Hearing of the Transportation, Housing and Urban Development, and Related Agencies Subcommittee of the House Appropriations Committee - Department of Transportation Fiscal Year 2010 Budget Request

Statement

Chaired by: Rep. John W. Olver (D-MA)

Witness: Ray LaHood, Secretary, Department of Transportation

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REP. OLVER: The hearing will come to order. I apologize I suddenly realized that I could barely see out of my glasses. So I had to make a quick trip to kind of clear the fog away.

I would like to welcome the secretary of transportation to our hearing this morning, Ray LaHood, a former member of our august body, a very honored member as well.

Mr. Secretary, this is your second appearance before the subcommittee this year. And we're pleased to have you with us this morning to discuss the Fiscal Year 2010 budget request for the Department of Transportation. You've been on the job now a little over four months, and you're getting your political team in place to lead the department in a new direction. The department has unique opportunity to set new policy with major multi-year authorizations that are pending through the aviation and the surface transportation programs.

The budget which you released -- which was released nearly a month ago requests a total of $72.45 billion for the agencies and programs within the Department of Transportation. And represents a little more than a two percent increase over the Fiscal Year 2009 enacted level, excluding the Recovery Act funding that was passed earlier this year. In many ways, this budget represents a positive step forward for aviation and passenger rail programs. But there are some urgent challenges that lie ahead for the highway and transit programs.

While the budget proposes modest increases for the surface transportation programs, there is - (audio break) - for the specific highway transit and safety program. The surface budget before us has the overall funding level, but little information on the individual programs for each agency. This is underscored by the nearly $40 billion from the general fund to the highway and transit programs, which is described as a placeholder until the administration comes forward with its reauthorization proposal.

This causes the subcommittee some difficulty as we move forward to put together the Fiscal Year 2010 bill, which is further complicated by the CBO and OMB projections; as the Highway Trust Fund will once again face a cash flow insolvency crisis towards the end of the present fiscal year. Additionally, the current transportation authorization SAFETEA-LU expires at the end of Fiscal Year 2009. And it is uncertain whether a reauthorization will pass before it expires leaving in doubt future funding and revenue levels.

It is imperative that the long-term solvency of the trust fund be addressed. Solutions have been proposed. In the last year, two congressionally-designated commissions on transportation infrastructure have recommended substantial reforms; and have strongly suggested that we need additional revenues to maintain and improve our aging surface transportation system.

Given the national, long-term impact the change in the financing structure could have, I believe the administration must exert greater leadership in this area. And hope that you will provide more specificity on the budgetary needs of the highway and transit programs; as well as the administration's suggestions on how these programs ought to be financed. As I mentioned at the outset, there are some positive aspects to the budget pending before us. With regards to aviation, I am pleased that the budget request acknowledges the infrastructure needs at the nation's airports. The previous administration repeatedly sought to cut the Airport Improvement Program by over $750 million a year.

The budget also proposes a robust $865 million in the FAA's NextGen Program, which was created to modernize our nation's aging air traffic control system. However, given the aviation industry's declining performance record exemplified by the steady drop in on-time arrivals, the successful implementation of the NextGen system is vital to managing air traffic growth and reducing delays. And I fear that your $850 million request is too little, too cautious in addressing that challenge.

I'm not sure what's going on here. I seem to -- my light seems to be saying that my microphone is on, but I keep slipping in and out apparently -- maybe just because I'm not really talking directly into it. That might help. Okay. Pardon?

(Off mike.)

(Laughter.)

I actually don't need much of a mike. But concerning passenger rail, I'm pleased that the administration requested $1 billion for High-Speed and Intercity Passenger Rail to follow on the $8 billion appropriated in the American Recovery and Reinvestment Act. This is a significant step towards diversifying the nation's transportation options and reducing congestion on our highways.

Additionally, I'm pleased that the administration has embraced the concept of livable communities. For too long transportation, housing and energy policy have been viewed as separate tiers (ph) with little or no coordination on the federal, state and local level. A few months ago, you and the HUD Secretary Shaun Donovan announced the new sustainable-communities initiative. And I want to learn more from you this morning on how the department intends to move forward on that initiative.

Last, I would like to commend your department's implementation of the Recovery Act. As of May 8, your department reports that over $7.5 billion in obligations have been invested in infrastructure projects across the country. These funds have been crucial in creating thousands of jobs and repairing our nation's transportation infrastructure.

Mr. Secretary, as I have just outlined, you are presented with many challenges, but equally many opportunities. I strongly believe and I am sincerely hopeful that under your leadership we can break out of the historical practice of transportation silos; and focus on holistic approaches that reduce congestion, improve mobility, increase affordability, and reduce environmental impact.

Before we have an opportunity to hear from you, I would like to recognize our ranking member, Tom Latham for any opening remarks that he would like to make.

Tom.

REP. TOM LATHAM (R-IA): Thank you, Mr. Chairman.

And good morning Mr. Secretary Ray. It is great to have you here and I look forward to your testimony today. We miss you in Congress, but I'm very, very pleased that you continue to serve our country in your new role. I think the department and the administration are going to be a lot better because of your leadership, your commitment to the programs, and a great asset for the whole department. I just want to thank you for your openness in coming to visit and to talk about what we're looking at here in the future. And I want to continue that dialogue; and as good personal friends, I'm sure we will.

So I think we need though to really today probably cut to the chase about solvency of the Highway Trust Fund. And that is a huge problem. There are both immediate needs obviously with the shortfall and in the future, the next five or six years to get through that authorization.

I really appreciate the situation that you're in that you're working for the White House and you need to represent their position and there is obviously a whole process that the authorizers need to complete. And you need to work with them and just -- I hope that the T and I committee would work with us and appreciate the calendar and the process that we have. However, the clock is ticking and time is short here. This has been a very bipartisan subcommittee and Chairman Olver has been very gracious. And we're going to work together to make sure that we come up with a -- as good a product as we have, you know, working with the staff and the entire subcommittee.

But you know, we probably won't agree with every provision down the road here. But I have really faith that we're going to come up with a good product. These issues, as you know, are extremely important for the people at home. And as we go around our districts and our states, all we hear about are the projects that need to be implemented or put in place -- economic growth, safety concerns, all those things.

My concern -- and again I want to reiterate it's not you. But in the budget statement, there is the phrase in the testimony and I quote, "The administration is developing a comprehensive approach for surface transportation reauthorization. Consequently, the budget contains no policy recommendations for programs subject to reauthorization including those for the Federal Highway Administration, the Federal Motor Carrier Safety Administration, National Highway Traffic Safety Administration and the Federal Transit Administration," end quote.

You know, we're in a bit of a quandary here. Chairman Obey said that we're going to have our bill marked up in July, off the floor before the August break. The Senate probably as we -- usually happens, doesn't move quite as quickly. But you know, I'm -- we want to have a bill signed into law by the end of certainly this calendar year. And I want to work with the chairman and make sure we get that done.

I think everyone in the room knows full well that there will not be a surface transportation reauthorization bill for signature this year, probably not even in 2010. And that puts us in a real difficult situation with the shortfalls obviously in the trust fund today. But there will be an appropriations bill. And we need to make sure that we get your input on this now because the train -- whether it be high- speed rail or a local is going to leave the station here pretty quickly. And we want to make sure that we work together to get it done.

The states are depending upon their reimbursements beyond August, as you know. And they can't wait two years to get this all done. I really hope today we can just have a dialogue. And I know you're delivering the administration's budget proposal, but I do think you're going to hear a lot of concerns from the committee about the proposals or the lack of some specifics as to what we need to go forward. I just hope you'll go back to the administration and all our good friends down at OMB; obviously your being on the committee, we all know and love OMB. And -- but make sure that they know how important it is to get these specifics to us as soon as possible.

With that, Mr. Chairman, I appreciate it and look forward to your testimony.

REP. OLVER: Thank you, Mr. Latham.

We are fortunate to have the ranking member of the full committee here today, Mr. Lewis from California. And Jerry Lewis, your opening remarks.

REP. JERRY LEWIS (R-CA): Thank you, Mr. Chairman. I do not have a formal statement, but I really have come to express my appreciation for the service of Ray LaHood in the Congress -- and now the secretary of transportation. I look forward to the questions. Thank you.

REP. OLVER: Thank you, Mr. Lewis.

Mr. Secretary, the floor is yours. Your full text of your testimony will be placed in the record. If you could contain your remarks to somewhere close to five minutes or so then we can get on with the questioning.

SEC. LAHOOD: Thank you, Mr. Chairman and Mr. Latham and members of the committee for the opportunity to discuss the administration's Fiscal Year 2010 budget request for the United States Department of Transportation. I'm grateful for the many kind remarks that all of you have expressed; and I appreciate that very much.

The president is seeking a total of $73.2 billion in budgetary resources. This funding level supports the president's ambitious agenda for revitalization in enhancing our national transportation infrastructure. As you know, transportation is vital to the health of our economy and the American way of life. It is essential we continue to invest in these assets to keep our highways and rails in good repair, keep our freight and maritime shipping lanes open; and keep all modes of transportation operating as efficiently and safely as possible.

I'm mindful that on the road, on the rails, in the air and on the water, safety always has been and will continue to be our chief concern at DOT. That's why over one quarter of the department's total budget request supports transportation safety. I want to highlight the president's funding request for some of our critical modes. First, High-Speed and Intercity Passenger Rail, as you know, President Obama and Congress has made a historic $8 billion investment to jumpstart new rail corridors around the nation. Yesterday, we had eight governors along with the vice president and myself; and listened to them about their dreams and considerations for high-speed rail.

The president's budget proposes to fund a five-year, $5 billion high-speed rail, state-grant program. This represents a major commitment by the government to offer the traveling public a safe and sustainable alternative to driving and to flying. The budget also includes $1.5 billion in grant dollars to support Amtrak. When combined with the $1.3 billion provided in funding through the Recovery Act, Amtrak is poised at last to address its long-standing capital needs.

With respect to aviation, the president's budget requests nearly $16 billion for FAA. This level will enable us to fund the FAA's highest priorities including $860 million to keep NextGen air transportation system moving forward. With these resources, FAA will also be able to fund additional air traffic control positions and invest in nearly 3,500 airport infrastructure projects at 1,500 airports. It's vital that we fully fund FAA in order to ensure we can modernize our air traffic control systems, attract and retain the talent that's needed to keep our aircraft flying safely, reduce congestion at the busiest airports and reduce aviation's impact on the environment.

The maritime industry also plays a vital role in our economy with nearly half of all U.S-foreign trade by value traveling by water. The president's budget seeks $346 million for the Maritime Administration. This includes $15 million for a new presidential initiative to enable MARAD to work with the Department of Homeland Security on modernizing our intermodal freight and infrastructure links that tie ports, highways, rail networks into a seamless transportation network.

I'm pleased to report that MARAD has addressed budget issues at the U.S. Merchant Marine Academy, which have concerned many in the past. And I have directed the agency to establish a blue ribbon panel of experts to examine the academy's long-term capital needs.

This is a very high priority for me. I want to make the Merchant Marine Academy the same jewel that Air Force West Point and Annapolis are. And we're going to do that. And it's going to take some dollars to do it.

But Merchant Marine Academy is in very bad repair and they have 900 cadets there. I visited the facility and we need to do some work there. The blue ribbon committee will report back in six months with a complete plan about what needs to be funded, how much, and what it will take to do it. Our just previous, past deputy secretary Admiral Tom Barrick (ph) will chair that group and report back. And I will keep all of you posted on that.

I'm confident the president's transportation budget for Fiscal Year 2010 will help our nation continue to develop our most vital infrastructure assets for the 21st Century. Most of the significant challenges our department faces going forward is the ability to identify resources to meet our goals and provide American people with the transportation system they need and deserve. Obviously, I'm grateful to Congress for your interest, for providing the $48 billion in transportation funding through the Economic Recovery plan. This historic investment is making possible thousands of transportation projects around the country. As a direct result, we're helping to save or create good paying jobs that so many families and communities need right now.

And we're rebuilding, retooling, revitalizing our airports, roads, bridges, ports, transit systems and more. But we must also recognize that two primary funding sources the department has relied on fuel taxes and airline ticket taxes are no longer sufficient. As you know, last year the highway -- account of the Highway Trust Fund required an $8 billion infusion from the general fund. The current reduction in economic activity on our roads has made the problem of sustainability even more serious. We remain at risk for another cash shortfall in the trust fund later this year, probably by mid-August. And this situation puts even greater pressure on the general fund to supply resources that have historically come from the trust fund.

And we clearly cannot go down this path. The administration has inherited a system that can no longer pay for itself. We must think creatively as we search for sustainable funding mechanism. In the meantime, I want to assure you we are working on a plan to address the potential trust fund shortfall this summer.

We believe strongly that any trust fund fix must be paid for. We also believe that any solution must be tied to reform of the current highway program. It needs to be more performance based and accountable to our priorities, including making our communities more livable and sustainable. We're pledged to work with Congress on these important challenges. And I'm confident we will find the solutions.

Mr. Chairman, thank you for the opportunity and I look forward to your questions.

REP. OLVER: Thank you Mr. Secretary for your statement. The tradition here is that each -- I and the ranking member will have five minutes; and then we will go five by five, back and forth in the order in which people have come into the room. So with that, I will start with the first round of questioning.

I'm not sure exactly when -- there is some suggestion we may have votes sometime -- it's not long after 11:00. And we certainly want to be out of here certainly by 12 noon. We will move on as quickly as we can.

Generally Mr. Secretary, you've been very direct in your written testimony and also direct in your comments, in your oral testimony about the state of the trust fund. And you've laid out exactly what we ran into last year and have stated quite clearly that we're going to run into the same thing again this year. With the ultimate being that there is the placeholder of about $36 billion in there looks like it's coming from the general fund, which ultimately gets settled somewhere in the reauthorization process.

Mr. Secretary, you would remember that in the last authorization process back four years ago, the position really coming from -- in a bipartisan way, both parties on the T and I committee at the authorization level was that we needed more than was being done. And we needed more infrastructure, we needed to have more expenditure. But the agreement was finally reached to considerably limit what they had been asking for. And now, here as we got through the next to the last year of the authorization, we already ran into a problem, which has been exacerbated by the down side of the economy as we go into this fiscal year.

Now, the money in the trust fund goes pretty directly. Money is raised in specific areas, money goes directly into transportation issues both highway -- all the surface transportation programs. But particularly highway and the transit programs for maintaining and improving and expanding the surface transportation system. There is strong evidence that people around the country will support dedicated funding when it's clear there have been referenda in various places to that effect, when it is clear that the -- what is being asked for is being used for a purpose that people can see; and that they may believe in.

Now I think maybe the most dramatic ones of those was in California where the people voted for a $9 billion bond authorization to build high-speed rail, which we hope that the kick starting will certainly do. At the same time that you've been very direct about the problem, you've been like a dancer walking on -- walking on a field of eggs as to the question of how this is going to be actually paid for along the way. Though we have clearly the history of where dedicated funding can come from. And we have also the history of several commissions who have looked at this at great extent. And then, have made recommendations for some series of ways to raise money.

Can you give us any indication of where we're headed for or what you're going to be offering to the authorization committee on how one gets out of the pay for?

SEC. LAHOOD: Well, I think I have -- I think I've been very frank about the fact that the administration did not want to raise the gas tax. This is about one of the worst economic slumps that our country -- I've been in public service for 30 years; and I know many of you have too. There are a lot of people hurting in America. There are a lot of people out of work and I think the last thing you want to say to people is we're going to raise your gasoline taxes. A lot of people right now can't even afford to put a gallon of gasoline in their car because they don't have a job.

We are not going to raise the gasoline tax. I mean, I'll just say that emphatically, we can't. The economy is in very bad shape. And so, you know, I don't think I've danced around on that one. What I've said is the Highway Trust Fund has been a great formula and mechanism for building a state-of-the-art interstate system in America.

We have a model for the world. And the problem is that people are driving less. And when you drive less, you put less gas in your cars, and we have less money in the Highway Trust Fund. So we need to think creatively about what we're going to do to use the Highway Trust Fund and build on it. And I've talked about some alternatives and hopefully some creative ways to do it. But you know, and some of them have, you know, some people like them and some people don't like them.

But you know, there's about four or five things that we could do. I was in Miami where they on an existing road built what they call a hot lane and used tolls to do it. So if you want to go faster and get out of congestion, you get in the hot lane. And you can add capacity to highways by doing that. You can build bridges by tolling. And you can raise a lot of money to do it.

We've also talked about public-private partnerships. There are people -- maybe not right at the moment because the economy is not that great that are willing to invest. When roads are being built, they're certainly willing to invest in the fiber to put broadband in, you know, in areas of the country that don't have it. So there are these opportunities.

In the Senate, they've talked a lot about the infrastructure bank. There's bills pending over there for that. And so, there are other creative ways. And so -- but you know, Mr. Chairman and members of the committee, we're not going to be for raising the gas tax; we're just not, not right now.

REP. OLVER: Okay. Let me just use your quotes. I do commend you very strongly for being so direct about the difficulty with the trust fund, as I said in my own comments.

But -- and you -- the two comments that go in your written testimony that particularly come out to me. "There simply is not enough money in the Highway Trust Fund to do what we need to do. And the authorizers are suggesting that we need to do much more than we have been doing in the past."

That's my editorial comment. And then the further quote, "We must think creatively as we search for sustainable funding mechanisms." So I'm just looking for what are those creative funding mechanisms?

SEC. LAHOOD: Well, I mentioned three.

REP. OLVER: You mentioned several. You have mentioned several.

SEC. LAHOOD: Yeah, you know, some people like them, some people don't.

REP. OLVER: Thank you very much.

Mr. Latham.

REP. LATHAM: Thank you, Mr. Chairman.

And I guess kind of continuing the same line the trust fund bankruptcy was coming. Like you said in your testimony mid-August you look for it to be out of money. Like in Iowa, they are planning on doing about a half a billion dollars worth of work this summer. And obviously a lot of that is to come out of the trust fund. And you said that you want to offset the money that goes in to replenish the trust fund.

Can you give us any idea from the administration as to what those offsets will be, where this money is going to come from?

SEC. LAHOOD: Well, the way this works is -- and thank you Tom for your earlier comments. I appreciate that very much. You and I and Mr. LaTourette came into Congress together; and so we have I think developed wonderful relationships. When people ask me if I miss the House, I don't miss the roll calls, but I miss the relationships. I really do.

There's a -- I mean, we're trying to figure this out. We've made some recommendations to the administration. OMB gets involved in this. There are people in the White House that get involved with it. The leadership has to be involved with it.

And we're going to come back to you with what we think is a way -- we have to pay for this. I mean, we -- the administration is committed to paying for the $5 billion to $7 billion that's needed to plus up the trust fund in '09. And it's about $8 billion to $10 billion for '10. We're committed to paying for it; and I hope sooner rather than later we'll be coming back to all of you and saying here's how we think we should do it.

REP. LATHAM: In the supplemental just last week, the administration sent a budget amendment to reuse some stimulus funds for the flu pandemic preparedness. Is that a possibility of --

SEC. LAHOOD: Of using Recovery funds?

REP. LATHAM: Recovery --

SEC. LAHOOD: That is not something that we've had much discussion about. That money, to be honest with you, I mean, that money has really been committed in a lot of different ways. A lot of it is out the door.

REP. LATHAM: And I, you know, commend you for doing it. I wish we would have had a lot more money in your department, in that stimulus package that would have actually created more jobs rather than some of the --

SEC. LAHOOD: Well I would say this, a lot of these projects are coming in under what we thought they would. And we may be able to -- we're going to take that money and then, you know, hopefully have more projects. So that part is good.

REP. LATHAM: As far as the reauthorization, obviously it's not going to happen this year, probably not next year. I don't think there is any appetite probably next year or time limitations.

Is there a plan B, or are you just going to continue the safety Loop programs? Or is there any thought as to the --

SEC. LAHOOD: Well that's a part of the debate that is going on among our department, the White House, OMB and others, and the leadership here. I mean that will be a part of, you know, how do we plus up the trust fund and what do we do about the way forward, as far as authorization?

REP. LATHAM: Is there a date that --

SEC. LAHOOD: Sooner rather than later. I mean, look it, this discussion is going on about every day at the White House. I was just on the phone with some folks down there talking about this just to see if I could give you any more intelligent answers, and I'm sorry I can't be more specific, but I want you all to know that this is on peoples' agendas.

REP. LATHAM: Yeah.

SEC. LAHOOD: Yeah.

REP. LATHAM: On the stimulus funds, how many full time equivalent, you know, positions have you hired to get those dollars out? I guess my question also would be, when those funds are disbursed are those people going to stay at the department? What, how many additional --

SEC. LAHOOD: Well look, you know, one of the things that I've discovered at DOT is that with maybe only one or two or a handful of political people, we've been able to do what all of you asked us to do in the time frames, get the money out the door in 120 days, with the professional people. DOT has some of the most professional people that I have ever seen in the 30 years that I've been in government. The professional people have done the work. And these are full-time people who work at the department and are thrilled to come to work every day because they are doing what they love to do, which is work with the state DOTs, and the transit districts, and the airport officials. And they're working with them on getting this money out the door.

And so, you know, the people that we've hired are the political people in the different modes. I mean, we didn't bring anybody on to help us with this. We used the professional people in the department.

REP. LATHAM: Yeah. And I commend you for doing a good job.

SEC. LAHOOD: Right, right.

REP. LATHAM: Thank you, Mr. Chairman.

REP. OLVER: Mr. Lewis.

REP. JOHN LEWIS (R-CA): Thank you very much, Mr. Chairman. Mr. Secretary, as you mentioned in your statement, it's good this movement is pretty critical to the impact of your department upon our economic recovery. In the West, movement of goods, cargo from Long Beach from the port of Los Angeles, is pretty fundamental. Those goods flow through the empire in our territory and then go towards the East.

Mr. Secretary, how does your department plan to address the impact of goods movement throughout the country to help with this stimulus?

SEC. LAHOOD: We have $1.5 billion in discretionary money. We put out guidance, and we believe that we'll use some of the money to enhance our ports. We believe that when you look at the stimulus -- 28 billion for roads and bridges, 8 billion for transit, 1 billion for airports, 8 billion for high-speed rail -- there's some money in there for Amtrak. So the 1.5 discretionary that the Congress put in the economic recovery portion, we believe we're receiving some significant projects that are inter-modal, and there's nothing more inter-modal than a port.

And so to enable to expand some capacity, to relieve congestion, I think you'll see a pretty good chunk of this money being used at ports around the country to do the things that you were just talking about that are very important to our ports. I was just at the Rotterdam port and, you know, it's an economic engine for the country. And I know that ports around the country are an economic engine where they are located. And if we can use some of our dollars to help expand and relieve congestion, then I think we've done a good service to the economy.

REP. LEWIS: Thank you, Mr. Secretary. It might startle you to know that when I arrived in the Congress a week and a half ago, I was considered to be somewhat of an environmental nut. That is, I was the author of the air quality management district in southern California, know the importance of the movement of goods as well as the movement of vehicles to improving our environment.

Now, having said that, there's probably nothing out there that is standing in the way of our efficiently moving forward with so many of these programs that are driven by your department. We do need policy action that will help the Congress interrupt this whole maze of conflicting, overlapping, etcetera environmental requirements. I'd be interested in knowing what your position may be regarding states waiving some of these requirements.

And I specifically mention a relatively new thought; that is, maybe the Congress and the administration should consider helping us look at a special court to deal with environmental concerns to make certain that environmental interests are adequately addressed. At the same time, don't stand in the way and drive a no-growth policy. Comments?

SEC. LAHOOD: Well, look it. I'm a part of the team of people that works in this administration, but our environmental portfolio has pretty much been around the idea of CAFE standards for automobiles. We've worked as a member of the automobile task force. We've worked as a group that is working at the White House on climate change issues.

But ours relates a lot more to, you know, CAFE standards than some of the other things that you're talking about, Mr. Lewis. And, you know, I'd be happy to carry your thoughts back, but, you know, we don't necessarily have the jurisdiction like the EPA would or -- they do at the Department of Energy -- to do probably some of the things that you would like.

REP. LEWIS: -- (off mike) -- upon what the environmental considerations, the lawsuits and otherwise --

SEC. LAHOOD: -- Right.

REP. LEWIS: -- are doing to your ability to deliver --

SEC. LAHOOD: -- Right.

REP. LEWIS: -- product out there. I mean, it's pretty fundamental.

SEC. LAHOOD: Right.

REP. LEWIS: So within that discussion, I hope that you would at least think about the idea of a special court --

SEC. LAHOOD: -- Yeah. Good.

REP. LEWIS: -- to deal with environmental concerns.

SEC. LAHOOD: I will.

REP. LEWIS: Thank you, Mr. Secretary.

SEC. LAHOOD: Thank you.

REP. OLVER: Thank you, Mr. Lewis.

I'm going to honor the placeholder that Mr. Rodriguez put into order. He was here before anybody else came, and then went to do a quick markup somewhere else. So, Mr. Rodriguez.

REP. CIRO RODRIGUEZ (D-TX): Thank you very much and welcome back --

SEC. LAHOOD: Thank you.

REP. RODRIGUEZ: -- Mr. Secretary. Let me ask you, on the air control - - (inaudible) --, I know that a good number, 80 percent, are scheduled to retire, and we got to go into a new system. And I have been somewhat concerned about the diversity of that. And seeing how as we provide the new air control that we have some diversity in terms of African American, gender, as well as Hispanic, and I wonder if you might want to comment on that because we've been working for a couple of years on trying to make something happen, and we just haven't been able to crack that nut, you know, in terms of trying to get through there and trying to get a little more diverse.

I know that they are actually picking them up off the street, as far as I know, in some cases.

SEC. LAHOOD: We have a new administrator at FAA who I'm sure will be before your subcommittee when you consider the FAA budget, and whose name is Randy Babbitt. I think he's, like, been three or four days on the job. He's a former airline pilot of 25 years, and also was the head of the union and a business man. He knows of the concern that's in recruiting that we really do a wide reach-out. And we've talked about this in the department.

We've talked about the idea of diversity when we are reaching out to fill a number of these FAA controller positions and other positions within the department. This is a very high priority for the administration. It will be a high priority for Mr. Babbitt. And I will let him know of your expression.

I know that others on this subcommittee have had concerns. I know that there's a plan in place for us to really do a lot more reach-out, and I want to assure you that we will do that. It's a priority.

REP. RODRIGUEZ: Thank you, and I look forward to working with you there. I also have -- in Texas we have a rail, the South Orient, that basically the train runs at about 10, 15 miles an hour because of the conditions there. And I was wondering what kind of a --

SEC. LAHOOD: Is that a passenger rail system?

REP. RODRIGUEZ: No it isn't.

SEC. LAHOOD: Freight rail?

REP. RODRIGUEZ: It's a, you know, cargo rail.

SEC. LAHOOD: Yeah, yeah.

REP. RODRIGUEZ: And so there's a real need to improve the infrastructure there, and seeing what we might be able to do.

SEC. LAHOOD: Well we, look, we work with our freight friends all the time on their opportunities to improve, you know, the railway grades, and the freight is very important in our country. Really it's very important to our ability to get the high-speed rail because we know that we are not going to have dedicated lines all over America, that freight rail is going to have to be a partner with us. So we have good relationships. And so, you know, I will have our people look into this.

REP. RODRIGUEZ: And then, I don't know if I have additional time, but also as we look at major cities, looking at long-term transportation needs, such as San Antonio and other communities, between Austin and San Antonio and those fast-rail passenger trains, I know that there's a real need for them to come back with those master plans, not only for the states but for the communities in the region. And I know the language is there to require that to occur. Is that my understanding?

SEC. LAHOOD: Yes. On June 17th, we will release the information, the criteria, the guidelines, the guidance for high-speed rail corridors or regions. And that will go out to every governor and every state DOT. And we've had regional meetings in which Texas was included. And I'm sure your people were there. And so the guidance is out and then we will begin accepting applications in the Fall, and then be making some allocations of money later this year.

REP. RODRIGUEZ: Okay. Thank you very much, Mr. Secretary.

MR. LAHOOD. Thank you.

REP. OLVER: Mr. LaTourette.

REP. STEVEN C. LATOURETTE (R-OH): Thank you, Mr. Chairman, for the recognition. Mr. Secretary, it's lovely to see you again.

I was commenting before, and I'll say it publicly, that I want to congratulate you and the administration for the naming of John McHugh as the new Secretary of the Army. You couldn't have a better person. The only consternation that it has created on our side is that, as the president's chief of staff, Mr. Emanuel, continues to pillage moderate Republicans from the House and increase the Democratic margin, Mr. Latham and I are a little disappointed, because he's gone from LaHood, skipped Latham, LaTourette and went right to the M's. So maybe -- (laughter) -- if we could revisit that issue, I'd, we'd appreciate it.

MR. ( ): He might be next in line.

REP. LATOURETTE: You never know. (Laughter.) You never know. Maybe not after these questions. We'll see. (Laughter.)

Mr. Secretary, you and I have talked about the Star Alliance, and I thank you for your work in getting out some documents on April the 7th. But as you know, that continues even though that application has been pending for over a year. That's my (ear ?) to the Department of Justice.

And I guess I'm looking for some guidance. The statutory deadline has come and passed, June the 1st. I have talked to the president's chief of staff in small four-letter words that he understands, and I'm just wondering what it is that we can do to --

SEC. LAHOOD: Are you talking about the alliance between United and Continental?

REP. LATOURETTE: I am.

SEC. LAHOOD: That will be resolved to your satisfaction.

REP. LATOURETTE: Okay. And soon.

SEC. LAHOOD: Of course.

REP. LATOURETTE: Excellent.

SEC. LAHOOD: We'll meet the deadline.

REP. LATOURETTE: Excellent. Let's go to high-speed rail. I understood in response to Mr. Rodriguez's question that the guidance is out and --

SEC. LAHOOD: It will be out on the 17th.

REP. LATOURETTE: Seventeenth. A

SEC. LAHOOD: Yes.

REP. LATOURETTE: And then it's going to be an application process, and who is going to be the decider of who wins and who loses?

SEC. LAHOOD: Well, there aren't going to be any losers. I mean, look it. There are a lot of people around America who have been dreaming about high-speed rail. We, as I said, we've had like eight or nine regional meetings. Over eleven-hundred people showed up at these meetings. We just had eight governors in town yesterday to meet with the vice president and myself. And we know there are people all over America dreaming about high-speed rail.

We have 8 billion (dollars) now, and another 5, and -- But the answer to your question is DOT is going to make the decisions.

REP. LATOURETTE: Right, and maybe there won't be losers; there might be some people disappointed. But everybody will win I'm sure with your leadership.

REP. LAHOOD: I'll try and make a point, Mr. LaTourette, to make sure there are no disappointed people.

REP. LATOURETTE: Excellent. We look forward to that.

I want to congratulate you as well on the FAA re-authorization, in terms of getting Jane Garvey involved in the negotiations with the air traffic controllers. It's a travesty that the former administrator of the FAA imposed a contract on those people, and Mr. Rodriguez has talked about some of the difficulties in recruiting. But I'm a believer that not everybody is entitled to a contract that they love when they go to work, but everybody is entitled to a contract when there is collective bargaining that's collectively bargained. And so thank you for your work and your service on that.

On the question of the trust fund and TEA-LU, as you know, that the blue ribbon panel appointed in the SAFETEA-LU legislation, recommended a 40 cents a gallon tax increase, so you've been pretty clear about that. Also talked about vehicle miles traveled. When Mr. Latham was talking, I heard this giant thud around the corner, and I think that was Jim Oberstar falling over when you said they were not going to have a re-authorization this year or next year. Mr. Oberstar, Chairman Oberstar, tells me he's going to have the bill on the floor in the third week of June.

And, as you know, the missing piece -- and again, I think it would be a travesty not to have the re-authorization. I think that President Bush was poorly served by some bean counters when they came in at $256 billion over six years, which was clearly inadequate, and the two years late we delivered that bill, and we continue to have some problems.

So I hope whatever the fix is, if it's vehicle miles traveled, if it's tolling, if it's -- I guess we're not going to have a gas tax -- but whatever it is we need to have that program in place. It needs to be a solid six-year program so states can plan and make improvements and do all the things that are necessary.

Last thing I just want to -- the yellow light is on, so I'll be real quick. This auto task force is a disaster. And it's a disaster because decisions are being made. And I listened to a speech you gave where the administration didn't make any decisions on the auto dealers as to car companies. But by creating these structured bankruptcies for Chrysler and General Motors, you have -- not you, but the task force has created an environment where the car dealers, the car manufacturers are going into court and they are waiving the dealer's day in court with federal legislation. They are trampling over state franchise legislation.

And people who have sold cars -- and each car dealer, according to NADA, employs about 60 people. If you add up the Chrysler and the GM car dealerships, and forget about the 30,000 UAW workers that have lost their jobs, I mean, and the 20 communities that are now suffering, it's over 200,000 people. It's over 200,000 people who are losing their job, and, quite frankly, the Sopranos would be quite proud of what General Motors is doing in this letter that they've sent out, that not only if you question them, you're out. If you don't buy more cars, you're out. And they wouldn't be able to do that without this structured bankruptcy, facilitated by the auto task force.

And I know the president, when he announced the Chrysler deal on April the 30th -- I'm not one of those Republicans who wants the president to fail. I think if he fails, the country fails. But he said no communities would be disrupted by the bankruptcies, and nobody that worked for Chrysler would be disrupted as a result of the bankruptcies.

That's not true. And I would hope, since we've had a double delegation -- Congress has delegated the president, the president has delegated this non-elected task force -- I would hope that when the president comes back from the Middle East, you would sit down and chat with him. We've got to have fairness in this, Mr. Secretary. And it's just not fair.

SEC. LAHOOD: Well I wouldn't mind responding to that, if you don't mind, Mr. Chairman. I got your point. Look it, I don't know of another president who has done more for the American automobile manufacturer than this president, in terms of taking an interest, devoting a lot of time and energy, and the amount of money that has been loaned to the American automobile manufacturer. It's substantial. It's real money.

I think the fact that Chrysler is about ready to come out of bankruptcy, that means that it was a pretty good blueprint for saving Chrysler. And I'll just tell you this, Steve, the auto task force did not tell GM or Chrysler which dealerships to close. We didn't. We had nothing -- and the president didn't say, okay, now you got to close this one in Peoria or this one in Cleveland, or whatever.

I mean, we didn't do that.

And I've talked to the GM executive, and I've talked to the Chrysler CEO. These are very painful, hard decisions. They were not made lightly. Because, I'll tell you, the GM CEO has worked for the company for 25 years. His father worked for the company for 35 years. He knows a lot of these employees. Now I'm not saying he knows every salesman around the country.

But these are hard decisions for these people. And I think the administration is done all that they could have done to save the American automobile manufacturer. And I think the Chrysler thing is going to show that it seems to be a pretty good blueprint for saving the American automobile manufacturer.

(Off mike.)

REP. ED PASTOR (D-AZ): Thank you, Mr. Chairman. And good morning, Mr. Secretary.

SEC. LAHOOD: Good morning.

REP. PASTOR: Congratulations.

SEC. LAHOOD: Thank you.

REP. PASTOR: And welcome back to the appropriation room.

SEC. LAHOOD: Thank you.

REP. PASTOR: First of all, I want to congratulate you and also thank you for recommending Victor Mendez as the Federal Highway Administrator. And he had his hearing Monday, so I'm assuming he'll be coming to work for you very shortly.

SEC. LAHOOD: Well thank you for recommending him.

REP. PASTOR: Well, since I gave you one good recommendation, maybe you want to go back to the L's, and as you look for a railroad administrator, you might go back to LaTourette. (Laughter.)

SEC. LAHOOD: After his statement, I don't think -- (cross talk; laughter) --

REP. PASTOR: -- Well okay.

SEC. LAHOOD: -- I don't think he's go a shot right now. (Laughter.)

I want to talk about next gen.

SEC. LAHOOD: Yes, sir.

REP. PASTOR: And being on this committee over the years, I see deja vu all over again in terms of how the process is working and the possibility that the system may not come on, on time, under budget, and would continue to have some problems. And that troubles me because, like you, we fly frequently.

And then when the report came from ADOT, IG, it kind of perked me up again. And one of the comments that's made is that if the FAA lacks detailed plans as to how to transition from the existing system to the next gen architecture, the FAA needs to develop the strategy for assembling a skilled work force that can appropriately manage and integrate these complex systems and contracts.

This is one that I think that you will probably resolve. The FAA needs to develop a stakeholder initiative plan that will ensure that aircraft operators acquire next gen equipment.

It seems to me, and this is, I know you'll be looking at it, but in the past we had problems in getting the federal agencies that were involved in developing next gen, just getting together and working on it. And conversations I have had with some of the stakeholders, the airline industry, both commercial and general, the air traffic controllers, there seems to be that there isn't involvement of the stakeholders as this system is being developed. I can tell you that the existing system -- we sat here a number of hours talking about the radar screen and the mouse, because the air traffic controllers were concerned about how the equipment affected them and how they could use it.

Talking to some of the airline people, they are saying, there's a pilot project, I guess, that US Air is going to be involved with next gen, in Pennsylvania. But I think this system needs to develop itself with the stakeholders having meaningful input so that, at the end, the aircraft industry -- both commercial and general -- knows how it's going to fit, how it's going to work. The air traffic controllers will know whether or not the system is one that they can use effectively, and FAA will have a system that can transition from the old to the new effectively and make our skies safer for the Americans who will be up in the air.

And so I bring those thoughts to you, and I know that you are a problem solver, but I am concerned that in the past everything has been done kind of isolated and in a vacuum, and I would suggest to you there's probably a better way of doing it.

SEC. LAHOOD: Look it. I think, Mr. Pastor, you should know that this is a new day at the Department of Transportation.

REP. PASTOR: I know that.

SEC. LAHOOD: I think we have hired, the president has appointed about as good an FAA administrator as we could have, to get the next gen. That will be Randy Babbitt's number one priority. He's a commercial pilot for 25 years. He knows this stuff. He knows the importance of, you know, the airline industry having the best equipment in the planes.

The other thing is, I think there's a commitment from the White House that we have to get the next gen. The president understands this, and so do his people. And I think we will be there sooner rather than later, and sooner than a lot of people would have ever imagined.

This is a big, big priority for us. It can really help us in saving a lot of fuel. If you have the right equipment you can direct planes in and out of airports so they don't have to fly all over kingdom come, and you can, you know, relieve some congestion and save some jet fuel and --

But the safety part of it is the most important part of it. And this will be the number one priority for Randy Babbitt for his time at the FAA. To get us there. And we think we are going to get some help from the White House on the funding part of it too.

REP. PASTOR: Thank you Mr. Secretary.

SEC. LAHOOD: Can I just also say, I was in Phoenix recently and had a chance to meet with the controllers there, but also to tour the air traffic control --

REP. PASTOR: Did you like that tower? (Laughs.)

SEC. LAHOOD: Congratulations. I think you had something to do with that. It's state of the art. It's magnificent. Yeah, the controllers, I mean they love coming to work there.

REP. PASTOR: Well I can point it out to Jeff Flake. That's what an earmark can do for you.

SEC. LAHOOD: Yeah. Well I'll let you tell Jeff that.

REP. ( ): Be careful. His head will get even larger. (Laughter.)

REP. OLVER: Mr. Carter.

REP. JOHN R. CARTER (R-TX): Thank you, Mr. Chairman, and Mr. Secretary, I'm pleased to see you. I always respected your wise counsel while we were colleagues, and certainly respect you on the big job you're taking on.

SEC. LAHOOD: Thank you, judge.

REP. CARTER: Well we're here, first off, first thing I was going to ask you about was the same thing Mr. LaTourette asked about.

I have one of those hubs --

SEC. LAHOOD: Yes sir.

REP. CARTER: And I'm very happy to know, to be able to report that this is going to have action very soon.

SEC. LAHOOD: Yes sir.

REP. CARTER: The first time you all were here, you all talked to us about that your concept of transportation as it relates to growth of cities and city density and so forth, and I have some questions and some concerns that I always try to figure out what. It really was less about transportation and more about density, but you all seem to be teamed on this.

This smart growth idea, which would move us more to mass transit, if I understood it, was we would basically turn the cities back in on themselves and fill in the blanks before we would grow out any farther. And that raised the question that came to my mind: are we looking at a future of federal land use planning, federal zoning ordinances? Is there something that's going to restrict our cities' outward growth to cause them to grow back in on themselves, and become a higher density? So is that part of the plan?

And, as part of that question, the EPA is already working on, got $50 million, that they are out there working on smart growth already. Is this going to be a joint operation between DOT and HUD, or is it going to be a -- where, how's this going?

SEC. LAHOOD: Well, judge, we are not going to create a national zoning department. We have no intention of doing that. We'll leave that to local officials to decide what they want to zone and where they want to zone it.

But I'll give you an example. I mean, when I was in Houston, I took a light rail from downtown out to what I believe is one of the most comprehensive health communities in Houston, and where they have MD Anderson, the children's hospital, the women's hospital. And the people that I saw on that light rail were people who didn't want to get in their car and get into congestion in Houston and drive out there. And also people that, I don't know, maybe couldn't afford to buy a gallon of gasoline but needed to go see their doctor.

And that's what we're talking about. It's creating opportunities for people who, you know, maybe don't want to own two or three automobiles. Look it, every family is going to have a car. I mean, we're not going to eliminate cars. We're not trying to do that. We're trying to say to people, if you'd rather get on a light rail or a bus or a metro line or a bike path or a walking path to go to your doctor, to go to the grocery store, or even a streetcar. I mean, Portland is a classic example. They not only make the streetcars there, they use them.

And so that's the kind of -- which enables people to think that they don't always have to get in their car to go somewhere. And they don't have to sit in an hour and a half of congestion to go see their doctor or go to the grocery store. And so, look it, we have the opportunity at DOT to work with EPA and HUD to create opportunities for people to use other modes of transportation.

I'm not going to get in the zoning business though.

REP. CARTER: Well I was really just -- Houston is the perfect example to talk about because in 1960, I accidentally got laid off on the other side of Houston trying to get back over to the southwest side of Houston, and found out to my chagrin that it was 168 miles across Houston by street. And so I wasn't going to walk home. But that's another little story --

SEC. LAHOOD: But maybe -- (cross talk) -- you could take a light rail -- (cross talk) --

REP. CARTER: -- a good light rail, I would. But the impression was given last time that the only way you would get the massive urban sprawl cities like Houston, LA and others to quit being further urban sprawl, was there was going to be some kind of restrictions that would say that, first, the cities -- I believe this was exactly what the HUD secretary said -- would fill in the empty spaces inside the city before they moved out of the city. And they would crack some density areas, maybe make them higher density areas, as the growth of cities issues, to provide the incentive for the rail issues.

I'm all for high-speed rail. I'm not knocking rail. I would -- it's interesting that that rail you rode on -- there used to be a trolley that ran up and down that street. They took it out. Before I was born. So, anyway, getting back to the thing, I'm not so concerned about the rail as I am concerned about the density issues, because it looks like to me the federal government is going to have to impose restrictions to make people do that. Is that what you think they envision to do?

SEC. LAHOOD: That's not what I envision to do. What I envision to do is create opportunities for people to use a lot of different modes so that they have a lot of different options in the event that they can't afford a car or can't afford a gallon of gasoline and they want to use a clean burning light rail or a natural gas bus or a diesel bus, and create the kind of communities where, you know, you don't have CO2 floating around the air, so you feel like you can go out and take a walk or ride a bike or, you know, lots of options for people.

REP. : And you're not going to get into zoning.

SEC. LAHOOD: We're not going to become a national zoning department.

REP. : Good news, thank you.

REP. OLVER: Mr. Berry.

REP. BERRY: Thank you, Mr. Chairman. I would associate myself with the nice remarks that have been made about you, Mr. Secretary. We've already talked about most of my issues before today and I won't take up anybody's time. Do we have any problems that money won't solve?

SEC. LAHOOD: No, sir.

REP. BERRY: I'm surprised at that. And I'm glad to hear we're not going to have a national zoning commission, too. I applaud your efforts there. The reason they've got that situation in Portland is because Blumenauer won't let them have cars. He makes -- (inaudible) -- Thank you, Mr. Chairman. I yield back.

MS. KILPATRICK: Thank you, Mr. Chairman. Good morning.

REP. OLVER: Good morning.

MS. KILPATRICK: Good morning, Mr. Secretary, you're a breath of fresh air.

SEC. LAHOOD: Thank you.

MS. KILPATRICK: Thank you so much. You're one of the excellent appointments the president has made.

SEC. LAHOOD: Thank you.

MS. KILPATRICK: My region of the world is in decimation, as you know, but there's some hope. There's always an opportunity. We have the ports, highways, the freight rail lines, the airports, the bridges, the international waterway, high-speed rail that comes from Chicago into Michigan -- not across Michigan yet. We hope we'll win one of those corridors and we're working on it. We are primed to be one of the international gateways that the president talked about, and I want to work with you on it. I've done some work on it. We're ready for our MPO, and we talked a little about this when we met recently. Mine, I don't know about all of them, but all of them need to be looked at. I'm not sure how they fit; mine had $100 million out of the Recovery Act. Can't yet find out what they are doing with it. The transportation authorization was due to Chairman Oberstar over a week ago. We submitted ten or 15 of them. My MPO went to my district and asked them to ask for that, so, again, I asked them what about the $100 million.

One thing Oberstar is requiring is that if and when it's authorized, we have to have local money.

I want to make sure that our MPO helps in that. I don't know yet what they do. Secretary Napolitano was in our district last weekend looking at our bridges and waterways and the infrastructure needs and all of that. One thousand less trucks a day cross that international bridge. We were at a billion dollars a day before the demise of the industry. We don't know what that's going to come to, but the whole traffic patterns -- I'm urging you to take a look at them. I am not opposed to one project over the other project. I want the encompassing vision that I talked to you about.

SEC. LAHOOD: Mm-hmm. (In agreement.)

REP. KILPATRICK: If we use my hand and this is the world, this is where Michigan is—we did it back and forth. I want to do world stuff, and I want you to help us because, as I said as I started talking, we have the infrastructure for much of what's needed. The international waterway, our friend and neighbors with Canada and doing what we need to do, not this project or that project based on old projections, but bringing it all together and becoming that international -- to hire, to have jobs, to increase our university; I see all of that. We have a great university community -- Wayne State, Michigan State, U of M right there; all of that needs to come together now. What I don't want you to do, and I think you've told me you won't, don't get involved in this or that because it's neither at this point. It's a bigger vision. A thousand less trucks a day, the revenue source decimated, people out of work.

I love what you said to all the people before you coming to me this morning. You have the vision, and I believe the president does, too. I want to work with you on it and Chairman Olver, as well. Don't be bothered by individuals like myself talking about wanting this or that. It's a new America and that's what I think we're building, so my question, and it's not really a question, but a commitment from you. This light rail from Detroit to Ann Arbor, we started it five years ago in the planning; we hope to get it reauthorized in the next session of whatever the loop was going to be, the next transportation bill and Oberstar had said by October. Chairman Oberstar said he's going to have you an authorization bill somewhere. I know some people said nothing's coming back. We need one because transportation still is the engine that will renew the development that we want to see.

Can you speak on the MPOs? Have you had a chance to look at it and are they archaic, need to be turned out? There has been no change in them. I chaired the transportation budget in the Michigan legislature. I've been here 13 years, so that had to be 17 years ago.

SEC. LAHOOD: The MPOs did a good job over the, you know, last several years, but there's going to be reform of MPOs.

REP. KILPATRICK: Good.

MR. LA HOOD: They don't meet the structure of America now. They need to have a much wider opportunity for people, and I've learned this from talking to Mayor Daley and other mayors who are hamstrung by the way that MPOs are structured now. We need to restructure them, reform them, make them look like planning organizations that reflect --

REP. KILPATRICK: Thank you.

SEC. LAHOOD: -- the area from which they now are operating in. And it's not just—it's got to be the suburban area, the rural areas, so that they're much more inclusive, and I think we are working on that in the Department. That's one of our priorities.

REP. KILPATRICK: Thank you very much.

SEC. LAHOOD: Yeah.

REP. KILPATRICK: Our MPOs are seven counties.

SEC. LAHOOD: Right.

REP. KILPATRICK: Two-thirds of Michigan's population lives in those seven counties. I look forward to working with you on all of this.

SEC. LAHOOD: Yeah, let me just say also that your governor was with us yesterday on our discussions on high-speed rail and her suggestion is that, you know, if we need facilities to build the high- speed rail equipment and, you know, because of the "buy America" provisions that are in the economic recovery plan, I know there's a lot of capacity and --

REP. KILPATRICK: Unfortunately, a lot of coal capacity—

SEC. LAHOOD: Yeah, but we could use Department of Labor money to retrain people --

REP. KILPATRICK: Yes.

SEC. LAHOOD: -- to build train cars and, you know, equipment like that, and that's something that your governor suggested, and it is a good idea.

REP. KILPATRICK: Support --

MR. : Excellent concept.

REP. KILPATRICK: Yes.

MR. : Excellent concept.

REP. KILPATRICK: Yes, it is. Thank you.

MR. : Thanks to Roy Billalard. We need to move on.

REP. KILPATRICK: Okay. Thank you.

MS. ROYBAL: Welcome, Mr. Secretary.

SEC. LAHOOD: Thank you.

REP. ROYBAL: I also want to associate myself with the praises that have --

SEC. LAHOOD: Thank you.

REP. ROYBAL: -- been given. I also would like to associate myself with the comments that were made by Mr. Rodriguez with regard to the air traffic controller positions, and I'll be following up with Mr. Babbitt as well. Last year, as you know, Americans took 10.7 billion trips on public transit. That was the highest in 52 years. This increase of the use of public transportation requires expanded services and capacity, but with state budgets in crises the opposite is happening. In fact, more than 80 agencies across the nation have been forced to cut service, lay off workers and raise fares. And you have stated publicly in recent weeks that you are open to the idea of providing operating assistance to transit agencies.

One idea that has been promoted by local agencies is to have the flexibility to use federal capital monies for operating assistance. Are you open to considering this option and, if not, what ideas are you considering to help transit agencies during this time of crisis to keep up with the current need?

SEC. LAHOOD: I am open to this idea that, you know, if we provide money to buy all these buses and you don't have people to drive them or people to run the organizations, it's counterproductive. I mean I am open minded to this idea and I know there's a provision -- somebody put an amendment on the Senate side to allow this to happen. I don't know if it'll prevail or not, but I think it's a part of the supplemental maybe, but for the long term I think we need to be open minded. We need to have some flexibility about these things when there's a downturn in the economy.

REP. ROYBAL: Thank you. There's been a lot of discussion here about high-speed rail and you've said that there'll be no disappointed people. I hope that is also going to apply to the communities that are going to be disrupted by high-speed rail but will not be able to afford to even ride on the high-speed rail. I'm particularly, of course, focused on California, and I believe this: the mode of transportation does, in fact, have potential for our growing and challenging transportation issues in terms of moving people quickly and efficiently. However, I have concerns about it because building a high-speed rail route along existing highways or existing rights of way in places like Los Angeles, for example, may minimize the negative impact to other communities, but the concern that I have is that it would add to the damages that have already been done decades ago when the new interstate system divided and destroyed four communities and caused lingering health issues for residents.

In my district alone, for example, communities are dissected by no fewer than eight state and federal highways and several railroads, so building a new high-speed rail system along existing rights of way is far more disruptive and intrusive than proponents would like us to believe, and it certainly would be in communities like mine where I said the residents in those communities aren't going to be able to afford the proposed fees or the charge of riding these rails.

You have listed five elements that are important to the reauthorization of surface transportation and one of them was creating livable communities. I think there's been a little bit of discussion about that. I hope that it also means protecting existing communities, and the question that I have is, what is the administration's commitment to ensuring environmental justice for existing communities already negatively impacted by transit projects and does the administration have any plans to mitigate any of these additional impacts for these communities and will the administration promote fairness and justice by making sure that it is not only poor communities that share in the burden of high-speed rail, but, you know, all communities because I'm just talking from my experience, for example, growing up in Los Angeles where freeways just destroyed communities, took away homes when the logical route was actually to go through an industrial area, but for political reasons and so on, that didn't happen. So that's the concern that I have and my question is, what is the commitment of the administration to ensure environmental justice and livable communities for all communities?

SEC. LAHOOD: Well, obviously there would be a commitment. I think we would be sensitive to some of the concerns that you've expressed here. I've talked to lots of people from California about high-speed rail. There's a lot of interest there. People have been working on it for ten years, but, look it, it'll be up to the state and the people in California to decide what kind of proposal they put together. But I think we have to be sensitive to what you've just said here and, you know, the last thing we want to do is be promoting livable communities and then, you know, ruin neighborhoods. You know, we're not going to be in that kind of a mode and so, you know, what I would commit to you is that we'll work with you, but I encourage you to also work with some of these high-speed rail advocates to make sure when they send their proposal to DOT, it's not developing high-speed rail and destroying neighborhoods.

We're not for that. I mean, that goes against what we've been promoting and so, you know, we'll work with you, but I also encourage you to work with some of these high-speed rail advocates because they're going to be sending us a proposal because, you know, they've been working on it for ten years.

REP. ROYBAL: Oh, I've seen it.

SEC. LAHOOD: And I know you're well aware of that, but, you know, I'll commit to you that we'll be sensitive to this idea, that these neighborhoods are important.

REP. ROYBAL: Thank you.

SEC. LAHOOD: Thank you.

REP. OLVER: Thank you very much. We're expecting to have some votes shortly. I think we can manage to finish our round and do so in a reasonable way. Mr. Price.

REP. PRICE: Thank you, Mr. Chairman. Mr. Secretary, I'll add my words of commendation and welcome and congratulations.

SEC. LAHOOD: Good morning. Thank you.

REP. PRICE: We're very happy to have you where you are.

SEC. LAHOOD: Thank you.

REP. PRICE: I have a question I will try to make brief, although it's a little complicated. It, like many questions we ask, I guess, on this committee, it is of national import but it also has local and state implications, so let me try to formulate this very briefly. It has to do with the TIFIA program.

SEC. LAHOOD: Yes.

REP. PRICE: And I understand that program is somewhat in flux and that this may be a timely question because I believe your credit committee, DOT's credit committee, is going to be meeting tomorrow to talk about this program and to review the new policy the Bush administration sought to impose regarding subsidy fees. The national concern, I guess, is obvious. This program has undergone a good deal of fluctuation and change.

In North Carolina it's of interest because one of our major projects, I-540, the Triangle Expressway, is at stake. This is a $1.2 billion project. It's absolutely shovel ready. The state DOT has completed the ratings process, set to issue a AAA bond to fund the remainder of the cost, but now the goal posts have been moved and the additional subsidy they've been advised they have to cover is threatening to delay the bond issue to require them, in effect, to start over. That's why we need to let you know about the situation and ask for your help.

The TIFIA program went from being underutilized in the early years, as I understand it, to now being very much in demand, unable to cover the demand and the Department appears to have responded in a haphazard way to this change. Abandoning the first come-first served principle at one point, dividing the available budget authority equally among projects in the pipeline, rather than on a percentage basis, instituting a new brand of subsidy fees, imposing a moratorium on new projects; it's kind of a muddle right now, so it's a good thing that you're going to be looking at this.

We're caught in the cross currents in our state. We're probably a good example of how this is not working. Our loan application was approved before the moratorium was imposed, but now we've been advised that we're going to have to pay a substantial subsidy fee under regulations that were not in place at the time the loan was approved. Initially the fee was going to be $24 million with $20 million covered by their equal share TIFIA and $4 million for us to cover out of pocket, but in the spring, following a very minor change in the bond portion of the financing language which in no way affected the loan amount, we were told the subsidy fee would be $37 million. That's $17 million out of pocket.

In the meantime, the ratings process had already been completed, earning a AAA score, so it really doesn't seem right or sensible to have to go through that all over again, to come up with an additional $13 million. This decision to divide the subsidy pot up equally because of a lack of funds seems to be fairly dysfunctional. It's not holding up well, and I could go into that in more detail, but I won't. I think you understand the problem and, of course, you've inherited the problem, but there is an opportunity now to get it right, and I want to say this is not just a matter prospectively of getting it right but there are some projects in the balance that really are going to depend on some timely adjustment here. And that's the best I can do for a brief overview, and I appreciate your response.

SEC. LAHOOD: Well, no, I'm familiar with this and I'm familiar with what, you know, you've laid it out very carefully. These decisions are recommended to me and I would, you know, the best thing for me to do is take that piece of paper that you just read from and take into account a number of things that have intervened and do the best that I can with it.

REP. PRICE: I'm very grateful for that. I'll make sure you get that piece of paper and anything else you need, and we appreciate your cooperation.

SEC. LAHOOD: Thank you. Yes, sir.

REP. PRICE: Thank you, Mr. Chairman.

REP. OLVER: Thank you. Miss Kaptur.

REP. KAPTUR: Thank you, Mr. Chairman. Welcome, Mr. Secretary.

SEC. LAHOOD: Thank you.

REP. KAPTUR: I'm like everyone else, I'm sorry you're not here anymore.

SEC. LAHOOD: Thank you.

REP. KAPTUR: I'm very glad for your new appointment, but I miss you.

SEC. LAHOOD: Thank you.

REP. KAPTUR: And we wish you very well in your duties.

SEC. LAHOOD: Thank you.

REP. KAPTUR: I'll tick through several things very quickly. Air controllers. I don't know if you have a figure with you this morning on the number of air controllers that will be hired over the next several years, but I would certainly appreciate any information your staff could provide us about those recruitment efforts and how we, as a community, could better support -- we have such high unemployment -- perhaps recruiting future controllers in areas of high unemployment.

I understand once they're recruited they enter a very difficult process where they have to pay their own hotel rooms and go off to Colorado and all this other stuff. I want to understand what happens to people when they try to go into training to an extraordinarily important position and what we might do to support them during their training period and make the glide pass easier. Would that be possible?

SEC. LAHOOD: Of course. We'll give you a report. The other thing that I don't want to take because I know you have other questions. We're in very serious negotiations with the controllers right now, and it's going very well. I don't know what will happen, but I think we're going to have a happier controller group when the negotiations are over than we've had in the last several years, but we will give you a report on recruitment, how it's done, what happens after you're actually offered a job, your training and all of that. Some of that may change after these negotiations, but we'll give you the update on that.

REP. KAPTUR: All right, thank you, Mr. Secretary, very much. Greatly appreciate it. Number two on both MARAD with Maritime administration and with high-speed rail, I'm wondering if you could identify someone in your department to work with us? I'm convening a meeting of those who represent seaway communities, St. Lawrence Seaway communities, and have a discussion about modernizing those seaway authorities as we move into this new millennium. I think people have ideas on energy and on intermodal and they need a way of doing that. If you can think of a way to do that with members, I would certainly greatly appreciate it. And then I know Mr. LaTourette and I, anchoring both ends of the state of Ohio, are very interested in that high-speed rail on the eastern side of Ohio, the greater Cleveland area, west of Toledo into Chicago. We're planning a convening sometime this summer in Ohio on that and we would love to have someone from your department join us for that.

SEC. LAHOOD: We'll be there and your Ohio Transportation Administrator or Secretary was with us yesterday and I had a very good discussion with her, and she's right on top of all of this.

REP. KAPTUR: Beautiful. I thank you. And then two final points: one is, in the Recovery Act there is $1.5 billion appropriated for discretionary grants for capital investments and surface transportation. I wondered if in the final moments you could discuss what you're going to be looking for as chief criteria in evaluating those and, number two, as you do your work if I have any suggestion for you -- (laughs) -- through the massive programs you manage, in a place like I live, it would be great to have incentives or directives from DOT to get local communities to consolidate and manage their public fleets.

We have city fleets, transit fleets, county fleets, fleets for the mentally disabled, postal fleets, so you've got federal, state, county, et cetera, if you could get them to think green in consolidated maintenance facilities with consolidated fueling, the amount of money we could save, and our garbage trucks only get three miles a gallon. The postal vehicles, on average, get ten miles a gallon in regions like mine, and I think that you have an enormous capacity to encourage -- and I don't think communities are thinking this way. We could save a lot of money if we were to do this in a more intelligent way and manage our maintenance fleet, those doing the work in a very proactive way, we could bring up the mechanics of the future connecting to our local colleges and so forth, and right now in apprentice programs this isn't being done. It's all very haphazard, too much duplication and, frankly, the miles per gallon are proof in the pudding it's not working, and I doubt that my community's the only one that faces that, so if you could encourage through the expenditure of some of these dollars that are coming down, that kind of consolidated effort maybe you could have some prototypes or demonstrations or give awards to communities that have done it right, but I just put that on the table as something to be considered.

And, finally, I have to ask you, you just returned from Europe where you were able to look at high-speed rail systems. I wonder if you could discuss that with us just for a moment. I'm particularly interested in the Chunnel between England and France. I think it's about 26 miles long or something, because I think about a chunnel between Ohio and Ontario and connecting two economic powerhouses and what it would take to do that in our country. Could you discuss how speed rail --

SEC. LAHOOD: On the $1.5 billion, we're asking for projects of national significance, intermodal, and we're looking at some port projects just because there was not other money for ports, really, in the economic recovery, but it'll be more than ports, but it's national significance, intermodal, and we know that some ports are going to come in for expansion, and on the high-speed rail we took a train from Paris to Strasbourg. We went 200 miles an hour. State of the art. Very comfortable.

In Spain, we went from Madrid to a town I can't think of right now, 250 miles per hour. There were 450 people on the train. They paid $65 one way. If the train does not arrive on time in Spain, the people get their money, so anybody that boards that train is hoping it doesn't get there on time as long as it gets there. They get their $65 back. Now, I mean, these are state of the art -- now look it, we're not going to have trains going 250 miles an hour in America, but what we are going to have is an opportunity for America to experience passenger rail service that's comfortable, efficient, and cost- effective and provide jobs to people.

To build these, to build the equipment, to build it in America, the companies that are doing this now in Europe and in Spain are going to partner with American companies. They have the technology; they know how to do it, they're ready to do it. They were practically running us over in order to get appointments with us, to talk to us. They're ready to come to America and share their expertise, so, you know, people who travel to Spain and Europe and ride on the high-speed rail wonder why we don't have it in America. Well, we don't have it because it's never been a priority. Think if Eisenhower had signed a bill that said high-speed rail when the interstate system -- you know what we'd have? We'd have state-of-the art high-speed rail, but we have state-of-the art interstate and, you know, it's the model for the world.

We're going to have high-speed rail. It's the president's dream. It's something that he really is committed to. He's the one that put the $8 billion in the Economic Recovery, and another $5 billion, if you all will go along with that, over the next five years. Americans want this and so Europe's got it down to a real science and so Spain, France, Germany, Asia -- and I encourage any of you on your next CODEL to hop on a high-speed rail line. It's coming to America.

REP. KAPTUR: Mr. Chairman, I just wanted to ask the Secretary, I've heard from so many people American can't do 250 miles an hour. You've got a teeny little country like Spain and a massive country like the United States. I really can't understand technologically why we can't do 250 miles an hour.

SEC. LAHOOD: Yeah, well, it goes back to what Ms. Roybal was saying. You know, I mean, our, you know, we have communities shoe- horned all over. It's pretty hard to make a train go from Washington through Philadelphia through Wilmington to get up to 250 miles an hour. You can't, I mean, you can't do it.

Now, in California, you know, they have some dedicated opportunities here, but I think we have to be sensitive to what Ms. Roybal said about the communities that it's going to go through. You know, it's conceivable you could start in Chicago and go to St. Louis and get up to -- I mean, you know, if I predict a speed here, that'll be the headline, so I'm not going to do that, but anyway, we're not going to get to 250 because America is already built out. If you get on the Spain train, I mean, it goes across the rural part of Spain, it's a direct; there's no -- it's direct.

You're going 250 miles an hour and it's very comfortable, okay?

REP. OLVER. Thank. Thank you. We're finished first round. The votes are holding up, but we'll at least start again here and see how far we get. I just -- it's my turn now. I just want to go back to where I was on the funding issue for a moment. The policy and revenue commission which was part of the previous authorization bill, that authorization bill is about to run out, had assessed for the year before they made their report that the total expenditure in this country in federal, state and local funds for the transit and highway programs were about $85 billion. A major portion of that -- more than half of that -- is federal money and none of that came from any of the creative -- because they offered some creative ideas about what could be done, including the ones that you had mentioned, Mr. Secretary, but also such things as custom duties and imposing fees on vehicle registrations and things of that sort, which we basically do not do from the federal level. Our dedicated sources of money have been basically from the gasoline tax, and so it's only been the states that have used tolling and HOVs and public/private partnerships thus far, and it takes a fair amount of time to create those in a way, if we decided to go that way at the federal level, and a lot of competition with the states because that's been some of the way that they get their money, so your quote of "You have to be creative about this," you really are going to have to be creative about it to make it all fit together, I think.

Now, I wanted to contrast and I was going to just add on a little bit and go slightly farther than Mr. Pastor did on the next agenda issue. In your written testimony your words on the federal aviation, I'll quote them for you. It says, "Federal Aviation Administration should move toward a model whereby the agency's funding is related to its cost, financing burden is distributed more equitably, and funds are used to pay directly for services the users need." That sounds very much like dedicated spending, the sort of thing that is most likely to be acceptable to people in general.

I mean, I can --- could relate other sorts of instances along the way. And so there, where we at the moment don't have a problem with our trust fund, that's what it is that's going on there. So it puts, again, all pressure on the TNI committee and on the administration to come up with something that's going to be a funding mechanism that will get the kinds of money because TNI committee's debt policy and revenue commission had stated that we basically need twice as much money fairly soon and over a fifty year period two and a half times as much money, on average, year by year, to do the kind of public --- the kind of transportation, surface transportation system that we really need.

My comment on the --- on the next gen is this, and I'm very pleased that you have already said that your new FAA administrator is very concerned about it, that it, you think is going to move more quickly.

I would hope your goal would be rather specifically one to cut the time. This has been something we've been talking about for all the years I've been on this committee, which is most of a decade now. And it's now being said that we're headed onto a system that will get us next gen in place by the year 2020. We ought to be able to cut that in half.

SEC. LAHOOD: I agree.

REP. OLVER: Oh, you agree. Okay, well then we don't have anything else but you can't do it with 865 million (dollars). It's going to have to be larger once you get up and ready to go and know what we really have to do. We really have to put some effort and the money, as Mr. Barry back there said, it comes down to how much money do you need to raise to get to where you want to go?

You don't need to comment. You've already ---

SEC. LAHOOD: Well no, I want to tell you that the White House, they're committed to helping us try and speed this up and all it takes is money to speed it up. Everybody knows, I mean, the stakeholders all know and the people that provide the equipment know.

REP. OLVER: Our traffic control system is antiquated.

SEC. LAHOOD: It is. It is.

Could I just comment? Let me just read this for our --- Mr. Rodriguez, Mr. Pastor, I'm sorry Ms. Roybal-Allard left but I'll send her a little note. Let me just -- there's four points here that the staff gave me and I'll just put it on the record. Hispanic recruitment will be addressed in the air traffic control organizations workforce diversity plan. The plan is currently being finalized and will be delivered to Congress June 16th.

So, if Ms. Roybal-Allard's staff is here and I will give this to them. FAA to date has hired 765 Hispanic controllers, representing 5.14 percent of the controller workforce but we will have a focus on doing better. But that's sort of the state of play right now and we'll have this report to you in about a week.

REP. OLVER: Thank you.

Mr. Latham.

REP. LATHAM: Thank you, Mr. Chairman.

Secretary, as far as the essential air servicers a substantial increase and then basically, from what I see, it's pretty much to maintain normal services. It's important to two cities in my area, my district probably was for Peoria too, I would guess.

SEC. LAHOOD: Sure.

REP. LATHAM: Can you elaborate the reason for the size of that increase? Are you ---

SEC. LAHOOD: Because we know that this is what Congress, you know, we got the memo on this and we know this is important to Congress and it's important to communities and it's important to DOT and FAA that we have essential air service.

REP. LATHAM: Are there going to be any proposals --- and maybe this question later on --- to change it in any way so that we don't see this, you know, huge increases ---

SEC. LAHOOD: Well I don't --- I'll let you know about that. I don't know that there is but I'll check that out.

REP. LATHAM: Okay. I still have, as far as using stimulus money for operating in the ---(inaudible).

SEC. LAHOOD: Right.

REP. LATHAM: I mean, I understand where you're coming from as far as the difficulty some communities and entities are having. My concern is do you ever get that genie back in the bottle again afterwards? Will there be legislation or proposals?

SEC. LAHOOD: I think this, I mean, I think what people ought to think about is during hard economic times, you know, we should be open-minded about allowing transit districts to do it and then when things improve, you know, I mean you could set a date certain on it, assuming that --- let's assume the economy's going to be better two years from now, which I think everybody does assume. You could say, you know, on date certain that's the end of that availability of money.

REP. LATHAM: Is there precedent for any program that started up ever that ever ends, you know?

SEC. LAHOOD: Probably. I can't think of any right now.

REP. LATHAM: There's nothing more permanent than a temporary government program, you know that. I mean, -- and that's my concern. I don't think you ever get the genie back in the bottle again. And I have great empathy for your ---

SEC. LAHOOD: Right. Yeah. You know, I'm really just, you know, I'm taking my cues on this. I went to a transit conference where you had transit people from all over the country. This is a big deal for them, I mean, they're hurting. They can ill afford to pay their drivers of their buses and to keep the doors open. I mean, it's a big --- it's a serious issue.

REP. LATHAM: Right.

SEC. LAHOOD: And I think when people like that raise a serious issue you have to be sensitive and try and figure out a way forward for them.

REP. LATHAM: No, I understand but I'm just worried about long term and it's a precedent that could be carried over into a lot of different areas too. That would be my concern.

You know, we tried in the full committee -- I had an amendment about not --- the planning local government shares or what they were already doing with stimulus money and this and that was rejected in committee. But this kind of goes on in the same veins.

So, Mr. Chairman, in the interest of time and the bells just went. I yield back.

REP. OLVER: Thank you.

Votes have now been called which means that we should be done here within the --- by 12:00 certainly. We have 15 minutes or so.

If we take maybe two minutes we can probably finish the round for everybody and get everybody one more question. And Mr. Latham and I don't need to have any more time. We've had our time.

I would say that in a couple of days we should pass the supplemental budget, which does have a 10 percent allowance for --- in that legislation, to my understanding at least. The problem is that the first round of the transit monies had already been, kind of, obligated before that was --- that legal authority is now being provided. But it would hope work for the second round, the second year of the transit redistributions.

Mr. Pastor. I'm going to go down the line in seniority as we go. Two minutes each.

REP. PASTOR: I'll just ask the question and then maybe at a later conversation --

In October the railroad administrator, or that office, is supposed to come to us with a national railroad plan as I understood from prior panels. And June, I think, was it June 16th you were going to come out with the guidelines for high speed rails?

SEC. LAHOOD: Right.

REP. PASTOR: I would hope that as we develop --- that this plan is presented to us in October and you have the guidelines that there's some kind of connection so that the national plan, if adopted, will follow some of the recommendations that --- which I'm sure is going to include high speed rail, are looked at.

SEC. LAHOOD: Of course, yeah, no, no, yeah.

REP. PASTOR: So I would hope that when the national plan is provided that we're able to at least give you some of our comments and input because ---

SEC. LAHOOD: Of course.

REP. PASTOR: I agree that Amtrak is a great national railroad today but it can get better and we should do what Eisenhower did with our interstate and do a correct job.

SEC. LAHOOD: Sure.

REP. OLVER: Mr. Carter.

REP. CARTER: Thank you, Mr. Chairman.

I'd just have kind of brief --- in our last meeting we had and we talked about high speed rail we were talking about, unless I missed it, the rail speed being 120 to maybe 150 miles an hour.

SEC. LAHOOD: Yes, sir.

REP. CARTER: You're not looking at the 200 plus right now.

SEC. LAHOOD: No, sir. I mean, after meeting with these folks around the country I think that there are very few corridors or regions that are going to ever get to that speed.

REP. CARTER: Well we happen to have a proposal that might, well actually going 200 plus.

SEC. LAHOOD: Okay.

REP. CARTER: Dallas and San Antonio and then Fort Hood, which is our largest military ---

SEC. LAHOOD: Right.

REP. CARTER: -- position down through Houston.

SEC. LAHOOD: Okay.

REP. CARTER: And --- but I was telling them that we were not talking about 200 but if there is a 200 miles an hour plus proposal it will be considered.

SEC. LAHOOD: Absolutely. Absolutely.

REP. CARTER: That's the only question I got. Thank you.

SEC. LAHOOD: Yes, sir. Yeah.

REP. OLVER: Mr. Rodriguez.

REP. RODRIGUEZ: Mr. Secretary, welcome once again.

And on the area of air traffic controllers and that new technology probably I would ask, you know, I know there's additional resources and you said it exactly right, the more resources the quicker we can get into some of these areas. And I think we really need to move into the new technology as quickly as possible and if you can let us know, maybe in the future, in terms of what might be needed for us to do that. And it just seems that right now since a lot of those new air traffic controllers are needed we might as well come up with a new technology and move it up as quickly as possible.

SEC. LAHOOD: Good point.

REP. RODRIGUEZ: Thank you very much.

REP. OLVER: Mr. LaTourette.

REP. LATOURETTE: Mr. Secretary one of the reasons I admire you was in the 15 years that I've known you you're a tremendously loyal person and I know that you are now on team Obama and I appreciate your loyalty. And I think you misunderstood my observations about the president's task force. I think the president's done a wonderful job and my criticisms weren't at the president. My observation is that he's being poorly served by this nonelected automobile task force.

And so, Mr. Chairman, I would ask unanimous consent, and I'll get you copies, Mr. Secretary, to insert into the record of this hearing an email that they didn't want out, Chrysler didn't want out, the task force didn't want out, from indicating that they tried to work this out and the lawyer on the task force told Robert Manzo at Chrysler forget about it, we're going into bankruptcy.

I want to submit an article that appeared in the Detroit news that indicates that the auto task force tried to set the advertising budget for Chrysler, the new Chrysler, during the course of the bankruptcy.

I want to submit an article that appeared in the Automotive News on June the first that indicates that the task force directed --- everybody's wondering why the GM bankruptcy is in New York, it's in New York even though it's incorporated in Delaware and has most of its stuff in Michigan because they had one poor little guy selling cars in Harlem and that's how they got the hook to create it.

On the question of who picked the dealerships, Mr. Nardelli testified, who you talked about earlier, submit his testimony from the bankruptcy proceeding that indicates when he was asked to quantify how much these things were costing the dealers he said we've never computed those costs. So it's not a matter of cost.

Also submit for the record a transcript that the Judiciary committee had two weeks ago in a Wall Street Journal article where the witnesses testified that the automotive task force, not one of them has any experience in the automotive business, making cars, selling cars, repairing cars. And, as a matter of fact, the Wall Street Journal goes on to report most of them don't even own cars and those that do own cars own foreign cars.

The hearing is going on in New York currently in the Chrysler case and the Chrysler dealers are testifying that the decisions were made by the car companies not the task force, not based upon productivity, how productive they were, how much money they were making, how good their service was. It's based upon how many times they got into a fight with Chrysler and the same things going on at GM.

So, Mr. Secretary I'm not criticizing the president but I'm telling you we now own 61 percent of General Motors, or will soon. The president has the ability to rein this stuff in and stop it. And I'm just here to tell you that 300,000 Americans are not being treated fairly by these decisions and they're not the fault of the administration but by aiding and abetting this structured bankruptcy the president has the ability to rein it in and that's --- I'll give you these documents and ask you to look at it.

SEC. LAHOOD: Mr. Chairman, let me just --- can I just say this, I've told ---

REP. OLVER: Without objection the --- (inaudible).

SEC. LAHOOD: I've told Mr. LaTourette this privately but I will say it publicly. When I saw him represent Mr. Traficant on the House floor I told him whenever I needed a lawyer he would be the one that I would pick. This is the reason right here. He does his homework and he obviously has done his homework. I did see your press conference that you held at the Capital and it, as usual, was very well documented and very thorough and I appreciate that. I appreciate the points that you made.

REP. OLVER: Mr. Secretary, you really are good.

Ms. Kaptur.

REP. KAPTUR: I would just like to say I'd like to associate myself with the remarks of Mr. LaTourette and say that I think it's an abomination that the automotive task force has not come before this Congress, either chamber. And I would've handled it as we did back in the 1970's with the Chrysler warrants and restructuring. The fact that it's been handled internally is shocking to me as a citizen and a believer in our constitution. And the automotive industry is in the trouble that it's in because of the damage that five major Wall Street banks did to this country and it brought down an industry that has been the lifeblood of the community that I represent. I'm very angry as a member. I'm going everything I can to enlighten what is happening. I think what has been done is outside the authority of the TARP and so I thank Mr. LaTourette for putting those items on the record.

I just wanted to make a comment about a totally different subject and that is the condition of medium size communities that lose air service because of the prejudice toward the large hubs.

And Mr. Secretary, though I don't really have a formal question to you, I would say there are many communities in this country that have been terribly harmed by the lack of air service. And I see these large hubs getting bigger. Every couple of months the names of the airlines seem to change. Now we've got, I think it's Delta Northwest or Northwest Delta and the result of that for one month is cookies on the flights but those are going to leave in a month. And we see this massive, these massive companies and these large hubs get bigger and bigger and the majority of communities across our country being forced to go further to have airline business taken from them. We haven't seen the robust development of the smaller flights serving these medium sized communities.

I would really urge you to look at the medium sized communities and the research that exists over there at DOT and see what can be done to strengthen service to medium size communities that have lost carriers and service. Just in my service here in the Congress I can't believe the difference in terms of service from the communities that I represent.

So I thank you very much and wish you well in your service, sir.

REP. OLVER: Thank you very much, Mr. Secretary for being with us today and for your responsiveness. You really know how to --- what we have to deal with as people who take our exams every two years. Thank you very much for being with us and the hearing is closed. Thank you.

END.

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