[Senate Hearing 116-575]
[From the U.S. Government Publishing Office]


                                                        S. Hrg. 116-575

                  BUILDING INFRASTRUCTURE IN AMERICA:
                  OVERVIEW OF THE BUILD AMERICA BUREAU
    AND THE U.S. DEPARTMENT OF TRANSPORTATION RURAL TRANSPORTATION 
                              INITIATIVES

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

                                HEARING

                               BEFORE THE

               SUBCOMMITTEE ON TRANSPORTATION AND SAFETY

                                 OF THE

                         COMMITTEE ON COMMERCE,
                      SCIENCE, AND TRANSPORTATION
                          UNITED STATES SENATE

                     ONE HUNDRED SIXTEENTH CONGRESS

                             SECOND SESSION
                               __________

                            JANUARY 28, 2020
                               __________

    Printed for the use of the Committee on Commerce, Science, and 
                             Transportation
                             

                 [GRAPHIC NOT AVAILABLE IN TIFF FORMAT]
                 

                Available online: http://www.govinfo.gov
                
                              __________

                   U.S. GOVERNMENT PUBLISHING OFFICE
                    
52-613 PDF                 WASHINGTON : 2023                  
                
                
                
       SENATE COMMITTEE ON COMMERCE, SCIENCE, AND TRANSPORTATION

                     ONE HUNDRED SIXTEENTH CONGRESS

                             SECOND SESSION

                  ROGER WICKER, Mississippi, Chairman
JOHN THUNE, South Dakota             MARIA CANTWELL, Washington, 
ROY BLUNT, Missouri                      Ranking
TED CRUZ, Texas                      AMY KLOBUCHAR, Minnesota
DEB FISCHER, Nebraska                RICHARD BLUMENTHAL, Connecticut
JERRY MORAN, Kansas                  BRIAN SCHATZ, Hawaii
DAN SULLIVAN, Alaska                 EDWARD MARKEY, Massachusetts
CORY GARDNER, Colorado               TOM UDALL, New Mexico
MARSHA BLACKBURN, Tennessee          GARY PETERS, Michigan
SHELLEY MOORE CAPITO, West Virginia  TAMMY BALDWIN, Wisconsin
MIKE LEE, Utah                       TAMMY DUCKWORTH, Illinois
RON JOHNSON, Wisconsin               JON TESTER, Montana
TODD YOUNG, Indiana                  KYRSTEN SINEMA, Arizona
RICK SCOTT, Florida                  JACKY ROSEN, Nevada
                       John Keast, Staff Director
                  Crystal Tully, Deputy Staff Director
                      Steven Wall, General Counsel
                 Kim Lipsky, Democratic Staff Director
              Chris Day, Democratic Deputy Staff Director
                      Renae Black, Senior Counsel
                                 ------                                

               SUBCOMMITTEE ON TRANSPORTATION AND SAFETY

DEB FISCHER, Nebraska, Chairman      TAMMY DUCKWORTH, Illinois, Ranking
JOHN THUNE, South Dakota             AMY KLOBUCHAR, Minnesota
ROY BLUNT, Missouri                  RICHARD BLUMENTHAL, Connecticut
JERRY MORAN, Kansas                  EDWARD MARKEY, Massachusetts
CORY GARDNER, Colorado               TOM UDALL, New Mexico
SHELLEY MOORE CAPITO, West Virginia  GARY PETERS, Michigan
TODD YOUNG, Indiana                  TAMMY BALDWIN, Wisconsin
RICK SCOTT, Florida
                            C O N T E N T S

                              ----------                              
                                                                   Page
Hearing held on January 28, 2020.................................     1
Statement of Senator Fischer.....................................     1
Statement of Senator Duckworth...................................     2
Statement of Senator Cantwell....................................    11

                               Witnesses

Hon. Joel Szabat, Acting Under Secretary of Transportation for 
  Policy, U.S. Department of Transportation......................     3
    Joint statement..............................................     5
Morteza Farajian, Ph.D., Executive Director, Build America 
  Bureau, U.S. Department of Transportation......................    12
Hon. John McCarthy, Port of Tacoma Commission President and Co-
  Chair, The Northwest Seaport Alliance..........................    13
    Prepared statement...........................................    15

                                Appendix

Response to written questions submitted to Hon. Joel Szabat by:
    Hon. Maria Cantwell..........................................    31
    Hon. Tammy Duckworth.........................................    32
    Hon. Tammy Baldwin...........................................    35
    Hon. Tom Udall...............................................    36
Response to written questions submitted to Morteza Farajian, 
  Ph.D. by:
    Hon. Maria Cantwell..........................................    39
    Hon. Tammy Duckworth.........................................    41
Response to written questions submitted to Hon. John McCarthy by:
    Hon. Maria Cantwell..........................................    43

 
                  BUILDING INFRASTRUCTURE IN AMERICA:
                 OVERVIEW OF THE BUILD AMERICA BUREAU
                     AND THE U.S. DEPARTMENT OF
          TRANSPORTATION RURAL TRANSPORTATION INITIATIVES

                              ----------                              


                       TUESDAY, JANUARY 28, 2020

                               U.S. Senate,
         Subcommittee on Transportation and Safety,
        Committee on Commerce, Science, and Transportation,
                                                    Washington, DC.
    The Subcommittee met, pursuant to notice, at 10 a.m., in 
room SH-216, Hart Senate Office Building, Hon. Deb Fischer, 
Chairman of the Subcommittee, presiding.
    Present: Senators Fischer [presiding], Wicker, Thune, 
Moran, Young, Duckworth, Cantwell, and Blumenthal.

            OPENING STATEMENT OF HON. DEB FISCHER, 
                   U.S. SENATOR FROM NEBRASKA

    The Chairman. The hearing will come to order. Good morning. 
I am pleased to convene today's hearing as Chairman of the 
Senate Subcommittee on Transportation and Safety. This hearing 
will focus on the Department of Transportation's infrastructure 
development programs housed within the Office of the Secretary 
of Transportation. Specifically, we will examine the Build 
America Bureau and the newly created rural opportunities to use 
transportation for economic success, or the ROUTES initiative, 
and the Railroad Rehabilitation and Improvement Financing, or 
RRIF Express programs.
    Everyone here can agree that the United States surface 
transportation infrastructure is critical to public safety and 
to the economy. It connects people across this country. Many of 
us hear from our constituents about the poor state of American 
infrastructure. Their concerns have been confirmed by numerous 
studies, including the often-cited infrastructure report card 
from the American Society of Civil Engineers, which gave U.S. 
infrastructure a D+ in 2017. That is unacceptable. To ensure we 
have the infrastructure we need for the future, the U.S. 
transportation policy should focus on both improving the 
infrastructure we currently have and building new assets to 
accommodate increasing demand.
    While infrastructure has always been a priority for this 
Subcommittee, it is particularly important this year as we 
consider the reauthorization of important Federal surface 
transportation programs. That is why today we will examine OT 
programs that affect both urban and rural transportation 
infrastructure. As you know, Congress established the Build 
America Bureau in the FAST Act in 2015. The idea was simple, 
project sponsors should have a one-stop shop to access 
information on DOT grants and financing, streamlined 
application processes and technical assistance such as 
permitting and procedural advice.
    The FAST Act specifically directed the Bureau to administer 
several programs, the Transportation Infrastructure Finance and 
Innovation Act loan program known as TIFIA and the RRIF loan 
program for rail, infrastructure for rebuilding America grant 
program known as INFRA, and private activity bonds.
    Today, we have the opportunity to learn more about DOT's 
work to establish the Bureau, what the Bureau offers to aid 
project sponsors, and how Congress could better support the 
Bureau's work in a surface transportation reauthorization. In 
particular, I look forward to hearing about the Bureau's vision 
and strategy for how they plan to provide assistance and to 
coordinate with project sponsors.
    I also look forward to hearing specific details from the 
witnesses about how DOT will implement the TIFIA rural project 
initiative, RRIF Express, and the ROUTES initiative. As we have 
seen, project sponsors especially in our rural areas may not be 
aware of the resources available to them through DOT or they 
simply may not have the means to access this assistance.
    My colleagues and I often receive questions from 
stakeholders asking how to access these important programs. 
Many of my constituents will be interested to know what rural 
project sponsors can expect if they reach out to DOT for 
assistance. I hope today's witnesses can help us better direct 
constituents to helpful resources that will guide them in their 
efforts to improve our Nation's infrastructure, and I look 
forward to the testimony of our panel.
    At this point, I would like to invite my colleague and 
Ranking Member Senator Duckworth for her opening comments.

              STATEMENT OF HON. TAMMY DUCKWORTH, 
                   U.S. SENATOR FROM ILLINOIS

    Senator Duckworth. Thank you so much Chairman Fischer. 
Thank you again for holding today's hearing. I want to thank 
our witnesses for joining us today to highlight the 
opportunities and challenges facing the DOT's Build America 
Bureau and DOT's efforts to advance major infrastructure 
projects in rural America.
    As this Committee knows well, every sector of our economy 
and every corner of the Nation benefits from reliable, 
efficient transportation. I would go a step further and say 
that our Nation's global competitiveness is dependent on our 
safe, reliable, and efficient transportation network. Despite 
this dependence however, investments in transportation 
infrastructure have not kept pace with need and public 
expenditures on infrastructure as a percentage of GDP has 
declined to the lowest levels in a generation.
    The American Society of Civil Engineers gives our 
infrastructure a D+ rating and estimates that we must invest $2 
trillion by 2025 to rebuild, maintain, and expand our 
transportation infrastructure. In pursuit of reliability and 
efficiency, Congress has established a variety of credit and 
grant programs administered by DOT to invest in major projects 
all across the Nation. For states, local governments, and other 
stakeholders, the Build American Bureau is DOT's one-stop-shop 
for Federal transportation funding and financing opportunities. 
The Bureau's core responsibilities is administering finance 
programs like RRIF program and TIFIA.
    Meanwhile, the Office of the Secretary has taken the lead 
on implementing INFRA grants to enhance our Nation's great 
network and build grants to benefit projects of local or 
regional importance. While many worthwhile projects have 
advanced thanks to these programs, I do hope that today's 
hearing will shed light on stakeholder concerns about 
burdensome application processes, high front-end costs, and 
extreme uncertainty in securing Federal support. For example, I 
have heard from RRIF applicants who spent many months and more 
than $1 million to not get a RRIF loan. Meanwhile, an opaque 
project selection process for the INFRA and Build programs 
undermines stakeholders' confidence and DOT's merit-based 
decisionmaking.
    For example, the portion of Build funding invested in rural 
projects increased from 33 percent to more than 70 percent over 
the past three years. Yet during that same period, transit 
awards diminished from 27 percent to 8 percent. The Trump 
Administration has made no secret of its focus on rural 
investments and I agree that many rural communities face 
stronger headwinds when applying for Federal resources than 
their urban counterparts. That is why it is critically 
important for DOT to ensure its practices and policies reflect 
the transparency that Congress and the public require to make 
informed decisions and ensuring a level playing field for all 
stakeholders regardless of mode or geography.
    I hope that today's witnesses will shed light on many of 
these concerns and help this Committee identify opportunities 
to further enhance DOT's credit and grant programs and maximize 
outcomes for U.S. taxpayers. Thank you, and I yield back.
    The Chairman. Thank you, Senator Duckworth. I would like to 
ask the witnesses for their opening statements at this time. We 
will begin with Mr. Szabat, who is the Assistant Secretary of 
Aviation and International Affairs and performing the duties of 
the Under Secretary for Policy. He has extensive experience 
with transportation policy since joining the Department in 
2002.

                 STATEMENT OF HON. JOEL SZABAT,

            ACTING UNDER SECRETARY OF TRANSPORTATION

         FOR POLICY, U.S. DEPARTMENT OF TRANSPORTATION

    Mr. Szabat. Thank you, Chairman Fischer, Ranking Member 
Duckworth, and members of the Subcommittee. We appreciate the 
opportunity to share with you the steps this Administration and 
the Department of Transportation have taken to facilitate 
better transportation in America's rural communities. Safety is 
the first priority of Secretary Chao and the entire Department.
    Data shows that the Federal Government ought to increase 
its focus on rural transportation safety. Rural transportation 
networks are also vital to economic growth, creating 
opportunity and ensuring that no one is left behind. Many rural 
communities in the United States continue to face 
transportation disparities. While only 19 percent of Americans 
live in rural communities, 69 percent of highway lane miles are 
in rural areas.
    Truck drivers, essential, unheralded, and literally the 
prime movers of our economy, spend roughly half their working 
days and nights rowing across rural roads. And two-thirds of 
all U.S. rail freight originates in rural areas. Consequently, 
there are disproportionately more highway fatalities in rural 
areas, 72 percent of large truck occupant fatalities, 67 
percent of pick up occupant fatalities, and 58 percent of SUV 
occupant fatalities occur in rural areas.
    In fact 46 percent of total highway fatalities in our 
country occur on rural roads, at a rate twice that of urban. So 
it is vitally important not only to growth and competitiveness 
but to safety that the transportation infrastructure needs of 
rural communities be addressed. The U.S. Department of 
Transportation is working hard to address these inequities in 
several ways.
    The Administration recognizes that rural transportation is 
a lifeline for farmers, working families, seniors, veterans, 
individuals with disabilities, and tribal residents among 
others. For that reason, the Administration is placing 
considerable emphasis on underserved communities, including 
those in rural America. Here I'll spotlight two particular 
initiatives.
    The Rural Project Initiative allows more sponsors of 
infrastructure projects in rural communities to tap into the 
Department's major loan programs, enabling projects that might 
not otherwise get done and the rural opportunities to use 
transportation for economic success, or ROUTES initiative helps 
rural communities access Federal transportation grant funding 
and loan programs. It also improves data sharing to help rural 
communities better analyze their transportation needs.
    Access to rural transportation can be a significant 
challenge for seniors, people with disabilities, and low-income 
communities. So the ROUTES initiative will address the rural 
public transit lifeline as well. We have exceeded our rural 
transportation obligations as laid out in the 2015, FAST Act. 
We continue pressing forward with new ways to improve rural 
mobility because our whole Nation, including urban citizens and 
businesses, depend on it. While we have increased focus on 
rural areas, we remain intent on improving transportation 
systems throughout the Nation. Connecting urban and rural 
transportation networks are critically important for domestic 
production and export of agriculture, mining, and energy 
commodities, as well as the quality of life for all Americans.
    The disparity in transportation conditions between urban 
and rural communities are exacerbated because urban communities 
often are better equipped to seek out Federal resources to 
address their needs. Our initiatives work to redress the 
balance. The most meaningful way to help rural America's 
transportation infrastructure is through the discretionary 
grant. Since Fiscal Year 2016, the rural share of discretionary 
funds awarded nearly doubled in the nine transportation 
programs that distinguish between rural and non-rural.
    Just two months ago, Secretary Chao announced the latest, 
better utilizing investments to leverage development or build 
discretionary grant awards. In the last three rounds of Build, 
an infrastructure for rebuilding America or INFRA grants, each 
around $900 million, the rural share of the awards ranged 
between 50 percent and 64 percent. As detailed in my written 
testimony, key operating administrations in the Department, 
transit, highway, and rail, also increased their focus on rural 
safety and mobility as indicated by their Fiscal Year 2019 
funding priorities.
    These awards are only a sample of the Department's effort 
in the past thirteen months to champion rural transportation 
improvements to discretionary grant awards. In some, they total 
over $2.4 billion. In addition to efforts by DOT operating 
administrations, our innovative financing arm, the Build 
America Bureau, has also played a key role in supporting 
development of rural transportation infrastructure. Credit 
programs such as TIFIA and RRIF, which Dr. Farajian will speak 
to next, are powerful tools to better address rural 
transportation needs.
    Special thanks are due to Dr. Farajian, his staff, and his 
supervisor, the Chief Infrastructure Funding Officer of the 
Department, Dan DeBono, for their work with rural communities. 
I also commend Secretary Chao's Senior Policy Advisor, Jannine 
Miller, who has been the driving force in shaping our rural 
initiatives. Thank you, and I look forward to your questions.
    [The joint prepared statement of Mr. Szabat and Mr. 
Farajian follow:]

 Joint Statement of Joel Szabat, Assistant Secretary for Aviation and 
  International Affairs, Performing the Duties of Under Secretary for 
  Policy, Department of Transportation; and Morteza Farajian, Ph.D., 
 Executive Director, Build America Bureau, Department of Transporation
    Thank you, Chairman Fischer, Ranking Member Duckworth, and Members 
of the Subcommittee. We appreciate the opportunity to share with you 
the steps the Trump Administration and Secretary of Transportation 
Elaine L. Chao have taken to facilitate better transportation in 
America's rural communities.
    Rural transportation networks are vital to the Nation's economic 
growth, creating opportunity, and ensuring that no one is left behind. 
Yet many rural communities in the United States continue to face 
significant transportation challenges. For example, while only 19 
percent of Americans live in rural communities, 69 percent of highway 
lane miles are in rural areas, nearly half of all truck vehicle miles 
traveled occur on rural roads, and two-thirds of all U.S. rail freight 
originates in rural areas.
    One result of these challenges is a disproportionate high rate of 
highway fatalities in rural areas.

   72 percent of large truck occupant fatalities,

   67 percent of pickup occupant fatalities, and

   58 percent of SUV occupant fatalities occur in rural areas.

    In fact, 46 percent of total highway fatalities in our country 
occur on rural roads--and the fatality rate on rural roads is twice 
that of urban roads. This is of special concern because safety is the 
Department of Transportation's Number One priority. So it is vitally 
important not only to growth and competitiveness, but to safety, that 
the transportation and infrastructure needs of rural communities be 
addressed.
    The U.S. Department of Transportation is working hard to address 
these inequities through a number of initiatives, including:

   Funds Administration. The Department distributes about $70 
        billion annually for infrastructure needs, much of which goes 
        to State governments via formula stipulated by law. Yet DOT has 
        several discretionary grant programs as well. Since FY 2016, 
        the rural share of discretionary funds awarded nearly doubled 
        in the nine transportation programs that distinguish between 
        rural and non-rural. And the number of awards made to rural 
        projects more than tripled.

   Rural Project Initiative Implementation. This initiative 
        allows more sponsors of infrastructure projects in rural 
        communities to utilize the Department's major loan program, 
        which offers very generous financing and loan repayment terms.

   ROUTES Initiative. The Rural Opportunities to Use 
        Transportation for Economic Success (ROUTES) initiative helps 
        rural communities access Federal transportation grant funding 
        and loan programs. It also improves data sharing to help rural 
        communities better analyze their transportation needs. As part 
        of this initiative, the Department established a ROUTES 
        Council, which supports rural communities to better identify 
        and assess their transportation needs, and re-balance DOT 
        discretionary grants to address those needs. Rural Transit. 
        Access to transportation can also be a significant challenge 
        for seniors, people with disabilities and low-income 
        communities in rural areas. Public transportation is a lifeline 
        for them. So the ROUTES initiative will be addressing public 
        transit in rural areas, as well. Addressing rural-urban 
        transportation disparities will help ensure a more inclusive 
        transportation network for the future. That's a goal that all 
        countries can and should incorporate into their national 
        transportation plans.

    The Administration recognizes that transportation in rural areas 
functions as a lifeline for farmers, working families, seniors, 
veterans, individuals with disabilities, tribal residents, and others. 
To that end, this Administration has placed considerable emphasis on 
underserved communities like those in rural America. We have met and 
exceeded our obligation regarding rural transportation in the 2015 FAST 
Act, and we continue pressing forward with new ways to improve rural 
mobility. In addition to efforts by DOT Operating Administrations, our 
innovative financing arm, the Build America Bureau, has also played a 
key role in supporting development of rural transportation 
infrastructure. Of course, while we have increased focus on rural 
areas, we are as intent as always on improving transportation systems 
throughout the Nation.
Rural transportation networks
    Rural transportation networks are critically important for domestic 
production and export of agriculture, mining, and energy commodities as 
well as the quality of life for all Americans. For example, two-thirds 
of rail freight originates in rural areas, and nearly half of all truck 
vehicle-miles-traveled (VMT) occur on rural roads. And, 70 percent of 
America's road-miles are in rural communities.
    At the same time, 90 percent of posted, or limited weight, bridges, 
which heavy trucks cannot use, are in rural areas. Freight-hauling 
truck drivers in rural areas often contend with lengthy detours to find 
a bridge able to handle the weight; these detours consume fuel and 
time. In addition to the problem of weight-limited bridges, 80 percent 
of the bridges in the U.S. that are rated to be in poor condition are 
in rural areas.
    Not surprisingly, a disproportionate number of roadway fatalities 
occur in rural areas based on exposure measures like population and 
VMT. While only one-fifth of the Nation's population lives in rural 
areas, in 2018, 46 percent of the Nation's highway fatalities occur on 
rural roads. Breaking that down into deeper categories, in 2018, 72 
percent of large truck occupant fatalities, 67 percent of pickup 
occupant fatalities, and fifty-eight percent of SUV occupant fatalities 
occur in rural areas. And, the highway fatality rate per 100 million 
VMT in rural areas is more than twice that of urban areas. It is worth 
noting that 44 percent of personal vehicle miles traveled on rural 
roadways are driven by urban residents traveling to destinations 
outside their home metro areas, so rural roadway safety matters for our 
entire country.
    Many people living in rural and tribal communities can ill-afford 
to drive the considerable distances they must travel to work and other 
destinations. That is why 81 percent of U.S. counties provide rural 
transit service. The disparity in transportation conditions between 
urban and rural communities are exacerbated because urban communities 
are better equipped to seek out Federal resources to address their 
needs. Rural areas often lack the capacity to fully compete for Federal 
transportation infrastructure funding.
    This Administration is working hard through the Department of 
Transportation to ensure that rural and all other communities are 
treated fairly and equitably.
The Department's Efforts and Achievements
ROUTES: Rural Opportunities to Use Transportation for Economic Success
    Addressing these disparities calls for a sharper focus on our 
investments in rural areas to meet national priorities such as 
improving safety and economic competitiveness in all parts of the 
country. That's why Secretary Chao launched the ROUTES initiative, in 
October 2019. The ROUTES initiative will improve how the DOT considers 
rural project applications in our discretionary grant programs, 
including ensuring that project costs, local resources, and the 
benefits to the American people and economy are appropriately 
considered. Under this initiative, ROUTES will provide rural areas with 
user-friendly information to improve planning and development of grant 
applications. It will also give projects in rural communities due 
consideration in grant programs, to assist in meeting their 
transportation needs.
    Under the initiative, the Department has already begun collecting 
input from stakeholders on the benefits rural projects offer for safety 
and the economy, as well as the types and degrees of assistance rural 
projects require. The Department recently issued a Request for 
Information (RFI) seeking input on a number of rural transportation-
related issues. This includes comments and data pertaining to current 
unmet needs in rural transportation, barriers rural communities face in 
addressing these transportation needs, stakeholders' experiences with 
applying to and using DOT discretionary grant and credit programs, and 
opportunities for the DOT to improve its services and technical 
assistance to rural communities in relation to these grant and credit 
programs, within the limits of statutory requirements. The RFI closed 
yesterday, and, as of Friday January 24, we had already received input 
from 130 respondents, and we expect this is just the beginning of an 
effort to launch more data-driven approaches to better assess the need 
for and benefits of rural transportation infrastructure projects.
    Given the feedback we have been receiving, we are trying to make 
DOT's discretionary grants easier for rural applicants to understand. 
For instance, we are currently developing a Toolkit that will help 
rural (and other) applicants identify which discretionary grant 
programs could help fund their particular safety and infrastructure 
priorities. We expect to make the Toolkit available this spring.
    We have also established the ROUTES Council, an internal 
deliberative body of DOT leadership that will review and use input from 
the RFI as well as other public input to improve the alignment of the 
Department's discretionary funding programs with the needs of rural 
communities to address National transportation goals. The Council held 
its first meeting in November 2019 and met again on-schedule in 
January. It will review feedback received through the RFI and seek 
additional input from stakeholders, starting with State DOTs, local 
governments, and national organizations. The Council will identify 
critical rural transportation concerns, coordinate efforts among DOT's 
Operating Administrations, and shape the resources ROUTES avails to 
rural stakeholders.
Other Efforts
    In addition to the new ROUTES initiative, the Department is also 
seeking other opportunities to benefit rural and other communities. 
Just two weeks ago, for example, Secretary Chao announced an 
interactive map application showing transportation infrastructure 
against a background layer featuring the U.S. Internal Revenue 
Service's designated Opportunity Zones and the U.S. Census Bureau's 
Urbanized Areas. Using the map, potential investors can discover which 
Qualified Opportunity Zones, many of which are in rural communities, 
offer good transportation connectivity. At the same time, other 
investors can identify rural Opportunity Zones that would benefit from 
private investment in transportation.
Grants
    As previously mentioned, a meaningful way to help rural America is 
through discretionary grants. Just two months ago, in November 2019, 
Secretary Chao announced the award of $900 million to 55 infrastructure 
projects in 35 states through the Better Utilizing Investments to 
Leverage Development (BUILD) Transportation Discretionary Grants 
program. Fifty percent of that investment was awarded to 31 projects in 
rural communities. In the previous year, the Department awarded $965 
million--64 percent of its $1.5 billion appropriation--to 62 rural 
projects.
    Last July, the Secretary announced the award of $856 million in 
Infrastructure for Rebuilding America (INFRA) grants. Fifty-four 
percent of those awards, $465 million, went to rural projects, far 
exceeding the FAST Act's statutory requirement of 25 percent. And, 10 
percent of the FY 2019 INFRA investment was awarded to small projects 
with costs between $5 million and $25 million, most of which were in 
rural communities. Two weeks ago, the Secretary announced the Notice of 
Funding Opportunity for the FY 2020 INFRA grants, and the Department 
will continue to adhere to or surpass the statutory requirements.
    The Department's Operating Administrations were also mindful of 
rural America in their FY 2019 funding practices. For example, in FY 
2019, the Federal Transit Administration (FTA) awarded $119 million in 
Buses and Bus Facilities Discretionary Grants, 28 percent of the 
program's total awards, to projects in rural communities. FTA also 
awarded 41 percent of its Innovative Coordinated Access and Mobility 
Pilot Program grants, $3.9 million, to rural projects, and a full 100 
percent of its Tribal Transit Program awards, $5 million, went to rural 
communities.
    Also in FY 2019, the Federal Railroad Administration awarded $179 
million in Consolidated Rail Infrastructure and Safety Improvements 
(CRISI) awards to rural projects, 31 percent of its awards for that 
year. And, in August 2019, the Federal Highway Administration awarded 
$225 million in grant funding under the Competitive Highway Bridge 
Program (CHBP) to 20 bridge improvement projects in 18 states, all of 
which have population densities fewer than 100 persons per square-mile.
    These awards alone, only a sample of the Department's effort in the 
past 13 months to champion rural transportation improvements through 
discretionary grant awards, total more than $2.4 billion. These grants 
are a powerful tool the Department is using to address rural 
transportation needs, in addition to the Operating Administrations' 
formula grant funding, much of which is also targeted for rural 
communities.
The Build America Bureau is developing products and processes 
        specifically tailored to rural communities
    Authorized by the 2015 FAST Act and established in July 2016, the 
Department's Build America Bureau administers the Transportation 
Infrastructure Finance and Innovation Act (TIFIA) and Railroad 
Rehabilitation and Improvement Financing (RRIF) credit programs, 
administers the INFRA grant program, allocates Private Activity Bonds, 
and serves as a one-stop shop for project sponsors to assist them in 
navigating the complex regulatory, governance and financial processes 
necessary in delivering successful transportation projects.
New Executive Director
    The Bureau's Executive Director, Morteza Farajian, Ph.D., joined 
the Department in April 2019. Formerly, he served as Acting Deputy 
Secretary of the Virginia Department of Transportation (VDOT) and 
Director of that State's Public-Private Partnership (P3) program 
office.
Three Loans Issued During the Past 90 days
    Dr. Farajian's experience as a practitioner is already paying 
tangible dividends as three new loans have been issued by the Bureau in 
just the past 90 days alone. These loans, totaling $1.6 billion, will 
result in the delivery of $6 billion in new transportation 
infrastructure The Bureau's participation in these projects alone has 
generated more than $3 billion in non-Federal capital investment, 
further leveraging Federal dollars.
    The Bureau is implementing two overarching goals that will benefit 
American transportation infrastructure in general and rural communities 
in particular:

   Enhance the pipeline of eligible projects to fully utilize 
        the capacity provided by Congress, and;

   Diversify the pipeline of eligible projects by geography 
        (i.e., urban and rural, new States, etc.) size, and type (i.e., 
        highway, transit, rail, port, etc.), to ensure an equitable 
        distribution of program benefits.

    To achieve these goals, the Bureau is focusing on three key 
activities that will enable increased utilization and a more diverse 
pipeline of projects. They are:

   Conduct active, focused outreach to prospective borrowers 
        that may not know of the Bureau, or of its new products and 
        services. This activity includes the development and delivery 
        of products that are best suited to underserved borrowers;

   Enhance the scope and scale of technical assistance to 
        project sponsors, especially new, smaller borrowers, and;

   Continue to streamline the credit process, improving 
        efficiency and reducing costs to borrowers.

    The Bureau has considerable lending capacity and expertise to 
significantly expand its loan portfolio, including loans to rural 
borrowers.
Tailored Products
    Historically, the TIFIA loan program has financed large, complex 
highway, bridge and transit projects that largely serve urban 
communities. We have the capacity to continue to support these 
projects. However, the TIFIA and RRIF loan programs--with some 
modifications (within our existing authorities)--can be tailored to 
focus on helping other geographic areas and asset classes that have, 
until now, not received Bureau assistance. One area of Bureau 
innovation that has been particularly valuable for rural communities is 
the effort to develop products tailored to the specific needs of these 
communities.
TIFIA Rural Project Initiative
    The first of these is the TIFIA Rural Projects Initiative (RPI), 
which Secretary Chao announced in November, 2018. RPI represents a 
targeted and significant easing of financial barriers to participation 
in the TIFIA program--while maintaining robust creditworthiness 
standards to protect taxpayers. By combining existing authorities, the 
Bureau offers qualified borrowers a number of significant benefits.
    An eligible RPI project is one that is not inside a U.S. Census 
Bureau-designated urbanized area with a population greater than 150,000 
persons and that has eligible project costs not greater than $100 
million. For qualifying projects with total eligible costs between $10 
million and $75 million, the usual application costs (e.g., the cost of 
procuring independent financial and legal advisors) may be paid by DOT. 
This often represents a savings of several hundred thousand dollars. 
Eligible RPI may borrowers receive a 50 percent interest rate 
reduction. As of mid-January, a rural project could receive a loan at a 
fixed interest rate of slightly over one percent for 30 or more years. 
Additionally, some rural borrowers may benefit from the Bureau's 
flexibility--we can also provide short-term assistance at even further 
reduced interest rates. In addition to the lower interest rate 
available under RPI, eligible project sponsors under this program can 
borrow up to 49 percent of a project's eligible costs instead of the 33 
percent ceiling more typical of a TIFIA loan.
    Currently, the Bureau is providing technical assistance to develop 
12 RPI projects in eight states. This represents approximately 10 
percent of the projects in the Bureau's pipeline.
RRIF Express
    Small and medium-sized freight railroads represent a significant 
opportunity for economic growth in rural communities. Even small 
marginal savings in shipping costs for agricultural, mining, energy or 
manufacturing goods can have a major impact in global competitiveness, 
and about 80 percent of short line and regional freight railroads are 
in rural America. As such, the Bureau has developed a pilot program 
that focuses on improving the borrowers experience for short line and 
regional railroads, called RRIF Express, which I announced in mid-
December, 2019.
    Although the Bureau has, since its inception, closed four loans 
under the Department's RRIF program, in its current form, RRIF is 
significantly undersubscribed by smaller railroads. Like TIFIA RPI, 
RRIF Express eases several financial barriers for prospective 
borrowers. A qualifying RRIF Express borrower is a U.S. Class II or III 
short line or regional railroad, seeking a loan up to $50 million that 
meet the requirements set forth in the Notice of Funding Opportunity.
    The cost of paying for the Bureau's external financial and legal 
advisors and the Credit Risk Premium often poses a significant obstacle 
for prospective RRIF borrowers. Under the RRIF Express initiative, 
these costs are paid by DOT, using funds from appropriations. In 
addition, RRIF Express also promises to expedite the credit process by 
streamlining reviews and speeding the procurement of outside advisors.
    The 90-day application window for RRIF Express opened on January 
13, 2020 and we hope to receive a healthy number of qualified 
expressions of interest.
Innovative Procurement Model--Short-Term Design Build Finance
    The TIFIA loan program can provide loans of up to 35 years after 
the date of substantial completion. However, we are learning that some 
jurisdictions, including State DOTs, might benefit more from shorter-
term loans to increase efficiency and reduce the costs of projects they 
otherwise would deliver in phases. A high proportion of these 
jurisdictions are in rural America.
    When projects are phased, costs and schedules can increase 
considerably: multiple mobilizations, de-mobilizations, numerous 
contracts and sequential construction all impact cost and schedule. 
Future phases of construction also incur cost escalations, often 
exceeding four percent annually.
    Additionally, because rural projects often are not good candidates 
for tolling, they often overlook Bureau credit as a financing option at 
all.
    To address these gaps, the Bureau has introduced an innovative 
procurement concept that offers alternatives that allow project 
sponsors to construct projects more quickly in a single phase, 
potentially reducing costs due to single contract, single mobilization, 
but also avoiding annual cost escalations incurred by future phases.
    Under this concept, projects can proceed into construction of all 
phases in a single procurement and utilize shorter-term loans, further 
reducing costs. This procurement can take the form of a Design-Build-
Finance procurement, where the developer actually borrows from the 
Bureau while also delivering into service new or upgraded 
transportation options more quickly.
    Because the Bureau can lend to the contractor and not the public 
sponsor, this can be particularly useful for projects whose sponsors 
lack borrowing authority, or those who typically use a pay-as-you-go 
infrastructure funding model.
    In short, the Bureau--in engaging jurisdictions that have not 
typically borrowed from TIFIA and/or RRIF--is finding that a one-size-
fits-all approach to lending is not optimal and offering a wide variety 
of financing options can help a far more diverse pool of applicants 
deliver their projects more efficiently and at lower cost.
Education & Technical Assistance
    Since April, 2019, the Bureau has increased its Outreach and 
Project Development (OPD) team by 150 percent, adding six staff 
members, all of whom bring considerable experience. This team has been 
instrumental in performing more up-front planning with project sponsors 
and providing more technical assistance to project sponsors earlier in 
the project cycle.
    This earlier and more active engagement will facilitate a faster 
credit process with less re-work and inefficiency, especially for 
smaller, first-time borrowers such as rural project sponsors. It also 
will help project sponsors avoid inadvertently making the project 
ineligible for a loan by taking actions such as initiating non-
qualified procurements, missing critical environmental review 
requirements or not sourcing materials in the United States. Sponsors 
of larger projects, typically urban or suburban, often avoid this type 
of misstep thanks to experienced internal resources and to the 
participation of outside consultants and advisors. Project sponsors 
less experienced with Federal processes and less able to access the 
valuable expertise of outside consultants cannot benefit from this 
advantage, an inequity that earlier Bureau participation from a more 
well-staffed OPD team will remediate. In addition to allowing the 
Bureau to support more projects earlier in their development, a fully 
staffed OPD team allows the Bureau to educate more prospective project 
sponsors about the Bureau's products and services.
    While the Bureau continues to represent itself at the larger, main-
stream infrastructure and public-private-partnership (P3) conferences 
and events, we have also targeted the events that cater to smaller 
jurisdictions, rural communities, towns and counties. To educate 
potential project sponsors and access more prospective projects, the 
Bureau is now focusing on these venues, including, for example, the 4th 
National Technical Assistance Conference of the Rural Transit 
Assistance Program this past October. We look forward to introducing 
the Bureau, its products, and its services to the membership of the 
National Association of Towns and Townships this March.
    We have also participated in regional meetings sponsored by the 
U.S. Department of Commerce's Economic Development Administration 
(EDA), including sessions in West Virginia and southeastern 
Massachusetts, where the EDA convenes planners from distressed 
communities seeking technical assistance to develop the infrastructure 
needed for economic growth.
    The Bureau has also increased its work with like-minded 
organizations such as the Association of American State Highway and 
Transportation Officials, planning associations, contractors and 
industry groups. This has borne considerable fruit already.
    The Bureau's recent engagement with the American Short Line and 
Regional Railroad Association was instrumental in the successful launch 
this past December of the RRIF Express pilot program for Class II and 
III short line and regional railroads.
State visits
    Another important recent initiative is the Bureau's outreach to new 
States. Under this initiative, the Bureau has reached out specifically 
to States with little or no DOT credit experience or other Bureau 
engagement. Many of these states are largely rural.
    Bureau leadership visits the State capital for a full day of 
meetings introducing the Bureau to the State DOT director or secretary, 
participants from the Governor's office and congressional delegation, 
key State legislators, administrators of the various State DOT 
departments, economic development organizations, planners, and county 
and municipal leaders. Many of the participants during these visits 
indicate they had never heard of the Bureau or the Department's credit 
programs and that they plan to utilize the Bureau and its products and 
services in the future.
    Since June 2019, the Bureau has visited with ten new states, 
including Alabama, Mississippi, Wisconsin, Minnesota, North Dakota, 
Montana, Nevada, Connecticut, Pennsylvania, and Louisiana. Those visits 
have resulted in nearly two dozen prospective projects. Currently, the 
Bureau has visits planned with Tennessee and New Mexico, and specific 
discussions are underway with four other states: Arkansas, Arizona, 
Maine, and Vermont.
Regional Infrastructure Accelerators
    Another element in the Bureau's ongoing mission to provide more 
technical assistance to rural communities is the Regional 
Infrastructure Accelerator program. By pooling resources, regional 
accelerators can assist local governments in developing improved 
infrastructure priorities and financing strategies for the accelerated 
development of projects, many of which would be eligible for TIFIA, 
RRIF and other innovative programs. Accelerators will act as 
multipliers of the Bureau's existing staff and resources, helping 
develop infrastructure planning and delivery capacity in rural 
communities and elsewhere.
    As a result of last month's $5 million Congressional appropriation, 
the Bureau is developing a Request For Information to seek input from 
interested parties about the most effective, transparent and expedient 
ways to structure and deliver the accelerator program. Upon receipt of 
public feedback, we intend to issue a Notice of Funding Opportunity to 
fund, through grants, a small number of Regional Infrastructure 
Accelerators as a demonstration program that will continue to explore 
more innovative and efficient ways to identify, finance and deliver 
projects--especially in small town America.
Conclusion
    The Department of Transportation and its Build America Bureau have 
placed a long-overdue emphasis on Rural America. Through the ROUTES 
Initiative, discretionary grant programs and the innovative solutions 
offered by the Bureau, we have been focusing, and are continuing to 
focus, all available resources and authorities on solutions for rural 
communities. Focused Bureau outreach, tailored products such as TIFIA 
RPI, RRIF Express, Build It Now and others, combined with technical 
assistance and streamlining the process have already begun to produce 
tangible dividends for small-town America.
    We know we have much more work ahead as we continue the important 
job of solving those challenges and improving the both the safety and 
connectivity of transportation in rural America. We look forward to 
working with the Committee and other partners to continue to remove 
barriers to safety, economic growth and mobility for rural and urban 
communities alike.
    Thank you.

    The Chairman. Thank you, Mr. Szabat. I see we have been 
joined by the Ranking Member of our Committee, Senator 
Cantwell. I would like to recognize you at this time for any 
comments you would like to make.

               STATEMENT OF HON. MARIA CANTWELL, 
                  U.S. SENATOR FROM WASHINGTON

    Senator Cantwell. Thank you, Chair Fischer. Thank you so 
much for you and Ranking Member Duckworth for holding this 
hearing. There couldn't be anything more dear to our heart in 
the Northwest than building infrastructure, and I would like to 
welcome former Superior Court Judge McCarthy who is now in a 
new role as the Co-Chair of the Northwest Seaport Alliance.
    Judge McCarthy has done great work as a port Commissioner 
and working on a lot of the issues on the waterfront because he 
was also a longshoreman. So the perspective I hope that he will 
bring to this morning's hearing is his diverse background on 
these issues at a point in time when United States freight is 
supposed to expand by 40 percent over the next decade. I think 
we feel that on the Pacific coast as we are shipping so much 
West coast product all the way to Asia--I mean so much Midwest 
product all the way to Asia.
    The throughput of these ports is essential and so is your 
work here on the Subcommittee and helping us get a surface 
transportation bill, and the key focus of this Committee which 
is the infrastructure piece. So, thank you. I couldn't be more 
thrilled that you are having his hearing this morning. I know 
both of you and your states are committed to getting 
improvements to freight mobility, so thank you so much, and 
thank you to our witness, Mr. McCarthy, for being here this 
morning.
    The Chairman. Thank you, Senator Cantwell. Next, I would 
like to recognize Dr. Farajian, who is the Executive Director 
of Build America Bureau. Before he joined the Department in 
April 2019, he served as Acting Deputy Secretary of 
Transportation and was Director of Public Private Partnerships 
at the Virginia Department of Transportation. Welcome, doctor.

              STATEMENT OF MORTEZA FARAJIAN, Ph.D.

           EXECUTIVE DIRECTOR, BUILD AMERICA BUREAU,

               U.S. DEPARTMENT OF TRANSPORTATION

    Mr. Farajian. Thank you, Chairman Fischer, Ranking Member 
Duckworth, and members of the Subcommittee. We appreciate the 
opportunity to share with you the steps that the Build America 
Bureau has taken to facilitate better transportation in 
America's rural communities.
    As you know, under Secretary Chao's leadership, the entire 
Department has placed an emphasis on rural America. In addition 
to implementing the ROUTES initiative and the discretionary 
grant programs that Mr. Szabat just talked about, we have been 
working on new programs that directly support the 
Administration and Secretary Chao's priorities for more 
efficient transportation infrastructure investment in America. 
In general, the Bureau is implementing two overarching goals: 
enhance the pipeline of eligible projects to fully utilize the 
existing capacity, and diversify the pipeline of eligible 
projects to ensure an equitable distribution of program 
benefits.
    To achieve these goals, the Bureau is focusing on three key 
initiatives: continuing to streamline the credit process, 
improve efficiency, and reduce costs to borrowers, conducting 
focus outreach the potential borrowers, and enhancing the scope 
and scale of technical assistance to project sponsors, 
especially new, smaller borrowers. There are 33 states that 
have not taken advantage of the Bureau's credit programs in the 
past 15 years. Some of them have shovel-ready projects and non-
Federal revenues that can be leveraged to deliver those 
projects.
    Since June, we have visited with ten of these states. These 
visits have resulted in nearly two dozen perspective projects 
that have been added or pipelined. During these visits, we 
typically meet with a diverse audience from the Governor's 
Office to State duty leadership and individual jurisdictions 
such as Mayors, counties, and regional planners. Many of these 
participants have never heard of the Bureau, but when they 
learn about the opportunities that our programs provide, more 
detailed conversations about specific projects tend to follow.
    In addition to our outreach efforts, we are also developing 
innovative products to create a more diverse pipeline of 
projects. Historically, the TIFIA loan program has financed 
large complex highway bridge and transit projects that 
primarily serve urbanized and suburban communities. The 
Bureau's other credit program, RRIF, is significantly 
undersubscribed by smaller railroads.
    About 80 percent of the track operated by these short-line 
and regional freight railroads is in rural America and serves 
as an economic engine for agriculture, mining, energy, 
manufacturing, and other industries. While we will continue to 
support the existing projects, we have tailored initiatives 
under both TIFIA and RRIF programs to diversify our portfolio 
and help new project sponsors who until now have not benefited 
from Bureau's assistance to the same level. The first of these 
is the TIFIA rural project initiative which Secretary Chao 
announced in November 2018.
    Under this initiative, qualified rural borrowers receive an 
interest rate that is currently around 1 percent. This can be a 
game changer for small communities, particularly when comparing 
it to the savings from annual construction cost escalation, 
which is currently around 4 percent. As of today, we have 13 
projects under the rural project initiative in 7 different 
states. This represents approximately 10 percent of our 
existing pipeline. As we continue to visit new states, this 
number will likely continue to climb. The second initiative is 
RRIF Express that was announced last month to assist short 
lines and regional railroads.
    A qualifying RRIF Express borrower is a short line regional 
freight railroad seeking a loan up to $50 million. RRIF Express 
covers advisor fees and a substantial portion, if not all, of 
the credit risk premium that has posed a significant obstacle 
for small railroads. It also expedites the application and 
review process.
    In short, a one-size-fits-all approach to lending is not 
optimal. Therefore, in support of the Administration and 
Secretary Chao's infrastructure in rural priorities, the Bureau 
will continue to diversify the pipeline of projects by 
providing innovative financing programs and educating new 
borrowers, especially those in rural America. We look forward 
to working with the Committee--with the Subcommittee, to 
eliminate obstacles, develop new products and services, and 
continue to streamline our processes. Thank you.
    The Chairman. Thank you, doctor. Next, I would like to join 
Ranking Member Cantwell in welcoming Mr. McCarthy. It is so 
nice to have you here. Mr. McCarthy is the Co-Chair of the 
Northwest Seaport Alliance and a Commissioner at the Port of 
Tacoma. He has previously served as a Pierce County District 
and Superior Court Judge, a longshoreman, as well as a Member 
of the Port of Tacoma Commission. Welcome, sir.

  STATEMENT OF HON. JOHN McCARTHY, PORT OF TACOMA COMMISSION 
     PRESIDENT AND CO-CHAIR, THE NORTHWEST SEAPORT ALLIANCE

    Mr. McCarthy. Good morning Chairwoman Fischer, Ranking 
Member Duckworth, Ranking Member Cantwell, and members of the 
Subcommittee. Thank you for the invitation to be here today. 
The Northwest Seaport Alliance is the fourth largest container 
gateway in North America, created to manage the joint marine 
cargo facilities of the ports of Tacoma and Seattle. Our cargo 
activity employs over 58,000 people, but our focus is much 
bigger with hundreds of thousands of jobs across rural and 
urban areas that depend on our facilities.
    The Alliance does not view the world through our urban or 
rural lands because our success is embedded in both. More than 
a quarter of the U.S. GDP is a result of cargo that moves 
through seaports. Truly seaports serve the entire Nation not 
just the communities where they are located. Our port is a 
great example of this. Nearly 60 percent of our imports move 
beyond the region and our exports originate from all 50 states.
    As the number two U.S. agricultural port, we are an 
essential partner to our Nation's farmers. As it relates to 
waterborne trade, for example, from Nebraska, 8 percent of the 
state's containerized exports and 26 percent of its 
containerized imports pass through the NWSA. And from Illinois, 
we handle at least 10 percent of each of that state's top 10 
containerized imports.
    We are also an important gateway for Illinois's 
containerized export products, including 12 percent of its 
soybeans and 23 percent of its cereals. Beyond these examples, 
the Alliance handles about 90 percent of containerized exports 
from Montana, half of the container exports from Orgon and 
Idaho, and at least 20 percent from Minnesota, the Dakotas, and 
Iowa. All of these rural trade dependent commodities need 
efficient and reliable infrastructure to move goods to market, 
yet America's port infrastructure is OK, just OK.
    The American Society of Civil Engineers gives us a low 
grade, as mentioned by Senator Duckworth. Rapid advancements in 
freight are driving ports to make significant changes. For 
example, a tripling of the container capacity of ships in the 
last decade requires billions of dollars in new investments. 
And improving our port system requires that we also focus 
outside seaport gates across the U.S. freight networks. 
Bottlenecks and the cost of fixing them is often beyond the 
means of the communities where projects are located.
    I greatly appreciate the Subcommittee's efforts to increase 
understanding among policymakers and the public because I do 
not think our Nation has found the right approach to supporting 
U.S. ports and moving us beyond a low grade. Before I close, I 
would like to offer an example from the Northwest. NWSA's main 
competitors are the Canadian ports of Vancouver and Prince 
Rupert. We are struggling to compete because the government of 
Canada has made the success of these ports a national priority 
and is providing substantial financial support to them.
    In the past two years, Canada awarded $384 million to just 
these two ports, which is more than 75 percent of the two-year 
total for U.S. Department of Transportation support 
infrastructure development program. Canada is also investing in 
its freight corridors all the way into the U.S. heartland. This 
investment has resulted in a 15 percent reduction in our market 
share in recent years, causing job losses and fewer carrier 
costs that U.S. exporters depend on.
    We are committed to maintaining a growing competitive 
gateway through investments in our port and connecting freight 
infrastructure, and we are leveraging hundreds of millions of 
dollars in private sector funds to remain a premier gateway, 
yet limited funding is a barrier to keeping pace with Canada.
    And unfortunately, we have had little success securing 
Federal funding for our projects. The success of Canadian 
initiatives to enhance its freight network represents a 
successful partnership between its ports and the Canadian 
government. In closing, I would respectfully recommend that the 
Subcommittee consider supporting increased funding for the Port 
Intermodal Improvement Program, freight formula funds, INFRA, 
and the elimination of the multimodal funding cap.
    Thank you once again for the opportunity to share my 
thoughts about the importance of DOT programs and the 
interdependence of urban and rural areas as it relates to 
freight mobility and goods movement. I would be happy to answer 
any questions that you might have.
    [The prepared statement of Mr. McCarthy follows:]

  Prepared Statement of Hon. John McCarthy, Port of Tacoma Commission 
         President and Co-Chair, The Northwest Seaport Alliance
Introduction
    Good morning, Chairman Wicker, Ranking Member Cantwell, Chairwoman 
Fischer, Ranking Member Duckworth and members of the subcommittee. I am 
John McCarthy, Port of Tacoma Commission President and Co-Chair of The 
Northwest Seaport Alliance (NWSA). It is an honor to be with you today 
to discuss the importance of ports to the nation, including rural 
America, and the critical role Federal partnerships play plays in our 
ability to effectively serve the Nation's economy. Thank you for the 
invitation to testify and for the work you are doing to address the 
challenges facing ports and our freight system.
    Founded in 1918, the Port of Tacoma is an independent special 
purpose government with directly elected commissioners representing the 
people of Pierce County, Washington. The NWSA is a unique partnership 
formed in 2015 between the ports of Tacoma and Seattle (a similar 
special purpose government representing the people of King County, 
Washington) to jointly manage our marine cargo facilities, including 
the fourth largest container port complex in North America as well as 
substantial breakbulk, auto, military, and project cargo operations.
    The primary mission of a port authority is to create and support 
economic activity by building transportation infrastructure and 
managing operations at our facilities. In our region, NWSA cargo 
activity employs over 58,000 people. But our job and our focus are much 
bigger than the Puget Sound region. The State of Washington is the most 
trade dependent state in the nation, with 40 percent of all jobs tied 
to trade, including hundreds of thousands in both rural and urban areas 
who work for importers and exporters that use our facilities.
    These job impacts carry far beyond the Puget Sound region because 
ports are not simply local assets in urban centers. Our port system is 
a fundamental foundation of the U.S. economy, supporting every corner 
of the country. At the NWSA we cannot view the world through an urban 
or rural perspective because our economic success is deeply embedded in 
both.
    The investments ports are making create nationwide benefits, but 
what we're able to do locally is insufficient if our goal is to build a 
system that enables the U.S. economy to remain among the most 
competitive in the world. And that should be our goal. It is critical 
to view our ports and our freight system through the lens of national 
economic competitiveness and as strategic assets. The modernization of 
this critical transportation infrastructure should be a top Federal 
government priority and focus of Federal investment by all grant 
programs at the Department of Transportation (DOT), including those 
managed by the Build America Bureau. And as a representative of ports 
today, I want to highlight the important work the Bureau is doing with 
ports to drive Federal investment through programs like TIFIA and 
INFRA. On behalf of all ports we look forward to continuing to work 
with the Build America Bureau and DOT to facilitate Federal investment 
and support of our Nation's ports and trade corridors.
Seaports are Vital to the U.S. Economy
    Every American depends on the success of our ports because seaports 
are vital economic engines. Nearly all the country's overseas cargo 
volume moves through seaports: 99 percent by weight and 64 percent by 
value. International trade through seaports accounts for over a quarter 
of the U.S. economy and supports over 31 million American jobs. In 
2018, seaports generated nearly $5.4 trillion in total economic 
activity and more than $378 billion in federal, state and local tax 
revenues.
    Seaports are critical to the success of U.S. businesses. For 
agricultural shippers, ports often make the difference in whether their 
products are competitive in global markets. Manufacturers depend on 
highly efficient, reliable ports to get their goods to market and to 
take advantage of the just-in-time processes that are common practice 
in their industries. Strong ports provide critical advantages to 
exporters, including lower shipping costs, more frequent calls by ocean 
carriers serving more export markets, shorter time to market and 
greater vessel capacity and container availability. If we hope to 
increase U.S. exports and economic competitiveness more broadly, 
enhancing our port system is essential.
    Seaports serve the entire nation, not just the coastal and Great 
Lakes states in which most seaports are located. Our port is a great 
example of this. Nearly 60 percent of our containerized import volumes 
are bound for the Midwest and other destinations outside the Pacific 
Northwest. Our export cargo originates from all 50 states. While our 
port is located in an urban area, we represent critical infrastructure 
for the Nation's agricultural industry and the rural communities that 
depend on it. In fact, according to the U.S. Department of Agriculture, 
the NWSA is the second largest port in the country as measured by 
agricultural trade tonnage.
    In specialized agriculture markets the importance is even more 
pronounced. For example, the NWSA is the Nation's leading export 
gateway for refrigerated agriculture products, representing nearly 20 
percent of national volumes. In the Northwest, among the top eleven 
export markets for both apples and pears, nine of them depend on our 
seaports. For Washington's potato industry 70 percent of the 10 billion 
pounds of potatoes produced were exported, the vast majority of which 
passed through NWSA seaport facilities.
    The Washington state forage product industry is one of the best 
examples of how competitive ports can affect jobs in an export-
dependent industry. Forage products like hay are the largest export by 
volume through the NWSA. However, our state's hay exports have been 
constrained by limited vessel capacity and container availability, 
which have been exacerbated by our loss of market share to expanding 
Canadian ports, as well as by congested freight infrastructure. Given 
the relatively low margins, small increases in cost have serious 
implications for the future of the animal feed industry in the Pacific 
Northwest.
    As it relates to Nebraska, 8 percent of the state's containerized 
waterborne exports pass through the NWSA, as do 26 percent of its 
containerized waterborne imports and 10 percent of total imports.
    And in Illinois, the NWSA handles at least 10 percent of each of 
the state's top ten containerized waterborne imports. We also are an 
important gateway for critical export products, including 12 percent of 
Illinois' containerized soybean exports, 23 percent of containerized 
cereal exports, 15 percent of oilseed exports, 10 percent of meat 
exports, and 15 percent of dairy exports.
    Beyond these examples, the NWSA handles about 90 percent of 
containerized cargo from Montana, half of containerized exports from 
Oregon and Idaho, and at least 20 percent from Minnesota, the Dakotas, 
and Iowa. Most U.S. soybeans are grown in the Midwest and 23 percent of 
all U.S. soybean exports including those from Nebraska and Illinois are 
shipped through bulk and container terminals in the Pacific Northwest.
    All of these rural, trade-dependent commodities need well 
maintained, efficient and reliable infrastructure to move goods to 
market both in the U.S. and abroad. Currently, it costs two to three 
times MORE to ship a container of apples from Washington state to the 
East Coast than it does to ship it to China. And of that cost of 
shipping to Asia, as much as 40 percent is the cost of moving it from 
the packing facility to the port itself. These products cannot move 
without sufficient port and freight infrastructure. This is why rural 
America understands and supports ensuring ports and freight corridors 
into and through urban areas are well maintained and efficient.
Our Port System's Infrastructure Challenges
    Unfortunately, our ports and our freight system do not always get 
the attention they deserve. I greatly appreciate the subcommittee's 
efforts to increase understanding among policymakers and the public 
because I do not think our Nation has found the right approach to 
supporting its ports.
    America's port infrastructure is OK. Just OK. The American Society 
of Civil Engineers gives us a C+ in their Infrastructure Report Card. 
Building a more modern port system requires that we address a long list 
of shortcomings. Because the scope of this challenge is so great, 
additional Federal investment and focus will be needed if we are to be 
truly successful in this endeavor.
    We need to not only maintain what we have in a state of good 
repair, but also expand our ability to handle more cargo. This requires 
ongoing and often significant investment, as many seaport terminals are 
in need of major rehabilitation. In addition, ports need to increase 
our capacity and efficiency to manage increased volumes. By 2045, DOT 
estimates that container traffic at ports will be driven by a doubling 
in the volume of imports and exports transported by our freight system.
    Remaining competitive requires more than simply maintaining the 
status quo. Rapid developments in our industry are driving ports to 
make transformational changes. One of the most significant dynamics is 
the dramatically increasing size of container ships. The average ship 
calling at NWSA terminals about ten years ago could hold 5,000 to 6,000 
twenty-foot containers. Today we receive calls on a weekly basis from 
container vessels that can hold more than 13,000 containers, and 
18,000-container ships are on the way soon. These vessels are longer 
than five Boeing 747s and larger than an aircraft carrier. 
Accommodating these larger ships require major investment at ports, 
including deeper berths and navigation channels; larger cranes and 
stronger docks to support them; electrical grid upgrades; additional, 
high-efficiency cargo-handling equipment; and improvements to container 
yards and intermodal facilities.
    Alongside these projects, ports often must make investments to 
mitigate the impacts of rising cargo volumes on neighboring 
communities, which bear a disproportionate burden in supporting U.S. 
trade flows. In addition, government regulations, community 
expectations and customer demands increasingly require that we build 
infrastructure in a more resilient and environmentally friendly 
fashion. While necessary, this increases costs considerably.
    Modernizing port terminal infrastructure at a pace sufficient to 
remain competitive globally is already challenging enough for ports. 
Yet improving our port system also requires that we look outside 
seaport gates to the road and rail infrastructure that connects ports 
to the rest of the national freight system. Upgrading this 
infrastructure is even more costly than for marine terminals. An 
additional challenge is that the roads, rails, bridges, tunnels, and 
waterways that connect ports with the markets they serve are typically 
outside port boundaries and thus are the responsibility of 
municipalities, counties, states or the Federal government. Bottlenecks 
in the supply chain can be found all over the country, but the cost of 
prioritizing and fixing them is often beyond the means of the 
jurisdictions in which the projects are located. Furthermore, building 
a railroad overpass, for example, might be more important to an 
exporter in a faraway state than it is to the local community that must 
approve taxing themselves to pay for that overpass. This is why the 
work of the DOT and Build America Bureau is important to ports. We need 
Federal investment to bridge the gap through grant programs like INFRA 
or loan programs like TIFIA to help communities bring to fruition these 
critical infrastructure projects that provide nationwide benefits.
    To that end, U.S. ports have identified $66 billion in needed 
investments in terminal, road, rail and waterway infrastructure over 
the next ten years.
Significant Near-Term Investment in Freight is Key to U.S. 
        Competitiveness--A Pacific Northwest Example
    I would like to offer an example from the Pacific Northwest that 
demonstrates the high stakes of the decisions our Nation faces about 
how to prioritize ports and freight infrastructure and what role the 
Federal government should play. To me it a case study for why 
maintaining the status quo is not sustainable.
    The port business is competitive, especially over discretionary 
cargo bound for inland regions that can be shipped through any number 
of ports. NWSA's main competitors are the nearby Canadian ports of 
Vancouver and Prince Rupert, which in recent years have been 
aggressively targeting U.S.-bound cargo. A key reason why we have 
struggled to overcome the competitive threat from our neighbors to the 
north is because the government of Canada has designated the 
development of their West Coast ports to capture U.S. bound cargo as a 
national priority and is providing substantial financial and policy 
support to ensure they succeed.
    Canadian Federal government funds have helped Vancouver and Prince 
Rupert build highly competitive marine terminals and are continuing to 
support their expansion. In the past two years the government of Canada 
awarded $US 384 million to the ports of Vancouver and Prince Rupert 
alone for projects that support goods movement through those ports. 
Canadian Federal contributions in their trade gateways have been 
mirrored by Federal investments along the entire trade corridor that 
connects the ports to population centers in the Canadian and U.S. 
heartland. Transport Canada has launched initiatives and adopted wide-
ranging policies to improve performance of their ports and the goods 
movement system. Because of the high priority Canada has placed on 
optimizing their goods movement system, they now offer an efficient and 
lower-cost alternative to shipping through ports in the U.S. Pacific 
Northwest. As a result, the NWSA lost 15 percent of our market share to 
the British Columbia ports in the decade following the opening of 
Prince Rupert's container terminal in 2007. In addition to continuing 
to expand on the West Coast, Canada has plans to repeat this success on 
the East Coast.
    The diversion of cargo from our ports to ports in Canada has 
resulted in the loss of U.S. transportation sector jobs. It also has 
reduced ocean carrier calls and, critically, the supply of returning 
containers that exporters depend on, which increases shipping costs and 
erodes or eliminates the competitiveness of their products in 
international markets--as demonstrated by hay growers in Washington 
state. If the Canadian ports continue to realize their goals for growth 
at the expense of U.S. ports, the economic consequences for our region 
and the agriculture exports from rural America I highlighted previously 
could be grave.
    The NWSA is committed to maintaining a growing and competitive U.S. 
trade gateway in the Pacific Northwest. The cornerstone of our strategy 
to respond to the challenge from Canada is ensuring we have the high-
capacity, high-efficiency infrastructure we need to remain a preferred 
port of call. The NWSA is making substantial investments to modernize 
our marine terminals and deepen our waterways. And we are contributing 
to projects in other jurisdictions that improve freight mobility 
through our port, including evaluating intermodal yards to strengthen 
our connectivity to rural communities.
    Yet limited funding is a barrier to developing infrastructure at a 
pace sufficient to keep up with Canada. We already are leveraging 
hundreds of millions of dollars in direct private sector contributions 
in support of our infrastructure efforts. Unfortunately, even though 
our port is a critical economic asset for our nation, we have had 
little success in obtaining Federal funding support for these 
initiatives.
    This resource challenge coupled with other cost drivers outside the 
control of our ports increases the Canadian advantage. For example, the 
major West Coast ports in the U.S. and Canada are blessed with 
naturally deep harbors that do not require regular dredging. Yet U.S. 
importers utilizing the ports of Tacoma, Seattle, Los Angeles and Long 
Beach still are charged an ad valorem tax of .125 percent, known as the 
Harbor Maintenance Tax (HMT), to maintain U.S. navigation channels. The 
collections at just these four naturally deep harbors account for 
approximately one-third of total HMT collections, but our ports receive 
almost nothing in return. Conversely, Canadian West Coast ports do not 
charge an equivalent tax, which creates a cost differential on average 
of $125 per container that is driving U.S.-bound cargo to Canadian 
ports. Similarly, rail rates to move containerized cargo from West 
Coast ports to the Midwest are significantly higher than those charged 
by the two Class 1 Canadian railroads.
How Can the Federal Government Help?
    We need to rethink our Nation's approach to port and freight 
infrastructure policy and funding. The success of Canadian initiatives 
to enhance its West Coast ports and the infrastructure that supports 
international trade demonstrates the positive returns a better 
partnership between ports and the Federal government can bring, 
including job growth and increased export competitiveness. A more 
proactive stance by the U.S. Federal government is justified given the 
importance of ports to the entire U.S. economy. And not only is greater 
Federal government involvement justified, it is absolutely necessary to 
overcome the policy and funding challenges ports are facing.
    I recommend this subcommittee explore the following actions.

  1.  Increase funding for the Port Infrastructure Development Program/
        Port and Intermodal Improvement Program

     The NWSA and other U.S. ports were encouraged by the creation of 
        the Port Infrastructure Development Program, which is now known 
        as the Port and Intermodal Improvement Program, and I would 
        like to thank Chairman Wicker and Ranking Member Cantwell for 
        your efforts to authorize it. Congress appropriated $225 
        million for this program for Fiscal Year 2020. While this will 
        provide U.S. ports a tangible boost, it should be viewed as a 
        beginning. As I highlighted above, nearly this level of funding 
        was provided annually to just two Canadian ports by the 
        Canadian Federal government. We urge Congress to prioritize 
        this key program and to increase its authorized funding level 
        in the upcoming reauthorization.

  2.  Increase funding for the FAST Act's INFRA and freight formula 
        programs

     U.S. ports view the INFRA and freight formula funding programs 
        created in the FAST Act as another step in the right direction. 
        Yet funding levels for these programs are not sufficient to 
        meet the needs of our gateways and trade corridors. The INFRA 
        program is oversubscribed. In the combined FY19 funding round, 
        DOT received $11 in unique requests for every $1 available. 
        State planning efforts required by the FAST Act have 
        demonstrated that the freight formula program also is 
        underfunded. With the FAST Act expiring this year, Congress has 
        an opportunity to increase funding levels for these programs.

  3.  Remove multimodal funding caps on the INFRA and freight formula 
        programs

     Freight does not move by highways alone, as the Committee well 
        knows. Our freight system is multimodal, and our freight 
        programs should reflect that reality if they are to be 
        effective. The FAST Act funding programs currently have 
        limitations on the amount of funding that can go to non-road 
        projects. Funding for these multimodal projects is capped at 
        $500 million over five years in the INFRA program and 10 
        percent of freight formula funding. I recommend these caps be 
        removed. This will allow our Nation to more quickly modernize 
        our seaports, as well as the first and last mile projects that 
        connect us to the rest of the freight system to move goods, 
        which have often fallen through the cracks in traditional 
        Federal infrastructure funding programs.

    In closing, I appreciate the opportunity to share my thoughts with 
you about the importance of DOT programs and the interdependence of 
urban and rural areas as it relates to freight mobility and goods 
movement. It is essential that we embrace a wholistic view of the 
supply chain to ensure that Federal freight investment is not viewed 
simply through a rural vs. urban lens. Without enhanced Federal support 
for freight we will continue to earn no better than a C+. And this 
mediocrity will not allow us to overcome the challenges limiting our 
export competitiveness, to support a modern global economy, or to 
compete with our neighbors to the north or south that seek to supplant 
U.S. ports as gateways to America's heartland and beyond, which will 
result in grave consequences for rural agriculture communities 
throughout our country.
    I appreciate the Committee's continued leadership and the ongoing 
commitment of Senator Cantwell specifically to help bring freight to 
the forefront and drive economic growth.
    Thank you for the invitation to testify today.

    The Chairman. Thank you, Mr. McCarthy. We will begin with 5 
minute rounds. So for our first round, I will start. Mr. 
Szabat, one purpose of the ROUTES initiative is to provide 
information to rural communities about available Federal 
funding and financing options, as well as other technical 
assistance. Can you provide more details about how the ROUTES 
initiative will work for rural project sponsors? For example, 
if a rural project sponsor calls or e-mails asking for 
technical assistance, can you walk us through what they should 
expect in response?
    Mr. Szabat. Thank you, Senator, for the question. And 
first, I will caveat my response for saying this is a brand new 
program and initiative, and it is designed from the start to 
evolve. So we will have a feedback loop with our the rural 
communities which we work with and the goal is--so I will just 
say the way in which we respond to an inquiry that comes in 
today may not be the same process that we have six months from 
now when we get their feedback.
    But with that, I would say I can give an example of what we 
are doing right now. We have just concluded a request for 
information from rural communities and they have come in with 
comments to say here is what we think, we the communities think 
the Department ought to do different and do better. So those 
communications have come to us and are being parsed by 
dedicated staff that we have within the Office of Policy in the 
Department, as well as within the our Build America Bureau.
    And their responsibility is twofold. One, interactions and 
communications directly back to the communities so that they 
have somebody who they can deal with in the Department directly 
and not have to wait weeks or months at a time for a response. 
And second, they are kicking that upstairs to the leadership in 
their offices and ensure that leadership is coordinated 
intermodal so that we don't have things that are stuck in one 
bucket, in a single silo of one mode. And our coordinating 
office or organization is called the ROUTES Council. If you 
have further questions about that, I would be happy to go into 
more detail.
    The Chairman. DOT's recent request for information 
regarding the initiative ask for feedback--and that is to look 
at the current unmet needs in rural transportation. How do you 
think the DOT can work to better address them? How can the DOT 
help rural areas in this country to be able to access even 
right now the funds that would be available for them through 
these initiatives?
    Mr. Szabat. I appreciate the question, Chairman Fischer. 
There are several ways and much of this is informed by the 
feedback that we received from before the RFI and from what we 
have received already. One is clarity of the world definition. 
We have a collection of different programs that can serve rural 
communities. Many of them have different statutory definitions.
    So we find it is helpful for us to put that together in one 
place and have a one-stop shop so that anybody who wants to 
come and discover what program or programs may assist them, 
that we can give them and not just say here is one example, 
here is another example, but give them a comprehensive list.
    The Chairman. Do people need to call in? Do managers need 
to call in? Do they need to contact DOT in order to find that 
information? Is it available in a clear way on a website?
    Mr. Szabat. Yes. Well, yes to the first and we are 
developing the second thing. I mean truly one of the issues 
that we have identified was we need to have more information 
and more up-to-date information and more quickly updated on our 
website. That is one of the first--one of the initial actions 
that we are taking.
    The Chairman. When you are looking at different types of 
proposals or resources that are out there, what does DOT expect 
to provide as a result of the information that you get in? Is 
it going to be available in that toolkit that you are going to 
have out there?
    Mr. Szabat. Yes----
    The Chairman. User-friendly?
    Mr. Szabat. Yes, user-friendly. So this is the intent. 
Among the amount of feedback that we receive is how complex it 
is to work through the range that we have, available grant sand 
loan programs, and the associated effect of that is, it is 
easier for communities that have a long history of working with 
the Department and these tend to be larger communities and they 
are better funded. They tend to have more success because they 
know better how to work through these wickets.
    So through the toolkit we want to help try to redress the 
imbalance, level the playing field if you will, and provide 
guidance to rural communities both on--and all underserved 
communities, both on here is what you need, the information you 
need to have in order to apply, here is how you should organize 
it. The other thing that we can do is collect more, and we are 
doing, is collect more data and share that with communities so 
that they don't have to pay collect that information 
themselves. That is a longer-term project that will not be part 
of the initial toolkit, but we anticipate the toolkit coming 
out later this quarter.
    The Chairman. Thank you. I think that that is really 
important when you look at the limited resources maybe those 
underserved communities do face, and to make it easier for 
those communities to access funds that are available for them 
will be really helpful.
    Usually larger communities, states, they have grant 
writers, they have the ability to access grants where smaller 
communities, underserved areas that definitely face long-term 
needs are unable to do that. So I commend you on that being a 
goal. Thank you. Senator Duckworth.
    Senator Duckworth. Thank you, Chairman. Dr. Farajian, I was 
a strong advocate for systems' approach to Federal 
transportation policy. And to maintain our global 
competitiveness in the 21st century, the U.S. will need to 
break down the outdated and inefficient modal silos that have 
developed over 75 years. Congress and DOT should do more to 
reflect the realities of supply chains that stretch from 
factories and shops in Illinois all the way across the world to 
homes, all around the world.
    To this end, I authorized a provision in the FAA 
Reauthorization Act of 2018 that required DOT to study the 
benefits of expanding TIFIA program to include eligible airport 
related expenses. President Trump and I agree on very little, 
but we did agree on this one thing. So Dr. Farajian, the FAA 
Reauthorization Act required you to report to Congress within 9 
months on the TIFIA airports study. That was 15 months ago.
    Do I have your commitment that we will finally see the DOT 
study by the end of this first quarter of 2020?
    Mr. Farajian. Thank you very much, Senator, for that 
question. If I may, I want to mention that this is an important 
report for us and we have not taken it lightly. We have gone 
through a lengthy process of collecting the necessary 
information because we had to do a comprehensive market 
analysis and engage different stakeholders.
    We have gone through the steps. It was a national study 
that we had to go through it and do a nationwide analysis of 
the market to figure out what are the funding and financing 
gaps in the market. We have also had to look at the impact to 
the budget and impacts of the existing programs. That also is 
something that we have spent a lot of time to look at those 
impacts and reflect those in the report.
    Finally, we had to make recommendations on whether to 
expand eligibility under an existing program or establish an 
entirely new program. So that also takes a lot of analysis. 
There are a lot of details and we had to work through them. I 
am glad to say that we are almost done with the report.
    Senator Duckworth. So this quarter?
    Mr. Farajian. We should be able to finalize the report and 
put it in interagency clearance soon. Hopefully this quarter we 
will be able to put it in interagency clearance. And as soon as 
it is cleared, we will be happy to share that with the 
Congress.
    Senator Duckworth. I will be checking in with you on a 
regular basis to get those results. Thank you. I also mentioned 
in my opening statements, some stakeholders have spent seven 
figures to not secure a loan and this is especially burdensome 
for rural communities and small communities. While the Bureau's 
new RRIF Express program is a step in the right direction, I 
want to highlight that DOT approved only 6 loans in the last 8 
years and less than 40 since the program's inception in 2002. 
Clearly, the process is flawed.
    To be fair, Congress enacted a credit risk premium 
mechanism, more to appease a Congressional budget office and 
hide the true cost of investing in rail infrastructure than 
addressing the practical needs of rail stakeholders. In the 
interest of time, I will be asking you to submit for the 
record, Dr. Farajian, a list of recommendations for this 
Committee to consider in the next reauthorization bill to 
improve the RRIF program. Will you do that?
    Mr. Farajian. Talking about the RRIF program, if I may, I 
would like to also mention that as someone who used to be a 
borrower of the programs that Bureau was providing in the past 
when I was in Virginia, I completely understand some of those 
concerns that you just mentioned.
    The program, the RRIF program that you mentioned is 
definitely a little bit challenging because the borrowers need 
to go through the process with us in order to understand what 
the CRP is going to be. And it requires a lot of studies, a lot 
of analysis, gathering information to be able to provide them 
with accurate information about what they should expect.
    Senator Duckworth. I am sorry, I am running low on time. 
Can you just send us a list of recommendations?
    Mr. Farajian. Yes, we can do that.
    Senator Duckworth. Thank you. Dr. Szabat, I have a very 
short amount of time, but if you could tell me here and then 
also in writing as a followup, can you tell me more about the 
pilot program that Secretary Chao announced, the $38 million 
multimodal First Responders safety technology pilot program. 
Where is DOT putting the--where are you pulling the $38 million 
from? When is DOT expected to begin accepting applications? 
This is something that is very near and dear to my heart as 
well as Senator Durbin and other Senators.
    I think we have all lost public safety officials who have 
been killed on the side of the road doing their jobs. And then 
we want to make sure that our First Responders are protected.
    Mr. Szabat. Thank you, Senator, for your interest in this 
important initiative that we also care and Secretary Chao cares 
very much about. This targeted investment about $38 million, we 
intend it to build to demonstrate the benefits of a vehicle to 
infrastructure technology for emergency response vehicles using 
the 5.9 gigahertz safety band. We anticipate that the funding 
opportunity will come out shortly and happy to give you more 
details for record.
    Senator Duckworth. Thank you. I am over time. Thank you.
    The Chairman. Thank you, Senator Duckworth.
    Senator Cantwell.
    Senator Cantwell. Thank you, Madam Chair. And again, thank 
you to the witnesses for being here. Mr. McCarthy mentioned the 
juggernaut that Seattle and Tacoma are on moving product. In 
Washington State we shipped $440 billion in freight products in 
2018. That is a lot and I guess we are quite significant in the 
total of U.S. agricultural products. One of the things that you 
mentioned, which I wholeheartedly agree with, is that 
communities are often left without the resources to take care 
of moving all that freight.
    I consider it to be almost like the last mile here. Ports 
are the most critical aspect and they are right there, the last 
mile. It is almost as if America's ports on local streets are 
like clogged arteries. They are key to making it through the 
system and yet they are clogged.
    So, I wanted to ask our two DOT witnesses if they supported 
lifting the multimodal cap on the INFRA program so we could put 
more money into freight infrastructure so that we can solve 
some of these problems of congestion that are taxing at the 
last mile or in other aspects of building capacity, and 
certainly in the rural communities< But this congestion problem 
is certainly causing us great problems. So Mr. Szabat or----
    Mr. Szabat. With your permission Senator, I will take first 
crack at that question because you--I appreciate it very much. 
You are addressing one of the most important challenges we 
have. Safety is the Department's top priority but congestion 
mitigation in all modes of transportation, getting that right 
mix of multimodal use of transportation, are also high 
priorities for us. And so you mentioned the challenge of the 
possibility of raising the cap. We have got about $158 million 
in INFRA funding that is still available to allocate to 
multimodal projects or component projects in this current 
fiscal year----
    Senator Cantwell. So are you ready to give that to Mr. 
McCarthy?
    [Laughter.]
    Senator Cantwell. Because he--and I don't mean to 
interrupt. We are all short on time today. Mr. McCarthy just 
said Canada, his competition is Prince Rupert, and the Canadian 
government just gave, what did you say, $300 million?
    Mr. McCarthy. $385 million.
    Senator Cantwell. OK, and why? Because they want them to be 
able to take business competitively from us. So their 
government is making that investment and at the same time the 
Chair's product, I guarantee you, is sitting too darn long 
because it can't get through the congestion.
    So we have to wake up, that this Nation's economy for the 
future is very much based on the Pacific being able to move 
export product to Asia and we have to make this investment. 
Again, I'm glad that you have some extra left over money, but I 
want to know how much are you willing to increase the 
multimodal cap, because we are going to have this debate and I 
am definitely going to be for lifting the cap.
    Or doing are you for doing something else, if you don't 
want to--if you want to leave the cap, what else can we do? 
Because this is a problem. So are you for lifting the cap or 
not?
    Mr. Szabat. I am tempted to say, yes, to answer your 
question of which you gave me the option of both yes or no, but 
I will not give that as a formative an answer. The 
Administration does not have the position on lifting the cap. 
So we don't--the challenge that we have is the $158 million 
that we have.
    I suspect that the port or ports in Puget Sound could put 
to good use every single dollar of that money and more but the 
challenge of this is a national program because in there are 
other ports and other transportation needs, multimodal 
transportation needs across the country. So lifting the cap to 
assist a particular project or mix of projects does not address 
the overall need of transportation investment from all sources, 
not just the Federal Government.
    Senator Cantwell. I was illuminating the fact that other 
countries are being more aggressive and that we pay the price 
for the lack of that investment. I am sure that we can get a 
very broad coalition of people who say we should be spending 
more on freight. When you look at the numbers, you are going to 
see a 40 percent increase in freight.
    We should be celebrating that now we have on a global basis 
for the first time in 2018, a tipping point. The majority of 
the world's population is middle class. What does that mean? 
They are going to eat and consume things that America can 
produce and export to them. It is a tremendous market, but if 
we can't get our products there because they are sitting 
somewhere in traffic, it is going to be a problem for us.
    So I guess I know DOT's position since you are the senior 
person here, but we love the yes, and we look forward to 
continue working with you in getting a robust administrative 
decision on more freight investment. Thank you, Madam Chair.
    The Chairman. Thank you, Senator Cantwell. And Dr. 
Farajian, in my previous questions to Mr. Szabat, I was asking, 
you know, how are you going to make it easier for stakeholders, 
for managers to be able to access the grants that are 
available, what is needed, especially those with limited 
resources? I would ask you, in your testimony, you mentioned 
state visits, which we would like to get you to Nebraska as 
well. I noticed you haven't been there. But you mentioned state 
visits is one thing but are there other actions that the Bureau 
can take in order to inform states and localities about the 
services that are available to them especially with regard to 
the rural initiatives?
    Mr. Farajian. Chairman Fischer, thank you for that 
question. That is an excellent question. Since I joined the 
Department, we have worked very hard to make sure that we have 
a comprehensive outreach plan to reach out to those who have 
not heard about their programs in the past or will have a 
difficult time to understand how they can take advantage of 
some of those programs.
    So let me just explain to you briefly what are some of the 
steps that we have taken. State visits is one of the successful 
efforts that we have gone through, because when we go, we meet 
with them face to face, we spend about a day with them at 
different levels, as I mentioned in my oral testimony. We try 
to meet with them at different levels, educate them about our 
programs, answer their questions, and also explain to them how 
the process works. That has been a very successful effort for 
us.
    But beside that, we have conference calls with them, we 
have webinars for them, we go to different conferences and 
industry gatherings, not only to the big ones that folks who 
are familiar with our projects typically attend, but to those 
that people from rural communities, counties, cities often go 
and participate in those. So that is the outreach program that 
we have in place. Our outreach team is very active in terms of 
reaching out to people and answering any questions that they 
may have.
    Sometimes they reach out to us with questions. We will 
spend time, walk them through the answers, walk them through 
the process. Besides that, as I mentioned also in my oral 
testimony, we have tried to tailor our products so that they 
are not just benefiting larger projects the way that they were 
being used in the past.
    Some of the new projects that we have added to our pipeline 
are smaller projects. They are not going for a 35, 40 year 
loan. They actually are going for shorter type of loans. They 
are simpler, not as complicated as some of the larger projects. 
So we have put those also in the toolbox. So those who want to 
take advantage of those tools also have access to those tools 
as well.
    The Chairman. Thank you. Also, Dr. Farajian and Mr. Szabat, 
a question to you both. As you are developing these rural 
transportation initiatives, have you or others at DOT 
identified any statutory, regulatory barriers that may have 
limited the Department's ability to support rural communities 
or to carry out these initiatives?
    Mr. Szabat. Senator, with your permission, I will take the 
first crack at that answer. As we review the statutes and as we 
identify areas and get feedback from the rural communities, we 
intend to have a feedback loop with Congress, with these 
members of this Committee who are interested, to inform you of 
what those issues may be that we identify.
    So for example, one thing that we know is almost certain to 
come up, we have nine different programs that distinguish 
between rural and urban and they have a range of different 
definitions of what constitutes a rural and urban community. 
There may be some advantage in having them more uniform or 
there may be advantages in keeping some of these programs 
defined the way they are. This is part of the conversation.
    We have to have the rural communities before we make any 
recommendations ourselves to our processes, the interagency 
review, and then coming to you to talk to Members of Congress. 
Similarly, on the regulatory side, I think this is one of the 
main reasons we have the ROUTES Council established.
    Take a look at what we are doing internal within the 
Department of Transportation. What can we streamline and what 
can we do quicker and better that would serve the communities, 
and frankly, the best advice we are going to get on that is the 
input we get from the communities themselves as opposed to us 
looking at the tea leaves and trying to determine internally 
what we are doing that that works well for the communities and 
what we are doing that does not.
    The Chairman. Thank you. Doctor?
    Mr. Farajian. I just want to add to what Mr. Szabat just 
mentioned that we actually think that within the existing 
authorities and within the existing programs that we have there 
are plenty of opportunities, and we are more focused on finding 
where we can help rural communities to take advantage of those 
programs in areas that were not explored in the past.
    Maybe, for example, TIFIA rural project initiative is 
something that I want to bring up. That is a program that, as I 
mentioned in my oral testimony, is getting a lot of attention 
especially from rural communities. We have 13 projects in seven 
different states. It is a program that can greatly benefit 
rural communities projects that are under $100 million, and it 
is a program that doesn't require any modifications, any 
changes to the existing requirements that we have. We can 
easily implement it and we are going through that process with 
our rural stakeholders.
    The Chairman. I would ask that if both of you could follow 
up with me on what this Committee should do to address any of 
the concerns that are out there in the future so that we can 
make sure that these efforts to help rural development are 
going to happen.
    So, I would appreciate that. I am going to keep going. Dr. 
Farajian, Congress appropriated funding for RRIF credit 
assistance, including $25 million in Fiscal Year 2018 to 
address the cost of the RRIF credit risk premium. What impact 
do you expect this assistance will have on the utilization of 
the RRIF program?
    Mr. Farajian. Chairman Fischer, that is an excellent 
question. I was asked a question about some of the challenges 
that currently the RRIF program is facing. That program, the 
RRIF Express pilot program that you just refer to is our effort 
to streamline our process and utilize the RRIF programs, 
especially for short line and regional railroads.
    If a project--if they have a project, short line and 
regional railroads, who have a project that is less than $50 
million, if it qualifies under the program, they can come to us 
and borrow up to $50 million for their project costs, and we 
with the money that you just mentioned has been appropriated to 
us, are able to pay for credit risk premium of that loan as 
well as some of the advising fees that typically they pay. We 
have also streamlined our process to make it faster. We have 
set up a team within the Bureau that is meeting on weekly 
basis, looking at interests that we are receiving under that 
program.
    We have advisors that we can bring on board quickly to look 
at the applications that we receive. Our goal is to make that 
program streamlined and fast and efficient, as fast and 
efficient as possible. We have received very good feedback so 
far on that program.
    As a matter of fact, just this afternoon at 2 p.m., the 
American Short Line and Regional Association is hosting a 
webinar to educate some of the potential borrowers on how they 
can take advantage of the program. And the application period 
has been open for 2 weeks. It is just the beginning of it.
    So it will be open for another two and a half months, and 
we are very optimistic that based on the feedback we have 
received so far, that it is going to generate very good 
results.
    The Chairman. Thank you. Mr. McCarthy, I see you----
    [Laughter.]
    Mr. McCarthy. Well, it is really interesting to listen to 
these two gentlemen. I am learning some things.
    The Chairman. Well, we need to hear from you as well 
because you represent an industry in an area that is extremely 
important to our country, as was pointed out by Senator 
Cantwell. You mentioned in your testimony that container 
vessels are getting larger, noting that 18,000 container 
vessels could be coming to port soon.
    Mr. McCarthy. Yes.
    The Chairman. What effect do these larger vessels have been 
on port operations, and what actions are ports taking now to 
mitigate any negative effects such as congestion at these 
facilities? I have had the opportunity to visit ports on the on 
the West coast and on the East coast, down to Florida. It is 
fascinating what is going on at our ports and changes that are 
being made, but no matter which port I have been at, there is 
deep concern about the congestion problem.
    Mr. McCarthy. Absolutely. It wasn't too many years ago that 
most of our vessels were 6,000 to 8,000 equivalent unit 
containers. And as you mentioned, we are looking at 18,000 
TEUs, which is substantial. It creates a lot of activity over a 
short period of time, which as you point out congest our roads, 
rail, and other infrastructure.
    So ports are struggling to develop that infrastructure 
within the vicinity of the gateway. So, we are doing innovative 
things like extended gate hours where we would operate on 24 
hours a day if possible, which has a dual benefit. For example, 
if I am not putting congestion on the roads when people are 
commuting to and from work. So that is the type of innovation 
that we are doing. Those come with expenses involved but our 
cranes are getting bigger, our ships are getting bigger, but a 
lot of it is the same activity.
    But that expanded activity, as you say, does pose a 
challenge with us that we are working through. We do need 
assistance as local communities to bring those facilities so 
that they are more than competitive with Canada, so that our 
U.S. products will find their way to their markets outside of 
the United States.
    The Chairman. We have heard on this Committee about 
technology and how technology can make some major changes. From 
the Port of Long Beach, Dr. Hasegawa testified before the 
Subcommittee about their work that they are doing on a port 
optimizer and that provides all stakeholders with more clear 
advanced information about the movement of freight. Is the 
Northwest Seaport Alliance working on similar technologies or 
practices to better utilize the current infrastructure you have 
while we are waiting to build and not just maintain, but to 
expand?
    Mr. McCarthy. Yes. In the last couple of years, we have 
expanded our efforts to track, for example, the length of time 
that a truck is at the terminal and waiting for the terminal to 
open up. And we have programs similar to those in Port of Long 
Beach and Port of Los Angeles, although by a different name, 
but for the record, I would like to provide some additional 
details on those and provide them to you for the record, if I 
could.
    The Chairman. That would be wonderful. Thank you. I also 
wanted to talk to you, sir, about concerns that I have heard 
from shippers, particularly agriculture shippers, and that is 
the result of the congestion and delays at port facilities. As 
you know, the Federal Maritime Commission is currently 
reviewing a proposal to clarify how it is going to assess the 
reasonableness of the detention.
    And what is the Northwest Seaport Alliance policy on the 
fees that you have for detention? And do you have 
recommendations for addressing the underlying issues which I 
hope to receive from you on the port congestion and delays, 
lack of clarity where the freight is, so that the port 
facilities don't need to assess those fees in the first place? 
My folks don't want to pay them. That is what I am saying to 
you.
    Mr. McCarthy. I understand. That is a fair question and one 
that I have heard throughout our State. For example, we grow 
about 10 billion pounds of potatoes and export about 70 percent 
of them, apples and cherries, and other agricultural products. 
And also we are huge exporter of hay.
    And so I recently met with those that generate and compress 
the hay for export and we have talked about those issues, and 
the issue primarily centered around the fact that they have 
certain number of trucks they sent over to our gateway. They 
are tied up. They are unable to do, for example, two loads in a 
different, you know, in the same work cycle. It expands their 
costs. Those are the type of delays that are directly related 
to our infrastructure issue problems.
    As to the detention fees itself, that is another one of 
those issues, if you don't mind, I would like to for the record 
provide some additional information to you.
    The Chairman. Thank you. Thank you so much. I understand 
Senator Thune will be returning? Senator Thune will not be 
returning. So I am just going to ask a couple more questions, 
if I may.
    Mr. Szabat, last year the Congressional Research Service 
issued a report showing that several highways that are 
projected to have the largest increases in truck traffic 
between now and 2045, and that includes large portions of I-80 
in my state of Nebraska as well as interstate portions in 
Illinois and Texas and a handful of other States.
    Can you tell me, does the DOT take into consideration 
future increases in traffic demand or other similar metrics 
when developing infrastructure policy? And should Congress 
consider future freight demand, such as truck traffic demand 
along Interstate 80, when developing surface transportation 
infrastructure policy, particularly as it relates to the 
National Highway Freight Program?
    Mr. Szabat. I appreciate the question, Senator. The short 
answer is yes to both aspects of your question. First, when we 
look at applications for our discretionary grant program, one 
of things that we are looking at is reduction and congestion 
immediately, but also what is the forecast growth. And a second 
aspect which plays into that is, what is the economic impact. 
We try to measure benefit-cost analysis for each of these 
projects----
    The Chairman. When you look at the impact, do you look at 
the impact within a state, within a locality, within a state, 
within a region or nationally?
    Mr. Szabat. So the--you will recall that when these 
programs--the grandfather of all of our discretionary grant 
programs was TIGER, and these were for projects of regional and 
national significance.
    And much of that remains within the criteria we have for 
our programs today. So when we evaluate it, we look not just at 
the local benefit, but for example, you know for highway 
project like I-80 in Nebraska or from any of our rail or 
highway projects, what is its benefit nationally to moving 
freights, whether it is to the ports in the Pacific Northwest 
or someplace else because investing in a highway just for the 
sake of the people who live around that stretch rarely makes 
sense. It makes sense for its impact on the Nation.
    And then second, as you very much aware, we are working on 
a national freight strategy and a national freight network. And 
in both cases, in both of those, we are looking not just at a 
snapshot in time as to where are the freight flows today, but 
where are the opportunities to reduce congestion and develop, 
if you will, shift freight flows to better utilize the network 
so that we can get the maximum economic benefit at the least 
infrastructure investment cost.
    So I think all of that would flow into an answer of if you 
are asking for a personal recommendation for should Congress 
consider these factors going forward, I would give an emphatic, 
yes.
    The Chairman. Thank you. Also in Nebraska last year, we 
experienced severe flooding that caused extensive damage to our 
surface transportation infrastructure, including railroad 
infrastructure. When a short line railroad in Nebraska had 
significant damage, it had nowhere to turn to at DOT for grant 
assistance. Congress has previously allocated grant funding to 
repair critical short line infrastructure following disasters. 
Mr. Szabat, would the Administration support Congressional 
grant funding short line railroads could access to help recover 
after disasters?
    Mr. Szabat. Thank you, Senator. You have identified a 
critical gap in how we, the Government, approach some modes of 
transportation are not done unequally in certain circumstances. 
As the Administration has not taken a position on the 
legislation, I cannot say that we would or would not support. I 
do say I would look very much forward to working with you, 
members of your staff, other interested members in Congress to 
provide whatever information or assistance that you need, both 
in developing a proposal and possibly in developing the 
Administration's position.
    The Chairman. Thank you, sir. We will be in touch. 
Additionally, Dr. Farajian, would the RRIF Express program, 
including the credit risk premium assistance, be available for 
short line railroads to use to repair infrastructure following 
disasters?
    Mr. Farajian. Thank you. Thank you for that question, 
Senator. There are some eligibility criteria for different 
types of projects that can use RRIF Express. Right now, I don't 
know exactly what is the situation that you are describing, but 
my staff will be happy to meet with any potential borrower and 
answer their questions, look at the specific project that they 
are trying to borrow, to develop--to spend money on it.
    And if the project is eligible, yes, the answer is that 
RRIF Express could be a source of financing for that project. 
However, I should also mention that the duration that the 
application period is open is as of now just for 3 months and 
it is going to expire on April 13. So that is just something 
that I wanted to have on record. A note that was published, it 
specifically says that applications can be received between 
January 13 and April 13.
    The Chairman. Thank you very much, doctor. I would like to 
thank all three of our panelists today. I appreciate you coming 
in and sharing your expertise with us.
    The hearing record will remain open for two weeks and 
during this time Senators are asked to submit any questions for 
the record. Upon receipt, the witnesses are requested to submit 
their written answers to the Committee as soon as possible.
    Again, thank you so much for your participation on this 
very important subject. Thank you. The hearing is adjourned.
    [Whereupon, at 11:05 a.m., the hearing was adjourned.]

                            A P P E N D I X

   Response to Written Questions Submitted by Hon. Maria Cantwell to 
                            Hon. Joel Szabat
    INFRA and BUILD funding. The FAST Act provide $4.5 billion over 
five years for the Nationally Significant Freight and Highways Grant 
Program, also known as the INFRA program. In that same time period, 
Congress has provided $4.4 billion for the National Infrastructure 
Investments Grant program, also known as BUILD.

    Question 1. Mr. Szabat, how much funding would be needed to support 
all the applications received for INFRA and BUILD grants last year?
    Answer. In 2019, eligible applicants for the INFRA and BUILD 
program requested approximately $19.4 billion in grant funding from the 
Department. The continued overwhelming demand for the Department's 
discretionary grant programs demonstrates the significant unmet 
infrastructure needs across the country. Eligible BUILD applicants 
requested $9.6 billion, and eligible INFRA applicants requested $9.8 
billion.

    Question 2. How much funding would be needed to support all of the 
applications subject to the multimodal cap under the INFRA program?
    Answer. For the 2019 round, approximately $1.2 billion of $9.8 
billion in requested grant funding would have been subject to the 
multimodal cap. At the beginning of the round, approximately $200 
million of the original $500 million was still available to be awarded.

    Freight Infrastructure. The FAST Act required the Department to 
develop a National Strategic Freight Plan by December 2017. The FAST 
Act also required the Department to establish a National Multimodal 
Freight Network to assist in the prioritization of Federal freight 
investment. DOT was required to issue a final network by December 2016.

    Question 3. How is the Department able to appropriately prioritize 
Federal freight investment through programs like INFRA and BUILD when 
these items are not yet completed?
    Answer. The Department recognizes the importance of Federal freight 
investment to the safe and efficient movement of freight throughout the 
United States. Through discretionary programs, the Department has 
included evaluation criteria that allow the Department to identify 
priority freight projects. For example, in the most recent INFRA notice 
of funding opportunity, the Department has included whether a project 
primarily serves freight and goods movement as a factor in the economic 
vitality criterion evaluation.

    Question 4. When can we expect the Department to finalize these 
items?
    Answer. The Department has completed the National Freight Strategic 
Plan and it is expected to be released in FY20.The completion of the 
National Freight Strategic Plan will directly lead into the 
identification of the National Multimodal Freight Network.

    GAO Report. Last March the GAO issued a report titled Action Needed 
to Guide Implementation of Build America Bureau and Improve Application 
Process noting that the Build America Bureau lacks a plan to guide 
ongoing and future efforts, as well as any kind of performance 
indicators to assess its progress. A year later, all five of the GAO's 
recommendations remain open.
    In response to a recommendation calling for a detailed 
implementation plan that sets goals and a timeline for the Bureau's 
continued efforts and prioritizes work to carry out the multiple 
responsibilities given to the Bureau in the FAST Act, DOT stated it did 
not plan to create a detailed implementation plan as that would detract 
from higher priority efforts.

    Question 6. What are the Bureau's top priorities, and what steps 
has the Bureau taken to establish goals or timelines for ensuring that 
states and local governments are able to complete the application 
process and receive necessary funding in a timely manner?
    Answer. The Bureau top priorities are to:

   Enhance the pipeline of eligible projects by providing 
        proactive educational outreach and technical assistance to 
        potential borrowers in utilizing the TIFIA and RRIF programs, 
        and their capacity to fill market gaps by leveraging 
        substantial local and private co-investment.

   Diversify the pipeline of eligible projects by geography 
        (i.e., urban and rural, new States, etc.) size, and type (i.e., 
        highway, transit, rail, port, etc.), to ensure an equitable 
        distribution of program benefits.

    The FAST Act directs the Department to establish technical 
assistance programs to educate borrowers on how to access the 
Department's credit programs. In addition, the FAST Act made certain 
changes to the TIFIA program set forth in Chapter 6 of title 23 and 
established other programs to facilitate access to the Bureau's credit 
programs. To meet these requirements, the Bureau has established 
several programs as outlined below and initiated an effort to educate 
state and local government officials on how they can identify potential 
projects and innovative approaches to benefit from the Department's 
credit programs. Also, the Bureau has taken several steps to ensure 
that states and local governments can complete the application process 
and receive necessary funding in a timely manner, and we continue to 
refine and streamline our processes wherever possible. For example:

   The Bureau has merged both the Letter of Interest (LOI) and 
        the loan Application forms so that a borrower can submit a 
        single version of each form for either a RRIF or TIFIA loan or 
        both.

   The Bureau has implemented the FAST Act's new streamlined 
        process for TIFIA applicants with highly rated credits not 
        affected by project performance and the project is ready to go.

   To address the needs of rural borrowers, the Bureau 
        implemented the TIFIA Rural Projects Initiative that educates 
        sponsors regarding the TIFIA program's statutory benefits for 
        eligible small, rural projects, including application fee 
        relief, ability to finance a larger share of eligible project 
        cost, and a reduced interest rate equal to half the rate 
        applicable to standard loans.

   The Bureau launched the RRIF Express pilot program in 
        December, 2019. Eligible applicants will receive reduced fees, 
        Credit Risk Premium (CRP) relief and expedited loan processing.

   In FY 2020, the Bureau will launch the Regional 
        Infrastructure Accelerator demonstration program that was 
        authorized under the FAST Act and funded under the Further 
        Consolidated Appropriations Act, 2020, aimed at helping project 
        sponsors develop capacity, obtain technical assistance and more 
        easily access the TIFIA loan program at the regional level.
                                 ______
                                 
  Response to Written Questions Submitted by Hon. Tammy Duckworth to 
                            Hon. Joel Szabat
    Question 1. Secretary Chao recently announced a $38 million multi-
modal First Responder Safety Technology Pilot Program to equip 
emergency response vehicles and transportation infrastructure, like 
traffic signals and public transit, with ``V2X'' technologies using the 
5.9-gigahertz safety band to enhance safety for emergency responders. 
Per your commitment during the hearing, please provide additional 
details about this pilot program, including but not limited to: the 
specific source(s) of funding for the pilot program, the anticipated 
timeline for issuing the Notice of Funding Opportunity and completion 
of the application process, criteria that have been identified for 
inclusion in the pilot program including, any specific requirements for 
utilization of the 5.9 GHz band, as well as minimum and maximum grant 
award limits.
    Answer. The Department plans to invest up to $38 million for the 
First Responder Safety Technology Pilot Program (First Responder) 
through the Federal Highways Administration's Advanced Transportation 
and Congestion Management Technologies Deployment (ATCMTD) Program (see 
23 U.S.C. Sec. 503(c)(4)) and the National Highway Traffic Safety 
Administration's vehicle safety research program (see 49 U.S.C. 
Sec. 30182). This pilot program seeks to fund projects that equip law 
enforcement, fire, and emergency medical services (EMS) vehicles, and 
potentially other public vehicles (e.g., transit and tow trucks), and 
related infrastructure (e.g., traffic control signals and highway-rail-
grade crossings signals) with vehicle-to-everything (V2X) communication 
technologies. This pilot program seeks a creative and innovative 
approach to adopt V2X technologies that will use the 5.9 Gigahertz 
Safety Band of spectrum in a technology-neutral manner.

    Question 2. One hundred people die every day on the roads in the 
U.S. V2X technologies is expected to significantly improve the safety 
and efficiency of our transportation system. How does FCC's proposal 
for reallocating the 5.9 GHz spectrum impact the development and 
deployment of V2X technologies, like advanced driver-assistance systems 
(ADAS) such as Left Turn Assist (LTA) and Forward Collision Warning 
(FCW)?
    Answer. Many of today's vehicles use ``conventional'' sensors 
(e.g., radar, camera, lidar) for Advanced Driver Assistance Systems 
(ADAS), such as forward collision waring (FCW), blind spot warning 
(BSW), automatic emergency braking (AEB), rear cross-traffic alert, and 
others. Notably, left turn assist (LTA) is not available on vehicles 
today as this application cannot be reliably implemented with 
conventional sensors. Vehicle-to-everything (V2X) technology, with its 
ability to detect other V2X vehicles beyond just line-of-sight, enables 
new safety applications such as LTA, intersection movement assist 
(IMA). In addition, V2X can also improve the performance of existing 
safety applications (such as FCW, BSW, and AEB) by augmenting 
conventional sensors to identify collision threats more reliably and 
accurately.
    To date, all development and deployment of V2X safety applications 
are based on dedicated-short-range-communications (DSRC) technology 
using channel 172 of the Safety Band for vehicle-to-vehicle (V2V) and 
channels 174-184 for vehicle-to-infrastructure (V2I). If the FCC 
proposal for reallocating 5.9 GHz spectrum were to be implemented, 
these applications would need to be moved to channel 180 and radios and 
roadside installations re-engineered for that channel. While the 
applications should operate the same on channel 180, testing would also 
be necessary to determine whether interference from Wi-Fi operations on 
adjacent channels may impact the safety performance of the 
applications. USDOT has completed initial testing. Additional analyses 
are underway on unlicensed Wi-Fi effects on the remaining channels 182-
184 as well as with effects to other emerging technologies. Results are 
provided on the Safety Band website as they are completed..

    Question 3. Please describe which of the pilot deployments on 
USDOT's map are actively using all 75 MHz today for the Dedicated 
Short-Range Communication (DSRC) safety operations and what are the 
specific DSRC safety operations? How many vehicles have these 
technologies installed, and why do the pilot projects require more than 
30 MHz of spectrum?
    Answer. The Department surveyed the sites for channel usage 
approximately a year ago. Approximately 35 percent of sites responded 
to our survey. At that time, there were no sites using all 75 MHz of 
spectrum. There was a total of seven sites using multiple channels. 
Notably, New York City, which is one of USDOT's Connected Vehicle Pilot 
sites, is using six of the seven available channels; while Michigan, 
which has been hosting several deployments, is also using six of the 
seven channels. The specific DSRC safety applications supported by 
these sites include:

   Curve Speed Warning

   Dynamic Ridesharing and Shared Use Transportation

   Eco-Approach and Departure at Signalized Intersections

   Emergency Vehicle Preemption

   Evacuation and Reentry Management

   Freight Signal Priority

   Integrated Multi-Modal Electronic Payment

   Oversize Vehicle Warning

   Parking Space Management

   Pedestrian and Cyclist Safety

   Queue Warning

   Reduced Speed Zone Warning/Lane Closure

   Restricted Lane Warnings

   Road Weather Motorist Alert and Warning

   Smart Park and Ride System

   Signal Phase and Timing (Spat) messaging

   Speed Warning and Enforcement

   Transit Signal Priority

   Basic Safety Message (BSM): Supports multiple V2V 
        applications that are being implemented in CV pilot sites such 
        as forward collision warning; blind spot warning; intersection 
        collision warning; and red light violation warning, and 
        emergency brake light warning

   Work Zone Safety Monitoring

    We estimate there are approximately 16,000 vehicles equipped with 
V2X technology at these deployment sites with several thousand more in 
the planning stages.
    While most of the pilot sites are presently using less than 30 MHz 
of spectrum, additional spectrum allows for anticipated expansion of 
V2X services and applications into the future. Examples of applications 
and services requiring additional spectrum include: vehicle-to-
pedestrian (V2P) safety applications; platooning and cooperative-
automation applications; and expanded vehicle-to-infrastructure 
messaging.

    Questions 4. The Government Accountability Office's (GAO) 2019 
report, Surface Transportation: Action Needed to Guide Implementation 
of Build America Bureau and Improve Application Process (GAO-19-279) 
recommended that the USDOT Under Secretary of Transportation for Policy 
ensure that the Build America Bureau develop and adopt a public 
statement that outlines USDOT's and the Bureau's policy goals and 
appetite for risk for the RRIF program. USDOT stated in their response 
that they did not fully concur with this recommendation, but did not 
provide any additional explanation for their reasoning. Please describe 
the Department's appetite for risk related to the RRIF program.
    Answer. In the Department's letter response to the GAO, we noted 
that we do not believe that a risk appetite statement for the TIFIA or 
RRIF loan programs would be feasible. In that letter, we noted the 
following reason:

        ``The loan programs in the Bureau cover a diverse portfolio of 
        public, private, highway, transit, rail, intermodal, airport 
        and seaport projects that range widely in size, complexity, 
        location and financial structure. Given that diversity, a 
        single statement designed to cover the whole portfolio would, 
        by necessity, make the program inaccessible to some project 
        sponsors. Developing the significant number of separate 
        statements that would be necessary to address each project 
        scenario needs would not be feasible. The Bureau has a due 
        diligence process designed to appropriately vet the 
        creditworthiness and potential risk of projects seeking credit 
        assistance.''

    Question 5. FMCSA recently announced a two-year delay in the 
implementation of the entry-level driver training (ELDT) rule due to 
information technology issues with the Training Provider Registry 
(TPR). According to FMCSA, changes to in USDOT internal requirements 
for cloud-based IT systems are primarily responsible for the delay in 
the completion of the TPR technology platform. What is the current 
status of the TPR? Has the Office of Management and Budget (OMB) 
approved the Information Collection Request for ELDT? Please describe 
the changes to USDOT's internal requirements that necessitated this 
delay, when and why the determination to make those changes was made, 
the estimated timeline for completing those changes, and whether other 
USDOT rules or project deadlines have been--or are expected to be--
impacted by these changes. Additionally, please describe how this delay 
will impact state driver license agencies (SDLA) or may otherwise 
impact safety.
    Answer. On June 4, 2020, FMCSA launched the TPR website, followed 
by the release of the Web Services Handbook, which will allow the 
SDLAs, training providers, and American Association of Motor Vehicle 
Administrators to meet the IT technical requirements for interfacing 
with the TPR. FMCSA is currently finalizing several components of the 
TPR, including the TPR system testing tools for external users 
interfacing with the TPR, the training provider registration and search 
functionality, and the ELDT certification transmission and retrieval 
functionality.
    Based on our project plan, FMCSA estimates that SDLAs will begin 
integrating the TPR functionalities with State-based systems to allow 
them to begin receiving ELDT driver-specific information by the 
beginning of 2021, and we are planning to allow training providers to 
begin registering for the TPR in October 2021.
    With regard to the details about the technical challenges in 
initiating the IT development phase the Agency has shared this 
information with stakeholders via the preamble of the February 4, 2020, 
Interim Final Rule (IFR) to ensure interested parties were aware of all 
the factors the Agency considered in making the decision to issue the 
IFR, and they too could consider those factors in providing comments to 
the rulemaking docket.
    Finally, in response to the question about the status of the 
Information Collection Request, OMB approved FMCSA's request on June 
26, 2020.

    Question 6. What concerns and impediments have States raised with 
USDOT regarding the implementation of the entry-level driver training 
rule? What is USDOT doing to assist States in addressing those concerns 
and impediments? Has the FMCSA established any dates or deadlines for 
states by which states must make decisions on the format of IT systems, 
where to store data, and any other required steps for compliance?
    Answer. Several SDLAs have raised important questions and concerns 
regarding the transmittal of ELDT certification information to the 
States through the Commercial Driver's Licensing Information System 
(CDLIS) and the Commercial Skills Test Information Management System 
(CSTIMS), as well as obtaining the information from the Training 
Provider Registry. Further, States questioned the need for a second 
verification that an applicant completed the required ELDT training 
prior to the issuance of a CDL.
    In response, FMCSA made clarifying changes to the ELDT rules, 
eliminating what would otherwise have been a duplicative requirement 
imposed on the States. The Agency revised the rules to clarify that the 
State must verify an applicant's completion of required ELDT at the 
point of testing, not issuance (and testing). Additionally, FMCSA 
amended the rule by removing the requirement to perform CDLIS 
inquiries, which would limit the State to one interface option for 
accessing the TPR. FMCSA has worked closely with, and will continue to 
work with, the American Association of Motor Vehicle Administrators 
(AAMVA) and the SDLAs during the implementation phases to address these 
issues in a way that minimizes the administrative burden on States to 
the greatest possible extent.
    We also encourage States to apply for funding through FMCSA's 
Commercial Driver's License Program Implementation grant program to 
help offset the costs of implementing the ELDT rule. Implementation of 
the ELDT rule is important to the FMCSA, so much so that we offer 100 
percent reimbursement for these mandated projects.
    FMCSA has not established any deadlines for States, other than the 
proposed compliance dates. However, the Agency has set a high priority 
on the development of an IT environment by October 2020, for the SDLAs 
to begin testing their connectivity to the TRP. We have also determined 
that the ELDT certification information will be stored in the Training 
Provider Registry. The Agency believes that storing the training 
information in the TPR should further alleviate administrative burdens 
on States. As we further develop the TPR, we will continue to 
communicate the system requirements to the States to help assist them 
with creating or modifying their existing IT systems.
                                 ______
                                 
   Response to Written Questions Submitted by Hon. Tammy Baldwin to 
                            Hon. Joel Szabat
    Question 1. The Consolidated Appropriations Act of 2020 directed 
the Department of Transportation to continue to partner with State 
DOTs, metropolitan planning organizations, local and Tribal governments 
and other entities to assess vulnerabilities and analyze opportunities 
to improve the resiliency of federal, state and local transportation 
assets. According to the report language, such partnerships should 
include additional pilot projects and ensure geographic diversity. 
Further, in that report language, DOT was directed to expand its 
technical assistance and trainings to help these entities revise 
current practices to develop reliable indicators of vulnerability and 
actionable mitigation measures in all phases of transportation 
planning, asset management, project-specific planning and development, 
and operations toward improving resiliency and reducing lifecycle 
costs.
    Please provide me with the status of implementation of each item 
above.
    Answer. The Department of Transportation's Federal Highway 
Administration (FHWA) continues to partner with States and metropolitan 
areas to increase the longevity of the Nation's highways by assessing 
vulnerabilities and incorporating resilience throughout all phases of 
transportation decision-making. This includes funding pilot projects, 
developing resources, facilitating information exchange among 
transportation agencies, and providing technical assistance.
    The FHWA continues to work with State DOTs, Metropolitan Planning 
Organizations, and local agencies across the country to develop lessons 
learned and share this information nationally through the development 
of resources on incorporating resilience into all aspects of 
transportation decision making.
    FHWA is expanding its technical assistance and training workshops 
to help State and local officials. For example, FHWA is currently 
working with the National Highway Institute (NHI) to develop training 
for addressing resilience in highway project development and 
preliminary design. FHWA is also working to provide technical 
assistance and identify resilience related impacts and opportunities in 
the form of ``rapid resilience assessments'' to State DOTs following 
various natural and other hazard events.

    Question 2. On December 3, 2019, Senator Duckworth and I wrote to 
Secretary Chao and Administrator Dickson about implementation of 
Section 440 of FAA Reauthorization. We have not yet received a response 
to our letter, which requested an update on the status of DOT's review 
and revision of regulations related to training programs for air 
carrier personnel, including contractors, who provide physical 
assistance to passengers with disabilities to ensure that training 
programs are offered annually and include hands on training. I look 
forward to a response to that letter.
    Please provide me with the status of implementation of Section 440 
of FAA Reauthorization.
    Answer. I have summarized below and included a copy of DOT's 
response to your letter referenced above.
    Section 440 requires the Department to review, and if necessary 
revise, applicable regulations to ensure that passengers with 
disabilities who request assistance while traveling receive dignified, 
timely, and effective assistance from trained personnel. Section 440 
also requires the Department to review, and if necessary revise, 
applicable regulations related to covered air carrier training programs 
for air carrier personnel, including contractors, who provide physical 
assistance to passengers with disabilities to ensure that training 
under such programs occurs on an annual schedule for all new and 
continuing personnel charged with providing physical assistance, and 
includes as appropriate, instruction by personnel with hands-on 
training for employees who physically lift or otherwise physically 
assist passengers with disabilities, including the use of relevant 
equipment.
    The Department has completed its initial review of the applicable 
regulations related to assisting passengers with disabilities in 
enplaning, deplaning, and connecting between flights, and to training 
for employees and airline contractors who physically lift or otherwise 
physically assist passengers to determine whether regulatory changes 
may be needed. The Department's review of its regulations and complaint 
data, pursuant to section 440, revealed that the Department receives a 
significant number of complaints from consumers alleging that they did 
not receive prompt or timely wheelchair or guide assistance at the 
airport. This suggests that airlines may not fully understand their 
obligation to provide prompt passenger assistance for passengers with 
disabilities in moving within the airport. Accordingly, through 
issuance of the Spring 2020 Unified Agenda, the Department announced 
its plans to amend its regulation to clarify airlines' responsibility 
to provide prompt assistance to passengers with disabilities who 
request assistance in moving within the airport.
    Also, the Department shared information regarding its review with 
the Air Carrier Access Act Advisory Committee (ACAA Advisory Committee) 
at its first meeting, which was held on March 10 and 11, 2020. The ACAA 
Advisory Committee consists of representatives of passengers with 
disabilities, airlines, airports, and others. It is tasked with 
identifying and assessing the disability-related access barriers 
encountered by passengers with disabilities.
    The Department has established three subcommittees of the ACAA 
Advisory Committee. They are the Subcommittee on Ticketing Practices 
and Seating Accommodations, Subcommittee on Stowage of Assistive 
Devices, and the Subcommittee on Assistance at Airports and Related 
Training. The Subcommittee on Assistance at Airports and Related 
Training will be focusing on the issues identified in Section 440 of 
the FAA Reauthorization, and will report its findings to the full ACAA 
Advisory Committee in a public meeting. The Department believes it 
would be beneficial to engage the expertise of the ACAA Advisory 
Committee as part of its review pursuant to Section 440 to help inform 
the Department's decision.
                                 ______
                                 
     Response to Written Questions Submitted by Hon. Tom Udall to 
                            Hon. Joel Szabat
    Question 1. As you are aware, visibility is limited on rural roads, 
and poor conditions and obstacles are prevalent, some risks could be 
mitigated by increasing the number of road signs to warn drivers of 
potential, unforeseen dangers. Does the DOT support increasing road 
signage to better communicate possible dangers such as fallen rocks and 
boulders, wildlife crossings, and train tracks which may help decrease 
high fatality rates on rural roadways?
    Answer. The Department, through the Federal Highway Administration 
(FHWA), establishes nationwide standards for traffic control devices, 
including signs, in the Manual on Uniform Traffic Control Devices for 
Streets and Highways (MUTCD). The MUTCD is incorporated by reference in 
regulations found at 23 CFR part 655, and it applies to all roads open 
to public travel. State and local agencies make decisions on the 
appropriate traffic control devices to deploy, and compliance by State 
and local agencies is required. The MUTCD contains many warning signs 
for different types of road hazards, such as horizontal curves and 
intersections and occasional hazards such as fallen rock, wildlife, 
weather-related conditions, and road surface conditions. Some examples 
include Fallen Rock, Fog Area, and Deer Crossing. At passive highway-
rail grade crossings (those without automatic gates or lights), a Stop 
or Yield sign is required depending on the visibility of trains to 
approaching drivers on the road. The Department currently promotes 
several countermeasures for rural road safety and highway-rail grade 
crossings to reduce crashes on rural roads, including Chevron signs 
along curves, Intersection Warning signs, and Grade Crossing safety. 
States may use Highway Safety Improvement Program (HSIP) funding to 
install, replace, or otherwise improve signage, as long as it is to 
address a highway safety problem, and is consistent with the State's 
strategic highway safety plan.

    Question 2. Costs to maintain and repair infrastructure in rural 
areas is increasing at a higher rate than tax receipts used to cover 
these costs, putting rural areas in a particularly difficult position. 
Is there a plan to alleviate pressure on rural communities and help 
address this imbalance of revenue to cost in rural communities?
    Answer. The Department appreciates that rural communities face 
unique challenges, and is working to address them through a number of 
approaches, including the Department's ROUTES Initiative. The 
Administration also has reinforced its commitment to meeting rural 
needs through the President's Fiscal Year 2021 Budget Request.
    To better address rural needs, Secretary Chao launched the ROUTES 
Initiative in 2019. The ROUTES Initiative, which stands for Rural 
Opportunities to Use Transportation for Economic Success, includes a 
rural transportation infrastructure council and currently has three 
focus areas: (1) collecting stakeholder feedback to identify rural 
infrastructure project needs and challenges; (2) sharing user-friendly 
information with rural communities to assist them in understanding and 
applying for the Department's discretionary grants; and (3) improving 
the Department's data-driven approaches to better assess needs and 
benefits of rural transportation infrastructure projects. Modal 
administrations including the Federal Highway Administration (FHWA), 
the Federal Transit Administration (FTA), the Federal Railroad 
Administration (FRA), and the Federal Aviation Administration (FAA) 
will coordinate on the ROUTES Initiative.
    Finally, the President's Fiscal Year 2021 Budget request calls for 
a substantial increase in funding that could help address rural 
infrastructure needs. For example, the Budget proposes $35 billion for 
a new Bridge Rebuilding Program, including $12 billion to be allocated 
by formula for use on ``off-system'' bridges--often locally-owned and 
located in rural areas. The Budget also proposes another $25 billion 
for a new Revitalizing Rural America program, which would help rural 
communities deliver broadband, transportation, water, and other 
infrastructure projects.

    Question 3. Rural infrastructure is disproportionately impacted by 
usage necessary to sustain economic activity in the area, specifically 
within the agriculture and extractive industries that are more 
prevalent in rural communities. These industries often use heavier, 
oversized vehicles that increase wear and deterioration of 
infrastructure and also lend to more dangerous traffic by causing 
sudden decreases in speed, prompting other vehicles to pass them using 
on-coming lanes, etc. These issues increase seasonally during peak 
recreation seasons. What are some ways DOT plans to address these 
issues?
    Answer. In October 2019, Secretary Chao announced a major new 
initiative to address disparities in rural transportation 
infrastructure with the aim of improving safety and economic 
competitiveness throughout the Nation. The Rural Opportunities to Use 
Transportation for Economic Success (ROUTES) Initiative recognizes the 
importance of rural transportation networks to the agriculture and 
extractive industries, because transportation is essential for both 
domestic uses and the export of agricultural, mining, and energy 
commodities. As discussed in response to the previous question, the 
ROUTES Initiative will begin work in three focus areas. One area 
involves collecting ideas from stakeholders on the benefits rural 
projects offer for safety and economic outcomes, as well as the kind of 
assistance rural projects need. The other areas include providing rural 
communities with information to assist them in applying for the 
Department's discretionary grants and improving data-driven approaches 
to evaluate needs and benefits of rural transportation projects. The 
Department is open to other ideas for addressing impacts to rural 
infrastructure resulting from economic activity.

    Question 4. Insufficient rural broadband and wireless connectivity 
is an issue across the country that needs to be addressed. Do you 
support the ``dig once'' concept that pairs improvements in 
infrastructure, specifically roads, with the installation and 
improvement in wireless networks and broadband?
    Answer. The Department agrees that it is important to expand access 
to broadband connections, and has been supportive of the 
Administration's work on broadband, including participation in the 
American Broadband Initiative. Consistent with President Trump's 
Executive Order 13821, ``Streamlining and Expediting Requests to Locate 
Broadband Facilities in Rural America,'' the Federal Highway 
Administration (FHWA) has been working with State transportation 
officials to improve utility coordination and accommodation in the 
highway rights-of-way to accelerate broadband infrastructure 
deployment. Additionally, FHWA encourages States to work with service 
providers on joint highway and utility planning, and to consider the 
use of innovative practices and technologies to minimize roadway 
excavation.
    The FHWA is also developing a proposed rule to facilitate broadband 
infrastructure deployment in the right-of-way (ROW) of applicable 
Federal-aid highway projects. The proposed rule, which FHWA anticipates 
publishing, in the coming months will implement provisions of the 
MOBILE NOW Act (codified at 47 U.S.C. 1504) to ensure that States meet 
specific registration, notification, and coordination requirements for 
such broadband infrastructure ROW efforts.

    Question 5. How is DOT working with rural communities to address 
often times unique issues in the formulation and implementation of 
infrastructure policy?
    Answer. Planning policy and project development decisions are part 
of the Statewide transportation planning process. Some States have 
designated Rural Planning Organizations (RPO) or Rural Transportation 
Planning Organizations (RTPO) that work directly with rural communities 
to identify policy and planning needs. To assist in the formulation and 
implementation of infrastructure policy, FHWA provides technical 
support and expertise on design and construction specifications, 
policies, and procedures. FHWA Division Offices work with State 
Departments of Transportation in developing standard plans and 
specifications, and local agencies and rural communities follow their 
State's policies. The FHWA also develops resources to help small towns 
and rural communities develop active transportation infrastructure that 
is safe and comfortable for people of all ages and abilities. The 
Department anticipates that the Rural Opportunities to Use 
Transportation for Economic Success (ROUTES) Initiative described in 
response to Questions 2 and 3 will build upon and enhance these 
efforts.

    Question 6. The unique challenges that rural areas face require 
specific expertise in rural planning. The lack of such expertise leads 
to reduced planning, which then negatively affects the application for 
funding projects. According to officials in Sandoval County--a rural 
county in New Mexico--creating a dedicated funding source for planning 
and design of rural transportation needs could resolve this issue. Do 
you agree with this assessment? What steps is DOT taking to assist 
communities with technical assistance?
    Answer. The Department agrees that planning is vital to 
understanding transportation needs in rural areas. The Statewide 
transportation planning process accounts for rural needs and offers 
opportunities for identifying and prioritizing transportation 
improvements in these areas. In some cases, the States have designated 
Rural Planning Organizations or Rural Transportation Planning 
Organizations that identify rural planning needs and priorities. In 
other cases, States work directly with local officials. The needs and 
priorities in rural areas can be different than those in non-rural 
areas; therefore, approaches that are sensitive to the needs of rural 
communities are important.
    To assist communities, FHWA has produced resources to help rural 
transportation planners increase their skillsets and abilities through 
guidebooks and tools. For example, Regional Models of Cooperation, an 
Every Day Counts initiative, helps regions pool resources to address 
multi-jurisdictional transportation issues. Virtual Public Involvement 
another Every Day Counts initiative, enhances and broadens the reach of 
public engagement by making participation more convenient, affordable, 
and enjoyable for greater numbers of people.

    Question 7. Is DOT looking at ways to update the scoring of grant 
applications in order to more fairly analyze the cost-benefit 
assessments that are sometimes harder to quantify in rural communities?
    Answer. Benefit-cost analysis is one of several factors that the 
Department considers when evaluating grant applications. Such analyses 
are intended to provide an objective and fair assessment of benefits 
and costs for projects in both rural and urban areas. The Department is 
consistently looking to update and improve its guidance on conducting 
benefit-cost analysis, while being cognizant of the resource and 
technical capacity constraints that potential applicants face, 
particularly those in smaller communities. Our staff also works with 
those applicants to help them better-articulate and quantify the 
benefits of those projects through targeted webinars, debriefs, 
technical assistance, and, in the case of rural communities, 
initiatives such as ROUTES.

    Question 8. Matching fund requirements are more challenging for 
rural communities to meet due to often limited tax bases. What efforts, 
if any, are being made to create information, support, and outreach 
initiatives, to help rural communities learn about, and apply for 
Federal options for matching fund sources? Additionally, are there any 
efforts being made to allow non-DOT Federal funds to be used as 
matching funds? If no such efforts are being made, would it be possible 
to allow for rural areas to be required to match funds at a lower rate?
    Answer. One of the main areas of activity for the ROUTES initiative 
is developing easy-to-use information for rural communities to help 
them better understand the Department's discretionary grant programs. 
To that end, we are developing an Applicant Toolkit that provides an 
overview of all the Department's discretionary grants and an 
introduction to the application process. Some of our programs do 
provide greater flexibility for rural applicants--for instance, BUILD 
does not require a match for rural projects. In many cases, of course, 
the rules for these programs are set by statute, but we are working 
closely with the modes to identify programs where we may have authority 
to provide useful flexibility for rural communities.

    Question 9. Many rural communities have limited resources which 
make it hard to hire technical assistance for grant writing, and grant 
administration. In order to address this, do you think that DOT should 
provide funding for a program specifically aimed at providing such 
assistance and training to rural communities?
    Answer. This is an area our ROUTES Council and Management Team are 
examining. We are also examining options to leverage existing 
Department programs that offer technical assistance to rural 
communities, such as FHWA's Local Technical Assistance Program (LTAP) 
and Tribal Technical Assistance Program (TTAP), as well as FTA's Rural 
Transit Assistance Program (RTAP). We are also exploring ways to 
partner with other Federal agencies such as USDA, who have extensive 
presence in rural communities.
                                 ______
                                 
   Response to Written Questions Submitted by Hon. Maria Cantwell to 
                        Morteza Farajian, Ph.D.
    Railroad Rehabilitation and Investment Financing. The FAST Act 
provided the Department of Transportation $35 billion in loan authority 
for the Railroad Rehabilitation and Investment Financing (RRIF) 
program. However, only four loans have been provided since the passage 
of the FAST Act and only $6.2 billion in loans has been distributed.

    Question 1. Outside of the RRIF Express program, what actions has 
the Bureau taken to encourage eligible entities to apply for RRIF 
loans?
    Answer. Since establishing the Bureau in 2016, we have implemented 
a number of measures aimed at helping project sponsors access both the 
RRIF and TIFIA credit programs more easily. These range from 
establishing the Outreach and Project Development team that serves as 
the single point of contact for project sponsors and helps then 
navigate the regulatory and financial processes. We implemented a more 
formal and streamlined processes for the review of applications, 
including weekly meetings of the staff-level Credit Review Team and 
monthly meetings of the Council on Credit and Finance, both of which 
have served to reduce the time that it takes for a qualified borrower 
to obtain a loan. Additionally, we have harmonized the application 
processes between the TIFIA and RRIF program to the extent we can. We 
are also developing standardized loan agreement templates for corporate 
borrowers to make it easier for borrowers to get to financial close by 
saving time and reducing transaction expenses. We are providing 
increased in-house technical assistance, including help with 
environmental (NEPA) and permitting issues.

    Question 2. What are the most common concerns that you hear from 
applicants regarding the RRIF the application process and what are you 
doing to address those concerns?
    Answer. The three most common challenges we hear from prospective 
borrowers, especially the smaller short line and regional railroads, 
are:

   The amount of time it takes to secure a RRIF loan;

   The cost of the Credit Risk Premium (CRP) and that the CRP 
        cost is not known until late in the underwriting process; and

   The expense that the borrower incurs in paying for Bureau 
        financial and legal advisors to review the loan application.

    The RRIF Express pilot program was implemented to address each of 
these concerns and we anticipate learning much from this pilot to help 
us better understand how to serve the short line and regional railroads 
following its close-out later in the year.

    Question 3. How many applications have your received so far for the 
RRIF Express Program and when do you expect to complete the application 
process for those applications?
    Answer. The open application period for RRIF Express closed in mid-
August, with ten initial Letters of Interest received at that point, 
which we anticipate would not utilize all $25 million in budget 
authority for credit subsidy that Congress appropriated. We are 
considering options to expand eligibility and extend the deadline in 
hopes of fully utilizing this budget authority. While it is difficult 
to predict when projects will reach financial close because much of the 
timing is driven by the prospective borrower's rate of progress, we 
believe the application review process can be finalized within six 
months of receiving a complete application. We will be happy to share 
more details on the results of the pilot program and lessons learned 
once we have the information available.

    GAO Report. Last March the GAO issued a report noting that the 
Build America Bureau lacks a plan to guide ongoing and future efforts, 
as well as any kind of performance indicators to assess its progress. A 
year later, all five of the GAO's recommendations remain open.

    Question 4. What steps has the Bureau taken to implement each 
recommendation and when can we expect each recommendation to be fully 
implemented?
    Answer. The Bureau responded to the GAO's report and 
recommendations in a letter dated June 28, 2019. A copy of the letter 
was provided to the Senate Subcommittee on Transportation, Housing and 
Urban Development. The Bureau has completed actions to address three of 
the five recommendations (Recommendations 3, 4 and 5), as of August 24, 
and GAO has closed one (Recommendation 5). The Bureau is on track to 
complete a deliverable that will address the two other Recommendations 
(1 and 2) and provide them to GAO by October 1, 2020.

    ROUTES and the Budget. The Build America Bureau's RRIF Express 
program and Transportation Infrastructure Finance and Innovation Act 
(TIFIA) loan program's Rural Project Initiative are key parts of the 
Department ROUTES Initiative. Not only is tailoring infrastructure 
programs to meet the needs of rural communities, but outreach and 
technical assistance are vitally important to ensure rural communities 
have access to these programs. The President's Budget proposes reducing 
appropriations for the Build America Bureau by 15 percent to $4.25 
million in FY 2021.

    Question 5. How would this cut impact the Bureau's ability to 
perform outreach and technical assistance to rural communities?
    Answer. In addition to the resources appropriated to the Bureau for 
administration, the Bureau also has access to the administrative 
resources authorized in section 608 of title 23 for the TIFIA program, 
which we envision will be reauthorized for Fiscal Year 2021. Together, 
these funding sources for the Bureau's administrative expenses will 
adequately support our rural and other initiatives. In addition, we 
recently received an appropriation to conduct a regional infrastructure 
accelerator demonstration program, which presents another opportunity 
to provide technical assistance to rural and non-rural project sponsors 
seeking TIFIA and other innovative financing. As such, the requested 
funding level in the 2021 President's Budget for the Bureau's 
administrative expenses will not negatively impact our ability to 
conduct this outreach.

    Question 6. What other impacts would this cut have on the Bureau's 
activities?
    Answer. We do not anticipate any negative impacts on the Bureau's 
activities resulting from the 2021 President's Budget.

    Question 7. At the hearing you testified that there were 
approximately a dozen applications being considered pursuant to the 
TIFIA Rural Projects Initiative. When do you expect to complete the 
application process and make awards pursuant to that Initiative?
    Answer. While it is difficult to predict when projects will reach 
financial close because much of the timing is driven by the prospective 
borrower's rate of progress and their timing needs, we do have a 
growing pipeline of projects that are interested to use the TIFIA Rural 
Project Initiative, mainly due to our expanded outreach and technical 
assistance efforts to rural communities. We have two projects in the 
final stages of the creditworthiness and negotiation phase, with 
expected closing in September and October 2020. We also have a third 
project which has entered the creditworthiness phase and is expected to 
close by year-end 2020. We are closely working with the remainder of 
the Rural Projects, but because they are less advanced in their 
development, it is difficult to predict when they might reach financial 
close, however, based on current participation, we believe it is likely 
that all TIFIA subsidy funds set aside for rural projects will be used 
by the end of FY 2021.
                                 ______
                                 
  Response to Written Questions Submitted by Hon. Tammy Duckworth to 
                        Morteza Farajian, Ph.D.
    Question 1. Over the past five years, how many applicants 
successfully completed the pre-application process for a Railroad 
Rehabilitation and Improvement Financing (RRIF) loan. How many of these 
applicants did USDOT invite to apply for a RRIF loan?
    Answer. Over the past five years, a total of 10 projects have 
completed the RRIF pre-application process, and USDOT invited all 10 to 
submit a RRIF loan application.

    Question 2. Stakeholders are frustrated with the time it takes, and 
the associated costs, for USDOT to procure advisors for the RRIF pre-
application process. Please describe the process of identifying and 
procuring USDOT advisors for the RRIF process? On average, how long 
does it take for USDOT to procure advisors for the RRIF pre-application 
process? Please describe any impediments to the timely identification 
and procurement of these advisors.
    Answer. Through a competitive procurement process, USDOT has 
established a select pool of financial and legal advisors that have 
demonstrated to USDOT the specialized expertise necessary to evaluate 
potential RRIF loans. As a result, USDOT can typically procure its 
financial and legal advisors within 4-6 weeks from the time the Bureau 
has determined that a RRIF project sponsor's letter of interest has 
offered sufficient information to begin the evaluation of the project.

    Question 3. Many stakeholders have complained about the high cost 
associated with the financial and legal advice required in the RRIF 
pre-application process. Some applicants have spent hundreds of 
thousands of dollars during the RRIF pre-application process, which can 
deter future applicants from seeking Federal financing assistance. What 
is the spectrum of costs (low to high) for finance, legal and 
administrative advice for the RRIF pre-application process? For 
applicants who considering the pre-application process, how does USDOT 
establish expectations for applicants regarding these costs?
    Answer. The characteristics of RRIF loan projects can vary greatly, 
and therefore the costs of both USDOT's advisors and the prospective 
RRIF borrower's advisors also vary greatly. These costs are not 
necessarily driven by the RRIF loan amount itself, and are due to a 
number of factors, including, but not limited to, compliance with 
Federal requirements, the project's technical complexity, and the 
evaluation of the potential borrower's ability to repay the RRIF loan. 
As we receive information from the applicant, we develop a range for 
the estimated expenses. Those estimates are usually as good as the 
level of information that we receive from the applicant. At early 
stages it may be a wide range, but as we make progress in the process 
and more accurate information becomes available the range becomes 
tighter. Also, sometimes new information may become available or 
unknown issues may arise that may require adjustments to the initial 
estimates. In all cases, we try our best to communicate realistic 
expectations regarding the expenses and estimates.

    Question 4. How does USDOT ensure that applicants' pre-application 
costs and timeline are minimized? What mechanism does USDOT employ to 
incentivize advisors appropriate and timely advancement of the pre-
application processes in a timely manner?
    Answer. When USDOT releases a request for proposals for the 
evaluation of a RRIF loan project to its pre-selected pool of financial 
and legal advisors, USDOT evaluates all responsive proposals and 
ultimately selects the proposal that offers the best value through a 
combination of both the proposal's technical rating and total price. 
This incentivizes USDOT's financial and legal advisors to submit 
proposals that propose to analyze a RRIF loan project as efficiently as 
possible.

    Question 5. The Government Accountability Office's (GAO) 2019 
report, Surface Transportation: Action Needed to Guide Implementation 
of Build America Bureau and Improve Application Process (GAO-19-279), 
highlights that the Build America Bureau (BAB) has a number of 
prolonged vacancies. How many vacant positions currently exist at BAB? 
How long have those positions been vacant? Please explain what 
impediments exist to filling those vacancies? Please provide a list of 
the vacant positions including, title and job description.
    Answer. The Bureau has made several hires in the past year. The 
Outreach and Project Development team has grown by six staff, the 
Credit Programs team has added a Lead Underwriter, a Business Operation 
Manager and two attorneys were hired. While there are a few remaining 
vacancies in the process of being recruited, mainly to enhance 
portfolio management and risk management functions, we are primarily at 
the point that we are replacing staff as personnel turnover occurs.

    Questions 6. In GAO-19-279, GAO recommended that BAB develop and 
adopt a public statement that outlines USDOT's and the Bureau's policy 
goals and appetite for risk related to the RRIF programs. USDOT stated 
that it did not concur with the recommendation because a risk appetite 
statement ``would not be feasible'' given the variety and diversity of 
projects that may be funded by BAB's loan programs. USDOT indicated 
that while it would be developing a strategy that outlined BAB's policy 
goals, it did not intend to issue a public risk statement. Please 
provide a timeline for when USDOT will be finalizing and releasing the 
proposed strategy outlining BAB's policy goals, and describe USDOT's 
appetite for risk specifically for the RRIF program. Additionally, if 
USDOT or BAB have developed, or intend to develop, a private risk 
appetite statement or other similar analysis for the RRIF program or 
other programs under BAB's jurisdiction, please provide that statement 
or the timeline for when such a statement will be completed.
    Answer. As noted in our response to the GAO, we do not believe that 
providing a risk appetite statement for either the TIFIA or RRIF 
programs would be feasible and practical. In our response, we state 
that; ``The loan programs in the Bureau cover a diverse portfolio of 
public, private, highway, transit, rail, intermodal, airport and 
seaport projects that range widely in size, complexity, location and 
financial structure. Given that diversity, a single statement designed 
to cover the whole portfolio would, by necessity, make the program 
inaccessible to some project sponsors. Developing the significant 
number of separate statements that would be necessary to address each 
project scenario needs would not be feasible. The Bureau has a due 
diligence process designed to appropriately vet the creditworthiness 
and potential risk of projects seeking credit assistance.'' As an 
alternative action, we have developed a risk approach statement which 
provides a high-level overview of the Bureau approach within the 
mandates and limitations of TIFIA and RRIF credit programs. This 
document is going through final steps of internal review and will be 
provided to the GAO by October 1, 2020.
    In addition, we have posted the Bureau's policy goals for the TIFIA 
and RRIF programs on our website in January, 2020, which are to:

   Enhance the pipeline of eligible projects by providing 
        proactive educational outreach and technical assistance to 
        potential borrowers in utilizing the TIFIA and RRIF programs, 
        and their capacity to fill market gaps by leveraging 
        substantial local and private co-investment.

   Diversify the pipeline of eligible projects by geography 
        (i.e., urban and rural, new States, etc.) size, and type (i.e., 
        highway, transit, rail, port, etc.), to ensure an equitable 
        distribution of program benefits.

    Question 7. Credit risk is generally considered the possibility of 
a loss resulting from a borrower's failure to repay a loan. While it is 
impossible to predict who will default on a loan, assessing and 
managing risk is important to address the severity of a loss. However, 
lenders charge interest as a reward for assuming that risk, and in the 
case of the RRIF program, have the backing of the Federal government 
and the authority provided by Congress. However, concerns have been 
raised about USDOT's acceptance of risk in RRIF applications. For 
example, some stakeholders have related that they have been required to 
``let'' a project during the pre-application process. In layman's 
terms, this is the equivalent of signing a contract to buy a house 
without a financing contingency before securing a mortgage. Please 
state whether this has occurred for any RRIF applications and cite to 
USDOT's authority to compel applicants to let projects before a loan is 
secured. Additionally, if this has occurred or if USDOT intends to 
utilize such an approach in the future, please provide an explanation 
of how this advances RRIF program goals of improving rail 
infrastructure.
    Answer. As required by statute and regulation, the interest rate on 
a RRIF loan is equal to the rate on Treasury securities for a similar 
term. The Treasury rate is a ``risk-free'' interest rate that only 
compensates the Government for its time value of money. That is, the 
RRIF loan interest rate does not account for the risk of a default on 
the RRIF loan, and USDOT cannot charge a higher interest rate on a RRIF 
loan to compensate for any potential loan default risk as other lenders 
can.
    As part of a RRIF loan evaluation, USDOT also analyzes a RRIF 
project's construction and completion risk. USDOT does not require that 
a potential RRIF borrower ``let'' a project during the pre-application 
and application processes. However, USDOT does typically require that 
final construction or other purchase contracts be executed before USDOT 
can execute a loan agreement with a RRIF project sponsor to avoid 
unanticipated increases in total project costs that could jeopardize 
the project's completion, as well as the project's plan of finance, 
including the RRIF loan.
                                 ______
                                 
   Response to Written Questions Submitted by Hon. Maria Cantwell to 
                           Hon. John McCarthy
    Freight Data. Big data can help policy makers and transportation 
planners with making important decisions about our transportation 
networks. The FAST Act required the Bureau of Transportation Statistics 
(BTS) to publish an annual Port Performance Freight Statistics report. 
The report provides nationally consistence performance metrics to 
measure capacity and throughput for the Nation's largest ports. 
Additionally, BTS provides a number of freight related datasets in its 
annual Freight Facts and Figures reports.

    Question 1. How does the Northwest Seaport Alliance currently use 
the information provided by BTS?
    Answer. The Northwest Seaport Alliance does not use the performance 
metrics for ports. They are too generic for decision making. We do 
review the freight-related datasets BTS publishes to communicate with 
partner agencies and the community at large. Our MPO, the Puget Sound 
Regional Council (PSRC), uses Freight Analysis Framework (FAF) data to 
some extent for its freight modeling efforts. Most (including our own) 
consultants use the PSRC's model as the basis--with some adjustments--
to evaluate the impacts of roadway and freeway projects on freight 
mobility.

    Question 2. What additional freight related data would you find 
useful for BTS to provide?
    Answer. NWSA offers the following suggestions on data that would be 
helpful to our organization.

   Metrics and measures that support U.S. businesses and trade: 
        Data that support metrics that track freight system impacts on 
        our exporters' and importers' competitiveness, including 
        shipping cost, travel time and reliability.

   Data that allow us to incorporate shipping costs into 
        freight system performance metrics within each mode, for these 
        reasons:

     Cost is a reflection of freight system efficiency: The 
            cost of shipping can be directly affected by the efficiency 
            of freight systems, and therefore it is a useful metric to 
            compare like-modal investments.

     Cost is critical for freight system users: Moreover, 
            shipping cost is of critical importance to those who depend 
            on the system. For exporters, it can make the difference in 
            whether their products are competitive in global markets. 
            It also is important to U.S. manufacturers, who depend on a 
            highly efficient system to get their goods to market and to 
            take advantage of the just-in-time processes that are 
            common practice in their industries.

     Shipping cost can drive shifting trade routes: Cost 
            also is a factor that can influence significant shifts in 
            trade routes, a phenomenon that should be of concern to 
            policymakers and closely tracked. The port business is 
            extremely competitive, especially over discretionary cargo 
            bound for inland regions that can be shipped through any 
            number of ports.

     Cost is the primary driver of the Canadian ports' 
            advantage: At the NWSA we are keenly aware of the role cost 
            plays in cargo routing decisions. Our main competitors are 
            the nearby Canadian ports of Vancouver and Prince Rupert, 
            which in recent years have aggressively targeted US-bound 
            cargo. In the decade that followed the opening of Prince 
            Rupert's container terminal in 2007, the NWSA lost 15 
            percent of our market share to British Columbia ports. In 
            addition to continuing to expand on the West Coast, Canada 
            has plans to repeat this success on the East Coast. The 
            NWSA competes well when it comes to efficiency, reliability 
            and transit time to inland markets. Yet the cost of moving 
            a container from Asia through the ports of Vancouver or 
            Prince Rupert can be $600 less than it is to move a 
            container through our port.

   Data supporting other freight system performance metrics: 
        Recent efforts by FHWA's Office of Freight Management and 
        Operations to identify performance measures related to freight 
        in the areas of safety, maintenance/preservation, mobility 
        reliability, accessibility/connectivity and the environment 
        provide a robust first set of performance measures for trucks. 
        Truck travel time reliability, truck-based delays, and the 
        value of wasted time and fuel also are helpful measures that 
        could inform DOT's discretionary grant programs. However, some 
        issues that warrant further work include:

     Currently, analysis focuses mostly on the Interstate 
            System and does not adequately cover state and/or local 
            facilities providing access to that system or rail 
            intermodal yards serving major freight intermodal 
            facilities such as our port's container terminals. High-
            volume, last-mile facilities are often located in urban 
            areas that are severely congested, yet they are often 
            overlooked in the analyses.

     Future performance measures must address the 
            performance of intermodal facilities, connectors and the 
            rail and truck corridors to which they provide access in a 
            way that addresses their role in the national freight 
            system. (The current port performance metrics don't support 
            this.)

     Greater incorporation of environmental measures.

   Data that allow us to benchmark the U.S. freight system with 
        that of other nations: The Federal government should utilize 
        international benchmarks and increase efforts to understand how 
        our freight system compares at a global level. This will help 
        ensure U.S. exporters retain the transportation-related 
        competitive advantages they have enjoyed over previous decades. 
        A comparison can utilize many of the metrics USDOT already is 
        tracking. Another good area to compare is public and private 
        spending on freight infrastructure.

   Data that allow us to assess individual supply chains: It 
        may also be helpful for USDOT to assess individual supply 
        chains that are impacted by a project, set of projects or 
        performance of certain corridors to determine the impacts of 
        public investments on specific industries. For example, this 
        could be helpful in determining the benefits of port 
        improvements on the transportation costs of agricultural 
        exports that are critical to supporting rural economies. Such 
        an analysis should be performed based on end-to-end freight 
        trips rather than over a single segment or mode.

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