[Senate Hearing 114-72]
[From the U.S. Government Publishing Office]



                                                         S. Hrg. 114-72
 
 SURFACE TRANSPORTATION REAUTHORIZATION: BUILDING ON THE SUCCESSES OF 
MAP-21 TO DELIVER SAFE, EFFICIENT, AND EFFECTIVE PUBLIC TRANSPORTATION 
                         SERVICES AND PROJECTS

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

                                HEARING

                               before the

                              COMMITTEE ON
                   BANKING,HOUSING,AND URBAN AFFAIRS
                          UNITED STATES SENATE

                    ONE HUNDRED FOURTEENTH CONGRESS

                             FIRST SESSION

                                   ON

  EXAMINING THE REAUTHORIZATION OF ``MOVING AHEAD FOR PROGRESS IN THE 
 21ST CENTURY ACT'' (MAP-21; P.L. 112-141), THE SURFACE TRANSPORTATION 
                           AUTHORIZATION BILL

                               __________

                             APRIL 21, 2015

                               __________

  Printed for the use of the Committee on Banking, Housing, and Urban Affairs
  
  
                                  
                                
                                
                                
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            COMMITTEE ON BANKING, HOUSING, AND URBAN AFFAIRS

                  RICHARD C. SHELBY, Alabama, Chairman

MICHAEL CRAPO, Idaho                 SHERROD BROWN, Ohio
BOB CORKER, Tennessee                JACK REED, Rhode Island
DAVID VITTER, Louisiana              CHARLES E. SCHUMER, New York
PATRICK J. TOOMEY, Pennsylvania      ROBERT MENENDEZ, New Jersey
MARK KIRK, Illinois                  JON TESTER, Montana
DEAN HELLER, Nevada                  MARK R. WARNER, Virginia
TIM SCOTT, South Carolina            JEFF MERKLEY, Oregon
BEN SASSE, Nebraska                  ELIZABETH WARREN, Massachusetts
TOM COTTON, Arkansas                 HEIDI HEITKAMP, North Dakota
MIKE ROUNDS, South Dakota            JOE DONNELLY, Indiana
JERRY MORAN, Kansas

           William D. Duhnke III, Staff Director and Counsel

                 Mark Powden, Democratic Staff Director

                Shannon Hines, Professional Staff Member

                  Jen Deci, Professional Staff Member

            Laura Swanson, Democratic Deputy Staff Director

          Homer Carlisle, Democratic Professional Staff Member

                       Dawn Ratliff, Chief Clerk

                      Troy Cornell, Hearing Clerk

                      Shelvin Simmons, IT Director

                          Jim Crowell, Editor

                                  (ii)
                                  
                                  
                                  
                                  


                            C O N T E N T S

                              ----------                              

                        TUESDAY, APRIL 21, 2015

                                                                   Page

Opening statement of Chairman Shelby.............................     1

Opening statements, comments, or prepared statements of:
    Senator Brown................................................     2
    Senator Crapo
        Prepared statement.......................................    26

                                WITNESS

Therese W. McMillan, Acting Administrator, Federal Transit 
  Administration, Department of Transportation...................     4
    Prepared statement...........................................    26
    Responses to written questions of:
        Chairman Shelby..........................................    32
        Senator Brown............................................    41
        Senator Vitter...........................................    41
        Senator Kirk.............................................    42
        Senator Menendez.........................................    44

                                 (iii)


 SURFACE TRANSPORTATION REAUTHORIZATION: BUILDING ON THE SUCCESSES OF 
MAP-21 TO DELIVER SAFE, EFFICIENT, AND EFFECTIVE PUBLIC TRANSPORTATION 
                         SERVICES AND PROJECTS

                              ----------                              


                        TUESDAY, APRIL 21, 2015

                                       U.S. Senate,
          Committee on Banking, Housing, and Urban Affairs,
                                                    Washington, DC.
    The Committee met at 10:02 a.m., in room SD-538, Dirksen 
Senate Office Building, Hon. Richard Shelby, Chairman of the 
Committee, presiding.

        OPENING STATEMENT OF CHAIRMAN RICHARD C. SHELBY

    Chairman Shelby. The hearing will come to order.
    This is the first of our hearings on the reauthorization of 
MAP-21, which expires on May 31. I believe that a long-term 
reauthorization bill is necessary to provide certainty and 
stability to cities and States across the country. More 
importantly, it is essential to Americans who rely on 
transportation for their livelihoods.
    However, the solvency of the Highway Trust Fund is the most 
significant hurdle we face in advancing a reauthorization bill. 
Today, the revenue coming into the Highway Trust Fund is $15 
billion less than what is needed to sustain transportation 
spending at current authorization levels. This persistent 
revenue shortfall highlights the fact that our transportation 
needs have outstripped the capacity of the trust fund. Any 
reauthorization proposal Congress considers, I believe, must 
balance spending needs with long-term sustainability, 
flexibility, and innovation.
    Federal policies should encourage private sector investment 
in transportation and transit infrastructure in order to better 
leverage Federal investments and increase economic growth. I 
have long advocated this approach, and I am pleased that the 
administration has launched the Build America Investment 
Initiative, which seeks to expand the reach of existing 
financing tools and to promote the use of public-private 
partnerships.
    We cannot stop there, however. By eliminating burdensome 
regulations, we will invite more innovation into the 
marketplace. By reforming the FTA's internal administrative 
practices, project sponsors can achieve greater efficiencies. 
Projects that have a minimal Federal investment and significant 
private investment should not be, in my opinion, subjected to 
the same level of bureaucratic oversight as those with a 
significant Federal investment. Experience tells us that large 
bureaucracies tend to delay projects and ultimately discourage 
infrastructure investment.
    In addition, Federal policies should encourage a 
responsible and measured approach to transportation system 
management. This includes the funding of operations, preventive 
maintenance, and most importantly, fleet acquisition. ``State 
of good repair'' must become an integral part of the public 
transportation dialogue, and transit systems must take a ``fix 
it first'' approach. We do not need to look any further than 
Washington Metro for an example of what happens when an agency 
does not maintain its system in a state of good repair.
    Moreover, public transportation policy should support this 
effort and prioritize Federal spending to maintain our aging 
public transportation infrastructure. Federal policy should not 
encourage more spending to expand systems that cannot maintain 
what they already have.
    The issues we are facing are difficult, but I believe we 
can find some middle ground here. It is possible to produce a 
long-term, fiscally responsible reauthorization bill that can 
garner broad bipartisan support both in the Banking Committee 
and on the Senate floor. I look forward to working with the 
administration and my colleagues on a reauthorization measure 
that provides the stability and the certainty that our 
transportation system needs.
    Senator Brown.

               STATEMENT OF SENATOR SHERROD BROWN

    Senator Brown. Thank you, Mr. Chairman.
    Ms. McMillan, thank you for joining us today.
    I am committed to passing a long-term reauthorization bill 
that grows the overall transportation program. It is good for 
the economy. It is good for workers. It is good for our 
Nation's economic competitiveness.
    A special shout out to Senator Menendez for his studied 
strong advocacy on this issue. In a letter to me soon after I 
became Ranking Member of this Committee, he very cogently laid 
out the importance of a transportation policy serving his 
State, serving particularly the East Coast, but much more of 
this country than that, and I appreciate his leadership in 
that.
    Previous generations of Americans built the best 
infrastructure in the world and we have watched it crumble for 
decades. New investment in infrastructure puts Americans back 
to work fixing railways and roadways. Our work in the Banking 
Committee to rebuild and expand public transportation will lead 
to new economic opportunities.
    People are riding, again riding buses, trains, and subways, 
more last year than they have in many years. Sixty percent of 
the trips taken on public transportation are to and from work. 
Transit provides crucial access to jobs, particularly for low-
income workers.
    In my State's three largest cities, the three Cs, 
Cleveland, Columbus, and Cincinnati, our transit agencies carry 
more than a quarter-million passengers every day. Those trips 
do not just benefit riders, it is important to note. Every 
transit trip takes cars off the road, good for the environment, 
reduces highway congestion.
    Federal transportation investment has been flat since 2009, 
but the level of backlog maintenance and repair grows each 
year. I appreciate Ms. McMillan speaking out on that issue, how 
important that is.
    Cleveland RTA's fleet of 108 rail cars has an average age 
of more than 30 years and will need to be replaced soon. Its 
tunnels and stations also need major repairs. I have worked 
with Cleveland RTA General Manager Joe Calabrese for a long 
time. Most people carry pictures of their grandchildren in 
their wallet, but it seems that whenever I see Joe, he is 
showing pictures he carries around of crumbling concrete in his 
stations. That is all he wants to show me.
    In the Banking Committee, there is a strong history of 
bipartisanship when it comes to drafting the transit title. I 
am looking forward to working with Chairman Shelby to reach a 
bipartisan agreement in the weeks and months ahead.
    We have a chance today to talk about the President's vision 
for surface transportation as we begin work on a bill. He has 
proposed a 6-year, $478 billion transportation package that 
significantly expands investment in public transportation. The 
President has proposed a new international corporate tax system 
that would shut down tax havens and increase domestic 
investment. This system includes a one-time transition tax on 
the roughly $2 trillion--two-thousand-billion dollars--in 
offshore profits, which could make up the shortfall we need for 
a 6-year bill at administration levels.
    I think we could look at a range of options, including the 
current user fee, but no matter what mechanism we choose and we 
pursue, we need to avoid an endless cycle of extensions. Nobody 
can plan when we run Government from Government shutdown to 
Government shutdown the way we have. We need to do much, much 
better than flat investment levels.
    I would argue that stand-alone international tax reform, 
which I am working on with Senators Schumer and Portman and 
Mark Warner, who sits on this Committee, affords us the best 
opportunity we have had in years to escape the cycle of short-
term flat funding. As the Finance Committee works on revenue 
for this bill, Banking will be working our part of it.
    One area I think we should look at is the opportunity to 
increase jobs in the transit manufacturing sector in this bill 
through Buy America provisions. I know Senator Shelby and I 
both share significant transit manufacturing in our States and 
I am hopeful we can come to an agreement. I have been a 
longtime supporter of Buy America and have introduced the 
Invest in America Jobs Act in previous Congresses. Taxpayer 
dollars, whenever possible, should be spent supporting American 
workers and American businesses. All of us hear that in our 
States over and over again.
    I understand there are concerns, but I do not accept the 
argument, as I know Ms. McMillan does not, that nothing can be 
done. We need to encourage the use of American suppliers up and 
down the supply chain. We need to close loopholes. We need to 
use more American-made products, such as steel.
    Our Committee also needs to look at how we can build on the 
many successful policy changes in MAP-21. It helps speed 
construction under New Starts and Small Starts. MAP-21 provided 
long-needed authority to FTA to oversee transit safety.
    And, I thank again Administrator McMillan. She has been 
overseeing FTA's efforts to implement MAP-21. She can offer 
valuable guidance to our Committee.
    I hope that our Committee can consider, Mr. Chairman, can 
consider Ms. McMillan's nomination quickly. The President 
nominated her in July. We reported her nomination unanimously 
last November, but the full Senate could not act on her 
nomination at the end of the year. The President re-nominated 
her in January. I hope she does not have to wait much longer to 
be confirmed.
    Thank you, Mr. Chairman.
    Chairman Shelby. Thank you, Senator Brown.
    Our witness today is Ms. Therese McMillan, the Acting 
Administrator of the Federal Transit Administration. Welcome to 
the Committee. Your written testimony will be made part of the 
hearing record. You proceed as you wish.

STATEMENT OF THERESE W. MCMILLAN, ACTING ADMINISTRATOR, FEDERAL 
      TRANSIT ADMINISTRATION, DEPARTMENT OF TRANSPORTATION

    Ms. McMillan. Chairman Shelby, Senator Brown, and Members 
of the Committee, good morning and thank you for the 
opportunity to discuss the progress being made by the Federal 
Transit Administration in implementing MAP-21 and the 
administration's reauthorization proposal, the GROW AMERICA 
Act. I appreciate this Committee's continuing support of FTA as 
we deliver vital Federal funding to the Nation's public 
transport systems.
    Mr. Chairman, transit ridership reached a record high of 
10.8 billion trips in 2014 and the demand for transit service 
is on the rise. In many communities, transit is the lifeline to 
jobs, medical services, education, and community.
    When increasing transit demand, however, is coupled with 
static investment, we see a growing need to bring existing 
systems into a state of good repair and to expand system 
capacity.
    The passage of MAP-21 has moved us in the right direction 
to address these issues. Importantly, MAP-21 supported FTA's 
top three priorities: Improving transit safety, addressing the 
transit maintenance backlog, and building system capacity.
    With the help and encouragement of this Committee, FTA is 
making significant progress toward implementing our new safety 
authorities. We are establishing the regulatory framework 
needed to ensure safety standards are in place in each transit 
system across the country to protect the riding public and 
transit agency employees. We have issued a Notice of Proposed 
Rulemaking to strengthen State safety oversight agencies. We 
have also issued final interim guidance on safety training, and 
there will be more FTA safety-related NPRMs and related 
guidance issued later this year.
    MAP-21 began to address the maintenance backlog with the 
creation of the State of Good Repair Grant Formula Program, but 
much more needs to be done if we are to make significant 
headway against years of under-investment. The U.S. DOT's 2013 
Conditions and Performance Report to Congress found an $86 
billion maintenance backlog of transit assets and that backlog 
continues to grow at an estimated rate of $2.5 billion a year.
    In my 30 years working in public service, I have come to 
understand how critical it is to maintain and sustain the 
current system. Every day, millions of passengers across the 
country depend on the existing transit services to get onto the 
roads and rails and arrive at their stops or stations. This 
infrastructure must be maintained and renewed to improve safety 
and reliability.
    That said, demand for new transit service continues to 
rise. FTA has 44 new projects in our New Starts or Small Starts 
pipeline since MAP-21 took effect, and 12 more projects are 
waiting in the wings to enter the program. This is, in part, 
because we have streamlined the process to help local project 
sponsors reduce the time required to move major projects 
through the pipeline.
    In March of 2015, the administration submitted to Congress 
an updated version of its GROW AMERICA reauthorization 
proposal. Consistent with the President's fiscal year 2016 
budget request, GROW AMERICA provides funding certainty by 
requesting a 6-year, $478 billion multimodal proposal, 
including $115 billion to support our Nation's public 
transportation systems.
    The proposal increases average transit spending by nearly 
76 percent above the fiscal year 2015 enacted levels, and this 
will enable us to address what transit agencies and local 
communities are asking for: Immediate repair needs, increased 
reliability, and better connections. GROW AMERICA also supports 
economic competitiveness through workforce development 
initiatives and increased Buy America requirements that would 
ensure transit assets are made in the United States.
    By 2045, the population of the U.S. is expected to grow by 
an estimated 70 million people, and transit will be an 
important part of the transportation system that moves them. 
MAP-21 included provisions enabling FTA to focus limited 
resources on certain strategic investments and policies. The 
administration's GROW AMERICA Act will build on that 
foundation, improving transit service for millions of Americans 
by repairing and modernizing transit systems and expanding 
capacity for the generations to come.
    I am committed to working together with this Committee 
toward our mutual goal of addressing America's urgent need for 
investment in transit infrastructure. Thank you again for 
inviting me to testify, and I am happy to answer your 
questions.
    Chairman Shelby. Thank you.
    The law requires project applicants seeking a capital 
investment grant to have the resources necessary to 
recapitalize, maintain, and operate their existing system as 
well as the proposed system. This requirement is in place to 
ensure that we are not building beyond the true financial 
capabilities of a system. Regardless of the demand, the one 
thing we do not need is more infrastructure that cannot be 
adequately maintained.
    Ms. McMillan, in reviewing the projects in the pipeline, 
including those currently receiving Federal funding, it is hard 
to believe that they are all being maintained in a state of 
good repair. It is even harder to believe that they will be 
able to maintain additional miles in the future. We all see 
that. What specific assurances can you give the Committee that 
the Federal Transit Administration is, in fact, holding 
applicants to that basic requirement?
    Ms. McMillan. Thank you, Mr. Chairman, for that question, 
and it reinforces the need for state of good repair in all 
aspects of our systems.
    First of all, let me point out that under MAP-21, a 
significant new requirement was put in place for Transit Asset 
Management Plans and programs and we have been aggressively 
moving forward to implement that and we are expecting a Notice 
of Proposed Rulemaking to be issued certainly by the end of the 
year, and hopefully sooner than that. That is really critical 
in terms of being able to identify what the inventory is of all 
of the transit assets and to ensure that the transit agencies 
are assessing the risks attached to making sure they are in 
good repair, including safety implications. So, we will be 
working closely with the industry on implementing the transit 
asset management----
    Chairman Shelby. Along these lines, does the administration 
believe that the Government should continue to make investments 
in new or expanded fixed guideway systems without a state of 
good repair requirement? In other words, should project 
sponsors have to certify that their system is in a state of 
good repair before they are given Federal funding to build 
more? And, what, in your view, can and should be done to ensure 
that systems are making the investments necessary to properly 
maintain their infrastructure assets? It is kind of like you 
wanting to build onto your house a room or so and your house is 
just going to the devil, you know. What the heck?
    Ms. McMillan. Well, as I mentioned before in my opening 
remarks, we do have an $86 billion backlog in transit asset 
management. That is one of the main reasons we are asking for 
significant Federal dollars to invest in state of good repair 
as a priority. We believe that there are dual needs in the 
system. Clearly, we want to make sure that transit assets are 
safe, in the existing system, because that is the foundation, 
and that any new services would only be brought to bear if 
there is sufficient continuing progress made toward state of 
good repair. But, we are also seeing, as I mentioned, 
increasing demand to serve the growing needs for transit. So, 
we are trying very hard to balance both of those objectives in 
terms of both MAP-21 and GROW AMERICA provisions.
    Chairman Shelby. There are a lot of regional differences, 
we have been told. Over the years, the Committee has heard from 
the Federal Transit Administration grantees that FTA's regional 
offices do not uniformly apply the rules and regulations. These 
differences range from issues of funding eligibility, to ADA 
compliance, to Buy America waivers, among others.
    Could you address just for a minute the perception that 
different agencies are held to different standards depending on 
their region of the country and tell the Committee what 
processes the Federal Transit Administration has in place to 
ensure that the regions uniformly apply the law. And, what kind 
of guidance and oversight of the regional offices do you have 
in place?
    Ms. McMillan. Well, in the time left allowed, let me say 
that this is a priority for my administration. I have led 
significant reviews of our oversight processes. We work very 
closely with our transit agencies as well as our regions if 
issues are brought to our attention. Very often, 
inconsistencies are fact specific and we want to understand 
those facts in order to address clearly what the concern may 
be. I am committed and have worked very closely with my staff 
to ensure that when we do oversight, it is important that it be 
done in a consistent and clear fashion.
    Chairman Shelby. Senator Brown.
    Senator Brown. Thank you, Mr. Chairman.
    We do not in this body think all that much, unfortunately, 
or often enough, about low-income workers and low-income 
commuters, for that matter, and I find this a bit curious in 
that we are sort of chasing our tails. We are saying we should 
not invest in new infrastructure until we fund existing 
infrastructure, but we are not funding existing infrastructure. 
For example, the cars in Cleveland, is that new infrastructure 
to build new cars that are too aging and fixing those tunnels? 
Well, not really. It is really maintaining what we have. And, 
we are sort of chasing our tail with a kind of a circular 
argument, to mix metaphors here.
    I bring up low-income workers because I know that, from 
conversations lots of places in my State, how hard it is to be 
poor, how hard it is to make $9 and $10 an hour, to get to 
work, to buy groceries. I remember a woman in Youngstown I was 
talking to who lived in what we call food deserts, and she had 
to get on a bus and go downtown, because that was where the 
line went, change buses and get on another bus and go out to 
Austintown, a suburb, which had real grocery stores with real 
fresh produce. It would take her about an hour, depending on 
the timing, it could take an hour and 15 minutes to get there. 
She could only carry--she was an older woman, I mean, sort of 
my age older, not 20 older, or not 70 or 80, but she was old 
enough that she could not carry that much with her and she had 
those struggles.
    But, let me talk about access to jobs and commuting. How 
does this aging transit system affect access to jobs and 
commuting for low-income workers?
    Ms. McMillan. Well, one of the critical needs, Senator, we 
need to be attentive to, is that the reliability of the transit 
system is critical in terms of job access. And, so, the state 
of repair of current systems can impact certainly the 
reliability of getting the service out on the road and that 
could have significant ramifications for the person who is late 
to their job or cannot access it at all.
    But, in addition to your point about low-income workers, it 
is also important to note provisions both in MAP-21 as well as 
GROW AMERICA in trying to provide job opportunities through 
them, perhaps even within the transit industry. We have a 
workforce program that we have tried to target to low-income 
populations, to veterans, to women, to others who may need and 
could get a job through workforce programs supported by the 
FTA. As well, we have local hire programs that have been 
included recently in terms of efforts by the administration to 
expand the flexibility to consider local hiring, particularly 
in economically distressed communities, as well as provisions 
to allow that flexibility within GROW AMERICA.
    So, I could comment more if that is getting at your 
concerns.
    Senator Brown. That is helpful. So, a modernized, 
efficient, up-to-date transit system gets people to their jobs, 
but a modern, efficient, up-to-date transit system also can 
create jobs.
    Ms. McMillan. Correct.
    Senator Brown. Talk to me--talk to us, if you would, about 
Buy America, if you would, why it makes sense to significantly 
increase the amount of American-made parts and materials 
required to go into transit vehicles in the next transportation 
bill. Are there interim steps we should take there to get 
compliance in full, meaning right up to approaching 100 percent 
made in America, not just for the assembly of the buses and the 
rail cars, but the steel and the components and all other 
things that can be made in America, leading up to that in the 
supply chain.
    Ms. McMillan. Yes. Thank you, Senator, for that 
introduction to a very important commitment by the 
Administration to create and preserve American manufacturing 
jobs in the transit industry. As you know, the GROW AMERICA Act 
does include a proposal to increase in a step-wise fashion the 
domestic content of both components and subcomponents for 
rolling stock from the current 60 percent on a 10-percent per 
year increase up to 100 percent.
    It is our belief that this policy will create a significant 
market share for domestic manufacturing and entice overseas 
manufacturers to establish plants here in the United States. We 
have certainly seen the market be responsive to the fact that 
we significantly reduced waivers, Buy America waivers that we 
have granted----
    Senator Brown. So, explore that in the last couple seconds. 
Have you seen a domestic supplier stepping up where there might 
not have--I mean, you get these waivers because you cannot find 
a supplier that makes this component in a rail car, so you get 
a waiver. Are you seeing some new suppliers coming in, 
anticipating that there are going to be Buy America provisions 
and they are meeting that market demand?
    Ms. McMillan. Yes. In fact, there is a manufacturer in your 
State of Ohio who established a new plant in North Carolina to 
develop what is known as low-vibration ties, an important 
component of mitigating noise for a rail track. And, that had 
been something that had been sourced overseas previously, but 
when we had issued a non-availability waiver and asked for 
comment, this company was able subsequently to step in and fill 
that niche. So, we are seeing responsiveness in that----
    Senator Brown. So, that current 60 percent requirement for 
domestic content is going up, step by step, under MAP-21, is 
that right?
    Ms. McMillan. The proposal would be that it would increase 
to 70, 80, 90, and 100 on a step-wise year-by-year basis.
    Senator Brown. Mr. Chairman, bear with me for 30 more 
seconds.
    And you are confident, Administrator McMillan, that we will 
be able to get to 70, 80, 90, because companies will anticipate 
that there is a place to sell to communities and transit 
systems and all, to sell these components and do it profitably 
and you will see these businesses begin to meet that demand?
    Ms. McMillan. I believe we are creating the environment for 
new domestic manufacturers to step in and serve the needs of 
building transit infrastructure, rolling stock infrastructure, 
as well as rehabilitate it, yes.
    Senator Brown. Good. Thanks, Mr. Chairman.
    Chairman Shelby. Senator Scott.
    Senator Scott. Thank you, Mr. Chairman.
    Ms. McMillan, I certainly thank you, and good morning. 
Thank you for being here with us today. I certainly enjoyed our 
conversation last week as it relates to--I think we spoke in 
depth about the local hire program, and I will have a question 
about that.
    But, just following up on Senator Brown's questions, this 
relates to Buy America and the President's proposal to move 
over the next 5 years incrementally to 100 percent. It appears 
that when I talk to industry and when I look at what we are 
asking industry to do, we may be creating an environment that 
is conducive for industry to move in that direction. I probably 
would say we are compelling them to move in that direction.
    And, the fact of the matter is, when you talk to industry, 
especially Proterra, who uses a battery that is designed and 
made in China, getting there in 5 years just seems completely 
unrealistic. Your thoughts?
    Ms. McMillan. We are attempting with the Buy America 
provision to significantly lift the bar and, as I said, to 
create the environment, to incentivize domestic manufacturers 
to step in. I believe that with the step-wise approach, that 
this provides an opportunity for the market to react. We are 
certainly willing to hear from the market and manufacturers, 
their sense of this. Our goal is to, though, make sure that we 
are pushing the market in a forward direction for domestic 
manufacturing, and importantly, domestic jobs.
    Senator Scott. Thank you.
    On the question that we discussed on the telephone, as it 
relates to the local hire programs, to me, part of the local 
hire program seems to be a perverse incentive to move jobs from 
one locality to another locality. It certainly has some, as 
Senator Brown talked about, the necessity of trying to find a 
way to use the Federal Government's programs to improve and 
incent folks to do local hiring. Perhaps there is a silver 
lining in there from an employee standpoint, but when you are 
talking about moving rolling stock from one State to the other 
State so that they would be compliant and allowed to bid on 
contracts, that seems to be a leap in the wrong direction, from 
my perspective.
    When I look at Proterra located in South Carolina, in 
Greenville, South Carolina, bidding on a contract in 
California, it appears to me that the Department of 
Transportation in their recently announced pilot program would 
permit recipients of Federal transit money to use local hire 
rules in the procurement process not only for the construction 
services, but for the rolling stock that we talked about on the 
telephone. The end result would be to use South Carolina tax 
dollars, who contribute to the Nation, to subsidize creating 
jobs and, frankly, moving companies from one coast to the other 
in order to abide by the local hire program.
    That just seems like a perverse incentive that is 
counterproductive, or merely charging one State and moving jobs 
to another State if, in fact, we saw the rolling stock move to 
another State in an attempt to abide by the local hire 
preference programs that could be put in place.
    Ms. McMillan. Thank you, Senator, and maybe if I could take 
a minute to explain the nature of the local hire options that 
we----
    Senator Scott. Please.
    Ms. McMillan. ----that we are working with. I think it 
would be helpful.
    First of all, let me stress that the pilot program that we 
put forward is voluntary and the objective, actually, of 
putting it out there is to get at the concerns that you raised. 
We know that there are local communities, particularly in 
distressed economic areas, that would like the opportunity to 
create jobs for either the construction projects that are 
happening in their community or in the case of potential 
procurement opportunity. Very often, they have local or State 
laws that are already encouraging in that regard.
    But, we also know that there are statutory provisions 
requiring fair and open competition, and so the objective of 
having the pilot program was for those areas that wanted to 
expand their flexibility in geographic preference to be able to 
evaluate the data and actually see what impact that would have 
on the competitive environment, so that we would have more 
information about how to strike that sweet spot between those 
two objectives: local hire, economic opportunity, and the 
competitive environment that we also need.
    Senator Scott. Thank you.
    My last thought would be that it seems like there may be an 
incentive to, in an attempt to help low-income wage earners in 
a specific locale, we create a program that takes good jobs in 
another low-income area of the country and we just transfer 
those jobs to another location. I am sure that is not the 
intention of the program. But, I think part of the unintended 
consequences could easily lead to us merely transferring and 
shifting jobs from one place to another place and both places 
have a very similar economic environment.
    Thank you.
    Chairman Shelby. Senator Menendez.
    Senator Menendez. Thank you, Mr. Chairman, for convening 
this hearing on the Nation's transit programs. We all know they 
expire in just over a month, so it is incredibly important.
    And, 3 years ago, the Committee worked in a bipartisan way 
to draft the transit title of MAP-21 and I think we made the 
best of a funding constrained environment, streamlining and 
reforming programs, eliminating stovepipes, focusing on core 
formula programs. But, I feel compelled to say program reforms 
are not going to fix our transit systems alone if we are not 
willing to make the necessary investments, as we have heard 
from everybody in the transit industry. Small transit systems 
are telling us they cannot replace their aging bus fleets. 
Large transit systems are working to tackle complex mega-
projects.
    So, it is an incredibly challenging set of circumstances, 
but incredibly important to the Nation's economy, to the 
Nation's national security. I say that because in the post-
September 11 world, when everything closed down in New York 
City, it was different modes of transportation, like ferries, 
that brought people out of downtown Manhattan to New Jersey, 
where they were triaged, to hospitals. And, when there was no 
other intercity travel, the reality is that Amtrak became an 
incredibly important tool. So, even in a post-September 11 
world, in addition to the economies, moving people, the 
environment, quality of life, it has a national security 
imperative.
    Now, Ms. McMillan, I appreciate your work. One of my top 
priorities is advancing the Gateway project, which includes 
replacement of the Hudson River tunnels and the Portal Bridge, 
both of which are over 100 years old and in serious danger of 
failing in the near future. Projects like this are critical for 
our mobility, our economic strength, particularly in our 
region, our security, and our safety. It is a linchpin, this 
particular project, of the entire Northeast Corridor region, 
which supports 20 percent of the United States' GDP. That is 
$3.5 trillion of our domestic economy.
    Now, in other parts of the world, we see visionary transit 
projects taking place, but here, projects like Gateway, that 
mean so much to our national economy, they are trying to cobble 
together funding and financing across dozens of funding and 
financing sources. So, does Congress need to fund a new 
Projects of National and Regional Significance Program, and 
does the administration have any proposals to help the United 
States undertake significant complex projects like Gateway?
    Ms. McMillan. Thank you, Senator. I would observe, first, 
that the significant increases in the funding levels for 
transit generally in GROW AMERICA is very reflective of the 
issues that you raised, that there is continuing need to 
support our existing systems and critical strategic 
investments, such as the Gateway project, that need to be made.
    One thing that GROW AMERICA does is include significant 
increases in funding programs for rail, passenger rail, new 
programs in that regard that could certainly meet the 
eligibility needs of that project. We are also supporting 
increases in TIGER, in our TIFIA and RRIF Programs and the 
like. So, it is a rising tide lifts all boats scenario, I 
think.
    Senator Menendez. And, the difference with that--and I 
respect that and appreciate it--but, the difference with that 
is, again, you are creating a patchwork of funding sources for 
what is really a major project. In the past, we have had these 
Projects of National Significance or Regional Significance 
because we understand their significance to the country as a 
whole, even though it may be located in some part of the 
country. And, so, I hope we can look at that because otherwise, 
funding projects like that are very difficult.
    Let me go to your testimony, which notes concerns raised by 
some bus systems about the cuts to the Bus and Bus Facilities 
Program under MAP-21. I would like to clarify several points.
    First, a 2009 FTI report found $50 billion in state of good 
repair needs in just seven of the larger oldest transit systems 
across the country. A subsequent report found that the state of 
good repair backlog for all transit systems nationwide was $78 
billion. So, is it safe to say that larger, older transit 
systems account for a significant amount of the state of good 
repair backlog?
    Ms. McMillan. Yes, Senator, and that is exactly why we have 
asked for a state of good repair increase in two major pots of 
funding under MAP-21, the Bus and Bus Facilities Program, as 
you noted, significantly, but also increases in the State of 
Good Repair Formula Program, which serves our fixed guideways, 
including our rail systems.
    Senator Menendez. And if I may, Mr. Chairman, is it correct 
that according to the 2013 Conditions and Performance Report 
that non-vehicle rail assets are the biggest challenge to 
achieving a state of good repair?
    Ms. McMillan. Yes. Critical facilities in our capital-
intensive rail systems do make up a good portion of that.
    Senator Menendez. I have a lot of other questions, but I 
will submit them for the record and look forward to your 
answers. Thank you, Mr. Chairman.
    Chairman Shelby. Senator Rounds.
    Senator Rounds. Thank you, Mr. Chairman.
    My questions really have to do not so much with mass 
transit, but with transit in rural areas. We often discuss 
transit funding in terms of large metropolitan areas with large 
transportation systems, such as a subway system, but rural 
areas, rural communities in a State like South Dakota depend on 
systems such as a bus or a van service to help seniors get to a 
doctor or to a pharmacy and to help workers, in many cases, get 
to a job in small towns and on our Reservations.
    And in the case of South Dakota, we have nine Reservations, 
none of them in an urban area, all of them in rural areas. And, 
in these areas, in a lot of cases, particularly on Reservations 
where we have two counties that are some of the poorest 
counties in the entire United States, cars are still a luxury. 
Most--a lot of people do not have access to them. These 
services, in many cases, replace that vehicle. The services are 
vital to helping citizens in those areas get to where they need 
to be.
    Can you outline for us some of the benefits that you would 
see to rural transit services with the expiration coming up of 
MAP-21 and what opportunities that might be available for us to 
modernize and to expand rural transit services while making 
certain that these important transportation services actually 
receive the necessary funding. It is kind of a softball 
question in a way, but I think it is something that we have to 
remember, is mass transit is one thing and the vast majority of 
the dollars we are talking about go in that direction and we 
understand that. But, let us not forget about the need for the 
transit system in our rural areas, as well.
    Can you share with us a little bit about your knowledge of 
that and where you see the opportunities to make sure that we 
do not forget about those folks in those rural areas.
    Ms. McMillan. Thank you so much for that question, because 
it is a critical part of the tools that we bring to bear to 
ensure that those tools can be used by our rural systems as 
well as our urban systems.
    Just to give you a sense of scale, our current formula 
program, where we continue to offer significant assistance to 
the States that administer that program as well as the 
recipients who use it, there are 1,300 sub-recipients under 
what we call our 5311 Formula Rural Program. There are many, 
many very small systems that critically need the services that 
get folks, as you say, to regional health centers or employment 
centers or education and we need to be very mindful of those 
needs.
    For the Tribal Program, in particular, under MAP-21, we 
actually doubled the program, from $15 million per year to $30 
million a year, and made that program into a combined formula 
program for some increased predictability as well as a 
discretionary program to deal with some specific needs. We are 
now serving 114 Tribes under the programs as of fiscal year 
2015, so working very closely with them.
    But, I would also like to point out that when we are 
dealing with national policies, such as our State of Good 
Repair Program, our Transit Asset Management Program that we 
have mentioned, as well as our new safety authority, it is very 
important to recognize one size does not fit all when we 
implement those policies and programs, and we are keenly aware 
that we need to work with our smaller urban and rural systems 
to ensure that we make a commonsense framework for dealing with 
these new programs and make sure they fit the needs of those 
smaller systems and are not overly burdensome.
    Senator Rounds. Could you share a little bit about your 
discretionary capabilities with regards to the funding on the 
Tribal areas, please.
    Ms. McMillan. So, of the $30 million we have, $5 million is 
for a discretionary program and $25 million is for the formula. 
We serve every--a number of needs, anywhere from startup 
operation systems for new Tribal services that are put in place 
as well as, similar to rural areas, vehicle replacement 
opportunities, the facilities and services that accompany 
keeping those vehicles in good repair and getting the services 
out on the street. So, it is a fairly flexible program in terms 
of where we can put the need. Importantly, my regions work very 
closely to understand what those needs are and make sure that 
the technical assistance is provided to Tribal Nations to make 
sure that they can participate effectively in the program.
    Senator Rounds. Thank you.
    Thank you, Mr. Chairman.
    Chairman Shelby. Senator Warren.
    Senator Warner. Thank you, Mr. Chairman, and thank you, 
Administrator McMillan, for being here with us today.
    This winter, Massachusetts was hit by a record-breaking 
snowfall. We had more than 110 inches in the Boston area alone, 
and unfortunately, the Massachusetts Bay Transportation 
Authority System failed under that unprecedented duress. The T 
was forced to shut down many of its operations and it took 
about a month to restore normal service. That forced tens of 
thousands of commuters to seek other ways to get to work, which 
resulted in snarled traffic, long lines, and a mess throughout 
the region, a very costly mess.
    The T faces a huge maintenance backlog. A recent report by 
Governor Baker's special panel to review the MBTA indicated 
that the T did not do enough to bring crucial components of the 
transit system to a state of good repair. And, we know there 
are similar problems all around the country.
    Now, given the size of our Nation's backlog on transit 
maintenance, which stands, as you said, at over $86 billion, 
growing at about $2.5 billion annually, it is unrealistic to 
think that we are going to solve this problem overnight, but we 
need a plan to increase our transit systems' resiliency and we 
need it now.
    Administrator McMillan, a recent GAO study noted that some 
aspects of Federal grants that have made it more difficult for 
transit networks to become more resistant to catastrophic 
events. Do you believe transit system resiliency should be a 
priority in the next reauthorization, and if so, how can grant 
programs be improved to achieve this goal?
    Ms. McMillan. Thank you for that question, and indeed, we 
all were incredibly mindful and, I think, humbled by Mother 
Nature's attack on the Northeast and its impact on transit 
systems. Let me point to a couple of things, Senator, that I 
think get to your concerns and questions.
    The first, again, goes back to the effective implementation 
of the Transit Asset Management Program. This was, again, 
created in MAP-21 and the intent is to ensure that every 
transit agency, from our very small rural areas, and up to our 
complex urban systems, have a handle on what is their inventory 
of assets; what is the condition of those assets; what are the 
risks and other factors that need to be taken into account in 
terms of how those conditions came about and how they could be 
mitigated; and use that information to make very strategic 
decisions about the resources, not only Federal, but local and 
State and others, of how to prioritize those resources to deal 
with those needs.
    Once those needs are identified, though, through those 
programs, as you have well mentioned, we then need to have the 
resources brought to bear in order to address a solution, and 
that is exactly why under GROW AMERICA we have identified, 
again, those two major programs, increasing the State of Good 
Repair Program for mainly our fixed guideway rail assets, but 
importantly on the bus side, as well, because, of course, they 
were caught up in those additionally----
    Senator Warren. Oh, yes.
    Ms. McMillan. That is where, with our Bus and Bus 
Facilities Program, we are looking for a fourfold increase to 
almost $2 billion a year from the lower base that they were 
having to grapple with under MAP-21.
    Senator Warren. And, let me just ask you, and if I can, 
briefly, because we are low on time here, do you believe the 
FTA should encourage transit systems to conduct stress tests to 
expose the weaknesses in their systems?
    Ms. McMillan. I think that is exactly the type of 
diagnostic that would be incorporated into a Transit Asset 
Management Program. Again, one of the things we are very 
careful to acknowledge----
    Senator Warren. I take that as yes, then.
    Ms. McMillan. If it makes sense for the operating 
conditions of the transit agency, they should have the 
flexibility to incorporate that into their program.
    Senator Warren. OK, good. I just want to say, thank you 
very much. Extreme weather events are hitting more and more 
often. We experienced it firsthand in the Northeast this 
winter. We saw also firsthand the vulnerability of our decaying 
transportation infrastructure. We know that there are a number 
of challenges in trying to deal with our maintenance backlog, 
but it is time to get moving, to prioritize Federal funding to 
get our transit systems to a state of good repair.
    Thank you very much, Administrator McMillan.
    Chairman Shelby. Senator Warner.
    Senator Warner. Thank you, Mr. Chairman, and thank you, 
Administrator McMillan.
    I want to pick up on my colleague, Senator Warren's, 
comments. In Boston, it was the case of an extraordinary 
weather event. In Washington, we did not have that excuse. The 
Chairman even mentioned the event that took place on January 12 
here in the Washington system. Unfortunately, not the first 
time the Washington Metro has been plagued by events, 
accidents, what appears to be a lack of a culture of safety. We 
saw in this event failures of evacuation systems, failures of 
ventilation systems, failures of radio systems.
    One of the things I want to thank you for was the fact that 
the FTA decided that they would come in and do, in effect, an 
after-action independent report that would provide the kind of 
transparency that is lacking. My understanding, that report was 
scheduled to be done by the end of May. I just want to know, is 
it still on schedule to be released at that point and are there 
any early, preliminary findings?
    Ms. McMillan. Thank you, Senator, for the question. Yes, we 
are conducting a safety management inspection of WMATA, which 
is a complement, of course, to the partnering we did with the 
NTSB looking specifically at the L'Enfant incident. And, our 
field work is ongoing right now with WMATA. I do not have 
findings at this point to share. Certainly, when they are 
available, we would work with your office on not only the 
findings that come out, but recommendations that we may be 
making. The work and analytics, though, are ongoing still at 
this point.
    Senator Warner. But, it is still hopeful that this report 
will be done by the end of May, as it was announced?
    Ms. McMillan. We are--I will get back to you with the 
timing on that and----
    Senator Warner. We would be very focused on the end of May.
    Ms. McMillan. Absolutely.
    Senator Warner. Let me just move to specifics here. I have 
had some background in the mobile radio business, and what was 
remarkable in the case of the L'Enfant Plaza incident was we 
have now found that the radios were failing on an average of 12 
percent, that there was--you know, we have got here in greater 
Washington a series of different governments, all with 
different radio systems. We contacted our Council of 
Governments that came back with a report on interoperability. 
It seems to me, and again, I think Senator Warren's comments 
about a stress test makes a lot of sense--are there not 
standards in place, standard protocols for testing of radio 
systems, because most every metro system has a variety of 
jurisdictions, all with their first responder systems different 
in nature.
    Ms. McMillan. One of the key things that we are doing at 
the Federal Transit Administration is implementing the new 
safety oversight that was provided to us under MAP-21, and a 
significant pivot point in our approach to that is what we call 
a safety management system that would be the focus of, not only 
for each transit agency, an opportunity for them to identify 
what are the unique risks that are attached to the operating 
environment as well as the capital infrastructure where hazard 
mitigations need to be identified. So, in that particular case, 
that would be something we would hope would be highlighted 
within an SMS----
    Senator Warner. Just yes or no. Will there be Federal 
minimum standards for emergency radio interoperability 
standards?
    Ms. McMillan. We will be----
    Senator Warner. So there is not----
    Ms. McMillan. There is not at this point----
    Senator Warner. What about evacuation standards?
    Ms. McMillan. We need to assess what makes the most sense 
under our safety authorities. We could certainly work with your 
staff and get back to you with our thinking on that----
    Senator Warner. What about----
    Ms. McMillan. ----as we are going forward.
    Senator Warner. ----minimum ways to check ventilation 
systems?
    Ms. McMillan. Our hope is that there certainly will be 
attention paid to all of those things as part of the safety 
protocols that we will put in place under our authority. One of 
the--what would be dictated in terms of national standards 
versus ones that agencies themselves would put into place is 
something we are working on right now as we are implementing 
our safety authorities----
    Senator Warner. What I hear is there are not any of these 
standards. I guess, Mr. Chairman----
    Ms. McMillan. Not at this point.
    Senator Warner. Mr. Chairman, what I would hope is that, 
you know, we have got a lot of folks in this region, a lot of 
our staff who ride the Metro every day. There was an inability 
for us to convey to riders in the aftermath of the incident on 
January 12 whether it was safe to get back on Metro, and there 
seemed to be part of that because there was not these standards 
that are established, and these can--I am not sure we are 
looking at one additional level of regulatory bureaucracy, but 
there ought to be some level of common standards. And, I think 
Senator Warren's comments of the notion of a stress test-type 
approach, and there are going to be radio systems, evacuation 
systems, ventilation systems in every transit system, would be 
something worthwhile.
    And, again, I am looking forward to your report on the 
incident, hopefully reported by the end of May. But, I do think 
this is a subject that, as we go through reauthorization, we 
ought to look more carefully at.
    Chairman Shelby. Senator, I think you are right. I think 
Senator Warren raised that earlier. You need some uniformity 
when it comes to safety. We know that.
    Senator Warner. Thank you, Mr. Chairman.
    Chairman Shelby. Senator Merkley.
    Senator Merkley. Thank you, Mr. Chairman, and thank you, 
Administrator McMillan.
    One of the questions that I would like to get your insight 
on is the Buy America provision of public transit. Our Ranking 
Member has had a bill in the past that increased the proportion 
of inputs to rolling stock in terms of a Buy America ratio. Do 
you have any insights or thoughts in that regard?
    Ms. McMillan. The GROW AMERICA Act put forward by the 
administration does include a step-wise change to Buy America 
provisions to increase the domestic content for components and 
subcomponents over a step-wise period of 10 percent per year. 
That is included in the bill.
    Senator Merkley. And what does it rise to?
    Ms. McMillan. It would go to a hundred percent.
    Senator Merkley. OK. And you consider that a valuable use 
of public funds, to help reinvest in our own economy?
    Ms. McMillan. Yes. We believe by increasing the domestic 
content requirement, it provides the environment for domestic 
manufacturers to step in and meet that market need and create 
the jobs attached to that.
    Senator Merkley. Thank you. I appreciate that.
    You said in your testimony that about, quote, ``half of all 
transit riders do not have access to a private vehicle,'' 
making public transportation many people's primary way of 
getting to work, school, or health services. As we think about 
putting together another surface transportation bill, what 
suggestions might you have to ensure that we are spending our 
transportation dollars to better connect communities and people 
who have a high reliance on public transportation and the 
community services and jobs they depend on?
    Ms. McMillan. A critical part of public transportation is 
ensuring that each community has the opportunity with Federal 
funds to tailor the types of services they need, whether in a 
large urban system it is ensuring the existing system is in a 
state of good repair and reliable; or providing valuable 
resources that exist in suburban areas that are growing, where 
they may need opportunities to expand transit. We would note 
that, very often, low-income communities are located in 
suburban environments as well as urban and rural environments, 
and so their needs would have to be addressed in that growth. 
There may be opportunities, or needs, certainly, to grow 
transit services in rural areas, as well, depending on their 
circumstances. So, you will see a diverse portfolio in the 
programs that we have in GROW AMERICA to meet the diverse needs 
that we are seeing.
    Senator Merkley. Thank you, and I think Oregon has a 
somewhat unique situation of having urban growth boundaries 
that concentrate the form of the city and public transit 
becomes incredibly important in that strategy. The whole effort 
was to preserve farming and forest lands and it has worked 
relatively well, but it does not work well without good 
transit.
    One of the items that transit districts in Oregon keep 
bringing up to me is the change from discretionary programs to 
formula funding in the Bus Facility Program under MAP-21. And, 
essentially what they lay out is they used to be able to get a 
big grant to help essentially buy a significant number of 
replacement vehicles at a single time, or if not replacement, 
to add to their fleet. Now, they receive formula funding that 
is kind of a trickle of funds and does not enable them to 
undertake the substantial acquisitions where there are cost 
efficiencies in buying a significant portion of a fleet at a 
time. So, they have found themselves essentially in a situation 
where they use that trickle of funds to maintain aging fleets 
because they cannot afford to buy new ones.
    I will just put it simply. They liked the previous strategy 
better. They found that more effective, and the ability to 
acquire more fuel-efficient vehicles and so forth. Is there any 
thought to pushing back to the direction of the former 
framework?
    Ms. McMillan. GROW AMERICA would increase the overall Bus 
and Bus Facilities Program four times, almost $2 billion a 
year, and we propose to reintroduce a portion of that, about 30 
percent of that funding base, to a discretionary program.
    Senator Merkley. Well, I do not know. You are just 
completely befuddling me because you are saying yes to 
everything I ask for. What else should I ask for, Mr. Chairman?
    Chairman Shelby. Go ahead.
    Senator Merkley. Anything you want me to ask for on your 
behalf while we have got this positive rhythm going here?
    Chairman Shelby. Always something.
    Senator Merkley. Well, really, that is all the things that 
I needed to raise and I appreciate your testimony, and thank 
you, Mr. Chairman.
    Chairman Shelby. Thank you, Senator.
    Senator Moran.
    Senator Moran. Mr. Chairman, thank you very much. Ma'am, 
thank you very much for being here.
    I always smile when I tell people I am on the Banking and 
Urban Affairs Committee. Coming from Kansas, it is sometimes 
not thought of as an urban place. The same is true of transit. 
We sometimes think that transit is simply something that is 
useful and beneficial to folks who live in the cities, who live 
in urban areas or suburban areas, and from my most rural 
communities, where a bus is necessary to get to the hospital or 
the doctor, to Johnson County, Kansas City, Kansas, the suburbs 
of Kansas City, Wichita, or Topeka, these issues are hugely 
important.
    You indicated last year that more Americans travel by bus 
than any other form of transit, and MAP-21 took about half the 
funding of the Bus and Bus Facilities account and transferred 
that to the rail State of Good Repair Account Program, and as a 
result, our ability to purchase buses, our ability for our 
transit authorities to acquire the necessary equipment to meet 
the needs of their riders, the consumer, is significantly 
limited.
    Johnson County, which would be the suburb of Kansas City, 
is our most populated county. They have 58 fixed-route buses, 
20 percent of which are nearly two decades old, and those buses 
have been in--are very expensive to replace. The total amount 
of money that the transit authority got was $350,000. It would 
not buy, probably, a bus.
    So, my question is--I guess there is a point here. We want 
your help in emphasizing the importance of this program and I 
would ask you about how you would prioritize this--or describe 
the consequences of the removal of $560 million to the railroad 
side of things.
    Ms. McMillan. Senator, what you have been hearing from your 
constituents is clearly what we have been hearing over and over 
again in terms of an area in MAP-21 that presented some 
significant challenges. And, to redress the concerns that we 
are hearing from folks, there are two things to emphasize.
    One, the change to a formula did bring some predictability, 
but it needed to be on a much higher funding base. So, we are 
proposing to increase the base from just under $500 million a 
year to $2 billion a year under the GROW AMERICA proposal.
    Within that, though, to the point that you made, even then, 
the slice of the pie that a smaller agency may have in a rural 
area or a small urban area simply would not be enough for those 
big one-time needs that they have, which is why we are 
proposing to reintroduce a discretionary element--not to take 
away the formula completely, but to make the much higher funded 
Bus and Bus Facilities 70 percent under formula, and 30 percent 
under a discretionary program.
    Within that, we would also ensure that 10 percent of the 
discretionary awards would go to rural areas to make sure that 
within that discretionary paradigm, that----
    Senator Moran. How do you define rural? Do you know, in 
your proposal?
    Ms. McMillan. Yes. The break points or thresholds, if you 
will, for formula programs are 50,000 in population or under is 
rural, and small urban, if I am getting this correctly, is 
200,000 or under in the area.
    Senator Moran. And you are talking population----
    Ms. McMillan. Population. Yes. Yes.
    Senator Moran. All right. So, the problems that you are 
aware of and that I am describing are ones that you believe 
your proposal would solve?
    Ms. McMillan. Yes. We believe that--in fact, we scaled our 
recommendations for Bus and Bus Facilities based on the 
concerns that we were hearing, yes.
    Senator Moran. Thank you very much. Thank you, Mr. 
Chairman.
    Chairman Shelby. Senator Reed.
    Senator Reed. Well, thank you very much, Mr. Chairman, and 
welcome. Thank you very much for your service and for your 
testimony.
    One of the things that we have discovered in Rhode Island, 
but it is not unique to Rhode Island, is our transit system, 
the operators are aging out and their anticipation is that 
within the next 10 years, half of the drivers, mechanics, et 
cetera, will be retiring from systems all across the country. 
So, how is the administration, or is the administration 
proposing to help these transit systems deal with a very quick 
change in their workforce?
    Ms. McMillan. Thank you, Senator, for that question, and 
let me take it in two parts, briefly.
    The first is that under MAP-21, we did have the opportunity 
to implement an Innovative Workforce Development Program, and 
in fiscal years 2011 and 2012, we had over that period $10 
million that we made available for workforce programs targeted 
particularly at the issue you have raised of the need for 
training a workforce and the changing technologies. As new fuel 
buses are coming online and the like, we were realizing that we 
did not have a workforce that was trained in those new skills, 
nor did we have an opportunity for the existing workforce to 
get retrained. And, so, we were identifying pilot programs to 
address that.
    Likewise, in October of 2014, we released a notice of 
funding availability for another round of workforce assistance, 
this time geared at creating workforce opportunities for 
populations often not having a chance to get into this 
opportunity: low-income populations, veterans, women, and the 
like, and looking at model workforce training with community 
colleges or apprenticeship programs to deal with that.
    That said, the gap is estimated to be between 5,000 and 
6,000 workers in terms of what transit agencies need going 
forward. Therefore, under GROW AMERICA, we are asking for some 
significant increases in workforce assistance, about $20 
million a year to support recruiting and training, again, of 
skilled workforce through grants, but also to revamp our public 
transit Federal institute that we underwrite. We would revamp 
that to ensure that the training offered through that mechanism 
would deal with what you would term blue collar or line skills 
training as well as managerial leadership-level training, again 
recognizing the breadth of need that we have.
    Senator Reed. Thank you very much.
    We are pleased to see that the administration is proposing 
some significant funding for transit, and it seems, though, 
that--and I think there is a demand and a need for it--that 
some of the money is going to rural areas, which Senator Moran 
was talking about that, and then some of the money seems to be 
headed toward sort of bigger, faster growing areas. Rhode 
Island sort of finds itself maybe in the middle, because it is 
not growing dramatically in terms of population, it is not a 
rural area by any stretch of the imagination, but transit is so 
critical. How would these proposals sort of help areas like 
Rhode Island expand bus rapid transit service within very 
constrained spaces, our metropolitan areas?
    Ms. McMillan. Well, bus rapid transit is a technology and 
approach that we are seeing increased popularity in across the 
country. And, one of the areas certainly is in our New Starts 
and Small Starts Program, Small Starts in particular. We are 
seeing a lot of demand there. We have asked for a significant 
uptick in funding for the program in order to create the 
capacity for services such as BRT, and we have seen BRT in 
areas such as you describe in your State, established areas 
that have a growing ridership, but also in areas such as El 
Paso, Texas. So, we just want to make sure our programs are 
flexible enough to accommodate each of those demands.
    Senator Reed. Well, I think the key is flexibility, 
because, again, there are rural areas that are very much 
underserved and then there are some older urban areas that are 
not growing but depend critically on transit in terms of being 
more productive and more attractive for job growth and 
everything else.
    But, thank you for your service and thank you, Mr. 
Chairman.
    Chairman Shelby. Thank you.
    I have another question for you, getting into some areas 
that I brought up earlier. Federal policies, I believe, should 
encourage private investment in transportation infrastructure 
in order to better leverage Federal investments and to increase 
economic growth. Public-private partnerships, or P3s, are one 
way to do this. The Denver Eagle P3 project is the only public 
transportation public-private partnership in existence, to my 
knowledge. While I am pleased that the administration is 
encouraging private investment in transportation 
infrastructure, I am interested in the steps that the Federal 
Transit Administration is taking to encourage more transit P3s. 
Are you doing that, and if not, why not?
    Ms. McMillan. Thank you, Senator, and I would like to 
highlight four areas----
    Chairman Shelby. OK.
    Ms. McMillan. ----where public-private partnership is being 
worked on.
    First of all, under MAP-21, as you know, Mr. Chairman, 
there was direction to provide technical assistance and 
education to those interested in pursuing private sector 
related opportunities. We launched a Web site in July of 2014 
to do exactly that, highlighting areas from research that we 
had done with the communities, and we are working closely with 
the Build America Transit Infrastructure Center, as you 
mentioned, a very important way to collaborate and bring even 
more resources from the Department to bear.
    We are pursuing a rulemaking, also required under MAP-21, 
to identify potential barriers to the private sector. Again, we 
spent some time researching and holding outreach efforts to the 
industry and stakeholders, came up with a list of barriers that 
have been identified, and we are hoping to get that NPRM out by 
the end of the year.
    Importantly, though, with transit, we are pursuing private 
sector participation opportunities in the area of economic 
value capture. This is something that I think is uniquely 
situated to the transit industry, whereby when new transit 
projects come in, we can work with----
    Chairman Shelby. What do you mean by that, economic value 
capture? Explain.
    Ms. McMillan. When a new transit project is built, it often 
has the effect of increasing the land values----
    Chairman Shelby. Oh, yes.
    Ms. McMillan. ----around the station.
    Chairman Shelby. The whole area.
    Ms. McMillan. Exactly. And, so, what we would like to do is 
explore with the development community as well as local 
jurisdictions and transit agencies how the transit projects can 
capture some of that value to help with the construction, 
importantly, in terms of that mix, but also potentially in 
terms of ongoing operations and maintenance assistance. We are 
seeing that in a few areas, where the development community 
sees the ``t'' in transit-oriented development as critical to 
their ongoing health. So, that is an area we are very actively 
exploring.
    Finally, I wanted to note, transit's presence in accessing 
TIFIA loans has increased dramatically. There have been 14 
TIFIA loans made to transit projects, also one RRIF loan, the 
rail oriented loan program, where transit had eligibilities 
there. And, we have seven letters of interest for additional 
transit projects tapping into that source. And, as you know, 
that has been very helpful in helping to attract private 
capital into these complex funding mixes for transit. So, those 
are four areas where we have been involved.
    Chairman Shelby. What if someone had a vision of an area, 
we will just call it in Kansas or Rhode Island or anywhere 
else, you know, to upgrade an area, and you could do it by a 
new transit project and the things that build around it and so 
forth. Because our dollars are so short, would it make sense if 
you could, say, fund 20 to 30 percent of it like a grant of 
some kind and then have a private partnership that would come, 
like you would pay the downpayment and they would do it, 
because you could leverage so much more money. You would prime 
the pump, so to speak. That works in other areas. I just 
wondered if it was really developed theoretically, and then to 
a practical sense, to where you can leverage money, because 
leveraging money is how they do things.
    Ms. McMillan. Right. I think those leveraging opportunities 
is exactly the arena that we want to explore with the Build 
America Transportation Investment Center. I think there are 
things we can learn from what our sister agencies that have 
seen, and bring best practices into the transit industry. And, 
also, again, be a resource.
    We updated, for example--significantly updated--our joint 
development circular that we have had for many years, and we 
understood from the private sector industry it was quite 
confusing. And, so, simply by going through and revamping that 
and being very clear about the opportunities that presented was 
a way of bringing, hopefully, more folks into the circumstances 
you just described.
    Chairman Shelby. Do you agree that projects with a minimal 
Federal investment should not be subject to the same level of 
bureaucratic oversight as those with a significant Federal 
investment? And, what can you do administratively to alleviate 
some of those?
    Ms. McMillan. Well, Mr. Chairman, one of the things that 
was an important opportunity under MAP-21 was the streamlining 
opportunities related to our New Starts, Small Starts Program 
and Core Capacity. It is a flagship program with very big 
dollar amounts often involved in the projects and streamlining 
was designed into some of the reforms that MAP-21 brought to 
the table.
    I am happy to say that with a policy guidance that was put 
out for comment this month, we have addressed all of the 
streamlining steps that were attached to the baseline program 
and we are looking forward to seeing that move forward.
    So, I would say, broadly, for any transit project where 
Federal dollars are put to use, streamlining and getting those 
projects out, on the ground as soon as possible, is an 
objective.
    Chairman Shelby. With our greatest needs that have been 
laid out here today all over the country, maintenance, keeping 
up, keeping up what we have, new buses, new transit systems, 
new rail, whatever, we have got to change the model some way. 
Do you agree with that? We are going to have to change the 
model, because we are not going to have the money that we need. 
You can see us tightening up. So, it looks to me like 
leveraging the private system, because the private system is 
much bigger, if they had the incentives to work, and I think we 
would all benefit from it. I know that is probably above your 
job description right now, but it is something I think we, as 
policymakers, ought to really seriously think about up here.
    Senator Moran, do you have any other questions?
    Senator Moran. If I could, Mr. Chairman, thank you.
    Chairman Shelby. OK.
    Senator Moran. Ms. McMillan, you answered my questions 
earlier satisfactorily. Thank you. But, your answers did assume 
more money. You talked about the President's budget, our 
request. I think it is more likely that the spending, the 
funding is going to be much closer to flatlined than it is a 
significant increase, and my question is, do you have the 
capabilities and plans to help us answer those questions? How 
do we put more money--and perhaps this is exactly what the 
Chairman is indicating--how do we put more money into 
infrastructure and transit if it is not the easy answer that we 
are just going to have more money to do it? And, so, what are 
your priorities? How do you help us prioritize how I can help 
those rural communities and I can help those Topeka, Wichita, 
and Kansas City areas, for example, acquire a new bus if there 
is only the same amount of money in the transit part of the new 
transportation bill that I hope we pass?
    Ms. McMillan. Senator, I would say that we can always make 
progress in making our framework, whether it be our regulatory 
framework or project development and evaluation framework more 
streamlined. One example with our small bus operators that we 
are working on is to figure out ways that we can make the 
procurement process for vehicles, when they only buy a small 
number of vehicles, make that more streamlined and, hopefully, 
bring the unit cost down as a result.
    But, that said, I firmly believe and I have to reiterate 
that the reason that we have put forward the robust funding 
levels under GROW AMERICA is that the United States economy and 
the people here deserve more than just backfilling the holes 
that we have seen. We are not going to be able to advance and 
meet the needs of transit and the larger United States 
transportation system if we do not see increased funding 
levels. And, so, we look forward to working with Congress on 
that discussion. But, we have built these numbers around the 
needs that we see, everything from, again, reinvesting in the 
existing system which is crumbling at the seams, to the demand 
that we are seeing from generations that want options and they 
want to move in ways that are different from perhaps how we are 
doing it right now.
    Senator Moran. Thank you.
    Chairman Shelby. Senator Schumer.
    Senator Schumer. Thank you, Mr. Chairman, and to you and 
the witness, I apologize. We have Finance Committee on TPA, so 
that is sort of right on the hotplate right now. But, anyway, I 
thank you and thank you for your good work, Acting 
Administrator McMillan.
    One of our top priorities for this Congress must be passing 
a long-term infrastructure bill that provides the level of 
funding our system needs. Throughout the country and in my 
State of New York, we are seeing impacts of recent failures to 
sufficiently invest in infrastructure. The failure to properly 
invest poses huge issues for safety, for local governments, for 
the ability to meet critical repair needs, enhance capacity, 
and invest in projects that create jobs, spur economic growth 
and development in the future.
    Current estimates of backlog of critical maintenance in 
transit alone is $86 billion. That number does not account for 
roads and bridges, which are probably even greater, nor does it 
include projects that would increase capacity. In New York, our 
subway system, because New York has grown in population and we 
are doing pretty well, is just up to the gills, record 
ridership.
    So, right now--and right now, the MTA, New York's transit 
agency, has a state of good repair backlog of $50 billion. That 
is just the investment required to fix issues in the existing 
system and get it up to current standards.
    So, my first question to you, do you believe our current 
transit spending levels are enough? Some people say, let us 
just for a short time, a long time, keep the same level of 
spending and renew it. Can you talk about some of the impacts 
both on safety and the Nation's economy if we fail to increase 
spending levels for these programs.
    Ms. McMillan. Well, the short answer to your question, 
Senator, is no, we do not believe that the current funding 
levels are sufficient. To start with your observation on need 
of the existing systems, we have a backlog of an estimated $86 
billion, but that grows every year at the existing funding 
levels, as I mentioned in my earlier remarks, at $2.5 billion a 
year, and that is just for the systems as we see right now. Not 
dealing with that certainly increases the risks, the safety 
risks, of operating those systems. Transit agencies every day 
do the best job and put out a safe system, but crumbling 
infrastructure has its impacts and we need to ensure that we 
deal with those.
    In addition to that, though, as you have mentioned, there 
is increasing demand for more transit service. We have programs 
that we have proposed in GROW AMERICA, increases in our New 
Starts, Small Starts, in our Core Capacity Program. New York 
MTA is extremely interested in participating in that, which is 
creating capacity within the existing footprint. Our rural 
systems are seeing increased pressure because of the aging 
populations in their area. So, demographics are pushing us to 
greater need and that is why we have the diverse portfolio we 
have proposed.
    Senator Schumer. OK. The next two questions are transit 
related. Even in areas that do not have lots of mass transit--
obviously, we in New York depend on it. To get 3.5 million 
people on and off Manhattan Island every day is an amazing 
accomplishment that is done by the, for all its problems and 
all its need for funding, the miracle of the New York City 
subway and mass transit system. It helps the rest of the 
country.
    And, that is my first question. I am going to ask both at 
once to not take too much of the Chairman's time. Can you talk 
about the impact of increasing spending in transit on 
communities that do not have a local recipient, in other words, 
they do not have a local transit agency, but spending on 
transit still helps them, manufacturing and other things.
    And, second, a specific concern I am hearing from transit 
agencies in my State, across my State, the need for a 
discretionary program for buses. I am sure you are aware, 
without a program of this type, it is difficult for smaller 
communities, as you mentioned, to replace existing bus fleets, 
given the sizable one-time cost of bus replacement. Rural 
communities are particularly affected. Doing things like 
creating a discretionary bus program would be a worthwhile use 
of funding. We do not even have, though, now with the current 
funding levels, enough for the cost of maintenance of 
infrastructure.
    So, can you talk about the benefits of creating a 
discretionary bus program and how smaller bus-dependent systems 
could benefit from an agreement by this Committee to increase 
that level. You can focus on the second.
    Ms. McMillan. On the second one----
    Senator Schumer. Yes.
    Ms. McMillan. ----again, our proposal for Bus and Bus 
Facilities under GROW AMERICA is to increase the program 
fourfold and to change the structure to 70 percent of the 
formula that we see right now, but reintroduce the remaining 30 
percent in a discretionary structure to meet the unique needs 
that may emerge for our transit agencies.
    Senator Schumer. Great. Thank you.
    Mr. Chairman, thank you very much.
    Chairman Shelby. Thank you for your appearance and your 
testimony here today. We look forward to trying to solve some 
of these problems together. Thank you very much.
    Ms. McMillan. Thank you, Mr. Chairman.
    Chairman Shelby. The meeting is adjourned.
    [Whereupon, at 11:27 a.m., the hearing was adjourned.]
    [Prepared statements and responses to written questions 
supplied for the record follow:]
                PREPARED STATEMENT OF SENATOR MIKE CRAPO
    I commend the Committee for holding this hearing on transit issues. 
Transit is often discussed in the context of large metropolitan areas 
and in the context of fixed rail service--but it is also important in a 
relatively rural State like Idaho where bus service is the option in 
our largest metro area. And it is important service. Bus and van 
service, whether on routes or on demand, can help get seniors to the 
doctor, hospital, or pharmacy and get workers to jobs. In the absence 
of a car, transit can be a lifeline for a number of citizens. As the 
Committee reviews transit issues, I urge that we keep in mind the 
important role played by transit in smaller and rural communities.
                                 ______
                                 
               PREPARED STATEMENT OF THERESE W. MCMILLAN
  Acting Administrator, Federal Transit Administration, Department of 
                             Transportation
                             April 21, 2015
    Mr. Chairman, Ranking Member, and Members of the Committee, thank 
you for the invitation to appear before you today to report on the 
Federal Transit Administration's (FTA) progress toward implementing the 
Moving Ahead for Progress in the 21st Century Act (MAP-21). We are 
pleased for the opportunity to discuss the Administration's surface 
transportation reauthorization proposal, the Generating Renewal, 
Opportunity, and Work with Accelerated Mobility, Efficiency, and 
Rebuilding of Infrastructure and Communities throughout America (GROW 
AMERICA) Act. It builds on the strong foundation MAP-21 provided for 
public transit, recognizing transit's growing presence across the 
country.
    In 2014, Americans took 10.8 billion trips on transit--the highest 
annual ridership number since 1957. Public transportation is a way of 
life in urban areas, a lifeline in many towns and rural areas, and a 
quality of life improvement for many fast growing communities. In 
addition, many working families, seniors, veterans, individuals with 
disabilities, tribal residents, and others rely on public 
transportation for their mobility needs. Transit is a driver of local 
and regional economic development, helps reduce highway congestion and 
greenhouse gas emissions, and provides people better access to job 
centers, schools, medical services, and other vital daily activities.
    Approximately half of all transit riders do not have access to a 
private vehicle, making public transit a primary means of connecting to 
their local community. FTA anticipates that demand for public 
transportation service will continue to rise. Now is the time to 
deliver the policy and funding solutions America needs to improve our 
national transportation network, invest in our collective future, and 
grow the economy.
    MAP-21 took effect on October 1, 2012, and authorized $10.6 billion 
in FY2013 and $10.7 billion in both FY2014 and FY2015 for public 
transportation. FTA is effectively and efficiently administering those 
Federal dollars through its formula and discretionary grant programs. 
We also continue to make significant progress on an aggressive 
timetable towards implementing new safety authority through the 
rulemaking process and developing related guidance with input from 
affected stakeholders.
    Last year, the Administration proposed the GROW AMERICA Act, which 
was a comprehensive 4-year, $302 billion reauthorization proposal 
calling for substantial funding increases as well as critical policy 
reforms. Congress passed a short term extension with status quo 
policies and flat funding, which did not address America's 
infrastructure funding challenges. In March 2015, the Administration 
submitted to Congress an updated version of GROW AMERICA, consistent 
with the President's FY2016 Budget Request, which adds additional 
funding certainty by requesting a 6-year, $478 billion multimodal 
proposal, including $115 billion to support our Nation's public 
transportation systems.
    The GROW AMERICA Act continues the focus on FTA's three key 
priorities: improving transit safety--FTA's highest priority; 
addressing a transit asset maintenance backlog that's more than $86 
billion and growing; and building system capacity to meet growing 
ridership demand.
    To that end, the President's FY2016 Budget Request seeks $18.4 
billion to maintain existing transit systems in a state of good repair 
while expanding transportation options. The proposal increases average 
transit spending by nearly 76 percent above FY2015 enacted levels, 
which will enable transit agencies to address immediate repair needs, 
enhance core capacity and plan for expansion to improve connectivity in 
suburbs, fast growing cities, small towns, and rural communities. GROW 
AMERICA also supports economic competitiveness by creating ladders of 
opportunity through workforce development initiatives and ensuring that 
manufactured products are produced in the United States. These transit 
investments will play a critical role in supporting communities around 
the country.
Safety
Public Transportation Safety (49 U.S.C. 5329; Section 3008 of GROW 
        AMERICA)
    MAP-21 amended 49 U.S.C. 5329 to give FTA authority for the first 
time to establish safety criteria for all modes of public 
transportation, and to establish minimum safety standards for public 
transportation vehicles used in revenue operations.
    Keeping rail public transportation safe requires a partnership 
between FTA, transit agencies and those States that have State safety 
oversight (SSO) obligations. FTA will serve as a leader, facilitator, 
and final regulatory authority; transit agencies will be held 
responsible for the safe operation of their systems; and the SSOs will 
act as effective day-to-day safety oversight regulators capable of 
holding transit rail systems accountable and ensuring they comply with 
minimum State and Federal safety standards.
    Following the August 2013 publication of an ANPRM on safety, FTA 
published the SSO Program Notice of Proposed Rulemaking (NPRM) on 
February 27, 2015, outlining a program that will replace the existing 
outdated regulatory framework with one designed to better evaluate the 
effectiveness of a rail transit agency's system safety program. This 
new framework will support the flexible, scalable principles of Safety 
Management Systems (SMS) to focus on organization-wide safety policy, 
proactive hazard identification and risk informed decision making as 
part of risk management, safety assurance, and safety promotion. 
Comments are requested on the SSO NPRM by April 28, 2015. Relatedly, 
FTA intends to launch an SMS Implementation Pilot Program to assist 
transit agencies of all sizes and operations, including bus-only, in 
the development and maintenance of their Safety Management System.
    FTA also recently published the Final Interim Safety Training 
Certification requirements designed to enhance the technical 
competencies and capabilities of individuals responsible for direct 
safety oversight of rail transit systems at agency, State and Federal 
levels, and of individuals who conduct safety audits of these systems. 
These requirements become effective on May 28, 2015.
    We intend to issue additional guidance and notices of proposed 
rulemaking in 2015, about such issues as the National Public 
Transportation Safety Plan, the Public Transportation Safety Program, 
the Transit Agency Safety Plan, the National Public Transportation 
Safety Certification Training Program and the Transit Asset Management 
Plan. Together, this framework will ensure safety standards are in 
place at each transit system across the country to protect the riding 
public and transit agency employees.
    In the meantime, in order to better understand the strengths and 
weaknesses of public transit safety operations, FTA is utilizing its 
new safety authorities to collaborate with the Chicago Transit 
Authority to examine their safety program, and to conduct a Safety 
Management Inspection of the Washington Metropolitan Area Transit 
Authority, which began in early March 2015.
    While MAP-21 gave FTA the authority to establish safety 
regulations, it did not provide FTA with expanded enforcement tools to 
ensure compliance with such regulations. To that end, the GROW AMERICA 
Act bolsters FTA's safety authority by allowing for the imposition of 
civil and criminal penalties and establishes emergency authority for 
FTA to restrict or prohibit unsafe transit practices. It also includes 
data confidentiality for our grantees and an opt-out provision from the 
law's SSO Oversight program. This will apply to States with fixed 
guideway public transportation systems, whether in operation, under 
construction, or in design, with fewer than one million combined actual 
and projected revenue miles per year, or which provide fewer than 10 
million combined actual and projected unlinked passenger trips per 
year. FTA will oversee the safety of these exempted systems. The GROW 
AMERICA Act would also provide resources to fully carry out the safety 
program, including providing an appropriate level of assistance to 
States and individual transit providers, while also enhancing safety 
data collection.
Transit Asset Management
State of Good Repair (49 U.S.C. 5337 and 5339; Section 3010 of GROW 
        AMERICA)
    Returning transportation assets to a state of good repair is a 
strategic goal for the Department of Transportation (DOT) and a high 
priority for FTA. Well-maintained infrastructure investments can have 
long-term economic benefits for the Nation, but those benefits are not 
fully realized because of years of underinvestment and neglect. This is 
evident in the DOT's 2013 Conditions and Performance Report to 
Congress, which found an $86 billion maintenance backlog of rail and 
bus assets that are in marginal or poor condition. The backlog 
continues to grow at an estimated rate of $2.5 billion per year under 
current investment levels.
    MAP-21 requires transit agencies to develop a Transit Asset 
Management plan to help them strike a better and more informed balance 
between preservation and expansion needs in the context of a safety-
first performance culture. Strategic and targeted investments focused 
on replacing and rehabilitating aging transit infrastructure are needed 
to help bring our Nation's bus and rail systems into a state of good 
repair. Having newer and more reliable track, signal systems, vehicles 
and stations will help ensure the safe, dependable and accessible 
transit service demanded by the American public.
    FTA is actively working to implement this new National Transit 
Asset Management System through the rulemaking process, supplemented by 
technical assistance and outreach to grantees. Given the diversity of 
transit systems, from complex urban rail and bus networks, to demand 
response van systems in rural communities, a flexible approach will be 
paramount. FTA expects to issue a NPRM later this year, addressing the 
extensive comments received on the October 2013 Advanced NPRM, which 
aligned the transit asset management process with the need for 
strengthening transit safety. Additionally, on January 28, 2015, FTA 
published in the Federal Register final guidance to assist recipients 
applying for funding under the State of Good Repair Formula Grant 
Program.
    However, under MAP-21, our efforts still do not go far enough to 
address the backlog of maintenance. The current State of Good Repair 
Formula Grant Program focuses on rail and bus rapid transit (BRT) 
systems that are at least 7 years old. The preservation needs of non-
BRT bus services were severely impacted in MAP-21, with the decrease in 
funding for the Bus and Bus Facilities Formula Grant Program. The need 
for additional investments and innovative policies that address the 
backlog for all bus and rail maintenance still exists, and much more 
work remains to be done. To that end, the GROW AMERICA Act proposes a 
total of $7.6 billion in fiscal year 2016 to support FTA's State of 
Good Repair efforts, and includes $5.7 billion for State of Good Repair 
Grants (49 U.S.C. 5337) and $1.9 billion for Bus and Bus Facilities 
Grants (49 U.S.C. 5339), with incremental increases in each fiscal year 
through the end of the authorization.
    All of these actions, taken together, reflect the U.S. Department 
of Transportation's strategic commitment to address the infrastructure 
deficit in a holistic fashion--and to help the industry employ better 
metrics that enable them, in turn, to be better stewards of their 
assets.
Building System Capacity
Core Formula Programs (49 U.S.C. 5307, 5310, 5311; Section 3003, 3004 
        of GROW AMERICA)
    FTA's formula grant programs provide the critical funding for the 
day to day business of transit agencies across America. MAP-21 retained 
the program structure for the formula programs with a few exceptions, 
which were implemented quickly in 2013. The Urbanized Area Formula 
Program (5307) provides critical capital funding to transit agencies 
for recapitalization needs. The Rural Formula program (5311) provides 
capital and operating funding to transit agencies serving in rural 
areas, tribal lands and Appalachian States. The Enhanced Mobility of 
Seniors and Individuals with Disabilities Formula Program (5310) 
provides funding for transit services that specifically target serving 
the elderly and disabled.
    Since FY2013, FTA has obligated more than $10.8 billion in funding 
for these three formula programs. GROW AMERICA builds on the baseline 
provided by MAP-21 by requesting a 2 percent increase for FY2016, with 
moderate increases thereafter for the life of the authorization.
Capital Investment Grants (49 U.S.C. 5309; Section 3002a of GROW 
        AMERICA)
    Not long after the enactment of MAP-21, FTA streamlined its New 
Starts and Small Starts Capital Investment Program through a final rule 
and accompanying guidance. The changes are helping local project 
sponsors shave up to 6 months off the time required to move major 
projects through the Capital Investment Grant (CIG) Program pipeline. 
Sponsors who choose to use the optional simplified travel model 
developed by FTA--a significant streamlining tool--may develop 
ridership forecasts in as little as 2 weeks, a dramatic timesaving from 
the 2 years it can take using traditional forecasting models, while 
saving as much as $1 million on related model forecast development 
costs. Additionally, FTA now has a more straightforward approach for 
measuring a proposed transit project's cost-effectiveness, considers an 
expanded range of environmental benefits, and has simplified the 
administrative reporting process.
    In April 2015, FTA requested comments from the industry on interim 
policy guidance that, when finalized, will continue to address MAP-21 
provisions that govern the CIG program. The guidance provides a deeper 
level of detail about the methods for applying the project 
justification and local financial commitment criteria for rating and 
evaluating New Starts, Small Starts, and Core Capacity Improvement 
projects, and the procedures for getting through the steps in the 
process required by law. FTA is proposing to use simple eligibility 
parameters, simplified evaluation measures, and expanded ``warrants'' 
based on readily available, easily verifiable data to make the process 
less burdensome and time consuming for project sponsors who qualify.
    GROW AMERICA proposes to expand the CIG program by increasing the 
program funding level to match the growth in projects seeking funding. 
FTA has seen a steady rise in the demand for projects seeking Capital 
Investment Grant funding and a significant increase of projects 
requesting to enter project development since the passage of 
streamlined Capital Investment Grant program requirements in MAP-21. 
The FY2016 CIG Annual Report includes many projects seeking 
construction grant agreements, and FTA has seen 44 new projects overall 
since MAP-21 took effect.
    GROW AMERICA would also create a streamlined review process for 
simple, low-risk, cost-effective projects in smaller communities by 
adding a Very Small Starts category. Very Small Starts projects would 
be new corridor or regional-based bus services with premium features 
located in small urban or rural areas.
Rapid Growth Area Transit Program (49 U.S.C. 5314; Section 3011 of GROW 
        AMERICA)
    GROW AMERICA proposes a new Rapid Growth Area Transit competitive 
program that will provide $500 million in capital funds in fiscal year 
2016, with incremental increases each fiscal year through 2021, to help 
fast-growing communities introduce new BRT systems as part of their 
transportation mix. BRT systems are a proven way to expand mobility 
relatively quickly and affordably, helping communities to get ahead of 
congestion and develop a transit-oriented culture as an integral part 
of their growth management strategy.
Economic Competitiveness
Workforce Development (49 U.S.C. 5322; section 3005 of GROW AMERICA)
    MAP-21 formally established the Innovative Transit Workforce 
Development Program under 49 U.S.C. 5322, which provides funding to 
transit agencies and partners with solutions to pressing workforce 
development issues. Program funds are used to address serious shortages 
in the skilled transit workforce--estimated to be 5,000 to 6,000 
workers--by fostering job growth and a stronger workforce through 
ladders of opportunity initiatives that teach individuals technical 
skills to support the transit industry in the 21st century.
    Rapidly changing technology and growing transit ridership along 
with plans to expand service has heightened the need for continued 
training in a variety of public transportation occupations. A new 
generation of workers must refine their skillsets to meet future 
demands and contribute to building our Nation's 21st Century 
transportation infrastructure. GROW AMERICA will expand FTA's workforce 
development efforts with a program that will fund and support 
innovative transit-focused training programs and apprenticeships, 
particularly at the regional and/or national level. The Act will also 
establish a new Public Transit Institute to replace the current 
National Transit Institute (NTI), that allows FTA to expand training to 
cover blue-collar transit workforce training in addition to the 
management-level courses now offered by NTI.
Local Hiring (49 U.S.C. 5325; Section 3007 of GROW AMERICA)
    Currently, Federal requirements prohibit the use of local-hiring 
preferences. It is important that we support local hiring as an 
effective tool to help men and women who are ready to work to obtain 
jobs, and job training, in their communities. The GROW AMERICA Act 
allows the use of local hiring preferences in contracts using FTA funds 
for projects over $10 million when the work is in an area with a low 
per capita income or higher than average unemployment. The local-hiring 
preferences are designed with flexibility and as such may not require 
the hiring of workers without the necessary skills, and the use of such 
preferences may not compromise the quality, timeliness, or cost of the 
project.
Emergency Relief (49 U.S.C. 5324; Section 3009 of GROW AMERICA)
    A final rule establishing procedures governing the implementation 
of the Emergency Relief program became effective on November 6, 2014. 
On February 4, 2015, FTA published its proposed ``Emergency Relief 
Manual: A Reference Manual for States and Transit Agencies on Response 
and Recovery from Declared Disasters and FTA's Emergency Relief 
Program''. FTA sought public comment through April 6, 2015, and expects 
to finalize the guidance later this year.
    While Congress appropriated $10.9 billion for Hurricane Sandy 
emergency relief efforts, these funds are only available for areas 
affected by Sandy. Congress did not appropriate funds for FTA's 
Emergency Relief program in FY2013, FY2014, or FY2015, leaving the 
agency with no funds to immediately address any new disasters that 
impact the transit industry. GROW AMERICA proposes that $25 million be 
appropriated in each fiscal year 2016 through 2021 to capitalize the 
program so that FTA stands ready to respond.
Buy America (49 U.S.C. 5323(j); Section 3006 of GROW AMERICA)
    The administration remains committed to preserving and creating 
home-grown jobs that support our domestic manufacturing industry and 
position the United States to take the lead in transportation-related 
innovation. Therefore, GROW AMERICA proposes to increase the domestic 
content requirement for manufacturing rolling stock components and 
subcomponents further than the current standard of 60 percent. With a 
phased increase, by 2020, 100 percent of the components and 
subcomponents for rolling stock, by cost, including rolling stock 
prototypes, will have to be produced in the United States. Final 
assembly in the United States remains a requirement, as under MAP-21.
Public-Private Partnerships (49 U.S.C. 5315)
    FTA also recognizes the value of public-private partnerships as a 
means of augmenting public investments in infrastructure. On August 25, 
2014, FTA published a final circular on Joint Development that clearly 
explains how FTA funds and FTA-funded property may be used for public 
transportation projects that are related to and often colocated with 
commercial, residential, or mixed-use development. The circular 
emphasizes the concept of ``value capture,'' which encourages FTA 
grantees to leverage Federal investments to capture revenue that can in 
turn be used to offset capital and operating expenses.
    Additionally, FTA held an Online Dialogue with stakeholders on 
Public-Private Partnerships in January 2015, and is using the 
information learned to develop a NPRM on Public-Private Partnerships. 
We expect this rulemaking to address major barriers to utilizing this 
financing method, and propose methods to ease and encourage their use.
Research, Planning, and Environment
Research (U.S.C. 5312; Section 3009 of GROW AMERICA)
    GROW AMERICA includes $60 million in FY2016 increasing to $70 
million in FY2021 to support research activities that improve public 
transportation systems by investing in the development, testing, and 
deployment of innovative technologies, materials, and processes. FTA 
partners with public institutions, transit agencies, nonprofits, 
universities, and other entities, awarding funding for activities that 
improve safety, state of good repair, and help to advance transit 
vehicle and system technology.
Fixing and Accelerating Surface Transportation (FAST) (49 U.S.C. 5602; 
        Section 1401 of GROW AMERICA)
    GROW AMERICA includes a new $1 billion per fiscal year competitive 
grant program designed to spur major reform in the way States and 
metropolitan regions make transportation policy and investment 
decisions, and to encourage new and innovative solutions to 
transportation challenges. The FAST program will be jointly 
administered with the Federal Highway Administration (FHWA), each 
overseeing $500 million, to encourage the adoption of bold, innovative 
strategies and best practices in transportation that will have long-
term impacts on all projects across the transportation programs.
Performance-Based Planning and Accelerated Project Delivery
    MAP-21 transformed the Federal-Aid Highway program and the Federal 
Transit program by requiring a transition to performance-driven, 
outcome-based approaches to key areas. With respect to planning, the 
statute introduced critical changes to the planning process by 
requiring States, MPOs, and providers of public transportation to link 
investment priorities to the achievement of performance targets for 
safety, infrastructure condition, congestion, system reliability, 
emissions, and freight movement. FHWA and FTA jointly issued an NPRM on 
Metropolitan Transportation Planning, and Statewide and Nonmetropolitan 
Transportation Planning in June 2014, and are on target to issue a 
final planning rule later this year. The two agencies also jointly 
issued a final rule in October 2014 that creates five new categorical 
exclusions for transit projects, thereby shortening the environmental 
review process by requiring minimal analysis and documentation, where 
appropriate. These types of actions effectively cut red tape for 
funding recipients, reduce the administrative burden on State and local 
governments, and expedite results for the American public.
Conclusion
    The May 31st expiration of the extension of MAP-21 offers an 
important opportunity to recalibrate the way our Government evaluates 
and invests in our federally funded public transportation 
infrastructure. From a transit perspective, MAP-21 included provisions 
enabling FTA to focus limited resources on certain strategic 
investments and policies. The administration's comprehensive 6-year 
reauthorization plan set forth in GROW AMERICA will provide FTA with 
the additional tools necessary to improve the riding experience for 
millions of Americans by repairing and modernizing transit systems and 
expanding capacity for generations to come.
    I am committed to working together with this Committee to achieve 
our mutual goal of addressing America's urgent need for investment in 
transit infrastructure. Thank you again for inviting me to testify on 
this important topic, and I will make myself and my staff available to 
answer your questions.
       RESPONSES TO WRITTEN QUESTIONS OF CHAIRMAN SHELBY
                    FROM THERESE W. MCMILLAN

Q.1. I want to revisit the first question that I posed Ms. 
McMillan and ask you to identify the specific measures that FTA 
employs to hold capital investment grant applicants to the 
requirement that they have the resources necessary to 
recapitalize, maintain, and operate their existing system, as 
well as the proposed system?
    In your earlier answer you identified FTA's efforts to 
implement the new asset management program and while I agree 
that this is an important element to the overall state of good 
repair measures enacted in MAP-21, the requirements I cited 
have been in place since passage of SAFETEA-LU. Are you 
suggesting that FTA is relying solely on the new Transit Asset 
Management program to adhere to a statutory requirement that 
has been in place since 2005?

A.1. FTA already employs a rigorous evaluation and rating 
process, as required under the statute establishing the Capital 
Investment Grant (CIG) Program. One area that FTA is required 
to evaluate is local financial commitment, which includes an 
assessment of whether local resources are available to 
recapitalize, maintain, and operate the overall existing and 
proposed public transportation system. FTA requires project 
sponsors to submit detailed 20-year financial plans outlining 
all estimated sources and uses of capital and operating funds. 
Additionally, FTA requires project sponsors to submit historic 
information on sources and uses of funding for the transit 
system. When developing the rating, FTA examines the financial 
plan to ensure there are adequate recapitalization costs 
included based on an examination of the transit system's fleet 
management plan that outlines fleet replacement needs and 
historic expenditures on systemwide maintenance, repair, and 
operating needs. Specific measures FTA examines include: (1) 
the average fleet age of the transit system, which is an 
indicator of how well the agency has been meeting its vehicle 
replacement needs; (2) the operating ratio of the transit 
system (current assets compared to current liabilities), which 
is an indicator of the financial health of the transit agency; 
and (3) the reasonableness of the assumptions used in the 
financial plan with regard to growth in costs and revenues to 
ensure they are in line with historical expenditures and not 
overly optimistic. The transit asset management requirements of 
MAP-21 will help provide additional data to FTA that can be 
used to help determine the reasonableness of recapitalization 
estimates included in the financial plans submitted by CIG 
project sponsors.

Q.2. Again, following up on an earlier question regarding new 
investments in systems that are not in a state of good repair--
You said: `` . . . clearly we want to make sure that transit 
assets are safe--the existing system or the foundation, and 
that any new services would only be brought to bear if there is 
sufficient, continuing progress made toward the state of good 
repair.''
    Could you tell the Committee exactly how FTA defines 
``sufficient--continuing progress'' toward the state of good 
repair?

A.2. I did not intend to imply a statutory or regulatory 
definition of ``sufficient--continuing progress'' toward a 
state of good repair. I was using the term in a general way to 
convey that FTA will continue to consider a transit agency's 
state of good repair backlog and its plan for managing that 
backlog, including prioritizing investments that address any 
existing backlog.

Q.3. Moreover, could you share with the Committee how you are 
applying this standard today given that ``state of good 
repair'' has not yet been defined by the FTA?

A.3. When a transit agency with a large backlog of state of 
good repair (SGR) needs comes to FTA seeking CIG funding, we 
ask them to provide us with a comprehensive assessment of their 
overall SGR needs and how they anticipate prioritizing them to 
ensure system safety critical needs and efficient operations 
are maintained. We then review their 20 year financial plan to 
ensure they have sufficient funding to pay for the prioritized 
SGR needs as well as the proposed CIG project and ongoing 
operations.
    The term ``state of good repair'' will be further defined 
in the Transit Asset Management Notice of Proposed Rulemaking 
(NPRM) later this year and subject to public comment.

Q.4. As it relates to funding for state of good repair and 
funding to meet increasing demand, you stated that FTA is 
``trying very hard to balance both of those objectives.'' Could 
you tell provide some specifics regarding FTA's current efforts 
to balance those competing priorities?

A.4. FTA's FY16 Budget proposal and GROW AMERICA 
reauthorization proposal demonstrate our commitment to both 
priorities. We are asking for significant Federal dollars to 
invest in state of good repair to address the more than $86 
billion backlog of transit needs around the country. We are 
also asking for increases in funding for the Capital Investment 
Grant program to address the growing demand we are seeing 
around the country for new and expanded transit services to 
move people to where they need to go safely and efficiently. 
Investment in both areas is critical to our Nation's 
transportation system and our economy.

Q.5. I also want to follow-up on my question regarding the 
steps the Administration is taking to alleviate some of the 
bureaucratic oversight for projects with a minimal Federal 
investment. While I appreciate you sharing the details of FTA's 
implementation of MAP-21's Capital Investment Grant (CIG) 
streamlining provisions, I am more interested in the steps FTA 
can take administratively to remove bureaucratic hurdles for 
projects with minimal Federal investment. Has the FTA 
identified any efforts that it can undertake administratively 
and if so, what are they? Please provide details regarding the 
specific impact these identified administrative efforts would 
have on projects and project sponsors?

A.5. FTA has taken multiple steps over several years to 
streamline the process for Capital Investment Grant (CIG) 
program funds both prior to MAP-21 and after MAP-21. FTA 
implemented a Simplified Trips on Projects (STOPs) tool 2 years 
ago that project sponsors may use at their option to estimate 
project ridership. Because this tool uses readily available 
census data and transit network feeds commonly prepared by 
transit agencies to inform Google Maps and other applications, 
the time required for project sponsors to develop ridership 
estimates can be as little as 2 weeks, whereas using a 
conventional local travel forecasting model can take project 
sponsors several months or even years. To greatly simplify the 
reporting process for project sponsors, FTA developed reporting 
templates for project sponsors that automatically populate 
information used in multiple measures and automatically 
calculate the evaluation criteria. Previously sponsors had to 
enter such data multiple times. FTA also recently proposed an 
expansion of ``warrants''--ways in which projects can qualify 
for automatic ratings on the statutory criteria rather than 
having to submit extensive data and information to FTA. FTA is 
also tailoring its oversight of CIG projects rather than 
providing a one size fits all approach, which will help shorten 
the length of time it takes FTA to complete its reviews of 
smaller and less complex projects. We believe that our efforts 
to reduce CIG process timeframes are gaining wide acceptance. 
For instance, 40 percent of CIG project sponsors submitting 
data to FTA in fall 2014 for evaluation and rating used STOPs 
to develop their ridership estimates at greatly reduced time 
and expense.

Q.6. The Administration has talked a lot about private 
investment in transportation infrastructure and leveraging 
Federal dollars. While FHWA, through SEP-14 and SEP-15, has 
made great strides to streamline the process, particularly for 
P3 projects, FTA has not made similar progress. Could you 
identify any statutory impediments FTA believes prevent it from 
implementing a similar ``SEP-type'' process for certain CIG 
projects?

A.6. Section 20013(b) of MAP-21 requires FTA to develop and 
implement procedures and approaches that address impediments to 
the greater use of public-private partnerships and private 
investment in capital projects in a manner similar to FHWA's 
SEP-15. FTA has conducted extensive outreach to transit 
stakeholders on this issue and currently is drafting a notice 
of proposed rulemaking (NPRM) that outlines a process similar 
to SEP-15. FTA expects to publish the NPRM for comment by the 
end of calendar year 2015.
    The major impediment to FTA implementing a ``similar'' 
process for CIG projects is that FTA does not have the 
statutory authority to waive requirements like FHWA's statute. 
FTA cannot administratively waive program requirements, such as 
evaluation and oversight, labor protections such as Davis Bacon 
or 13(c), or other requirements in order to streamline the 
approval process for projects with significant private funding 
or delivery methods.

Q.7. Following-up on my question regarding regional 
difference--could you please provide the specific guidance and 
oversight FTA currently has in place to ensure that the 
determinations of the regional offices are in line with the 
laws and regulations issues by headquarters?
    What process to you have in place to review decisions made 
in the regional offices and what recourse do grantees have if 
they believe that rules have been applied differently?
    What can/does FTA do to alleviate the innate conflict that 
may arise between grantees and their regional offices if they 
were to complain about a decision that impacts them directly?
    Is there a formal appeals process that is removed from the 
regions?

A.7. FTA has taken very seriously the challenges of ensuring a 
foundational level of knowledge and understanding of new and 
changing requirements while trying to advance an ever growing 
program.
    FTA has heard specific concerns related to consistency in 
oversight processes and issuance of findings. In terms of 
oversight, Triennial Review reports are issued at the Regional 
Office level, and FTA has a number of checks in place to ensure 
nationwide consistency. For example, FTA Headquarters subject 
matter experts have an opportunity to comment on draft findings 
prior to FTA issuing the draft report to grantees. Grantees are 
given an opportunity to comment on the Triennial Review draft 
report and grantee comments are considered by FTA prior to 
finalization and issuance of the report. If a grantee believes 
that rules have been applied differently, they may elevate 
their concern to FTA headquarters for review.
    In addition, FTA has strengthened its oversight contractor 
training, and provides standardized guidance and deficiency 
codes to cover the typical findings and corrective actions 
issued in a Triennial Review to ensure consistency across the 
country.
    Finally, FTA publishes all grant program information, 
guidance, and program circulars on its external and internal 
Web sites. FTA's Executive Management Team meets regularly, 
including a bi-monthly meeting with Regional staff and 
Headquarters Program Management staff on program, project, and 
grant matters. Acting Administrator McMillan also meets with 
all Headquarters Associate Administrators, and all 10 Regional 
Administrators monthly to discuss ongoing matters, in addition 
to receiving weekly Regional Update reports.

Q.8. Recent accidents such as CTA's O'Hare crash and WMATA's 
L'Enfant Plaza incident have further highlighted the serious 
safety issues that exist in many transit systems--which, prior 
to enactment of MAP-21, were not overseen or regulated by the 
FTA. Nearly 6 years after the deadliest crash in WMATA's 
history which provided the impetus for FTA's new safety 
authority, FTA has yet to issue any safety standards or 
protocols. Moreover, when Senator Warner asked about FTA's 
implementation of the safety authority, you were hesitant to 
provide details and, it seemed, unsure as to whether that was 
appropriate. What assurances can you provide the Committee that 
the FTA is effectively using the authority provided in MAP-21? 
Will FTA issue any safety standards or protocols--will FTA 
respond quickly and comprehensively to address safety issues 
that come to light in the wake of an incident?

A.8. Safety is and will remain the Department's number one 
priority. Congress did not provide FTA direct, regulatory 
authority over the safety of transit systems until October 
2012, when MAP-21 went into effect. In the intervening 2.5 
years, FTA has made extraordinary progress in addressing this 
new authority from the ground up, despite limited additional 
financial resources to do so.
    FTA has been actively working to set up the regulatory 
framework to support its new safety authority. In early 2015, 
we issued an NPRM for the State Safety Oversight program. The 
Final Safety Certification Interim Provisions took effect on 
May 28, 2015, requiring necessary training for rail safety 
employees. Later this year, we expect to issue NPRMs for the 
Public Transportation Safety Program, National Public 
Transportation Safety Plan, Public Transportation Agency Safety 
Plan, and Bus Testing Program.
    Specific nationwide standards and protocols will emerge 
from this regulatory framework, once complete.
    In parallel, FTA has taken several direct actions in 
response to specific safety incidents that have occurred: (1) 
FTA issued a nationwide safety advisory in December 2013 in 
response to incidents at WMATA and BART that resulted in the 
deaths of Right Of Way workers. (2) In response to multiple 
incidents at CTA, FTA partnered with CTA to conduct a safety 
examination to support strengthening their safety programs and 
capabilities through the implementation of Safety Management 
Systems (SMS). (3) Most recently, FTA is using its authority 
under 5329(f)(1) to conduct a Safety Management Inspection 
(SMI) of WMATA's transit system. At the conclusion of the 
inspection, FTA expects to issue findings and recommendations 
to assist WMATA in building a mature and effective SMS.
    FTA will continue to exercise its safety authority by 
responding swiftly to incidents as they occur.

Q.9. The GROW AMERICA proposal requests additional safety 
authorities for the FTA, specifically fines and penalties. Why 
are these additional authorities necessary in light of the fact 
that FTA has not used any of its existing authority to ensure 
that certain standards and protocols are established by transit 
systems nationwide? Shouldn't FTA focus on making transit 
systems safer by using its existing authority rather than 
coming back to Congress for more? Is there a specific incident 
or scenario that the FTA is considering which would require 
this additional authority; if so please describe?

A.9. Currently, FTA's primary enforcement tool is the 
withholding of Chapter 53 funds. However, withholding funds 
from a recipient may not correct a safety issue, as the penalty 
would not correct the specific unsafe action nor be directed at 
any responsible individual. Moreover, many transit agencies are 
heavily reliant on Federal subsidy. To withhold funds from 
these agencies would ultimately pose the most adverse impact on 
the riding public who are reliant on public transportation 
services. FTA believes that having additional enforcement 
authority to impose civil and criminal penalties would aide in 
the implementation of its new safety authority, as the threat 
of such penalties would serve as a deterrent to noncompliance.
    Similar to other Federal enforcement regimes, FTA's sister 
modes have civil and criminal penalty authority and are able to 
more effectively address specific unsafe actions--by an 
individual or an organization--to prevent reoccurrence. 
Accordingly, FTA is seeking this additional authority in order 
to establish a comprehensive and effective safety oversight 
regime.

Q.10. I have said many times that I am concerned that we are 
building transportation infrastructure without regard to their 
long-term maintenance and operation costs. What kind of life 
cycle cost analysis goes into the overall evaluation of a 
capital investment grant project that is moving through the 
pipeline today? Does FTA have plans to modify that analysis, 
assuming there is one, given the current state of our 
transportation infrastructure?

A.10. The Capital Investment Grant program looks at life cycle 
costs in two ways. First, in our cost-effectiveness 
calculation, we consider not only the annualized capital cost 
of the project which factors in the useful life of each element 
of the project, but we also consider the ongoing operating and 
maintenance costs. Second, our financial evaluation includes an 
examination of a 20 year cash flow statement from the project 
sponsor outlining all capital and operating sources and uses of 
funds for the entire transit system, including the proposed 
project. FTA does not have plans to modify these analyses, but 
expects the transit asset inventory requirement of MAP-21 will 
provide useful additional data to FTA to help with determining 
the reasonableness of recapitalization costs included in the 
20-year financial plan.

Q.11. MAP-21 included a ``Pilot Program for Expedited Project 
Delivery'' as a SEP-15-type delivery method on the transit side 
for a few, select capital investment grant projects that meet 
specific criteria. As I have shared with you and others, I am 
concerned that FTA has drug its feet in advancing this pilot 
project--which, unfortunately, is not out of the ordinary for 
FTA as we have seen with past legislative attempts to achieve 
innovative project delivery. Unofficially, I have heard 
numerous reasons the FTA has not taken action on this MAP-21 
provision but I would like to ask you directly, why this pilot 
project has not been implemented.

A.11. The Pilot Program for Expedited Project Delivery as 
written in MAP-21 is limited to projects in the Capital 
Investment Grant (CIG) program including New Starts, Small 
Starts and Core Capacity. However, the law does not exempt 
projects in the pilot program from the evaluation and rating 
process required under the CIG program, the only source of 
funding the pilot can draw from, as the law also did not 
provide a separate pot of funding for which they would be 
eligible. The Pilot also requires the project sponsors selected 
for the program to develop a before and after study one year 
sooner than would otherwise be required under the CIG program. 
These requirements have led to challenges implementing the 
pilot program and outlining its advantages to the industry. The 
law appears to impose more requirements on these pilot 
projects, not fewer, which may prevent the industry from 
expressing much interest. FTA has been soliciting input and 
ideas from the industry on the pilot program at various CIG 
workshops given over the past 2 years, and we expect to put 
forth some proposals to implement the pilot soon.

Q.12. GROW AMERICA and the APTA reauthorization proposal 
include a discretionary bus program to supplement the 5339 
formula program. This is necessary, it is argued, because of 
the substantial cost to buy vehicles and build facilities. A 
discretionary grant program, I believe, forces transit agencies 
to chase funding rather than budget for their needs. I do not 
understand how a discretionary grant program can truly address 
everyone's needs. A formula program, on the other hand, has 
that potential.
    If all transit agencies face the challenge associated with 
making large capital purchases, how do you make sure all 
agencies that need money for buses and facilities get money?

A.12. Formula funding has the potential to address growing 
capital needs only to the extent that the base program contains 
sufficient funding to address those needs. The shift of the Bus 
and Bus Facilities program, from a discretionary program to a 
formula program under MAP-21, was accompanied by a decrease of 
the funding base by more than 50 percent.
    Following passage of MAP-21, one of the most frequent 
comments FTA received from transit agencies and localities, 
especially in smaller- and medium-sized urban areas, was that 
the new Bus and Bus Facilities formula program does not provide 
the necessary funding to recapitalize their systems and the 
lack of any supplemental discretionary program limits their 
ability to undertake nonroutine large investments, such as bus 
facilities.
    GROW AMERICA proposes to substantially increase funding for 
the Bus and Bus Facilities program (from $428 million to over 
$1.9 billion annually) to address the needs issue that you 
raise first. With respect to the second issue, GROW AMERICA 
proposes to reintroduce a discretionary element to the program, 
with 30 percent of the $1.9 billion available through a 
competitive process with the remaining 70 percent distributed 
by formula. A discretionary program would permit FTA to direct 
funding for these larger one-time investments that cannot be 
solely funded through a formula to transit agencies at the 
point in time the funding is needed.

Q.13. The discretionary grant program that both GROW AMERICA 
and the APTA proposal include is simply that, discretionary. 
These proposals do not include specific criteria or rules for 
distribution of the resources.
    What assurances would transit agencies have that 
discretionary funds would not be broken into ``mini-grant'' 
programs or initiatives that target specific policy 
preferences? Such preferences render some systems ineligible 
for funding as we saw with ``Ladders of Opportunity,'' ``Bus 
Livability,'' ``Urban Partnership Program,'' ``Veterans 
Transportation and Community Living,'' ``Urban Circulator,'' 
and ``Transit Asset Management'' among others--all were created 
using 5309 bus and bus facilities funding.

A.13. Although past discretionary programs had policy-focused 
areas such as economic development, connecting communities, 
state of good repair, and supporting veteran access to 
transportation services; those policy objectives did not 
eliminate any community from being eligible for the funding. 
These needs exist across all communities and all transit 
agencies were eligible to apply for the funds. Each of these 
funding opportunities was well over subscribed. Under the bus 
and bus facilities discretionary program proposed in GROW 
AMERICA, FTA would ensure resources are targeted towards 
communities that need nonroutine and often large investments, 
such as bus facilities or fleet replacement, where annual 
formula funds are insufficient to make this type of large one-
time purchase.

Q.14. The Capital Investment Grant (CIG) program is, as the 
name implies, a capital intensive grant program but it is not 
funded out of the Highway Trust Fund (HTF). Rather, CIG 
projects rely on the annual appropriations process for funding. 
However, this has not always been the case. The program has, in 
the past, received funds from the HTF.
    Given the significance of these projects and the associated 
investment, is there a down side to funding this program out of 
General Fund revenues rather than the Highway Trust Fund?
    What are the pros and cons, in your view, to the current 
funding structure for this program?

A.14. The President's Fiscal Year 2016 Budget and the GROW 
AMERICA Act propose that all authorized transit programs, 
including Capital Investment Grants, be funded with contract 
authority and not subject to the annual appropriations process 
to increase predictability in funding. Contract authority is 
predictable in that it is authorized in advance through a 
reauthorization bill enacted by Congress and allows for better 
planning of projects.
    The FY16 Budget and GROW AMERICA Act propose an increase in 
the authorization level provided to the CIG program, requesting 
$3,250,000,000 in fiscal year 2016.

Q.15. If it is most appropriate to rely on the annual 
appropriations process to fund the Capital Investment Grant 
program, can the same be said for other capital intensive grant 
programs, such as a bus and bus facilities grant program? 
Please provide a detailed explanation.

A.15. No, as stated above in Question 14, the Administration is 
proposing that all authorized transit programs, including the 
Capital Investment Grants and Bus and Bus Facilities programs, 
be funded with contract authority and not subject to the annual 
appropriations process to increase predictability in funding.

Q.16. Over the last several years, there has been a substantial 
increase in the number of vehicles purchased through the 
Research program--specifically for the demonstration and 
deployment of no or low-emission vehicles. That said, while 
these vehicles are being purchased with Federal funding and 
subsequently integrated into a system's fleet, they are still 
being tested to demonstrate their ability to withstand the 
rigors of regular service and fleet integration. Does FTA 
differentiate between the deployment of ``demonstration-type'' 
vehicles and ``proven'' vehicles when granting Federal funding? 
If so, how?

A.16. Research, in the Federal context, is an iterative process 
that takes an innovative idea, thoroughly develops and studies 
it, then demonstrates its feasibility in a real-world 
environment, and, if the concept proves itself, ultimately 
takes it to deployment within the industry. FTA's research 
program encompasses all aspects of this cycle, from proof of 
concept to commercialization, and supports, where appropriate, 
through funding and technical assistance, both demonstrations 
of new technologies and deployment of new, proven technologies. 
With respect to the ``Low or No Emission Vehicle Deployment 
Program'' (LoNo Program) as described in 49 U.S.C. 5312 
paragraph (d)(5), FTA understood the law to support and focus 
on the deployment phase of this cycle and implemented the 
program as such.
    Proven technology, in the case of the deployment phase of 
the research, is not defined in the same way as off-the-shelf 
equipment. The difference is that there is a long history of 
experience with off-the-shelf equipment, whereas, proven 
technologies may still be new enough to the industry that their 
operational capabilities are not well or fully understood. Off-
the-shelf equipment, rolling stock and technology are eligible 
under FTA's formula and traditional capital grant programs.

Q.17. Do grantees have more flexibility after purchasing 
``demonstration-type'' vehicles in terms of how the vehicles 
are used and integrated in their fleets; do the traditional 
rolling stock requirements apply? Please explain.

A.17. ``Demonstration-type'' vehicles and other technologies 
are ones that show promise but that haven't reached the point 
where they might be confidently commercialized or used in 
everyday, revenue service. To use more common engineering 
language, this could be described as the ``prototype and 
evaluation'' stage. FTA works closely with transit operators 
who have the technical capacity and willingness to demonstrate 
new technologies in real-world environments. FTA seeks out 
agencies that are willing to partner in this regard but it is 
ultimately their decision to acquire and integrate these 
vehicles into their operations. For procurement of equipment 
for demonstrations, the FTA rules that apply to any equipment 
purchase with Federal grants (Buy America requirements, useful 
life rules, etc.), apply here as well.

Q.18. Are grantees provided opportunities through the program 
or otherwise to refresh or even upgrade the vehicle's 
technology either during a vehicle overhaul or as it becomes 
available? Please explain.

A.18. Once a new technology ``becomes available'' in a 
commercial sense, FTA grantees have the opportunity to purchase 
it with formula funds. FTA might also further assist in the 
acquisition of new technologies by providing technical 
assistance on ways of using and integrating new technologies, 
explore innovative asset management and financing strategies 
(e.g., public-private partnerships, technology leasing 
agreements, etc.) and provide a level of confidence to grantees 
seeking new technologies through such means as our Bus Testing 
program and wider dissemination of our technology evaluations.

Q.19. Would, in your opinion, greater flexibility in the 
demonstration/deployment of new technology for rolling stock or 
other capital investments do more to advance cutting edge 
technologies in the transit space? Please explain.

A.19. With appropriate FTA oversight, greater program 
flexibility would allow for more technology innovation, 
improved products and enhanced transit services, especially in 
a time where advances in technology and service provision are 
transforming the nature of surface transportation. With the 
advent of ``on-demand'' technologies, the emergence of 
automation in various forms, and the evolving preferences of 
today's travelers, seamless, safe, multimodal, environmentally 
sound transportation is becoming a reality. Transit has a major 
role in this new paradigm and developing and deploying the 
practices and technologies involved in this innovative model 
require flexibility.

Q.20. Does FTA currently have the authority to provide this 
flexibility?

A.20. On a case by case basis, FTA has the authority to issue 
waivers on certain rules and requirements as needed. For 
example, FTA issued a program-specific Buy America waiver for 
the National Fuel Cell Bus Program in 2008. FTA acknowledges 
its important role to provide oversight of Federal funds and to 
ensure that federally funded programs comply with the law.
                                ------                                


        RESPONSES TO WRITTEN QUESTIONS OF SENATOR BROWN
                    FROM THERESE W. MCMILLAN

Q.1. Under current Buy America regulations, does the steel and 
iron used to produce transit rolling stock, i.e., buses and 
rail cars, need to be of domestic origin? Is it the experience 
of the Federal Transit Administration (FTA) that the frames for 
transit rolling stock are generally made of domestic or foreign 
materials?

A.1. The requirement in 49 CFR 661.5(b) that all steel and iron 
manufacturing processes take place in the United States applies 
to construction materials primarily made of steel or iron, such 
as structural steel or iron beams, columns, and running rail. 
As set forth in section 661.5(c), the requirements do not apply 
to steel or iron used as components or subcomponents of other 
manufactured products or rolling stock.
    FTA does not specifically track whether the frames for 
transit rolling stock are made of domestic or foreign material. 
Pursuant to statute, the cost of rolling stock components 
produced in the United States must be more than 60 percent of 
the cost of all components, and final assembly of the rolling 
stock must take place in the United States. How a rolling stock 
manufacturer apportions its domestic and foreign components to 
comply with this requirement is at the discretion of the 
manufacturer.
    Anecdotally, FTA is aware that several rolling stock 
manufacturers import finished shells and frames to the United 
States.
                                ------                                


        RESPONSES TO WRITTEN QUESTIONS OF SENATOR VITTER
                    FROM THERESE W. MCMILLAN

Q.1. In your testimony, you stated, ``In 2014, Americans took 
10.8 billion trips on transit--the highest annual ridership 
number since 1957.'' Transit continues to receive the largest 
Federal subsidy among all modes of passenger transportation--
highways, passenger rail, transit, and air--and that figure is 
projected to grow over the next several years. What steps is 
your agency taking to aggressively pursue privatization or 
public-private partnerships for transit-system operations in 
those cities and/or regions that require the highest Federal 
subsidy?

A.1. In 2014, FTA provided technical assistance to grantees in 
the form of a series of public-private partnership workshops 
and created a private sector participation Web page that 
includes fact sheets, questions and answers, studies, best 
practices, and sample model public-private partnership 
contracts. See http://www.fta.dot.gov/grants/16030_16036.html.
    FTA's Joint Development circular, issued in 2014, clarifies 
for recipients and developers the process for incorporating 
private investment in transit facilities with Federal funding. 
FTA is drafting a rulemaking to identify impediments to and 
facilitate the increased use of public-private partnerships and 
private investment. This Notice of Proposed Rulemaking (NPRM) 
is expected to publish for public comment by the end of 2015.
    Additionally, the Department of Transportation created the 
Build America Transportation Investment Center to increase 
infrastructure investment and economic growth by engaging with 
State and local governments and private sector investors to 
encourage collaboration, expand the market for public-private 
partnerships and put Federal credit programs to greater use. 
See more at: http://www.dot.gov/buildamerica.

Q.2. In your testimony, you stated, ``FTA held an Online 
Dialogue with stakeholders on Public-Private Partnerships in 
January 2015, and is using the information learned to develop a 
NPRM on Public-Private Partnerships. We expect this rulemaking 
to address major barriers to utilizing this financing method, 
and propose methods to ease and encourage their use.'' When do 
you expect your agency to publish those rules? What models of 
public-private partnerships is FTA currently considering?

A.2. FTA anticipates publishing the notice of proposed 
rulemaking by the end of calendar year 2015. FTA published the 
RTD-Denver Eagle P3 Concession Agreement on its public-private 
partnership Web page (http://www.fta.dot.gov/grants/
16030_16036.html), which FTA considers to be one model for 
structuring public-private partnership contracts. This 
information can help guide local transit agencies in their 
decision-making process of determining how to deliver a transit 
project using design-build contracting methods.
                                ------                                


         RESPONSES TO WRITTEN QUESTIONS OF SENATOR KIRK
                    FROM THERESE W. MCMILLAN

Q.1. Core Capacity: Three years ago, this Committee authorized 
a new category of projects called Core Capacity to be eligible 
for the Federal Transit Administration's (FTA) Section 5309 
Capital Investment Grant Program in MAP-21. This program is 
critical for aging transit systems, including the Chicago 
Transit Authority, looking to compete for Federal funding to 
modernize their infrastructure on existing transit lines by 
extending platforms, modernizing signals, adding infill 
stations or laying new track within their existing footprint to 
meet growing demand.
    The Administration has signaled its support for these 
projects by including support for core capacity in its FY16 
Budget Request. As public transit ridership continues to grow, 
especially in urban areas like Chicago, how does the 
Administration see this program and other FTA initiatives 
working to improve our legacy transit systems?
    What are the agency's plans for the program?
    How will the FTA use projects like the CTA's Red and Purple 
Line Modernization as an example going forward?

A.1. FTA was very pleased to see the addition of the Core 
Capacity eligibility under the Capital Investment Grant program 
because we know there is great demand around the country for 
capacity improvements to existing transit infrastructure that 
is heavily utilized. That is why we have recommended funding in 
each of the past 3 years' budgets for the program, including 
$351 million in our FY2016 budget proposal. We now have four 
core capacity projects in the program, with three more that 
have applied to enter.
    Since passage of MAP-21, FTA has been meeting with the 
industry to determine how best to implement the core capacity 
provisions. Through ongoing dialogue with transit agencies such 
as CTA, NYMTA, CalTrain, BART, and others, we developed 
proposals for implementation of core capacity that were 
published in April 2015 for public comment. Our proposals are 
based on industry research, include easy to calculate criteria, 
and that recognize these projects are located in highly 
traveled transit corridors. The feedback from project sponsors 
like CTA has been invaluable as we work to implement this 
important new eligibility.

Q.2. State of Good Repair (P3 Pilot Program): As evidenced by a 
national $86 billion maintenance backlog, returning our 
transportation assets to a state of good repair is a top 
priority. Growing public transit infrastructure backlogs in 
cities like Chicago, Boston, Philadelphia, and New York, 
continue to be a serious issue. To help tackle these 
challenges, MAP-21 created a pilot program for ``Expedited 
Project Delivery'' to determine if ``innovative project 
development and delivery methods or innovative financing 
arrangements'' can be used to expedite project delivery. If a 
transit agency is selected for the pilot program, it can 
receive Federal money earlier in the FTA process than usual 
transit projects. However, MAP-21 specified that in order for a 
transit agency to eligible to participate in the pilot, an 
agency must first be in a state of good repair. This presents a 
significant challenge as the majority of transit agencies face 
a growing backlog of maintenance and capital projects.
    What is the current status of this program's 
implementation?
    In a world of constrained resources, do you believe public-
private partnerships programs such as this effectively 
accelerate project delivery and help transit systems attain a 
state of good repair? Why or why not?
    Does the FTA have recommendations to make the program more 
cost effective for the taxpayer while also expanding its reach 
to transit agencies that are not in a state of good repair?

A.2. The Pilot Program for Expedited Project Delivery as 
written in MAP-21 is limited to projects in the Capital 
Investment Grant (CIG) program, including New Starts, Small 
Starts, and Core Capacity. However, the law does not exempt 
projects in the pilot program from the evaluation and rating 
process required under the CIG program, the only source of 
funding the pilot can draw from, as the law also did not 
provide a separate pot of funding for which they would be 
eligible. The Pilot also requires the project sponsors selected 
for the program to develop a before and after study one year 
sooner than would otherwise be required under the CIG program. 
These requirements have led to challenges implementing the 
pilot program and outlining its advantages to the industry. The 
law appears to impose more requirements on these pilot 
projects, not fewer, which may prevent the industry from 
expressing much interest. FTA has been soliciting input and 
ideas from the industry on the pilot program at various CIG 
workshops given over the past 2 years, and we expect to put 
forth some proposals to implement the pilot soon.
    FTA believes Public-Private Partnerships are a tool that 
can be used to implement projects more quickly than they might 
otherwise if funded by the public sector on a pay-as-you-go 
approach. The private sector provides much needed capital and 
borrowing power up front to allow for quicker implementation, 
which gets repaid over time by the public sector through long-
term availability payments. Previous experience has indicated 
to FTA that project sponsors typically utilize private sector 
partnerships for capital projects, which do not necessarily 
address state of good repair needs--but typically expand 
transit systems.

Q.3. In your testimony, you discussed an upcoming Notice of 
Proposed Rulemaking (NPRM) for Public-Private Partnerships to 
address major barriers to utilizing innovative financing and 
attracting more private capital.
    What feedback did you receive from the FTA Online Dialogue 
that spurred this rulemaking process?

A.3. Section 20013(b) of MAP-21 requires FTA to issue a rule on 
Public-Private Partnerships, identifying barriers to use, and 
suggesting possible administrative changes to promote 
utilization.
    FTA decided to conduct the Online Dialogue, which covered 
more topics than just barriers, to help inform the required 
rulemaking process. The Online Dialogue comments that touched 
upon barriers to public-private partnerships were consistent 
with what was identified in the 2009 Government Accountability 
Office report entitled Federal Project Approval Process Remains 
a Barrier to Greater Private Sector Role and DOT Could Enhance 
Efforts to Assist Project Sponsors.

Q.4. What barriers does the FTA believe currently exist that 
hinder the utilization of public-private partnerships?

A.4. FTA is in the process of identifying barriers as part of 
the NPRM process, and the rule will contain more details. 
However, we do know that barriers typically fall into several 
broad categories, and include the sequential process of the 
Capital Investment Grants program, permitting timelines, NEPA 
requirements vs. categorical exclusions, and the transfer of 
both financial risk, and project delivery risks.

Q.5. When does the FTA expect to issue the NPRM?

A.5. FTA expects to issue the NPRM by the end of calendar year 
2015.
                                ------                                


               RESPONSES TO WRITTEN QUESTIONS OF
           SENATOR MENENDEZ FROM THERESE W. MCMILLAN

Q.1. Your testimony notes that the administration is moving 
ahead with a proposed rulemaking regarding public-private 
partnerships. Given our investment needs, it's important that 
we leverage private sector capital when appropriate. But it's 
also worth noting that private sector involvement is not a 
panacea. It can complement, but not replace existing Federal 
funding--and any private sector participation still has to be 
subject to public sector oversight, which comes with its own 
costs. It's also critical that we maintain existing protections 
for our workers. In particular, the outsourcing of operations 
and maintenance functions in transit P3s has a checkered 
history. According to the Government Accountability Office, 
savings related to the contracting out of transit operations 
and maintenance service are often derived through diminished 
wages and benefits to workers, not through service delivery.
    As FTA works to put together this new rulemaking, can you 
assure me that you won't take any actions that would undermine 
our existing workforce protections?

A.1. Yes, Senator Menendez, I can assure you that FTA will not 
take any actions that would undermine existing workforce 
protections while utilizing public-private partnerships. 
Section 20013(b) of MAP-21 provides that the Secretary, and 
therefore FTA, has no authority to waive the provisions of 49 
U.S.C. 5333, which are the labor protection provisions.