    [House Hearing, 116 Congress]
    [From the U.S. Government Publishing Office]

    OVERSIGHT OF THE FEDERAL TRANSIT ADMINISTRATION'S IMPLEMENTATION OF THE
                        CAPITAL INVESTMENT GRANT PROGRAM

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

                                    (116-27)

                                    HEARING

                                   BEFORE THE

                                SUBCOMMITTEE ON
                              HIGHWAYS AND TRANSIT

                                     OF THE

                                  COMMITTEE ON
                       TRANSPORTATION AND INFRASTRUCTURE
                            HOUSE OF REPRESENTATIVES

                         ONE HUNDRED SIXTEENTH CONGRESS

                                 FIRST SESSION

                                   __________

                                 JULY 16, 2019

                                   __________

                           Printed for the use of the
                 Committee on Transportation and Infrastructure

                    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

         Available online at: https://www.govinfo.gov/committee/house-
         transportation?path=/browsecommittee/chamber/house/committee/
                                 transportation
                                  __________

                      U.S. GOVERNMENT PUBLISHING OFFICE

    40-698 PDF              WASHINGTON : 2020

                 COMMITTEE ON TRANSPORTATION AND INFRASTRUCTURE

                        PETER A. DeFAZIO, Oregon, Chair

    ELEANOR HOLMES NORTON,               SAM GRAVES, Missouri
      District of Columbia               DON YOUNG, Alaska
    EDDIE BERNICE JOHNSON, Texas         ERIC A. ``RICK'' CRAWFORD,
    ELIJAH E. CUMMINGS, Maryland         Arkansas
    RICK LARSEN, Washington              BOB GIBBS, Ohio
    GRACE F. NAPOLITANO, California      DANIEL WEBSTER, Florida
    DANIEL LIPINSKI, Illinois            THOMAS MASSIE, Kentucky
    STEVE COHEN, Tennessee               MARK MEADOWS, North Carolina
    ALBIO SIRES, New Jersey              SCOTT PERRY, Pennsylvania
    JOHN GARAMENDI, California           RODNEY DAVIS, Illinois
    HENRY C. ``HANK'' JOHNSON, Jr.,      ROB WOODALL, Georgia
    Georgia                              JOHN KATKO, New York
    ANDRE CARSON, Indiana                BRIAN BABIN, Texas
    DINA TITUS, Nevada                   GARRET GRAVES, Louisiana
    SEAN PATRICK MALONEY, New York       DAVID ROUZER, North Carolina
    JARED HUFFMAN, California            MIKE BOST, Illinois
    JULIA BROWNLEY, California           RANDY K. WEBER, Sr., Texas
    FREDERICA S. WILSON, Florida         DOUG LaMALFA, California
    DONALD M. PAYNE, Jr., New Jersey     BRUCE WESTERMAN, Arkansas
    ALAN S. LOWENTHAL, California        LLOYD SMUCKER, Pennsylvania
    MARK DeSAULNIER, California          PAUL MITCHELL, Michigan
    STACEY E. PLASKETT, Virgin Islands   BRIAN J. MAST, Florida
    STEPHEN F. LYNCH, Massachusetts      MIKE GALLAGHER, Wisconsin
    SALUD O. CARBAJAL, California, Vice  GARY J. PALMER, Alabama
    Chair                                BRIAN K. FITZPATRICK, Pennsylvania
    ANTHONY G. BROWN, Maryland           JENNIFFER GONZALEZ-COLON,
    ADRIANO ESPAILLAT, New York            Puerto Rico
    TOM MALINOWSKI, New Jersey           TROY BALDERSON, Ohio
    GREG STANTON, Arizona                ROSS SPANO, Florida
    DEBBIE MUCARSEL-POWELL, Florida      PETE STAUBER, Minnesota
    LIZZIE FLETCHER, Texas               CAROL D. MILLER, West Virginia
    COLIN Z. ALLRED, Texas               GREG PENCE, Indiana
    SHARICE DAVIDS, Kansas
    ABBY FINKENAUER, Iowa
    JESUS G. ``CHUY'' GARCIA, Illinois
    ANTONIO DELGADO, New York
    CHRIS PAPPAS, New Hampshire
    ANGIE CRAIG, Minnesota
    HARLEY ROUDA, California

                                      (ii)

                      Subcommittee on Highways and Transit

               ELEANOR HOLMES NORTON, District of Columbia, Chair

    EDDIE BERNICE JOHNSON, Texas         RODNEY DAVIS, Illinois
    STEVE COHEN, Tennessee               DON YOUNG, Alaska
    JOHN GARAMENDI, California           ERIC A. ``RICK'' CRAWFORD,
    HENRY C. ``HANK'' JOHNSON, Jr.,      Arkansas
    Georgia                              BOB GIBBS, Ohio
    JARED HUFFMAN, California            DANIEL WEBSTER, Florida
    JULIA BROWNLEY, California           THOMAS MASSIE, Kentucky
    FREDERICA S. WILSON, Florida         MARK MEADOWS, North Carolina
    ALAN S. LOWENTHAL, California        ROB WOODALL, Georgia
    MARK DeSAULNIER, California          JOHN KATKO, New York
    SALUD O. CARBAJAL, California        BRIAN BABIN, Texas
    ANTHONY G. BROWN, Maryland           DAVID ROUZER, North Carolina
    ADRIANO ESPAILLAT, New York          MIKE BOST, Illinois
    TOM MALINOWSKI, New Jersey           DOUG LaMALFA, California
    GREG STANTON, Arizona                BRUCE WESTERMAN, Arkansas
    COLIN Z. ALLRED, Texas               LLOYD SMUCKER, Pennsylvania
    SHARICE DAVIDS, Kansas               PAUL MITCHELL, Michigan
    ABBY FINKENAUER, Iowa, Vice Chair    MIKE GALLAGHER, Wisconsin
    JESUS G. ``CHUY'' GARCIA, Illinois   GARY J. PALMER, Alabama
    ANTONIO DELGADO, New York            BRIAN K. FITZPATRICK, Pennsylvania
    CHRIS PAPPAS, New Hampshire          TROY BALDERSON, Ohio
    ANGIE CRAIG, Minnesota               ROSS SPANO, Florida
    HARLEY ROUDA, California             PETE STAUBER, Minnesota
    GRACE F. NAPOLITANO, California      CAROL D. MILLER, West Virginia
    ALBIO SIRES, New Jersey              GREG PENCE, Indiana
    SEAN PATRICK MALONEY, New York       SAM GRAVES, Missouri (Ex Officio)
    DONALD M. PAYNE, Jr., New Jersey
    DANIEL LIPINSKI, Illinois
    DINA TITUS, Nevada
    STACEY E. PLASKETT, Virgin Islands
    PETER A. DeFAZIO, Oregon (Ex
    Officio)

                                     (iii)

                                   CONTENTS

                                                                       Page

    Summary of Subject Matter........................................   vii

                     STATEMENTS OF MEMBERS OF THE COMMITTEE

    Hon. Eleanor Holmes Norton, a Delegate in Congress from the
      District of Columbia, and Chairwoman, Subcommittee on Highways
      and Transit:

        Opening statement............................................     1
        Prepared statement...........................................     2
    Hon. Rodney Davis, a Representative in Congress from the State of
      Illinois, and Ranking Member, Subcommittee on Highways and
      Transit:

        Opening statement............................................     3
        Prepared statement...........................................     3
    Hon. Peter A. DeFazio, a Representative in Congress from the
      State of Oregon, and Chairman, Committee on Transportation and
      Infrastructure:

        Opening statement............................................     4
        Prepared statement...........................................     6
    Hon. Sam Graves, a Representative in Congress from the State of
      Missouri, and Ranking Member, Committee on Transportation and
      Infrastructure, prepared statement.............................    83
    Hon. Eddie Bernice Johnson, a Representative in Congress from the
      State of Texas, prepared statement.............................    83

                                   WITNESSES
                                    Panel 1

    Hon. K. Jane Williams, Acting Administrator, Federal Transit
      Administration:

        Oral statement...............................................     8
        Prepared statement...........................................    10

                                    Panel 2

    Robert E. Alger, Chairman of the Board, The Lane Construction
      Corporation, on behalf of the American Road & Transportation
      Builders Association:

        Oral statement...............................................    43
        Prepared statement...........................................    44
    Tom Gerend, Executive Director, Kansas City Streetcar Authority:

        Oral statement...............................................    53
        Prepared statement...........................................    55
    Paul P. Skoutelas, President and Chief Executive Officer,
      American Public Transportation Association:

        Oral statement...............................................    60
        Prepared statement...........................................    62

                           SUBMISSIONS FOR THE RECORD

    Report, Subcommittee on Highways and Transit, Majority Staff,
      July 16, 2019, Submitted for the Record by Hon. Peter A.
      DeFazio........................................................    84
    Statement of Randal O'Toole, Senior Fellow, Cato Institute,
      Submitted for the Record by Hon. Sam Graves of Missouri........    87

                                    APPENDIX

    Question from Hon. Peter A. DeFazio to Hon. K. Jane Williams,
      Acting Administrator, Federal Transit Administration...........    91
    Questions from Hon. Henry C. ``Hank'' Johnson, Jr. to Hon. K.
      Jane Williams, Acting Administrator, Federal Transit
      Administration.................................................    91
    Questions from Hon. Alan S. Lowenthal to Hon. K. Jane Williams,
      Acting Administrator, Federal Transit Administration...........    92
    Questions from Hon. Sam Graves to Hon. K. Jane Williams, Acting
      Administrator, Federal Transit Administration..................    92
    Questions from Hon. Rodney Davis to Hon. K. Jane Williams, Acting
      Administrator, Federal Transit Administration..................    93
    Question from Hon. Rob Woodall to Hon. K. Jane Williams, Acting
      Administrator, Federal Transit Administration..................    93
    Question from Hon. Gary J. Palmer to Hon. K. Jane Williams,
      Acting Administrator, Federal Transit Administration...........    94
    Questions from Hon. Peter A. DeFazio to Robert E. Alger, Chairman
      of the Board, The Lane Construction Corporation, on behalf of
      the American Road & Transportation Builders Association........    95
    Questions from Hon. Henry C. ``Hank'' Johnson, Jr. to Robert E.
      Alger, Chairman of the Board, The Lane Construction
      Corporation, on behalf of the American Road & Transportation
      Builders Association...........................................    95
    Questions from Hon. Peter A. DeFazio to Tom Gerend, Executive
      Director, Kansas City Streetcar Authority......................    97
    Questions from Hon. Peter A. DeFazio to Paul P. Skoutelas,
      President and Chief Executive Officer, American Public
      Transportation Association.....................................    97
    Questions from Hon. Henry C. ``Hank'' Johnson, Jr. to Paul P.
      Skoutelas, President and Chief Executive Officer, American
      Public Transportation Association..............................    98

                    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

                                 July 12, 2019

        SUMMARY OF SUBJECT MATTER

        TO:       Members, Subcommittee on Highways and Transit
        FROM:   Staff, Subcommittee on Highways and Transit
        RE:       Subcommittee Hearing on ``Oversight of the
    Federal Transit Administration's Implementation of the Capital
    Investment Grant Program''

                                    PURPOSE

        The Subcommittee on Highways and Transit will meet on
    Tuesday July 16, 2019, at 10:00 a.m. in 2167 Rayburn House
    Office Building, to receive testimony related to the
    ``Oversight of the Federal Transit Administration's
    Implementation of the Capital Investment Grant Program.'' The
    purpose of this hearing is to examine how the Federal Transit
    Administration (FTA) is implementing the Capital Investment
    Grant (CIG) program in light of the Administration's FY 2018
    and FY 2019 budget requests to phase the program out and the
    June 29, 2018, FTA Dear Colleague letter to transit agencies.
    The Subcommittee will hear from the Federal Transit
    Administration and representatives of the American Public
    Transportation Association, the American Road & Transportation
    Builders Association, and the Kansas City Streetcar Authority.

                                   BACKGROUND

        The Capital Investment Grant (CIG) program is a multi-year,
    multi-step process to fund the construction of new or the
    expansion of existing fixed-guideway public transportation
    systems. Fixed guideway systems include subway, light rail,
    commuter rail, streetcar, ferry, and bus rapid transit (BRT)
    projects. Currently, there are 54 projects in the CIG program
    pipeline.\1\ There are three types of CIG projects:
    ---------------------------------------------------------------------------
        \1\ Overview of Capital Investment Grant Program. Federal Transit
    Administration.
    ---------------------------------------------------------------------------
          New Starts are projects that exceed $300 million
    in total costs or request $100 million or more in CIG funding
    and must move through a three step approval process.
          Core Capacity projects must go through the same
    three step approval process, but are projects that expand an
    existing fixed-guideway corridor to increase capacity by 10
    percent or more.
          Small Starts projects cost less than $300 million
    and receive less than $100 million of CIG funding, and have a
    more streamlined approval process.\2\
    ---------------------------------------------------------------------------
        \2\ Public Transportation Capital Investment Grant (New Starts)
    Program: Background and Issues for Congress. Congressional Research
    Service.

    APPROVAL PROCESS NEW STARTS AND CORE CAPACITY

        New Starts and Core Capacity projects are required by law
    (49 U.S.C. Sec.  5309) to go through a three-phase approval
    process--Project Development, Engineering, and Construction, as
    shown in Figure 1.
    Figure 1: The Capital Investment Grants Program Process

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

    Congressional Research Service, Federal Transit Administration. Capital
                       Investment Grant MAP 21 Overview.

        After FTA accepts and approves an application for CIG
    program funding, the project advances to the Project
    Development phase (PD). During PD, FTA requires an applicant to
    conduct an environmental review, as required by the National
    Environmental Policy Act (NEPA), and submit it to FTA. FTA will
    use this and other documentation to determine a project rating,
    which includes an assessment of the project justification
    criteria and local financial commitment criteria. The applicant
    has two years to complete the PD, although an extension can be
    granted in certain circumstances.
        Moving from the PD to the Engineering phase requires formal
    approval from FTA. A project can enter into the Engineering
    phase (Engineering) once the NEPA process is concluded (under
    which the project is selected as the locally preferred
    alternative), the project is adopted into the metropolitan
    plan, and the project is determined by FTA to be justified on
    its merits through a project rating (discussed in detail
    below), including an acceptable degree of local financial
    commitment.
        The amount of CIG funding requested by the project sponsor
    is fixed when the project is approved for entry into
    Engineering. This means that if a project's cost increases
    after entry into Engineering, the extra cost must be borne by
    the project sponsor from non-CIG funding sources.
        After the Engineering phase is completed, FTA can approve
    the project for entry into Construction by signing a Full
    Funding Grant Agreement, (FFGA), which is a multiyear agreement
    between the Federal Government and a transit agency. An FFGA
    establishes the terms and conditions for federal financial
    participation, including the maximum amount of federal funding
    that is committed. FTA retains some oversight of a project
    during Construction to ensure compliance with the terms of the
    FFGA.

    SMALL STARTS APPROVAL PROCESS

        Small Start projects are also required by law (49 U.S.C.
    Sec.  5309(h)) to go through an approval process, but it only
    consists of two phases--PD and construction. As with New Starts
    projects, entry into PD only requires the project sponsor to
    apply to FTA and initiate the NEPA process. Consequently, for
    Small Starts only one formal decision is made by FTA, and that
    is whether to award funding and, hence, move the project into
    construction. Once FTA approves a small start project, funding
    is provided in a Small Starts Grant Agreement (SSGA). The
    Federal Government's funding commitment, as stipulated in the
    SSGA is typically for a single year.

    PROJECT RATING

        FTA determines a project rating to decide whether to
    approve a project's advancement to the next phase in the CIG
    process. FTA computes an overall project rating by averaging
    the summary ratings that the project received in the project
    justification criteria and local financial commitment criteria.
    A New Starts or Core Capacity project is required by law to
    achieve an overall rating of at least ``medium'' on a five-
    point scale (low, medium-low, medium, medium-high, high). Small
    Starts projects are similarly rated, but the law does not set a
    minimum rating to be eligible for a grant.
    Figure 2: Capital Investment Grants Program Project Rating

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

     Source: Federal Transit Administration, Final Interim Policy Guidance
     Federal Transit Administration Capital Investment Grant Program, June
                                     2016.

    LOCAL FINANCIAL COMMITMENT

        To be approved for federal CIG funding, FTA must determine
    that the project has an acceptable degree of local financial
    commitment. Federal law requires that the project have
    financing that is stable, reliable, and timely; sufficient
    resources to maintain and operate both the existing public
    transportation system and the new addition; and contingency
    money to support cost overruns or funding shortfalls.

                            IMPLEMENTATION CONCERNS

    CIG PROGRAM FUNDING

        The CIG program was reauthorized from FY2016 through FY2020
    as part of the Fixing America's Surface Transportation (FAST)
    Act (P.L. 114-94) at $2.3 billion per year. Unlike FTA's other
    major programs, funding for the CIG program comes from the
    general fund of the U.S. Treasury, rather than the mass transit
    account of the Highway Trust Fund and is therefore subject to
    appropriation each year. Table 1 shows the appropriated funding
    levels provided in FY 2016-FY2019. In addition, FTA allocates
    CIG program funding via discretionary grant, whereas FTA
    apportions formula funds for the other major transit grant
    programs.

           Table 1: Enacted CapitalPInvestment Grants Program Funding
    ------------------------------------------------------------------------

    ------------------------------------------------------------------------
    FY 2016                             $2.18 billion
    ------------------------------------------------------------------------
    FY 2017                             $2.41 billion
    ------------------------------------------------------------------------
    FY 2018                             $2.65 billion
    ------------------------------------------------------------------------
    FY 2019                             $2.55 billion
    ------------------------------------------------------------------------

        The President's Budget for FY 2018 proposed $1.23 billion
    (a reduction of $1.18 billion from FY 2017 enacted) and for FY
    2019 proposed $1 billion (a reduction of $1.65 billion from FY
    2018 enacted) to only fund CIG projects with existing FFGAs.
    The Administration did not request funding to allow FTA to
    advance any new New Starts, Core Capacity, or Small Starts
    projects,\3\ thereby proposing to phase-out the CIG program.
    ---------------------------------------------------------------------------
        \3\ Federal Transit Administration, Annual Report on Funding
    Recommendations, Fiscal Year 2019 Capital Investment Grants Program,
    Report of the Secretary of Transportation to the United States
    Congress; Federal Transit Administration, Annual Report on Funding
    Recommendations, Fiscal Year 2018 Capital Investment Grants Program,
    Report of the Secretary of Transportation to the United States Congress
    ---------------------------------------------------------------------------
        However, Congress, on a bipartisan basis, appropriated
    $2.65 billion for the CIG program in FY 2018 and directed FTA
    to obligate $2.25 billion, or 85 percent, of this funding by
    December 31, 2019. Congress also directed that FTA, ``continue
    to administer the capital investment grant program in
    accordance with the procedural and substantive requirements of
    section 5309 [title 49].'' \4\
    ---------------------------------------------------------------------------
        \4\ P.L. 115-141, Consolidated Appropriations Act, 2018.
    ---------------------------------------------------------------------------
        In FY 2019, Congress appropriated $2.55 billion for the CIG
    Program and again directed FTA to obligate $2.17 billion, 85
    percent, of this funding by December 31, 2020. The Act
    contained language that repeated its direction from the FY 2018
    Act that FTA, ``continue to administer the capital investment
    grant program in accordance with the procedural and substantive
    requirements of section 5309 [title 49].'' \5\
    ---------------------------------------------------------------------------
        \5\ P.L. 116-6, Consolidated Appropriations Act, 2019.
    ---------------------------------------------------------------------------
        In a general, the FY 2020 President's Budget proposed $1.5
    billion (a reduction of $1.05 billion from FY 2019 enacted) for
    the CIG program, including a $500 million set aside for new CIG
    projects.\6\ The House-passed FY 2020 THUD appropriations bill
    provides $2.3 billion for the CIG program and continues the
    direction contained in the FY 2018 and FY 2019 THUD
    Appropriations Acts to FTA.
    ---------------------------------------------------------------------------
        \6\ FY 2020 Budget Highlights of the U.S. Department of
    Transportation (DOT).
    ---------------------------------------------------------------------------

    FTA DEAR COLLEAGUE

        On June 29, 2018, FTA Acting Administrator K. Jane Williams
    sent a Dear Colleague letter to public transit agencies
    highlighting the Trump Administration's policies regarding the
    CIG program.\7\ Many transit agencies have raised concerns with
    the policies addressed in the Dear Colleague: the treatment of
    federal loans, inclusion of a geographic diversity factor in
    grant awards, and encouraging a low federal cost share.
    Separately, FTA also changed the CIG Risk Assessment process,
    which has also concerned many in the stakeholder community. As
    a result, many transit agencies fear higher project costs and
    more bureaucratic challenges.
    ---------------------------------------------------------------------------
        \7\ U.S. Dep't of Transportation, Federal Transit Administration,
    Dear Colleague letter, June 29, 2018 [https://www.transit.dot.gov/
    sites/fta.dot.gov/files/docs/regulations-and-guidance/policy-letters/
    117056/fta-dear-colleague-letter-capital-investment-grants-
    june2018_0.pdf].
    ---------------------------------------------------------------------------
        In response, Congress included a provision in the FY 2019
    Omnibus Appropriations Act that prohibited FTA from using funds
    to implement or further new policies detailed in FTA's Dear
    Colleague letter to CIG project sponsors,\8\ and addressed some
    of these issues within the CIG appropriating paragraph and FTA
    administrative provisions in the House-passed FY 2020 THUD
    Appropriations Bill.\9\
    ---------------------------------------------------------------------------
        \8\ P.L. 116-6, Consolidated Appropriations Act, 2019.
        \9\ House-passed FY 2020 THUD Appropriations Bill
    ---------------------------------------------------------------------------

    TREATMENT OF FEDERAL LOANS

        Some CIG projects include federal loans from the
    Transportation Infrastructure Finance and Innovation Act
    (TIFIA) program as part of their overall project financing
    package. Since these loans are typically repaid using non-
    federal funding sources, project sponsors believe the loans
    should count toward their local financial commitment.
        FTA's Dear Colleague letter states that it ``considers U.S.
    Department of Transportation loans in the context of all
    Federal funding sources requested by the project sponsor when
    completing the CIG evaluation process, and not separate from
    the Federal funding sources.'' \10\
    ---------------------------------------------------------------------------
        \10\ U.S. Dep't of Transportation, Federal Transit Administration,
    Dear Colleague letter, June 29, 2018 [https://www.transit.dot.gov/
    sites/fta.dot.gov/files/docs/regulations-and-guidance/policy-letters/
    117056/fta-dear-colleague-letter-capital-investment-grants-
    june2018_0.pdf].
    ---------------------------------------------------------------------------
        Current law states that TIFIA loans may be used for any
    non-federal share of project costs required under title 23,
    United State Code (USC) or Chapter 53 of title 49 USC, if the
    loan is repayable from non-federal funds.\11\ Prior to the Dear
    Colleague letter, FTA allowed project sponsors to decide
    whether the TIFIA loan would count as local or federal funding.
    FTA's new policy provides less flexibility for project sponsors
    of transit projects than for highway and other projects that
    receive a TIFIA loan.
    ---------------------------------------------------------------------------
        \11\ 23 U.S.C. Sec.  603(b)(8) states: ``The proceeds of a secured
    loan under the TIFIA program may be used for any non-Federal share of
    project costs required under this title [title 23] or chapter 53 of
    title 49, if the loan is repayable from non-Federal funds.''
    ---------------------------------------------------------------------------
        Section 193 of the FY 2020 House-passed THUD bill amends
    federal law to ensure that TIFIA loans repaid with non-federal
    sources are treated as local dollars when assessing cost share
    requirements.

    GEOGRAPHIC DIVERSITY

        In its Dear Colleague letter, FTA states that it will
    consider geographic diversity as a factor in FTA funding
    allocation decisions. In its July 2018 Fact Sheet on the Dear
    Colleague letter, FTA states, ``[i]t is longstanding FTA
    practice to consider geographic diversity in discretionary
    funding decisions.'' \12\
    ---------------------------------------------------------------------------
        \12\ U.S. Dep't of Transportation, Federal Transit Administration,
    FACT SHEET: Capital Investment Grants Program Dear Colleague Letter,
    July 2018.
    ---------------------------------------------------------------------------
        However, neither current law nor FTA's current Policy
    Guidance for the CIG program (2016) include geographic
    diversity as a factor.\13\ When prioritizing projects among
    those that have met all the necessary requirements and ratings,
    official FTA policy guidance emphasizes local financial
    commitments (including private contributions) and project
    readiness, but not geographic distribution.\14\ In fact,
    current law allows FTA to expedite certain reviews for projects
    whose sponsors have recently successfully completed another CIG
    project.
    ---------------------------------------------------------------------------
        \13\ U.S. Dep't of Transportation, Federal Transit Administration,
    Final Interim Policy Guidance, Capital Investment Grant Program, June
    2016.
        \14\ See id.
    ---------------------------------------------------------------------------

    FEDERAL AND CIG COST SHARE

        Under the FAST Act, a CIG project cannot exceed a maximum
    federal share of 80 percent; however, a New Starts project may
    not receive more than 60 percent of its total cost from the CIG
    program. Core Capacity and Small Starts projects may receive up
    to 80 percent of total cost from the CIG program.\15\ The FY
    2019 Omnibus Appropriations Act reduces the amount a New Starts
    project can receive in CIG funding to not more than 51 percent.
    ---------------------------------------------------------------------------
        \15\ 49 U.S.C. 5309(l)(1)
    ---------------------------------------------------------------------------
        FTA's Dear Colleague letter states that ``Federal law
    requires FTA to evaluate all projects seeking CIG funding on
    local financial commitment, and it has the authority to
    consider the extent to which the project has a local financial
    commitment that exceeds the required non-government share of
    the cost of the project.'' Transit agencies have informed the
    Committee that FTA staff are encouraging project sponsors to
    ``overmatch'' the federal share by committing additional local
    funds to the project beyond the required share.
        Further, FTA staff are indicating that New Starts projects
    are unlikely to get approval unless they are under a 40 percent
    federal cost share, despite the fact the FY 2019 Omnibus
    Appropriations Act allows a federal match of up to 51 percent.
    Although Federal law allows FTA to encourage overmatch, it does
    not authorize FTA to require a project sponsor to overmatch in
    order to receive a New Starts grant.\16\
    ---------------------------------------------------------------------------
        \16\ 49 U.S.C. 5309(l)(5) establishes that FTA is not authorized to
    require a local match for a project that is more than the federal cap.
    FY 2019 Omnibus Appropriations Act set the federal cap at 51 percent of
    the project cost.
    ---------------------------------------------------------------------------
        Section 164 of the FY 2020 House-passed THUD bill addressed
    FTA's new policy by prohibiting the use of funds to request or
    require any project to have a maximum CIG contribution lower
    than 50 percent of the total project cost.

    CHANGES TO RISK ASSESSMENT PROCESS

        In addition to the Dear Colleague letter, FTA also
    announced two changes to the CIG Risk Assessment process. The
    risk assessment is a third party assessment of the project
    risks and their effects on the project's timeline and cost
    estimate. It also calculates the amount of contingency funding
    that FTA will require the project sponsor to have in order to
    cover potential cost overruns. The required contingency fund
    comes from local dollars.
        First, FTA moved the Risk Assessment of New Starts and Core
    Capacity projects from the Engineering phase to the Project
    Development phase. In addition, FTA may perform updates to the
    Risk Assessment and conduct scope, cost, and schedule reviews
    of the project prior to awarding an FFGA. FTA stated that it
    believes this policy change would allow projects to identify
    and address issues earlier in the process and improve the
    estimate for final costs. In turn, it would ensure that the CIG
    contribution that FTA locks in is sufficient as a project moves
    from Project Development into Engineering. However, current law
    limits the Project Development phase of New Start and Core
    Capacity projects to a two-year period (although FTA may extend
    the time-period).\17\ Transit agencies are concerned that
    requiring the Risk Assessment during the Project Development
    phase provides an additional hurdle to completing Project
    Development within the two-year time period.
    ---------------------------------------------------------------------------
        \17\ 49 U.S.C. Sec.  5309(d)(1)(C) and (e)(1)(c).
    ---------------------------------------------------------------------------
        Second, when assessing the appropriateness of the New
    Starts project's budget, FTA increased its probability
    threshold from 50 percent to 65 percent in determining the
    reasonableness of the cost and schedule estimates. This policy
    change means is that project sponsors whose contingencies do
    not meet the 65 percent threshold will experience project costs
    increases. However, FTA establishes the project's Federal share
    upon entry into Engineering, and any cost overruns are the
    responsibility of the project sponsor. Many transit agencies
    believe this new policy is unnecessarily increases costs for
    project sponsors, since they are already responsible for
    project overruns.
        Section 164 of the FY 2020 House-passed THUD bill provides
    an additional six months within the Engineering Phase to
    determine the project's CIG grant amount, and prohibits FTA
    from requiring a probability threshold higher than 50 percent
    in the risk assessment.

                                  WITNESS LIST

    PANEL I

          The Honorable K. Jane Williams, Acting
    Administrator, Federal Transit Administration

    PANEL II

          Mr. Bob Alger, President and Chief Executive
    Officer, The Lane Construction Corporation, on behalf of the
    American Road & Transportation Builders Association
          Mr. Tom Gerend, Executive Director, The Kansas
    City Streetcar Authority
          Mr. Paul P. Skoutelas, President and CEO,
    American Public Transportation Association

    OVERSIGHT OF THE FEDERAL TRANSIT ADMINISTRATION'S IMPLEMENTATION OF THE
                        CAPITAL INVESTMENT GRANT PROGRAM

                                  ----------

                             TUESDAY, JULY 16, 2019

                      House of Representatives,
                  Subcommittee on Highways and Transit,
                Committee on Transportation and Infrastructure,
                                                        Washington, DC.
        The subcommittee met, pursuant to notice, at 10:06 a.m., in
    room 2167 Rayburn House Office Building, Hon. Eleanor Holmes
    Norton (Chairwoman of the subcommittee) presiding.
        Ms. Norton. The subcommittee will come to order and good
    morning.
        I want to welcome everyone to today's hearing. This is a
    hearing on a matter that needs oversight. It is the Federal
    Transit Administration's implementation of the Capital
    Investment Grant--the CIG--program.
        This hearing is necessary not only because it is timely,
    but because we are now hearing from many transit agencies, from
    mayors, from local officials, questions that we simply must
    answer.
        They say to us that they are frustrated by the slow pace
    and the needless bureaucracy. Now here is a program that has
    money. So you can imagine the frustration, that money is not
    getting to where it is needed. They say they can't get
    communication so that they can understand how to proceed and
    what is slowing up this program. And they say they are
    especially delayed in project approvals.
        What is happening here? Surely this isn't deliberate. But
    then we are left to believe that the administration doesn't
    know how to handle this program. So we need to come to grips
    with the problems today, particularly since transit is
    associated with the backbone of our urban areas. This committee
    has a long tradition that is bipartisan of paying attention to
    matters that are important to rural areas such as bridges and
    barges that farmers need to get their products to market. In
    the same way we expect attention to transit we are aware of
    course that that is mostly an issue for urban America but
    increasingly we are talking about the metropolitan areas as
    well. We are not simply talking about big cities. America is
    clustered around these metropolitan areas.
        The CIG program has long enjoyed strong bipartisan support.
    We authorized it in the FAST Act at $2.3 billion per year. In
    the same way, the House Appropriations Committee has strongly
    supported the CIG program, appropriating funding. And they have
    appropriated funding generally well above the authorized level
    because of the high demand for the project. That is pretty
    unusual. Therefore, any slowup in this project has got to be
    explained by the administration. Why hasn't the administration
    moved this program more rapidly? The budget requests for the
    CIG program from the administration have been, to say the
    least, anemic, and the administration of the CIG program has
    created many challenges. So it looks like a program that should
    be going along well, is failing at both ends.
        The FTA sent a Dear Colleague letter to transit agencies
    that created a lot of confusion. They expressed fears of higher
    project costs and more bureaucratic challenges. For example,
    until this Dear Colleague, the FTA had allowed project sponsors
    to decide whether a TIFIA loan, paid back with local dollars,
    would count as local or Federal funding. FTA now demands that
    all TIFIA funds be counted as Federal share, no matter who
    actually pays for the loan. And that is ridiculous. So we have
    got to have some answers on matters like that.
        In its Dear Colleague letter, FTA states that it will
    consider geographic diversity as a factor in FTA funding. The
    FTA seems intent on spreading a very little amount of money
    very quickly over the entire Nation. That does not reflect the
    reality of how cities and, again I stress, metropolitan areas
    grow. They are expanding at a rapid pace and should not be
    penalized because of multiple projects in the CIG pipeline.
        If we are going to keep up with this growth, this very
    rapid growth, we are going to have to make big investments in
    transit. Is this deliberate slowing of the CIG program, or is
    it rank inefficiency?
        The House-passed transportation appropriations bill
    addressed many of the issues, and others, I expect, will be
    raised at this hearing. When this committee reauthorizes the
    FAST Act, you can be sure we will also carefully review the CIG
    program and if necessary, we will amend section 5309.
        [Ms. Norton's prepared statement follows:]

        Prepared Statement of Hon. Eleanor Holmes Norton, a Delegate in
    Congress from the District of Columbia, and Chairwoman, Subcommittee on
                              Highways and Transit
        Welcome to today's hearing on the Federal Transit Administration's
    implementation of the Capital Investment Grant (CIG) program. We have
    heard from many transit agencies, mayors and other local officials
    about the challenges of getting a transit project funded by the CIG
    program.
          They are frustrated by the slow pace of needless
    bureaucracy.
          They are frustrated by the lack of communication.
          They are frustrated by delays in project approvals.

        Today we are going to examine these problems and see if we cannot
    find a solution.
        Transit is the backbone of our urban cities. Rural Republicans may
    believe transit is of no use to them, but that does not mean they need
    to attack it. We are all in this together. Transit costs money as do
    the bridges and barges America's farmers need to get their products to
    market. But I do not oppose your bridges and barges in rural America. I
    know you need them, just like urban America needs bridges and transit.
    You have my support for your infrastructure needs. All I ask is for
    your support for urban American infrastructure needs too. And that
    brings us to the implementation of the Capital Investment Grant
    program.
        The CIG program enjoys strong bipartisan support and was
    reauthorized as part of the FAST Act at $2.3 billion per year. The
    House Appropriations Committee has also been a strong supporter of the
    CIG program, appropriating funding levels generally well above the
    authorized level because of the high demand for projects.
        Today we just need to push the Administration to become a strong
    supporter of the Capital Investment Grant program. Their budget
    requests for the CIG program have been anemic and their administration
    of the CIG program has created many challenges for transit agencies.
        In June 2018, FTA sent a Dear Colleague letter to transit agencies
    that created considerable confusion and consternation. Transit agencies
    expressed fears of higher project costs and more bureaucratic
    challenges.
        For example, until this Dear Colleague, FTA allowed project
    sponsors to decide whether a TIFIA loan, paid back with local dollars,
    would count as local or federal funding. FTA now demands that all TIFIA
    funds be counted as federal share no matter who actually pays for the
    loan. That is ridiculous.
        In its Dear Colleague letter, FTA states that it will consider
    geographic diversity as a factor in FTA funding allocation decisions.
    FTA seems intent on spreading the peanut butter thin over the entire
    nation. My concern with this is it does not reflect the reality of how
    cities grow. Cities that are expanding at a rapid pace should not be
    penalized for multiple projects in the CIG pipeline. To keep up with
    rapid growth requires big investments in transit.
        The House-passed Transportation Appropriations bill addresses many
    of these issues and others I expect will be raised at this hearing.
    When this committee reauthorizes the FAST Act, we will also carefully
    review the CIG program and amend Section 5309 as necessary.

        Ms. Norton. I am going to ask the ranking member for his
    comments.
        Mr. Davis. Well, thank you. I just really appreciate the
    opportunity, Madam Chair, to be here.
        You know, districts like mine that are not in urban areas,
    you still have transit needs too. The district I represent in
    central Illinois is one that brings in a lot of transit issues
    in and around the public universities in Champaign-Urbana,
    Bloomington-Normal. Even in Springfield, Illinois, and down
    into Metro East around Southern Illinois University at
    Edwardsville. Transit is necessary.
        My concern today is how do we effectively bring in some of
    what I consider the mini-urban areas into the transit programs
    like the Capital Investment Grant program and what we do to
    ensure that there is capability to provide those services in
    nonmajor urban areas, but also the ability to serve those
    customers and be able to market that product.
        So thank you for having the opportunity to be here. This is
    our fourth hearing as we continue to work to reauthorize the
    Federal surface transportation policies. And I want to thank
    the chair of this subcommittee and also Chairman DeFazio, for
    their leadership and their bipartisanship on this issue.
        [Mr. Davis' prepared statement follows:]

     Prepared Statement of Hon. Rodney Davis, a Representative in Congress
        from the State of Illinois, and Ranking Member, Subcommittee on
                              Highways and Transit
        The Subcommittee is holding its fourth hearing as we continue our
    work to reauthorize federal surface transportation programs and
    policies. Today, the Subcommittee will focus on the Federal Transit
    Administration's (FTA) Capital Investment Grants program, commonly
    known as ``New Starts'' or ``the CIG program.''
        Historically, federal public transportation programs have provided
    financial support, primarily for capital costs, to local transit
    agencies around the country. Although the benefits of federal
    investments in public transit systems appear to be limited to the
    community they serve, these investments are, in fact, important to the
    Nation.
        Federal transit programs, including the CIG program, complement our
    investments in other transportation modes in order to support an
    integrated national surface transportation network. They provide an
    additional and affordable mobility option that people can use to travel
    to work or school.
        The CIG program differs from other discretionary grant programs.
    The grant process, laid out in statute and regulations, is a complex
    multi-year and multi-step process. FTA evaluates and rates all projects
    at various points during the process. Projects that are selected for
    funding must have a strong local financial commitment and achieve a
    sufficient overall rating.
        There are currently 54 projects moving through the CIG pipeline.
    These include large projects, such as the Red and Purple Line
    Modernization Project in Chicago, and smaller projects, such as the
    Streetcar project in the City of Baton Rouge.
        The FAST Act authorized $2.3 billion for the CIG program in each
    fiscal year 2016 through 2020, and the House version of the FY 2020
    Appropriations bill would provide $2.3 billion for the CIG program.
        I recently had the opportunity to speak with Acting Administrator
    Williams; I believe she is doing everything in her power to ensure that
    the FTA executes the CIG program consistent with federal law. We must
    have a responsible program that makes sound investments in public
    transit to ensure the public and stakeholders continue to support the
    program. This will allow us to make the necessary investments to
    modernize our surface transportation system.
        I understand, however, that some stakeholders have concerns with
    changes that FTA announced last year, and the effect those changes are
    having on projects in the pipeline. I look forward to our discussion on
    this important program.

        Mr. Davis. And with that, Madam Chair, I yield back.
        Ms. Norton. Thank you very much, Ranking Member Davis.
        I would like to ask Mr. DeFazio, the chair of the full
    committee, if he has any opening statement.
        Mr. DeFazio. Thank you, Madam Chair. Yes, I do.
        I had some optimism that we would be looking at a major
    infrastructure package in partnership with the President and
    the White House, and the first blow to those hopes was back
    actually in the 2018 budget request when the President's budget
    proposed essentially to eliminate the CIG program. The Congress
    responded and we said no, on a bipartisan basis and
    appropriated a record amount of funds, $2.6 billion, to run the
    program as the law requires. And similarly in 2019, yet another
    Mick Mulvaney proposal to essentially eliminate the program and
    yet another bipartisan response from Congress to appropriate
    $2.5 billion into the program.
        Back in 2017, it was tremendously disruptive and basically
    all of the pending projects were canceled. Now this is a bit
    odd, because the assertion by DOT was that this was
    administration policy. Now everybody knows that Presidents'
    budgets are not policy, they are merely a suggestion to the
    United States Congress. And Congress holds the power of the
    purse. So a suggestion by the President or an ideologue running
    the President's office or OMB or whatever Mr. Mulvaney is
    running these days--both, everything--is not a law and cannot
    supersede the law. Ideology does not supersede the law.
        Now I have read the testimony here from the Acting
    Administrator and it paints a very rosy picture for CIG but I
    don't think things are quite as rosy as purported there.
        Earlier this year, we sent a letter to FTA and transit
    agencies looking for data that allows us to look at the CIG
    program operation under the FAST Act. That is another one of
    our duties here, is to oversee the laws that have been
    implemented and see that they are being properly followed.
        Now if we use that data, despite what I keep hearing and
    heard from the President's previous infrastructure advisor, DJ
    Gribbin, that the only problem was the environmental review
    process and that is what was slowing everything down and this
    administration was going to streamline things. Actually if we
    look at the first slide, CIG projects have nearly doubled in
    the delays for approval. Entry into engineering, 135 to 289
    days; full funding grant agreements, 172 to 391 days; SSGA, 112
    to 243 days--everything is more than double.
        [Slide.]
        So now to get a New Start project through to the final
    phase is 391 days, more than a year, Small Starts, 243 days.
    And this covers the entire period of the FAST Act and
    certainly, I think, reflects that things are not as rosy as is
    purported.
        Secondly, staff found that FTA actions since 2017 have
    resulted in $845 million--almost $1 billion in extra costs. The
    risk assessment process added $650 million and the delays
    caused about another $200 million.
        Then third, the staff found that the CIG cost share for New
    Starts has shrunk dramatically. It is clear that transit
    agencies are feeling pressured by the administration. Again,
    the ideological proposals of Mr. Mulvaney and DJ Gribbin, now
    gone, was that we were going to shrink the share that would be
    paid by the Federal Government and increase the burden on the
    local governments. And if you look here, it was nearly 50
    percent CIG cost share pre-2017. Now it is below 36.6 percent
    and that is because the administration has basically sent a
    message that if you ask for more than 40 percent, you are not
    going to get approved or you are going to get a very low
    rating. This unofficial policy or whatever this is directly is
    contrary to 49 U.S.C. section 5309(l)(5) and the fiscal year
    2019 Omnibus Appropriations Act which said the FTA is not
    authorized to require a local match that is more than 49
    percent of the project cost.
        Fourth, staff found that FTA has delayed the use of
    streamlining tools. Now that is just extraordinary for an
    administration that was going to get all these barriers out of
    the way. If we want to repeal an environmental law, we can
    streamline that. If we want to get transit grants out, no, no,
    we really can't do that.
        Approvals for a Letter of No Prejudice took 44 percent
    longer than under the previous administration, and these
    letters allow work to begin on a project earlier, which as we
    all know, the sooner you can initiate a project, the greater
    the cost savings as long as it is well-planned. We have heard
    from multiple transit agencies that are absolutely desperate to
    get a Letter of No Prejudice because of the potential cost
    savings. So it is vexing and interesting, and hopefully it can
    be corrected that these things are taking so long.
        So I am hoping that given the testimony submitted by the
    Acting Administrator, given the past record, that we can do
    better in the future. And that is why we are here today.
        [Mr. DeFazio's prepared statement follows:]

       Prepared Statement of Hon. Peter A. DeFazio, a Representative in
         Congress from the State of Oregon, and Chairman, Committee on
                       Transportation and Infrastructure
        Since the election in 2016, I have been cautiously optimistic that
    the President and Congress could really work together and invest in the
    rebuilding of America. President Trump was clear in his public
    statements that he wanted to be the ``Infrastructure President.'' I
    remain hopeful that this is still possible. I stand ready to work with
    anyone who is serious about investing in our infrastructure.
        But my optimism took a blow with the President's first budget
    request to Congress. The Administration's FY 2018 request slashed
    infrastructure investment, most notably the effective elimination of
    new transit investments under the Capital Investment Grant (CIG)
    program. The President proposed to slash over a billion dollars from
    the program and fund only projects that were already under
    construction. Dozens of projects in the planning phase were on the
    chopping block.
        Congress responded by appropriating a record amount of CIG funds,
    over $2.6 billion, and directing the Federal Transit Administration
    (FTA) to run the CIG program as current law requires. This was repeated
    in 2019--another budget request slashing investment in transit projects
    by the administration and Congress responding by appropriating $2.5
    billion to the CIG program.
        Despite clear direction from Congress, FTA asserted that the
    President's Budget Request was administration policy, and they refused
    to approve CIG projects that had been moving through the approval
    process for years. This unlawful action carried on for most of 2017,
    save for a few projects that were too far along to refuse.
        A President's annual budget request is nothing more than a request
    for Congress to consider. It cannot supersede the law or the
    congressional power of the purse. FTA began violating the law the first
    day they decided to ignore the CIG program.
        I have read your testimony, Acting Administrator Williams. You are
    clearly trying to paint the picture that the administration's refusal
    to initially run the CIG program had no impact. This testimony cherry
    picks a few project comparisons to argue everything is fine.
    Unfortunately, that is not true.
        Earlier this year, Ranking Member Graves and I sent a bipartisan
    letter to the FTA and dozens of transit agencies seeking ``data that
    will allow us to conduct a quantitative analysis of the CIG program and
    its operations under the FAST Act.'' I am releasing the results of that
    analysis today.
        First, using data supplied by FTA, staff found that the number of
    days needed for project approval more than doubled under this
    administration. These delays affected projects regardless of their
    size, indicating that the delays had nothing to do with the complexity
    of projects.

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

        As you can see on the screen, the average number of days to get a
    New Start project through the final phase grew to 391 days. Small Start
    projects averaged 243 days. This data covers the entire period of the
    FAST Act and represents a fair and accurate look at the impact the
    Trump Administration has had on transit projects.
        Second, staff found that FTA actions since 2017 have resulted in at
    least $845 million in extra costs for transit agencies. FTA's changes
    to the Risk Assessment process added $650 million to total project
    costs, and FTA's delays inflicted on the approval process caused $195
    million in additional project costs. These additional costs were
    generally covered by local governments, forcing them to scramble to pay
    for federal inaction. These unnecessary costs could have instead funded
    several more transit projects.
        Third, staff found the CIG cost share for New Starts projects has
    shrunk dramatically. It is clear that transit agencies have felt
    pressured by FTA staff to seek lower CIG shares in order to be approved
    for a CIG grant, in contravention of the statute.

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

        On the screen, you can see the data demonstrates the effect of this
    pressure; the CIG cost share for New Start projects has dropped over 10
    percent in the last two years to below 40 percent. This is below the
    arbitrary 40 percent cost share cap that FTA has unofficially
    communicated to transit agencies. This unofficial policy is directly
    contrary to 49 U.S.C. Section 5309(l)(5) and the FY 2019 Omnibus
    Appropriations Act, which combined essentially say FTA is not
    authorized to require a local match for a project that is more than 49
    percent of the project cost.
        Fourth, staff found that FTA has delayed the use of streamlining
    tools for CIG transit projects. Approvals for a Letter of No Prejudice
    (LONP) took 44 percent longer than under the previous administration.

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

        These letters allow work to begin before final approval on the most
    time sensitive components of the project. LONPs can lead to significant
    cost savings and may reduce the potential for schedule delays later in
    the project. In fact, the Committee has heard from multiple transit
    agencies desperate for a LONP because of the cost savings they afford.
    Given the importance this administration has placed on streamlining
    project approvals, expediting LONPs should have been a priority.
        I hope these findings, and the discussion today, mark the beginning
    of a new page, where FTA, the Department of Transportation, and the
    White House drop their hostility towards transit and follow the law. We
    should be working together to improve transportation options for all
    Americans, not making it more difficult.

        Mr. DeFazio. Thank you, Madam Chair.
        Ms. Norton. I thank Chairman DeFazio.
        I would like to welcome Acting Administrator K. Jane
    Williams, Federal Transit Administration, and ask for her
    testimony at this time.

       TESTIMONY OF HON. K. JANE WILLIAMS, ACTING ADMINISTRATOR,
                     FEDERAL TRANSIT ADMINISTRATION

        Ms. Williams. Good morning. Thank you, Chairman Norton,
    Ranking Member Davis and members of the subcommittee. I would
    also like to recognize Chairman DeFazio and Ranking Member
    Graves; thank you for inviting me here to appear before you
    today to talk about the Federal Transit Administration's
    Capital Investment Grants Program.
        FTA's mission is to improve public transportation for
    America's communities. And last year, we invested more than $15
    billion to support public transportation consistent with the
    law. In all of our work, FTA continues to focus on implementing
    Secretary Chao's three major priorities--safety, innovation and
    infrastructure investment.
        Last April, FTA certified the Washington Metrorail Safety
    Commission as a State safety oversight agency. The
    certification allowed FTA to transfer direct safety authority
    of the Washington Metropolitan Area Transit Authority's
    Metrorail system to the WMSC, after nearly 4 years of direct
    safety oversight.
        When I began my tenure at FTA in August of 2017, there was
    not one single State safety oversight program certified by FTA.
    Now 18 months later, well before the April 15th deadline, all
    31 State safety oversight programs were certified, allowing
    billions of dollars of transit funding to continue to support
    agencies across our Nation.
        FTA has also achieved significant success in advancing
    innovation in public transportation. FTA's Mobility on Demand
    Program, which I know is a subject of interest to you, Madam
    Chair, has supported new forms of mobility such as car-sharing
    services and automation. Our MOD Program has helped meet the
    expectations of the traveling public for modernized service
    through on-demand options, integrated fare payments and ride-
    sharing.
        My testimony today focuses on the Trump administration's
    track record in advancing CIG projects. The CIG program plays a
    significant role in modernizing and expanding public
    transportation in communities across our Nation. Authorized at
    $2.3 billion annually, it is FTA's largest discretionary
    investment program. And under President Trump and Secretary
    Chao's leadership, FTA has advanced 25 projects totaling
    approximately $7.6 billion in funding. In fact, in just the
    first 2 years of the Trump administration, FTA signed 13 CIG
    grant agreements totaling $3.3 billion. And yet in the same
    first 2 years of the previous administration only 10
    construction grant agreements were signed totaling only a
    little over $1 billion in investment.
        In 2018 alone, FTA was able to execute 10 construction
    grant agreements including one of our largest to date, $1.17
    billion to Lynnwood Link Light Rail System in Seattle.
        The President's fiscal year 2020 budget request also
    supports the CIG program with $1.5 billion in funding,
    including, for the first time, $500 million for potential new
    Capital Investment Grant projects funded through the general
    fund.
        FTA is moving projects through the CIG program in
    accordance with the law. It is a priority of the administration
    to streamline the process as much as possible, and we are
    making progress. Just last month, we took a major step in
    implementing the expedited project delivery program. However,
    it is important to note that CIG projects are often delayed by
    local challenges that impact the timing of construction grant
    awards. FTA does not sign construction grant agreements
    committing millions and many times billions of dollars until we
    have assurance from the project sponsors that they have met the
    multiple steps outlined in law, that all non-CIG funding is
    committed, and the project's cost, scope and schedule are firm
    and final.
        FTA has also emphasized the need for a firm local financial
    commitment, recommending a balanced approach for the local,
    State and private-sector funding through value capture
    alongside Federal grants and loans. Simply put, that's just
    good governance.
        Over many years, across multiple administrations, FTA has
    encouraged project sponsors to leverage Federal dollars to
    capture the value we all recognize transit brings to
    communities across the Nation. And like you, we want to ensure
    that projects funded with taxpayer dollars are sound
    investments.
        In closing, let me assure you that FTA will continue to
    press its projects through the program consistent with the law
    and will review projects based on its merits. During my tenure
    as FTA's Acting Administrator, I have met with hundreds of
    stakeholders and Members of Congress and staff.
        I look forward to continuing to work with this committee
    and each of you and I am happy to answer any of your questions.
        Ms. Norton. Thank you for that testimony. Without
    objection, the witness' full statement will be included in the
    record.
        [Ms. Williams' prepared statement follows:]

      Prepared Statement of Hon. K. Jane Williams, Acting Administrator,
                         Federal Transit Administration
        Good morning Chairman Norton, Ranking Member Davis, and Members of
    the Subcommittee. I would also like to recognize Chairman DeFazio and
    Ranking Member Sam Graves. Thank you for inviting me to appear before
    you today to report on the Federal Transit Administration's Capital
    Investment Grants (CIG) program.
        FTA's mission is to improve public transportation for America's
    communities. Since 1964, FTA has partnered with state and local
    governments to create and enhance public transportation systems. Today,
    FTA invests more than $13 billion annually to support and enhance rail,
    bus, ferry, and other transit services. This investment has helped
    modernize public transportation and extend service into large and small
    urban areas as well as rural communities across our nation.
        The CIG program began as a loan program for transit projects in the
    1960s. Today, the CIG program, authorized at $2.3 billion a year, is
    the Department's largest discretionary grant program.
        Today's CIG program funds capital investments in heavy rail,
    commuter rail, light rail, streetcars, and bus rapid transit. These are
    high-impact, capital-intensive projects that receive substantial local
    and national attention. In fact, the CIG program accounts for
    approximately 20 percent of FTA's annual appropriation but generates
    more scrutiny than all of our other programs combined.
        My testimony today focuses on the Department's track record in
    advancing CIG projects and dispelling misinformation about DOT's
    current management of the program. First, let me summarize some of the
    important work FTA has accomplished under this Administration.
                            Departmental Priorities
        In addition to funding projects through the CIG program, we have
    focused our attention on Secretary Chao's three major priorities:
    safety, innovation and infrastructure investment.
        As Chairman Norton and other Members are aware, FTA certified the
    Washington Metrorail Safety Commission (WMSC) as one of the 31 State
    Safety Oversight Agencies for states with rail transit last spring,
    ahead of the April 2019 statutory deadline. The WMSC certification
    allowed FTA to transfer direct safety oversight of the Washington
    Metropolitan Area Transit Authority's (WMATA) Metrorail system to the
    WMSC after nearly four years of direct safety oversight authority by
    FTA. You will recall that the Department assumed direct safety
    oversight of WMATA in 2015 following serious safety lapses, including a
    smoke incident in which one passenger was killed and several injured.
        FTA issued eight directives with 289 corrective actions; conducted
    four safety investigations focused on track integrity, stop signal
    overruns, traction power electrification, and vehicle securement; and
    completed more than 1,200 inspections. FTA partnered with WMATA General
    Manager Paul Wiedefeld to bring about significant systemic safety
    improvements across the WMATA system before transferring oversight to
    the WMSC. FTA continues to provide annual funding and technical
    assistance to the WMSC.
        When I began my tenure at FTA in August of 2017, there was not one
    single State Safety Oversight Program certified by FTA. Thanks to the
    hard work of our team at FTA and action by our state partners, all 31
    SSO programs are now certified.
        FTA has continued to support transit across the nation, awarding
    more than $15 billion dollars in grants, including funding for bus
    fleet modernization, state of good repair needs, and planning for
    Transit-Oriented Development.
        For example, last fall FTA awarded $12 million in Bus and Bus
    Facilities grants to Central Illinois. As Ranking Member Davis is
    aware, the grants enabled Illinois transit agencies to modernize bus
    fleets, improve service and enhance safety for riders.
        Transit riders in Texas also benefited from an FTA Bus and Bus
    Facilities grant last year. A $7 million grant to the Texas Department
    of Transportation replaced older buses that exceeded their useful life
    in rural areas throughout the state. The grant, combined with matching
    funds, will replace more than 250 buses and bring the rural fleet in
    line with standards for state of good repair.
        FTA supports Secretary Chao's priority to advance innovation in
    transportation through a $15 million Integrated Mobility Innovation
    (IMI) discretionary grant program, which will fund some of the most
    promising new technologies. We expect the IMI program will help deliver
    new forms of mobility such as car-sharing services and automation to
    help meet transit rider expectations and increase ridership.
    About the CIG Program
        The CIG program funds the construction of transit projects that
    have completed a statutorily defined multi-step, multi-year process. As
    required by law, a proposed project must be evaluated and receive an
    overall rating by FTA based on both the project justification and the
    local financial commitment criteria at several points during the
    process. A project must receive a ``Medium'' or better overall rating
    to advance to the next step in the process, including before it can be
    considered for a construction grant agreement.
        The CIG program is one of the government's most complex and
    rigorous grant programs. Depending on the size and complexity of the
    project and the degree of local consensus, the process to reach a grant
    award can take on average two to four years, with the pace primarily
    depending on actions by the local project sponsor. Adding to the
    challenge, since 2013 the number of projects seeking funding has
    increased 112 percent, from 25 to 53. These projects have also
    increased in cost as well, with 31 percent of New Starts and Core
    Capacity projects currently in the program requesting more than $1
    billion in CIG funding.
    Successes
        I have heard concerns expressed about FTA's current approach toward
    the CIG program. Some say FTA has slowed the number of signed
    construction grant agreements compared to previous Administrations.
        That, however, is not true. During the first two years of this
    Administration FTA advanced more CIG projects than the previous
    Administration's first two years in office--an apt comparison given
    that every new Administration faces a transition period.
        During the first two years of this Administration--beginning
    January 21, 2017 through the end of 2018--FTA signed 13 CIG
    construction grant agreements totaling $3.3 billion in funding. In the
    same period during the previous Administration--January 21, 2009
    through the end of 2010--10 construction grant agreements were signed
    totaling $1.08 billion in funding.
        We are continuing to process projects through the CIG program in
    accordance with the law and Congressional intent.
        In 2017, the FTA executed three construction grant agreements: the
    Caltrain commuter rail electrification project in San Francisco, the
    Maryland Purple Line light rail project and the Ft. Lauderdale Wave
    Streetcar (although, ultimately, the Wave Streetcar project was
    cancelled by the local sponsor and withdrawn from the CIG program).
        In 2018, FTA executed ten construction grant agreements, including
    eight Small Start agreements: for the Laker Line bus rapid transit
    (BRT) system in Grand Rapids; the Jacksonville First Coast Flyer BRT;
    the SMART Regional Rail in San Rafael, California; the Prospect MAX BRT
    in Kansas City; the Everett Swift BRT line and the Tacoma Link light
    rail extension in Washington State; the IndyGo Red Line BRT in
    Indianapolis; and the Albuquerque Rapid Transit BRT in New Mexico.
        We ended the year by signing two Full Funding Grant Agreements: for
    the Santa Ana Streetcar in Orange County, California, and the Lynnwood
    Link light rail in Seattle. The Lynnwood Link Full Funding Grant
    Agreement was one of the agency's largest in recent history, and
    included the most funding during my FTA tenure, providing $1.17 billion
    dollars to Sound Transit to help expand its light rail system. In
    addition, the project received a $658 million USDOT Build America
    Bureau Transportation Infrastructure Finance and Innovation Act (TIFIA)
    loan.
        Lynnwood Link provides a good comparison to the previous
    Administration as well. From the time FTA received a complete
    information package from the project sponsor, it took FTA 133 days to
    complete the statutorily required evaluations and reviews to execute
    the Lynnwood Link grant award. That is the same amount of time the
    previous Administration took to complete the Los Angeles Westside
    Section 2 subway grant award. Both were large, complicated projects
    submitted by experienced project sponsors seeking CIG funding and TIFIA
    loans concurrently.
        In 2019, we executed a construction grant agreement for the
    Minneapolis Orange Line BRT project, and a Full Funding Grant Agreement
    for Dallas Area Rapid Transit's Core Capacity project.
        Overall, since this Administration began through the end of June,
    FTA has executed 15 CIG grant agreements--for five New Starts and Core
    Capacity projects and 10 Small Starts projects throughout the nation
    totaling approximately $3.5 billion dollars in transit infrastructure
    investment.
        That investment has continued this year, and FTA now has committed
    approximately $7.6 billion toward 25 new projects. To detail just this
    year's investment, in 2019, FTA has allocated funding for the following
    new projects:
          Phoenix, AZ South Central light rail extension ($100
    million)
          Jacksonville, FL Southwest Corridor BRT ($16.6 million)
          Reno, NV Virginia Street BRT Extension ($40.4 million)
          Albany, NY River Corridor BRT ($26.9 million)
          Portland, OR Division Transit BRT ($87.4 million)
          Seattle, WA Federal Way light rail extension ($100
    million)
          Spokane, WA Central City Line BRT ($53.4 million)
          San Francisco, CA Transbay Corridor ($300 million)
          Los Angeles County, CA Westside Subway Section 3 ($100
    million)

        In addition to providing funding, FTA continues to work with
    project sponsors through the CIG process. For example, FTA has moved 18
    projects into the first phase of the CIG program, the Project
    Development phase, during this Administration (1/21/17 through 6/30/
    2019); and advanced seven projects into the Engineering phase,
    including New York's Canarsie power improvements project, Durham, NC
    light rail, Los Angeles Westside Subway Section 3, Phoenix South
    Central light rail, Seattle's Lynnwood Link light rail, San Francisco
    Bay Area's Transbay Corridor subway project and the Dallas platform
    extensions project that we advanced to a Full Funding Grant Agreement.
    FTA also approved 22 letters of no prejudice, which allow projects to
    proceed with initial construction activities using non-federal funds
    while retaining eligibility for future reimbursement should a CIG grant
    be awarded.
        It is important to note that the President's FY 2020 budget request
    supports the CIG Program. The FY 2020 budget proposal contains $1.5
    billion dollars in funding for the CIG Program, including $500 million
    for potential new Capital Investment Grant projects that may become
    ready for funding during FY 2020, including Expedited Project Delivery
    (EPD) projects. In addition, the FY 2020 request includes $500 million
    in Transit Infrastructure Grants that would reinvest in existing
    transit assets, including fixed-guideway and buses and related
    equipment. This new funding would come from the General Fund, which
    competes across the entire government for funding. It also balances the
    need to expand with the importance of maintaining current systems in a
    state of good repair and modernizing bus fleets and facilities.
        FTA also made significant progress in implementing the EPD pilot
    program. The program encourages collaboration between public and
    private entities to leverage federal expenditures on major transit
    infrastructure projects. The law limits the total federal contribution
    to 25 percent or less of the total project cost. With the federal
    government contribution maxed at 25 percent, the law indicates FTA must
    perform expedited reviews of project justification and local financial
    commitment and accelerate grant award decisions.
        The law allows the award of up to eight grant agreements, and FTA
    received expressions of interest from four agencies representing seven
    projects. We are moving forward with discussions with the Santa Clara
    Valley Transportation Authority in San Jose for the BART Silicon Valley
    Phase II subway project. We are also continuing to work with the other
    project sponsors as their projects may become ready for an agreement
    under the program.
        A total of $125 million dollars has been appropriated for the EPD
    Program in fiscal years 2019 and prior.
    Challenges
        FTA is moving projects through the CIG program in accordance with
    the statutory requirements. The timing of construction grant awards
    depends heavily on project sponsors completing necessary work to meet
    those statutory requirements. The anticipated schedule for signing
    construction grant agreements can, and often does, change as project
    sponsors work to complete the myriad of requirements in law,
    regulation, and guidance for receipt of CIG funds.
        In short, FTA does not sign construction grant agreements
    committing millions or billions of federal dollars until we have
    assurance from the project sponsor that all non-CIG funding is
    committed, all critical third-party agreements are complete, and the
    project's cost, scope, and schedule are considered firm and final.
        Frequently, we see proposed CIG projects delayed by challenges at
    the local level. Those challenges might include a lack of local
    consensus on project scope such as disputes over the location of
    proposed stations or alignments, or whether lines will run above or
    below ground--decisions that have huge budget implications and can
    often lead to litigation. For example, the Fort Lauderdale Wave
    Streetcar and the Durham, NC light rail projects were withdrawn due to
    challenges at the local level. The Maryland Purple Line construction
    grant award was delayed for a year by a series of court actions taken
    by local project opponents.
        Another complicating factor is whether the project sponsor can
    secure all needed non-CIG funding, whether from other federal, state,
    local, or private sources.
        Delays can also occur as part of the project sponsor's procurement
    process or when a project sponsor changes its approach to construction.
        This is a complicated process that relies on a number of actions
    and approvals at the local level and, as such, it is important to note
    that schedules for large capital projects can--and do--shift.
    Program Policies
        The CIG program fosters highly successful federal-local
    partnerships that positively impact millions of Americans across the
    country.
        Last summer, in an effort to be transparent, FTA issued a Dear
    Colleague letter to remind project sponsors about the policies
    underpinning the CIG program and the rationale behind funding
    decisions. The letter emphasized the need for a firm local financial
    commitment and project readiness before a construction grant agreement
    could be awarded and recommended a balanced approach of local and state
    funding alongside federal grants and loans. We also reminded project
    sponsors that innovative approaches, including value capture, private
    contributions and public-private partnerships, could help them meet the
    matching funds requirements.
        Although FTA has never required project sponsors to seek a lower
    CIG share, we have over the years, across multiple administrations,
    encouraged project sponsors to consider a more balanced local share to
    better leverage federal dollars to invest in additional projects
    throughout the nation. The statute requires that FTA consider the
    extent to which the project has a local financial commitment that
    exceeds the required non-government share of the cost of the project.
        In short, we want to ensure projects that are funded with taxpayer
    dollars are sound investments completed on time and within budget.
        Also last summer, FTA updated the procedures it uses to review
    capital cost estimates. The law requires FTA to consider both project
    readiness and associated risk in evaluating projects for funding
    through the CIG program. The agency's diligence in administering the
    program helps ensure that federal funds allocated to projects will be
    protected from the risks of cost overruns and schedule delays that CIG
    projects have often experienced.
        Undertaking an analysis of project risk earlier in the process
    permits FTA and project sponsors to identify strategies to mitigate and
    reduce potential cost increases, ensuring that cost projections are
    realistic, the public knows what they are supporting, and that taxpayer
    dollars are spent wisely. The public, our shared constituents, expects
    us to deliver projects on time and within budget. Effective analysis
    and the mitigation of risk earlier in the CIG process, before FTA locks
    in the CIG contribution, provides the best way, short of a guarantee,
    to meet our public obligation.
        Simply put, it's good governance.
        Identifying risk earlier in the process also benefits project
    sponsors because it requires them to develop more realistic financial
    plans to pay for a project or identify changes to the design or project
    management to save costs when there is still time to implement such
    changes.
        FTA intends to continue to evaluate each CIG project on its
    individual merits, consistent with the discretion afforded by law. FTA
    regularly engages with stakeholders in local communities, across the
    transit industry, and with our Congressional colleagues on the CIG
    program.
    Conclusion
        In conclusion, FTA will continue to process projects through the
    Capital Investment Grants program in accordance with the law. We remain
    committed to our mission to improve public transportation for America's
    communities. I look forward to working with this Committee and each of
    you. I'm happy to answer any questions you may have.

        Ms. Norton. Acting Administrator Williams, I listened
    closely to your testimony. I am used to Congress slowing things
    up, we do it all the time. It takes three branches and even
    this branch, as we have recently seen, takes a long time with
    things that matter.
        I noted that you seemed--in fact you did blame all the
    project delays on the local level and you didn't offer a single
    example of delays by the Department of Transportation. Now, the
    data shows that approved times, times at your levels, have
    doubled.
        Why should we conclude that the delays are solely the fault
    of transit agencies. And look, Administrator Williams, I am
    willing to accept for the agencies, for the localities, faults
    on their side. But we are not getting anywhere unless everybody
    accepts responsibility.
        Now we have figures showing delays and I want to know why
    you won't take responsibility for those delays and then
    indicate what you think you can do about them.
        Ms. Williams. Thank you, Madam Chair.
        First of all, let me talk a little bit about the data. The
    data compares the last 2 years of the Obama administration with
    the first 2 years of the Trump administration and I would argue
    that the first 2 years of a first-term administration looks
    very different than the last 2 years of a second term.
        Ms. Norton. All right, given that, what are you going to do
    about it, Ms. Williams, even if one accepts that notion. That
    is the first time I have ever heard that kind of comparison
    made.
        We are really interested on behalf of these local agencies
    in remedies. What are you going to do about them?
        Ms. Williams. I think our record speaks for itself. We were
    able to bring 15 construction grant agreements across the
    finish line in just the first 2 years. When you compare that to
    the first 2 years of the previous administration, that is two
    more and $2 billion more in investment. We have 10 more
    allocations that have been made. In our administration, when we
    make an allocation, it is our signal that we are looking to
    bring that over the finish line as well, that project.
        Ms. Norton. So you think you are going to be able to equal
    the last administration----
        Ms. Williams. Part of it is dictated----
        Ms. Norton. Yeah, but you are comparing yourself to that
    administration.
        Ms. Williams. Part of it, I will tell you--and we have
    talked about this across administrations--we are also only
    allowed to deal with what comes to us. So I am constrained,
    just like all administrations have been, with what is in the
    pipeline and what is ready and----
        Ms. Norton. Well, let's talk about that. CIG projects
    seeking funding have increased. The figures I have been given
    is 112 percent from 25 to 53 projects. So people are coming
    in----
        Ms. Williams. Uh-huh.
        Ms. Norton [continuing]. Fast and furious, massive demand
    for new transit projects. And that is across the Nation.
        Now your testimony is that for the fiscal year 2020 budget,
    the administration is seeking $1.5 billion for CIG projects,
    which is a 40-percent cut. Sadly, of course, that is better
    than the draconian Trump administration request.
        If the need for CIG projects is increasing, why is the
    administration proposing cuts in the program?
        Ms. Williams. We believe the $1.5 billion figure is what we
    will need for fiscal year 2020. We believe that is what will be
    ready, the $500 million will cover projects that we believe now
    will be ready for funding in fiscal year 2020. And that is an
    estimate because some things are borne out at the local level
    that are unanticipated. If you look at the Durham project in
    North Carolina, no one anticipated that project having a third
    party----
        Ms. Norton. Well, if some project falls out, given the
    demand, there would be other projects ready to step up.
        Administrator Williams, our concern is that we are not even
    trying to meet the demand and I am afraid your testimony
    doesn't help us to believe that you will be able to accelerate
    that demand.
        I am going to ask the ranking member if he would offer his
    questions.
        Mr. Davis. Thank you, Madam Chair. And again, Acting
    Administrator Williams, thanks for being here.
        You and I have had opportunity to speak on numerous
    occasions and I believe you are doing everything in your power
    to ensure that the FTA executes the CIG program that is
    consistent with the laws that we make here, and sometimes may
    bind you with.
        That may be a question you might want to answer, you know,
    what are we doing here in this institution, this branch, that
    makes it more difficult for you to implement programs like CIG?
        Ms. Williams. I think it is a blend of doing things fast
    and doing things right. You are talking about billions of
    dollars of Federal investment and so, as much as we absolutely
    want to streamline projects, we have to make sure that they are
    done correctly as well. And so it is a topic that I am sure we
    will work with the committee as we look at reauthorizing the
    FAST Act of ways that maybe we could streamline the CIG
    program. I would be happy to work with you, Congressman.
        Mr. Davis. We appreciate that, Acting Administrator. And,
    you know, we want that. That is why you are here today. We want
    to come together and have a bipartisan highway reauthorization
    and transit reauthorization, and we are going to need your
    help.
        You know, as I mentioned earlier, my district is less
    urban. And we have seen ridership even in some of the most
    urban areas in the country, it seems to go down. I think our
    goal should be how do we put policies in place here at this
    committee that are going to encourage more public
    transportation ridership, not just in those urban areas where
    it is even falling, but in the smaller communities that I
    serve. And with that being said, you mentioned it is pretty
    complex to deal with billions of dollars in a program, and I
    get that, I understand that.
        What can I do and what can we do at this committee to help
    communities in smaller rural areas that I have mentioned, how
    can they take advantage of programs like the CIG? You visited
    my district before, you have seen the small rural transit
    districts I serve. I reached out to them. None of them have
    participated in this program, but they are interested. They may
    have opportunities in the future. How do we give them those
    opportunities?
        Ms. Williams. I think, Congressman, it is an interesting
    question, because really the CIG program, we have no rural
    projects. I think there has been one done in the entire
    history, out in Colorado, a bus rapid transit project. It
    really doesn't allow for a rural project to enter, even small
    urban projects have a difficulty really being able to compete
    and being able to meet all the requirements in law.
        So I would be happy to look at that with you more and see
    how we could make it more amenable to smaller rural areas in
    our country.
        Mr. Davis. That would be great. I am certainly hoping that
    with Colorado being the lone project, that maybe Illinois' 13th
    Congressional District a couple of years from now might be
    another one. Let's work together to ensure that we address
    these issues.
        You know, you are going to talk about some of the issues
    with CIG and you mentioned in your response to Chairman
    DeFazio's PowerPoint, you know, about what this administration
    has done over the last 2 years.
        I do want to make a point that you made earlier. It is
    imperative that we look at the last 2 years of the last
    administration and look at what we project the next 2 years to
    be. You know, the goal of this committee has and always will be
    to put good policies in place without letting partisanship get
    in the way. And that is why I commend Chairman DeFazio and also
    Chairlady Norton for allowing us this opportunity to come
    together.
        Is there anything, with the time that I have left, that you
    haven't had a chance to mention in your short time up there,
    that you may want to get across to the committee and to the
    folks that are watching today, that may be helpful as to why
    the CIG program is so important and also why it is important to
    your administration?
        Ms. Williams. I think clearly we put $15 billion into
    transit this year. Clearly that shows our willingness to
    support transit and the Capital Investment Grant program.
    Although we may disagree on the amount of money in the fiscal
    year 2020 budget, it is a change, in that it is not a zero
    there, it is $500 million. I think that speaks to the fact that
    we believe that is what the number is.
        We are constrained by what comes to us and what is ready to
    be funded. And we believe that is the correct number. So I am
    happy to talk more with Members and have those conversations
    and we are happy to work with the committee as we have been.
        Mr. Davis. Thank you again, Administrator. And just so you
    know, I am thankful as a resident of Illinois for the
    investment CIG has made in the Chicagoland area, because
    Chicagoland transit has a tremendous impact on downstate
    transit and the rest of our State too. So thank you for that
    investment there too.
        And with that, I will yield back, Madam Chair.
        Ms. Williams. I had an opportunity to visit Chicago and
    they have a great system. Thank you.
        Ms. Norton. I appreciate your response, the response to the
    ranking member, that you would be willing to work with the
    committee and you compared the last 2 years of one
    administration with the first 2 years of another.
        So if we see any improvement, I think we would be very
    pleased. So if you would give us on a quarterly basis the
    number of projects that have been approved, that would be very
    helpful.
        Ms. Williams. Absolutely. We would be happy to, Chairwoman
    Norton.
        Ms. Norton. Thank you very much.
        Chairman DeFazio.
        Mr. DeFazio. Thanks, Madam Chair.
        I have got to say I find it nonsensical to say well, it is
    the first 2 years of this administration and of course things--
    first off, the first budget proposed killing the program
    altogether. I don't think we have recovered from that and I
    believe that Mr. Mulvaney and his new hench person over at OMB
    are still hostile to transit. And I assume that that pressure
    and that attitude filters down.
        And it was a very broad bipartisan consensus of the
    Congress that said no, hell no, and pushed back. But now we
    have got other issues.
        One would be the changes in the risk assessment process
    that are incurring additional costs. Where did that idea
    originate?
        Ms. Williams. Actually, the risk assessment process from
    2006 until 2016 was at the probability 65 level. It was
    changed--I am sorry, at the probability 65 level and it was
    changed to probability 50 at that time by FTA. And neither time
    was it sent out for notice and comment.
        And I want to clear up. I think there is some confusion as
    to what we use that for. It is an internal tool that FTA uses
    to measure the risk in the project. So it is not adding cost to
    the project. So, you know, it's your budget and your cost. So
    if the budget says the project is going to cost $100 million
    and yet, you know, you cost it out at only $75 million, you
    need to add $25 million to the project or you need to make the
    budget and the cost meet.
        So it is not about adding additional cost to projects or
    increasing those----
        Mr. DeFazio. But it requires them to maintain a larger
    contingency fund, irregardless of the merits of the project or
    the viability of the agency or anything else. It is an
    arbitrary thing and it does require them to set aside more
    contingency funds; correct?
        Ms. Williams. It requires them to predict more accurately
    the actual cost of their project and we believe that that is
    good governance and that that is what the taxpayer deserves to
    know, that they have a better than 50/50 chance of the project
    coming in on time and on budget.
        And like I said, this was a tool used for many years
    internally by FTA and was just changed for the last 2 years
    from 2016 to 2018 when we reverted back, seeing project costs
    is coming in much higher than what was predicted. And we felt
    that it was necessary to go back to that probability 65.
        Mr. DeFazio. OK. Then have you or any member of your staff
    ever strongly implied--and we have heard this repeatedly,
    repeatedly, repeatedly from transit agencies--they won't say
    that we have to come in under 40 percent, they just say we have
    never approved a project that wasn't below 40 percent. And so,
    I mean, if that is not the case, I would like you to say it
    now, that you are willing to look at and approve projects at
    above 40 percent. Because we have just heard this so many times
    that that is the word in the transit community, even though the
    law prohibits that, even though the law sets a much higher
    threshold, that the agency is saying no, this is policy, as set
    informally by the administration.
        Ms. Williams. So this is an approach used by both the Bush
    administration and the Obama administration and we believe that
    the best chance of success for a project is when it is a blend
    of local, State and private----
        Mr. DeFazio. I have got that, but Congress says 51 and your
    agency is telling people you have to be under 40. Will you say
    here that there is no informal policy, that you will be totally
    open to looking at projects that come in over 40 percent and
    they would have as good a chance of approval as anything else,
    given their merits. Yes or no?
        Ms. Williams. In fact, Chairman----
        Mr. DeFazio. Yes or no.
        Ms. Williams [continuing]. We just moved the BART project
    in San Francisco into engineering at a 43-percent share. And so
    yes, many of our mega projects----
        Mr. DeFazio. Not a New Start.
        Ms. Williams. It is a Core Capacity project, but it is a
    large contribution on----
        Mr. DeFazio. Why do the agencies across the country have
    this impression and why are they all coming in under 40
    percent?
        Ms. Williams. Historically, most of our large projects have
    come in under 40 percent but that is no different than many of
    the large projects in past administrations. When you----
        Mr. DeFazio. But I never heard before from the transit
    agencies that they were being bullied to come in under 40
    percent.
        Ms. Williams. I am not aware of anybody bullying----
        Mr. DeFazio. OK, so you are willing to look at projects and
    approve projects over 40 percent.
        Ms. Williams. We always look at every project and----
        Mr. DeFazio. Are you willing to look at and approve
    projects over 40 percent----
        Ms. Williams. Yes, Chairman----
        Mr. DeFazio [continuing]. Up to the statutory cap?
        Ms. Williams. Yes, Chairman, absolutely.
        Mr. DeFazio. Would you answer the question?
        Ms. Williams. Yes.
        Ms. Norton. She says yes.
        Mr. DeFazio. Thank you.
        Ms. Norton. Thank you.
        Mr. Webster.
        Mr. Webster. Madam Chair.
        How can automated vehicles improve efficiency and cost?
        Ms. Williams. So automation in transit, I think where we
    will see it first is in maintenance cost improvements for
    transit agencies, such as parking buses closer together in the
    urban centers, being able to automate buses through bus washes
    and the like. I think we are still a ways off before we see
    automation in actual buses itself.
        Mr. Webster. So what percentage do you think it is right
    now?
        Ms. Williams. That is difficult to predict, sir. It is
    still a fair amount of years off I believe.
        Mr. Webster. I have kind of a personal question.
        Ms. Williams. Yes.
        Mr. Webster. In 2014, the silver line began in DC transit
    and they had new cars, 7000 series. I just wondered if you
    could do anything about the improper message that has been on
    there for 5 years. When the doors open to allow people on, it
    says ``doors open.'' When the doors close, it says ``stand
    back, doors opening.'' And I think this is a safety issue. It
    is just you are the first person to come along that I have been
    able to say anything to about it.
        Ms. Williams. Let me understand. So when the doors are
    closing, it says the doors are opening?
        Mr. Webster. Yes.
        Ms. Williams. I will take care of that today, sir. I was
    not aware. In fact, I rode a 7000 series car here on the green
    line, switched at L'Enfant, and I didn't notice that recording.
        Mr. Webster. I don't think anybody else has either, but it
    is there.
        Ms. Williams. I have a great relationship with the general
    manager Paul Wiedefeld. I will give him a call this afternoon
    after our hearing.
        Mr. Webster. Awesome.
        Ms. Williams. Thank you, sir.
        Mr. Webster. I yield back.
        Ms. Norton. I thank the Member for that keen observation.
        Mr. Johnson of Georgia.
        Mr. Johnson of Georgia. Thank you, Madam Chair, for hosting
    this hearing today and thank you, Madam Williams for appearing
    today.
        It is a fact that the Trump administration has taken steps
    to roll back the environmental review process for Federal
    infrastructure projects.
        Can you explain whether or not you have any concern that
    your agency may be approving projects improperly vetted for
    their potential environmental threat to new bioeco systems in
    communities?
        Ms. Williams. No, sir, I don't have a concern about that.
    In the CIG program in particular----
        Mr. Johnson of Georgia. And you do admit that the
    environmental review process has been rolled back; correct?
        Ms. Williams. I am here to speak as the Acting
    Administrator of FTA. All I can speak to is what we do in the
    CIG program. And I can tell you that NEPA, we follow NEPA very
    closely. And that is done early on in the CIG process. And so
    we take that very seriously, sir.
        Mr. Johnson of Georgia. Uh-huh. You are not really
    concerned about the environmental impacts that may have been
    improperly assessed due to the cutback in the review process.
        Ms. Williams. In fact, in the CIG program, we base our
    decisions on project justification and finance ratings. And in
    the project justification is environmental benefits and that is
    one of the categories we look very--you know, we look at to
    make sure that when we rate a project, it is properly rated. So
    it is definitely a consideration in our CIG program.
        Mr. Johnson of Georgia. Can you explain how the rollbacks
    in the environmental review process are compatible with the
    FTA's requirements for the project development phase of their
    grant approval process?
        Ms. Williams. I am not sure I understand the question, sir.
    We haven't rolled back any environmental review processes for
    CIG projects in FTA.
        Mr. Johnson of Georgia. All right, fair enough. Thank you.
        I yield back.
        Ms. Williams. You are welcome.
        Ms. Norton. Thank you very much.
        Mr. Woodall.
        Mr. Woodall. Thank you, Madam Chair. Thank you, Madam
    Administrator for being here.
        Could we put the slides back up that the chairman had up to
    begin with? I wanted to look at the cost share shrinking in
    particular. My friend, Mr. Mulvaney, was invoked there. We
    worked on a lot of budget cutting that is going on while he was
    on Capitol Hill.
        [Slide.]
        Madam Administrator, when we see the cost share shrink from
    the pre-2017 to the post-2017 levels, so that is just over 10
    percent, how much of that money is going back to the taxpayer
    for deficit reduction?
        Ms. Williams. None.
        Mr. Woodall. None? You are saying that we are reducing the
    amount of money we are sending to an individual project and the
    taxpayer is not benefitting from that at all? Where in the
    world is that money going?
        Ms. Williams. Well, that is actually staying in the CIG
    program to make sure that we have other projects that we can
    fund. So actually, it is allowing us to fund additional
    projects across the country.
        Mr. Woodall. You are saying that when the chairwoman noted
    that applications to this fund had more than doubled, you have
    been able to fund more projects than you would have otherwise
    been able to fund, by reducing the Federal cost share?
        Ms. Williams. Right. So they have doubled in number and
    also in size. We have more projects coming in asking for more
    funding, so they are larger projects as well.
        Mr. Woodall. Well, I am going to have to talk to my friend,
    Mr. Mulvaney, about why the taxpayer isn't getting--it sounds
    like what you are doing is you are trying to take a program
    that has been oversubscribed and underfunded and participate
    with as many different projects across the country as you can.
    Am I understanding the goal correctly?
        Ms. Williams. Yes, you are.
        Mr. Woodall. Well, I hope you won't let that goal
    disappear. We do have to find ways, and coming from a community
    that does a lot of self-starting--we just passed $1 billion
    locally in new transportation taxes--I don't want to see all
    the giant projects in the country suck up all the funding
    stream. I don't want to see the big guys who are used to
    accessing a program like this suck up all the funding stream. I
    appreciate that effort to try to move more money to more
    projects.
        Let me go back to something else the chairman said about
    the risk assessment, because my constituents don't mind
    investing money in transformational projects. They mind
    throwing money down a rat hole towards failures. When we moved
    from a probability 65 standard down to a probability 50
    standard, meaning the odds of success of coming in on budget or
    under budget diminished dramatically, what did we see? Did it
    not make a material difference to the success of projects
    across the country when the standard fell from P-65 to P-50?
        Ms. Williams. It absolutely did. And actually the reason we
    then considered it is it came to me from our career
    professional staff who said, you know, we are seeing project
    bids come in much higher. Given the really booming economy we
    are having, the tightening of the labor market, we are seeing,
    you know, project bids come in much higher and projects like
    the Wave streetcar was the very first project I approved as the
    Acting Administrator, in Florida, was not actually able to
    absorb that cost increase and was not able to move forward. It
    really caused us to take a step back and really look at all the
    projects. And that was one of the earlier delays. I felt that
    it was really important to understand what happened in that
    project, so that we didn't have another project that we
    approved that that happened to.
        Mr. Woodall. I know we fund CIG out of the general fund. I
    hope this committee will have a conversation about finding a
    permanent funding stream for mass transit generally. It is an
    interest we all share, and to have to pick up the crumbs off
    the table is not the right way to fund a major national
    infrastructure program like this.
        But for you to make those changes, again returning to what
    had a better success rate during the Obama administration and
    the Bush administration in terms of a P-65 standard, for you to
    try to squeeze more projects into your limited budget stream,
    even though it produces charts like this one, to give more
    communities an opportunity to benefit, I just want you to know
    how much I appreciate that. I think our job is not to tell you
    what a great job you are doing, it is to hold you accountable
    when you are not doing a great job.
        But on these two fronts in particular, I am grateful for
    your efforts. I know it has not been easy and know how much it
    is valued.
        Madam Chair, I yield back.
        Ms. Williams. Thank you, sir.
        Mr. Woodall. Oh, Madam Chair, could I--if there is any
    other information on these charts that you didn't get a chance
    to talk about, feel free to submit that in writing. I know
    charts can sometimes be misleading and I want to make sure we
    have the very best information.
        Ms. Williams. We will do so. Thank you, sir.
        Mr. Woodall. Thank you for your indulgence, Madam Chair.
        Ms. Norton. Certainly.
        There doesn't seem to be any problem with more projects
    being funded. That really has not been the problem. The problem
    is that there are funds not being used and jurisdictions
    waiting to be funded.
        Mr. Malinowski, please.
        Mr. Malinowski. Thank you, Madam Chair.
        Madam Williams, I wanted to ask you about a specific
    project that is existentially important to my State and frankly
    the economy of the Northeast, the Portal North Bridge project.
        For those who don't know, this is a 110-year-old railroad
    bridge, it is a swing bridge that swings open when boats pass
    and when it swings back, it is so rickety that sometimes a guy
    needs to go out there with a sledge hammer to lock it back into
    place. This is not a partisan issue in my part of the country,
    everyone understands this needs to be replaced.
        Congress has provided the funding to fund the Federal part
    of the project and yet you have given it a medium-low rating
    because you have decided that local funds were not committed.
    Would you briefly define for us what you consider to be
    committed funding from the local partner?
        Ms. Williams. Absolutely, sir.
        Committed means nothing else has to occur to have access to
    that funding. And so in New Jersey, I think there has been
    somewhat of a miscommunication in that many people feel that we
    are saying they have to sell the bonds. That is not what we are
    asking. What we are asking is that the funds need to be
    committed, which means New Jersey Transit has to have access to
    those funds today. Today, they do not. And in fact, they
    brought this to our attention through the CIG process, that
    there were requirements in New Jersey State law that they
    needed to meet in order to have access to those funds. And they
    are making progress, I believe there was a New York DOT signoff
    that they had to receive by the end of June, which I understand
    they have received. New Jersey Transit has to have it approved
    by their board, and this is to be funded in their State
    transportation plan.
        And so, once they have that done, I believe it comes to FTA
    and FHWA, our Federal Highway Administration. And once they
    have those steps completed, then that way, I believe they will
    be considered committed. And then they can resubmit an
    application for an additional rating, which I am sure they will
    do in the fall.
        Mr. Malinowski. OK, well, that is helpful. I just want to
    hone in on this precisely.
        As you know, the State of New Jersey has agreed to fund up
    to $600 million of this project through a bond issue that will
    be securely backed by our gas tax, there is another $200
    million that has been committed. So you are not saying the bond
    has to actually have been issued?
        Ms. Williams. No, I am not.
        Mr. Malinowski. OK.
        So this definition of having access to funds, because there
    are a number of other projects, as I think you know, around the
    country, that have received the medium rating where bonds have
    not been issued.
        Ms. Williams. Right.
        Mr. Malinowski. The Durham Light Rail project, the Phoenix
    South Central Light Rail extension which is supposed to be
    backed by a sales tax that has to be approved by the voters and
    a referendum hasn't been held.
        Why is that receiving a medium rating, given how secure the
    commitment in New Jersey is, and here you have a project that
    needs to be approved by the voters and has not yet been?
        Ms. Williams. What I can tell you is that everybody has to
    comply with the same requirements. So, my technical team, which
    are career professionals that have worked with these project
    sponsors for years many times, have looked at each of those
    projects and it doesn't mean that they have to sell the bonds,
    it means that they have to comply with their own laws. And so
    in individual cases, I am happy to get back to you for the
    record, but my understanding is that they were able to meet the
    requirement to have access to the funding in the project. And
    so it must be something that is inconsequential to the State
    income tax that hasn't been passed.
        Mr. Malinowski. OK, that is helpful and we would appreciate
    following up with you----
        Ms. Williams. Absolutely, happy to do that.
        Mr. Malinowski [continuing]. On differences and
    similarities, because we need to understand there is a common
    standard.
        Ms. Williams. Yes.
        Mr. Malinowski. Let me ask you about another project which
    I am sure you have heard about, and that is the Hudson River
    Tunnel. Right now, one of the major holdups there is a lack of
    a record of decision for the environmental impact statement.
    That statement was completed and submitted to you in frankly a
    record period of time, 14 months, given to the Department in
    June of 2017 with an estimated completion of March 30th, 2018.
    This was what the Department told us. It has been more than 15
    months since that original completion, predicted completion
    date.
        FRA Administrator Batory testified before us last year that
    the EIS would be completed in the first or second quarter this
    year. This hasn't happened.
        Madam Williams, where is the environmental impact statement
    and why has it taken so long?
        Ms. Williams. Well, what I can tell you is the Federal
    Railroad Administration is the lead on the EIS for the Hudson
    Tunnel, we are a cooperating agency. And we are working
    diligently to complete that. I know Mr. Batory was up on the
    Hill just a few weeks ago and stated that there were still some
    steps that needed to be completed. It is a very complex project
    and so it is taking a bit longer to get finished.
        And so I would say to you that that is really in FRA's
    court and we are working very closely with them to get that
    done.
        Ms. Norton. Thank you very much. Your time has expired.
        Mr. Katko.
        Mr. Katko. Thank you, Madam Chair, and thank you for being
    here today, Ms. Williams.
        Before I ask a couple of questions about cybersecurity
    amongst others, I do want to make an observation. We are
    Members of Congress, we control the powers of the purse and we
    control what legislation goes to any President. So to the
    extent that there has been observations here that somehow the
    administration may be an impediment to getting something done,
    I would only challenge both sides to think in a bipartisan
    manner. If we produce a good enough highway bill and it is
    bipartisan, it will be veto-proof and we can get what we want.
    We will not get it by partisanship, we will get it by working
    together, all of us of all stripes, to get this done. And there
    is not anything in this country that I can see that needs more
    addressing than infrastructure. And if we don't work together,
    we are going to continue to be in the malaise we are in now. So
    I encourage all of us to put down our swords and work together
    to get infrastructure done once and for all, on the highway
    side at least.
        Now, with respect to cyber, I am ranking member on the
    Committee on Homeland Security's Cybersecurity, Infrastructure
    Protection, and Innovation Subcommittee and have been briefed
    many times about the threat of the Chinese influence in our
    transportation systems, in our cybersecurity systems
    nationwide.
        Congresswoman Rice, my friend from the New York area, and I
    wrote a letter to New York City subway authorities about their
    plan to purchase Chinese-made subway systems. It is a very big
    concern and I think we have established in other hearings
    before this committee and others the influence of Chinese in
    this area and their desire to infect the products that they put
    into the United States, like 5G technology, as well as train
    technology, with spyware, for example, embedded into the
    systems.
        So in that letter to New York City we were trying to note
    the fact that, first of all, the Chinese are trying to do that.
    And second of all, they are undercutting the markets and
    putting a lot of other train manufacturers out of business,
    therefore, by default being the only train supplier around. It
    is a huge problem and something that cannot be ignored and I
    know the Washington metropolitan system is bringing the same
    thing.
        So I would like to know what your office is doing in that
    regard and whether or not providing money for funding of like a
    subway system in San Francisco with additional trains there,
    what are you doing to make sure that we don't have these
    Chinese products coming into the system, and therefore creating
    a greater vulnerability. Because if you think about it, even if
    they provide Wi-Fi, everything that people are using on a Wi-Fi
    system is getting back to them. And the invasion of privacy and
    the national security implications are pretty serious.
        So with that, I would just like to have you talk about
    that.
        Ms. Williams. We, of course, support your concern when it
    comes to cybersecurity in the railcar manufacturing.
    Unfortunately, we have no direct role at FTA to require transit
    agencies to buy a certain product from a certain manufacturer.
    We do make sure, if they use Federal funding, they have to be
    Buy America compliant. But unfortunately, there is no way for
    us to preclude them from purchasing railcars from any
    manufacturer they want, if they are considered Buy America
    compliant, at this time.
        Mr. Katko. So even if they present a potential threat that
    has been established in Congress, has been established in the
    national security agencies, that is the case?
        Ms. Williams. I know that there is language on the Hill now
    to prevent that from occurring and we would certainly be very
    supportive of that.
        Mr. Katko. And what are you referring to?
        Ms. Williams. I believe it was something that Madam Chair
    put into the defense bill, the defense appropriations bill,
    that would preclude those purchases.
        Mr. Katko. So what would you need, that type of language,
    or is there other language that you think would be helpful as
    well?
        Ms. Williams. We can certainly work with the committee if
    you think there is additional language. Maybe there is
    something to look at more longer term in the reauthorization
    bill, but certainly shorter term appropriation bills would be
    appropriate. We are happy to work with you.
        Mr. Katko. Madam Chair, I am happy to work with on on that
    as well. I think it is a very important issue and that we need
    to be mindful of it.
        Also, you talked about ways we could possibly streamline
    the FAST Act and improve what we have been doing. And if we
    really are going to work together to get this done, I would
    very much appreciate any input, and frank input, that you could
    have on what the next generation of the highway bill would look
    like. And if you have any general suggestions right now, I
    would like to hear them.
        Ms. Williams. We would be happy to work with you on that.
    Today, I am really prepared to talk about the Capital
    Investment Grant program, but we are certainly happy to work
    with the committee on reauthorization proposals as we get
    closer to reauthorization.
        Mr. Katko. Thank you very much.
        I yield back.
        Ms. Williams. Thank you.
        Ms. Norton. Thank you very much.
        Mr. Stanton.
        Mr. Stanton. Thank you very much, Madam Chair.
        By the way, I thank you for putting that suggestion in the
    national defense authorization bill as it relates to what the
    gentleman was just speaking about.
        Acting Administrator Williams, I want to thank the FTA for
    its recent commitment of $100 million for the South Central
    Light Rail extension in the city that I used to lead as mayor,
    Phoenix, Arizona. This Federal investment is critical to the
    future of light rail in south Phoenix. It is a project that we
    have long fought for and when completed will connect the
    community to new economic opportunities, jobs, education,
    healthcare, social services, and more. That project has been
    ranked as one of the top projects in the United States of
    America in terms of using public infrastructure to help lift
    people out of poverty.
        Over the past year, the local transit agency in Maricopa
    County, Valley Metro, has been working with the FTA to advance
    a number of critical transit projects--Tempe Streetcar,
    Northwest extension phase 2, and of course South Central that I
    just mentioned.
        The Tempe Streetcar in particular is at a critical stage
    and the pending grant agreement must be approved soon. The
    deadline for this to be finalized by the FTA is September 1st,
    prior to the shutdown of the transit award management system,
    which could occur anywhere from September 20th to October 11th.
    My understanding is the grant needs to be sent to the Hill for
    circulation by September 6th at the very latest. Although
    Valley Metro can complete construction of this project under
    the current Letter of No Prejudice, and while they may be able
    to enter a grant agreement as late as December 15, Valley Metro
    will experience serious cash flow issues as soon as September.
        I understand that all required documentation for approval
    has been submitted by Valley Metro. Can you provide me with
    assurances that this project will receive the necessary
    approvals in time to meet these deadlines?
        Ms. Williams. Absolutely, sir. We have a great working
    relationship with Scott Smith, the GM there. He has done a
    terrific job of bringing that project across the finish line.
    There have been some hiccups with Tempe Streetcar and he has
    managed that very well. As you noted in your earlier remarks,
    we just did a $100 million allocation to a second project in
    our program, the South Central Light Rail project, and we have
    a great working relationship. You have my commitment to get
    that done for him.
        Mr. Stanton. That is great. Phoenix does have a dedicated
    funding source. When I was mayor, we did that dedicated funding
    source, the people of Phoenix overwhelmingly supported a
    transportation infrastructure investment in the local
    community, 35 years, $32 billion. And the first program under
    that election and that source of revenue was the South Central
    Line.
        As some of the witnesses on the second panel have noted in
    their written testimony, there have been concerns about revised
    Federal cost share for CIG projects. It is my understanding you
    have been working with Valley Metro to resolve those concerns
    over a proposed Federal share for several projects in our
    region. I appreciate your continued effort on this front and I
    want to add my support to maintaining the level of Federal
    participation that was anticipated when these projects were
    initially planned. Of course, we don't want to move the goal
    post in the middle of the game.
        Can you provide your thoughts on how FTA will resolve the
    cost sharing issues in keeping with those expectations of the
    local sponsors of these projects?
        Ms. Williams. I think as I mentioned earlier, you know,
    being able to look at value capture--I think the industry as a
    whole tends to think of that as only tax increment financing,
    and we want to broaden that definition to include things like
    land deals, operation and maintenance. We all recognize that
    transit brings value to our Nation's communities but sometimes
    we don't capture that value for transit.
        We sit, at U.S. DOT, at the Navy Yard, it looks a whole lot
    different than it did 30 some years ago when I was first in DC.
    And a lot of that is due to the green line coming in, that
    Metro line coming into that area. And yet, none of that revenue
    was really, and that increase in value, was really borne out to
    the transit agency. And so our commitment is to help the
    transit agency really capture that value that they bring to a
    community because we know communities value transit and we want
    to make sure that they capture that value and invite those
    private investors to the table so that we can have additional
    funding to be able to fund more projects across the entire
    country.
        Mr. Stanton. We need to do more to make the case for
    transit, not just as a way to move people to jobs and education
    and healthcare, but as an economic development tool. In my
    city, in my community, our initial 20-plus-mile line of the
    light rail, did result in $11 billion in public and private
    investment. I would argue that public transportation investment
    is as strong of an economic development tool as almost anything
    else that we can do at the local level and in partnership with
    the Federal Government.
        I yield back. Thank you.
        Ms. Williams. I would agree.
        Ms. Norton. Amen, Mr. Stanton.
        Mr. Babin.
        Dr. Babin. Yes, ma'am, thank you, I appreciate it, Madam
    Chair. And thank you, Administrator Williams, for being here.
    You have a very important job, so thank you for being here with
    us today to discuss the Capital Investment Grant program.
        On one hand, you have a certain group of people concerned
    that the FTA is unable to, or it has even been suggested
    unwilling, to approve grant applications in an appropriate
    manner or timeframe, given the number of factors under your
    administrative authority. And on the other hand, we know that
    there are dozens of bureaucratic hoops that you have to jump
    through in order to approve a grant application, which is
    slowing this already arduous process down.
        So, how can we help you along in this process and how can
    this committee untie your hands in order to lessen the onerous
    regulations and expedite a CIG grant approval process in a
    timely manner?
        Ms. Williams. You know, I think that the CIG program has
    evolved over many years. I am proud of the progress that we
    have made under the Trump administration and Secretary Chao's
    leadership to advance 25 projects through the program. That
    totals $7.6 billion in funding. I know some have talked about
    the concern of geographic diversity of the 15 that we have
    signed construction grant agreements with. Six of them have
    been in just two States.
        So let me assure you though that geographic diversity is a
    consideration, but it is certainly not a barrier. You know, I
    think we are making progress. I know that when the
    administration did not request additional funding early on in
    the first two budgets, it was alluded to that projects were
    canceled. Let me assure you, there was not one project canceled
    in the CIG program. We actually funded 3 projects in 2017, 10
    in 2018 and we have funded 2 in 2019. So I want to make sure
    that there is no impression of when we actually requested zero
    funding for the CIG program in the first 2 years of the
    administration, that no projects, no new projects, were done.
    That is simply not the case. And so we are making progress.
        And we would love to talk to you more as we get closer on
    the reauthorization topic on how we could maybe streamline the
    CIG process a little further.
        Dr. Babin. Excellent, thank you.
        And then to follow up here, there has been a good deal of
    conversation surrounding your Dear Colleague letter from last
    year regarding the FTA's advancement of projects through the
    CIG program.
        Do you believe that any of the policies in that letter
    actually violate Federal law?
        Ms. Williams. I do not. In fact, many of those policies are
    long-held policies across multiple administrations. Both the
    Bush administration and Obama administration held those
    policies as internal decisionmaking tools.
        Dr. Babin. OK. And any claims to the contrary to that seem
    to be incorrect, in my opinion, because I cannot see that.
        But what was your reason behind sending the Dear Colleague
    letter in the first place?
        Ms. Williams. Actually, it was our attempt to be
    transparent as we were making discretionary decisions about
    grants. And so it was our way of communicating that to the
    industry of what we were looking for. We thought it was just a
    recharacterization of what was used for a long time and it
    would not be surprising to anyone. We saw differently, that
    that was not the impact we had really expected.
        Dr. Babin. Thank you, Administrator.
        I yield back, Madam Chair.
        Ms. Norton. Thank you very much.
        And I want to reinforce Mr. Babin's notion that this
    committee stands ready to help. While I have been critical of
    you, anything the committee can do to hasten these projects
    with this huge backlog desiring funding, please let us know.
    And thank you for that suggestion, Mr. Babin.
        Mr. Allred.
        Mr. Allred. Thank you, Madam Chair. And I want to welcome
    you, Administrator Williams, thank you for being here today.
        Last month, I was very pleased to hear of your agency's
    announcement of a $60 million grant agreement with the Dallas
    Area Rapid Transit, or DART, which serves my district in the
    Dallas-Fort Worth area. The grant will help the project to
    lengthen platforms at 28 stations along the existing red and
    blue light rail lines, many of which are in my district.
        I would also like to thank you for your recent visit to
    north Texas, which I am sure highlighted how important transit
    is for our region. We are one of the most rapidly growing
    places in the country and our economic growth and population
    growth is dependent on Federal investment as well. So, thank
    you for that commitment and for coming to north Texas.
        I do want to mention another project that DART has applied
    for CIG funding, it is the second rail line in downtown Dallas,
    called the D2 Subway. This is a project that will greatly
    improve mobility and add capacity for our system. Right now, if
    anything happens in downtown to block our existing line, the
    entire line is shut down. So adding a second station will be
    very important for us.
        And to kind of add on to what some of my colleagues have
    said, I am concerned of course about some of the delays we have
    seen. But I trust that your agency is going to be working with
    DART to make sure that gets full consideration. I think it is
    something that is certainly worthy of being considered.
        Ms. Williams. Yes.
        Mr. Allred. Thank you.
        I want to turn to TIFIA loans because this is an important
    thing for Texas. As you know, we combine different funding
    mechanisms for a lot of things.
        Ms. Williams. Yes.
        Mr. Allred. And in your Dear Colleague letter, you said
    that TIFIA will be considered, quote, ``In the context of
    Federal funding sources,'' end quote, and, quote, ``not
    separate from the Federal funding sources.''
        Can you explain how FTA is applying that standard?
        Ms. Williams. OK, so let me begin by saying that loans are
    treated by the Build America Bureau, so RRIF and TIFIA loans
    are actually handled through them. We have done multiple
    projects that have included TIFIA loans, including Seattle
    being probably the most recent one, and one of the largest
    actual CIG projects we have done at $1.17 billion for Seattle.
        What I think the Dear Colleague was trying to get at is
    that it looks at--so in CIG, we only look at the funding based
    on CIG or non-CIG funding. The repayment sources really don't
    factor in to that. But it is a discretionary grant program, so
    when the Department looks at funding, they look at the totality
    of the Federal investment. And so they look at everything that
    is being asked for from the Federal Government. And I think
    that is what it was getting at. And so I know that has been
    somewhat confusing, but let me assure you that we have used
    TIFIA--Maryland purple line is another example of where we have
    used a TIFIA loan.
        Mr. Allred. Well, I am glad to hear you say that because,
    as you know, this is not being repaid with Federal funds, and
    so my concern is that we are providing less flexibility to
    transit projects than we are to highway projects, which I think
    are treated differently. Is that the case?
        Ms. Williams. I am not as familiar with the highway side, I
    couldn't really answer that.
        Mr. Allred. OK.
        Ms. Williams. I would be happy to get back to you on the
    record for that.
        Mr. Allred. Sure, sure.
        Well, as I said, transit is very important for us. I want
    to make sure that as many funding sources are available as
    possible. I want to work with your agency and the
    administration to try and do everything we can to help our area
    continue to grow. And for us TIFIA and other funding sources
    are very important. So we will certainly be following up with
    you about that.
        But I also, as I said, want to thank you for coming to
    north Texas and for the grant that DART received. It is a great
    program, DART is making great advancements, we have very good
    leadership there, as I am sure you have seen.
        Ms. Williams. Yes. We have a great working relationship
    with Gary there. He is very forward-thinking in the industry,
    so you are very lucky to have him there.
        Mr. Allred. Thank you so much.
        I yield back, Madam Chair.
        Ms. Williams. Thank you, sir.
        Ms. Norton. Thank you.
        Mr. LaMalfa.
        Mr. LaMalfa. Thank you, Madam Chair, for today's hearing.
        Now some colleagues have been saying that the
    administration has not been very supportive of the Capital
    Improvement Grant Program, CIG. But through its first 2 years
    in office, the administration has approved 30 percent more
    projects and 300 percent more funding than the previous
    administration had done at the same time. About 10 projects at
    $1 billion versus 13 projects at $3.3 billion. So, I don't know
    where that stat comes from, it doesn't seem very fair.
        But as a Californian, I have noted that one thing the
    previous administration did do is put out money to a disastrous
    project like the California High-Speed Rail, which is going to
    be at least triple the price of what was originally sold to
    voters in 2008 when they approved about a $10 billion bond. And
    then following that, $3.5 billion of stimulus money to
    stimulate the economy back in 2009 came forth from the Federal
    Government. One billion dollars of that, almost $1 billion, has
    not been spent and I appreciate the administration trying to
    acquire that back. We are working on legislation known as H.R.
    1515 to acquire back the rest of the $2\1/2\ billion. Since it
    has not performed, it is a breach of contract and it is not
    even going to be a high-speed rail system from S.F. to L.A. It
    is going to start in Merced and end in an orchard somewhere
    Bakersfield. It is not high-speed rail, it is not S.F. or L.A.,
    I think by their standards. So those dollars need to come back
    and go into true transit projects that can help everybody. That
    is what we will seek to do if they do not meet their marks,
    which I think they have not already met.
        So, what we bring up today is the capital investment for
    rural communities and my colleague, Mr. Davis, mentioned that
    as well. It is mostly grants for passenger rail, light rail or
    buses. So that means all taxpayers are paying for a program
    that only benefits, mostly only benefits, cities and suburbs,
    without any practical rural application.
        So we had a roundtable about this last month, it was about
    Mobility on Demand, and some of the things being talked about
    were some kind of public-private transit system to help the
    rural elderly get to their doctors' appointments, et cetera, to
    help the rural disabled to get to their jobs or even help rural
    veterans seek their VA facilities, at least until community
    care kicks in more effectively to give veterans more choices,
    more locally.
        So we have these things, we can be delivering groceries or
    prescriptions instead of them having to get in their car and
    go. We had one hospital brought up that they could increase
    their success of appointments not being met by being able to
    integrate this into it. So we need a more rural component on
    that, I think, in order to have some kind of fairness.
        So do you think FTA would be willing to work with Congress
    to adapt the CIG program for these Mobility on Demand projects
    I am speaking of? And what kind of applications can you see for
    that, Administrator Williams?
        And thank you for being here.
        Ms. Williams. Absolutely. We would love to work with this
    committee and Congress on how CIG could apply to the rural side
    of the country. I would have to tell you that you are correct
    in that many of these projects lie in the very large urban
    centers of the country where mass transit is most viable. For
    instance, in New York alone, there are five projects, two of
    which are in the Gateway suite of nine projects that total $10
    billion in investment. And so if we were to fund all of those
    projects, including the two we spoke of--the Portal North
    Bridge and Hudson Tunnel--you are talking about the entire
    appropriation for this program, all of it would be consumed by
    what projects would be requested from just New York alone.
        And so when you look at a nationwide program, you need to
    be cognizant of that. And so we would be happy to work with the
    committee and look at how we can help rural America as well on
    the Mobility on Demand side.
        Mr. LaMalfa. Thank you for that.
        Let's go back to a couple of stats that were thrown out at
    the beginning of the hearing here on CIG projects and the
    Letter of No Prejudice timeframe. It was stated that since
    2017, this administration has taken about 78 days to get to the
    LONP whereas credit was given to the previous administration of
    it being 54 days. Well, was that a cherry-picked number, the 54
    days? Was that in the first 2 years of that previous
    administration when they didn't have their staff hired out or
    confirmation of key people in the Department and all that? What
    was the number of days that it took for the first 2 years of
    the previous administration to get the letter out versus the
    number of days here?
        Ms. Williams. I would argue, Congressman, that the first 2
    years of a brandnew administration is very different when you
    compare it to the last 2 years of a second term Presidency. You
    know, when you look at a Letter of No Prejudice, we are very
    cognizant that although that letter says we are not committing
    Federal resources to this project, many grant sponsors do just
    that, they communicate that to their locality that we have the
    Federal investment now on the line, that we will get Federal
    dollars. Because we are allowing them to proceed on their own
    without any commitment from us, they still message that at the
    local level as our commitment.
        And so we are very careful when we sign those letters of no
    prejudice that we look at the project to make sure that it is a
    good project on its merits and that we believe it will be able
    to meet the scrutiny of the CIG program before we sign that.
    So, it is important to do things fast and streamline things,
    but it is also important to balance those with doing things
    right.
        Mr. LaMalfa. Yeah. Certainly it is more difficult with
    change of administration, especially when there is change of
    party involved to an administration. I know things look
    different around here right now too.
        I yield back, Madam Chair, thank you.
        Ms. Williams. Thank you, Congressman.
        Ms. Norton. I thank you as well.
        I want to assure the gentleman that we will work with him
    on rural projects. The CIG project is confined to high-density
    areas. Mr. Davis, the ranking member of course, is interested
    in rural projects as well. So we would be pleased to work with
    him.
        On this matter of the data, I asked the staff to look at
    that and I am informed that the data captured all projects in
    the pipeline during the FAST Act. That includes projects begun
    long before the last 2 years of the prior administration. So I
    am not sure how we can assign these projects to one
    administration or another. We talk about projects that overlap
    by their very nature.
        Mr. Payne.
        Mr. Payne. Thank you, Madam Chair. And I would like to
    thank the Acting Administrator for being here today.
        How long have you been in that position of Acting
    Administrator?
        Ms. Williams. Since August of 2017.
        Mr. Payne. And is there a reason why you are still
    ``Acting''?
        Ms. Williams. The nominee has not been confirmed at this
    point.
        Mr. Payne. Seems like a pattern in this administration.
        Based on your testimony here, ma'am, you seem very
    qualified for the position, so I am just wondering why this
    administration can never go the entire distance in confirming
    people. But I guess it is an ideology.
        Ms. Williams. Let me be clear. My name is not before the
    Senate for confirmation.
        Mr. Payne. I would nominate you.
        [Laughter.]
        Mr. Payne. Let me just say, Mr. Malinowski raised the issue
    that I have raised that we are all very concerned about the
    Gateway suite of projects. During your testimony, I had my
    staff check to follow up on some of the points that you made
    and thanks to technology, I have a response already back from
    the State of New Jersey on comments you made.
        Ms. Williams. Wonderful.
        Mr. Payne. And basically the ball is actually in your court
    and the board approved $600 million last year for NJ Transit
    projects that we are discussing. And the State approved the
    budget in June. So the FTA has been sent a draft that you can
    basically approve in October, so hopefully you can take a look
    at that. Maybe you didn't have that information up to before
    June, but the budget has passed and the money is there. There
    is no other threshold that the State of New Jersey has to meet
    other than you acting on it.
        Ms. Williams. Our understanding is that New Jersey Transit
    still needs to have their board sign off on it before it comes
    back to FTA. So maybe that has transpired since I last talked
    to my technical team, but we would be happy to take a look at
    it, for sure.
        Mr. Payne. Thank you.
        Last month, there were media reports indicating that
    Secretary Chao influenced the award of a Department of
    Transportation grant to projects in Kentucky. The reports
    indicated that she went so far as to designate one of her aides
    as a liaison between the Department and Senator McConnell's
    office.
        Does the FTA employ similar practices in implementing the
    CIG program? And how can the public be certain that money meant
    for infrastructure investments is not swayed by political whims
    or relationships?
        Ms. Williams. No, sir. I am happy to tell you that there is
    not one CIG project in Kentucky, that that is not something
    that the Department does under Secretary Chao's leadership.
        Mr. Payne. But under that same Secretary, these other
    projects have been approved in Kentucky. How convenient.
        Ms. Williams. Many projects were not though, sir. I am not
    familiar with that. I am really here to talk about, as the
    Acting Administrator, the CIG program. I can assure you that
    every grant program is dealt with by the career personnel in
    the Department, just like they have been across multiple
    administrations. They are highly professional, very committed
    personnel within our Department.
        Mr. Payne. Well, I will leave it at that. I had something
    else to say, but I better not. Thank you. I yield back.
        Ms. Norton. Well, thank you, Mr. Payne.
        Mr. Pence.
        Mr. Pence. Thank you, Madam Chair, and Ranking Member. As
    the crossroads of America, it is critical to have reliable
    freight and public transportation options in Indiana. We must
    prioritize investments in our infrastructure system, and the
    FTA's Capital Investment Grant program is a crucial way States
    like Indiana work with the Federal Government to promote
    economic growth and improve rail safety.
        These projects help our communities thrive by attracting
    business to the project corridor, connecting workers to their
    employers and relieving freight congestion chokepoints. Nearly
    73 percent of the funds from CIG program flow directly to the
    private sector via manufacturers and suppliers and are located
    in nearly every congressional district.
        Administrator Williams, as you are aware, there are two
    projects in my home State of Indiana currently advancing
    through the program. When Secretary Chao visited northwest
    Indiana, she saw firsthand how the West Lake corridor and
    Double Track projects serve as a key economic driver for the
    Hoosier State.
        Currently, both projects are awaiting movement from the
    project development phase into the engineering phase, and I
    know that your office is working hard on these and we thank
    you.
        My good friend and fellow Hoosier, Congressman Visclosky,
    has been working for several years on the improvement and
    expansion of the South Shore Rail Line, another great example
    of how CIG is keeping our economy moving.
        Administrator Williams, I thank you for keeping me informed
    as this project moves forward. I recognize the valuable
    partnership between our State and the Department of
    Transportation, and I have the upmost faith in your leadership.
        Madam Chair, I yield.
        Ms. Williams. Thank you, Congressman.
        Ms. Norton. Thank you very much, Mr. Pence.
        Mr. Lowenthal.
        Mr. Lowenthal. Thank you, Madam Chair. Also, thank you,
    Administrator Williams, for coming to our committee. I want to
    discuss with you something that we have already been talking
    about, and I think is critical to all of our communities, and
    that is that partnership between the Federal Government, our
    local transit agencies, that really is designed to improve and
    expand public transportation across the country.
        A personal example. When Secretary Chao last appeared
    before us in March of last year, I asked the Secretary about
    the Orange County Streetcar, which is a transit project that is
    going to connect, as you know, Garden Grove, which is in my
    congressional district, with Santa Ana, which is the county
    seat.
        The point I am making is I emphasized that our local agency
    was counting on a full funding grant agreement from FTA because
    our local agency had now bids out that were set to expire, and
    that costs would now begin--once that happened would rise.
        What was nice was that, yes, FTA did sign the agreement in
    November of last year, of 2018, which had been in the New
    Starts program since 2015. So my question is: are other
    communities experiencing the same delays in the New Starts
    process and have seen their costs increased as a result of
    delays? And is FTA tracking those cost increases?
        Ms. Williams. So I was happy to go out to Orange County and
    sign that FFGA with Darrell. It was a significant tool, I
    think, for the local economy there. What I would tell you is
    that I am not sure that it included project cost increases. So
    when we went through the risk assessment process, if the risk
    assessment says the actual project cost is higher than what the
    agency is predicting it to be, we require them to meet that
    cost. And I think that was the issue with Orange County.
        Mr. Lowenthal. Right. I understand that. But I am just
    wondering, in other counties, are you tracking data that you
    could provide us about those--the cost increases that were due
    to whatever--not blaming you, but this process taking longer
    than people expected.
        Ms. Williams. I am not sure that we are tracking that
    specifically. I would have to ask my technical team. We would
    be happy to get back to you on that.
        Mr. Lowenthal. I would appreciate that. And maybe you can
    explain to me. I may have missed some of this. When there are
    delays, and what are you doing and how is the agency
    streamlining the New Starts process to avoid these kinds of
    cost increases?
        Ms. Williams. So let me assure you that there is not one
    FFGA or SSGA or LONP on my desk, my leadership's desk, or OMB's
    desk. So there are no delays happening----
        Mr. Lowenthal. There are no delays.
        Ms. Williams. There is not one single project waiting for
    my action as I sit here today. And so many of the actions that
    cause delays, sometimes there are third party agreements that
    are difficult to work out. There are local financial
    commitments that need to be made.
        A lot of sponsors--we worked a lot with Indiana on how you
    define ``committed'' in our program means you have access,
    immediate access to those funds, and many sponsors confuse that
    with if they have a board action saying they are going to give
    the funding, if that board action is required to be approved by
    anyone else, it is not considered actual committed funding.
        And so we try to make sure--we work very closely with the
    sponsors. My technical team is one of the best in Government.
    They work with our grantees all the time to make sure they
    really understand what needs to happen.
        Mr. Lowenthal. I appreciate that, and I think it is very
    important what you are saying, so that the applicants do
    understand. But I am also talking about another issue. What
    about when that is all taken care of, the applicants have done
    what they have to do, they have applied, you know, and they
    have bids out.
        They are expecting to have that full funding, a grant
    agreement. And it takes longer, and then now it is going to
    cost--not because they have done anything wrong--the applicant
    more money.
        Ms. Williams. We obviously never want to cost a project
    sponsor additional costs on their project. And so we work
    really hard to make sure that doesn't happen.
        Mr. Lowenthal. Well, I appreciate that. Thank you, and I
    yield back.
        Ms. Williams. You are welcome. Thank you, Congressman.
        Ms. Norton. Well, I appreciate the gentleman's questions
    because, obviously, the local jurisdictions can't know what--
    when there are several of them working together, that have to
    work together, the leadership has to come from the agency. So
    anything we can do to facilitate that? But you have the
    expertise. They are simply applying--if a number of them have
    to get together, they still are going to have to look to you
    for leadership on what to do and how to do it quicker.
        Mrs. Miller.
        Mrs. Miller. Thank you, Madam Chairwoman, and thank you for
    being here today.
        I think we all know that America's transportation system
    plays a significant role in our economic development
    globalization and industrial development. We need to continue
    together, work together, on improving our public transportation
    innovation, especially in our rural areas, which you have heard
    from several people.
        I want to thank you for your work on FTA, and I am
    particularly interested in how we can modernize public
    transportation and extend service into our rural communities
    across the Nation.
        Can you elaborate on the Department's goals and priorities
    to advance innovation in transportation?
        Ms. Williams. Yes. So we are doing a lot in our MOD sandbox
    we call it, our Mobility On Demand, and we are looking at
    different things with paratransit services, which are critical
    in rural America. We are looking at, you know, younger
    generation expects things much quicker than many of us are used
    to in the public transportation field, and so developing
    applications where they can look online and be able to
    integrate their fare payments. Gary in Dallas is doing a lot of
    work on that.
        So we are doing a lot of innovative things in transit.
    Microtransit is big right now. Right-sizing the transit system
    to what the ridership is is very important. Rural America has
    already sort of done that. Small urban and large urban are
    coming to that. We are doing partnerships with Uber and Lyft
    for first mile/last mile. So there is a lot of interesting
    innovations happening in public transportation.
        Mrs. Miller. Well, along those lines, can you discuss the
    new technologies that are included in the Integrated Mobility
    Innovation discretionary grant program?
        Ms. Williams. Yes. So it is a $50 million grant program
    that is out right now. The notice of funding opportunity is out
    now for people to apply. It will include fare integration
    payments. Most people want to be able to go to their phone, hit
    an app, and be able to pay for their entire ride, whether it be
    starting with Uber and Lyft to the rail system, getting off at
    the rail system, and having a bike or a scooter there to take
    them for the last 2 miles.
        They want to do it all at one time. They want to pay for it
    all at once. And they want to know what that cost will be and
    how long it will take. And so many of the MOD sandbox that we
    are doing will do that.
        So it also will look for ideas in automation. I talked
    earlier about in the automation field we are looking at being
    able to automate parking buses in the urban core closer
    together, more efficiently, so that you use less land space.
    Being able to automate, taking them through car washes. I think
    you will see that fairly soon. And so there is a lot of
    interesting things going on, but that notice of funding
    opportunity is right now out for applications, and we are very
    excited about it.
        Mrs. Miller. That sounds good. I think about, in my
    particular rural area where people are more elderly, the
    visualization of the scooters might be an interesting thing.
        The CIG program is one of the Government's most complex and
    rigorous grant programs. I understand that the number of
    projects seeking funding have increased. How are you and your
    Department working to streamline the grant application process
    to ensure that the needed funding is delivered efficiently and
    cost effectively?
        Ms. Williams. It is difficult, I will be honest, to
    streamline this program because there are so many requirements
    in law for these projects to meet. It is quite rigorous, and so
    it is difficult to do things. You know, you are talking about
    billions of dollars of Federal investment. So you need to
    balance streamlining and doing things fast with doing things
    right, and so we are trying to strike that balance to make sure
    that we do that and protect the Federal investment as the
    stewards of taxpayer dollars.
        Mrs. Miller. OK. Thank you. I yield back my time.
        Ms. Williams. You are welcome. Thank you, Congresswoman.
        Ms. Norton. Thank you very much, Ms. Miller.
        Mr. Espaillat.
        Mr. Espaillat. Thank you, Madam Chair, and thank you,
    Acting Administrator Williams, for being here today. I am
    particularly happy that our subcommittee is discussing the
    Capital Improvement Grants Program today. This program made the
    MTA's 2nd Avenue subway phase 1 a reality, which carries nearly
    200,000 people each day, more than some cities and entire
    systems across the United States.
        By now, everyone knows I am a passionate advocate for the
    MTA's 2nd Avenue subway phase 2 extension project, which will
    finally bring subway services to a transit desert in East
    Harlem in my district. The project will also connect the subway
    to the Metro-North commuter rail system, to counties outside of
    New York City, and the express bus to LaGuardia Airport from
    125th Street.
        Federal investment in the New York subway is a good value,
    so I was glad to bring Chairman DeFazio to see the project,
    both the current completed phase and the existing tunnels that
    will make a large portion of the second phase.
        The MTA, in an effort to reduce project costs and make
    strategy design choices, recently changed the project to take
    advantage of existing tunnels under 2nd Avenue in this portion
    of my district. These tunnels were constructed back in the
    1970s, so a lot of the work has already been done. There was
    Federal funding available back then. The city got into fiscal
    trouble, and the project was left sort of like halfway through.
        However, I am concerned that by new FTA policies, that
    could make it harder for this and similar projects to get off
    the ground, not only in New York City but around the country.
    The Federal Transit Administration last June informed local
    transportation agencies via letter that they will now need to
    meet a threshold of 65 percent certainty in the cost estimates
    rather than the previous 50 percent certainty.
        While we all want to help projects have better and more
    accurate cost estimates, what this change functionally means is
    that the agencies will likely have to increase the amount of
    funds they hold in contingency. So this new formula will sort
    of like alter the fiscal aspects of these major and important
    transportation projects in my district.
        We need to be careful about placing a burden on bigger
    investments. A bump of 15 percent on estimates for a large
    project takes a project that has great value for the volume of
    riders it serves and muddies it up with an artificially high
    price that will cause sticker shock, an unprecedented shock.
        And for projects whose projected costs have already been
    publicized, this minor policy change could result in a major
    roadblock if the new estimate creates negative attention,
    especially if much of that money may not actually be used.
        In the case of the 2nd Avenue subway second phase
    extension, the current estimated cost is between $5.7 billion
    to $6 billion. But with this change from P-50 to P-65, the
    project could appear to cost as much as $7.5 billion on paper.
    I am afraid that this artificial move will make it harder for
    CIG projects to get off the ground and may harm the viability
    of projects already in the pipeline, while doing nothing to
    promote accurate cost estimates.
        My question is: does the FTA still plan to hold projects to
    the 65-percent threshold?
        Ms. Williams. So let me unpack that a little bit. Phase 1
    had a difficult opening but has had great ridership. And I
    actually met with Representative Maloney, Carolyn Maloney,
    several months ago on the phase 2 project. And it is under
    review in our program for rating. It has never been rated, so
    this is the beginning stages for this project in our process.
        Let me tell you that P-65, that probability value of 65,
    does not increase the cost of the project. What it is trying to
    do is give us a 65-percent chance of the project cost being
    correct, and allowing that project to come in on budget and on
    time. And so the concern is that, you know, MTA has a project
    that is underway now. It is East Side Access. It is 10 years
    behind schedule and $5 billion over budget, and they will be
    the same sponsor for the second phase project.
        Mr. Espaillat. The MTA seems to feel that it does impact
    this bump of 15 percent. And just to finalize, because I am
    running out of time, since the second phase is in my district,
    I will look forward to speaking to you about it.
        Ms. Williams. Absolutely. I would be happy to talk to you
    further.
        Mr. Espaillat. Thank you so much.
        Ms. Williams. You are welcome.
        Ms. Norton. Thank you very much, Mr. Espaillat.
        Mr. Westerman.
        Mr. Westerman. Thank you, Madam Chair. Thank you,
    Administrator Williams, for your testimony and for being here
    today.
        If you look at my rural district in Arkansas, the Fourth
    Congressional District, there are zero projects going on, and
    so you may think, what do I care about CIG and the projects
    that are out there? But, actually, it affects my district
    because there is only a limited number of transportation
    dollars to go around, so I want to make sure that where these
    projects are going on that they are done very efficiently and
    in the most economical way possible.
        And I know that part of that is innovation. There are some
    interesting things going on in mass transit. I have had the
    opportunity to visit the Hyperloop facility. And my question to
    you is--and getting back to the gentleman's question about P-50
    versus P-65, you know, I see that as a way to be more efficient
    and effective at the agency to make sure that we are not
    getting cost overruns, and those taxpayer dollars are handled
    more--or better, in the taxpayer's interest.
        So what do you see as far as innovation in the future and
    ways to lower cost, ways to get systems maybe like Hyperloop
    that take much less right-of-way to build? They can go at
    ground level, they can be elevated, under the ground, through
    the water. You know, it looks like there would be a lot less
    cost and potentially a much safer way to do mass transit. Where
    do you see us heading there?
        Ms. Williams. So that technology is still in its very
    infant stages, and so it is impossible to predict what that
    would look like. What I would say is that there is a lot of
    other technology that is happening, for instance, with bus
    rapid transit, where you can do transit signal priority and
    have a dedicated lane, where a lot of people would rather take
    the bus than sit in their car in traffic when you have a
    dedicated lane that doesn't stop for a signal and that bus just
    goes right on by. So there are easier things to do that cost
    less money.
        It also provides a way that if and when automation actually
    comes into the market, those types of projects can be a little
    bit easier converted to automation. And so because they already
    have a dedicated lane, they already have transit signal
    priority. So when automation comes into the market, it would
    actually be a lot easier to do. It is also a lot less that you
    would have to pay back on a Federal investment.
        When you talk about light rail, those investments are a lot
    more expensive. And so buses have a shorter shelf life and a
    much smaller price tag. And so there is a lot of innovation
    that is happening just in the bus market itself.
        Mr. Westerman. Thank you for your answer, and I yield back.
        Ms. Norton. The gentleman's question brings to mind the
    fact that, because he is interested in rural areas, that rapid
    bus--to deal with your answer--would help rural and urban
    areas, since many of those who are coming from rural areas are
    coming into the city. So that is an important question.
        Ms. Craig.
        Ms. Craig. Thank you so much, Madam Chairwoman.
        Administrator Williams, the FTA has been a very strong
    Federal partner for the State and local efforts in Minnesota to
    develop safe, efficient mass transit, including in my district.
        Just 2 weeks ago, the FTA announced the release of the last
    remaining tranche of funds--I believe it was $74 million for
    the Orange Line BRT--that provides 7-day-a-week service to
    residents of Minneapolis, Richfield, Bloomington, and in my
    district, Burnsville.
        This is our region's first such Small Starts grant and the
    latest grant agreement that our State and local partners have
    reached with the FTA since 2011. Getting to this point took
    years of cooperation and communication between one Federal
    agency, three State agencies, two counties, five cities, and
    one regional transit provider. So I am sure that was incredibly
    complex and complicated.
        I am a strong supporter of these types of Federal/State/
    local partnerships. What can FTA do to ensure that the
    application approval and grant-making process is as simple and
    efficient as possible for State and local partners who apply
    for these funds?
        Ms. Williams. I think, you know, our team, our professional
    career staff that work with our grant sponsors, are terrific. I
    have worked for two other Presidents in four other Departments,
    and I have never seen a more committed staff, a more
    professional staff. They worked tirelessly to make sure that
    the grantees understand what is expected and what information
    they need.
        We have a great working relationship with the Metropolitan
    Council. They are great about bringing all of their project
    partners in to see us. They are great about value capture. And
    so we have an excellent working relationship, and I think that
    is why you see that they have had success in our program.
        Ms. Craig. That is fantastic. Ms. Williams, there are other
    BRT projects that I am incredibly supportive of in the region.
    I am particularly optimistic about the Red Rock corridor, which
    would connect the Twin Cities to Hastings and Cottage Grove,
    two other cities in my congressional district.
        However, the President's full-year 2020 budget request
    called for cuts to vital mass transit programs, including sharp
    cuts to the Capital Investment Grants Program. This comes on
    the heels of previous budget requests that would have
    eliminated the CIG program entirely.
        Fortunately, the House passed a transportation
    appropriations bill that would fund the CIG program at
    necessary levels. How can Congress continue to work with the
    FTA to ensure that the FTA continues to fund critical projects,
    as metro regions continue to expand? How can we best advocate
    to the White House and OMB for the CIG program that is so vital
    to communities around the country?
        Ms. Williams. I think, you know, in the beginning of the
    administration, there was no allocation for CIG in the
    President's budget, and I think you see a difference in the
    fiscal year 2020 budget of an allocation of $500 million in our
    budget request by the President. I think that is what we
    believe we need for new projects.
        The total is $1.5 billion, so it funds all of the full
    funding grant agreements currently in place, as well as what we
    believe we will need for projects that will be ready.
        Let me assure you also that during the 2017 and 2018
    timeframe, that even though the President's request was not for
    any new funding, the Department did follow the intent of
    Congress and fund projects. I believe it was 3 in 2017 and 10
    in 2018.
        So I want to make sure that we are on the record that even
    though the request was zero, none of those projects were
    canceled or not funded or set aside.
        Ms. Craig. I appreciate that very much. And with that, Ms.
    Williams, Madam Chairwoman, I yield back.
        Ms. Williams. Thank you, Congresswoman.
        Ms. Norton. Thank you, Ms. Craig.
        Mr. Balderson.
        Mr. Balderson. Thank you, Madam Chair.
        Good morning, Ms. Williams.
        Ms. Williams. Good morning.
        Mr. Balderson. Good afternoon almost. Thank you for being
    here this morning. You are here as the Acting Administrator of
    the FTA, but you are also the Deputy Administrator of the FTA.
    You have the task of doing two jobs, which I think you are
    doing very well.
        I think it would help speed up projects in the CIG program
    if we had an Administrator confirmed by the U.S. Senate. So
    when did the Trump administration submit to Congress its
    nominee to head the FTA?
        Ms. Williams. I believe it was in January of 2018.
        Mr. Balderson. OK. Thank you.
        Ms. Williams. And was resubmitted again in the new
    Congress, I believe.
        Mr. Balderson. OK. Thank you. I knew my colleague from New
    Jersey raised the issue earlier, but to clarify, what is the
    status of the nomination?
        Ms. Williams. As far as I know, it is still pending before
    the Senate.
        Mr. Balderson. OK. I hope my colleagues in the Senate move
    quickly with your nomination. I agree with my colleague from
    New Jersey. I would support you.
        My next question is, as you know, Columbus, Ohio, was
    selected as the winner of the Department of Transportation's
    first-ever Smart City Challenge in 2016. The program's
    acceleration fund has since leveraged hundreds of millions of
    dollars in private-sector contributions and investments. It is
    a national model for how public-private partnerships should
    operate.
        According to the list of current CIG projects, nearly all
    of the projects are in large or medium-sized cities. In your
    experience, how are these areas better equipped to receive
    outside funding and resources than rural areas, which we have
    touched on a lot here this morning?
        Ms. Williams. I think, you know, in large urban cities, we
    are still working with grant sponsors to remind them the value
    that transit brings and to capture that value. I think to your
    point, there is a lot of value that your project has captured.
        And so knowing that we work with developers to develop
    around transit, you just need to look outside my window at the
    U.S. DOT and see the massive amounts of development in
    Southeast that was completely different 30 years ago when I was
    here before.
        And so there is a value that it brings, and sometimes you
    merely have to ask the question. But we are not always--you
    know, we are not used to having to ask that question. And so we
    are trying to make sure that grantees understand that and bring
    more private participation to the table.
        Mr. Balderson. My followup question to that, you have kind
    of touched on it there with that answer, but why should the
    Department of Transportation encourage leverage of such funds
    in the future?
        Ms. Williams. We have also seen that when projects are
    funded with local, State, and private contributions, they have
    a better chance of success, because you have the community
    involvement and support. And so we like to see that blend of
    funding, in addition to the Federal grants and loan support as
    well. We have found that those projects are the most successful
    in our program.
        Mr. Balderson. Thank you very much. Thank you very much for
    that answer.
        And, Madam Chair, I yield back my remaining time.
        Ms. Williams. Thank you, Congressman.
        Ms. Norton. Thank you, Mr. Balderson.
        Mr. Carbajal.
        Mr. Carbajal. Thank you, Madam Chair.
        And, Administrator Williams, improving our Nation's roads,
    bridges, and overall surface infrastructure is of the utmost
    importance to both maintaining our economic competitiveness and
    advancing safety.
        I must say, I was disappointed when the administration's
    fiscal year 2020 budget request only included $500 million in
    funding for new transit projects under the Capital Investment
    Grant program. This is significantly less than both the
    authorized level and recent appropriations.
        While this budget for the first time in this administration
    proposes funding for new transit projects, the funding level
    for the program and for new projects is substantially lower
    than what our current needs are. Can you help me understand how
    the administration arrived at this number of $500 million? And,
    two, what projects would receive funding should Congress
    provide the requested amount?
        Ms. Williams. So let me unpack that a bit. The first
    question you asked is how we arrived at the $500 million. That
    is something our technical team looks at as we craft our
    budget, and that is the number we thought was appropriate for
    what we believe may be ready in fiscal year 2020.
        It is difficult to gauge because many of the issues that
    need to be resolved are local issues like third party
    agreements, having all of their non-CIG funding secured. So
    those are things that are outside of our purview, so we try to
    estimate what will be ready, and we believe that that is the
    right number.
        The $500 million is also paired in our budget with another
    $500 million out of the general fund that is above the FAST Act
    level; $250 million of that is for buses and bus facilities, in
    recognition that our bus fleets are aging across the country
    and that it is important to look at that in the overall
    infrastructure program, not just looking at rail but also in
    our bus fleets.
        And, secondly, another $250 million for our state of good
    repair needs, which is a formula program, because we have a $90
    billion backlog in the industry of state of good repair. So it
    was a balance of we need to perhaps build and expand transit,
    but we also need to take care of what we have, of our existing
    projects and transit systems. And so it was a way to balance
    those both.
        Mr. Carbajal. Thank you. I couldn't help but to heed the
    observation or the comment you made earlier about a good
    healthy mix of revenue for various projects actually lends
    itself to making them better candidates.
        So by that logic, I am pretty sure that California is going
    to get its fair share. And my district in particular, who has
    voted with almost an 80-percent vote to approve self-help tax
    measures, is actually going to be at the front of the line now.
        So I look forward to scoring as high as possible with all
    these grant programs, so that we could get our fair share to
    the 24th Congressional District in California.
        Thank you very much.
        Ms. Williams. Congressman, let me assure you, of the 15
    construction grants, 6 of them are in only 2 States, 1 of which
    is California. So----
        Mr. Carbajal. Thank you very much.
        Madam Chair, I yield back.
        Ms. Norton. Well, I am very envious of that answer. You
    said that before. I don't know if it is the size of California,
    but I know when people hear that, they want to know why there
    aren't more in their States. Either California is doing
    something right or there must be some other response.
        I understand that there are no more questions. I want to
    thank you, Ms. Williams, for your testimony. Your comments have
    been very helpful. You have indicated that you would be back to
    us, as we asked for more information. So I appreciate your very
    knowledgeable testimony. And you are dismissed, and I am going
    to call the next and last panel.
        Ms. Williams. Thank you, Madam Chair.
        Ms. Norton. Could I ask Mr. Bob Alger, the president and
    CEO of Lane Construction Corporation, to come forward. He is
    testifying on behalf of the American Road & Transportation
    Builders Association; Mr. Tom Gerend, the executive director,
    Kansas City Streetcar Authority; and Paul Skoutelas, the
    president and CEO of the American Public Transportation
    Association.
        I want to thank all of you for being here today, and I look
    forward to your testimony.
        Without objection, our witnesses' full statements will be
    included in the record. Since your written testimony has been
    made a part of the record, the subcommittee requests that you
    limit your oral testimony to 5 minutes.
        Mr. Alger, you may proceed.

     TESTIMONY OF ROBERT E. ALGER, CHAIRMAN OF THE BOARD, THE LANE
      CONSTRUCTION CORPORATION, ON BEHALF OF THE AMERICAN ROAD &
      TRANSPORTATION BUILDERS ASSOCIATION; TOM GEREND, EXECUTIVE
        DIRECTOR, KANSAS CITY STREETCAR AUTHORITY; AND PAUL P.
      SKOUTELAS, PRESIDENT AND CHIEF EXECUTIVE OFFICER, AMERICAN
                   PUBLIC TRANSPORTATION ASSOCIATION

        Mr. Alger. Chairman Norton and Ranking Member Davis, thank
    you for convening today's hearing. I am Bob Alger, chairman of
    The Lane Construction Corporation, and I am here today in my
    role as chairman of the American Road & Transportation Builders
    Association, or ARTBA.
        Our association's members design, build, manage, and
    operate all modes of transportation infrastructure projects. My
    company has direct experience with projects supported by the
    transit Capital Investment Grant program.
        Madam Chairman, there has been a lot of talk about a
    Federal infrastructure initiative since the 2016 Presidential
    campaign. If you take anything away from my remarks, it is
    this: now is the time to act on our Nation's infrastructure
    needs, and this process begins with fixing the Highway Trust
    Fund.
        I am pleased to talk about the Federal Transit
    Administration's Capital Investment Grant program, but I am
    also here to tell you that Congress' chronic failure to fix the
    Highway Trust Fund Program threatens all Federal surface
    transportation programs, including transit projects.
        The next Highway Trust Fund crisis looms shortly after the
    FAST Act expires in less than 15 months. Rather than repeat the
    past dysfunctions that led to $140 billion in general fund
    transfers and budget gimmicks, President Trump, congressional
    leaders, and members of this committee, must seize the
    initiative and fix the Highway Trust Fund shortfall once and
    for all.
        Here are three approaches for your consideration: raise the
    Federal gasoline and diesel user fee rates, apply a freight-
    based user fee to heavy trucks, and institute a fee to ensure
    electric vehicle users also help pay for the system from which
    they benefit.
        While ARTBA believes these options are the most viable in
    the short term, we are open to any user-based recurring revenue
    solutions that would support increased Federal highway and
    public transportation investment.
        Many of the same complications we face when delivering a
    highway project are also prevalent on public transportation
    projects as well, and these obstacles cost American taxpayers
    time and money. According to FTA's capital cost database, which
    compiles as-built cost for 54 federally funded transit
    projects, average cost for delivering these projects increases
    an average of 5 percent annually. As such, a project that costs
    $100 million in 2019 would cost $163 million to build in 2029.
        This annual increase is more than twice the rate of general
    inflation, which is estimated to increase at an annual rate of
    2.4 percent over the next 10 years, according to the
    Congressional Budget Office. Users of the system will also have
    to wait longer for the economic benefit from the increased
    access to services, job creation, and other activities. And
    depending on the project, delays can far exceed the 5-percent
    annual increase projection.
        My company recently completed work on a project that went
    from under 3 years projected completion to nearly 4 years. The
    increase in costs for that single year amounted to nearly 20
    percent cost increase.
        My written testimony includes a host of recommendations for
    meaningful improvements to the regulatory and project delivery
    process. I would like to highlight a few of them. Public
    transportation projects have previously been allowed to use
    Federal loan programs such as TIFIA as local match.
        Recent denial of such flexibility has delayed some
    critically important projects, which only increases their
    eventual cost and schedule. Since the loans are repaid with
    local dollars, they should be allowed to be counted as local
    match.
        Another key factor in keeping transportation construction
    projects on schedule are the use of dispute resolution boards.
    These entities should include members recommended by the
    project owner, contractor, or industry, and should set up quick
    and efficient timelines, so that members can carefully follow
    its progress.
        Previous Federal surface transportation laws included
    provisions to expedite the project approval process. Due to
    lack of application and awareness of these reforms by project
    sponsors, the permitting process time horizon has not
    substantially improved. It is time to take the next step to
    ensure these tools are utilized to deliver the transportation
    benefits Americans need.
        Thank you again for the opportunity to be here today. ARTBA
    and its members look forward to working with you and your
    colleagues on these ideas and others to make the Capital
    Investment Grant program more effective and preserve its
    important contributions to the mobility of all Americans. I
    look forward to your questions.
        [Mr. Alger's prepared statement follows:]

    Prepared Statement of Robert E. Alger, Chairman of the Board, The Lane
          Construction Corporation, on behalf of the American Road &
                      Transportation Builders Association
        Subcommittee Chairman Norton and Ranking Member Davis, thank you
    for convening today's hearing. I am Bob Alger, Chairman of the Board of
    The Lane Construction Corporation. I have spent 40 years in the
    construction industry--all with Lane. I am also proud to serve as the
    chairman of the American Road & Transportation Builders Association
    (ARTBA). I am pleased to provide this statement on the importance of
    the federal role in transit capital investment and the Capital
    Investment Grant (CIG) Program.
        Established in 1902, ARTBA is the oldest national transportation
    construction-related association. ARTBA's more than 8,000 members
    include public agencies and private firms and organizations that own,
    plan, design, supply and construct transportation projects throughout
    the country and world. The industry we represent generates more than
    $500 billion annually in U.S. economic activity and sustains more than
    4 million American jobs.
        In 1977, ARTBA added ``Transportation'' to its name to more
    accurately reflect that our members build, operate and maintain more
    than highways and bridges. Ever since, ARTBA has continued to support
    federal investment in all modes of transportation construction,
    including light rail and bus rapid transit lanes.
                               Highway Trust Fund
        In 1956, Congress created the Highway Trust Fund (HTF) to ensure
    that taxes levied on highway users, not general taxpayers, would be the
    source of funding for federal investments in highways. This includes
    the Interstate Highway System and other highways of importance to the
    national economy. In 1982, Congress and President Reagan expanded the
    HTF revenue stream and dedicated a portion of the resulting proceeds to
    support investment in mass transit improvements. Overall, for more than
    50 years, revenues from highway user taxes--including the tax on
    gasoline and diesel fuels and taxes on heavy trucks--supported most
    federal spending on highways and public transportation without
    burdening the general fund. Due to a revenue base that has not kept
    pace with growing needs, however, the HTF has been plagued by repeated
    revenue shortfall crises since 2008. Over the last 11 years, Congress
    has utilized $140 billion in General Fund transfers and budget gimmicks
    to supplement federal gas and diesel tax revenue streams that have not
    been adjusted in 25 years.
        The Fixing America's Surface Transportation (FAST) Act surface
    transportation authorization law enacted in December 2015 expires on
    September 30, 2020, less than 15 months from today. Projections from
    the Congressional Budget Office (CBO) show the HTF's Highway and
    Transit Accounts remaining stable into FY 2021. However, the Mass
    Transit Account is forecast to be near zero by the end of that year.
    The Highway Account will be approaching zero as well. As the chart
    below shows, without additional user fee revenues or more General Fund
    transfers, HTF supported programs will face draconian cuts in funding
    beginning in 2021. To pay for another five-year surface transportation
    law at current spending levels with modest inflationary adjustments and
    the $5 billion liquidity cushion the accounts require for cash
    management purposes, the HTF will need $79 billion, according to CBO
    projections.

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

        While the CIG program is traditionally supported with general
    revenue dollars through the annual appropriations process, continued
    uncertainty or disruption to HTF program funding will adversely impact
    all federal surface transportation programs, including CIG. As an
    example, during the lead up to the FAST Act, such uncertainty about
    future federal investment and HTF solvency caused seven states in 2015
    to delay roughly $1.6 billion in planned transportation projects.
        Rather than repeat these past dysfunctions, the call from
    bipartisan congressional leaders and President Trump for a robust
    infrastructure initiative must be seized upon to fix the HTF revenue
    shortfall once and for all. There are a host of traditional and
    innovative user-based revenue solutions--it is time for one (or more)
    to move forward. Among the approaches ARTBA urges you to consider are:
          Raise the federal gasoline and diesel tax rates. The
    fuels tax remains the most transparent, efficient and effective
    mechanism to generate revenue for surface transportation improvements.
    The experience of 30 states that have increased their motor fuels tax
    rates since 2013 confirms these user fee increases have broad public
    support and minimal political consequences.
          Capture value from supply chain movements. The movement
    of freight throughout the nation is the embodiment of the federal
    government's constitutional responsibility to regulate and promote
    interstate commerce. To support the nation's aviation infrastructure
    system, a 6.25 percent Air Cargo Tax has been imposed since 1972 as a
    cost for moving goods via air transportation. This same concept could
    be applied to surface transportation infrastructure through either a
    commercial truck air cargo tax companion or a mileage tax.
          Initiate a one-time federal excise tax on electric
    vehicle batteries, or some other comparable mechanism that would be
    exclusively applied to alternative fuel vehicles. Fully electric motor
    vehicles exact the same wear and tear on the nation's roads as those
    powered by gas, without contributing one penny to the HTF. This
    provision would create parity in the financial support all roadway
    users provide for the infrastructure system on which their vehicles
    rely--regardless of what powers their vehicles.

        While ARTBA believes these options are the most viable in the
    short-term, we are open to any user-based, recurring revenue solutions
    that would support increased federal highway and public transportation
    investment.
                 Federal Investment and Transit Capital Outlays
        Federal investment accounts for an average of 40 percent of all
    transit agency capital outlays, according to data from the Federal
    Transit Administration's National Transit Database. This includes
    spending on guideways, stations, maintenance facilities, passenger
    vehicles and other fare collection and communication equipment and
    systems.

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

        Over the last five years, more than 2,630 transit agencies serving
    residents in every state and in Washington, D.C. have used federal
    funds to support capital outlays and purchases. This includes major
    heavy and commuter rail systems in New York, Boston, Los Angeles, San
    Francisco, Chicago and Washington, D.C., as well as local agencies such
    as the Transit Authority of Omaha and the Thunder Bay Transportation
    Authority in Michigan.
        These transit agencies are operated by cities, counties, local
    governments, Native American tribes and state authorities. They include
    independent public agencies and even private groups, like universities.
    The services they provide connect people and communities.

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

                     Source: FTA National Transit Database

        Federal investment accounts for over 80 percent of transit capital
    outlays in Kentucky, Rhode Island, Louisiana, Nebraska and Vermont. It
    represents over 40 percent of transit capital spending in 43 states and
    Washington, D.C.
        The federal role in public transportation is a vital contributor to
    the capital outlays made by the transit agencies that provide rail
    services in major metropolitan areas. Nearly 50 transit agencies
    invested a total of $13.7 billion in 2017 on capital outlays related to
    heavy rail, commuter and light rail services. Nearly half of that
    total--$6.8 billion--was to improve and expand guideway systems.
    Another $3 billion (22 percent) was invested in other construction
    activities--station upgrades and expansions, administrative buildings
    and maintenance facilities.
        Transit capital investments for heavy, commuter and light rail
    services are supported through several different FTA programs,
    including Urbanized Area Formula Grants, State of Good Repair Grants
    and Capital Investment Grants.
        The FTA discretionary Capital Investment Grants program includes
    support for the New Starts, Core Capacity and Small Starts programs.
    U.S. DOT awarded an average of $2.4 billion in annual Capital
    Investment Grants between FY 2014 and 2018, supporting an average of 28
    projects each year.
        As part of the FY 2019 and FY 2020 budgets, U.S. DOT has requested
    funds to support 10 projects each year. The funding request for FY 2019
    was just over $1 billion, of which $936 million has already been
    allocated. The U.S. DOT funding request for FY 2020 is $795 million.

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

         Source: Data compiled from U.S. DOT Annual Report on Funding
      Recommendations and U.S. DOT reports on grant allocations. Proposed
    funding recommendations include funds for accelerated project delivery
        and development as well as one percent for oversight activities.

                               The Cost of Delay
        The cost of delaying heavy, commuter and light rail transit
    projects can be significant and add up over time. Put simply: the
    longer improvements wait, the more they cost.
        Projects will cost more in the future as the price of materials,
    services and labor increases over time. According to FTA's Capital Cost
    Database, which compiles as-built costs for 54 federally funded transit
    projects, average costs for delivering these projects increases an
    average of five percent annually.
        This means projects that cost $100 million in 2019 would cost $163
    million to build in 2029. This annual increase is more than twice the
    rate of general inflation, which is estimated to increase at an annual
    rate of 2.4 percent over the next ten years, according to the CBO.
        Users of the system will also have to wait longer for the economic
    benefits from the increased access to services, job creation and other
    activities.

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

    Source: Average annual increase of 5% a year in project costs based on
                FTA's 2016 version of the Capital Cost Database.

              Case Study: LYNX Blue Line Project in Charlotte, NC
        This project, constructed by The Lane Construction Corporation,
    involved the civil work for construction of the Blue Line Extension
    (BLE) Segment B/C in Charlotte, North Carolina. The Project extends
    from north of the Old Concord Road Station to Wallis Hall on the
    University of North Carolina-Charlotte campus. The work included
    grading, drainage, erosion control, bridges, arterial roadways,
    retaining walls, traffic control, traffic signal, water main and
    sanitary sewer installation and related works. The track work for
    Segment B/C was performed by a different contractor under a separate
    contract with the owner.

    Anticipated Start Date:                                                                                 4/15/14
    Anticipated Substantial Completion Date:                                                                1/19/17
    Original Duration:                                                                                     1,010 CD
    Actual Start (NTP):                                                                                     5/14/14
    Actual Substantial Completion:                                                                          4/18/18
    Actual Duration:                                                                                       1,435 CD
    Projected Cost:                                                 $119,051,742.33 (Includes Contingency Amount of
                                                                                                      $8,236,68.07)
    Actual Cost:                                                                                    $147,311,459.90

        The major obstacle this project faced was utility relocation delays
    that delayed the work. This resulted in a contract amendment for
    acceleration costs in the amount of $21,750,000.00 and adjustments to
    the Contract Times and Intermediate Contract Times. Another obstacle on
    this project was the dispute resolution process drafted by the owner.
    The process adopted was a hybrid between the owner's own claim/dispute
    resolution process and the North Carolina Department of
    Transportation's claim/dispute resolution process. The two processes
    did not completely align causing confusion and issues with timely
    resolution of disputes.
        This example demonstrates that the cost of project delays extends
    beyond time value of money to include unforeseen issues. In essence,
    the market prices delay regardless of their cause.
      Remove Unnecessary Regulatory Burdens from Transit Project Delivery
        The transportation construction industry must directly navigate the
    regulatory process to deliver transportation improvements. As such,
    they have first-hand knowledge of the specific federal burdens that can
    and must be alleviated.
        ARTBA recognizes regulations play a vital role in protecting the
    public interest in the transportation project review and approval
    process. They provide a sense of predictability and ensure a balance
    between meeting our nation's transportation needs and protecting vital
    natural resources. These goals, however, do not have to be in conflict.
    The most successful transportation streamlining provisions have been
    process-oriented and find a way to fulfill regulatory requirements in a
    smart and more efficient manner.
        However, in recent years the rulemaking process has morphed in
    certain instances from something intended solely to protect the public
    interest into a tool for achieving diverse policy and political
    objectives, many of which are largely unrelated to improving our
    transportation infrastructure. Furthermore, this process has routinely
    ignored the affected interests, while often dismissing or undervaluing
    the project cost increases, delays and compromises in safety which can
    result.
        According to a report by the U.S. Government Accountability Office
    prior to enactment of the Moving Ahead for American Progress in the
    21st Century (MAP-21) surface transportation law, as many as 200 major
    steps were involved in developing a transportation project, from the
    identification of the project need to the start of construction. This
    process involves dozens of overlapping state and federal laws,
    including: the National Environmental Policy Act (NEPA); state NEPA
    equivalents; wetland permits; endangered species implementation; clean
    air conformity; and additional regulatory hurdles not related to the
    environmental review and approval process.
        Project delays carry severe financial consequences. According to a
    2016 report by the Texas A&M Transportation Institute, project delay is
    estimated to cost $87,000 per month for small projects (e.g.,
    reconstruction), $420,000 per month for medium-sized projects (e.g.,
    widening) and $1.3 million per month for large projects. Both political
    parties recognized that the current system was simply too long and too
    expensive for delivering transportation projects that improve mobility
    and safety. As such, finding meaningful ways to expedite this process
    has been a congressional priority for more than 15 years.
        Regulatory reform is an essential part of any effort to ensure the
    federal government, through the CIG program, utilizes resources in the
    most efficient manner possible. Reducing unnecessary delays in the
    project delivery process will allow allocated funds to have the maximum
    possible impact in delivering projects. With that in mind, ARTBA
    recommends the following enhancements to the project delivery process
    be considered by this committee as the FAST Act reauthorization process
    moves forward.
            Emphasize Utilization of Existing Project Delivery Tools
        The past four federal surface transportation reauthorization laws
    have included significant provisions to expedite the review and
    approval process for transportation improvement projects. While these
    efforts have intended to cut red tape while preserving environmental
    protections, the permitting process time horizon has not substantially
    improved. There are several reasons for this outcome, but one major
    cause is the lack of utilization and/or awareness of these reforms by
    project sponsors.
        Examples of these tools include:
          The option for a state Department of Transportation (DOT)
    to request the U.S. DOT to impose a two-year time limit on completion
    of an Environmental Impact Statement (EIS) if the process has already
    taken at least two years (from the MAP-21 reauthorization law);
          Establishment of U.S. DOT as the lead agency for
    coordinated project reviews, although the department may not set a
    mandatory schedule for other agencies to follow (from MAP-21 and the
    FAST Act reauthorization laws); and
          A provision calling for planning documents to be used in
    the NEPA process ``to the maximum extent practicable and appropriate,''
    rather than generating the same or similar material all over again
    (from the FAST Act reauthorization law).

        Existing process reforms should be the new standard. Rather than
    the discretionary approach taken over the past 20 years, Congress
    should require their use. However, to preserve flexibility, states
    should be able to opt out of using reforms on a project if they provide
    U.S. DOT with a written explanation of their determination.
        The more state and federal agencies use these reforms, the greater
    their impact will be. The default use of these reforms will better
    achieve Congress' original intent in enacting them, provide a more
    accurate measure of their effectiveness, and help identify areas for
    further improvements in project delivery.
                  Require Shorter, More Concise NEPA Documents
        The EIS is a resource for affected members of local communities to
    gain information about proposed projects. However, current EIS
    documents can be so long and complex that even many lawyers have
    difficulty understanding them, much less community members without any
    prior training in environmental law or consulting.
        Congress should direct U.S. DOT to survey current initiatives at
    improving clarity in NEPA documents (including NEPA ``plain language''
    efforts within the current administration and a similar department-wide
    initiative within U.S. DOT dating back more than 20 years) and set
    standards to reduce unnecessary length and complexity. Improved EIS
    documents would reduce delays in the NEPA process by clearly
    communicating the impacts of a proposed project and how to mitigate
    them.
                   Establish Clear Timelines for NEPA Reviews
        Past reauthorization bills have set enforceable deadlines for
    permitting decisions. However, there remains no set legislative time
    limit for the completion of NEPA documents. When initiating a NEPA
    review, project planners have no sense of when the process is going to
    be completed. Statutorily requiring timelines would add predictability
    to the NEPA process and allow project planners to more accurately plan
    schedules for environmental review. The lead agency and project sponsor
    should determine a realistic time frame for the project early in the
    planning process, allowing for project-specific flexibility and
    external agencies to fulfill the obligations with a clear deadline for
    all involved parties.
      Educate Project Participants on the Use of Dispute Resolution Boards
        Timely decision-making and claims resolution are key factors in
    keeping transportation construction projects on schedule. Some states
    have used dispute resolution boards (DRBs) as part of their contract
    administration strategies. While procedures vary from state to state,
    generally these entities include expert members recommended by the
    project owner and contractor or industry. A DRB can be specific to a
    project, with the members carefully following its progress, meeting
    regularly and resolving issues as needed. To cite one example, the
    transportation department and industry in Florida highly recommend this
    approach.
        Congress should direct U.S. DOT to educate state transportation
    agencies and the industry on the use of dispute resolution boards for
    appropriate projects.
         Allow for a De Minimis Waiver of ``Buy America'' Requirements
        The Buy America law, dating to the early 1980's, requires that
    steel or iron components ``permanently incorporated'' in federal-aid
    highway and transit projects be manufactured in the United States,
    subject to possible waivers and exemptions. Some interpretations of Buy
    America have required that contractors provide extensive documentation
    and certification for the smallest and least expensive project
    components. In these cases, the administrative costs and potential
    related delays can easily outweigh the slight economic benefits of
    employing domestic manufacturers. Codifying a waiver for these products
    would save on these compliance costs, while preserving and reaffirming
    the law's coverage of core project materials and components, which
    ARTBA supports.
        Congress should waive Buy America requirements for ``commercially
    available off-the-shelf'' (COTS) items permanently incorporated in
    federal-aid highway and transit projects. A COTS item has been defined
    as any item manufactured product incorporating steel or iron components
    (with some exceptions) that is:
        1.  Available and sold to the public in the retail and wholesale
    market;
        2.  Offered to a contracting agency, under a contract or
    subcontract at any tier, without modification, and in the same form in
    which it is sold in the retail or wholesale market; and
        3.  Broadly used in the construction industry.

        This waiver should not be intended to preempt or compromise project
    specifications or quality standards relating to these items. Exempting
    COTS items from Buy America requirements will ensure the law protects
    domestic manufacturing interests while not causing project cost
    increases and delays relating to small, inexpensive components.
                           Additional Recommendations
        In addition to regulatory reforms, we ask you to consider numerous
    programmatic changes to the CIG program, including:
          Transit capital grants programs should be limited to true
    capital investments--i.e. ones that have an amortized useful life. They
    should not be used to offset more routine transit system operating
    expenditures under the catch all of preventive maintenance. (For
    example, rolling stock has a 12-15-year life for a bus and a 30+ year
    life for a rail car. A bricks and mortar capital project should have a
    useful life of 25-40 years. Anything that does not meet such
    requirements should not be funded with federal capital grant dollars.)
          States and localities should be required to maintain a
    minimum level of effort to qualify for federal transit grants. Many
    transit systems depend solely on a combination of fare box revenue and
    federal assistance to operate their systems, with little or no state/
    local contribution. States and localities must do their fair share of
    funding their operating, maintenance, and capital needs before they
    turn to the federal government for funding.
          FTA must ensure that projects are completely scoped out
    and the involved state/locality has fully approved the project to
    reduce mid-project re-scopings and costly change orders which can add
    cost and extend schedules.
          FTA project approvals and milestones are handled
    differently in different parts of the country by FTA Regional Offices.
    Uniform, consistent and transparent approval processes must be applied
    across FTA regions--and across DOT modes.
          FTA should be granted the same flexibility as FHWA by
    being allowed to extend ``contract authority'' to projects so they can
    proceed while routine approvals move forward.
          Capital funding comes from a variety of state and local
    sources in addition to the federal contribution. Unlike most highway
    projects that have an 80-90 percent federal share, in many cases, the
    CIG funding is a minority stake of the total project costs.
    Nonetheless, federal oversight is applied to the entire project,
    limiting flexibility in the construction of parts of a project not
    financed with federal funds. Only those phases of the project that are
    federally funded should be subject to federal oversight.
          Historically, transit projects have been allowed to use
    Federal Loan Programs such as TIFIA and RRIF as local match. Recent
    denial of such flexibility has delayed some critically important
    projects, which only increases their eventual cost and schedule. Since
    the loans are repaid with local dollars, they should be allowed to be
    counted as local match.

        These program changes would help ensure a consistent national focus
    for CIG projects and maximize limited federal resources through
    improved efficiency and better leverage these dollars with state, local
    and private funds.
                                   Conclusion
        America's transportation infrastructure, including its public
    transportation and roadway system, is in dire need of repair. It is
    clear that we must invest more capital in our transportation systems
    and that goal cannot be achieved without a permanent revenue solution
    to ensure the HTF can support this needed investment growth.
        There has been a lot of talk about a federal infrastructure
    initiative since the 2016 presidential campaign. While this discussion
    is long overdue and much needed, there are two key things you need to
    know:
          An HTF solution must be the cornerstone of any such
    initiative. Otherwise we risk taking one step forward and two steps
    back.
          It is time to stop talking and start acting.

        Thank you for the opportunity to be here today Chairman Norton and
    Ranking Member Davis. ARTBA and its members look forward to working
    with you and the rest of your colleagues on these ideas as the
    subcommittee develops and enacts a long-term Highway Trust Fund fix and
    implements policy changes that enable much-needed Capital Investment
    Programs as well as other highway, bridge and public transportation
    improvements to move forward on time and at budget.
        The travelling American public deserves no less.

        Ms. Norton. Thank you, Mr. Alger, for that very important
    testimony. I just want to say, before I move on to Mr. Gerend,
    that it is interesting and important to note that the first
    part of your testimony was on fixing the Highway Trust Fund,
    and I think a well-placed critique of Congress for not doing
    so, even though this is about the CIG program.
        Nevertheless, it seems to me that that is an admonition you
    were well-placed to give Congress, and I appreciate your
    suggestions on the user fee raise. That is where there has been
    disagreement between my colleagues on the other side and on
    this side. I couldn't agree more on electric vehicles. You had
    a third one.
        They seemed all very helpful. I just had to note that
    because the fact that you detoured from your testimony to
    discuss the Highway Trust Fund I think sends a message to this
    committee how important it is to get something done on raising
    the gas tax and moving along. Hasn't been done in more than 20
    years.
        I am going to ask Mr. Tom Gerend if he would now offer his
    testimony.
        Mr. Gerend. Good morning. Madam Chairman, members of the
    committee, and members of our Kansas City regional delegation,
    good morning. Thank you for having me. My name is Tom Gerend,
    and I have the honor of serving as the executive director of
    the Kansas City Streetcar Authority in Kansas City, Missouri.
        Today I come before you on behalf of our regional
    partnership to share a bit about our local history, our
    experience, and our aspirations and suggestions related to the
    Capital Investment Grant program, in the hopes that these
    comments prove insightful in your committee deliberations and
    support our collective efforts to make these programs, and more
    importantly the resulting projects, the best they can possibly
    be.
        Our Kansas City story is not unique. It is one built on a
    history of regional collaboration and strong and productive
    local and Federal partnerships. Thanks to great work by our
    friends of the city of Kansas City, Missouri, Mayor Sly James,
    the city council, our Streetcar Authority board of directors,
    and the Kansas City Area Transportation Authority, and my good
    friend Robbie Makinen, we have now ignited a transit
    renaissance that is reshaping and reconnecting our city like
    never before.
        So why is this important to Kansas City and other cities
    across the country? It is incredibly important to us because we
    believe there is no more impactful way of connecting people to
    opportunity and building livable, sustainable, and prosperous
    cities for the next 50 years than through coordinated and well-
    executed public transportation investment.
        Our Kansas City Streetcar starter line is an example of
    this success, which opened in 2016 thanks to a Federal
    partnership outside of the CIG program with surface
    transportation, and then TIGER funds.
        In 3 short years of operations, the $100 million investment
    has produced more than $3 billion in economic activity, a 30-
    to-1 return on our collective investments, has attracted more
    than 30 percent of our residents now to public transportation
    than previously existed, and now over 6 million trips to date
    have redefined how residents, visitors, and employees
    experience and move around our city.
        But as strong as our regional partnerships have been, they
    have only been successful in delivering projects due to the
    ability and opportunity to leverage well-placed and adequately
    funded Federal Transportation Administration programs that have
    made these projects a reality.
        Without programs like the Capital Investment Grant program,
    these projects would simply not be possible. Since 2005, we
    have successfully funded and advanced three small bus rapid
    transit projects through the CIG program, and we have one
    streetcar extension that is now moving through the New Starts
    pipeline.
        Our most recent grant award was for Prospect MAX BRT, which
    Acting Administrator Jane Williams was kind enough to come to
    for the groundbreaking in October of this past year, and that
    project is now under construction and moving towards opening.
        This is all to say we have some experience in Kansas City
    navigating the CIG program. So I am pleased to be here today to
    share a few points.
        The first point, the importance of the program itself. as I
    previously mentioned, the existence of a well-supported and
    adequately funded CIG program is critical to the advancement
    and modernization of our transit system in Kansas City and
    systems across the country.
        Without CIG and other Federal programs, an active and
    engaged Federal partnership, these most prominent and impactful
    transportation projects constructed really in our city's
    history would not have been possible, and the economic
    opportunity, the investment in the community revitalization,
    and the benefits would have been lost.
        Secondly, the CIG program is rigorous, but we have received
    strong support from the FTA, and specifically our region 7
    office, at every step. We thank the current Acting
    Administrator Williams and the region 7 administrator, Mokhtee
    Ahmad, for the great support. Without their efforts, we would
    not have the success that we have had over the course of the
    years.
        And not surprisingly, moving through complicated programs
    like CIG, which are ever-evolving, provide some revelations and
    some learnings at every step.
        So a few points in closing that I would touch on as we
    think about how to improve the program together as we move
    forward. We would support the administration's efforts on
    process streamlining. We have advanced successfully projects
    outside of CIG that we think would have cost significantly more
    resources and money and time if they would have been advanced
    through the CIG program. There are opportunities, there are
    successful projects, that we think serve as an example for how
    we can in fact do this.
        We think the CIG thresholds and categories, frankly, could
    be reevaluated. There is an opportunity to reintroduce the Very
    Small Starts Program, specifically targeting and allowing small
    projects the ability to move quickly through the process.
        And then, lastly, project due diligence. There is an
    incredible burden placed on local government to advance due
    diligence on the front end of these processes, with local
    funding at risk prior to acknowledgment of a Federal grant. So
    opportunities to formalize a Federal partnership earlier in
    their process would no doubt make it easier on local
    governments to bring good projects, as well as to fund the
    local contribution that is necessary to see their projects to
    the end.
        In closing, I want to thank you for your interest and
    support of the CIG program, and I want to lift up those on the
    committee and FTA that are doing the hard work to make this
    program the best it can be. These programs and these projects
    benefit communities like Kansas City greatly.
        We thank you immensely for your support, and I look forward
    to answering any questions you may have. Thank you.
        [Mr. Gerend's prepared statement follows:]

       Prepared Statement of Tom Gerend, Executive Director, Kansas City
                              Streetcar Authority
        Honorable Chairman DeFazio, Ranking Member Graves, members of the
    committee, and members of our Kansas City regional delegation, good
    morning.
        My name is Tom Gerend and I have the honor of serving as the
    Executive Director of the Kansas City Streetcar Authority, in Kansas
    City, Missouri. Today I come before you on behalf of our regional
    partnership to share a bit about our local history, our experience, and
    our aspirations and suggestions related to the Capital Investment Grant
    Program, in the hope these comments prove insightful in your committee
    deliberations and support our collective efforts to make these
    programs, and more importantly, the resulting projects, the best they
    can possibly be.
        Our Kanas City story is likely not unique, it is one built on a
    history of regional collaboration and strong and productive local and
    federal partnerships. Thanks to great work by our friends at the City
    of Kansas City Missouri, Mayor James and City Council, our Streetcar
    Authority Board of Directors, and the Kansas City Area Transportation
    Authority, we have ignited a transit renaissance that is now reshaping
    and reconnecting our city and our region like never before.
        Why is this important to Kansas City? This is incredibly important
    to us because we believe there is no more impactful way of connecting
    people to opportunity and building a livable, sustainable, and
    prosperous city for the next 50 years than through coordinated and well
    executed public transit investments. Our KC Streetcar starter line
    which opened in 2016 is an example of this impact. In three short years
    of operation, the $100m investment has produced more than $3B in
    economic activity, a 30 to 1 return on our investment, has attracted
    30% more of our city residents to public transportation, and with over
    6 million trips to-date has redefined how residents, visitors and
    employees experience and move around our City. Perhaps most
    significantly, the unique model was built upon a revenue capture
    district, and this district surrounding our streetcar route has seen
    sales tax revenue grow by over 60% since the start of operations,
    benefiting downtown business while supporting a sustainable revenue
    stream for operations and maintenance of the system in the years to
    come.
        As strong as our regional partnership is however, it has only been
    successful in delivering projects due to the ability and opportunity to
    leverage well-placed and adequately funded Federal Transit
    Administration programs that have made these projects a reality.
    Without programs like CIG these projects would not be possible.
        Some indicate the Capital Investment Grant Program simply is not
    accessible to small and mid-sized regions. Yes, it can be challenging,
    costly, and a long road but I am here today as evidence that this claim
    isn't entirely true.
        Kansas City, Missouri is currently home to 488,000 residents and
    our Kansas City region is home to 2.1 million people. Since 2005 we
    have successfully funded and advanced three bus rapid transit projects
    through the CIG program, one streetcar project thanks to federal TIGER
    and Surface Transportation Program support, and a streetcar extension
    project currently in the New Starts pipeline, with the most recent
    grant award for Prospect MAX BRT, which acting administrator Jane
    Williams was kind enough to come to for the groundbreaking in October
    of last year. This project is now under construction and moving towards
    opening later this year.
        Kansas City's major capital transit project list includes:

    2005                                  KCATA Main Street MAX    CIG, New Starts                             $21m
                                           BRT
    2009                                  KCATA Troost Ave. MAX    CIG, Very Small Starts                    $30.6m
                                           BRT
    2016                                  KC Streetcar Starter-    TIGER, STP, CMAQ                           $102m
                                           Line
    2018                                  KCATA Prospect Ave MAX   CIG, Small Starts                         $55.8m
                                           BRT
    2024                                  KC Streetcar Main        CIG, New Starts                 $330m (PD Phase)
                                           Street Extension

        This is all to say we have had some experience and have learned a
    great deal navigating the CIG program so I am pleased to be here today
    to share our collective learnings and I will start with two overarching
    facts.
        Importance of Federal CIG Program--The existence of a well-
    supported and adequately funded CIG program is absolutely critical to
    the advancement and modernization of our transit systems in Kansas City
    in addition to systems across the country. Without CIG, other federal
    programs, and an active and engaged federal partnership the most
    prominent and impactful transit projects constructed in Kansas City's
    history would not have happened, and the economic opportunity,
    investment, community revitalization, and benefits that have been
    realized from these projects would have been lost.
        Strong support from FTA and Region VII at every step--Yes, the CIG
    program is rigorous, demanding, and complicated but at every step our
    Federal Transit Administration partners and staff in Region VII have
    been helpful and doing their very best to guide our region through the
    process. We thank current acting administrator Williams and Region VII
    Administrator Mokhtee Ahmad for your great support.
        Not surprisingly, complicated programs like CIG are ever-evolving
    and each pass at the program reveals a slightly different experience
    and learning. The four take aways that I will touch on and share with
    you in more detail relate to the areas we feel most strongly about
    helping to improve, and they include; 1) process stream-lining, 2)
    program thresholds and categories, 3) project due-diligence demands,
    and 4) incenting innovation in project finance and delivery.
        1.  Opportunity for Process Stream-lining--We understand the need
    for a well thought-out due diligence process to ensure the CIG process
    yields strong projects that can be delivered as promised but our belief
    is work can be done to make this process less burdensome, less time
    consuming, and less costly, particularly for projects on the lower end
    of the cost spectrum. As an example our Streetcar starter-line,
    successfully implemented outside of the CIG program with support from
    TIGER and Surface Transportation Funding, was completed from planning
    to operations in record time, in just five years, and is a
    demonstration that this is possible. We estimate that had we proceeded
    through CIG this would have added 2 years and 20% in additional cost to
    this project potentially making it unfeasible.

            Our concern here is one size does not fit all. As an additional
    example the current structure of the program holds our proposed
    streetcar project, a relatively straight forward extension to an
    existing system, to the same standards and expectations as multi-
    billion dollar projects that naturally bring with them more complexity
    and risk. In all cases the rigor of the CIG process is unlike any other
    federal transportation program we have experienced and an order of
    magnitude more complicated than a similarly funded roadway or
    interchange projects that are routinely advanced across our region.

        2.  CIG Program Thresholds and Categories--There is a need and
    opportunity to better align the program categories, and their related
    requirements, with the complexity and risk of respective projects.

          I.  We would suggest and propose a reintroduction of a Very Small
    Starts Program (Under $75m) to allow low cost projects with high
    benefits, located primarily within existing right-of-way, to advance
    rapidly through the process with reduced reporting and documentation
    requirements. This model has been proven successful with our region's
    Troost BRT project and would no doubt be advantageous and appropriately
    scaled for other projects in the pipeline.

          II.  We would suggest expanding the Small Starts project category
    ($75-$500m), and propose eliminating the $100m federal allocation cap
    on Small Starts Projects. The existing $300m project cost threshold
    coupled with the $100m federal allocation cap creates a dynamic where
    projects costing between $250m and $300m are actually encouraged to get
    more expensive and move to New Starts in order to by-pass the $100m
    federal cap and pursue more advantageous cost-share commonly found in
    New Starts grant agreements.

      Example of local project sponsor benefiting by increasing the cost of
                                     project

    ------------------------------------------------------------------------
            $275m Small Starts Project            $300m New Starts Project
    $100m Federal (max allowed)         36.4%   $150m Federal           50%
    $175m Local                         63.6%   $150m Local             50%

          III.  Modify New Starts and raise threshold to only include
    projects over $500m. Very few New Starts projects actually fall between
    the $300m and $500m cost range and those that do more appear to more
    closely align with project characteristics and risks found in Small
    Starts Projects. Once again one size does not fit all and aligning the
    actual project characteristics to the related due diligence
    requirements should be an important objective to ensure fair and
    appropriately placed requirements.

        3.  Project Due-Diligence is increasingly costly and time
    consuming. Again, we recognize and appreciate the need for a sufficient
    due-diligence process for all CIG categories and applaud FTA for doing
    their very best to work within the rules of the program to move
    projects expeditiously, but as currently structured, the process places
    excessive financial burden on project sponsors, who are expected and
    required to spend millions of local dollars at risk prior to a federal
    grant commitment. For our pending streetcar application, it is possible
    we could be betting $20m or more in local funds on the hope of a
    federal grant award at the end of the process. This is a hard pill for
    strapped local governments to swallow and it impedes quality projects
    from advancing through the process. Two recommendations that we would
    raise for your consideration that would aid local sponsors in managing
    this burden include;

          I.  Consideration of project development/engineering funding that
    would set aside a small percentage of program resources for awards to
    eligible project sponsors to support FTA required due-diligence. This
    would formalize a low-risk but meaningful local-federal partnership
    earlier in the process and make it easier for local governments and
    agencies to justify front end costs associated with the process when
    the anticipated award date of FFGA is unknown.

          II.  Re-evaluation of requirements related to entry into
    Engineering. This approval stage within the New Starts program is
    peculiar as it currently stands because it includes detailed
    requirements related to organizational capacity, risk assessments,
    financial commitment and numerous other requirements prior to the
    completion of Project Development and prior to any federal commitment
    for project funding. Deferring some or all of these requirements beyond
    ``engineering approval'' to serve as prerequisites to a Full Funding
    Grant Agreement would allow projects sponsors time to fully leverage
    the ``engineering phase'' to inform project plans and strategies while
    still allowing FTA the ability to require satisfactory completion of
    these requirements prior to full funding grant agreement. Our pending
    streetcar expansion project is an example of this dynamic at play. We
    have secured a dedicated voter approved tax (with a 70-30 margin) and
    have secured local approvals and adopted ordinances committing to 100%
    of local match and bonding obligations. But even with these significant
    actions there are still some questions if these action are sufficient
    to demonstrate the local financial commitment required for entry into
    Engineering, again an approval to proceed to the next phase of the
    process that is still absent federal commitment and federal risk.
    Projects demonstrating meaningful progress and real local commitment
    should be promoted and advanced through the process.

        4.  Incenting Innovative Finance and Project Delivery Models--
    Projects like our pending streetcar extension that will bring newly
    committed and dedicated funding to public transit investment and
    support 100% of the local share of project costs, including operations
    and maintenance, through a revenue-capture district should receive
    special consideration. This is a one-time local-federal partnership,
    designed to launch an impactful project that otherwise would not
    happen, and after which will be supported 100% by newly captured and
    self-generated local revenues. This is the future for how, together, we
    can grow the impact of your federal investment and leverage the
    economic return these projects create.

        In closing, I want to thank you for your interest and support for
    the CIG program and I want to lift up those on the Committee and at FTA
    that are doing the hard work to make this program the best it can be.
    These projects greatly benefit communities, like Kansas City, that they
    serve. We thank you immensely for your support and I look forward to
    answering any questions you may have. Thank you.

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                        KC Streetcar_Starter-line, 2017

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       KC Streetcar_Main Street Extension Rendering, New Starts, Project
                                  Development

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             KC Streetcar_Starter-Line_new hotel under construction

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     KC Streetcar_Starter-Line_Crowd boarding at Kansas City Union Station
                                 Streetcar Stop

        Ms. Norton. Thank you, Mr. Gerend.
        Mr. Paul Skoutelas, president and CEO of American Public
    Transportation Association.
        Mr. Skoutelas. Good afternoon. Chairwoman Norton, Ranking
    Member Davis, and members of the Subcommittee on Highways and
    Transit, thanks for this opportunity to testify today on the
    Capital Investment Grants, which are critically important to
    help growing communities address their mobility needs and to
    expand public transit throughout our Nation.
        My name is Paul Skoutelas. I am the president and chief
    executive officer of APTA, the American Public Transportation
    Association. We are the only association in North America that
    represents all modes of public transport. Our 1,500 public and
    private-sector member organizations speak with one voice in
    terms of making the case for public transit in the industry.
        Capital investment grants are a vital source of capital
    funding to expand our public transit services. Over the past
    decade, more than one-half of all of the States have benefitted
    from CIG projects. The economic benefits of projects funded
    through CIG are very wide-ranging. In addition to the critical
    local economic benefits of CIG projects themselves, the
    vehicles, the equipment, the supplies that comprise these
    projects are made in America and States all across the Nation.
        As an example, I point to the rail and bus manufacturing
    schematics that are appended to my written testimony. These
    schematics show how dozens of States contribute to each railcar
    that is manufactured in America and to each bus that is made as
    well. Capital investment grants are a critical tool to
    addressing the mobility needs of our communities and to helping
    them grow and grow the national economy.
        Unfortunately, over the past two decades, we have seen both
    Congress and FTA have layered additional requirements on the
    CIG process that have resulted in a bureaucratic maze. As a
    result, CIG requirements are vastly more complex, more time-
    consuming, and more burdensome than they need to be. And there
    are more requirements of these projects than comparable large
    U.S. DOT transportation discretionary grant programs.
        Moreover, these burdensome requirements cause significant
    delay in project approvals, which result in considerable
    increases in project costs. Today a CIG project sponsor--
    typically a transit agency--faces almost 60,000 words of
    Federal statutory law, regulations, and administrative guidance
    that is required under the program.
        In comparison, a Federal-aid highway INFRA grant applicant
    faces less than one-quarter of the statutory language and no
    specific regulations. The bureaucratic maze is not only a
    burden for CIG project sponsors, but also affects local
    decisionmaking as communities must then weigh whether to
    proceed with a CIG transit project with all of its requirements
    or, alternatively, to build perhaps a highway project that has
    much more limited requirements.
        Although we have got a great partnership with FTA, this is
    an area of great concern for us and some disagreement. And I
    want to say for the record that we have a terrific partnership
    with the FTA and with Administrator Williams. We work together
    hand in hand on a daily basis, as do our members, but this is
    an area of CIG that we have a striking difference of opinion.
        With regard to funding, while we are encouraged that the
    administration expressed support this year for the CIG program
    and the President's budget, we strongly urge Congress to
    provide funding at or above the fiscal year 2019 enacted level
    of $2.6 billion. Additionally, we encourage Congress to
    continue to require FTA to obligate these funds. Of the $2.6
    billion that Congress provided for Capital Investment Grants in
    fiscal 2019, more than one-half, some $1.3 billion, has not yet
    been even allocated, let alone obligated, to specific projects.
        I can assure you there is no shortage of interest in these
    vital grants. There are 10 New Start and Core Capacity projects
    under full funding grant agreements today, and 53 additional
    projects in the CIG pipeline, in 20 different States seeking
    $27 billion of CIG funds.
        We urge FTA to move forward as expeditiously as possible to
    use the available fiscal 2018 and 2019 funds to invest in these
    critical projects. Many APTA members have expressed concerns
    that FTA is strongly encouraging significant local overmatch of
    the Federal CIG share, particularly for New Start projects.
        These project sponsors believe that DOT will not move
    forward with their New Start project unless the project sponsor
    accepts significantly less than a 50-percent CIG share. This
    significant overmatch can require projects in a pipeline to
    redo their budgets, causing delays, and could in fact
    discourage project sponsors from seeking the CIG grant at all.
        CIG overmatch can also affect local community decisions, as
    I mentioned a moment ago, the decision between do I invest
    through the myriad of requirements for a CIG project, or do I
    look for another alternative?
        APTA is also concerned with the policies outlined in FTA's
    2018 Dear Colleague letter. Again, as we have a great
    partnership with FTA, this is an area that we regret the
    agency, FTA, did not consult with the public transit industry
    prior to making these significant policy changes.
        Their Dear Colleague letter has created considerable
    confusion among project sponsors regarding certain policies.
    For instance, sponsors remain confused on DOT's new treatment
    of TIFIA. To eliminate that confusion, we urge Congress to
    clarify that TIFIA loans repaid with non-Federal funds are
    indeed local match. That shouldn't be an issue of contention.
        At the time of the Dear Colleague letter, FTA also
    announced changes to its evaluation of CIG projects.
    Specifically, FTA now conducts risk assessments much earlier in
    the process.
        Prior to joining APTA as president and CEO last year, 2018,
    I was directly involved in delivering capital investment
    projects on both the public side and the private-sector side.
    Conducting risk assessments too early in the process can be
    problematic because at that point project sponsors have not yet
    performed an adequate level of design and engineering to fully
    calculate the likely risks.
        Similarly, increasing the probability threshold percentage
    requires project sponsors to have large amounts of local
    funding on hand as project contingencies. As many local elected
    officials know and transit governing members know, it is
    difficult to find the extra dollars oftentimes.
        Moreover, given that the Federal share is established upon
    entry into engineering, significant costs of contingencies and
    the risk and responsibility are pushed to the project sponsor.
    Thus, we urge Congress to reverse the Dear Colleague and risk
    assessment changes.
        Finally, APTA strongly urges the committee to conduct a
    zero-based review of the CIG program, to assess all statutory,
    regulatory, and administrative requirements through what I
    would describe as a two-part test. First, does the requirement
    strengthen the CIG program and ensure that beneficial projects
    across the country are delivered in a timely manner? Second,
    does the requirement protect the taxpayer's interest in funding
    good projects?
        We strongly believe that dozens of current CIG requirements
    do not meet this test. In addition to a zero-based review, we
    recommend four additional policy reforms to strengthen the CIG
    program.
        First, establish a CIG pipeline dashboard where FTA must
    report on the progress and status of its projects at each
    milestone, so that stakeholders, decisionmakers, elected
    officials, and the public understand how these projects are
    moving through the pipeline.
        Second, codify a fixed Federal share to provide certainty
    for project sponsors for CIG projects.
        Third, clarify the TIFIA loans, as I mentioned, are indeed
    local match.
        Fourth, reverse the 2018 risk assessment changes, which
    really do not add to project certainty and create more delays.
        On behalf of APTA, I thank you for giving us the
    opportunity to testify and to share our thoughts on Capital
    Investment Grants. We look forward to continuing to work with
    this committee, with the FTA, and the industry, to strengthen
    the CIG program and ensure that these critically needed public
    transportation improvements are delivered in a timely manner.
        I look forward to answering any questions you may have.
    Thank you.
        [Mr. Skoutelas' prepared statement follows:]

    Prepared Statement of Paul P. Skoutelas, President and Chief Executive
              Officer, American Public Transportation Association
                                  Introduction
        Chairwoman Norton, Ranking Member Davis, and Members of the
    Subcommittee on Highways and Transit, on behalf of the American Public
    Transportation Association (APTA) and its more than 1,500 public- and
    private-sector member organizations, thank you for the opportunity to
    testify on ``Oversight of the Federal Transit Administration's
    Implementation of the Capital Investment Grant Program''.
        My name is Paul Skoutelas, and I am the President and Chief
    Executive Officer (CEO) of APTA, an international association
    representing a $71 billion industry that employs 430,000 people and
    supports millions of private-sector jobs. We are the only association
    in North America that represents all modes of public transportation--
    bus, paratransit, light rail, commuter rail, subways, waterborne
    services, and intercity and high-performance passenger rail.\1\ Public
    transportation not only spurs economic growth, but reduces congestion,
    improves air quality, saves time and money, and advances an equitable
    and better quality of life for our communities.
    ---------------------------------------------------------------------------
        \1\ APTA members include public transit systems; planning, design,
    construction, and finance firms; product and service providers;
    academic institutions; transit associations; and state departments of
    transportation.
    ---------------------------------------------------------------------------
        Prior to joining APTA in January 2018, I served as national
    director of WSP USA's Transit & Rail Technical Excellence Center where
    I provided strategic direction on public transit and rail projects.
    Earlier in my career, I was CEO at two major public transportation
    agencies: the Port Authority of Allegheny County in Pittsburgh,
    Pennsylvania, and the Central Florida Regional Transportation Authority
    (LYNX) in Orlando, Florida. At both WSP and the public transit
    agencies, I was directly involved in delivering Capital Investment
    Grant (CIG) projects.
     Capital Investment Grants Addressing the Mobility Demands of Growing
                                  Communities
        APTA strongly supports the CIG program. Capital Investment Grants
    provide critical investments for new and expanded subways, light rail,
    commuter rail, streetcars, and bus rapid transit (BRT), among others.
        As illustrated on the following page, over the past decade, more
    than one-half of all states have benefited from the CIG program or are
    in the current pipeline. From BRT projects in Michigan and Oregon, to
    commuter rail projects in Texas, to heavy rail projects in Illinois,
    and light rail projects in Arizona, Utah, and California, public
    transportation projects that are funded through the CIG program are an
    essential component of addressing the mobility demands of growing
    communities.
                      CIG Projects Within the Last Decade

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

                              Growing the Economy
        The economic benefits of these projects reach a far greater span
    than just the project location itself. A CIG project in California may
    be receiving vehicles, parts, or materials from a supplier in Alabama,
    Arkansas, Georgia, or Wisconsin. These projects also represent
    thousands of construction jobs, transit equipment manufacturing jobs,
    and wider multiplier effects on jobs associated with parts and
    materials suppliers and worker spending. Moreover, after a new transit
    line is constructed and operational, there are ongoing, permanent
    economic growth and development impacts enabled by the transportation
    improvements and associated economic productivity gains.\2\
    ---------------------------------------------------------------------------
        \2\ American Public Transportation Association, Economic
    Implications from Proposed Public Transportation Capital Funding Cuts,
    April 2017.
    ---------------------------------------------------------------------------
        As a result, every $1 billion invested in public transportation
    creates or sustains 50,000 jobs.\3\ The enclosed Appendix shows the
    jobs created across America in rail car and bus manufacturing.
    ---------------------------------------------------------------------------
        \3\ American Public Transportation Association, 2019 Public
    Transportation Fact Book, April 2019.
    ---------------------------------------------------------------------------
        For these reasons, Capital Investment Grants are a critical tool to
    addressing the mobility demands of our communities and growing the
    national economy. We greatly appreciate the Subcommittee's continued
    oversight of the CIG program. We have a great working relationship with
    the Committee and the Federal Transit Administration (FTA) and we look
    forward to continuing to work together to advance these critical public
    transportation capital projects.
                      The CIG Program: A Bureaucratic Maze
        Unfortunately, over the past two decades, both Congress and FTA
    have repeatedly layered additional requirements on the CIG program,
    resulting in a bureaucratic maze. If an individual project suffers
    schedule or budget issues, Congress and FTA have often responded with
    new statutory, regulatory, or administrative requirements imposed
    across-the-board on every project in the CIG pipeline. As a result,
    beginning with the enactment of the Transportation Equity Act for the
    21st Century (TEA 21) in 1998, the CIG requirements have become vastly
    more complex, time-consuming, and burdensome than the requirements of
    other comparable, large U.S. Department of Transportation (DOT)
    discretionary grant programs.
        Moreover, these burdensome requirements cause significant delay in
    project approvals, which result in considerable increases in project
    costs prior to construction. Today, a CIG project sponsor faces almost
    60,000 words of federal statutory law, regulations, and administrative
    guidance under the program. Comparatively, a Federal-aid Highway INFRA
    Grant applicant faces less than one quarter of the statutory language
    of the CIG program and no specific regulations.
        The bureaucratic maze is not only a burden on CIG project sponsors.
    It also affects local decision-making as communities weigh whether to
    proceed with a CIG transit project, together with the accompanying
    program requirements and multi-year process, or, alternatively, build a
    highway project with limited federal requirements and an expedited DOT
    discretionary grant review process.
                    FTA's Implementation of the CIG Program
    Funding
        Funding Levels. In fiscal year (FY) 2018 and FY 2019, the
    President's Budgets proposed to eliminate funding for new CIG projects
    and limit funding to projects with existing Full Funding Grant
    Agreements (FFGAs). APTA strongly opposed these proposals and greatly
    appreciates that Congress continued significant funding for Capital
    Investment Grants, including new projects. This year, the President's
    Budget proposes $1.5 billion for the CIG program, including $500
    million for new projects. Although we are encouraged that the
    Administration has expressed support for the program, we strongly urge
    Congress to provide funding at or above the FY 2019 enacted level of
    $2.6 billion.
        In the past three fiscal years (FY 2017-FY 2019), Congress has
    repeatedly recognized the importance of CIG investments and provided
    funding that is greater than the $2.3 billion authorized in the Fixing
    America's Surface Transportation Act (FAST Act) (P.L. 114-94).
    Investment in public transportation yields significant economic and
    community benefits and we are grateful for this Committee's and
    Congress' support throughout the years.
        Investing Available Funds. In addition, Congress has specifically
    directed FTA to obligate 85 percent of CIG funding by a specific date
    (e.g., obligating 85 percent of FY 2018 CIG funds by December 31,
    2019). We strongly support this requirement because it requires FTA to
    help projects navigate the bureaucratic maze of the CIG program and
    obligate the available funds.
        For instance, in FY 2019, Congress provided $2.6 billion for CIG
    investments. To date, more than one-half ($1.3 billion) of these funds
    remain unallocated (i.e., FTA has not assigned the funds to a specific
    project).\4\ In fact, FTA has not completed allocating its FY 2018
    funds--$41 million remains unallocated from last year.\5\
    ---------------------------------------------------------------------------
        \4\ Allocating funds is simply designating the funding for the
    project and is a step prior to the obligation of funds, which require
    project approval. Federal Transit Administration, FY 2019 Section 5309
    Fixed Guideway Capital Investment Grants Allocations, Table 7, July 9,
    2019.
        \5\ Federal Transit Administration, FY 2018 Section 5309 Fixed
    Guideway Capital Investment Grants Allocations, Table 7, June 20, 2019.
    ---------------------------------------------------------------------------
        Communities across the nation have proposed CIG projects to address
    their growing mobility demands. FTA's current CIG pipeline includes 10
    New Start and Core Capacity projects under FFGA and 53 additional
    projects seeking construction grants, including 14 New Start, 3 Core
    Capacity, and 36 Small Start projects in 20 different states.\6\
    ---------------------------------------------------------------------------
        \6\ Federal Transit Administration, Current Capital Investment
    Grant Projects, Accessed July 2019.
    ---------------------------------------------------------------------------
        In total, communities are requesting approximately $27 billion of
    Capital Investment Grants to fund these projects in the pipeline.

            We urge FTA to move forward as expeditiously as possible to use
            the available FY 2018 and FY 2019 funds to invest in critical
            CIG projects.

        Local Overmatch. APTA is concerned that many New Start project
    sponsors believe that FTA is strongly encouraging significant ``local
    overmatch'' of the federal CIG share. Despite current law
    restrictions,\7\ these project sponsors believe that DOT will not move
    forward with their New Start projects unless the project sponsor
    requests significantly less than a 50 percent CIG share. This
    significant overmatch could discourage project sponsors from seeking a
    CIG grant. Moreover, overmatch requirements can affect local community
    decisions on whether to proceed with a highway or transit project
    because of the unequal playing field between the availability of
    highway and transit federal funds to complete a project.
    ---------------------------------------------------------------------------
        \7\ Section 5309(l)(5) of Title 49, United States Code, states:
    ``Nothing in this section shall be construed as authorizing the
    Secretary to require a non-Federal financial commitment for a project
    that is more than 20 percent of the net capital project cost.''

            We urge Congress to establish a fixed CIG share for New Start,
            Core Capacity, and Small Start projects.
    CIG Policies
        On June 29, 2018, FTA issued a ``Dear Colleague'' letter to public
    transit agencies highlighting the Administration's policies regarding
    the CIG program. The Administration's Dear Colleague letter established
    geographic diversity as a factor in FTA funding allocation decisions;
    considered DOT loans ``in the context of'' all federal funding sources
    requested by the project sponsor, and not separate from the federal
    funding sources; and included other Administration policy
    objectives.\8\ FTA stated that these changes reflect the
    Administration's current policy and are in effect. At the same time,
    FTA also made changes to the CIG Risk Assessment process.\9\
    ---------------------------------------------------------------------------
        \8\ U.S. Dep't of Transportation, Federal Transit Administration,
    Dear Colleague letter, June 29, 2018.
        \9\ The Risk Assessment changes were posted to the FTA website as
    part of a set of questions and answers, and not distributed through a
    formal notice and comment process or other public process.
    ---------------------------------------------------------------------------
        Section 165 of the Transportation, Housing and Urban Development,
    and Related Agencies Appropriations Act (P.L. 116-6, Division G)
    prohibits FTA from implementing or furthering new policies detailed in
    FTA's June 29, 2018 Dear Colleague letter to CIG project sponsors.
        Although we have a great partnership with FTA, we have a serious
    difference of opinion with the agency regarding the policies outlined
    in FTA's Dear Colleague letter. We regret that FTA did not consult with
    the public transit industry prior to making these significant policy
    changes. FTA's Dear Colleague letter has created considerable confusion
    among project sponsors regarding certain CIG policies. In addition, it
    remains unclear how FTA interprets the THUD Appropriations Act
    limitation of the Dear Colleague letter.
        Federal Loans as a Federal Funding Source. In the Dear Colleague
    letter, FTA states that it ``considers U.S. Department of
    Transportation loans in the context of all Federal funding sources
    requested by the project sponsor when completing the CIG evaluation
    process, and not separate from the Federal funding sources.'' \10\
    (emphasis added). This change could be read to curtail a public transit
    agency's ability to use Transportation Infrastructure Finance and
    Innovation Act (TIFIA) loans for the local share of a CIG project.
    ---------------------------------------------------------------------------
        \10\ U.S. Dep't of Transportation, supra note 8.
    ---------------------------------------------------------------------------
        Current law specifically provides that TIFIA may be used for any
    non-federal share of transit project costs if the loan is repayable
    from non-federal funds. Thus, we believe that FTA's policy is
    inconsistent with TIFIA's statutory requirements. Moreover, under FTA's
    policy, DOT will treat TIFIA loans differently based on whether they
    are funded under FTA or Federal Highway Administration (FHWA) programs.

            We urge Congress to clarify that TIFIA loans repaid with non-
            federal funds are local match.

        Changes to Risk Assessment Process. On June 29, 2018, FTA also
    announced two changes to the CIG Risk Assessment process that could
    cause delays to projects going through the pipeline: the timing of the
    Risk Assessment and increasing the Probability Threshold of CIG
    projects' budget and schedule.
        Timing of FTA Risk Assessment. Under the new policy, FTA conducts a
    Risk Assessment of New Starts and Core Capacity projects prior to entry
    into the Engineering phase (i.e., during Project Development) of the
    program. Prior to the new policy, Risk Assessments were generally
    conducted during the Engineering phase of CIG projects.\11\ This change
    is problematic because project sponsors may not have an adequate level
    of design and engineering completed to provide accurate and fair
    estimates for the Risk Assessment at this early stage.
    ---------------------------------------------------------------------------
        \11\ New Start and Core Capacity projects are required by law to go
    through a three-phase process--Project Development, Engineering, and
    Construction. Small Start projects are required by law to go through a
    two-phase process--Project Development and Construction. The FFGA or
    Small Start Grant Agreement (SSGA) are typically awarded prior to the
    Construction phase of the project.
    ---------------------------------------------------------------------------
        In addition, current law limits the Project Development phase of
    New Start and Core Capacity projects to a two-year period (although FTA
    may extend the time period). Conversely, the Engineering phase is not
    time-limited (although projects must show that they are making progress
    three years after entering Engineering).
        APTA is very concerned that requiring the Risk Assessment during
    the Project Development phase provides an additional hurdle to
    completing Project Development within the two-year time period. Given
    the significant number of tasks already required to be completed during
    the two-year period,\12\ this change is likely to require CIG project
    sponsors to conduct and fund even more preliminary work before seeking
    entry into Project Development. The sponsor's funding of this
    preliminary work is not included in calculating the CIG share.
    ---------------------------------------------------------------------------
        \12\ Under Project Development, the project sponsor is already
    required to select a locally preferred alternative (LPA); have the LPA
    included in the fiscally constrained metropolitan transportation plan;
    and complete the environmental review process required under the
    National Environmental Policy Act (NEPA).
    ---------------------------------------------------------------------------
        Probability Threshold. When determining the reasonableness of a
    project sponsor's cost and schedule, FTA reviews the estimates to
    determine whether they include reasonable assumptions or whether
    adjustments need to be made. FTA then examines risks related to the
    project to determine the appropriate level of contingency funding
    needed. FTA increased its Probability Threshold from 50 percent to 65
    percent in determining the reasonableness of the cost and schedule
    estimates. APTA is concerned that increasing the Probability Threshold
    percentage will require project sponsors to identify more contingency
    funds, adding to the costs for project sponsors.
        Moreover, given that the federal share is established upon entry
    into Engineering, cost overruns are the risk and responsibility of the
    project sponsor. This change increases costs for project sponsors
    regarding risks for which they are already responsible.

            We urge Congress to require FTA to conduct the Risk Assessment
            and establish the federal CIG share during the Engineering
            phase of New Start and Core Capacity projects. Similarly, we
            urge Congress to require FTA to reduce the Probability
            Threshold from 65 percent to 50 percent in determining the
            reasonableness of cost and schedule estimates, which will
            restore the Probability Threshold to the level required prior
            to FTA's 2018 changes in Risk Assessment policy.
                 Reforming the CIG Program: A Zero-Based Review
        Over the past 18 months, APTA has solicited input from our diverse
    membership on priorities for the next surface transportation
    authorization bill. At our Legislative Committee meeting on June 23,
    2019, members unanimously approved APTA's surface transportation
    authorization recommendations, which include numerous proposed reforms
    of the CIG program. In October, APTA's Board of Directors will consider
    these recommendations for final approval.
        APTA strongly urges the Committee to conduct a zero-based review of
    the CIG program to assess all statutory, regulatory, and other
    administrative requirements through a two-part test:
          Does the requirement strengthen the CIG program and
    ensure that beneficial projects across the country are delivered in a
    timely manner?
          Does the requirement protect the taxpayer's interest in
    funding good projects?

        We strongly believe that dozens of current CIG requirements fail
    this two-part test.
        In addition to a zero-based review, we recommend four additional
    policy reforms to strengthen the CIG program.
        First, APTA recommends that FTA establish a CIG Pipeline Dashboard.
    The Dashboard would allow for the public to track the status of each
    project in the CIG pipeline. The Dashboard would provide a level of
    transparency and oversight that enhances good governance and can be a
    valuable tool for current and future project sponsors, Congress,
    interested stakeholders, and many others.
        Second, providing funding certainty is essential for any multi-year
    transportation project. To that end, APTA calls on Congress to codify a
    fixed federal CIG share for New Start, Core Capacity, and Small Start
    projects. Codifying a fixed federal CIG share will provide certainty
    for project sponsors contemplating entry into the CIG program and it
    will expedite FTA decision-making.
        Third, APTA advocates for the continued use of TIFIA loans to be
    considered as a local match. Many CIG project sponsors have utilized
    TIFIA loans to help offset upfront costs associated with capital
    projects. While the federal government does provide money to fund these
    critical public transportation capital projects, the TIFIA loan is
    repaid with local funds. APTA seeks a technical clarification
    stipulating that such TIFIA loans shall be counted as the non-federal
    share of project costs.
        Finally, we call on Congress to move the Risk Assessment to the
    Engineering phase of the CIG process and reverse the changes to the
    Probability Threshold. Specifically, we urge Congress to require FTA to
    conduct the Risk Assessment and establish the federal CIG share no
    earlier than 180 days after entering the Engineering phase (for New
    Starts and Core Capacity projects) or earlier at the project sponsor's
    request. Similarly, we urge Congress to require FTA to reduce the
    Probability Threshold from 65 percent to 50 percent in determining the
    reasonableness of cost and schedule estimate.
        The Appendix includes APTA's surface transportation authorization
    recommendations regarding the CIG program, as approved by APTA's
    Legislative Committee on June 23, 2019.
                                   Conclusion
        On behalf of APTA, thank you for giving me the opportunity to
    testify and share our thoughts on Capital Investment Grants. We look
    forward to working with the Committee on Transportation and
    Infrastructure to strengthen the CIG program and ensure that these
    critical public transportation projects across the country are
    delivered in a timely manner.

                                   __________
                                    appendix
                 Capital Investment Grants Program (Sec.  5309)
        APTA strongly supports the CIG program. Beginning with enactment of
    the Transportation Equity Act for the 21st Century (TEA 21) in 1998,
    both Congress and FTA have repeatedly layered additional requirements
    on the CIG program, which has resulted in a bureaucratic maze. Congress
    must continue to reject policies that would cut, delay, or make this
    vital program more burdensome. We urge Congress to adopt provisions
    that will strengthen the CIG program and ensure that beneficial
    projects across the country are delivered in a timely manner.
    APTA Recommendations:
          Establish a fixed federal CIG share for New Start, Core
    Capacity, and Small Start projects. The fixed federal CIG shares shall
    be:
          i.  New Starts: 60 percent or, for New Start projects with
    significant total project costs, a lesser percentage;
          ii.  Core Capacity: 80 percent or, for Core Capacity projects
    with significant total project costs, a lesser percentage; and
          iii.  Small Starts: 80 percent.

          Increase the maximum federal and total estimated net
    capital costs for Small Starts projects by $100 million. In 49 U.S.C.
    Sec.  5309(a)(7)(A), strike ``$100,000,000'' and insert
    ``$200,000,000''; and in subparagraph (B), strike ``$300,000,000'' and
    insert ``$400,000,000''.

          Extend the time period for Core Capacity projects to be
    at or over capacity from five years to 10 years, and clarify that
    projects that expand or modify existing station facilities are
    increasing capacity. Strike clause (iii) of 49 U.S.C. Sec.
    5309(e)(2)(A), and insert ``(iii) will increase capacity of an existing
    fixed guideway system, corridor, or station at least 10 percent and
    is--(I) at or over capacity; or (II) projected to be at or over
    capacity within the next 10 years;''.

          Extend the deadline to complete Project Development
    activities for New Starts and Core Capacity projects from 2 to 3 years.
    In 49 U.S.C. Sec.  5309(d)(1)(C)(i) and in Sec.  5309(e)(1)(C)(i),
    strike ``2'' and insert ``3''.

          Strike the requirement for New Starts and Core Capacity
    project sponsors to complete a Before and After Study and require the
    Government Accountability Office to provide Congress a biannual report
    that analyzes the impacts of New Starts and Core Capacity projects on
    public transportation services and ridership. Strike 49 U.S.C. Sec.
    5309(k)(2)(E).

          Expand the use of warrants, where a project can pre-
    qualify for a satisfactory rating on particular requirements if certain
    conditions are met. Current FTA policy guidance does not allow warrants
    for projects with a capital cost greater than $500 million. Strike 49
    U.SC. Sec.  5309(g)(3)(D). In 49 U.S.C. Sec.  5309(g)(3)(C), strike ``;
    and'' and insert ``.''

          Require FTA to conduct the Risk Assessment and establish
    the federal CIG share during the Engineering phase of New Start and
    Core Capacity projects. In 49 U.S.C. Sec.  5309, insert a subsection:
    ``(r) For projects defined under subsection (a)(2) or (a)(5), the
    Secretary may not determine a maximum Capital Investment Grant
    contribution or perform a risk assessment until at least 180 days after
    a project has entered into the Engineering phase, unless the project
    sponsor specifically requests a risk assessment on an earlier date.''.

          Require FTA to reduce the probability threshold from 65
    percent to 50 percent in determining the reasonableness of cost and
    schedule estimates, which will restore the probability threshold to the
    level required prior to FTA's recent changes in Risk Assessment policy.
    In 49 U.S.C. Sec.  5309(f)(1)(A) before the semicolon, add ``but may
    not exceed 50 percent''.

          Establish a CIG Program Pipeline Dashboard on a publicly
    available website that includes complete information on the program and
    the status of each CIG project in the pipeline, including:
          i.  the amount of CIG funding appropriated, allocated, and
    obligated for the program and each of its components (New Starts, Core
    Capacity, and Small Starts).
          ii.  the date the project entered Project Development and
    Engineering (if applicable);
          iii.  the status of FTA and DOT review at each stage of the
    process, including when a Letter of No Prejudice (LONP) was requested
    and the date of when the LONP was issued;
          iv.  the date the New Starts FFGA, Core Capacity FFGA, or Small
    Starts grant agreement was executed; and
          v.  the status of the project sponsor in securing its non-federal
    match, based on information provided by the project sponsor.

          Reduce the required period of notification to Congress
    from 30 days to 10 days before issuing a letter of intent, entering
    into an FFGA, or entering into an early systems work agreement. In 49
    U.S.C. Sec.  5309(k)(5), strike ``30 days'' and insert ``10 days''.

          Reduce the required period of notification to Congress
    for a Small Start project from 10 days to 3 days. In 49 U.S.C. Sec.
    5309(h)(6)(C), strike ``10 days'' and insert ``3 days''.

          Allow expenditures to fulfill compliance with the
    National Environmental Policy Act of 1969 (42 U.S.C. 4321 et seq.), to
    be counted toward the non-federal match for CIG projects prior to
    entering Project Development.

          Require the Secretary to issue updated guidance no later
    than six months after the date of enactment. In 49 U.S.C. Sec.
    5309(g)(5)(A), strike ``of the Federal Public Transportation Act of
    2012''.

          Add a Congressional notification requirement on the
    status of implementation for the Program of Interrelated Projects and
    the Expedited Project Delivery Pilot Program. Add the following new
    section:

            ``Sec. ___ Capital Investment Grants Program Notification
            Requirement.
            Not later than 90 days after the date of enactment of this
            section, and every 90 days thereafter, the Administrator shall
            notify the Committee on Transportation and Infrastructure of
            the House of Representatives and the Committee on Banking,
            Housing, and Urban Affairs of the Senate of----
            (A) The status of implementation for the Program of
            Interrelated Projects and the Expedited Project Delivery Pilot;
            and
            (B) Any additional legislative actions that may be needed.''
    Expedited Project Delivery for Capital Investment Grants Pilot Program
                            (FAST Act Sec.  3005(b))
        The Expedited Project Delivery for Capital Investment Grants Pilot
    Program was originally established in MAP-21. This pilot program allows
    for up to eight New Starts, Core Capacity, or Small Starts projects to
    expedite the evaluation process normally required for CIG. FTA has only
    issued an expression of interest for projects and has not begun
    implementation of the pilot program.
    APTA Recommendations:
          Increase the maximum federal CIG share from 25 percent to
    50 percent. Amend Sec.  3005(b)(9)(A) by striking ``25 percent'' and
    insert ``50 percent''.

          Reduce the required period of notification to Congress
    from 30 days to 10 days. Amend Sec.  3005(b)(8)(D) by striking ``30
    days'' and insert ``10 days''.

          Increase the maximum federal and total estimated net
    capital costs for Small Starts projects to be consistent with 49 U.S.C.
    Sec.  5309(a)(7), as amended by these Recommendations. Amend Sec.
    3005(b)(1)(I) in clause one by striking ``$75,000,000'' and insert
    ``$200,000,000''; and in clause two, strike ``$300,000,000'' and insert
    ``$400,000,000''.

          Strike the requirement for project sponsors to complete a
    Before and After Study. Amend Sec.  3005(b) by striking paragraph (12)
    and re-designating paragraph (13) as (12).

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

        Ms. Norton. Thank you very much, Mr. Skoutelas. I must say,
    your figure--when I hear a figure like that, $1.3 billion, I
    believe it was, not allocated, you know, I am not used to that
    kind of money floating around the Congress and nobody making
    use of it.
        Could I ask you, Mr. Skoutelas, you indicated I believe
    that there was no consultation before the changes in TIFIA and
    risk assessment. No regulation, no regulatory changes required
    for that kind of change?
        Mr. Skoutelas. There was none. There was none, and we think
    it is vitally important as the industry--again, not to take
    anything away from the FTA staff and their expertise, and I
    commented on that previously, a lot of expertise lies within
    the project sponsors themselves. And we have a lot to offer
    because the individual members and sponsors are on the
    frontlines delivering these projects.
        And so I think an order of consultation, an opportunity for
    the industry to input, would be highly appropriate.
        Ms. Norton. That is the usual rule in the Congress. We make
    all kinds of mistakes by not consulting. And if that is not
    required by regulation, we will have to make sure in the 2020
    reauthorization that the appropriate statutory change is made.
    Very helpful suggestions.
        I tried to get at, for example, your notion of reporting on
    the status when I asked the Acting Administrator to get back to
    me, but your further detail will be very helpful to us in
    submitting questions to her following this hearing.
        I am trying to understand these different programs. We have
    one program, the DOT discretionary program, and then we have
    this program which seems to be far more complicated. And I
    believe--I am trying to understand how one being more
    complicated than the other--of course, the CIG program
    encourages local communities to build on the program--using the
    program that is least complicated, which turns out to be the
    highway program. Does that result in localities making
    decisions it would not otherwise make?
        All of you, or, Mr. Skoutelas, why don't we start with you.
        Mr. Skoutelas. I certainly think that is a strong
    possibility. I think it discourages, to some degree, projects
    from getting into the pipeline once they see some of the
    daunting requirements. The demand is great from communities
    because this is a valuable resource of funding that is
    important for them to build important projects like bus rapid
    transit or extensions to light rail, and the like.
        Local governments make judgments and where they are going
    to put their money, and certainly the agencies themselves have
    to make that decision. Do they ask for Federal dollars; do they
    not? Which projects do they support?
        My only point to that is I think there needs to be a level
    playing field. There is no basis to require a full set of more
    demanding requirements on one mode versus another, and I think
    that would be something that Congress ought to look at. And
    let's level the playing field; let's make it equally
    appropriate in terms of what has to be done to implement these
    projects. I think that would serve us very well.
        Ms. Norton. Do either of you have views on that notion? I
    am sure that the projects went different ways for different
    reasons. They have very different authorizations. Do you have
    any response on that question?
        Mr. Gerend. I will give you the perspective from Kansas
    City. As mentioned in my comments, we advanced our streetcar
    starter line project. Outside of CIG, it was $102 million. We
    leveraged a Federal partnership through the surface
    transportation program, and then TIGER, now BUILD, for some
    supplemental Federal match.
        So FTA oversaw the implementation of that program outside
    of CIG, and that was advantageous to the timeline of that
    project, which we completed really in record time--in under 5
    years from planning to full-blown operations, with
    satisfactory, obviously, oversight and a really successful
    launch.
        We are now in full-blown New Starts through our streetcar
    extension, and really are noticing clearly the differences in
    the requirements, despite the fact that we have successfully
    deployed an initial project.
        And with my background on the regional transportation side,
    I would say in all cases, frankly, the rigor of the CIG program
    is unlike any other Federal transportation grant program across
    any of the categories that we have had experience with in
    Kansas City and, frankly, an order of magnitude more
    complicated than similarly funded roadway projects, highway
    projects, and the like, that we are continuously advancing
    throughout the region.
        So it is an impediment to progress. It is where the money
    is, frankly, for large-scale capital transit projects. So we
    play by the rules. We understand that they are rigorous, and we
    expect that that comes with the territory. But there is a
    front-end local financial commitment that is very real in these
    processes. The Federal obligation and commitment for
    partnership is at the very back end of the project, so as
    indicated, we may be spending upwards of $20 million of local
    funds developing a project concept before we know we have a
    Federal partnership that is real and can actually implement a
    project.
        That is a tough pill for local governments to swallow, but
    it comes with the territory, and so we are in a position of
    having to make that decision, and we are doing that because
    that it is a competitive framework but it is challenging, and
    the due diligence and the burden on sponsors is very real.
        Ms. Norton. Well, thank you very much, Mr. Gerend. This is
    very difficult. One program is more complicated than another
    just because Congress has set out one is a grant program; the
    other was always meant to give a lot of discretion to the
    jurisdictions. So in reauthorization, we will have to look more
    closely in making the CIG program easier to deal with at the
    level of the administration as well with grantees.
        I am pleased to recognize our ranking member, Mr. Davis.
        Mr. Davis. Thank you, Madam Chair, and thank you to the
    witnesses. Sorry we didn't have a little bigger crowd, but you
    got the best of the best with us three here, I would say.
        Hey, look, first off, Mr. Gerend, now the Kansas City
    Streetcar, I know that is probably in my colleague, Ms. Davids'
    district, but I got to know, does it go to Worlds of Fun?
        Mr. Gerend. It does not, not yet, no.
        Mr. Davis. OK, is that in your long-term planning?
        Mr. Gerend. That is part of our multimodal strategy to
    extend beyond streetcar. It's multimodal: bus, on-demand
    transit services, of course.
        Mr. Davis. As somebody who was born in Des Moines, Iowa,
    our closest city outside of Des Moines to go have fun at when I
    was young was Kansas City, and I remember the Worlds of Fun was
    my favorite place to go.
        So is that in your district, Ms. Davids? Is it across the
    State line? Oh, it is in Missouri? OK, well, hey, you know what
    is good? It is projects like that that can transcend State
    lines, if needed, if needed.
        Well, first off, I want to thank all the witnesses. And,
    you know, we have talked about the CIG program, the panel
    before with the Acting Administrator, and now with you. And I
    get we have some issues between the discretionary portion
    versus some of the normal applicant portions of CIG, and I
    think the Acting Administrator answered a lot of the concerns
    very well.
        But I have got an overall concern on this panel; an overall
    concern with how do we actually get to the bipartisan solution
    to reauthorize the FAST Act. And the biggest concern I have is
    are we, at T&I, going to have to pass a bill that we know is
    not adequately funded, like that last one, for the entirety of
    the policy recommendation period. How do we get do a point
    where we have a fully funded highway reauthorization? What do
    we do?
        You know, there are many that have taken a strict increase
    in our current revenue stream off the table. So what is the
    next step, Mr. Alger? What is the next step to actually ensure
    that we not only make the Highway Trust Fund solvent, we make
    it viable; we make it less volatile; and how do we bring in new
    modes of transportation that may not be paying into the Highway
    Trust Fund now, but maybe more of a ubiquitous part of our
    roadways in the future?
        Mr. Alger. Well, I think there are a couple points here.
    Number one, all transportation in the United States is
    interrelated--if we don't fund transit then more people are
    going to be on the roads in cars, and we are going to have more
    trucks; we are going to have all kinds of problems, more
    congestion, people trying to get where they are trying to get
    to. So there has to be a solution for everything.
        I almost think that we are making this too complicated. We
    are trying to get this----
        Mr. Davis. In Congress? Really?
        Mr. Alger. Really. I truly believe that.
        So this $2 trillion that everybody is talking about, I
    almost think we need to take smaller bites of the apple. There
    are a lot of things out there that we could do, that we could
    raise the gas tax today. We could do some other things that
    have been proposed. We sat this morning and there is like 10 or
    12 different items that are available to be done today that we
    could do. But we just can't seem to get everybody together.
        One comment that I had when I met with a couple Members of
    Congress was why can't we just get everybody in one room like
    this and we lock the doors until somebody figures out what the
    hell we are going to do. Because it just doesn't seem to happen
    around here. If it was private industry we would come with a
    solution, we would get it together, we would move forward. For
    some reason, this thing just gets bottlenecked, and I don't get
    it. There is a lot of things we could do right now that we just
    choose not to do, whether it is bipartisan or not. And it is
    foolish.
        Mr. Davis. Well, I appreciate the comments. You know, as
    somebody who has said, I think it is extremely shortsighted
    just to use the existing revenue sources that we have, because
    same Federal Government tells auto manufacturers to make
    engines that burn less gas. So we are not providing a long-
    term, less volatile solution.
        Do you have any ideas how we bring electric vehicles into
    the mix? I want to sell more electric vehicles. I have got an
    old Mitsubishi factory that shut down, that is in my district,
    a few years ago, that has now got a few hundred million dollars
    of investment from Rivian car company, and investment from Ford
    Motor Company, Amazon and others, hundreds of millions of
    dollars. They want to produce small SUVs and small, light,
    electric pickups.
        I mean as we look ahead over the next 5 to 6 years, 10
    years, I believe more of those will be on the roadway, and I
    certainly hope so because it will provide jobs to my
    constituents. But what do we do since, you know--any of you
    drive a fully electric vehicle up there?
        Mr. Skoutelas. I don't have an automobile. I take the bus.
        Mr. Davis. All right, well, I can't do that in my district.
    So nobody drives a fully electric vehicle on the panel, right?
        Mr. Alger. I do not, but I think that we could put a tax on
    electric vehicles so that they pay for the roads that they are
    using, that the gas-powered cars are using. They are using the
    same facilities, they should pay for using those facilities,
    just like everybody else does.
        Mr. Skoutelas. Can I offer a comment? First of all, I want
    to thank you for your leadership on this whole issue, and you
    have come and spoken to our group in recent months, and you
    have made the strong case that there needs to be action taken.
        Certainly from the standpoint of the transportation
    industry, and there is almost an incredible alignment between
    the associations and virtually everyone that recognizes, we
    need to take this bold step forward for infrastructure
    investment. It is a great opportunity that we have. Yes, there
    might be some issues. Is it a gas tax? Is it some blend? Is
    this a tax on electric vehicles? That is seemingly something we
    should be able to get over, and to cause some kind of a
    blending.
        In my own personal opinion, I believe that perhaps that is
    the future of a tax on electric vehicles. Unfortunately, there
    is not enough of them yet to make a difference. And yet it
    probably needs to be in the horizon of when that can happen.
    But I would hope that given the great demands that we have in
    our communities across the board, across the multimodal nature
    of infrastructure, that we can find a way to come together to
    get it done.
        As Bob said here, it shouldn't be that difficult. I know it
    is, but it shouldn't be that difficult. And we stand here to
    help however way we can to assist in that.
        Mr. Davis. Well, thank you all. I know I have no time to
    yield back, and I want to thank Mr. Gerend, too, for the long-
    term plans of extending the streetcar to one of the greatest
    amusement parks in my childhood.
        Thank you, Madam Chair. I yield back nothing.
        Ms. Norton. Well, I want to thank the ranking member for
    his important questions. I do want to note that once Mr. Alger
    raised the Highway Trust Fund, it brought the ranking member
    back, who has other business, but he came right back to the
    table because I think, like his questions indicated, you see a
    bipartisan desire to do something about the Highway Trust Fund.
    He seems to have taken off raising the gas tax, but he didn't
    take off your other two suggestions, Mr. Alger. And if I may
    recall it for the record, I believe the number is two-thirds of
    the States have raised their gas tax.
        Mr. Alger. Thirty-one.
        Ms. Norton. Thirty-one States. That is more than two-
    thirds. So the problem is in the Congress. It looks like nobody
    would be punished if we did at the Federal level what the
    States have already done at their level. I am not sure whether
    we are afraid of our own shadow.
        Mr. Alger. I think it is 96 percent of the people that have
    been elected to Congress have voted for a gas tax and got
    reelected. It is something like that. So people should not be
    scared to vote to raise the gasoline tax.
        Mr. Davis. It is about the same as the incumbent retention
    rate all around.
        Ms. Norton. We may have to find some way to get a vote on
    that matter, or at least to test, to do a kind of whip count
    and see if we put the figures that the ranking member just gave
    and that I just gave before people whether we might get another
    result. We can do a whip count and see whether we are simply
    going off of what we have done for more than 20 years, and that
    with these new figures, States may have updated their own
    thinking about----
        Mr. Alger. If I may, it is very frustrating on our part to
    talk about this for the last 9 months to 1 year and see
    absolutely nothing get done. It is really frustrating from
    industry, from the associations, from the general public. And
    it seems like we have the opportunity now potentially, now we
    need to seize that opportunity and make something happen.
        Ms. Norton. Thank you very much. Ms. Davids.
        Ms. Davids. Well, thank you to the witnesses for being here
    today. I appreciate the testimony you have provided in writing
    and then listening to the suggestions that you have.
        So of course I definitely want to talk to Mr. Gerend about
    not just the Kansas City Streetcar, but the regional
    collaboration that has happened across the State lines, which I
    think has been one of the most beneficial things to our area in
    terms of economic vitality and growth that we have seen over
    the last number of years.
        I want to just dig right into some of the recommendations
    that you made. There are two really big things that jump out at
    me, and we have very limited time for each person to testify,
    so I wanted to jump into the Very Small Starts program and your
    recommendation of reintroducing that as part of the CIG. And
    could you just really quickly talk about why you think that
    would be beneficial and what it would look like?
        Mr. Gerend. Sure. Thank you for the question, and it is a
    pleasure seeing you this morning. We had some experience in the
    Kansas City region with our Troost MAX BRT project in deploying
    that, then, was the Very Small Starts program, which was
    designed to help small-scale projects with high community
    benefits move through the process, sort of on an expedited
    timeline with minimal requirements. These are lower risk
    projects so there is lots of conversation in the room today
    about small cities, about rural communities.
        We definitely think as we look at even the Small Starts
    requirements and the burden placed on projects even through the
    Small Starts pipeline that there is a smaller--the smaller end
    of the projects in that spectrum, there is an opportunity to,
    once again, carve those out, create another category,
    effectively, for the small Small Starts project, the Very Small
    Starts projects, that could help expedite and move low-risk
    projects with high benefits at a faster pace. It has worked
    well in the past; we think it is an opportunity; it is worth
    revisiting again.
        Ms. Davids. And so when we think about those high community
    benefits, it kind of sparks the next recommendation, so that
    was--or takeaway--the second takeaway was what you were just
    speaking about. And then a third takeaway which has to do with
    the project due diligence, and part two--I really get into
    these things--part two of the due diligence takeaway has to do
    with the way that the Federal Government looks at the local
    commitment. And, you know, you specifically mentioned the--I
    remember seeing this go through the voter-approved tax to
    secure funding for projects, and some of the other things that
    have happened in the region that demonstrate a local commitment
    to investing in these projects, and then to still not have that
    count.
        Can you talk a little bit about what do you think we need
    to do to make sure that when the people who are on the ground
    doing what they are supposed to be doing and committing to
    projects in very real ways still are not--they are not getting
    that credit in these programs.
        Mr. Gerend. Sure, happy to elaborate. So in my written
    statement it was really about the requirements to enter into
    engineering through the New Starts pipeline. And with that
    comes, as was talked about earlier today, some specific
    requirements related to financial commitment. And many
    properties around the country are having conversations with FTA
    about defining commitment, what does that really mean. So in
    our case, we are fortunate. We have had a voter-approved taxing
    district dedicated for our expansion effort. It passed 70 to
    30. That included a sales and property tax. It demonstrates the
    value. We have had recently as it relates to--as recently as
    last week, city council formal ordinances and agreements
    approved.
        It really is, though, an ongoing conversation with FTA
    about what the Acting Director's comments were related to no
    additional actions. What specifically does that mean? How does
    it relate to local processes? How does it relate to State law
    and annual appropriations of budgeted resources? So really sort
    of in the weeds.
        The point that I would really like to make here as it
    relates to CIG, and engineering specifically, is that it is
    still an action and it is authorization and approval to enter
    into a phase of the process that is still without a Federal
    commitment. We are not talking about full-funding grant
    agreement; we are just simply seeking to move into the final
    phase of the process, the engineering phase, and there are some
    really high bars as it relates to entering into that phase.
        So our recommendation as it relates to the risk assessment,
    financial readiness, some of those considerations as we are
    thinking about streamlining the program we think makes sense to
    reevaluate and reconsider. Do they really have to be located
    where they are currently located in the process, or could they
    be criteria that instead of being held against entry into
    engineering or held against a full-funding grant agreement.
        So FTA still has the leverage to require satisfactory
    responses, but we are not slowing down the projects and we are
    utilizing the engineering phase on the backend of the process
    to fully inform project plans, financial plans and ultimately,
    obviously, the local cost share.
        So all to say it is part of a really costly and labor
    intensive due diligence effort, and we think there are some
    advantages with deferring some of those requirements to later
    in the process. And that is what we would suggest the committee
    consider as you reevaluate the long-term opportunities for
    streamlining and program improvements.
        Ms. Davids. Thank you. I appreciate your testimony, and I
    yield back.
        Ms. Norton. Thank you very much. We will have another round
    of questions, and I yield to the ranking member, Mr. Davis.
        Mr. Davis. Well, thank you all for your comments, and I am
    glad to hear the chair talk about wanting to have the debate on
    the long-term solvency of the Highway Trust Fund. I look
    forward to having that debate at this committee, and I look
    forward to our Ways and Means Committee, our committee on
    revenue, have the debate. But I think we here at T&I can help
    lead the charge on what that debate looks like. And that is why
    I am glad, you know, you three are at the table.
        I know Mr. Alger, your organization has put together
    options. I mean I have always been for diversification. I mean
    I enjoy the discussion on the political courage on whether or
    not to cast a vote or take a vote here in Congress. I believe
    every vote we take has an impact on whether or not we get
    reelected or elected in the first place. And frankly, you know,
    many of the issues that we face are going to be used either for
    or against any of us. But the bottom line is Members of
    Congress on both sides of the aisle, we take votes based upon
    what we think is best for policy.
        I mean I can tell you there are good men and women that sit
    on this committee and serve in this Congress that will not put
    political considerations ahead of doing what is right for this
    country. I think we all agree that we ought to have a more
    funded, well-funded, more solvent, less volatile Highway Trust
    Fund. It is going to deal with our crumbling roads, our
    crumbling bridges; it is going to deal with our transit issues,
    streetcar issues and streetcar extensions. But we have got to
    stop the discussion on politics when it comes to issues.
        I have a distinct concern as a policymaker, how do we
    actually solve the long-term problems that we have in our
    Highway Trust Fund. I spent 16 years as a congressional staffer
    working with local communities before I got elected making sure
    that they knew how to fund their long-term projects. So this
    Highway Trust Fund problem didn't start when I got here 6\1/2\
    years ago. It started long before this. And we, in this
    committee, have continued to lead in making sure that we put
    good funding solutions together, but we can do better.
        Now, I hope all of us in this room agree that the roadways
    are going to look much different in the next 10 years. Let's
    look at Europe, for example. President Macron said that in the
    next 10 years he doesn't envision any fossil fuel burning on a
    roadway in France. You don't think that is going to have an
    impact on the rest of the EU? Unless they have a Frexit. It is
    going to be huge. You don't think that is going to come over
    here?
        I mean look, I hope we are selling a lot of Rivian small
    trucks and SUVs out of my district. We didn't sell enough
    Mitsubishis which means that plant shut down. And now it is
    reopening. So we look ahead. I want to commend ARTBA for
    helping to lead the charge in the past, for helping to look at
    diversification. That is leadership. We need to do more of that
    and less about politics here in this committee. That is what I
    hope we do here.
        Now, I mentioned diversification. I got 1 minute and 36
    seconds left after my 3\1/2\-minute filibuster. Who wants to
    answer what can we do to diversify? Do you agree that we need
    to diversify, number one. And what do you recommend?
        Mr. Alger. So I will take the lead on that. You know, we
    have had the BOLD Act in place at ARTBA for quite some time
    now. We have been talking about this. As I talked about, 31
    States have done some sort of a gas, diesel tax increase. It is
    nonpolitical, it is simple, it is easy, it is nothing that we
    shouldn't be doing anyway.
        ARTBA members have long been open to user-based growing
    revenue alternatives to the motor fuels user fee to support the
    Nation's aviation infrastructure system. The 6.25-percent air
    cargo tax was imposed in 1972 as a cost of moving goods for
    transportation. Congress could apply the same concept to
    surface transportation infrastructure through either a
    commercial truck air cargo tax companion or a vehicle-miles tax
    on trucks.
        And then combining the freight fee with electric user
    vehicle fees collected on the battery manufacturers level or as
    a registration fee, like 27 States do now, can serve as a
    strong base alternative to motor fuel tax increases. Or better
    yet, combine the two and then you have even got two mechanisms
    that will adjust the tax.
        Mr. Davis. And those are the types of debates that we need
    to have here. Look, this committee, during my time here, was
    asked by the barge industry--our water resources, our locks and
    dam, our inland waterway and navigation system, it runs through
    my district in Illinois--it is so important for us to get
    products out into the global marketplace, they asked for a
    voluntary fee increase. You know what? It passed unanimously, I
    believe, out of this committee room. Not one person has been
    criticized for that because it was working within industry; we
    were working within the institution.
        Now my biggest problem is, is the Corps of Engineers going
    to spend that money wisely. We went from no money to wondering
    what to do; now we have a surplus, wondering if the Corps of
    Engineers is going to actually invest in upgrading our inland
    waterway system. That is a good problem to have. We don't have
    that in highways and bridges and transit right now. But this
    committee leads. This committee does it, and I look forward to
    working with the chair to make sure we have good commonsense
    solutions like that coming forward.
        Mr. Alger, thank you for those other options. Thank you for
    your time. And Mr. Skoutelas, Mr. Gerend, thank you for your
    time. I promise I won't ask another round of questions. I yield
    back.
        Ms. Norton. Well, that was a very useful round 2 to the
    close on it. I thank the ranking member. You can see the
    ranking member is searching for ways to respond to your
    testimony indicating what is necessary if we are going to
    proceed, and the fact that the issue of gas tax increases has
    become so prominent in this testimony was not one shunned by
    the ranking member, but encouraged more questions for him. And
    I want to ensure him that I want to work with him to find a way
    to get through this conundrum that the States have somehow
    managed to get through, your figure of 31 States. My State, the
    District of Columbia, has raised its gas tax. I wouldn't be
    surprised if the ranking member's State has as well.
        Mr. Davis. They just doubled it.
        Ms. Norton. Just doubled it, he says. So we have lots of
    encouragement from you and from our own jurisdictions. I want
    to say to the ranking member how much I appreciated his
    forward-thinking remarks on how France will get to no fossil
    fuels in no time flat because it shows his understanding and
    concern about climate change, indeed about the revenue that
    could be yielded by doing what France is doing, and that is
    turning away from fossil fuel to other modes of energy.
        So I want to indicate, I want to thank you, I was not aware
    that France was that far ahead of us, and I want to encourage
    the ranking member that I would like very much to work with him
    on this issue, as well, which is very much related to our
    committee. I think the transportation is second in use of
    fossil fuels in the United States.
        If there are no more questions, then I would certainly like
    to thank our witnesses. You were held overtime because of the
    interest of the ranking member and me in your testimony. I want
    to thank each and every one of you for very helpful testimony
    today. Your contribution has not only stimulated us, but will
    certainly go into our thinking about the 2020 reauthorization.
        I ask unanimous consent that the record of today's hearing
    remain open until such time as our witnesses have provided any
    answers that may have been requested by Members or that they,
    themselves, want to submit in writing. I thank the ranking
    member for his questions, and I ask unanimous consent that the
    record remain open for 15 days for any additional comments and
    information submitted by Members or witnesses to be included in
    the record of today's hearing.
        Without objection, so ordered.
        If no other Members have anything to add, the subcommittee
    stands adjourned.
        [Whereupon, at 12:55 p.m., the subcommittee was adjourned.]

                           Submissions for the Record

                                  ----------

      Prepared Statement of Hon. Sam Graves, a Representative in Congress
         from the State of Missouri, and Ranking Member, Committee on
                       Transportation and Infrastructure
        Thank you, Chairwoman Norton, and thank you to our witnesses for
    being here today.
        I also want to welcome Mr. Tom Gerend--a fellow Missourian who's
    testifying on behalf of the Kansas City Streetcar Authority.
        The Kansas City Streetcar Main Street Extension project is
    currently working its way through the Captial Investment Grant (C.I.G.)
    process.
        To date, the streetcar has transported more than 6 million
    passengers along a corridor in Kansas City that has more than $3
    billion in economic development underway leading to more than 36
    percent increase in the market value of property within the
    transportation district.
        The expansion that is being applied for will hopefully build upon
    this record and deliver a strong return on investment for the taxpayers
    and for the city.
        Today's hearing enables the Committee to:
          Exercise its responsibility for oversight of Federal
    transportation program spending; and
          Gather ideas on how to improve this program as we work to
    develop the next surface transportation reauthorization bill.

        Congress established clear criteria and a transparent selection
    process for evaluating projects that are seeking C.I.G. funding.
        We need to maintain proper oversight of the taxpayer money that is
    being used for these projects across the country.
        Also, these Federal investments need to go to projects that provide
    transit services that our constituents will want to use.
        At a time when many people are seeking different mobility options,
    Congress needs to ensure that federal investments in transit projects
    relieve congestion in local communities, make commutes safer, and are a
    good use of taxpayer money. With that, I look forward to hearing from
    today's witnesses.
        I yield the balance of my time.

     Prepared Statement of Hon. Eddie Bernice Johnson, a Representative in
                        Congress from the State of Texas
        Thank you, Madam Chairwoman.
        It is with great appreciation that I thank the Chairwoman for
    holding this hearing today, as it allows us to review the Federal
    Transit Administration's (FTA's) implementation of Capital Investment
    Grant (CIG) Program, considering the Administration's FY 2018 and
    FY2019 budget requests to phase out the program, and the June 29, 2018
    FTA Dear Colleague letter to transit agencies.
        In the FTA's Dear Colleague letter of June 29, 2018, FTA stated it
    would publish revised policy guidance on how it administers this
    program for notice and comment. Today, I am eager to hear from the
    Acting FTA Administrator on the progress of publishing its revised
    policy guidance and the comments received in response.
        Moreover, in her written testimony today, Acting Administrator
    Williams noted that the FTA is complying with statutory requirement in
    its implementation of the CIG program. That assertion does not seem to
    be accurate.
        Specifically, the FTA's Dear Colleague letter changed statutory
    requirements for the CIG program by not allowing the use of other U.S.
    Department of Transportation loans, which would be repaid by non-
    Federal funds, to be considered as project sponsor funds. Thus, FTA
    causes project sponsors to raise additional funds that are not required
    by statute.
        Finally, FTA is placing the blame for all delays in processing an
    application for a CIG grant on local officials without taking any
    responsibility for its own internal processing and changing of criteria
    in assessing applications that are contrary to the statute. Only two
    CIG Funding Agreements were executed and not withdrawn in 2017 and
    2019. Why does it take so long for the FTA to review and approve an
    application?
        I am ready to work with my colleagues in fulfilling our oversight
    responsibilities and ensuring FTA's implementation of this program is
    complying with statutory requirements.
        I look forward to hearing your testimony and solutions from
    stakeholders to improve FTA's implementation of the Capital Investment
    Grant Program.
        Thank you. I yield back.

    Report, Subcommittee on Highways and Transit, Majority Staff, July 16,
            2019, Submitted for the Record by Hon. Peter A. DeFazio

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

                                 July 16, 2019
        TO:       Members, Subcommittee on Highways and Transit
        FROM:   Majority Staff, Subcommittee on Highways and Transit
        RE:       Oversight of the Federal Transit Administration's
    Implementation of the Capital Investment Grant Program
    _______________________________________________________________________

        Transit industry stakeholders have raised concerns about the
    implementation of the Capital Investment Grant Program (CIG) in recent
    years, including the slow pace of decision-making and new policy
    guidance leading to costlier projects and a higher required local cost
    share. In order to further examine concerns raised with the Committee
    and to ensure compliance with the law, Chairman DeFazio and Ranking
    Member Graves sent a bipartisan letter to the Federal Transit
    Administration (FTA) and dozens of transit agencies on March 8, 2019,
    seeking ``data that will allow us to conduct a quantitative analysis of
    the CIG program and its operations under the FAST Act.''
        The findings below are based on a majority staff review of data
    provided to the Committee. Results have been consolidated to ensure the
    identity of individual projects or agencies remain confidential.
    Analysis of certain project data under the CIG program and the
    findings, detailed below, corroborate the concerns raised by transit
    agencies.
    Finding 1: Transit agencies face significantly longer timeframes for
            decision-making by FTA under this Administration

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

        Transit agencies have continued to express frustration over the
    long wait times for project approvals and the lack of clear and timely
    communication from FTA on the causes of a delay or a timeline for
    approval. A review of the data confirms significantly longer approval
    times for decisions under the CIG program by this Administration. The
    analysis examined the number of days to get approval into Engineering
    and to execute Full Funding Grant Agreements (FFGAs) for New Starts
    projects and Small Starts Grant Agreements (SSGAs) for Small Smarts
    projects.\1\
    ---------------------------------------------------------------------------
        \1\ Full Funding Grant Agreement, (FFGA) is a multiyear agreement
    between the federal government and a transit agency that establishes
    the terms and conditions for federal financial participation, including
    the maximum amount of federal funding that is committed. A Small Starts
    Grant Agreement (SSGA), is similar to an FFGA but for a transit project
    seeking less than $100 million in a CIG grant and typically commits the
    funding in a single year.
    ---------------------------------------------------------------------------
        The number of days for approval more than doubled under this
    administration, demonstrating a signicant delay in project approval.
    These delays affected projects regardless of their size, indicating
    that the delays had nothing to do with the complexity of projects.
    Finding 2: FTA actions have resulted in at least $845 million in extra
            costs for transit agencies
        The risk assessment is a third party assessment of the project
    risks and their effects on the project's timeline and cost estimate. It
    also calculates the amount of contingency funding that FTA will require
    the project sponsor to have in order to cover potential cost overruns.
        The Committee requested information from transit agencies
    documenting higher project costs resulting from changes in the risk
    assessment process and delays in approving projects, and reviewed
    aggregated data provided by a subset of transit agencies willing to
    report data. Changing the probability threshold in the risk assessment
    process from 50 percent to 65 percent added an additional $650 million
    to total project costs for these projects. In addition, the data also
    revealed $195 million in additional project costs from delays in the
    approval process.
        In total, the data revealed approximately $845 million in
    additional project costs created unnecessarily by FTA actions. These
    additional costs were generally covered by local dollars, forcing local
    governments to scramble to pay for federal inaction. The identified
    cost overruns do not represent costs for all agencies, only a subset
    from those willing to report them, and therefore is an incomplete
    figure.
    Finding 3: The federal cost share for New Starts projects is shrinking

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

        The Committee has also been made aware that transit agencies have
    felt pressured by FTA staff to seek lower federal shares in order to be
    approved for a CIG grant. The data provided demonstrates the effect of
    this pressure; the CIG cost share for New Start projects has dropped
    over 10 percent in the last two years. The data reveals that currently,
    the average CIG cost share for New Starts projects is 36.6 percent.
    This is below the arbitrary 40 percent cap that FTA has unofficially
    communicated to transit agencies should be their cost share goal. This
    unofficial policy is directly contrary to 49 U.S.C. Sec.  5309(l)(5),
    which states: ``[n]othing in this section [49 U.S.C. Sec.  5309] shall
    be construed as authorizing the Secretary to require a non-Federal
    financial commitment for a project that is more than 20 percent of the
    net capital project cost.''
    Finding 4: Project sponsors are waiting longer for approval to use
            streamlining tools

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

        CIG projects move through a lengthy and strenuous process. Upon
    nearing final project approval, project sponsors may request a Letter
    of No Prejudice (LONP) to allow them to begin work before final
    approval on the most time sensitive components of the project. LONPs
    can lead to significant cost savings and may reduce the potential for
    schedule delays later in the project.
        LONPs are not a commitment of funds, but a cost saving measure and
    streamlining tool. Given the importance the Administration has placed
    on streamlining project approvals, expediting LONPs would be logical.
    However, committee data shows that the number of days required to
    approve a LONP rose by 44 percent in the current Administration.
    Finding 5: Transit agencies and FTA are working from different
            timelines
        A comparison of the data FTA submitted and the data transit
    agencies submitted revealed large disparities in terms of timelines in
    the Project Development phase. The dates provided by FTA and transit
    agencies matched as little as 39 percent of the time.

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

        The data shows that FTA and project sponsors are frequently not in
    agreement on the date a project moves from one phase to the next. This
    finding raises concerns about a lack of coordination, understanding,
    and bureaucratic complexities in the CIG program. This finding also
    supports calls for a CIG program dashboard.

     Statement of Randal O'Toole, Senior Fellow, Cato Institute, Submitted
                 for the Record by Hon. Sam Graves of Missouri
        My name is Randal O'Toole and I'm a senior fellow with the Cato
    Institute, which is located at 1000 Massachusetts Avenue NW, Washington
    DC. I've worked on urban transportation issues for 24 years, including
    writing numerous papers on the transit capital improvement grant
    program, also known as New Starts.
        New Starts is one of the most destructive programs the United
    States has ever inflicted upon its cities. It is comparable to the
    federal urban renewal programs created in 1949 that were devastatingly
    critiqued by Jane Jacobs in her book, The Death and Life of Great
    American Cities. New Starts has prompted transit agencies to go heavily
    into debt in order to build antiquated transportation systems whose
    high costs and low capacities do nothing to solve, and in many cases
    exacerbate, urban transportation problems.
        The first problem with New Starts is that it is an open-ended
    fund--what I call an ``open bucket'' fund--that encourages transit
    agencies to develop the most expensive transit projects possible in
    order to get the most federal money. As a result, the cost of otherwise
    similar projects has increased by more than ten times since the early
    1980s.
        In 1981, San Diego built the first modern light-rail line without
    any federal support. It spent an average of about $7 million a mile on
    the line, which in today's dollars is $17 million a mile.
        Later in the 1980s, several cities including Portland, Sacramento,
    and San Jose used federal highway turn-back funds, in which cities were
    allowed to use federal funds for cancelled interstate highways on
    transit capital improvements instead, to build light rail. They chose
    light rail because it was expensive and a way to absorb all of the
    highway funds. They spent an average of about $30 million a mile, in
    today's dollars, building those lines.
        By the 1990s, under New Starts, the average cost of light-rail
    projects had risen to about $75 million a mile in today's dollars. In
    the 2000s, it had grown to more than $100 million a mile. Today, the
    average cost of light-rail projects on the New Starts project list is
    more than $220 million a mile, and none are less than $110 million a
    mile. This increase in costs is mainly if not solely because transit
    agencies have competed with one another to get ``their share'' of
    federal New Starts funds.
        The second major problem with New Starts is that it has encouraged
    cities to adopt obsolete technologies so they can spend this much
    money. Light rail and streetcars were rendered obsolete in 1927, when a
    bus designer named William Fageol developed the first bus that was both
    less expensive to buy and less expensive to operate than streetcars. In
    the following ten years, more than 500 American cities converted their
    streetcars to buses. The supposed General Motors streetcar conspiracy,
    which began in 1937, was actually an effort by General Motors to
    capture market share from Fageol, not an effort to shut down streetcars
    which was happening anyway.
        The main reason, other than cost, why light rail is obsolete is
    that it is low-capacity transit, despite claims by transit agencies to
    the contrary. The ``light'' in light rail refers not to weight--light-
    rail cars actually weigh more than heavy-rail cars--but to capacity.
    According the American Public Transportation Association's transit
    glossary, light rail has ``a light volume traffic capacity.'' 1
    Buses, in fact, have much higher capacities to move people than most
    rail.
        This seems counterintuitive since a bus can hold, at most, about
    100 people while light-rail cars can hold 150 and be strung together in
    trains of two, three, or four cars. But for safety reasons, a light-
    rail line can move no more than about 20 trains per hour, limiting its
    capacity to 6,000, 9,000, or 12,000 people per hour (depending on the
    number of cars).
        By comparison, busways can safely move hundreds of buses per hour.
    There are busways around the world that take up no more land than a
    light-rail line but routinely move twice as many people per hour as the
    highest-capacity light-rail line in the United States. As a report from
    the Institute for Transportation & and Development Policy concluded,
    ``there are currently no cases in the US where LRT [light-rail transit]
    should be favored over BRT [bus-rapid transit].'' 2 Yet,
    thanks mainly to New Starts, it has been built in 29 urban areas.
        Transit agencies' claims that rail transit stimulates economic
    growth are contradicted by research funded by the Federal Transit
    Administration. This concluded that ``Urban rail transit investments
    rarely `create' new growth, but more typically redistribute growth that
    would have taken place without the investment.'' 3 In other
    words, the presence of a rail line might influence where a new
    development is located, but the development would have taken place with
    or without the rail line.
        A more recent study found that, far from contributing to economic
    growth, spending on unproductive infrastructure can lead to ``economic
    fragility.'' 4 This can be seen in San Jose's Valley
    Transportation Authority, which has gone so heavily into debt building
    light rail that, in any recession, the agency must choose between
    making heavy cuts to transit service or defaulting on its debt. As a
    result, it has lost more than a third of its riders since its 2001 peak
    and ridership in 2018 was the lowest in its history. It can also be
    seen in the Los Angeles Metro system, which cut bus service and raised
    fares in order to help fund new light-rail lines, with the result that
    it has lost more than four bus riders for every new rail rider.5
        Indeed, the construction of rail transit lines funded by New
    Starts has rarely been good for transit riders. Dallas Area Rapid
    Transit is proud of the fact that it has built more miles of light rail
    than any agency in the country. What it fails to mention is that,
    before it started building light rail, transit carried 2.8 percent of
    Dallas-area commuters to work. By 2017, this had declined to 1.6
    percent. Portland is supposed to be a great light-rail success story,
    but in 1980, before it started building light rail, transit carried 9.9
    percent of commuters to work. Today, Portland has five light-rail
    lines, a commuter-rail line, and a streetcar line, and transit carried
    just 7.9 percent of commuters to work in 2017.
        Other reasons used to justify expensive projects are that they help
    the poor and are good for the environment. Neither are true. Most low-
    income people today own a car and the number who depend on transit to
    get to work is very small. Census data show that people who earn less
    than $25,000 a year were significantly less likely to commute by
    transit in 2017 than they were a decade ago, whereas people who earn
    more than $75,000 are significantly more likely to commute by transit
    than a decade ago. Indeed, the above-$75,000 income class is transit's
    biggest growth market, and people in this income class hardly need
    transportation subsidies.6 These trends are partly because
    New Starts has encouraged transit agencies to build expensive rail
    lines catering to the middle- and upper-middle class, while they cut
    service to low-income neighborhoods.
        As for transit being greener than driving, that is only true in a
    handful of places. Outside of New York, San Francisco, Portland, and
    Honolulu, transit uses more energy and emits more greenhouse gases per
    passenger mile than the average car. New rail transit lines may save a
    little energy compared with buses, but the energy and greenhouse gas
    cost of building those lines is so large that it would require many
    decades of savings to pay back that cost.7
        Streetcars and new commuter rail lines are just as bad as
    light rail. As illustrated by Washington's H Street streetcar,
    streetcars are basically just a way to spend federal dollars, as they
    provide no economic or transportation benefits. Many recent commuter-
    rail lines, including lines in Austin, Dallas-Ft. Worth, Minneapolis,
    Miami-Ft. Lauderdale, Nashville, Orlando, Portland, and Salt Lake City,
    were so expensive and carry so few riders that it would have been less
    expensive to give every daily round-trip riders a new Toyota Prius
    every other year--and in some cases every year--for the life of the
    rail project.8 In 2017, fare revenues from Orlando's SunRail
    didn't even pay for the cost of operating the ticket machines, much
    less the trains.9
        Heavy-rail lines built in Baltimore, Los Angeles, and Miami
    have all flopped as well. While heavy rail may make sense in New York
    City, spending more than $2 billion a mile building more subways
    doesn't make sense, especially when the New York Metropolitan
    Transportation Authority has a $41 billion debt, a $60 billion
    maintenance backlog, and $20 billion in unfunded pension and health
    care obligations.
        Peter Rogoff, who was President Obama's first administrator of the
    Federal Transit Administration, said it best: ``paint is cheap; rail
    systems are extremely expensive.'' By that, he meant that ``you can
    entice even diehard rail riders onto a bus, if you call it a `special'
    bus and just paint it a different color than the rest of the fleet,''
    in other words, start a bus-rapid transit line.10
        In conclusion, Congress should not reauthorize New Starts or
    Small Starts. If Congress wants to continue contributing funds to
    transit agencies, the money now going to New Starts should be put in a
    formula fund whose formula depends heavily on the fare revenues
    collected by transit agencies. Transit agencies should be allowed to
    use these funds, without a local match, for buying buses,
    rehabilitating worn-out transit infrastructure, or building new
    infrastructure. Basing the formula on fares will more fairly distribute
    funds across the country and encourage transit agencies to put their
    riders first, and to emphasize programs that increase ridership rather
    than ones that increase costs.
                                     notes
    1. Glossary of Transit Terminology (Washington: American Public Transit
    Association, 1994), p. 23, tinyurl.com/y5m5tm6x.

    2. Walter Hook, Stephanie Lotshaw, and Annie Weinstock, More
    Development for Your Transit Dollar: An Analysis of 21 North American
    Transit Corridors (New York: Institute for Transportation & and
    Development Policy, 2013), p. 21, tinyurl.com/y3yxl2ge.

    3. Robert Cervero and Samuel Seskin, An Evaluation of the Relationships
    Between Transit and Urban Form (Washington: Transit Cooperative
    Research Program, 1995), p. 3, tinyurl.com/24ggm2j.

    4. Atif Ansar, Bent Flyvbjerg, Alexander Budzier, and Daniel Lunn,
    ``Does Infrastructure Investment Lead to Economic Growth or Economic
    Fragility? Evidence from China,'' Oxford Review of Economic Policy,
    Volume 32, Number 3, 2016, pp. 360-390, arxiv.org/pdf/1609.00415.pdf.

    5. National Transit Database Historic Time Series (Washington: Federal
    Transit Administration, 2018), table TS2.1, tinyurl.com/y52ta9t5.

    6. For more information on ridership trends, see Randal O'Toole,
    Transit's Growing Costs Drive Away Low-Income Commuters (Camp Sherman,
    OR: Thoreau Institute, 2019), ti.org/pdfs/TPB1.pdf.

    7. Randal O'Toole, Does Rail Transit Save Energy or Reduce Greenhouse
    Gas Emissions? (Washington: Cato Institute, 2008), tinyurl.com/
    y2uz7f4d.

    8. For an explanation of how this was calculated as well as data for 20
    different commuter-rail systems, see Randal O'Toole, ``Dumb Trains,''
    The Antiplanner, November 27, 2018, ti.org/antiplanner/?p=15347.

    9. Kevin Spear, ``SunRail Ticket Revenue is Less Than Ticketing
    Expense,'' Orlando Sentinel, February 24, 2017, tinyurl.com/y4z4jj8h.

    10. Peter Rogoff, ``Next Stop: A National Summit on the Future of
    Transit,'' presentation at the Federal Reserve Bank of Boston, May 18,
    2010, tinyurl.com/y6o24puu.

                                    Appendix

                                  ----------

     Question from Hon. Peter A. DeFazio to Hon. K. Jane Williams, Acting
                 Administrator, Federal Transit Administration

        Question 1. Acting Administrator Williams, I'd like to understand
    the final stages of the CIG approval process better.
        After career staff verify a project has met all the legally
    required metrics, please tell the Committee how many political
    appointees, and how many offices within FTA and the Office of the
    Secretary have to approve the project before a grant agreement is
    signed.
        Answer. For a CIG construction grant agreement, FTA officials in
    the budget, legal, program, policy, and regional offices review and
    approve the agreement prior to the FTA Administrator's review. Once the
    FTA Administrator approves the agreement, it is forwarded to officials
    in the Office of the Secretary to review and concur in the Acting
    Administrator's recommendations in order to ensure compliance with
    Departmental policy and Federal law prior to Secretarial action.

      Questions from Hon. Henry C. ``Hank'' Johnson, Jr. to Hon. K. Jane
         Williams, Acting Administrator, Federal Transit Administration

        Question 2. Your testimony speaks to local issues that can inhibit
    projects from advancing through the CIG pipeline. However, several of
    these impediments are generated by FTA itself. For example, the transit
    agency is forewarning project sponsors that they'll likely need to
    overmatch funding to even receive a grant. This isn't federal law, and
    wouldn't be enforced in a court of law.
        What's the plan to move these projects through the pipeline if
    local sponsors are unexpectedly required to foot larger portions of the
    bill?
        Answer. The law specifically requires FTA to consider the amount of
    local financial commitment that exceeds the required non-government
    share of the cost of the project. (49 U.S.C. 5309(f)(2)(E)). This has
    been a long-standing consideration for the program by all
    Administrations dating back to the program's origins in the mid-1970s.
        By conducting effective project risk assessments, FTA and the
    project sponsor can identify more accurate project cost estimates prior
    to entry into Engineering for New Starts and Core Capacity projects,
    creating the opportunity for adjustments to be made to the project
    budget earlier in the process.
        Projects continue to move through the CIG pipeline. Since January
    2017, FTA has advanced funding for 25 projects totaling $7.6 billion in
    CIG funding commitments. FTA maintains close contact with project
    sponsors throughout the process to maximize coordination.

        Question 3. If FTA is committed to funding robust public
    transportation systems, why are they insisting, beyond what's indicated
    in statute, that project sponsors allot more funds than they're
    required to for these projects?
        Answer. FTA administers the CIG program in accordance with
    statutory requirements, which establish a maximum Federal share (49
    U.S.C. 5309(l)(1)(B)). Further, the law explicitly requires that FTA
    consider the extent to which a CIG project has a local financial
    commitment that exceeds the required non-government share of the cost
    of the project. (49 U.S.C. 5309(f)(2)(E)).

        Question 4. In the Project Development phase of New Starts and Core
    Capacity projects, applicants are required by the National
    Environmental Policy Act (NEPA) to conduct an environmental review of
    the projects for which they're seeking CIG funding.
        The Trump Administration has taken steps to roll back the
    environmental review process for federal infrastructure projects--is
    that correct?
        Answer. Executive Order (EO) 13807 ``Establishing Discipline and
    Accountability in the Environmental Review and Permitting Process for
    Infrastructure Projects'' was signed on August 15, 2017. EO 13807 does
    not roll back the environmental review process but instead addresses
    the need for a more efficient, coordinated, predictable, and
    transparent Federal environmental review process for infrastructure
    projects while protecting public health, safety, and the environment.

        Question 5. Can you explain how these rollbacks to environmental
    review process are compatible with FTA's requirements for the Project
    Development phase of their grant approval process?
        Answer. EO 13807 does not roll back the environmental review
    process.

        Question 6. Does FTA have any concern that they may be approving
    projects improperly vetted for their potential environmental threat to
    nearby ecosystems or communities?
        Answer. FTA does not have any concerns. All projects must complete
    the NEPA process before they are eligible for CIG funding.

    Questions from Hon. Alan S. Lowenthal to Hon. K. Jane Williams, Acting
                 Administrator, Federal Transit Administration

        Question 7. Is FTA tracking cost increases incurred by local
    governments that have bids expire while waiting for a Full Funding
    Grant Agreement?
        Answer. The terms and details of project procurements are
    negotiated by CIG project sponsors. FTA tracks project sponsors'
    progress on advancing design and procurements for proposed projects,
    but is not involved in the contract preparations, reviews, or
    negotiations. Project sponsors develop and manage the project schedule
    and, if necessary, seek a Letter of No Prejudice from FTA to allow a
    contract award to proceed with work in advance of a CIG construction
    grant award.

        Question 8. What steps is FTA taking to address delays and
    streamline the New Starts process to avoid these cost increases?
        Answer. FTA works closely with project sponsors during each phase
    of the CIG process to communicate next steps and requirements. The
    timing of CIG construction grant awards depends on project sponsors
    completing the requirements in law. Project schedules can, and often
    do, change as project sponsors work to get actions completed at the
    local level--such as obtaining local funding commitments, completing
    all critical third-party agreements, and developing a firm and final
    cost, scope, and schedule.

        Questions from Hon. Sam Graves to Hon. K. Jane Williams, Acting
                 Administrator, Federal Transit Administration

        Question 9. How many days, on average, did it take to issue a
    letter of no prejudice during the first two years of the Obama
    Administration?
        Answer. Between January 20, 2009 and December 31, 2010, the first
    two years of the Obama Administration, FTA approved 31 Letters of No
    Prejudice (LONP). The average timeframe to approve the LONPs from the
    date complete information was submitted to FTA was 40 days.

        Question 10. How many days, on average, did it take to issue a
    letter of no prejudice during the first two years of the Trump
    Administration?
        Answer. Between January 21, 2017 and December 31, 2018, the first
    two years of the Trump Administration, FTA approved 15 LONPs. The
    average timeframe to approve the LONP from the date complete
    information was submitted to FTA was 53 days.

        Question 11. When did the Federal Transit Administration change the
    probability threshold from 50 to 65 as part of the risk assessment
    process?
        Answer. From 2007-2016, FTA required sponsors to meet a 65 percent
    probability threshold that the project could be completed within
    budget. It was only recently (from mid-2016 to mid-2018) that FTA used
    the 50 percent probability threshold.

        a.  What was the reason for that change?
            Answer. FTA is required by law to ensure ``the reliability of
    the forecasting methods used to estimate project costs.'' (49 U.S.C.
    5309(d)(2)(B)(i)). FTA has found that better cost estimates improve
    project delivery and protect the taxpayer investment.

        b.  What is the impact of that change?
            Answer. FTA's data demonstrates that the current risk
    assessment process reduces unnecessary costs and delays by identifying
    and mitigating problems earlier in the process. The return to the 2007-
    2016 risk assessment 65 percent probability threshold has ensured that
    projects are more likely to be delivered within budget and gives the
    public more accurate information about project costs and budgets, so
    that taxpayer dollars are invested responsibly. This has significantly
    improved the delivery of CIG projects within budget and on schedule.

            Comparing 13 completed projects that did not use the 2007 risk
    assessment tool with 28 completed projects that did use the tool, the
    percentage of projects completed within budget increased from 62 to 89
    percent and the percent completed within schedule increased from 69 to
    79 percent. FTA's data demonstrates that the current risk assessment
    process reduces unnecessary costs and delays by identifying and
    mitigating problems early. When FTA tested the 50 percent probability
    threshold for two years, there was evidence that an increased number of
    projects would exceed their budgets.

        c.  Did it increase costs for project sponsors?
            Answer. The risk assessment process does not change or increase
    what it will actually cost a project sponsor to construct a project.
    FTA is required by law to ensure ``the reliability of the forecasting
    methods used to estimate project costs.'' (49 U.S.C. 5309(d)(2)(B)(i)).
    The risk assessment is the tool FTA uses to meet this requirement.

            In instances where the project sponsor's cost estimate is
    determined not to be reliable, based on the results of the risk
    assessment, FTA would require the sponsor to develop a more reliable
    cost estimate and corresponding project budget. The risk assessment
    process therefore ensures that project cost estimates are realistic and
    achievable.

        d.  Was there a prior time when the probability threshold was 65?
    If so, when?
            Answer. From 2007 to 2016, FTA required sponsors to meet a 65
    percent probability threshold that a project could be completed within
    budget. It was only recently (from mid-2016 to mid-2018) that FTA used
    the 50 percent probability threshold.

       Questions from Hon. Rodney Davis to Hon. K. Jane Williams, Acting
                 Administrator, Federal Transit Administration

        Question 12. What steps can the Administration take to ensure that
    communities in rural areas can take advantage of the Capital Investment
    Grant program?
        Answer. Although small urban project sponsors have secured CIG
    grants in the past, primarily through Small Starts Bus Rapid Transit
    projects, the CIG program evaluation criteria are structured such that
    densely-populated corridors are most likely to be successful in the CIG
    program. FTA will continue working with Congress to ensure that as many
    communities as possible can benefit from our Federal partnership,
    whether through the CIG program or other FTA opportunities.

        Question 13. Are there any policy proposals that this Committee
    should consider as it works to develop the next surface transportation
    reauthorization bill that would further this objective?
        Answer. FTA routinely communicates with Congressional and industry
    stakeholders. FTA will certainly continue working with Congress through
    surface transportation reauthorization discussions and other avenues
    that to ensure as many communities as possible can benefit from our
    Federal partnership, whether through the CIG program or other FTA
    opportunities.

        Question from Hon. Rob Woodall to Hon. K. Jane Williams, Acting
                 Administrator, Federal Transit Administration

        Question 14. Charts were displayed at the hearing that illustrated
    concerns with the Federal Transit Administration's (FTA) implementation
    of the Capital Investment Grant program.
        Can FTA please provide the Committee with any information or
    documentation that clarifies or explains those charts?
        Answer. Overall, as stewards of billions of taxpayer dollars,
    including one of U.S. DOT's largest discretionary grant programs, FTA
    must be certain that funding decisions are properly reviewed to ensure
    that projects are delivered within budget and on schedule. FTA does
    have specific responses to the Committee's findings displayed at the
    hearing as follows:
    Finding #1: Transit agencies face significantly longer timeframes for
            decision-making by FTA under this Administration
        First, FTA would note that the Committee based its findings on the
    date of the project sponsor's initial request for approval, not the
    date on which all required information was received and considered
    complete by FTA. FTA cannot act on incomplete requests, as there can be
    significant delays in acquiring this information in order to complete
    their request.
        In addition, project timelines often vary, primarily due to local
    decisions or other issues outside of FTA's control. Simply measuring
    the days between a request and an approval does not capture project-
    specific factors. For example, the Committee considers the Maryland
    Purple Line project to have waited 455 days for an FTA decision on its
    Full Funding Grant Agreement (FFGA). The data does not note that, for
    over a year of that timeframe, the project was subject to litigation in
    Federal court--including a court order precluding FTA from executing
    the FFGA, so that FTA could not act until the litigation was resolved.
    Finding #2: FTA actions have resulted in at least $845 million in extra
            costs for transit agencies
        The risk assessment process does not change or increase what it
    will cost to construct a project. FTA is required by law to ensure
    ``the reliability of the forecasting methods used to estimate project
    costs.'' (49 U.S.C. 5309(d)(2)(B)(i)). The risk assessment process is
    the tool FTA uses to meet this requirement. In instances where the
    project sponsor's cost estimate is determined to be insufficiently
    reliable based on the risk assessment results, FTA requires the sponsor
    to develop a more reliable cost estimate and corresponding project
    budget. This is simply good governance--the risk assessment process
    ensures that project cost estimates are realistic and achievable with
    budgets sufficient for project delivery.
    Finding #3: The federal cost share for New Starts projects is shrinking
        The statute requires FTA to consider the local financial commitment
    that exceeds the required non-government share for New Starts projects.
    (49 U.S.C. 5309(f)(2)(E)). This has been a longstanding consideration
    since the program began in the mid-1970s. FTA works to support as many
    projects as possible throughout the nation, in accordance with Federal
    law.
    Finding #4: Project sponsors are waiting longer for approval to use
            streamlining tools
        FTA would again note that the Committee based its findings on the
    date of the project sponsor's initial request for approval, not the
    date on which FTA found the request to be complete and include all
    required information. In addition, there were several extenuating
    factors affecting the approval of Letters of No Prejudice (LONPs),
    including:
          A 35-day lapse in appropriations, the longest Federal
    government shutdown in history, which affected at least two LONP
    approval timeframes.
          FTA determined it was prudent to consider whether to
    allow construction activities to begin on several projects seeking
    LONPs since the projects faced significant challenges, such as
    environmental lawsuits and vehicle manufacturer compliance issues.
    Finding #5: Transit agencies and FTA are working from different
            timelines
        Unfortunately, this data was not provided to FTA, so we cannot
    comment.

      Question from Hon. Gary J. Palmer to Hon. K. Jane Williams, Acting
                 Administrator, Federal Transit Administration

        Question 15. After the Obama Administration lowered the CIG
    probability threshold from P65 to P50, did the FTA see an increase in
    the number of CIG projects that would have failed to meet the P65
    threshold?
        Answer. Comparing 13 completed projects that did not use the 2007
    risk assessment tool with 28 completed projects that did use the tool,
    the percentage of projects completed within budget increased from 62 to
    89 percent and the percent completed within schedule increased from 69
    to 79 percent. FTA's data demonstrates that the current risk assessment
    process reduces unnecessary costs and delays by identifying and
    mitigating problems early. When FTA tested the 50 percent probability
    threshold for two years, there was evidence that an increased number of
    projects would exceed their budgets.

     Questions from Hon. Peter A. DeFazio to Robert E. Alger, Chairman of
    the Board, The Lane Construction Corporation, on behalf of the American
                   Road & Transportation Builders Association

        Question 1. Mr. Alger, your testimony highlights an issue that was
    the subject of our first hearing this Congress in the Transportation
    Committee--the impacts and costs of delaying projects. Your testimony
    cites that costs for delivering transit projects increases an average
    of five percent annually, which is twice the general inflation rate.
    You state that a project that costs $100 million in 2019 will cost $163
    million in 2029. Your testimony demonstrates that every day, failure to
    invest and advance projects to construction is literally throwing money
    away.
        Do you believe FTA truly understands that by dragging their feet on
    project approvals, they are wasting money, forgoing good jobs, and
    delaying economic benefits to communities across the country?
        Answer. Project delays are costly and problematic regardless of
    their origin. These costs are significant and add up over time. Whether
    project approvals, environmental reviews, or utility relocation are
    causes of delay, the longer improvements wait, the more expensive they
    become.
        Funding uncertainty is also a proven driver of delays in investment
    and increased project costs. While many transit initiatives, like the
    Capital Investment Grant (CIG) program, are traditionally supported
    with general revenue dollars through the annual appropriations process,
    continued uncertainty or disruption to Highway Trust Fund (HTF) program
    funding will adversely impact all federal surface transportation
    programs. As a recent example, during the run-up to the FAST Act, such
    uncertainty about federal investment and HTF solvency caused seven
    states to delay roughly $1.6 billion in planned transportation
    projects.
        To avert additional costly delays, ARTBA urges Congress to fix the
    HTF revenue shortfall once and for all.

        Question 2. Mr. Alger, your testimony shows that in 27 States,
    Federal funds account for 60 percent or more of transit capital
    outlays. Only 6 States rely on Federal funds for less than 40 percent
    of their transit capital needs. New York is one of those States, where
    Federal dollars make up 37 percent of transit capital budgets. That
    means New Yorkers supply the remaining 63 percent of funds needed for
    transit capital, not to mention all costs to operate the largest subway
    system in the country. New Jersey is similarly self-sufficient with 58
    percent of its capital needs coming from State and local funds, and
    California at 66 percent State and local funds.
        Would you agree that States who provide a significant share of
    funding for their transit capital needs deserve a robust partnership
    with the Federal government to advance critical projects?
        Answer. As indicated by the map provided in ARTBA's testimony,
    federal funds are a vital part of transit capital outlays in every
    state and the District of Columbia. More than 2,600 transit agencies
    used federal funds to support capital outlays, demonstrating the strong
    partnership between state and local transit agencies and the federal
    government.
        However, both sides of this partnership must increase investment in
    transit programs to make improvements necessary to connect people and
    communities.
        As you correctly indicate above, federal funds account for 60
    percent or more in transit capital outlays for over half of the country
    and accounts for, on average, 40 percent of all transit agency capital
    outlays. For those states falling below 40 percent, there is a greater
    role for the federal government to play.
        Given the variability in federal funds on transit capital outlays,
    ARTBA recommends only those phases of a project that are financed with
    federal dollars be subject to federal oversight in order to enhance
    project flexibility and reduce costly delays.

    Questions from Hon. Henry C. ``Hank'' Johnson, Jr. to Robert E. Alger,
    Chairman of the Board, The Lane Construction Corporation, on behalf of
            the American Road & Transportation Builders Association

        Question 3. Your testimony refers to, what you consider,
    unnecessary or prohibitive regulatory burdens to the delivery of
    transit projects. You refer to NEPA regulations as one of those
    regulatory burdens.
        Are you also unconcerned about the approval of projects that fail
    to meet acceptable environmental standards?
        Answer. If a project does not meet acceptable environmental
    standards, it would not be approved under NEPA. Thus, ARTBA is not
    concerned with the approval of such projects because an essential part
    of the review and approval process is ensuring acceptable environmental
    standards are met.
        ARTBA recognizes regulations play a vital role in protecting the
    public interest in the transportation project review and approval
    process. Such regulations add a sense of predictability and ensure a
    balance between meeting U.S. transportation needs and protecting vital
    natural resources. These goals, however, are not mutually exclusive.
    The most successful transportation streamlining provisions have been
    process oriented and have essentially found a path for regulatory
    requirements to be fulfilled in a smarter and more efficient manner.
        However, in recent years the rulemaking process has morphed from
    something intended to protect the public interest into a tool to
    achieve diverse policy and political objectives, many of which are
    largely unrelated to improving our transportation infrastructure.
    Furthermore, this process has been routinely unaccountable to affected
    interests, while often dismissing or undervaluing the project cost
    increases, delays and compromises in safety which can result.
        NEPA was never meant to be a statute enabling delay, but rather a
    vehicle to promote balance. While the centerpiece of this balancing is
    the environmental impacts of a project, other factors must also be
    considered, such as the economic, safety, and mobility needs of the
    affected area and how a transportation project or any identified
    alternative will address those needs.
        Regulatory reform is an essential part of any effort to ensure
    federal funding through the Capitol Investment Grant program is being
    spent in the most efficient manner possible. Reducing unnecessary
    delays in the project delivery process will allow allocated funds to
    have the maximum possible in terms of delivering projects.

        Question 4. Can you recommend what a more streamlined application
    and review process for CIG projects should look like?
        Answer. While recognizing the application and approval process is
    very complex and deserves a full study on what works well and what can
    be improved, ARTBA recommends the following enhancements to streamline
    delivery of CIG projects:
          Specific timelines--and limitations--should be put in
    place for the environmental process (receipt of a Record of Decision),
    preliminary design/engineering and FFGA approval stages of a CIG
    project. FTA should not be allowed to game the process by not starting
    the clock until they have unofficially gone through all the approval
    steps and are ready to grant an approval.
          FTA must ensure that projects are completely scoped out
    and the involved state/locality has fully approved the project to
    reduce mid-project re-scopings and costly change orders which can add
    cost and extend schedules.
          FTA project approvals and milestones are handled
    differently in different parts of the country by the agency's Regional
    Offices. Uniform, consistent and transparent approval processes must be
    applied across FTA regions--and across DOT modes.
          FTA should be granted the same flexibility as FHWA by
    being allowed to extend ``contract authority'' to projects so they can
    proceed while routine approvals move forward.
          Capital funding comes from a variety of state and local
    sources in addition to the federal contribution. Unlike most highway
    projects that have an 80-90 percent federal share, in many cases, CIG
    funding is a minority stake of the total project costs. Nonetheless,
    federal oversight is applied to the entire project, limiting
    flexibility in the construction of parts of a project not financed with
    federal funds. Only those phases of the project that are federally-
    funded should be subject to federal oversight.
          Historically, transit projects have been allowed to use
    Federal Loan Programs such as TIFIA and RRIF as local match. Recent
    denial of such flexibility has delayed some critically important
    projects, which only increases their eventual cost and schedule. Since
    the loans are repaid with local dollars, they should be allowed to be
    counted as local match.
          Where two or more DOT modal administrations have
    oversight responsibilities for a project (where both agencies may be
    providing funds), evaluation and final decision for a Buy America
    waiver should be coordinated between the two agencies or issued by one
    mode and binding on the other mode. Currently, two separate reviews are
    required, which adds time, cost and confusion. When a Buy America
    waiver is granted, DOT should establish, through guidance, a process by
    which essentially similar waiver requests are granted, rather than
    engage in an entirely new process.

    Questions from Hon. Peter A. DeFazio to Tom Gerend, Executive Director,
                        Kansas City Streetcar Authority

        Question 1. Mr. Gerend, your KC Streetcar has exceeded expectations
    and drawn strong ridership and economic activity to Kansas City. You
    are currently seeking an expansion to the streetcar and it has been
    rated Medium-High by FTA. However, your project is currently seeking a
    48 percent cost share, just below the statutory cap.
        Has anyone at FTA suggested to you that your CIG share will have to
    be lower than 40 percent to get your expansion approved?
        Answer. No.

        Question 2. Do unwritten rules make project approval more
    difficult?
        Answer. Yes. Examples include:
        a.  National Office vs. Regional Office--Responses and feedback
    that require continued engagement with the national office, and leave
    the regional office standing by, slow the process
        b.  Local cost Share--General suggestions that reducing federal
    cost share below allowable levels will improve project's funding
    chances
        c.  Funding Commitment--Interpretation and determination of
    compliance with ``funding commitment'' requirements
        d.  Local Control--Expectations regarding specific local managerial
    processes, procedures, and controls (i.e., which scheduling system a
    local project sponsor chooses to use, etc.)
        e.  NEPA--Lack of consistency with regards to implementation and
    compliance with NEPA requirements.

     Questions from Hon. Peter A. DeFazio to Paul P. Skoutelas, President
    and Chief Executive Officer, American Public Transportation Association

        Question 1. Mr. Skoutelas, the Acting FTA Administer has testified
    that the FTA is doing better than the Obama Administration in getting
    CIG grants out the door and that any CIG project delays are the fault
    of project sponsors.
        Would APTA members in the CIG program concur with this assessment?
        Answer. We applaud both the Federal Transit Administration (FTA)
    and Congress' efforts to ensure that Capital Investment Grant (CIG)
    funds are invested in critical projects. We believe that the program
    has become a bureaucratic maze of statutory, regulatory, and
    administrative requirements. We believe that the Appropriations Act
    requirements to obligate 85 percent of CIG funds by a specific date
    helps move these projects through the CIG pipeline. We urge FTA to
    allocate and obligate the Fiscal Year (FY) 2018 and FY 2019 funds as
    soon as possible. We also strongly support a CIG Project Dashboard that
    would bring more transparency to FTA decision-making and project
    status.

        Question 2. Do you think it is indicative of a bigger problem if
    multiple projects are delayed?
        Answer. Delays cost money. These delays become a part of CIG
    project assumptions and they add risk to projects, which also costs
    money. These delays and added risks affect local decision-making,
    budgets, and support for critical CIG projects.

        Question 3. Mr. Skoutelas, many FTA policy changes are driving up
    the costs for local sponsors. The Committee staff memo has documented
    $845 million in higher costs. Risk Assessments policies are driving up
    contingency funds, and project delays are driving up project costs as
    the economy expands. These new costs fall almost exclusively on the
    project sponsor after the CIG share is locked in.
        Can you express to this Committee the frustration transit agencies
    are feeling with these new policies and their impacts on the projects?
        Answer. As the Committee has noted, project delays cost significant
    additional resources. As I mentioned in my written testimony, Capital
    Investment Grants are burdened by red tape. APTA advocates for a
    streamlined CIG process to ensure that good projects are being built
    and to protect the taxpayers' interest.

        Question 4. Are the cost overruns that are generally borne by local
    governments undercutting local support for transit projects?
        Answer. As any local elected official will tell you, any price
    increase or decrease to a project may influence support or opposition
    for a project. It is difficult for any local member to go back to
    voters and request an additional tax assessment to fund increased costs
    for projects. FTA's recent changes to Risk Assessments provide a good
    example. FTA required local sponsors to identify more contingency
    funding. From a local perspective, costs went up, even though nothing
    regarding the overall estimated cost of the project had changed, except
    FTA's requirements.

         Questions from Hon. Henry C. ``Hank'' Johnson, Jr. to Paul P.
       Skoutelas, President and Chief Executive Officer, American Public
                           Transportation Association

        Question 5. Under previous administrations, when a project applied
    for CIG funding, the FTA provided guidance to the project sponsor about
    what needed to be done to strengthen their application. The FTA under
    the Trump Administration doesn't appear to be following precedent, and
    is not offering this level of transparency.
        Can you describe the communication between the FTA and project
    sponsors?
        Answer. APTA has a great working relationship with the FTA and we
    look forward to continuing to work together to advance these critical
    public transportation capital projects. However, there is limited
    transparency on decision-making regarding CIG projects. We would like
    to have further clarification on how FTA is applying the June 2018 Dear
    Colleague letter and how it interprets the Transportation
    Appropriations Act provision limiting the use of the Dear Colleague
    policies.

        Question 6. Has the FTA provided sufficient guidance to transit
    agencies in addressing issues with their program so they can receive
    funding?
        Answer. There remains confusion surrounding FTA's consideration of
    U.S. Department of Transportation (USDOT) loans in the context of all
    Federal funding sources. While we have noted that some project sponsors
    have received Transportation Infrastructure Finance and Innovation Act
    (TIFIA) loans simultaneously with CIG grant agreements, we do not
    understand how FTA evaluates this issue, or what metrics it uses. APTA
    supports Congressional efforts to clarify this issue and ensure that
    TIFIA and Railroad Rehabilitation and Improvement Financing (RRIF)
    loans repaid with local funds are considered local match.

        Question 7. Do you believe that project sponsors may feel
    vulnerable and ill-equipped to move their projects through the CIG
    pipeline without guidance from the FTA?
        Answer. As mentioned in my written testimony, both Congress and the
    FTA have repeatedly layered additional requirements on the CIG program
    which has resulted in a bureaucratic maze. CIG requirements are vastly
    more complex, time-consuming, and burdensome than the requirements of
    other comparable USDOT discretionary grant programs. Without
    consultation and guidance from the FTA, it can be difficult for project
    sponsors to navigate through the CIG pipeline in a cost-effective and
    expeditious manner. We strongly urge the Committee to conduct a zero-
    based review of the program to assess all current CIG requirements.