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Hearing of the Surface Transportation and Merchant Marine Infrastructure, Safety, and Security Subcommittee of the House Commerce, Science and Transportation Committee - The Future of National Surface Transportation Policy



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SEN. LAUTENBERG: (Inaudible) -- to order. And first I thank everyone who's here for being here with us today.

And I am sorry to convey the news that Senator Rockefeller has been injured and he's not ready to come back. It's said that he's in good shape but that it'll take a while for, I think, some bone healing to be in order. And he asked that his statement be included in the record and I do that, I include the statement in the record unless there are any objections. That will be the first document in this hearing.

And I'm pleased to be here with our colleagues, Senator Thune from South Dakota and Senator Kay Bailey Hutchison from the great state of Texas, great senator representing the great state.

Now have I done enough? I mean --- (laughter). I'm pleased to be here with Senator Hutchison and Senator Thune.

Friends today in America we're being overtaken by congestion. Our surface transportation is wallowing in all kinds of difficult things. Travelers and shippers experience crippling delays on our highways and our skyways. Congestion is so bad that you almost can't go any place where there's a significant road bed that doesn't have more traffic by far than it used to have.

And if you look just at simply at 2007 was one of the worst years on record for flight delays. More than one out of four flights was late and I think I took all of only the late ones. (Laughter)

Just as an example, the other day I flew up to LaGuardia Airport, which is near my house in New Jersey and I got in the airplane and --- a rather new airplane --- closed the door, the pilot gave us his quick review and said the flight time would be about 36 minutes and expected that we would have an on time departure.

And within a couple minutes he said, oh, and I just got news that we have a two hour ground delay. Two hour ground delay for a 36 minute flight doesn't seem to make sense. Well we've seen that in almost every place that there is any volume of flight traffic.

In 2008, while the number of flight delays went down slightly, the length of those delays went up. And safety is an even more important concern.

Last year more than 37,000 men, women, and children lost their lives on our roads. And we all know the impact that America's vehicles are having on global warming.

To overcome these challenges we need a national transportation policy that will reduce delays, improve safety, create jobs, and reduce greenhouse gas emissions as well as reduce our dependence on foreign oil.

This year Congress will reauthorize our nation's surface transportation programs. In the past this legislation has been more commonly referred to as the Highway Bill. But highways alone cannot meet the transportation needs of the future. The reality is that Congress will be producing a surface transportation bill, a bill that recognizes the critical role of mass transit and passenger and freight rail service.

Most mass transit reduces our dependence on foreign oil, relieves stress and congestion on our already overburdened roads and bridges, and saves commuter money on gas and other costs associated with traveling by car.

In my state of New Jersey we are ready -- the term is usually used Mr. Secretary, and I'll introduce you in just a minute, but the secretary and I have had a running debate on how soon we're going to get going on these things. And so shovel ready seems to be the easiest way to convey our readiness to get to work.

Well, we're ready to build a new Hudson River rail tunnel that will create 6,000 construction jobs a year and remove 22,000 cars from the roads each day. And like transit, passenger rail reduces not only congestion but toxic emissions and fuel consumption.

We took the first step toward revitalizing passenger rail last year when an Amtrak Bill, that I was fortunate to author, was signed into law. Amtrak's record ridership shows that American's crave a travel option that's more convenient, less hassle than a car or a plane. And I'm pleased that President Obama shares my commitment to passenger rail, provides more than $9 billion for Amtrak and high speed rail in the economic recovery law, which was a bold step by the president.

But we need to do more. Between now and 2050 America's population is expected to reach 420 million people. In order to meet the demands of our nation's travelers --- and by the way, that 420 people and I remind everyone that in 1970 the American population was 200 million people. And so we are headed to building the world's biggest beehive.

In order to meet our --- the demands of our nation's travelers, keep our businesses competitive in the world's economy and create jobs we need to establish a bold vision for a national surface transportation system. We need to make our system better, not only for ourselves, but for the generations yet to come.

And I look forward to hearing from today's witnesses about how we can make that happen. And I would ask Senator Thune is he has an opening statement?

SEN. JOHN THUNE (R-SD): Thank you, Mr. Chairman. I thank you for holding today's hearing on the future of national surface transportation policy.

I am very pleased to be able to serve as the ranking member of this subcommittee and I look forward to working with you Mr. Chairman as well as the senator from Texas and the senator from West Virginia and many other members of this committee as we focus on the pressing surface transportation issues that are facing our country.

This is our subcommittee's first hearing and I want to extend a warm welcome to the secretary of Transportation, Ray LaHood, former colleague from the House days, who is joining us today as our first witness. I think his presence is reflective of the importance the transportation agenda that's ahead of us and I look forward to working with him as we consider an array of issues involved with reauthorizing our nation's surface transportation programs, which expire, I might add, in September.

Like many members of the committee, I represent a state that's mostly rural. Rural states face unique challenges when it comes to transportation, while playing a crucial role in transport of goods and people.

South Dakota is a state that's very large in size and has an extensive highway network but a low population density. It also contains large tracks of federal lands. These factors make it very difficult for states like mine to maintain and provide for a modern national transportation system.

Of course, states in our area of the country are a vital part of our national transportation system. Our highways serve as connectors for traffic and commerce that benefit citizens from other states. In fact, more than two-thirds of the truck traffic on highways in South Dakota neither begins nor terminates in the state.

Our roads also provide access to many of the nation's great national parks and are essential in transporting agricultural goods to the market.

So there is a real national interest in facilitating interstate commerce mobility that requires good highways in and connecting across rural states.

In order to meet our national transportation needs it is essential that we maintain the viability of the highway trust fund. While some have suggested that the trust fund be eliminated or significantly altered I feel this is unwise and would have a particularly negative effect on large, rural states, such as mine, and, in turn, travelers throughout the country.

For example, there are about 19 people per lane mile of federal aid highways in South Dakota while the national average is about 128 people per lane mile. Furthermore, our per capita contribution to the highway trust fund of $150 per person exceeds the national average of only $109 per person.

So clearly there's a lot more to consider than simply coining one state is donee and another state is donor. It is far more complicated and would result in enormous ramifications to the transportation system as we know it if we make knee jerk changes to the distribution from the highway trust fund without considering the far reaching implications to the traveling public.

Finally, I would like to talk briefly about the Build America Bonds Act of 2009, which I have joined in co-sponsoring with Senators Wyden, Wicker, Collins, and Klobuchar. Our legislation would provide $50 billion in new funding for transportation projects such as roads, bridges, transit, rails, and ports.

In turn, Build America Bonds would create jobs, spur economic recovery, and ultimately help to save lives by making needed improvements to our nation's transportation system.

While our legislation is not a substitute for fixing the highway trust fund, it would provide valuable supplemental funding for transportation projects.

I hope that the Senate will seriously consider this legislation.

Mr. Chairman, again I thank you. I look forward to hearing from today's witnesses and want to welcome Secretary LaHood to our first committee hearing.

SEN. LAUTENBERG: The --- what we're going to have is five minute opening statements for those who would like to make them.

And I now call on Senator Pryor.

SEN. MARK PRYOR (D-AR): Mr. Chairman, thank you but I'll just submit mine for the record and thank you very much.


Senator Hutchison.

SEN. KAY BAILEY HUTCHISON (R-TX): Thank you, Mr. Chairman. I do thank you for holding this hearing today. It is the first hearing of this committee to consider the many important issues we do confront in reauthorizing our nation's surface transportation programs, which expire in September.

I believe there is a proper federal role in promoting the safety and security of our national transportation system and I hope this hearing marks the beginning of a thorough debate on this issue. It is my hope that we can together reform the federal role in a manner that will better meet our state's transportation priorities.

I want to welcome, obviously, Secretary LaHood and also Ned Holmes who will be on the second panel who serves on the Texas Transportation Commission and is chairman of the Transportation Transformation Group.

It's been more than 50 years since President Eisenhower signed legislation to create the interstate system and construction on the final span of national highway was finished nearly 20 years ago. Yet highway users in all 50 states are still paying into the national highway system through a formula designed around the now obsolete purpose of completing the interstate system. Many of those states, including Texas, are forced to bear an unfair burden through the current funding scheme whereby a far greater portion of our gas tax dollars are being diverted away from critical transportation needs in our state.

In my view, the existing funding formula is no longer serving the best interest of each state and the traveling public. Our transportation mission should evolve to maintaining and improving this valuable infrastructure. We must add highway capacity in areas where population and commercial growth is exceeding what our infrastructure can withstand. Our funding structure must change to meet these shifting priorities.

That is why today I am introducing the Highway Fairness and Reform Act of 2009 along with Senators Martinez, Cornyn, and Kyl. Our bill would give states the choice to opt out of the federal highway program and instead be rebated federal fuel taxes collected within our borders. It would cut the overwhelming majority of federal strings attached but would require that rebated taxes be spent on surface transportation projects. This option would allow all states to receive a more equitable distribution of gas tax dollars, while ensuring funds are directed toward improving transportation in the high-growth areas within those states.

The policy of revenue sharing was instituted in 1956 because some states with a lot of land mass but lower populations were unable to generate enough revenue to build the roads comprising a truly national highway system.

Even though the highway system is complete the current formula continues to send some states excess revenues while the roads and residents of donor states, those paying in more than they are receiving back, are shortchanged.

In short, the gas tax revenues of these states like Texas, Arizona, Florida, Ohio, and more, could be spent on bike trails in Vermont or bridges in Madison County rather than on crumbling or congested highways in Miami or Cincinnati.

I also think that, as we address the proper federal role in transportation, we need to alleviate states from the unnecessary burdens that have accumulated over the years.

For example, of the federal funding that states do receive, there are no fewer than 108 federally mandated programs that must be factored in to decisions on how the money will be spent.

Once the state decides to begin a transportation project using some of its federal highway funding it takes an estimated 12 to 15 years of bureaucratic process before the state can even break ground. This level of federal micromanagement fails to acknowledge that our state and local leaders are best positioned to carry out the present transportation mission, which should be maintenance and improvement.

My legislation is designed to ensure interstate equity and to allow states that most efficiently will be able to maintain and improve their highways while removing unnecessary regulatory burdens. Opt out states would be required to maintain their interstate highway system but could determine which federal programmatic requirements could be eliminated.

So, Mr. Chairman, I thank you for calling this hearing. I think this is the time to start this debate and I hope we can come to agreement on what is equitable for all of our states, not just some. Thank you.

SEN. LAUTENBERG: Thank you very much.

Going from side to side, I'd call on now on Senator Begich. Five minutes, please.

SEN. MARK BEGICH (D-AK): Thank you very much, Mr. Chairman.

I'm going to limit mine and just get into Q and A at some point here. But I just want to say thank you, Mr. Secretary, for being here. I do have some questions regarding specifically the kind of Alaskan issues. I beg to differ with the senator from Texas in regards to the needs when 52 percent of our state is still owned by the federal government through the department of Interior and the need that we have in regards to infrastructure and roads. But I'll ask you some specific questions on that.

Along with that, I'm going to be interested in having additional conversation regarding how you see, as a former mayor, how you see local governments in the role they can play in regards to our highway system.

And then the third is I believe in one part of what the senator from Texas talked about regarding the regulatory process of the federal government is so burdensome and very costly to the highway system that I want to put on the table an idea in regards to where there might be states or local communities that have had very good solid reputations with maybe the EPA, the CORE, federal highways, whatever those many different regulatory bodies are that there's a way to streamline those for doing good behavior because we don't want to reward those who do poorly designed roads and then end up paying for it later, environmental or otherwise.

But in order to streamline it and there's several examples I can give you in Anchorage, Alaska where we didn't use federal money, we used state money and we have probably the most sensitive environmental areas in some of our urban areas where we went through wetlands and other areas to great mitigation. The project is fantastic. Environmental community supports it. But because of what we did we shaved probably two years off the project and almost two and a half million dollars in process.

And I think the goal is to get these projects done but do them in the right way. And I think there's way to maybe modify these federal regulations to allow more flexibility for those well-performing communities. Again, not rewarding the bad ones because those are the folks that we've got to watch out for but well-performing and recognizing very sensitive environmental issues that may be in the new development of especially urban roads.

So I just want to kind of put that on there. Again, I'm looking forward to the Q and A and have some back and forth.

Thank you very much.


Senator Johanns.

SEN. MIKE JOHANNS (R-NE): Thank you very much, Mr. Chairman.

Mr. Secretary, good to see you again.

I'll speak very, very briefly. There are just two or three things that I did want to highlight, however.

Of course, I come from a state that's a mix of urban centers and very, very rural areas. In our state our railroads are very important. In fact, we are the home of Union Pacific in Omaha. Railroads in Nebraska move a lot of freight, they don't move a lot of passengers. The state is just not set up for that kind of railroad transportation.

So, when we look at surface transportation we really concentrate and focus on not just the railroads but roads and bridges. That's our lifeblood. That's our lifeline between farm and ranch to market.

So I'm very, very anxious to hear how we work together to provide the funding necessary to do those kinds of projects.

In a state like Nebraska we also have some significant issues because if you look just at traffic count you'd never build a road in some parts of the state. But it's so much more than traffic count. It is moving people to critical services, to market their products. It really, again, is the lifeblood of that community to have a good road system and good bridges.

I also want to lend my support to some comments made by Senator Begich relative to the regulatory process. As a former counter commissioner, mayor, governor, I can tell you we would tear our hair out just in terms of the slowness of the process. Some of that is tied up in very, very difficult environmental issues. Roads do and bridges do cross rivers and streams and sensitive environmental areas. But it does add significant cost to get the project done.

So, Mr. Secretary, again I really appreciate you being here. I look forward to working with you, anxious to hear what you have to say.

And with that, Mr. Chairman, thank you very much.


Senator Warner.

SEN. MARK WARNER (D-VA): Thank you, Mr. Chairman.

And let me also say greetings to Mr. Secretary. As I was hoping Senator Johanns went through that list of things you wouldn't forget governor component because as a former governor grappling with federal transportation funds, or lack thereof, was something that continues to stymie us and many in the audience who live in the greater Washington area know the challenges we've had to confront.

One of the things I'm anxious to hear --- and I think Senator Hutchison raised some of this in terms of the old formulas. I really do hope we take this opportunity to think beyond the silos within your department. I know when you first came before us for your confirmation you, I think very appropriately, pointed out you were willing to take a fresh look at how we look at all our various aspects of surface transportation.

I, for one, personally believe that the --- a much greater emphasis on multimodal analysis is terribly important. I, for one, believe that many of our old VMT and other formulas need to be reexamined and prior to my tenure worked closely with the bipartisan policy group who had a transportation initiative that I think has done some quite good work about different types or criteria we ought to be using from issues, as my colleagues have mentioned, in terms of economic productivity, energy usage, safety, a whole host of criteria beyond just the amount of fuel consumed or vehicles miles traveled.

So I, like my colleagues, am anxious to work with you going forward and particularly for all of us who live in the greater Washington area. If there's ever a case of how transportation has not worked because of the failure of the jurisdictions to work together, because of the failure to have an adequate planning process, to failure to have a real focus on multimodalism, as well as the fact of inadequate funding sources, we ought to be --- greater Washington ought to be the case study.

And it sure would be great if we could all agree that this ought to be the definition of how we get it right in the 21st century.

Thank you, Mr. Chairman and I look forward to the secretary's comments.

SEN. LAUTENBERG: Thank you very much, Senator Warner.

Senator Cantwell.

SEN. MARIA CANTWELL (D-WA): Thank you, Mr. Chairman.

I'm going to add my statement to the record.

SEN. LAUTENBERG: Thank you for that wonderful contribution. (Laughter)

Senator Udall.

SEN. MARK UDALL (D-CO): Thank you, Mr. Chairman.

I'd also like to put my statement in the record and then just touch on a couple of points that I hope Secretary LaHood touches in his testimony.

The --- you've talked a lot, I think, about rural transportation and livability in rural communities so I hope you can talk a little bit about that initiative, Secretary LaHood.

I know that you're new on the job. One of the other areas that I'm very interested in though is the drinking and driving and bringing down the fatality rate and I wonder what kind of new thinking is going on within the department to keep pushing this in terms of lowering those numbers.

My state of New Mexico is looking at things like emission --- ignition locks, all sorts of a variety of different things in order to keep people from getting back in cars and I don't know whether those have been looked at at the federal level but I'd be very interested in your thoughts on that.

And then railroad safety. You say in your testimony that freight and passenger transportation is expected to be increased two and a half times over the next 40 years. And I'm wondering, you know, what the balance is going to be. You know, are you pushing more on passenger, as Secretary or Senator Johanns talked about, more freight, more --- and I hope that we, you know, we move like our governor, Governor Richardson did to push commuter rail, especially in the big areas.

And one of the things that your transportation plan, I believe it has 10 regions where you're looking at the overall --- when you unveil this of high speed rail. And I --- maybe I missed it but I didn't see anything on the Southwest. I didn't see anything on El Paso, Denver, Albuquerque connections there, North-South or East and West. And I don't know whether that's because the states haven't gotten together to push you and I'm just wondering what we need to do to get on the map in that particular respect.

So it's wonderful to have you here again. I saw you at a town hall meeting with Bernie Sanders up in Vermont. You're obviously making it around the country and you've got a lot of energy that you bring to this job. And we're happy to have you here today and I hope you can address a couple of those questions.

And sorry, I'm going to have to slip in and out of here. But, we look forward to hearing from you. Thank you.

SEN. LAUTENBERG: Thank you, Senator Udall.

I'm going to call on the secretary momentarily. I have several charts that we're, I think we can hand out to everybody, that will show you what the investments have been like in rail as well as aviation and highways to see the comparison and to try to get some understanding across the board that what we're looking for here is a balanced transportation policy. We can't ignore the problems of the urban states and we dare not forget about the contribution made by our rural states in our country. But the needs definitely in the transportation mode are quite different.

And that's why I was so pleased when President Obama selected former Congressman, Ray LaHood, to take this job because this was also a quite a vote of thrust as well as respect because Mr. LaHood was a conscientious Republican but he cared about the general interests in a very direct way. And so he comes here with good credentials and we're pleased to see Ray LaHood here. He's already shown his commitment to change how we travel by supporting funding for a new high speed rail lines and mass transit across the country and in my region and I look forward to working with him to achieve the vision that we both foresee for our country.

Secretary LaHood, please, let us have your testimony.

MR. LAHOOD: Thank you, Mr. Chairman.

And to ranking member Thune and members of the subcommittee, thank you for inviting me here today to highlight the policy priorities of the Department of Transportation and outline some of the challenges we must overcome.

Transportation has always been critical to American's economic health and competitiveness. From construction of the Erie Canal to the interstate highway system, our ability to facilitate the safe and efficient flow of people and commerce has accounted for much of our success. Today the stakes are higher than ever. President Obama recognizes that strengthening our transportation infrastructure is tied to broader efforts to restore our economy and put Americans back to work. Clearly, the American Recovery and Reinvestment Act was designed in part, to do just that. And I believe we are succeeding.

Of the roughly 48 billion dollars allocated for transportation under the recovery act, we have already made nearly $38 billion dollars available to more than 2,800 surface and aviation improvement projects. More than 9 billion dollars of these funds have been obligated in nearly every state and territory. This summer, we will begin awarding a portion of the 8 billion dollars to deserving rail corridor projects around the country. This investment will jumpstart the development of a world class, high speed rail system, and strengthen our existing rail infrastructure.

Through these investments, we are helping to restore a measure of hope to the middle class by putting men and women back to work in good paying, local jobs. But we must understand that the recovery act is not an end in itself. It is rather the beginning of a new direction for transportation policy in this country. Several trends suggest we need to find new ways to preserve and invest in multimodal transportation solutions that meet the evolving needs of urban, rural and suburban communities. For instance, a rapidly aging population is becoming less mobile and seeking alternatives to the automobile.

Meanwhile, demand for public transit in congested metropolitan areas is at an all time high. Our domestic seaports and intermodal rail and truck rate systems experience delays that impede the efficient, cost-effective movement of imported goods. And the increase in vehicle miles traveled on our roadways has outpaced population growth by almost four to one. We cannot continue down this path. And we cannot expect the transportation policies of the past to take us where we need to go in the future.

We must realign our priorities and our investments, so we can focus on national and regional transportation solutions that promote safety, economic growth, and make our communities more livable and sustainable in the long run. We are tackling these challenges head on. For example, we are actively exploring new approaches and performance measures to help reduce transportation related fatalities across all modes. To support livable communities, our department is working with the Department of Housing and Urban Development on specific initiatives to encourage the development of more affordable housing near transit.

This is imperative, given that American families spend nearly 60 percent of their household budget on housing and transportation. We are coordinating with the Department of Energy and Environmental Protection to reduce our dependence on oil, and reduce greenhouse gas emissions by setting new fuel efficiency standards for autos and trucks. And we are also investing in cleaner alternative fuel busses, and environmentally sustainable technology for transit and aviation.

We will work closely with congress on a new transportation authorization bill that we hope will give communities the ability to prioritize investments in local roadways, transit and bicycle and pedestrian paths. One size will not fit all, as urban and rural communities seek to preserve their unique qualities while encouraging economic growth. We also need innovative approaches to financing our transportation needs for the years to come.

President Obama's administration is committed to investing in transportation systems that work for all Americans and able us to compete in a global economy for years to come. I assure the committee that as we move forward, we will adhere to the highest standards of accountability and transparency, and seek measurable results for all that we do. Mr. Chairman, this concludes my testimony. I'm happy to receive any questions.

SEN. LAUTENBERG: Thank you very much, Mr. Secretary. I want to start, you noted that congestion is all over, whether in the largest cities, or in the more distant communities. And it's had a negative, tremendous negative impact on our economy; delays, highway wear and tear, insufficient tracks (ph) for freight rail. So, in the next surface transportation bill, what do you think we ought to do to address this congestion of, that prevents us from functioning efficiently, that creates the other problems that we all are aware of here that plagues both travelers and freight traffic, and the question of rail (ph).

MR. LAHOOD: Mr. Chairman, first of all, I think we have to make a commitment to continue to make sure that the state of the art, interstate system that we have in this country is well maintained. We've built a state of the art system, and we need to make sure that it's maintained. But we also have to offer opportunities for people that want to get out of their automobiles, that want to use light rail, that want to use transit, that want to use Amtrak, that want to use other modes of transportation. And in the economic recovery, our portion of it, we do have the largest share of the dollars is for roads and bridges.

But we also have money committed for airport repair. We have runway repair. We have money committed, 8 billion dollars for transit. We have more money committed for high speed rail than we've ever had. And I think that's an indication that this administration sees, will make a commitment to not only continue to maintain our highway trust fund, but to really look at priorities for, how do we get people, move people from rural communities into opportunities to go doctor's appointments and hospital appointments, and those kind of things, to go to the grocery store? But also people who want to get out of their cars, make other forms of transportation available to them.

SEN. LAUTENBERG: I have a chart here, at best from the distance, only color variation is available. But there's a very thin line here that is rail (ph) investment, and this is highway, and then, there. And I hope that these charts have been distributed. If not, we will get them to you. But what we've seen is pitifully small investments in rail. The car has been such a convenience for America; get in it and go someplace.

The problem is that going someplace means that you'd have to have the ability to jump over lots of cars in front of you, for the patterns have changed substantially. What we've seen, Mr. Secretary, and I've seen it in my own state, New Jersey is the most densely populated state in the country. More people per square mile than any other state. So we have to get around as efficiently as possible. And what we've done, is where we've build essentially light rail lines, and that connect some cities, and found out that those lines that, with hardly anybody aboard it in the earliest days are now the subjects, the opportunities for businesses to come to essentially transit type villages, which is a European concept.

And development does take place around there. And jobs occur there. So, but the one thing also that we dare not ignore, is the contribution that rail freight makes to our society. Freight traffic is projected to increase nearly 70 percent by 2020. In the last administration, DOT failed to develop a complete freight policy program. Now, does your administration now, and your department have a strategy to improve the efficiency of freight transportation, as well as the safety side of things?

MR. LAHOOD: Well, I take, you know, I take our point on this, Mr. Chairman. I think it's a good point. I think it was the point that Senator Johanns was also making. Freight rail is very important in America. And we should have a very strong freight rail system and plan, and program. I have met with some of the freight rail folks. Some of the CEO's of these companies, they've come by to see me. We're committed to working with you in the senate and the house, to make sure we have a comprehensive freight rail system that is safe, and because it makes an enormous contribution in our country. Could I say one word about light rail, Mr. Chairman?


MR. LAHOOD: I was in Houston recently, and rode on a light rail system that goes from downtown Houston, and delivers people to one of the finest medical centers anywhere in the world. Children's Hospital, MD Anderson, many other facilities. And for poor people who can't afford to get in an automobile and drive the 15 or 20 miles, this is one of the best light rail systems, proof that people will use light rail if you provide them the opportunity, and to be able to deliver these folks to the best medical care, perhaps in the world, I think, is an example of where we need to replicate that in places around the country. It works.

SEN. LAUTENBERT: And I mentioned to Senator Hutchinson, who knows that I used to run a good sized computer company, and we located in Houston. And above a road that was just being developed, and it was suggested that there might be a light rail system there. And I heard skeptics say, oh they'll never, you can't have a light rail system here. And when we hear something like this, they ain't got no choice, as they say. I agree. Senator Thune.

SEN. JOHN THUNE (R-SD): Thank you, Mr. Chairman. Mr. Secretary, in your written testimony, you state that, and I quote, this administration believes that people should have options to get to work, school, the grocery, or the doctor, that do not rely solely on driving. We want to transform our transportation system into a truly multi mobile system with strong alternatives to driving, in order (ph) to maximize highway capacity, combat traffic congestion, reduce our reliance on oil, and decrease greenhouse gas emissions, end quote.

And then you go on to say that the, President Obama has already begun to chart a different course, and highlight that with the economic stimulus package. Eight billion dollars was included for passenger rail investment. South Dakota is one of three states that isn't served by Amtrak, and so it won't benefit much from any of that money. We rely on driving. That's not going to change much during this administration, regardless of how much we try to transform our transportation system.

And while bus transportation can be an option for certain travel, you know, people out here shouldn't kid themselves that public transportation does not exist as a practical matter for average South Dakotans to attend a PTA meeting or to get to church on a Sunday. It just isn't a reality. So, I guess my question is sort of a broader one. How does the administration's vision to transform our transportation system impact states, rural states like South Dakota?

MR. LAHOOD: Well, senator, I'll go back. When I started to answer the chairman's question, I made the point that we have to maintain a commitment to our interstate system. It is a state of the art system, and people around the world come to America to look at our interstate system because they know it works. And we can't give up on our opportunities to make sure that that's a well maintained system, particularly in states where you have no other form of transportation. So we're going to be committed. We're not giving up on the interstate system. We know that it, in particularly in rural areas in states like you come from, that it is the mode of transportation. And we will be committed to it.

SEN. THUNE: And I want to say that I, in your written testimony, you did acknowledge rural America with regard to the issue of livable and sustainable communities. I think what we're going, the biggest food fight that happens around here in Washington, generally is the fight between donor and donee states. When it comes to a highway bill reauthorization, it's probably the least pleasant part of any highway bill. And I'm afraid that's likely to hold true for the forthcoming debate that we'll have about the next bill.

But the real issue here is going to be funding, and how do we come up with the funding that's necessary to truly maintain a national transportation system.

And so, I guess, I'm curious to know what your views are concerning the shortfall in the highway trust fund, and what are your thoughts about how best to strike the proper balance among, first off, how do you, we deal with the funding issue. But then how, when it comes to distribution, striking that balance among urban and rural states that you just spoke to?

MR. LAHOOD: Well, look at the, we wouldn't the interstate system that we have without the highway trust fund. It was a good mechanism for funding roads, but it's a system that is clearly inadequate to do all the things that we want to do that you all want to do. And so, I've said everywhere that I've been going, we need to think outside the box. We need to think about public/private partnerships. We need to think about your bill, that would hopefully create some kind of an infrastructure banks (ph). You know, the buy America bonds.

I hope that you all get around to debating that bill, and perhaps including it. I think it's one of the alternatives that we can use when we think outside the box about, not eliminating the highway trust fund. We should use it, but know that it's inadequate. And in some states where they have congestion, they put these hot lanes, which they build with tolls, in order to add a lane on a road that already allows people, then, if they need to go faster, if you need to put a bus on there, you have these lanes. And they've been built by using tolls.

Tolling bridges is a good way to build bridges. We have lots of bridges, opportunities where people want to build bridges too. There are four or five different alternatives other than the Highway Trust Fund. I mean, I will tell you this, and I know this causes some people heartburn. The administration is not going to be for raising taxes to increase the highway trust fund. With the kind of economy that we have today, it's not the time to be raising the gas tax. So, we're committed to thinking about a lot of alternatives. The one that we just simply think is the wrong kind is raising the, raising the gas tax. But there are other alternatives. And one of them is your bill, senator. And we think it's a pretty good approach.

And I hope you all get around to debating that, and I hope it can be included as one of the alternatives. We need some alternatives to fund all the things we want to do. I want to say a word about broadband. Because I think it does effect states like you represent. In the economic recovery plan, there is money in the bill, if we're going to lay down roads, if we're going to build new roads, there's opportunity to put the fiber in the ground and begin to think about how we broadband states.

You know, I'm from a state where, if you go south in Illinois, the technology is not there to do what people can do in Peoria or Chicago. And so, the technology, and there's some money in the economic recovery to really begin to think about how we broadband states. And particularly in rural America. And you can do it when you begin the construction of a rail line or a highway. And we hope there will be continued funding to do that. We think it's important part of really connecting America technologically.

SEN. THUNE: Mr. Chairman, I had another question, but with that endorsement of my bill, I think I'll quit while I'm ahead. And -- (inaudible) -- best.

SEN. KAY BAILEY HUTCHINSON (R-TX): Well, thank you, Mr. Secretary. I'm wondering if I could get an endorsement for my bill. That was a joke. I do want to ask you, though, on that, because I'm sure you wouldn't want to endorse it without even looking at it. But my question is, since the highway fund, since the highway system was completed 20 years ago, do you think that it is time for us to start looking at, perhaps different ways of dividing this up, where you have some high growth states that are hurting for highway money.

And then you have these areas that are so congested, as you have pointed out. And of course, totaling one lane to build another is, I think, a very legitimate way to do it with local input. But do you think it's time to look at this formula to determine how is the fairest way to, to have a federal role for the states. And if so, what are your thoughts about what would be maybe the next step for maintenance and keeping the highways up, but not necessarily adding to the system?

MR. LAHOOD: Senator, I'm going to leave the debate to the formula to you all. You know, I just, I think it's better left to congress. But I, I want you all to know that we're going to be committed at DOT to maintaining an interstate highway. We should do that. We have, that has to be a priority. These, interstate was built with the hard earned dollars of tax payers. And it's a state of the art system. And we need to maintain it. The formula I'm going to leave for you all to figure out, and whatever you decide, DOT will implement.

SEN. HUTCHINSON: But let me ask you this. This is something that you can affect. This is the, the book of laws that affect what you require of state departments of transportation when you are giving federal money. That was 1998. This is the book for 2008. You've heard the complaints from highway departments, of the delay that is necessary because of all of the federal regulations and mandates. My question is, are you looking at this with maybe a view towards lowering the number of strings and requirements and mandates that would lower the amount of time that it takes from planning a highway that would use federal funds to completion?

MR. LAHOOD: Absolutely. And I, I think that I can safely say that we have proven that with 48 billion dollars, we put together a team of people that goes to something that Senator Warner and I talked about, how do you break down the mode? We created a tiger team. And that's an acronym for something. But what it really means is that, what it really means is that we took all the modes, and they get together every day, and talk to one another about how we get the 48 billion dollars out the door, meet all of our requirements, no earmarks, no boondoggles, no sweetheart deals.

But the money is spent correctly. And we've proven that we can do it with 48 billion. I think we can do it with whatever dollars you give us, which will be much more than 48 billion. It takes people talking to one another at DOT, and making sure that things are done by the book. But we don't string people out for years and years and years. And I, every time I come before the senate, I hear this complaint. It's a legitimate complaint. And we are going to be committed to streamlining how we get money out the door, so that people can do the things that are necessary to get around the country.

SEN. HUTCHINSON: What role will the administration play in the reauthorization bill? Are you going to present a bill, or --

MR. LAHOOD: We're going to present some principles to the congress that we think are very important, some transportation principles. We want to be in the room. We want to be in the game. We want to be available when folks are writing the bill, and, so we're working with the president and his team at OMB to develop these principles. As soon as we have them, you'll all have them. And you'll know what direction the president wants to take the transportation and the authorization.

SEN. HUTCHINSON: Thank you. Thank you, Mr. Chairman.

SEN. LAUTENBERG: Thank you, Senator Hutchinson. Senator Begich.

SEN. MARK BEGICH (D-AK): Thank you very much, Mr. Chairman. Mr. Secretary, thank you very much for being here. If I can ask you just a couple of questions. One, I just want to get the heard issue out of the way, for me at least. A couple of months ago I sent you a letter regarding a comment you made, and I just wanted to give you an opportunity to expand on it. And that is, as a former mayor I'm biased, of course. And you can probably imagine then. I think when we had our confirmation I mentioned that too.

And it was the comment that they simply don't have the ability to do what we want to do. And I guess I just like you to expand on that, because of course I think in a lot of ways some of the large city local governments have been able to achieve some great things in regards to their road infrastructure. And I just want to get your thoughts on that comment, but how you see local communities participating in direct allocation from DOT to them to directly get those dollars into, onto the street literally?

MR. LAHOOD: Senator, I've met with a number of mayors. Mayor Hickenlooper (ph) put together a group of mayors. He's the mayor of Denver. He put a group of mayors together. And we just had a meeting, I don't know, two or three weeks ago, talking about how we can interface better with our department and mayors who have to work through governors and state DOT's in order to fix up their infrastructure. And one of the things we talked about, the Metropolitan Planning Organization were good in terms of building interstate system, and fixing up roads.

But you have mayors like Mayor Daley in Chicago, and other big city mayors that have reached out well beyond their cities. They've gone well, they've gone out into the suburban area.

SEN. BEGICH: Regional, yeah.

MR. LAHOOD: They've gone regional. And they've done it because it benefits them. But they know it benefits other mayors out in these other communities. And I hope that when you're all writing this new transportation bill, that you'll look at an opportunity to restructure how planning is done for infrastructure beyond just the urbanized areas. Out into the rural area, out in the suburban areas, so that it can be inclusive for mayors, so that when dollars are spent, your point of contact doesn't always have to be the governor of the state DOT.

It could be a region of the country that has the capability. I mean, one of the things under the stimulus plan under our part was, we needed to get the money out the door in 120 days, 'cause that's the way you all wrote the bill. In order to do that, we had to have relationships with state DOTS and governors who had the mechanism to check all the boxes to make sure it was done right. Some small cities don't have that capability. But if they hook up with other cities, and other suburban mayors, and other rural mayors, with a big city mayor, they can all work together to get it right. And that's what I'm really hoping. We need to restructure the way that we get the money out the door, so we can be inclusive.

SEN. BEGICH: Perfect. That gives me a lot of opportunity then. And that's what I'm looking for. And I think you're right. That's more of a regional approach that mayors are doing now versus just their city or their community. In Alaska we have a system called the Marine Highway System, which is a transportation network for Southeast Alaska; Juneau, - (inaudible) -- Ketchikan, Wrangle (ph), Petersburg, and so forth. And it's never really part of a federal highways transportation bill, because they don't view it as transportation.

The fact is, that is our highway. That's the only way you move freight, people to hospitals and so forth. How do you view those types of systems where that is the exclusive way to move from one place to the next versus there's no road, there's air, but no road transportation. And no, and it's cost prohibited (ph), because you'd be building bridges until you're, you know, decades and centuries later.

MR. LAHOOD: I mean, in our department, we have an agency called MIRAD (ph) that --

SEN. BEGICH: I know MIRAD well.

MR. LAHOOD: Yes, and again, we need to work with you as we get into the authorization bill about providing some opportunities for states just like yours. I mean, the folks in MIRAD believe in what you're talking about. I mean, it is, it's a water --

SEN. BEGICH: - (inaudible) --

MR. LAHOOD: Yeah, it really is. And we've talked about it in the agency, and we've talked about it as a part of authorization. We're willing to work with you. In the authorization bill, this is the creative thinking that we, of the 21st century, if you will.

SEN. BEGICH: Right. Let me ask you one more. And this I may not have all the information right, but I just became aware of it. I just want your thoughts on it. It used to be, I think it was in '67 or so, but the Coast Guard managed the permitting for bridges when it was with the Transportation Department. And then the Coast Guard got shifted to Homeland Security in 2003. The permitting is still over there with the bridges. Do you see (the federal ?) hires in the administration really managing that into the future? And is that something we should look at within the reauthorization, putting (ph) permitting of bridges within the --

MR. LAHOOD: I'll tell you this. We would love --

SEN. BEGICH: I want to get you agency to agency, but I --

MR. LAHOOD: No, look, we would love if congress would give Coast Guard back to DOT. There was a lot of heartburn when Coast Guard was taken away, and if you all want to give it back --

SEN. BEGICH: I'm not sure I want to get into that, just the permitting on the bridges.

MR. LAHOOD: I'll look at it, senator.

SEN. BEGICH: But you're not closed --

MR. LAHOOD: I'm not closed to it, but I doubt if Coast Guard wants to give up that kind of responsibility. I mean, but certainly, you know, if congress decides that's a better way to go, we'll live with that.

SEN. BEGICH: Okay. I'll leave it at that. My time is out. Thank you very much, secretary.

MR. LAHOOD: Thank you.

SEN. LAUTENBERG: Senator Warner.

SEN. MARK WARNER (D-VA): Mr. Secretary, I've got some questions. I've got to go back to one of your earlier comments. And I completely understand during these challenging times, while the administration doesn't want to take on the question of gas tax and declining long term social revenue anyway. And trust me, I still bear the scars from getting whupped really bad on a transportation referendum for this region in 2002, when I was governor. But I do hope that we will continue to make the case that our current transportation funding sources at the federal or the state level are basically bankrupt. The highway trust fund cannot meet even maintenance needs let alone new starts.

MR. LAHOOD: Agreed.

SEN. WARNER: And that, while I am all for public, private, and no state has probably done more in public private than the commonwealth of Virginia, but it's not free money. And sometimes, the private sector deals would come in and would not pass Business School 101 kind of classes in terms of being bad deals for the taxpayers. And, while totaling (ph) seems to have, is one viable option, I hope we would not walk away from the continuing education process that we do not have enough funding to meet our core transportation needs.

And that is, I can tell you, from our state, it is, recognition is a bipartisan issue. It's one that we've got to take on. But I recognize the constraints you're under. But we've got to still keep making the case that there's got to be additional funding.

On the broadband, I also want to make one quick comment on that. We were very big advocates of that. And the minimal amounts of new construction we're doing during my time as governor, we put in place a policy to always put in the dark fiber, even if it wasn't immediately needed. But enormous challenges at the federal level in terms of needing additional federal go ahead, so I'd love to continue. I know Senator Klobuchar's got a bill on this. We'd love to work with you on that, because we're going to need some authority because of the jumbled masses of all the other right-of-ways that you have to deal with and I would urge you to think as boldly as possible there.

Earlier you heard me talk, and we've talked again about, multimodal and invariably I'll ask my two questions very quickly. One is, the junk pile amount of multimodal funds that were available in the stimulus package -- do you feel like you're making a good progress on how you're going to assess those projects that are available for those junk bond multimodal funds, number one, in terms of how we get to really meet the right criteria?

And number two, we all talk about productivity measures, mobility, other non-VMT type assessment tools -- it seems to me that it's easy to talk about it at the macro level.

To actually write it into regs and how you droll down on that is a real challenge and do you feel that the department has enough data collection capabilities to be able to get the information to make the assessment of if we're going to use a new assessment tools about which projects are going to be awarded federal fund, if we're going to move away from the more simplistic VMT and other current --

MR. RAY LAHOOD: -- Well I think we have plenty of tools in the department and I think we can make these assessments. Was your first question about the discretionary money?

SEN. WARNER: -- Yeah, the first questions is about the discretionary multimodal money which I was a big advocate for. I think it was a great first step and a great way to kind of have a beta test of a new, fairly unrestrictive, pot of money, looking at multimodal, a way to maybe try out some new assessments on how you're going to evaluate the projects that apply for those funds—How do you feel that's going? Do you feel --

MR. LAHOOD: We just sent our criteria to OMB and we hope we'll get it back very quickly. We think we can use this money in very, very creative ways outside—I mean, the one pot, we have $20 billion (dollars) for roads; we have $8 billion for transit, $8 billion for high-speed, so we're looking at things like ports, and multimodal opportunities around ports, and some other opportunities that didn't exist in the economic recovery or to build on some opportunities that were there where we really didn't have the dollars. And so, we think we're going to come up with some pretty creative ideas for people and we think people in the country, when they see the criteria, are going to come up with some very creative ideas. And, it's a pretty good --

SEN. WARNER: And you think this criteria will be out there so that as Congress takes on the next reauthorization bill that we'll see your criteria that might be able to be used to be --

MR. LAHOOD: Absolutely. You'll see it very soon. Very soon. Just, you know, probably, within the next, hopefully, 10 days or so. Absolutely. I think it'll be a creative use of the money.

SEN. WARNER: Very good. Thank you Mr. Chairman.

SEN. MARIA CANTWELL: (D-WA): Thank you, Mr. Chairman. I'd like to continue on that same discussion and thank you for being willing to look at this from the perspective of continuing to improve the ability to commerce to flow effectively through our ports and to their destinations. And, obviously, the North relies heavily on our port systems for our economic well-being—that's moving products into the country and agricultural products out of the country—and so, we've created a freight-mobility strategic investment board that meets every year to determine which of these projects should be funded from state funds so that we're best facilitating freight mobility. And that's obviously not just for us within the state, but through the nation.

And, the board, obviously, briefs members of Congress on their list of projects and so it helps us in prioritizing these from an economic perspective. One of the ideas circulating around in the new highway bill is to create a separate, national account for freight mobility projects. Does the administration have a position on this?

MR. LAHOOD: Well, we don't, as I've said, we've sent some principles to the president, his team, and to OMB and we hope to be able to share those with you very soon. So, at this point, I think it's premature for me to comment specifically on that.

SEN. CANTWELL: Okay. Well, I hope that you will consider the success of the programs that have been implemented at the state level and the fact that, you know, obviously in our current economic situation, getting products moving means jobs for not just the Pacific Northwest, but for everyone and it's been very successful from a strategic perspective. So, I look forward to working with you on that.

A second question is the same priorities for another economic engine of the Northwest is our Washington state ferry system, which operates 22 vessels and 20 ferry terminals and serve nearly 23 million people annually. I think at one point in time, I saw that that basically served more than Amtrak as it relates to various populations. But, one of the questions that I have is, obviously the funding program, you know, the ferry systems, overall, are weighed together—both those that are moving tourists and moving intricate parts of a transportation system. We use it as part of our national highway system and moving population centers to and from work locations. And, so I'd like to get your thoughts on the adequacy of the current program and do you think we need to think about altering that distribution formula?

MR. LAHOOD: I do think that we need to -- We're going to be making some announcements. We will receive some funds in the economic recovery -- our portion -- for some ferry grants and we're going to be making those announcements very soon. And we also have spoken out when the ferry boat operators on the Hudson River saved peoples' lives by rushing to the U.S. Air flight; we paid great compliments to them.

We know these ferry systems are very, very important. Not the least of which for what they did on the Hudson River, but also for the kind of transportation opportunities they provide in states like yours and other states. And, I hope the Congress will put more of a priority on it. You won't get—Look it, we'll support you on that. We think these ferry systems are very important.

SEN. CANTWELL: It's not a paved highway system, but it's moving lots of people and so, I personally think we need more in the account, and I think we need to recognize that part of the system that is an integral part to moving people in employment centers. So, I look forward to working --

MR. LAHOOD: I agree.

SEN. CANTWELL: -- with you on that and I'll have a couple of other questions, Mr. Chairman, for the secretary about privatization on infrastructure, including highways and some of your thoughts about where we should go from there. But, thank you Mr. Chairman.

SEN. FRANK. R. LAUTENBERG (D-NJ): We're joined by Senator Isakson from Georgia. We welcome him to take his five minutes and --

SEN. JOHNNY ISAKSON (R-GA): Well, I won't take that long, Mr. Chairman and I want to apologize to the secretary for not being here for his entire statement, but I'm in another markup which of an equally important appointee by the administration. But, I did want to come by to say that I've told everybody this is the best pick the president's made.

MR. LAHOOD: Thank you.

SEN. ISAKSON: I've known—I don't say that 'cause we're in desperate need of federal money for highways, but it might not hurt. (Laughter). But, I have had the privilege when I was elected to the House in 1999 if meeting Ray Lahood and from the very first time I walked in, he was presiding over the House with that rather authoritative scowl that he can get on his face. I was impressed with his ability to come in a large group of pretty independent-thinking people and we have a significant challenge in the United States transportation system, and I know Ray and I've talked about this.

My state has one of the largest ports on the Eastern coast of the United States--the major port receiving automobiles, we have compressed natural gas Elba Island facility there which, of course, is of national significance. We have, probably, as many miles of interstate as just about anybody but maybe Texas and California. We have a rapid transit system in the city of Atlanta. We have the busiest airport in the United States of America and the largest airline in the world.

So, I'm going to spend a lot of time at Ray's office trying to talk about challenges that we have. But, I want to welcome you to the administration. You've been a great friend to transportation when you were in the House as a member of the committee, and I look forward to working very closely with you as we meet the challenges that we all face in the years ahead. So, that's why I made a special effort to get here. I wanted that on the record.

MR. LAHOOD: Well, thank you, Senator Isakson and I appreciate that and I also want you to know that your Governor took time to come by our office and we had a visit for an hour on many of things that you just mentioned and many of the different transportation issues that your state is facing and he's providing lots of good leadership and so I look forward to working with you.

SEN. ISAKSON: We're proud to have you. Thank you.

MR. LAHOOD: Thank you.

SEN. ISAKSON: Thank you, Mr. Chairman.

SEN. LAUTENBERG: Thanks very much. Mr. Secretary, thank you very much for your presence and for your participation in the discussion. You do, obviously have known, but note maybe more particularly when you're in front of this committee, that we have our differences. They're brought on by not only —these are not party differences, as much as regional or type state districts. And the physical characteristics of South Dakota are much different from New Jersey, but one thing that we have to do is we are obliged by history to patch together a common interest in transportation where this rich country of ours, to be in the state that we are, is unacceptable by any measure.

We put it together in piecemeal form. We've not put, necessarily, put where our funds are most needed, but rather put the money where the strength is most garnered and we've got to change that. We have to get balance in our transportation system. I have now been in the Senate 25 years and one of the things that brought me to the Senate is what I saw happening in the New York/New Jersey region with traffic and we were in a business there that depended on movement of material and we're still not caught up with what we have to do, in my view, by way of rail service, good planning for aviation service, making sure the more rural communities aren't left out of the opportunity to participate in America's growth and interest.

So, we've got quite a bundle of things to put together in good sensible fashion. It's going to take reason. It's going to take time, but we trust that your hand, Mr. Secretary, to help us level these conditions, so that we can get on with something that's better for America, that protects our kids from being enveloped by pollution, that permits more time for family and work instead of just sitting on the highways and burning up fuel that we no longer can afford, to import like we do. The world is changing around us and we must not let it change without us. So, I thank you very much.

MR. LAHOOD: Thank you.

SEN. LAUTENBERG: We call our second panel, Mr. Heminger, Ms. Anne Canby, James Corless, and Ned Holmes.

Mr. Heminger and Mr. Holmes, I know that each of you has the time constraint and I just wonder whether—I want to try to accommodate you, but you're important witnesses and we want to hear from you. So, what are your timeframes like? Do you have to catch planes out of here?

MR. STEVE HEMINGER: Mr. Chairman, mine's 4:30.

SEN. LAUTENBERG: 4:30. At the airport?

MR. HEMINGER: Leaving here.

SEN. LAUTENBERG: Leaving here?

MR. HEMINGER: Yes, sir.

SEN. LAUTENBERG. Okay. And, you, Mr. Holmes?

MR. NED S. HOLMES: Mr. Chairman. I'm riding with him. (Laughter).

SEN. LAUTENBERG: Okay. Alright. So, the two trapped in the middle, please forgive me. I give them an opportunity to—we welcome you, and as you've heard, we're on to something big, and your contribution's important. Mr. Heminger, Commissioner of National Surface Transportation Policy and Revenue Study Commission and you are the executive director of the San Francisco Bay area Metropolitan Transportation Commission. Ms. Canby, we know that you are the President of Surface Transportation Policy Partnership and also a former commissioner of the DOT in my home state of New Jersey. Now, that's a mix of things.

And, Mr. Corless, you're Campaign Director for Transportation for America and Mr. Holmes, we've already met, said hello, and I recall Commissioner of the Texas Transportation Commission. Each of you will have five minutes to present your summarized paper and Mr. Heminger, I'll call on you first. Is it Heminger or Heminger?

MR. HEMINGER: I'll answer to either one, Mr. Chairman.

SEN. LAUTENBERG: Alright, Steve. (Laughter).

MR. HEMINGER: Thank you very much, sir, and I appreciate the courtesy about letting me go first. As you mentioned, I served with great pleasure on the National Surface Transportation Policy and Revenue Study Commission. I was appointed by House Speaker Nancy Pelosi, but today I speak on behalf of nine commissioners who signed our final report -- five of them appointed by republican office holders, four by democratic office holders. We reached a bipartisan result and I think I noted one of my colleagues, Tom Skancke, from the state of Nevada in the audience and I'd like to acknowledge him as well. Our blueprint for the nation's future transportation policy is comprised of three key elements: reform, restructuring, and reinvestment—the 3 R's.

First: reform. Our commission's fundamental finding is this: that the federal surface transportation program should not be reauthorized in its current form. Instead, we should make a new beginning. We must reform how the nation upgrades and expands its network, from how we pick the projects in the planning process to how we build them in the field. Federal investment should be guided by a national surface transportation strategic plan that employs benefit cost-analysis and performance-based outcomes, just as in the private sector. In particular, we believe the nation should set ambitious and achievable performance goals for our surface transportation system, such as cutting traffic fatalities in half by 2025.

Another aspect of our reform agenda is shortening the time to complete environmental reviews, in conjunction with other measures that speed the design and construction of new highway, transit, and freight capacity. All members of the committee talked about this earlier. One example: Last September a new replacement Interstate bridge was opened for traffic in downtown Minneapolis only 13 months after the tragic collapse of its predecessor. This stands in stark contrast to the 13 years that the average major highway project takes to advance from project initiation to completion. If Minnesota can do it, so can the rest of the nation. And if we can do it in an emergency, why can't we do it all the time?

Secondly: restructuring. As you noted, there are 108 separate categorical surface transportation programs in current law. It is safe to say that any agency of government with more than 100 priorities really has none at all. Our commission report -- Transportation for Tomorrow -- recommends replacing this plethora of programs with 10 new initiatives to guide federal investment in areas of genuine national interest such as: upgrading the nation's roads, bridges, and transit systems to a state of good repair; improving our global gateways and national goods movement system; and restoring mobility in congested metropolitan areas of greater than 1 million people that will be the engines of our economic recovery and prosperity.

Finally, three: reinvestment. Our report estimates that the U.S. needs to invest at least $225 billion annually for the next 50 years to repair our existing network and to build the more advanced facilities we will require to remain competitive in a global economy. We are spending less than 40 percent of this amount today. To boost investment, we will need to raise new revenue from the private sector as well as all levels of government -- federal, state, and local.

The additional public funding, we believe, should come primarily from users of the transportation system who will benefit the most from its improvement, whether in the form of higher fuel taxes and truck weight charges or a new fee on passenger rail tickets and container cargo. While no one likes higher taxes or fees, if we want a better transportation system we are going to have to pay for it. There is no free lunch.

It was noted earlier that U.S. population is projected to reach 420 million people, a 50 percent increase from the year 2000, by 2050. In short, the nation will be faced with a massive increase in passenger and freight travel in the years to come. And we must accommodate this future travel demand in far more sustainable ways than we have in the past, such as through increased reliance on urban and intercity passenger rail.

Faced with these daunting challenges, federal surface transportation policy has reached a crossroads. I think Senator Hutchison today, in her proposal to let some states opt out of the federal program, represents one path forward. Respectfully, my commission colleagues and I urge you to take a different approach. We urge you to blaze a new path toward a more robust federal program refocused to protect our national security, enhance our international competitiveness, and safeguard our enviable quality of life.

If I can conclude my oral remarks with a quotation from President Eisenhower, father of the interstate system—and we use this quotation at the beginning of our report, so I'd like to conclude my testimony with it. President Eisenhower said, "Our transportation and communication systems are dynamic elements in the very name we bear—United States. Without them, we would be a mere alliance of many separate parts." Thank you very much.

SEN. LAUTENBERG: Thank you very much. Mr. Holmes.

MR. HOLMES: Thank you, Mr. Chairman, Senator Hutchison, Senator Begich. I'm honored to be here as a member of the Texas Transportation Commission and also as Chairman of the Transportation Transformation Group or T2. Texas is a high-growth state with significant congestion. TxDOT formed the 2030 Committee. It was a panel of transportation experts and business leaders. It estimated that Texas will require $14 billion a year just to maintain the status quo.

We currently have around $3 billion a year, a huge shortfall. With SAFETEA-LU expiring this year, we have a challenge and an opportunity to create a new vision. As Secretary Lahood so eloquently stated, sustainable funding mechanisms that expand and enhance our infrastructure investments are critically needed now. Funding is not sustaining our current needs, much less those of the future. The longer that we wait to act, the more it will cost us to address the problems.

Inflation has dramatically increased cost and decreased the purchasing power of motor fuel tax. To compound the situation, fuels taxes are declining. In Texas, the state fuel taxes were 8 percent lower this April compared to last April, and that's in a high-growth state. States have to choose between maintenance and new capacity. In Texas, our forecasts indicate that in 2012, gas taxes will only be sufficient to pay for a portion of much-needed maintenance.

Other troubling federal funding issues are the federal Highway Trust Fund, which is trending towards insolvency, and rescissions, which have been almost $14.5 billion dollars to date with another $8.5 billion (dollars) this year. Texas' share of the total, by the end of this year, will be nearly $2 billion. We urge you to end the rescissions.

T2 was formed to address these challenges. We are an alliance of state DOTs from Florida, Indiana, New Hampshire, Texas and Utah, port and toll authorities, think tanks, academic institutions, financial and engineering firms. We believe that national transportation policy needs to be transformed from a process-based system to a goal-based system that maximizes flexibility and enhances the roles of the public sector and their private sector partners.

T2 elected not to engage in past debates, such as donor-donee fights and the gas tanks issues. Reforms that are needed transcend those issues. We believe the federal government should be primarily responsible for establishing a customer focus, long-range vision of surface transportation that includes all modes for moving people and goods. We suggest that Congress empower states to set goals, make decisions, and deliver projects that implement the national strategy. States must be accountable and transparent in their performance measured.

We support the continuation of the federal motor fuel tax coupled with significant program reforms and additional innovative financing methods. We also believe that our current static per gallon fuel charge is not a sustainable, long-term method to fund our system. We support the transition from a fuel-based funding system to a user fee system, such as VMT pricing. The lengthy time for transition will require revenue enhancements, a suggestion made by recent federal study commissions.

In summary, T2 emphasizes a multimodal approach with flexibility in all areas, fewer and less restrictive federal funding categories, and more sustainable financial models and business strategies. In Texas, we need flexibility to blend transit, rail and highways. In New Hampshire, they need flexibility for Commissioner George Campbell's rail revitalization to link Concord and Boston. Florida has created a strategic intermodal system that includes airport, highway, rail, and seaport facilities, which will require more flexible funding. Utah, Indiana and other states also need flexibility to solve their own unique transportation issues.

Citizens deserve a renewed focus on customer service, reduced congestion, improved air quality, and improved quality of life for our increasingly urban nation. Infrastructure investment also promotes economic growth and prosperity, a promising legacy to leave for our children. The needs of our nation are great and your task is very difficult. On behalf of the TxDOT and T2, I appreciate your time and I thank you very much for your service.

SEN. LAUTENBERG: Thank you very much, Mr. Holmes. I listened with amazement. I know Texas is big. I've been through Texas in many places, but when I hear that you have more (paved lanes?) than any other state, and I think of California, the length that it is and the number of bridges, and so forth, and you call out the problems that each state has. And, you left out New Jersey, so I don't know whether the implication is that we're perfect in what we're doing -- (Laughter) -- or whether or not we're just too far down the to get into line. But, I can tell you transportation is the lifeblood of New Jersey and we have to be able to do it.

It's so interesting, and I mentioned, and I'll take note for the time. But, I mentioned, the breadth of the differences that we have in our society. They're wholesome differences. See, states are different and we can't just have a one-size-fits-all. So, I hope that we can all cooperate. But, anyway, we're thankful to have you here.

(Off mike).

SEN. LAUTENBERG: (Inaudible) -- have had an interesting times in our years here at the Senate. Mr. Corless.

MR. JAMES CORLESS: Chairman Lautenberg, Ranking Member Thune, members of the subcommittee, I'm James Corless. I'm the Director for Transportation for America or T4America. You've got T2. I promise we're not twice as big. T4America. Thank you very much for inviting us today to testify in the future of our national surface transportation policy.

T4America is the country's broadest and most diverse transportation coalition with more than 270 member organizations nationwide in the fields of transportation, housing, and environment, public health, real estate, safety and social equity. Mr. Chairman, T4America is grateful for your leadership on both Amtrak and ARC--the new mast-transit tunnel connecting New Jersey with midtown Manhattan that's set to break ground in June--because they're paving the way for a 21st century transportation system.

We're here today because we believe while Congress has the chance to rewrite our nation's transportation law every six years, the chance to truly change national transportation policy comes only once in a generation. The upcoming authorization of the federal transportation bill presents just such an opportunity. But we know, as you do, the challenges ahead of us and this authorization are immense.

The federal transportation program had a brief moment on the national media stage in last year's presidential election, but it wasn't a positive one. It was the bridge to nowhere that became a symbol of what needed to be fixed in Washington and now we find ourselves with a Highway Trust Fund going broke and the difficult, political reality that we're going to have to ask the American people to ask more if we're going to keep the federal transportation program solvent. And, of course, if we're going to ask the public to pay more, they'll want to know exactly what they're getting for their money.

It's our responsibility to provide America with a new vision. We've done this before. President Lincoln pledged to link the coasts of our nation with the transcontinental railroad in the 19th century. Nearly 100 years later, the members of Congress who sat in your very seats, were inspired to create the interstate highway system. And now we need a vision for a 21st century transportation system, a system that should be smarter, safer, cleaner, and provide more choices for all Americans.

A system that T4America believes ought to be based on the following six national transportation objectives: economic competitiveness, the preservation and maintenance of existing assets, safety and improved public health, energy conservation and security, protecting the environment and addressing environmental justice, and, finally, providing equal access to transportation options in urban, suburban, and rural communities. Using these objectives as a framework, the new transportation bill should define specific measurable targets that transportation agencies must meet.

T4America is specifically recommending the following performance targets over a 20-year period: to improve the share of transportation facilities that are well-maintained and in good condition by 20 percent, to reduce traffic-related crashes by 50 percent, to reduce vehicle miles travels per capita by 16 percent, to triple the rates of walking, biking, public transportation and passenger rail use, to reduce the transportation generated levels of carbon dioxide by 40 percent, reduce vehicle delay per capita by ten percent, increase the share of freight carried on rail by 20 percent, achieve zero population exposure to health harming levels of air pollution, reduce household expenditures on housing and transportation by ten percent and, finally, increase by 50 percent the number of essential destinations accessible for low income, senior and disabled populations.

Now, unfortunately, we do not have currently a performance driven transportation planning process. In order to get there, we are going to have to invest more in robust data collection efforts and provide significant technical assistance to transportation agencies at all levels of government. Finally, T for America believes that there should be a renewed commitment to rural areas in the next federal transportation bill.

We're calling for a new program designed specifically for small cities in rural regions because there are such a number of key issues that we believe need to be addressed, such as developing rural road safety measures that prioritize cost-effective solutions, developing public transportation, van pools, ride sharing for rural areas that can realize efficiencies through the use of technology, shared vehicles, and volunteer services, reinvesting in rail freight and short line railroads, supporting stronger coordination of transportation land use in rural areas, to preserve rural town character and promote local economic development efforts and, finally, elevating the capacity of rural planning to promote greater cooperation with state departments of transportation.

As Congress considers the upcoming transportation authorization, T for America stands ready to assist you in developing a new vision for a world class transportation system through strong national transportation objectives, performance targets and programs that meet the needs of our cities, suburbs and rural areas.

Thank you again for inviting Transportation for America to testify before this subcommittee.

SEN. LAUTENBERG (?): Thank you very much. Now, Ms. Canby, please.

MS. CANBY: Thank you, Senator, ranking member Thune and other members of the committee. I am very pleased to be here this afternoon representing Surface Transportation Policy Partnership and also as a founding member of the One Rail Coalition. STPP commends the committee for holding this hearing to launch a discussion on the need for a national surface transportation policy. We strongly support the idea of defining a national policy that makes the connection between our surface transportation policies and other critical national issues.

There's a long history in defining national transportation policy, which is spelled out in my full statement. From Secretary Coleman's statement back in 1975 to bridges to nowhere, suffice it to say we have yet to establish a meaningful policy for surface transportation with clear objectives, goals or accountability. The negative reaction to bridges to nowhere created, however, a positive result in the sense that people are beginning to talk about the need for a clearer sense of national purpose, calling for meaningful outcomes and for greater accountability in the expenditure of federal resources.

The transportation policy and revenue study commission that my colleague, Steve Heminger served on addressed this issue head-on in its report, saying that new revenues should be accompanied by a performance based approach that identifies priorities and avoids parochial and wasteful spending. Establishing a clear national policy would create a framework for moving to such an outcome-driven performance based set of programs and, hopefully, in my lifetime anyway, away from a donor/donee set of issues.

Integrating modal systems into national, state, regional and local networks would yield system efficiency and productivity benefits for all users. The current program structure could be described, I would suggest, as a jumble of functional modal and system related mechanism to distribute funds to state transportation and transit agencies. Rail programs currently have no connection to the highway or transit programs. This structure makes it extremely difficult to integrate the various forms of transportation into an efficient network.

With energy and climate challenges facing our nation STPP believes it is critical that a national policy should encompass rail, pipeline and waterborne systems along with highway, transit and bicycle and pedestrian facilities. National policy is best served if the relationship between the federal, state and local governments and the private sector is truly a partnership. The federal/state relationship, as described in §145 of Title XXIII providing for, quote "a federally assisted state program" has constrained the federal role in terms of policy direction and accountability for national policy outcomes.

Federal leadership is critical to direct and oversee implementation of national policies across sectors and modes and to ensure that transportation contributes to the national solutions for some of the challenges we face. To measure performance we have to know what it is we want to accomplish. Today congestion and time delays have become the de facto performance indicators, along with the physical condition of our roads, bridges and transit facilities.

In our view, this is too narrow a perspective, especially in light of President Obama's agenda to implement energy and climate policies to restore America's prosperity and to reduce our healthcare costs. His agenda calls out for synergies between transportation policy and other sectors of national interest. Clearly, transportation affects a number of sectors. Its heavy reliance on fossil fuel has been noted, as well as a significant share of our carbon emissions, the impact on our pocketbooks, our economic leadership and our health, just to name a few. Objectives should address both the internally focused areas of safety, system connectivity, network efficiency and asset preservation, as well as key external links between our transportation system and energy use, carbon emissions, reasonable access for all users, and sustainable development patterns.

For national policy to have any meaning, it is important to connect objectives with outcomes expected from federal programs and funding support. My statement provides more description of that. Provisions under the current law ensuring accountability are insufficient or non-existent. Only one program that I'm familiar with, the Congestion Mitigation and Air Quality, is tied to a national purpose with specific goals and consequences for failing not to meet them, and having lived through the initiation of that law, I can tell you it was a challenge in the early years.

Other programs may have a clear purpose but no goals or accountability for results. Aligning program structure, funding distribution factors and use of funds in support of our national policies would go a long way to meaningful accountability. More detail is provided also in my full statement.

A good step in the next authorization would be to require a report that measures the performance of the transportation system in the context of national goals. STPP believes that Congress should establish a baseline year from which to measure the performance of all elements of the system from local walking trip to the regional work trip to shipment of products in markets around the nation and to the world.

The report should examine emerging trends that affect the performance of our transportation system, assess the critical impediments to achieving national goals and proposed strategies for success. Further, we suggest including an analysis of expenditures for surface transportation by program and by type of investment for all modes in this report, along with surveys on how the public thinks the system is in fact performing.

A critical component -- (off mike). Thank you. Let me do that. We believe it's essential to have a statement of national purpose supported by clear objectives with goals and regular reporting, and we stand ready to work with you to achieve this. Thank you, Senator.

SEN. LAUTENBERG (?): (Off mike) -- a breath of realism that is being discussed today and that we know that we've got to include all parts of our country and all means available to solve this problem. We are so delinquent. It's awful when you think about the deficient bridges that pervade our system and the inadequacy of highways. And when President Eisenhower came up with his plan it had a second effect and it was Senator Moynihan, of great memory, who called attention to the fact that this brilliant system had a secondary effect and that is it permitted people to leave the cities, abandon the problems, get out of town, and, as a consequence, we found all of these cities without the proper income or the appropriate energy that it took to build these, so we in a kind of a second phase of building America, and I think that we can do it and will do it.

And I ask a question here. There have been a number of policy goals mentioned today and those that relieve congestion and improve safety, facilitating freight movement, and you're transportation experts, what can you, in summary form, deliver as a specific goal that you think should be established? Now, in your presentation there were several things mentioned by each of you. Is there a particular thing that you think we should focus on to get this job done or is it too amorphous to say that there is a single thing? Sir.

MR. : Mr. Chairman, if I could start, in our report we identified ten new focus areas for the federal program. As I said in my testimony, there are over a hundred now and they're not really focus areas. I don't know how you could focus on a hundred things.

We recommend that there be a performance objective for each of those ten areas. Other areas of federal policy where the federal government invests in certain activities come with accountability. This is one of the few places where that accountability is largely lacking. The money is invested and projects are certainly built, but there is no standard for measurement against which to judge success or failure. Did we increase or reduce congestion? Did we increase or reduce fatalities? If you look at the evidence that we've racked up in what I would call the "T" era, ever since the substantial completion of the interstate in the eighties, fatalities have not improved. They've improved slightly recently just because we're driving less, for the most part.

Congestion has gotten considerably worse. Goods movement has bogged down to a crawl in many ports, so by most objective measures, and I think the amount we've invested over that period is something around $600 billion of federal money, things have gotten worse. So I guess, like that old joke goes, you know, (laughs) if it's not working, stop doing what you're doing, you know? That's the first thing you do, and so I do believe that in each area of federal investment there ought to be a performance objective and there ought to be consequences if it's not met, either positive or negative, carrots or sticks.

And I think the best way to develop those measures actually isn't for the Congress to establish them but for the Congress to require that DOT work with the states and the metropolitan areas to establish standards. Let people have some flexibility in the standards they choose.

SEN. LAUTENBERG (?): Fair enough.

MR. : But then hold them accountable to them.

SEN. LAUTENBERG (?): It was said in these premises before, and I extended because I didn't like the way it was presented at the time, it was trust and verify the fact is that you've got to go along and see what you're doing. Mr. Holmes, you're on a tight timeline, so I ask you for your response to that.

MR. HOLMES: Thank you, Mr. Chairman. I think you've heard a common thread, really, that ran through all four presentations and that is flexibility, accountability, transparency. If we have, I think it's 109 different funding categories, we also recommended reducing those significantly and then having the states develop their plan that meets the broad goals that the federal DOT outlines in conjunction with Congress and then measuring those results.

MR. : I learned one thing in the business I ran. The company I ran was called ADP and I was the founder of that company. It has over 40,000 employees today and the one thing I learned in my business years is that when it's such a massive program that you want to introduce, you've got to do it piecemeal. You can never take -- and we have seen it here in government, we've seen it in health care, we've seen it in the FAA, we've seen as soon as you tackle it at this size, you just never get anywhere until the money is gone. Ms. Canby, do you want to volunteer? And I ask the indulgence of my colleagues here for a moment.

MS. CANBY: Thank you, Senator. I certainly would. It seems to me that, first, we need to be clear on why we have a national program, what it is we're trying to accomplish and define that very clearly so that then the agencies that are actually implementing have the flexibility to figure out how best to deliver it in their particular situation, whether it is in your state, my state, South Dakota, Texas or Alaska, or wherever, and then hold people accountable for reaching and addressing national interests. Now we're all addressing different interests in our own ways, and it's not adding up to dealing with an energy problem or a climate problem or a health issue or whatever the national concern might be.

SEN. LAUTENBERG (?): Mr. Corless.

MR. CORLESS: Senator, when we provided, obviously in both our written and oral remarks, at least six overarching objectives, and I think you obviously want to get down to a point where you have 108 programs to something manageable, but I would say that we think whatever objectives we choose in the next authorization it actually has to be a package because there are a number of complimentary, but quite different, goals we are trying to accomplish, I think, both in terms of safety, congestion, repairing --

SEN. LAUTENBERG (?): The one thing that I see here, and I have skilled colleagues at this table, people who know government from all sides, even the junior member (laughs) has been a mayor and they say there's no place like a mayor's job to feel the pain and the inadequacy at the same time, so I will say this, that to me the problem is of such magnitude, such importance, that this kind of a forum is by no means a way to get the kind of information that we have, and I've talked to Senator Hutchison as the next senior person here, and say that I think somehow or other this has to develop into a more traditional meeting format where these things can be discussed at length than it is in a five minute squeeze that we do it. And I would reserve the opportunity to invite each of the four of you to a panel discussion that may take some time, but I think can develop some thoughts. Please, Senator Hutchison, it's up to you.

SEN. HUTCHISON: Am I next, you mean? Oh, okay. Well, I think that's a very good idea, actually, because I think, having heard their different views, they have studied this, they've had commissions and they have some good ideas and we're up for—go ahead.


SEN. HUTCHISON: Well, see, I had left and I didn't realize that John hadn't already gone. You go ahead. No, I don't mind.

MR. : This will take 20 minutes.

MR. : I'll go if they're going to debate it. I -- I hope this is the way the donor/donee relationship (off mike and laughter)

SEN. HUTCHISON: No, you defer.

MR. : John and I will be eating up on that.

MR. : Let me just ask you all sort of a general question about the funding issue and how can we most responsibly provide for continued adequate funding to ensure we truly continue to have a national transportation system, and some of you have kind of talked about it a little bit around the edges, but anybody care to take that one on?

MR. HEMINGER: Senator, I'll speak on behalf of our commission, which spent two years, days of testimony on that subject, and one way you can characterize what we did is, we spent about two years looking for an alternative to the fuel tax because no one likes it and it's hard to raise. We couldn't find one. And I know I regret to report that to you. You probably regret to hear it. We took a lot of testimony on public/private partnerships and they will play a role in the future, but I think a fairly modest one.

About half of our current investment shortfall is just meat and potatoes and maintenance of our existing system and there aren't a lot of investment bankers lining up to pay for that. A lot of our transit systems, the new systems we need to build, will operate at a loss, not a profit. And so, there's no financial return there in many of them, conceivably, so I think where you will see private capital play a role is in high growth areas with a lot of congestion.

I think a number of freight improvements could very well benefit from that strategy, but for the most part I think we're going to need public investment and the only two places we saw where that investment could come from -- one is the fuel tax, the traditional source, and the second is the general fund. And we strongly oppose the notion of essentially converting this user fee program, which has been a user fee program for 60 years now into another General Fund drain on the U.S. Treasury which, God knows, is -- (laughs) -- under strain already for a lot of other reasons.

And so, as unwelcome as that message might be, we believe the fuel tax has to continue to play a major role. As you know it hasn't been adjusted here in Washington since 1993. That's true in many states. In my state of California, it's 1989. Secretary LaHood said earlier that, you know, he wasn't sure now is a good time. I'm not sure it is, either, but I'll tell you $2 gasoline might be a better time than $4 gasoline, and it's only a matter of time before that's where we are again.

So, our report does emphasize the use of user fees, whether it's the fuel tax or a container fee for freight improvement or a ticket tax for rail improvements. We think all the users have a stake in the system and ought to help pay for its improvement.

MR. : I'd like to make a couple of comments. We believe that the continuation of the fuel tax is important and, in fact, critical. The time that it's going to take to transition from the fuel tax to another type of use fee is going to be lengthy, but ultimately the fuel tax is a dinosaur. As the average miles per gallon in the fleet in America increases, funding for the transportation system, if it is solely based on that, is in terrible jeopardy. It's obviously difficult to increase. Witness the fact that it hasn't increased in California since '89, in Texas since 1991, federal level since '93.

We think that there needs to be a very broad array. It is not going to be solved out of one source. The public/private has a role, but it is a limited role. In Texas, we looked at a number of different toll opportunities that might be subject to a private interest. There were about 90 different toll projects. There were only a handful of those that would be subject to an appropriate public/private type partnership.

There were only a handful that would attract the interest of investment bankers, as Steve said, because most of them require toll equity as opposed to being toll rich. So it's going to take, I think, a fairly long time to move from a total reliance on a fuel tax to other user fees.

SEN. : Let me direct this one, if I might. I appreciate your comments. Those are both very insightful. Mr. Corless, you had suggested addressing freight demand through reinvestment and short haul freight railroads. How much funding to you believe would be needed to effectively improve short line rail movements?

MR. CORLESS: Senator, I know we've been working with NATO and others on this question. I don't have a number for you today, but I'm happy to get back to you, certainly, with something.

I would also defer to my colleague here, Anne Canby, with the One Rail Coalition, among others, who may have a more specific answer, but we do know that the short line railroads are in desperate need of repair. We do know that they are an asset and that we need to actually reinvest in them fairly quickly.

SEN. : All right, thank you, Mr. Chairman. Appreciate very much all your testimony and responses. Thanks.

SEN. HUTCHISON: Thank you. I would like to ask Mr. Holmes—obviously in your testimony you basically have said that the federal government is many times an impediment to being able to build the highways that are so needed in a high growth state like Texas, and you've proposed some solutions from your transportation research group.

My question is, on the bill that I have introduced that would allow states to opt out with the requirement that they maintain the federal highway system but then allow them to make other choices in the transportation needs with their own transportation dollars, what would be your thought about legislation like that, and, if you had other thoughts, what would those be?

MR. HOLMES: It sounds, Senator, as though that bill would provide significant increased flexibility to the states to design and implement their systems in accordance with appropriate federal standards, and I think that would be a tremendous benefit. I mean, basically, there's not enough money and there's not enough flexibility, and it takes too long to produce a new asset. Thirteen years to produce a new roadway is incredibly counter-productive. To shorten that cycle, provide more money, less time, more flexibility would be a great benefit.

SEN. HUTCHISON: Thank you. I really do appreciate your coming because we are all dealing with these issues of high growth and having to look for innovative ways to fund our transportation systems and, of course, we all, I think, have dealt also with the issue of congestion and trying to build transportation infrastructure when a place is already congested is the most expensive way to go, which Houston, your hometown, is learning right now, with—my hometown, as well.

Let me ask both of you, Mr. Holmes and Mr. Heminger. Mr. Heminger was on the commission that basically said that private investment should be a relatively small part of the solution and it was a bone of contention among the commissioners whether that was something that should be considered a major part. The state of Texas has gone into private partnerships pretty heavily, and I would like to ask you, Mr. Heminger, what was the debate and how did you all come out on the side of it not being as important and, Mr. Holmes, why it has become a major focus of the Texas solutions? First, Mr. Heminger.

MR. HEMINGER: Senator, as you said, we did have a vigorous debate on our commission about it. I think it was in large part responsible for the fact that three members of our commission did dissent, including the former Secretary of Transportation, Mary Peters. I think we all saw a greater role for private capital to play. I think where we disagreed is in how big that role can be. Not necessarily should be, but can be. And given the fact that a lot of our investment need, as I described in my earlier answer, I think is such that it will not attract private capital. Then you're left with the issue that, well, if private capital can take care of 15 or 20 percent, and I think it's somewhere around that range, if that, what do we do with the other 80 percent? How are we going to raise the revenue for that?

And I think the dissenters on our commission did not want to support an increase in the fuel tax, but we, the majority, really didn't see any other way around it. I would note, in conclusion, that there was another commission created by Congress.

You weren't satisfied with one. You created two in the last transportation bill, and they essentially came to the same conclusion, that over the long haul we ought to move toward a new user fee, something that tracks vehicle miles of travel, but in the short term we really have no alternative but to raise the fuel tax to continue the program and to grow it as it needs to grow.

SEN. HUTCHISON: So your point was really not that it wasn't effective, just that it couldn't be relied on to make the big differences that are necessary?

MR. HEMINGER: It really can't be viewed, I don't think, Senator, as a replacement for the fuel tax. The fuel tax is the workhorse of our federal service transportation program, and I think for the next 15 or 20 years, until we have a replacement, it has to continue to be or we have to resign ourselves to much diminished funding levels.


MR. HOLMES: I happen to agree with that. I think it seems like Texas has moved in the direction of PPPs very heavily, but in point of fact, out of the 87 toll projects that TexDOT looked at a couple of years ago, there were less than 20 percent of those that would be susceptible to a private interest. And so, while it is an incremental help and a very important one, it will not solve the overall problem. It can be utilized in very congested areas where traffic counts are extremely high. I mean, it works in those areas. It does not work in rural Texas or in rural South Dakota or wherever there is not sufficient traffic volumes in order to recover the cost and maintenance of the roadway.

One of the things that is beneficial, though, about a PPP or any type of toll road, is that not only does it help pay for the capital costs, but it pays for the ongoing maintenance into the future. Texas currently needs about $4 billion a year just to cover maintenance, and we have a total of $3 billion for maintenance and new capacity.

SEN. HUTCHISON: Ugh! Thank you very much and thank you for coming up from (laughs) Texas because I know the problems you're facing.

MR. HOLMES: It was rainy there, right?

SEN. HUTCHISON: Yeah. Thank you. Thank you, Mr. Chairman.

SEN. LAUTENBERG (?): Are the two of you on the -- (off mike)

SEN. HOLMES: Yes, sir.

MR. HOLMES: I'm just about out. If there's one more question, I'd be happy to field it.

SEN. LAUTENBERG (?): My colleague, Senator (Begich ?).

SEN. BEGICH (?): Mr. Chairman, I won't. I'll just reserve my questions. I will make a general comment and that is, I agree with you. You know, as a new person here, I'll be honest with you. These formats are very cumbersome to really get to the meat of how to deal with this very complex issue, so I really encourage your idea because, for example, when Senator Hutchison just talked about the PPPs, you know, the country that does the most of this -- actually, they have huge operations within their bureaucracy to manage these -- is in France, and they do it on water, sewer, roads. They do it on core infrastructure, and there's very incredible information and great experience that, you know, if we go down that path in any way, but I would be very interested in that work kind of session because I think there's a wealth of information here that I would like to extract out of them because I have questions about the regulatory process.

How do we streamline that, for example, and some we require for the, you know, putting benches in and some things, like that on federal right-of-ways, we require NEPA. It's just a ridiculous process for simplistic things that we should be able to resolve.

So I'll reserve my questions and just thank all of you and I will—I know the chairman is interested in having something that we can have more engagement, and I think that's going to be great to extract more out of you, and they can then catch their plane, but why would you want to be going to a place that's raining when you can be here, but -- (laughter) -- I'll leave that for you. Thank you, Mr. Chairman.

SEN. LAUTENBERG (?): (Off mike) -- contribution. I think it was a very good session and that I'd like to follow on with some kind of transportation conference mechanism, and it may be in some places across the country that we have to go because this is too serious, too important, and flashes of ideas do strike a bell and it's (so heartening ?) because I come out of the computer business, and if you would have asked me ten years ago what I would have thought was a good idea to raise revenues I would have said to tax cable to the right-of- way, but that's gone away. We don't need that anymore, but other ways of generating revenue that these rights-of-way can provide, so we thank you all for your thoughtful and excellent presentation. Senator Hutchison.

SEN. HUTCHISON: Thank you, Mr. Chairman. I think it was very helpful. I think we have a good body of information now and I hope that we can come to some conclusions that will not just be another highway authorization bill that's just what we've done in the past because I think we have new challenges. Thank you.


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