[House Hearing, 115 Congress]
[From the U.S. Government Publishing Office]


                 EXAMINING TAX	EXEMPT PRIVATE ACTIVITY
    BONDS FOR ALL ABOARD FLORIDA'S BRIGHTLINE PASSENGER RAIL SYSTEM

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

                                HEARING

                               BEFORE THE

                            SUBCOMMITTEE ON
                         GOVERNMENT OPERATIONS

                                 OF THE

                         COMMITTEE ON OVERSIGHT
                         AND GOVERNMENT REFORM
                        HOUSE OF REPRESENTATIVES

                     ONE HUNDRED FIFTEENTH CONGRESS

                             SECOND SESSION

                               __________

                             APRIL 19, 2018

                               __________

                           Serial No. 115-109

                               __________

Printed for the use of the Committee on Oversight and Government Reform

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              Committee on Oversight and Government Reform

                  Trey Gowdy, South Carolina, Chairman
John J. Duncan, Jr., Tennessee       Elijah E. Cummings, Maryland, 
Darrell E. Issa, California              Ranking Minority Member
Jim Jordan, Ohio                     Carolyn B. Maloney, New York
Mark Sanford, South Carolina         Eleanor Holmes Norton, District of 
Justin Amash, Michigan                   Columbia
Paul A. Gosar, Arizona               Wm. Lacy Clay, Missouri
Scott DesJarlais, Tennessee          Stephen F. Lynch, Massachusetts
Virginia Foxx, North Carolina        Jim Cooper, Tennessee
Thomas Massie, Kentucky              Gerald E. Connolly, Virginia
Mark Meadows, North Carolina         Robin L. Kelly, Illinois
Ron DeSantis, Florida                Brenda L. Lawrence, Michigan
Dennis A. Ross, Florida              Bonnie Watson Coleman, New Jersey
Mark Walker, North Carolina          Raja Krishnamoorthi, Illinois
Rod Blum, Iowa                       Jamie Raskin, Maryland
Jody B. Hice, Georgia                Jimmy Gomez, Maryland
Steve Russell, Oklahoma              Peter Welch, Vermont
Glenn Grothman, Wisconsin            Matt Cartwright, Pennsylvania
Will Hurd, Texas                     Mark DeSaulnier, California
Gary J. Palmer, Alabama              Stacey E. Plaskett, Virgin Islands
James Comer, Kentucky                John P. Sarbanes, Maryland
Paul Mitchell, Michigan
Greg Gianforte, Montana
Vacancy

                     Sheria Clarke, Staff Director
                    William McKenna, General Counsel
                        Caroline Nabity, Counsel
                 Cameron Connor, Legislative Assistant
                    Sharon Casey, Deputy Chief Clerk
                 David Rapallo, Minority Staff Director

                                 ------                                

                 Subcommittee on Government Operations

                 Mark Meadows, North Carolina, Chairman
Jody B. Hice, Georgia, Vice Chair    Gerald E. Connolly, Virginia, 
Jim Jordan, Ohio                         Ranking Minority Member
Mark Sanford, South Carolina         Carolyn B. Maloney, New York
Thomas Massie, Kentucky              Eleanor Holmes Norton, District of 
Ron DeSantis, Florida                    Columbia
Dennis A. Ross, Florida              Wm. Lacy Clay, Missouri
Rod Blum, Iowa                       Brenda L. Lawrence, Michigan
                                     Bonnie Watson Coleman, New Jersey
                           
                           
                           C O N T E N T S

                              ----------                              
                                                                   Page
Hearing held on April 19, 2018...................................     1

                               WITNESSES

Mr. Grover Burthey, Deputy Assistant Secretary for Policy, U.S. 
  Department of Transportation
    Oral Statement...............................................     5
    Written Statement............................................     8
Mr. Patrick Goddard, President and Chief Operating Officer, All 
  Aboard Florida/Brightline
    Oral Statement...............................................    12
    Written Statement............................................    14
Mr. Robert Crandall, former CEO, American Airlines
    Oral Statement...............................................    31
    Written Statement............................................    33
Chief Dan Wouters, Division Chief Emergency Management, Martin 
  County Fire Rescue
    Oral Statement...............................................    39
    Written Statement............................................    41
Mr. Dylan Reingold, County Attorney, Indian River County
    Oral Statement...............................................    47
    Written Statement............................................    49

                                APPENDIX

Florida 8th District Crossing Location Photographs submitted by 
  Mr. Posey......................................................    78
Hearing Follow-up Response submitted by Mr. Burthey, Department 
  of Transportation..............................................    85
Response from All Aboard Florida to Mr. Meadows, Questions for 
  the Record                                                         87
Response from Mr. Goddard to Mr. DeSantis, Questions for the 
  Record.........................................................    95

 
                 EXAMINING TAX-EXEMPT PRIVATE ACTIVITY
    BONDS FOR ALL ABOARD FLORIDA'S BRIGHTLINE PASSENGER RAIL SYSTEM

                              ----------                              


                        Thursday, April 19, 2018

                  House of Representatives,
             Subcommittee on Government Operations,
              Committee on Oversight and Government Reform,
                                                   Washington, D.C.
    The subcommittee met, pursuant to call, at 10:06 a.m., in 
Room 2154, Rayburn House Office Building, Hon. Mark Meadows 
[chairman of the subcommittee] presiding.
    Present: Representatives Meadows and Connolly.
    Also Present: Representatives Mast and Posey.
    Mr. Meadows. The Subcommittee on Government Operations will 
come to order. And without objection, the chair is authorized 
to declare a recess at any time. And the chair notes the 
presence today of Congressman Bill Posey of Florida and 
Congressman Bryan Mast of Florida.
    We appreciate both of you and your interest in this 
particular topic. We welcome your participation.
    I ask unanimous consent that Congressman Posey and 
Congressman Mast be permitted to fully participate in today's 
hearing.
    Mr. Connolly. No objection, Mr. Chairman.
    Mr. Meadows. I thank the gentleman from Virginia. So 
without objection, it is so ordered.
    I am pleased to hold this oversight hearing to examine the 
use of tax-exempt private activity bonds for All Aboard 
Florida's Brightline project.
    It is a pleasure to welcome the local stakeholders and 
experts on this issue. I thank you all for joining us here 
today.
    And as you know, this committee is charged with uncovering 
and exposing waste, fraud, and abuse within the Federal 
Government. And as some of you may have seen in the news, the 
safety of the Brightline train issue raises grave safety 
concerns. And tragically, some 6 people have been killed by 
Brightline trains since they began trial runs last year.
    And so due to some of the public safety concerns, some of 
my colleagues, including Congressman Mast, have raised these 
concerns related to the eligibility of a private sector entity 
like Brightline to receive Federal assistance. And so as 
stewards of the taxpayer dollars, we take these concerns 
seriously.
    In 2017, All Aboard Florida applied for two allocations of 
a tax-exempt private activity bond totaling $1.75 billion. 
These bonds would be used to fund its Brightline passenger rail 
project. And after reviewing the request, DOT approved both 
applications and deemed the bonds eligible for tax-exempt 
status.
    However, questions remain as to whether the project was, in 
fact, eligible to receive this type of funding. And this is 
especially concerning for a number of reasons.
    So, obviously, we'll get to hear some of the testimony 
today as it relates to the Title 23 funds and when those were 
received for this particular issue, because that's one of the 
components, certainly, of getting the private activity bond. 
And additionally, I look forward to the testimony from all of 
you.
    But with that, I would like to yield the remaining time for 
my opening statement to the gentleman from Florida, Mr. Mast.
    Mr. Mast. Thank you, Mr. Chairman, for holding this 
hearing, for your work on rooting out waste, fraud, and abuse 
in the Federal Government.
    I could tell you one of the issues that I do hear about 
most frequently from my constituents are the physical and 
economic danger that are posed by the Brightline expansion into 
the Treasure Coast.
    There are numerous issues that deserve scrutiny when it 
comes to this expansion. On February 15, my committee of 
Transportation and Infrastructure had the opportunity to ask 
the National Transportation Safety Board, also the Federal 
Railroad Administration, about many of these issues. And the 
FRA indicated that they are also very concerned about these 
safety issues, including the deaths, some of them by suicide, 
that have been as a result of this train.
    Now, let me just start by saying, I am a supporter of 
private activity bonds. There are numerous important project, 
good projects that Congress has specifically intended to 
provide the option of private activity bonds for. There's a 
list of them up on the board right there.
    Airport, docks, wharfs, mass commuting facilities, 
facilities for furnishing water, sewage facilities, solid waste 
disposal, residential projects, furnishing electronic and 
energy and gas, heating, cooling facilities, hazardous waste 
facilities, environmental enhancements of hydroelectric-
generating facilities, and qualified public educational 
facilities, green building and sustainable design projects.
    There are two additional categories. The first is high-
speed intercity rail facilities, which Congress defines as a 
railway using vehicles that are reasonably expected to be 
capable of obtaining a speed in excess of 150 miles per hour. 
In other words, if Brightline wants to use tax-exempt bonds, 
they have to have the capability to run their trains in excess 
of 150 miles per hour. But they don't.
    So Brightline has, instead, sought to circumvent this 
congressional intent by claiming that they qualify as a 
highway. We'll get into the theory of this claim in this 
hearing, but I do think we can all agree that based on any 
common understanding of the word ``highway,'' this train does 
not meet that definition.
    I do believe that if Congress had intended to provide 
private activity bonds for a passenger train traveling 80 to 
110 miles per hour, as Brightline does, then Congress would 
have laid that out. They would have just said so. And any other 
interpretation is an affront to the American taxpayer.
    And in that, I thank you for the time to speak Mr. 
Chairman, and I yield back.
    Mr. Meadows. I thank the gentleman.
    In my remaining 35 seconds, I would like to thank the 
ranking member. As many of you know, we are not actually voting 
today, and what that normally means is that everybody is out of 
town almost immediately. And so the ranking member was gracious 
enough to continue on with this hearing. And I would like to 
personally thank him.
    And I recognize him for his opening statement.
    Mr. Connolly. I thank the chair for ever being gracious. 
And I'm very well aware of the fact that for some of our 
colleagues, this obviously has great impact. And so we wanted 
to make sure that that was a possibility today. But I thank the 
chair.
    As a former local government official, I recognize some of 
the aspects of this issue in this hearing. In fact, it almost 
feels like I'm back in my old boardroom in Fairfax County.
    What we have here is a local dispute between a new 
transportation facility, in this case Brightline passenger 
rail, and the communities that object to building the facility 
in their backyards. That's the kind of dispute I dealt with 
countless times as the chairman of one of the larger counties 
in the United States.
    No case is ever easy, but what we always hope for is a 
resolution that balances the interests of the community with 
the need to make necessary transportation improvements. And 
that's what I hope ultimately happens in this case.
    As Federal overseers, we also have a responsibility to 
ensure that projects using government funding or financing 
mechanisms are held to high safety standards and, in fact, meet 
the statutory terms of the program as set by Congress.
    This hearing appears to focus on a local dispute which is 
currently subject to litigation. The witnesses are the parties 
to the litigation, and the testimony they're offering tracks 
closely with their legal briefs.
    Of course, we're not a court of law here, and nothing that 
happens here will affect the eventual outcome of the litigation 
itself, nor is this hearing intended to do so, nor should it.
    However, I think the hearing raises some issues that should 
be relevant to President Trump, though perhaps not in the way 
my friends on the other side of the aisle intend.
    I believe we can all agree the country's infrastructure is 
in an appalling state of disrepair. The state of our 
infrastructure is so bad that the American Society of Civil 
Engineers gave the country an overall D-plus, D-plus. Although 
our rail systems scored a B, the Society stated that, quote, 
``U.S. rail still faces clear challenges, most notably in 
passenger rail, which faces the dual problems of aging 
infrastructure and insufficient funding.''
    The dispute at the center of the lawsuit is how a major 
passenger rail infrastructure project in Florida is funded. The 
project is privately owned and operated. It's funded by private 
investors who receive tax exemptions for the income they earn 
from their investments in the railroad. The financing vehicle 
is called private activity bonds, PABs.
    Two Florida counties and a group of homeowners in Florida's 
Treasure Coast want to stop the project. They're saying, in 
effect, ``Not in my backyard,'' and they have gone to court to 
contest the appropriateness of the use of PABs for this 
infrastructure project.
    Here is why this Florida dispute should matter to President 
Trump. President Trump's infrastructure plan abandoned the long 
tradition of public funding of major infrastructure projects. 
Instead, he relies significantly upon the private sector to 
finance the cost and upgrading of infrastructure. As is the 
case with this passenger rail project in Florida, PABs are a 
key part of the financing option that the Federal Government 
uses to incentivize private sector investment in 
infrastructure. The Trump plan depends upon them.
    So it's not too much of a stretch to say that if this 
hearing and the accusations of crony capitalism based on 
government-supported financing mechanisms can in fact stop a 
private passenger rail project in Florida from using tax-exempt 
bonds intended to incentivize private investment in 
infrastructure, then President Trump's plan to rely on those 
some instruments, that is to say PABs, for infrastructure 
projects across the country could also be stopped in a similar 
way.
    In a way, then, it's the Trump infrastructure plan that's 
also before us today.
    Isn't it ironic that the loudest critics are likely to be 
in the President's own party and probably believe in private 
ownership and private investment of infrastructure, just not in 
this backyard.
    I have no opinion one way or the other about whether this 
passenger train should be built in Florida or whether the 
mechanism used to finance it is appropriate. I am, however, 
skeptical that the Nation can rely entirely on these private 
instruments of finance to repair and improve our aging 
infrastructure. And I'm doubtful that the President's privately 
funded infrastructure plan will ever be anything more than 
another campaign promise.
    I have a suspicion this hearing will shine the light on the 
Achilles' heel of that infrastructure plan because it will 
demonstrate that private financing alone is not a panacea, 
something that will become more clear every time someone in 
this hearing attacks Brightline for taking advantage of 
existing tax-exempt bonds.
    So I think in many ways this hearing is more than about a 
rail line in Florida. It actually sheds light on how we're 
going to approach the whole issue of our Nation's 
infrastructure, which is so critical. And for that, I thank the 
chair for bringing us together to do that just that.
    With that, I look forward to hearing the testimony.
    Thank you, Mr. Chairman.
    Mr. Meadows. I thank the gentleman for his opening remarks.
    I'm pleased to introduce the witnesses. We have Mr. Grover 
Burthey, deputy assistant secretary for policy at the 
Department of Transportation.
    Welcome.
    Mr. Patrick Goddard, president and chief operating officer 
of Brightline All Aboard Florida.
    Welcome, Mr. Goddard.
    Mr. Robert Crandall, former chairman and CEO of American 
Airlines.
    Welcome, Mr. Crandall.
    Chief Dan Wouters, division chief of the Emergency 
Management of Martin County Fire Rescue.
    Welcome, Chief.
    And Mr. Dylan Reingold, county attorney for Indian River 
County.
    Welcome.
    And pursuant to committee rules, all witnesses will be 
sworn in before they testify, so if you would please stand and 
raise your right hand.
    Do you solemnly swear or affirm that the testimony you are 
about to give is the truth, the whole truth, and nothing but 
the truth, so help you God?
    All right. You may be seated.
    Please, the record will reflect that all witnesses answered 
in the affirmative.
    In order to allow time for discussion, I would ask that you 
please limit your testimony, your oral testimony to 5 minutes, 
but your entire written testimony will be made part of the 
record.
    And as a reminder, there is a clock in front of you. And so 
as you're looking at that clock it should have a countdown. But 
as it turns yellow, that means you need to prepare your closing 
remarks. And as it turns red, it'll start with a gentle tap and 
a harder gavel if you continue to go beyond the 5 minutes.
    But with that, if you'll remember to press the red talk 
button, that will turn red when you press it.
    You're recognized, Mr. Burthey, for 5 minutes.

                       WITNESS STATEMENTS

                  STATEMENT OF GROVER BURTHEY

    Mr. Burthey. Chairman Meadows, Ranking Member Connolly, and 
members of the subcommittee, thank you for the opportunity to 
testify today.
    My name is Grover Burthey, and I'm the deputy assistant 
secretary for transportation policy in the Office of the Under 
Secretary at the United States Department of Transportation.
    In my role at the Department, I oversee both the Office of 
Infrastructure Finance and Innovation, as well as the Build 
America Bureau, the entities with historical and current 
responsibility managing the private activity bond allocation 
process.
    As you are aware, private activity bonds, or PABs, are a 
category of bonds issued by State or local governments to 
private investors. The interest on State or local bonds is 
normally not subject to Federal taxation. But if State or local 
bonds are used to fund a private project, the interest is only 
tax-exempt if the bonds fit into one of several categories, 
including the category of exempt facility bonds at issue here.
    Private activity bonds are a valuable tool in facilitating 
private investment in transportation infrastructure. Extending 
tax incentives to privately financed projects or facilities 
that are similar to those enjoyed by publicly financed projects 
or facilities helps to level the playing field and encourages 
increased private investment in transportation infrastructure.
    Section 142 of Title 26, the Internal Revenue Code, defines 
several different categories of exempt facilities, including 
multiple categories of transportation facilities which may be 
financed using PABs.
    Many of these categories are subject to annual volume caps 
set by the statute and administered at the State level, while 
others are not limited in volume at all. Airports, docks and 
wharves, mass commuting facilities, and high-speed intercity 
rail facilities all fall into one of those categories with a 
volume cap.
    Qualified highway and surface freight transfer facilities, 
a category established in 2005 by SAFETEA-LU legislation, is 
unique in that it is subject to a nationwide volume cap of $15 
billion, which the Secretary of Transportation is directed to 
allocate in such a manner as the Secretary determines to be 
appropriate.
    From enactment until today, approximately $8.25 billion of 
this volume cap has been issued, while an additional amount of 
approximately $2.8 billion is currently allocated.
    The statute authorizing this category, 26 U.S. Code 142(m), 
defines qualified highway or surface freight transfer facility 
to mean, among other things, any surface transportation project 
which receives Federal assistance under Title 23. The 
Department has consistently understood this language to mean 
any surface transportation project which receives assistance 
from Title 23, not limited to highways, is eligible for private 
activity bond issuance.
    All Aboard Florida originally applied for an allocationof 
$1.75 billion in PAB authority for both Phase 1 and Phase 2 of 
their project, later named Brightline, in August of 2014. 
Brightline Phase 1 is a passenger rail service from Miami to 
West Palm Beach, and Phase 2 would extend the service to 
Orlando International Airport.
    The application indicated that in the time since the 
planning process for the All Aboard Florida project had begun, 
the Florida Department of Transportation has spent Title 23 
funds improving railway-highway grade crossings along the 
project corridor.
    Based on these expenditures, the Department determined that 
the All Aboard Florida project was a surface transportation 
project which receives Federal assistance under Title 23, and 
it therefore qualified for a private activity bond allocation 
under 26 U.S. Code 142(m)(1)(A).
    The Department issued an allocation letter in December of 
2014. The Department acted subsequently to extend that 
allocation twice.
    In September of 2016, All Aboard Florida submitted a new 
application requesting a $600 million application for Phase 1 
of the Brightline projects. It simultaneously requested that 
the existing $1.75 billion allocation be withdrawn. In November 
of 2016, the old allocation was withdrawn and the new 
allocation was granted.
    $600 million in private activity bonds were subsequently 
issued for Phase 1 in December of 2017. These bonds help fund 
construction of new stations and track infrastructure. On 
December 5 of 2017, All Aboard Florida applied for an 
allocation of $1.15 billion in private activity bond authority 
for Phase 2 of their project. This allocation was granted in 
December of 2017 and has an expiration date of May 31, 2018.
    Thank you again for the opportunity to testify today 
regarding the Department's private activity bond allocation 
process to the All Aboard Florida Brightline project, and I 
look forward to your questions.
    [Prepared statement of Mr. Burthey follows:]
    [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
    
    Mr. Connolly. Nineteen seconds, pretty good for government 
work, Mr. Burthey.
    Mr. Meadows. Thank you for your testimony.
    Is it Goddard, is that correct?
    Mr. Goddard. That's correct.
    Mr. Meadows. I don't want to pronounce it wrong the whole 
time. So 5 minutes, Mr. Goddard. Thank you. You're recognized.

                  STATEMENT OF PATRICK GODDARD

    Mr. Goddard. Thank you, Chairman.
    Chairman Meadows, Ranking Member Connolly, and members of 
the subcommittee, thank you for the invitation to participate 
in this hearing. My name is Patrick Goddard, and I'm the 
president and chief operating officer of Brightline.
    As many of you know, Brightline has revived the legacy of 
Henry Flagler, who introduced passenger rail to Florida over 
100 years ago. We launched our service in January between Fort 
Lauderdale and West Palm Beach, and Miami is set to begin 
operations in the coming weeks.
    Early works to Orlando are also now underway, which will 
connect major economic engines for the third-largest State in 
our country. In doing so, we have created employment for over 
10,000 people.
    I'm excited to report that early ridership numbers are 
higher than anticipated and support for our current service and 
future expansion opportunities from consumers, elected 
officials, and the business community has been nothing short of 
overwhelming.
    This model serves city pairs that are too short to fly and 
too long to drive. It's working, and it will work in other 
markets across the country.
    There was never a more important time than now to build 
this system that will benefit all of Florida and its visitors. 
Today, 400 million trips are taken annually in this market 
relying on roads and airways that are among the most congested 
in the Nation. Driving speeds on the Interstate 95 highway in 
south Florida currently average 34 miles per hour with no 
capacity for improvement.
    With 20 million residents and 116 million visitors, 
enhanced mobility between these markets is vital to meeting the 
growth trajectories in this region.
    Brightline will eventually take up to 6 million trips off 
our highways, giving residents and tourists a safer, more 
reliable, and convenient means to travel around the State.
    That said, I would like to address the topics that have 
been brought to bear today.
    First of all, Brightline is a private company and is 
privately funded. Contrary to propaganda disseminated by some 
of our opponents, private activity bonds are not government 
funded and taxpayers are not at any risk whatsoever.
    The Federal Government does not guarantee the bonds, 
subsidize the interest rate on the bonds, or assume any 
liability for the project's losses or cost overruns. Private 
investors assume 100 percent of the risk and local governments 
receive millions of dollars in new tax revenue.
    In fact, it is estimated that Brightline will generate more 
than $650 million in tax revenue to Federal, State, and local 
governments, and there will be $6 billion in positive economic 
impact over 8 years.
    In addition to the PABs, which are collateralized by our 
assets, we have invested over a billion dollars in equity, 
which is at risk, not an insignificant amount of our own money.
    Despite this investment, at our own risk and for public 
benefit, might I add, we still face opposition from a minority 
of narrow-minded residents of two counties along our corridor 
who are willing to support passenger rail everywhere, it seems, 
except in their own backyard.
    The fact is, I concur with Mr. Connolly, President Trump's 
infrastructure bill is what is actually on trial in this room 
and as long as we allow a small group of obstructionists to tie 
up courts and spend taxpayer dollars on frivolous lawsuits to 
stand in the way of necessary progress.
    On safety. Safety has been Brightline's priority since the 
inception of this project back in 2012. APTA has published a 
recent study demonstrating that train travel is 90 percent 
safer than travel by car. With 700 deaths year-to-date on our 
State's roads, I would say that percentage is far higher in 
Florida.
    Rail opponents to our north claim that recent incidents 
validate their claim that passenger rail is unsafe. But they 
choose to ignore the facts and the actual police reports 
surrounding these incidents, a common theme of bending 
information to suit their anti-progress narrative.
    In every incident to date, all of the safety and warning 
systems worked exactly as intended. These were all examples of 
individuals circumventing the very equipment that was put in 
place to protect them.
    It's impossible to have a conversation about rail safety 
without discussing opioids and mental health. Every person who 
has died on our railroad has either chosen to end their lives 
or been under the influence of drugs.
    In every aspect of this project, Brightline has gone above 
and beyond what is required by regulators and what is expected 
of others in our industry.
    Early ridership and guest feedback tell us we are bringing 
a much-needed solution to south Florida. Not only are people in 
the State excited about Brightline, but in January, your 
colleagues Bill Shuster and Peter DeFazio took part in our 
launch, tried our trains, and walked away overwhelmingly 
impressed.
    I welcome you and all members of this subcommittee to join 
us in Florida and to see our impressive operation.
    I thank you.
    [Prepared statement of Mr. Goddard follows:]
    [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
    
    Mr. Meadows. Mr. Crandall, I'm going to recognize you, and 
I'll give perhaps one just caveat based on Mr. Goddard's 
opening remarks.
    Try to keep personalities out of it. And, Mr. Goddard, I 
don't think it serves your case well when you call some of Mr. 
Posey and Mr. Mast's constituents narrow-minded and 
obstructionists. But that's mine.
    The rest of the panel, I would just encourage you to try to 
keep personalities out of it.
    Mr. Crandall, you are recognized for 5 minutes.

                  STATEMENT OF ROBERT CRANDALL

    Mr. Crandall. Thank you, Mr. Chairman, Ranking Member 
Connolly, members of the subcommittee. Thank you for inviting 
me. My name is Robert Crandall. I live in the Treasure Coast 
region, and at one time I was chairman of American Airlines.
    CARE Florida, where I have served on the steering committee 
since 2014, is a coalition of Treasure Coast citizens and 
organizations trying to preserve the character of the several 
communities through which All Aboard Florida proposes to run 32 
daily passenger trains at 110 miles per hour.
    I'm here to answer a straightforward question. Should this 
project be subsidized by Federal taxpayers? CARE Florida 
believes the answer to that question as no, for three reasons.
    First, the DOT's allocation of $1.15 billion in private 
activity bonds, or PABS, to All Aboard Florida is improper, 
unlawful and in direct contravention of congressional intent. 
Second, because All Aboard Florida is unsafe as designed. And 
finally, because in CARE Florida's judgment and mine, the 
project cannot be financially successful.
    I would like to spend the next couple of minutes addressing 
the PABs and then add a word on financial viability.
    All Aboard Florida portrays itself as a private enterprise, 
but it has demonstrated an insatiable desire for taxpayer-
subsidized financing and is unlikely to be able to finance its 
project without it.
    In August of 2016, a U.S. District Court ruling on a DOT 
allocation of $1.75 billion, the original allocation, cited 
legitimate questions about All Aboard Florida's commitment to 
completing the project without PABs.
    First of all, and I quote the Court, ``PAB-based financing 
is not just the current financing plan, it appears to be the 
only financing plan.'' And I ask that that ruling be made a 
part of this hearing record.
    Mr. Meadows. Without objection, so moved.
    Mr. Crandall. Unhappily, the U.S. DOT, in our judgment, 
does not have the statutory authority to allocate PABs for this 
type of passenger rail project. The Internal Revenue Code 
allows the issuance of tax-exempt PABs only if the project to 
be financed falls into 1 of the 15 specified categories on the 
chart.
    A high-speed intercity rail facility would qualify, but no 
one, not AAF and not DOT, disputes the fact that AAF is not 
high speed and does not qualify.
    DOT has chosen, therefore, to approve PAB allocations based 
on the theory that it is a qualified highway or surface freight 
transfer facility. But AAF is a passenger railroad. It is not a 
highway. It is not a freight transfer facility.
    Nonetheless, DOT has allocated $1.15 billion, the largest 
PAB allocation to date, claiming that AAF can be considered a 
highway because once, years ago, the Florida Department of 
Transportation spent $9 million in Title 23 highway funds to 
improve highway rail crossings in the separately owned Florida 
East Coast Railway corridor in which AAF will run.
    In recent years, there have been several attempts, 
occasions, on which the Obama administration or individual 
Members of Congress have proposed to amend the statute to 
include passenger rail projects that do not meet the current 
high-speed definition. None of those proposals were ever 
enacted, but the fact that they were proposed is a clear 
admission that the authority does not exist.
    In closing, I would like to comment briefly on AAF's 
projected financing. In order to succeed, they must obviously 
raise enough revenue to cover their costs.
    Twice, in 2013 and in 2017, they have commissioned revenue 
studies. In 2017, they proposed a study which increased the 
2013 assumptions by doubling fares and thereby increasing, 
according to this study, passengers by 52 percent and tripling 
revenue.
    Now, if anybody when I was running American Airlines had 
told me that we could change a route from a loss to a success 
by doubling our fares and would thereby triple our revenues, I 
would have paid little attention.
    We are glad this hearing is taking place. We are glad you 
are watching. We hope you will decide to end this debacle.
    Thank you very much.
    [Prepared statement of Mr. Crandall follows:]
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    Mr. Meadows. Thank you, Mr. Crandall.
    Chief, you're now recognized for 5 minutes.

                    STATEMENT OF DAN WOUTERS

    Chief Wouters. Thank you very much.
    Chairman Meadows, Ranking Member Connolly, and members of 
the subcommittee, thank you very much for inviting me to 
testify here today on the All Aboard Florida passenger rail 
project.
    My name is Daniel Wouters. I'm a division chief for the 
Fire Rescue Department in Martin County, Florida.
    Martin County is located in the Treasure Coast region and 
has 151,000 residents and 538 square miles. As the division 
chief, I'm responsible for emergency preparedness, response, 
and field operations in the county.
    Within the Florida East Coast Railway in which the All 
Aboard Florida high-speed passenger train project is proposed, 
Martin County has 27 at-grade crossings. Currently, 10 to 14 
freight trains pass through our region at speeds typically 
between 30 to 40 miles per hour.
    On the upgraded rails, All Aboard Florida and FECR plan to 
run 32 high-speed passenger trains up to 110 miles per hour and 
freight trains up to 70 miles per hour through our community. 
The significant increase in the numbers and speeds of those 
trains passing through our traffic-congested at-grade crossings 
will negatively impact public safety.
    The project will quadruple our railroad crossing closures, 
resulting in additional delays for fire rescue. The 
survivability of patients decrease each minute these services 
are delayed. The potential for injuries and fatalities is real, 
not hypothetical.
    According to the FRA accident/incident overview from 2011 
through 2017 in the FECR corridor, 107 fatalities and 191 
injuries occurred, with 16 fatalities and 33 injuries in 2017 
alone. If 32 high-speed passenger trains as well as additional 
faster freight trains are added, statistically these fatalities 
and injuries will increase based on the current trends.
    In fact, this is already occurring. Since the start of the 
AAF trial runs between West Palm Beach and Fort Lauderdale, the 
All Aboard Florida trains have struck and killed five people 
and injuring others in separate incidents, involving 
pedestrians, bicyclists, and motorists.
    When busy traffic occurs on roadways, motorists can 
inadvertently get caught at traffic signals, resulting in them 
stopping on the rails.
    Two such incidents occurred on February 14 and March 10 of 
2018. In one incident, a vehicle followed another onto the 
tracks, which had inadvertently stopped, leaving it stranded. 
In the second case, an elderly driver stopped for a red light 
when the crossing guards came down. The two incidents I 
referenced occurred in the span of less than a month on just a 
46-mile short span.
    In 2017, our response vehicles crossed the railroad tracks 
approximately 17,000 times responding to incidents as well as 
transporting patients to area hospitals. Based on the estimated 
increase in the rail traffic, there will be substantially more 
delays if the All Aboard Florida project proceeds as planned 
due to a lack of grade separation through our community.
    In our downtown area, a nearly 100-year old single-track 
bridge still exists. A parked freight train waiting to pass 
another train could substantially cause delays to our downtown 
community and impact public safety and response to hospitals.
    Within the increased potential of collisions comes the 
potential for devastating chemical releases. To make this 
point, I would like to refer to a chart I have on the easel.
    In 2015, Martin County conducted a vulnerability analysis 
to examine the potential for an impact of a single rail car 
crash resulting in a chemical release. This slide shows the 
potential for catastrophe based on the rail corridor proximity 
to the community.
    If you'll notice in the shaded areas, the red areas are 
where patients would have life-threatening injuries, in the 
orange areas, serious, irreversible conditions, and the yellow 
area where they would have effects as well.
    I summarize by simply stating that this shows a potential 
for significant harm to occur due to the track
    s proximity to that of Martin County.
    There are additional harmful impacts such as no pedestrian 
crossings at 10 of the 27 at-grade crossings in Martin County. 
All Aboard Florida has told the county that local taxpayers 
will be responsible for 100 percent of those costs to add those 
safety features.
    As well, with the increase in the additional track, there 
will be insufficient spacing at some locations for buses to 
stop between the traffic light and the rail. Because of this, 
it's essential that the installation of vehicle presence 
detection as well as dynamic exit gates are installed at all of 
the crossings.
    Martin County is gravely concerned about the public safety 
risks and the increase in the proposed All Aboard Florida 
project.
    Mr. Chairman, the FRA approved a $1.15 billion bond 
allocation for this project based on a FEIS and the ROD that 
contained critically deficient safety analysis and 
recommendations. Given the track record for injuries and 
fatalities within the rail corridor, the FRA's decision to 
approve the project without the safety measures we have sought 
is both startling and dangerous.
    Thank you very much.
    [Prepared statement of Chief Wouters follows:]
    [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
    
    Mr. Meadows. Thank you, Chief.
    Mr. Reingold, you're recognized for 5 minutes.

                  STATEMENT OF DYLAN REINGOLD

    Mr. Reingold. Thank you, Chairman Meadows.
    Thank you Ranking Member Connolly.
    Mr. Meadows. You may want to pull that a little bit closer. 
We're getting older and our hearing is not quite as good as it 
used to be.
    Mr. Reingold. Thank you for allowing me to testify today. 
My name is Dylan Reingold. I'm the county attorney for Indian 
River County.
    Indian River County is a small county located on the east 
coast of Florida. It is south of Kennedy Space Center and north 
of West Palm Beach. We have approximately 146,000 people who 
live in Indian River County, mostly in the population centers 
of the city of Vero Beach and Sebastian.
    As you may know, All Aboard Florida's proposed Brightline 
service will travel from Orlando to Miami, with stops in Fort 
Lauderdale and West Palm Beach. It will then zip through Indian 
River County and our 31 at-grade highway railway crossings and 
near businesses and schools and residences at over 100 miles an 
hour.
    Please understand that safety is our biggest concern. 
However, that issue will be addressed by other speakers today. 
I will, therefore, focus upon the financial impact that All 
Aboard Florida will have upon local governments like Indian 
River County.
    The higher-speed passenger rail project is subject to the 
National Environmental Policy Act. In NEPA documents, the 
Department of Transportation has stated that it expects Indian 
River County to pay for the maintenance of safety improvements 
at at-grade crossings for eternity.
    Let me repeat that, because that is very important to my 
community. The United States Department of Transportation and 
the private company funded by a Japanese hedge fund expect 
Indian River County and other local governments to pay for the 
maintenance of those safety improvements at the crossings in 
eternity.
    We know where this theory originated. Indian River County 
currently has license agreements with the Florida East Coast 
Railway for the crossings within the jurisdiction.
    The truth is FECR has these agreements with local 
governments up and down the east coast of Florida. That is 
because the railroad, which was built approximately about 1925, 
existed long before the highways and roads that were necessary 
to support a population that has since grown by 10,000 percent.
    So Indian River County, like our sister communities to the 
north and south of us, have funded this arrangement with FECR 
for many years, which, may not necessarily be fair, represents 
the status quo.
    Now, All Aboard Florida is demanding to piggyback off these 
arrangements and to change the terms of the deal. This cannot 
be permitted. This is an unfunded mandate upon the local 
governments.
    First, All Aboard Florida is not an affiliate company, it 
is not a sister company of FECR. It is a separate company.
    Second, the speed of All Aboard Florida is nothing--well, 
at least it was not contemplated when these agreements were 
executed by the parties. The existing railway corridor in 
Flagler's east coast railway time period has never had a 
higher-speed passenger rail system. The original service was 
slow, it had many stops. It ceased to exist in 1968. And the 
evidence of this is that you have 159 at-grade crossings in 
populated areas between West Palm and Cocoa.
    To allow for the increase in speed is unconscionable. These 
trains will travel at more than three times the average speed 
of the current freight trains today. And the steep increase in 
these speeds mandates the need for improvements at the highway 
grade crossings.
    While All Aboard Florida has recently offered to pay for 
the installation of these improvements, it still expects and 
demands that local governments, like Indian River County, pay 
for the maintenance of these facilities forever. An initial 
cost estimate performed by Indian River County estimated that 
this will cost Indian River County approximately $8.2 million 
through 2030, which is a significant sum of money for a small 
county like ours.
    In closing, I want to say that Indian River County prides 
itself on being a fiscally conservative county. We keep our 
taxes low. We limit the size of our government. But we won't be 
able to limit the cost that we spend on the maintenance of 
these facilities. That is because local governments like ours 
have absolutely no control over the cost of the maintenance for 
these facilities.
    So in closing, I specifically want you to remember two 
things. One, we are concerned about safety. And two, we do not 
want the bills for these safety and maintenance costs to come 
from the pockets of our constituents. That is unacceptable.
    Thank you very much.
    [Prepared statement of Mr. Reingold follows:]
    [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
    
    Mr. Meadows. Thank you, Mr. Reingold, for your testimony.
    As a personal note, probably way before your time, some 40 
years ago, when there was a younger, thinner, more agile 
individual, I used to take highway 60 across from Brandon 
Florida, to surf at Sebastian Inlet. And so that was my 
indoctrination to Indian County.
    I'll now recognize the gentleman from Florida that has been 
a strong advocate, along with the gentleman to his left, Mr. 
Posey, on this particular issue, the reason why we're having 
this hearing, Mr. Mast, for a series of questions.
    Mr. Mast. Chairman, I'm going to have to think about you 
with surfer hair for a while now.
    Thank you all for being here.
    Mr. Goddard, I thank you for taking the time to be here for 
this hearing. Just with a couple of for-the-record questions.
    Do the All Aboard Florida trains currently operate in 
speeds of excess of 150 miles per hour?
    Mr. Goddard. No, they do not.
    Mr. Mast. Thank you, sir.
    Mr. Burthey, did the Department of Transportation approve 
$1.15 billion in private activity bonds to All Aboard Florida 
as a qualified highway or surface freight transfer facility?
    Mr. Burthey. Yes.
    Mr. Mast. Thank you. I'd like to think that if Congress 
wanted to fund trains through the private activity bond process 
outside of those that are high speed, those in excess of 150 
miles per hour, they would have put that into the list of 15 
eligible projects for private activity bonds.
    Mr. Burthey, Section 142, Title 26, it does define 
eligibility for private activity bonds: A qualified highway or 
surface transfer facility is any surface transportation project 
which has received Federal assistance under Title 23.
    So I want to ask, did any Title 23 money go to the All 
Aboard Florida project?
    Mr. Burthey. Thank you for the question, Congressman.
    In the application from All Aboard Florida that the 
Department of Transportation received, All Aboard Florida 
indicated that over 2012, 2013, and 2014 Title 23 funds were 
used on the corridor. That was after the announcement from----
    Mr. Mast. The corridor or the All Aboard Florida project?
    Mr. Burthey. I'm sorry?
    Mr. Mast. The corridor being FEC corridor or the All Aboard 
Florida project specifically?
    Mr. Burthey. The corridor on which the All Aboard Florida 
trains will run.
    Mr. Mast. So if All Aboard Florida did not specifically 
receive funds, I would wish that the Department would withdraw 
their award letter for private activity bonds.
    But I would ask, was there actually moneys distributed or 
deposited to All Aboard Florida specifically, that project? 
Were there moneys distributed into an account for a surface 
transportation project to All Aboard Florida?
    Mr. Burthey. The Florida Department of Transportation 
manages Title 23 funds in the State of Florida.
    Mr. Mast. So are you saying not to the best of your 
knowledge were dollars specifically put into an All Aboard 
Florida account, they went to FDOT, Florida Department of 
Transportation?
    Mr. Burthey. We are not aware of any funds going to an All 
Aboard Florida account; however, the application which the 
Department of Transportation reviewed did indicate that funds 
were used by the Florida Department of Transportation from 
Title 23 on the corridor on which the All Aboard Florida trains 
run, enabling it to be eligible for assistance under private 
activity bond statute.
    Mr. Mast. Thank you for that. And I think this is an 
important point of what we're getting at here, and it has a 
very broad implication for what goes on with private activity 
bonds across the breadth of this country. This is the problem.
    Congress has given a list of projects to provide private 
activity bonds to. As it relates to rail, Congress said very 
specifically high speed rail, over 150 miles per hour. You 
said, for the record, that's not you. We're not disputing that. 
Nobody is.
    So what we're using here is this kind of doublespeak that I 
think often ticks people off, where everybody is labeling this 
train something that it's not. We're saying because it once, in 
one section of the corridor, not even the same project, had 
some infrastructure upgrades done to the project, that by that 
rational an intersection was fixed somewhere on the rail, that 
an entirely new project is subject to being eligible for 
private activity bonds. And I think that's what we're getting 
at here.
    I would like to get to something else very quickly here.
    Mr. Goddard, All Aboard Florida CEO Mike Reininger 
testified in June of 2017 on the T&I Committee that I sit on. 
He testified to me that All Aboard Florida is not publicly 
funded at all, it is completely an investment of private sector 
capital.
    However, Brightline's private activity bond application 
from December of 2017 reads: The project has received financial 
assistance under Title 23, that is the Federal assistance, and 
eligibility for private activity bonds under Title 26 mandates 
that the financial assistance is, in fact, Federal assistance.
    So my question would be, when the CEO, Mike Reininger, 
testified before T&I in that time, was he lying to me when he 
said that the Brightline project hadn't received any Federal 
funding? Or was there a lie to the Department of Transportation 
on the application in saying that private activity bonds are 
eligible because they have received private assistance? That to 
me sounds like two completely different answers.
    Mr. Goddard. No, he did not lie. He do not lie to you. That 
funding was relative to safety improvements.
    Mr. Mast. And with that, my time has expired, and I will 
yield back. Thank you.
    Mr. Meadows. The chair recognizes the gentleman from 
Virginia for a series of questions.
    Mr. Connolly. I thank the chair.
    I thank the panel for being here.
    Mr. Burthey, we heard the testimony. Mr. Crandall says, 
inter alia, that this is a misuse of PABs, and it's pretty 
clear in the code this the a circumvention of that.
    Chief Wouters talks about safety, that there are inherent 
safety problems giving at-grade crossings, multiple at-grade 
crossings, that put the public at risk, and were never 
intended--never intended--for a train of this kind of capacity, 
speed-wise, putting the communities at risk.
    Mr. Reingold makes an argument that, as somebody who comes 
from local government, I can sympathize with, that in effect, 
whether by design or not, approving this project puts a 
permanent unfunded mandate on local governments to maintain 
whatever safety measures are put into place or not put into 
place from now until the end of time.
    Any of these concerns factor into the decisions at the 
Department of Transportation about this project?
    Mr. Burthey. Thank you, Congressman.
    So to be clear, the Department of Transportation's 
responsibility in providing an allocation for private activity 
bonds is to determine statutory eligibility. And the Department 
has historically interpreted any surface transportation project 
that utilizes Title 23 funds to be eligible for the phrase 
``qualified highway or surface freight facility.''
    Mr. Connolly. Mr. Burthey, is it your testimony that upon 
that examination, irrespective of these concerns, the 
Department determined it was qualified?
    Mr. Burthey. The Department determined that the application 
met the statutory eligibility to being able to use private 
activity bonds.
    Mr. Connolly. So not to create the argument, because I 
don't wish to have the litigation by surrogate here, but so you 
take direct issue with Mr. Crandall's testimony that it most 
certainly does not? Those are two pretty different 
interpretations of the code.
    Mr. Burthey. We do take issue with his interpretation. Our 
interpretation is that by statute any surface transportation 
project, which obviously a passenger rail train is a surface 
transportation project, any surface transportation project that 
utilizes Title 23 funding is then eligible as a qualified 
highway or surface freight transportation project.
    Mr. Connolly. Mr. Goddard, you heard the testimony of the 
three folks to your left. What is the reaction of Brightline to 
the substance of these concerns in terms of unfunded mandates, 
safety, and for that matter, eligibility?
    Mr. Goddard. Thank you, Congressman.
    So we've been questioned on these issues for several years. 
We've been through several lawsuits on PABs, on safety, on 
whether or not we meet the criteria. We have prevailed up until 
this point. We continue to engage in dialogue with our 
opponents relative to these issues, and we seem to be talking 
past each other.
    Mr. Connolly. But I'm asking a different question. Holding 
in abeyance for litigation and who is an opponent and all of 
that, I'm familiar with lots of different passenger rail 
systems, commuter rail, for example. And I'll take the western 
suburbs of Chicago, one I'm quite familiar with. They don't go 
110 miles an hour.
    Mr. Goddard. Yeah.
    Mr. Connolly. They have a lot of at-grade crossings, but 
they also have safety provisions in place. And they can live 
peaceably side-by-side. And in fact communities have grown up 
around the stations and it's almost a way of life, but it 
works. But it wouldn't work at 110 miles an hour, I don't 
think.
    So what is your substantive reaction to----
    Mr. Goddard. Yeah.
    Mr. Connolly. If I had, I think you said Mr. Reingold, 39 
crossings?
    Mr. Reingold. Ranking Member, we have 31.
    Mr. Connolly. Thirty-one.
    So if I'm a small county and I got 31 crossings, I have a 
legitimate concern about safety. What are you going to do about 
that? How can you help us address that, ameliorate that 
concern?
    Mr. Goddard. Again, safety, the safety of train travel has 
been demonstrated, and, again, as substantially safer than 
traveling by car.
    I can tell you that passenger rail happens every day in 
this country, all over this country. Our corridor meets the 
sealed corridor requirements as determined by the FRA.
    We don't actually set----
    Mr. Connolly. Mr. Goddard, with due respect, that's a very 
bureaucratic answer. I asked you, what are you doing to try to 
ameliorate the concern in the case of Indian River County?
    Mr. Reingold. Yes, sir, Indian River County.
    Mr. Connolly. It's a legitimate concern. I'm worried about 
kids. I'm worried about people.
    Mr. Goddard. Sure.
    Mr. Connolly. And so how is Brightline trying to ameliorate 
that concern in a reasonable way?
    Mr. Goddard. Sir, we have spent the last 4--about 4 years 
ago, when we started this project, in conjunction with USDOT 
and FRA, we went crossing by crossing with each municipality 
all the way up the corridor to determine what was the properly 
prescribed safety equipment to implement at each crossing--
crossing-by-crossing--to make sure that we implemented the 
right safety equipment.
    Furthermore, all of that safety equipment was implemented 
at our expense, which is, again, above and beyond what is 
required of us. So we feel that we have done more than is 
required of us at every step of this process.
    Mr. Meadows. You're still not answering the gentleman's 
question. I mean, speak to the question.
    Mr. Goddard. Okay. So we, again, we feel that we have met 
the demands already of these groups. We've had discussions, 
we've had dialogue with them, and we've met their demands.
    So if there are additional discussions that my colleagues 
would like to engage in relative to their needs, we're prepared 
to have those discussions. But up until this point, we feel 
like we've addressed all of the concerns.
    Mr. Connolly. All right. I don't wish to impose, but if the 
chair will just indulge one last question to Mr. Crandall, 
because I was intrigued by your testimony, Mr. Crandall.
    You've obviously done a lot of homework. You've heard the 
testimony of Mr. Burthey that our review at DOT, this meets the 
criteria. You want to just take a moment to perhaps rebut that 
or give your elaborated view of why they're wrong?
    Mr. Crandall. Thank you for the opportunity, sir.
    Mr. Connolly. And then I yield back. I thank the chair.
    Mr. Crandall. I think Mr. Mast has put his finger on the 
issue. The rule is quite clear, and that is that a project 
which has benefited or received funds under Section 23 might 
then be eligible. But the fact is, All Aboard Florida has not 
received such funds, as Mr. Mast, I think, quite aptly pointed 
out.
    Such funds have been used in prior years to improve the 
crossing, the point where the road crosses the tracks, perhaps 
to put paving, et cetera, et cetera, whatever what might have 
been done. But it was a long time ago. And that's an entirely 
different project for All Aboard Florida.
    Thus, it is quite clear to me on the reading of the statute 
that All Aboard Florida is not eligible. It is a railroad and 
it isn't eligible under any of those 15 categories.
    Mr. Meadows. I thank the gentleman from Virginia. The chair 
recognizes the gentleman from Florida, Mr. Posey, for a series 
of questions.
    Mr. Posey. Thank you very much, Mr. Chairman, for holding 
this hearing, and, Mr. Ranking Member, I want to thank you for 
agreeing to it, and, Congressman Mast, I want to thank you for 
requesting this hearing. You know, the proposed Brightline 
service will run through the heart of many of my communities in 
my district. Obviously, I have a lot of concerns and questions. 
I have seen the data from the Federal Railroad Administration 
Accident Database that shows that during the period of 2007 to 
2018 there was an average of 13.5 rail crossing deaths per year 
in Florida.
    In the short time Brightline has been operating during 
Phase I you have already recorded six such fatalities, almost 
50 percent of the annual Florida average. This abysmal 
performance suggests a serious safety deficiency and should be 
immediately remedied. One of the questions I am going to have 
for Mr. Goddard when I am finished here if you would write this 
down now and remember to respond to it is I would like you to 
share with me your firm's plan to mitigate the increased risk 
to pedestrians and vehicles at rail crossings.
    I read the summary of comments on safety in the 2015 
environmental impact statement for All Aboard Florida pages 1 
through 23 of that document. Quite a few residents worried 
about the safety of grade crossings under the new train service 
are evident. The Federal Railroad Administration's response was 
completely puzzling. The most troubling was the response that 
these safety concerns are covered by FRA safety standards, and 
therefore, not subject to the National Environmental Protection 
Act, so we have got to worry about protecting everything in the 
doggone world except humans.
    You know, Mr. Burthey, I appreciate you showing up today. I 
have written your agency twice with some serious questions 
about safety concerns, and I have received responses only from 
the FRA, and I still get very, very poor service and response 
from your agency at addressing some of the serious safety 
issues that we have before us here.
    You know, I am puzzled how your agency can possibly 
consider a highway and a railroad the same thing. I mean, what 
can you drive on a highway? A bicycle, a motorcycle, an 
automobile, a truck. What can you drive on a railroad track? If 
you don't have a train, it is no help to you, you know? Maybe 
you can buy a ticket, you know, one way to----
    Given that the NAPA requires the agency to assess the 
impacts of the human environment, surely we don't intend to cut 
off the process without mitigating for increased risk to 
pedestrians and drivers. I am very puzzled about the rationale 
for not analyzing and addressing safety in the environmental 
impact statement, obviously, and at the end, Mr. Burthey, maybe 
you can give us some further insight and wisdom on that.
    Construction of Phase II of the project, which will bring 
the train through my district, through Indian River County and 
Brevard Counties has yet to happen. Many narrow-minded 
residents, as you call them, Mr. Goddard, are understandably 
nervous, especially those residents whose homes back right up 
to the train tracks. There are schools and businesses that are 
in close proximity to this train, and, Mr. Chairman, with your 
indulgence, I would like to ask for unanimous consent to 
include seven images showing how close in proximity this train 
runs through my constituents' homes, schools, and businesses.
    This is a photograph of the crossing at Vero Beach looking 
north. This one of downtown Melbourne. I can't imagine a high-
speed train going through there. This is one of Stuart. This is 
St. Lucie crossing. This is downtown Vero Beach looking from 
the east. And these are residents that setback up to the line.
    Mr. Connolly. Without objection.
    Mr. Meadows. I thank the gentleman.
    Mr. Posey. Thank you. Shouldn't we open up the process to 
reexamine the safety issues in collaboration with the public? 
You know, we get a pledge maybe to do that today.
    It is my understanding that All Aboard Florida plans to 
have local governments like my constituents in Indian River 
County pay for the maintenance of the safety equipment 
necessary to operate as passenger and rail trains across 
hundreds of at grades crossings. This is basically an unfunded 
mandate from the Federal Government on local government, 
something that we always swear that we won't do, and we 
inadvertently sometimes end up doing that, and this would be a 
horrible injustice.
    And given that we are providing substantial support to AAF 
and the requirements for new safety equipment due to Brightline 
service shouldn't the capital and operating costs of safety 
equipment be paid for by Brightline, the people who benefit 
from it?
    Mr. Chairman, let me tell you how I found out about 
Brightline about this All Aboard Florida. For several years 
representatives came through and said, look, we are going to 
put in a high-speed rail. Here is our plan. We don't need any 
government assistance. We don't need any government approvals. 
We are doing this completely in-house. We are authorized 
completely to do it. It is all on our own. We are just telling 
you for informational purposes so you will know what is going 
on through your district.
    That went on for 3 or 4 years, and then I am asked to sign 
a letter executed by Mr. Mast's predecessor putting them at a 
high priority for a RRIF loan, and I go, well, I thought you 
guys were doing it--well, yeah, our plans changed. Yeah, they 
sure do change.
    So when we had a transportation bill come through on the 
floor I thought it would be appropriate to have a couple of 
amendments, you know, one that you should have the approval of 
at least majority of your local elected officials to do 
something like this, and we should also limit the amount of the 
loans. This would be--I think they were asking for $1.7 billion 
at the time, the most humongous loan in the history of RRIF 
loans, and, of course, follow the law because at that time they 
hadn't gotten somebody to sandwich in a glitch fix for them 
because they didn't meet the criteria for the money that they 
were asking for.
    Of course, I met with a lot of strong opposition. One of 
their strongest supporters and advocates, a Member of Congress 
who is now in Federal penitentiary, said twice shame on me for 
asking the railroad to actually follow the law. And the floor 
was flooded with colorful handouts of misinformation about the 
rail, and of course, the amendments didn't pass. They should 
have, but they didn't. I have correspondence from my local 
officials asking them--they were asked by Brightline to write 
nasty letters to the editor about me calling me narrow-minded 
and some of the things to quote Mr. Goddard, and I just think 
this attempt to do this is everything but straightforward and 
upright.
    I believe they tried to sell some bonds before, but they 
couldn't sell them, and so now that has changed. You know, you 
wonder how fast these trains travel through these little 
villages? Even at 70 miles an hour the consequences can be 
horrific based on how long it takes to stop one of these 
doggone things, and, you know, I think we have been called 
narrow-minded and not in my backyard people, and, you know, I 
think a lot of people would support a rail if it didn't go 
through the middle of their downtowns and our neighborhoods and 
if it was actually safe, which this clearly is not.
    My own experience and I think yours and other Members of 
Congress we were recently in a train accident, and I was 
advised by one, the reason for the accident even though the 
guards work is the guys in the truck, one of whom lost his 
life, were used to seeing coal trains coming around that corner 
about 30 miles an hour, and they thought they would have plenty 
of time to get across. They weren't, you know, accustomed to 
having our Amtrak come through there at 60 to 70 miles an hour, 
and the result was tragic just like it will be in many, many 
communities in my district and Congressman Mast's district.
    So, you know, I have heard a lot of talk about overwhelming 
support for the project. Man, I sure as hell haven't seen that, 
and I don't think it is was overwhelming support that you are 
able to sell any bonds before. I don't think people are all 
stooges, you know, and they are not that stupid to invest in a 
train. We don't have any lines like this that make any money. 
The Federal Government has to subsidize them.
    The problem with the RRIF loan is after you guys would go 
broke on passenger rail if that was your real agenda then what 
collateral really usable collateral, safe collateral would the 
Federal Government have? So my question to ask you right now 
under oath is, Mr. Goddard, what is your real agenda here?
    Mr. Goddard. Congressman, I am not sure which of your 
questions to address first.
    Mr. Posey. We can do the agenda question first so we don't 
forget it.
    Mr. Goddard. Our agenda is to improve mobility for millions 
of visitors and residents of South Florida.
    Mr. Posey. Is there a reason why somebody would get off an 
airplane if they were going to Miami, they would get off an 
airplane that could get them to Miami in an hour and get on a 
train that would take them two hours to get there, and they 
would have to do their luggage back and forth in a train? I 
mean, is the model looked at that as being a realistic 
expectation? And would somebody in Miami going to Orlando or 
going past Orlando sacrifice an hour flight to get on a train 
and unload and load?
    Mr. Goddard. Our business case, which Mr. Crandall to my 
left has made on many occasions is there are many corridors 
that are from 200 to 350 miles apart that are too short to fly 
and too far to drive. There are 400 million trips between 
Central and South Florida on a daily basis, and, yeah, we 
believe that we can capture a good share of those.
    Mr. Posey. Well, if it just stayed in South Florida 
obviously I wouldn't have an interest in this thing, but it is 
not just in South Florida, it is in East Central Florida, which 
affects our districts, and as I said before, if you were 
following a path west to I-95 where there was less population 
and weren't running through the middle of our downtowns and our 
school areas and it wasn't a safety effect we would probably 
think that was great idea, but, you know, do we want to 
sacrifice--and I think the answer is no from my standpoint--the 
safety of our local residents for your profit and convenience?
    Mr. Goddard. So if I could respond to that, there was a 
2015 report commissioned by Indian River County to study the 
safety impacts of Brightline, and their own consultants 
concluded that we can find no decrease in grade crossing safety 
with the advent of All Aboard Florida. To Indian River County's 
benefit, the additional capacity improvements, other additional 
infrastructure, safety improvements, upgraded crossing warns 
devices, which are regulated by the FRA, implementing 
suggestions for quiet zones, fencing, pavement markings, a 
public awareness campaign, and a finding of no additional 
closure time with the additional trains, draws a conclusion 
that there is no adverse safety impact to Indian River County 
from All Aboard Florida. If the proposed upgrades actually 
occur they will improve and update the safety factors that 
exist today.
    I would also like to add that, again, passenger rail 
happens in this country every day, and, you know, in Detroit--
Detroit to Chicago that route has a similar number of grade 
crossings as Brightline and runs at grade. St. Louis to Chicago 
has 213 crossings that have been upgraded. Trains travel at 110 
miles an hour through dense urban areas on those corridors, as 
well.
    Mr. Posey. Well, I submit to you that sometimes a picture 
is worth a thousand words, and your remarks about this being 
safe crossings in Indian River County and St. Lucie County 
don't pass a straight face test.
    Mr. Goddard. So if I may, Congressman, that is a picture of 
where exactly?
    Mr. Posey. This is Vero Beach crossing.
    Mr. Goddard. So obviously we haven't made any improvements 
there yet. We haven't actually begun construction on that 
segment.
    Mr. Posey. So, you know, like there is less than--room for 
one car to back up over here, and of course, I have seen them 
even for the little local trains backed way up over here. How 
would you propose to make this crossing safe?
    Mr. Goddard. Again, that is actually determined by the 
Federal railroad authority and USDOT in conjunction with your 
community leaders. So again, we over the last 4 years met with 
your community and determined exactly how to do that. Sitting 
here today, frankly, I'm not--you know, I don't have the answer 
at my fingertips, but the net is there will be improvements on 
there that comply with the FRA's sealed corridor guidelines and 
our States and other municipalities.
    Mr. Posey. You're going to require these local governments 
to maintain these crossings forever, yet your train is not 
going to stop in any of these communities. They get absolutely 
no benefit whatsoever from your train, yet they're stuck with 
the liability of it. You know, how do you possibly think that 
that's fair and reasonable?
    Mr. Goddard. So for those who may not--for those who may 
not know, our right of way predates, you know, the communities 
through which we travel. Correspondingly, there are decades-old 
agreements between each municipality up and down the corridor, 
as each community asked if they could put a road across our 
railroad.
    When we granted communities that right to transverse our 
railroad we--the cost of creating the gates, the bells, the 
whistles was actually--that burden was on the community.
    Mr. Posey. Well, when you said, ``we,'' you didn't make 
those agreements. Flagler made those agreements. You know, 
you're an international hedge fund now. I mean, you had no dog 
in the fight at that time, and those agreements are probably 
100 years old. Obviously they were intended for not high speed 
trains going through their little towns, but trains that would 
actually stop in their towns, if necessary, and help promote 
their commerce and passengers at one time.
    Mr. Goddard. It sounds like you might like a stop.
    Mr. Posey. You know, that wouldn't appease me. I know that 
has been one of the latest, you know, things that they have 
thrown out from saying absolutely, positively there will never, 
ever, ever be a stop in this high-speed rail because then it 
wouldn't be a high-speed rail. To appease some critics I 
understand you have lately been saying, well, we might have a 
stop in your town and we might have a stop in your town, but we 
know that's not going to happen because then it would take a 5-
hour ride on a high-speed rail to get from Miami to Orlando, 
and, you know five times longer than the airline flight.
    Mr. Meadows. So go ahead, you can respond to that. We are 
going to do a second round of questioning, but you can go ahead 
and finish up on any response that you have, Mr. Goddard.
    Mr. Goddard. Thank you, chairman. So just for the record it 
is important to understand that there are longstanding 
agreements, and, in fact, the responsibility to improve the 
crossings are actually the municipalities, as well, although we 
have actually taken on that financial responsibility up and 
down the corridor. We have improved all of the crossings up and 
down the corridor. We have done that on our dime. We have not 
asked the municipalities to participate in that, but yes, they 
do need to continue to pay the maintenance that they agreed to 
pay.
    Mr. Meadows. All right. I thank both the gentlemen from 
Florida. We'll come back and let you ask a second round of 
questions. The chair recognizes himself for a series of 
questions.
    Mr. Burthey would you agree that this does not qualify 
under number 11 on the statute 26 U.S.C. Code. It is not a 
high-speed rail project. Is that correct?
    Mr. Burthey. Yes, sir, I would agree with that.
    Mr. Meadows. Okay. Would you agree that it does not qualify 
as highway under that same statute?
    Mr. Burthey. The Department of Transportation does believe 
that it qualifies under----
    Mr. Meadows. So you're saying the Brightline rail project 
is a highway, that's your sworn testimony?
    Mr. Burthey. We are saying that the definition of a 
qualified highway or----
    Mr. Meadows. That's not what I asked you. Is it a highway 
or not?
    Mr. Burthey. It fits the definition under the statute.
    Mr. Meadows. Well, it is interesting you say that because 
the definition under your guidelines and under the code would 
indicate that it is a surface transportation project. Now, I 
serve--I happen to serve on the Transportation and 
Infrastructure Committee. Secretary Chao would agree that 
surface transportation are not rail, and so you're at odds with 
your own Secretary on that.
    Mr. Burthey. Again, our interpretation longstanding of the 
statute is that any service transportation project, including 
passenger rail, which utilizes Title 23 funds does qualify 
under----
    Mr. Meadows. So how much Title 23 funds does somebody have 
to spend in order to qualify?
    Mr. Burthey. The statute does not specify.
    Mr. Meadows. So a dollar?
    Mr. Burthey. Theoretically, yes.
    Mr. Meadows. So do you believe that that was the intent of 
Congress? I can tell you it wasn't. This is a softball answer. 
The intent of Congress was not for a dollar of Title 23 money 
to be able to qualify them for a PAB, and so, if you're going 
forward, and as you go back to the Department of Transportation 
if that's their interpretation that a dollar qualifies them, 
then everything qualifies because anybody would spend a dollar 
to say I can get some tax exempt money from the Federal 
Government, wouldn't you think?
    Mr. Burthey. Well, what I would say is that private 
activity bonds are a very useful tool to minimize the Federal 
dollars that are required at a project. So they enable us to 
fund projects without having to----
    Mr. Meadows. Listen, you're preaching to the choir here, so 
let's dispense with that. I actually support private activity 
bonds, and in the tax reform package in the House where it was 
excluded I actually said I wasn't going to vote for it unless 
we got private activity bonds back in there. As you know, it is 
part of that. I see the critical tool that it is, but we must 
also understand that Congress has a certain intent on how those 
are to be used.
    And when the Department of Transportation uses their wide 
discretion and what qualifies and doesn't--it undermines the 
very fact of why we have private activity bonds, and it makes 
Members of Congress like me who have advocated for it say how 
in the world can you say that one dollar in Title 23 funding 
would qualify somebody for a PAB?
    Is that your sworn testimony here today?
    Mr. Burthey. Well, this project did receive more than one 
dollar to be clear. It received----
    Mr. Meadows. I'm asking----
    Mr. Burthey. --several million dollars.
    Mr. Meadows. Does one dollar qualify?
    Mr. Burthey. Technically under statute under my 
understanding, yes, it would.
    Mr. Meadows. Okay. So your sworn testimony is that the 
intent of Congress was that one dollar would qualify?
    Mr. Burthey. I cannot speak to the intent of Congress.
    Mr. Meadows. Well, but you're here to actually convey the 
intent of Congress. That's the whole reason why you write rules 
and regs are to take the laws that we pass and actually have 
the intent of Congress to go forward.
    Is there any scenario where you think that there was some 
Member of Congress who said if you will put up a dollar of 
Title 23 money that we'll allow you to do $1.75 billion in 
private activity bonds? Do you think any Member of Congress 
could go home and get reelected based on that kind of 
rationale?
    Mr. Burthey. Our responsibility is to consistently apply 
the statute as it is interpreted by our Department and that 
historically----
    Mr. Meadows. So how do you do that consistently--that's 
your word consistently--when there is not a standard of how 
much money has to be put in in terms of Title 23? So somebody, 
Mr. Goddard can come up--and listen, it is not my backyard and, 
you know, they're not going to run high-speed rail to Western 
North Carolina--well, but I guess under your scenario it would 
qualify because if they have used--no, it has to be in the 
State, right, so you're saying that anywhere in the State of 
Florida they can run a high-speed rail because we have some 
amount of money for a crossing that was paid some time ago. Is 
that correct?
    Mr. Burthey. Well, we are not saying that. What we are 
saying----
    Mr. Meadows. Well, where does it stop? It obviously doesn't 
stop in Orlando, so where does it stop? Does it stop in 
Jacksonville?
    Mr. Burthey. So here specifically the Title 23 funding was 
spent after All Aboard Florida announced their plans----
    Mr. Meadows. For what? For what?
    Mr. Burthey. For grade crossing improvements.
    Mr. Meadows. For grade crossing improvements where?
    Mr. Burthey. Along the tracks where the All Aboard Florida 
trains will run.
    Mr. Meadows. All along the entire corridor?
    Mr. Burthey. I do not know the exact grade----
    Mr. Meadows. I do. I'm asking a question that I already 
know. So how much of this second phase of this was Title 23 
funds used to improve crossings? Do you know that amount?
    Mr. Burthey. All Aboard Florida's application indicated 
that subsequent to their announcement of their project in 2012, 
2013, and 2014, $9 million were spent.
    Mr. Meadows. In this second phase?
    Mr. Burthey. Along the second phase of the corridor.
    Mr. Meadows. Okay. And where was that spent?
    Mr. Burthey. Again, I don't know the exact grade crossings 
but spent on grade crossings.
    Mr. Meadows. You have 30 days to get that to this 
committee. Do you have that? Is that a reasonable request?
    Mr. Burthey. We do have the information, yes. I just don't 
know----
    Mr. Meadows. So is 30 days--I'm looking at your staff to 
see if that--because it is really their work, not yours, so is 
that adequate time?
    Mr. Burthey. Yes.
    Mr. Meadows. All right. So in 30 days you can get that to 
us.
    Mr. Meadows. So let me ask you a little bit further because 
I do not see this as fitting the definition of surface 
transportation and not not even under if you read even the 
statute it doesn't seem to apply, and so at this particular 
point I have a real concern that the intent of Congress is 
being overwritten with the private activity bond measure here 
because it is really all about we wanted cooperation between a 
State and a Federal entity. And when we looked at this we 
wanted that cooperation to take place, wouldn't you agree with 
that, Mr. Burthey?
    Mr. Burthey. Cooperation was with the State and the Federal 
entity?
    Mr. Meadows. Right.
    Mr. Burthey. That makes sense.
    Mr. Meadows. And so we want that cooperation, and so what 
you're saying is is if we fix some kind of road that happens to 
go over a rail that that automatically qualifies the entire 
rail project that is going a different direction because a 
freight transfer system is not what we are talking about here, 
would you agree with that?
    Mr. Burthey. So, for example, we would draw a line----
    Mr. Meadows. Answer the question. Is this a freight 
transfer?
    Mr. Burthey. That is a passenger rail system.
    Mr. Meadows. Okay. So under definition of 15 we now are 
coming down to part of the definition is is this a surface 
transportation issue or not, would you agree? That's the only 
part of this statute that could possibly apply.
    Mr. Burthey. The statute specifically says that whether or 
not it is a surface transportation project which receives 
Federal assistance under Title 23. And again, I reiterate the 
statement I made before that our conclusion was that it did.
    Mr. Meadows. All right. So would you suggest that this is 
not a freight transfer facility? So that's the second part of 
that----
    Mr. Burthey. There's a distinction between applying that 
specific phrase versus the statutory definition.
    Mr. Meadows. That's correct.
    Mr. Burthey. The statutory definition of a freight transfer 
facility includes a surface transportation project which----
    Mr. Meadows. Well, it actually--that's the third paragraph. 
I mean, actually I have actually done a little bit of reading 
here, and any facility for the transfer of freight from a truck 
to rail or a rail to truck. It is obviously not doing that. Is 
that correct?
    Mr. Burthey. It is not doing that, but our definition is 
under (m)(1)(A).
    Mr. Meadows. So under (A) is any surface transportation 
project that receives Federal assistance. So what you're saying 
is is that you can give money to a highway and build a railroad 
right on top of it? Because surface transportation--let me just 
tell you, you know, you may want to say, well, this under the 
definition--and we have got very high paid lawyers sitting 
behind Mr. Goddard who would say well anything that is on the 
surface actually would qualify, is that what you're saying?
    Mr. Burthey. We are not saying anything.
    Mr. Meadows. He is shaking his head yes, so
    Mr. Burthey. It does need to be related to the project.
    Mr. Meadows. So how is a railroad crossing on a road 
necessarily being a fraction of the cost related to that?
    Mr. Burthey. Well, obviously here, given all the safety 
concerns that have been mentioned, improving grade crossings is 
of the utmost importance.
    Mr. Meadows. So what percentage of the project does the 
Title 23 funding have to be?
    Mr. Burthey. There is no percentage that's placed in the 
statute.
    Mr. Meadows. So everything qualifies for a PAB?
    Mr. Burthey. Based on our statutory interpretation, yes.
    Mr. Meadows. Okay. Well, then I would suggest to my 
colleagues that I guess we need to change the law, and what is 
going happen is--and I don't agree with that. I understand that 
your interpretation is that. I think the intent of Congress was 
very clear, and that was not the intent, but in doing that 
perhaps the Secretary needs to look at the rules and regs 
because you will have a real problem continuing on with private 
activity bonds being there.
    Mr. Goddard, let me come to you. You said that the 
taxpayers are not subsidizing this. Was that your sworn 
testimony?
    Mr. Goddard. That's correct.
    Mr. Meadows. All right. So that's one. I don't believe that 
to be the case, but if that's this case, if the taxpayer has no 
exposure, and it is of no consequence to the taxpayer, why 
don't you get private funding for this?
    Mr. Goddard. We certainly could.
    Mr. Meadows. Well, why don't you?
    Mr. Goddard. Because----
    Mr. Meadows. Most of this hearing would go away if you did 
that, so why don't you go ahead and get private funding. It 
gets me out of it. It takes a problem off of my desk. And you 
know what, why don't you go ahead and get your own private 
funding? And you're saying that you can get the same private 
funding at the same benefit without the taxpayer having any 
subsidy in that?
    Mr. Goddard. Yes.
    Mr. Meadows. Is that what you're saying, Mr. Goddard?
    Mr. Goddard. No, chairman. So the reason why I would love 
to alleviate you of this burden, however, the reason why we are 
interested in a financial instrument such as PABs is it is a 
cheaper cost of money. It is a less expensive cost of money.
    Mr. Meadows. Well, then it is taxpayer subsidized, so 
your----
    Mr. Goddard. Sorry, so taxpayer subsidized--again, what is 
your definition of taxpayer?
    Mr. Meadows. In your sworn testimony--I asked you to 
clarify it because I didn't think I heard what you said the 
first time, and I didn't believe it the first time, and then 
you reiterated it. There is a benefit to your company that 
comes at the expense of the American taxpayer, is there not?
    Mr. Goddard. There is a deferral of taxes to investors, but 
the intent of the PABs----
    Mr. Meadows. So there's a tax benefit to somebody--and let 
me just tell you----
    Mr. Goddard. There's a distinction between that and 
receiving money from the government. This is a loan.
    Mr. Meadows. I didn't say that you were receiving it. 
Listen, I'll say this nicely because I have already criticized 
you for some of your opening remarks. I will say this, that 
what happens is PABs by their very design are designed to be a 
tool to make it more affordable for us to do projects with the 
Department of Transportation. In doing that we have to 
recognize that there is a Federal component to that. Would you 
recognize that there is a Federal component to private activity 
bonds in that that there is a deferred ability under tax law. I 
can give you the IRS code if you want.
    Mr. Goddard. I am not an attorney, Chairman Meadows. I run 
the company. We have attorneys who understand these matters far 
better than I do. You have heard Mr. Burthey's testimony. I 
feel that I don't have an awful lot to add in this context.
    There's a--we have been to court three times on this 
matter, and I think that we, again, to the extent that we are 
now in a new lawsuit on this I don't wish to comment further.
    Mr. Meadows. Well, that's not an option that you have, Mr. 
Goddard. You're here under sworn testimony, and that's the 
reason why I'm--it is not a criminal conviction. We can't bring 
any criminal charges towards you here today, but you do have 
the responsibility to uphold the truth in your testimony and 
answer the questions.
    Mr. Goddard. So to the best of my knowledge--I mean, you 
have heard Mr. Burthey speak about the PABs, and USDOT 
determined we are eligible. Our legal term has looked at the 
issue. They also agree that we qualify. We believe we qualify 
because we receive Section 130 funds.
    Mr. Meadows. And section--Title 23 funds.
    Mr. Goddard. Title 23 funds. And----
    Mr. Meadows. Fine, I got your testimony. So Mr. Reingold, 
you're saying over 2030 that it is going to cost your county 8 
point something million. Is that correct?
    Mr. Reingold. $8.2 million, Congressman.
    Mr. Meadows. Is that high, Mr. Goddard?
    Mr. Goddard. Honestly, I'm not sure.
    Mr. Meadows. Okay. So are you stopping in Indian River 
County?
    Mr. Goddard. No.
    Mr. Meadows. Okay. So he is going to have to maintain 
railroad crossings so that you can get people from one area to 
another, and it will go through his county--and, listen, I'm 
all about commerce, and I realize that it is always in 
somebody's backyard, so I don't know that I have a whole lot of 
sympathy about it not being in my backyard. These two guys do.
    But here's my concern, and it is with unfunded mandates. If 
you're asking his county and his city to support the 
maintenance ongoing, and I would see that as a tangential cost 
to your particular operation, would you not?
    Mr. Goddard. Again, we have existing agreements in place 
that, again, I don't know what the material increase is from 
prior to Brightline----
    Mr. Meadows. So if you're asking their county to spend $8 
million for a new railroad crossing maintenance, do you not see 
that they wouldn't have to do that unless you were coming 
through their county? That's an easier question.
    Mr. Goddard. Well, they wouldn't have to do that--I mean, 
again the road crossings--the road crossings, this is our 
private property. We are trying to run our business on our 
private property.
    Mr. Meadows. And what I'm saying is----
    Mr. Goddard. There is a requirement----
    Mr. Meadows. I get that. Listen, there's no one--in fact, I 
can tell you, I'm the most conservative on private property 
rights of anybody on this dais, I promise you being from 
Western North Carolina. And at the same time if you're going to 
do railroad crossings and you're going to ask them to maintain 
something that they don't get a benefit from, do you not see a 
problem with that?
    Mr. Goddard. I can see how--potentially.
    Mr. Meadows. Okay. So here's what I would ask you.
    Mr. Goddard. What I would say though, if I may, chairman. 
We have actually spent the money on improving those grade 
crossings. So we did not turn around and ask----
    Mr. Meadows. I don't disagree, and I have heard that--and 
let me just tell you, you're going to find that I will be 
willing to look at the truth in every argument, and I get that 
because I can see your counsel when the chief was talking about 
how they were having to spend the money for all these railroad 
crossings and I could tell your counsel in the back he was 
shaking his head and saying that--don't ever play poker, by the 
way--but in doing that, in doing this here's what I'm saying is 
there are legitimate safety concerns the chief has made and for 
you to----
    Mr. Goddard. I would love to address those.
    Mr. Meadows. Well, I know where you're going. In your 
opening statement you talked about the opioid crisis.
    Mr. Goddard. No, no, no, no, no. I think there are other--
there are other actually--there's actual real misinformation, 
there's actually like a misstatement of some facts there. Like 
I would love to have a conversation with the chief.
    Mr. Meadows. We will have a second round. I will give you 
the opportunity, and if I haven't you can remind me and nudge 
me to give you the opportunity for rebuttal and I'll be--but 
here is my concern. If you're asking this county and more 
specifically their taxpayers to fund the maintenance of 
railroad crossing in perpetuity and they don't benefit, it has 
to be at least a cost consideration for this project, and in 
doing so, and I know you're shaking your head no----
    Mr. Goddard. Just we have agreements in place. This 
passenger rail is not a new phenomenon.
    Mr. Meadows. You have a lot of things in place that may be 
in jeopardy, Mr. Goddard, so let me just suggest to you, let me 
suggest to you that you come back to this committee with how 
you're going to address these types of concerns. Are you 
willing to do that in the next 45 days?
    Mr. Goddard. Certainly.
    Mr. Meadows. All right. So you're going to come back to the 
committee on how we are going to address the ongoing 
maintenance concerns that may happen with--and obviously Mr. 
Reingold is here for his county, but as we look at some of 
those other counties if you would do that, that would be very 
helpful.
    With that I'm to go ahead and recognize the gentleman Mr. 
Mast for a series of questions.
    Mr. Mast. Thank you again, Mr. Chairman. Mr. Goddard, does 
FEC have agreements in place or does Brightline have agreements 
in place with Indian River County, with Martin County, with St. 
Lucie County?
    Mr. Goddard. FEC.
    Mr. Mast. Is FEC Brightline?
    Mr. Goddard. No. FEC is not Brightline.
    Mr. Mast. So then is there new upgrades to these crossings 
that has to occur as a result of the Brightline crossing, not 
as a result of the FEC project?
    Mr. Goddard. So I think it is important to clarify 
Congressman that All Aboard Florida owns the perpetual right 
and permanent easement to run passenger service on the FEC 
railway between Miami and----
    Mr. Mast. FEC is not Brightline though?
    Mr. Goddard. That's right.
    Mr. Mast. And the agreements are with FEC?
    Mr. Goddard. That is correct.
    Mr. Mast. The new infrastructure is as a result of the 
Brightline project, the new expensive infrastructure that Mr. 
Reingold's county will have to pay for the upkeep of?
    Mr. Goddard. It is shared infrastructure.
    Mr. Mast. Got it.
    Mr. Goddard. It's shared infrastructure.
    Mr. Mast. And on all of the safety upgrades that were 
conducted throughout the entire corridor of train I do read on 
all of them it does say FEC crossing, FEC crossing, FEC 
crossing for everything, and so it is in that I want to get to 
the truth in testimony for what I was able to question your CEO 
on transportation and infrastructure or the truth on the 
Department of Transportation application and get where we left 
off before.
    As I said, All Aboard Florida's CEO Mike Reininger he 
testified June 23, 2017, in transportation and infrastructure 
to me to a question that I asked that All Aboard Florida is not 
publicly funded at all, but we have been having this entire 
argument throughout this on whether there is even one dollar of 
public funding that has gone to this project, which would allow 
it to qualify even as a highway or a freight transfer facility, 
and we have gone back and forth.
    Is there one dollar, is there not one dollar, is there a 
limit to it? The testimony to me on transportation and 
infrastructure was is not publicly funded at all, it is a 
completely--it is completely an investment of private sector 
capital.
    So I will ask one more time. Your answer before was he did 
not lie to me. That was your answer before he did not lie to me 
when he said it is completely private. So on the application 
was there not truth on the application where you're saying 
there was public funding used, which would enable you to get 
these private activity bonds?
    Mr. Goddard. The funding that was received through Section 
23 was for what is now the shared infrastructure, and it was 
intended to improve safety crossings and the safety of 
crossings throughout the corridor.
    Mr. Mast. So you maintain there is public funding in this?
    Mr. Goddard. There has been public funding granted to the 
corridor.
    Mr. Mast. So it was not truthful when you testified to me 
on transportation and infrastructure.
    Mr. Goddard. Well, again, this was--so there's a 
distinction between, I suppose, the--I'm not sure of the timing 
of the funding honestly, Congressman. I don't know exactly when 
the timing was. I would need to get back to you.
    Mr. Mast. Please get back to me.
    Mr. Goddard. Whether the funding preceded the inception of 
All Aboard Florida or not, I'm not certain.
    Mr. Mast. Please get back to me on that.
    Mr. Burthey, I want to get to you. So it sounds to me, and 
I heard you use the word ``indicated,'' ``indicated,'' 
``indicated'' probably at least three or four times as we were 
talking about the application of FEC Brightline All Aboard 
Florida, whichever company it was, and it sounds to me as if 
from their testimony thus far the Department of Transportation 
did base the eligibility of the decision for private activity 
bonds on All Aboard Florida's self-reported acceptance of Title 
23 funds.
    That whole argument of whether there was Federal funding or 
not Federal funding, whether there was truth or not truth in 
the testimony on transportation and infrastructure. So did the 
Department investigate All Aboard Florida's claims in their 
application at all?
    Mr. Burthey. The Department does review all components of 
the application, including the actual use of Title 23 funds 
that a sponsor claims.
    Mr. Mast. Does the Department determine FEC to be 
Brightline? Are they the same company to the Department?
    Mr. Burthey. That is not a consideration that the 
Department makes. Given pending litigation on that issue, I 
cannot comment further.
    Mr. Mast. So the Department does not look at whether one 
company received Federal funding and whether a completely 
separate company is applying for private activity bonds. That's 
not looked at in an application, when one company is claiming 
that they received Federal funding?
    Mr. Burthey. Unfortunately, Congressman, I cannot comment 
further on that given litigation that's pending.
    Mr. Mast. Okay. I would hope that you could comment on this 
being that this is the primary concern of how we are 
determining whether somebody is eligible for private activity 
bonds. The Department does seem very unsure of whether All 
Aboard Florida actually received Title 23 funds or not, and as 
we said, that's what the application is entirely based on----
    Mr. Meadows. So, Mr. Burthey--hold on, if the gentleman 
will yield for just a second. So, Mr. Burthey, are you 
suggesting that you don't know whether you evaluate that or 
not?
    Mr. Burthey. I'm not suggesting that. I'm suggesting that 
the overlap between FEC and All Aboard Florida is the subject 
of litigation, and I have been instructed by our counsel to not 
comment on that matter.
    Mr. Meadows. So let me ask you this, his question is more 
generic. Do you typically evaluate whether one entity and 
another is one in the same? Do you typically do that? Which 
would not speak to the litigation at bay here or at bar. I 
mean, do you typically evaluate that?
    Mr. Burthey. Well, obviously, all applications are very 
different, and so it would be----
    Mr. Meadows. Right. So either it is typically evaluated or 
it is not because all applications are evaluated differently, 
but you would say do you consider two different entities--to 
Mr. Mast's point--as one typically? In all your reviews--
obviously if you're prepared for litigation you have already 
looked at this and all of that. Would you typically do that?
    Mr. Burthey. Well, certainly, Congressman, Mr. Chairman, we 
do very significantly take a look at the applicant that is 
requesting private activity bond allocation, but with regard to 
whether or not when and if he is judged versus another I mean, 
I think it is difficult to answer that question on an 
overarching basis. I think it is very situational.
    Mr. Meadows. Well, can you confidentially get your counsel 
and certainly with the DOT's help respond to this committee in 
30 days with specificity. I see your staff is nodding yes. Is 
30 days enough? All right. Thank you. I yield back.
    Mr. Mast. Thank you, Mr. Chairman. I'm going to complete 
with my line of questioning with this, and I would like to go 
to Chief Wouters for a minute here. In all of your time in 
looking at safety issues, have you experienced the push on the 
county or have you heard, Mr. Reingold, the push on your county 
to say that because there is uproar about the 32 trains and 
train horns blowing 32 times in the backyard of everybody or in 
the downtown of everybody.
    Have you been approached by the Brightline project about 
the fact that there can be quiet zones or that they can be 
quieted or they cannot below the train horn?
    Mr. Wouters. Thank you, Mr. Congressman. Yes, we have been 
approached about them. At this point the county's position is 
we don't feel that it is a good thing. We recognize the 
significant change in the train speeds and frequency through 
the area. It is something that the community needs to have 
time, if you were, to come to understand how it works.
    Much like Congressman Posey mentioned in the incident that 
happened on the train that you were on, they have to come to 
understand those changes in speeds affect the way they make 
decisions, and we don't think that quiet zones are an important 
thing to put in. We think that all the safety features should 
be working as normal, not agreeing to those quiet zones.
    Mr. Mast. Mr. Reingold, do you have a comment?
    Mr. Reingold. We have concerns with quiet zones, as well. 
As we have seen already in South Florida there have been 
significant accidents and incidents already, and we certainly 
will take the consideration of quiet zones seriously, but we 
are very concerned about the safety of this project, and thus, 
are not jumping instantly into that issue.
    Mr. Mast. Mr. Goddard, you did mention quiet zones briefly 
in your written testimony. Is the possibility of quiet zones 
something that you push on the localities or encourage to the 
localities?
    Mr. Goddard. So the quiet zones are completely at the 
option of the municipalities through which we travel.
    Mr. Mast. In order to avoid outrage of a train horn blowing 
at every interaction in an area do you encourage--have you 
encouraged the City of West Palm Beach or any other cities to 
consider permitting quiet zones?
    Mr. Goddard. No.
    Mr. Mast. Okay. I don't know if you're aware, but this goes 
to the point, and I'll finish with this. This goes to the point 
of the continued cost of this project, not just at the local 
level or, you know, potentially at the State level, but also at 
the Federal level, just last week the mayor of the City of West 
Palm Beach she was in my office and she was very specifically 
asking me that the Federal Government pay for increased 
infrastructure at every intersection because they permitted 
every intersection as a quiet zone as to avoid the outrage in 
their community of this train travelling through it 30 times, 
and they now wish that the Federal Government will pay to get 
those quiet zone permitted intersections up to a higher quality 
because of the deaths that have occurred.
    This is in the area that this train is running and this is 
just in my opinion another example of where the Federal 
Government potentially gets on the hook for the cost of this 
line, not just from where FEC or Brightline is asking for 
dollars, but where the cities and the municipalities come and 
ask for those dollars, as well as especially in the result of 
safety concerns.
    In that, Mr. Chairman, I thank you for the time today and 
thank you for the hearing.
    I thank all of you for your testimony to me. Thank you.
    Mr. Meadows. I thank the gentleman from Florida. I'm going 
to recognize the other gentleman from Florida for a probably 
more straight 5 minutes because I gave him a very generous 5 
plus minutes in his opening round. So the gentleman is 
recognized for 5 minutes.
    Mr. Posey. Thank you again, Mr. Chairman, for holding this, 
and it is so enlightening. I mean, I'll be eternally tormented 
trying to figure out how in the world a highway is the exact 
same as a railroad, and if you can solve that puzzle or you can 
before I do share it with me because it is----
    Mr. Burthey, in 2005 Congress passed the Safe Accountable 
and Flexible Efficient Transportation Equity Act. I know that 
sounds all oxymoron, but, you know, we did, and they did. And 
it created a $15 billion pool of tax exempt bonds that could be 
used on eligible taxes and facilities. In order to obtain these 
tax exempt bonds private sector entities must submit an 
application for review. And what I'll ask you to respond to in 
writing since we do have a very limited amount of time here is 
if you would be kind enough in the next 30 days to let me know 
if there is a high demand in the private sector for these 
bonds, how many applications DOT receives, how many 
applications are typically approved and how many are denied.
    Who oversees exactly, precisely who oversees the 
application review process like name and position numbers. How 
long a review process for applications typically takes from 
start to finish. If you could do that. Can you do that in the 
next 30 days.
    Mr. Burthey. Yes, sir.
    Mr. Posey. Thank you very much. Generally given that 
there's a $15 billion pool that we just talked about, how much 
do project sponsors request in taxes and private equity bonds?
    Mr. Burthey. In other words, on average how much--what is 
the average of our applications?
    Mr. Posey. Yes.
    Mr. Burthey. It varies wildly. It is always in the hundreds 
of millions at least and sometimes into the billions.
    Mr. Posey. Okay. And roughly how many requests are we 
talking about?
    Mr. Burthey. Over history or in a given year?
    Mr. Posey. In a given year.
    Mr. Burthey. In a given year? I believe last year we 
approved somewhere in the neighborhood of four to six.
    Mr. Posey. Okay. In your correspondence to me if you can 
also briefly walk me through the application process. I know it 
is set in statute somewhere, but if you would include that in 
the letter I have another reason for requesting that.
    Mr. Burthey. Okay. Yes, sir.
    Mr. Posey. Who makes a determination of whether a project 
fits under one of the 15 categories in 142(A)?
    Mr. Burthey. The Department does, sir. Ultimately the 
discretion for the program lies with the Secretary of 
Transportation.
    Mr. Posey. The Secretary then.
    Mr. Burthey. Ultimately by statute.
    Mr. Posey. Okay. Typically does the project sponsor have to 
specify the type of exempt facility in their application?
    Mr. Burthey. The Department of Transportation only manages 
the $15 billion with regard to the qualified highway or freight 
transfer facility. That's the only definition that applies to 
the $15 billion cap.
    Mr. Posey. Okay. So does DOT give any difference to or rely 
upon the project sponsor's evaluation of how their project is 
eligible?
    Mr. Burthey. Yes, we do.
    Mr. Posey. Okay. Mr. Crandall, would you like to comment on 
the record further about the judge's decision as to the cost of 
the taxpayers of the subsidy?
    Mr. Crandall. Thank you, Mr. Posey. In the district court 
the judge heard testimony as to the probable cost to taxpayers 
and reached the opinion that the original $1.75 billion, if 
granted, would cost taxpayers about $600 million during the 
first 10 years of that bond issuance.
    Mr. Posey. Okay. Thank you. Mr. Goddard, is the RRIF loan 
application still pending?
    Mr. Goddard. Thank you, Congressman. If I could just 
clarify Mr. Crandall's response.
    Mr. Posey. Okay.
    Mr. Goddard. So the 600 million was actually a number that 
was formulated by one of Care's consultants. It was not 
actually--didn't come from the judge. We ran our own numbers. 
It is probably around $250 million.
    Mr. Posey. Okay. I'm running out of time here.
    Mr. Goddard. And we actually have--there will be a tax 
benefit of about $650 million from that investment of $250 
million.
    Mr. Posey. Back to the RRIF loan, is it still pending?
    Mr. Goddard. Yes. We are actively in the process of 
applying for a RRIF loan.
    Mr. Posey. And how much is the RRIF loan for?
    Mr. Goddard. $1.75 billion.
    Mr. Posey. Okay. That is 1.75 billion with a B?
    Mr. Goddard. With a B.
    Mr. Posey. Okay.
    Mr. Reingold. If I can, Congressman? This is Don Reingold.
    Mr. Posey. Why was the decision made to seek funding 
through the tax exempt private equity bonds?
    Mr. Goddard. I think as a private entity and stewards of 
our investor's capital we are going to avail of any, any 
funding available that's at a lower cost of capital.
    Mr. Posey. Okay. And what other sources of funding has All 
Aboard Florida used to fund Brightline or attempted to fund 
Brightline?
    Mr. Goddard. So in addition to, you know, obviously PABs 
and RRIF are options for us, but should they not materialize, 
conventional, that's an option.
    Mr. Posey. Okay. Mr. Chairman, I thank you for your 
indulgence.
    Mr. Meadows. I thank both the gentlemen for your leadership 
on this particular issue, and, Mr. Reingold, I think you wanted 
to respond, and I have not forgotten Mr. Goddard's ability to 
offer rebuttal on something, but go ahead Mr. Reingold, if you 
want to respond to Mr. Posey's line of questioning. I think you 
tried to interrupt him and didn't get recognized, so go ahead.
    Mr. Reingold. Thank you to the chair. Two points I want to 
make about the litigation, which has been discussed. First off, 
there have been a mention that the All Aboard Florida prevailed 
on all of the lawsuits. I just want to state that the Federal 
court had found that, in fact, that the court had found that 
the plaintiffs had adequately alleged the existence of a major 
Federal action. That was significant win for the counties. 
Additionally, specifically to the point as asked by the 
Congressman was that the judge found that over a 10-year 
timeframe that the amounts to what would amount to a $370 
million to $600 million cost to the taxpayer, so that was 
exactly the information that was found and determined by the 
Federal court, not just by Care FL's consultant, but actually 
by the court. Thank you very much for letting me clarify.
    Mr. Meadows. I thank you for your clarification. Mr. 
Goddard, I think you wanted to speak to the safety issue, if I 
recall, that you said there was some misinformation out there, 
and I told you I would come back, and I want to be good to my 
word there.
    Mr. Goddard. I appreciate that very much, Mr. Chairman. And 
I want to recognize the good work that all first responders do 
in our communities, but I would like to just point out that the 
maximum allowable speed for freight trains are 60 miles an 
hour, not 70 miles an hour.
    You know, this image of chaotic disruption of trains 
running through the counties is a little bit misleading. You 
know, freight trains obviously take a lot longer than passenger 
trains to get through a crossing. It takes us all of about 45 
seconds to get through a crossing. It is actually about half 
the time of a red light.
    Brightline would only run 32 trains, far fewer than most 
systems throughout the country. In South Florida there's 
already a local commuter system that runs 52 daily trains over 
72 grade crossings with no impact on first responders. In one 
suburban Chicago town they run 102 daily trains at grade. In 
Long Island more than 800 trains run over 200 crossings.
    So again, if we believe that short passenger trains are 
going to create the kind of disruption that Brightline 
opponents claim then perhaps we should consider shutting down 
all commuter and intercity rail systems in the country.
    Mr. Meadows. Well, obviously we are not debating that 
particular issue today. That's a little bit of hyperbole, but I 
will let the gentleman make his case, and point well taken in 
terms of how quickly it would go through.
    Listen, obviously there are three different debates that 
are going on here. One is the fact that there are some who 
don't want this bill for any reason whatsoever. I recognize 
that. There are two other very significant debates that are 
going on, and it is the proper use of private activity bonds 
and the way that this has come about and the safety concerns 
that create an unfunded mandate for some of our municipalities 
and counties along the way. Those are two very different 
arguments that, quite frankly, have a lot more and perhaps less 
passion behind them, but a lot more material facts, Mr. 
Goddard, and unless we are able to answer those questions to 
the satisfaction of the American taxpayer we are going to 
create problems for Secretary Chao and Mr. Burthey and the 
others because, quite frankly, what we are doing and what I see 
this as is the PAB that you're looking at is being used in a 
way that is not consistent with the original intent of 
Congress. And your counsel again is shaking his head no, but 
that's all right.
    What we have is we have moneys that was spent for a 
crossing that goes this way, and we are building with PABs 
something that goes the exact opposite way. And when we look at 
that this was all about trying to have a partnership for Title 
23 funding along with PABs and other things to create a highway 
going one way, understanding that the--on the rail transfer 
side of things they were saying we understand that there may be 
these like there would be with a seaport or an airport there 
would be these facilities that should qualify neither of which 
the money--Title 23 money has been spent for.
    So what we will do for your own edification, as well, is we 
will get some of the legislative history that I don't think is 
consistent with the interpretation of DOT or perhaps the way 
that it is done because I can tell you based on our initial 
research this may not have been the best vehicle to use a 
private activity bond.
    That being said, I want to thank all of our witnesses for 
coming, and specifically Mr. Goddard, listen, I know this is 
like going to the dentist. We are now getting it over so you're 
getting out of the chair. I get that. I was a developer. 
Listen, there's no one who has seen not in my backyard more 
than I have, and at the same time we have a responsibility to 
make sure that we do things safely and with integrity and 
making sure that we don't create a financial liability for 
other entities. That is a big concern of mine hearing what we 
have for these counties and knowing that we can say, okay, 
because, you know what, we don't face the same taxpayers when 
their county commissioners have to raise rates to pay for that 
$8 million over a 10-year period. So we really need to address 
that.
    Mr. Burthey, I thank you for allowing for short timeframes. 
I thank your staff for doing that. Give my best to Secretary 
Chao, and as we look at this I want to make sure that we know--
we are going to leave the record open for 2 weeks for any other 
opening statements that any of our members would like to make, 
especially in light of the fact that we are holding this on a 
day that we recessed yesterday.
    And additionally, any additional questions, so all of you 
may be getting additional questions in 2 weeks for additional 
questions for the record. I would ask that yourespond to the 
committee's request. We will try to be gracious in terms of the 
amount of time that you have to respond to those questions.
    And if there is no further business before the subcommittee 
the subcommittee stands adjourned.
    [Whereupon, at 11:57 a.m., the subcommittee was adjourned.]


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