voters.
        This was started in the Central Valley. It was written into
    Prop. 1A. Far too often, initiatives are passed and the
    investment gets done in the bay area, the investment gets done
    in L.A., and yes, the high unemployment continues to go on in
    the Central Valley because we don't put the money into
    infrastructure in the Central Valley.
        So this was done there, putting the Central Valley in this
    first, but the concern is that all of the money is going to be
    spent and you could be stuck in a field with somewhere between
    Shafter and Wasco and somewhere further down the road in
    Madera, and we are out of money. That is the last thing we want
    in the Central Valley. We don't want to have something that has
    no riders, that has no train, that has no future investment,
    only to wait for decades hoping that maybe we can take some
    money from the Northeast Corridor and hold you guys up, or we
    can take money somewhere else, from another State, to get this
    project moving along.
        So this has more to do with transparency and accountability
    than I think any of us, Republican or Democrat, on whether we
    want more transportation in this State or in this country.
        Let me now jump to the issue of jobs. Labor in my district
    has continuously asked me, on a variety of different projects,
    where are the local jobs? So, Mr. Richard, before this hearing
    started we had talked about some of the jobs that have started
    in 2015 and now this year. I would like for you to provide for
    this committee, and I will follow up with a written request,
    but specifically where those jobs are.
        And to Mr. Hunter, the question has been with PLAs on a
    number of different projects in our area, labor in our area has
    questioned whether or not it has been a local job. So a PLA
    will be put in place by the letter of the law. The contract is
    granted, only to find out that all of the labor has been
    brought in from out of State or out of the area and living in a
    hotel room under an address in the Central Valley, showing
    Central Valley jobs. The people in my district still don't get
    those jobs.
        So first if you could comment on that, and Mr. Richard, you
    don't need to comment. I would just like a followup just to let
    us know where those jobs are and who is taking them.
        Mr. Hunter, you mentioned Billy Powell. The IBEW was the
    very union that asked me specifically about French camp and the
    PLAs, the future PLAs there and whether or not those would be
    local jobs or whether or not, like high-speed rail, was their
    response, would we have out-of-the-area jobs.
        Mr. Hunter. Measure our L.A. County $40 billion half-cent
    sales tax for a transit system because we had none. Everybody
    wanted the local people in there. They wanted no tax on their
    sales. We are not getting it from the State or the Federal
    Government. We negotiated an agreement for the percentage of
    workers to be in this from the L.A. County. Just like this
    agreement, we negotiated preference for kids in the foster care
    system, for veterans, and for people who were on social
    services.
        These contractors are private contractors. They are going
    to use the least amount of people. They are going to do it in
    the least amount of time. We have no seniority. They want the
    most streamlined workforce. We negotiated at the end of this
    agreement a preference for zip codes from the Central Valley. I
    myself have been up and down from the Central Valley----
        Mr. Denham. But specifically your members had expressed
    concern that while you enter a zip code, you could be living in
    a hotel room or be a new resident to the area using a local zip
    code. I am almost out of time.
        Mr. Hunter. I am aware of none of that. We looked pretty
    closely. The people who are on the books live in the zip codes
    of the area, Merced and Fresno.
        Mr. Denham. Thank you. I look forward to a followup. I
    would just like to point out for the record that a big part of
    our, in the Central Valley, our high unemployment is due to the
    shortage of water. Temperance Flat, a $2.5 billion project to
    provide over 3,000 jobs for members of yours. Shasta Dam, $1.3
    billion, our biggest bang for the buck in California, 1,400
    jobs. Over 4,000 jobs could have been done if we had waited for
    7 years on this project. As well, BART expansion, 1,400 jobs;
    ACE expansion in my area, 1,000 jobs; less than $2 billion for
    those two projects. Caltrain's Alameda County, 235 jobs. We are
    talking over 4,000 jobs just in rail projects that are on the
    books right now that could have all been done during this same
    time period. Those could be jobs that--again, this is not an
    issue of labor. It is an issue of jobs today.
        Mr. Capuano?
        [No response.]
        Mr. Denham. Mr. Huffman, you are recognized for 5 minutes.
        Mr. Huffman. Thank you.
        Mr. Richard, I want to go back to you about the financing
    issue. I know that one of the criticisms of your plans and the
    Governor's involvement in the plans has been the reliance on
    credit from the Cap and Trade system under AB-32. A lot of
    folks in the months leading up to this hearing have claimed
    that that is an unreliable source of revenue, maybe even an
    unlawful source of revenue, and we know that the fossil fuel
    industry has been putting on a full court press to allow the
    very authority from which it derives, AB-32, to simply expire
    and not be renewed.
        But it seems to me that with developments in Sacramento
    over the past week, we are having a bit of a different
    conversation now. The fossil fuel industry lost and we are
    moving forward not just with the continuation of AB-32
    authority but actually we are doubling down on climate
    leadership, raising the bar even higher and declining to join
    the fossil fuel industry on the road backward to perdition.
        So let me ask you now as we sit here today, what is your
    assessment of the reliability and the stability of that
    greenhouse gas policy framework and the Cap and Trade revenues
    that are a critical part of your long-term plans?
        Mr. Richard. First of all, as you know as one of the
    leading environmental voices in the California Legislature
    before you became one of the leading ones in the U.S. Congress,
    California has led the globe in terms of action on climate
    change, and our Governor and our legislature have just
    recommitted to that last week with an extension of the basic
    law, which was Assembly Bill 32. Now Senate Bill 32 by the same
    author has, as you said, essentially tightened down on the
    limits. Instead of meeting the 1990 limits by 2020, we are now
    talking about 40 percent below the 1990 limits by 2030.
        Industry, and I think even the oil industry, knows that the
    best way to get there is through market mechanisms and not just
    rely on command and control. I have had this conversation with
    many of my conservative Republican friends. You want cap and
    trade to continue because you do not want to have everything be
    simply coming out of the error sources as a command that you
    will, smokestack by smokestack, reduce these emissions.
        So I am very confident that with the action of the
    legislature last week and the bill signed by the Governor, I
    think it will now turn the dialogue back to the extension of
    the market mechanism of cap and trade as a way to help our
    businesses and industry meet these standards, which we will
    meet one way or another. But the market mechanism provides a
    very effective tool for them.
        We have already gotten about a half-a-billion dollars from
    the Cap and Trade Program this year, even before the recent
    auctions that were, in fact, disappointing. But I am not an
    expert on this and this is not an official State pronouncement,
    but the things that I read from people are that the uncertainty
    around these issues was one of the big contributors to people
    holding back from participating in these markets. So let's see
    what happens going forward.
        But today sitting here, I can say to you I have great
    confidence Cap and Trade will be extended, and I think it will
    be a successful program, as it has been.
        Mr. Huffman. And in the time that I have remaining, since
    we haven't covered this specifically yet, could you just speak
    to the greenhouse gas reduction benefits that should accrue to
    the State of California if your vision of this project is
    realized?
        Mr. Richard. Very quickly, one of the interesting things
    about California is we are the exact opposite of the rest of
    the country. The rest of the country, electric generation
    emissions are about 43, 45 percent of carbon emissions. In
    California, they are 22 percent. The rest of the country,
    transportation is in the 20-percent contributor. In California,
    it is in the 40s.
        The only way we are going to meet our climate goals for Cap
    and Trade is basically to address the transportation sector,
    and that means the electrification of the transportation
    sector, not just electric vehicles, in which we lead the
    Nation, but regional and statewide rail systems. And what we
    are doing with high-speed rail--and again, I go back to the
    point that this is not just about high-speed trains. It is our
    total investment in the electrification of State, regional, and
    local rail systems. It is going to put an enormous dent in
    carbon emissions.
        High-speed rail has been the glue. We have been the last
    funding source for the Caltrain electrification, the last
    funding source for BART car rehabilitation, the last funding
    source for the L.A. Metro run-through tracks. So we are
    basically on the forefront of electrifying California's
    transportation system. That is what will help us achieve our
    carbon goals.
        Mr. Huffman. Thank you, and I yield back.
        Mr. Denham. Thank you, Mr. Huffman.
        Mr. Farenthold?
        Mr. Farenthold. Thank you very much.
        Mr. Richard, I want to go back a little bit to the eminent
    domain and the funding question for a second. You said you have
    been able to negotiate purchases of roughly half of the land
    that you will need. Do you have an estimate of what the--are
    the cost estimates still in line, or because you are going to
    have to use eminent domain, are the cost estimates going to go
    up?
        I ask this question because recently in the district that I
    represent we had a relatively large bridge project that ran
    through an economically disadvantaged community in the
    district, and part of the negotiation for this and avoiding
    potential lawsuits was that despite the eminent domain
    requirement that we pay fair market value for the property that
    was taken, some of these homes were below, well below the cost
    of what they could be replaced at.
        Do you foresee running into this, and has this been
    included in some of your cost calculations? So rather than just
    purchasing their home, an expense associated with relocating,
    long-term rent subsidies or subsidies of purchasing a more
    expensive home because there are no homes at that cost range.
        Mr. Richard. Congressman, you raise a really critically
    important point. While I don't know all the different
    mechanisms we use, and I will be happy to supplement the record
    with that, the essential point is the right one. It has been a
    real tragedy that, as we have gone out to acquire people's
    property and we are limited legally to paying fair market
    value, many parts of the State have not recovered yet in terms
    of the downturn in the housing markets that occurred, and
    taking somebody's property at today's fair market value, which
    is less than what it was in 2008, seems manifestly unfair.
        I can tell you that we have done everything we can to try
    to be aggressive in using tools to be fair with people, and we
    have also done things, particularly with our farmers, where
    what we have said to them is we will be quite liberal in
    looking at the impact on your property if we are only taking a
    portion of it. So, for example, we have----
        Mr. Farenthold. I understand the issues, and I want to ask
    you a couple of other questions.
        Mr. Richard. I am sorry, sir.
        Mr. Farenthold. It just runs the cost of these things up,
    and it is very tough.
        Mr. Richard. It is.
        Mr. Farenthold. I want to ask Mr. Hartnett a question real
    quick. We talked a little bit about sharing track with the
    high-speed rail and your commuter rail. I worry about this. I
    am not sure you--maybe you did it in your testimony. Are we
    going to drop the high-speed rail down to your standard
    commuter rail speeds, or are we going to have different speeds
    of trains on these tracks?
        Mr. Hartnett. They will be able to go faster than our
    trains, but we also have built into the blended system approach
    passing tracks. So certainly they are not stopping at all our
    stations. It is designated to be----
        Mr. Farenthold. Because to me this seems like a scheduling
    nightmare. I mean, I am not a regular train rider, if you don't
    count the Washington Metro, but they are never on time.
        Mr. Hartnett. Actually, we don't foresee it as a problem.
    We have already studied it. There is further scheduling work
    that will be done. But with our ability to schedule down even
    without passing tracks, the blended system can be accommodated.
    There will be passing tracks, so that will enhance the
    ability----
        Mr. Farenthold. I am going to reserve the right to remain
    skeptical of that. We will see, and I am just going to shake my
    head because I expect you will be coming back to Uncle Sam for
    some more money.
        If you will allow me, Mr. Chairman, I want to digress for
    my last minute of questioning since I have Administrator
    Feinberg here. I just wanted to ask her if the Texas high-speed
    rail project that we are talking about between Houston and
    Dallas is currently going through some environmental studies.
    Can you give me an update on the project and how those studies
    are coming in the last 30 seconds I have here?
        Ms. Feinberg. I will be happy to. The last time I spoke to
    you, I believe that the draft environmental work should be done
    by the end of 2016. I believe it is the fall of 2016. It will
    be in the coming months. I believe that is the latest report we
    have on this, as well.
        Mr. Farenthold. All right. Would you please keep me posted
    if you run into any hiccups?
        Ms. Feinberg. Be happy to.
        Mr. Farenthold. Thank you. And I will yield back my last 3
    seconds.
        Mr. Denham. Thank you, Mr. Farenthold.
        Ms. Lofgren?
        Ms. Lofgren. Thanks very much. I think this hearing has
    been enormously helpful, not only hearing from the witnesses
    but hearing from my colleagues about some of the things of
    concern to them.
        You know, there is a lot of construction going on in Santa
    Clara County for transportation right now per your comments,
    Mr. Chairman, on BART and ACE. We are building BART right now.
    We had the Secretary of Transportation out last week. The
    station is almost done in San Jose, and now we are going to the
    ballot in November with a proposal for county voters to tax
    themselves, renew their sales tax to do the extension down to
    the Dearborn station. Obviously, the voters have to decide, but
    it is polling at a very high rate. People are used to paying
    for what they get. The ACE train is about to be expanded, and
    then with high-speed rail coming in, we are going to have a
    whole system that will really help people get to work. The
    transportation system right now is at gridlock, and it is
    really a drag on economic development, in addition to being an
    annoyance.
        Mr. Hunter, it was so good hearing from you that the men
    and women who are in the building trades build this country,
    build this State, and they are building these systems. We want
    to make sure they keep working on not just these transit
    projects but other infrastructure projects. I have heard the
    comment about off-street storage versus rail. We need both.
    There is growing consensus that it is not a partisan issue,
    that there is going to be a need for off-street storage. There
    is not a fight about that. There are issues we need to work
    through on where it is, but I noticed the San Luis Reservoir is
    almost empty. So it is not as if there is an immediate need. We
    have a terrible drought right now.
        I want to ask you, Mr. Richard, you said you are going to
    fill in later with the jobs that are underway, but I would love
    to get, if you could off the top of your head, an outline of
    who is in the work, what has happened so far in the
    construction, who will be put to work, and where.
        Mr. Richard. Well, there are hundreds and hundreds of
    people who are directly involved in the construction right now.
    We have seven construction sites in the Central Valley of the
    viaducts, which are the long lead-time items. But beyond that,
    for example, the columns, the concrete that was made for the
    Tuolumne Street overcrossing was made in Lathrop, California.
    So people in that community, which is in the Central Valley,
    are working in a factory to make those pre-cast things that
    drive down to Fresno.
        The other thing that I think is really important here is I
    am proud that my colleagues on the California High-Speed Rail
    Authority Board have set up a 30-percent set-aside for small
    business. Right now, we have 276 small businesses working on
    the project. We have a 10-percent set-aside for disadvantaged
    businesses. We have 94 of those on the project. We have a 3-
    percent set-aside for disabled veteran businesses. We have 46
    of those disabled veteran-owned businesses working on the
    project.
        Ms. Lofgren. Not 46 vets but 46 businesses?
        Mr. Richard. Businesses. And I can just tell you one
    businessman who is a disabled American veteran, fought for this
    country, runs a business that does environmental remediation.
    He has expanded his workforce, including hiring people from the
    CalWORKs program who were homeless, unemployed, who are now
    working. One of them bought his first home ever. There are some
    really wonderful stories about the economic impacts here.
        Ms. Lofgren. Let me ask you this. The chairman sketched a
    scenario that no one would find suitable, which is we build
    this to Madera and then that is the end of it. What is your
    answer to that scenario? Is that something we need to fear in
    your judgment?
        Mr. Richard. Well, when I was listening to the chairman say
    that I thought to myself, I don't want my name, I don't want
    the Governor's name associated with a piece of track in the
    Central Valley that doesn't connect to the rest of the State.
    So none of us want to see that.
        Mr. Denham. Nor do I, for the record.
        Mr. Richard. Mr. Chairman, that was very clear. But I will
    just say this, to sort of take the extreme position on it.
    Right now what we are building in the Central Valley, if you
    just looked at that--and I don't--but if you just looked at
    that, we are taking out 55 at-grade crossings in the Central
    Valley right now with this $6 billion construction program. We
    are creating a passenger-only track system that will relieve
    pressure on our freight system because the Central Valley has
    the fifth most traveled Amtrak corridor in the United States. I
    have talked to major agribusiness people down there who can't
    get freight capacity. So there is a lot we are doing right now
    that will have immediate benefits in the Central Valley, but I
    believe we will be connecting it.
        Ms. Lofgren. I will close with this, Mr. Chairman. I
    represent the Silicon Valley. I think it is essential that we
    connect the Central Valley and the Silicon Valley. But my
    husband grew up in Bakersfield. When I hear people say, well,
    instead of going from nowhere to nowhere, I always think the
    people who live in the Central Valley think they are somewhere,
    and they are a part of our State's population.
        So I yield back and I thank you again for inviting me here
    today.
        Mr. Denham. Thank you, Ms. Lofgren.
        Mr. LaMalfa?
        Mr. LaMalfa. Thank you, Mr. Chairman.
        For $100 billion, we can do a lot of things. That is truly
    what this will cost at the end. You can build 20 dams, as was
    mentioned earlier, or possibly 3,000 miles of infrastructure. I
    think that was the figure reported. Think of all those jobs.
    Mr. Hunter's colleagues, if they had all that activity instead
    of what we are talking about here, because we haven't
    established yet what the true cost of this rail is going to be,
    as I thought 6 years ago legislatively.
        Mr. Richard, I would still like to know after the fact,
    after the voters narrowly approved the measure, there seemed to
    be a new idea to go ahead and drill through the Tehachapis
    instead of some alternative route. Do we have any idea what
    this is going to cost, what tunneling through the Tehachapis
    will be?
        Mr. Richard. We do, Congressman. If I could just make two
    quick points.
        Mr. LaMalfa. I am short on time, so----
        Mr. Richard. Yes. On the southern leg from the Central
    Valley to Los Angeles, that is an estimated $30 billion leg.
        Mr. LaMalfa. OK. So is this reflected in the initial 2008
    plan the voters saw?
        Mr. Richard. No, but----
        Mr. LaMalfa. So we had $33 billion, plus $30 billion. So we
    are at $66 billion right there.
        Mr. Richard. Sir, it is an apples to oranges comparison
    because the numbers we used are fully inflated over the life of
    the project numbers. That is different than a single point
    number.
        But my main point to you is I wasn't here in 2008. I came
    in in 2011. The Governor told us to tell the truth to the
    people about what it would cost. We stood up and we told them
    that. I wasn't here for the earlier time. Today----
        Mr. LaMalfa. It doesn't matter who was here because you
    said something about a commitment to the program working as it
    is, a commitment to a true high-speed rail train.
        Mr. Richard. That is right.
        Mr. LaMalfa. And that would be one that runs from S.F. to
    L.A., and makes it in 2 hours and 40 minutes.
        Mr. Richard. That is right, and right now that looks like
    it will cost $64 billion over its life, fully inflated. That
    number, if it were----
        Mr. LaMalfa. Including the drilling through the Tehachapis.
        Mr. Richard. Yes, sir.
        Mr. LaMalfa. You can do it for that original $30 billion
    that wasn't included in the original plan.
        Mr. Richard. I don't think I understand or accept the
    second part of your question, but I am saying that for the $64
    billion fully inflated cost, we will build you a system from
    San Francisco to Los Angeles, including going through the
    Tehachapis.
        Mr. LaMalfa. I don't see how those numbers can possibly
    come in on that. But that said, right now, again, we can
    identify about $13.5 billion, plus what you are pulling in from
    the Cap and Trade, which by the time SB-32 finishes putting a
    noose around whatever petroleum products are drilled in
    California industries--the industries are leaving in droves--
    you are not going to tap a whole lot, even in a good year for
    Cap and Trade. Half-a-billion dollars, I hate to project how
    many years that half-a-billion dollars it would take to raise
    $55 billion or $58 billion or $100 billion.
        So, sir, where is the money going to come from? There is no
    private-sector money. The Federal Government isn't in a mood to
    do this since we already have a $19.5 trillion national debt,
    and we have other priorities. Where will this additional $55
    billion come from? Because I don't see it forthcoming from
    anywhere.
        Mr. Richard. Well, it is a longer conversation than we have
    today, but the private-sector money is going to be a very
    robust part of this, and it will equal about a third of the
    contribution----
        Mr. LaMalfa. There are taxes, but they are not California
    in the private sector.
        Mr. Richard. I am trying to do this as quickly as I can.
    The private sector has told us--we are not able to offer any
    kind of a subsidy. That means the private sector needs to see
    the first leg operating before they will come in. Our estimates
    are that there will be about $20 billion of net present value
    of private-sector contribution----
        Mr. LaMalfa. Could we meet them, please, at another
    meeting?
        Mr. Richard. Yes, sir.
        Mr. LaMalfa. All right. As Mr. Capuano was talking about,
    the system is successful in the Northeast Corridor. I have
    ridden that. I like it, you know? But it makes sense in a dense
    urban area, that Boston to Washington area, with lots of stops.
    You have to have lots of stops where people get on and off. It
    isn't truly high-speed anymore when you are stopping a lot.
    California can't do that because if you are stopping in Wasco
    and places like that, you are not high-speed rail anymore. So
    this is a project that isn't nearly the same as the Acela in
    the Northeast Corridor. It can't make money when you are
    stopping. It can't fulfill the mandate that the voters voted
    for, for true high-speed rail.
        I was told one time that if one train ran north to south at
    full speed without stopping, that would fulfill a high-speed
    rail system. The rest is going to be commuter lines stopping in
    Hanford and Shafter, even in the Bakersfield area, although
    without Buck Owens and Merle Haggard around anymore, so there
    is less reason to stop in Bakersfield.
        That said, I don't see how this can be successful, sir. How
    do you see this as being successful? And lastly, what will the
    price of the ticket be these days since it cannot be
    subsidized?
        Mr. Richard. I will say this very quickly, Congressman. In
    our business plan, what we use for our revenue models, if we
    had the system in place today we believe it would have to
    compete with the airlines. So we priced the ticket at 85
    percent of a discounted airfare between L.A. and San Francisco,
    roughly about $83.
        On your other question, it is a longer conversation, but I
    will say this, and I say this to you as a person who I know is
    a conservative Republican: We are building this system to be
    operated by the private sector. The Government would put in the
    first money, but it is the private sector that would bring
    their genius, their innovation, their efficiency to operate it.
    They are telling us they want the chance to do that. To do
    that, they know they have to compete with the airlines and they
    have to provide a service that would make money.
        The Acela is not true high-speed rail, but it throws off
    operating cash. Every high-speed rail system in the world, once
    it is built, throws off positive operating cash. That is why
    the private sector wants to come in and operate this system,
    and they will be able to operate it successfully. We really
    believe that, and all our models and all our numbers--and we
    have the former vice chair of Bank of America on our board who
    has looked at all this and says this will operate profitably
    when we get it done.
        It is a longer conversation. I welcome the opportunity, Mr.
    LaMalfa, to have it with you.
        Mr. LaMalfa. You made my point right to Amtrak, which I am
    heartily supportive of, and it still requires the input of
    Federal dollars to keep it----
        Mr. Richard. All but the Acela.
        Mr. LaMalfa [continuing]. The Northeast----
        Mr. Richard. That is right.
        Mr. LaMalfa. But the rest of it, it doesn't.
        Mr. Denham. I think this will require a longer debate.
        Mr. LaMalfa. Thank you, Mr. Chairman.
        Mr. Denham. Mr. Capuano?
        Mr. Capuano. I would like to yield a few minutes to my
    colleague, Ms. Lofgren.
        Ms. Lofgren. I just wanted to mention that in terms of the
    subsidy, we don't know precisely but the tech companies, they
    have the Google bus, the Yahoo bus, the Genentech. I saw them
    coming off here on 280. In talking with the technology sector
    in Silicon Valley, they fully expect that they will be part of
    financing their employees on the system, and it would actually
    cost them less than what they are paying to get their employees
    to work now.
        I thank the gentleman for yielding.
        Mr. Capuano. I guess I would just like to start out by
    asking can anybody here imagine what would have happened to
    this country, the last time we had a major deficit which
    actually was greater than the deficit we have today, no matter
    how you measure it, if a conservative Republican President had
    said that because of our deficit, we are not building the
    Interstate Highway System? Dwight Eisenhower said we need to
    invest in our future. We had just spent every penny we had in
    war, on World War II, but we knew we had to invest. I can't
    imagine what this country would be like.
        I am not going to say whether this project is the best way
    to invest in our future, or building dams, or something else.
    That is an issue for the people of California. But to fail to
    invest in our future, regardless of the economic situation, is
    shortsighted and stupid, no matter how you look at it. If this
    is the way you want to invest in it, good for you.
        I do want to ask a question about the blended system. That
    is a new term to me. I want to make sure I understand it. That,
    to me, sounds like Amtrak. Am I hearing that correctly?
        Mr. Richard. You are.
        Mr. Capuano. OK. That is not a new system. The question I
    have is do you have the ability to separate this track in the
    future? Because, Mr. Hartnett, I know what you are saying, and
    I accept that you can time these trains right. We do it when we
    have to do it. But one of the biggest problems we have in the
    Northeast Corridor is shared track. It doesn't mean we don't do
    it. We do it. But we are doing everything we can now, and
    spending a lot of the money, to separate that track.
        So I am just curious, as you build this, is there the
    ability at a later time to separate the track if and when the
    system proves viable?
        Mr. Hartnett. I think the way the system is designed is to
    share our right-of-way and it is to be built substantially
    within the right-of-way. In order to increase the number of
    trains, there are passing track opportunities. While passing
    tracks can be built, it enables us to share the remainder of
    the track more efficiently because of the passing track. So I
    think that is an integral element of the future.
        Mr. Capuano. I get that. I am looking 50 years down the
    road or something. And the reason I am asking is because I am
    personally involved with two projects in my own area where we
    are trying everything we can to separate track. Some of it is
    subway and rail, some of it is rail and rail, some of it is
    Amtrak. It would help us greatly--again, I am not saying don't
    do the project because you can't do it, but I am hoping that
    you are thinking long term.
        I guess the other question I have, and again it goes back
    to a personal opinion, as you build up these stations, there
    has to be one. You have to start somewhere. You are not going
    to build them all the same day. You are not going to open them
    up the same day. Is there priority being given to the areas
    taking local or regional leadership in allowing for smart
    growth?
        I say that because if you are going to build a stop in the
    middle of nowhere, or you are going to build a stop in the
    middle of a community that allows for more residential
    development and more parking opportunities so you can actually
    get on and off the train, obviously I would argue to build in
    the latter. The communities that want to fight it, I guarantee
    you they will be back 20 years later saying we didn't mean it,
    but that is a different issue. We can jump over them and move
    to the guys that want to do it.
        I am just curious. Are you doing that, or are you just kind
    of going full steam ahead?
        Mr. Richard. Yes, sir. Very quickly. And by the way, I grew
    up in the DC area, so I am very familiar with Georgetown and
    the Metro and the communities that said no and the communities
    that didn't.
        This is a particular passion of mine. This is how we really
    make the system work for everybody and meet our environmental
    objectives, is we have to look at transit and land use. I had
    the transit land-use committee of my board. We are looking at
    developing sustainability and connectivity and density
    standards around the stations. We absolutely need to do that
    and build these stations the right way.
        Mr. Capuano. Thank you. I yield back.
        Mr. Denham. I know better than to cut off the ranking
    member. We work very, very closely together. We have a trip
    here ahead of us.
        Let me first start by thanking all of the Members for not
    only expressing their views but for keeping us on time today.
    And I want to thank each of our witnesses today for taking time
    out of your schedules to be here with us today. A lot of
    information, but I would say the most important information
    that we usually get out of each of these hearings is the
    questions that we have to follow up afterwards.
        Ms. Feinberg, I specifically want to thank you and all of
    the work that you have done to keep our rail systems safe
    across the country. We have made some big accomplishments this
    year with implementing PTC, Positive Train Control, as well as
    the new tank car rules, working together to make sure that the
    crude by rail that is moving throughout our communities is much
    safer. I think one of the most important issues is alerting and
    training our first responders, letting them know not only what
    is coming through our communities but making sure they have the
    training to address any catastrophe that we may see.
        So I just want to thank you for your ongoing relationship
    and communication that we continue to have. I look forward to
    working with you in September in Washington, DC.
        And Mr. Richard as well, we have communicated well. Early
    on we had a number of hearings. I don't expect to have another
    oversight hearing for some time, but you certainly had previous
    leadership that ran things a different way. We have had a great
    relationship and having a discussion about some of these, but
    we have not always agreed on our approach. But you have been
    very accessible, and I hope to address a number of the
    transparency issues. So we would follow up with some questions
    that we still have outstanding from this committee.
        As well, I want to thank each of our other panelists. You
    each have different concerns, as we have different concerns,
    and your testimony today has been very helpful.
        I just have one last thing that I want to touch on. We have
    an election ahead of us. There will be a new administration,
    and we still have $2.9 billion for the initial operating
    segment, which you say you need to have completed before we can
    have private investment.
        So first of all, on the initial operating segment,
    regardless of who the next President is, it sounds like both
    candidates are making positive statements about infrastructure
    investments. What do you need? What do you anticipate going
    back to the Federal Government for on the initial operating
    segment?
        Mr. Richard. Just to be clear, Mr. Chairman, our business
    plan says that even without that $2.9 billion, we can open an
    initial operating segment. What we are saying to the Federal
    Government is we are going to put all this money in at the
    State level, but if you help us with this piece, it will really
    enhance it, enhance the value, and I can follow up with you on
    that.
        But I wanted to be clear, we don't need the Federal dollars
    to open the initial operating segment beyond what we have
    already received from the Congress and the administration, but
    we think we are ready to have a good conversation with you
    about the costs and benefits there.
        Mr. Denham. And the initial operating segment you are
    defining as----
        Mr. Richard. Well, I am defining it south of Fresno or
    north of Bakersfield into San Jose, with more limited service
    to San Francisco. We can enhance service to San Francisco and
    reach down to Bakersfield with this additional support.
        Mr. Denham. And the phase 1 of this project, do you
    anticipate Federal tax dollars, and do you have an idea of what
    that Federal request would be as well?
        Mr. Richard. I would just say this, Mr. Chairman. Right
    now, if we got no more Federal money and we were able to build
    this, the Federal contribution to California's high-speed rail
    system would be 5 percent. I would submit to you that that is a
    far lower percentage of Federal participation of any major
    transportation project in this Nation. Without giving you a
    specific number, I would like to work with the Congress. Once
    we establish that we are on track and we are doing this in the
    right way, to have a more intelligent conversation, not just
    about grant money but about things that you can also do to help
    us accelerate private-sector investment.
        Mr. Denham. Thank you.
        Thank you. Again, I want to thank all of our Members here
    today, as well as our witnesses.
        I am going to ask unanimous consent that the record of
    today's hearing remain open until such time as our witnesses
    have supplied answers to any questions that may be submitted to
    them in writing; and unanimous consent that the record remain
    open for 15 days for any additional comments and information
    submitted by Members or witnesses to be included in the record
    of today's hearing.
        Without objection, so ordered.
        I would also like to thank again Ms. Pelosi for inviting us
    or having us in her beautiful city and her great district and
    allowing us to have this hearing here today.
        If no other Members have anything to add, the subcommittee
    stands adjourned.
        [Whereupon, at 11:04 a.m., the subcommittee was adjourned.]

       [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

                             [all]